EHXIBIT 10.04
AMENDED and RESTATED
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT, made as of the 31st day of December,
1997, and amended and restated as of ____________, 1999 among XXXXXX XXXXXXX
XXXX XXXXXX SPECTRUM COMMODITY L.P. (formerly Xxxxxx Xxxxxxx Tangible Asset Fund
L.P.), a Delaware limited partnership (the "Partnership"), DEMETER MANAGEMENT
CORPORATION, a Delaware corporation (the "General Partner"), and XXXXXX XXXXXXX
XXXX XXXXXX COMMODITIES MANAGEMENT, INC. (formerly Xxxxxx Xxxxxxx Commodities
Management, Inc.), a Delaware corporation (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the Partnership's business and general purpose is to trade,
buy, sell, spread, or otherwise acquire, hold, or dispose of certain
commodity-related interests including but not limited to commodity futures
contracts (hereinafter referred to as "futures interests") and securities (such
as United States Treasury securities) approved by the Commodity Futures Trading
Commission (the "CFTC") for investment of customer funds, and to engage in all
activities incident thereto;
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
trading advisor for the Partnership and to make investment decisions with
respect to futures interests for the Partnership and the Trading Advisor desires
so to act;
WHEREAS, the Partnership is offering units of limited partnership
interest ("Units") to investors in a public offering under the Securities Act of
1933, as amended, (the "Securities Act"), pursuant to a registration statement
on Form S-1 (the most recently effective registration statement being the
"Registration Statement") and a final prospectus constituting a part thereof (as
amended and supplemented, the "Prospectus"); 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 the Partnership's futures interests trading;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Undertakings in Connection
with the Offering of Units.
(a) The Trading Advisor agrees: (i) to make all disclosures
regarding itself, its principals and affiliates, its trading performance, its
trading systems, methods, and strategies (subject to the need to preserve the
secrecy of proprietary information concerning such systems, methods, and
strategies), any client accounts over which it has discretionary trading
authority, and otherwise, as the Partnership may reasonably require (x) to be
made in the Partnership's Prospectus 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 pre- or post-effective amendments or supplements
thereto and any subsequent registration statements or prospectuses, 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.
(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 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 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.
2. Duties of the Trading Advisor.
(a) The Trading Advisor agrees to act as the trading advisor for the
Partnership and, as such, shall have sole authority and responsibility for
advising the investment and reinvestment of the assets of the Partnership in
futures interests on the terms and conditions and in accordance with the
restrictions and trading policies set forth in this Agreement, the Partnership's
Limited Partnership Agreement as from time to time in effect (the "Limited
Partnership Agreement"), and the Prospectus; provided, however, that the General
Partner may override the instructions of the Trading Advisor to the extent
necessary
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(i) to comply with the trading policies of the Partnership described in the
Limited Partnership Agreement, (ii) to fund any distributions or redemptions, or
(iii) to pay the Partnership's expenses. The General Partner agrees not to
override any such instructions for the reasons specified in clauses (ii) and
(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 days of such request.
(b) The Trading Advisor shall exercise its best judgment in
determining the trades in futures interests for the account of the Partnership
in accordance with the restrictions and trading policies of the Partnership and
the Trading Advisor's trading strategy as in effect on the date hereof, with
such changes and additions to such trading strategy as the Trading Advisor, from
time to time, incorporates into its trading approach for accounts the size of
the Partnership.
(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 and commissions arising from trading by the Trading Advisor shall
be for the account of the Partnership.
(d) Notwithstanding any provision of 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. The Trading Advisor's errors
shall include, but not be limited to, inputting improper trading signals or
communicating incorrect orders to any commodity broker for the Partnership.
However, the Trading Advisor shall not be responsible for errors committed or
caused by any commodity broker for the Partnership. 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
to any commodity broker for the Partnership.
(e) The General Partner on behalf of the Partnership shall deliver
to the Trading Advisor a trading authorization in the form annexed hereto as
Exhibit A appointing the Trading Advisor the Partnership's attorney-in-fact for
such purpose.
3. Designation of Additional Trading Advisors; Additional 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
defined in Section 6(c) hereof) 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
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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 additional trading advisor(s)
are 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 that portion of the Net Profits properly attributable to
the trading done by the Trading Advisor.
[(b) The Trading Advisor in its sole discretion may refuse to accept
any additional allocation of Partnership assets for management hereunder after
the final closing of the public offering pursuant to the Registration
Statement.]
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(s) 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.
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, Xxxx Xxxxxx Xxxxxxxx Inc. acts as the non-clearing commodity
broker, MS & Co. acts as the clearing commodity broker for exchanges except the
London Metals Exchange and Xxxxxx Xxxxxxx International Limited acts as the
clearing commodity broker on London Metals Exchange Contracts for the
Partnership.
6. Fees.
(a) For the services 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 (the "Management Fee"), without
regard to the profitability of the Trading Advisor's trading for the
Partnership's account, equal to 5/24 of 1% of the Net Assets of the Partnership
as of 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 (a 2.5% annual rate).
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(ii) An annual incentive fee equal to 20% of the "Trading
Profits" (as defined in Section 6(d)) as of the end of each calendar year. Any
accrued incentive fees with respect to any Units redeemed at the end of the
month which is not the end of a calendar year will be deducted and paid to the
Trading Advisor at the time of the redemption.
(b) If this Agreement is terminated on a date other than the end of
a calendar year, the incentive fee described above shall be determined as if
such date were the end of a calendar year. If this Agreement is terminated on a
date other than the first day of a calendar 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, or, as a result of an act or 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 engaged in trading
operations or utilizes 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 as in Section 8(d)(1) of the Limited Partnership Agreement.
(d) As used herein, the term "Trading Profits" shall mean futures
interests trading profits (realized and unrealized) earned by the Partnership,
decreased by monthly Management Fees, brokerage fees, service fees, and other
expenses directly attributable to the Partnership's futures interests trading
activities, with such trading profits and items of decrease determined from the
end of the last calendar year for 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 the Partnership commenced trading to the end of
the calendar year as of which such incentive fee calculation is being made. If
Net Assets are reduced or increased because of redemptions or subscriptions
which occur at the end of, or subsequent to, a calendar year in which the
Partnership experiences a futures interests trading loss, the trading loss which
must be recovered before the Partnership will be deemed to experience Trading
Profits will be equal to the amount determined by (x) dividing Net Assets after
such redemptions or subscriptions by the Net Assets immediately before such
redemptions or subscriptions and (y) multiplying that fraction by the amount of
the unrecovered futures interests trading loss. In the event that the
Partnership experiences a futures interests trading loss in more than one fiscal
year without an intervening payment of an incentive fee and Net Assets are
reduced or increased in more than one such calendar year because of redemptions
or subscriptions, then the trading loss shall in each case be adjusted in
accordance with the formula described above and such adjusted amount of futures
interests trading loss shall be carried forward and used to offset subsequent
futures interests contract trading profits. Extraordinary expenses of the
Partnership, if any, will not be deducted in determining Trading Profits.
Trading Profits do not include interest income earned by the Partnership on its
assets.
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(e) If any payment of incentive fees is made to the Trading Advisor
on account of Trading Profits earned by the Partnership and the Partnership
thereafter fails to earn Trading Profits or experiences losses for any
subsequent incentive period, 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.
7. Term.
This Agreement shall continue in effect for a period of one year
after the date of this Agreement. Thereafter, this Agreement shall be renewed
automatically for additional one-year terms unless either the Partnership or the
Trading Advisor, upon written notice given not less than 60 days prior to the
original termination date or any extended termination date, notifies the other
party of its intention not to renew. This Agreement shall terminate if the
Partnership terminates. The Partnership shall have the right to terminate this
Agreement without penalty (a) upon 15 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 the Trading Advisor becomes
bankrupt or insolvent; (ii) if the Trading Advisor is unable to use its trading
systems or methods as in effect on the date of this Agreement and as refined and
modified in the future for the benefit of the Partnership; (iii) 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; (iv) except as provided in Section 11
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 trading systems or methods, or its goodwill to,
any individual or entity; (v) if, the Net Asset Value of a Unit, after adding
back distributions, if any, shall be less than $500; (vi) if, at any time, the
Trading Advisor violates any trading policy set forth in the Limited Partnership
Agreement or any administrative policy the General Partner delivered to the
Trading Advisor, except with the prior express written consent of the General
Partner; or (vii) if the Trading Advisor fails in a material manner to perform
any of its obligations under this Agreement. The indemnities set forth in
Section 8 hereof shall survive any termination of this Agreement.
8. Standard of Liability and Indemnity.
(a) 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 affiliates (as defined below) shall be liable to the Partnership, the
General Partner, the Limited Partners, or any of its or their respective
successors or assigns; provided, that, the Trading Advisor shall be liable for
acts, omissions, conduct or activity of such persons unless the Trading Advisor
in good faith determines such act, omission, conduct or activity to be in the
best interests of the Partnership, and such act, omission, conduct, or activity
did not constitute misconduct or negligence.
(b) The Partnership shall indemnify, defend and hold harmless the
Trading Advisor and its affiliates from and against any loss, liability, damage,
cost, or expense (including attorneys' and accountants' fees and expenses
incurred in the defense of any
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demands, claims, or lawsuits) actually and reasonably incurred arising from any
act, omission, conduct, or activity undertaken by the Trading Advisor or its
affiliates in connection with futures interests trading on behalf of the
Partnership, including, without limitation, any demands, claims, or lawsuits
initiated by a Limited Partner of the Partnership (or assignee thereof),
provided, that (i) the Trading Advisor has determined, in good faith, that the
act, omission, conduct, or activity giving rise to the claim for indemnification
was in the best interests of the Partnership, and (ii) the act, omission,
conduct, or activity that was the basis for such loss, liability, damage, cost,
or expense was not the result of misconduct or negligence.
(c) The Trading Advisor shall indemnify, defend and hold harmless
the Partnership, the General Partner, and each of their affiliates from and
against any liabilities, losses, claims, damages, costs and expenses (including
attorneys' and accountants' fees and expenses incurred in the defense of any
demands, claims, or lawsuits) actually and reasonably incurred as a result any
act, omission, conduct or activity of the Trading Advisor or its affiliates in
connection with futures interests trading on behalf of the Partnership pursuant
to this Agreement, provided that the act, omission, conduct, or activity giving
rise to the claim for indemnification was the result of such person's bad faith,
misconduct or negligence.
(d) The Trading Advisor shall indemnify, defend and hold harmless
DWR, the Partnership, the General Partner, any additional seller of Units, and
each of their affiliates 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 of 1933, as amended (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
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forma tables), or was made in reliance upon, and in conformity with, written
information or instructions furnished by the Trading Advisor.
(e) The Partnership and the General Partner agree, jointly and
severally, to indemnify, defend and hold harmless the Trading Advisor and each
of its affiliates 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 to the contrary contained in the
foregoing, neither the Trading Advisor nor any of its affiliates shall be
indemnified by the Partnership for any losses, liabilities, or expenses arising
from or out of an alleged violation of federal or state securities laws unless
(A) there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular indemnitee, or
(B) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee, or (C) a court of
competent jurisdiction approves a settlement of the claims against the
particular indemnitee and finds that indemnification of the settlement and
related costs should be made, provided, with regard to such court approval, the
indemnitee must apprise the court of the position of the SEC, and the position
of the securities administrators of Massachusetts, Missouri, Tennessee, and/or
those other states and jurisdictions in which the plaintiffs claim they were
offered or sold Units, with respect to indemnification for securities laws
violations before seeking court approval for indemnification. Furthermore, in
any action or proceeding brought by a Limited Partner in the right of the
Partnership to which the Trading Advisor or any affiliate thereof is a party
defendant, any such person shall be indemnified only to the extent and subject
to the conditions
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specified in this Section 8. The Partnership shall make advances to the Trading
Advisor or its affiliates hereunder only if: (1) the demand, claim, lawsuit, or
legal action relates to the performance of duties or services by such persons to
the Partnership; (2) such demand, claim, lawsuit, or legal action is not
initiated by a Limited Partner; and (3) such advances are repaid, with interest
at the legal rate under Delaware law, if the person receiving such advance is
ultimately found not to be entitled to indemnification hereunder.
(g) The indemnities provided in this Section 8 by the Partnership to
the Trading Advisor and its affiliates shall be inapplicable in the event of any
liabilities, losses, claims, damages or expenses arising out of, or based upon,
any material breach of any representation, warranty, covenant, or agreement of
the Trading Advisor contained in this Agreement to the extent caused by such
event. Likewise, the indemnities provided in this Section 8 by the Trading
Advisor to the General Partner and the Partnership and any of their affiliates
shall be inapplicable in the event of any liabilities, losses, claims, damages
or expenses arising out of, or based upon, any material breach of any
representation, warranty, covenant, or agreement of the Partnership or the
General Partner, as applicable, contained in this Agreement to the extent caused
by such event. The indemnifying party will not be liable for any settlement
effected without the indemnifying party's express written consent.
(h) As used in this Section 8, the term "affiliate" of an entity
shall mean: (i) any natural person, partnership, corporation, association, or
other legal entity directly or indirectly owning, controlling, or holding with
power to vote 10% or more of the outstanding voting securities of such entity;
(ii) any partnership, corporation, association, or other legal entity 10% or
more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote by such entity; (iii) any natural person,
partnership, corporation, association, or other legal entity directly or
indirectly controlling, controlled by, or under common control with, such
entity; or (iv) any officer or director of such entity. Notwithstanding the
foregoing, "affiliates" of the Trading Advisor for purposes of this Section 8
shall include only those persons acting on behalf of the Trading Advisor within
the scope of the authority of the Trading Advisor, as set forth in this
Agreement, who perform services for the Partnership.
9. Right to Advise Others and
Uniformity of Acts and Practices.
(a) The Trading Advisor is engaged in the business of advising
persons 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 persons (including affiliates) 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 (which
employs the same trading strategy as the Partnership) over the account of the
Partnership in any way or manner (other than by charging different management
and/or incentive fees or employing different leverage). 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
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Trading Advisor or any of its principals or affiliates shall be free to advise
and manage accounts for other persons 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
Commodity Exchange Act 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 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, fairly and equitably in light of each accounts trading strategies to
the extent necessary to comply with the applicable position limits.
10. Representations Warranties and Covenants.
(a) The Trading Advisor 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 trading on
behalf of the Partnership pursuant to the trading programs described in the
Prospectus or any other trading programs agreed to by the General Partner.
(ii) All information furnished or to be furnished in writing
to the General Partner by the Trading Advisor relating to the Trading Advisor or
its trading is or will be accurate and complete in all material respects.
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(iii) The Trading Advisor shall follow, at all times, the
Trading Policies of the Partnership (as described in the Prospectus) and as
amended from time to time with the consent of the Trading Advisor, which consent
shall not be unreasonably withheld.
(iv) The Trading Advisor shall trade the Partnership's Net
Assets only in futures contracts traded on U.S. contract markets, and futures
contracts traded on non-U.S. exchanges which are permitted under the Commodity
Exchange Act for trading in the U.S. by U.S. persons.
(v) The Trading Advisor is a corporation duly organized,
validly existing and in good standing as a corporation under the laws of the
State of Delaware and is qualified to do business as a foreign corporation and
in good standing 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 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").
(vi) All references to the Trading Advisor and each Trading
Advisor Principal, including the Trading Advisor's trading programs and 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
information relating to the Trading Advisor and each Trading Advisor Principal,
including the Trading Advisor's and the Trading Advisor Principals' trading
programs and systems, and performance information, as applicable (excluding pro
forma performance information unless such statement or omission was based on
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.
-11-
(vii) 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.
(viii) 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, self-regulatory and exchange licenses,
memberships and approvals and has effected all filings and registrations with
federal and state governmental and regulatory and self-regulatory organizations
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.
(ix) 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 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,
governmental body, administrative agency, panel or self-regulatory organization
having jurisdiction over it.
(x) 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 Trading Advisor or any Trading Advisor Principal.
(xi) 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,
governmental body, or any administrative, self-regulatory 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, CFTC rules or
rules of the NFA.
(xii) 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.
(xiii) 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
-12-
(i) the date of commencement of trading for each such account or (ii) a date
five years prior to the date of the Prospectus, 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 CFTC rules and the rules of the NFA.
(b) 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 in the event that the Trading Advisor or any of its principals
described in the Prospectus becomes the subject of any investigation, claim, or
proceeding of any exchange, commission, court or regulatory authority 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.
(c) 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
Monthly 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.
-13-
(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 Monthly 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 Monthly 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
-14-
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 of the Partnership, or the Limited Partnership Agreement of
the Partnership 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 or self-regulatory 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 or NFA rules 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 self-regulatory approvals, licenses and
memberships, 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
-15-
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). The General
Partner's principals identified in the Registration Statement are all of the
General Partner Principals.
(d) 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 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 General Partner's ability to act as described herein and in the Prospectus.
(ii) The General Partner shall inform the Trading Advisor
immediately in the event that the General Partner or any of its principals
described in the Prospectus becomes the subject of any investigation, claim, or
proceeding of any exchange, commission, court or regulatory authority 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.
11. 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 trading 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.
12. 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.
13. Assignment.
This Agreement may not be assigned by any party hereto without the
express written consent of the other parties hereto.
-16-
14. Amendment.
This Agreement may not be amended except by the written consent of
the parties hereto.
15. 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.
16. Closing Certificates and Opinions.
(a) The Trading Advisor shall, at the Partnership's at the request
of the General Partner at any Monthly 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 a 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 Delaware and is
qualified to do business and in good standing 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 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
-17-
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,
licenses, 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
-18-
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, if a similar request is made of the
Trading Advisor at any Monthly Closing, provide the following:
(i) 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:
(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
-19-
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.
(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 of the
Partnership, the Limited Partnership Agreement of the Partnership
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 engages 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 or under this Agreement. 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
-20-
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 of
the Partnership, and the Limited Partnership Agreement of the
Partnership 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 that are not disclosed in the Registration
Statement and the Prospectus.
(G) The Registration Statement is effective under the
Securities Act and, to the best of such counsel's knowledge, no
proceedings for
-21-
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 such counsel 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.
17. Inconsistent Filings.
Prior to the end of 90 days following termination of the offering of
Units, 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
and affiliates 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
-22-
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. If a copy of any materially inconsistent filing or
publication is filed or published after the 90th day following termination of
the offering of Units, the Trading Advisor shall promptly furnish the General
Partner with such a copy, but the Trading Advisor need not give the General
Partner prior notice thereof.
18. Disclosure Documents.
The General Partner acknowledges receipt of the Trading Advisor's
disclosure document dated [December 1, 1997].
19. 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 mail, on the day of receipt, addressed as follows
(or to such other address as the party entitled to notice shall hereafter
designate in accordance with the terms hereof):
-23-
if to the Partnership:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum Commodity L.P.
c/o Demeter Management Corporation
0 Xxxxx 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:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Commodities Management, Inc.
1221 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx
20. 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.
21. 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.
22. 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
-24-
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.
23. 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 and its terms will take effect as of the day and year
first above written.
XXXXXX XXXXXXX XXXX XXXXXX
SPECTRUM COMMODITY L.P.
By: Demeter Management Corporation,
General Partner
By: _____________________________________
Xxxxxx X. Xxxxxx, President
DEMETER MANAGEMENT CORPORATION
By: _____________________________________
Xxxxxx X. Xxxxxx, President
XXXXXX XXXXXXX XXXX XXXXXX
COMMODITIES MANAGEMENT, INC.
By: _____________________________________
Xxxxx X. Xxxxxxxx, President
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