MANAGEMENT AGREEMENT
THIS AGREEMENT, made as of the 6th day of March, 2000,
among XXXXXX XXXXXXX XXXX XXXXXX SPECTRUM CURRENCY L.P., a
Delaware limited partnership (the "Partnership"), DEMETER
MANAGEMENT CORPORATION, a Delaware corporation (the "General
Partner"), and XXXX X. XXXXX & COMPANY, INC., a Florida
corporation (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the Partnership has been organized pursuant to
the Limited Partnership Agreement dated as of March 6, 2000 (the
"Limited Partnership Agreement"), to trade, buy, sell, spread, or
otherwise acquire, hold, or dispose of, among other things,
domestic and foreign futures contracts, forward contracts,
foreign exchange commitments, options on futures contracts, spot
currencies, and any rights pertaining thereto (hereinafter
referred to collectively as "futures interests") and securities
(such as United States Treasury bills) approved by the Commodity
Futures Trading Commission (the "CFTC") for investment of
customer funds.
WHEREAS, the Partnership is a member partnership of the
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum Series (the "Fund Group")
pursuant to which units of limited partnership interest ("Units")
of such member partnerships will be sold to investors in a common
prospectus. Units of the Partnership are being offered pursuant
to a Registration Statement on Form S-1 (No. 333-90485) (as
amended from time to time, the "Registration Statement") filed
under the Securities Act of 1933, as amended (the "Securities
Act"), and a final Prospectus dated March 6, 2000, constituting a
part thereof (as amended and supplemented from time to time, the
"Prospectus").
WHEREAS, the Trading Advisor engages in trading in
futures interests and is willing to provide certain services and
undertake certain obligations as set forth herein.
WHEREAS, the Partnership desires the Trading Advisor to
act as a trading advisor for the Partnership and to make
investment decisions with respect to futures interests for its
allocated share of the Partnership's Net Assets (as defined in
Section 7(c) hereof) and the Trading Advisor desires so to act.
WHEREAS, the Partnership, the General Partner and the
Trading Advisor wish to enter into this Management Agreement
which, among other things, sets forth certain terms and
conditions upon which the Trading Advisor will conduct a portion
of the Partnership's futures interests trading.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Undertakings in Connection with the Initial and Continuing
Offering of Units.
(a) The Trading Advisor agrees to cooperate with the Partnership
and the General Partner with respect to the initial and
continuing offering of Units: (i) to make all disclosures
regarding itself, its principals and affiliates, its trading
performance, its trading programs, systems, methods, and
strategies provided that nothing herein shall require the Trading
Advisor to disclose any proprietary information concerning such
programs, systems, methods, and strategies), any client accounts
over which it has discretionary trading authority (other than the
names of any such clients), and otherwise, as the Partnership may
reasonably require to comply with any applicable federal or state
law or rule or regulation, including those of the Securities and
Exchange Commission (the "SEC"), the CFTC, the National Futures
Association (the "NFA"), the National Association of Securities
Dealers, Inc. (the "NASD") or any other regulatory body,
exchange, or board; and (ii) otherwise to cooperate with the
Partnership, the General Partner and Xxxx Xxxxxx Xxxxxxxx Inc.
("DWR"), the selling agent for the Partnership, in connection
with their preparation and filing of the Registration Statement
and Prospectus, including any pre- or post-effective amendments
or supplements thereto, with the SEC, CFTC, NFA, NASD, and with
appropriate governmental authorities as part of making
application for registration of the Units under the securities or
Blue Sky laws of such jurisdictions as the Partnership may deem
appropriate by providing information regarding the Trading
Advisor. As used herein, the term "principal" shall have the
meaning as defined in Section 4.10(e) of the CFTC's Regulations
and the term "affiliate" shall mean an individual or entity that
directly or indirectly controls, is controlled by, or is under
common control with, the Trading Advisor.
(b) The General Partner, in its sole discretion and at any time,
may (i) withdraw the SEC registration of the Units, or
(ii) discontinue the offering of Units.
(c) If, while Units continue to be offered and sold, the Trading
Advisor becomes aware of any materially untrue or misleading
statement or omission regarding itself or any of its principals
or affiliates in the Registration Statement or Prospectus, or of
the occurrence of any event or change in circumstances which
would result in there being any materially untrue or misleading
statement or omission in the Registration Statement or Prospectus
regarding itself or any of its principals or affiliates, such
Trading Advisor shall promptly notify the General Partner and
shall cooperate with it in the preparation of any necessary
amendments or supplements to the Registration Statement or
Prospectus. Neither the Trading Advisor nor any of its
principals, or affiliates, or any stockholders, officers,
directors, or employees shall distribute the Prospectus or
selling literature or shall engage in any selling activities
whatsoever in connection with the continuing offering of Units
except as may be specifically requested by the General Partner
and agreed to by the Trading Advisor.
2. Undertakings of the General Partner Relating to the Offering
of Units.
The General Partner shall use its best efforts to
consummate the public offering of the Units (the "Offering") as
contemplated by the Registration Statement. Notwithstanding the
foregoing, the General Partner may: (a) withdraw the
Registration Statement from either or both of the SEC and CFTC
(and, if required, so notify the NASD and NFA); (b) withdraw the
applications filed under the securities or Blue Sky laws of the
various jurisdictions from any or all of such jurisdictions; and
(c) terminate the offering or the registration of Units with the
SEC at any time. The foregoing actions shall have no effect on
the Trading Advisor's obligation to continue providing services
to the Partnership pursuant to the terms hereof. In the event
the Offering terminates prior to the issuance of any Units, this
Agreement shall terminate and the parties hereto shall have no
further obligations under this Agreement.
The General Partner shall use its best efforts to
advise the Trading Advisor of estimated additions and redemptions
at least three business days prior to the end of each month and
at the end of each month. The Trading Advisor shall be
authorized to rely on such estimated information in making its
trading decisions for the Partnership. The General Partner shall
incur no liability as a result of any actions taken pursuant to
this Section 2; provided, however, that the General Partner shall
not be relieved hereby of any liability that it may incur under
other sections of this Agreement.
3. Duties of the Trading Advisor.
(a) The Trading Advisor hereby agrees to act as a trading
advisor for the Partnership. The Trading Advisor will initially
be allocated 50% of the Partnership Net Assets and shall have
sole authority and responsibility for directing the investment
and reinvestment of its allocable share of the Net Assets of the
Partnership which shall be traded pursuant to its International
Foreign Exchange Program on the terms and conditions and in
accordance with the prohibitions and trading policies set forth
in this Agreement or the Prospectus or as otherwise provided in
writing to the Trading Advisor; provided, however, that the
General Partner may override the instructions of the Trading
Advisor to the extent necessary (i) to comply with the trading
policies of the Partnership described in writing to the Trading
Advisor and with applicable speculative position limits, (ii) to
fund any distributions, redemptions, or reapportionments among
other trading advisors to the Partnership, (iii) to pay the
Partnership's expenses, (iv) to the extent the General Partner
believes doing so is necessary for the protection of the
Partnership, (v) to terminate the futures interests trading of
the Partnership, or (vi) to comply with any applicable law or
regulation. The General Partner agrees not to override any such
instructions for the reasons specified in clauses (ii) or (iii)
of the preceding sentence unless the Trading Advisor fails to
comply with a request of the General Partner to make the
necessary amount of funds available to the Partnership within
five calendar days of such request. Except as otherwise provided
herein, the Trading Advisor shall not be liable for the
consequences of any decision by the General Partner to override
instructions of the Trading Advisor. In performing services to
the Partnership the Trading Advisor may not materially alter the
trading program(s) used by the Trading Advisor in investing and
reinvesting its allocable share of the Partnership's Net Assets
in futures interests as described in the Prospectus without the
prior written consent of
the General Partner, it being understood that changes in
the futures interests traded shall not be deemed an alteration in
the Trading Advisor's trading program(s).
(b) The Trading Advisor shall:
(i) Exercise good faith and due care in trading futures
interests for the account of the Partnership in accordance with
the prohibitions and trading policies of the Partnership
described in the Prospectus and as otherwise provided in writing
to the Trading Advisor and the trading programs, systems,
methods, and strategies of the Trading Advisor described in the
Prospectus, with such changes and additions to such trading
programs, systems, methods or strategies as the Trading Advisor,
from time to time, incorporates into its trading approach for
accounts the size of the Net Assets allocated to the Trading
Advisor.
(ii) Subject to reasonable assurances of confidentiality by the
General Partner and the Partnership, provide the General Partner,
within 30 calendar days of a request therefor by the General
Partner, with information comparing the performance of the
Partnership's account and the performance of all other client
accounts directed by the Trading Advisor using the trading
program used by the Trading Advisor for the Partnership over a
specified period of time. In providing such information, the
Trading Advisor may take such steps as are necessary to assure
the confidentiality of the Trading Advisor's clients' identities.
The Trading Advisor shall, upon the General Partner's request,
consult with the General Partner concerning any discrepancies
between the performance of such other accounts and the
Partnership's account. The Trading Advisor shall promptly inform
the General Partner of any material discrepancies of which the
Trading Advisor is aware. The General Partner acknowledges that
different trading programs, systems, methods, and strategies may
be utilized for different accounts, accounts with different
trading policies, accounts experiencing differing inflows or
outflows of equity, accounts which commence trading at different
times, accounts which have different portfolios or different
fiscal years, accounts with different expense and interest
arrangements, and that the Trading Advisor offers different
trading programs and that such differences may cause divergent
trading results.
(iii) Upon request of the General Partner and subject to
reasonable assurances of confidentiality by the General Partner
and the Partnership, provide the General Partner with all
material information concerning the Trading Advisor other than
proprietary information (including, without limitation,
information relating to changes in control, principals, trading
approach or any materially adverse change in the Trading
Advisor's financial condition). The General Partner acknowledges
that all trading instructions made by the Trading Advisor and any
other details or other information regarding the trading systems,
strategies, methods or programs of the Trading Advisor will be
held in confidence by the General Partner and the Partnership,
except to the extent necessary, in
the reasonable judgment of the General Partner, to conduct the
business of the Partnership or as required by law.
(iv) Inform the General Partner when the Trading Advisor's open
positions maintained by the Trading Advisor exceed the Trading
Advisor's applicable speculative position limits.
(v) Not trade spot and forward contracts on physical and cash
commodities, other than in connection with exchange for physical
transactions, without the prior written consent of the General
Partner, which consent the General Partner may withhold in its
sole discretion.
(c) All purchases and sales of futures interests pursuant to
this Agreement shall be for the account, and at the risk, of the
Partnership and not for the account, or at the risk, of the
Trading Advisor or any of its stockholders, directors, officers,
or employees, or any other person, if any, who controls the
Trading Advisor within the meaning of the Securities Act. All
brokerage fees arising from trading by the Trading Advisor shall
be for the account of the Partnership. The Trading Advisor makes
no representations as to whether its trading will produce profits
or avoid losses.
(d) Notwithstanding anything in this Agreement to the contrary,
the Trading Advisor shall assume financial responsibility for any
errors committed or caused by it in transmitting orders for the
purchase or sale of futures interests for the Partnership's
account, including payment of the floor brokerage commissions,
exchange and NFA fees, and other transaction charges and give-up
charges incurred on such trades but only for the amount of DWR's
out-of-pocket costs in respect thereof. The Trading Advisor's
errors shall include, but not be limited to, inputting improper
trading signals or communicating incorrect orders for execution.
The Trading Advisor shall not be responsible for errors committed
or caused by DWR, any clearing commodity broker designated by DWR
to clear futures interests trades for the Partnership (the
"Clearing Commodity Broker"), or any other floor broker or
futures commission merchant executing trades. Initially, Xxxx
Futures Inc. shall serve as the Non-Clearing Commodity Broker.
The Trading Advisor shall have an affirmative obligation promptly
to notify the General Partner of its own errors, and the Trading
Advisor shall use its best efforts to identify and promptly
notify the General Partner of any order or trade which the
Trading Advisor reasonably believes was not executed in
accordance with its instructions.
(e) Prior to the commencement of trading, the General Partner on
behalf of the Partnership shall deliver to the Trading Advisor a
trading authorization appointing the Trading Advisor the
Partnership's attorney-in-fact for such purpose.
4. Designation of Additional Trading Advisors and Reallocation
of Net Assets.
(a) If the General Partner at any time deems it to be in the
best interests of the Partnership, the General Partner may
designate an additional trading advisor or advisors for the
Partnership and may apportion to such additional trading
advisor(s) the management of such amounts of Net Assets as the
General Partner shall determine in its absolute discretion. The
designation of an additional trading advisor or advisors and the
apportionment of Net Assets to such trading advisor(s) pursuant
to this Section 4 shall neither terminate this Agreement nor
modify in any regard the respective rights and obligations of the
Partnership, the General Partner and the Trading Advisor
hereunder. In the event that Net Assets are reallocated from the
Trading Advisor, the Trading Advisor shall thereafter receive
management and incentive fees based, respectively, on that
portion of the Net Assets managed by the Trading Advisor and the
Trading Profits (as defined in Section 7(d) hereof) attributable
to the trading by the Trading Advisor.
(b) The General Partner may at any time and from time to time
upon three business days' prior notice reallocate Net Assets
allocated to the Trading Advisor to any other trading advisor or
advisors of the Partnership or allocate additional Net Assets
upon three business days' prior notice to the Trading Advisor
from such other trading advisor or advisors; provided that any
such addition to or withdrawal from Net Assets allocated to the
Trading Advisor of the Net Assets will only take place on the
last day of a month unless the General Partner determines that
the best interests of the Partnership require otherwise. The
Trading Advisor shall have the right to refuse any additional
allocations to be made pursuant to this Section 4(b).
(c) The General Partner shall not, without the consent of the
Trading Advisor, allocate to the Trading Advisor "notional"
assets of the Partnership.
(d) If the Net Assets of the Partnership allocated to the
Trading Advisor equal or exceed $30,000,000 as of any month-end
allocation date, the Trading Advisor shall have the right to
reject additional monthly allocations to the extent they exceed
10 percent of the Net Assets of the Partnership allocated to the
Trading Advisor.
5. Trading Advisor Independent.
For all purposes of this Agreement, the Trading Advisor
shall be deemed to be an independent contractor and shall, unless
otherwise expressly provided herein or authorized, have no
authority to act for or represent the Partnership in any way or
otherwise be deemed an agent of the Partnership. Nothing
contained herein shall be deemed to require the Partnership to
take any action contrary to the Limited Partnership Agreement,
the Certificate of Limited Partnership of the Partnership as from
time to time in effect (the "Certificate of Limited
Partnership"), or any applicable law or rule or regulation
of any regulatory body, exchange, or board. Nothing herein
contained shall constitute the Trading Advisor as a member of any
partnership, joint venture, association, syndicate or other
entity with the Partnership or the General Partner, or be deemed
to confer on any of them any express, implied, or apparent
authority to incur any obligation or liability on behalf of any
other. It is expressly agreed that the Trading Advisor is
neither a promoter, sponsor, nor issuer with respect to the
Partnership, nor does the Trading Advisor have any authority or
responsibility with respect to the sale or issuance of Units.
6. Commodity Broker.
The Trading Advisor shall effect all transactions in
futures interests for the Partnership through, and shall maintain
a separate account with, such commodity broker or brokers as the
General Partner shall direct. The Trading Advisor shall be
authorized to rely on the General Partner's and the Partnership's
assessments of the risks of trading on non-U.S. exchanges and the
creditworthiness of such exchanges and their associated
clearinghouses, if any. At the present time, DWR shall act as
the non-clearing commodity broker for the Partnership and all
trades will be cleared separately by the Clearing Commodity
Broker. The General Partner shall provide the Trading Advisor
with copies of brokerage statements. Notwithstanding DWR's
designation of a Clearing Commodity Broker, the Trading Advisor
may execute trades through floor brokers other than those
employed by the Clearing Commodity Broker so long as arrangements
are made for such floor brokers to "give-up" or transfer the
positions to the Clearing Commodity Broker and provided that the
rates charged by such floor brokers have been approved in writing
by DWR. The Trading Advisor will not be responsible for paying
give-up fees at rates approved by DWR.
7. Fees.
(a) For the services to be rendered to the Partnership by the
Trading Advisor under this Agreement, the Partnership shall pay
the Trading Advisor the following fees:
(i) A monthly management fee, without regard to the
profitability of the Trading Advisor's trading for the
Partnership's account, equal to 1/12 of 4% (a 4% annual rate) of
the Net Assets of the Partnership (as defined in Section 7(c))
allocated to the Trading Advisor calculated as of the opening of
business on the first day of each calendar month, commencing with
the month in which the Partnership begins to receive trading
advice from the Trading Advisor pursuant to this Agreement.
(ii) A monthly incentive fee equal to 15% of the "Trading
Profits" (as defined in Section 7(d)) experienced by the
Partnership as of the end of each calendar month, payable on a
non-netted basis vis-a-vis other trading advisors(s) of the
Partnership. The initial incentive period will commence on the
date of the Partnership's initial closing (the "Initial Closing")
and shall end on the last day of the first month ending after
such Initial Closing occurs.
(b) If this Agreement is terminated on a date other than the
last day of a month, the incentive fee described above shall be
determined as if such date were the end of a month. If this
Agreement is terminated on a date other than the end of a month,
the management fee described above shall be prorated based
on the ratio of the number of trading days in the month through
the date of termination to the total number of trading days in
the month. If, during any month after the Partnership commences
trading operations (including the month in which the Partnership
commences such operations), the Partnership does not conduct
business operations, or suspends trading for the account of the
Partnership managed by the Trading Advisor, or, as a result of an
act or material failure to act by the Trading Advisor, is
otherwise unable to utilize the trading advice of the Trading
Advisor on any of the trading days of that period for any reason,
the management fee described above shall be prorated based on the
ratio of the number of trading days in the month which the
Partnership account managed by the Trading Advisor engaged in
trading operations or utilized the trading advice of the Trading
Advisor to the total number of trading days in the month.
(c) As used herein, the term "Net Assets" shall mean the total
assets of the Partnership (including, but not limited to, all
cash and cash equivalents (valued at cost), accrued interest and
amortization of original issue discount, and the market value of
all open futures interests positions and other assets of the
Partnership) less the total liabilities of the Partnership
(including, but not limited to, all brokerage, management and
incentive fees, and extraordinary expenses) determined in
accordance with generally accepted accounting principles
consistently applied under the accrual basis of accounting.
Unless generally accepted accounting principles require
otherwise, the market value of a futures interest traded on a
U.S. exchange shall mean the settlement price on the exchange on
which the particular futures interest was traded by the
Partnership on the day with respect to which Net Assets are being
determined, provided, however, that if a futures interest could
not have been liquidated on such day due to the operation of
daily limits or other rules of the exchange upon which that
future interest shall be traded or otherwise, the settlement
price on the first subsequent day on which the futures interest
could be liquidated shall be the market value of such futures
interest for such day. The market value of a forward contract or
a futures interest traded on a foreign exchange or market shall
mean its market value as determined by the General Partner on a
basis consistently applied for each different variety of forward
contract or futures interest.
(d) As used herein, the term "Trading Profits" shall mean net
futures interests trading profits (realized and unrealized)
earned on the Partnership's Net Assets allocated to the Trading
Advisor, decreased by the Trading Advisor's monthly management
fees and a pro rata portion of the monthly brokerage fee relating
to the Trading Advisor's allocated Net Assets; with such trading
profits and items of decrease determined from the end of the last
calendar month in which an incentive fee was earned by the
Trading Advisor or, if no incentive fee has been earned
previously by the Trading Advisor, from the date that the
Partnership commenced trading to the end of the calendar month as
of which such incentive fee calculation is being made.
Extraordinary expenses of the partnership, if any, are not
deducted in determining Trading Profits. No incentive fee will
be paid on interest income earned by the Partnership.
(e) If any payment of incentive fees is made to the Trading
Advisor on account of Trading Profits earned by the Partnership
on Net Assets allocated to the Trading Advisor and the
Partnership thereafter fails to earn Trading Profits or
experiences losses for any subsequent incentive period with
respect to such amounts so allocated, the Trading Advisor shall
be entitled to retain such amounts of incentive fees previously
paid to the Trading Advisor in respect of such Trading Profits.
However, no subsequent incentive fees shall be payable to the
Trading Advisor until the Partnership has again earned
Trading Profits on the Trading Advisor's allocated Net Assets;
provided, however, that if the Trading Advisor's allocated Net
Assets are reduced or increased because of redemptions, additions
or reallocations which occur at the end of, or subsequent to, an
incentive period in which the Partnership experiences a futures
interests trading loss with respect to Net Assets allocated to
the Trading Advisor, the trading loss for that incentive period
which must be recovered before the Trading Advisor's allocated
Net Assets will be deemed to experience Trading Profits will be
equal to the amount determined by (x) dividing the Trading
Advisor's allocated Net Assets after such increase or decrease by
the Trading Advisor's allocated Net Assets immediately before
such increase or decrease and (y) multiplying that fraction by
the amount of the unrecovered futures interests trading loss
experienced in that month prior to such increase or decrease. In
the event that the Partnership experiences a futures interests
trading loss in more than one month with respect to the Trading
Advisor's allocated Net Assets without the payment of an
intervening incentive fee and Net Assets are increased or reduced
in more than one such month because of redemptions, additions or
reallocations, then the trading loss for each such month shall be
adjusted in accordance with the formula described above and such
increased or reduced amount of futures interests trading loss
shall be carried forward and used to offset subsequent futures
interest trading profits. The portion of redemptions to be
allocated to the Net Assets of the Partnership managed by each of
the trading advisors to the Partnership shall be in the sole
discretion of the General Partner.
(f) If the Trading Advisor's allocated Net Assets are reduced
because of a reallocation pursuant to Section 4 hereof on a date
other than the last day of the month, the Trading Advisor shall
be paid an incentive fee with respect to any Trading Profits
earned as of such date with respect to the Net Assets to be
reallocated.
(g) The Partnership will remit the management and incentive fees
to the Trading Advisor as soon as practicable, but in no event
later than 30 calendar days, in the case of the management fee,
or 45 calendar days in the case of any incentive fee, of the
month-end as of which they are due, together with an itemized
statement showing the calculations.
8. Term.
This Agreement shall continue in effect until
December 31, 2002 (the "Initial Termination Date"). If this
Agreement is not terminated on the Initial Termination Date, as
provided for herein, then, this Agreement shall automatically
renew for an additional one-year period and shall continue to
renew for additional one-year periods until this Agreement is
otherwise terminated, as provided for herein. At least 30
calendar days prior to the expiration of the Initial Termination
Date or any subsequent one-year period, as the case may be, the
Trading Advisor may terminate this Agreement at the end of the
current period by providing written notice to the Partnership
indicating that the Trading Advisor desires to terminate this
Agreement at the end of such period. This Agreement shall also
terminate if the Partnership terminates. The Partnership shall
have the right to terminate this Agreement at its discretion
(a) at any month-end upon 5 calendar days' prior written notice
to the Trading Advisor or (b) at any time upon written notice to
the Trading Advisor upon the occurrence of any of the following
events: (i) if Xxxx X. Xxxxx ceases for any reason to be a
principal of the Trading Advisor; (ii) if the Trading Advisor
becomes bankrupt or insolvent; (iii) if the Trading Advisor is
unable to use its trading systems or methods as in effect on the
date hereof and as refined and modified in the future for the
benefit of the Partnership; (iv) if the registration, as a
commodity trading advisor, of the Trading Advisor with the CFTC
or its membership in the NFA is revoked, suspended, terminated,
or not renewed, or limited or qualified in any respect;
(v) except as provided in Section 12 hereof, if the Trading
Advisor merges or consolidates with, or sells or otherwise
transfers its advisory business, or all or a substantial portion
of its assets, any portion of its futures interests trading
systems or methods, or its goodwill to, any individual or entity
not controlled, directly or indirectly, by Xxxx X. Xxxxx; (vi) if
the Trading Advisor's initially allocated Net Assets, after
adjusting for distributions, additions, redemptions, or
reallocations, if any, shall decline by 50% or more as a result
of trading losses; (vii) if, at any time, the Trading Advisor
violates any trading or administrative policy described in
writing to the Trading Advisor by the General Partner, except
with the prior express written consent of the General Partner; or
(viii) if the Trading Advisor fails in a material manner to
perform any of its obligations under this Agreement. The Trading
Advisor may terminate this Agreement at any time, upon written
notice to the Partnership, in the event: (i) that the General
Partner imposes additional trading limitation(s) (not in effect
on the date hereof) in the form of one or more trading policies
or administrative policies which the Trading Advisor does not
agree to follow in its management of its allocable share of the
Partnership's Net Assets; (ii) the General Partner objects to the
Trading Advisor implementing a proposed material change in the
Trading Advisor's trading program(s) used by the Partnership and
Trading Advisor certifies to the General Partner in writing that
it believes such change is in the best interests of the
Partnership; (iii) the General Partner overrides a trading
instruction of the Trading Advisor for reasons unrelated to a
determination by the General Partner that the Trading Advisor has
violated the Partnership's trading policies and the Trading
Advisor certifies to the General Partner in writing that as a
result, the Trading Advisor believes the performance results of
the Trading Advisor relating to Partnership will be materially
adversely affected; (iv) the Partnership materially breaches this
Agreement and does not correct the breach within 10 days of
receipt of a written notice of such breach from the Trading
Advisor; or (v) the Trading Advisor has amended its trading
program to include a foreign futures or option contract which may
lawfully be traded by the Partnership under CFTC regulations and
counsel, mutually acceptable to the parties, has not opined that
such inclusion would cause adverse tax consequences to Limited
Partners and the General Partner does not consent to the Trading
Advisor's trading such contract for the Partnership within 5
business days of a written request by the Trading Advisor to do
so, and, if such consent is given, does not make arrangements to
facilitate such trading within 90 calendar days of such notice;
or (vi) the assets allocated to the Trading Advisor fall below
$2,000,000 at any time.
The indemnities set forth in Section 9 hereof shall
survive any termination of this Agreement.
9. Standard of Liability; Indemnifications.
(a) Limitation of Trading Advisor Liability. In respect of the
Trading Advisor's role in the futures interests trading of the
Partnership's assets, none of the Trading Advisor, or its
controlling persons, its affiliates, and their respective
directors, officers, shareholders, employees or controlling
persons shall be liable to the Partnership or the General Partner
or their partners, officers, shareholders, directors or
controlling persons except that the Trading Advisor shall be
liable for acts or omissions of any such person provided that
such act or omission constitutes a breach of this Agreement or a
representation, warranty or covenant herein, misconduct or
negligence or is the result of any such person not having acted
in good faith and in the reasonable belief that such actions or
omissions were in, or not opposed to, the best interests of the
Partnership.
(b) Trading Advisor Indemnity in Respect of Management
Activities. The Trading Advisor shall indemnify, defend and hold
harmless the Partnership and the General Partner, their
controlling persons, their affiliates and their respective
directors, officers, shareholders, employees, and controlling
persons from and against any and all losses, claims, damages,
liabilities (joint and several), costs, and expenses (including
any reasonable investigatory, legal, and other expenses incurred
in connection with, and any amounts paid in, any settlement;
provided that the Trading Advisor shall have approved such
settlement) incurred as a result of any action or omission
involving the business or activities undertaken by the Trading
Advisor pursuant to this Agreement; provided that such liability
arises from an act or omission of the Trading Advisor, or any of
its controlling persons or affiliates or their respective
directors, officers, partners, shareholders, or employees which
is found by a court of competent jurisdiction upon entry of a
final judgment (or, if no final judgment is entered, by an
opinion rendered by counsel who is approved by the Partnership
and the Trading Advisor, such approval not to be unreasonably
withheld) to be a breach of this Agreement or a representation,
warranty or covenant herein, the result of bad faith, misconduct
or negligence, or conduct not done in good faith in the
reasonable belief that it was in, or not opposed to, the best
interests of the Partnership. The termination of any demand,
claim, lawsuit, action or proceeding by settlement shall not, in
itself, create a presumption that the conduct in question was not
undertaken in good faith in a manner reasonably believed to be
in, or not opposed to, the best interest of the Partnership.
(c) Partnership and General Partner Indemnity in Respect of
Management Activities. The Partnership and the General Partner
shall, jointly and severally, indemnify, defend, and hold
harmless the Trading Advisor, its controlling persons, their
affiliates and their respective directors, officers,
shareholders, employees, and controlling persons, from and
against any and all losses, claims, damages, liabilities (joint
and several), costs, and expenses (including any reasonable
investigatory, legal, and other expenses incurred in connection
with, and any amounts paid in, any settlement; provided that the
Partnership shall have approved such settlement) resulting from a
demand, claim, lawsuit, action, or proceeding (other than those
incurred as a result of claims brought by or in the right of an
indemnified party) relating to the business or activities
undertaken by the Trading Advisor pursuant to this Agreement or a
breach of this Agreement or a breach of a representation,
warranty or covenant of the General Partner or Partnership;
provided that a court of competent jurisdiction upon entry of a
final judgment finds (or, if no final judgment is entered, an
opinion is rendered to the Partnership by independent counsel
reasonably acceptable to both parties) to the effect that the
action or inaction of such indemnified party that was the subject
of the demand, claim, lawsuit, action, or proceeding did not
constitute negligence, misconduct, or a breach of this Agreement
or a representation, warranty or covenant of the Trading Advisor
herein and was done in good faith and in a manner such
indemnified party reasonably believed to be in, or not opposed
to, the best interests of the Partnership. The termination of
any demand, claim, lawsuit, action or proceeding by settlement
shall not, in itself, create a presumption that the conduct in
question was not undertaken in good faith in a manner reasonably
believed to be in, or not opposed to, the best interest of the
Partnership.
(d) Trading Advisor Indemnity in Respect of Sale of Units. The
Trading Advisor shall indemnify, defend and hold harmless DWR,
the Clearing Commodity Broker, the Partnership, the General
Partner, any additional seller of Units, and their affiliates and
each of their officers, directors, principals, shareholders, and
controlling persons from and against any loss, claim, damage,
liability, cost, and expense, joint and several, to which any
indemnified person may become subject under the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Commodity Exchange Act, as amended and rules
promulgated thereunder (the "CEAct") the securities or Blue Sky
law of any jurisdiction, or otherwise (including any reasonable
investigatory, legal, and other expenses incurred in connection
with, and any amounts paid in, any settlement, provided that the
Trading Advisor shall have approved such settlement, and in
connection with any administrative proceedings), in respect of
the offer or sale of Units, insofar as such loss, claim, damage,
liability, cost, or expense (or action in respect thereof) arises
out of, or is based upon: (i) a breach by the Trading Advisor of
any representation, warranty, or agreement in this Agreement or
any certificate delivered pursuant to this Agreement or the
failure by the Trading Advisor to perform any covenant made by
the Trading Advisor herein; (ii) the factual accuracy of the
information relating to the Trading Advisor in any selling
material that has been approved in writing by the Trading Advisor
herein; (iii) a misleading or untrue statement or alleged
misleading or untrue statement of a material fact made in the
Registration Statement, or the Prospectus, or an omission or
alleged omission to state a material fact therein which is
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, and
such statement or omission relates specifically to the Trading
Advisor, or its Trading Advisor Principals (as defined below)
(including the historical performance capsules but excluding the
pro forma performance information, except to the extent the pro
forma performance information was based on information furnished
by the Trading Advisor for the General Partner's preparation of
such pro forma capsules), or was made in reliance upon, and in
conformity with, written information or instructions furnished by
the Trading Advisor.
(e) Partnership and General Partner Indemnity in Respect of Sale
of Units. The Partnership and the General Partner agree, jointly
and severally, to indemnify, defend and hold harmless the Trading
Advisor and each of its officers, directors, principals,
shareholders, and controlling persons from and against any loss,
claim, damage, liability, cost, and expense, joint and several,
to which any indemnified person may become subject under the
Securities Act, the Exchange Act, the CEAct, the securities or
Blue Sky law of any jurisdiction, or otherwise (including any
reasonable investigatory, legal, and other expenses incurred in
connection with, and any amounts paid in, any settlement,
provided that the Partnership and the General Partner shall have
approved such settlement, and in connection with any
administrative proceedings), in respect of the offer or sale of
Units, unless such loss, claim, damage, liability, cost, or
expense (or action in respect thereof) arises out of, or is based
upon: (i) a breach by the Trading Advisor of any representation,
warranty, or agreement in this Agreement or the failure by the
Trading Advisor to perform any covenant made by it herein; (ii)
the factual accuracy of the information relating to the Trading
Advisor in any related selling material approved in writing by
the Trading Advisor; or (iii) a misleading or untrue statement or
alleged misleading or untrue statement of a material fact made in
the Registration Statement or the Prospectus, or an omission or
alleged omission to state a material fact therein which is
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading,
provided that such misleading or untrue statement or alleged
misleading or untrue statement or omission or alleged omission
relates to the Trading Advisor or its Trading Advisor Principals
(including the historical performance capsules but excluding the
pro forma performance information unless such statement or
omission was based on information furnished by the Trading
Advisor in connection with the preparation of such pro forma
information) or was made in reliance upon, and in conformity
with, information or instructions furnished by the Trading
Advisor.
(f) Notwithstanding anything in the above to the contrary, Xxxx
X. Xxxxx shall have no liability to the General Partner or the
Partnership under this Agreement or in connection with the
transaction contemplated by this Agreement except for fraud and
willful misconduct by Xxxx X. Xxxxx.
(g) The foregoing agreements of indemnity shall be in addition
to, and shall in no respect limit or restrict, any other remedies
which may be available to an indemnified person.
(h) Promptly after receipt by an indemnified person of notice of
the commencement of any action, claim, or proceeding to which any
of the indemnities may apply, the indemnified person will notify
the indemnifying party in writing of the commencement thereof if
a claim in respect thereof is to be made against the indemnifying
party hereunder; but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability
which the indemnifying party may have to the indemnified person
hereunder, except where such omission has materially prejudiced
the indemnifying party. In case any action, claim, or proceeding
is brought against an indemnified person and the indemnified
person notifies the indemnifying party of the commencement
thereof as provided above, the indemnifying party will be
entitled to participate therein and, to the extent that the
indemnifying party desires, to assume the defense thereof with
counsel selected by the indemnifying party and not unreasonably
disapproved by the indemnified person. After notice from the
indemnifying party to the indemnified person of the indemnifying
party's election so to assume the defense thereof as provided
above, the indemnifying party will not be liable to the
indemnified person under the indemnity provisions hereof for any
legal and other expenses subsequently incurred by the indemnified
person in connection with the defense thereof, other than
reasonable costs of investigation.
Notwithstanding the proceeding paragraph, if, in any
action, claim, or proceeding as to which indemnification is or
may be available hereunder, an indemnified person reasonably
determines that its interests are or may be adverse, in whole or
in part, to the indemnifying party's interests or that there may
be legal defenses available to the indemnified person which are
different from, in addition to, or inconsistent with the defenses
available to the indemnifying party, the indemnified person may
retain its own counsel in connection with such action, claim, or
proceeding and will be indemnified by the indemnifying party for
any legal and other expenses reasonably incurred in connection
with investigating or defending such action, claim, or
proceeding.
In no event will the indemnifying party be liable
for the fees and expenses of more than one counsel for all
indemnified persons in connection with any one action, claim, or
proceeding or in connection with separate but similar or related
actions, claims, or proceedings in the same jurisdiction arising
out of the same general allegations. The indemnifying party will
not be liable for any settlement of any action, claim, or
proceeding effected without the indemnifying party's express
written consent, but if any action, claim, or proceeding, is
settled with the indemnifying party's express written consent or
if there is a final judgment for the plaintiff in any such
action, claim, or proceeding, the indemnifying party will
indemnify, defend, and hold harmless an indemnified person as
provided in this Section 9.
10. Right to Advise Others and Uniformity of Acts and Practices.
(a) The Trading Advisor is engaged in the business of advising
investors as to the purchase and sale of futures interests.
During the term of this Agreement, the Trading Advisor, its
principals and affiliates, will be advising other investors
(including affiliates and the stockholders, officers, directors,
and employees of the Trading Advisor and its affiliates and their
families) and trading for their own accounts. However, under no
circumstances shall the Trading Advisor by any act or omission
favor any account advised or managed by the Trading Advisor over
the account of the Partnership in any way or manner (other than
by charging different management and/or incentive fees). The
Trading Advisor agrees to treat the Partnership in a fiduciary
capacity to the extent recognized by applicable law, but, subject
to that standard, the Trading Advisor or any of its principals or
affiliates shall be free to advise and manage accounts for other
investors and shall be free to trade on the basis of the same
trading systems, methods, or strategies employed by the Trading
Advisor for the account of the Partnership, or trading systems,
methods, or strategies which are entirely independent of, or
materially different from, those employed for the account of the
Partnership, and shall be free to compete for the same futures
interests as the Partnership or to take positions opposite to the
Partnership, where such actions do not knowingly or deliberately
prefer any of such accounts over the account of the Partnership.
(b) The Trading Advisor shall not be restricted as to the number
or nature of its clients, except that: (i) so long as the
Trading Advisor acts as a trading advisor for the Partnership,
neither the Trading Advisor nor any of its principals or
affiliates shall hold knowingly any position or control any other
account which would cause the Partnership, the Trading Advisor,
or the principals or affiliates of the Trading Advisor to be in
violation of the CEAct or any regulations promulgated thereunder,
any applicable rule or regulation of the CFTC or any other
regulatory body, exchange, or board; and (ii) neither the Trading
Advisor nor any of its principals or affiliates shall render
futures interests trading advice to any other individual or
entity or otherwise engage in activity which shall knowingly
cause positions in futures interests to be attributed to the
Trading Advisor under the rules or regulations of the CFTC or any
other regulatory body, exchange, or board so as to require the
significant modification of positions taken or intended for the
account of the Partnership; provided that the Trading Advisor may
modify its trading systems, methods or strategies to accommodate
the trading of additional funds or accounts. If applicable
speculative position limits are exceeded by the Trading Advisor
in the opinion of (i) independent counsel (who shall be other
than counsel to the Partnership), (ii) the CFTC, or (iii) any
other regulatory body, exchange, or board, the Trading Advisor
and its principals and affiliates shall promptly liquidate
positions in all of their accounts, including the
Partnership's account, as to which positions are attributed
to the Trading Advisor as nearly as possible in proportion to the
accounts' respective amounts available for trading (taking into
account different degrees of leverage and "notional" equity) to
the extent necessary to comply with the applicable position
limits.
11. Representations, Warranties, and Covenants of the Trading
Advisor.
(a) Representations and Warranties of the Trading Advisor. The
Trading Advisor with respect to itself and each of its principals
represents and warrants to and agrees with the General Partner
and the Partnership as follows:
(i) It will exercise good faith and due care in using the
International Foreign Exchange Program on behalf of the
Partnership as described in the Prospectus (as modified from time
to time) or any other trading programs agreed to by the General
Partner.
(ii) The Trading Advisor shall follow, at all times, the trading
policies of the Partnership (as described in the Prospectus) and
as amended in writing and furnished to the Trading Advisor from
time to time.
(iii) The Trading Advisor shall trade: (A) the Partnership's
Net Assets pursuant to the International Foreign Exchange Program
as described in the Prospectus unless the General Partner agrees
otherwise and (B) only in futures and option contracts traded on
U.S. contract markets, foreign currency forward contracts traded
with the Clearing Commodity Broker, and such other futures
interests that are approved in writing by the General Partner.
(iv) The Trading Advisor is duly organized, validly existing and
in good standing as a corporation under the laws of the state of
its incorporation and is qualified to do business as a foreign
corporation and in good standing in each other jurisdiction in
which the nature or conduct of its business requires such
qualification and the failure to so qualify would materially
adversely affect the Trading Advisor's ability to perform its
duties under this Agreement. The Trading Advisor has full
corporate power and authority to perform its obligations under
this Agreement, and as described in the Registration Statement
and Prospectus. The only principals (as defined in Rule 4.10(e)
under the CEAct) of the Trading Advisor are those set forth in
the Prospectus (the "Trading Advisor Principals").
(v) All references to the Trading Advisor and each Trading
Advisor Principal, including the Trading Advisor's trading
programs, approaches, systems, and performance, in the
Registration Statement and the Prospectus, are accurate and
complete in all material respects, and any supplemental selling
material which has been approved in writing by the Trading
Advisor is accurate in all material respects. With respect to
the information relating to the Trading Advisor and each Trading
Advisor Principal, including the Trading Advisor's and the
Trading Advisor Principals' trading programs, approaches,
systems, and performance information, as applicable (excluding
pro forma performance information, but including all information
furnished by the Trading Advisor for the preparation of
such pro forma performance information), (i) the Registration
Statement and Prospectus contain all statements and information
required to be included therein under the CEAct, (ii) the
Registration Statement as of its effective date will not contain
any misleading or untrue statement of a material fact or omit to
state a material fact which is required to be stated therein or
necessary to make the statements therein not misleading and
(iii) the Prospectus at its date of issue and as of each closing
will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
therein, in light of the circumstances under which such
statements were made, not misleading.
(vi) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Trading Advisor and is a
valid and binding agreement of the Trading Advisor enforceable in
accordance with its terms.
(vii) Each of the Trading Advisor and each "principal" of the
Trading Advisor, as defined in Rule 3.1 under the CEAct, has all
federal and state governmental, regulatory and exchange licenses
and approvals and has effected all filings and registrations with
federal and state governmental and regulatory agencies required
to conduct its or his business and to act as described in the
Registration Statement and Prospectus or required to perform its
or his obligations under this Agreement. The Trading Advisor is
registered as a commodity trading advisor under the CEAct and is
a member of the NFA in such capacity.
(viii) The execution and delivery of this Agreement, the
incurrence of the obligations set forth herein, the consummation
of the transactions contemplated herein and in the Prospectus and
the payment of the fees hereunder will not violate, or constitute
a breach of, or default under, the certificate of incorporation
or bylaws of the Trading Advisor or any agreement or instrument
by which it is bound or of any order, rule, law or regulation
binding on it of any court or any governmental body or
administrative agency or panel or self-regulatory organization
having jurisdiction over it.
(ix) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as may
otherwise be stated in or contemplated by the Registration
Statement and the Prospectus, there has not been any material
adverse change in the condition, financial or otherwise, business
or prospects of the Trading Advisor or any Trading Advisor
Principal.
(x) Except as set forth in the Registration Statement or
Prospectus there has not been in the five years preceding the
date of the Prospectus and there is not pending, or to the best
of the Trading Advisor's knowledge threatened, any action, suit
or proceeding before or by any court or other governmental body
or any administrative, self-regulatory or commodity exchange
organization to which the Trading Advisor or any Trading Advisor
Principal is or was a party, or to which any of the assets of the
Trading Advisor or any Trading Advisor Principal is or was
subject and which resulted in or might reasonably be expected to
result in any materially adverse change in the condition,
financial or otherwise, business or prospects of the Trading
Advisor or which would be material to an investor's decision to
invest in the Partnership. None of the Trading Advisor or
any Trading Advisor Principal has received any notice of an
investigation by the NFA or the CFTC regarding noncompliance by
the Trading Advisor or any of the Trading Advisor Principals with
the CEAct.
(xi) Neither the Trading Advisor nor any Trading Advisor
Principal has received, or is entitled to receive, directly or
indirectly, any commission, finder's fee, similar fee, or rebate
from any person in connection with the organization or operation
of the Partnership, other than as described in the Prospectus.
(xii) The actual performance of each discretionary account of
a client directed by the Trading Advisor and the Trading Advisor
Principals since at least the later of (i) the date of
commencement of trading for each such account or (ii) a date five
years prior to the effective date of the Registration Statement,
is disclosed in the Prospectus (other than such discretionary
accounts the performance of which are exempt from CEAct
disclosure requirements); all of the information regarding the
actual performance of the accounts of the Trading Advisor and the
Trading Advisor Principals set forth in the Prospectus is
complete and accurate in all material respects and is in
accordance with and in compliance with the disclosure
requirements under the CEAct and the Securities Act, including
the Division of Trading and Markets "notional equity" advisories
and interpretations and the rules and regulations of the NFA.
(b) Covenants of the Trading Advisor. The Trading Advisor
covenants and agrees that:
(i) The Trading Advisor shall use its best efforts to maintain
all registrations
and memberships necessary for the Trading Advisor to
continue to act as described herein and to at all times
comply in all material respects with all applicable laws,
rules, and regulations, to the extent that the failure to
so comply would have a materially adverse effect on the
Trading Advisor's ability to act as described herein.
(ii) The Trading Advisor shall inform the General Partner
immediately as soon as the Trading Advisor or any of its
principals becomes the subject of any investigation, claim or
proceeding of any regulatory authority having jurisdiction over
such person or becomes a named party to any litigation materially
affecting the business of the Trading Advisor. The Trading
Advisor shall also inform the General Partner immediately if the
Trading Advisor or any of its officers becomes aware of any
breach of this Agreement by the Trading Advisor.
(iii) The Trading Advisor agrees reasonably to cooperate with
the Partnership and the General Partner by providing information
regarding itself and its performance in the preparation of any
amendments or supplements to the Registration Statement and the
Prospectus.
12. Representations, Warranties, and Covenants of the General
Partner and the Partnership.
(a) Representations and Warranties of the General
Partner and the Partnership. The General Partner and the
Partnership represent and warrant to the Trading Advisor, as
follows:
(i) The Partnership has provided to the Trading Advisor, and
filed with the SEC, the Registration Statement and has filed
copies thereof with: (i) the CFTC under the CEAct (ii) the NASD
pursuant to its Conduct Rules; and (iii) the NFA in accordance
with NFA Compliance Rule 2-13. The Partnership will not file any
amendment to the Registration Statement or any amendment or
supplement to the Prospectus unless the Trading Advisor has
received reasonable prior notice of and a copy of such amendments
or supplements and has not reasonably objected thereto in
writing.
(ii) The Limited Partnership Agreement provides for the
subscription for and sale of the Units; all action required under
applicable law to be taken by the General Partner and the
Partnership as a condition to the sale of the Units to qualified
subscribers therefor has been, or prior to each Closing (as
defined in the Prospectus) have been taken; and, upon payment of
the consideration therefor specified in each accepted
Subscription and Exchange Agreement and Power of Attorney in such
forms as attached to the Prospectus, the Units will constitute
valid limited partnership interests in the Partnership.
(iii) The Partnership is a limited partnership duly organized
pursuant to the Certificate of Limited Partnership, the Limited
Partnership Agreement and the Delaware Revised Uniform Limited
Partnership Act ("DRULPA") and is validly existing under the laws
of the State of Delaware with full power and authority to engage
in the trading of futures interests and to engage in its other
contemplated activities as described in the Prospectus; the
Partnership has received a certificate of authority to do
business in the State of New York as provided by
Article 8-A of the New York Revised Limited Partnership Act and
is qualified to do business in each jurisdiction in which the
nature or conduct of its business requires such qualification and
where failure to be so qualified could materially adversely
affect the Partnership's ability to perform its obligations
hereunder.
(iv) The General Partner is duly organized and validly existing
and in good standing as a corporation under the laws of the State
of Delaware and in good standing and qualified to do business as
a foreign corporation under the laws of the State of New York and
is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature or conduct
of its business requires such qualification and where the failure
to be so qualified could materially adversely affect the General
Partner's ability to perform its obligations hereunder.
(v) The Partnership and the General Partner have full
partnership or corporate power and authority under applicable law
to conduct their business and to perform their respective
obligations under this Agreement.
(vi) The Registration Statement and Prospectus contain all
statements and information required to be included therein by the
CEAct. When the Registration Statement becomes effective under
the Securities Act and at all times subsequent thereto up to and
including the Initial Closing and each Closing, the Registration
Statement and Prospectus will comply in all material respects
with the requirements of the Securities Act, the rules and
regulations promulgated thereunder (the "SEC Regulations"), the
rules of the NFA and the CEAct. The Registration Statement as of
its effective date will not contain any misleading or 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 not misleading. The Prospectus as of its date of issue
and at the Initial Closing and each Closing will not contain any
misleading or untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein,
in light of the circumstances under which such statements were
made, not misleading. The supplemental selling material, when
read in conjunction with the Prospectus, will not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which such statements were made, not
misleading. The supplemental selling material will comply with
the CEAct and the regulations and rules of the NFA and NASD. The
representations and warranties in this clause (vi) shall not,
however, apply to any statement or omission in the Registration
Statement, Prospectus or supplemental selling material
specifically relating to the Trading Advisor, or its Trading
Advisor Principals or its trading programs (other than the pro
forma performance information except to the extent such
information was based on information furnished by the Trading
Advisor) or made in reliance upon and in conformity with
information furnished by the Trading Advisor.
(vii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has
not been any material adverse change in the condition, financial
or otherwise, business or prospects of the General Partner or the
Partnership, whether or not arising in the ordinary course of
business.
(viii) This Agreement has been duly and validly authorized,
executed and delivered by the General Partner for itself and on
behalf of the Partnership and constitutes a valid, binding and
enforceable agreement of the Partnership and the General Partner
in accordance with its terms.
(ix) The execution and delivery of this Agreement, the incurrence
of the obligations set forth herein and the consummation of the
transactions contemplated herein and in the Registration
Statement and Prospectus will not violate, or constitute a breach
of, or default under, the General Partner's certificate of
incorporation, bylaws, the Certificate of Limited Partnership, or
the Limited Partnership Agreement or any agreement or instrument
by which either the General Partner or the Partnership, as the
case may be, is bound or any order, rule, law or regulation
applicable to the General Partner or the Partnership of any court
or any governmental body or administrative agency or panel or
self-regulatory organization having jurisdiction over the General
Partner or the Partnership.
(x) Except as set forth in the Registration Statement or
Prospectus, there has not been in the five years preceding the
date of the Prospectus and there is not pending or, to the best
of the General Partner's knowledge, threatened, any action, suit
or proceeding at law or in equity before or by any court or by
any federal, state, municipal or other governmental body or any
administrative, self-regulatory or commodity exchange
organization to which the General Partner or the Partnership is
or was a party, or to which any of the assets of the General
Partner or the Partnership is or was subject and which resulted
in or might reasonably be expected to result in any materially
adverse change in the condition, financial or otherwise, of the
General Partner or the Partnership or which is required under the
Securities Act or the CEAct to be disclosed in the Prospectus;
and neither the General Partner nor any of the principals of the
General Partner, as "principals" is defined under Rule 4.10 under
the CEAct ("General Partner Principals") has received any notice
of an investigation by the NFA, NASD, SEC or CFTC regarding non-
compliance by the General Partner or the General Partner
Principals or the Partnership with the Securities Act or the
CEAct which is required under the Securities Act or the CEAct to
be disclosed in the Prospectus.
(xi) The General Partner and each principal of the General
Partner, as defined in Rule 3.1 under the CEAct, have all federal
and state governmental, regulatory and exchange approvals and
licenses, and have effected all filings and registrations with
federal and state and foreign governmental agencies in order for
the General Partner to conduct its business and to act as
described in the Registration Statement and Prospectus or
required to perform its obligations under this Agreement
(including, without limitation, registration as a commodity pool
operator under the CEAct and membership in the NFA as a commodity
pool operator) and will maintain all such required approvals,
licenses, filings and registrations for the term of this
Agreement. The General Partner's principals identified in the
Registration Statement are all of the General Partner Principals.
(b) Covenants of the General Partner. The General Partner
covenants and agrees that:
(i) The General Partner shall use its best efforts to maintain
all registrations and memberships necessary for the General
Partner to continue to act as described herein and in the
Prospectus and to all times comply in all material respects with
all applicable laws, rules, and regulations, to the extent that
the failure to so comply would have a materially adverse effect
on the General Partner's ability to act as described herein and
in the Prospectus.
(ii) The General Partner shall inform the Trading Advisor
immediately as soon as the General Partner or any of its
principals becomes the subject of any investigation, claim, or
proceeding of any regulatory authority having jurisdiction over
such person or becomes a named party to any litigation materially
affecting the business of the General Partner. The General
Partner shall also inform the Trading Advisor immediately if the
General Partner or any of its officers become aware of any breach
of this Agreement by the General Partner.
(iii) The Partnership will furnish to the Trading Advisor
copies of the Registration Statement, the Prospectus, and all
amendments and supplements thereto, in each case as soon as
available.
13. Merger or Transfer of Assets of Trading Advisor.
The Trading Advisor may merge or consolidate with, or
sell or otherwise transfer its advisory business, or all or a
substantial portion of its assets, any portion of its commodity
trading programs, systems or methods, or its goodwill, to any
entity that is directly or indirectly controlled by, controlling,
or under common control with, the Trading Advisor, provided that
such entity expressly assumes all obligations of the Trading
Advisor under this Agreement and agrees to continue to operate
the business of the Trading Advisor, substantially as such
business is being conducted on the date hereof.
14. Complete Agreement.
This Agreement constitutes the entire agreement between
the parties with respect to the matters referred to herein, and
no other agreement, verbal or otherwise, shall be binding as
between the parties unless in writing and signed by the party
against whom enforcement is sought.
15. Assignment.
This Agreement may not be assigned by any party hereto
without the express written consent of the other parties hereto.
16. Amendment.
This Agreement may not be amended except by the written
consent of the parties hereto.
17. Severability.
The invalidity or unenforceability of any provision of
this Agreement or any covenant herein contained shall not affect
the validity or enforceability of any other provision or covenant
hereof or herein contained and any such invalid provision or
covenant shall be deemed to be severable.
18. Closing Certificates and Opinions.
(a) The Trading Advisor shall, at the Partnership's Initial
Closing and at the request of the General Partner at any Closing,
provide the following:
(i) To DWR, the General Partner and the Partnership a
certificate, dated the date of any such closing and in form and
substance satisfactory to such parties, to the effect that:
(A) The representations and warranties by the Trading Advisor in
this Agreement are true, accurate, and complete on and as of the
date of the closing, as if made on the date of the closing.
(B) The Trading Advisor has performed all of its obligations and
satisfied all of the conditions on its part to be performed or
satisfied under this Agreement, at or prior to the date of such
closing.
(ii) To DWR, the General Partner and the Partnership an opinion
of counsel to the Trading Advisor, in form and substance
satisfactory to such parties, to the effect that:
(A) The Trading Advisor is a corporation duly organized and
validly existing under the laws of the state of its incorporation
and is qualified to do business and in good standing in each
other jurisdiction in which the nature or conduct of its business
requires such qualification and the failure to be duly qualified
would materially adversely affect the Trading Advisor's ability
to perform its obligations under this Agreement. The Trading
Advisor has full corporate power and authority to conduct its
business as described in the Registration Statement and
Prospectus and to perform its obligations under this Agreement.
(B) The Trading Advisor (including the Trading Advisor
Principals) has all governmental, regulatory, and self-regulatory
registrations and memberships required by law, and the Trading
Advisor (including the Trading Advisor Principals) has received
or made all filings and registrations necessary to perform
its obligations under this Agreement and to conduct its business
as described in the Registration Statement and Prospectus, except
for such licenses, memberships, filings and registrations, the
absence of which would not have a material adverse effect on its
ability to act as described in the Registration Statement and
Prospectus or to perform its obligations under this Agreement,
and, to the best of such counsel's knowledge, after due
investigation, none of such, memberships or registrations have
been rescinded, revoked or suspended.
(C) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Trading Advisor and constitutes
a valid and binding agreement of the Trading Advisor enforceable
in accordance with its terms, subject only to bankruptcy,
insolvency, reorganization, moratorium or similar laws at the
time in effect affecting the enforceability generally of rights
of creditors and by general principals of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law), and except as enforceability of the
indemnification, exculpation, and contribution provisions
contained in such agreements may be limited by applicable law or
public policy.
(D) Based upon due inquiry of certain officers of the Trading
Advisor, to such counsel's knowledge, except as disclosed in the
Prospectus, there are no actions, suits or proceedings at law or
in equity pending or threatened before or by any court,
governmental body, administrative agency, panel or self-
regulatory organization, nor have there been any such actions,
suits or proceedings within the five years preceding the date of
the Prospectus against the Trading Advisor or any Trading Advisor
Principal which are required to be disclosed in the Registration
Statement or Prospectus.
(E) The execution and delivery of this Agreement, the incurrence
of the obligations herein set forth and the consummation of the
transactions contemplated herein and in the Prospectus will not
be in contravention of any of the provisions of the certificate
of incorporation or bylaws of the Trading Advisor and, based upon
due inquiry of certain officers of the Trading Advisor, to such
counsel's knowledge, will not constitute a breach of, or default
under, or a violation of any instrument or agreement known to
such counsel by which the Trading Advisor is bound and will not
violate any order, law, rule or regulation applicable to the
Trading Advisor of any court or any governmental body or
administrative agency or panel or self-regulatory organization
having jurisdiction over the Trading Advisor.
(F) Based upon reliance of certain SEC "no-action" letters, the
performance by the Trading Advisor of the transactions
contemplated by this Agreement and as described in the Prospectus
will not require the Trading Advisor to be registered as an
"investment adviser" as that term is defined in the Investment
Advisers Act of 1940, as amended.
(G) Nothing has come to such counsel's attention that would lead
them to believe that, (A) the Registration Statement at the time
it became effective, insofar as the Trading Advisor and the
Trading Advisor Principals are concerned, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (B) the Prospectus at the time it was
issued or at the closing contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein relating to the Trading
Advisor or the Trading Advisor Principals, in light of the
circumstances under which they were made, not misleading;
provided, however, that such counsel need express no opinion or
belief as to the performance data and notes or descriptions
thereto set forth in the Registration Statement and Prospectus,
except that such counsel shall opine, without rendering any
opinion as to the accuracy of the information in such tables,
that the actual performance tables of the Trading Advisor set
forth in the Prospectus comply as to form in all material
respects with applicable CFTC rules and all CFTC and NFA
interpretations thereof, except as disclosed in the Prospectus.
In giving the foregoing opinion, counsel may rely on
information obtained from public officials, officers of the
Trading Advisor, and other sources believed by it to be
responsible and may assume that signatures on all documents
examined by it are genuine.
(iii) To DWR, the General Partner and the Partnership, a
report dated the date of the closing which shall present, for the
period from the date after the last day covered by the historical
performance capsules in the Prospectus to the latest practicable
day before closing, updated performance information which shall
certify that such figures are, to the best of such Trading
Advisor's knowledge, accurate in all material respects.
(b) The General Partner shall, at the Partnership's Initial
Closing and at the request of the Trading Advisor at any Closing,
provide the following:
(i) To the Trading Advisor a certificate, dated the date of such
closings and in form and substance satisfactory to the Trading
Advisor, to the effect that:
(A) The representations and warranties by the Partnership and
the General Partner in this Agreement are true, accurate, and
complete on and as of the date of the closing as if made on the
date of the closing.
(B) No stop order suspending the effectiveness of the
Registration Statement has been issued by the SEC and no
proceedings for that purpose have been instituted or are pending
or, to the knowledge of the General Partner, are contemplated or
threatened under the Securities Act. No order preventing or sus
pending the use of the Prospectus has been issued by the SEC,
NASD, CFTC, or NFA and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the General
Partner, are contemplated or threatened under the Securities Act
or the CEAct.
(C) The Partnership and the General Partner have performed all
of their obligations and satisfied all of the conditions on their
part to be performed or satisfied under this Agreement at or
prior to the date of the closing.
(ii) To the parties hereto, an opinion of Cadwalader, Xxxxxxxxxx
& Xxxx, counsel to the General Partner and the Partnership, in
form and substance satisfactory to such parties, to the effect
that:
(A) The Partnership is a limited partnership duly formed
pursuant to the Certificate of Limited Partnership, the Limited
Partnership Agreement and the DRULPA and is validly existing
under the laws of the State of Delaware with full partnership
power and authority to conduct the business in which it proposes
to engage as described in the Registration Statement and
Prospectus and to perform its obligations under this Agreement;
the Partnership has received a Certificate of Authority as
contemplated under the New York Revised Limited Partnership Act
and is qualified to do business in New York and need not affect
any other filings or qualifications under the laws of any other
jurisdictions to conduct its business as described in the
Registration Statement and Prospectus.
(B) The General Partner is duly organized and validly existing
and in good standing as a corporation under the laws of the State
of Delaware and is qualified to do business and is in good
standing as a foreign corporation in the State of New York and in
each other jurisdiction in which the nature or conduct of its
business requires such qualification and the failure to so
qualify might reasonably be expected to result in material
adverse consequences to the Partnership or the General Partner's
ability to perform its obligations as described in the
Registration Statement and Prospectus. The General Partner has
full corporate power and authority to conduct its business as
described in the Registration Statement and Prospectus and to
perform its obligations under this Agreement.
(C) The General Partner, each of its principals as defined in
Rule 3.1 under the CEAct, and the Partnership have all federal
and state governmental and regulatory licenses, registrations and
memberships required by law and have made all filings necessary
in order for the General Partner and the Partnership to perform
their obligations under this Agreement to conduct their business
as described in the Registration Statement and Prospectus, except
for such licenses, memberships, filings, and registrations, the
absence of which would not have a material adverse effect on the
ability of the Partnership or the General Partner to act as
described in the Registration Statement and Prospectus, or to
perform their obligations under this Agreement, and, to the best
of such counsel's knowledge, after due investigation, none of
such licenses and memberships or registrations have been
rescinded, revoked or suspended.
(D) This Agreement has been duly authorized, executed and
delivered by or on behalf of the General Partner and the
Partnership, and constitutes a valid and binding agreement of the
General Partner and the Partnership, enforceable in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect
affecting the enforceability generally of rights of creditors and
by general principals of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law), and except as enforceability of indemnification,
exculpation and contribution provisions contained in this
Agreement may be limited by applicable law or public policy.
(E) The execution and delivery of this Agreement and the offer
and sale of the Units by the Partnership and the incurrence of
the obligations herein set forth and the consummation of the
transactions contemplated herein and in the Prospectus will not
be in contravention of the General Partner's certificate of
incorporation or bylaws, the Certificate of Limited Partnership,
and the Limited Partnership Agreement and, to such counsel's
knowledge based upon due inquiry of certain officers of the
General Partner, none of the foregoing will constitute a breach
of, or default under, or a violation of any agreement or
instrument known to such counsel by which the General Partner or
the Partnership is bound or violate any order known to such
counsel or any law, rule or regulation applicable to the General
Partner or the Partnership of any court, governmental body,
administrative agency, panel or self-regulatory organization
having jurisdiction over the General Partner or the Partnership.
(F) To such counsel's knowledge, based upon due inquiry of
certain officers of the General Partner, there are no actions,
suits or proceedings at law or in equity pending or threatened
before or by any court governmental body, administrative agency,
panel or self regulatory organization, nor have there been any
such actions, suits or proceedings within the five years
preceding the date of the Prospectus against the General Partner
or the Partnership which are required to be disclosed in the
Registration Statement or Prospectus.
(G) The Registration Statement is effective under the Securities
Act and, to the best of such counsel's knowledge, no proceedings
for a stop order are pending or threatened under Section 8(d) of
the Securities Act or any similar state securities laws.
(H) At the time the Registration Statement became effective, the
Registration Statement, and at the time the Prospectus was issued
and as of the closing, the Prospectus, complied as to form in all
material respects with the requirements of the Securities Act,
the Securities Regulations, the CEAct and the regulations of the
NFA and NASD.
(I) Nothing has come to such counsel's attention that would lead
them to believe that the Registration Statement at the time it
became effective contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus at the time it was issued or
at the closing contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they where made, not misleading; provided, however, that
Cadwalader, Xxxxxxxxxx & Xxxx need express no opinion or belief
(a) as to information in the Registration Statement or the
Prospectus regarding any Trading Advisor or its principals, or
(b) as to the financial statements, notes thereto and other
financial or statistical data set forth in the Registration
Statement and Prospectus, or (c) as to the performance data and
notes or descriptions thereto set forth in the Registration
Statement and Prospectus.
(J) Based upon reliance on certain SEC "no-action" letters, as
of the closing, the performance of the transactions contemplated
by this Agreement and as described in the Prospectus will not
require the Partnership to register as an "investment company"
under the Investment Company Act of 1940, as amended.
In rendering its opinion, such counsel may rely on
information obtained from public officials, officers of the
General Partner and other sources believed by it to be
responsible and may assume that signatures on all documents
examined by it are genuine, and that a Subscription and Exchange
Agreement and Power of Attorney in the form attached to the
Prospectus has been duly authorized, completed, dated, executed,
and delivered and funds representing the full subscription price
for the Units purchased have been delivered by each purchaser of
Units in accordance with the requirements set forth in the
Prospectus.
19. Inconsistent Filings.
The Trading Advisor agrees not to file, participate in
the filing of, or publish any description of the Trading Advisor,
or of its respective principals or trading approaches that is
materially inconsistent with those in the Registration Statement
and Prospectus, without so informing the General Partner and
furnishing to it copies of all such filings within a reasonable
period prior to the date of filing or publication. No such
description shall be published or filed to which the General
Partner reasonably objects, except as otherwise required by law.
20. Disclosure Documents.
(a) During the term of this Agreement, the Trading Advisor shall
furnish to the General Partner promptly copies of all disclosure
documents filed with the CFTC or NFA by the Trading Advisor. The
General Partner acknowledges receipt of the Trading Advisor's
disclosure document dated June 30, 1999, as amended October 31,
1999, and as further amended November 5, 1999. Failure to
provide a disclosure document shall not constitute breach of this
agreement unless the Trading Advisor fails to provide a
document within 7 calendar days of a request.
(b) The General Partner and the Partnership will not distribute
or supplement any promotional material relating to the Trading
Advisor unless the Trading Advisor has received reasonable prior
notice of and a copy of such promotional material and has not
reasonably objected thereto in writing.
21. Notices.
All notices required to be delivered under this
Agreement shall be in writing and shall be effective when
delivered personally on the day delivered, or when given by
registered or certified mail, postage prepaid, return receipt
requested, on the day actually received, addressed as follows (or
to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
if to the Partnership:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum Currency L.P.
c/o Demeter Management Corporation
Two World Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
if to the General Partner:
Demeter Management Corporation
0 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
if to the Trading Advisor:
Xxxx X. Xxxxx & Company, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxxxx Xxxxxx
22. Survival.
The provisions of this Agreement shall survive the
termination of this Agreement with respect to any matter arising
while this Agreement was in effect.
23. Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York. If any action
or proceeding shall be brought by a party to this agreement
or to enforce any right or remedy under this Agreement, each
party hereto hereby consents and will submit to the jurisdiction
of the courts of the State of New York or any federal court
sitting in the County, City and State of New York. Any action or
proceeding brought by any party to this Agreement to enforce any
right, assert any claim or obtain any relief whatsoever in
connection with this Agreement shall be brought by such party
exclusively in the courts of the State of New York or any Federal
court sitting in the County, City and State of New York.
24. Remedies.
In any action or proceeding arising out of any of the
provisions of this Agreement, the Trading Advisor agrees not to
seek any prejudgment equitable or ancillary relief. The Trading
Advisor agrees that its sole remedy in any such action or
proceeding shall be to seek actual monetary damages for any
breach of this Agreement.
25. Headings.
Headings to sections herein are for the convenience of
the parties only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement has been
executed for and on behalf of the undersigned as of the day and
year first above written.
XXXXXX XXXXXXX XXXX XXXXXX
SPECTRUM CURRENCY L.P.
By:Demeter Management
Corporation,
General Partner
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Its: Chairman & President
DEMETER MANAGEMENT CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Its: Chairman & President
XXXX X. XXXXX & COMPANY, INC.
By:/s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Its: President
