Document:

Exhibit 10.1 2015.04.06

EXHIBIT 10.1

 

Participant Name:        ###PARTICIPANT_NAME###

Grant Name:         ###GRANT_NAME###

Grant Date:         ###GRANT_DATE###

Grant Price:         ###GRANT_PRICE###

Total ###DICTIONARY_AWARD_NAME###:         ###TOTAL_AWARDS###
###EMPLOYEE_GRANT_VEST_SCHEDULE_TABLE###

FLAGSTAR BANCORP, INC.
2006 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AND PERFORMANCE UNIT 
SENIOR EXECUTIVE OFFICER AWARD AGREEMENT

This Award Agreement (this "Agreement") is made effective April ____, 2015 (the "Grant Date") by and between Flagstar Bancorp, Inc., a Michigan corporation (the "Company") and [____________] (the "Grantee"). 

WHEREAS, the Company sponsors and maintains the Flagstar Bancorp, Inc. 2006 Equity Incentive Plan (the "Plan"); and

WHEREAS, the Grantee, as a Participant, has been selected by the Committee to receive a grant of Restricted Stock Units and Performance Share Units and, if applicable, Quality Share Units (collectively, the "Units") under the Plan.

NOW, THEREFORE, the Company and the Grantee hereby agree as follows:

Section 1.Grant of Restricted Stock Units. The Company hereby grants to the Grantee, as of the Grant Date, an award of ###TOTAL_AWARDS### Restricted Stock Units (the "Restricted Stock Units") on the terms and conditions set forth in this Agreement and the Plan. Each Restricted Stock Unit represents the right to receive one share of Common Stock at the times and subject to the conditions set forth herein. Capitalized terms that are used but not defined herein have the meaning given to them in the Plan.

		
	(a)
	Vesting. The Restricted Stock Units granted by the Company hereunder shall vest in three (3) installments in accordance with the following schedule: (a) twenty-five percent (25%) shall vest on the first anniversary of the Grant Date, (b) twenty-five percent (25%) shall vest on the second anniversary of the Grant Date, and (c) the remaining fifty percent (50%) shall vest on the third anniversary of the Grant Date (each such date, a "RSU Vesting Date"), in each case, subject to the Grantee’s continued employment through the applicable RSU Vesting Date. Notwithstanding anything to the contrary in this Agreement or the Plan, the Restricted Stock Units shall vest immediately upon a Change in Control (unless provisions are made in connection with the transactions resulting or arising in connection with the Change in Control for the assumption or substitution of the Restricted Stock Units, in accordance with Section 12.1 of the Plan) or upon the Grantee’s death or Disability. If the Grantee’s employment is terminated (other than due to death or Disability) prior to any RSU Vesting Date, any unvested Restricted Stock Units shall be forfeited. If the 

Grantee’s employment is terminated by the Company for Cause prior to any RSU Vesting Date, all vested and unvested Restricted Stock Units shall be forfeited.

		
	(b)
	Termination for Death or Disability. The Restricted Stock Units shall vest immediately and fully upon the Grantee’s termination of employment due to death or Disability and be settled in the same form and at the same time as set forth in Section 4 below.

		
	(c)
	Account. The Restricted Stock Units shall be credited to a separate account maintained for the Grantee on the books and records of the Company. All amounts credited to this account shall continue for all purposes to be part of the general assets of the Company.

Section 2.Grant of Performance Share and Quality Share Units. The Company hereby grants to the Grantee, as of the Grant Date, an award of ###TOTAL_AWARDS### Performance Share Units (the "Performance Share Units") on the terms and conditions set forth in this Agreement and the Plan. Each Performance Share Unit represents the right to receive one share of Common Stock upon the attainment of performance goals established by the Committee and described in Exhibit A, and subject to the conditions set forth herein. In addition, at the conclusion of the Performance Period (as defined in Exhibit A), an additional number of Quality Share Units (the "Quality Share Units") may be awarded depending on the Committee’s assessment of a predetermined set of quality components (also outlined in Exhibit A). If awarded, each Quality Share Unit represents the right ot receive one share of Common Stock. 

		
	(a)
	Vesting. The Performance Share Units and, if applicable, the Quality Share Units granted by the Company hereunder shall vest one year following the end of the full Performance Period (as defined in Exhibit A) (the "Vesting Date"), subject to and contingent upon (i) the Grantee’s continued employment through the Vesting Date, and (ii) the Committee’s certification of the performance level attained for the Performance Period. 

Notwithstanding anything to the contrary in this Agreement or the Plan, in the event of a Change in Control (unless provisions are made in connection with the transactions resulting or arising in connection with the Change in Control for the assumption or substitution of the Performance Share Units, in accordance with Section 12.1 of the Plan) or the Grantee’s death or Disability, prior to end of the Performance Period, any Performance Share Units awarded will fully vest and be paid out at target performance levels, and no Quality Share Units shall be awarded. 

If the Change in Control or the Grantee’s death or Disability occurs between the end of the Performance Period and the Vesting date, any Performance Share Units and Quality Share Units shall fully vest and be paid out at the actual performance levels certified by the Committee.

If the Grantee’s employment is voluntarily or involuntarily terminated (other than due to death or Disability) prior to the Vesting Date, any unvested Performance Share Units and Quality Share Units shall be forfeited. If the Grantee’s employment is terminated by the Company for Cause prior to the Vesting Date, all vested and unvested Performance Share Units and Quality Share Units shall be forfeited, and Company shall be entitled to recoup the proceeds from the sale of any Common Stock underlying the Units.

		
	(b)
	Termination for Death or Disability. If the Grantee’s termination of employment is due to death or Disability the continued employment requirement (i.e., through the third anniversary of the Grant Date) shall be waived and the Performance Share Units and Quality Share Units shall vest according to clause (a) of this Section and shall be settled in the same form and at the same time as set forth in Section 4 below. 

		
	(c)
	Account. The Performance Share Units and Quality Share Units shall be credited to a separate account maintained for the Grantee on the books and records of the Company. All amounts credited to this account shall continue for all purposes to be part of the general assets of the Company.

Section 3.Transfer Restrictions. Until such time as the Units vest and the shares of Common Stock underlying the Vested Units have been issued, the Grantee may not assign or otherwise transfer the Units or the rights relating thereto except as provided in the Plan. Any attempt to sell, pledge, assign or otherwise transfer the Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Units or the rights relating thereto will be forfeited by the Grantee and all of the Grantee's rights to such units or related shares of Common Stock shall immediately terminate without any payment or consideration by the Company. Once the Units vest and the shares of Common Stock underlying the Units have been issued, the Grantee may not be able to sell immediately the shares of Common Stock depending on securities laws. Any inability to sell or transfer the shares of Common Stock underlying the Units will not relieve the Grantee of the obligation to pay any required withholding taxes at the time of vesting (see discussion below under "Tax Withholding"). 

Section 4.Settlement of Vested Units. 

		
	(a)
	Within thirty (30) calendar days following the Vesting Date and/or the RSU Vesting Date, whichever is applicable, but in no event later than March 15 of the year following the year in which the applicable Vesting Date occurs, the Company shall distribute to the Grantee the number of shares of Common Stock (either in book-entry form or otherwise) equal to the number of Vested Units. 

		
	(b)
	The shares of Common Stock will be deposited into a dividend reinvestment plan in the name of the Grantee, held by the Company’s transfer agent, Registrar and Transfer Company, or its successor. All distributions in shares of Common Stock shall be in the form of whole shares of Common Stock, and any fractional share shall be distributed in cash in an amount equal to the value of such fractional share determined based on the Fair Market Value of a share of Common Stock on the applicable vesting date. 

		
	(c)
	The vesting and delivery of shares of Common Stock by the Company is conditioned upon the Grantee’s prior delivery to the Company of an executed acknowledgement of the Company’s insider trading policy in a form acceptable to the Company. This Agreement is subject to compliance with applicable laws, statutes, rules, regulations and policies of, and any agreements with, any regulatory authority, body or agency having jurisdiction over the Company or any of its subsidiaries, including, but not limited to, compliance with any notice, non-objection or approvals requirements set forth in any of the foregoing.

Section 5.Tax Withholding. The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the minimum amount required to be withheld for federal, state and local taxes, domestic or foreign, including payroll taxes, in respect of the Units and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes. The Company shall determine the amount of such withholding. The Committee, in its sole discretion, may permit the Grantee to satisfy any such tax withholding obligation by any one or a combination of the following means: 
		
	(a)
	tendering a cash payment or check payable to the Company; and/or

		
	(b)
	authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Grantee as a result of the vesting of the Restricted Stock Units; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the minimum statutory amount of tax required to be withheld by law.

Any Grantee who surrenders previously owned shares of Common Stock to satisfy withholding obligations incurred in connection with the Units must comply with the applicable provisions of Rule 16b‐3 of the Exchange Act, if applicable.

Section 6.Rights as Stockholder. Except as otherwise provided in the Agreement, the Grantee shall not have any of the rights or privileges of a stockholder with respect to the shares of Common Stock underlying the Units, including but not limited to rights to vote the shares of Common Stock or to receive dividends on the shares of Common Stock, unless and until the vest and certificates representing such shares of Common Stock (which may be 

in book-entry form) have been issued and recorded on the records of the Company, and delivered to the Grantee. After such issuance, recordation and delivery, Grantee will have the rights of a stockholder of the Company with respect to such shares of Common Stock, subject to any restrictions on the shares of Common Stock and the terms and conditions of the Stockholder’s Agreement.

Section 7.No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon the Grantee any right to continue as an employee of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the right of the Company to terminate Grantee’s employment at any time, with or without cause. 

Section 8.Adjustments. In the event that any change in the outstanding shares of Common Stock of the Company (including an exchange of Common Stock for stock or other securities of another corporation) occurs by reason of a Common Stock dividend or split, recapitalization, merger, consolidation, combination, exchange of shares or other similar corporate changes, other than for consideration received by the Company therefore, the number of shares subject to the Units awarded hereunder may be appropriately adjusted by the Committee in its sole and absolute discretion, whose determination shall be conclusive, final and binding; provided, however that fractional shares shall be rounded to the nearest whole share. In the event of any other change in the Common Stock, the Committee shall determine in its sole discretion whether such change equitably requires a change in the number or type of shares of stock subject to the Units awarded hereunder and any adjustment made by the Committee shall be conclusive, final and binding.

Section 9.Restrictive Covenants. The Grantee acknowledges and agrees that the services provided by the Grantee to the Company and its Affiliates including, but not limited to, Flagstar Bank, FSB (the "Bank"), are of a special, unique and extraordinary nature, and that the restrictions contained in this Section are necessary to prevent the use and disclosure of Confidential Information and to protect other legitimate business interests of the Company and its Affiliates. The Grantee acknowledges that all of the restrictions in this Section are reasonable in all respects, including duration, territory and scope of activity. In the event a court of competent jurisdiction determines as a matter of law that any of the terms of this Section are unreasonable or overbroad, the Company and the Grantee expressly allow such court to reform this Agreement to the extent necessary to make it reasonable as a matter of law and to enforce it as so reformed. The Grantee agrees that the restrictions contained in this Section shall be construed as separate agreements independent of any other provision of this Agreement or any other agreement between the Grantee and the Company or its Affiliates. 

		
	(a)
	Confidentiality. In the course of the Grantee’s performing his duties for the Company and its Affiliates, the Company expects to provide Grantee with various proprietary, confidential and trade secret information of the Company and its Affiliates. Such proprietary, confidential and trade secret information may include, but not be limited to, any database of customer accounts; any customer, supplier and distributor list; customer profiles; information regarding sales and marketing activities and strategies; trade secrets; data regarding technology, products and services; information regarding pricing, pricing techniques and procurement; financial data and forecasts regarding the Company and customers, suppliers and distributors of the Company; software programs and intellectual property (collectively, "Confidential Information"). All Confidential Information shall be and remain the sole property of the Company and its assigns, and the Company shall be and remain the sole owner of all patents, copyrights, trademarks, names and other rights in connection therewith and without regard to whether the Company is at any particular time developing or marketing the same. The Grantee acknowledges that the Confidential Information is a valuable, special and unique asset of the Company and its Affiliates and that his access to and knowledge of the Confidential Information is essential to the performance of his duties as an employee of the Company and its Affiliates. In light of the competitive nature of the business in which the Company and its Affiliates are engaged, the Grantee agrees that he will, both during his employment or service with the Company and its Affiliates and thereafter, maintain the strict confidentiality of all Confidential Information known or obtained by him or to which he has access in connection with his employment by or service with the Company and that he will not, without prior written consent of the Board, for and on behalf of the Company, (i) disclose any Confidential Information to any person or entity (other than in proper performance of his duties hereunder) 

or (ii) make any use of any Confidential Information for his own purposes or for the direct or indirect benefit of any person or entity other than the Company or its Affiliates. Confidential Information shall not be deemed to include information that (w) becomes generally available to the public through no fault of Grantee, (x) is previously known by the Grantee prior to his receipt of such information from the Company, (y) becomes available to Grantee on a non-confidential basis from a source which, to Grantee’s knowledge, is not prohibited from disclosing such information by legal, contractual or fiduciary obligation to the Company or (z) is required to be disclosed in order to comply with any applicable law or court order. Immediately upon termination of the Grantee’s employment or at any other time upon the Company’s request, the Grantee will return to the Company all memoranda, notes and data, computer software and hardware, records or other documents compiled by Grantee or made available to the Grantee during the Grantee’s employment with the Company concerning the Business of the Company, including without limitation, all files, records, documents, lists, equipment, supplies, promotional materials, keys, phone or credit cards and similar items and all copies thereof or extracts therefrom.

		
	(b)
	No Competition. For a period of one (1) year following the Grantee’s voluntary termination of employment with the Company or its Affiliates, but only if the Grantee has vested in some portion of the Units, the Grantee agrees that the Grantee shall not, on behalf of the Grantee or for others, directly or indirectly (whether as employee, consultant, investor, partner, sole proprietor or otherwise), be employed by, have an ownership interest in, or perform any services for a financial institution engaged in the same lines of business as the Company or its Affiliates ("Business of the Company") in any state of the United States where the Company is doing business. The parties agree that this provision shall not prohibit the ownership by the Grantee, solely as an investment, of securities of a person engaged in the Business of the Company if (i) the Grantee is not an "affiliate" (as such term is defined in Rule 12b-2 of the regulations promulgated under the Exchange Act) of the issuer of such securities, (ii) such securities are publicly traded on a national securities exchange and (iii) the Grantee does not, directly or indirectly, beneficially own more than two percent (2%) of the class of which such securities are a part. 

		
	(c)
	No Solicitation of Employees. The Grantee agrees that, both during the Grantee’s employment with the Company and for a period of one (1) year following termination of the Grantee’s employment with the Company or its Affiliates for any reason, the Grantee will not, directly or indirectly, on behalf of the Grantee or any other person or entity, hire, engage or solicit to hire for employment or consulting or other provision of services, any person who is actively employed (or in the six (6) months preceding the Grantee’s termination of employment with the Company was actively employed) by the Company or its Affiliates, except for rehire by the Company or its Affiliates. This includes, but is not limited to, inducing or attempting to induce, or influence or attempting to influence, any person employed by the Company to terminate his or her employment with the Company.

		
	(d)
	No Solicitation of Customers. The Grantee agrees that, both during the Grantee’s employment with the Company and for a period of one (1) year following termination of the Grantee’s employment with the Company and its Affiliates for any reason, the Grantee will not directly, on behalf of any competitor of the Company or its Affiliates in the Business of the Company, solicit the business of any entity within the United States who is known by the Grantee to be a customer of the Company or its Affiliates.

		
	(e)
	Survival. The obligations and provisions contained in this Section shall survive the Grantee’s separation from service and this Agreement and shall be fully enforceable thereafter.

Section 10.Company Policies; Forfeiture.

		
	(a)
	The Grantee agrees that the grant of Restricted Stock Units, Performance Share Units, Quality Share Units, and the shares of Common Stock issued upon vesting of the Units will be subject to any applicable clawback or recoupment policies, insider trading policies, policies related to confidential information and assignment of intellectual property, stock ownership guidelines and other policies that may be implemented or updated by the Company, from time to time. 

		
	(b)
	Notwithstanding anything to the contrary in this Agreement or the Plan, the Grantee agrees that during the Grantee’s employment or other service with the Company or an Affiliate and thereafter, if Grantee violates any of the restrictive covenants under Section 9 above, irrespective of whether the restrictive covenant is enforceable under applicable law, immediately upon demand by the Company, the Grantee shall return to the Company the proceeds resulting from this Agreement, including the Units and the shares of Common Stock (or the sale thereof) to the extent the foregoing were realized or received in the twenty-four months prior to Grantee’s termination for any reason. 

Section 11.Notices. Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon personal delivery, upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid or upon deposit with a reputable overnight courier. Notice shall be addressed to the Company at its principal executive office and to the Grantee at the address most recently provided by the Grantee to the Company.

Section 12.Incorporation of Plan Terms. The provisions of the Plan are incorporated by reference into these terms and conditions. To the extent any provision of this Agreement conflicts with the Plan, the terms of the Plan shall govern. The Grantee acknowledges receipt of a copy of the Plan and represents that the Grantee has reviewed the Plan and is familiar with the terms and provisions thereof. The Grantee hereby accepts this Agreement and the terms of the Plan.

Section 13.Successors and Assigns. This Agreement is personal to the Grantee and shall not be assignable by the Grantee other than by will or the laws of descent and distribution, without the written consent of the Company. This Agreement shall inure to the benefit of and be enforceable by the Grantee’s legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors. It shall not be assignable by the Company except in connection with the sale or other disposition of all or substantially all the assets or business of the Company.

Section 14.No Impact on Other Benefits. The value of the Grantee's Units is not part of the Grantee’s compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

Section 15.Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the Units in this Agreement does not create any contractual right or other right to receive any Units or other awards or grants in the future. Future awards, if any, will be at the sole discretion of the Committee. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee's employment with the Company or its Affiliates.

Section 16.Amendment. The Committee shall have authority, subject to the express provisions of the Plan, to interpret this Agreement and the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to modify the terms and provisions of this Agreement, and to make all other determinations in the judgment of the Committee necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in this Agreement in the manner and to the extent it shall deem necessary or desirable to carry it into effect. All action by the Committee under the provisions of this Section shall be final, conclusive and binding for all purposes.

Section 17.Code Section 409A. This Agreement and the award of Units hereunder are intended to be exempt from the requirements of Section 409A of the Code, and shall be interpreted and administered in accordance with such intent. Notwithstanding anything in the Plan or this Agreement to the contrary, the Grantee shall be solely responsible for the tax consequences of the Units, and in no event shall the Company have any responsibility or liability if an award under the Plan is subject to and/or fails to comply with the requirements of Code Section 409A.

Section 18.Entire Agreement. This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement supersedes any other agreements, representations or understandings (whether oral or written and whether express or implied) which relate to the subject matter hereof. 

Section 19.Severability. If any provision of this Agreement for any reason should be found by any court of competent jurisdiction to be invalid, illegal or unenforceable, in whole or in part, such declaration shall not affect the validity, legality or enforceability of any remaining provision or portion hereof, which remaining provision or portion hereof shall remain in full force and effect as if this Agreement had been adopted with the invalid, illegal or unenforceable provision or portion hereof eliminated.

Section 20.Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Michigan, as such laws are applied to contracts entered into and performed in such State, without giving effect to the choice of law provisions thereof. The jurisdiction and venue for any disputes arising under, or any action brought to enforce the terms of, this Agreement shall be resolved exclusively in the courts of the State of Michigan, including the Federal Courts located therein (should Federal jurisdiction exist). 

Section 21.Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

Section 22.Acceptance. As a condition of receiving this Award, the Grantee agrees that the Committee, and to the extent that authority is afforded to the Board, the Board, shall have full and final authority to construe and interpret the Plan and this Agreement, and to make all other decisions and determinations as may be required under the Plan or this Agreement as they may deem necessary or advisable for administration of the Plan or this Agreement, and that all such interpretations, decisions and determinations shall be final and binding on the Grantee, the Company and all other interested persons. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Grantee and the Company. 

This Agreement is executed by the Company and the Grantee as of the date and year first written above.

	
			
	GRANTEE
	FLAGSTAR BANCORP, INC.

	________________________________
	By:
	________________________________

	 
	Its:
	________________________________

	 
	 
	 

ACKNOWLEDGEMENT OF INSIDER TRADING LAWS AND POLICY

NOTE:  OUR INSIDER TRADING POLICY ADDRESSES VERY SERIOUS MATTERS. IF YOU HAVE ANY QUESTION OR DOUBT ABOUT THE APPLICABILITY OR INTERPRETATION OF THIS POLICY, PLEASE SEEK CLARIFICATION FROM OUR GENERAL COUNSEL. 

The undersigned acknowledges that he/she has reviewed the Company’s Insider Trading Policy (the "Policy"), and will review any amendments to the Policy. The current Policy and any amendments will be maintained and available on the My Flagstar intranet. The undersigned agrees to comply with the restrictions and procedures contained in the Policy, as it may be amended from time to time.

	
							
	Dated: 
	 
	 
	 
	By:efc15-329_ex101.htm

Exhibit 10.1

 

	  	EXECUTION VERSION
	
DATED: 1 JANUARY 2015

	  
	  
	
 

 

 

 

 

 

 

 

 

Novation and Amendment

Agreement

	  

 

relating to

 

	
the novation and amendment of the amended and restated advisory agreement between the Manager, the Fund and the Original Trading Advisor and the novation of the letter agreement between the Manager, the Funds, the Selling Agent and the Original Trading Advisor

 

 

 

  

  

  

TABLE OF CONTENTS

 

	
1.

	
Interpretation

	
2

	
2.

	
Novation

	
3

	
3.

	
Amendments to Novated Agreement

	
4

	
4.

	
Further Assurance

	
4

	
5.

	
Costs

	
4

	
6.

	
Notices

	
4

	
7.

	
Assignment

	
5

	
8.

	
Amendments

	
5

	
9.

	
Reservation of Rights

	
5

	
10.

	
Whole Agreement

	
5

	
11.

	
Severability

	
5

	
12.

	
Counterparts

	
5

	
13.

	
Governing Law

	
6

	
14.

	
Jurisdiction

	
6

	
Schedule 1 : Amendments to Novated Agreement

	
7

	
JFSC ANNEX

	
9

  

i  

  

 

 

	
THIS AGREEMENT is dated 1 January 2015 and made

BETWEEN:

	
(1) 

	
ML BLUETREND FUTURESACCESSSM LLC, limited liability company incorporated in Delaware whose office is at c/o Merrill Lynch Alternative Investments LLC at 250 Vesey Street, 11th Floor, New York, NY 10080 (the “Fund”);

 

	
(2) 

	
MERRILL LYNCH ALTERNATIVE INVESTMENTS LLC, a limited liability company incorporated in Delaware whose registered office is at 250 Vesey Street, 11th Floor, New York, NY 10080 (the “Manager”);

 

	
(3)

	
BLUECREST CAPITAL MANAGEMENT LIMITED, a limited company incorporated in Guernsey with registered number 58114 whose registered office is at BlueCrest House, Glategny Esplanade, St Peter Port, Guernsey, GY1 1WR, Channel Islands (the “Original Trading Advisor”); and

 

	
(4)

	
SYSTEMATICA INVESTMENTS LIMITED, a limited company incorporated in Jersey whose registered office is at 47 Esplanade, St. Helier, Jersey, JE1 0BD (the “New Trading Advisor”);

 

and with respect to the Letter Agreement (as defined below) only, additionally:

 

	
(5)

	
ML SYSTEMATIC MOMENTUM FUTURESACCESSSM LLC, limited liability company incorporated in Delaware whose office is at c/o Merrill Lynch Alternative Investments LLC at  250 Vesey Street, 11th Floor, New York, NY 10080 (“Systematic Momentum”);

 

	
(6)

	
ML TREND-FOLLOWING FUTURES FUND LP, Delaware limited partnership whose office is at c/o Merrill Lynch Alternative Investments LLC at  250 Vesey Street, 11th Floor, New York, NY 10080 (“Trend-Following”); and

 

	
(7)

	
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, a corporation incorporated in Delaware whose office is at 250 Vesey Street, 11th Floor, New York, NY 10080 (the “Selling Agent”).

 

BACKGROUND:

 

	
(A)

	
Pursuant to the Original Agreement (as defined below), the Original Trading Advisor has been engaged to make trading decisions and make investments on behalf of the Manager and the Fund on the terms set forth therein.

 

	
(B)

	
The Original Trading Advisor entered into the Letter Agreement in order to set forth the understanding of the parties as to the offering of interests in the Fund, Systematic Momentum, Systematic Momentum Offshore (as defined below) and the Trend-Following Fund.  Systematic Momentum Offshore has since been liquidated.

 

	
(C)

	
The Original Trading Advisor wishes to novate its rights and obligations under the Agreements (as defined below) to the New Trading Advisor on the terms of this agreement, and wishes to be released and discharged from the further performance of its obligations under the Agreements. The Parties wish to release and discharge the Original Trading Advisor upon the condition that the New Trading Advisor will perform and observe those obligations in place of the Original Trading Advisor.

 

	
(D)

	
The New Trading Advisor, the Fund and the Manager then wish to amend the Original Agreement, immediately following its novation, on the terms of this agreement.

 

 

 

 

 

  

1

  

 

THE PARTIES AGREE THAT:

 

	
1. 

	
Interpretation

 

	
1.1  

	
In this agreement, unless the context otherwise requires, the following words have the following meanings:

 

“Agreements” means the Original Agreement and the Letter Agreement.

 

“Condition” means the New Trading Advisor obtaining all applicable legal, regulatory or other licences, authorisations, registrations, consents and/or approvals as may be necessary to enable it to perform its obligations under the Original Agreement (as novated by this agreement).

 

“Effective Date” means the later of (i) 00:00 (London time) on 1 January 2015 and (ii) the satisfaction of the Condition, or such other time and date as may be agreed between the parties.

 

“Funds” means the Fund, Systematic Momentum and Trend-Following and “each Fund” shall mean each of the foregoing.

 

“Letter Agreement” means the letter agreement entered into on 22 June 2009 between the Fund, the Manager, the Original Trading Adviser, Systematic Momentum, Systematic Momentum Offshore, Trend-Following and the Selling Agent, as amended and restated by the second amended and restated letter agreement dated 25 January 2010, by the separate letter agreement regarding the investment in the Fund by Trend-Following dated 25 January 2010, by the Novation and Amendment Agreement dated 31 July 2014, and as otherwise amended or novated from time to time.

 

“Original Agreement” means the ML FuturesAccessSM Advisory Agreement entered into as of 8 May 2008 between the Fund, the Manager and the Original Trading Advisor, as amended and restated by the Amendment to ML FuturesAccessSM Advisory Agreement dated 22 June 2009, the ML FuturesAccessSM Amended and Restated Advisory Agreement dated 25 January 2010, the Amendment to Advisory Agreement dated 3 May 2011, by the Novation and Amendment Agreement dated 31 July 2014, and as otherwise amended and restated from time to time.

 

“Parties” means the Manager, the Funds, the Original Trading Advisor, the New Trading Advisor and the Selling Agent.

 

“Systematic Momentum Offshore” means ML Systematic Momentum FuturesAccess Ltd.

 

	
1.2  

	
References to Clauses are to clauses of this agreement and headings are inserted for convenience only and shall not affect the construction of this agreement.

 

	
1.3  

	
The parties acknowledge that the New Trading Advisor is the general partner of Systematica Investments LP, a limited partnership formed in Guernsey, and that the New Trading Advisor has entered into this agreement and will act pursuant to the Novated Agreement (as defined below), solely in that capacity.

 

 

  

2

  

 

 

	
1.4  

	
The parties acknowledge that the Original Trading Advisor is the general partner of BlueCrest Capital Management LP, a limited partnership formed in Guernsey, and that the Original Trading Advisor has entered into this agreement solely in that capacity.

 

	
2. 

	
Novation

 

	
2.1  

	
Subject to Clause 2.5, the Parties agree that, notwithstanding any contrary provision in the Agreements, on and from the Effective Date:

 

	
(A)  

	
the New Trading Advisor is substituted for the Original Trading Advisor under the Agreements as if the New Trading Advisor had originally been the party to the Agreements instead of the Original Trading Advisor and all references in the Agreements to the Original Trading Advisor are to be read and construed mutatis mutandis, as if they were references to the New Trading Advisor;

 

	
(B)  

	
the New Trading Advisor is bound by and must fulfil, comply with and observe all the provisions of the Agreements, shall make each of the representations and warranties in the Original Agreement beginning as of the Effective Date, including without limitation those set forth in section 10(a) and Appendix A of the Original Agreement, and shall enjoy all the rights and benefits of the Original Trading Advisor under the Agreements, in each case whether in relation to matters arising before or after the Effective Date; and

 

	
(C)  

	
each of the Manager, the Selling Agent and each Fund is entitled to the full benefit of the Agreements and to enforce its rights and obligations thereunder against the New Trading Advisor, whether in relation to matters arising before or after the Effective Date.

 

	
2.2  

	
On and from the Effective Date, the New Trading Advisor shall assume all the liabilities of the Original Trading Advisor arising under the Agreements, whether in relation to matters arising before or after the Effective Date.

 

	
2.3  

	
To the fullest extent permitted by applicable law, on and from the Effective Date, each of the Manager, the Selling Agent and each Fund releases and discharges the Original Trading Advisor from any and all claims, actions, proceedings, obligations and liabilities (including without limitation those resulting from the negligence or wilful default of any Indemnified Party (as defined below) or from the fraud of any partner, member, director, officer or employee of any Indemnified Party) which each of the Manager, the Selling Agent and each Fund has against the Original Trading Advisor pursuant to the Agreements, whether in relation to matters arising before or after the Effective Date.

 

	
2.4  

	
On and with effect from the Effective Date, the Original Trading Advisor shall forfeit and surrender in favour of the New Trading Advisor any rights, benefits and entitlements under the Agreements in relation to matters arising on or after the Effective Date, and that it shall not be entitled to bring any claim under or in connection with the Agreements against the Manager, the Selling Agent or each Fund in relation to matters arising on or after the Effective Date.

 

 

 

  

3

  

 

 

 

	
2.5  

	
Notwithstanding any other provision of this agreement, the Original Trading Advisor retains all rights, benefits and entitlements under the Agreements in relation to matters arising before the Effective Date, including without limitation the rights to receive from the Funds any amounts payable in respect of (i) any costs, fees or expenses incurred by the Original Trading Advisor for which it is entitled to be reimbursed by the Funds under the Agreements or (ii) any liabilities, obligations, losses, damages, suits and expenses for which the Original Trading Advisor is entitled to be indemnified by the Funds under the Agreements.

 

	
2.6  

	
To the fullest extent permitted by applicable law, the New Trading Advisor shall indemnify and hold harmless each of the Original Trading Advisor, BlueCrest Capital Management LP, their affiliates and each of their respective partners, members, directors, officers and employees (each an “Indemnified Party”) from all liabilities, obligations, losses, damages, suits and expenses (including the cost of settling any action) (together, “Losses”) which may be incurred by or asserted against it (whether to or by the Manager, the Selling Agent or each Fund or to or by any third party) in connection with the Original Trading Advisor’s duties, undertakings and obligations under the Agreements, whether arising before or after the Effective Date, including without limitation Losses resulting from the negligence or wilful default of any Indemnified Party or from the fraud of any such partner, member, director, officer or employee who is not the relevant Indemnified Party.

 

	
2.7  

	
Each of the Manager, the Selling Agent and each Fund hereby consents to the novation and assignment of the Original Trading Advisor’s rights and duties to the New Trading Advisor. Each of the Fund and the Manager confirms that it has received Part 2 of the current Form ADV of the New Trading Advisor before executing this agreement.

 

	
2.8  

	
Solely to the extent required by applicable law, the New Trading Advisor will notify the Manager and the Fund of any change in the ownership of the New Trading Advisor within a reasonable amount of time following such change.

 

	
3. 

	
Amendments to Novated Agreement

 

The Fund, the Manager and the New Trading Advisor agrees that, immediately following this agreement becoming effective, the amendments set out in Schedule 1 hereto be made to the Original Agreement as novated pursuant to Clause 2 (the “Novated Agreement”).

 

	
4. 

	
Further Assurance

 

At any time after the Effective Date each of the Parties shall, at the request and cost of the party so requesting, execute or procure the execution of such documents and do or procure the doing of such acts and things as the party so requiring may reasonably require for the purpose of giving to the Party so requiring the full benefit of all the provisions of this agreement.

 

	
5. 

	
Costs

 

Each Party to this agreement shall pay its own costs of and incidental to the negotiation, preparation, execution and carrying into effect of this agreement.

 

	
6. 

	
Notices

 

The Parties agree that any notice or other communication required to be given under this agreement or under the Agreements (to the extent applicable) shall be deemed to have been duly served on the Manager, the Fund and the Original Trading Advisor or the New Trading Advisor (as if it were a party to the Agreements in place of the Original Trading Advisor) if it is served in accordance with the notice provisions in the Original Agreement, with the address details for the New Trading Advisor being the New Trading Advisor’s 

 

 

 

  

4

  

 

 

address set out in the Original Agreement for the Fund, Manager and Original Trading Advisor and on page 1 for the New Trading Advisor.

 

	
7. 

	
Assignment

 

Subject to the assignment provisions set out in the Agreements, none of the Parties shall assign all or any of its rights or benefits under this agreement without the written consent of the other Parties.

 

	
8. 

	
Amendments

 

No amendment to this agreement shall be effective unless made in writing and executed as an agreement by each of the Parties.

 

	
9. 

	
Reservation of Rights

 

	
9.1  

	
The rights, powers, privileges and remedies provided in this agreement are cumulative and are not exclusive of any rights, powers, privileges or remedies provided by law or otherwise.

 

	
9.2  

	
No failure to exercise nor any delay in exercising by any party to this agreement any right, power, privilege or remedy under this agreement shall impair or operate as a waiver thereof in whole or in part.

 

	
9.3  

	
No single or partial exercise of any right, power, privilege or remedy under this agreement shall prevent any further or other exercise thereof or the exercise of any other right, power, privilege or remedy.

 

	
10. 

	
Whole Agreement

 

	
10.1  

	
This agreement, together with any documents referred to in it, constitutes the whole agreement between the parties relating to the subject matter of this agreement and supersedes and extinguishes any prior drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter.

 

	
10.2  

	
Each Party acknowledges that it has not been induced to enter into this agreement by any representation or warranty other than those contained in this agreement and, having negotiated and freely entered into this agreement. Each party acknowledges that its legal advisers have explained to it the effect of this Clause 10.2.

 

	
11. 

	
Severability

 

If any provision of this agreement shall be held to be illegal, void, invalid or unenforceable under the laws of any jurisdiction, such provision shall be deemed to be deleted from this agreement as if it had not originally been contained in this agreement and the legality, validity and enforceability of the remainder of this agreement in that jurisdiction shall not be affected, and the legality, validity and enforceability of the whole of this agreement in any other jurisdiction shall not be affected. Notwithstanding the foregoing in the event of such deletion the Parties shall negotiate in good faith in order to agree the terms of a mutually acceptable and satisfactory alternative provision in place of the provision so deleted.

 

	
12. 

	
Counterparts

 

This agreement may be executed in any number of counterparts, which shall together constitute one agreement. Each party may enter into this agreement by signing any such counterpart.

 

 

 

  

5

  

 

 

	
13. 

	
Governing Law

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, EXCEPT WHERE SPECIFIC PROVISIONS HEREOF REFER TO THE LAWS, RULES OR REGULATIONS OF OTHER JURISDICTIONS.

 

	
14. 

	
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, State of New York or the Island of Jersey, as applicable pursuant to Clause 13. 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, State of New York and the Island of Jersey. 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, State of New York and the Island of Jersey.

 

 

  

6

  

 

SCHEDULE 1 : AMENDMENTS TO NOVATED AGREEMENT

 

	
1.  

	
The New Trading Advisor will not be authorised or regulated by the Guernsey Financial Services Commission. The New Trading Advisor is licensed and regulated by the Jersey Financial Services Commission. As such:

 

	
(A)  

	
the GFSC Annex shall be deleted; and

 

	
(B)  

	
the Novated Agreement shall be amended to incorporate the appended JFSC Annex, which shall form part of the Novated Agreement.

 

	
2.  

	
Without prejudice to the generality of the foregoing or Clause 2.1(A) above of this agreement, the following amendments shall also be made to the Novated Agreement:

 

	
(A)  

	
references to “BlueCrest Capital Management LP” shall be deleted from the Novated Agreement and replaced with “Systematica Investments LP”.

 

	
(B)  

	
the wording of Section 2(k) shall be deleted in its entirety and replaced with the following:

 

“The Trading Advisor may delegate any of its duties and obligations hereunder to any of its duly appointed affiliated sub-investment managers (each a “Trading Advisor Subsidiary”), including but not limited to Systematica Investments Jersey Limited; provided that the Trading Advisor shall act in good faith and shall exercise reasonable skill and care in the selection, use and monitoring of the Trading Advisor Subsidiary. The Trading Advisor Subsidiary may sub-delegate any of its duties and obligations to to any of its duly appointed sub-investment managers including but not limited to (i) BlueCrest Capital Management Guernsey L.P. (operating solely through its Geneva branch); (ii) BlueCrest Capital Management (Singapore) Pte. Ltd.; and (iii) Systematica Investments GP Limited, as general partner of Systematica Investments Guernsey LP, operating solely through its Geneva branch ((i) to (iii) together, the “Sub-Delegates”). Without the prior written consent of the Manager and the Fund, the Trading Advisor shall not delegate and the Trading Advisor Subsidiary shall not sub-delegate any portion of its duties to any person that is not a Trading Advisor Subsidiary or a Sub-Delegate. In connection with any such delegation, the Trading Advisor may provide information about the Fund and its portfolio to the Trading Advisor Subsidiary or the Sub-Delegates. The Trading Advisor shall be responsible for the costs of any such delegation or sub-delegation including, without limitation, any fees and expenses of a Trading Advisor Subsidiary or the Sub-Delegates. For the avoidance of doubt, the Trading Advisor shall only be permitted to delegate its duties and obligations hereunder to an entity which is part of the Systemica Group or to a Sub-Delegate.

 

	
  

	
For the purposes of this Section 2(k), “Systematica Group” shall mean the Trading Advisor, Systematica Investments Jersey Limited and such other entity or entities as may from time to time share common control with the Trading Advisor.

 

 

 

  

7

  

 

 

The Trading Advisor shall remain liable for the negligence, misconduct and breach of the Advisory Agreement by any of its delegates.”

 

	
(C)  

	
“except where specific provisions hereof refer to the laws, rules or regulations of other jurisdictions” shall be added to the end of Clause 17.

 

	
(D)  

	
“or the Island of Jersey” shall be added after the reference to “State of New York” in the first sentence of Clause 18 and “and the Island of Jersey” shall be added after the reference to “State of New York” in the second and third sentences of Clause 18.

 

 

 

  

8

  

JFSC ANNEX

 

	
1.  

	
The Trading Advisor is licensed and regulated for the conduct of “fund services business” by the Jersey Financial Services Commission (the “JFSC”), and/or any successor authority carrying out all or part of the relevant functions thereof applicable to the business to which this Agreement relates under the Financial Services (Jersey) Law, 1998, as amended (the “FSJL”).

	
2.  

	
The Trading Advisor hereby covenants with the Fund and the Manager that for so long as this Agreement remains in force it shall carry out its duties and obligations and exercise its powers and discretions under this Agreement in accordance with the FSJL and the Codes of Practice for fund services business promulgated by the JFSC and as amended and updated from time to time (the “COP”).

	
3.  

	
In addition to the Manager’s and Fund’s representations and warranties set out in Section 10 the following representation shall be added both as a new Section 10(b)(viii) and as a new Section 10(c)(vii):

“the following QSMA Warning has been received from the Trading Advisor:

QSMA WARNING

Systematica Investments Limited (the “Operator”) intends to provide discretionary investment management services (the “Services”) to you, its client(s), in connection with a segregated managed account which it is intended will be a Qualifying Segregated Managed Account (a “QSMA”) pursuant to the provisions of the Financial Services (Investment Business (Qualifying Segregated Managed Accounts – Exemption)) (Jersey) Order 2014 (the “QSMA Order”). In respect of its provision of the Services in connection with your QSMA, the Operator, when in compliance with the conditions specified in the QSMA Order, will be subject to only some, and importantly therefore not all, of the provisions of the Financial Services (Jersey) Law 1998, as amended (the “Law”). The Operator would not, in such circumstances, be registered by the Commission in respect of its provision of the Services even though the Operator may be registered pursuant to the Law to conduct investment business. Additionally, whilst the Operator is required by the QSMA Order to be registered pursuant to the Law to conduct fund services business in at least one relevant class of such activity, such licensing will not apply to the Operator’s activities and provision of the Services in connection with your QSMA.

Participation in a QSMA in respect of which the Operator is placing reliance on the QSMA Order (such QSMA, a “Relevant QSMA”) is only suitable for professional or highly sophisticated and experienced investors. In addition, participation in a Relevant QSMA is intended only for those making the prescribed minimum financial contribution or commitment of US$1 million (or currency equivalent). (If you intend to become a joint owner of a Relevant QSMA but your own financial contribution would be less than such amount, you should take particular care to ensure that participation in such QSMA is suitable for you). Investment in a Relevant QSMA may involve special risks that could lead to the loss of all or a substantial portion of your investment as well as the possibility of incurring financial liabilities in excess of your investment. You are wholly responsible for ensuring that all aspects of your proposed participation in a Relevant QSMA and the risks involved are acceptable to you.

It must be distinctly understood that the Jersey Financial Services Commission: (i) has not evaluated or approved your QSMA; and (ii) does not take any responsibility for the financial soundness of a party’s participation in a Relevant QSMA or for the correctness of any

 

 

 

  

9

  

statements made, or opinions expressed, with regard to the same by any party. The Commission is protected by the Law against liability arising from the discharge of its functions thereunder.”

 

	
4.  

	
In addition to the termination provisions set out in Sections 7(b)(i), 7(b)(ii), 7(b)(iii) and 7(b)(iv) of this Agreement, the following two provisions shall be incorporated as new Sections 7(b)(v) and 7(b)(vi):

“(v) the Trading Advisor may terminate this Agreement upon notice in writing to the Fund if the Fund requests categorisation as a retail client (as defined in the COP) either generally or in specific circumstances; and

(vi) this Agreement shall terminate immediately upon the Trading Advisor ceasing to be licensed and regulated by the JFSC.”

 

 

 

 

 

  

10

  

PURSUANT TO AN EXEMPTION FROM THE U.S. COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE U.S. COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE U.S. COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR ACCOUNT DOCUMENT.

IN WITNESS whereof the parties hereto have caused this agreement to be signed as of the day and year first above written.

 

	Executed by	)
	ML BLUETREND FUTURESACCESSSM LLC	)
	acting by:	)
	MERRILL LYNCH ALTERNATIVE 	)
	INVESTMENTS LLC, Manager	)
	 	 
	 	 
	Executed by	)
	MERRILL LYNCH ALTERNATIVE	)
	INVESTMENTS LLC	)
	acting by:	)
	 	 
	 	 
	Executed by	)
	BLUECREST CAPITAL MANAGEMENT LIMITED	)
	acting as the general partner of 	)
	BLUECREST CAPITAL MANAGEMENT LP	)
	 	 
	 	 
	Executed by	)
	SYSTEMATICA INVESTMENTS LIMITED	)
	acting as the general partner of	)
	SYSTEMATICA INVESTMENTS LP	)
	acting by Robert Heaselgrave, Director	)
	 	 
	 	 
	With respect to the novation of the Letter Agreement only:	 
	 	 
	Executed by	)
	ML SYSTEMATIC MOMENTUM FUTURESACCESS LLC	)
	acting by: 	)
	MERRILL LYNCH ALTERNATIVE	)
	INVESTMENTS LLC, Manager 	)
	 	 
	 	 
	Executed by	)
	ML TREND-FOLLOWING FUTURES FUND LP	)
	acting by: 	)
	MERRILL LYNCH ALTERNATIVE 	)
	INVESTMENTS LLC, General Partner 	)
	 	 

 

 

 

  

11

  

 

 

	 	 
	Executed by	)
	MERRILL LYNCH PIERCE FENNER & SMITH INC.	)
	acting by:  	)
	__________________, Managing Director 	)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

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