ADVISORY AGREEMENT
ADVISORY AGREEMENT (the "Agreement") dated as of the 15th day
of May, 1997 by and among Prudential-Bache OptiMax Futures Fund,
L.P., a Delaware limited partnership (the "Partnership"), Seaport
Futures Management Inc., a Delaware corporation (the "General
Partner") and Eagle Trading Systems, Inc., a Delaware corporation
(the "Advisor").
W I T N E S S E T H :
WHEREAS, the Partnership has been organized primarily for the
purpose of trading, buying, selling, spreading or otherwise ac-
xxxxxxx, holding or disposing of futures, forwards and options
contracts. Physical commodities also may be traded from time to
time. The foregoing commodities related transactions are collec-
tively referred to as "Commodities"; and
WHEREAS, the General Partner is authorized to utilize the
services of one or more professional commodity trading advisors in
connection with the Commodities trading activities of the Partner-
ship; and
WHEREAS, the Partnership wishes to retain the Advisor as a
commodity trading advisor to the Partnership to manage a portion of
the assets managed by another advisor until April 30, 1997 (excluding
any open positions previously managed by such advisor); and
WHEREAS, the Advisor's present business includes the manage-
ment of Commodities accounts for its clients; and
WHEREAS, the Advisor is registered as a commodity trading
advisor under the United States Commodity Exchange Act, as amended
("CE Act") and is a member of the National Futures Association
("NFA") as a commodity trading advisor and will maintain such
registration and membership for the term of this Agreement; and
WHEREAS, the Partnership and the Advisor desire to enter into
this Agreement
in order to set forth the terms and conditions upon
which the Advisor will render and implement commodity advisory
services in connection with the conduct by the Partnership of its
Commodities trading activities during the term of this Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Duties of the Advisor.
(a) Appointment. The Partnership hereby appoints the
Advisor, and the Advisor hereby accepts appointment, as its attorney-
in-fact to invest and reinvest in Commodities a portion of the Net
Asset Value of the Partnership on the terms and conditions set forth
herein, commencing as of the date hereof. The Advisor's initial
allocation shall be approximately $5.8 million. The precise defini-
tion of the term "Net Asset Value" shall be as defined in Exhibit A
hereto. This limited power-of-attorney is a continuing power and
shall continue in effect with respect to the Advisor until terminated
hereunder. To this end, the Advisor (i) agrees to act as a commodity
trading advisor retained by the General Partner on behalf of the
Partnership, and specifically, to exercise discretion with respect
to that portion of the Net Asset Value of the Partnership which the
General Partner has allocated to the Advisor's management above, and
which the General Partner may allocate to the Advisor in the future
with the Advisor's consent), upon the terms and conditions, and for
the purposes, set forth in this Agreement and (ii) shall have sole
authority and responsibility for independently directing the
investment and reinvestment in Commodities of the portion of the
Partnership's Net Asset Value allocated to it for the term of this
Agreement pursuant to the trading methods, systems and strategies of
its Eagle-Global Systems (the Advisor's "Trading Approach") as such
trading approach is described in the Advisor's Disclosure Document
dated February 10, 1997 attached hereto as Exhibit B (the "Disclosure
Document"), receipt of which is hereby acknowledged, subject to the
Partnership's
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trading policies and limitations as set forth in
Exhibit C, attached hereto, as the same may be modified or amended
and provided in writing to the Advisor from time to time (the
Partnership's "Trading Policies and Limitations"). The General
Partner and the Partnership acknowledge that the Advisor makes no
guarantee of profits or of protection against loss, and that the
Advisor's Commodities transactions hereunder are for the account and
risk of the Partnership. During the term of this Agreement the
Advisor agrees to provide the Partnership with updated month-end
information related to the Advisor's performance results within a
reasonable period of time after the end of the month to which it
relates.
(b) Allocation of Responsibilities. The General Partner
will have the responsibility for the management of the portion of the
Partnership's Net Asset Value that is invested in United States
Treasury bills or other investments approved by the Commodity Futures
Trading Commission ("CFTC") for the investment of "customer" funds
or are held in cash. The Advisor will use its good faith best
efforts in determining the investment and reinvestment in Commodities
of that portion of the Partnership's Net Asset Value allocated to it
in compliance with the Trading Policies and Limitations, and in
accordance with its Trading Approach. In the event that the General
Partner shall, in its sole discretion, determine in good faith
following consultation, if appropriate under the circumstances, with
the Advisor that any trading instruction issued by the Advisor vio-
lates the Partnership's Trading Policies and Limitations, then the
General Partner, following reasonable notice appropriate under the
circumstances to the Advisor, may override such trading instruction
and the Advisor shall not be subject to liability for the results of
any such action taken by the General Partner. Nothing herein shall
be construed to prevent the General Partner from imposing any limita-
tion(s) on the trading activities of the Partnership beyond those
enumerated in Exhibit C hereto if the General Partner determines that
such limita-
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tion(s) are necessary or in the best interests of the
Partnership, in which case the Advisor will adhere to such
limitations following written notification thereof.
(c) Modification of Trading Approach. In the event the
Advisor wishes to use a trading method or strategy other than or in
addition to the Trading Approach in connection with trading for the
Partnership (including without limitation the deletion of an agreed
upon trading method or strategy or the addition of a trading method
or strategy in addition to the then agreed upon Trading Approach),
either in whole or in part, the Advisor may not do so unless it gives
the General Partner prior written notice of its intention to utilize
such different trading method or strategy, and the General Partner
consents thereto. (d) Notification of Material Changes.
The Advisor also agrees to give the Partnership prior written notice
of any proposed material change in its Trading Approach, and agrees
not to make any material change in such Trading Approach (as applied
to the Partnership) over the objection of the General Partner, it
being understood that the Advisor shall be free to institute non-
material changes in its Trading Approach (as applied to the Partner-
ship) without prior written notification. Without limiting the
generality of the foregoing, refinements to the Advisor's Trading
Approach, the addition or deletion of Commodities to or from the
Advisor's Trading Approach, and variations in the leverage principles
and policies utilized by the Advisor shall not be deemed a material
change in the Advisor's Trading Approach, and prior approval of the
General Partner shall not be required therefor. The Advisor agrees
that it will discuss with the General Partner upon request, subject
to adequate assurances of confidentiality, any trading methods or
strategies used by it for trading customer accounts which differ from
the Trading Approach which it uses for the Partnership.
(e) Request for Information. The Advisor agrees to provide
the Partnership with
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any reasonable information concerning the
Advisor that the Partnership may reasonably request, subject to
receipt of adequate assurances of confidentiality by the Partnership,
including, but not limited to, information regarding any change in
control, key personnel, Trading Approach and financial condition
which the Partnership reasonably deems to be material to the
Partnership, as well as any trading methods, programs, systems or
strategies used by it for other clients; the Advisor also shall
notify the Partnership of any such matters the Advisor, in its
reasonable judgment, believes may be material to the Partnership
relating to the Advisor and its Trading Approach.
(f) Non-Disclosure. Nothing contained in this Agreement
shall require the Advisor to disclose what it deems to be proprietary
or confidential information concerning any such trading methods or
strategies, including the Trading Approach. The Partnership and the
General Partner agree that they will keep confidential and will not
disseminate the Advisor's trading advice hereunder other than to (i)
the Partnership's brokers or dealers, or (ii) except as, and to the
extent that, it may be determined by the General Partner to be
expressly required by law (including court order) or regulation.
(g) Notice of Errors. The Advisor is responsible for
promptly reviewing all oral and written confirmations it receives to
determine that the Commodities trades were made in accordance with
the Advisor's instructions. If the Advisor determines that an error
was made in connection with a trade or that a trade was made other
than in accordance with the Advisor's instructions, the Advisor shall
promptly notify the Partnership of this fact, and shall utilize its
reasonable best efforts to cause the error or discrepancy to be
corrected.
(h) Exculpation. The Advisor shall not be liable to the
General Partner, its officers, directors, shareholders or employees,
or any person who controls the General Partner,
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or the Partnership
or its partners, or any of their respective successors or assigns
under this Agreement, except by reason of the Advisor's (including
any employee, director, officer or shareholder of the Advisor, or any
person who controls the Advisor) acts or omissions in material breach
of this Agreement or due to its or their misconduct or negligence or
by reason of not having acted in good faith in the reasonable belief
that such actions or omissions were in the best interests of the
Partnership; it being understood that all purchases and sales of
Commodities shall be for the account and risk of the Partnership, and
the Advisor shall not incur any liability for trading profits or
losses resulting therefrom.
2. Indemnification.
(a) The Advisor and each employee of the Advisor shall be
indemnified by the Partnership against any losses, judgments, lia-
bilities, expenses (including, without limitation, reasonable
attorneys' fees) and amounts paid in settlement of any claims
(collectively "Losses") sustained by the Advisor (i) in connection
with any matter relating to the Partnership's Registration Statement
No. 33-36216 as filed with the Securities and Exchange Commission or
its final prospectus, dated November 5, 1990 ("Prospectus"), as well
as any matters relating to the Partnership or any other advisor prior
to the effective date of this Agreement, (ii) in connection with any
acts or omissions of the Advisor relating to its management of its
allocable portion of the Partnership's Net Asset Value or in its
capacity as a trading advisor to the Partnership, and (iii) as a
result of a material breach of this Agreement by the Partnership or
the General Partner provided that, with respect to (ii) only (A) such
Losses were not the direct result of negligence, misconduct or a
material breach of this Agreement on the part of the Advisor, (B) the
Advisor and its employees officers, directors, shareholders, and each
person controlling the Advisor acted (or omitted to act) in good
faith and in a manner reasonably believed by it and
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them to be in the
best interests of the Partnership, and (C) any such indemnification
by the Partnership will only be recoverable from the assets of the
Partnership and/or the General Partner.
(b) The Partnership shall be indemnified by the Advisor
against any Losses sustained by the Partnership directly resulting
from (i) the negligence or misconduct of, or a material breach of
this Agreement by, the Advisor or its employees officers, directors,
shareholders, and each person controlling the Advisor or (ii) any
action or omission to act of the Advisor or its employees officers,
directors, shareholders, and each person controlling the Advisor that
was not taken in good faith or in a manner reasonably believed by it
and them to be in the best interests of the Partnership.
(c) No indemnification shall be permitted under this Section
2 for amounts paid in settlement if either (A) the party claiming
indemnification (the "Indemnitee") fails to notify the indemnifying
party of the terms of any settlement proposed, at least fifteen (15)
days before any amounts are paid or (B) the indemnifying party does
not in its good faith business judgment approve the amount of the
settlement within thirty (30) days of its receipt of notice of the
proposed settlement. Notwithstanding the foregoing, the indemnifying
party shall, at all times, have the right to offer to settle any
matter with the approval of the Indemnitee (which approval shall not
be withheld unreasonably) and if the indemnifying party successfully
negotiates a settlement and tenders payment therefor to the
Indemnitee, the Indemnitee must either use its reasonable best
efforts to dispose of the matter in accordance with the terms and
conditions of the proposed settlement or the Indemnitee may refuse
to settle the matter and continue its defense in which latter event
the maximum liability of the indemnifying party to the Indemnitee
shall be the amount of said proposed settlement. Any indemnification
under this Section 2, unless ordered by a court, shall be made by the
indemnifying party only as authorized in the specific case and
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only
upon a determination by mutually acceptable independent legal counsel
in a written opinion that indemnification is proper in the
circumstances because the Indemnitee has met the applicable standard
of conduct set forth hereunder.
(d) None of the provisions for indemnification in this
Section 2 shall be applicable with respect to default judgments or
confessions of judgment entered into by an Indemnitee, with its
knowledge, without the prior consent of the indemnifying party.
(e) In the event that an Indemnitee under this Section 2 is
made a party to an action, suit or proceeding alleging both matters
for which indemnification can be made hereunder and matters for which
indemnification may not be made hereunder, such Indemnitee shall be
indemnified only for that portion of the Losses incurred in such
action, suit or proceeding which relates to the matters for which
indemnification can be made.
(f) Expenses incurred in defending a threatened or pending
civil, administrative or criminal action, suit or proceeding against
an Indemnitee shall be paid in advance of the final disposition of
such action, suit or proceeding if (i) the legal action, suit or pro-
ceeding, if sustained, would entitle the Indemnitee to indemni-
fication pursuant to the terms of this Section 2, and (ii) the
Indemnitee undertakes to repay the advanced funds in cases in which
the Indemnitee is not entitled to indemnification pursuant to the
preceding paragraph, and (iii) in the case of advancement of
expenses, the Indemnitee receives a written opinion of mutually ac-
ceptable independent legal counsel that advancing such expenses is
proper in the circumstances.
3. Advisor Independence. The Advisor shall for all purposes
herein be deemed to be an independent contractor with respect to the
Partnership, the General Partner and each other commodity trading
advisor that provides or may in the future provide commodity trading
advisory services to the Partnership (the other Advisors and each
such other commodity trading advisor
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being collectively referred to
herein as the "Other Advisors"), and shall, unless otherwise
expressly authorized, have no authority to act for or to represent
the Partnership, the General Partner or any Other Advisor in any way
or otherwise be deemed to be a general agent, joint venturer or
partner of the Partnership, the General Partner or any Other Advisor,
or in any way be responsible for the acts or omissions of the
Partnership, the General Partner or any Other Advisor as long as it
is acting independently of such person. The parties acknowledge that
the Advisor has not been an organizer or promoter of the Partnership
and has no responsibility and shall not be subject to liability in
connection therewith.
Nothing herein contained shall be deemed to require the Part-
nership or the Advisor to take any action contrary to the
Partnership's Agreement of Limited Partnership or Certificate of
Limited Partnership, or The Advisor's By-Laws or Articles of
Incorporation, respectively, or any applicable statute, regulation
or rule of any exchange or self-regulatory organization.
The Partnership and the General Partner acknowledge that the
Advisor's Trading Approach is its confidential property. Nothing in
this Agreement shall require the Advisor to disclose the confidential
or proprietary details of its Trading Approach. The Partnership and
the General Partner further agree that they will keep confidential
and will not disseminate the Advisor's trading advice to the
Partnership, except as, and to the extent that, it may be determined
by the General Partner to be (i) necessary for the monitoring of the
business of the Partnership, including the performance of brokerage
services by the Partnership's commodity broker(s), or (ii) expressly
required by law or regulation.
4. Commodity Broker. All Commodities trades for the account of
the Partnership shall be made through such commodity broker or
brokers as the General Partner directs pursuant to such procedures
as are mutually agreed upon. The Advisor shall not have any
authority or
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responsibility in selecting or supervising any broker
for execution of Commodities trades of the Partnership or for
negotiating commission rates to be charged therefor. The Advisor
shall not be responsible for determining that any such bank or broker
used in connection with any Commodities transactions meets the xxxxx-
cial requirements or standards imposed by the Partnership's Trading
Policies and Limitations. At the present time it is contemplated
that the Partnership will effect all Commodities trades through
Prudential Securities Incorporated ("Prudential Securities");
provided, however, that the Advisor may execute transactions at such
other broker(s), and upon such terms and conditions, as the Advisor
and the General Partner agree if such broker(s) agree to "give up"
all such transactions to Prudential Securities for clearance and the
General Partner's consent to executing brokers shall not be
unreasonably withheld. To the extent that the Partnership determines
to utilize a broker or brokers other than Prudential Securities, it
will consult with the Advisor prior to directing it to utilize such
broker(s), and will not retain the services of such broker(s) over
the reasonable objection of the Advisor.
5. Fees. In consideration of and in compensation for the
performance of the Advisor's services under this Agreement, the
Advisor shall receive from the Partnership Management and Incentive
Fees as set forth below within fifteen (15) days following the end
of the period to which they relate, as follows:
(a) A management fee (the "Management Fee") of 1/6 of 1% (2%
annualized) of the portion of the Partnership's Net Asset Value
allocated to it as of the last day of each calendar month. For
purposes of determining such Management Fee, any distributions and
redemptions allocable to the Advisor made as of the last day of such
month shall be added back to the Net Asset Value and there shall be
no reduction for (i) the accrued Management Fee being calculated, or
(ii) any fees due the Advisor under paragraph (b) below accrued as
of the last day of such
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month or (iii) any reallocation of assets as
of the last day of such month, or (iv) any accrued but unpaid
extraordinary expenses. The Management Fee for any month in which
the Advisor manages all or any portion of the Net Asset Value of the
Partnership allocated to it for less than a full month shall be pro-
rated, such proration to be calculated on the basis of the number of
days in the month the Net Asset Value allocated to the Advisor was
under the Advisor's management as compared to the total number of
days in such month.
(b) A quarterly incentive fee (the "Incentive Fee") of
twenty-three percent (23%) of New High Net Trading Profits (as here-
inafter defined) achieved on the portion of the Partnership's Net
Asset Value allocated to the Advisor. New High Net Trading Profits
for the Advisor shall be computed as of the close of trading on the
last day of each calendar quarter. The first Incentive Fee which may
be due and owing to the Advisor in respect of any New High Net
Trading Profits shall be computed as of June 30, 1997. New High Net
Trading Profits shall be computed solely on the performance of the
Advisor and shall not include or be affected by the performance of
any Other Advisor. The Advisor shall not be required to make up any
trading losses which may have been incurred by any previous advisor
or any Other Advisor before the Advisor is eligible to receive any
incentive fees.
"New High Net Trading Profits" (for purposes of calculating the
Advisor's Incentive Fee only) for each calendar quarter is defined
as the excess (if any) of (A) the Net Asset Value of the Partnership
allocated to the Advisor as of the last day of any calendar quarter,
over (B) the Net Asset Value of the Partnership allocated to the
Advisor as of the last day of the most recent preceding calendar
quarter for which an Incentive Fee was earned (or the date the
Advisor commenced trading the Partnership's Net Asset Value,
whichever date the Net Asset Value allocated to it was higher). In
computing New High Net Trading Profits:
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(1) The Net Asset Value of (A) in the preceding sentence
shall be reduced by Management Fees for such quarter together with
brokerage commissions and other transaction costs attributable to the
Advisor's trading activities, general administrative charges
attributable to the pro rata portion of the Partnership's Net Asset
Value allocated to the Advisor for trading, and extraordinary
expenses, if any, directly attributable to the Advisor;
(2) The Net Asset Value of (B) in the preceding sentence
shall be reduced by Management and Incentive Fees for such quarter
together with brokerage commissions and other transaction costs
attributable to the Advisor's trading activities, general
administrative charges attributable to the pro rata portion of the
Partnership's Net Asset Value allocated to the Advisor for trading,
and extraordinary expenses, if any, directly attributable to the
Advisor;
(3) The difference between (A) and (B) in the preceding
sentence shall be (i) decreased by all interest earned on the portion
of the Partnership's Net Asset Value allocated to the Advisor between
the dates referred to in (A) and (B), and (ii) increased by (x) any
distributions or redemptions allocable to the Advisor and paid or
payable by the Partnership as of, or subsequent to, the date in (B)
through the date in (A); as well as (y) losses (including losses in-
curred from the date of the last Incentive Fee paid or payable), if
any, associated with redeemed Units allocable to the Advisor, and
(iii) adjusted (either increased or decreased, as the case may be)
to reflect any additional allocations or negative reallocations of
the Partnership's Net Asset Value to or from the Advisor from the
date in (B) to the last day of the calendar quarter as of which the
current Incentive Fee calculation is made.
For purposes of calculating the first Incentive Fee payable to the
Advisor, the date referred to in (B) shall be the date of this
Agreement.
If there is a cumulative loss when a withdrawal is made from the
Net Asset Value
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allocated to the Advisor for any reason, such loss
shall be reduced by the proportionate amount of the loss attributable
to the monies being withdrawn.
If an Incentive Fee shall have been paid by the Partnership to the
Advisor in respect of any calendar quarter and the Advisor shall
incur subsequent losses on the portion of the Partnership's Net Asset
Value under its management, the Advisor shall nevertheless be
entitled to retain amounts previously paid to it in respect of New
High Net Trading Profits.
(c) Neither the Advisor nor any of its employees shall
receive any commissions, compensation, remuneration or payments
whatsoever from any broker with which the Partnership carries an
account for transactions executed in the Partnership's account.
6. Term and Termination.
(a) Term. This Agreement shall commence on the date hereof
and, unless sooner terminated, shall continue in effect until the
close of business on June 30, 1998. Thereafter, this Agreement shall
be renewed automatically on the terms and conditions set forth herein
for additional successive twelve (12) month terms, each of which
shall commence on the first day of the month subsequent to the
conclusion of the preceding twelve (12) month term, unless this
Agreement is terminated pursuant to paragraphs (b), (c) or (d) of
this Section 6. The automatic renewal(s) set forth in the preceding
sentence hereof shall not be affected by (i) any reallocation of
Partnership's Net Asset Value away from the Advisor pursuant to
Section 7 of this Agreement, or (ii) the retention of Other Advisors
following a reallocation, or otherwise.
(b) Automatic Termination. This Agreement shall terminate
automatically in the event that the Partnership is terminated. This
Agreement shall terminate automatically with respect to the Advisor,
upon notice from the General Partner, without affecting the contin-
uation of this Agreement with any Other Advisor in the event that the
Advisor's allocable percentage
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of the Partnership's Net Asset Value
at the close of trading on any business day is equal to or less than
the Termination Amount. The "Termination Amount" shall be an amount
equal to 66-2/3% of the portion of the Partnership's Net Asset Value
allocated to the Advisor's management on the date it commences
Commodities trading activities for the Partnership, or the first day
of any calendar year, whichever day the Net Asset Value allocated to
the Advisor is higher, in either case, as adjusted on an ongoing
basis by the percentage decline(s) or increases in that portion of
the Partnership's Net Asset Value allocated to the Advisor's
management caused by distributions, redemptions and permitted
reallocations, and new allocations to the Advisor covered by
reallocations away from other trading advisors, respectively. Each
redemption and distribution of funds shall have the effect of re-
ducing the Termination Amount by an amount equal to the portion of
such redemption or distribution allocable to the Advisor. Reallo-
cations of funds away from the Advisor shall reduce the Termination
Amount dollar for dollar.
(c) Optional Termination Right of Partnership. This Agree-
ment may be terminated at any time in the sole discretion of the
General Partner upon at least thirty (30) days' prior written notice
to the Advisor. The General Partner will use its best efforts to
cause any such termination to occur as of a month-end.
(d) Optional Termination Right of Advisor. The Advisor
shall have the right to terminate this Agreement (1) upon written
notice to the General Partner at least thirty (30) days' prior to the
end of each month of this Agreement; and (2) upon thirty (30) days'
prior written notice to the General Partner in the event (i) of the
receipt by the Advisor of an opinion of independent counsel
satisfactory to the Advisor and the Partnership that by reason of the
Advisor's activities with respect to the Partnership, the Advisor is
required to register as an investment adviser under the Investment
Advisers Act of 1940; (ii) that the registration of the
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General
Partner as a commodity pool operator under the CE Act, or its NFA
membership as a commodity pool operator is revoked, suspended,
terminated or not renewed; (iii) the General Partner imposes addi-
tional trading limitation(s) pursuant to Section 1 of this Agreement
which the Advisor does not agree to follow in its management of the
Partnership's Net Asset Value or the General Partner overrides a
trading instruction of the Advisor; (iv) if the Net Asset Value
allocated to the Advisor decreases, for any reason, to less than
$2,000,000; (v) the General Partner elects (pursuant to Section 1 of
this Agreement) to have the Advisor use a different Trading Approach
in the Advisor's management of Partnership assets from that which the
Advisor is then using to manage such assets and the Advisor objects
to using such different Trading Approach; (vi) there is an
unauthorized assignment of this Agreement by the Partnership or the
General Partner; or (vii) other good cause is shown and the written
consent of the General Partner is obtained (which shall not be
withheld unreasonably).
(e) In the event that this Agreement is terminated pursuant
to subparagraphs (b), (c) or (d) of this Section 6, the Advisor shall
be entitled to, and the Partnership shall pay, the Management Fee and
the Incentive Fee, if any, which shall be computed (A) with respect
to the Management Fee, on a pro rata basis, based upon the portion
of the month for which the Advisor had its portion of the
Partnership's Net Asset Value under management, and (B) with respect
to the Incentive Fee, if any, as if the effective date of termination
was the last day of the then current calendar quarter. The rights
of the Advisor to fees earned through the earlier to occur of the
date of expiration or termination of this Agreement shall survive
this Agreement until satisfied.
7. Reallocation of Funds. The General Partner may, at any
month-end, in its sole discretion, upon at least thirty (30) days'
prior written notice, reallocate a portion of the
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Partnership's Net
Asset Value then allocated to the Advisor's management away from the
Advisor.
8. Liquidation of Positions.
The Advisor agrees to liquidate open positions in the amount
that the General Partner informs the Advisor, in writing via telecopy
or other equivalent means, that the General Partner considers
necessary or advisable to liquidate in order to (i) effect any
termination or reallocation pursuant to Sections 6 or 7,
respectively, or (ii) fund its pro rata share of any redemption,
distribution or Partnership expense. The General Partner shall not,
however, have authority to instruct the Advisor as to which specific
open positions to liquidate, except as provided in Section 1 hereof.
The General Partner shall provide the Advisor with such reasonable
prior notice of such liquidation as is practicable under the
circumstances and will endeavor to provide at least three (3)
business days' prior notice. In the event that losses incurred by
the Advisor exceed the assets allocated to the Advisor, the General
Partner will withdraw the funds necessary to cover such excess losses
pro rata from the assets under the management of all Other Advisors.
9. Other Accounts of the Advisor.
(a) Subject to paragraph (b) of this Section 9, the Advisor
shall be free to manage and trade accounts for other investors (in-
cluding other public and private commodity pools) during the term of
this Agreement and to use the same or other information and Trading
Approach utilized in the performance of services for the Partnership
for such other accounts so long as the Advisor's ability to carry out
its obligations and duties to the Partnership pursuant to this
Agreement is not materially impaired thereby. In addition, the
Advisor and its employees, as applicable, also will be permitted to
trade in Commodities for their own accounts, so long as the
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Advisor's
ability to carry out its obligations and duties to the Partnership
is not materially impaired thereby.
(b) Furthermore, so long as the Advisor is performing
services for the Partnership, it agrees that it will not accept
additional capital for management in the Commodities markets if doing
so would have a reasonable likelihood of resulting in the Advisor
having to modify materially its agreed upon Trading Approach being
used for the Partnership in a manner which might reasonably be
expected to have a material adverse effect on the Partnership
(without limiting the generality of the foregoing, it is understood
that this paragraph shall not prohibit the acceptance of additional
capital, which acceptance requires only routine adjustments to
trading patterns in order to comply with speculative position limits
or daily trading limits).
(c) The Advisor agrees, in its management of accounts other
than the account of the Partnership, that it will not knowingly or
deliberately favor any other account managed or controlled by him or
any of its employees or affiliates (in whole or in part) over the
Partnership. The preceding sentence shall not be interpreted to
preclude inter alia (i) the Advisor from charging another client fees
which differ from the fees to be paid to it hereunder, or (ii) an
adjustment by the Advisor in the implementation of any agreed upon
Trading Approach in accordance with the procedures set forth in
Section 1 hereof, which is undertaken by the Advisor in good faith
in order to accommodate additional accounts. The Advisor, upon
reasonable request and receipt of adequate assurances of
confidentiality, shall provide the General Partner with an ex-
planation of the differences, if any, in performance between the
Partnership and any other similar account pursuant to the same
Trading Approach for which the Advisor or any of its affiliates acts
as a commodity trading advisor (in whole or in part).
-17-
(d) Upon reasonable notice from the General Partner, the
Advisor shall permit the General Partner to review at the Advisor's
offices during normal business hours such trading records as it
reasonably may request for the purpose of confirming that the
Partnership has been treated equitably with respect to advice
rendered during the term of this Agreement by the Advisor for other
accounts managed by the Advisor, which the parties acknowledge to
mean that the General Partner may inspect, subject to such
restrictions as the Advisor may reasonably deem necessary or
advisable so as to preserve the confidentiality of proprietary
information and the identity of its clients, all trading records of
the Advisor as it reasonably may request related to such other
accounts during normal business hours. The Advisor may, in its
discretion, withhold from any such report or inspection the identity
of the client for whom any such account is maintained and in any
event, the Partnership and the General Partner shall keep all such
information obtained by it from the Advisor confidential.
10. Speculative Position Limits. If, at any time during the term
of this Agreement, it appears to the Advisor that it may be required
to aggregate the Partnership's Commodities positions with the
positions of any other accounts it owns or controls for purposes of
applying the speculative position limits of the CFTC, any exchange,
self-regulatory body, or governmental authority, the Advisor promptly
will notify the General Partner if the Partnership's positions are
included in an aggregate amount which equals or exceeds one hundred
percent (100%) of the applicable speculative limit. The Advisor
agrees that, if its trading recommendations pursuant to its agreed
upon Trading Approach are altered because of the potential applica-
tion of speculative position limits, the Advisor will modify its
trading instructions to the Partnership and its other accounts in a
good faith effort to achieve an equitable treatment of all accounts.
The Advisor presently believes that its Trading Approach for the
management of the Partnership's ac-
-18-
count can be implemented for the
benefit of the Partnership notwithstanding the possibility that, from
time to time, speculative position limits may become applicable.
11. Redemptions, Distributions and Reallocations.
(a) The General Partner agrees to give the Advisor at least
three (3) business days' prior notice of any proposed redemptions,
distributions or reallocations.
(b) Redemptions and distributions shall be charged against
the various Partnership accounts managed by its trading advisors,
including the Advisor, in such proportions as the General Partner,
in its discretion, determines to be in the Partnership's best
interests.
12. Brokerage Confirmations and Reports. The General Partner
will instruct the Partnership's commodity broker or brokers to
furnish the Advisor with copies of all trade confirmations, daily
equity runs, and monthly trading statements relating to the Part-
nership's assets under the management of the Advisor. The Advisor
will maintain records and will monitor all open positions relating
thereto; provided, however, that except as provided in Section 1(f)
hereof, the Advisor shall not be responsible for any brokerage
errors. The General Partner also will furnish the Advisor with a
copy of all reports, including but not limited to, monthly, quarterly
and annual reports, sent to the limited partners, the Securities and
Exchange Commission ("SEC"), the CFTC and the NFA. The Advisor
shall, at the General Partner's request, provide the General Partner
with copies of all trade confirmations, daily equity runs, monthly
trading reports or other reports sent to the Advisor by the
Partnership's commodity broker regarding the Partnership, and in the
Advisor's possession or control, as the General Partner deems
appropriate, if the General Partner cannot obtain such copies on its
own behalf. Upon request, the General Partner will provide the
Advisor with accurate information with respect to the Partnership's
then current Net Asset Value and Net Asset Value per Unit.
-19-
13. The Advisor's Representations and Warranties. The Advisor
represents and warrants that:
(a) It has full corporate capacity and authority to enter
into this Agreement, and to provide the services required of it
hereunder;
(b) It will not by entering into this Agreement and by
acting as a commodity trading advisor to the Partnership, (i) be
required to take any action contrary to its incorporating documents,
any applicable statute, law or regulation of any jurisdiction or (ii)
breach or cause to be breached any undertaking, agreement, contract,
statute, rule or regulation to which it is a party or by which it is
bound which, in the case of (i) or (ii), would materially limit or
materially adversely affect its ability to perform its duties under
this Agreement;
(c) It is duly registered as a commodity trading advisor
under the CE Act and is a member of the NFA as a commodity trading
advisor and it will maintain and renew such registration and
membership during the term of this Agreement, and has complied, and
will continue to comply, with all laws, rules and regulations having
application to its business, including but not limited to rules and
regulations promulgated by the CFTC and NFA.
(d) A copy of its most recent Commodity Trading Advisor Dis-
closure Document, as required by Part 4 of the CFTC's regulations,
has been provided to the Partnership in the form of Exhibit B hereto
and, except as disclosed in such Disclosure Document, all information
in such Disclosure Document (including, but not limited to,
background, performance, trading methods and trading systems) is
true, complete and accurate in all material respects and is in
conformity in all material respects with the provisions of the CE Act
including the rules and regulations thereunder;
(e) The amount of Partnership assets to be allocated to the
Advisor should not,
-20-
in the reasonable judgment of the Advisor, result
in the Advisor being required to alter its Trading Approach to a
degree which would be expected to have a material adverse effect on
the Partnership;
(f) Neither the Advisor nor its stockholders, directors,
officers, employees, agents, principals or affiliates, nor any of its
or their respective successors or assigns: (i) shall knowingly or
deliberately use or distribute for any purpose whatsoever any list
containing the names and/or residence addresses of, and/or other
information about, the limited partners of the Partnership; nor (ii)
shall solicit any person it or they know is a limited partner of the
Partnership for the purpose of soliciting commodity business from
such limited partner, unless such limited partner shall have first
contacted the Advisor or is already a client of the Advisor or a
prospective client with which the Advisor has commenced discussions
or is introduced or referred to the Advisor by an unaffiliated agent
other than in violation of clause (i);
(g) This Agreement has been duly and validly executed and
delivered and is a valid and binding agreement, enforceable against
it in accordance with its terms;
(h) Xxxxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx concentrate, and
will continue to concentrate during the term of this Agreement, their
activities at the Advisor on portfolio management; and
(i) There is not pending, or to the best of its knowledge,
threatened or contemplated, any action, suit or proceeding before any
court or arbitration panel, or before or by any governmental,
administrative or self-regulatory body, to which the Advisor or its
stockholders, directors, officers, employees, agents, principals or
affiliates is a party, or to which any of its assets is subject,
which might reasonably be expected to result in any material adverse
change in the condition of the Advisor (financial or otherwise),
business or prospects or
-21-
reasonably might be expected to affect
adversely in any material respect any of the Advisor's assets or
which reasonably might be expected to (A) materially impair the
Advisor's ability to discharge its obligations to the Partnership,
or (B) result in a matter which would require disclosure in its
Disclosure Document which has not been so disclosed; and the Advisor
has not received any notice of an investigation by (i) the NFA
regarding noncompliance with NFA rules or the CE Act, (ii) the CFTC
regarding noncompliance with the CE Act, or the rules and regulations
thereunder, or (iii) any exchange regarding noncompliance with the
rules of such exchange, which investigation reasonably might be
expected to (1) materially impair its ability to discharge its
obligations to the Partnership, or (2) result in a matter which would
require disclosure in its Disclosure Document which has not been so
disclosed.
The within representations and warranties shall be continuing
during the term of this Agreement, and, if at any time, any event has
occurred which would make or tend to make
any of the foregoing not true, the Advisor promptly will notify the
Partnership in writing thereof.
-22-
14. The General Partner's Representations and Warranties. The
General Partner represents and warrants on behalf of the Partnership
and itself that:
(a) It has full corporate and other capacity and authority
to enter into this Agreement;
(b) It will not, by acting as general partner to the
Partnership or by entering into this Agreement, (i) be required to
take any action contrary to its incorporating or partnership doc-
uments or any applicable statute, law or regulation of any
jurisdiction, or (ii) breach or cause to be breached (A) any
undertaking, agreement, contract, statute, rule, regulation, to which
it or the Partnership is a party or by which it or the Partnership
is bound or (B) any order of any court or governmental or regulatory
agency having jurisdiction over the Partnership or the General
Partner, which in the case of (i) or (ii) would materially limit or
materially adversely affect the performance of its or the
Partnership's duties under this Agreement;
(c) The Partnership and the General Partner have obtained
all required governmental and regulatory licenses, registrations and
approvals required by law as may be necessary to act as described in
the Partnership's Registration Statement and Prospectus, including,
without limitation, registration as a commodity pool operator under
the CE Act and membership as a commodity pool operator in the NFA.
The General Partner will maintain and renew the foregoing
registrations, licenses, memberships and approvals, as
appropriate, during the term of this Agreement;
(d) The Partnership and the General Partner have complied,
and will continue to comply, with all laws, rules and regulations
having application to its or their business, including but not
limited to rules and regulations promulgated by the CFTC and NFA, and
there are no actions, suits or proceedings pending or, to the best
of the knowledge of the Partnership or the
-23-
General Partner,
threatened against it or them, at law or in equity or before or by
any federal, state, municipal or other governmental or regulatory
department, commission, board, bureau, agency or instrumentality, or
by any commodity or security exchange worldwide in which an adverse
decision would materially and adversely affect the ability of the
Partnership or the General Partner to comply with, and perform their
obligations under, this Agreement;
(e) This Agreement has been duly and validly authorized,
executed and delivered, and is a valid and binding agreement,
enforceable against each of them, in accordance with its terms; and
(f) On the date hereof, it is, and during the term of this
Agreement, it will be (i) in the case of the Partnership, a duly
formed and validly existing limited partnership, and (ii) in the case
of the General Partner, a duly formed and validly existing
corporation, in each case, in good standing under the laws of the
State of Delaware, and in good standing and qualified to do business
in each jurisdiction in which the nature and conduct of its business
requires such qualification and the failure to be so qualified would
materially adversely affect its ability to perform its obligations
under this Agreement; and
(g) All authorizations, consents or orders of any court, or
of any federal, state or other governmental or regulatory agency or
body required for the valid authorization, issuance, offer and sale
of the Partnership's Units were obtained, and, to the best of its
knowledge, after due inquiry no order preventing or suspending the
use of the Prospectus with respect to the Units was issued by the
SEC, the CFTC or the NFA. The Partnership's Registration Statement
and Prospectus contained all statements which were required to be
made therein, conformed in all material respects with the
requirements of the Securities Act of 1933, as amended and the CE
Act, and the rules and regulations of the SEC and the CFTC,
respectively, thereunder, and with
-24-
the rules of the NFA, and did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein (with respect to the Prospectus, in light of the
circumstances in which they were made) not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished to the General Partner, the Partnership or to
Prudential Securities by or on behalf of the trading advisors
referenced in the Registration Statement or Prospectus, including,
without limitation, all references to those trading advisors and
their affiliates, controlling persons, shareholders, directors,
officers and employees, as well as to each such trading advisor's
trading approach and past performance history.
(h) The Partnership's offering of its Units has terminated
and there are not currently, and will not be in the future, any
offering materials in use by the Partnership or the General Partner
in connection with the offer or sale of Units in the Partnership.
The within representations and warranties shall be continuing
during the term of this Agreement, and, if at any time, any event has
occurred which would make or tend to make any of the foregoing not
true, the General Partner promptly will notify the Advisor in
writing.
15. Assignment. This Agreement may not be assigned by any of the
parties hereto without the express prior written consent of the other
parties hereto.
-25-
16. Successors. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and the successors and permitted
assigns of each of them, and no other person (except as otherwise
provided herein) shall have any right or obligation under this
Agreement. The terms "successors" and "assigns" shall not include
any purchasers, as such, of Units.
17. Amendment or Modification. This Agreement may not be amended
or modified except by the written consent of the parties hereto.
18. Notices. Except as otherwise provided herein, all notices
required to be delivered under this Agreement shall be effective only
if in writing and shall be deemed given by the party required to
provide notice when received by the party to whom notice is required
to be given and shall be delivered personally, by registered mail,
postage prepaid, return receipt requested, or by telecopy, as follows
(or to such other address as the party entitled to notice shall
hereafter designate by written notice to the other parties):
If to the General Partner: If to the Partnership:
Seaport Futures Management Inc. Prudential-Bache OptiMax
Xxx Xxx Xxxx Xxxxx, 00xx xxxxx Futures Fund, L.P.
Xxx Xxxx, Xxx Xxxx 00000-0000 c/o Seaport Futures Management Inc.
Attention: Xxxxx X. Xxxxx One New York Plaza, 13th floor
Facsimile: (000) 000-0000 Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
and in either case with a copy to:
Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
-26-
and, with respect to legal notices,
a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to the Advisor:
Eagle Trading Systems, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
19. Governing Law. The parties agree that this Agreement shall
be governed by and construed in accordance with the laws of the State
of New York without regard to conflict of laws principles.
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. Disclosure Document Modifications. The Advisor shall
promptly furnish the General Partner with a copy of all modifications
to its Disclosure Document when available for distribution. Upon
receipt of any modified Disclosure Document by the General Partner,
the General Partner will provide the Advisor with an acknowledgement
of receipt thereof.
-27-
22. Promotional Literature. The parties agree that prior to
using any promotional or other material in which reference to the
other parties hereto is made (including reports to clients), they
shall furnish a copy of such information to the other parties and
will not make use of any literature containing references to such
other parties to which such other parties object, except as otherwise
required by law or regulation.
23. No Waiver. No failure or delay on the part of any party
hereto in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. Any waiver
granted hereunder must be in writing and shall be valid only in the
specific instance in which given.
24. Headings. Headings to Sections herein are for the con-
venience of the parties only, and are not intended to be or to affect
the meaning or interpretation of this Agreement.
25. Complete Agreement. Except as otherwise provided herein,
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
upon the parties hereto.
-28-
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which, when taken together, shall constitute one original instrument.
IN WITNESS WHEREOF, this Agreement has been executed for and
on behalf of the undersigned as of the day and year first above
written.
PRUDENTIAL-BACHE OPTIMAX SEAPORT FUTURES MANAGEMENT INC.
FUTURES FUND, L.P.
By: SEAPORT FUTURES
MANAGEMENT INC., By: /s/ Xxxxx X. Xxxxx
Its: General Partner -------------------------------
Xxxxx X. Xxxxx, President
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Xxxxx X. Xxxxx President
EAGLE TRADING SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------
Xxxxx Xxxxxxxxx, President
-29-
