EXHIBIT 1.1
THE FRONTIER FUND
Denver, Colorado
, 20
SELLING AGENT
AGREEMENT
Equinox Fund Management, LLC, a
Delaware limited liability company (the “Managing
Owner”), is the managing owner of The Frontier Fund (the
“Trust”), a statutory trust organized under Chapter 38
of Title 12 of the Delaware Code (the “Delaware Act”).
Wilmington Trust Company, a Delaware banking company (the
“Trustee”), is the trustee of the Trust and has
delegated substantially all responsibility for the management of
the Trust’s business and affairs to the Managing Owner. The
Trust has been formed primarily for the purpose of trading, buying,
selling, spreading or otherwise acquiring, holding or disposing of
a diversified portfolio of commodity futures, forward and options
contracts. Units of beneficial interest in the Trust (the
“Units”) will be issuable in multiple series (the
“Series”), each separately managed by one or more
different trading advisors (collectively, the “Trading
Advisors”), each of which is registered with the Commodity
Futures Trading Commission (the “CFTC”) as a commodity
trading advisor under the Commodity Exchange Act, as amended (the
“CE Act”), and is a member of the National Futures
Association (the “NFA”) in such capacity. Each Series
of Units will be separately valued and its assets will be
segregated from the assets of the other Series. Holders of Units
(“Limited Owners”) will have the right to exchange,
through redemption and purchase, Units of one Series for Units of
any other Series. The Trust proposes to offer to the public and to
sell to Subscribers (as hereinafter defined) acceptable to the
Managing Owner, the Units upon the terms and subject to the
conditions set forth in this Selling Agent Agreement (the
“Agreement”) and the Registration Statement (as
hereinafter defined) and the Prospectus (as hereinafter defined)
included therein referred to below. The Units of each Series will
be offered at $100 per Unit during the Initial Offering Period and
thereafter at the Net Asset Value per Unit of the applicable Series
(“Series Net Asset Value”). All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them
in the Prospectus.
[
], a [
] (the “Selling Agent”), will
act as selling agent for the Trust on a “best efforts”
basis.
Section 1. The Managing Owner
and the Trust, jointly and severally, represent and warrant to the
Selling Agent that:
(a) A registration statement on Form
S-1 for the Trust and as a part thereof a combined prospectus for
all Series with respect to all of the Units being offered (which
registration statement together with all amendments thereto, at the
times and in the forms declared effective by the Securities and
Exchange Commission (the “SEC”) shall be referred to
herein as the “Registration Statement”, and which
prospectus in final form, together with all amendments and
supplements thereto, shall be referred to herein as the
“Prospectus”), prepared in full conformity with the
applicable requirements of the Securities Act of 1933, as amended
(the “1933 Act”), the CE Act, and the rules,
regulations and instructions promulgated under the 1933 Act and the
CE Act, respectively, have been filed with the SEC, Financial
Industry Regulatory Authority (“FINRA”) and the NFA
pursuant to the 1933 Act, the CE Act and the rules and regulations
promulgated, respectively, thereunder, as well as the rules and
regulations of the NASD and the NFA, in the form heretofore
delivered to the Selling Agent;
(b) To the best of their knowledge,
no order preventing or suspending the effectiveness of the
Registration Statement or use of the Prospectus or any previous
prospectus with respect to the Units has been issued by the SEC,
the CFTC, FINRA, the NFA or any other federal, state or other
governmental agency or body. The Registration Statement contains
all statements which are required to be made therein, conforms in
all material respects to the requirements of the 1933 Act and the
CE Act and the rules and regulations of the SEC and the CFTC,
respectively, thereunder, and does not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein (with
respect to the Prospectus, in light of the circumstances in which
they were made) not misleading; and, when the Registration
Statement becomes effective under the 1933 Act and at all times
subsequent thereto up to and including the Initial Closing Date for
each Series, and thereafter up to and including each subsequent
closing date during the Continuous Offering Period, as such terms
are hereinafter defined, the Registration Statement and the
Prospectus will contain all material statements and information
required to be included therein by the 1933 Act and the CE Act and
the rules and regulations, respectively, thereunder, as well as the
rules and regulations of the NASD and the NFA, and will conform in
all material respects to the requirements of the 1933 Act, the CE
Act and the rules and regulations, respectively, thereunder, as
well as the rules and regulations of the NASD and the NFA, and will
not include any untrue
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statement of a material fact or omit
to state a material fact required to be stated therein or necessary
to make the statements therein (with respect to the Prospectus, in
light of the circumstances in which they were made) not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Trust or
the Managing Owner by the Selling Agent, the Trustee or their
respective agents or by or on behalf of the Trading Advisors or any
other commodity trading advisor (an “Other Advisor”)
engaged by the Managing Owner on behalf of the Trust for use
therein, all without prejudice to any defense that the Selling
Agent may have based upon its “due diligence”
investigation under the 1933 Act;
(c) The Trust was duly formed and is
validly existing as a statutory trust in good standing under the
Delaware Act, with full power and authority, and all necessary
authorizations, approvals and orders of and from all federal, state
and other governmental or regulatory officials and bodies, to carry
out its obligations under this Agreement, its certificate of trust
(the “Trust Certificate”) and its amended and restated
Declaration of Trust and Trust Agreement, dated as of
August 8, 2003 (the “Trust Agreement”), and to own
its properties and conduct its business as described in the
Prospectus;
(d) On the date hereof, the Managing
Owner is and, at all times through the Initial Closing Date for
each Series and thereafter through each subsequent closing date,
will be duly organized and validly existing as a limited liability
company under the laws of the State of Delaware with requisite
limited liability company power and authority, and all necessary
authorizations, approvals and orders of and from all required
federal, state and other governmental or regulatory officials and
bodies, to (1) conduct its business, (2) enter into the
agreements, and (3) consummate the transactions, each as
described in the Prospectus; and on the date hereof the Managing
Owner is and, at all times through the Initial Closing Date for
each Series and thereafter through each subsequent closing date,
will be duly qualified to conduct business as a foreign limited
liability company in good standing in every jurisdiction in which
the character of such business requires such qualification and the
failure to be so qualified would materially adversely affect its
ability to act as Managing Owner of the Trust and perform its
obligations hereunder;
(e) The offer and sale of the Units
for each Series have been duly authorized by the Managing Owner on
behalf of the Trust, and the Units, when issued, will constitute
valid units of beneficial interest in the Trust which conform to
the description thereof contained in the Prospectus. The liability
of each Limited Owner will be limited as set forth in the
Prospectus and the Trust Agreement, and no Limited Owner will be
subject to personal liability for the debts, obligations, or
liabilities of the Trust by reason of his being a Limited Owner of
the Trust other than as described in the Prospectus and the Trust
Agreement;
(f) This Agreement has been duly and
validly authorized, executed and delivered by the Managing Owner
and the Trust and constitutes a valid and binding agreement of the
Managing Owner and the Trust enforceable in accordance with its
terms. Neither the offer and sale of the Units, the execution and
delivery of this Agreement, nor the compliance by the Trust or the
Managing Owner with all of the provisions of this Agreement will
conflict with, or result in a breach of any of the terms or
provisions of, or result in a default under, the provisions of the
Trust Certificate or the Trust Agreement or the limited liability
company agreement of the Managing Owner (the “Limited
Liability Company Agreement”) or the terms of any indenture,
mortgage, deed of trust, loan agreement, other evidence of
indebtedness or other agreement or instrument to which the Trust or
the Managing Owner is a party or by which the Trust or the Managing
Owner is bound or to which any of the property or assets of the
Trust or the Managing Owner is subject, nor, to the best of their
knowledge, any applicable statute or any order, rule or regulation
of any court or of any federal, state or other governmental or
regulatory agency or body having jurisdiction over the Trust or the
Managing Owner or any of their properties, nor will any such
actions result in the imposition of any lien, charge or encumbrance
upon any of the property or assets of the Trust or the Managing
Owner, and subsequent to the dates as of which information is given
in the Registration Statement and the Prospectus and except as set
forth or contemplated therein, neither the Trust nor the Managing
Owner has incurred any material liabilities or obligations (direct
or contingent) or entered into any material transactions not in the
ordinary course of its business and no consent, approval,
authorization, order, registration or qualification of or with any
court or any federal, state or other governmental or regulatory
agency or body is required for the issue and sale of the Units or
the consummation of the other transactions contemplated by this
Agreement, except the registration of the Managing Owner under the
CE Act as a commodity pool operator, membership by the Managing
Owner in the NFA in such capacity, the registration of the Units
under the 1933 Act, submission of the Prospectus to FINRA, CFTC and
NFA, and such consents, approvals, authorizations, orders,
registrations or qualifications as may be required by securities or
Blue Sky laws in connection with the offer and sale of the
Units;
(g) The financial statements of the
Managing Owner and the Trust as of and for the periods ended
December 31, 2003 and 2004, have been examined by an
independent registered public accounting firm, as required by the
CE Act and the 1933 Act and the rules and regulations of the CFTC
and SEC, respectively, thereunder;
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(h) The Trust has been capitalized
as set forth in the Prospectus;
(i) The Trust and the Managing Owner
have complied, and will continue to comply, in all material
respects with all laws, rules and regulations having application to
its or their business, including rules and regulations promulgated
by the CFTC and NFA, the violation of which would materially and
adversely affect the business, financial condition or earnings of
the Trust or the Managing Owner; and there are no actions, suits or
proceedings pending or, to the best of the knowledge of the Trust
or the Managing Owner, threatened against it or them, at law or in
equity or before or by any federal, state, municipal or other
governmental or regulatory department, commission, board, bureau,
agency or instrumentality, or by any commodity or security exchange
worldwide in which an adverse decision would materially and
adversely affect the business, financial condition, earnings or
properties of the Trust or the Managing Owner or their ability to
comply with, and perform their obligations under this Agreement,
and which are not adequately disclosed in the
Prospectus;
(j) On or before the Initial Closing
Date for each Series, and thereafter, on or before each subsequent
closing date, the Managing Owner shall have purchased or subscribed
for the General Units required of it by the Trust Agreement and
shall have a Net Worth (as defined in the Trust Agreement) equal to
or in excess of the requirements therein;
(k) The financial statements of the
Managing Owner and the Trust contained in the Registration
Statement and the Prospectus fairly present the financial condition
thereof and the results of operations as of the dates and for the
periods therein specified; and such financial statements have been
prepared in accordance with generally accepted accounting
principles in the United States consistently applied throughout the
periods involved; and no other financial statements are required by
Form S-1 to be included in the Registration Statement or the
Prospectus;
(l) There are no contracts or other
documents which are required to be filed as Exhibits to the
Registration Statement by the 1933 Act or the CE Act or by the
rules and regulations of the SEC or CFTC, respectively, thereunder,
or by the rules and regulations of the NASD or NFA, which have not
been filed as required; and
(m) The Trust has the power and
authority to enter into the various contractual obligations and
agreements referred to in the Prospectus, and the execution and
delivery of such agreements by the Trust and by the Managing Owner
on behalf of the Trust, the consummation of the transactions
contemplated therein, and the compliance with all of the terms
thereof by the Trust and the Managing Owner will be in compliance
in all material respects with all applicable legal requirements to
which either the Trust or the Managing Owner is subject and will
not conflict with or constitute a breach of or default under, the
terms or provisions of any order of the SEC, FINRA, the CFTC, or
the NFA, the Trust Agreement, the Trust Certificate, the Limited
Liability Company Agreement, or any other agreement or instrument
to which either the Trust or the Managing Owner is a party or by
which either is bound.
Section 2. The Selling Agent
represents and warrants to the Managing Owner and the Trust
that:
(a) it is registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and in each State where it will
make offers or sales of Units;
(b) it is a member of FINRA and is
in material compliance with all material rules and regulations
applicable to the Selling Agent generally and, to its knowledge,
applicable to the Selling Agent’s participation in the
offering of Units;
(c) it is duly organized and validly
existing under the laws of the jurisdiction of its
organization;
(d) it has full power and authority
to enter into this Agreement and to perform its obligations under
this Agreement;
(e) this Agreement has been duly and
validly authorized, executed and delivered by the Selling Agent and
is a valid and binding agreement of the Selling Agent enforceable
in accordance with its terms;
(f) it will deliver to each
purchaser, prior to any submission by such person of a written
offer relating to the purchase of the Units, a copy of the
Prospectus, as it may have been most recently amended or
supplemented by the Managing Owner or the Trust;
(g) it will not intentionally take
any action which it reasonably believes would cause the offering of
Units to violate the provisions of the 1933 Act, the Exchange Act,
the respective rules and regulations promulgated thereunder or
applicable “blue sky” laws or any state or
jurisdiction;
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(h) The Selling Agent further
represents and warrants that, in recommending to any person the
purchase or sale of Units, it shall:
(1) use commercially reasonable
efforts to determine, on the basis of information obtained from the
prospective purchaser concerning the prospective purchaser’s
investment objectives, the prospective purchaser’s other
investments and the prospective purchaser’s financial
situation and needs, and any other information known by the Selling
Agent through the review of its offeree questionnaire completed by
such prospective purchaser; and
(2) maintain in the Selling
Agent’s files documents disclosing the basis upon which the
determination of suitability was reached as to each purchaser for
at least six (6) years.
(i) In compliance with the NASD
Conduct Rules, it will not sell Units to discretionary accounts
without prior specific written approval of the Customer
Section 3. (a) Subject to
the terms and conditions, and on the basis of the representations,
warranties and covenants herein set forth, the Trust hereby
appoints the Selling Agent as its selling agent and the Selling
Agent agrees to use its best efforts to procure Subscribers during
the Initial Offering Period and the Continuous Offering Period on
the terms and conditions set forth, and for the periods described,
in the Prospectus.
(b) The Trust acknowledges that the
Selling Agent has no present intention to retain certain selected
brokers or dealers (“Additional Sellers”) but that the
Selling Agent maintains the right to retain Additional Sellers in
the future, which in such case the Additional Sellers, if located
in the United States, will be members of FINRA and will execute a
selected dealers agreement to be agreed upon between the
parties.
(c) During the Initial Offering
Period and the Continuous Offering Period, all Selling Agent home
offices or branch offices will be required to forward subscriptions
to the Managing Owner no later than noon of the first Business Day
following receipt of an acceptable subscription agreement from a
subscriber for Units (each, a “Subscriber”). The
Managing Owner shall have sole responsibility for determining
whether Subscribers are qualified to become Limited Owners in the
Trust and for accepting subscriptions and determining their
validity. The Selling Agent agrees to use its best efforts to cause
Subscribers to prepare their subscriptions in proper form. The
Selling Agent shall deposit the subscription proceeds from the sale
of Units in each Series (the “Proceeds”) during the
Initial Offering Period in escrow accounts designated by the Series
at U.S. Bank National Association in Denver, Colorado (the
“Escrow Agent”), for the separate benefit of the
Subscribers of each Series no later than noon of the first Business
Day following the receipt by the Selling Agent of such Proceeds.
Proceeds will be transferred to the escrow accounts at the Escrow
Agent by check from the Subscriber or via wire transfer from the
Subscriber’s account. The Managing Owner will determine
whether to accept or reject all subscriptions within two
(2) Business Days following receipt of subscription documents
from the Selling Agent. Upon notification by the Managing Owner to
the Escrow Agent that a subscription for Units of a Subscriber has
been rejected, for whatever reason, or in the event that the
Subscriber rescinds its subscription in conformity with the
requirements of the North American Securities Administrators
Association Inc. Guidelines for Registration of Commodity Pool
Programs, the Escrow Agent shall by check or wire transfer return
any Proceeds held in escrow, excluding any interest thereon, to the
payor of such Proceeds. The Escrow Agent shall make interest
payments to the Trust to be retained by the Trust for the benefit
of all investors in the applicable Series of Units by delivering a
check in the amount equal to the interest allocable by Series to
each Subscriber. If subscriptions for the minimum number of Units
in a Series set forth in the Prospectus (after taking into account
the Managing Owner’s contribution) have not been made by the
conclusion of the Initial Offering Period for a Series, then all
Proceeds deposited in the escrow account designated for that
Series, excluding any interest thereon, shall be returned (in the
same way described above in the case of a rejected or rescinded
subscription) to the payor of such Proceeds on a pro rata basis
(and taking into account the amount and time of deposit), no later
than ten (10) Business Days after the termination of the
Initial Offering Period for the affected Series, or as soon
thereafter as practicable if payment cannot be made in such time
period.
(d) During the Continuous Offering
Period, the Managing Owner also will determine whether to accept or
reject all subscriptions received and will do so (1) within
two (2) Business Days following receipt from the Selling Agent
of a “Request for Exchange” (in the form attached to
the Prospectus as Exhibit C) or the “Subscription
Agreement” (in the form attached to the Prospectus as Exhibit
B) with respect to a Limited Owner in an existing Series and
(2) within two (2) Business Days following receipt of
subscription documents from the Selling Agent for a new Subscriber.
For subscriptions which are accepted, Proceeds will be transferred
to the Escrow Agent by check from the Subscriber or via wire
transfer from the Subscriber’s account. For an existing
Limited Owner, such transfer will occur on the first Business Day
which first follows the date on which the Managing Owner accepts
the subscription. For a new Subscriber, such transfer will occur on
the second Business Day after the subscription documents are
delivered by the Subscriber to the Selling Agent (or an Additional
Seller).
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(e) On the Initial Closing Date for
a Series, and thereafter on each subsequent closing date with
respect to that Series, the acceptance, delivery, and receipt of
subscriptions for Units will be subject to the terms and conditions
set forth in this Agreement, including, but not limited to,
(1) the payment of the full subscription price for Units and
delivery of a properly completed Subscription Agreement/Power of
Attorney by each Subscriber; (2) the fact that a new
Subscriber’s subscription will not be final and binding until
two (2) Business Days following the Subscriber’s
delivery of his subscription documents to the Selling Agent (or an
Additional Seller), and (3) compliance with Section 7
hereof. Upon the satisfaction of such terms and conditions, the
aggregate subscription price for Units (inclusive of any interest
earned on such subscriptions while held in escrow which will be
retained by the Trust for the benefit of all investors in the
applicable Series of Units) will be paid and delivered to the Trust
in accordance with the Escrow Agreement.
(f) The Selling Agent agrees that it
will not take any of the following actions against the Trust:
(1) seek a decree or order by a court having jurisdiction in
the premises (A) for relief in respect of the Trust in an
involuntary case or proceeding under the Federal Bankruptcy Code or
any other federal or state bankruptcy, insolvency, reorganization,
rehabilitation, liquidation or similar law or (B) adjudging
the Trust a bankrupt or insolvent, or seeking reorganization,
rehabilitation, liquidation, arrangement, adjustment or composition
of or in respect of the Trust under the Federal Bankruptcy Code or
any other applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Trust or of any substantial part
of any of its properties, or ordering the winding up or liquidation
of any of its affairs, (2) seek a petition for relief,
reorganization or to take advantage of any law referred to in the
preceding clause; or (3) file an involuntary petition for
bankruptcy (collectively “Bankruptcy or Insolvency
Action”).
(g) In addition, the Selling Agent
agrees that for any obligations due and owing to it by any Series,
the Selling Agent will look solely and exclusively to the assets of
such Series or the Managing Owner, if it has liability in its
capacity as Managing Owner, to satisfy its claims and will not seek
to attach or otherwise assert a claim against the other assets of
the Trust, whether or not there is a Bankruptcy or Insolvency
Action taken. The parties agree that this provision will survive
the termination of this Agreement, whether terminated in a
Bankruptcy or Insolvency Action or otherwise.
(h) This Agreement has been made and
executed by and on behalf of the Trust and the Managing Owner and
the obligations of the Trust and/or the Managing Owner set forth
herein are not binding upon any of the Limited Owners individually
but are binding only upon the assets and property identified above
and no resort shall be had to the assets of other Series issued by
the Trust or the Limited Owners’ personal property for the
satisfaction of any obligation or claim hereunder.
Section 4. Service Fees.
(a) Class 1 and Class 1a Service Fees. (1) Units in the
Class 1 of Balanced Series, Winton Series, Campbell/Graham/Tiverton
Series, Currency Series and Winton/Graham Series. As compensation,
the Selling Agent shall receive from the Managing Owner a service
fee at an annual rate of up to 3.0% of the subscription amount of
each subscription of Units in the Class 1 of the Series sold by it.
After the expiration of twelve (12) months following the
purchase of Units in the Class 1 of the Balanced Series, Winton
Series, Campbell/Graham/Tiverton Series, Currency Series and
Winton/Graham Series of Units, the Selling Agent shall also receive
a monthly or quarterly on-going service fee of up to 3.0% annually
of the Net Asset Value of each Unit in the Class 1 sold by the
Selling Agent on an on-going basis for customary on-going services
provided to the Trust and its Limited Owners by the Selling Agent
for commodities related brokerage services. Such on-going services
may include, without limitation, advising Limited Owners of the Net
Asset Value of the Trust, of the relevant Series of the Trust and
of their Units in such Series, responding to Limited Owners’
inquiries about monthly statements and annual reports and tax
information provided to them, advising Limited Owners whether to
make additional capital contributions to the Trust or to redeem
their Units, assisting with redemptions of Units, providing
information to Limited Owners with respect to futures and forward
market conditions and providing further services as may be
requested by the Limited Owners. The on-going service fee with
respect to the Class 1 Units of the Balanced Series, Winton Series,
Campbell/Graham/Tiverton Series, Currency Series and Winton/Graham
Series shall continue only until such Units are exchanged for Class
3 Units of such Series.
(2) Units in the Class 1a of
Balanced Series and Class 1 of Frontier Long/Short Commodity
Series. As compensation, the Selling Agent shall receive from the
Managing Owner a service fee at an annual rate of up to 3.0% of the
subscription amount of each subscription of Units in the Class 1 or
Class 1a, as applicable, of the Balanced Series sold by it. After
the expiration of twelve (12) months following the purchase of
Units in the Class 1a of the Balanced Series of Units or the Class
1 of the Frontier Long/Short Commodity Series Units, the Selling
Agent shall also receive a monthly or quarterly on-going service
fee of up to 3.0% annually of the Net Asset Value of each Unit in
the Class 1 or Class 1a, as applicable, sold by the Selling Agent
for customary on-going services provided to the Trust and its
Limited Owners by the Selling Agent for commodities related
brokerage services. Such
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on-going services may include,
without limitation, advising Limited Owners of the Net Asset Value
of the Trust, of the relevant Series of the Trust and of their
Units in such Series, responding to Limited Owners’ inquiries
about monthly statements and annual reports and tax information
provided to them, advising Limited Owners whether to make
additional capital contributions to the Trust or to redeem their
Units, assisting with redemptions of Units, providing information
to Limited Owners with respect to futures and forward market
conditions and providing further services as may be requested by
the Limited Owners. The on-going service fee with respect to the
Class 1a Units of the Balanced Series and Class 1 Units of the
Frontier Long/Short Commodity Series shall continue only until such
Units are exchanged for Class 3a Units or Class 3 Units of such
Series, respectively.
(3) Units in the Class 1 of Long
Only Commodity Series and Managed Futures Index Series. As
compensation, the Selling Agent shall receive from the Managing
Owner a service fee at an annual rate of up to 2.0% of the
subscription amount of each subscription of Units in the Class 1 of
the Series sold by it. After the expiration of twelve
(12) months following the purchase of Units in the Class 1 of
the Long Only Commodity Series and Managed Futures Index Series of
Units, the Selling Agent shall also receive a monthly or quarterly
on-going service fee of up to 2.0% annually of the Net Asset Value
of each Unit in the Class 1 sold by the Selling Agent for customary
on-going services provided to the Trust and its Limited Owners by
the Selling Agent for commodities related brokerage se
