Exhibit 10.02
MANAGEMENT AGREEMENT
THIS AGREEMENT, made as of the _____ day of ______________, 1999,
among XXXXXX XXXXXXX XXXX XXXXXX SPECTRUM CURRENCY L.P., a Delaware limited
partnership (the "Partnership"), DEMETER MANAGEMENT CORPORATION, a Delaware
corporation (the "General Partner"), and SUNRISE CAPITAL PARTNERS, LLC, a
California limited liability company (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the Partnership has been organized pursuant to the Limited
Partnership Agreement dated as of __________ (the "Limited Partnership
Agreement"), to trade, buy, sell, spread, or otherwise acquire, hold, or dispose
of, among other things, domestic and foreign futures contracts, forward
contracts, foreign exchange commitments, options on futures contracts, spot
currencies, and any rights pertaining thereto (hereinafter referred to
collectively as "futures interests") and securities (such as United States
Treasury bills) approved by the Commodity Futures Trading Commission (the
"CFTC") for investment of customer funds.
WHEREAS, the Partnership is a member partnership of the Xxxxxx Xxxxxxx
Xxxx Xxxxxx Spectrum Series (the "Fund Group") pursuant to which units of
limited partnership interest ("Units") of such member partnerships will be sold
to investors in a common prospectus. Units of the Partnership are being offered
pursuant to a Registration Statement on Form S-1 (No. 333-_____) (as amended
from time to time, the "Registration Statement") filed under the Securities Act
of 1933, as amended (the "Securities Act"), and a final Prospectus dated
__________, constituting a part thereof (as amended and supplemented from time
to time, the "Prospectus").
WHEREAS, the Trading Advisor engages in trading in futures interests
and is willing to provide certain services and undertake certain obligations as
set forth herein.
WHEREAS, the Partnership desires the Trading Advisor to act as a
trading advisor for the Partnership and to make investment decisions with
respect to futures interests for its allocated share of the Partnership's Net
Assets (as defined in Section 6(c) hereof) and the Trading Advisor desires so to
act.
WHEREAS, the Partnership, the General Partner and the Trading Advisor
wish to enter into this Management Agreement which, among other things, sets
forth certain terms and conditions upon which the Trading Advisor will conduct a
portion of the Partnership's futures interests trading.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. UNDERTAKINGS IN CONNECTION WITH THE INITIAL AND CONTINUING
OFFERING OF UNITS.
(a) The Trading Advisor agrees with respect to the initial and
continuing offering of Units: (i) to make all disclosures regarding itself, its
principals and affiliates, its trading performance, its trading programs,
systems, methods, and strategies provided that nothing herein shall require the
Trading Advisor to disclose any proprietary information concerning such
programs, systems, methods, and strategies), any client accounts over which it
has discretionary trading authority (other than the names of any such clients),
and otherwise, as the Partnership may reasonably require to comply with any
applicable federal or state law or rule or regulation, including those of the
Securities and Exchange Commission (the "SEC"), the CFTC, the National Futures
Association (the "NFA"), the National Association of Securities Dealers, Inc.
(the "NASD") or any other regulatory body, exchange, or board; and (ii)
otherwise to cooperate with the Partnership, the General Partner and Xxxx Xxxxxx
Xxxxxxxx Inc. ("DWR"), the selling agent for the Partnership, by providing
information regarding the Trading Advisor in connection with the preparation and
filing of the Registration Statement and Prospectus, including any pre- or
post-effective amendments or supplements thereto, with the SEC, CFTC, NFA, NASD,
and with appropriate governmental authorities as part of making application for
registration of the Units under the securities or Blue Sky laws of such
jurisdictions as the Partnership may deem appropriate. As used herein, the term
"principal" shall have the meaning as defined in Section 4.10(e) of the CFTC's
Regulations and the term "affiliate" shall mean an individual or entity that
directly or indirectly controls, is controlled by, or is under common control
with, the Trading Advisor.
(b) The General Partner, in its sole discretion and at any time, may
(i) withdraw the SEC registration of the Units, or (ii) discontinue the offering
of Units.
(c) If, while Units continue to be offered and sold, the Trading
Advisor becomes aware of any materially untrue or misleading statement or
omission regarding itself or any of its principals or affiliates in the
Registration Statement or Prospectus, or of the occurrence of any event or
change in circumstances which would result in there being any materially untrue
or misleading statement or omission in the Registration Statement or Prospectus
regarding itself or any of its principals or affiliates, the Trading Advisor
shall promptly notify the General Partner and shall cooperate with it in the
preparation of any necessary amendments or supplements to the Registration
Statement or Prospectus. Neither the Trading Advisor nor any of its principals,
or affiliates, or any stockholders, officers, directors, or employees shall
distribute the Prospectus or selling literature or shall engage in any selling
activities whatsoever in connection with the continuing offering of Units except
as may be specifically requested by the General Partner and agreed to by the
Trading Advisor.
2. DUTIES OF THE TRADING ADVISOR.
(a) The Trading Advisor hereby agrees to act as a Trading Advisor for
the Partnership and, as such, shall have sole authority and responsibility for
directing the investment and reinvestment of its allocable share of the Net
Assets of the Partnership which shall initially
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be allocated to the Sunrise Currency Program on the terms and conditions and in
accordance with the prohibitions and trading policies set forth in this
Agreement or the Prospectus or as otherwise provided in writing to the Trading
Advisor; PROVIDED, HOWEVER, that the General Partner may override the
instructions of the Trading Advisor to the extent necessary (i) to comply with
the trading policies of the Partnership and with applicable speculative position
limits, (ii) to fund any distributions, redemptions, or reapportionments among
other trading advisors to the Partnership, (iii) to pay the Partnership's
expenses, (iv) to the extent the General Partner believes doing so is necessary
for the protection of the Partnership, (v) to terminate the futures interests
trading of the Partnership, or (vi) to comply with any applicable law or
regulation. The General Partner agrees not to override any such instructions for
the reasons specified in clauses (ii) or (iii) of the preceding sentence unless
the Trading Advisor fails to comply with a request of the General Partner to
make the necessary amount of funds available to the Partnership within five
calendar days of such request. Except as otherwise provided herein, the Trading
Advisor shall not be liable for the consequences of any decision by the General
Partner to override instructions of the Trading Advisor. In performing services
to the Partnership the Trading Advisor may not materially alter the trading
program(s) used by the Trading Advisor in investing and reinvesting its
allocable share of the Partnership's Net Assets in futures interests as
described in the Prospectus without the prior written consent of the General
Partner, it being understood that changes in the futures interests traded shall
not be deemed an alteration in the Trading Advisor's trading program(s).
(b) The Trading Advisor shall:
(i) Exercise good faith and due care in trading futures interests
for the account of the Partnership in accordance with the prohibitions
and trading policies of the Partnership described in the Prospectus and
as otherwise provided in writing to the Trading Advisor and the trading
programs, systems, methods, and strategies of the Trading Advisor
described in the Prospectus, with such changes and additions to such
trading programs, systems, methods or strategies as the Trading Advisor,
from time to time, incorporates into its trading approach for accounts
the size of the Partnership.
(ii) Subject to reasonable assurances of confidentiality by the
General Partner and the Partnership, provide the General Partner, within
30 calendar days of a request therefor by the General Partner, with
information comparing the performance of the Partnership's account and
the performance of all other client accounts directed by the Trading
Advisor using the trading programs used by the Trading Advisor for the
Partnership over a specified period of time. In providing such
information, the Trading Advisor may take such steps as are necessary to
assure the confidentiality of the Trading Advisor's clients' identities.
The Trading Advisor shall, upon the General Partner's request, consult
with the General Partner concerning any discrepancies between the
performance of such other accounts and the Partnership's account. The
Trading Advisor shall promptly inform the General Partner of any
material discrepancies of which the Trading Advisor is aware, other than
discrepancies resulting from different fees or client trading
restrictions or resulting to the opening and closing of accounts. The
General Partner acknowledges that different trading programs, systems,
methods, and strategies may be utilized for different accounts, accounts
with different trading policies, accounts with less than the minimum
account size, experiencing differing inflows or outflows of
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equity, accounts which commence trading at different times, accounts
which have different portfolios or different fiscal years and that such
differences may cause divergent trading results.
(iii) Upon request of the General Partner and subject to reasonable
assurances of confidentiality by the General Partner and the
Partnership, provide the General Partner with all material information
concerning the Trading Advisor other than proprietary information
(including, without limitation, information relating to changes in
control, principals, trading approach or any materially adverse change
in the Trading Advisor's financial condition). The General Partner
acknowledges that all trading instructions made by the Trading Advisor
will be held in confidence by the General Partner, except to the extent
necessary to conduct the business of the Partnership or as required by
law.
(iv) Inform the General Partner when the Trading Advisor's open
positions maintained by the Trading Advisor exceed the Trading Advisor's
applicable speculative position limits.
(c) All purchases and sales of futures interests pursuant to this
Agreement shall be for the account, and at the risk, of the Partnership and not
for the account, or at the risk, of the Trading Advisor or any of its managers,
members, officers, or employees, or any other person, if any, who controls the
Trading Advisor within the meaning of the Securities Act. All brokerage fees
arising from trading by the Trading Advisor shall be for the account of the
Partnership. The Trading Advisor makes no representations as to whether its
trading will produce profits or avoid losses.
(d) Notwithstanding anything in this Agreement to the contrary, the
Trading Advisor shall assume financial responsibility for any errors committed
or caused by it in transmitting orders for the purchase or sale of futures
interests for the Partnership's account, including payment of the floor
brokerage commissions, exchange and NFA fees, and other transaction charges and
give-up charges incurred on such trades. The Trading Advisor's errors shall
include, but not be limited to, inputting improper trading signals or
communicating incorrect orders for execution. The Trading Advisor shall not be
responsible for errors committed or caused by DWR, any clearing commodity broker
designated by DWR to clear futures interests trades for the Partnership (the
"Clearing Commodity Broker"), or any other floor broker or futures commission
merchant executing trades. The Trading Advisor shall have an affirmative
obligation promptly to notify the General Partner of its own errors, and the
Trading Advisor shall use its best efforts to identify and promptly notify the
General Partner of any order or trade which the Trading Advisor reasonably
believes was not executed in accordance with its instructions.
(e) Prior to the commencement of trading, the General Partner on
behalf of the Partnership shall deliver to the Trading Advisor a trading
authorization appointing the Trading Advisor the Partnership's attorney-in-fact
for such purpose.
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3. DESIGNATION OF ADDITIONAL TRADING ADVISORS AND REALLOCATION OF
NET ASSETS.
(a) If the General Partner at any time deems it to be in the best
interests of the Partnership, the General Partner may designate an additional
trading advisor or advisors for the Partnership and may apportion to such
additional trading advisor(s) the management of such amounts of Net Assets as
the General Partner shall determine in its absolute discretion. The designation
of an additional trading advisor or advisors and the apportionment of Net Assets
to such trading advisor(s) pursuant to this Section 3 shall neither terminate
this Agreement nor modify in any regard the respective rights and obligations of
the Partnership, the General Partner and the Trading Advisor hereunder. In the
event that Net Assets are reallocated from the Trading Advisor, the Trading
Advisor shall thereafter receive management and incentive fees based,
respectively, on that portion of the Net Assets managed by the Trading Advisor
and the Trading Profits (as defined in Section 6(d) hereof) attributable to the
trading by the Trading Advisor.
(b) The General Partner may at any time and from time to time upon two
business days' prior notice reallocate Net Assets allocated to the Trading
Advisor to any other trading advisor or advisors of the Partnership or allocate
additional Net Assets upon two business days' prior notice to the Trading
Advisor from such other trading advisor or advisors; PROVIDED that any such
addition to or withdrawal from Net Assets allocated to the Trading Advisor of
the Net Assets will only take place on the last day of a month unless the
General Partner determines that the best interests of the Partnership require
otherwise.
4. TRADING ADVISOR INDEPENDENT.
For all purposes of this Agreement, the Trading Advisor shall be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized, have no authority to act for or represent the
Partnership in any way or otherwise be deemed an agent of the Partnership.
Nothing contained herein shall be deemed to require the Partnership to take any
action contrary to the Limited Partnership Agreement, the Certificate of Limited
Partnership of the Partnership as from time to time in effect (the "Certificate
of Limited Partnership"), or any applicable law or rule or regulation of any
regulatory body, exchange, or board. Nothing herein contained shall constitute
the Trading Advisor as a member of any partnership, joint venture, association,
syndicate or other entity with the Partnership or the General Partner, or be
deemed to confer on any of them any express, implied, or apparent authority to
incur any obligation or liability on behalf of any other. It is expressly agreed
that the Trading Advisor is neither a promoter, sponsor, nor issuer with respect
to the Partnership.
5. COMMODITY BROKER.
The Trading Advisor shall effect all transactions in futures interests
for the Partnership through, and shall maintain a separate account with, such
commodity broker or brokers as the General Partner shall direct. At the present
time, DWR shall act as the non-clearing commodity broker for the Partnership and
all trades will be cleared separately by the Clearing Commodity Broker. The
General Partner shall provide the Trading Advisor with copies of brokerage
statements. Notwithstanding DWR's designation of a Clearing Commodity Broker,
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the Trading Advisor may execute trades through floor brokers other than
those employed by the Clearing Commodity Broker so long as arrangements are made
for such floor brokers to "give-up" or transfer the positions to the Clearing
Commodity Broker and provided that the rates charged by such floor brokers have
been approved in writing by DWR. The Trading Advisor will not be responsible for
paying give-up fees at rates approved by DWR.
6. FEES.
(a) For the services to be rendered to the Partnership by the Trading
Advisor under this Agreement, the Partnership shall pay the Trading Advisor the
following fees:
(i) A monthly management fee, without regard to the profitability
of the Trading Advisor's trading for the Partnership's account, equal to
1/12 of 3% (a 3% annual rate) of the Net Assets of the Partnership (as
defined in Section 6(c)) allocated to the Trading Advisor calculated as
of the opening of business on the first day of each calendar month (or
the first day on which the Trading Advisor trades for the Partnership),
commencing with the month in which the Partnership begins to receive
trading advice from the Trading Advisor pursuant to this Agreement.
(ii) A monthly incentive fee equal to 15% of the "Trading Profits"
(as defined in Section 6(d)) experienced by the Partnership as of the
end of each calendar month, payable on a non-netted basis vis-a-vis
other trading advisors(s) of the Partnership. The initial incentive
period will commence on the date of the Partnership's initial closing
(the "Initial Closing") and shall end on the last day of the first month
ending after such Initial Closing occurs.
(b) If this Agreement is terminated on a date other than the last day
of a month, the incentive fee described above shall be determined as if such
date were the end of a month. If this Agreement is terminated on a date other
than the end of a month, the management fee described above shall be prorated
based on the ratio of the number of trading days in the month through the date
of termination to the total number of trading days in the month. If, during any
month after the Partnership commences trading operations (including the month in
which the Partnership commences such operations), the Partnership does not
conduct business operations, or suspends trading for the account of the
Partnership managed by the Trading Advisor, or, as a result of an act or
material failure to act by the Trading Advisor, is otherwise unable to utilize
the trading advice of the Trading Advisor on any of the trading days of that
period for any reason, the management fee described above shall be prorated
based on the ratio of the number of trading days in the month which the
Partnership account managed by the Trading Advisor engaged in trading operations
or utilized the trading advice of the Trading Advisor to the total number of
trading days in the month.
(c) As used herein, the term "Net Assets" shall have the same meaning
ascribed thereto in Section 7(d)(1) of the Limited Partnership Agreement.
(d) As used herein, the term "Trading Profits" shall mean net futures
interests trading profits (realized and unrealized) earned on the Partnership's
Net Assets allocated to the Trading Advisor, decreased by the Trading Advisor's
monthly management fees and a pro rata
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portion of the monthly brokerage fee relating to the Trading Advisor's allocated
Net Assets and any transaction fees and costs, if any, not included in the
brokerage fees; with such trading profits and items of decrease determined from
the end of the last calendar month in which an incentive fee was earned by the
Trading Advisor or, if no incentive fee has been earned previously by the
Trading Advisor, from the date that the Partnership commenced trading to the end
of the calendar month as of which such incentive fee calculation is being made.
No incentive fee will be paid on interest income earned by the Partnership.
(e) If any payment of incentive fees is made to the Trading Advisor on
account of Trading Profits earned by the Partnership on Net Assets allocated to
the Trading Advisor and the Partnership thereafter fails to earn Trading Profits
or experiences losses for any subsequent incentive period with respect to such
amounts so allocated, the Trading Advisor shall be entitled to retain such
amounts of incentive fees previously paid to the Trading Advisor in respect of
such Trading Profits. However, no subsequent incentive fees shall be payable to
the Trading Advisor until the Partnership has again earned Trading Profits on
the Trading Advisor's allocated Net Assets; PROVIDED, HOWEVER, that if the
Trading Advisor's allocated Net Assets are reduced or increased because of
redemptions, additions or reallocations which occur at the end of, or subsequent
to, an incentive period in which the Partnership experiences a futures interests
trading loss with respect to Net Assets allocated to the Trading Advisor, the
trading loss for that incentive period which must be recovered before the
Trading Advisor's allocated Net Assets will be deemed to experience Trading
Profits will be equal to the amount determined by (x) dividing the Trading
Advisor's allocated Net Assets after such increase or decrease by the Trading
Advisor's allocated Net Assets immediately before such increase or decrease and
(y) multiplying that fraction by the amount of the unrecovered futures interests
trading loss experienced in that month prior to such increase or decrease. In
the event that the Partnership experiences a futures interests trading loss in
more than one month with respect to the Trading Advisor's allocated Net Assets
without the payment of an intervening incentive fee and Net Assets are increased
or reduced in more than one such month because of redemptions, additions or
reallocations, then the trading loss for each such month shall be adjusted in
accordance with the formula described above and such increased or reduced amount
of futures interests trading loss shall be carried forward and used to offset
subsequent futures interest trading profits. The portion of redemptions to be
allocated to the Net Assets of the Partnership managed by each of the trading
advisors to the Partnership shall be in the sole discretion of the General
Partner.
(f) If the Trading Advisor's allocated Net Assets are reduced because
of a reallocation pursuant to Section 3 hereof on a date other than the last day
of the month, the Trading Advisor shall be paid an incentive fee with respect to
any Trading Profits earned as of such date with respect to the Net Assets to be
reallocated.
(g) The Partnership will remit the management and incentive fees to
the Trading Advisor as soon as practicable, but in no event later than 30
calendar days, in the case of the management fee, or 45 calendar days in the
case of any incentive fee, of the month-end as of which they are due, together
with an itemized statement showing the calculations.
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7. TERM.
This Agreement shall continue in effect until December 31, 2002 (the
"Initial Termination Date"). If this Agreement is not terminated on the Initial
Termination Date, as provided for herein, then, this Agreement shall
automatically renew for an additional one-year period and shall continue to
renew for additional one-year periods until this Agreement is otherwise
terminated, as provided for herein. At least 30 calendar days prior to the
expiration of the Initial Termination Date or any subsequent one-year period, as
the case may be, the Trading Advisor may terminate this Agreement at the end of
the current period by providing written notice to the Partnership indicating
that the Trading Advisor desires to terminate this Agreement at the end of such
period. This Agreement shall also terminate if the Partnership terminates. The
Partnership shall have the right to terminate this Agreement at its discretion
(a) at any month-end upon 5 calendar days' prior written notice to the Trading
Advisor or (b) at any time upon written notice to the Trading Advisor upon the
occurrence of any of the following events: (i) if any person described as a
"principal" of the Trading Advisor in the Prospectus (other than Xxxxxx Xxxxx)
ceases, for any reason to be a principal of the Trading Advisor; (ii) if the
Trading Advisor becomes bankrupt or insolvent; (iii) if the Trading Advisor is
unable to use its trading systems or methods as in effect on the date hereof and
as refined and modified in the future for the benefit of the Partnership; (iv)
if the registration, as a commodity trading advisor, of the Trading Advisor with
the CFTC or its membership in the NFA is revoked, suspended, terminated, or not
renewed, or limited or qualified in any respect; (v) except as provided in
Section 12 hereof, if the Trading Advisor merges or consolidates with, or sells
or otherwise transfers its advisory business, or all or a substantial portion of
its assets, any portion of its futures interests trading systems or methods, or
its goodwill to, any individual or entity; (vi) if the Trading Advisor's
initially allocated Net Assets, after adjusting for distributions, additions,
redemptions, or reallocations, if any, shall decline by 50% or more as a result
of trading losses or if Net Assets allocated to the Trading Advisor fall below
$________ at any time; (vii) if, at any time, the Trading Advisor violates any
trading or administrative policy described in writing to the Trading Advisor by
the General Partner, except with the prior express written consent of the
General Partner; or (viii) if the Trading Advisor fails in a material manner to
perform any of its obligations under this Agreement. The Trading Advisor may
terminate this Agreement at any time, upon written notice to the Partnership, in
the event: (i) that the General Partner imposes additional trading limitation(s)
(not in effect on the date hereof) in the form of one or more trading policies
or administrative policies which the Trading Advisor does not agree to follow in
its management of its allocable share of the Partnership's Net Assets; (ii) the
General Partner objects to the Trading Advisor implementing a proposed material
change in the Trading Advisor's trading program(s) used by the Partnership and
Trading Advisor certifies to the General Partner in writing that it believes
such change is in the best interests of the Partnership; (iii) the General
Partner overrides a trading instruction of the Trading Advisor for reasons
unrelated to a determination by the General Partner that the Trading Advisor has
violated the Partnership's trading policies and the Trading Advisor certifies to
the General Partner in writing that as a result, the Trading Advisor believes
the performance results of the Trading Advisor relating to Partnership will be
materially adversely affected; (iv) the Partnership materially breaches this
Agreement and does not correct the breach within 10 days of receipt of a written
notice of such breach from the Trading Advisor; or (v) the Trading Advisor has
amended its trading program to include a foreign futures or option contract
which may lawfully be traded by the Partnership under CFTC regulations and
counsel, mutually acceptable to the parties, has not
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opined that such inclusion would cause adverse tax consequences to Limited
Partners and the General Partner does not consent to the Trading Advisor's
trading such contract for the Partnership within 5 business days of a written
request by the Trading Advisor to do so, and, if such consent is given, does not
make arrangements to facilitate such trading within 90 calendar days of such
notice; or (vi) the assets allocated to the Trading Advisor fall below
$__________ at any time.
The indemnities set forth in Section 8 hereof shall survive any
termination of this Agreement.
8. STANDARD OF LIABILITY; INDEMNIFICATIONS.
(a) LIMITATION OF TRADING ADVISOR LIABILITY. In respect of the Trading
Advisor's role in the futures interests trading of the Partnership's assets,
none of the Trading Advisor, or its controlling persons, its affiliates, and
their respective managers, directors, officers, members, shareholders, employees
or controlling persons shall be liable to the Partnership or the General Partner
or their partners, officers, shareholders, directors or controlling persons
except that the Trading Advisor shall be liable for acts or omissions of any
such person provided that such act or omission constitutes a breach of this
Agreement or a representation, warranty or covenant herein, misconduct or
negligence or is the result of any such person not having acted in good faith
and in the reasonable belief that such actions or omissions were in, or not
opposed to, the best interests of the Partnership.
(b) TRADING ADVISOR INDEMNITY IN RESPECT OF MANAGEMENT ACTIVITIES. The
Trading Advisor shall indemnify, defend and hold harmless the Partnership and
the General Partner, their controlling persons, their affiliates and their
respective directors, officers, shareholders, employees, and controlling persons
from and against any and all losses, claims, damages, liabilities (joint and
several), costs, and expenses (including any reasonable investigatory, legal,
and other expenses incurred in connection with, and any amounts paid in, any
settlement; provided that the Trading Advisor shall have approved such
settlement) incurred as a result of any action or omission involving the futures
interests trading activities undertaken by the Trading Advisor pursuant to this
Agreement; provided that such liability arises from an act or omission of the
Trading Advisor, or any of its controlling persons or affiliates or their
respective managers, directors, officers, partners, members, shareholders, or
employees which is found by a court of competent jurisdiction upon entry of a
final judgment (or, if no final judgment is entered, by an opinion rendered by
counsel who is approved by the Partnership and the Trading Advisor, such
approval not to be unreasonably withheld) to be a breach of this Agreement or a
representation, warranty or covenant herein, the result of bad faith, misconduct
or negligence, or conduct not done in good faith in the reasonable belief that
it was in, or not opposed to, the best interests of the Partnership. The
termination of any demand, claim, lawsuit, action or proceeding by settlement
shall not, in itself, create a presumption that the conduct in question was not
undertaken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interest of the Partnership.
(c) PARTNERSHIP INDEMNITY IN RESPECT OF MANAGEMENT ACTIVITIES. The
Partnership shall, indemnify, defend, and hold harmless the Trading Advisor, its
controlling persons, their affiliates and their respective managers, directors,
officers, members, shareholders,
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employees, and controlling persons, from and against any and all losses, claims,
damages, liabilities (joint and several), costs, and expenses (including any
reasonable investigatory, legal, and other expenses incurred in connection with,
and any amounts paid in, any settlement; provided that the Partnership shall
have approved such settlement) resulting from a demand, claim, lawsuit, action,
or proceeding (other than those incurred as a result of claims brought by or in
the right of an indemnified party) relating to the business or activities of the
Partnership undertaken by the Trading Advisor pursuant to this Agreement or a
breach of this Agreement or a breach of a representation, warranty or covenant
of the General Partner or Partnership; provided that a court of competent
jurisdiction upon entry of a final judgment finds (or, if no final judgment is
entered, an opinion is rendered to the Partnership by independent counsel
reasonably acceptable to both parties) to the effect that the action or inaction
of such indemnified party that was the subject of the demand, claim, lawsuit,
action, or proceeding did not constitute negligence, misconduct, or a breach of
this Agreement or a representation, warranty or covenant of the Trading Advisor
herein and was done in good faith and in a manner such indemnified party
reasonably believed to be in, or not opposed to, the best interests of the
Partnership. The termination of any demand, claim, lawsuit, action or proceeding
by settlement shall not, in itself, create a presumption that the conduct in
question was not undertaken in good faith in a manner reasonably believed to be
in, or not opposed to, the best interest of the Partnership.
(d) TRADING ADVISOR INDEMNITY IN RESPECT OF SALE OF UNITS. The Trading
Advisor shall indemnify, defend and hold harmless DWR, the Clearing Commodity
Broker, the Partnership, the General Partner, any additional seller of Units,
and their affiliates and each of their officers, directors, principals,
shareholders, and controlling persons from and against any loss, claim, damage,
liability, cost, and expense, joint and several, to which any indemnified person
may become subject under the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Commodity Exchange Act, as amended
and rules promulgated thereunder (the "CEAct") the securities or Blue Sky law of
any jurisdiction, or otherwise (including any reasonable investigatory, legal,
and other expenses incurred in connection with, and any amounts paid in, any
settlement, provided that the Trading Advisor shall have approved such
settlement, and in connection with any administrative proceedings), in respect
of the offer or sale of Units, insofar as such loss, claim, damage, liability,
cost, or expense (or action in respect thereof) arises directly out of, or is
based upon: (i) a breach by the Trading Advisor of any representation, warranty,
or agreement in this Agreement or any certificate delivered pursuant to this
Agreement or the failure by the Trading Advisor to perform any covenant made by
the Trading Advisor herein; (ii) a misleading or untrue statement or alleged
misleading or untrue statement of a material fact made in the Registration
Statement, the Prospectus, or any related selling material or an omission or
alleged omission to state a material fact therein which is required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus or any selling material, in light of the circumstances under which
they were made) not misleading, and such statement or omission relates
specifically to the Trading Advisor, or its Trading Advisor Principals (as
defined below) (including the historical performance capsules but excluding the
pro forma performance information, except to the extent the pro forma
performance information was based on information furnished by the Trading
Advisor), or was made in reliance upon, and in conformity with, written
information or instructions furnished by the Trading Advisor (PROVIDED, HOWEVER,
that with respect to any related selling material only such related selling
material as shall have been approved in writing by the Trading Advisor.
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(e) PARTNERSHIP INDEMNITY IN RESPECT OF SALE OF UNITS. The Partnership
agrees to indemnify, defend and hold harmless the Trading Advisor and each of
its managers, members, officers, directors, principals, and controlling persons
from and against any loss, claim, damage, liability, cost, and expense, joint
and several, to which any indemnified person may become subject under the
Securities Act, the Exchange Act, the CEAct, the securities or Blue Sky law of
any jurisdiction, or otherwise (including any reasonable investigatory, legal,
and other expenses incurred in connection with, and any amounts paid in, any
settlement, provided that the Partnership shall have approved such settlement,
and in connection with any administrative proceedings), in respect of the offer
or sale of Units, insofar as such loss, claim, damage, liability, cost, or
expense (or action in respect thereof) arises out of, or is based upon: (i) a
breach by the Partnership or General Partner of any representation, warranty, or
agreement in this Agreement or the failure by the Partnership or General Partner
to perform any covenant made by them herein; or (ii) a misleading or untrue
statement or alleged misleading or untrue statement of a material fact made in
the Registration Statement, the Prospectus, or any related selling material or
an omission or alleged omission to state a material fact therein which is
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus or any related selling material, in light of the
circumstances under which they were made) not misleading, provided that such
misleading or untrue statement or alleged misleading or untrue statement or
omission or alleged omission does not relate to the Trading Advisor or its
Trading Advisor Principals or was not made in reliance upon, and in conformity
with, information or instructions furnished by the Trading Advisor (including
the historical performance capsules but excluding the pro forma performance
information unless such statement or omission was based on information furnished
by the Trading Advisor in connection with the preparation of such pro forma
information) PROVIDED, HOWEVER, that with respect to any related selling
material, only such related selling material as shall have been approved in
writing by the Trading Advisor), or does not result from a material breach by
the Trading Advisor of any representation, warranty, or agreement in this
Agreement or any certificate delivered pursuant to this Agreement or the failure
by the Trading Advisor to materially perform any covenant made in this
Agreement.
(f) Notwithstanding any other provision herein to the contrary,
neither Xxxx X. Xxxxx nor Xxxx X. Xxxxxxx shall have any liability to the
Partnership, the General Partner or any other person, or their controlling
persons, directors, officers, shareholders or employees under this Agreement
except for fraud or willful misconduct by Xxxx X. Xxxxx or Xxxx X. Xxxxxxx, as
applicable.
(g) The foregoing agreements of indemnity shall be in addition to, and
shall in no respect limit or restrict, any other remedies which may be available
to an indemnified person.
(h) Promptly after receipt by an indemnified person of notice of the
commencement of any action, claim, or proceeding to which any of the indemnities
may apply, the indemnified person will notify the indemnifying party in writing
of the commencement thereof if a claim in respect thereof is to be made against
the indemnifying party hereunder; but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability which the
indemnifying party may have to the indemnified person hereunder, except where
such omission has materially prejudiced the indemnifying party. In case any
action, claim, or proceeding is brought against an indemnified person and the
indemnified person
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notifies the indemnifying party of the commencement thereof as provided above,
the indemnifying party will be entitled to participate therein and, to the
extent that the indemnifying party desires, to assume the defense thereof with
counsel selected by the indemnifying party and not unreasonably disapproved by
the indemnified person. After notice from the indemnifying party to the
indemnified person of the indemnifying party's election so to assume the defense
thereof as provided above, the indemnifying party will not be liable to the
indemnified person under the indemnity provisions hereof for any legal and other
expenses subsequently incurred by the indemnified person in connection with the
defense thereof, other than reasonable costs of investigation.
Notwithstanding the proceeding paragraph, if, in any action, claim, or
proceeding as to which indemnification is or may be available hereunder, an
indemnified person reasonably determines that its interests are or may be
adverse, in whole or in part, to the indemnifying party's interests or that
there may be legal defenses available to the indemnified person which are
different from, in addition to, or inconsistent with the defenses available to
the indemnifying party, the indemnified person may retain its own counsel in
connection with such action, claim, or proceeding and will be indemnified by the
indemnifying party for any legal and other expenses reasonably incurred in
connection with investigating or defending such action, claim, or proceeding.
In no event will the indemnifying party be liable for the fees and
expenses of more than one counsel for all indemnified persons in connection with
any one action, claim, or proceeding or in connection with separate but similar
or related actions, claims, or proceedings in the same jurisdiction arising out
of the same general allegations. The indemnifying party will not be liable for
any settlement of any action, claim, or proceeding effected without the
indemnifying party's express written consent, but if any action, claim, or
proceeding, is settled with the indemnifying party's express written consent or
if there is a final judgment for the plaintiff in any such action, claim, or
proceeding, the indemnifying party will indemnify, defend, and hold harmless an
indemnified person as provided in this Section 8.
9. RIGHT TO ADVISE OTHERS AND UNIFORMITY OF ACTS AND PRACTICES.
(a) The Trading Advisor is engaged in the business of advising
investors as to the purchase and sale of futures interests. During the term of
this Agreement, the Trading Advisor, its principals and affiliates, will be
advising other investors (including affiliates and the stockholders, officers,
directors, and employees of the Trading Advisor and its affiliates and their
families) and trading for their own accounts. However, under no circumstances
shall the Trading Advisor by any act or omission favor any account advised or
managed by the Trading Advisor over the account of the Partnership in any way or
manner (other than by charging different management and/or incentive fees). The
Trading Advisor agrees to treat the Partnership in a fiduciary capacity to the
extent recognized by applicable law, but, subject to that standard, the Trading
Advisor or any of its principals or affiliates shall be free to advise and
manage accounts for other investors and shall be free to trade on the basis of
the same trading systems, methods, or strategies employed by the Trading Advisor
for the account of the Partnership, or trading systems, methods, or strategies
which are entirely independent of, or materially different from, those employed
for the account of the Partnership, and shall be free to compete for the same
futures interests as the Partnership or to take positions opposite to the
Partnership, where such
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actions do not knowingly or deliberately prefer any of such accounts over the
account of the Partnership.
(b) The Trading Advisor shall not be restricted as to the number or
nature of its clients, except that: (i) so long as the Trading Advisor acts as a
trading advisor for the Partnership, neither the Trading Advisor nor any of its
principals or affiliates shall hold knowingly any position or control any other
account which would cause the Partnership, the Trading Advisor, or the
principals or affiliates of the Trading Advisor to be in violation of the CEAct
or any regulations promulgated thereunder, any applicable rule or regulation of
the CFTC or any other regulatory body, exchange, or board; and (ii) neither the
Trading Advisor nor any of its principals or affiliates shall render futures
interests trading advice to any other individual or entity or otherwise engage
in activity which shall knowingly cause positions in futures interests to be
attributed to the Trading Advisor under the rules or regulations of the CFTC or
any other regulatory body, exchange, or board so as to require the significant
modification of positions taken or intended for the account of the Partnership;
provided that the Trading Advisor may modify its trading systems, methods or
strategies to accommodate the trading of additional funds or accounts. If
applicable speculative position limits are exceeded by the Trading Advisor in
the opinion of (i) independent counsel (who shall be other than counsel to the
Partnership), (ii) the CFTC, or (iii) any other regulatory body, exchange, or
board, the Trading Advisor and its principals and affiliates shall promptly
liquidate positions in all of their accounts, including the Partnership's
account, as to which positions are attributed to the Trading Advisor as nearly
as possible in proportion to the accounts' respective amounts available for
trading (taking into account different degrees of leverage and "notional"
equity) to the extent necessary to comply with the applicable position limits.
10. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE TRADING ADVISOR.
(a) REPRESENTATIONS AND WARRANTIES OF THE TRADING ADVISOR. The Trading
Advisor with respect to itself and each of its principals represents and
warrants to and agrees with the General Partner and the Partnership as follows:
(i) It will exercise good faith and due care in using its Sunrise
Currency Program on behalf of the Partnership as described in the
Prospectus (as modified from time to time) or any other trading programs
agreed to by the General Partner.
(ii) The Trading Advisor shall follow, at all times, the trading
policies of the Partnership (as described in the Prospectus) and as amended
in writing and furnished to the Trading Advisor from time to time.
(iii) The Trading Advisor shall trade: (A) the Partnership's Net
Assets pursuant to its Sunrise Currency Program as described in the
Prospectus unless the General Partner agrees otherwise and (B) only in
futures and option contracts traded on U.S. contract markets, foreign
currency forward contracts traded with the Clearing Commodity Broker, and
such other futures interests that are approved in writing by the General
Partner.
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(iv) The Trading Advisor is duly organized, validly existing and in
good standing as a limited liability company under the laws of the state
of its organization and is qualified to do business as a foreign limited
liability company and in good standing in each other jurisdiction in
which the nature or conduct of its business requires such qualification
and the failure to so qualify would materially adversely affect the
Trading Advisor's ability to perform its duties under this Agreement.
The Trading Advisor has full limited liability company power and
authority to perform its obligations under this Agreement, and as
described in the Registration Statement and Prospectus. The only
principals (as defined in Rule 4.10(e) under the CEAct) of the Trading
Advisor are those set forth in the Prospectus (the "Trading Advisor
Principals").
(v) All references to the Trading Advisor and each Trading Advisor
Principal, including the Trading Advisor's trading programs, approaches,
systems, and performance, in the Registration Statement and the
Prospectus, and in any supplemental selling material which has been
approved in writing by the Trading Advisor are accurate and complete in
all material respects. With respect to the information relating to the
Trading Advisor and each Trading Advisor Principal, including the
Trading Advisor's and the Trading Advisor Principals' trading programs,
approaches, systems, and performance information, as applicable
(excluding pro forma performance information unless such statement or
omission was based on information furnished by the Trading Advisor for
the preparation of such pro forma performance information), (i) the
Registration Statement and Prospectus contain all statements and
information required to be included therein under the CEAct, (ii) the
Registration Statement as of its effective date will not contain any
misleading or untrue statement of a material fact or omit to state a
material fact which is required to be stated therein or necessary to
make the statements therein not misleading and (iii) the Prospectus at
its date of issue and as of each closing will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
which such statements were made, not misleading.
(vi) This Agreement has been duly and validly authorized, executed
and delivered on behalf of the Trading Advisor and is a valid and
binding agreement of the Trading Advisor enforceable in accordance with
its terms.
(vii) Each of the Trading Advisor and each "principal" of the
Trading Advisor, as defined in Rule 3.1 under the CEAct, has all federal
and state governmental, regulatory and exchange licenses and approvals
and has effected all filings and registrations with federal and state
governmental and regulatory agencies required to conduct its or his
business and to act as described in the Registration Statement and
Prospectus or required to perform its or his obligations under this
Agreement. The Trading Advisor is registered as a commodity trading
advisor under the CEAct and is a member of the NFA in such capacity.
(viii) The execution and delivery of this Agreement, the incurrence
of the obligations set forth herein, the consummation of the
transactions contemplated herein and in the Prospectus and the payment
of the fees hereunder will not violate, or constitute a breach of, or
default under, the certificate of incorporation or bylaws of the Trading
-14-
Advisor or any agreement or instrument by which it is bound or of any
order, rule, law or regulation binding on it of any court or any
governmental body or administrative agency or panel or self-regulatory
organization having jurisdiction over it.
(ix) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as may otherwise
be stated in or contemplated by the Registration Statement and the
Prospectus, there has not been any material adverse change in the
condition, financial or otherwise, business or prospects of the Trading
Advisor or any Trading Advisor Principal.
(x) Except as set forth in the Registration Statement or Prospectus
there has not been in the five years preceding the date of the
Prospectus and there is not pending, or to the best of the Trading
Advisor's knowledge threatened, any action, suit or proceeding before or
by any court or other governmental body or any administrative,
self-regulatory or commodity exchange organization to which the Trading
Advisor or any Trading Advisor Principal is or was a party, or to which
any of the assets of the Trading Advisor or any Trading Advisor
Principal is or was subject and which resulted in or might reasonably be
expected to result in any materially adverse change in the condition,
financial or otherwise, business or prospects of the Trading Advisor or
which would be material to an investor's decision to invest in the
Partnership. None of the Trading Advisor or any Trading Advisor
Principal has received any notice of an investigation by the NFA or the
CFTC regarding noncompliance by the Trading Advisor or any of the
Trading Advisor Principals with the CEAct.
(xi) Neither the Trading Advisor nor any Trading Advisor Principal
has received, or is entitled to receive, directly or indirectly, any
commission, finder's fee, similar fee, or rebate from any person in
connection with the organization or operation of the Partnership, other
than as described in the Prospectus.
(xii) The actual performance of each discretionary account of a
client directed by the Trading Advisor and the Trading Advisor
Principals since at least the later of (i) the date of commencement of
trading for each such account or (ii) a date five years prior to the
effective date of the Registration Statement, is included in the
composite capsules disclosed in the Prospectus (other than such
discretionary accounts the performance of which are exempt from CEAct
disclosure requirements); all of the information regarding the actual
performance of the accounts of the Trading Advisor and the Trading
Advisor Principals set forth in the Prospectus is accurate in all
material respects and is in accordance with and in compliance with the
disclosure requirements under the CEAct and including the Division of
Trading and Markets "notional equity" advisories and interpretations and
the rules and regulations of the NFA.
(b) COVENANTS OF THE TRADING ADVISOR. The Trading Advisor covenants
and agrees that:
(i) The Trading Advisor shall use its best efforts to maintain all
registrations and memberships necessary for the Trading Advisor to
continue to act as described herein and to at all times comply in all
material respects with all applicable laws, rules,
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and regulations, to the extent that the failure to so comply would have
a materially adverse effect on the Trading Advisor's ability to act as
described herein.
(ii) The Trading Advisor shall inform the General Partner
immediately as soon as the Trading Advisor or any of its principals
becomes the subject of any investigation, claim or proceeding of any
regulatory authority having jurisdiction over such person or becomes a
named party to any litigation materially affecting the business of the
Trading Advisor. The Trading Advisor shall also inform the General
Partner immediately if the Trading Advisor or any of its officers
becomes aware of any breach of this Agreement by the Trading Advisor.
(iii) The Trading Advisor agrees reasonably to cooperate by providing
information regarding itself and its performance in the preparation of
any amendments or supplements to the Registration Statement and the
Prospectus.
11. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE GENERAL PARTNER
AND THE PARTNERSHIP.
(a) REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER AND THE
PARTNERSHIP. The General Partner and the Partnership represent and warrant to
the Trading Advisor, as follows:
(i) The Partnership has provided to the Trading Advisor, and filed
with the SEC, the Registration Statement and has filed copies thereof
with: (i) the CFTC under the CEAct (ii) the NASD pursuant to its Conduct
Rules; and (iii) the NFA in accordance with NFA Compliance Rule 2-13.
The Partnership will not file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus unless the
Trading Advisor has received reasonable prior notice of and a copy of
such amendments or supplements and has not reasonably objected thereto
in writing.
(ii) The Limited Partnership Agreement provides for the
subscription for and sale of the Units; all action required under
applicable law to be taken by the General Partner and the Partnership as
a condition to the sale of the Units to qualified subscribers therefor
has been, or prior to each Closing (as defined in the Prospectus) have
been taken; and, upon payment of the consideration therefor specified in
each accepted Subscription and Exchange Agreement and Power of Attorney
in such forms as attached to the Prospectus, the Units will constitute
valid limited partnership interests in the Partnership.
(iii) The Partnership is a limited partnership duly organized
pursuant to the Certificate of Limited Partnership, the Limited
Partnership Agreement and the Delaware Revised Uniform Limited
Partnership Act ("DRULPA") and is validly existing under the laws of the
State of Delaware with full power and authority to engage in the trading
of futures interests and to engage in its other contemplated activities
as described in the Prospectus; the Partnership has received a
certificate of authority to do business in the State of New York as
provided by Article 8-A of the New York Revised Limited Partnership Act
and is qualified to do business in each jurisdiction in which the nature
or conduct of its business requires such qualification and where failure
to be so qualified
-16-
could materially adversely affect the Partnership's ability to perform
its obligations hereunder.
(iv) The General Partner is duly organized and validly existing and
in good standing as a corporation under the laws of the State of
Delaware and in good standing and qualified to do business as a foreign
corporation under the laws of the State of New York and is qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature or conduct of its business requires
such qualification and where the failure to be so qualified could
materially adversely affect the General Partner's ability to perform its
obligations hereunder.
(v) The Partnership and the General Partner have full partnership
or corporate power and authority under applicable law to conduct their
business and to perform their respective obligations under this
Agreement.
(vi) The Registration Statement and Prospectus contain all
statements and information required to be included therein by the CEAct.
When the Registration Statement becomes effective under the Securities
Act and at all times subsequent thereto up to and including the Initial
Closing and each Closing, the Registration Statement and Prospectus will
comply in all material respects with the requirements of the Securities
Act, the rules and regulations promulgated thereunder (the "SEC
Regulations"), the rules of the NFA and the CEAct. The Registration
Statement as of its effective date will not contain any misleading or
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus as of its date of issue and at
the Initial Closing and each Closing will not contain any misleading or
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not misleading. The supplemental
selling material, when read in conjunction with the Prospectus, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading. The
supplemental selling material will comply with the CEAct and the
regulations and rules of the NFA and NASD. The representations and
warranties in this clause (vi) shall not, however, apply to any
statement or omission in the Registration Statement, Prospectus or
supplemental selling material specifically relating to the Trading
Advisor, or its Trading Advisor, Principals or its trading programs
(other than the pro forma performance information except to the extent
such information was based on information furnished by the Trading
Advisor) or made in reliance upon and in conformity with information
furnished by the Trading Advisor.
(vii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition, financial or otherwise,
business or prospects of the General Partner or the Partnership, whether
or not arising in the ordinary course of business.
(viii) This Agreement has been duly and validly authorized,
executed and delivered by the General Partner for itself and on behalf
of the Partnership and constitutes
-17-
a valid, binding and enforceable agreement of the Partnership and the
General Partner in accordance with its terms.
(ix) The execution and delivery of this Agreement, the incurrence
of the obligations set forth herein and the consummation of the
transactions contemplated herein and in the Registration Statement and
Prospectus will not violate, or constitute a breach of, or default
under, the General Partner's certificate of incorporation, bylaws, the
Certificate of Limited Partnership, or the Limited Partnership Agreement
or any agreement or instrument by which either the General Partner or
the Partnership, as the case may be, is bound or any order, rule, law or
regulation applicable to the General Partner or the Partnership of any
court or any governmental body or administrative agency or panel or
self-regulatory organization having jurisdiction over the General
Partner or the Partnership.
(x) Except as set forth in the Registration Statement or
Prospectus, there has not been in the five years preceding the date of
the Prospectus and there is not pending or, to the best of the General
Partner's knowledge, threatened, any action, suit or proceeding at law
or in equity before or by any court or by any federal, state, municipal
or other governmental body or any administrative, self-regulatory or
commodity exchange organization to which the General Partner or the
Partnership is or was a party, or to which any of the assets of the
General Partner or the Partnership is or was subject and which resulted
in or might reasonably be expected to result in any materially adverse
change in the condition, financial or otherwise, of the General Partner
or the Partnership or which is required under the Securities Act or the
CEAct to be disclosed in the Prospectus; and neither the General Partner
nor any of the principals of the General Partner, as "principals" is
defined under Rule 4.10 under the CEAct ("General Partner Principals")
has received any notice of an investigation by the NFA, NASD, SEC or
CFTC regarding non-compliance by the General Partner or the General
Partner Principals or the Partnership with the Securities Act or the
CEAct which is required under the Securities Act or the CEAct to be
disclosed in the Prospectus.
(xi) The General Partner and each principal of the General Partner,
as defined in Rule 3.1 under the CEAct, have all federal and state
governmental, regulatory and exchange approvals and licenses, and have
effected all filings and registrations with federal and state and
foreign governmental agencies in order for the General Partner to
conduct its business and to act as described in the Registration
Statement and Prospectus or required to perform its obligations under
this Agreement (including, without limitation, registration as a
commodity pool operator under the CEAct and membership in the NFA as a
commodity pool operator) and will maintain all such required approvals,
licenses, filings and registrations for the term of this Agreement. The
General Partner's principals identified in the Registration Statement
are all of the General Partner Principals.
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(b) COVENANTS OF THE GENERAL PARTNER. The General Partner covenants
and agrees that:
(i) The General Partner shall use its best efforts to maintain all
registrations and memberships necessary for the General Partner to
continue to act as described herein and in the Prospectus and to all
times comply in all material respects with all applicable laws, rules,
and regulations, to the extent that the failure to so comply would have
a materially adverse effect on the General Partner's ability to act as
described herein and in the Prospectus.
(ii) The General Partner shall inform the Trading Advisor
immediately as soon as the General Partner or any of its principals
becomes the subject of any investigation, claim, or proceeding of any
regulatory authority having jurisdiction over such person or becomes a
named party to any litigation materially affecting the business of the
General Partner. The General Partner shall also inform the Trading
Advisor immediately if the General Partner or any of its officers become
aware of any breach of this Agreement by the General Partner.
(iii) The Partnership will furnish to the Trading Advisor copies of
the Registration Statement, the Prospectus, and all amendments and
supplements thereto, in each case as soon as available.
12. MERGER OR TRANSFER OF ASSETS OF TRADING ADVISOR.
The Trading Advisor may merge or consolidate with, or sell or
otherwise transfer its advisory business, or all or a substantial portion of its
assets, any portion of its commodity trading programs, systems or methods, or
its goodwill, to any entity that is directly or indirectly controlled by,
controlling, or under common control with, the Trading Advisor, provided that
such entity expressly assumes all obligations of the Trading Advisor under this
Agreement and agrees to continue to operate the business of the Trading Advisor,
substantially as such business is being conducted on the date hereof.
13. COMPLETE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
with respect to the matters referred to herein, and no other agreement, verbal
or otherwise, shall be binding as between the parties unless in writing and
signed by the party against whom enforcement is sought.
14. ASSIGNMENT.
This Agreement may not be assigned by any party hereto without the
express written consent of the other parties hereto.
15. AMENDMENT.
This Agreement may not be amended except by the written consent of the
parties hereto.
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16. SEVERABILITY.
The invalidity or unenforceability of any provision of this Agreement
or any covenant herein contained shall not affect the validity or enforceability
of any other provision or covenant hereof or herein contained and any such
invalid provision or covenant shall be deemed to be severable.
17. CLOSING CERTIFICATES AND OPINIONS.
(a) The Trading Advisor shall, at the Partnership's Initial Closing
and at the request of the General Partner at any Closing, provide the following:
(i) To DWR, the General Partner and the Partnership a certificate,
dated the date of any such closing and in form and substance satisfactory
to such parties, to the effect that:
(A) The representations and warranties by the Trading
Advisor in this Agreement are true, accurate, and complete on and as
of the date of the closing, as if made on the date of the closing.
(B) The Trading Advisor has performed all of its obligations
and satisfied all of the conditions on its part to be performed or
satisfied under this Agreement, at or prior to the date of such
closing.
(ii) To DWR, the General Partner and the Partnership an opinion of
counsel to the Trading Advisor, in form and substance satisfactory to
such parties, to the effect that:
(A) The Trading Advisor is a limited liability company duly
organized and validly existing under the laws of the state of its
organization is qualified to do business and in good standing in each
other jurisdiction in which the nature or conduct of its business
requires such qualification and the failure to be duly qualified would
materially adversely affect the Trading Advisor's ability to perform
its obligations under this Agreement. The Trading Advisor has full
limited liability company power and authority to conduct its business
as described in the Registration Statement and Prospectus and to
perform its obligations under this Agreement.
(B) The Trading Advisor (including the Trading Advisor
Principals) has all governmental, regulatory, and self-regulatory
registrations and memberships required by law, and the Trading Advisor
(including the Trading Advisor Principals) has received or made all
filings and registrations necessary to perform its obligations under
this Agreement and to conduct its business as described in the
Registration Statement and Prospectus, except for such licenses,
memberships, filings and registrations, the absence of which would not
have a material adverse effect on its ability to act as described in
the Registration Statement and Prospectus or to perform its
obligations under this Agreement, and, to the best of such counsel's
knowledge, after due investigation, none of such, memberships or
registrations have been rescinded, revoked or suspended.
-20-
(C) This Agreement has been duly authorized, executed and delivered by
or on behalf of the Trading Advisor and constitutes a valid and binding
agreement of the Trading Advisor enforceable in accordance with its terms,
subject only to bankruptcy, insolvency, reorganization, moratorium or similar
laws at the time in effect affecting the enforceability generally of rights of
creditors and by general principals of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and except as
enforceability of the indemnification, exculpation, and contribution provisions
contained in such agreements may be limited by applicable law or public policy
and the enforcement of specific terms or remedies may be unavailable.
(D) Based upon due inquiry of certain officers of the Trading Advisor,
to such counsel's knowledge, except as disclosed in the Prospectus, there are no
actions, suits or proceedings at law or in equity pending or threatened before
or by any court, governmental body, administrative agency, panel or self-
regulatory organization, nor have there been any such actions, suits or
proceedings within the five years preceding the date of the Prospectus against
the Trading Advisor or any Trading Advisor Principal which are required to be
disclosed in the Registration Statement or Prospectus.
(E) The execution and delivery of this Agreement, the incurrence of
the obligations herein set forth and the consummation of the transactions
contemplated herein and in the Prospectus will not be in contravention of any of
the provisions of the certificate of incorporation or bylaws of the Trading
Advisor and, based upon due inquiry of certain officers of the Trading Advisor,
to such counsel's knowledge, will not constitute a breach of, or default under,
or a violation of any instrument or agreement known to such counsel by which the
Trading Advisor is bound and will not violate any order, law, rule or regulation
applicable to the Trading Advisor of any court or any governmental body or
administrative agency or panel or self-regulatory organization having
jurisdiction over the Trading Advisor.
(F) Based upon reliance of certain SEC "no-action" letters, the
performance by the Trading Advisor of the transactions contemplated by this
Agreement and as described in the Prospectus will not require the Trading
Advisor to be registered as an "investment adviser" as that term is defined in
the Investment Advisers Act of 1940, as amended.
(G) Nothing has come to such counsel's attention that would lead them
to believe that, (A) the Registration Statement at the time it became effective,
insofar as the Trading Advisor and the Trading Advisor Principals are concerned,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (B) the Prospectus at the time it was issued or at the
closing contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein relating to the
Trading Advisor or the Trading Advisor Principals, in light of the circumstances
under which they
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were made, not misleading; PROVIDED, HOWEVER, that such counsel need express no
opinion or belief as to the performance data and notes or descriptions thereto
set forth in the Registration Statement and Prospectus, except that such counsel
shall opine, without rendering any opinion as to the accuracy of the information
in such tables, that the actual performance tables of the Trading Advisor set
forth in the Prospectus comply as to form in all material respects with
applicable CFTC rules and all CFTC and NFA interpretations thereof, except as
disclosed in the Prospectus.
In giving the foregoing opinion, counsel may rely on information
obtained from public officials, officers of the Trading Advisor, and other
sources believed by it to be responsible and may assume that signatures on all
documents examined by it are genuine.
(iii) To DWR, the General Partner and the Partnership, a report dated
the date of the closing which shall present, for the period from the date
after the last day covered by the historical performance capsules in the
Prospectus to the latest practicable day before closing, updated
performance information which shall certify that such figures are, to the
best of such Trading Advisor's knowledge, accurate in all material
respects.
(b) The General Partner shall, at the Partnership's Initial Closing
and at the request of the Trading Advisor at any Closing, provide the following:
(i) To the Trading Advisor a certificate, dated the date of such
closings and in form and substance satisfactory to the Trading Advisor, to
the effect that:
(A) The representations and warranties by the Partnership and the
General Partner in this Agreement are true, accurate, and complete on
and as of the date of the closing as if made on the date of the
closing.
(B) No stop order suspending the effectiveness of the
Registration Statement has been issued by the SEC and no
proceedings for that purpose have been instituted or are pending
or, to the knowledge of the General Partner, are contemplated or
threatened under the Securities Act. No order preventing or
suspending the use of the Prospectus has been issued by the SEC,
NASD, CFTC, or NFA and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the General
Partner, are contemplated or threatened under the Securities Act or
the CEAct.
(C) The Partnership and the General Partner have performed all of
their obligations and satisfied all of the conditions on their part to
be performed or satisfied under this Agreement at or prior to the date
of the closing.
(ii) To the parties hereto, an opinion of Cadwalader, Xxxxxxxxxx
& Xxxx, counsel to the General Partner and the Partnership, in form and
substance satisfactory to such parties, to the effect that:
(A) The Partnership is a limited partnership duly formed pursuant
to the Certificate of Limited Partnership, the Limited Partnership
Agreement and the
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DRULPA and is validly existing under the laws of the State of Delaware
with full partnership power and authority to conduct the business in
which it proposes to engage as described in the Registration Statement
and Prospectus and to perform its obligations under this Agreement;
the Partnership has received a Certificate of Authority as
contemplated under the New York Revised Limited Partnership Act and is
qualified to do business in New York and need not affect any other
filings or qualifications under the laws of any other jurisdictions to
conduct its business as described in the Registration Statement and
Prospectus.
(B) The General Partner is duly organized and validly existing
and in good standing as a corporation under the laws of the State of
Delaware and is qualified to do business and is in good standing as a
foreign corporation in the State of New York and in each other
jurisdiction in which the nature or conduct of its business requires
such qualification and the failure to so qualify might reasonably be
expected to result in material adverse consequences to the Partnership
or the General Partner's ability to perform its obligations under this
Agreement or as described in the Registration Statement and
Prospectus. The General Partner has full corporate power and authority
to conduct its business as described in the Registration Statement and
Prospectus and to perform its obligations under this Agreement.
(C) The General Partner, each of its principals as defined in
Rule 3.1 under the CEAct, and the Partnership have all federal and
state governmental and regulatory licenses, registrations and
memberships required by law and have made all filings necessary in
order for the General Partner and the Partnership to perform their
obligations under this Agreement to conduct their business as
described in the Registration Statement and Prospectus, except for
such licenses, memberships, filings, and registrations, the absence of
which would not have a material adverse effect on the ability of the
Partnership or the General Partner to act as described in the
Registration Statement and Prospectus, or to perform their obligations
under this Agreement, and, to the best of such counsel's knowledge,
after due investigation, none of such licenses and memberships or
registrations have been rescinded, revoked or suspended.
(D) This Agreement has been duly authorized, executed and
delivered by or on behalf of the General Partner and the Partnership,
and constitutes a valid and binding agreement of the General Partner
and the Partnership, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium or similar laws
at the time in effect affecting the enforceability generally of rights
of creditors and by general principals of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law), and except as enforceability of indemnification, exculpation
and contribution provisions contained in this Agreement may be limited
by applicable law or public policy.
(E) The execution and delivery of this Agreement and the offer
and sale of the Units by the Partnership and the incurrence of the
obligations herein
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set forth and the consummation of the transactions contemplated herein
and in the Prospectus will not be in contravention of the General
Partner's certificate of incorporation or bylaws, the Certificate of
Limited Partnership, and the Limited Partnership Agreement and, to
such counsel's knowledge based upon due inquiry of certain officers of
the General Partner, none of the foregoing will constitute a breach
of, or default under, or a violation of any agreement or instrument
known to such counsel by which the General Partner or the Partnership
is bound or violate any order known to such counsel or any law, rule
or regulation applicable to the General Partner or the Partnership of
any court, governmental body, administrative agency, panel or
self-regulatory organization having jurisdiction over the General
Partner or the Partnership.
(F) To such counsel's knowledge, based upon due inquiry of
certain officers of the General Partner, there are no actions, suits
or proceedings at law or in equity pending or threatened before or by
any court governmental body, administrative agency, panel or self
regulatory organization, nor have there been any such actions, suits
or proceedings within the five years preceding the date of the
Prospectus against the General Partner or the Partnership which are
required to be disclosed in the Registration Statement or Prospectus.
(G) The Registration Statement is effective under the Securities
Act and, to the best of such counsel's knowledge, no proceedings for a
stop order are pending or threatened under Section 8(d) of the
Securities Act or any similar state securities laws.
(H) At the time the Registration Statement became effective, the
Registration Statement, and at the time the Prospectus was issued and
as of the closing, the Prospectus, complied as to form in all material
respects with the requirements of the Securities Act, the Securities
Regulations, the CEAct and the regulations of the NFA and NASD.
(I) Nothing has come to such counsel's attention that would lead
them to believe that the Registration Statement at the time it became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus at
the time it was issued or at the closing contained an untrue statement
of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under which
they where made, not misleading; provided, however, that Cadwalader,
Xxxxxxxxxx & Xxxx need express no opinion or belief (a) as to
information in the Registration Statement or the Prospectus regarding
any Trading Advisor or its principals, or (b) as to the financial
statements, notes thereto and other financial or statistical data set
forth in the Registration Statement and Prospectus, or (c) as to the
performance data and notes or descriptions thereto set forth in the
Registration Statement and Prospectus.
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(J) Based upon reliance on certain SEC "no-action" letters, as of
the closing, the performance of the transactions contemplated by this
Agreement and as described in the Prospectus will not require the
Partnership to register as an "investment company" under the
Investment Company Act of 1940, as amended.
In rendering its opinion, such counsel may rely on information
obtained from public officials, officers of the General Partner and other
sources believed by it to be responsible and may assume that signatures on all
documents examined by it are genuine, and that a Subscription and Exchange
Agreement and Power of Attorney in the form attached to the Prospectus has been
duly authorized, completed, dated, executed, and delivered and funds
representing the full subscription price for the Units purchased have been
delivered by each purchaser of Units in accordance with the requirements set
forth in the Prospectus.
18. INCONSISTENT FILINGS.
The Trading Advisor agrees not to file, participate in the filing of,
or publish any description of the Trading Advisor, or of its respective
principals or trading approaches that is materially inconsistent with those in
the Registration Statement and Prospectus, without so informing the General
Partner and furnishing to it copies of all such filings within a reasonable
period prior to the date of filing or publication.
19. DISCLOSURE DOCUMENTS.
During the term of this Agreement, the Trading Advisor shall furnish
to the General Partner promptly copies of all disclosure documents filed with
the CFTC or NFA by the Trading Advisor. The General Partner acknowledges receipt
of the Trading Advisor's disclosure document dated March 15, 1999.
20. NOTICES.
All notices required to be delivered under this Agreement shall be in
writing and shall be effective when delivered personally on the day delivered,
or when given by registered or certified mail, postage prepaid, return receipt
requested, on the day actually received, addressed as follows (or to such other
address as the party entitled to notice shall hereafter designate in accordance
with the terms hereof):
if to the Partnership:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum Currency L.P.
c/o Demeter Management Corporation
Two World Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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if to the General Partner:
Demeter Management Corporation
0 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
if to the Trading Advisor:
Sunrise Capital Partners, LLC
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx
21. SURVIVAL.
The provisions of this Agreement shall survive the termination of this
Agreement with respect to any matter arising while this Agreement was in effect.
22. GOVERNING LAW.
This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York. If any action or proceeding
shall be brought by a party to this Agreement or to enforce any right or remedy
under this Agreement, each party hereto hereby consents and will submit to the
jurisdiction of the courts of the State of New York or any federal court sitting
in the County, City and State of New York. Any action or proceeding brought by
any party to this Agreement to enforce any right, assert any claim or obtain any
relief whatsoever in connection with this Agreement shall be brought by such
party exclusively in the courts of the State of New York or any Federal court
sitting in the County, City and State of New York.
23. REMEDIES.
In any action or proceeding arising out of any of the provisions of
this Agreement, the Trading Advisor agrees not to seek any prejudgment equitable
or ancillary relief. The Trading Advisor agrees that its sole remedy in any such
action or proceeding shall be to seek actual monetary damages for any breach of
this Agreement.
24. HEADINGS.
Headings to sections herein are for the convenience of the parties
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed for and on behalf
of the undersigned as of the day and year first above written.
XXXXXX XXXXXXX XXXX XXXXXX
SPECTRUM CURRENCY L.P.
By: Demeter Management Corporation,
General Partner
By: ___________________________________
Name:
Its:
DEMETER MANAGEMENT
CORPORATION
By: _________________________________________
Name:
Its:
SUNRISE CAPITAL PARTNERS, LLC
By: Sunrise Capital Management, Inc., as
Manager
By: _________________________________________
Name:
Its:
