Document:

dwssex1001.htm

ALTERNATIVE INVESTMENT

PLACEMENT AGENT AGREEMENT

 

This Alternative Investment Placement Agent Agreement (“Agreement”) is dated as of October 1, 2014, by and among each of the Delaware limited partnerships listed on Schedule 1 hereto (each, a “Partnership,” and together, the “Partnerships”), Ceres Managed Futures LLC, a Delaware limited liability company (the “General Partner”), and Morgan Stanley Smith Barney LLC, a Delaware limited liability company, currently doing business as Morgan Stanley Wealth Management (“MSSB”).  Partnerships may be added to this Agreement upon the agreement of the General Partner and MSSB.  The listing of such partnership on Schedule 1 hereto shall be evidence of such agreement.  This Agreement supersedes all prior agreements between each Partnership, MSSB and the General Partner, including, but not limited to, those listed on Schedule 2 hereto.

 

WHEREAS, the offering and sale of units of limited partnership or other interests in the Partnerships (“Interests” or “Units”) in accordance with the terms of each Partnership’s private placement offering memorandum and disclosure document, including any supplements thereto approved by the applicable Partnership (each, a “Memorandum”), each Partnership’s subscription/exchange agreements (the “Subscription Agreements”) and certain other investor materials or supplements approved for use or prepared by each Partnership, including without limitation the summary information contained in certain related marketing materials, all as amended from time to time (collectively, the “Offering Documents”), and each Partnership’s organizational documents (as amended or supplemented from time to time, “Organizational Documents”) (collectively, “Offering Materials”) is exempt from the registration requirements of the Securities Act of 1933, as amended (“Securities Act”), pursuant to Section 4(a)(2) and Rule 506 of Regulation D promulgated thereunder;

 

WHEREAS, the Partnerships desire to retain MSSB as a placement agent; and

 

WHEREAS, MSSB desires to be so retained and to assist, as placement agent, in the offer and sale of the Interests.

 

           NOW, THEREFORE, in consideration of the promises and the mutual agreements hereinafter contained and other good and valuable consideration the value of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1. Appointment of MSSB.

 

(a) MSSB is hereby appointed as a non-exclusive placement agent of the Partnerships during the term of this Agreement for the purpose of finding eligible investors for Interests through offerings that are exempt from registration under the Securities Act, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.  For Managed Futures Strategic Alternatives, L.P., MSSB is appointed as a non-exclusive placement agent during the term of this Agreement for the purpose of finding eligible investors that are “qualified eligible persons,” as defined in Commodity Futures Trading Commission Rule 4.7, for Interests through offerings that are exempt from registration under the Securities Act, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.

 

  

  

  

(b) In the case of any Partnership formed after the date of this agreement, Units initially shall be offered at $1,000 per Unit or as otherwise determined by the General Partner, and thereafter shall be offered on a continuous basis as of the first day of each month at the final Net Asset Value per Unit (as defined in each Partnership’s Limited Partnership Agreement) as of the last day of the immediately preceding month.  For all other Partnerships, Units are being offered on a continuous basis as of the first day of each month at the final Net Asset Value per Unit (as defined in each Partnership’s Limited Partnership Agreement) as of the last day of the immediately preceding month.  The General Partner in its sole discretion may terminate at any time the continuous offering period of one or more of the Partnerships and may at any time in its sole discretion, terminate, discontinue or resume the continuous offering of any class of Units in any of the Partnerships.

 

(c) Subject to the right of the General Partner to reject any subscription in whole or in part at any time prior to acceptance, the General Partner shall accept subscriptions for Units properly made and shall cause proper entries to be made in the books and records of the relevant Partnership.  No certificate evidencing Interests shall be issued to any limited partner, although limited partners shall receive confirmations of purchase from the General Partner in its customary form.  Payment for the Interests shall be made as described in the Offering Documents at such time on such date as may be agreed to by the General Partner.  Payment shall be made against issuance of the Interests in the name of the limited partners.

 

(d) Subject to the performance by the Partnerships and the General Partner of their respective obligations hereunder, MSSB hereby accepts such appointment and agrees on the terms and conditions set forth herein to find eligible investors for Interests during the term hereof and to use reasonable efforts to assist the Partnerships and the General Partner in communicating with limited partners with respect to consent solicitations and limited partner votes and other items requiring actions of the limited partners with respect to the applicable Partnership, at the reasonable request of the General Partner.  MSSB shall have no obligation to offer or sell any Interests.

 

(e) MSSB may, without notice to the Partnership or the General Partner, assign or delegate its rights and obligations to its affiliates, or otherwise retain affiliates to act as sub-placement agents, in connection with the solicitation of investors and otherwise to assist MSSB in performing its obligations under this Agreement to the extent MSSB deems appropriate, subject to compliance with applicable laws, rules or regulations; provided however, that each such sub-placement agent shall execute a sub-agent agreement substantially in the form of this Agreement.  MSSB may compensate any such sub-placement agent by paying the sub-placement agent from MSSB’s own funds.

 

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2. Offering and Sale of Interests.

 

(a) MSSB shall deliver, to each person to whom MSSB makes an offer of an Interest, the Offering Documents, as amended as of such time.

 

(b) MSSB shall not make any offer of Interests on the basis of any communications or documents relating to any of the Partnerships or the Interests, except the Offering Materials, any other documents supplied or prepared by the General Partner on behalf of the Partnerships and delivered to MSSB by the General Partner for use in making an offer of Interests, or any other materials expressly approved for such use by the General Partner in writing (which shall include electronic mail).  Subject to Section 9, the Partnerships and the General Partner shall provide MSSB copies of any Offering Documents a commercially reasonable time prior to providing such Offering Documents to any limited partner for MSSB’s review and approval, which shall not be unreasonably withheld.

 

(c) Without the prior written consent of the General Partner, MSSB shall not use any form of “general solicitation” or “general advertising” (within the meaning of Rule 502 of Regulation D under the Securities Act prior to the effective date of the final rules implementing Section 201(a) of the Jumpstart Our Business Startups Act) in making offers of Interests, including any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or advertising.

 

(d) MSSB shall, in accordance with requirements of Regulation D under the Securities Act, reasonably believe immediately prior to making any offer or sale of Interests that any prospective investor solicited by MSSB is an “accredited investor,” as that term is defined in Rule 501(a) of Regulation D under the Securities Act, and meets such other eligibility criteria as are set forth in the Offering Documents.  The Partnerships shall be responsible for the timely filing with the U.S. Securities and Exchange Commission (“SEC”) of any notices required by Rule 503 of Regulation D under the Securities Act.  MSSB shall only solicit prospective investors in any jurisdiction in compliance with the marketing rules and private placement rules of such jurisdiction.

 

(e) MSSB represents and warrants that it has policies and procedures reasonably designed to comply with applicable anti-money laundering and anti-terrorist financing laws, rules and regulations.  Additionally, MSSB represents and warrants that it has policies and procedures reasonably designed to ensure that it does not accept or maintain investments in the Partnerships, directly or indirectly, from a person, government, organization or entity (a) who is or becomes the subject of a sanctions program administered by the U.S. Office of Foreign Assets Control (“OFAC”), is included in any executive order or is on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, or (b) whose name appears on such other lists of prohibited persons and entities as may be mandated by applicable local law or regulation.

 

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(f) MSSB represents to the Partnerships as of the date hereof that MSSB is subject to the anti-money laundering regime of the United States and maintains anti-money laundering policies and procedures in compliance with applicable anti-money laundering legislation and regulations, as amended from time to time (the “Anti-Money Laundering Regime”).

 

(g) MSSB shall be responsible for ensuring that any activities taken in connection with the sale of Interests in any jurisdiction outside of the United States shall be conducted in compliance with the private placement or other applicable offering rules of such jurisdiction; provided, however, that, the Partnerships and the General Partner agree to coordinate with MSSB in respect of determining the number of offers made to prospective investors in any particular jurisdiction and such other relevant information in respect of offerings of Interests made by any party other than MSSB, which would reasonably be deemed to affect MSSB’s compliance with applicable offering rules.  MSSB shall make no offer or sale of any Interest in any foreign jurisdiction, or to any prospective investor located in any foreign jurisdiction, where there is a prohibition on the sale of securities such as the Interests.

 

(h) The General Partner shall be responsible for any applicable registration or qualification of the Interests under all applicable laws, rules or regulations of the United States and the states therein.  The General Partner on behalf of the Partnerships acknowledges that MSSB intends to offer the Interests in each state within the United States.  The General Partner, at the applicable Partnership’s expense, shall use reasonable efforts to register or qualify the Interests, if required, in each jurisdiction within the United States that the Interests are offered by MSSB or to make any filings required by applicable law in each jurisdiction within the United States in which the Interests are sold by MSSB.  If the Interests may not be offered in any particular jurisdiction in the United States, the applicable Partnership and the General Partner shall promptly notify MSSB.

 

(i) The Partnerships shall provide a reasonable quantity of copies of the Offering Materials and such other documents as MSSB is required to provide to prospective investors under this Agreement.  If any Offering Materials are amended or supplemented, the General Partner shall promptly notify MSSB, and provide copies of such amendments or supplements in accordance with the preceding sentence.

 

(j) All subscriptions for Interests submitted by or through MSSB shall be subject to the General Partner’s approval, in its sole discretion.  The General Partner and MSSB agree that the General Partner has the ultimate responsibility to determine whether a prospective investor meets all applicable private placement accreditation, minimum investment, and other regulatory requirements necessary to invest in a Partnership, provided, however, it is acknowledged by MSSB that the General Partner shall reasonably rely upon due diligence conducted by MSSB on each prospective investor.

 

3. Fees and Expenses. 

 

(a) Each Partnership listed in Schedule 3 shall pay MSSB a monthly ongoing compensation fee as of the beginning of each month with respect to each prospective investor introduced by MSSB that invests in one or more of such Partnerships on a placement basis equal to the amount described for each Partnership in Schedule 3 (“Ongoing Placement Agent Fee”).  Net Asset Value shall have the meaning set forth in the respective Partnership’s Limited Partnership Agreement.  The fee shall be payable monthly beginning with the first month that a Unit is issued.

 

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(b) MSSB may introduce investors on an advisory basis whereby the applicable Partnership shall not be obligated to pay MSSB any direct compensation for such limited partners; provided MSSB may be compensated directly by such limited partners in relation to their investments in such Partnership.

 

(c) MSSB may, without notice, allocate all or a portion of its fees to its affiliates and may also allocate all or a portion of its fees to non-affiliates upon written notice to the General Partner.  The Partnerships and the General Partner agree that MSSB, including any applicable affiliate of MSSB, reserves the sole right to reduce or waive the Ongoing Placement Agent Fee in whole or in part.  The General Partner agrees to reduce or waive the Ongoing Placement Agent Fee described herein for any limited partner in accordance with written instructions provided by MSSB to the General Partner.  MSSB agrees that neither the Partnerships nor the General Partner shall have any additional responsibility or liability to MSSB or any other party for complying with the written instructions provided by MSSB relating to this Section 3(c) beyond making payments in accordance with such written instructions.

 

(d) If MSSB becomes aware that a limited partner is no longer a client of MSSB, it shall promptly inform the General Partner and if the General Partner becomes aware that a limited partner is no longer a client of MSSB, the General Partner shall promptly notify MSSB.  Once a limited partner is no longer a client of MSSB, the applicable Partnership will no longer be obligated to pay the Ongoing Placement Agent Fee attributable to such limited partner.  Notwithstanding the foregoing, a limited partner may be a client of MSSB and another broker-dealer at the same time, and the fact that such limited partner is a client of another broker-dealer may not, by itself, serve as evidence that such limited partner is not a client of MSSB.

 

(e) The Partnerships and MSSB shall each bear their own expenses in connection with the solicitation of prospective investors, including expenses of preparing, reproducing, mailing and/or delivering offering and sales materials.

 

4. Representations, Warranties and Agreements of the Partnership and the General Partner.  Each Partnership and the General Partner (for purposes of this Section 4 only, each a “Party”) severally, and not jointly, represent and warrant to MSSB and agree with MSSB as follows:

 

(a) It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation or organization, and it has full power and authority under applicable laws, rules or regulations to conduct its business as contemplated by the Offering Materials.

 

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(b) The execution, delivery and performance of this Agreement has been duly authorized by all necessary action of each Party, and upon the execution and delivery hereof, this Agreement shall constitute a valid, binding and enforceable obligation of such Party.

 

(c) The execution, delivery and performance of this Agreement, the incurrence of the obligations set forth herein and the consummation of the transactions contemplated herein and in the Offering Materials, including the issuance and sale of the Interests, shall not constitute a breach of or default under any agreement or instrument by which such Party is bound, or to which any of its assets is subject, or any order, rule or regulation applicable to it of any court or any governmental body or administrative agency having jurisdiction over it.

 

(d) There is not pending or, to the best knowledge of such Party, threatened any action, suit or proceeding before or by any court or other governmental body to which such Party is a party, or to which any of its assets is subject, which might reasonably be expected to result in any material adverse change in the condition, financial or otherwise, business or prospects of such Party.  Such Party has not received any notice of an investigation regarding non-compliance by such Party with applicable laws, rules or regulations.

 

(e) The Offering Materials, as of the date hereof and at any subsequent time during the term of this Agreement, do not and shall not contain any untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they are made, not misleading.  If any statement were to become untrue or if an omission of a material fact is discovered, the General Partner shall promptly supplement the Offering Materials to remove such untrue statement or to disclose such material fact.

 

(f) At all times during which MSSB client(s) own(s) an Interest, the General Partner shall, as soon as commercially practical, notify and update in writing such MSSB client(s) of any material changes or developments relating to the applicable Partnership or their Interests.

 

(g) The Interests have been duly authorized for issuance and sale, and, when issued and subscribed for in the amounts and for the consideration described in the Offering Materials, shall be entitled to the rights and subject to the restrictions and conditions contained in the Organizational Documents; no limited partner shall be personally liable for the debts of and claims against the Partnership in which it is invested by the mere reason of being a limited partner; and all necessary action required to be taken for authorization, issue and sale of the Interests has been validly and sufficiently taken.

 

(h) It is not necessary in connection with the offer, sale and delivery of the Interests in the manner contemplated by this Agreement to register the Interests under the Securities Act or, to the best knowledge of such Party, the laws of any other jurisdiction where it is being offered.  For Managed Futures Strategic Alternatives, L.P., it is also not necessary in connection with the offer, sale and delivery of the Interests to file the confidential private placement memorandum and disclosure document pursuant to the regulations under the Commodity Exchange Act (the “CEAct”).  Each Party shall conduct itself, and ensure that its agents conduct themselves, in a manner consistent with the exemption from registration under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder, and the regulations under the CEAct, as applicable, and, without limitation, shall not use, or permit any other person to use, any form of prohibited general solicitation or general advertising in making offers of Interests.

 

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(i) The General Partner will promptly notify MSSB in the event that a Partnership is no longer able to rely on the private placement exemption under Rule 506(d).

 

(j) Each Party acknowledges that in performing the services contemplated hereby, MSSB shall be entitled to rely upon and assume, without independent verification, the accuracy and completeness of all information that is available from public sources and all information that has been provided to it by, or on behalf of, the Partnerships or the General Partner, and that MSSB has no obligation to verify the accuracy or completeness of any such information and shall have no liability to the Partnerships, the General Partner or any third party for any information contained in the Offering Materials.

 

(k) The representations and warranties set forth in this Agreement are continuing during the term of this Agreement and each Party agrees to notify MSSB promptly in writing if at any time during the term of this Agreement, any such representation or warranty becomes materially inaccurate or untrue and of the facts related thereto.

 

(l) Each Party acknowledges that MSSB enters into this Agreement in reliance on the representations, warranties and agreements of the Partnerships and the General Partner contained herein.

 

5. Representations, Warranties and Agreements of MSSB.  MSSB represents and warrants to and agrees with, the Partnerships and the General Partner as follows:

 

(a) MSSB is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and MSSB has full power and authority under applicable laws, rules or regulations to engage in the activities contemplated under this Agreement.

 

(b) The execution, delivery and performance of this Agreement has been duly authorized by all necessary action of MSSB, and upon the execution and delivery hereof, this Agreement shall constitute a valid, binding and enforceable obligation of MSSB.

 

(c) The execution, delivery and performance of this Agreement, the incurrence of the obligations set forth herein and the consummation of the transactions contemplated herein shall not constitute a breach of or default under any agreement or instrument by which MSSB is bound, or to which any of its assets is subject, or any order, rule or regulation applicable to it or of any court or any governmental body or administrative agency having jurisdiction over it.

 

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(d) MSSB (or any designee to which it delegates its right and obligations hereunder pursuant to Section 1(e)) has and shall maintain all licenses and registrations necessary under applicable federal and state laws, rules and regulations, including the rules and regulation of any self-regulatory organization with competent jurisdiction, to provide the services required to be provided by MSSB (or such designee) hereunder. To the reasonable knowledge of MSSB, MSSB has not solicited and shall not solicit any offer to buy or offer to sell Interests in any manner that would be inconsistent with applicable laws and regulations, or in any manner that would constitute a general solicitation or general advertising (within the meaning of Rule 502 of Regulation D under the Securities Act) or any state securities laws.  MSSB shall conduct itself and take reasonable measures to ensure that its respective agents conduct themselves, in a manner consistent with (i) the exemption from registration under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder, including, without limitation the requirements of Regulation D under the Securities Act, and (ii) any applicable state law exemptions from registration.

 

(e) MSSB shall furnish to each prospective investor it solicits the most current copy of the applicable Partnership’s Memorandum provided to it by the General Partner prior to that person’s admission as a limited partner.

 

(f) MSSB shall furnish to the Partnerships a description of all material pending and prior litigation and regulatory actions involving MSSB and its subsidiaries, required to be disclosed in the Memorandums during the term of this Agreement.

 

(g) MSSB has and maintains policies, procedures, and internal controls that are reasonably designed to ensure that no Covered Person identified in Appendix A subject to disqualification is permitted to participate in any of a Partnership’s offerings pursuant to Rule 506 of Regulation D under the Securities Act (“Rule 506”).  MSSB represents that it has exercised reasonable care, in accordance with section (e) of Rule 506 in making a factual inquiry into whether any Covered Person is the subject of any of the acts enumerated in Rule 506(d)(1)(i) through (viii) or that would cause a Partnership to be unable to rely upon Rule 506 (each a “Disqualifying Event”).  MSSB agrees that each Partnership may disclose any Disqualifying Event involving a Covered Person that occurred prior to September 23, 2013, in accordance with the method of disclosure under Rule 506(e).

 

(h) The representations and warranties set forth in this Agreement are continuing during the term of this Agreement and MSSB agrees to notify each of the Partnerships and the General Partner promptly in writing if at any time during the term of this Agreement, any such representation or warranty becomes materially inaccurate or untrue and of the facts related thereto.

 

(i) MSSB acknowledges that each of the Partnerships and the General Partner enter into this Agreement in reliance on the representations, warranties and agreements of MSSB contained herein.

 

6. Covenants of MSSB.

 

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(a) MSSB will promptly notify the Partnerships and the General Partner if it becomes aware of any Covered Person who is or becomes the subject of a Disqualifying Event.

 

(b) MSSB shall, to the extent practicable and reasonable, make available personnel to the General Partner to respond to reasonable queries about its processes directly related to identifying Covered Persons and Disqualifying Events under Rule 506(d) and confirm that the representations made in Section 5(g) are accurate and complete.

 

7. Indemnification.

 

(a) Each Partnership shall indemnify, hold harmless, and defend MSSB, each person who controls MSSB within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934, and their respective officers, directors, partners, members, shareholders, employees and agents from and against any losses, claims, damages or liabilities (or actions in respect thereof) (“Covered Claims”) arising out of or relating to (i) the offer or sale of the Interests or the management or affairs of the applicable Partnership; (ii) any untrue statement or alleged untrue statement of material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in any Offering Materials or in any advertising or promotional material approved, published or provided to MSSB by or on behalf of the applicable Partnership or the General Partner or accurately derived from information approved, published or provided to MSSB by or on behalf of the applicable Partnership (iii) any violation of any law, rule or regulation relating to the registration or qualification of Interests or the applicable Partnership, (iv) any breach by the applicable Partnership or the General Partner of any representation, warranty or agreement contained in this Agreement, (v) any violation of any law, rule or regulation relating to the operation of the applicable Partnership or (vi) any willful misconduct or gross negligence by the applicable Partnership or the General Partner or their respective affiliates in the performance of, or failure to perform, its obligations under this Agreement, except to the extent that any such Covered Claim is caused by breach of this Agreement by MSSB or its affiliates, directors, members, employees, agents and affiliates or the willful misconduct or gross negligence of any of the foregoing in the performance of, or failure to perform, their obligations under this Agreement.

 

(b) MSSB shall indemnify, hold harmless, and defend each of the Partnerships and the General Partner, each person who controls any of the foregoing within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934, and their officers, directors, partners, members, shareholders, employees, and agents from and against any Covered Claims arising out of or relationg to (i) any breach by MSSB of any representation, warranty or agreement contained in this Agreement, (ii) failure of MSSB to comply with marketing rules or private placement rules in any jurisdiction, (iii) any untrue statement, or alleged untrue statement of a material fact, made by MSSB in connection with MSSB’s placement of the Interests that is not in reliance on or in conformity with the Offering Materials, or (iv) willful misconduct or gross negligence by MSSB in the performance of, or failure to perform, its obligations under this Agreement, except in each case to the extent that any Covered Claim is caused by breach pf tjos Amendment by any of the Partnerships or the General Partner or their officers, directors, partners, members, shareholders, employees, agents and affiliates or the willful misconduct or gross negligence of any of the foregoing in the perfromance of or failure to perform, their obligations under this Agreement.

 

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(c) Promptly after receipt of notice of any claim or complaint or the commencement of any action or proceeding with respect to which an indemnified party is entitled to seek indemnification hereunder, the indemnified party shall notify the indemnifying party in writing of such claim or complaint or the commencement of such action or proceeding.  The indemnifying party shall be entitled to participate at its own expense in the defense or, if it so elects within a reasonable time after receipt of such notice, to assume the defense of any suit so brought, which defense shall be conducted by counsel chosen by it and satisfactory to the indemnified party or parties.  In the event that the indemnifying party elects to assume the defense of any such suit and retain such counsel, the indemnified party or parties shall bear the fees and expenses of any additional counsel thereafter retained by it or them.

 

(d) If the foregoing indemnification is for any reason unavailable to an indemnified party (other than by reason of the terms thereof), the indemnifying party shall contribute to the Covered Claims that are paid or payable by the indemnified party in such proportion as is appropriate to reflect the relative economic interests of the indemnifying party, on the one hand, and the indemnified party, on the other hand, in the transactions contemplated by this Agreement (whether or not consummated) and any other relevant equitable considerations.  For purposes of this paragraph, the relative interests of the applicable Partnership and the General Partner, on the one hand, and MSSB, on the other hand, in the transactions contemplated by this Agreement, shall be deemed to be in the same proportion as (i) the total proceeds received or contemplated to be received by the applicable Partnership and the General Partner in the transactions contemplated by this Agreement (whether or not any such transaction is consummated) bears to (ii) the fees paid or to be paid to MSSB under the Agreement; provided however, that to the extent permitted by applicable law, in no event shall the applicable Partnership and the General Partner contribute less than the amount necessary to ensure that all indemnified parties, in the aggregate, are not liable in excess of the amount of fees actually received by MSSB pursuant to this Agreement.

 

(e) The foregoing indemnity shall be in addition to any liabilities that the parties may otherwise have incurred hereunder.

 

8. Confidentiality.

 

(a) Each party acknowledges that, in performing its obligations under this Agreement, it may have access to confidential and proprietary information of the other party (“Confidential Information”).  The parties agree that information concerning any potential investor introduced by MSSB to the Partnerships or the General Partner is the Confidential Information of MSSB.  By way of illustration but not of limitation, “Confidential Information” includes any “nonpublic personal information” (as defined in SEC Regulation S-P or FTC Regulation 313) regarding prospective investors and limited partners or members, trade secrets, data, know-how, accounting data, statistical data, financial data or projections, forecasts, business practices or policies, research projects, reports, development and marketing plans, strategies, or other business information that is not generally known or available to the public.  The term “Confidential Information” does not include information that: (i) is or becomes generally available to the public other than as a result of an improper disclosure by the disclosing party; (ii) was rightfully available to a party on a non-confidential basis before its disclosure by the other party; (iii) was independently developed by the receiving party or (iv) becomes available to a party on a non-confidential basis from a source other than the other party, provided that such source is not prohibited from transmitting the information by a contractual, legal, or fiduciary obligation.

 

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(b) Except to the extent necessary to perform its obligations under this Agreement, no party may disclose or use any of the other parties’ Confidential Information.  Each party shall maintain the confidentiality of the other parties’ Confidential Information in its possession or control.  For the avoidance of doubt, no party may provide information concerning the Partnerships or prospective investors to any third party knowing that such third party may use such information in any form of publication, whether publicly or privately distributed, without the express prior written approval of the other parties.  Each party shall limit the disclosure of the other parties’ Confidential Information to those of its employees and agents with a need to know such Confidential Information for purposes of this Agreement.  Each party shall use reasonable care to prevent its employees and agents from violating the foregoing restrictions.  Notwithstanding the above, Confidential Information may be disclosed to the extent required by law or by an order or decree of any court or other governmental authority or a request is made by a governmental authority, regulatory agency or self-regulatory agency; provided, however, that each party shall, to the extent practicable, if legally compelled to disclose such information:  (i) provide the applicable party with prompt written notice of that fact so that the other party may attempt to obtain a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 8; (ii) disclose only that portion of the information that a party’s legal counsel advises is legally required; and (iii) endeavor to obtain assurance that confidential treatment shall be accorded the information so disclosed.  Notwithstanding the foregoing, limited partners shall also be governed by the privacy policy included in the Offering Materials.

 

(c) On written request or on the expiration or termination of this Agreement, each party shall return to the other parties or destroy all Confidential Information in its possession or control, provided that each party may retain a single archival copy of any document or information that such party is obligated to maintain pursuant to record keeping requirements to which it is subject under applicable laws, rules or regulations, but for only so long as such records are required to be maintained.

 

9. Client Communications.  Each Partnership and the General Partner severally agree to provide to MSSB copies of any communications to limited partners with respect to the operation and performance of the applicable Partnership.  Communications that are provided on a regular basis such as monthly account statements, shall be distributed to MSSB when such communications are distributed to MSSB clients.  The General Partner shall use its commercially reasonable efforts to distribute to MSSB all communications that require any action by limited partners such as limited partner consent or vote prior to the distribution of such communication to limited partners.  Each Partnership and the General Partner agree that MSSB may use such communications in connection with reports issued by MSSB to the applicable limited partners to which such communications were directed.  Each Partnership and the General Partner severally agree to respond as soon as practicable to inquiries of MSSB investors as communicated by MSSB and shall endeavor to copy MSSB on all such communications.

 

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10. Term and Termination.

 

(a) This Agreement shall remain in full force and effect until terminated by a party on thirty days’ prior written notice to the other parties.

 

(b) This Agreement may be terminated immediately on written notice to the other parties hereto on the dissolution, insolvency or bankruptcy of any party or upon a material breach of any condition, warranty, representation or other term of this Agreement by the other party.

 

(c) Notwithstanding Section 10(b), upon becoming aware of a Disqualifying Event occurring on or after September 23, 2013 with respect to MSSB or any of its Covered Persons, a Partnership may, in its sole discretion, terminate this Agreement which shall be effective immediately or on such future date as indicated by such Partnership in a notice to MSSB relating to such termination.

 

(d) On termination of this Agreement, the General Partner shall continue to pay MSSB the compensation set forth in Section 3 for so long as each limited partner introduced to the Partnerships by MSSB remains a limited partner and MSSB (and its applicable employees) maintains all necessary licenses and regulations required to receive such compensation.  For purposes of the foregoing, MSSB shall be entitled to the compensation set forth in Section 3 with respect to any person introduced by MSSB to the General Partner prior to termination whose subscription is accepted by the applicable Partnership within sixty days following such termination.

 

11. Notices.  Any notice required or desired to be delivered under this Agreement shall be effective on actual receipt and shall be in writing and (i) delivered personally; (ii) sent by first class mail or overnight delivery, postage prepaid; (iii) transmitted by electronic mail (with confirmation of delivery and receipt); or (iv) transmitted by fax (with confirmation by first class mail, postage prepaid) to the parties at the following address or such other address as the parties from time to time specify in writing:

 

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If to the Partnership or the General Partner :

 

[Name of Partnership]

c/o Ceres Managed Futures LLC

Morgan Stanley Alternative Investments

522 5th Avenue, 14th Floor

New York, NY  10036

Fax: 212-296-6869

Email: Alper.Daglioglu@morganstanley.com

Attention: Alper Daglioglu, President

 

With a copy to:

Alston & Bird LLP

90 Park Avenue

New York, NY 10016

Email:  tim.selby@alston.com

Attention: Tim Selby

 

	
If to MSSB:

 

Morgan Stanley Smith Barney LLC

522 5th Avenue, 13th Floor

New York, NY  10036

Fax: 212 905-2750

Email: Jeremy.Beal@morganstanley.com

Attention:  Jeremy Beal, Executive Director

 

12. Status of Parties.  In selling the Interests, MSSB shall be an independent contractor (rather than employee, agent or representative) of any Partnership or the General Partner, and MSSB shall not have the right, power or authority to enter into any contract or to create any obligation on behalf of any Partnership or the General Partner or otherwise bind any Partnership or the General Partner in any way.  Nothing in this Agreement shall create a partnership, joint venture, agency, association, syndicate, unincorporated business or any other similar relationship between the parties.  Nothing in this Agreement shall be construed to imply that MSSB is a partner, shareholder, manager, managing member or member of any Partnership or the General Partner.

 

13. Miscellaneous.

 

(a) Headings.  Headings to sections and subsections in this Agreement are for the convenience of the parties only and are not intended to be a part of or affect the meaning or interpretation hereof.

 

(b) Entire Agreement.  This Agreement embodies the entire agreement and understanding of the parties with respect to the subject matter hereof, and supersedes all other agreements and understandings, whether written or oral, between the parties relating to the subject matter hereof entered into prior to this Agreement.

 

(c) Amendments.  This Agreement (including Schedule 3) shall not be amended except by a writing signed by all parties hereto.  Notwithstanding the previous sentence, Partnerships may be added to this Agreement upon the agreement of the General Partner and MSSB.  The listing of such Partnership on Schedule 1 hereto shall be evidence of such agreement.

 

- 13 -

 

  

  

  

(d) Waiver.  No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto either before or after the effective date of this Agreement or from any failure by any party hereto to assert its rights hereunder on any occasion or series of occasions.

 

(e) Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict or choice of law provisions thereof.  The provisions of Sections 3, 7 (including with respect to breaches of Section 4 or 5), 8, 9, 10(c), and this Section 13 shall survive termination of this Agreement.  If any provision of this Agreement is or should become inconsistent with any present or future law, rule, or regulation of any governmental or regulatory authority having jurisdiction over the subject matter of this Agreement, such provision shall be deemed rescinded or modified in accordance with any such law, rule or regulation.  In all other respects, this Agreement shall continue and remain in full force and effect.

 

(f) Successors and Assigns.  This Agreement shall inure to the benefit of and be binding on the parties hereto and such parties’ respective successors and permitted assigns.

 

(g) Assignment.  No party may assign this Agreement without the prior written consent of the other parties, except as otherwise provided herein.  Any purported assignment in violation of this Section 13 shall be void.

 

(h) Jurisdiction and Consent.  THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN NEW YORK CITY OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND WAIVE TRIAL BY JURY.  EACH OF THE PARTIES IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE PARTIES AGREES THAT A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND BINDING UPON THE PARTIES AND MAY BE ENFORCED IN ANY OTHER COURTS TO WHOSE JURISDICTION A PARTY IS OR MAY BE SUBJECT, BY SUIT UPON SUCH JUDGMENT.  EACH PARTNERSHIP AND THE GENERAL PARTNER EACH HEREBY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT BY MEANS OF PERSONAL DELIVERY OR COURIER SERVICE, ADDRESSED TO ITS ADDRESS PROVIDED ABOVE AND TO THE ATTENTION OF ANY SECRETARY, ASSISTANT SECRETARY OR ANY OTHER OFFICER, DIRECTOR, MANAGING AGENT OR GENERAL AGENT OF SUCH PARTY, AND SUCH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE UNDER NEW YORK LAW OR UNDER ANY LAW OF ANY STATE OF THE UNITED STATES OR OF ANY OTHER JURISDICTION OR OTHERWISE TO SERVICE OF PROCESS IN SUCH MANNER.

 

- 14 -

 

  

  

  

(i) Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  Facsimiles (including facsimiles of the signature pages of this Agreement) shall have the same legal effect hereunder as originals.

 

 

 

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

 

- 15 -

 

  

  

  

 

IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be executed as of the day and year first above written.

	
THE PARTNERSHIPS LISTED ON SCHEDULE 1 HERETO

 

By: Ceres Managed Futures LLC

 

Name: /s/ Alper Daglioglu

           Alper Daglioglu

 

Title:  President

	
Morgan Stanley Smith Barney LLC

 

 

 

Name: /s/ Jeremy Beal

             Jeremy Beal

 

Title:  Executive Director

 

 

	  	
Ceres Managed Futures LLC

 

Name: /s/ Alper Daglioglu

                 Alper Daglioglu

 

Title:  President

 

 

 

 

 

 

 

- 16 -               

 

	  	
  

 

 

 

                                                                                                                   

  

  

  

Schedule 1

 

	
PARTNERSHIP

	
STATE AND DATE OF ORGANIZATION

	
EFFECTIVE DATE

	
Polaris Futures Fund L.P.

	
Delaware; February 22, 2007

	
April 1, 2014

	
Meritage Futures Fund L.P.

	
Delaware; February 22, 2007

	
April 1, 2014

	
LV Futures Fund L.P.

	
Delaware; February 22, 2007

	
April 1, 2014

	
Managed Futures Premier BHM L.P.

	
Delaware; August 23, 2010

	
April 1, 2014

	
Managed Futures Premier Graham L.P.

	
Delaware; July 15, 1998

	
April 1, 2014

	
Managed Futures Strategic Alternatives, L.P.

	
Delaware; May 4, 1999

	
April 1, 2014

	
Managed Futures Premier Aventis L.P.

	
Delaware; April 10, 2012

	
April 1, 2014

	
Morgan Stanley Smith Barney Charter Aspect L.P.

	
Delaware; October 22, 1993

	
December 31, 2013

	
Morgan Stanley Smith Barney Charter Campbell L.P.

	
Delaware; March 26, 2002

	
December 31, 2013

	
Morgan Stanley Smith Barney Charter WNT L.P.

	
Delaware; July 15, 1998

	
December 31, 2013

	
Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P.

	
Delaware; October 20, 1999

	
December 31, 2013

	
Morgan Stanley Smith Barney Spectrum Select L.P.

	
Delaware; March 21, 1991

	
December 31, 2013

	
Morgan Stanley Smith Barney Spectrum Strategic L.P.

	
Delaware; April 29, 1994

	
December 31, 2013

	
Morgan Stanley Smith Barney Spectrum Technical L.P.

	
Delaware; April 29, 1994

	
December 31, 2013

 

  

  

  

Schedule 2

 

	
PRIOR AGREEMENT

	
Alternative Investment Placement Agent Agreement, dated as of June 1, 2007, by and among LV Futures Fund L.P. (formerly Morgan Stanley Managed Futures LV, L.P.), Meritage Futures Fund L.P. (formerly Morgan Stanley Managed Futures MV, L.P.), Polaris Futures Fund L.P. (formerly Morgan Stanley Managed Futures HV, L.P.), Ceres Managed Futures LLC (formerly Demeter Management Corporation), and Morgan Stanley Wealth Management (replacing Morgan Stanley & Co. LLC (formerly Morgan Stanley & Co. Incorporated)), as amended

	
Amended and Restated Selling Agreement, dated as of July 29, 2002, among Managed Futures Premier Graham L.P. (formerly Morgan Stanley Charter Graham L.P.), Morgan Stanley Smith Barney Charter Campbell L.P. (formerly Morgan Stanley Charter Campbell L.P.), Morgan Stanley Smith Barney Charter Aspect L.P. (formerly Morgan Stanley Charter MSFCM L.P.), Morgan Stanley Charter Welton L.P., and Morgan Stanley Smith Barney Charter WNT L.P. (formerly Morgan Stanley Charter Millburn L.P.), Morgan Stanley DW Inc., and Ceres Managed Futures LLC (formerly Demeter Management Corporation), as amended

	
Alternative Investment Placement Agent Agreement, dated as of October 1, 2011, by and among Managed Futures Premier Aventis L.P. (and such other partnerships listed on Schedule 1 thereto), Ceres Managed Futures LLC, and Morgan Stanley Smith Barney LLC

	
Amended and Restated Selling Agreement, dated as of March 7, 2000, among Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P. (formerly Morgan Stanley Dean Witter Spectrum Currency L.P.), Morgan Stanley Smith Barney Spectrum Global Balanced L.P. (formerly Morgan Stanley Dean Witter Spectrum Global Balanced L.P.), Morgan Stanley Smith Barney Spectrum Select L.P. (formerly Morgan Stanley Dean Witter Spectrum Select L.P.), Morgan Stanley Smith Barney Spectrum Strategic L.P. (formerly Morgan Stanley Dean Witter Spectrum Strategic L.P.), Morgan Stanley Smith Barney Spectrum Technical L.P. (formerly Morgan Stanley Dean Witter Spectrum Technical L.P.), Morgan Stanley Dean Witter Spectrum Commodity L.P., Dean Witter Reynolds Inc., and Ceres Managed Futures LLC (formerly Demeter Management Corporation), as amended

	
Alternative Investment Placement Agent Agreement, by and among Managed Futures Premier BHM L.P. (formerly BHM Discretionary Futures Fund L.P.), Ceres Managed Futures LLC, and Morgan Stanley Smith Barney LLC, as amended

	
Placement Agreement, dated as of June 30, 1999, between Morgan Stanley & Co. Incorporated, Morgan Stanley Dean Witter Strategic Alternatives, L.L.C., Morgan Stanley Strategic Alternatives L.P., and Demeter Management Corporation, as amended by the Additional Placement Agreement, dated as of August 31, 1999, between Morgan Stanley & Co. Incorporated, Morgan Stanley Dean Witter Strategic Alternatives, L.L.C., Morgan Stanley Strategic Alternatives L.P., Demeter Management Corporation, and Dean Witter Reynolds, Inc., as amended

	
Alternative Investment Placement Agent Agreement, dated as of April 1, 2014, by and among Ceres Managed Futures LLC, Morgan Stanley Smith Barney LLC and the Partnerships listed on Schedule 1 thereto

- 2 -

 

                                                                                                                   

  

  

  

Schedule 3

 

	
PARTNERSHIP

	
ONGOING PLACEMENT AGENT FEE

	
LV Futures Fund L.P.

	
1/12 of 2.0% per month (2.0% annual) of the net asset value per unit where the limited partner has an aggregate investment of up to $4,999,999; and 1/12 of 0.75% per month (0.75% annual) of the net asset value per unit where the limited partner has an aggregate investment of $5,000,000 or more1

	
Meritage Futures Fund L.P.

	
1/12 of 2.0% per month (2.0% annual) of the net asset value per unit where the limited partner has an aggregate investment of up to $4,999,999; and 1/12 of 0.75% per month (0.75% annual) of the net asset value per unit where the limited partner has an aggregate investment of $5,000,000 or more7

	
Polaris Futures Fund L.P.

	
1/12 of 2.0% per month (2.0% annual) of the net asset value per unit where the limited partner has an aggregate investment of up to $4,999,999; and 1/12 of 0.75% per month (0.75% annual) of the net asset value per unit where the limited partner has an aggregate investment of $5,000,000 or more7

	
Managed Futures Premier BHM L.P.

	
2.0% annual of the net asset value per unit paid on a monthly basis

	
Managed Futures Premier Graham L.P.

	
2.0% annual of the net asset value per unit paid on a monthly basis

	
Managed Futures Premier Aventis L.P.

	
1/12 of 2.0% per month (2.0% annual) of the net asset value per unit

	
Managed Futures Strategic Alternatives, L.P.

	
1/12 of 1.0% per month (1.0% annual) of the net asset value per unit

	
Morgan Stanley Smith Barney Charter Aspect L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Charter Campbell L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Charter WNT L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Spectrum Select L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Spectrum Strategic L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Spectrum Technical L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

  

1   For the calculation of the aggregate investment for an investor in each of LV Futures Fund L.P., Meritage Futures Fund L.P. and Polaris Futures Fund L.P., the aggregate investment shall equal the total investment by such investor in all three partnerships.

 

- 3 -

                                                                                                            

  

  

  

	
Morgan Stanley Smith Barney Charter WNT L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Spectrum Select L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Spectrum Strategic L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

	
Morgan Stanley Smith Barney Spectrum Technical L.P.

	
2.0% annually of the net asset value per unit paid on a monthly basis

 

 

- 4 -

  

 

 

  

 

 

  

  

 

  

Appendix A

 

Covered Persons:

 

	
(i)  

	
MSSB and its executive officers and directors and officers participating in the offering of any of the Partnerships;

 

	
(ii)  

	
Morgan Stanley Financial Advisors soliciting investors for the Partnerships on September 23, 2013 and thereafter who receive compensation with respect to such solicitation; and

 

	
(iii)  

	
MSSB’s managing member, Morgan Stanley Smith Barney Holdings LLC (the “Managing Member”), and the Managing Member’s executive officers and directors and officers participating in the offering of any of the Partnerships.

 

 

- 5 -Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made to be effective as of the 1st day of July, 2014 (the “Commencement Date”), by and between FieldPoint Petroleum Corporation, a publicly traded Colorado corporation (including all affiliates and subsidiaries hereinafter called the “Company”) and Phillip H. Roberson (hereinafter called the “Executive”).

WHEREAS, the Executive desires to enter into an executive employment relationship with the Company; and,

WHEREAS, both the Company and Executive have read and understood the terms and provisions set forth in this Agreement and have been afforded a reasonable opportunity to review this Agreement with their respective advisors;

NOW, THEREFORE, in consideration of the mutual promises of each, and other good and valuable consideration, the parties hereby agree as follows:

	 	
1.

	
SERVICES AND DUTIES

(a)       Positions.  The Executive shall serve as the President and CFO of the Company and shall report to the Board of Directors (the “Board”) of the Company and shall perform all duties consistent with these positions and such duties generally consistent therewith; and as such duties shall be prescribed and/or amended from time to time by the Board.

(b)       CPA Certification.Both parties acknowledge the value of the Executive’s CPA certification and Executive agrees to use best efforts to maintain this certification throughout the term of this Agreement.

(b)       Devotion of Time.  As of the Commencement Date of this Agreement the Executive shall devote his full time and attention to the Company. However, it is understood that the Executive may have certain other business activities in which he is free to engage, provided that such other business activities are properly disclosed to the Company, do not interfere with the accomplishment of his duties to the Company, and are not directly competitive or in conflict with any corporate opportunities available to the Company.  More specifically, such other business activities as they exist on the date of this Agreement are more fully described and disclosed on Schedule 1 which is attached hereto.

(c)       No Joint Venture.  The provisions of this Agreement are not intended to create any relationship between the Parties other than that of employer and employee contracting with each other solely for the purpose of effecting the provisions of this Agreement, and this Agreement shall not be construed as creating a joint venture between the Parties.

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2.

	
TERM

 

This Agreement shall begin on the Commencement Date and end on the three (3) year anniversary after the Commencement Date (the "Original Term"). Thereafter, this Agreement shall automatically renew for successive one (1) year terms unless either party provides a written notice to the other party of its intent not to renew at least thirty (30) days prior to any automatic renewal date.

	 	
3.

	
COMPENSATION AND RELATED MATTERS

(a)       Base Salary.  From and after the Commencement Date, the Executive shall receive an initial base salary (the "Base Salary") paid by the Company of $16,667 per month, ($200,000 annually). Base Salary may be adjusted from time to time by the Board based on Executive’s performance of duty, the growth of the Company, and the responsibilities assigned to the Executive by the Board.

(b)       Signing Bonus.  The Executive will be entitled to receive 50,000 shares of FPP common stock upon execution of this Agreement, provided that the Executive shall be immediately vested and shall immediately receive 10,000 of these shares on the Commencement Date of this Agreement, and shall be vested and receive 10,000 of these shares upon the 6 month anniversary of the Commencement Date, and shall be vested and receive 10,000 shares upon the 12 month anniversary of the Commencement Date, and shall be vested and receive 10,000 shares upon the 18 month anniversary of the Commencement Date, and shall be vested and receive the final 10,000 shares upon the 24 month anniversary of the Commencement Date.  Unless there shall be a Change of Control Event as defined in Section 4(b) occurring within this 24 month vesting period the Executive shall be required to have remained in the continuous employ of the Company as of these anniversary dates in order to vest in this award.  In the event of a Change of Control Event the Executive shall immediately vest in, and shall be immediately awarded any remaining shares granted under the provisions of this paragraph upon the date that the Change in Control Event becomes effective.

(c)            Annual Stock Grant. Once the Signing Bonus grant has been fully vested and fully paid the Executive will become entitled to receive, as part of the annual compensation for his services, certain shares of the Company’s common stock as follows: on the third (3rd) annual anniversary date 5,000 shares, on the fourth (4th) annual anniversary date 6,000 shares, on the fifth (5th) annual anniversary date 7,000 shares, on the sixth (6th) annual anniversary date 8,000 shares, on the seventh (7th) annual anniversary date 9,000 shares, and on each annual anniversary date thereafter 10,000 shares.  For all purposes of this Agreement each Annual Stock Grant to be awarded hereunder shall be deemed to be earned and shall be paid only upon the completion of a full year of continuous service ending on each prescribed annual anniversary date of this Agreement. Shares awarded pursuant to this paragraph shall be in addition to shares awarded under Section 3(b) above.

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(d)       Performance Bonus.  The Executive shall be entitled to receive an annual Performance based Bonus Award as may be deemed appropriate by the Board in its sole discretion.  It shall be understood by both Parties that the Company’s existing Performance Based Bonus Program as adopted by the Board in 2008 is to be considered temporarily suspended until the beginning of the fiscal year 2015, whereupon it may be formally reinstated subject to any modifications or amendments deemed appropriate by the Board in its sole discretion. For all purposes of this Agreement each Performance Bonus awarded hereunder shall be deemed to be earned at the end of each calendar year, and except as provided in Section 5.(f)(iv), shall be paid upon the condition that the Executive remains in the continuous employ of the Company through the end of same calendar year that the Performance Bonus is deemed to be earned.

(e)        Benefits.  In addition, the Executive will be entitled to the following benefits during the Employment Period if offered by the Company, unless otherwise altered by the Board with respect to all Executives of the Company:

 

(i)       hospitalization, disability, life and health insurance, to the extent offered by the Company, and in amounts consistent with Company policy, for all key management employees, as reasonably determined by the Board;

(ii)      three (3) weeks of paid vacation each year during the three (3) year primary term of this Agreement, and four (4) weeks of paid vacation during each successive year thereafter, provided that any unused vacation for any year shall not carry over into any ensuing year, and further provided that any unused vacation during any year shall not be compensated by cash payment except as provided in Section 5 of this Agreement:

(iii)     reimbursement for reasonable, necessary and ordinary out-of-pocket expenses incurred by the Executive in the performance of his duties, subject to the Company's policies in effect from time to time with respect to travel, entertainment and other expenses;

(iv)     $100,000 term life insurance policy, with premiums fully paid by the Company for as long as the Executive remains employed by the Company;

3

(v)      reimbursement of all reasonable and ordinary costs incurred by the Executive to maintain his CPA certification during the tenure of his employment with the Company;

(v)      $500 per month car allowance;

(vii)    any other benefit arrangements, to the extent made generally available by the Company to its Executives and key management employees.

 

	 	
4.

	
TERMINATION

The Executive's employment hereunder is "at will" and may be terminated by the Company or the Executive, under the following circumstances:

(a)       Mutual Agreement.  Termination may occur by mutual written agreement between the Executive and the Company.

(b)       Change of Control Event.  It is understood that Termination may be the necessary result of a Change in Control Event.  A Change of Control Event shall include any transaction which involves the sale or transfer of the Company or substantially all of the Company’s assets to another non-related person or entity by sale, merger, reverse merger, buy-out, takeover, or any other transaction which results in Company’s Board of Directors (as so constituted and existing immediately prior to the Change of Control Event) no longer retaining its voting majority or its ability to control the Company in either its activities or its direction.

(c)        Death.  Employment shall terminate upon the death of the Executive.

(d)       Disability.  Termination will result if the Executive is unable to perform his duties on a full-time basis because of Executive's inability to perform his duties under this Agreement, without reasonable accommodation, for a period of more than one hundred and twenty (120) days ("Disability").

(e)       Termination of the Executive's employment for "Cause." For purposes of this Agreement, the Company shall have "Cause" to terminate the Executive's employment hereunder only upon:

(i)        the failure by the Executive to substantially perform his duties as outlined hereunder or to follow the reasonable directions of the Board after demand for substantial performance is delivered by the Board;

4

(ii)       the engaging by the Executive in conduct that is materially injurious to the Company, monetarily or otherwise;

(iii)      the engaging by the Executive in criminal conduct or conduct constituting moral turpitude;

(iv)      the engaging by the Executive in employment practices which violate federal, state or local law.

 

(v)       the engaging in conduct by the Executive which results in an action against him by the Securities and Exchange Commission or any similar federal or state regulatory agency.

 

(f)        Termination Without Cause.  Notwithstanding any provisions of this Agreement to the contrary, the Company may not terminate the Executive’s employment for any reason other than those specified in the foregoing paragraphs (a), (b), (c), (d), or (e) at any time during the term of this Agreement.

(g)       Voluntary Resignation. The Executive may terminate this Agreement ("Voluntary Resignation") at any time effective upon thirty (30) days written notice to the Board.

	 	
5.

	
COMPENSATION AND PAYMENTS UPON TERMINATION

The Executive shall be entitled to the following compensation from the Company (in lieu of all other sums payable to the Executive hereunder) upon the termination of Executive's employment.

(a)       Mutual Agreement.  If the Executive's employment is terminated as a  result of mutual written agreement, the Company shall pay the Executive's Base Salary accrued but otherwise unpaid through the date of termination, any common stock awards earned and vested under Sections 3(b) and 3(c) but otherwise unpaid, plus a lump sum payment for the value of all accrued,  and unused vacation time through the date of termination, and the Executive will be entitled to receive any vested pension and retirement benefits (if any) as may be hereinafter enacted by the Board (for all purposes of this Agreement, all such accrued, earned, vested  and  unpaid items through the applicable date of termination are referred to as the "Earned Amounts").

5

(b)       Death.  If the Executive’s employment is terminated as a result of death, the Company will pay to the Executive's estate the Earned Amounts.

(c)       Disability.If the Executive's employment is terminated as a result of Disability (as defined in Section 4(d) above), the Executive will be provided long term disability benefits to which he may be eligible (if any) in accordance with the Company's then existing Standard Benefit Plans, and the Company shall pay to the Executive the Earned Amounts.

(d)       Termination by the Executive.  In the event the Executive voluntarily elects to terminate this Agreement, the Company shall pay the Executive the Earned Amounts.

(e)       Termination for Cause.  If the Executive's employment is terminated for Cause, the Company shall pay the Executive the Earned Amounts and the Company shall have no further obligation to the Executive.

(f)        Termination for Change of Control.  If the Executive's employment is terminated due to a Change of Control Event, the Company shall pay the Executive the Earned Amounts and, in addition, the Company shall pay the Executive:

(i)           eighteen (18) months of Base Salary in cash,

(ii)          all common stock awarded but remaining unpaid (if any) under Section 3(b), without regard to any vesting provisions that are otherwise prescribed therein,

(iii)         all common stock pursuant to Section 3(c) for the year in which the Change of Control Event occurs without regard to any requirement for the Executive to otherwise remain employed by the Company through the end of the calendar year in question.

(iv)         any Performance Bonus amounts earned (or being earned) under any Board approved and adopted Performance Bonus Program in effect during the fiscal year in which the Change of Control Event occurs without regard to any requirement for the Executive to otherwise remain employed by the Company through the end of the calendar year in question. Such Performance Bonus awards shall be only be paid on amounts actually earned up to the date of the Change of Control event, or if such Performance Bonus awards are otherwise determined on an annualized basis, they shall be prorated and paid based upon the amount of time that has actually elapsed during the fiscal year when the Change of Control event occurs.

6

In order to qualify for and to receive any amounts, other than the Earned Amounts, under this Section 5(f) the Executive shall remain in the continuous employ of the Company until the date that the Change of Control Event is final and complete, or until such other date as may be prescribed under any notice of Termination allowed under Section 5(f).  Executive may not earn any amounts, other than the Earned Amounts, under this Section 5(f) for exercising a Voluntary Resignation that would become effective prior to the date that the Change of Control Event becomes final and complete.  Furthermore, if the Executive is offered, and if Executive chooses to accept continued employment with the new Change of Control entity under terms no less favorable than the terms contained in this Agreement he shall be entitled to the Earned Amounts and shall not be entitled to any other consideration offered under this Section 5(f).

	 	
6.

	
NON-DISCLOSURE

(a)       ConfidentialInformation.  By virtue of employment with the Company, the Executive will have access to confidential, proprietary, and highly sensitive information relating to the business of the Company and which is a valuable, competitive and unique asset of the Company ("Confidential Information"), the confidentiality of which is essential to the Company's ability to differentiate its products and services. Such Confidential Information includes all information which relates to the business of the Company, which is or has been disclosed to the Executive orally or in writing by the Company or obtained by virtue of work performed for the Company, is or was developed by the Company, and is not generally available to or known by individuals or entities within the industry in which the Company is or may become engaged or readily accessible by independent investigation. The Confidential Information sought to be protected includes, without limitation, information pertaining to: (i) the identities of customers and clients with which or whom the Company does or seeks to do business, as well as the point of contact persons and decision-makers at these customers and clients, including their names, addresses, e-mail addresses and positions; (ii) the past or present  purchasing history and the past and/or current job requirements of each past and/or existing customer and client; (iii) the volume of business and the nature of the business relationship between the Company and its customers and clients; (iv) the pricing of the Company's services, including any deviations from its standard pricing for particular customers and clients; (v) the Company's business plans and strategy, including customer  or client assignments and rearrangements, sales and administrative staff expansions, marketing and sales plans and strategy, proposed adjustments in compensation of other Company personnel, revenue, expense and profit projections, industry analyses, and any proposed or actual implemented technology changes; (vi) information regarding the Company's employees, including their identities, skills, talents, knowledge, experience, and compensation; (vii) the Company's financial results and business condition; (viii) any past or present merchandise  or supply sources in the future; (ix) technical and non-technical information including patent, copyright, trade secret, proprietary information, methods, ideas, concepts, designs, inventions, know-how, processes, software programs, software source documents and formulae related to the current, future and proposed products and services of the Company including research, experimental work, development, design details and specifications and engineering, financial statements, forecasts, plans (whether business, strategic, marketing or other), client lists, prospective client lists, sales data, sales analysis, equipment and other assets, prices, costs, sources of supplies, pricing methods, personnel, marketing research, and business relationships, whether or not marked "Confidential" or "Proprietary".  Confidential Information may be contained on the Company's computer network, in computerized documents or files, or in any written or printed documents, including any written reports summarizing such information.

7

(b)      Non-Disclosure of Confidential Information. The Executive acknowledges that the Company's Confidential Information will be disclosed to the Executive throughout his employment at the Company in order to enable the Executive to perform his duties for the Company. The Executive further acknowledges that, prior to his employment at the Company, Executive was either unfamiliar with the Company's Confidential Information or Executive developed such Confidential Information for the benefit of the Company and was otherwise compensated for such services outside of the terms of this Agreement. Finally, Executive acknowledges that the unauthorized disclosure of Confidential Information could place the Company at a competitive disadvantage. Consequently, Executive agrees (i) not to use, publish, disclose or divulge, directly or indirectly, at any time, any Confidential Information for his own benefit and for the benefit of any person, entity, or corporation other than the Company, to any person who is not a current employee of the Company, without the express, written consent of the Company and except in the performance of the duties assigned to him by the Company; (ii) not to make copies of Confidential Information without the prior written consent of the Company; (iii) to take reasonable precautions to protect against the inadvertent disclosure of such Confidential Information or theft or misappropriation by others; and (iv) not to use such Confidential Information except in connection with the specific duties of the Executive in connection with his employment.

(c)       Notwithstanding the foregoing, the confidentiality and nondisclosure provisions contained herein with respect to any portion of the Confidential Information shall terminate when the Executive can document that the Confidential Information:

8

(i)        was in the public domain at the same time it was communicated to the Executive by the Company;

(ii)       entered the public domain subsequent to the time it was communicated to the Executive by the Company through no fault of the Executive;

 

(iii)      was in the Executive's possession free of any obligation of confidence at the time it was communicated to the Executive by the Company;

(iv)      was rightfully communicated to the Executive free of any obligation of confidence subsequent to the time it was communicated to the Executive by the Company;

 

(v)       was developed by the Executive independently of and without any reference to any information communicated to the Executive by the Company; or

(vi)      was communicated in response to a valid subpoena or order by a court or by a governmental body, provided that the Executive complies with the provisions of Section 6(e) below.

(d)       Survival of Executive's Obligations. Executive understands and agrees that his obligations under this Section shall survive the termination of this Agreement and/or his employment with the Company.

(e)       Certain Disclosures.  In the event that the Executive receives a request to  disclose all or any part of the Confidential Information under the terms of a subpoena or order issued by a court or by a governmental body, the Executive agrees (i) to notify the  Company immediately of the existence, terms, and circumstances surrounding such request, (ii) to consult with counsel on the advisability of taking legal available steps to resist or narrow such request, and (iii) if disclosure of such Confidential  Information is required to prevent the Executive from being held in contempt or subject to other penalty, to furnish only such potion of the Confidential Information as, in the opinion of counsel to the Executive, it is legally compelled to disclose and to exercise its best efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to the disclosed Confidential Information.

9

	 	
7.

	
RETURN OF COMPANY PROPERTY

 

Executive acknowledges that all memoranda, notes, correspondence, databases, computer discs, computer files, computer equipment and/or accessories, pagers, telephones, passwords or pass codes, records, reports, manuals, books, papers, letters, CD ROMS, flash-drives or any other type of electronic data storage devises, keys, internet database access codes, client profile data, job orders, client and customer lists, contracts, software programs, information and records, drafts of instructions, guides and manuals, and other documentation (whether in draft or final form), and other sales, financial or technological information relating to the Company's business, and any and all other documents containing Confidential Information furnished to Executive by any representative of the Company or otherwise acquired or developed by him in connection with his association with the Company (collectively, "Recipient Materials") shall at all times be the property of the Company. Within twenty-four (24) hours of the termination of his employment, Executive will return to the Company any Recipient Materials which are in his possession.

	 	
8.

	
NON-SOLICITATION OF EMPLOYEES

 

Executive acknowledges that, as part of his employment or association with the Company, he will become familiar with the salary, pay scale, capabilities, experiences, skill and desires of the Company's employees. In order to protect the confidentiality of such information, Executive agrees that, for a period of twelve (12) months following the termination of his employment with the Company, whether such termination occurs at the insistence of Executive or the Company, Executive shall not recruit, hire, solicit, or attempt to recruit, hire or solicit, directly or by assisting others, any employees of the Company, nor shall he contact or communicate with any employees of the Company for the purpose of inducing any other employees of the Company to terminate their employment or association with the Company. For purposes of this covenant, "employees" shall refer to permanent employees, temporary employees, or persons who are employed under full time contract with the Company. Executive's obligations under this Section 8 shall survive the termination of this Agreement and Executive's employment with the Company.

	 	
9.

	
REMEDIES

In the event that Executive violates any of the provisions set forth in Sections 6, 7, or 8 of this Agreement, he acknowledges that the Company will suffer immediate and irreparable harm which cannot be accurately calculated in monetary damages.  Consequently, Executive acknowledges and agrees that the Company shall be entitled to immediate injunctive relief, either by temporary or permanent injunction, to prevent such a violation. Executive further acknowledges and agrees that this injunctive relief shall be in addition to any other legal or equitable relief, including monetary damages, to which the Company would be entitled.

10

	 	
10.

	
SUCCESSORS; BINDING AGREEMENT

 

This Agreement shall be binding upon, and inure to the benefit of the Company, Executive, and their respective successors, assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. Without limiting the foregoing, the Company may assign this Agreement (or the same may remain with the Company as a subsidiary of a larger institution), without the consent of Executive, with such assignee being required to perform the obligations of the Company hereunder.

	 	
11.

	
COMPLETE AGREEMENT

This Agreement sets forth the entire agreement among the Company and Executive concerning the subject matter hereof, and supersedes all prior written or oral understandings of the parties.

	 	
12.

	
NOTICE

For purposes of this "Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when (i) delivered personally; (ii) sent by telecopy or similar electronic device and confirmed; (iii) delivered by overnight express; or (iv) sent by registered or certified mail, postage prepaid, addressed as follows (unless changed by written notice):

	
 

	
If to the Executive:

	
Phillip H. Roberson

	
 

	
 

	
609 Castle Ridge Road, Suite 335

	
 

	
 

	
Austin, Texas  78746

	
 

	
 

	
 

	
 

	
If to Company:

	
Roger D. Bryant, Executive Chairman

	
 

	
 

	
1124 Comanche Drive

	
 

	
 

	
Allen, TX 75013

 

	 	
13.

	
MISCELLANEOUS

 

No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing, signed by the Executive and the Company. No waiver by either party hereto of or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. Neither party hereof has made any agreements or representations, oral or otherwise, express or implied, with respect to the subject matter, which are not set forth expressly in this Agreement.

11

	 	
14.

	
GOVERNING LAW AND VENUE

 

This Agreement is being made and is intended to be performed in the State of Texas, and shall be governed, construed, interpreted, and enforced in accordance with the substantive laws of the State of Texas and venue for any matter in connection with or arising from this Agreement shall be in Travis County, Texas.

 

	 	
15.

	
ATTORNEY FEES

Each party shall agree to bear its own legal fees and costs which may be incurred in connection with the resolution of any dispute or controversy under or in connection with this Agreement.

	 	
16.

	
VOLUNTARY AGREEMENT

The parties acknowledge that each has had an opportunity to consult with an attorney or other counselor concerning the meaning, import, and legal significance of this Agreement, and each has read this Agreement, as signified by their respective signatures hereto, and each is voluntarily executing the same after, if sought, advice of counsel for the purposes and consideration herein expressed.

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of July 1, 2014.

 

	
 

	
EXECUTIVE:

	
	
 

	
 

	
	
 

	
 

	
	
 

	
Phillip H. Roberson

	

 

 

	
 

	
COMPANY:

	
	
 

	
 

	
	
 

	
 

	
	
 

	
Roger D. Bryant – Executive Chairman

	

 

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SCHEDULE 1

Disclosure of Other Business Activities of the Executive

Pursuant to Section 1(b)

I am a Managing Director and Unit Holder of AEG Operating, LLC (“AEG”) located at 4611 Bee Caves Road #209, Austin, Texas 78746.  AEG is an Exploration and Production fund which was founded in 2007, to purchase existing production and develop new production.  I recently hired a contract operator (REO Operating, LLC) and an accountant to assist my partner with the day to day operations of the business.  The fund is not pursuing new production or projects and is actively marketing the production that we have.

  

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