EXHIBIT 10.1.5
IDS MANAGED FUTURES, L.P.
ADVISORY CONTRACT
THIS ADVISORY CONTRACT is made and entered into as of the 2nd day of July,
1997 (the "AGREEMENT"), by and among IDS Managed Futures, L.P., a Delaware
limited partnership (the "PARTNERSHIP"), IDS Futures Corporation, a Minnesota
corporation ("IDS FUTURES"), CIS Investments, Inc., a Delaware corporation
("CISI") (IDS Futures and CISI are collectively referred to as the "GENERAL
PARTNERS" and individually referred to as a "GENERAL PARTNER") and Xxxxxx
Investment Corporation, a Delaware corporation ("XXXXXX");
WITNESSETH:
WHEREAS, the Partnership was organized primarily for the purpose of
trading, buying, selling, spreading or otherwise acquiring, holding or disposing
of commodity futures contracts on U.S. exchanges and, in addition, from time to
time the Partnership also may engage in transactions in futures contracts on
foreign exchanges, forward contracts, options on commodity futures contracts and
physical commodities on U.S. exchanges and other commodity interests
(collectively "COMMODITIES"); and
WHEREAS, the Partnership is currently engaged in an offering ("OFFERING")
of units of limited partnership interest in the Partnership (the "UNITS")
through American Express Financial Advisors Inc., an affiliate of IDS Futures
Corporation, and in connection therewith, the Partnership has previously filed
with the United States Securities and Exchange Commission (the "SEC"), pursuant
to the United States Securities Act of 1933, as amended (the "1933 ACT"), a
registration statement on Form S-1 effective June 26, 1995, to register an
additional $50,000,000 in aggregate Units plus the unsold amount from prior
offerings, and has subsequently filed (i) Post-Effective Amendment No. 1
effective July 31, 1996, and (ii) Post-Effective Amendment No. 2, not declared
effective with the SEC. The Partnership is in the process of preparing and
filing Post-Effective Amendment No. 3 with the SEC, and as part thereof a
prospectus, to extend the offering period of the offering and update financial
and certain other information. (The above-referenced registration statement,
together with all amendments thereto, shall be referred to herein as the
"REGISTRATION STATEMENT" and which prospectus together with all supplements
thereto in substantially the final form filed with the SEC under the Act shall
be referred to herein as the "PROSPECTUS"); and
WHEREAS, the General Partners desire to utilize the services of Xxxxxx in
connection with the commodity trading activities of the Partnership; and
WHEREAS, Xxxxxx is registered as a commodity trading advisor under the
Commodity Exchange Act, as amended ("CE ACT"), and is a member of the National
Futures Association ("NFA") as a commodity trading advisor ("CTA") and will
maintain such registration and membership for the term of this Agreement; and
WHEREAS, the Partnership and Xxxxxx desire to enter into this Agreement in
order to set forth the terms and conditions upon which Xxxxxx will render and
implement commodity advisory services in connection with the conduct by the
Partnership of its commodity trading activities during the term of this
Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND CONDITIONS
HEREINAFTER SET FORTH, the parties hereto hereby agree as follows:
1. DUTIES OF THE ADVISOR. The Partnership hereby appoints Xxxxxx as its
exclusive attorney-in-fact to invest and reinvest in Commodities the assets of
the Partnership which the General Partners allocate to Xxxxxx on the terms and
conditions set forth herein. This limited power-of-attorney is a continuing
power and shall continue in effect with respect to Xxxxxx until terminated
hereunder. To this end, Xxxxxx (i) agrees to act as one of the commodity
trading advisors employed by the General Partners on behalf of the Partnership,
and specifically, to exercise discretion with respect to that portion of the
assets of the Partnership which the General Partners allocate to Xxxxxx'x
management upon the terms and conditions, and for the purposes, set forth in
this Agreement and in the Prospectus of the Partnership relating to the offering
of Units, and (ii) shall have sole authority and responsibility for directing
the investment and reinvestment of the Partnership's assets allocated to it in
Commodities for the term of this Agreement pursuant to Xxxxxx'x trading systems,
methods and strategies included in Xxxxxx'x Diversified Portfolio, a description
of which is attached hereto as Exhibit A and hereby made a part hereof
(hereinafter referred to as Xxxxxx'x "TRADING APPROACH"), as set forth in the
Prospectus.
To the extent that assets of the Partnership are 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 General Partners will have the responsibility for the management thereof in
investments other than Commodities. Xxxxxx will use its good faith best efforts
in determining the investment and reinvestment of the Partnership's assets
allocated to it in compliance with the Partnership's Trading Policies and
limitations as set forth in Exhibit B attached hereto and hereby made a part
hereof (hereinafter referred to as the "TRADING POLICIES"), and in accordance
with Xxxxxx'x Trading Approach, and, to the extent Xxxxxx is notified thereof
and (except as set forth in the last sentence of this paragraph) agrees thereto,
in accordance with revisions to such Trading Policies and limitations made by
the General Partners (each using its good faith business judgment) in accordance
with the terms of this Agreement and the Prospectus. In the event that the
General Partners shall, in their sole discretion, determine that any trading
instruction issued by Xxxxxx violates the Partnership's Trading Policies or
limitations, or for any other reason, is not in the best interests of the
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Partnership, then the General Partners may override such trading instruction
upon prior notice to Xxxxxx, if practical, or, otherwise, as soon as possible
thereafter. Nothing herein shall be construed to prevent the General Partners
from imposing any limitation(s) on the trading activities of the Partnership
beyond those enumerated in the Prospectus if the General Partners determine
(each using its good faith business judgment) that such limitation(s) are
necessary in the best interests of the Partnership, in which case Xxxxxx will
adhere to such limitations following written notification thereof.
In the event that Xxxxxx wishes to use a Trading Approach other than or in
addition to the Trading Approach set forth in the Prospectus in connection with
its trading for the Partnership, either in whole or in part, it may not do so
unless Xxxxxx gives the General Partners prior written notice of its intention
to utilize such different Trading Approach, including a description of such
different Trading Approach and the General Partners consent thereto in writing.
Xxxxxx also agrees to give the Partnership prior written notice of any
proposed material change in its Trading Approach as set forth in the
Prospectus, and agrees not to make any material change in such Trading
Approach (as applied to the Partnership) without the prior express written
approval of the General Partners, it being understood that Xxxxxx shall be
free to institute non-material changes in its Trading Approach (as applied to
the Partnership) without such prior written approval. Without limiting the
generality of the foregoing, refinements to Xxxxxx'x Trading Approach, the
addition or deletion of Commodities to or from Xxxxxx'x Trading Approach, or
a change not exceeding 25% in the leverage of any such Trading Approach,
shall not be deemed a material change in Xxxxxx'x Trading Approach, and prior
approval of the General Partners shall not be required therefor.
All purchases and sales of Commodities shall be for the account and risk of
the Partnership.
2. INDEMNIFICATION. Neither Xxxxxx, its employees, directors, officers,
shareholders or partners, or any person who controls or who is controlled by
Xxxxxx, shall be liable to the General Partners, their officers, directors,
shareholders or employees, or the Partnership, its partners or any of their
successors or assigns under this Agreement, except by reason of acts or
omissions in contravention of the express terms of this Agreement or due to
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, or not opposed to,
the best interests of the Partnership; it being understood that, without
limiting Xxxxxx'x liability hereunder, trading profits or losses incurred on
behalf of the Partnership shall be for the account of the Partnership and Xxxxxx
shall not incur any credit or liability for such profits or losses and Xxxxxx
shall not in any way be responsible for the acts or omissions of the other
trading advisors.
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Xxxxxx, and each officer, director, shareholder, partner and employee of
Xxxxxx, and each person who controls and who is controlled by Xxxxxx, shall be
indemnified by the Partnership, to the fullest extent permitted by law, against
any losses, judgments, liabilities, expenses (including reasonable attorneys'
fees and accountants' fees) and claims, including settlements, incurred or
sustained by Xxxxxx in connection with any acts or omissions of Xxxxxx relating
to its management of its allocable share of Partnership assets pursuant to this
Agreement or with its status as a trading advisor to the Partnership, PROVIDED
that (i) there has been no judicial determination that such liability was the
result of negligence, misconduct or a breach of this Agreement on the part of
Xxxxxx, nor (ii) any judicial determination that Xxxxxx, and its officers,
directors, shareholders, partners and employees (as applicable), and each person
controlling or controlled by Xxxxxx, did not act (or took no action) in good
faith and in a manner reasonably believed by it and them to be in, or not
opposed to, the best interests of the Partnership. Any such indemnification
involving a material amount, unless ordered or expressly permitted by a court,
shall be made by the Partnership only upon the written advice of independent
counsel acceptable to the Partnership that Xxxxxx has met the applicable
standard of conduct described above.
Expenses incurred in defending a threatened or pending civil,
administrative or criminal action, suit or proceeding against the foregoing
indemnitees may be paid by the Partnership or the General Partners in advance of
the final disposition of such action, suit or proceeding if (i) the legal
action, suit or proceeding, if not sustained, would entitle the indemnitees to
indemnification pursuant to the preceding paragraph, and (ii) Xxxxxx undertakes
to repay the advanced funds to the Partnership and the General Partners in cases
in which the foregoing indemnitees are not entitled to indemnification pursuant
to the preceding paragraph. Expenses incurred in defending a threatened or
pending civil, administrative or criminal action, suit or proceeding against
Xxxxxx and one or both General Partners shall be paid initially by such General
Partner(s), subject to subsequent proportionate reimbursement by Xxxxxx in the
event of an unfavorable determination with respect to Xxxxxx; PROVIDED, that
such initial payment of expenses shall not be made by such General Partner(s) on
behalf of Xxxxxx if Xxxxxx elects to be represented by counsel of its own choice
or if the defense of Xxxxxx involves distinct issues of law or of fact, and,
PROVIDED FURTHER, that in the event of the initial payment of such expenses by
such General Partner(s), such General Partner(s) shall have the exclusive right
to select counsel.
3. OBLIGATIONS OF THE PARTNERSHIP AND XXXXXX. The Partnership, the
General Partners and Xxxxxx (only with respect to making the disclosures
regarding itself set forth in the immediately following sentence) respectively
agree to cooperate and use their good faith best efforts in connection with (a)
the preparation of amendments to the Registration Statement and the Prospectus;
(b) the filing of amendments to the Registration Statement and the Prospectus
with such governmental and self-regulatory authorities as the General Partners
deem appropriate for the registration and sale of the Units and the taking of
such other actions not inconsistent with this Agreement as the General Partners
may determine to be necessary or advisable in order to make the proposed offer
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and sale of Units lawful in any jurisdiction; and (c) causing the amendments to
the Registration Statement to remain effective under the 1933 Act and the
securities or Blue Sky laws of such jurisdictions as the General Partners may
deem appropriate. Xxxxxx agrees to make all necessary disclosures regarding
itself, its officers, partners and principals, trading performance, Trading
Approach, customer accounts (other than the names of customers or any other
information which Xxxxxx xxxxx to be proprietary or confidential, unless such
disclosure is required by law or regulation, including, without limitation, all
material disclosures required in connection with the preparation and filing of
the Registration Statement or Prospectus) and otherwise as may be required, in
the reasonable judgment of the General Partners, to be made in the Registration
Statement and Prospectus and in such applications. No description of Xxxxxx in
the Registration Statement, Prospectus, promotional material or otherwise may be
distributed by the General Partners without the prior consent of Xxxxxx.
Xxxxxx agrees to participate in "road show" and similar presentations in
connection with the offering of the Units to the extent reasonably requested by
the General Partners, on the following conditions: (i) all reasonable expenses
incurred by Xxxxxx in the course of such participation will be for the account
of the General Partners or the Partnership, and if paid directly by Xxxxxx shall
be reimbursed to Xxxxxx, (ii) Xxxxxx shall not be obligated to take any action
which might require registration as a broker-dealer or investment adviser under
any applicable federal or state law, and (iii) Xxxxxx shall not be required to
assist in "road show" or similar presentations to the extent that, on the advice
of counsel, Xxxxxx reasonably believes that doing so would interfere with
Xxxxxx'x trading activities or be unlawful. The parties acknowledge that Xxxxxx
has not been, either alone or in conjunction with the General Partners or their
affiliates, an organizer or promoter of the Partnership.
Xxxxxx agrees to execute a Representation Agreement in a form mutually
acceptable to all parties hereto, relating to the offering of the Units
("REPRESENTATION AGREEMENT") which shall contain, among other things, such
representations, warranties, covenants and indemnities of Xxxxxx, the
Partnership and the General Partners, as may be agreed upon between and among
the parties.
4. ADVISOR INDEPENDENCE. Xxxxxx is and shall for all purposes herein be
deemed to be an independent contractor with respect to the Partnership, the
General Partners and the other trading advisors of the Partnership, and shall,
unless otherwise expressly authorized, have no authority to act for or to
represent the Partnership, the General Partners or the other trading advisors in
any way or otherwise be deemed to be a general agent of the Partnership, the
General Partners or the other trading advisors.
The Partnership and the General Partners acknowledge that the Trading
Approach of Xxxxxx is the confidential property of Xxxxxx. Nothing in this
Agreement shall require Xxxxxx to disclose the confidential or proprietary
details of Xxxxxx'x Trading Approach, except (i) to the extent required by law
or regulation, (ii) to the extent that such details may have come to be
disseminated to the general public through the actions or omissions of persons
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other than the General Partners or the Partnership, or (iii) to the extent such
details are disclosed in the Registration Statement. The Partnership and the
General Partners further agree that they will keep confidential and will not
disseminate Xxxxxx'x trading advice to the Partnership, except as, and to the
extent, that it may be determined by the General Partners to be (i) necessary
for professional service providers or affiliates of the General Partners to
provide ordinary business services to the Partnership, (ii) the performance of
brokerage services with the Partnership's commodity broker(s), or (iii) required
by law or regulation.
5. COMMODITY BROKER. All Commodities trades for the account of the
Partnership shall be made through such commodity broker or brokers as the
General Partners direct. Xxxxxx shall have authority to communicate all orders
directly to such broker(s). Xxxxxx shall not have any authority or
responsibility in selecting or supervising any broker for execution of
Commodities trades of the Partnership or for negotiating commission rates to be
charged therefor. At the present time it is contemplated that the Partnership
will execute all Commodities trades through Cargill Investor Services, Inc. and
that brokerage commissions payable by the Partnership will equal $35 per round
turn plus applicable exchange, clearing, NFA fees, give-up charges and
international differentials. Xxxxxx shall be notified in writing by the General
Partners if any Commodities trades for the account of the Partnership are to be
made through any futures commission merchant other than Cargill Investor
Services, Inc. ("CIS").
In addition, Xxxxxx may engage in exchange for physical transactions with
respect to currencies into futures contracts. Xxxxxx may execute transactions
at such other broker(s), and upon such terms and conditions, as Xxxxxx and the
General Partners agree if such broker(s) agree to "give up" all such
transactions to CIS for clearance and the General Partners' consent to executing
brokers shall not be unreasonably withheld.
6. FEES. In consideration of and in compensation for the performance of
Xxxxxx'x services under this Agreement, the Partnership agrees that it will pay
to Xxxxxx the following: (i) a monthly management fee (the "MANAGEMENT FEE")
equal to 1/12 of 3% of the Partnership's Net Asset Value (as hereinafter
defined) under the management of Xxxxxx as of the end of each month, and (ii) a
quarterly incentive fee (the "INCENTIVE FEE") of Eighteen Percent (18%) of
Trading Profits (as hereinafter defined) on the Net Asset Value (as hereinafter
defined) of the Partnership allocated by the General Partners to Xxxxxx'x
management and the calculation and payment of such incentive fees shall not be
affected by the performance of the other trading advisors. Trading Profits for
Xxxxxx shall be computed as of the close of trading on the last day of each
calendar quarter (March 31, June 30, September 30 and December 31). The first
Incentive Fee which may be due and owing to Xxxxxx in respect of any Trading
Profits shall be computed as of the end of the first calendar quarter during
which Xxxxxx managed the partnership's assets allocated to it for at least sixty
(60) days. Trading Profits shall be computed solely on the performance of
Xxxxxx and shall not include or be affected by the performance of the other
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trading advisors. Payment of the Management Fee and of the Incentive Fee shall
be made as soon as practicable following the end of the period to which they
relate. Management Fee shall be paid monthly and deducted prior to the
calculation of the quarterly Incentive Fees. The Incentive Fee shall accrue
monthly and be payable to Xxxxxx quarterly.
"NET ASSET VALUE" means the Partnership's total assets less total
liabilities, including any liability for organization and offering
expenses, to be determined on the basis of generally accepted accounting
principles, consistently applied, except as set forth below. For purposes
of this calculation:
(a) Net Asset Value shall include any unrealized profit or loss on
securities and open commodity positions and any other credit or debit
accruing to the Partnership but unpaid or not received by the Partnership.
(b) All securities and open commodity positions shall be valued at
their then market value which means, with respect to open commodity
positions, the settlement price as determined by the exchange on which the
transaction is effected or the most recent appropriate quotation as
supplied by the Clearing Broker or banks through which the transaction is
effected. If there are no trades on the date of the calculation due to
operation of the daily price fluctuation limits or due to a closing of the
exchange on which the transaction is executed, the contract will be valued
at fair value as determined by the General Partners. Interest, if any,
shall accrue monthly.
(c) Brokerage commissions on open positions shall be accrued in full
upon the initiation of such open positions as a liability of the
Partnership. Management Fees shall be paid monthly and deducted prior to
the calculation of the quarterly Incentive Fee.
"TRADING PROFITS" (for purposes of calculating Xxxxxx'x Incentive Fee)
is defined as the excess (if any) of (A) the Net Asset Value of the
Partnership's funds under Xxxxxx'x management as of the last day of any
calendar quarter (before deduction of Incentive Fees payable for such
quarter) over (B) the highest Net Asset Value of the Partnership's funds
under the management of Xxxxxx as of the last day of the most recent
calendar quarter for which an Incentive Fee was due and owing or with
respect to the first Incentive Fee which may be due and owing, the Net
Asset Value of the initial Partnership funds allocated to Xxxxxx on the
date Xxxxxx commences trading Partnership assets. In computing Trading
Profits, the difference between (A) and (B) above shall be (i) decreased by
all interest realized on the Xxxxxx'x allocable share of Partnership assets
subject to Xxxxxx'x management between the dates referred to in (A) and
(B), and (ii) increased by Xxxxxx'x allocable share of any distributions or
redemptions paid or payable by the Partnership as of, or subsequent to, the
date in (B) through the date in (A), and (iii) adjusted (either increased
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or decreased, as the case may be) to reflect Xxxxxx'x allocable share of
any additional allocations or negative reallocations of Partnership assets
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
Trading Profits attributable to the assets under the management of Xxxxxx,
the definition of Net Asset Value shall be modified, insofar as it takes
into consideration the amount of Incentive and Management Fees payable by
and brokerage commissions accrued by the Partnership, to provide for the
allocation of such Incentive and Management Fees and brokerage commissions
specifically to the assets under the management of Xxxxxx which is entitled
to such fees or whose trading decisions generated those brokerage
commissions.
Incentive Fees shall be paid within 10 business days after the end of the
quarter for which they are earned. For purposes of determining whether an
Incentive Fee is payable by Units which are redeemed other than at quarter end,
the dates of such redemptions shall be considered as if they were the last day
of the quarter.
If an Incentive Fee shall have been paid by the Partnership to Xxxxxx in
respect of any calendar quarter and Xxxxxx shall incur subsequent losses on the
Partnership's assets subject to its management, Xxxxxx shall nevertheless be
entitled to retain amounts previously paid to it in respect of Trading Profits.
In addition, if the amount of assets allocated to Xxxxxx'x management is
reduced, whether due to redemptions, distributions or reallocations, there will
be a proportionate reduction in the related loss carryforward amount, the amount
of which shall be determined by multiplying the amount of the loss carryforward
by a fraction, of which the numerator shall be the amount of the reduction in
the assets allocated to Xxxxxx'x management and the denominator shall be the
amount of the assets allocated to Xxxxxx'x management immediately prior to the
reduction.
7. TERMS AND TERMINATION. The term of the Agreement shall commence on
the date this Agreement is executed and continue until December 31, 1998. This
Agreement shall automatically renew with respect to Xxxxxx on the same terms as
set forth herein for three additional twelve-month terms commencing January 1
and ending December 31, unless the Partnership shall give Xxxxxx 60 days prior
written notice prior to termination of the then-current twelve-month period.
This renewal right shall be applicable irrespective of any change in trading
advisors of the Partnership or reallocation of Partnership assets among the
trading advisors or to other trading advisors.
This Agreement shall terminate automatically in the event that the
Partnership is terminated. This Agreement may be terminated at the election of
the Partnership at any time, upon written notice to Xxxxxx in the event that:
(A) the Net Asset Value of Partnership funds allocated to Xxxxxx'x management
decreases as of the close of trading on any business day by more than thirty
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percent (30%) from the sum of the Net Asset Value of the Partnership's funds
allocated to Xxxxxx on the date Xxxxxx commenced trading Partnership assets plus
the Net Asset Value of any funds which may be allocated to Xxxxxx thereafter
(after adding back all redemptions, distributions and reallocations made to
Xxxxxx or any additional trading advisors in respect of such assets); (B) Xxxxxx
is unable, to any material extent, to use its agreed-upon Trading Approach, as
such Trading Approach may be refined or modified in the future in accordance
with the terms of this Agreement for the benefit of the Partnership; (C)
Xxxxxx'x registration as a commodity trading advisor under the CE Act, or
membership as a commodity trading advisor with the NFA is revoked, suspended,
terminated or not renewed; (D) the General Partners determine in good faith that
Xxxxxx has failed to conform to (i) the Partnership's Trading Policies or
limitations, as they may be revised or modified, or (ii) any agreed-upon Trading
Approach; (E) there is an unauthorized assignment of this Agreement by Xxxxxx;
(F) Xxxxxx dissolves, merges or consolidates with another entity or sells a
substantial portion of its assets, any portion of its Trading Approach utilized
by the Partnership or its business goodwill, in each instance without the
consent of the General Partners; (G) there is a change of control of Xxxxxx; (H)
Xxxxxx becomes bankrupt or insolvent; (I) Xxxxxxx Xxxxxx ceases to be an active
executive officer of Xxxxxx; or (J) the General Partners for any reason or for
no reason, in their sole discretion, terminate this Agreement by providing 30
days' written notice to Xxxxxx.
In addition, Xxxxxx has the right to terminate this Agreement at any time,
upon written notice to the Partnership in the event (i) of the receipt by Xxxxxx
of an opinion of independent counsel that solely by reason of Xxxxxx'x
activities with respect to the Partnership, Xxxxxx is required to register as an
investment adviser under the Investment Advisers Act of 1940; (ii) that the Net
Asset Value of Partnership assets under Xxxxxx'x management decreases by more
than 50% from the time trading commences solely as a result of a reallocation of
Partnership assets pursuant to Section 7 of this Agreement (I.E., not including
any decrease attributable to losses on commodity interest transactions directed
by Xxxxxx) immediately following any such reallocation; (iii) that the
registration of either 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; (iv) that the General Partners elect (pursuant to
Section 1 of this Agreement) to have Xxxxxx use a different Trading Approach in
Xxxxxx'x management of its allocable share of Partnership assets from that which
Xxxxxx is then using to manage such assets and Xxxxxx objects to using such
different Trading Approach; (v) that the General Partners override a trading
instruction of Xxxxxx pursuant to Section 1 of this Agreement for reasons
unrelated to a determination by the General Partners that Xxxxxx has violated
the Partnership's Trading Policies or limitations; (vi) that the General
Partners impose additional trading limitation(s) pursuant to Section 1 of this
Agreement which Xxxxxx does not agree to follow in its management of its
allocable share of Partnership assets; (vii) there is an unauthorized assignment
of this Agreement by the General Partners of the Partnership; or (viii) other
good cause is shown to which the written consent of the General Partners is
obtained.
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In the event that this Agreement is terminated with respect to, or by,
Xxxxxx pursuant to this Section 7, Xxxxxx shall be entitled to the Incentive
Fee, if any, which shall be computed as if the effective date of termination was
the last day of the then current calendar quarter. If this Agreement is
terminated on a day other than the last day of a calendar month, the Management
Fee described herein shall be determined as if such date were the end of a month
and such fee shall be pro-rated based on the ratio of the number of trading days
in the month through the date of termination to the total number of trading days
in the month. The rights of Xxxxxx to fees earned through the date of
expiration or termination shall survive this Agreement until satisfied.
8. FUNDS ALLOCATED TO MANAGEMENT OF XXXXXX. Initially, Xxxxxx shall be
allocated approximately thirty percent (30%) of the Partnership's assets to
manage in accordance with Section 1 of this Agreement. At any time thereafter,
in their sole discretion, the General Partners may reallocate assets of the
Partnership among the Partnership's trading advisors or among other additional
trading advisors which may be appointed without terminating this Agreement.
Xxxxxx may, however, in its sole discretion, refuse an increase in its
allocation of Partnership assets, whether resulting from a reallocation from the
other trading advisors or an allocation resulting from any sales of additional
Units subsequent to the close of the offering period (as defined in the
Prospectus). Xxxxxx agrees that (i) redemptions, distributions and payment of
Partnership expenses (except Management and Incentive Fees) shall be charged
against, and (ii) interest income earned by the Partnership shall be credited
to, the assets managed by Xxxxxx in what the General Partners determine to be as
close as practicable to Xxxxxx'x proportionate share of the Partnership's assets
as of the time of the initial allocation or subsequent reallocation of these
assets. Any Management and Incentive Fees paid or payable by the Partnership to
Xxxxxx shall only be charged against the assets of Xxxxxx. In the event that
losses incurred by any CTA exceeds the assets allocated to the CTA, the General
Partners will withdraw the funds necessary to cover such excess losses from the
assets under the management of the other CTAs, including Xxxxxx, in proportion
to the amount of Partnership assets being managed by such CTA.
9. OTHER ACCOUNTS OF XXXXXX. Xxxxxx shall be free to manage and trade
accounts for other investors (including 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 Xxxxxx'x ability to carry out its
obligations and duties to the Partnership pursuant to this Agreement is not
materially impaired thereby. Furthermore, neither Xxxxxx nor any shareholder,
partner, director, officer, employee or agent, as applicable, of Xxxxxx shall
cause or permit Xxxxxx to engage in any business enterprise not presently
engaged in which is unrelated to the giving of commodity advice or the operation
of commodity pools if such other business might reasonably be expected to have a
material adverse effect on Xxxxxx'x ability to perform its obligations and
duties to the Partnership under this Agreement, unless it obtains the prior
written consent from the General Partners, which consent shall not be
unreasonably withheld. In addition, Xxxxxx, and its shareholders, partners,
directors, officers, employees and agents, as applicable, also will be permitted
to trade in Commodities for their own accounts so long as Xxxxxx'x ability to
carry out its obligations and duties to the Partnership is not materially
impaired thereby.
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So long as Xxxxxx 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 Xxxxxx
having to modify materially the Trading Approach being used by Xxxxxx 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).
Xxxxxx agrees that, in its management of accounts other than the account of
the Partnership, Xxxxxx will not knowingly or deliberately favor any other
account managed or controlled by it or any of its principals or affiliates (in
whole or in part) over the Partnership on an overall basis. The preceding
sentence shall not be interpreted to preclude (i) Xxxxxx from charging another
client fees which differ from the fees to be paid to Xxxxxx hereunder, or (ii)
an adjustment by Xxxxxx in the implementation of any agreed upon Trading
Approach in accordance with the procedures set forth in Section 1 hereof, which
is undertaken by Xxxxxx in good faith in order to accommodate additional
accounts or adjustments deemed, in good faith, by Xxxxxx to be appropriate to
the management of a larger account. Xxxxxx, upon request, shall provide the
General Partners with an explanation of the material differences, if any, in
performance between the Partnership and any other comparable account for which
Xxxxxx or any of its principals or affiliates acts as a commodity trading
advisor (in whole or in part).
Upon the reasonable request of the General Partners, Xxxxxx shall provide
the General Partners with such information as they 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 Xxxxxx
for other accounts (including accounts of Xxxxxx or its shareholders,
partners, directors, officers, employees, and agents) managed by Xxxxxx,
which the parties acknowledge to mean that the General Partners may inspect
all records of Xxxxxx related to such other accounts during normal business
hours upon its prior written request. Xxxxxx may, in its discretion,
withhold from any such report or inspection the name of the client for whom
any such account is maintained and, in any event, the Partnership and the
General Partners shall keep all such information obtained by it from Xxxxxx
confidential.
10. SPECULATIVE POSITION LIMITS. If, at any time during the term of this
Agreement, it appears to Xxxxxx that it may be required to aggregate the
Partnership's Commodities positions it controls with the positions of any other
accounts it or any of its shareholders, partners, directors, officers,
11
employees, or agents owns or controls for purposes of applying the speculative
position limits of the CFTC, any exchange, self-regulatory body, or governmental
authority, Xxxxxx will promptly notify the General Partners when the
Partnership's positions are first included in an aggregate amount which equals
or exceeds the applicable speculative limit and will promptly respond thereafter
to requests from the General Partners with respect to the percentage of the
applicable speculative limit reflected by the aggregate positions owned or
controlled by Xxxxxx or any of its shareholders, partners, directors, officers,
employees, or agents. Xxxxxx agrees that if its trading recommendations are
altered because of the potential application of speculative position limits,
Xxxxxx 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; Xxxxxx will liquidate Commodities positions and/or limit the taking of
new positions in all accounts it manages, including the Partnership, as nearly
as possible in proportion to the assets available for trading of the respective
accounts to the extent necessary to comply with applicable speculative position
limits. Xxxxxx presently believes and represents that its program for the
management of the Partnership's account can be implemented for the benefit of
the Partnership notwithstanding the possibility that, from time to time,
speculative position limits may become applicable.
11. BROKERAGE CONFIRMATIONS AND REPORTS. The General Partners will
instruct the Partnership's commodity broker or brokers to xxxxxxx Xxxxxx with
copies of all trade confirmations and monthly trading statements relating to the
Partnership's assets under the management of Xxxxxx. Xxxxxx will maintain
records and will monitor all open positions relating thereto.
12. XXXXXX'X REPRESENTATIONS AND WARRANTIES. Xxxxxx represents and
warrants that:
(a) it has full 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 document, or 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 the performance
of 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;
12
(d) it has provided the Partnership with a copy of its most recent
Disclosure Document as required by Part 4 of the CFTC's regulations,
receipt of which is hereby acknowledged by the Partnership and the General
Partners; and
(e) the amount of Partnership assets to be allocated to Xxxxxx would
not, assuming that the Partnership's Net Asset Value is $43,148,000 as of
the commencement of trading by Xxxxxx, result in Xxxxxx being required to
alter its Trading Approach to a degree which reasonably could be expected
to have a material adverse effect on 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, with respect to Xxxxxx,
Xxxxxx will promptly notify the Partnership in writing thereof.
13. THE GENERAL PARTNERS' REPRESENTATIONS AND WARRANTIES. Each General
Partner represents and warrants on behalf of the Partnership and itself that:
(a) it has the capacity and authority to enter into this Agreement;
(b) it will not, by acting as general partner to the Partnership, (i)
be required to take any action contrary to its incorporating documents or
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 or the Partnership is a party or by
which it or the Partnership is bound, which in the case of (i) or (ii),
would limit or materially affect the performance of its or the
Partnership's duties under this Agreement; and
(c) it is duly registered as a commodity pool operator under the CE
Act and is a commodity pool operator member of the NFA, and it will
maintain and renew such registration and membership during the term of this
Agreement.
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 with
respect to which such representation or warranty is no longer true promptly will
notify Xxxxxx in writing.
14. ASSIGNMENT. This Agreement may not be assigned by any party without
the express prior written consent of the other parties.
15. 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 Xxxxx.
00
00. AMENDMENT OR MODIFICATION. This Agreement may not be amended or
modified except by the written consent of the parties. Xxxxxx shall receive a
copy of all proposed and final amendments and modifications to this Agreement so
long as it is an advisor to the Partnership.
17. NOTICES. Each notice, request, demand, approval or other
communications which may be or is required to be given under this Agreement
shall be in writing in English and shall be deemed to have been properly given
when delivered personally at the address set forth below for the intended party
during normal business hours at such address, when sent by facsimile or other
electronic transmission to the respective facsimile transmission numbers of the
parties set forth below with telephone confirmation of receipt, or when sent by
recognized overnight international courier service or by prepaid registered air
mail, return receipt requested, postage prepaid, addressed as follows:
If to CISI:
CIS Investments, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
with a copy to:
Xxxxxxx and Xxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to the Partnership:
IDS Managed Futures, L.P.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
14
with a copy to:
Xxxxxxx and Xxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to IDS Futures:
IDS Tower 10
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to Xxxxxx:
via regular mail
Xxxxxx Investment Corporation
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
via courier service
Xxxxxx Investment Corporation
Eastwood Building, 2nd Floor
San Xxxxxx Between 5th and 6th
Xxxxxx, Xxxxxxxxxx 00000-0000
with a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
15
Notices shall be given to such other addressee or address, or both, or by way of
such other facsimile transmission number, as a particular party may from time to
time designate by written notice to the other parties hereto. Each notice,
request, demand, approval or other communication which is sent in accordance
with this Section shall be deemed given and received for all purposes of this
Agreement as of five business days after the date of deposit thereof for prepaid
registered air mail in a duly constituted post office or branch thereof in the
county of origin of the sending party, two business days after deposit with a
recognized overnight international courier service or, in the case of a
facsimile transmission, the earlier of (i) confirmation of receipt of said
facsimile transmission by the intended recipient thereof or a person at the same
business address as said intended recipient; or (ii) electronic verification by
the sender's facsimile machine of the receipt of said facsimile transmission by
the intended recipient's facsimile machine; PROVIDED, HOWEVER, that any such
electronic verification which does not occur prior to 5:00 p.m. (local time of
the recipient thereof) on a business day shall be deemed to have occurred at
9:00 a.m. (local time of the recipient thereof) on the next business day
following the date of such electronic verification. Notice given to a party
hereto by any other method shall only be deemed to be given and received when
actually received in writing by such party.
18. GOVERNING LAW. The parties agree that this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to conflict of laws principles.
19. 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.
20. PROMOTIONAL MATERIAL. Xxxxxx agrees that prior to using any
promotional literature in which reference to the Partnership is made (other than
a simple statement to the effect that Xxxxxx is an advisor to the Partnership or
solely in the context of the preparation of required performance tables and
notes thereto and descriptions thereof), Xxxxxx shall furnish a copy of such
information to the General Partners and will not make use of any literature
containing references to the Partnership to which the General Partners
reasonably object, except as otherwise required by law or regulation.
21. 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 rights power or remedy. Any waiver granted hereunder must be in writing
and shall be valid only in the specific instance in which given.
16
22. HEADINGS. Headings to Sections herein are for the convenience of the
parties only, and are not intended to be or to affect the meaning or
interpretation of this Agreement.
23. COMPLETE AGREEMENT. Except as otherwise provided herein, this
Agreement and the Representation Agreement contemplated in the last paragraph of
Section 3 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.
24. 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.
25. BEST EFFORTS. As used in this Agreement, "BEST EFFORTS" shall mean
the efforts that a prudent person or entity desirous of achieving a result would
reasonably use in similar circumstances in order to achieve such result as
expeditiously as possible; PROVIDED, HOWEVER, that an obligation to use best
efforts under the Agreement does not require the person or entity subject to
that obligation to incur any substantial financial obligations or any onerous
non-financial obligations or to waive any material rights.
26. The General Partners acknowledge that they have received the commodity
trading advisor disclosure document of Xxxxxx. The General Partners further
acknowledge that Xxxxxx uses different proprietary trading programs and that
these different trading programs may achieve different trading results.
17
IN WITNESS WHEREOF, this Advisory Contract has been executed for and on
behalf of the undersigned as of the day and year first above written.
IDS MANAGED FUTURES, X.X. XXXXXX INVESTMENT CORPORATION
CIS INVESTMENTS, INC.,
General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Its Vice President Its C.E.O.
IDS FUTURES CORPORATION,
General Partner
By /s/ Xxxxxxx X. Xxxxxx
Its Vice President
CIS INVESTMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Its Vice President
IDS FUTURES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
Its Vice President
18
EXHIBIT A
DIVERSIFIED PORTFOLIO
The Diversified Portfolio manages investors assets through exposure to
the widest spectrum of futures markets spanning all major market sectors.
Multiple trading strategies are employed in an attempt to profitably
participate in a variety of market conditions. This emphasis on market and
methodological diversification epitomizes WISC's core principles in advising
on investor assets in the global marketplace.
INTEREST RATES CURRENCIES STOCK PRECIOUS AND ENERGY MEATS GRAINS SOFTS
Australian Bond Australian Dollar INDICES INDUSTRIAL Crude Oil Live Cattle Azuki Beans Coca
Australian T-Xxxx British Pound All Ordinaries METALS Heating Oil Live Hogs Corn Coffee
British Long Gilt Canadian Dollar CAC 40 Aluminum Natural Gas Soybean Meal Cotton
Canadian Gov't Dollar Index DAX Copper Unleaded Gas Soybean Oil Lumber
Bond German Xxxx Hang Seng Gold Soybeans Orange Juice
Eurodollar Japanese Yen London FTSE Lead Wheat Rubber
Eurolira Xxxx-Xxxx MIB 30 Nickel World Sugar
Euromark Xxxx-Xxxxx Nasdaq 100 Platinum
Euroswiss Xxxx-Swedish Nikkei Silver
Euroyen Krona S&P 000 Xxx
Xxxxxx Xxxx Xxxx-Xxxxx Xxxxx Zinc
German Xxxx Xxxx-Xxx
Italian Gov't Bond Mexican Peso
Japanese Gov't Sterling-Xxxx
Xxxx Swiss Franc
PIBOR
Short Sterling
Spanish Gov't Bond
US Treasury Bond
19
EXHIBIT B
TRADING POLICIES
The objective of the Fund is to achieve substantial appreciation of its
assets through speculative trading in commodity interests, including futures
contracts, forward contracts, physical commodities and related options thereon
on major United States and certain foreign commodity exchanges and in the
interbank forward markets. Commodity interests may include any instruments and
items which are now, or may hereafter be, the subject of futures trading, such
as physical commodities, Treasury bills, mortgage-backed securities, foreign
currencies, options and indexes on securities. The Fund will attempt to
accomplish its objective by following the Trading Policies set forth below:
(i) Fund assets will be invested only in futures contracts which are
traded in sufficient volume to permit, in the independent opinions of each
Trading Advisor, ease of taking and liquidating positions. Each Trading
Advisor may at any time independently determine to expand or reduce the
number of commodity interests traded by that portion of the Fund's assets
under its control.
(ii) No Trading Advisor will acquire on behalf of the Fund additional
positions in any commodity if such additional positions, when added to the
existing open positions initiated by the Trading Advisor, would result in a
net long or short position for that commodity requiring as margin or
premiums more than 15% of the Fund's assets allocated to that Trading
Advisor's management. For purposes of implementing this policy, soybeans
will be treated as one commodity and soybean oil and soybean meal will be
treated together as one commodity.
(iii) The Fund will not normally be as highly leveraged as
permitted in the case of an investment by an individual. On the basis of
information supplied by the Trading Advisors, the General Partners estimate
that between 20% and 60% of the Fund's assets will normally be committed as
initial margin (although the percentage may be more or less than such range
from time to time). This requirement may be changed and, to reduce the
Clearing Broker's risk, additional restrictions on the leverage of the Fund
may be imposed by the Clearing Broker without notice at any time.
(iv) No Trading Advisor will acquire on behalf of the Fund additional
positions in any commodity interest if such additional positions, when
added to the existing open positions initiated by the Trading Advisor,
would result in aggregate net long or short positions (including any
forward contracts) for all commodities requiring as margin or premiums more
than 66-2/3% of the Fund's assets allocated to that Trading Advisor's
management.
(v) The Fund will not generally enter into an open position for a
particular commodity during a delivery month for that commodity. However,
the Fund may occasionally make or accept delivery of a commodity. This may
occur because a Trading Advisor's trading strategies may, from time to
time, identify certain trends which occur in delivery months which can be
taken advantage of by the Fund. The Fund may take delivery of a commodity
and take a corresponding short position in the commodity by selling futures
contracts for the commodity. The Fund will not engage in cash commodity
transactions, except as indicated above, unless the cash position is
hedged.
(vi) The Fund will not employ the trading technique, commonly known as
"pyramiding," in which the speculator uses unrealized profits on existing
positions as margin for the purchase or sale of additional positions in the
same or a related commodity. However, a Trading Advisor may take into
account the Fund's open trade equity in assets of the Fund in determining
whether to acquire additional commodity futures contracts on behalf of the
Fund.
(vii) The Fund will not purchase, sell or trade in securities or
write, purchase, sell or trade in options to purchase or sell securities,
commodity futures contracts or physical commodities unless such options
have been approved for trading on a designated contract market by the CFTC.
The Fund may trade in foreign options if permitted under the Commodity
Exchange Act, as amended, and CFTC regulations, but only when and to the
extent authorized in writing by the General Partners to the Trading
Advisors. The Fund may trade in futures contracts on securities.
(viii) The Fund will not generally utilize borrowings, except for
short-term borrowings where the Fund takes delivery of any cash commodity
or to the extent that the Fund's Clearing Broker obtains lines of credit
for the trading of forward contracts with banks. The Fund will not make
any loans.
(ix) A Trading Advisor may, from time to time, employ trading
techniques such as spreads or straddles on behalf of the Fund. The term
"spread" or "straddle" describes a transaction involving the simultaneous
buying and selling of commodity interests dealing with the same or a
different commodity interest but involving different delivery dates or
markets, and in which the trader expects to earn profits from a widening or
narrowing movement of the two prices of the commodity interests. See
"FEDERAL INCOME TAX CONSIDERATIONS--PARTNERSHIP TAXATION: ALLOCATION OF
FUND PROFITS AND LOSSES" for a discussion of the tax effects of such
trading.
B-2
(x) The Fund may trade in futures contracts on foreign currencies
through foreign and domestic commodity exchanges, including the
International Monetary Market Division of the Chicago Mercantile Exchange.
The Fund may also establish positions in foreign currencies through banks
or in the interbank market. Forward contracts on foreign currencies will
be transacted only with banks having in excess of $100,000,000 in combined
capital and surplus. No specific limitation on the percentage or amount of
forward contracts, if any, engaged in by the Fund has been imposed.
(xi) The Fund's assets will not be commingled with the assets of any
other person; funds used to satisfy margin requirements will not be
considered commingled for this purpose.
(xii) No Trading Advisor to the Fund will be permitted to engage
in churning the Fund's assets (I.E., direct excessive trading for the
purpose of generating brokerage commissions without regard for the best
interests of the Fund).
(xiii) No rebates or give ups may be paid to or received by the
General Partners, nor may the General Partners participate in any
reciprocal business arrangements which could circumvent this prohibition,
but retention of Cargill Investor Services, Inc. to act as the Fund's
clearing broker and the retention of American Express Financial Advisors
Inc. to act as the Fund's introducing broker shall not be deemed to violate
this prohibition.
B-3