EXHIBIT 10.04
FORM OF
MANAGEMENT AGREEMENT
THIS AGREEMENT, made as of the 1st day of May, 1999 among
XXXXXX XXXXXXX XXXX XXXXXX SPECTRUM STRATEGIC L.P., a Delaware limited
partnership (the "Partnership"), DEMETER MANAGEMENT CORPORATION, a Delaware
corporation (the "General Partner"), and ALLIED IRISH CAPITAL MANAGEMENT LTD, an
Irish corporation (the "Trading Advisor").
WITNESSETH:
WHEREAS, the Partnership has been organized pursuant to the
Limited Partnership Agreement dated as of May 27, 1994 (the "Limited Partnership
Agreement"), to engage primarily in speculative trading of commodities
(including foreign currencies, mortgage-backed securities, money market
instruments, financial instruments, obligations of or guaranteed by the United
States Government, and any other financial instruments, securities, stock,
financial and economic indexes, and items which are now or may hereafter be the
subject of futures contract trading), futures contracts, forward contracts,
foreign exchange commitments, options on physical commodities and on futures
contracts, spot (cash) commodities and 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 became a member partnership of the
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum Series (the "Fund Group") by entering into
an agreement pursuant to which units of limited partnership interest ("Units")
of such member partnerships are sold to investors in a common offering under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement on Form S-1 as it may be amended from time to time (the
"Registration Statement") and a final Prospectus, constituting a part thereof as
it may be amended and supplemented from time to time (the "Prospectus"), and
thereafter, pursuant to which such Units can be exchanged by a limited partner
of a member partnership of the Fund Group for six months for Units of other
member partnerships of the Fund Group at 100% of the respective Net Asset Value
(as defined in Section 7(d)(2) of the Limited Partnership Agreement) thereof;
WHEREAS, the Trading Advisor has extensive experience 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 6(c)
hereof) and the Trading Advisor desires so to act; and
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 CONTINUING OFFERING OF
UNITS.
(a) The Trading Advisor agrees with respect to the 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 (subject to the need, in the reasonable discretion of the Trading
Advisor, to preserve the secrecy of 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 (x) to be made in the
Partnership's Prospectus required by Section 4.21 of the regulations of the
CFTC, including any amendments or supplements thereto, or (y) 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., the selling agent for the Partnership ("DWR") by providing
information regarding the Trading Advisor in connection with the preparation and
filing of the Registration Statement and Prospectus, including any 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. 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) 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, the 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
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connection with the continuing offering of Units except as may be specifically
requested by the General Partner.
2. DUTIES OF THE TRADING ADVISOR.
(a) The Trading Advisor hereby agrees to act as a Trading
Advisor for the Partnership and, as such, shall have sole authority and
responsibility for directing the investment and reinvestment of its allocable
share of the Net Assets of the Partnership 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 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. The Trading Advisor shall not be liable for the
consequences of any decision by the General Partner to override instructions of
the Trading Advisor, except to the extent that the Trading Advisor is in breach
of this Agreement. 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
programs for accounts the size of the Partnership.
(ii) Subject to reasonable assurances of
confidentiality by the General Partner and the Partnership, provide the
General Partner, within 30 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 programs used by the
Trading Advisor for the Partnership over a specified period of time. In
providing such information, the Trading
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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,
strategies or implementation methods may be utilized for different
accounts, accounts with different trading policies, accounts
experiencing differing inflows or outflows of equity, accounts that
commence trading at different times, accounts which have different
portfolios or different fiscal years 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, personnel, trading approach, or financial
condition). The General Partner acknowledges that all trading
instructions made by the Trading Advisor will be held in confidence by
the General Partner, except to the extent necessary 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.
(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 to DWR of
the floor brokerage commissions, exchange and NFA fees, and other transaction
charges and give-up charges incurred by DWR 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. However, the Trading Advisor
shall not be responsible for errors committed or caused by DWR or by floor
brokers or other FCM's. 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
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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.
3. 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 any such trading advisor(s) pursuant to this Section 3 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 an additional trading advisor or advisors is so
designated, 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 attributable to the trading by the
Trading Advisor.
(b) The General Partner may at any time and from time to time
upon two 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 two 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.
4. 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 or any other trading advisor or advisors for the Partnership
as members of any partnership, joint venture, association, syndicate or other
entity, 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
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neither a promoter, sponsor, or 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.
5. 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. At
the present time, DWR shall act as non-clearing commodity broker and Xxxx
Futures, Inc. ("CFI") shall act as the clearing commodity broker for the
Partnership. The General Partner shall provide the Trading Advisor with copies
of brokerage statements. Notwithstanding that CFI shall act as the clearing
commodity broker for the Partnership, the Trading Advisor may execute trades
through floor brokers other than those employed by CFI so long as arrangements
are made for such floor brokers to "give-up" or transfer the positions to CFI
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.
6. 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 3% (a 3% annual rate) of the "Net Assets" of
the Partnership allocated to the Trading Advisor (as defined in Section
6(c)) as of the opening of business on the first day of each calendar
month.
(ii) A monthly incentive fee equal to 15% of the
"Trading Profits" (as defined in Section 6(d)) as of the end of each
calendar month, payable on a non-netted basis vis-a-vis other trading
advisors(s) of the Partnership.
(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
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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 have the same
meaning ascribed thereto in Section 7(d)(1) of the Limited Partnership
Agreement.
(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 month as of which
such incentive fee calculation is being made. 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 that 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) The Partnership will remit the management and incentive
fees to the Trading Advisor as soon as practicable, but in no event later than
30 days, in the case of the
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management fee, or 45 days in the case of the incentive fee of the month-end as
of which they are due, together with an itemized statement showing the
calculations.
7. 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 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 five 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 any person described
as a "principal" of the Trading Advisor in the Prospectus ceases for any reason
to be an active executive officer of the Trading Advisor; (ii) if the Trading
Advisor becomes bankrupt or insolvent; (iii) if the Trading Advisor is unable to
use its trading programs, 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 programs, systems or
methods, or its goodwill to, any individual or entity; (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 or if Net Assets allocated to the Trading Advisor
fall below $1,000,000.00 at any time; (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) 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
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that as a result, the Trading Advisor believes the performance results of the
Trading Advisor relating to the 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 five 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 days of such notice; or (vi) the assets allocated to the
Trading Advisor fall below $1,000,000 at any time.
The indemnities set forth in Section 8 hereof shall survive
any termination of this Agreement.
8. 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 Partnership's futures interests trading of the Trading Advisor, or
any of its controlling persons or affiliates or their respective directors,
officers, partners, shareholders, or employees; 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
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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.
(c) PARTNERSHIP INDEMNITY IN RESPECT OF MANAGEMENT
ACTIVITIES. The Partnership shall 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 futures interests trading
activities of the Partnership undertaken by the Trading Advisor; 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.
(d) TRADING ADVISOR INDEMNITY IN RESPECT OF SALE OF UNITS. The
Trading Advisor shall indemnify, defend and hold harmless DWR, Xxxxxx Xxxxxxx &
Co., Incorporated, CFI the Partnership, the General Partner, any additional
seller, and their affiliates and each of their officers, directors, principals,
shareholders, 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) a misleading or untrue statement or alleged
misleading or untrue statement of a material fact made in the Registration
Statement, the Prospectus, or any related selling material 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 and any selling material, 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) or was made in
reliance upon, and in conformity with, written information or instructions
furnished
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by the Trading Advisor (PROVIDED, HOWEVER, that with respect to any related
selling material only such related selling material as shall have been approved
in writing by the Trading Advisor).
(e) PARTNERSHIP INDEMNITY IN RESPECT OF SALE OF UNITS. The
Partnership agrees to indemnify, defend and hold harmless the Trading Advisor
and each of its officers, directors, principals, shareholders, 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 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 Partnership or the General Partner of any representation,
warranty, or agreement in this Agreement or the failure by the Partnership or
the General Partner to perform any covenant made by them herein; or (ii) a
misleading or untrue statement or alleged misleading or untrue statement of a
material fact made in the Registration Statement, the Prospectus, or any related
selling material 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 or the selling material, in
light of the circumstances under which they were made) not misleading, provided
that such materially misleading or untrue statement or alleged materially
misleading or untrue statement or omission or alleged omission does not relate
to the Trading Advisor or its Trading Advisor Principals (including the
historical performance capsules) or was not made in reliance upon, and in
conformity with, information or instructions furnished by the Trading Advisor
(PROVIDED, HOWEVER, that with respect to any related selling material, only such
related selling material as shall have been approved in writing by the Trading
Advisor), or does not result from 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
materially perform any covenant made in this Agreement.
(f) 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.
(g) 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
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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, the
indemnifying party will indemnify, defend, and hold harmless an indemnified
person as provided in this Section 8.
9. 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 programs, systems, methods, or strategies employed by the
Trading Advisor for the account of the Partnership, or trading programs,
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
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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 programs, 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.
10. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE TRADING
ADVISOR.
(a) REPRESENTATIONS 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 trading programs on behalf of the Partnership that are 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, provided, that the General Partner has
notified the Trading Advisor of these trading policies.
(iii) The Trading Advisor shall trade: (A) the
Partnership's Net Assets pursuant to the same trading programs
described in the Prospectus unless the General Partner agrees otherwise
and (B) only in futures and option contracts traded on U.S.
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contract markets, foreign currency forward contracts traded with CFI,
and such other futures interests which 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, and in the supplemental selling material
which has been approved in writing by the Trading Advisor, are accurate
and complete in all material respects. With respect to the material
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, (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, registrations and approvals and has effected all filings 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
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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 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 is or was subject and which
resulted in or might reasonably be expected to result in any material
adverse change in the condition, financial or otherwise, business or
prospects of the Trading Advisor or which is required under the
Securities Act or CEAct to be disclosed in the Prospectus. 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 the 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:
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(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 by providing information regarding itself and its performance
in the preparation of any amendments or supplements to the Registration
Statement and the Prospectus.
(iv) The Trading Advisor agrees to participate, to
the extent that the General Partner may reasonably request, in "road
shows" and other promotional activities relating to the marketing of
the Units, provided that such participation shall not in the reasonable
judgment of the Trading Advisor require the registration of the Trading
Advisor or any of its principals or agents as a broker-dealer or
salesman or interfere materially with the trading activities of the
Trading Advisor. The Trading Advisor shall pay the costs of its
reasonably requested participation in such road shows.
11. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE GENERAL
PARTNER AND THE PARTNERSHIP.
(a) REPRESENTATIONS OF THE PARTNERSHIP AND THE GENERAL
PARTNER. 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 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 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) will have been taken;
and, upon payment of the consideration therefor specified in each
accepted Subscription and
-16-
Exchange Agreement and Power of Attorney, in such form 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 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
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 representation, and
warranties in this clause (vi) shall not, however, apply to any
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statement or omission in the Registration Statement, Prospectus or
supplemental selling material relating to the Trading Advisor, or its
Trading Advisor Principals or its trading programs 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 on behalf of
the Partnership and constitutes a valid, binding and enforceable
agreement of the Partnership 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 CEAct or the Securities Act 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,
registrations, and licenses, and have effected all filings with
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federal and state governmental agencies and regulatory agencies
required to conduct their business and to act as described in the
Registration Statement and Prospectus or required to perform their
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 AND THE PARTNERSHIP. 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.
12. 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.
13. 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
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between the parties unless in writing and signed by the party against whom
enforcement is sought.
14. ASSIGNMENT.
This Agreement may not be assigned by any party hereto without
the express written consent of the other parties hereto.
15. AMENDMENT.
This Agreement may not be amended except by the written
consent of the parties hereto.
16. 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.
17. CLOSING CERTIFICATES AND OPINIONS.
(1) The Trading Advisor shall, at the Partnership's first
Monthly Closing (as defined in the Prospectus), following the effective date of
the Registration Statement and at the request of the General Partner at any
Monthly Closing, provide the following:
(a) 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:
(i) 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.
(ii) 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.
(b) 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:
(i) 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
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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.
(ii) The Trading Advisor (including the Trading
Advisor Principals) has all governmental, regulatory, self-regulatory
and commodity exchange and clearing association licenses,
registrations, and memberships required by law, and the Trading Advisor
(including the Trading Advisor Principals) has made all filings
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 investigations, none
of such licenses, memberships or registrations have been rescinded,
revoked or suspended.
(iii) 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 principles 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 this Agreement may be limited by
applicable law or public policy and the enforcement of specific terms
or remedies may be unavailable.
(iv) Based upon due inquiry of certain officers of
the Trading Advisor, to the best of such counsel's knowledge, except as
disclosed in the Prospectus, there are no material actions, suits or
proceedings at law or in equity either threatened or pending in any
court or before or by any governmental or administrative body nor have
there been any such actions, suits or proceedings at any time 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.
(v) 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 the best of 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
-21-
governmental body or administrative agency or panel or self-regulatory
organization having jurisdiction over the Trading Advisor.
(vi) Based upon reliance of certain SEC "no-action"
letters, as of the closing, 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.
(vii) 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 or as otherwise permitted by the CFTC
staff.
In giving the foregoing opinion, counsel may rely on
information obtained from public officials, officers of the Trading Advisor, and
other resources believed by it to be responsible and may assume that signatures
on all documents examined by it are genuine.
(c) 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 records in the
Prospectus to the latest practicable day before closing, figures which shall be
a continuation of such historical performance records and which shall certify
that such figures are, to the best of such Trading Advisor's knowledge, accurate
in all material respects.
(2) The General Partner shall, at the Partnership's first
Monthly Closing following the effective date of the Registration Statement,
provide the following:
(a) To the Trading Advisor a certificate, dated the date of
such closing and in form and substance satisfactory to the Trading Advisor, to
the effect that:
(i) 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.
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(ii) 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 suspending 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.
(iii) 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.
(b) Cadwalader, Xxxxxxxxxx & Xxxx, counsel to the General
Partner and the Partnership, shall deliver its opinion to the parties hereto, in
form and substance satisfactory to the parties hereto, to the effect that:
(i) 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.
(ii) 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.
(iii) 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
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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.
(iv) 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
such agreements may be limited by applicable law or public policy.
(v) 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, or the Limited
Partnership Agreement and, to the best of such counsel's knowledge
based upon due inquiry of certain officers of the General Partner, will
not 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 and will not 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.
(vi) To such counsel's knowledge, based upon due
inquiry of certain officers of the General Partner, 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 General Partner
or the Partnership, which are required to be disclosed in the
Registration Statement or Prospectus.
(vii) 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.
(viii) 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. Nothing has come to such counsel's attention that would lead
them to believe
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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.
(ix) Based upon reliance on certain SEC "no-action"
letters, as of the closing, the Partnership need not 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.
18. 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.
19. DISCLOSURE DOCUMENT.
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 ___________ ___,
1999.
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20. 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 Strategic 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
Two World Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
if to the Trading Advisor:
Allied Irish Capital Management Ltd.
00 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxx 0
Xxxxxxx
Attn: Xxxxx Xxxxxx
21. 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.
22. 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
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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.
23. 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.
24. 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
STRATEGIC L.P.
by Demeter Management Corporation,
General Partner
By
----------------------------------------
DEMETER MANAGEMENT CORPORATION
By
----------------------------------------
ALLIED IRISH CAPITAL MANAGEMENT LTD.
By
----------------------------------------
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