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January 15, 1997
By Airborne
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Dear Rich:
We are writing this letter to amend the Cover Letter dated August 27, 1996 and
the Model Advisory Agreement, dated August 27, 1996 (together, the "Existing
Agreement"). To the extent this letter contradicts the Existing Agreement, this
letter will govern and the Existing Agreement will be deemed to have been
amended accordingly. All capitalized terms used but not defined herein will
have the meanings assigned to such terms in the Existing Agreement.
Effective April 1, 1997, The Xxxxxx Fund Limited Partnership (the "Fund") will
amend the fees payable to the Advisor as follows: an annual management fee of
1.75% and a quarterly incentive fee of 27.5%. All new investors will be
required to invest in this class.
Annual management fees and quarterly incentive fees payable to the Advisor by
the Fund will continue to be 2% & 25%, respectively, for those Units purchased
prior to April 1, 1997.
If the above is in accordance with your understanding of our agreement, please
countersign this letter agreement.
THE XXXXXX FUND LIMITED PARTNERSHIP
By: Kenmar Advisory Corp., its general partner
By: /s/ XXXXXX XXXXXXXXX XXXXXXX
----------------------------
Xxxxxx Xxxxxxxxx Xxxxxxx
Chief Operating Officer and
Senior Executive Vice President
ACCEPTED AND AGREED TO:
XXXXXX TRADING GROUP, INC.
By: /s/ XXXXXXX X. XXXXXX
---------------------
Xxxxxxx X. Xxxxxx
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August 27, 1996
Via Airborne Express
Xx. Xxxxx Xxxxxxx
Xxxxxx Trading Group, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
RE: THE XXXXXX FUND LIMITED PARTNERSHIP
Dear Xxxxx:
We are writing this letter (the "Cover Letter") to confirm our understanding
that you will manage the above-captioned entity pursuant to the Model Advisory
Agreement, dated August 27, 1996 (the "Model Agreement"), a copy of which is
attached hereto and incorporated herein as if each and every paragraph were set
forth in this Cover Letter.
In addition, we have agreed to the following:
1. Each capitalized term used in this Cover Letter will have the meaning
assigned to it in the Model Agreement.
2. The Kenmar Pool is Kenmar The Xxxxxx Fund Limited Partnership, a
Connecticut limited partnership.
3. The Advisor is Dennis Trading Group, Inc., an Illinois corporation with a
principal place of business at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX
00000, a telephone number of (000) 000-0000 and a facsimile number of (312)
559-9159.
4. The Advisor's Disclosure Document is dated March 19, 1996.
5. The Commodity Broker is E. D. & F. Man International Inc.
6. The Subaccount will initially be funded with the assets of the Kenmar Pool
other than those assets necessary for the ongoing operation of the Kenmar Pool.
7. The annualized Management Fee is 2%.
8. The Incentive Fee is 25%.
9. The Brokerage Commissions are $ 10.
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Xx. Xxxxx Xxxxxxx
August 27, 1996
Page 2
9. Section 3.1 (c) of the Model Agreement is hereby deleted in its
entirety and replaced with the following paragraph:
The Advisor may, in its sole discretion, refine or modify the Trading
Methods; provided, however, that the Advisor shall give the Kenmar Pool
at least 30 days' prior written notice of any proposed change to the
Trading Methods that the Advisor, in its reasonable judgment, deems
material and shall not trade the Subaccount based upon such proposed
material change without the prior written approval of the Kenmar Pool.
The addition and/or deletion of Commodity Interests from the Subaccount
shall be deemed not to be a material change.
10. Section 8.2 (a) is amended to delete the words "sole and exclusive".
If this is acceptable, please have Rich sign both copies of the Cover Letter and
return one of them to Xxxxxx X. Xxxxxxxxx, Esq.
THE XXXXXX FUND LIMITED PARTNERSHIP
By: Kenmar Advisory Corp., its general partner
By: /s/ XXXXXX XXXXXXXXX XXXXXXX
----------------------------
Xxxxxx Xxxxxxxxx Xxxxxxx
Chief Operating Officer and
Senior Executive Vice President
ACCEPTED AND AGREED TO:
XXXXXX TRADING GROUP, INC.
By: /s/ XXXXXXX X. XXXXXX
---------------------
Xxxxxxx X. Xxxxxx
President
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MODEL ADVISORY AGREEMENT
AUGUST 27, 1996
WITNESSETH:
WHEREAS, the Kenmar Pool was formed to engage in the speculative trading of
Commodity Interests (as defined below);
WHEREAS, the Kenmar Pool is authorized to select, retain, remove and/or replace
commodity trading advisors and to allocate and reallocate the assets of the
Kenmar Pool (as defined below) among such advisors;
WHEREAS, the Kenmar Pool has received and reviewed and understands the Advisor's
Disclosure Document dated as set forth in the Cover Letter;
WHEREAS, the Kenmar Pool desires to allocate to the Advisor a portion of the
assets of the Kenmar Pool to manage upon the terms and subject to the conditions
set forth herein;
WHEREAS, the Advisor desires to serve as an advisor for the Kenmar Pool and to
trade the Subaccount (as defined below) upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS. As used in this Agreement, the following terms will have the
following meanings:
Advisor. The Advisor, as set forth in the Cover Letter.
Affiliate. Any individual or entity that controls (directly or indirectly), is
controlled by (directly or indirectly), or is under common control with
(directly or indirectly), the individual or entity to which referred.
Agreement. This Advisory Agreement.
Allocation Date. The date on which funds are initially allocated to the
Subaccount.
Applicable Laws. (i) The provisions of all applicable statutes and laws of the
United States of America (including the states thereof) including the Commodity
Exchange Act of 1974, as amended, or of any other country, political subdivision
or jurisdiction in which a transaction is executed on behalf of the Kenmar Pool
and (ii) the constitution, by-laws, rules, regulations, orders, customs and
usage of (A) any market (and its clearing house, if any) on which a transaction
is executed on behalf of the Kenmar Pool and (B) the NFA or any other regulatory
or self-regulatory organization with jurisdiction over the Kenmar Pool or the
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Advisor.
Brokerage Commissions. The brokerage commissions to be charged the Subaccount,
as set forth in the Cover Letter, plus floor brokerage, exchange, clearing,
clearinghouse, principal, NFA, and administrative "give-up" fees and other
transaction fees and expenses.
CFTC. The Commodity Futures Trading Commission, or such other governmental
agency that performs the functions that are being performed as of the date of
this Agreement by the Commodity Futures Trading Commission.
Commodity Broker. The Commodity Broker, as set forth in the Cover Letter.
Commodity Interests. Commodity futures and forward contracts, commodity options
and other commodity interests as more fully described in the Disclosure Document
of the Kenmar Pool.
Cover Letter. The cover letter to which the Model Advisory Agreement is
attached.
Dealer. Such commodity dealer as the parties hereto may select.
Disclosure Document. The most current disclosure document, as it may be amended
or supplemented from time to time, of the Advisor or the Kenmar Pool (as the
case may be).
Incentive Fee. A calendar quarterly incentive fee, payable to the Advisor, equal
to the percentage set forth on the Cover Letter of Net New Trading Profits.
Kenmar Pool. The Kenmar entity, as set forth in the Cover Letter.
Management Fee. A monthly management fee payable to the Advisor without regard
to whether the Subaccount is profitable, equal to one-twelfth of the percentage
set forth on the Cover Letter of the month-end Net Asset Value of the Subaccount
before reduction for the Management Fee and Incentive Fee, if any, accrued with
respect to such month, pro rated for the actual number of trading days in the
month for which the Advisor managed the Subaccount or, in the case of mid-month
additions or withdrawals, if any, the applicable portion thereof.
NFA. The National Futures Association, or such other self-regulatory
organization that performs the functions that are being performed as of the date
of this Agreement by the National Futures Association.
Net Asset Value. The total assets of the Subaccount, including, but not limited
to, notional funds, all cash and cash equivalents, accrued interest, earned
discount, and open Commodity Interest positions, less total liabilities,
including, but not limited to, Brokerage Commissions that would be payable with
respect to the closing of open Commodity Interest positions, all as determined
in accordance with the principles set forth in this Agreement or, where no such
principles are specified herein, in accordance with United States generally
accepted accounting principles applied on a consistent basis. The value of all
Commodity Interests shall be the market value thereof. The market value of a
Commodity Interest traded on an exchange shall be based upon the settlement
price on the exchange on the date of determination; provided, however, that if a
Commodity Interest could not be liquidated on the day with respect to which the
assets of the Subaccount are being determined, the settlement price on the first
subsequent day on which the contract could be liquidated shall be the basis for
determining the liquidating value thereof. The market value of a forward
contract, a swap contract, or any other off-exchange contract, instrument, or
transaction shall mean its market value as determined by the Kenmar Pool on a
basis consistently applied.
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Net New Trading Profits. The realized (as adjusted by change in unrealized) net
trading profits earned on the Subaccount (excluding interest or
interest-equivalent income), decreased by the Management Fee and Brokerage
Commissions (as adjusted by change in accrued Brokerage Commissions), with all
such items determined from the first day of the calendar quarter that
immediately follows the last calendar quarter for which an Incentive Fee was
earned by the Advisor (or, if no Incentive Fee was earned previously by the
Advisor, from the Allocation Date) to the close of business on the last day of
the calendar quarter with respect to which such Incentive Fee calculation is
being made.
Position Limit. The speculative position limit of a certain Commodity Interest.
Principal. (1) Any person including, but not limited to, a sole proprietor,
general partner, officer or director, or person occupying a similar status or
performing similar functions, having the power, directly or indirectly, through
agreement or otherwise, to exercise a controlling influence over the activities
of the entity; (2) any holder or any beneficial owner of ten percent or more of
the outstanding share of any class of stock of the entity; and (3) any person
who has contributed ten percent or more of the capital of the entity.
Subaccount. The trading Subaccount of the Kenmar Pool to be opened at the
Commodity Broker or Dealer, in which the Advisor is to invest in Commodity
Interests pursuant to the Trading Methods upon the terms and subject to the
conditions set forth herein. The Subaccount will initially be funded as set
forth in the Cover Letter.
Trading Methods. The trading program(s), system(s), method(s), model(s),
strategy(ies) and/or formula(e) of the Advisor as disclosed in its Disclosure
Document. In the event that the Advisor has more than one Trading Method, the
Advisor will manage the Subaccount pursuant to the Trading Method set forth in
the Cover Letter.
Withdrawal Ratio. The ratio created by dividing (x) the Net Asset Value of the
funds withdrawn or allocated from the Subaccount by (y) the Net Asset Value of
the Subaccount as of the close of business on the immediately preceding business
day.
1.2 HEADINGS. Headings herein are for the convenience of the parties only, and
are not intended to affect the meaning or interpretation of this Agreement.
ARTICLE II
DUTIES AND UNDERTAKINGS OF THE KENMAR POOL
2.1 SUBACCOUNT. The Kenmar Pool will open and maintain the Subaccount and
allocate funds thereto and therefrom in accordance with this Agreement. Such
funds will be used to fulfill the margin requirements and other financial
obligations of the Subaccount. The Kenmar Pool, and not the Advisor, will have
the authority and responsibility with regard to the investment, maintenance and
management of assets held in the Subaccount but not needed for margin related
purposes.
2.2 POWER OF ATTORNEY. The Kenmar Pool hereby constitutes, appoints, and
authorizes the Advisor as its agent and attorney-in-fact with respect to the
Subaccount as such Subaccount may be increased or decreased by trading profits
or losses or subsequent additions or withdrawals. The Advisor will trade, buy,
sell, spread, swap or otherwise acquire, hold, or dispose of Commodity
Interests, on margin or otherwise, all in accordance with the authority and
terms and conditions set forth in this Agreement.
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ARTICLE III
DUTIES AND UNDERTAKINGS OF THE ADVISOR
3.1 INVEST SUBACCOUNT.
(a) As of the Allocation Date, the Advisor will have sole authority and
responsibility for investing and reinvesting the Subaccount in Commodity
Interests pursuant to the Trading Methods, which investments and reinvestments
will be at and for the risk of the Kenmar Pool and the Subaccount.
(b) Notwithstanding Subsection 3.1(a) above, the Kenmar Pool will have the
right orally, to be confirmed in writing: (i) to increase or decrease (including
decrease to $0) the amount of funds allocated to the Subaccount by such date
certain (including immediately) as the Kenmar Pool deems appropriate (in which
case the Advisor will modify accordingly its positions commensurate with its
risk/money management parameters); and/or (ii) to instruct the Advisor to
liquidate all or a portion of the Kenmar Pool's positions by such date certain
(including immediately) as the Kenmar Pool deems appropriate.
(c) The Advisor may, in its sole discretion, refine or modify the Trading
Methods; provided, however, that the Advisor will give the Kenmar Pool at least
thirty (30) days' prior written notice of any proposed material change to the
Trading Methods and will not trade the Subaccount based upon such proposed
material change without the prior written approval of the Kenmar Pool. The
addition and/or deletion of Commodity Interests from the Subaccount will be
deemed not material.
3.2 UNIFORMITY OF ACTS AND PRACTICES.
(a) The Advisor shall treat the Kenmar Pool in a fiduciary capacity;
accordingly, under no circumstance will the Advisor favor or prefer any client's
Commodity Interest account over the Subaccount. Subject to that standard, the
Advisor will be free (i) to advise other investors as to the purchase and sale
of Commodity Interests and to manage and trade for such other investors'
Commodity Interest accounts as well as trade for the Advisor's own Commodity
Interest accounts and (ii) to trade other accounts using the Trading Methods or,
subject to Subsection 3.2(b) below, using a trading system, method, model,
strategy or formula different from the Trading Methods. Notwithstanding anything
to the contrary in this Subsection 3.2(a), the Advisor will be deemed not to be
favoring or preferring another client's Commodity Interest account over the
Subaccount if the Advisor manages or trades such other client's Commodity
Interest account either (i) in accordance with specific written instructions of
a client, (ii) in accordance with the Advisor's money management approach based
upon the amount of equity and/or profits in such account, or (iii) in accordance
with another trading program, system, method, model, strategy and/or formula
disclosed in the Advisor's Disclosure Document.
(b) In addition to, and not in lieu of Section 3.1 above, the Advisor will
consult with the Kenmar Pool from time to time regarding modified or different
trading programs, systems, methods, models, strategies and/or formulas that the
Advisor has developed and tested and deems suitable for trading client Commodity
Interest accounts, and, if both the Advisor and the Kenmar Pool deem it
appropriate, the Advisor will trade the Subaccount pursuant to such strategy. In
no event will the Advisor employ any such modified or different trading system,
method, model, strategy or formula on behalf of any other client's Commodity
Interest account unless the Advisor has also offered such modified or different
trading system, method, model, strategy or formula to the Kenmar Pool for
trading on behalf of the Subaccount (subject to capacity constraints).
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(c) At the reasonable request of the Kenmar Pool and at the Advisor's
expense, the Advisor will promptly provide the Kenmar Pool with an explanation
of the differences, if any, in performance between the Subaccount and any other
client Commodity Interest account for which the Advisor is responsible for
trading (in whole or in part) pursuant to the Trading Methods.
3.3 PLACEMENT OF TRADES.
(a) The Kenmar Pool shall have sole authority and responsibility for
selecting, retaining and supervising clearing brokers and negotiating brokerage
commission rates. The Advisor will cause all Commodity Interest transactions for
the Subaccount to be cleared through the Commodity Broker.
(b) Notwithstanding Subsection 3.3(a) above, the Advisor may arrange for
the execution of orders for the Subaccount through floor brokers selected by the
Advisor, provided that such floor brokers "give up" such transactions to the
Commodity Broker for clearance and carrying in the Subaccount, and provided
further that the Kenmar Pool will have given its prior written consent to the
brokerage and floor commissions and fees and other transaction costs to be
charged by such floor broker.
3.4 SPECULATIVE POSITION LIMITS.
(a) The Advisor will not enter into or own, hold or control (either alone
or together with any other individual or entity) any position in any Commodity
Interest, or control any other Commodity Interest account, or render commodity
trading advice to any other individual or entity, or otherwise engage in any
activity that would cause the Advisor to knowingly cause the Kenmar Pool to be
in violation of any applicable Position Limits.
(b) If the positions in any Commodity Interest owned, held or controlled by
the Advisor (either alone or aggregated with the positions of any other
individual or entity to the extent such aggregation is required by Applicable
Law) equals or exceeds the Position Limits thereof, the Advisor will promptly
notify the Kenmar Pool of that fact and will take the action set forth in
Subsection 3.4(c) below.
(c) If the Advisor reaches a Position Limit, thereby necessitating the
reduction of positions in that Commodity Interest, the Advisor will reduce the
contracts of all those so participating in that Commodity Interest on an
equitable basis, taking into consideration the size of each account and the
leverage at which it is traded.
3.5 INFORMATION.
(a) The Advisor, at its own expense, will provide the Kenmar Pool with (i)
copies of all amendments and supplements to the Advisor's Disclosure Document
and (ii) at the Kenmar Pool's request, monthly reports presenting the updated
actual performance data of the Advisor, in form and substance consistent with
the Applicable Laws for the preceding month.
(b) Upon the reasonable request of the Kenmar Pool, the Advisor will
identify to the Kenmar Pool, and provide to the Kenmar Pool all performance
information with respect to, all client Commodity Interest accounts managed and
directed by it pursuant to the Trading Methods (without providing any client's
name or other identifying information), provide information reasonably requested
by the Kenmar Pool relating to each trade by the Advisor in the Subaccount and
provide all other information reasonably requested by the Kenmar Pool to monitor
the trading activities of the Advisor.
(c) The Advisor will send the Kenmar Pool copies of all trades made by the
Advisor on behalf of the
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Subaccount, by facsimile transmission or other means, by 4:30 p.m. (New York
time) on the day such trades are made.
3.6 BOOKS AND RECORDS.
(a) Subject to Subsection 3.6(b) below, the Advisor will permit the Kenmar
Pool and/or its accountants or agents to inspect, and will provide the Kenmar
Pool and/or its accountants or agents at the Kenmar Pool's expense, with copies
of such books, records and other documents of the Advisor relating to its
clients' Commodity Interest accounts as may be necessary for the Kenmar Pool to
confirm or verify (i) the completeness and accuracy of any performance data
provided pursuant to this Agreement or (ii) that the Subaccount is being treated
equitably by the Advisor.
(b) Such inspection will occur at the offices of the Advisor during normal
business hours and following 24 hours' notice by the Kenmar Pool or its
respective accountants or agents (as the case may be) of its intention to
inspect such books, records or other documents of the Advisor.
3.7 NOTICES. The Advisor will notify the Kenmar Pool orally (to be
confirmed in writing) promptly following the occurrence of any of the following
events:
(a) The Advisor modifies or revises its performance numbers so that there
is a material difference between the previous numbers and the revised numbers.
(b) A material error is committed with respect to the Subaccount or an
order or trade on behalf of the Subaccount was executed other than in accordance
with the Advisor's instructions.
(c) The Advisor merges, consolidates with, or sells or otherwise transfers
its advisory business, all or any portion of its assets, all or any portion of
its Trading Method or its goodwill.
(d) The Advisor becomes bankrupt or insolvent.
(e) The Advisor is unable to use any material part or aspect of its Trading
Method.
(f) The Advisor's registration with the CFTC or membership with the NFA is
revoked, suspended, terminated or not renewed, or limited, conditioned,
restricted or qualified in any respect.
3.8 THE KENMAR POOL'S DISCLOSURE DOCUMENT. Without the consent of the
Kenmar Pool, the Advisor will not circulate or distribute the Kenmar Pool's
Disclosure Document or any related promotional, advertising or solicitation
material nor engage in any marketing, selling or promotional activity whatsoever
relating to the Kenmar Pool.
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ARTICLE IV
FEES
4.1 MANAGEMENT FEE. For services rendered by the Advisor under this
Agreement the Kenmar Pool will pay the Advisor its Management Fee within thirty
(30) business days following the end of the month for which it is payable or
within thirty (30) business days following termination of this Agreement if
other than at month's end.
4.2 INCENTIVE FEE. In addition to the Management Fee, for services rendered
by the Advisor under this Agreement, the Kenmar Pool will pay the Advisor its
Incentive Fee within thirty (30) business days following the end of each
calendar quarter.
If the Advisor has a loss when funds are withdrawn or allocated away from the
Subaccount (other than for the payment of Brokerage Commissions, Management and
Incentive Fees and other proper charges or expenses), for the purpose of
calculating subsequent Incentive Fees, such loss will be reduced by an amount
equal to the product of (x) such loss and (y) the Withdrawal Ratio (as defined
below). If funds are subsequently reallocated to the Advisor, for the purpose of
calculating subsequent Incentive Fees, Net New Trading Profits will be reduced
by an amount equal to the product of (x) the amount of such earlier loss
reduction(s) and (y) the lesser of (i) 1 and (ii) the ratio created by dividing
(A) the amount of assets reallocated to the Advisor by (B) the amount of assets
previously withdrawn or allocated from the Advisor.
4.3 COMMISSIONS. The Advisor will not receive any share of the Brokerage
Commissions paid to any commodity broker, whether in the form of rebates or
otherwise.
4.4 SURVIVAL. Fees due the Advisor under this Article IV at the expiration
or termination of this Agreement will survive such expiration or termination and
shall be paid within ten (10) business days of Xxxxxx's receipt of such fees
from the Kenmar Pool.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 BY THE ADVISOR. The Advisor hereby represents and warrants to the
Kenmar Pool as follows:
(a) If the Advisor is a corporation or partnership, it is duly organized,
validly existing, and in good standing under the laws of its state of
incorporation or formation with full power and authority to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly and
validly authorized, executed and delivered by the Advisor and is a legal, valid
and binding agreement of the Advisor enforceable against the Advisor in
accordance with its terms. The individual executing and delivering this
Agreement for and on behalf of the Advisor is of full legal age in the
jurisdiction in which he resides and is legally competent and has full power and
authority and is permitted by applicable law to do so on behalf of the Advisor.
(b) The Advisor's Disclosure Document (and any amendments or information
contained in the supplements thereto) and the reports provided to the Kenmar
Pool pursuant to Subsection 3.5(a) above are true, accurate and complete in all
material respects and do not contain any misleading or untrue statement
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of a material fact or any omission to state a material fact required to be
stated therein or necessary to make the statements therein not materially
misleading in light of the circumstances under which such statements are made.
Such Disclosure Document complies in all material respects with all Applicable
Laws. Except as otherwise disclosed in the Disclosure Document, the actual
performance of all accounts managed or directed by the Advisor and required to
be disclosed is reflected therein in accordance with the requirements of the
Applicable Laws and such information is fairly presented and is true, correct
and complete in all material respects.
(c) The information relating to the Advisor (including performance of the
Advisor) contained in the most current Offering Memorandum of the Kenmar Pool
(and any amendments or supplements thereto) is true, accurate, complete and
complies in all material respects with the requirements of Applicable Laws
(including the rules and regulations of the CFTC) and does not contain any
materially misleading or untrue statement of a material fact or any omission to
state a material fact required to be stated therein or necessary to make the
statements therein not materially misleading in light of the circumstances under
which such statements are made.
(d) The performance of the obligations under this Agreement by the Advisor
will not conflict with, violate the terms of or constitute a default under: (i)
if the Advisor is a corporation or partnership, the organizational documents of
the Advisor; (ii) any agreement or instrument to which the Advisor is a party or
by which the Advisor is bound or to which any of the property (including but not
limited to the Trading Method) or assets of the Advisor is subject; or (iii) any
order, rule, law, regulation or other legal requirement applicable to the
Advisor or to the property or assets of the Advisor.
(e) The Advisor is currently registered as a commodity trading advisor with
the CFTC and is a member in such capacity with the NFA, and such registration
and membership have not expired or been revoked, suspended, terminated or not
renewed, or limited, conditioned, restricted, or qualified in any respect. The
Advisor and each Principal have all required governmental, regulatory, and
self-regulatory licenses, registrations and memberships necessary to carry out
its obligations under this Agreement and to act as described in this Agreement.
(f) The Advisor and each Principal thereof is in material compliance with
all Applicable Laws, the non-compliance with which will materially effect the
Advisor's ability to perform its obligations under this Agreement.
(g) There is neither pending nor, to the knowledge of the Advisor,
threatened any material investigation, action, suit or proceeding by or before
any court or governmental, regulatory, or self-regulatory authority or other
body to which the Advisor is a party, or to which any assets of the Advisor is
subject that may adversely affect the Advisor's business. The Advisor has not
received any notice of an investigation regarding non-compliance by the Advisor
with the Applicable Laws that may adversely affect the Advisor's business.
(h) The answer of the Advisor's Principals to each question of Part G of
Form 8-R is "no".
(i) Neither the Advisor nor any of its Affiliates or subsidiaries has any
arrangement or relationships with any futures commission merchant or
broker-dealer pursuant to which the Advisor or any of its Affiliates is or may
become entitled to receive any portion of the commissions or fees paid to such
entities by the Kenmar Pool.
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5.2 BY THE KENMAR POOL. The Kenmar Pool represents and warrants to the
Advisor as follows:
(a) The Kenmar Pool is duly organized and validly existing in its
jurisdiction of formation with full power and authority to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly and
validly authorized, executed and delivered by on behalf of the Kenmar Pool and
is a legal, valid and binding agreement of the Kenmar Pool enforceable against
the Kenmar Pool in accordance with its terms. The individual executing and
delivering this Agreement for and on behalf of the Kenmar Pool is of full legal
age in the jurisdiction in which he resides and is legally competent and has
full power and authority and is permitted by applicable law to do so on behalf
of the Kenmar Pool.
(b) The performance of the obligations under this Agreement by the Kenmar
Pool will not conflict with, violate the terms of or constitute a default under:
(i) the Kenmar Pool's organizational documents; (ii) any other agreement or
instrument to which the Kenmar Pool is a party or by which the Kenmar Pool is
bound or to which any of the property or assets of the Kenmar Pool is subject;
or (iii) any order, rule, law, regulation or other legal requirement applicable
to the Kenmar Pool or to the property or assets of the Kenmar Pool.
(c) The information contained in the Kenmar Pool's Disclosure Document is
true, accurate and complete in all material respects and does not contain any
misleading or untrue statement of a material fact and does not omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. Such Disclosure Document complies in all material
respects with the Applicable Laws.
(d) There is neither pending nor, to the knowledge of the Kenmar Pool,
threatened any investigation, action, suit or proceeding before or by any court
or governmental, regulatory or self-regulatory authority or other body to which
the Kenmar Pool is a party, or to which any of its assets are subject that may
adversely affect the Kenmar Pool's business. The Kenmar Pool has not received
any notice of any investigation regarding its non-compliance with the Applicable
Laws that may adversely affect the Kenmar Pool's business.
(e) The Kenmar Pool is in material compliance with all Applicable Laws, the
non-compliance with which will materially effect the Kenmar Pool's ability to
perform its obligations under this Agreement.
(f) The Kenmar Pool has all required governmental, regulatory, and
self-regulatory licenses, registrations and memberships necessary to carry out
its obligations under this Agreement and to act as described in this Agreement.
(h) The Kenmar Pool has received and reviewed a copy of the Advisor's
current Disclosure Document.
5.3 REPRESENTATIONS CONTINUING. The foregoing representations and
warranties will be continuing during the term of this Agreement and, if at any
time any event will occur that could make any of the foregoing incomplete or
inaccurate, the party whose representation and warranty would become incomplete
or inaccurate will promptly notify the other party of the occurrence of the
event causing such incompleteness or inaccuracy.
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ARTICLE VI
STANDARD OF LIABILITY AND INDEMNIFICATION
6.1 ADVISOR'S AGREEMENT TO INDEMNIFY. The Advisor will indemnify, hold
harmless and defend the Kenmar Pool, its Affiliates and their respective
officers, directors, employees and agents and each other person, if any, who
controls the Kenmar Pool within the meaning of the Securities Act of 1933, as
amended (the "1933 Act") from and against, any loss, liability, claim, demand,
damage, cost and expense (including reasonable attorneys' and accountants' fees
and cost of investigation) arising out of or based upon an act, omission,
conduct or activity of the Advisor under this Agreement arising out of or based
upon: (i) a breach of any representation, warranty, covenant or material term of
this Agreement by the Advisor; (ii) an act of, or omission to act due to, breach
of fiduciary duty, bad faith, misconduct or negligence by the Advisor; or (iii)
a misleading or untrue statement of a material fact contained in the Advisor's
Disclosure Document or in any information, notice or report provided to the
Kenmar Pool or an omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which such statements are made.
6.2 THE KENMAR POOL'S AGREEMENT TO INDEMNIFY. The Kenmar Pool will
indemnify, hold harmless, and defend the Advisor, its Affiliates and their
respective officers, directors, employees and agents and each other person, if
any, who controls the Advisor within the meaning of the 1933 Act from and
against any loss, liability, claim, demand, damage, cost and expense (including
reasonable attorneys' and accountants' fees and cost of investigation) arising
out of the Advisor's performance of its services under this Agreement except
for: (i) a breach of any representation, warranty, covenant or material term of
this Agreement by the Advisor; (ii) an act of, or omission to act due to, breach
of fiduciary duty, bad faith, misconduct or negligence by the Advisor; or (iii)
a misleading or untrue statement of a material fact contained in the Advisor's
Disclosure Document or an omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which such statements are made.
6.3 INDEMNITY PROCEDURE.
(a) Promptly after receipt by an indemnified party under Section 6.1 or 6.2
of notice of the commencement of an action or claim to which either such Section
may apply, the indemnified party will notify the indemnifying party in writing
of the commencement of such action or claim. The omission so to notify the
indemnifying party will not relieve the indemnifying party of any liability that
the indemnifying party may have to the indemnified party under either such
Section except to the extent such omission will have materially prejudiced the
indemnifying party. The indemnity obligations herein will be in addition to any
rights or remedies a party may have under Applicable Law.
(b) In case any such action or claim will be brought against an indemnified
party and the indemnified party will notify the indemnifying party of the
commencement of such action or claim, the indemnifying party will be entitled to
participate in such action or claim and, to the extent that the indemnifying
party may desire, to assume the defense of such action or claim at its own
expense with counsel selected by the indemnifying party and approved by the
indemnified party. After notice from the indemnifying party to the indemnified
party of the indemnifying party's election so to assume the defense of such
action or claim, the indemnifying party will not be liable to the indemnified
party under either such Section for any legal, accounting, and other expenses
subsequently incurred by the indemnified party in connection with the defense of
such action or claim other than reasonable costs of investigation.
(c) Notwithstanding any provision of this Section 6.4 to the contrary, if
in any action or claim as to which indemnity is or may be available an
indemnified party will reasonably determine that its interests are
14
or may be adverse, in whole or in part, to the interests of the indemnifying
party or that there may be legal defenses available to the indemnified party
that are or may be different from, in addition to, or inconsistent with the
defenses available to the indemnifying party, the indemnified party may retain
its own counsel in connection with such action or claim and will be indemnified
by the indemnifying party for any legal, accounting and other expenses
reasonably incurred by or on behalf of it in connection with investigating or
defending such action or claim.
6.4 SETTLEMENT. If an indemnified party takes over the defense, an
indemnifying party will not be liable for a settlement of any such action or
claim effected without its written consent, but if any such action or claim will
be settled with the written consent of an indemnifying party or if there will be
a final judgment for the plaintiff in any such action or claim, the indemnifying
party will indemnify, hold harmless, and defend the indemnified party from and
against any loss, liability, expense in accordance with this Article VI by
reason of such settlement or judgment. Neither party will consent to entry of
any judgment or enter into any settlement that requires the payment of money, or
imposes any other material obligation on the other party, or that does not
include an unqualified release for the other party, without the other party's
written consent.
6.5 EFFECT OF EXPIRATION OR TERMINATION. This Article VI will survive
expiration or termination of this Agreement.
ARTICLE VII
TERM AND TERMINATION
7.1 TERM. This Agreement will commence on the date hereof and will continue
in full force and effect until terminated pursuant to Section 7.2 below.
7.2 TERMINATION. This Agreement will terminate as follows:
(a) Upon three (3) full month's prior written notice from one party to the
other party, which notice will include the effective date of termination, which
may only be the last day of any month not earlier than two (2) full years from
the date hereof.
(b) Upon thirty (30) days prior written notice from one party to the other
party if there is a material breach of any representation, warranty, covenant or
material term of this Agreement by the other party and the other party has
failed to cure such material breach prior to ten (10) days before the effective
date of termination.
(c) Immediately, upon the dissolution or insolvency of Kenmar or the
Advisor.
(d) Immediately, upon the Advisor's registration with the CFTC or
membership with the NFA as a commodity trading advisor being revoked, suspended,
terminated or not renewed, or limited, conditioned, restricted or qualified in
any respect.
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ARTICLE VIII
MISCELLANEOUS
8.1 STATUS.
(a) The Advisor is, and for all purposes will be deemed to be, an
independent contractor, and unless otherwise expressly provided herein or with
the prior written authorization of the Xxxxxx Xxxx, the Advisor will have no
authority to act for or represent the Kenmar Pool in any way and will not
otherwise be deemed to be an agent of the Kenmar Pool.
(b) Unless otherwise expressly provided herein or with the prior written
authorization of the Advisor, the Kenmar Pool will have no authority to act for
or represent the Advisor in any way and will not otherwise be deemed to be an
agent of the Advisor.
(c) Nothing contained in this Agreement will create a partnership, joint
venture, association, syndicate, unincorporated business or other separate
entity between or among the Kenmar Pool and/or the Advisor.
(d) The Advisor is neither a sponsor nor a promoter of the Kenmar Pool.
8.2 CONFIDENTIALITY.
(a) The Trading Methods (including Commodity Interest positions established
pursuant to the Trading Methods) are the sole and exclusive property of the
Advisor, and the Kenmar Pool will keep confidential and not disseminate the
Trading Method or any other information with respect to the Advisor that is
known by the Xxxxxx Xxxx to be confidential and proprietary to the Advisor.
Nothing herein will require the Advisor to disclose any proprietary or
confidential information concerning its Trading Methods or any customer names.
(b) The obligations of the parties in relation to confidentiality will not
apply to the extent that any information (i) is required to be disclosed in
accordance with any law (including any Applicable Law), rule, regulation or
order of any court, arbitration panel, governmental, regulatory or
self-regulatory authority or any audit requirement or (ii) has entered into the
public domain other than by a breach of duty on the part of any party hereto.
8.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein, and
no other agreement, verbal or otherwise, will be binding between the parties
hereto with respect to the matters referred to herein unless in writing and
signed by the parties.
8.4 AMENDMENT. This Agreement may not be amended except by a writing
signed by the parties hereto.
8.5 ASSIGNMENT. This Agreement may not be assigned by either party hereto
without the prior written consent of the other party, except that the Kenmar
Pool may assign this Agreement or transfer all or a portion of its assets or
goodwill to, Xxxxxxx X. Xxxxxx and/or Xxxx X. Xxxxxxx and/or any entity
controlled by either or both of them and may merge or consolidate with any
entity controlled by either or both of them.
16
8.6 SUCCESSORS. This Agreement will be binding upon and inure to the
benefit of the parties hereto, their successors and permitted assigns, and no
other person will have any right or obligation under this Agreement.
8.7 WAIVER. No waiver of any provision of this Agreement will be implied
from any course of dealing between the parties hereto or from any failure by
either party hereto to assert its rights hereunder on any occasion or series of
occasions.
8.8 SEVERABILITY. If any provision of this Agreement, or the application of
any provision to any person or circumstance, will be held to be inconsistent
with any present or future law, ruling, rule or regulation of any court or
governmental, regulatory, or self-regulatory authority having jurisdiction over
the subject matter hereof, such provision will be deemed to be rescinded or
modified in accordance with such law, ruling, rule or regulation, and the
remainder of this Agreement, or the application of such provision to any person
or circumstance other than those as to which it will be held inconsistent, will
not be affected thereby.
8.9 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT REFERENCE TO CHOICE
OF LAW DOCTRINE.
8.10 CONSENT TO ARBITRATION. ANY ACTION OR PROCEEDING BROUGHT BY ANY PARTY
HERETO TO ENFORCE ANY RIGHT, ASSERT ANY CLAIM OR OBTAIN ANY RELIEF WHATSOEVER
ARISING FROM, IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY BREACH
HEREOF, OR THE ENFORCEMENT HEREOF, OR ANY TRANSACTION COVERED HEREBY WILL BE
BROUGHT AND MAINTAINED BY SUCH PARTY EXCLUSIVELY IN, AND THE OTHER PARTIES
HEREBY CONSENT AND SUBMIT TO THE EXCLUSIVE JURISDICTION OF, AN APPROPRIATE
ARBITRATION BODY LOCATED WITHIN THE COUNTY OF FAIRFIELD, STATE OF CONNECTICUT.
8.11 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which will be deemed an original but all of which together will constitute one
and the same instrument.
8.12 NOTICES. Any notice required or desired to be delivered pursuant to
this Agreement will be in writing and will be delivered by courier service,
postage prepaid mail, telex, facsimile transmission, telegram or other similar
means and will be effective, if by mail, 7 days after mailing, or if notified
otherwise, when actually received by the party to whom such notice will be
directed, addressed as set forth in the Cover Letter.
