Document:

Exhibit 10.1

 

AMENDMENT NO. 2 TO SIXTH AMENDED AND RESTATED

MORTGAGE WAREHOUSING CREDIT AND SECURITY AGREEMENT

 

This Amendment No. 2 to Sixth Amended and Restated Mortgage Warehousing Credit and Security Agreement (this “Amendment”) is entered into as of February 27, 2015 by and among ACRE CAPITAL LLC (the “Borrower”), the financial institutions (the “Lenders”) party to that certain Credit Agreement (as defined below) and Bank of America, N.A., as agent for the Lenders (in such capacity, the “Agent”).

 

R E C I T A L S

 

A.                                    The Agent, the Lenders and the Borrower are parties to that certain Sixth Amended and Restated Mortgage Warehousing Credit and Security Agreement, dated as of May 1, 2014 (as amended and/or restated from time to time, the “Credit Agreement”).  Capitalized terms used herein and not otherwise defined herein shall have the same meanings herein as ascribed to them in the Credit Agreement; and

 

B.                                    The Borrower requests that the Agent and the Lenders (i) extend the stated Maturity Date of the Credit Agreement through June 30, 2016 and (ii) increase the aggregate Commitment Amount under the Credit Agreement to $135,000,000 for the period beginning on February 27, 2015 and ending on the Maturity Date; and

 

C.                                    In response to such requests, the Agent and the Lenders have agreed to amend and waive certain provisions of the Credit Agreement solely upon the terms and conditions set forth herein, it being the intention of the parties that such amendments shall not constitute a novation of the obligations of the Borrower under the Credit Agreement and the other Loan Documents.

 

NOW THEREFORE, in consideration of the foregoing recitals and of the representations, warranties, covenants and conditions set forth herein and in the Credit Agreement, and for other valuable consideration the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1.                                           Addition of Section 2A.  The following Section 2A is hereby added to the Credit Agreement after Section 2.6:

 

“2A  TAXES, YIELD PROTECTION AND ILLEGALITY.

 

2A.1                      Taxes.

 

(a)                                 Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.

 

(i)                                     Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws.  If any applicable Laws (as determined in the good faith discretion of the Agent) require the deduction or withholding of any Tax from any such payment by 

 

 

the Agent or the Borrower, then the Agent or the Borrower shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

 

(ii)                                  If the Borrower or the Agent shall be required by the Code to withhold or deduct any Taxes, including both United States federal backup withholding and withholding taxes, from any payment, then (A) the Borrower or the Agent shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Borrower or the Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 2A.1) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

 

(iii)                               If the Borrower or the Agent shall be required by any applicable Laws other than the Code to withhold or deduct any Taxes from any payment, then (A) the Borrower or the Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Borrower or the Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 2A.1) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

 

(b)                                 Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection (a) above, the Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

 

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(c)                                  Indemnifications.

 

(i)                                     The Borrower shall, and does hereby, indemnify each Recipient, and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2A.1) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided, however that the Borrower, upon recording in its financial records any reserves required by GAAP, shall be given a reasonable opportunity to contest any such Indemnified Taxes which it reasonably believes have been incorrectly imposed or asserted, and no payment for such Indemnified Taxes shall be due until such contest has been resolved.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.  The Borrower shall also, and does hereby indemnify the Agent, and shall make payment in respect thereof within ten (10) days after demand therefor, for any amount which a Lender for any reason fails to pay indefeasibly to the Agent as required pursuant to Section 2A.1(c)(ii) below.

 

(ii)                                  Each Lender and the Agent shall, and does hereby, severally indemnify and shall make payment in respect thereof within ten (10) days after demand therefor, (A) the Agent against any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (B) the Agent and the Borrower, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.3.3 relating to the maintenance of a Register and (C) the Agent and the Borrower, as applicable, against any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent or the Borrower in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender, as the case may be,

 

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under this Agreement or any other Loan Document against any amount due to the Agent under this clause (ii).

 

(d)                                 Evidence of Payments.  Upon request by the Borrower or the Agent, as the case may be, after any payment of Taxes by the Borrower or by the Agent to a Governmental Authority as provided in this Section 2A, the Borrower shall deliver to the Agent or the Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Agent, as the case may be.

 

(e)                                  Status of Lenders; Tax Documentation.

 

(i)                                     Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2A(e)(ii)(A) and (ii)(B)) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(ii)                                  Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,

 

(A)                               any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed originals of IRS Form W-9

 

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certifying that such Lender is exempt from U.S. federal backup withholding tax;

 

(B)                               any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), whichever of the following is applicable:

 

(1)                                 in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of either IRS Form W-8BEN-E or IRS Form W-8BEN or any successor thereto establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, either IRS Form W-8BEN-E or IRS Form W-8BEN or any successor thereto establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(2)                                 executed copies of IRS Form W-8ECI;

 

(3)                                 in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit I-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of either IRS Form W-8BEN-E or IRS Form W-8BEN or any successor thereto; or

 

(4)                                 to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, either IRS Form W-8BEN-E or either IRS Form W-8BEN-E or IRS Form W-8BEN or any successor thereto, a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-2 or Exhibit I-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a

 

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partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-4 on behalf of each such direct and indirect partner;

 

(C)                               any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Agent to determine the withholding or deduction required to be made; and

 

(D)                               if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the Second Amendment Date.

 

(iii)                               Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 2A expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent in writing of its legal inability to do so.

 

(f)                                   Treatment of Certain Refunds.  Unless required by applicable Laws, at no time shall the Agent have any obligation to file for or otherwise pursue on behalf of a Lender, or have any

 

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obligation to pay to any Lender, any refund of Taxes withheld or deducted from funds paid for the account of such Lender, as the case may be.  If any Recipient receives a refund of any Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2A, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2A with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Recipient, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to the Borrower pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This subsection shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

 

(g)                                  Survival.  Each party’s obligations under this Section 2A shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

 

2A.2  Illegality.  If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its lending office to make, maintain or fund any Advance or any other credit extension whose interest is determined by reference to the LIBOR Daily Floating Rate, or to determine or charge interest rates based upon the LIBOR Daily Floating Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Agent, the interest rate on such Advance or other credit extension

 

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shall be the Prime Rate until such Lender notifies the Agent and the Borrower that the circumstances giving rise to such determination no longer exist.

 

2A.3  Inability to Determine Rates.  If (i)  the Agent determines that (A)  Dollars are not being offered to banks in the London interbank market for a one-month term and in the applicable amount of any Loan or (B) adequate and reasonable means do not exist for determining the LIBOR Daily Floating Rate with respect to any Loan, or (ii) the Agent or the Requisite Lenders determine that for any reason the LIBOR Daily Floating Rate with respect to any Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Agent will promptly so notify the Borrower and each Lender.  Thereafter, the interest rate on each affected Loan shall be the Prime Rate until the Agent (upon the instruction of the Requisite Lenders) revokes such notice.

 

2A.4  Increased Costs; Reserves on Eurodollar Rate Loans.

 

(a)                                 Increased Costs Generally.  If any Change in Law shall:

 

(i)                                     impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR Daily Floating Rate) or the Agent;

 

(ii)                                  subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(iii)                               impose on any Lender or the Agent or the London interbank market any other condition, cost or expense affecting this Agreement or any Advance or other credit extension made hereunder;

 

and the result of any of the foregoing shall be to increase the cost of making, continuing or maintaining such Advance or other credit extension or to reduce the amount of any sum received or receivable by such Lender or the Agent hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the Agent, the Borrower will pay to such Lender or the

 

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Agent, as the case may be, such additional amount or amounts as will compensate such Lender or the Agent, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If any Lender or the Agent determines that any Change in Law affecting such Lender or the Agent or any lending office of such Lender or such Lender’s or the Agent’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Agent’s capital or on the capital of such Lender’s or the Agent’s holding company, if any, as a consequence of this Agreement, the Commitment of such Lender or the Loans made by such Lender, to a level below that which such Lender or the Agent or such Lender’s or the Agent’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the  Agent’s policies and the policies of such Lender’s or the Agent’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Agent, as the case may be, such additional amount or amounts as will compensate such Lender or the Agent or such Lender’s or the Agent’s holding company for any such reduction suffered.

 

(c)                                  Certificates for Reimbursement.  A certificate of a Lender or the Agent setting forth the amount or amounts necessary to compensate such Lender or the Agent or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay to such Lender or the Agent, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

(d)                                 Delay in Requests.  Failure or delay on the part of any Lender or the Agent to demand compensation pursuant to the foregoing provisions of this Section 2A shall not constitute a waiver of such Lender’s or the Agent’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the Agent pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender or the Agent, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Agent’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof).

 

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2A.5  Mitigation Obligations; Replacement of Lenders.

 

(a)                                 Designation of a Different Lending Office.  If any Lender requests compensation under 2A.4, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender, the Agent, or any Governmental Authority for the account of any Lender or the Agent pursuant to 2A.1, or if any Lender gives a notice pursuant to 2A.2, then at the request of the Borrower, such Lender or the Agent shall, as applicable, use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the Agent, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2A.1 or 2A.4, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 2A.2, as applicable, and (ii) in each case, would not subject such Lender or the Agent, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the Agent, as the case may be.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or the Agent in connection with any such designation or assignment.

 

(b)                                 Replacement of Lenders.  If any Lender requests compensation under Section 2.A4, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2A.1 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2A.5(a), then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.3), all of its interests, rights (other than its existing rights to payments pursuant to 2A.1 and 2A.4) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

 

(i)                                     the Borrower, on behalf of the assigning Lender, shall have paid to the Agent the registration fee referred to in Section 11.3.1;

 

(ii)                                  such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans,

 

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accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

(iii)                               in the case of any such assignment resulting from a claim for compensation under Section 2A.4 or payments required to be made pursuant to Section 2A.1, such assignment will result in a reduction in such compensation or payments thereafter; and

 

(iv)                              such assignment does not conflict with applicable Laws; and

 

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

2A.6  Survival.  All of the Borrower’s obligations under this 2A shall survive termination of the aggregate Commitments of all the Lenders, repayment of all other Obligations hereunder, resignation of the Agent and the Maturity Date.”

 

Section 2.                                           Reduction in Unused Fee.  Section 2.5.2 of the Credit Agreement is hereby amended by replacing “50%” with “40%”.

 

Section 3.                                           Amendment to Section 7.5.4(l).  Section 7.5.4(l) of the Credit Agreement is hereby amended by replacing the text after “(l)” and before “Section 7.5.5” with the following:

 

“A copy of the quarterly DUS lender attestation furnished to Fannie Mae within forty-five (45) days after the last day of each of the first three fiscal quarters and within ninety (90) days of the last day of the fourth fiscal quarter.”

 

Section 4.                                           Amendment to Leverage Covenant.  Section 7.25.4 of the Credit Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

 

“7.25.4  Ratio of Total Liabilities to Tangible Net Worth.  The Borrower shall at all times maintain a ratio of total liabilities (excluding liabilities consisting of outstanding principal and interest included in the Loan and under any Agency Line permitted pursuant to Section 7.14.1(c) from such calculation of liabilities and determined in accordance with GAAP) to Tangible Net Worth (excluding any assets pledged to secure obligations under the Loan or any other Agency Lines from the calculation of Tangible Assets and excluding liabilities consisting of outstanding principal and interest included in the Loan and under any Agency Line permitted pursuant to Section 7.14.1(c) from the calculation of Liabilities) not to exceed 2.50:1.00.”

 

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Section 5.                                           Amendment to Schedule 1.  Schedule 1 to the Credit Agreement is hereby amended by replacing it in its entirety with Schedule 1 attached hereto as Exhibit A.

 

Section 6.                                           Additional Definitions.  The Credit Agreement is hereby amended by adding the following definitions to Exhibit A of the Credit Agreement in the appropriate alphabetical order:

 

“Change in Law means the occurrence, after the Second Amendment Date, of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.”

 

“Code means the Internal Revenue Code of 1986, as may be amended or replaced from time to time.”

 

“Connection Income Taxes means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.”

 

“Dollar and ‘$’ mean lawful money of the United States.”

 

“Excluded Taxes means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2A.5) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 2A.1(a)(ii), (a)(iii) or (c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender

 

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immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2A.1(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.”

 

“FATCA means Sections 1471 through 1474 of the Code, as of the Second Amendment Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.”

 

“Foreign Lender means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.”

 

“Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (b), to the extent not otherwise described in clause (a), Other Taxes.”

 

“Laws means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charge with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.”

 

“LIBOR Daily Floating Rate means a fluctuating rate of interest which can change on each banking day.  The rate will be adjusted on each banking day to equal the London Interbank Offered Rate (or a comparable or successor rate which is approved by the Agent) for U.S. Dollar deposits for delivery on the date in question for a one month term beginning on that date.  The Agent will use the “LIBOR Rate” as published by Bloomberg (or other commercially available source providing quotations of such rate as selected by the Agent from time to time) as determined at approximately 11:00 a.m. London time two (2) London Banking Days prior to the date in question, as adjusted from time to time in the Agent’s sole discretion for reserve requirements, deposit insurance assessment rates and other regulatory costs.  If such rate is not available at such time for any reason, then the rate will be determined by such alternate method as reasonably selected by the Agent.”

 

“Other Connection Taxes means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its

 

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obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).”

 

“Other Taxes means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.05).”

 

“Recipient means the Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder.”

 

“Second Amendment Date means February 27, 2015.”

 

“Taxes means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.”

 

Section 7.                                           Amendment to Definitions.

 

(a) The definition of “Applicable Rate” set forth in Exhibit A to the Credit Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

 

“Applicable Rate means, for any day, either (a) the LIBOR Daily Floating Rate, plus one and 60/100 percent (1.60%) per annum; or (b) if any of the events set forth in Sections 2A.2 or 2A.3 occur, the Prime Rate, plus one and 60/100 percent (1.60%) per annum.”

 

(b)  The definition of “Commitment Amount” set forth in Exhibit A to the Credit Agreement is hereby amended by replacing it in its entirety with the following:

 

“Commitment Amount means, for each Lender, the amount set forth on Schedule 1, and, in the aggregate under this Agreement the aggregate amount for all the Lenders set forth on Schedule 1 not to exceed $135,000,000.”

 

(c)  The definition of “Daily Floating LIBOR Rate” set forth in Exhibit A to the Credit Agreement is hereby deleted in its entirety.  All references to the term “Daily Floating LIBOR Rate” in the Loan Documents shall be replaced with the term “LIBOR Daily Floating Rate” and shall have the definition given to LIBOR Daily Floating Rate in this Amendment.

 

(d)  The definition of “Maturity Date” set forth in Exhibit A of the Credit Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

 

14

 

“Maturity Date means the earlier of June 30, 2016 or the date upon which the Commitments are terminated or the Loan is accelerated in accordance with the applicable provisions of this Agreement.”

 

Section 8.                                           Amendment to Exhibit C-1.  Exhibit C-1 to the Credit Agreement is hereby amended by replacing it in its entirety with the Exhibit C-1 attached hereto as Exhibit D.

 

Section 9.                                           Amendment to Exhibit D.  Section 1 to Exhibit D to the Credit Agreement is hereby amended by deleting the phrase “has been previously” and replacing it with the phrase “is currently”.

 

Section 10.                                    Amendment to Compliance Certificate.  Section 7.25.4 of the ACRE CAPITAL LLC Compliance Certificate as set forth on Exhibit G to the Credit Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

 

	
“7.25.4 Maintain   a ratio of total liabilities (minus those liabilities consisting of   outstanding principal and interest included under the Loan or any Agency Line   and determined in accordance with GAAP) to Tangible Net Worth (excluding   any assets pledged to secure obligations under the Loan or any Agency Lines   from the calculation of Tangible Assets and excluding liabilities consisting   of outstanding principal and interest included under the Loan or any Agency   Line permitted pursuant to Section 7.14.1(c) from the calculation   of Liabilities) to exceed:
    	
 
    	
2.50:1:00                          ”
    

 

Section 11.                                    Additional Exhibits.  The Credit Agreement is hereby amended by adding Exhibits I-1, I-2, I-3 and I-4, attached hereto as Exhibits E-1, E-2, E-3 and E-4, at the end of the Credit Agreement.

 

Section 11.                                    Representations and Warranties.  The Borrower represents and warrants to the Lenders and the Agent as of the effective date of this Amendment that:

 

(a)  No Default is in existence on the date hereof, or will result from the execution and delivery of this Amendment or the consummation of any transactions contemplated hereby;

 

(b)  Each of the representations and warranties of the Borrower in the Credit Agreement and the other Loan Documents is true and correct in all material respects on the effective date of this Amendment (except for representations and warranties limited as to time or with respect to a specific event, which representations and warranties shall continue to be limited to such time or event); and

 

15

 

(c)  This Amendment and the Credit Agreement (as amended by this Amendment) are legal, valid and binding agreements of the Borrower and are enforceable against it in accordance with their terms.

 

Section 13.            Ratification.  Except as hereby waived and amended, the Credit Agreement, all other Loan Documents and each provision thereof are hereby ratified and confirmed in every respect and shall continue in full force and effect, and this Amendment shall not be, and shall not be deemed to be, a waiver of any Default or Event of Default or of any covenant, term or provision of the Credit Agreement or the other Loan Documents.

 

Section 14.            Fee Letter.  The Borrower agrees to pay the Agent the fee(s) described in that certain side letter of even date herewith between the Borrower and the Agent (as the same may be amended and/or restated from time to time, the “Fee Letter”).

 

Section 15.            Conditions Precedent.  The agreements set forth in this Amendment are conditional and this Amendment shall not be effective until: (a) receipt by the Agent of a fully-executed counterpart original of this Amendment; (b) receipt by Bank of America, N.A., in its capacity as a Lender, of a fully-executed original Third Amended and Restated Promissory Note, in the form attached hereto as Exhibit B (c) receipt by the Agent of the other instruments, agreements, certificates and documents listed on the closing checklist attached hereto as Exhibit C; and (d) payment by the Borrower of all of the Agent’s fees, costs and expenses associated with the preparation, negotiation, execution and delivery and administration of this Amendment and the Credit Agreement accrued through the date hereof, including, without limitation, the Agent’s attorneys’ fees.

 

Section 16.            Counterparts.  This Amendment may be executed and delivered in any number of counterparts with the same effect as if the signatures on each counterpart were upon the same instrument.

 

Section 17.            Amendment as Loan Document.  Each party hereto agrees and acknowledges that this Amendment constitutes a “Loan Document” under and as defined in the Credit Agreement.

 

Section 18.            Governing Law.  This Amendment shall in all respects be governed, construed, applied and enforced in accordance with the internal laws of the State of New York without regard to principles of conflicts of laws other than for sections 5-1401 and 5-1402 of the New York General Obligations Law.

 

Section 19.            Successors and Assigns.  This Amendment shall be binding upon each of the Borrower, the Lenders, the Agent and their respective successors and assigns, and shall inure to the benefit of each of the Borrower, the Lenders and the Agent.

 

Section 20.            Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

Section 21.            Expenses.  The Borrower agrees to promptly reimburse the Agent and the Lenders for all expenses, including, without limitation, reasonable fees and expenses of outside

 

16

 

legal counsel, it has heretofore or hereafter incurred or incurs in connection with the preparation, negotiation and execution of this Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment.

 

Section 22.            Integration.  This Amendment contains the entire understanding of the parties hereto with regard to the subject matter contained herein.  This Amendment supersedes all prior or contemporaneous negotiations, promises, covenants, agreements and representations of every nature whatsoever with respect to the matters referred to in this Amendment, all of which have become merged and finally integrated into this Amendment.  Each of the parties hereto understands that in the event of any subsequent litigation, controversy or dispute concerning any of the terms, conditions or provisions of this Amendment, no party shall be entitled to offer or introduce into evidence any oral promises or oral agreements between the parties relating to the subject matter of this Amendment not included or referred to herein and not reflected by a writing included or referred to herein.

 

Section 23.            No Course of Dealing.  The Agent and the Lenders have entered into this Amendment on the express understanding with the Borrower that in entering into this Amendment the Agent and the Lenders are not establishing any course of dealing with the Borrower.  The Agent’s and the Lenders’ rights to require strict performance with all of the terms and conditions of the Credit Agreement and the other Loan Documents shall not in any way be impaired by the execution of this Amendment.  None of the Agent and the Lenders shall be obligated in any manner to execute any further amendments or waivers and if such waivers or amendments are requested in the future, assuming the terms and conditions thereof are satisfactory to them, the Agent and the Lenders may require the payment of fees in connection therewith. The Borrower agrees that none of the ratifications and reaffirmations set forth herein, nor the Agent’s nor any Lender’s solicitation of such ratifications and reaffirmations, constitutes a course of dealing giving rise to any obligation or condition requiring a similar or any other ratification or reaffirmation from the Borrower with respect to any subsequent modification, consent or waiver with respect to the Credit Agreement or any other Loan Document.

 

Section 24.            Jury Trial Waiver.  THE BORROWER, THE AGENT AND THE LENDERS BY ACCEPTANCE OF THIS AMENDMENT MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDMENT, THE CREDIT AGREEMENT, OR ANY OTHER CREDIT DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF AGENT OR ANY LENDER RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 

[Remainder of the page intentionally left blank; signatures appear on next page]

 

17

 

IN WITNESS WHEREOF, the undersigned have executed and delivered this Amendment No. 2 as of the date first set forth above.

 

	
 
    	
 
    
	
BORROWER:
    	
ACRE   CAPITAL LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Rachel Vinson
    
	
 
    	
 
    	
 
    	
Name:   Rachel Vinson
    
	
 
    	
 
    	
 
    	
Title:   Vice President
    
	
 
    	
 
    
	
AGENT AND LENDER:
    	
BANK   OF AMERICA, N.A
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Andrew Blomstedt
    
	
 
    	
 
    	
Name:   Andrew Blomstedt
    
	
 
    	
 
    	
Title:   Vice President
    
					

 

Signature Page to Amendment No. 2 to

Sixth Amended and Restated Mortgage Warehousing Credit and Security Agreement

 

 

EXHIBIT A

 

SCHEDULE 1 TO LOAN AGREEMENT

 

Lenders and Commitments

 

	
Lender
    	
 
    	
Commitment
    	
 
    	
Commitment
   Percentage
    	
 
    	
Address for Notices
    	
 
    	
Address for Advance Requests
    
	
Bank   of America, N.A.
    	
 
    	
$
    	
135,000,000
    	
 
    	
100
    	
%
    	
Bank   of America, N.A.

225   Franklin Street, 2nd Floor

Mail   Stop MA1-225-02-04

Boston,   MA 02110

Attn:   Mr. Andrew Blomstedt 

Vice   President 

email:   andrew.blomstedt@baml.com

telephone:   617-346-3491
    	
 
    	
Bank   of America, N.A.

225   Franklin Street, 2nd Floor

Mail   Stop MA1-225-02-04

Boston,   MA 02110 

 

Attn:   Cheryl A. Bailey,  

Vice   President 

email:   cheryl.a.bailey@baml.com

telephone:   617-346-0089 

 

Attn:   Clare O’Connor,  

Assistant   Vice President 

email:   clare.m.o’connor@baml.com

telephone:    617-346-0121
    
										

 

 

EXHIBIT B

 

THIRD AMENDED AND RESTATED PROMISSORY NOTE

 

	
$135,000,000.00
    	
 
    	
as of February 27, 2015
    

 

1.                                      Promise To Pay.  FOR VALUE RECEIVED, ACRE CAPITAL LLC (the “Borrower”) promises to pay to the order of BANK OF AMERICA, N.A. (the “Bank”), the principal sum of ONE HUNDRED THIRTY-FIVE MILLION AND 00/100 DOLLARS ($135,000,000.00) or so much thereof as may be advanced by or on behalf of the Bank, with interest thereon, or on the amount thereof from time to time outstanding, to be computed, as hereinafter provided, on each Advance from the date of its disbursement until such principal sum shall be fully paid.  Interest and principal shall be payable as set forth in the Credit Agreement (as defined below).  The total principal sum or the amount thereof outstanding, together with any accrued but unpaid interest, shall be due and payable in full on the Maturity Date.

 

All payments under this Note shall be made at the office of the Agent as set forth in the Credit Agreement (or at such other place as the Agent may designate from time to time in writing) in lawful money of the United States of America in federal or other immediately available funds.  The Borrower may prepay this Note in whole or in part at any time as provided in the Credit Agreement without premium or additional charge.  Amounts so prepaid may be borrowed and reborrowed by the Borrower from time to time as provided in the Credit Agreement.

 

2.                                      Credit Agreement.  This Note is issued pursuant to and is subject to the terms, provisions and conditions of that certain Sixth Amended and Restated Mortgage Warehousing Credit and Security Agreement entered into as of May 1, 2014 (as amended and/or restated from time to time, and as any provision thereof may be waived, the “Credit Agreement”) among: the Borrower; the Bank and each other financial institution party thereto from time to time as a Lender; and Bank of America, N.A., as agent for the Lenders (in such capacity, the “Agent”).  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.  This Note may be one of several Notes that may be executed and delivered from time to time by the Borrower to the different Lenders in accordance with the terms and provisions of the Credit Agreement.

 

3.                                      Acceleration; Event of Default.  The principal of, and interest on, this Note shall be payable as provided in the Credit Agreement and shall be subject to acceleration as provided therein.  Upon the occurrence and during the continuance of an Event of Default, the Agent shall have, in addition to any rights and remedies contained herein, any and all rights and remedies set forth in the Credit Agreement, any other Loan Document or at law or in equity.

 

4.                                      Certain Waivers, Consents and Agreements.  Each and every party liable hereon or for the indebtedness evidenced hereby whether as maker, endorser, guarantor, surety or otherwise hereby; (a) waives presentment, demand, protest, suretyship defenses and defenses in the nature thereof; (b) waives any defenses based upon and specifically assents to any and all extensions and postponements of the time for payment, changes in terms and conditions and all other indulgences and forbearances which may be granted by the Agent or the holder to any

 

 

party now or hereafter liable hereunder or for the indebtedness evidenced hereby; (c) agrees to any substitution, exchange, release, surrender or other delivery of any security or collateral now or hereafter held hereunder or in connection with the Credit Agreement, or any of the other Loan Documents, and to the addition or release of any other party or person primarily or secondarily liable; (d) agrees that if any security or collateral given to secure this Note or the indebtedness evidenced hereby or to secure any of the obligations set forth or referred to the Credit Agreement, or any of the other Loan Documents, shall be found to be unenforceable in full or to any extent, or if the Agent or any other party shall fail to duly perfect or protect such collateral, the same shall not relieve or release any party liable hereon or thereon nor vitiate any other security or collateral given for any obligations evidenced hereby or thereby; (e) agrees to pay all reasonable costs and expenses actually incurred by the Agent and the Bank in accordance with the Credit Agreement; and (f) consents to all of the terms and conditions contained in this Note, the Credit Agreement, and all other instruments now or hereafter executed evidencing or governing all or any portion of the security or collateral for this Note and for such Credit Agreement, or any one or more of the other Loan Documents.

 

5.                                      Delay Not A Bar.  No delay or omission on the part of the Agent or the holder in exercising any right hereunder or any right under any instrument or agreement now or hereafter executed in connection herewith, or any agreement or instrument which is given or may be given to secure the indebtedness evidenced hereby or by the Credit Agreement, or any other agreement now or hereafter executed in connection herewith or therewith shall operate as a waiver of any such right or of any other right of such holder, nor shall any delay, omission or waiver on any one occasion be deemed to be a bar to or waiver of the same or of any other right on any future occasion.

 

6.                                      Partial Invalidity.  The invalidity or unenforceability of any provision hereof, of the Credit Agreement, of the other Loan Documents, or of any other instrument, agreement or document now or hereafter executed in connection with the Loan made pursuant hereto and thereto shall not impair or vitiate any other provision of any of such instruments, agreements and documents, all of which provisions shall be enforceable to the fullest extent now or hereafter permitted by law.

 

7.                                      Compliance With Usury Laws.  All agreements among the Borrower, the Agent and the Lenders are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Agent or the Bank for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under applicable law.  As used herein, the term “applicable law”, shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date.  In this regard, it is expressly agreed that it is the intent of the Borrower, the Agent and the Lenders in the execution, delivery and acceptance of this Note to contract in strict compliance with the laws of the State of New York from time to time in effect.  If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limit of such validity, and if under or from any circumstances whatsoever Agent

 

 

or the Bank should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest.  This provision shall control every other provision of all agreements among the Borrower, the Agent and the Lenders with respect to the Loan.

 

8.                                      Use of Proceeds.  All proceeds of the Loan shall be used solely for the purposes provided for in the Credit Agreement.

 

9.                                      Security.  This Note is secured by the Collateral as set forth in the Credit Agreement.  The Collateral for this Note shall be held by the Agent for the ratable benefit of the Lenders, including the Bank.

 

10.                               Notices.  Any notices given with respect to this Note shall be given in the manner provided for in the Credit Agreement.

 

11.                               Governing Law and Consent to Jurisdiction.

 

11.1                        Governing Law.  This Note and each of the other Loan Documents shall be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to principles of conflict of laws other than Sections 5-1401 and 5-1402 of the New York General Obligations Law.

 

11.2                        Consent to Jurisdiction.  EACH OF THE BORROWER AND THE BANK (BY THE ACCEPTANCE OF THIS NOTE) SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE BORROWER AND THE BANK AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE AGENT, OR THE BANK MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.  EACH OF THE BORROWER AND THE BANK WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (ii) OF THIS SECTION.  EACH OF THE

 

 

PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

12.                               Waiver of Jury Trial and Damages.  THE BORROWER AND THE BANK (BY ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS, (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE BANK, THE AGENT OR ANY LENDER RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  EXCEPT AS PROHIBITED BY LAW, EACH OF THE BORROWER AND THE BANK (BY THE ACCEPTANCE OF THIS NOTE) HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES, EACH OF THE BORROWER AND THE BANK (BY THE ACCEPTANCE OF THIS NOTE) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE BORROWER, THE BANK, THE AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BORROWER, THE BANK, THE AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS.  THESE WAIVERS CONSTITUTE A MATERIAL INDUCEMENT FOR THE BORROWER TO MAKE THIS NOTE AND THE BANK TO ACCEPT THIS NOTE AND ADVANCE ITS COMMITMENT PERCENTAGE OF THE LOAN.

 

13.                               No Oral Change.  This Note and the other Loan Documents may only be amended, terminated, extended or otherwise modified by a single writing signed by the parties against which enforcement is sought in accordance with the terms and conditions of the Credit Agreement.  In no event shall any oral agreements, promises, actions, inactions, knowledge, course of conduct, course of dealing, or the like be effective to amend, terminate, extend or otherwise modify this Note or any of the other Loan Documents.

 

14.                               Rights of Agent, Bank and Holder.  This Note and the rights and remedies provided for herein may be enforced by the Agent, the Bank, or any subsequent holder hereof.  Wherever the context permits, each reference to the term “holder” herein shall mean and refer to the Agent or the then holder of this Note.

 

15.                               Right to Pledge.  Subject to Section 11.3.7 of the Credit Agreement, the Bank may at any time pledge all or any portion of its rights under this Note (or any portion thereof) or any of the other Loan Documents to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or

 

 

enforcement thereof shall release the Bank from its obligations under this Note or any of the other Loan Documents.

 

16.                               Not a Novation.  This Note is intended to amend and restate that certain Second Amended and Restated Note, dated as of May 1, 2014 (as amended from time to time), made by the Borrower payable to the order of Bank of America, N.A., as the Credit Agent and sole Lender, in principal face amount of $80,000,000.00 (the “Original Note”), and is intended as a continuation of the transactions contemplated by the Original Note, and shall not constitute a novation of the Original Note.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

 

IN WITNESS WHEREOF, this Note has been duly executed and delivered by an Authorized Representative of the Borrower as of the date first above written.

 

	
BORROWER:
    	
ACRE   CAPITAL LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:   
    	
Rachel   Vinson
    
	
 
    	
 
    	
Title:   
    	
Vice   President
    

 

Signature Page to Third Amended and Restated Promissory Noteefc15-265_ex101.htm

Exhibit 10.1

 

ML FUTURESACCESSsm ADVISORY AGREEMENT

 

 

among

 

 

ML WINTON FUTURESACCESSSM LLC

ML WINTON FUTURESACCESSSM LTD.

 

 

 

MERRILL LYNCH ALTERNATIVE INVESTMENTS LLC

 

 

and

 

 

WINTON CAPITAL MANAGEMENT LIMITED

 

 

Dated as of February 27, 2015

  

  

  

 

ML FUTURESACCESSSM ADVISORY AGREEMENT

Table of Contents

 

	Section	Page

 

	
1.

	
Undertakings of the Trading Advisor in Connection with Offering.

	
2

	
2.

	
Duties of the Trading Advisor.

	
4

	
3.

	
Trading Advisor Independent.

	
6

	
4.

	
Commodity Broker; Floor Brokers

	
6

	
5.

	
Management Fee.

	
7

	
6.

	
Incentive Fee.

	
8

	
7.

	
Term and Termination.

	
10

	
8.

	
Right to Advise Others; Uniformity of Acts and Practices.

	
10

	
9.

	
Additional Undertakings by the Trading Advisor.

	
11

	
10.

	
Representations and Warranties.

	
11

	
11.

	
Entire Agreement.

	
14

	
12.

	
Indemnification.

	
14

	
13.

	
Assignment.

	
15

	
14.

	
Amendment; Waiver.

	
16

	
15.

	
Severability.

	
16

	
16.

	
Notices.

	
16

	
17.

	
Governing Law.

	
17

	
18.

	
Consent to Jurisdiction.

	
17

	
19.

	
Remedies.

	
17

	
20.

	
Survival.

	
18

	
21.

	
Counterparts.

	
18

	
22.

	
No Waiver.

	
18

	
23.

	
Rules of Interpretation.

	
18

	
24.

	
Binding Effect; Benefit; Third-Party Beneficiary.

	
19

	
25.

	
Confidentiality.

	
19

	
26.

	
Advisers Act Compliance.

	
20

	
27.

	
Monthly Reports.

	
20

	
28.

	
Semi-Monthly Liquidity.

	
20

	
29.

	
AIFMD.

	
20

	
30.

	
Name Change.

	
21

 

______________________

                                                                                                         

	 Appendix A — List of Commodity Interests Traded by Trading Advisor	 A-1
	 	 
	 Appendix B — Commodity Trading Authority	 B-1
	 	 
	 	 
	 	 

 

 

 

  

  

  

 

ML FUTURESACCESSsm ADVISORY AGREEMENT

 

THIS AMENDED AND RESTATED ADVISORY AGREEMENT (the “Agreement”), made as of this February 27, 2015 and shall have effect from January 31, 2015, among ML WINTON FUTURESACCESSSM LLC, a Delaware limited liability company (the “Onshore Fund”), ML WINTON FUTURESACCESSSM LTD., a Cayman Islands exempted company (the “Offshore Fund,” and, together with the Onshore Fund, the “Funds”), MERRILL LYNCH ALTERNATIVE INVESTMENTS LLC, a Delaware limited liability company (the “Manager”), and WINTON CAPITAL MANAGEMENT LIMITED (the “Trading Advisor”);

 

W I T N E S S E T H:

 

WHEREAS, the Funds are part of the “family” of privately-offered managed futures funds sponsored by the Manager as part of the “ML FuturesAccessSM Program,” which provides for investors to invest in, and exchange their investments among, different funds in the ML FuturesAccessSM Program, as well as among the various “hedge funds” in the ML HedgeAccessSM Program (the ML FuturesAccessSM Program and the ML HedgeAccessSM Program being collectively referred to as the “Program”);

 

WHEREAS, the Onshore Fund has been formed in order to trade, buy, sell or otherwise acquire, hold or dispose of forward contracts, futures contracts for commodities, financial instruments and currencies, rights pertaining thereto and options thereon or on physical commodities and engage in all activities incident thereto (the foregoing forms of investment being collectively referred to herein as “commodity interests”) under the direction of the Trading Advisor;

 

WHEREAS, the Onshore Fund intends, subject to the terms and conditions set forth herein, to offer units of limited partnership interest in the Onshore Fund (“Units”) for sale to investors in an offering exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”), as described in the Onshore Fund’s Confidential Private Placement Offering Memorandum, as amended from time to time (the “Onshore Memorandum”), which has been filed with the Commodity Futures Trading Commission (the “CFTC”) and the National Futures Association (the “NFA”) pursuant to the Commodity Exchange Act, as amended (the “CEA”), the commodity pool operator and commodity trading advisor regulations promulgated under the CEA by the CFTC (the “Commodity Regulations”), and NFA rules promulgated under the CEA (the “NFA Rules”);

 

WHEREAS the Offshore Fund intends, subject to the terms and conditions set forth herein, to offer redeemable participating shares (“Shares,” and collectively with the Units, “Interests”) for sale exclusively to Non-“United States persons,” pursuant to Regulation S under the 1933 Act, as described in the Offshore Fund’s Confidential Offering Memorandum, as amended from time to time (the “Offshore Memorandum” and collectively with the Onshore Memorandum, the “Memorandum”).  The Manager has filed a Form 18-96 Notice with the NFA exempting the Offshore Fund from filing the Offshore Memorandum with the CFTC or NFA;

 

WHEREAS, the Manager acts as manager of the Funds;

 

 

  

  

  

 

 

WHEREAS, the Trading Advisor is engaged in the business of, among other things, making trading decisions on behalf of investors in the purchase and sale of certain commodity interests;

 

WHEREAS, the Manager sponsored the Funds in order that the Trading Advisor, upon the terms and conditions set forth herein, would act as the trading advisor for the Funds, making commodity interests investment decisions for the Funds on a discretionary basis;

 

WHEREAS, prior to January 31, 2015, the Trading Advisor managed a separate account for the Offshore Fund;

 

WHEREAS, as of January 31, 2015, the Offshore Fund transferred all of its assets previously in its separate account with the Trading Advisor to the Onshore Fund in consideration for Units in the Onshore Fund and the Offshore Fund no longer directly invests in a separate account with the Trading Advisor but rather acts as a “feeder fund” by investing its assets in the Onshore Fund;

 

WHEREAS, the Funds, the Manager and the Trading Advisor entered into an Advisory Agreement dated as of May 26, 2004 as amended prior to the effective date set forth above by the Amendment to the FUTURESACCESSSM Advisory Agreement dated June 17, 2014 and the Amendment to the FUTURESACCESSSM Advisory Agreement dated August 14, 2014 (the “Original Agreement”);

 

WHEREAS, the Trading Advisor is willing to continue to manage the Onshore Fund’s commodity interests trading;

 

WHEREAS, the Offshore Fund intends to change its name to “WNTN FuturesAccess Ltd.”; and

 

WHEREAS, the Funds, the Manager and the Trading Advisor wish to amend and restate the Original Agreement in its entirety with effect as of the date set forth above as follows.

 

NOW, THEREFORE, the parties hereto do hereby agree as follows, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in entering into this Agreement the parties intend to be legally bound.  Capitalized terms not otherwise defined herein have those meanings set forth in the Memorandum:

 

1.   Undertakings of the Trading Advisor in Connection with Offering.

 

(a)   Trading Advisor to Provide Current Information.  The Trading Advisor agrees to use its reasonable best efforts to cooperate with the Funds and the Manager in preparing the Memorandum and with the Onshore Fund and the Manager in preparing any Securities and Exchange Commission (“SEC”) filings of the Onshore Fund made pursuant to the Securities Exchange Act of 1934, as amended (the “1934 Act”), by separately providing its current Form ADV to the Manager as filed with the SEC and made available to the public at www.adviserinfo.sec.gov, provided that, upon the reasonable request of the Manager, the Trading Advisor shall also provide, as promptly as may be reasonably practicable, all other information (if any) regarding the Trading Advisor, its “principals,” “trading principals,” and 

 

 

  

2

  

 

 

“trading program” (each of the foregoing as defined in Section 4.10 of the Commodity Regulations) and “affiliates” (as defined in the Securities Act) which the Manager reasonably believes to be necessary or advisable to include in the Memorandum or in any SEC filings made pursuant to the 1934 Act and hereby consents to the disclosure of any of the above information in the Memorandum or such filings.  Notwithstanding the foregoing the Manager may make non-material changes to such information to conform the format of such information to the format of the Memorandum and/or to comply with Commodity Regulations without prior approval of the Trading Advisor.

 

(b)   Solicitation Material. None of the Trading Advisor and its affiliates, and their respective owners, principals, directors, officers, employees, representatives or controlling persons (“Trading Advisor Parties”) shall use, publish, circulate or distribute the Memorandum or any related solicitation material nor shall any Trading Advisor Party engage in any marketing, sales or promotional activities in connection with the offering of Interests, except as may be requested by the Manager.

 

(c)   “Roadshow” Participation.  The Trading Advisor Parties will, to the extent reasonably regulated by the Manager, participate in “road shows,” seminars, presentations and other marketing activities relating to the Funds as reasonably requested by the Manager, such participation to be at the expense of the Trading Advisor.

 

(d)   Performance Information.  At all times while any of the Interests continue to be offered, the Trading Advisor, at its own expense, shall promptly provide the Funds and the Manager with complete and accurate performance information (in form and substance consistent with Sections 4.25 and 4.35 of the Commodity Regulations and with the NFA Rules) reflecting the actual performance of the Winton Diversified Futures Fund (US) L.P. (“WDFF”) up to the latest practicable date (consistent with Sections 4.25 and 4.35 of the Commodity Regulations), together with any reports or letters relating to such performance data received from accountants and in the possession of the Trading Advisor.  The Trading Advisor shall also provide the Funds and the Manager with commentary pertaining to the performance of WDFF for each month in a timely manner and hereby consents to the use of such commentary, as may be modified by the Manager in any non-material way, in any reports or marketing materials produced by the Funds or the Manager and consents to the use of the information provided pursuant to this Section 1 in any SEC filings made pursuant to the 1934 Act.

 

(e)   Access to Books and Records.  Upon reasonable notice to the Trading Advisor, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) shall have the right to have access to the Trading Advisor’s offices in order to inspect and copy such books and records during normal business hours as Merrill Lynch may reasonably deem necessary in connection with the transactions contemplated hereby (in each case, subject to such restrictions as the Trading Advisor may reasonably deem necessary or advisable so as to preserve the confidentiality of proprietary information).

 

(f)   General Assistance.

 

(i)   The Trading Advisor acknowledges and agrees that Merrill Lynch will be expending substantial resources in preparing the Funds for marketing as well as in 

 

 

 

  

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marketing the Interests.  The Trading Advisor agrees to cooperate with Merrill Lynch in doing so to the fullest extent reasonably practicable.

 

(ii)   In consideration of the Manager’s reliance on the Trading Advisor’s availability and ability to manage the Onshore Fund, the Trading Advisor agrees promptly to notify the Manager in the event that the Trading Advisor has any reason to believe that the Trading Advisor may not be able or willing to do so to the full extent set forth herein.

 

(iii)   The Trading Advisor agrees not to accept other client capital or accounts, if doing so could reasonably be expected to impair the Trading Advisor’s ability to manage the Onshore Fund as contemplated by the Onshore Memorandum, assuming that the Onshore Fund has a minimum capitalization of $500 million.

 

(iv)   The Trading Advisor will assist the Manager, at the Manager’s reasonable request, with the Manager’s “anti-money laundering” and all related obligations.

 

(v)   The Trading Advisor acknowledges that the Manager is registered as an “investment adviser” with the Securities and Exchange Commission and agrees to take such steps as the Manager may reasonably request to ensure that the Funds are operated in full compliance with the Investment Advisers Act of 1940 (the “Advisers Act”).

 

2.   Duties of the Trading Advisor.

 

(a)   Trading for the Onshore Fund.  The Trading Advisor shall act as a trading advisor for the Onshore Fund.  The Trading Advisor, the Manager and the Onshore Fund agree that in managing the Onshore Fund, the Trading Advisor shall implement the trading program and strategies (the “Trading Program”) described in the Onshore Memorandum.  The Trading Advisor shall have sole and exclusive authority and responsibility for directing the Onshore Fund’s trading, subject to the Manager’s fiduciary authority to intervene to overrule or unwind trades if the Manager deems that doing so is necessary or advisable for the protection of the Onshore Fund.  The Onshore Fund or the Manager may also override the trading instructions of the Trading Advisor to the extent necessary:  (i) to fund any distributions or redemptions of Units to be made by the Onshore Fund; (ii) to pay the Onshore Fund’s expenses; and/or (iii) to comply with speculative position limits; provided that the Onshore Fund and the Manager shall permit the Trading Advisor three days in which to liquidate positions for the purposes set forth in clauses (i)-(ii) prior to exercising its override authority.  The Trading Advisor will have no liability for the results of any of the Manager’s interventions in (i)-(ii), above.

 

The Trading Advisor shall give the Onshore Fund prompt written notice of any proposed material change in the Trading Program or the manner in which trading decisions are to be made or implemented and shall not make any such proposed material change without the Manager’s consent.  The addition and/or deletion of commodity interests from the Onshore Fund’s portfolio managed by the Trading Advisor shall not be deemed a change in the Trading Advisor’s trading approach and prior written notice to the Onshore Fund or the Manager shall not be required therefor, except as set forth in Section 2(b) below.

 

 

  

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(b)   List of Commodity Interests Traded by the Trading Advisor.

 

(i)   The Trading Advisor shall provide the Onshore Fund and the Manager with a complete list of commodity interests which it intends to trade on the Onshore Fund’s behalf.  All commodity interests other than regulated futures contracts and options on regulated futures contracts traded on a qualified board or exchange in the United States shall be listed on Appendix A to this Agreement.  The addition of commodity interests (other than forward contracts on foreign currencies) to the Onshore Fund’s portfolio managed by the Trading Advisor as set forth in Appendix A to this Agreement shall require prior written notice to the Onshore Fund or the Manager and an amendment to Appendix A.

 

(ii)   The Trading Advisor acknowledges and agrees that U.S. investors are prohibited from trading in certain instruments — for example, certain “contracts for differences,” and certain non-U.S. stock index futures and related options.  The Trading Advisor agrees not to trade any such instruments for the Onshore Fund should the Manager so request.

 

(c)   Speculative Position Limits.

 

(i)   To the extent that the Trading Advisor’s trading is subject to speculative position limits or other comparable capacity limitations, the Trading Advisor agrees that it will reserve for the Onshore Fund sufficient trading capacity that the Onshore Fund’s trading would be unrestricted by such limits were the Onshore Fund’s capital to total $500 million.  The Trading Advisor also agrees to consult with the Manager in the event that, notwithstanding the undertaking in the preceding sentence, the Manager believes that speculative position limits or comparable capacity restrictions may affect the Trading Advisor’s strategy on behalf of the Onshore Fund.

 

(ii)   If the Trading Advisor (either alone or aggregated with the positions of any other person, if such aggregation shall be required by the CEA, the CFTC or any other regulatory authority having jurisdiction) shall exceed or be about to exceed applicable limits in any commodity interest traded for the Onshore Fund, the Trading Advisor shall immediately take such action as the Trading Advisor may deem fair and equitable to comply with the limits, and shall immediately deliver to the Onshore Fund a written explanation of the action taken to comply with such limits.  If such limits are exceeded by the Onshore Fund, the Manager may require the Trading Advisor to liquidate positions as required.

 

(d)   No Authority to Invest Assets Held in Securities and Cash.  The Onshore Fund and the Manager, and not the Trading Advisor, shall have the sole and exclusive authority and responsibility with regard to the investment, maintenance and management of the Onshore Fund’s assets other than in respect of the Trading Advisor’s trading of the Onshore Fund’s assets in commodity interests.

 

(e)   Trading Authorization.  Prior to the Onshore Fund commencing operations, the Onshore Fund delivered to the Trading Advisor a trading authorization in the 

 

 

  

5

  

 

 

form of Appendix B hereto appointing the Trading Advisor as an agent of the Onshore Fund and attorney-in-fact for such purpose.

 

(f)   Delivery of Disclosure Documents and Reports.  The Trading Advisor shall, during the term of this Agreement, deliver to the Funds copies of all disclosure documents and reports to investors prepared by the Trading Advisor promptly following preparation of such disclosure documents or reports.

 

(g)   Trade Reconciliations.  The Trading Advisor acknowledges its obligation to review its commodity interest positions on a daily basis and to notify the Onshore Fund and the Manager promptly of any errors committed by the Trading Advisor or any trade which the Trading Advisor believes was not executed in accordance with its instructions and which cannot be promptly resolved.

 

(h)   Trade Information.  The Trading Advisor shall use reasonable efforts to provide trade information to OMR Systems by electronic file by 4:30 p.m. on the date of any trade made on behalf of the Onshore Fund.

 

(i)   Letter Agreement.  On May 26, 2004, the Manager, Merrill Lynch and the Trading Advisor entered into a Letter Agreement, as amended from time to time, (the “Letter Agreement”) setting forth the legally binding agreements with respect to certain matters relating to the organization and marketing of the Funds.  This Agreement, which deals primarily with the Trading Advisor’s management of the Onshore Fund’s trading, is to be read and interpreted in conjunction with the Letter Agreement, and vice versa.

 

(j)   No Guarantee of Profits.  The Onshore Fund and the Manager both specifically acknowledge that in agreeing to manage the Onshore Fund, the Trading Advisor is in no respects making any guarantee of profits or of protections against loss, but it is undertaking to use reasonable best efforts to trade profitably on behalf of the Onshore Fund.

 

3.   Trading Advisor Independent.  For all purposes of this Agreement, the Trading Advisor shall be deemed to be an independent contractor and shall have no authority to act for or represent the Funds in any way and shall not otherwise be deemed to be an agent of the Funds.  Nothing contained herein shall create or constitute the Trading Advisor and any other trading advisor for the Funds, the Funds or the Manager as a member of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, nor shall be deemed to confer on any of them any express, implied, or apparent authority to incur any obligation or liability on behalf of any other.  The parties acknowledge that the Trading Advisor has not been an organizer or promoter of the Funds.

 

4.   Commodity Broker; Floor Brokers

 

(a)   (i)  Clearing of All Trades.  The Trading Advisor shall clear orders for all commodity interest transactions for the Onshore Fund through such commodity broker or brokers as the Onshore Fund shall designate from time to time in its sole discretion (the Onshore Fund currently so designating Merrill Lynch).  The Trading Advisor will not, without the consent of the Manager, trade on a “give up” basis through floor brokers not affiliated with Merrill Lynch.  The Manager will review and approve or disapprove all executing brokers proposed by 

 

 

 

  

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the Trading Advisor for the Onshore Fund’s account.  If an executing broker is approved, the Onshore Fund will not hold the Trading Advisor liable for any error or breach of contract by any such executing broker, barring negligence, misconduct or bad faith on the part of the Trading Advisor.  Irrespective of whether floor brokers unaffiliated with Merrill Lynch receive the Manager’s consent to execute trades on behalf of the Onshore Fund, all such trades will be “given-up” to be carried by Merrill Lynch.  The Trading Advisor shall receive copies of all daily and monthly brokerage statements for the Onshore Fund directly from Merrill Lynch.

 

(ii)   The Onshore Fund will be subject to round turn commission rates as determined from time to time by Merrill Lynch and consistent with disclosures made to investors.

 

(b)   Forward Trading.

 

(i)   All forward trades for the Onshore Fund shall be executed through the forward dealer(s) (which may be affiliates of the Manager) designated by the Manager, provided that at the request of the Trading Advisor, the Manager may consent to other forward trading arrangements, which consent shall not be unreasonably withheld.

 

(ii)   If necessary for the Trading Advisor to trade pursuant to the Trading Program, the Onshore Fund shall provide adequate dealing lines of credit for the Trading Advisor to place orders for spot and forward currency contracts on behalf of the Onshore Fund.

 

(iii)   Any “F/X prime brokerage” arrangements which the Trading Advisor may wish to establish for the Onshore Fund shall be subject to the approval of the Manager.

 

(c)   The Trading Advisor acknowledges that the Onshore Fund shall be subject to the brokerage commissions and administrative fees specified in the Onshore Memorandum.

 

(d)   Floor Brokerage Costs.  The “floor brokerage,” “give-up” fees and other transaction costs charged by any floor broker, other than Merrill Lynch, to effect Fund transactions shall be subject to the approval of Merrill Lynch, which shall pay such costs, such approval not to be unreasonably withheld provided that such fees and transaction costs are competitive with Merrill Lynch’s standard rates.

 

5.   Management Fee.  As of the last Business Day of each calendar month, the Onshore Fund shall pay the Trading Advisor a Management Fee calculated and payable in U.S. dollars, equal to:

 

	
(a)  

	
0.0833% (a 1.0% annual rate) of the aggregate gross asset value of the Class F and Class F-1 Units (as described in the Onshore Memorandum, including any supplements thereto);

 

	
(b)  

	
0.1041% (a 1.25% annual rate) of the aggregate gross asset value of the Class G Units (as described in the Onshore Memorandum, including any supplements thereto);

 

 

  

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(c)  

	
0.125% (a 1.5% annual rate) of the aggregate gross asset value of the Class DT Units (if any) (as described in the Onshore Memorandum, including any supplements thereto)  (the “15% Class”);

	
(d)  

	
0.1667% (a 2.0% annual rate) of the aggregate gross asset value of the Class A, Class C, Class I, Class D, Class DS, Class DI and Class M Units (as described in the Onshore Memorandum, including any supplements thereto) (together with the Class F, Class F-1 and Class G Units, collectively, the “20% Classes”); and

	
(e)  

	
0.1667% (a 2.0% annual rate) of the aggregate gross asset value of the Offshore Fund.

in each case, for the avoidance of doubt, such aggregate gross asset value being calculated prior to reduction for any accrued Incentive Fees (as defined below) or for the Management Fee being calculated.  Such Management Fee shall be pro rated in the case of partial calendar months, but shall not be subject to rebate once paid.

 

For the avoidance of doubt, Class F and Class F-1 Units were initially offered as of three subscription dates: May 1, 2013; May 16, 2013; and June 1, 2013.  Following this initial offering period, only investors who subscribed for Class F or Class F-1 Units during the initial offering period and continue to hold such Units will be permitted to make additional subscriptions to these Classes as determined by the Manager in its sole discretion.

6.   Incentive Fee.

 

(a)   The Onshore Fund will pay to the Trading Advisor, as of December 31, 2014 and thereafter at the end of each calendar quarter (i.e., the quarters ending on March 31, June 30, September 30 and December 31) (each an “Incentive Fee Calculation Date”), an incentive fee equal to 15% of the New Trading Profit (defined below) allocated to the 15% Class and 20% of the New Trading Profit allocated to the 20% Classes as of such Incentive Fee Calculation Date (as applicable, the “Incentive Fee”).   Incentive Fees shall be calculated with respect to the 15% Class on the one hand and the 20% Classes as a whole on the other hand, irrespective of the performance of different investor’s Units in such Classes.

 

(b)   “New Trading Profit” is calculated separately with respect to the 15% Class and the 20% Classes and equals any increase in the aggregate net asset value, subject to Section 6(e), of the 15% Class or the 20% Classes, as applicable, as of the current Incentive Fee Calculation Date over the High Water Mark attributable to the 15% Class or the 20% Classes, as applicable.

 

(c)  (i)    The “High Water Mark” attributable to each of the 15% Class and the 20% Classes shall be equal to the highest aggregate net asset value of the 15% Class or the 20% Classes, respectively, after reduction for the relevant Incentive Fee then paid, as of any 

 

 

  

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preceding Incentive Fee Calculation Date.  The High Water Mark shall be increased dollar-for-dollar by new subscriptions and decreased proportionately when capital withdrawals from the Onshore Fund’s account being traded by the Trading Advisor (“Capital Withdrawals”) are made with respect to the 15% Class or the 20% Classes.  The proportionate High Water Mark reduction made as a result of Capital Withdrawals shall be calculated by multiplying the High Water Mark in effect immediately prior to such Capital Withdrawal by a fraction, the numerator of which is the aggregate net asset value of the 15% Class or the 20% Classes, as applicable, immediately following such Capital Withdrawal and the denominator of which is the aggregate net asset value of the 15% Class or the 20% Classes, as applicable, immediately before such Capital Withdrawal, in each case prior to reduction for any accrued Incentive Fee.  For the avoidance of doubt, the payment of expenses shall not be deemed a Capital Withdrawal and shall not reduce the High Water Mark.

 

(ii)   If an Incentive Fee is paid with respect to the 15% Class or the 20% Classes as of an Incentive Fee Calculation Date, the relevant High Water Mark shall be reset to the aggregate net asset value of the 15% Class or the 20% Classes, as applicable, as of the Incentive Fee Calculation Date, immediately following such payment and following the payment of the Sponsor’s Fees (as defined in the Onshore Memorandum) and Management Fee charged, in the aggregate, to each Class within such group.

 

(iii)   For the avoidance of doubt, the High Water Mark shall be determined on the basis of the 15% Class on the one hand and the 20% Classes on the other hand and not on the basis of any individual investors or other group of investors.

 

(d)   When there is an accrued Incentive Fee at the time any net Capital Withdrawal is made, the Incentive Fee attributable to such Capital Withdrawal will be paid.  Such Incentive Fee shall be determined by multiplying the Incentive Fee that would have been paid had the date of the Capital Withdrawal been an Incentive Fee Calculation Date by a fraction, the numerator of which is the amount of the Capital Withdrawal attributable to the 15% Class or the 20% Classes, as applicable, and the denominator of which is the aggregate net asset value of the 15% Class or the 20% Classes, as applicable, immediately prior to the Capital Withdrawal, in each case prior to reduction for the accrued Incentive Fee.  Such Incentive Fee will be paid from and reduce the amount of the Capital Withdrawal.

 

(e)   New Trading Profit is calculated prior to the reduction for any Incentive Fees or Sponsor’s Fees being calculated as of such Incentive Fee Calculation Date with respect to the 15% Class or the 20% Classes, as applicable.  In addition, net asset value for purposes of calculating the Incentive Fee shall not include any interest income earned by the Onshore Fund and shall not be reduced by the Sponsor’s Fees, although such interest income shall increase, and such Sponsor’s Fees shall decrease, net asset value for purposes of determining the value of the Units and the Sponsor’s Fee shall reduce net asset value when resetting the High Water Mark pursuant to Section 6(c)(i).  For the avoidance of doubt, no Incentive Fee shall be payable on any interest income earned by the Onshore Fund.

 

(f)   Termination of this Agreement shall be treated as an Incentive Fee Calculation Date.

 

 

  

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(g)   The Trading Advisor will, at the request of the Manager, receive the Incentive Fee either as a fee or as a profit allocation.

 

(h)   The Manager shall calculate the Management and Incentive Fees promptly after each date as of which either of such fees is due.  The Manager will deliver to the Trading Advisor a reasonably detailed summary of the Manager’s calculation of such fees, and such calculation shall be binding and conclusive among all affected parties unless the Trading Advisor objects in writing to such calculation by the close of business in New York on the fifth full New York business day following the delivery of such summary.

 

7.   Term and Termination.

 

(a)   Term and Renewal.  This Agreement shall continue in effect until the tenth December 31 after May 26, 2004.  Thereafter, this Agreement shall be automatically renewed for successive three-year periods, on the same terms, unless terminated by either the Trading Advisor or the Onshore Fund upon 90 days’ notice to the other party.  For the avoidance of doubt, the Trading Advisor recognizes that the resources which the Manager has and will commit to the sponsorship and marketing of the Onshore Fund are only economically justifiable for Merrill Lynch if Merrill Lynch can rely on a long-term commitment from the Trading Advisor to manage the Onshore Fund, and the Trading Advisor hereby commits to do so (subject to the terms and conditions set forth herein.)

 

(b)   Termination.

 

(i)   Notwithstanding Section 7(a) hereof, this Agreement shall terminate immediately if the Onshore Fund shall terminate and be dissolved as determined by the Manager;

 

(ii)   The Onshore Fund and/or the Manager, on the one hand, or the Trading Advisor, on the other, may terminate this Agreement as a result of a material breach hereof by the other party, after due notice and an opportunity to cure.

 

8.   Right to Advise Others; Uniformity of Acts and Practices.  During the term of this Agreement, the Trading Advisor Parties shall, subject to the capacity undertaking set forth herein and the exclusivity undertaking of the Letter Agreement, be free to advise other investors as to the purchase and sale of commodity interests, to manage and trade other investors’ commodity interests accounts and to trade for and on behalf of their own proprietary commodity interests accounts.  However, under no circumstances shall any Trading Advisor Party favor any commodity interests account directed by any of them (regardless of the date on which they began or shall begin to direct such account) over the Onshore Fund’s account, giving due consideration to the trading program which the Manager has requested the Trading Advisor to trade on behalf of the Onshore Fund.

 

At the request of the Onshore Fund, the Trading Advisor shall promptly deliver to the Onshore Fund a satisfactory written explanation, in the judgment of the Onshore Fund, of the differences, if any, in the performance between the Onshore Fund’s account and such other commodity interest accounts traded utilizing the same program or portfolio (subject to the need to preserve the confidentiality of proprietary information concerning the Trading Advisor’s 

 

 

  

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trading systems, methods, models, strategies and formulas and the identity of the Trading Advisor’s clients).

 

9.   Additional Undertakings by the Trading Advisor.   No Trading Advisor Party or its respective successors or assigns shall:  (i) use or distribute for any purpose the names and/or any other information about any of the investors in the Funds; (ii) solicit any investor for any business purpose whatsoever (unless such investor is already a client of the Trading Advisor); or (iii) knowingly accept as a client, other than through Merrill Lynch, any person who has been an investor at any time during the twenty-four full calendar months prior to such acceptance.

 

10.   Representations and Warranties.

 

(a)   The Trading Advisor hereby represents and warrants to the other parties as follows:

 

(i)   The Trading Advisor is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization and in good standing in each other jurisdiction in which the nature or conduct of its business requires such qualification and the failure to be duly qualified would materially affect the Trading Advisor’s ability to perform its obligations under this Agreement. The Trading Advisor has full corporate, partnership or limited liability company (as the case may be) power and authority to perform its obligations under this Agreement.

 

(ii)   This Agreement has been duly and validly authorized, executed and delivered on behalf of the Trading Advisor and constitutes a valid, binding and enforceable agreement of the Trading Advisor in accordance with its terms.

 

(iii)   The Trading Advisor has all Federal and state governmental, regulatory and commodity exchange licenses and approvals and has effected all filings and registrations with Federal and state governmental and regulatory agencies required to conduct its business and to act as described herein or required to perform its obligations hereunder (including, without limitation, registration of the Trading Advisor as a commodity trading advisor under the CEA, and membership of the Trading Advisor as a commodity trading advisor in NFA), and the performance of such obligation will not violate or result in a breach of any provision of the Trading Advisor’s certificate of incorporation, by-laws or any agreement, instrument, order, law or regulation binding on the Trading Advisor.  The principals of the Trading Advisor are duly listed as such on its commodity trading advisor Form 7-R registration.

 

(iv)   The Trading Advisor is regulated by the Financial Conduct Authority and the Trading Advisor shall deal with all complaints hereunder in accordance with the rules of the Financial Conduct Authority.

 

(v)   Notwithstanding any other provision in this Agreement, the Trading Advisor has waived any obligation it has to provide best execution of commodity interest transactions.

 

 

 

  

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(vi)   The Trading Advisor will not enter into any “soft dollar” arrangements with brokers or dealers.

 

(vii)   Assuming the accuracy of the Manager’s representation in subsection 11(b)(vii) below, management by the Trading Advisor of an account for the Onshore Fund in accordance with the terms hereof will not require any registration under, or violate any of the provisions of, the Investment Advisers Act of 1940 (assuming that the Onshore Fund is not an “investment company” within the meaning of the Investment Company Act of 1940).

 

(viii)   The Trading Advisor’s implementation of the its trading program will not infringe any other person’s copyrights, trademark or other property rights.

 

(ix)   The execution and delivery of this Agreement, the incurrence of the obligations herein set forth and the consummation of the transactions contemplated herein will not constitute a breach of, or default under, any instrument by which the Trading Advisor is bound or any order, rule or regulation application to the Trading Advisor of any court or any governmental body or administrative agency having jurisdiction over the Trading Advisor.

 

(x)   Other than as may have been disclosed in writing to the Manager by the Trading Advisor, there is not pending, or to the best of the Trading Advisor’s knowledge threatened, any action, suit or proceeding before or by any court or other governmental body to which the Trading Advisor is a party, or to which any of the assets of the Trading Advisor is subject, which might reasonably be expected to result in any material adverse change in the condition, financial or otherwise, business or prospects of the Trading Advisor.  The Trading Advisor has not received any notice of an investigation or warning letter from NFA or CFTC regarding non-compliance by the Trading Advisor with the CEA or the regulations thereunder.

 

(b)   The Manager hereby represents and warrants to the other parties as follows:

 

(i)   The Manager is duly organized and validly existing and in good standing under the laws of its jurisdiction of formation and in good standing under the laws of each other jurisdiction in which the nature or conduct of its business requires such qualification and the failure to so qualify would materially adversely affect the Manager’s ability to perform its obligations hereunder.

 

(ii)   The Manager has the corporate power and authority under applicable law to perform its obligations hereunder.

 

(iii)   This Agreement has been duly and validly authorized, executed and delivered by the Manager and constitutes a legal, valid and binding agreement of the Manager enforceable in accordance with its terms.

 

(iv)   The execution and delivery of this Agreement, the incurrence of the obligations set forth herein and the consummation of the transactions contemplated 

 

 

  

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herein will not constitute a breach of, or default under, any instrument by which the Manager is bound or any order, rule or regulation applicable to the Manager of any court or any governmental body or administrative agency having jurisdiction over the Manager.

 

(v)   There is not pending, or, to the best of the Manager’s knowledge threatened, any action, suit or proceeding before or by any court or other governmental body to which the Manager is a party, or to which any of the assets of the Manager is subject, which might reasonably be expected to result in any material adverse change in the condition (financial or otherwise), business or prospects of the Manager or is required to be disclosed pursuant to applicable CFTC regulations.  The Manager has not received any notice of an investigation or warning letter from NFA or CFTC regarding non-compliance by the Manager with the CEA or the regulations thereunder.

 

(vi)   The Manager has all federal and state governmental, regulatory and commodity exchange approvals and licenses, and have effected all filings and registrations with federal and state governmental agencies required to conduct its business and to act as described herein or required to perform its obligations hereunder (including, without limitation, registration as a commodity pool operator under the CEA and membership in NFA as a commodity pool operator), and the performance of such obligations will not contravene or result in a breach of any provision of its certificate of incorporation, by-laws or any agreement, order, law or regulation binding upon it.  The principals of the Manager are duly registered as such on the Manager’s commodity pool operator Form 7-R registration.

 

(c)   Each of the Onshore Fund and the Offshore Fund represents and warrants as of the date of its formation to the other parties as follows:

 

(i)   The Funds are duly organized and validly existing and in good standing  under the laws of the jurisdiction of its formation and in each other jurisdiction in which the nature or conduct of its business requires such qualification and the failure to so qualify would materially adversely affect the Funds’ ability to perform its obligations hereunder.

 

(ii)   The Funds have the power and authority under applicable law to perform its obligations hereunder.

 

(iii)   This Agreement has been duly and validly authorized, executed and delivered by the Funds and constitutes a legal, valid and binding agreement of the Funds enforceable in accordance with its terms.

 

(iv)   The execution and delivery of this Agreement, the incurrence of the obligations set forth herein and the consummation of the transactions contemplated herein will not constitute a breach of, or default under, any instrument by which the Funds are bound or any order, rule or regulation applicable to the Funds of any court or any governmental body or administrative agency having jurisdiction over the Funds.

 

(v)   There is not pending, or, to the best of the Funds’ knowledge threatened, any action, suit or proceeding before or by any court or other governmental body to 

 

 

  

13

  

 

which the Onshore Fund or the Offshore Fund is a party, or to which any of the assets of the Funds are subject, which might reasonably be expected to result in any material adverse change in the condition (financial or otherwise), business or prospects of the Funds or is required to be disclosed pursuant to applicable CFTC regulations.  Neither the Onshore Fund nor the Offshore Fund has not received any notice of an investigation or warning letter from NFA or CFTC regarding non-compliance by the Onshore Fund with the CEA or the regulations thereunder.

 

(vi)   The Onshore Fund has all federal and state governmental, regulatory and commodity exchange approvals and licenses, and has effected all filings and registrations with federal and state governmental agencies required to conduct its business and to act as described herein or required to perform its obligations hereunder and the performance of such obligations will not contravene or result in a breach of any provision of its certificate of formation, organization agreement or any agreement, order, law or regulation binding upon it.

 

(d)   The foregoing representations and warranties shall be continuing during the entire term of this Agreement and, if at any time, any event shall occur which would make any of the foregoing representations and warranties of any party no longer true and accurate, such party shall promptly notify the other parties.

 

General

 

11.   Entire Agreement.   This Agreement and the Letter Agreement constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and no other agreement, verbal or otherwise, shall be binding as between the parties unless it shall be in writing and signed by the party against whom enforcement is sought.

 

12.   Indemnification.   The Onshore Fund shall indemnify, defend and hold harmless the Trading Advisor Parties and controlling persons from and against any and all losses, claims, damages, liabilities (joint and several), costs and expenses (including any investigatory, legal and other expenses incurred in connection with, and any amounts paid in, any settlement; provided that the Onshore Fund shall have approved such settlement) resulting from a demand, claim, lawsuit, action or proceeding relating to any of such person’s actions or capacities relating to the business or activities of the Onshore Fund pursuant to this Agreement; provided that the conduct of such person which was the subject of the demand, claim, lawsuit, action or proceeding did not constitute negligence, misconduct or a breach of this Agreement or of any fiduciary obligation to the Onshore Fund and was done in good faith and in a manner such person reasonably believed to be in, or not opposed to, the best interests of the Onshore Fund.  The termination of any demand, claim, lawsuit, action or proceeding by settlement shall not, in itself, create a presumption that the conduct in question was not undertaken in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the Onshore Fund.

 

The Trading Advisor shall indemnify, defend and hold harmless the Onshore Fund, the Manager, their respective affiliates and their respective directors, officers, employees, representatives and controlling persons (“Merrill Lynch Parties”) from and against any and all losses, claims, damages, liabilities (joint and several), costs and expenses (including any 

 

 

 

  

14

  

 

reasonable investigatory, legal and other expenses incurred in connection with, and any amounts paid in, any settlement resulting from a demand, claim, lawsuit, action or proceeding relating to any action or omission of the Trading Advisor or any of its respective officers, directors or employees relating to the business or activities of such person under this Agreement or relating to the management of the Onshore Fund; provided the conduct of such person which was the subject of the demand, claim, lawsuit, action or proceeding constituted negligence or misconduct or a breach of this Agreement or was an action or omission taken otherwise than in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the Onshore Fund.

 

The foregoing agreements of indemnity shall be in addition to, and shall in no respect limit or restrict, any other remedies which may be available to an indemnified party.

 

Any indemnification required by this Section 12, unless ordered or expressly permitted by a court, shall be made by the indemnifying party only upon a determination by independent legal counsel mutually agreeable to the parties hereto in a written opinion that the conduct which is the subject of the claim, demand, lawsuit, action or proceeding with respect to which indemnification is sought meets the applicable standard set forth in this Section 12.

 

In the event that a person entitled to indemnification under this Section 12, is made a party to an action, suit or proceeding alleging both matters for which indemnification may be due hereunder and matters for which indemnification may not be due hereunder, such person shall be indemnified only in respect of the former matters.

 

Promptly after receipt by any of the indemnified parties under this Agreement of notice of any demand, claim, lawsuit, action or proceeding, the indemnified party shall notify the indemnifying party in writing of the commencement thereof if a claim in respect thereof is to be made under this Agreement.  Except to the extent that the indemnifying party is not materially prejudiced thereby, the omission so to notify shall relieve the indemnifying party from any obligation or liability which it may have to any such indemnified party under this section.  In the event that such demand, claim, lawsuit, action or proceeding is brought against a person indemnified under this Agreement, and the indemnified party is notified of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that the indemnifying party may wish, to assume the defense thereof, with counsel selected by the indemnifying party and approved by the indemnified person (provided that approval may not be unreasonably withheld), and after notice from the indemnifying party to such indemnified person of the indemnifying party’s election so as to assume the defense thereof, the indemnifying party shall not be liable to such person under this section for any legal or other expenses subsequently incurred by such person in connection with the defense thereof, unless the indemnifying party approves the employment of separate counsel by such person (it being understood, however, that the indemnifying party shall not be liable for legal or other expenses of more than one separate firm of attorneys for all such persons indemnified hereunder, which firm shall be designated in writing by the Trading Advisor or the Manager, as the case may be).

 

13.   Assignment.   This Agreement shall not be assigned by any of the parties hereto without the prior express written consent of the other parties hereto.

 

 

 

  

15

  

 

14.   Amendment; Waiver.   This Agreement shall not be amended except by a writing signed by the parties hereto.  No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its rights hereunder on any occasion or series of occasions.

 

15.   Severability.   If any provision of this Agreement, or the application of any provision to any person or circumstance, shall be held to be inconsistent with any present or future law, ruling, rule or regulation of any court or governmental or regulatory authority having jurisdiction over the subject matter hereof, such provision shall be deemed to be rescinded or modified in accordance with such law, ruling, rule or regulation, and the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it shall be held inconsistent, shall not be affected thereby.

 

16.   Notices.   Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered by courier service, facsimile, e-mail, any form of electronic file transfer, mail, postage prepaid mail or other similar means and shall be effective upon actual receipt by the party to which such notice shall be directed, 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 Funds:

 

ML WINTON FUTURESACCESS, LLC

ML WINTON FUTURESACCESS LTD.

c/o Merrill Lynch Alternative Investments LLC

Bank of America

100 Federal Street, 11th Floor

Boston, MA 02110

Attn:  Christopher Thome

Facsimile:  617-310-3098

email:  christopher.thome@bankofamerica.com

with a copy to:

Managed Futures Product Management

250 Vesey Street -- 11th Floor

New York, NY 10080

Attn:  Gail Wygoda

e-mail:  ml.managedfutures@ml.com

 

if to the Manager:

 

MERRILL LYNCH ALTERNATIVE INVESTMENTS LLC

Bank of America

100 Federal Street, 11th Floor

 

 

  

16

  

 

Boston, MA 02110

Attn:  Christopher Thome

Facsimile:  617-310-3098

email:  christopher.thome@bankofamerica.com

with a copy to:

Managed Futures Product Management

250 Vesey Street -- 11th Floor

New York, NY 10080

Attn:  Gail Wygoda

e-mail:  ml.managedfutures@ml.com

 

and if to the Trading Advisor:

 

WINTON CAPITAL MANAGEMENT LIMITED

27 Hammersmith Grove

London W6 0NE, United Kingdom

Attn: Legal Department

e-mail: legal-london@wintoncapital.com

17.   Governing Law.   This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law.

 

18.   Consent to Jurisdiction.   The parties hereto agree that any action or proceeding arising directly, indirectly or otherwise in connection with, out of, related to or from this Agreement, any breach hereof or any transaction covered hereby, shall be resolved, whether by arbitration or otherwise, within the County of New York, City of New York, and State of New York.  Accordingly, the parties consent and submit to the jurisdiction of the federal and state courts and any applicable arbitral body located within the County of  New York, City of New York, and State of New York.  The parties  further agree that any such action or proceeding brought by  either party to enforce any right, assert any claim, or obtain any relief whatsoever in connection with this Agreement shall be brought by such party exclusively in federal or state courts, or if appropriate before any applicable arbitral body, located within the County of New York, City of New York, and State of  New York.

 

19.   Remedies.   In any action or proceeding arising out of any of the provisions of this Agreement, the Trading Advisor, the Manager and the Funds agree that they shall not seek any prejudgment equitable or ancillary relief.  Such parties also agree that their sole remedy in any such action or proceeding shall be to seek actual monetary damages for any breach of this  Agreement; provided, however, that the Onshore Fund agrees that the Trading  Advisor and the Manager may seek declaratory judgment with  respect to the indemnification provisions of this Agreement.

 

 

 

  

17

  

 

20.   Survival.   The provisions of this Agreement shall survive the termination hereof with respect to any matter arising while this Agreement shall be in effect.

 

21.   Counterparts.   This Agreement may be executed in one or more counterparts, each of which shall, however, together constitute one and the same document.  Facsimile signature pages shall have the same binding force and effect as original copies.

 

22.   No Waiver. 

 

(a)   No failure or delay on the part of the Manager in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  Failure on the part of the Funds or the Manager to complain of any act of the other or to declare the other in default under this Agreement, irrespective of how long such failure continues, shall not constitute a waiver by the Funds or the Manager of its rights with respect to such default until the applicable statute-of-limitations period has run.

 

(b)   Any waiver granted hereunder must be in writing and shall be valid only in the specific instance in which given.

 

23.   Rules of Interpretation. In this Agreement, unless inconsistent with the context or the contrary intention appears, a reference to:

 

(a)   “May” shall be construed as permissive;

 

(b)   A “notice” means written notice unless otherwise stated;

 

(c)   “Shall” shall be construed as imperative;

 

(d)   The singular includes the plural and vice versa;

 

(e)   The masculine includes the feminine and neuter respectively;

 

(f)   Writing includes typewriting, printing, lithography, photography and other modes of representing or reproducing words in a legible and non-transitory form;

 

(g)   Any reference to a law, agreement or a document shall be deemed also to refer to any amendment, supplement or replacement thereof;

 

(h)   Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless such reference specifies Business Days;

 

(i)   The term “and/or” is used herein to mean both “and” as well as “or.”  The use of “and/or” in certain contexts in no respects qualifies or modifies the use of the terms “and” or “or” in others.  “Or” shall not be interpreted to be exclusive, and “and” shall not be interpreted to require the conjunctive — in each case, unless the context otherwise requires;

 

 

  

18

  

 

 

(j)   The terms “include” and “including” are to be construed as non-exclusive (so that, by way of example and for the avoidance of doubt, “including” shall mean “including without limitation”);

 

(k)   Whenever it is provided or contemplated herein that the Manager is to determine or decide any matter, the Manager (on its own behalf as well as on behalf of the Fund) shall do so in its sole and absolute discretion, unless otherwise expressly provided herein;

 

(l)   In addition to the authority granted to the Manager pursuant to this Agreement, the Manager may, but shall have no obligation to, take any action that the Manager deems necessary or advisable to ensure that the Funds are not in violation of law or in breach of any contractual provisions;

 

(m)   The table of contents to and the headings in this Agreement are for convenience of reference only and are to be ignored in construing this Agreement;

 

(n)   Any reference to “payable” or “paid” or any derivative thereof shall mean credited to the deferred compensation account, as the context may require;

 

(o)   No provision of this Agreement shall be construed in favor of or against any person by reason of the extent to which any such person, its affiliates, or their respective employees or counsel participated in the drafting thereof; and

 

(p)   In the event of any inconsistency between the provisions of this Agreement and of the constituent documents, the Manager shall determine which provisions shall control.

 

24.   Binding Effect; Benefit; Third-Party Beneficiary.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, all persons indemnified hereunder and their respective estates, permitted successors, transferees, custodians, executors, administrators, legal representatives, heirs and permitted assigns.

 

(a)   To the fullest extent permitted by law (and, for the avoidance of doubt, whether or not such law is currently in effect), the Manager shall be a third-party beneficiary of the Articles.

 

25.   Confidentiality.

 

(a)   The parties hereto each acknowledge that the business and assets of the Merrill Lynch Parties and of the Trading Advisor Parties are confidential and involve a wide range of proprietary information, including trade secrets and financial or commercial information.

 

(b)   All information with respect to the Funds (including investment and trading) activities and assets shall be presumed confidential and proprietary unless the Manager otherwise so indicates in writing.  Each party covenants that it has and it shall at all times keep confidential and not, directly or indirectly, disclose, divulge, furnish or make accessible to anyone, or use in any manner that would be adverse to the interests any other party, any 

 

 

  

19

  

 

confidential or proprietary information to which the former party has been or shall become privy relating to the business or assets of any of such other parties except with the prior written approval of such other party or except for information that is otherwise publicly available (other than information made publicly available by breach of this contract) or required to be disclosed by law.  Each party may, however, share such information with such party’s service providers, accountants and attorneys (“Permitted Confidants”); provided, that the Funds’ Permitted Confidants undertake to hold such information strictly confidential to the same extent set forth herein, and not in any manner or respect to use any of such information for their personal gain.

 

26.   Advisers Act Compliance.  Any provisions of this Agreement which are construed to violate the Advisers Act shall be deemed null and void ab initio.  For the avoidance of doubt, no provision of this Agreement shall be deemed to constitute a waiver of any person’s rights or claims under any federal or state securities laws.

 

27.   Monthly Reports.  At all times while any of the Units continue to be offered, the Manager shall deliver to the Trading Advisor a report (the “Monthly Report”) including: (i) the net asset value of the Onshore Fund as of the end of each month; (ii) the net asset value of each Class of Units as of the end of such month; and (iii) the subscriptions and redemptions for each Class of Units occurring during such month.

 

28.   Semi-Monthly Liquidity.   The Trading Advisor acknowledges and understands that, effective October 15, 2012, the Manager changed the redemption rights and subscription dates of the Funds to permit subscriptions and redemptions on a semi-monthly basis.  As a result, the Funds offer Interests for subscription as of the 1st and 16th calendar day of each month as of October 16, 2012.  In addition, investors may generally redeem any or all of their Interests from the Funds in whole or fractional Interests effective as of (i) the 15th calendar day of each month and/or (ii) the last calendar day of each month.  Investors must submit subscription documents and redemption notices on or before the “Subscription/Redemption Date,” which is eight business days prior to the 1st or 16th of every month.  The Manager may eliminate the Funds’ investors’ mid-month redemption right, or change the Subscription/Redemption Date, at any time.  The Manager may amend the estimated trading level of the account of the Onshore Fund on or before the 1st and 16th calendar day of each month, and amend the final trading level by the third Business Day following the 1st and 16th calendar day of each month, by sending an email to fundsflows@wintoncapital.com, such trading level amendment to take effect by 5 pm (London time) on the first Business Day following the day on which the email specifying the final trading level is received by the Trading Adviser.

 

29.   AIFMD. 

 

(a)   The Onshore Fund and the Manager each represent and warrant to the Trading Advisor that the Onshore Fund is (i) a non-EU AIF, established in Delaware; (ii) not marketed (as defined in the AIFMD) in any member state of the European Economic Area; and (iii) managed by the Manager pursuant to the terms of this Agreement and as disclosed in the Onshore Memorandum.

 

 

 

  

20

  

 

 

(b)   The Onshore Fund and the Manager each represent and agree that the Trading Advisor serves as the trading advisor to the Onshore Fund pursuant to the terms of this Agreement and as disclosed in the Onshore Memorandum.

 

(c)   The Onshore Fund and the Manager each agree to provide the Trading Advisor with 120 days’ written notice in advance of the Onshore Fund being marketed (as defined in the AIFMD) in any member state of the European Economic Area.

 

(d)   The Manager, the Onshore Fund and the Trading Advisor agree that in the event the Onshore Fund were required under AIFMD to appoint an AIFM each shall negotiate in good faith to address in a timely manner the acts, things and deeds to be completed by the Onshore Fund by all parties to procure that the Trading Advisor does not become the AIFM in relation to the Onshore Fund (including effecting such amendments to this Agreement as may be necessary).

 

(e)   For the purposes of this Section 29:

 

“AIF” means an Alternative Investment Fund as defined in the AIFMD;

 

“AIFM” means an Alternative Investment Fund Manager as defined by the AIFMD;

 

“AIFMD” means Directive 2011/61/EU on alternative investment fund managers and any subordinate legislation enacted thereunder (as each may be amended, extended or re-enacted from time to time) as implemented in any relevant member state of the European Economic Area and other related rules or guidance that are relevant.

 

30.   Name Change.  Effective upon approval of a special resolution at the Offshore Fund’s Extraordinary General Meeting, reflecting the change of the Offshore Fund’s name to “WNTN FuturesAccess Ltd.,” all references herein to “ML Winton FuturesAccess Ltd.” shall be replaced with “WNTN FuturesAccess Ltd.”

 

  

21

  

IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of the undersigned on the day and year first written above.

 

	 	

ML WINTON FUTURESACCESSSM LLC

	 
	 	 	 	 
	
  

	
By: 

	
Merrill Lynch Alternative

Investments LLC,

    Manager

	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Ninon Marapachi	 
	 	 	Name:	Ninon Marapachi	 
	 	 	Title:	VP of MLAI	 
	 	 	 	 

 

	 	ML WINTON FUTURESACCESSSM LTD.	 
	 	 	 	 
	
  

	
By: 

	/s/ Ninon Marapachi	 
	 	 	Name:	Ninon Marapachi	 
	 	 	Title:	Director	 
	 	 	 	 
	 	 	 	 

	 	
MERRILL LYNCH ALTERNATIVE 

INVESTMENTS LLC

	 
	 	 	 	 
	
  

	
By: 

	/s/ Ninon Marapachi	 
	 	 	Name:	Ninon Marapachi	 
	 	 	Title:	VP of MLAI	 
	 	 	 	 

	 	WINTON CAPITAL MANAGEMENT LIMITED	 
	 	 	 	 
	
  

	
By: 

	 /s/ Brigid Rentoul	 
	 	 	Name:	Brigid Rentoul	 
	 	 	Title:	Director	 
	 	 	 	 

  

22

  

 

APPENDIX A

 

COMMODITY INTERESTS TRADED BY

 

 WINTON CAPITAL MANAGEMENT LIMITED

 

The undersigned represents that the following is a complete list of all commodity interests which the undersigned intends to trade on behalf of ML WINTON FUTURESACCESSSM LLC other than regulated futures contracts and options on regulated futures contracts traded on a qualified board of trade or exchange:

 

Contract Type

 

(futures, forward,

 

option on futures)                                           Exchange                                           Contract

 

	 	WINTON CAPITAL MANAGEMENT LIMITED	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

 

 

 

 

Dated as of January 31, 2015

 

 

 

 

  

A-1

  

 

 

APPENDIX B

 

COMMODITY TRADING AUTHORITY

 

Winton Capital Management Limited

1-5 St. Mary Abbot’s Place

London W8 6LS, United Kingdom

Attn: Legal Department

Dear Advisor:

 

ML WINTON FUTURESACCESSSM LLC (the “Fund”) does hereby make, constitute and appoint you as its attorney-in-fact to buy and sell commodity futures and forward contracts (including foreign futures and options contracts) in accordance with the ML FuturesAccessSM Advisory Agreement among us and certain others.

 

	 	

Very truly yours,

 

ML WINTON FUTURESACCESSSM LLC

	 
	 	 	 	 
	
 

	
By: 

	
Merrill Lynch Alternative

Investments LLC,

     Manager

	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Ninon Marapachi	 
	 	 	Name:	Ninon Marapachi	 
	 	 	Title:	VP of MLAI	 
	 	 	 	 

 

 

 

 

Dated as of January 31, 2015

 

 

 

B-1

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