<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/ x / Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
[Fee Required]
/ / Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
[No Fee Required]
For the Fiscal Year Ended: December 31, 1994
Commission File Number: 0-14738
THE FUTURES DIMENSION FUND
(Exact name of registrant as specified in its charter)
Illinois 36-3428400
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o HEINOLD ASSET MANAGEMENT, INC.
440 S. LaSalle
20th Floor
Chicago, Illinois 60605
(Address of principal executive offices)
Registrant's telephone number, including area code:
(312) 663-7900
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Assignee Units
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The registrant is a limited partnership and, accordingly, has no voting stock
held by non-affiliates or otherwise.
<PAGE> 2
PART I
Item 1. Business
(a) General development of business
The Futures Dimension Fund (the "Partnership") is a limited
partnership organized on January 31, 1986, pursuant to a Limited Partnership
Agreement (the "Limited Partnership Agreement") and under the Uniform Limited
Partnership Act of the State of Illinois, and funded through an offering of
Limited Partnership Assignee Units (the "Units"). On July 31, 1987, the
Partnership elected to be governed under the Illinois Revised Uniform Limited
Partnership Act. Each Unit represents the assignment of one unit of limited
partnership interest in the Partnership. Limited Partners and holders of
Limited Partnership Assignee Units are collectively referred to herein as
"Unitholders." The Partnership engages in speculative trading of futures and
forward contracts under the direction of multiple trading advisors.
The public offering resulted in the sale of 1,001,410 Units
and trading began on June 18, 1986. The offering was registered under the
Securities Act of 1933, as amended, and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Selling Agent") acted as the selling agent.
Heinold Asset Management, Inc., a Delaware corporation, is the General
Partner of the Partnership (the "General Partner") and performs various
administrative services for the Partnership. The General Partner is a
subsidiary of Geldermann, Inc., an Illinois corporation ("Geldermann"). Until
December 12, 1994, Geldermann was an independent operating subsidiary of
ConAgra, Inc., a Delaware corporation with headquarters in Omaha, Nebraska. On
that date, Geldermann was acquired by E. D. & F. Man International Inc.
(formerly known as E. D. & F. Man International Futures Inc.), a New York
corporation registered as a futures commission merchant with headquarters in
New York, New York.
Pursuant to a Customer Agreement (the "Customer Agreement"), Geldermann
acts as the commodity broker for the Partnership. The Customer Agreement may
be terminated by the Partnership or Geldermann upon 30 days' notice. The
General Partner invested $987,000 in the Partnership at the outset of trading;
after reflecting redemptions of $500,159, $271,597, $71,116, $330,991 and
$83,490 on September 1, 1987, July 1, 1988, October 1, 1988, September 1, 1991
and September 30, 1994, respectively, this investment was worth $110,121 as of
December 31, 1994.
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Under the terms of the Customer Agreement, the Partner-ship will not
pay brokerage commissions on the basis of the number of trades made on its
behalf, but will instead pay Geldermann a monthly brokerage fee of 0.8333% of
the Partnership's month-end Net Assets, as defined, (a 10% annual rate).
From inception until March 1, 1994, the Partnership's trading manager
was Commodities Corporation (U.S.A.) N.V. (the "Initial Trading Manager"), a
corporation formed under the laws of the Netherlands Antilles in June 1983, and
a wholly-owned subsidiary of Commodities Corporation, originally a Delaware
corporation formed in 1969 and reincorporated under the laws of the Cayman
Islands in 1980. Neither Commodities Corporation nor the Initial Trading
Manager is affiliated with the General Partner, Geldermann or the Selling
Agent. The Initial Trading Manager provided futures and forward trading advice
to the Partnership pursuant to a management contract which was terminated, upon
the resignation of the Initial Trading Manager, effective March 1, 1994.
Pursuant to a trading manager agreement with the Partnership (the
"Management Agreement"), the General Partner assumed the duties of the trading
manager of the Partnership effective March 1, 1994 (the "Trading Manager").
Under the terms of the Management Agreement, the Trading Manager's duties
include, among other things, selecting, hiring, monitoring and replacing
trading advisors, allocating and reallocating assets among the trading advisors
and terminating and engaging additional or replacement trading advisors.
The Partnership's assets were initially allocated among nine different
Trading Advisors (the "Initial Trading Advisors"), selected by the General
Partner on the recommendation of the Initial Trading Manager. One of the
Initial Trading Advisors, I.C.S.C., Inc., ceased trading on behalf of the
Partnership during 1987 and the Partnership added a new trading advisor,
Tiverton Trading Incorporated, on November 1, 1987. Until March 1, 1994, five
trading advisors traded on behalf of the Partnership: Blenheim Investments,
Inc.; Knightsbridge Capital Management; Mark J. Walsh & Co.; Princeton Paris
Research Corporation; and Reynwood Trading Corporation. The Initial Trading
Manager terminated the Advisory Agreements with the above-referenced trading
advisors effective February 28, 1994.
Heinold Asset Management, Inc., the Trading Manager, retained ARA
Portfolio Management Company, LaSalle Portfolio Management, Inc., Sunrise
Capital Management Inc. and Welton Investment Systems Corporation, effective
March 7, 1994, March 8, 1994, March 7, 1994 and March 1, 1994, respectively,
to act as the trading advisors for the Partnership. On June 6, 1994, Parthenon
Futures Management, Inc. and Michael Tym, Jr. were
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retained as trading advisors for the Partnership. The Advisory Agreement with
Welton Investment Systems Corporation was terminated on September 15, 1994 and
Lawless Commodities, Inc. was retained as a trading advisor effective January
24, 1995.
As of January 31, 1995, the following were the trading advisors for the
Partnership: LaSalle Portfolio Management, Inc., Sunrise Capital Management
Inc., Parthenon Futures Management, Inc., Michael Tym, Jr. and Lawless
Commodities, Inc. (the "Trading Advisors").
The Initial Trading Manager, which itself did not direct any trading on
behalf of the Partnership, advised the General Partner on the selection of the
Initial Trading Advisors and, among other things, monitored the performance of
the trading advisors and consulted with the General Partner in reviewing
certain aspects of the Trading Advisors' performance through February 28, 1994.
The Initial Trading Manager was responsible for providing satisfactory
replacement trading advisors throughout the term of the management contract,
should a replacement be required. The Trading Advisors are each allocated a
percentage of the Partnership's assets for trading. The General Partner
intends at all times to retain multiple trading advisors for the Partnership
that, collectively, will trade a diverse group of futures and forward contracts
pursuant to a mixture of systematic and discretionary trading approaches and
technical and fundamental analyses.
The Initial Trading Manager purchased 500 Units prior to the time the
Partnership commenced trading, which it agreed not to redeem so long as it
acted as the Initial Trading Manager. These Units, valued at $84,720, were
redeemed on March 1, 1994.
Prior to March 1, 1994, the Partnership paid the Initial Trading
Manager: (i) a monthly management fee of 1/2 of 1% of the month-end Net Assets
(as defined in the Limited Partnership Agreement, subject to certain
adjustments) of the Partnership; and (ii) a quarterly incentive fee of 20% of
New Appreciation, as defined in the management contract, as of the end of each
calendar quarter. The Partnership paid no fees to the trading advisors, who
were compensated solely by the Initial Trading Manager.
Effective March 1, 1994, each Trading Advisor is paid a management and
incentive fee by the Partnership at the rates negotiated at arm's-length on
behalf of the Partnership by the Trading Manager. At December 31, 1994, each
Trading Advisor receives: (i) a monthly management fee equal to 0.167 of 1% (a
2% annual rate) of the month-end Net Assets of the Partnership allocated to the
management of the trading advisors; and (ii) a quarterly incentive fee equal to
20% of any new trading profit, as defined in the Advisory Agreement with each
of the Trading
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Advisors, recognized with respect to the assets of the Partnership allocated to
each of the Trading Advisors. The Trading Manager will receive no compensation
for its services to the Partnership.
Regulation
Under the Commodity Exchange Act, as amended (the "Act"), futures
exchanges and futures trading are subject to regulation by the Commodity
Futures Trading Commission (the "CFTC"). The National Futures Association
("NFA"), a "registered futures association" under the Act, is the only
non-exchange self-regulatory organization for futures industry professionals.
The CFTC has delegated to the NFA responsibility for the registration of
"commodity trading advisors," "commodity pool operators," "futures commission
merchants," "introducing brokers" and their respective associated persons and
"floor brokers." The Act requires "commodity pool operators," such as the
General Partner, "commodity trading advisors," such as the Trading Advisors,
and commodity brokers or a "futures commission merchant," such as Geldermann,
to be registered and to comply with various reporting and record keeping
requirements. The General Partner, the Trading Advisors and Geldermann are all
members of NFA. The CFTC may suspend a commodity pool operator's or commodity
trading advisor's registration if it finds that its trading practices tend to
disrupt orderly market conditions or in certain other situations. In the event
that the registration of the General Partner as a commodity pool operator or
any of the Trading Advisors' registration as commodity trading advisors were
terminated or suspended, the General Partner and any of the Trading Advisors,
respectively, would be unable to continue to manage the business of the
Partnership. Should the General Partner's registration be suspended,
termination of the Partnership might result.
As members of NFA, the General Partner, the Trading Advisors and
Geldermann are subject to NFA standards relating to fair trade practices,
financial condition and customer protection. As the self-regulatory body of
the futures industry, the NFA promulgates rules governing the conduct of
futures industry professionals and disciplines those professionals which do not
comply with such standards.
In addition to such registration requirements, the CFTC and certain
futures exchanges have established limits on the maximum net long or net short
position which any person may hold or control in particular commodities. The
CFTC has adopted a rule requiring all domestic futures exchanges to submit for
approval speculative position limits for all futures contracts traded on such
exchanges. Many exchanges also limit the changes in futures contract prices
that may occur during a single trading day. The Partnership may trade on
foreign commodity exchanges
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<PAGE> 6
which are not subject to regulation by any United States government agency.
(b) Financial information about industry segments
The Partnership's business constitutes only one segment, speculative
trading of futures and forward contracts, for financial reporting purposes.
The Partnership does not engage in sales of goods and services. The
Partnership's revenue, operating results and total assets for each of the five
fiscal years in the period ended December 31, 1994 are set forth under "Item 6.
Selected Financial Data."
(c) Narrative description of business
(1) See Items 1(a) and (b) above.
(i) through (xii) - not applicable.
(xiii) - the Partnership has no employees.
(d) Financial information about foreign and domestic operations and
export sales
The Partnership does not engage in sales of goods or services. See
"Item 1(b). Business - Financial information about industry segments."
Item 2. Properties
The Partnership does not own any properties. Under the terms of the
Limited Partnership Agreement, the General Partner performs the following
services for the Partnership:
(1) Manages the business of the Partnership. Pursuant to this
authority, the General Partner, as Trading Manager, has entered into a
Management Agreement with the Partnership (under which the Trading Advisors
have complete discretion with respect to determination of the Partnership's
trading decisions pursuant to the Advisory Agreement between each Trading
Advisor and the Partnership) and a Customer Agreement with Geldermann (pursuant
to which Geldermann, Inc. executes all trades on behalf of the Partnership
based on the instructions of the Partnership's Trading Advisors).
(2) Maintains the Partnership's books and records, which Unitholders
or their duly authorized representatives may inspect during normal business
hours for any proper purpose upon reasonable written notice to the General
Partner.
(3) Furnishes each Unitholder with a monthly statement describing the
performance of the Partnership, which sets forth
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aggregate management fees, incentive fees, brokerage commissions and other
expenses incurred or accrued by the Partnership during the month.
(4) Forwards annual audited financial statements (including a
statement of financial condition and statement of operations) to each
Unitholder.
(5) Provides to each Unitholder tax information necessary for the
preparation of his annual federal income tax return and such other information
as the CFTC may by regulation require.
(6) Performs secretarial and other clerical responsibilities and
furnishes office space, equipment and supplies as may be necessary for
supervising the affairs of the Partnership.
(7) Administers the redemption of Units.
Item 3. Legal Proceedings
The General Partner is not aware of any pending legal proceedings to
which the Partnership is a party or to which any of its property is subject.
In the ordinary course of its business, Geldermann is involved in numerous
legal actions, some of which seek substantial damages. In view of the number
and diversity of the claims, the number of jurisdictions involved, and the
inherent difficulty of predicting the outcome of litigation, Geldermann cannot
state what the eventual outcome of these pending claims will be. As a matter
of policy, Geldermann vigorously defends civil litigation, reparations or
arbitration proceedings pending against it, and in all proceedings currently so
pending believes it has defenses which are factually and legally sound.
Geldermann is contesting the allegations of each complaint and believes that
there are meritorious defenses in most of the lawsuits.
Although the CFTC's staff's interpretation that any matter filed by the
CFTC against a registrant is, on its face (even though it has not been
litigated), material litigation which has to be disclosed, Geldermann takes
exception to this. Notwithstanding the preceding, Geldermann herewith discloses
a CFTC Enforcement Action titled In the Matter of Thomas Collins, et al., CFTC
Docket No. 94-13.
The Complaint in this case alleges that Geldermann, in 1986, carried
and cleared accounts in joint tenancy for a Mid-America local floor trader
and/or ten individuals with whom the floor trader maintained a separate joint
account with each of the ten individuals. None of the afore-mentioned persons
were ever employees of Geldermann. Geldermann's function was only that of
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<PAGE> 8
clearing broker. Over a period of approximately four years, at the direction
of the account holder(s), Geldermann transferred certain positions amongst and
between the accounts. It is those transfers that the CFTC is alleging are
non-competitive, fictitious transactions. The CFTC's complaint also alleges
that Geldermann failed to properly supervise the employees who accepted the
transfer instructions from the account holder(s). Geldermann takes exception
to the CFTC's allegation and is vigorously defending this litigation.
In any event, no pending proceeding affects Geldermann's ability to
provide its service to the Partnership. Neither the Trading Advisors nor the
Partnership have any connection with this litigation.
Item 4. Submission of Matters to a Vote
of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
(a) Market Information
There is no trading market for the Units, and none is likely to
develop. They are transferable only after written notice has been given to and
approved by the General Partner. Units may be redeemed as of the first day of
any month after the Partnership commences trading, upon ten days' written
notice at their Net Asset Value (as defined in the Limited Partnership
Agreement) as of the end of the immediately preceding month, without redemption
charge or penalty, as provided in the Limited Partnership Agreement. In the
event that all Units for which redemption is requested cannot be redeemed as of
any redemption date, Units of limited partners will be redeemed in the order
that requests for redemption have been received by the General Partner.
(b) Holders
As of January 1, 1995, there were 442 holders of Units.
(c) Dividends
No distributions or dividends have been made on the Units, and the
General Partner has no present intention to make any.
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Item 6. Selected Financial Data
The following is a summary of operations and total assets of the
Partnership for each of the five fiscal years in the period ended December 31,
1994.
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<TABLE>
<CAPTION>
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Period
Ended Ended Ended Ended Ended
December 31, December 31, December 31, December 31, December 31,
1994 1993 1992 1991 1990
------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net trading gain (loss)
on futures and
forward contracts $ 460,008 $ 3,406,786 $ 263,807 $ 2,736,403 $ 2,700,079
Interest income 307,314 226,370 391,251 692,442 839,051
----------- ------------ ----------- ----------- -----------
Total income (loss) 767,322 3,633,156 655,058 3,428,845 3,539,130
Brokerage commissions 735,811 869,772 1,047,306 1,371,702 1,215,312
Management fee 190,485 517,992 620,402 810,207 714,885
Incentive fee 287,295 249,920 0 0 69,961
Other administrative
expenses 35,449 57,027 43,602 92,150 111,225
----------- ------------ ----------- ----------- -----------
Total expenses 1,249,040 1,694,711 1,711,310 2,274,059 2,111,383
----------- ------------ ----------- ----------- -----------
Income (loss) before
equity in income
(loss) of Advisors
L.P., net (481,718) N/A N/A 1,154,786 1,427,747
----------- ------------ ----------- ----------- -----------
Equity in income (loss)
of Advisors L.P.,
net at allocated
expenses N/A N/A N/A (1,315,153) 1,484,666
----------- ------------ ----------- ----------- -----------
Net income (loss) $ (481,718) $ 1,938,445 $(1,056,252) $ (160,367) $ 2,912,413
=========== ============ =========== =========== ===========
Net income (loss)
allocated to
General Partner $ (17,301) $ 43,094 $ (14,044) $ (33,009) $ 68,963
=========== ============ =========== =========== ===========
Net income (loss)
allocated to
limited partners $ (464,417) $ 1,895,351 $(1,042,208) $ (127,358) $ 2,843,450
=========== ============ =========== =========== ===========
Increase (decrease) in
Net Asset Value for
a Unit outstanding
throughout each year/
period $ (9.61) $ 38.79 $ (12.64) $ .75 $ 20.58
=========== ============ =========== =========== ===========
Total assets $ 7,369,654 $ 9,066,332 $ 8,776,900 $16,554,929 $20,382,145
=========== ============ =========== =========== ===========
</TABLE>
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Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Reference is made to "Item 6. Selected Financial Data" and "Item 8.
Financial Statements and Supplementary Data." The information contained therein
is essential to, and should be read in conjunction with, the following analysis.
Capital Resources
The Partnership does not intend to raise any additional capital through
borrowing and, because it is a closed-end fund, it cannot sell any more Units
unless it undertakes a new public offering, which would require another
registration with the Securities and Exchange Commission. Due to the nature of
the Partnership's business, it will make no significant capital expenditures,
and substantially all its assets are and will be represented by cash, United
States Treasury securities and investments in futures and forward contracts.
Liquidity
Many United States commodity exchanges limit fluctuations in futures
contract prices during a single day by regulations referred to as "daily price
fluctuation limits" or "daily limits." During a single trading day no trades
may be executed at prices beyond the daily limit. Once the price of a futures
contract has reached the daily limit for that day, positions in that contract
can neither be taken nor liquidated. Futures prices have occasionally moved the
daily limit for several consecutive days with little or no trading. Similar
occurrences could prevent the Partnership from promptly liquidating unfavorable
positions and subject the Partnership to substantial losses which could exceed
the margin initially committed to such trades. In addition, even if futures
prices have not moved the daily limit, the Partnership may not be able to
execute futures trades at favorable prices if little trading in such contracts
is taking place. Other than these limitations on liquidity, which are inherent
in the Partnership's futures trading operations, the Partnership's assets are
highly liquid and are expected to remain so. Generally, forward contracts can
be offset at the discretion of the Trading Advisor. However, if the market is
not liquid, it could prevent the timely closeout or offset of an unfavorable
position until the delivery date, regardless of the changes in their value or
the Trading Advisor's investment strategies.
Results of Operations
Operating results showed a loss for the fiscal year ended December 31,
1994, a gain for the fiscal year ended
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<PAGE> 12
December 31, 1993 and a loss for the fiscal year ended December 31, 1992.
The Net Asset Value per Unit as of December 31, 1994 and December 31,
1993 was $180.23 and $189.84, respectively.
The Partnership had a net loss for the fiscal year ended December 31,
1994 as the Partnership's unprofitable trading in the currency, financial
instruments and agricultural sectors more than offset its profitable trading in
the coffee and cotton sectors.
The Partnership had a net gain for the fiscal year ended December 31,
1993 as the Partnership's profitable trading in the currency, financial
instruments, grains, meats and energy sectors more than offset the Partnership's
unprofitable trading in the metals sector.
The Partnership had a net loss for the fiscal year ended December 31,
1992 as the Partnership's profitable trading in the currency and financial
instruments sectors was more than offset by the Partnership's unprofitable
trading in the grains, metals, meats and energy sectors.
Inflation is not a significant factor in the Partnership's
profitability.
Item 8. Financial Statements and Supplementary Data
Financial statements are listed on page F-l of this report.
The supplementary financial information specified by Item 302 of
Regulation S-K is not applicable.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers. The Partnership
is managed by its General Partner. There are no "significant employees" of the
Partnership. Trading decisions for the Partnership are made by the Trading
Advisors and monitored by the Trading Manager.
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<PAGE> 13
Item 11. Executive Compensation
The Partnership has no directors or officers. The General Partner
performs the services described in "Item 2. Properties" herein. Geldermann acts
as the Partnership's commodity broker pursuant to the Customer Agreement
described in "Item 1(a). Business - General development of business."
The General Partner will participate in any appreciation in the net
assets of the Partnership in proportion to its investment in it.
Item 12. Security Ownership of Certain Beneficial Owners
and Management
(a) Security ownership of certain beneficial owners
The Partnership knows of no person who owns beneficially more than 5% of the
Units.
(b) Security ownership of management
Under the terms of the Limited Partnership Agreement, the Partnership's
affairs are managed by the General Partner and the Trading Advisors have
discretionary authority over the Partnership's futures and forward trading,
which is monitored by the General Partner as Trading Manager. The General
Partner owned 1,111 Unit-equivalents valued at $110,121 as of December 31, 1994,
1.5% of the Partnership's total equity. The Initial Trading Manager owned 500
Units as of December 31, 1993 valued at $94,920. These Units were redeemed on
March 1, 1994 for $84,720.
(c) Changes in control
None.
Item 13. Certain Relationships and Related Transactions
See "Item 11. Executive Compensation" and "Item 12. Security Ownership
of Certain Beneficial Owners and Management."
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
See Index to Financial Statements, infra.
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(a)(2) Financial Statement Schedules
All Schedules are omitted for the reason that they are not required, are
not applicable, or because equivalent information has been included in the
financial statements or the notes thereto.
(a)(3) Exhibits as required by Item 601 of Regulation S-K
(3) Articles of Incorporation and By-laws
a. Limited Partnership Agreement dated as of January 31, 1986, and
amended as of April 1, 1986.
b. Certificate of Limited Partnership of the Partnership as filed with
the Cook County Recorder of Deeds on January 31, 1986.
The above exhibits are incorporated herein by reference from the the
Partnership's Registration Statement on Form S-1, file no. 33-3514.
(10) Material Contracts
a. Customer Agreement between the Partnership and Geldermann.
b. Management Contract between the Partnership, Commodities Corporation
(U.S.A.) N.V. and the Trading Advisors.
c. Assignment Agreement among the Partnership, the General Partner,
Heinold Asset Management Service Corporation and each Unitholder.
d. Guarantor and Net Worth undertaking of Commodities Corporation.
The above exhibits are incorporated herein by reference from the
Partnership's Registration Statement on Form S-1, file no. 33-3514.
(e) Trading Manager Agreement dated March 1, 1994 between Heinold Asset
Management, Inc. and the Partnership.
(f) Advisory Agreement dated March 7, 1994 between ARA Portfolio
Management Company, the Trading Manager and the Partnership.
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<PAGE> 15
(g) Advisory Agreement dated March 8, 1994 between LaSalle Portfolio
Management, Inc., the Trading Manager and the Partnership.
(h) Advisory Agreement dated March 7, 1994 between Sunrise Capital
Management Inc., the Trading Manager and the Partnership.
(i) Advisory Agreement dated February 22, 1994 between Welton
Investment Systems Corporation, the Trading Manager and the Partnership.
The above exhibits are incorporated herein by reference from the the
Partnership's report on Form 10-K filed on March 30, 1994.
(j) Advisory Agreement dated June 6, 1994 between Parthenon Futures
Management, Inc., the Trading Manager and the Partnership.
(k) Advisory Agreement dated June 6, 1994 between Michael Tym, Jr., the
Trading Manager and the Partnership.
(l) Advisory Agreement dated January 24, 1995 between Lawless
Commodities, Inc., the Trading Manager and the Partnership.
The above exhibits are filed herewith.
(b) Reports on Form 8-K
The Partnership did not file a report on Form 8-K during the quarter
ended December 31, 1994.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Chicago
and State of Illinois on the 27th day of March, 1995.
THE FUTURES DIMENSION FUND
By HEINOLD ASSET MANAGEMENT, INC.
General Partner
By /s/ Ned W. Bennett
----------------------
Ned W. Bennett
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
General Partner of the Registrant in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Title with
Signature General Partner Date
- --------- --------------- ----
<S> <C> <C>
/s/ James R. Curley Chief Executive March 27, 1995
- ----------------------- Officer and Director
James R. Curley
/s/ Robert Ledvora Chief Financial Officer March 27, 1995
- ---------------------- (principal accounting
Robert Ledvora officer)
/s/ Thomas M. Harte Director March 27, 1995
- ----------------------
Thomas M. Harte
/s/ Ira Polk Director March 27, 1995
- ----------------------
Ira Polk
/s/ Ned W. Bennett President (principal March 27, 1995
- ---------------------- executive officer)
Ned W. Bennett and Director
</TABLE>
(Being the principal executive officer, the principal financial and
accounting officer, and a majority of the directors of Heinold Asset Management,
Inc.)
<TABLE>
<S> <C>
Heinold Asset Management, General Partner March 27, 1995
Inc. of Registrant
By /s/ Ned W. Bennett
----------------------
Ned W. Bennett
President
</TABLE>
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[LOGO]
- --------------------------------------------------------------------------------
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1994 AND 1993 AND FOR THE
THREE YEARS ENDED DECEMBER 31, 1994 AND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
<PAGE> 18
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT F - 1 and F - 2
FINANCIAL STATEMENTS:
Statements of Financial Condition as of
December 31, 1994 and 1993 F - 3
Statements of Operations for the Years Ended
December 31, 1994, 1993, and 1992 F - 4
Statements of Partners' Capital for the Years Ended
December 31, 1994, 1993, and 1992 F - 5
Statements of Cash Flows for the Years Ended
December 31, 1994, 1993, and 1992 F - 6
Notes to Financial Statements F - 7
<PAGE> 19
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the General Partner and
Limited Partners of
The Futures Dimension Fund:
We have audited the accompanying statements of financial condition of The
Futures Dimension Fund (an Illinois Limited Partnership, the "Partnership") as
of December 31, 1994 and 1993, and the related statements of operations,
partners' capital and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's General Partner. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the 1994 and 1993 financial statements present fairly, in all
material respects, the financial position of The Futures Dimension Fund as of
December 31, 1994 and 1993, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
February 28, 1995
F - 1
<PAGE> 20
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the General Partner and Limited Partners of
The Futures Dimension Fund:
We have audited the accompanying statements of financial condition of THE
FUTURES DIMENSION FUND (an Illinois limited partnership) as of December 31,
1992 and 1991, and the related statements of operations, partners' capital and
cash flows for each of the three years in the period ended December 31, 1992.
These financial statements are the responsibility of the Partnership's General
Partner. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of
The Advisors Private Limited Partnership (Note 6) for the years ended December
31, 1991 and 1990, the investment in which is reflected in the accompanying
financial statements using the equity method of accounting. The equity in
income (loss) of The Advisors Private Limited Partnership represents 820% and
51% of net income (loss) for the years ended December 31, 1991 and 1990,
respectively. The financial statements of The Advisors Private Limited
Partnership were audited by other auditors, whose report has been furnished to
us, and our opinion, insofar as it relates to the amounts included for The
Advisors Private Limited Partnership, is based solely on the report of the
other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of The Futures Dimension Fund as of December
31, 1992 and 1991, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1992, in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Chicago, Illinois,
February 5, 1993
<PAGE> 21
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1994 AND 1993
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1994 1993
<S> <C> <C>
CASH $ 23,013 $ 23,013
EQUITY IN FUTURES AND FORWARD TRADING ACCOUNTS:
U.S. Treasury securities -- 7,709,110
Net unrealized appreciation on open futures and forward contracts 719,050 1,201,915
Amount due from broker 6,627,591 132,294
----------- -----------
7,346,641 9,043,319
----------- -----------
TOTAL ASSETS $ 7,369,654 $ 9,066,332
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued brokerage commissions payable $ 62,450 $ 75,387
Redemption payable 45,058 47,460
Accrued management fee 11,165 44,855
Other accrued expenses 6,078 19,865
Accrued incentive fee 22,959 159,652
----------- -----------
Total liabilities 147,710 347,219
PARTNERS' CAPITAL:
Limited Partners (39,459 and 44,818 units outstanding
at December 31, 1994 and 1993, respectively) 7,111,823 8,508,201
General Partner (611 and 1,111 unit equivalents outstanding
at December 31, 1994 and 1993, respectively) 110,121 210,912
----------- -----------
Total partners' capital 7,221,944 8,719,113
----------- -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 7,369,654 $ 9,066,332
=========== ===========
NET ASSET VALUE PER OUTSTANDING UNIT OF
PARTNERSHIP INTEREST $ 180.23 $ 189.84
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 22
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION> 1994 1993 1992
<S> <C> <C> <C>
REVENUES:
Net realized trading gains on closed
futures and forward contracts $ 942,873 $ 2,604,738 $ 1,364,500
Increase (decrease) in net
unrealized appreciation on open
futures and forward contracts (482,865) 802,048 (1,100,693)
Interest income 307,314 226,370 391,251
---------- ----------- -----------
767,322 3,633,156 655,058
EXPENSES:
Brokerage commissions 735,811 869,772 1,047,306
Management fee 190,485 517,992 620,402
Incentive fee 287,295 249,920 -
Other administrative expenses 35,449 57,027 43,602
---------- ----------- -----------
1,249,040 1,694,711 1,711,310
---------- ----------- -----------
NET INCOME (LOSS) $ (481,718) $ 1,938,445 $(1,056,252)
========== =========== ===========
NET INCOME (LOSS) ALLOCATED TO:
General Partner $ (17,301) $ 43,094 $ (14,044)
========== =========== ===========
Limited Partner $ (464,417) $ 1,895,351 $(1,042,208)
========== =========== ===========
INCREASE (DECREASE) IN
NET ASSET VALUE FOR A
UNIT OUTSTANDING
THROUGHOUT EACH YEAR $ (9.61) $ 38.79 $ (12.64)
========== =========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 23
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL
LIMITED GENERAL PARTNERS'
PARTNERS PARTNER CAPITAL
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1992 $16,103,879 $181,862 $16,285,741
Redemption of 42,334 units
of limited partnership
interest (6,596,025) - (6,596,025)
Net loss (1,042,208) (14,044) (1,056,252)
----------- -------- -----------
BALANCE, DECEMBER 31, 1992 8,465,646 167,818 8,633,464
Redemption of 11,227 units
of limited partnership
interest (1,852,796) - (1,852,796)
Net income 1,895,351 43,094 1,938,445
----------- -------- -----------
BALANCE, DECEMBER 31, 1993 8,508,201 210,912 8,719,113
Redemption of 5,359 units
of limited partnership
interest and 500 general
partnership units (931,961) (83,490) (1,015,451)
Net loss (464,417) (17,301) (481,718)
----------- -------- -----------
BALANCE, DECEMBER 31, 1994 $ 7,111,823 $110,121 $ 7,221,944
=========== ======== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 24
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (481,718) $ 1,938,455 $(1,056,252)
Adjustments to reconcile net income
(loss) to net cash flows from operating
activities:
Decrease (increase) in equity in
futures and forward trading accounts 1,696,678 (289,432) 7,778,029
Decrease (increase) in accrued expenses (197,107) 203,783 (125,752)
----------- ----------- -----------
Net cash flows from
operating activities 1,017,853 1,852,796 6,596,025
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of limited and
general partnership units and
unit equivalents (1,017,853) (1,852,796) (6,596,025)
----------- ----------- -----------
NET CHANGE IN CASH - - -
CASH - Beginning of year 23,013 23,013 23,013
----------- ----------- -----------
CASH - End of year $ 23,013 $ 23,013 23,013
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 25
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
- --------------------------------------------------------------------------------
1. ORGANIZATION OF THE PARTNERSHIP
The Futures Dimension Fund (the "Partnership") was organized in January
1986, under the Illinois Uniform Limited Partnership Act (the "Act"),
for purposes of engaging in speculative trading of primarily futures and
forward contracts. Heinold Asset Management, Inc. ("HAMI"), a wholly
owned subsidiary of Geldermann, Inc. ("Geldermann"), is the General
Partner of the Partnership. On December 12, 1994, the parent of
Geldermann, ConAgra, Inc., sold all of the common stock of Geldermann to
E.D.& F. Man, International ("Man"). As a result, Geldermann and HAMI
are wholly owned by Man.
The Partnership's funds held at Geldermann are in segregated accounts as
required by the Commodity Exchange Act, as amended. These funds are
used to meet minimum margin requirements for all of the Partnership's
open positions, as set by the exchange upon which each futures contract
is traded. These requirements are adjusted, as needed, due to daily
fluctuations in the values of the underlying positions. If necessary,
certain positions may be liquidated to satisfy resulting changes in
margin requirements.
The Partnership has a brokerage contract with Geldermann, which provides
that the Partnership will pay a monthly brokerage fee of 0.8333%
(10% annually) of the Partnership's month-end net asset value, plus NFA
fees.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION - Futures and forward contracts are recorded on
trade date and are reflected in the accompanying statements of financial
condition at the difference between the original contract amount and the
market value on the last business day of the reporting period. The
difference between the original contract amount and the market value of
the futures and forward contracts is reflected as the change in net
unrealized appreciation. Market values of futures contracts are based
upon exchange settlement prices. Market values of forward contracts are
based upon quoted rates provided by major financial institutions.
OPERATING EXPENSES - The Partnership bears all expenses incurred in
connection with its activities. These include brokerage commissions,
trading manager's management and incentive fees, and periodic legal,
auditing, tax return preparation and filing fees. The General Partner
bears all other operating expenses.
INCOME TAXES - No provision for Federal income taxes has been made in
the accompanying financial statements since the net income (loss)
of the Partnership is not taxable as such but is included in the income
tax returns of the individual partners.
Statements of Cash Flows - For purposes of reporting cash flows for
each of the three years ended December 31, 1994, cash includes only cash
on deposit at financial institutions.
F - 7
<PAGE> 26
Reclassifications - Certain reclassifications have been made in the 1993
financial statements to conform to classifications adopted in 1994.
3. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION OF
CREDIT RISK
The Partnership invests in various financial and commodity futures
contracts for speculative purposes. These contracts are marked to
market daily with variations in value settled on a daily basis with the
exchange upon which they are traded. At December 31, 1994, the
Partnership held long financial futures and forward contracts having an
aggregate notional value of approximately $10,764,000, short financial
futures contracts having an aggregate notional value of approximately
$122,121,000, and short options on financial futures contracts having an
aggregate notional value of approximately $3,200,000. At December 31,
1993, the Partnership held long and short financial futures and forward
contracts having an aggregate notional value of approximately
$66,245,000, short financial futures contracts having an aggregate
notional value of approximately $131,335,000 and short options on
financial futures contracts having an aggregate notional value of
approximately $8,546,000.
The exchange upon which each financial futures and options on financial
futures contract is traded acts as the counterparty and, accordingly,
bears the risk of performance. A substantial portion of the
Partnership's open financial futures and options on financial futures
contracts was transacted with the Chicago Mercantile Exchange.
Generally, financial futures and forward contracts can be closed out or
offset, in the case of forward contracts, at the discretion of the
trading manager. However, illiquidity in the market could require the
Partnership to hold those positions until the delivery date, regardless
of the changes in their value or the trading manager's investment
strategies.
4. LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement (the "Agreement") provides for the
following:
ALLOCATION OF PROFIT AND LOSS FOR PARTNERSHIP ACCOUNTING PURPOSES - The
Limited Partners and the General Partner share in the profits and losses
of the Partnership in proportion to the number of units or unit
equivalents held by each. However, no Limited Partner is liable for
obligations of the Partnership in excess of its capital contribution and
profits, if any, and such other amounts for which it may be liable
pursuant to the Act.
DISTRIBUTIONS - Distributions (other than redemption of units) are made
on a prorata basis at the sole discretion of the General Partner in
accordance with the respective capital accounts of the partners. The
General Partner has made no distributions from the Partnership to date.
REDEMPTIONS - A Limited Partner (or any assignee thereof) may cause any
or all of its units to be redeemed as of the first of any month
following 10 days' written request for redemption, subject to certain
other conditions, as described in the Agreement. Redemption is at net
asset value as of month-end.
DISSOLUTION - The Partnership will be dissolved on December 31, 2006
unless preceded by a decline in the Partnership's aggregate net assets
to less than $1,000,000 or upon the occurrence of certain future events,
as specified in the Agreement.
F - 8
<PAGE> 27
5. MANAGEMENT AGREEMENT
As of December 31, 1993, the Partnership had a management contract with
Commodities Corporation (U.S.A.) N.V. (the "Trading Manager"). Under
the terms of the contract, the Trading Manager will not itself direct
any trading on behalf of the Partnership. Rather, all such trading
will be done solely by trading advisors selected by the Trading Manager.
The trading advisors are compensated by the Trading Manager. As
compensation for these services, the Trading Manager receives a monthly
management fee equal to 1/2 of 1% (6% annually) of the Partnership's net
asset value, as defined, as of the last day of each month and quarterly
incentive fees of 20% of "new trading profits," as defined in the
Agreement. The Trading Agreement with Commodities Corporation (U.S.A.)
N.V. was terminated on February 28, 1994. Effective March 31, 1994,
HAMI became the new Trading Manager replacing Commodities Corporation.
The Partnership entered into various trading advisor agreements (the
"Advisory Agreements") with effective dates as follows:
<TABLE>
<CAPTION>
DATE TRADING ADVISOR
<S> <C>
March 1, 1994 Welton Investment Systems Corporation
March 7, 1994 Sunrise Capital Management
March 7, 1994 ARA Portfolio Management Company
March 8, 1994 LaSalle Portfolio Management
June 6, 1994 Michael Tym Jr.
June 6, 1994 Parthenon Futures Management, Inc.
</TABLE>
The net assets of the Partnership were allocated among the Trading
Advisors. Under the terms of the Advisory Agreements, the Trading
Advisors have sole responsibility for determining futures trades for the
Partnership. As compensation for these services, each Trading Advisor
receives a monthly management fee equal to 2% annually of the
Partnership's net asset value, as defined, as of the last day of each
month and quarterly incentive fees of 20% of "new trading profits," as
defined, on their respective share of the Partnership's net asset value.
Incentive fees are retained by the Trading Advisors even when "trading
losses," as defined, occur in subsequent quarters; however, no further
incentive fees are payable until any such trading losses (other than
those attributable to redeemed units) are recouped by the Trading
Advisors.
The Advisory Agreements with Welton Investment Systems Corporation were
terminated on September_15, 1994.
At December 31, 1994, carry-forward losses to be used in calculating
new trading profits for the advisors were as follows:
<TABLE>
<S> <C>
Sunrise Capital $(159,979)
LaSalle Portfolio (244,573)
Michael Tym Jr. (25,255)
Parthenon Futures (45,601)
</TABLE>
Effective January 24, 1995, Lawless Commodities, Inc. entered into a
trading advisory agreement with the Partnership.
*****
F-9
<PAGE> 28
To the best of my knowledge and belief, the information in this statement is
accurate and complete.
Heinold Asset Management, Inc.
(Pool Operator)
/s/ Robert Ledvora
- ---------------------------------------
Robert Ledvora
Executive Vice-President and Controller
F - 10
<PAGE> 29
THE FUTURES DIMENSION FUND
EXHIBIT INDEX
Exhibits Included Herein
1. Advisory Agreement dated June 6, 1994 between Parthenon Futures
Management, Inc., the Trading Manager and the Partnership.
2. Advisory Agreement dated June 6, 1994 between Michael Tym, Jr., Inc., the
Trading Manager and the Partnership.
3. Advisory Agreement dated January 24, 1995 between Lawless Commodities,
Inc., the Trading Manager and the Partnership.
Exhibits Incorporated by Reference
See pages 14-15 for a list of exhibits incorporated by reference.
-16-
<PAGE> 1
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT, made as of June 2, 1994 by and among
HEINOLD ASSET MANAGEMENT, INC. (the "Trading Manager"), THE FUTURES DIMENSION
FUND L.P. (the "Fund") and PARTHENON FUTURES MANAGEMENT, INC. (the "Trading
Advisor");
WITNESSETH:
WHEREAS, pursuant to a Trading Manager Agreement (the "Trading
Manager Agreement"), the Trading Manager, which is also the general partner of
the Fund, has agreed with the Fund to act as the trading manager for the Fund,
selecting advisors to direct its trading;
WHEREAS, under the Trading Manager Agreement the Fund has
authorized the Trading Manager to allocate a portion of the Fund's assets to
the Trading Advisor to provide commodity interest advisory services to the
Fund;
WHEREAS, the Trading Advisor has agreed with the Trading
Manager to act as a Trading Advisor for the Fund;
NOW, THEREFORE, the parties agree as follows:
1. Independent Contractor.
The Trading Advisor shall for all purposes be considered an
independent contractor in respect of the Trading Manager and the Fund.
2. Duties of the Trading Advisor and its Principals.
Throughout the term of this Agreement, the Trading Advisor shall perform
futures trading advisory services for the Fund as follows:
(a) The Trading Advisor shall have sole authority and
responsibility for trading the assets of the Fund allocated from time to time
to the Trading Advisor in futures transactions in accordance with the Trading
Advisor's best judgment and the trading approach as described in the Trading
Advisor's Disclosure Document dated April 1, 1994 (the "Disclosure Document"),
except that the Trading Manager may overrule the trading instructions of the
Trading Advisor to the extent the Trading Manager deems necessary for the
protection of the Fund.
(b) The Trading Advisor may, with the Trading Manager's
consent, alter the trading approach used by the Trading Advisor in investing
and reinvesting the Fund's assets allocated to the Trading Advisor for
management, provided that the Trading
<PAGE> 2
Advisor determines that such alteration is in the best interests of the Fund.
(c) The Trading Advisor agrees that it will discuss with
the Trading Manager upon request, subject to reasonable assurances of
confidentiality, any trading approaches used by the Trading Advisor for trading
customer, proprietary or experimental accounts which differ from the approach
used for the Fund by the Trading Advisor, provided, that the Trading Advisor
shall not hereby be required to disclose what the Trading Advisor deems to be
proprietary information.
3. Allocation of Assets Among Trading Advisors; Replacement
Trading Advisors.
(a) The Trading Advisor shall initially be allocated
$450,000 of the Fund's assets as of June 3, 1994. The Trading Manager may
increase this allocation as of the first day of any month, provided that the
Trading Advisor shall not be obligated to accept hereunder more than $5,000,000
of additional allocations. No "notional" equity shall be included in such
allocation.
(b) Distributions and payment of Fund expenses shall be
charged against the various Fund accounts managed by its trading advisors in
proportion (subject to customary roundings and approximations) to the Fund's
total Net Assets maintained in each such account as of the time of such
distribution or payment. Redemptions may be charged to the various Fund
accounts in the discretion of the Trading Manager. The Trading Advisor agrees
to liquidate open positions in the Fund account traded by the Trading Advisor
in the allocable amount that the Trading Manager informs the Trading Advisor
the Trading Manager considers necessary or advisable to liquidate in order to
fund such distributions, payments or redemptions (the Trading Manager shall
not, however, have authority to instruct the Trading Advisor as to which
specific open positions to liquidate, except as otherwise provided herein).
(c) The Trading Manager may reallocate assets from the
Trading Advisor (i) as provided in Section 19 hereof, or (ii) as of the end of
any month in the Trading Manager's discretion.
4. Requests for Information and Notification of Material
Changes.
(a) The Trading Advisor agrees to provide the Trading
Manager with any information concerning the Trading Advisor that the Trading
Manager may reasonably request, subject to receipt of reasonable assurances of
confidentiality by the Trading Manager, including, but not limited to,
information regarding any change in control, personnel, trading approach and
financial condition which the Trading Manager reasonably deems to be material
to the Fund; the Trading Advisor shall also notify the Trading Manager
-2-
<PAGE> 3
of any such matters the Trading Advisor believes are material to the Fund.
Notwithstanding the foregoing sentence or any other provision set forth in this
Agreement, the Trading Advisor shall not be required to disclose the details of
its trading methods or practices or any proprietary or trade secret information
except to the extent that such disclosure may be necessary, in the opinion of
the counsel to the Fund or the Trading Manager, in connection with any
applicable state or federal law, statute, rule or regulation, including, but
not limited to, the United States Federal securities laws or the Commodity
Exchange Act, as amended (the "Act"); provided, however, that in no event shall
the Trading Advisor be required to disclose the names or identities of its
clients.
(b) The Trading Advisor agrees to give the Trading
Manager prior notice of any proposed material refinement or modification in any
trading systems, models, formulae, strategies or approaches the Trading Advisor
is using on behalf of the Fund, or any changes in the management, ownership or
control of the Trading Advisor. Changes in futures, forwards and options
traded shall not be deemed material changes unless the Trading Advisor had
specifically agreed to restrict its trading to a limited range of such
instruments.
(c) The Trading Advisor has furnished the Trading Manager
with the Disclosure Document, and the Fund and the Trading Manager acknowledge
receipt thereof. Subject to the second sentence of clause (a) above, the
Trading Advisor agrees to make all necessary disclosures regarding itself and
its principals, trading performance, approach and systems, customer accounts
(other than the names of customers, unless such disclosure is required by law
or regulation) and otherwise as may be required, in the reasonable judgment of
the Trading Manager, to be made to investors in the Fund; provided, that no
description of the Trading Advisor may be distributed by the Trading Manager
unless such description has been approved in writing and in advance by the
Trading Advisor, in its reasonable discretion.
5. Disclosure Documents. During the term of this Agreement,
the Trading Advisor shall promptly furnish the Trading Manager with a copy of
each amended, supplemented or updated disclosure document of the Trading
Advisor filed with the CFTC or the NFA. Neither the Trading Advisor nor its
principals or affiliates, nor the partners, employees or agents of the Trading
Advisor shall use, publish, circulate, or distribute information relating to
the Fund, except in the context of the preparation of updates to the
performance records set forth in the Trading Advisor's disclosure documents as
required under the Act and the rules and regulations promulgated thereunder.
6. Management and Incentive Fees. (A) Management Fees. The
Fund shall pay the Trading Advisor a monthly management fee equal to 0.167 of
1% (a 2% annual rate) of the month-end Net Assets of the Fund, as determined
pursuant to
-3-
<PAGE> 4
Section 10 of the Trading Manager Agreement, managed by the Trading Advisor,
including interest income, and before any reduction for accrued management or
incentive fees, but after reduction for the brokerage commissions payable and
accrued as of the end of such month.
(B) Incentive Fees. The Trading Advisor shall receive from
the Fund a quarterly incentive fee equal to twenty percent (20%) of any New
Trading Profit recognized with respect to the assets of the Fund allocated to
the Trading Advisor as of the end of each calendar quarter-end (including
partial quarters). Trading Profit equals the net realized gains and losses
from closed futures transactions during a calendar quarter, plus or minus the
change from the beginning to the end of such calendar quarter in unrealized
profit or loss on open futures positions, minus the Trading Advisor's share of
the brokerage commissions paid or accrued by the Fund, minus the Trading
Advisor's management fee payable as of the end of such quarter. New Trading
Profit equals cumulative Trading Profit in excess of the highest cumulative
level of Trading Profit as of the most recent calendar quarter-end as of which
there existed an all-time quarter-end high in Trading Profit (the "High Water
Mark of Profit"), or if New Trading Profit had never existed as of a calendar
quarter-end, from the commencement of the Trading Advisor's management of
assets for the Fund. Redemption of Units or reallocations of assets from the
Trading Advisor will result in a proportional reduction in any short-fall
between the High Water Mark of Profit and the current level of cumulative
Trading Profit as of the date of redemption. If any redemption or reallocation
of the Fund's assets allocated to the Trading Advisor occurs as of any date
which is not the end of a calendar quarter, a proportional incentive fee, if
accrued, will be charged as if such redemption or reallocation occurred as of
the end of a quarter and the incentive fee will be paid to the Trading Advisor.
Management and incentive fees shall be paid within 15 calendar
days after the end of each period for which they are earned.
7. Notices of Errors. The Trading Advisor agrees immediately
to notify the Trading Manager of any error committed by the Trading Advisor or
its principals or any of its employees with respect to a trade made by the
Trading Advisor on behalf of the Fund and to notify the Trading Manager
promptly of any order or trade for the Fund which the Trading Advisor believes
was not executed in accordance with the Trading Advisor's instructions to any
futures commission merchant, floor broker or forward trading dealer.
-4-
<PAGE> 5
8. Indemnification
(a) (i) In any threatened, pending or completed action, suit
or proceeding (regulatory or otherwise) to which the Trading Advisor is made a
party, relating to the services performed by the Trading Advisor for the Fund
as contemplated herein, the Fund shall indemnify and hold harmless the Trading
Advisor against any loss, liability, damage, cost and expense (including,
without limitation, attorneys' and accountants' fees and disbursements)
reasonably incurred or suffered by the Trading Advisor in connection with the
investigation, defense or settlement of any such action, suit or proceeding if
the Trading Advisor acted or omitted to act in good faith and if the actions or
omissions did not involve negligence or misconduct; provided that if the court
or administrative forum in which such action, suit or proceeding was brought
shall determine that, despite not having met the foregoing standard of conduct,
the Trading Advisor is, in view of all the circumstances of the case,
nevertheless entitled to indemnification, the Trading Advisor shall be
indemnified for such expenses as such court or administrative forum shall deem
proper;
(ii) To the extent that the Trading Advisor has been
successful on the merits or otherwise in the defense of any action, suit or
proceeding referred to in subparagraph (i), above, or in the defense of the
claim, issue or matter therein, the Fund shall indemnify it against any
expenses (including, without limitation, attorneys' and accountants' fees and
disbursements) reasonably incurred or suffered by it in connection therewith;
(iii) Expenses incurred in defending any threatened or
pending action, suit or proceeding against the Trading Advisor shall be paid by
the Fund in advance of the final disposition of such action, suit or proceeding
if, and to the extent that, the Trading Advisor agrees in writing to reimburse
the Fund, with interest, in the event that indemnification is not permitted
under this Section 8 upon final disposition;
(iv) As used in subsections (i) through (iii), above, the
terms "Trading Advisor" shall include the Trading Advisor, and each of the
Trading Advisor's partners or shareholders, employees and affiliates.
(b) The Trading Advisor agrees to indemnify, defend and hold
harmless the Fund and the Trading Manager against any loss, liability, damage,
cost or expense (including, without limitation, attorneys' and accountants'
fees) reasonably incurred or suffered by either of them as a result of the
breach of any representations and warranties made in this Agreement, or by
reason of any negligent act or omission of, or misconduct or act of bad faith
by, the Trading Advisor relating to the Fund (including, without limitation,
costs and expenses of investigating and defending any claims, demand or suit).
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<PAGE> 6
(c) In the event that a person entitled to indemnification
under this Section 8 is made a party to an action, suit or proceeding alleging
both matters for which indemnification can be made hereunder and matters for
which indemnification may not be made hereunder, such person shall be
indemnified only for that portion of the loss, liability, damage, cost or
expense incurred in such action, suit or proceeding which relates to the
matters for which indemnification can be made.
(d) None of the indemnifications contained in this Section 8
shall be applicable with respect to default judgments, confessions of judgment
or settlements entered into by the party claiming indemnification without the
prior written consent of the party obligated to indemnify such party.
(e) The provisions of this Section 8 shall survive the
termination or other expiration of this Agreement.
9. Status of the Fund, the Trading Manager and the Trading
Advisor. The Trading Advisor shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund or the Trading
Manager, except as provided herein. This Agreement shall not constitute the
Trading Advisor a promoter or sponsor with respect to the Fund.
10. Confidentiality. The Trading Manager agrees to keep
confidential and not to disseminate any details of the Trading Advisor's
approach to any of the limited partners of the Fund, any of the customers,
employees, agents, officers or directors of the Fund's commodity broker or any
others, except such details (other than proprietary information) as may, in the
reasonable judgment of the Trading Manager, be necessary or appropriate for the
conduct of the business of the Fund and the discharge of the Trading Manager's
obligations with respect to the Fund, or as requested by jurisdictional
authorities or required by law, or to the extent such details may have come to
be publicly disseminated through the actions or omissions of persons other than
the Trading Manager or the Fund, and will at no time disclose to any other
trading advisor the futures positions taken by the Trading Advisor for the Fund
or any other account traded by the Trading Advisor.
11. Other Accounts of the Trading Advisor and the Trading
Manager. Without in any respect limiting or qualifying any of the
representations, warranties or agreements made hereunder by any Trading Advisor
or the Trading Manager, the Trading Manager acknowledges and agrees that the
Trading Advisor shall be free to trade other customer and proprietary futures
accounts pursuant to a trading approach similar to or different from that used
by the Trading Advisor on behalf of the Fund, subject to the restrictions
imposed by this Agreement.
The Fund acknowledges and agrees that the Trading Manager
shall be free to manage (as well as trade) accounts other
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<PAGE> 7
than the account of the Fund and in so doing to use the same or different
combination of trading advisors, allocation of assets and monitoring procedures
as those used for the Fund; subject, in each case, to the restrictions imposed
by this Agreement.
The Trading Advisor hereby acknowledges the Trading Advisor's
fiduciary obligation to the Fund and agrees that under no circumstances and in
no manner, in making trading decisions for the Fund, shall the Trading Advisor
favor any of its other accounts over the Fund account allocated to it; provided
that this representation shall not restrict the Trading Advisor's freedom to
trade other accounts pursuant to different portfolios and strategies (subject
to Section 2(c) hereof) and to trade its proprietary account in a different
manner than its customer accounts.
12. Speculative Position Limits; Trading Policies.
(a) The Trading Manager will establish procedures for
ensuring that the Fund does not violate speculative position limits due to
trades entered by the trading advisors.
(b) The Trading Advisor agrees that from and after notice
from the Trading Manager that the Trading Advisor must submit orders for Fund
trades to the Trading Manager for clearance under applicable speculative
position limits, the Trading Advisor will so submit such orders pursuant to
whatever reasonable procedures the Trading Manager may, in its discretion,
establish and will not otherwise take positions on behalf of the Fund in any
contracts subject to such clearance procedures.
(c) The Trading Advisor further agrees to liquidate such
open positions in the Fund's account managed by such Trading Advisor as the
Trading Manager informs such Trading Advisor is necessary or advisable to
liquidate for speculative position limit purposes.
(d) The Trading Advisor agrees that in the event that the
Trading Advisor exceeds speculative position limits in respect to the Trading
Advisor's futures trading taken as a whole, the Trading Advisor will liquidate
positions as necessary to comply with applicable speculative position limits in
all of the Trading Advisor's and its principals' outstanding accounts in such
manner as the Trading Advisor may deem fair and equitable.
(e) The Trading Advisor agrees that in the event that any
such liquidation becomes necessary, the Trading Advisor will so inform the
Trading Manager and will report to them the steps taken by the Trading Advisor
in order to comply with all applicable speculative position limits.
(f) The Trading Manager will monitor compliance by the
trading advisors with the trading policies established for the Fund from time
to time. The Trading Advisor agrees to comply
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<PAGE> 8
with written procedures established by the Trading Manager from time to time
for the purpose of preventing the Trading Advisor from violating the Fund's
trading policies. The Trading Manager will notify the Trading Advisor promptly
of any changes in the trading policies of the Fund or in the procedures
established by the Trading Manager.
13. Standard of Liability. Neither the Trading Advisor nor
any of its employees or principals nor any person who controls the Trading
Advisor shall be liable to the Trading Manager, the Fund or their respective
principals, officers, directors, employees, agents, shareholders, or partners
or to any person who controls the Trading Manager or the Fund or any of their
respective successors or assigns under this Agreement except by reason of acts
or omissions in contravention of this Agreement or due to 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 Fund; it being understood that, without limiting the Trading
Advisor's liability hereunder, futures transactions made by the Trading Advisor
on behalf of the Fund's account shall be for the account and risk of the Fund.
The Trading Advisor is not responsible for the execution or clearance of the
Fund's trades once complete orders have been transmitted to the Fund's
commodity broker for those trades in accordance with the Trading Advisor's
duties.
14. Representations and Warranties of the Trading Advisor.
The Trading Advisor represents and warrants that:
(a) The Trading Advisor is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation. The Trading Advisor has full corporate power and authority to
enter into and perform its obligations under this Agreement; and the Trading
Advisor is qualified to conduct its business as a foreign corporation in good
standing in every jurisdiction in which the failure to so qualify could have a
materially adverse effect on its ability to comply with or perform its
obligations under this Agreement; it being understood that any decision as to
the jurisdiction or jurisdictions in which the Trading Advisor shall conduct
its business is within the sole discretion of the Trading Advisor;
(b) The Trading Advisor has full power and authority to enter
into and carry out its obligations under this Agreement and to conduct its
business as contemplated herein;
(c) 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, subject to applicable
-8-
<PAGE> 9
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally;
(d) The performance of the obligations under this Agreement
by the Trading Advisor will not conflict with, violate the terms or provisions
of, or constitute a default under, its partnership agreement, or any indenture,
mortgage, deed or trust, loan agreement, or other agreement or instrument to
which the Trading Advisor is a party or by which it is bound, or to which any
of the property (including, but not limited to, its trading systems, methods,
models, strategies and formulas) or assets of the Trading Advisor is subject,
or any order, rule, law, regulation, or other legal requirement applicable to
the Trading Advisor or to the property or assets of the Trading Advisor;
(e) The Trading Advisor and its principals are registered as
a "commodity trading advisor" and principals, respectively, under the Act and
are members of the NFA in such capacities, and such registrations and
memberships have not expired or been revoked, suspended, terminated, or not
renewed or limited or qualified in any respect, and the Trading Advisor is not
bankrupt or insolvent;
(f) The information contained in the Disclosure Document,
including, without limitation, the information regarding the trading method and
its performance tables and the notes thereto (i) is accurate and complete in
all material respects, (ii) does not contain any misstatement of a material
fact or omit to state a material fact necessary to make the statements made in
the Disclosure Document, in light of the circumstances under which they were
made, not misleading, and (iii) is in compliance with the Act and the rules and
regulations of the NFA;
(g) The Trading Advisor has complied, and will continue to
comply, with all laws, rules and regulations having application to its
business, properties, and assets, including the Act and of the NFA thereunder,
the violation of which would, in the Trading Advisor's best knowledge and
belief, materially and adversely affect its ability to comply with, and perform
its obligations under, this Agreement and, there are no action, suits,
proceedings, or investigations pending or, to the knowledge of the Trading
Advisor, threatened against the Trading Advisor or its affiliates at law or in
equity or before or by any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, or by a
self-regulatory, or by any commodity, exchange, in which an adverse decision
would, in the Trading Advisor's best knowledge and belief, materially and
adversely affect its ability to comply with, and perform its obligations under
this Agreement or an investor's decision of whether to invest in the Fund; and
(h) The foregoing representations and warranties shall be
continuing during the term of this Agreement and if at any time any event shall
occur which would make any of the foregoing
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<PAGE> 10
incomplete or inaccurate, the Trading Advisor shall promptly notify the Trading
Manager of the occurrence of such event.
15. Representations and Warranties of the Trading Manager.
The Trading Manager represents and warrants to the Trading
Advisor that:
(a) The Trading Manager is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Trading Manager has full corporate power and authority to enter into and
perform its obligations under this Agreement; and the Trading Manager is
qualified to conduct its business as a foreign corporation in good standing in
every jurisdiction in which the failure to so qualify could have a materially
adverse effect on its ability to comply with or perform its obligations under
this Agreement; it being understood that any decision as to the jurisdiction or
jurisdictions in which the Trading Manager shall conduct its business is within
the sole discretion of the Trading Manager;
(b) This Agreement has been duly and validly authorized,
executed, and delivered on behalf of the Trading Manager and is a valid and
binding agreement of the Trading Manager, enforceable in accordance with its
terms;
(c) The performance of the obligations under this Agreement
by the Trading Manager will not conflict with, violate the terms or provisions
of, or constitute a default under, its Articles of Incorporation or other
agreement or instrument to which the Trading Manager is a party or by which it
is bound, or to which any of the property or assets of the Trading Manager is
subject, or any order, rule, law, regulation, or other legal requirement
applicable to the Trading Manager or the property or assets of the Trading
Manager;
(d) The Trading Manager and its principals are registered as
a "commodity trading advisor" and principals, respectively, under the Act and
are members of the NFA in such capacities, and such registrations and
memberships have not expired or been revoked, suspended, terminated, or not
renewed or limited or qualified in any respect, and the Trading Advisor is not
bankrupt or insolvent;
(e) The Trading Manager has complied, and will continue to
comply, with all laws, rules and regulations having application to its
business, properties and assets, the violation of which would, to the Trading
Manager's best knowledge and belief, materially and adversely affect its
ability to comply with, and perform its obligations under, this Agreement, and
there are no actions, suits, proceedings, or investigations pending, or, to the
knowledge of the Trading Manager, threatened against the Trading Manager or its
principals or affiliates, at
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<PAGE> 11
law or in equity or before or by any federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or instrumentality,
or by a self-regulatory organization, or by any commodity exchange, in which an
adverse decision would, in the Trading Manager's best knowledge and belief,
materially and adversely affect its ability to comply with, and perform its
obligations under, this Agreement; and
(f) The foregoing representations and warranties shall be
continuing during the term of this Agreement and if at any time any event shall
occur which would make any of the foregoing incomplete or inaccurate, the
Trading Manager will promptly notify the Trading Advisor of the occurrence of
such event.
16. Representations and Warranties of the Fund.
The Fund represents and warrants to the Trading Advisor that:
(a) The Fund is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Illinois. The Fund
has full partnership power and authority to enter into and perform its
obligations under this Agreement.
(b) This Agreement has been duly and validly authorized,
executed, and delivered on behalf of the Fund and is a valid and binding
agreement of the Fund, enforceable in accordance with its terms;
(c) The performance of the obligations under this Agreement
by the Fund will not conflict with, violate the terms or provisions of, or
constitute a default under, its limited partnership agreement or other
agreement or instrument to which the Fund is a party or by which it is bound,
or to which any of the property or assets of the Fund is subject, or any order,
rule, law, regulation, or other legal requirement applicable to the Fund or the
property or assets of the Fund.
(d) The Fund has complied, and will continue to comply, with
all laws, rules and regulations having application to its business, properties
and assets, the violation of which would, to the Fund's best knowledge and
belief, materially and adversely affect its ability to comply with, and perform
its obligations under, this Agreement, and there are no actions, suits,
proceedings, or investigations pending or, to the knowledge of the Fund,
threatened against the Fund, at law or in equity or before or by any federal,
state, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, or by a self-regulatory organization, or by any
commodity exchange, in which an adverse decision would, in the Fund's best
knowledge and belief, materially and adversely affect its ability to comply
with, and perform its obligations under, this Agreement; and
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<PAGE> 12
(e) The foregoing representations and warranties shall be
continuing during the term of this Agreement and if at any time any event shall
occur which would make any of the foregoing incomplete or inaccurate, the Fund
will promptly notify the Trading Advisor of the occurrence of such event.
17. Term. The term of this Agreement shall be until the
close of business on May 31, 1995, subject to up to two one-year renewals in
the discretion of the Trading Manager, unless the Trading Manager has been
given notice by the Trading Advisor of the Trading Advisor's intent not to
renew at least 30 days prior to the expiration of the then current one-year
term.
18. Notices. All notices required to be delivered under this
agreement shall be in writing (including telegraphic communication or by
telephone confirmed in writing, all such writings to be delivered personally or
sent by registered or certified mail, postage prepaid and return receipt
requested, as follows:
if to the Fund or the Trading Manager:
HEINOLD ASSET MANAGEMENT, INC.
440 S. LaSalle Street, 20th Floor
Chicago, Illinois 60605
Attn: Ms. Stacy L. Hatch
if to the Trading Advisor:
PARTHENON FUTURES MANAGEMENT, INC.
3401 West End Avenue, Suite 306
Nashville, Tennessee 37203
Attn: Edward J. Cowell, Jr.
19. Termination.
(a) Either the Trading Advisor or the Trading Manager
may, in its discretion, terminate this Agreement if the Trading Manager
Agreement is terminated. In this regard, the Trading Manager agrees to notify
the Trading Advisor immediately upon a termination of the Trading Manager
Agreement.
(b) The Trading Advisor may terminate this Agreement on
ten (10) business days' notice in the event that the Net Assets of the Fund
under the management of the Trading Advisor, after adding back the Trading
Advisor's cumulative net trading loss, total less than $500,000.00 as of the
close of business as of any month-end. In addition, the Trading Advisor may
terminate the Trading Advisor's obligations hereunder by written notice to the
Trading Manager: (i) in the event that the trading polices applicable to the
Fund are amended without the consent of the Trading Advisor and, as amended,
would, in the opinion of the Trading Advisor, materially and adversely affect
the trading approach used by the Trading Advisor for the Fund; (ii) the
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<PAGE> 13
brokerage fees charged to the Fund account managed by the Trading Advisor are
altered in such a manner that the Trading Advisor believes the Trading
Advisor's strategy would generate excessive commission expense; (iii) in the
event any representation or warranty made by the Fund or the Trading Manager
becomes materially untrue at any time during the term hereof or was materially
untrue at the time made; or (iv) in the event the Trading Manager or the Fund
breaches any of its obligations hereunder.
(c) Termination of this Agreement and the Trading
Advisor's obligations hereunder or reallocations of assets from the Trading
Advisor may be made by the Trading Manager at any time upon one (1) business
day's notice; provided that the Trading Manager shall use best efforts, except
in the event of a material breach hereof by the Trading Advisor, to assure that
any such reallocations are made only as of a month-end upon at least ten (10)
business days' notice.
20. Amendment and Assignment. No party hereto may amend or
assign this Agreement without the prior written consent of the other party.
21. Complete Agreement. This Agreement constitutes the
entire agreement between the Trading Manager and the Trading Advisor with
respect to the matters covered herein.
22. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns, and no other person shall have any right or obligation under this
Agreement.
23. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the laws of the State
of Illinois (excluding the law thereof which requires the application of, or
reference to, the law of any other jurisdiction) and each of the parties hereto
consents and submits to the jurisdiction of the federal and state courts and
any applicable arbitral body within the County of Cook, City of Chicago, and
State of Illinois over any suit, action or proceeding with respect to this
Agreement.
24. Survival. The indemnity provision of this Agreement
shall survive the termination or expiration of this Agreement with respect to
any matter existing prior to such termination; the payment obligations under
this Agreement shall continue until satisfied; and the other provisions of this
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
25. Waiver of Breach. The waiver by either party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by either party. The failure of a party to
insist upon strict adherence to
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<PAGE> 14
any provision of the Agreement shall not constitute a waiver or thereafter
deprive such party of the right to insist upon strict adherence.
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<PAGE> 15
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
HEINOLD ASSET MANAGEMENT, INC.
By:/s/ William G. O'Donnell
------------------------------
Name: William G. O'Donnell
Title: President
PARTHENON FUTURES MANAGEMENT, INC.
By:/s/ Edward J. Cowell, Jr.
------------------------------
Name: Edward J. Cowell, Jr.
Title:
THE FUTURES DIMENSION FUND L.P.
By: Heinold Asset Management, Inc.
General Partner
By:/s/ William G. O'Donnell
------------------------------
Name: William G. O'Donnell
Title: President
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<PAGE> 1
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT, made as of June 1, 1994 by and among HEINOLD
ASSET MANAGEMENT, INC. (the "Trading Manager"), THE FUTURES DIMENSION FUND L.P.
(the "Fund") and MICHAEL TYM JR. (the "Trading Advisor");
WITNESSETH:
WHEREAS, pursuant to a Trading Manager Agreement (the "Trading Manager
Agreement"), the Trading Manager, which is also the general partner of the
Fund, has agreed with the Fund to act as the trading manager for the Fund,
selecting advisors to direct its trading;
WHEREAS, under the Trading Manager Agreement the Fund has authorized
the Trading Manager to allocate a portion of the Fund's assets to the Trading
Advisor to provide commodity interest advisory services to the Fund;
WHEREAS, the Trading Advisor has agreed with the Trading Manager to act
as a Trading Advisor for the Fund;
NOW, THEREFORE, the parties agree as follows:
1. Independent Contractor.
The Trading Advisor shall for all purposes be considered an independent
contractor in respect of the Trading Manager and the Fund.
2. Duties of the Trading Advisor and its Principals. Throughout the
term of this Agreement, the Trading Advisor shall perform futures trading
advisory services for the Fund as follows:
(a) The Trading Advisor shall have sole authority and
responsibility for trading the assets of the Fund allocated from time to time
to the Trading Advisor in futures transactions in accordance with the Trading
Advisor's best judgment and the trading approach as described in the Trading
Advisor's Disclosure Document dated February 14, 1994 (the "Disclosure
Document"), except that the Trading Manager may overrule the trading
instructions of the Trading Advisor to the extent the Trading Manager deems
necessary for the protection of the Fund.
(b) The Trading Advisor may, with the Trading Manager's consent,
alter the trading approach used by the Trading Advisor in investing and
reinvesting the Fund's assets allocated to the Trading Advisor for management,
provided that the Trading Advisor determines that such alteration is in the
best interests of the Fund.
<PAGE> 2
(c) The Trading Advisor agrees that it will discuss with the
Trading Manager upon request, subject to reasonable assurances of
confidentiality, any trading approaches used by the Trading Advisor for trading
customer, proprietary or experimental accounts which differ from the approach
used for the Fund by the Trading Advisor, provided, that the Trading Advisor
shall not hereby be required to disclose what the Trading Advisor deems to be
proprietary information.
3. Allocation of Assets Among Trading Advisors; Replacement Trading
Advisors.
(a) The Trading Advisor shall initially be allocated $500,000 of
the Fund's assets as of June 1, 1994. The Trading Manager may increase this
allocation as of the first day of any month, provided that the Trading Advisor
shall not be obligated to accept hereunder more than $5,000,000 of additional
allocations. No "notional" equity shall be included in such allocation.
(b) Distributions and payment of Fund expenses shall be charged
against the various Fund accounts managed by its trading advisors in proportion
(subject to customary roundings and approximations) to the Fund's total Net
Assets maintained in each such account as of the time of such distribution or
payment. Redemptions may be charged to the various Fund accounts in the
discretion of the Trading Manager. The Trading Advisor agrees to liquidate
open positions in the Fund account traded by the Trading Advisor in the
allocable amount that the Trading Manager informs the Trading Advisor the
Trading Manager considers necessary or advisable to liquidate in order to fund
such distributions, payments or redemptions (the Trading Manager shall not,
however, have authority to instruct the Trading Advisor as to which specific
open positions to liquidate, except as otherwise provided herein).
(c) The Trading Manager may reallocate assets from the Trading
Advisor (i) as provided in Section 19 hereof, or (ii) as of the end of any
month in the Trading Manager's discretion.
4. Requests for Information and Notification of Material Changes.
(a) The Trading Advisor agrees to provide the Trading Manager with
any information concerning the Trading Advisor that the Trading Manager may
reasonably request, subject to receipt of reasonable assurances of
confidentiality by the Trading Manager, including, but not limited to,
information regarding any change in control, personnel, trading approach and
financial condition which the Trading Manager reasonably deems to be material
to the Fund; the Trading Advisor shall also notify the Trading Manager of any
such matters the Trading Advisor believes are material to the Fund.
Notwithstanding the foregoing sentence or any other provision set forth in this
Agreement, the Trading Advisor shall
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<PAGE> 3
not be required to disclose the details of its trading methods or practices
or any proprietary or trade secret information except to the extent that
such disclosure may be necessary, in the opinion of the counsel to the Fund
or the Trading Manager, in connection with any applicable state or federal
law, statute, rule or regulation, including, but not limited to, the United
States Federal securities laws or the Commodity Exchange Act, as amended
(the "Act"); provided, however, that in no event shall the Trading Advisor
be required to disclose the names or identities of its clients.
(b) The Trading Advisor agrees to give the Trading Manager prior
notice of any proposed material refinement or modification in any trading
systems, models, formulae, strategies or approaches the Trading Advisor is
using on behalf of the Fund, or any changes in the management, ownership or
control of the Trading Advisor. Changes in futures, forwards and options
traded shall not be deemed material changes unless the Trading Advisor had
specifically agreed to restrict its trading to a limited range of such
instruments.
(c) The Trading Advisor has furnished the Trading Manager with the
Disclosure Document, and the Fund and the Trading Manager acknowledge receipt
thereof. Subject to the second sentence of clause (a) above, the Trading
Advisor agrees to make all necessary disclosures regarding itself and its
principals, trading performance, approach and systems, customer accounts (other
than the names of customers, unless such disclosure is required by law or
regulation) and otherwise as may be required, in the reasonable judgment of the
Trading Manager, to be made to investors in the Fund; provided, that no
description of the Trading Advisor may be distributed by the Trading Manager
unless such description has been approved in writing and in advance by the
Trading Advisor, in its reasonable discretion.
5. Disclosure Documents. During the term of this Agreement, the
Trading Advisor shall promptly furnish the Trading Manager with a copy of each
amended, supplemented or updated disclosure document of the Trading Advisor
filed with the CFTC or the NFA. Neither the Trading Advisor nor its principals
or affiliates, nor the partners, employees or agents of the Trading Advisor
shall use, publish, circulate, or distribute information relating to the Fund,
except in the context of the preparation of updates to the performance records
set forth in the Trading Advisor's disclosure documents as required under the
Act and the rules and regulations promulgated thereunder.
6. Management and Incentive Fees. (A) Management Fees. The Fund
shall pay the Trading Advisor a monthly management fee equal to 0.167 of 1% (a
2% annual rate) of the month-end Net Assets of the Fund, as determined pursuant
to Section 10 of the Trading Manager Agreement, managed by the Trading Advisor,
including interest income, and before any reduction for accrued management or
incentive fees, but after
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<PAGE> 4
reduction for the brokerage commissions payable and accrued as of the end
of such month.
(B) Incentive Fees. The Trading Advisor shall receive from the Fund a
quarterly incentive fee equal to twenty percent (20%) of any New Trading Profit
recognized with respect to the assets of the Fund allocated to the Trading
Advisor as of the end of each calendar quarter-end (including partial
quarters). Trading Profit equals the net realized gains and losses from closed
futures transactions during a calendar quarter, plus or minus the change from
the beginning to the end of such calendar quarter in unrealized profit or loss
on open futures positions, minus the Trading Advisor's share of the brokerage
commissions paid or accrued by the Fund, minus the Trading Advisor's management
fee payable as of the end of such quarter. New Trading Profit equals
cumulative Trading Profit in excess of the highest cumulative level of Trading
Profit as of the most recent calendar quarter-end as of which there existed an
all-time quarter-end high in Trading Profit (the "High Water Mark of Profit"),
or if New Trading Profit had never existed as of a calendar quarter-end, from
the commencement of the Trading Advisor's management of assets for the Fund.
Redemption of Units or reallocations of assets from the Trading Advisor will
result in a proportional reduction in any short-fall between the High Water
Mark of Profit and the current level of cumulative Trading Profit as of the
date of redemption. If any redemption or reallocation of the Fund's assets
allocated to the Trading Advisor occurs as of any date which is not the end of
a calendar quarter, a proportional incentive fee, if accrued, will be charged
as if such redemption or reallocation occurred as of the end of a quarter and
the incentive fee will be paid to the Trading Advisor.
Management and incentive fees shall be paid within 15 calendar days
after the end of each period for which they are earned.
7. Notices of Errors. The Trading Advisor agrees immediately to
notify the Trading Manager of any error committed by the Trading Advisor or its
principals or any of its employees with respect to a trade made by the Trading
Advisor on behalf of the Fund and to notify the Trading Manager promptly of any
order or trade for the Fund which the Trading Advisor believes was not executed
in accordance with the Trading Advisor's instructions to any futures commission
merchant, floor broker or forward trading dealer.
-4-
<PAGE> 5
8. Indemnification
(a) (i) In any threatened, pending or completed action, suit or
proceeding (regulatory or otherwise) to which the Trading Advisor is made a
party, relating to the services performed by the Trading Advisor for the Fund
as contemplated herein, the Fund shall indemnify and hold harmless the Trading
Advisor against any loss, liability, damage, cost and expense (including,
without limitation, attorneys' and accountants' fees and disbursements)
reasonably incurred or suffered by the Trading Advisor in connection with the
investigation, defense or settlement of any such action, suit or proceeding if
the Trading Advisor acted or omitted to act in good faith and if the actions or
omissions did not involve negligence or misconduct; provided that if the court
or administrative forum in which such action, suit or proceeding was brought
shall determine that, despite not having met the foregoing standard of conduct,
the Trading Advisor is, in view of all the circumstances of the case,
nevertheless entitled to indemnification, the Trading Advisor shall be
indemnified for such expenses as such court or administrative forum shall deem
proper;
(ii) To the extent that the Trading Advisor has been successful on the
merits or otherwise in the defense of any action, suit or proceeding referred
to in subparagraph (i), above, or in the defense of the claim, issue or matter
therein, the Fund shall indemnify it against any expenses (including, without
limitation, attorneys' and accountants' fees and disbursements) reasonably
incurred or suffered by it in connection therewith;
(iii) Expenses incurred in defending any threatened or pending action,
suit or proceeding against the Trading Advisor shall be paid by the Fund in
advance of the final disposition of such action, suit or proceeding if, and to
the extent that, the Trading Advisor agrees in writing to reimburse the Fund,
with interest, in the event that indemnification is not permitted under this
Section 8 upon final disposition;
(iv) As used in subsections (i) through (iii), above, the terms
"Trading Advisor" shall include the Trading Advisor, and each of the Trading
Advisor's partners or shareholders, employees and affiliates.
(b) The Trading Advisor agrees to indemnify, defend and hold harmless
the Fund and the Trading Manager against any loss, liability, damage, cost or
expense (including, without limitation, attorneys' and accountants' fees)
reasonably incurred or suffered by either of them as a result of the breach of
any representations and warranties made in this Agreement, or by reason of any
negligent act or omission of, or misconduct or act of bad faith by, the Trading
Advisor relating to the Fund (including, without limitation, costs and expenses
of investigating and defending any claims, demand or suit).
-5-
<PAGE> 6
(c) In the event that a person entitled to indemnification under this
Section 8 is made a party to an action, suit or proceeding alleging both
matters for which indemnification can be made hereunder and matters for which
indemnification may not be made hereunder, such person shall be indemnified
only for that portion of the loss, liability, damage, cost or expense incurred
in such action, suit or proceeding which relates to the matters for which
indemnification can be made.
(d) None of the indemnifications contained in this Section 8 shall be
applicable with respect to default judgments, confessions of judgment or
settlements entered into by the party claiming indemnification without the
prior written consent of the party obligated to indemnify such party.
(e) The provisions of this Section 8 shall survive the termination or
other expiration of this Agreement.
9. Status of the Fund, the Trading Manager and the Trading Advisor.
The Trading Advisor shall, unless otherwise expressly provided or authorized,
have no authority to act for or represent the Fund or the Trading Manager,
except as provided herein. This Agreement shall not constitute the Trading
Advisor a promoter or sponsor with respect to the Fund.
10. Confidentiality. The Trading Manager agrees to keep confidential
and not to disseminate any details of the Trading Advisor's approach to any of
the limited partners of the Fund, any of the customers, employees, agents,
officers or directors of the Fund's commodity broker or any others, except such
details (other than proprietary information) as may, in the reasonable judgment
of the Trading Manager, be necessary or appropriate for the conduct of the
business of the Fund and the discharge of the Trading Manager's obligations
with respect to the Fund, or as requested by jurisdictional authorities or
required by law, or to the extent such details may have come to be publicly
disseminated through the actions or omissions of persons other than the Trading
Manager or the Fund, and will at no time disclose to any other trading advisor
the futures positions taken by the Trading Advisor for the Fund or any other
account traded by the Trading Advisor.
11. Other Accounts of the Trading Advisor and the Trading Manager.
Without in any respect limiting or qualifying any of the representations,
warranties or agreements made hereunder by any Trading Advisor or the Trading
Manager, the Trading Manager acknowledges and agrees that the Trading Advisor
shall be free to trade other customer and proprietary futures accounts pursuant
to a trading approach similar to or different from that used by the Trading
Advisor on behalf of the Fund, subject to the restrictions imposed by this
Agreement.
The Fund acknowledges and agrees that the Trading Manager shall be free
to manage (as well as trade) accounts other
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<PAGE> 7
than the account of the Fund and in so doing to use the same or different
combination of trading advisors, allocation of assets and monitoring
procedures as those used for the Fund; subject, in each case, to the
restrictions imposed by this Agreement.
The Trading Advisor hereby acknowledges the Trading Advisor's fiduciary
obligation to the Fund and agrees that under no circumstances and in no manner,
in making trading decisions for the Fund, shall the Trading Advisor favor any
of its other accounts over the Fund account allocated to it; provided that this
representation shall not restrict the Trading Advisor's freedom to trade other
accounts pursuant to different portfolios and strategies (subject to Section
2(c) hereof) and to trade its proprietary account in a different manner than
its customer accounts.
12. Speculative Position Limits; Trading Policies.
(a) The Trading Manager will establish procedures for ensuring that
the Fund does not violate speculative position limits due to trades entered by
the trading advisors.
(b) The Trading Advisor agrees that from and after notice from the
Trading Manager that the Trading Advisor must submit orders for Fund trades to
the Trading Manager for clearance under applicable speculative position limits,
the Trading Advisor will so submit such orders pursuant to whatever reasonable
procedures the Trading Manager may, in its discretion, establish and will not
otherwise take positions on behalf of the Fund in any contracts subject to such
clearance procedures.
(c) The Trading Advisor further agrees to liquidate such open
positions in the Fund's account managed by such Trading Advisor as the Trading
Manager informs such Trading Advisor is necessary or advisable to liquidate for
speculative position limit purposes.
(d) The Trading Advisor agrees that in the event that the Trading
Advisor exceeds speculative position limits in respect to the Trading Advisor's
futures trading taken as a whole, the Trading Advisor will liquidate positions
as necessary to comply with applicable speculative position limits in all of
the Trading Advisor's and its principals' outstanding accounts in such manner
as the Trading Advisor may deem fair and equitable.
(e) The Trading Advisor agrees that in the event that any such
liquidation becomes necessary, the Trading Advisor will so inform the Trading
Manager and will report to them the steps taken by the Trading Advisor in order
to comply with all applicable speculative position limits.
(f) The Trading Manager will monitor compliance by the trading
advisors with the trading policies established for the Fund from time to time.
The Trading Advisor agrees to comply
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<PAGE> 8
with written procedures established by the Trading Manager from time to
time for the purpose of preventing the Trading Advisor from violating the
Fund's trading policies. The Trading Manager will notify the Trading Advisor
promptly of any changes in the trading policies of the Fund or in the
procedures established by the Trading Manager.
13. Standard of Liability. Neither the Trading Advisor nor any of its
employees or principals nor any person who controls the Trading Advisor shall
be liable to the Trading Manager, the Fund or their respective principals,
officers, directors, employees, agents, shareholders, or partners or to any
person who controls the Trading Manager or the Fund or any of their respective
successors or assigns under this Agreement except by reason of acts or
omissions in contravention of this Agreement or due to 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
Fund; it being understood that, without limiting the Trading Advisor's
liability hereunder, futures transactions made by the Trading Advisor on behalf
of the Fund's account shall be for the account and risk of the Fund. The
Trading Advisor is not responsible for the execution or clearance of the Fund's
trades once complete orders have been transmitted to the Fund's commodity
broker for those trades in accordance with the Trading Advisor's duties.
14. Representations and Warranties of the Trading Advisor.
The Trading Advisor represents and warrants that:
(a) The Trading Advisor is a sole proprietor. The Trading Advisor has
full power and authority to enter into and perform its obligations under this
Agreement.
(b) The Trading Advisor has full power and authority to enter into and
carry out its obligations under this Agreement and to conduct its business as
contemplated herein;
(c) 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, subject to
applicable bankruptcy, insolvency or other similar laws affecting creditors'
rights generally;
(d) The performance of the obligations under this Agreement by the
Trading Advisor will not conflict with, violate the terms or provisions of, or
constitute a default under, its partnership agreement, or any indenture,
mortgage, deed or trust, loan agreement, or other agreement or instrument to
which the Trading Advisor is a party or by which it is bound, or to which any
of the property (including, but not limited to, its trading
-8-
<PAGE> 9
systems, methods, models, strategies and formulas) or assets of the Trading
Advisor is subject, or any order, rule, law, regulation, or other legal
requirement applicable to the Trading Advisor or to the property or assets of
the Trading Advisor;
(e) The Trading Advisor and its principal are registered as a
"commodity trading advisor" and principal, respectively, under the Act and are
members of the NFA in such capacities, and such registrations and memberships
have not expired or been revoked, suspended, terminated, or not renewed or
limited or qualified in any respect, and the Trading Advisor is not bankrupt or
insolvent;
(f) The information contained in the Disclosure Document, including,
without limitation, the information regarding the trading method and its
performance tables and the notes thereto (i) is accurate and complete in all
material respects, (ii) does not contain any misstatement of a material fact or
omit to state a material fact necessary to make the statements made in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading, and (iii) is in compliance with the Act and the rules and
regulations of the NFA;
(g) The Trading Advisor has complied, and will continue to comply,
with all laws, rules and regulations having application to its business,
properties, and assets, including the Act and of the NFA thereunder, the
violation of which would, in the Trading Advisor's best knowledge and belief,
materially and adversely affect its ability to comply with, and perform its
obligations under, this Agreement and, there are no action, suits, proceedings,
or investigations pending or, to the knowledge of the Trading Advisor,
threatened against the Trading Advisor or its affiliates at law or in equity or
before or by any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, or by a self-regulatory,
or by any commodity, exchange, in which an adverse decision would, in the
Trading Advisor's best knowledge and belief, materially and adversely affect
its ability to comply with, and perform its obligations under this Agreement or
an investor's decision of whether to invest in the Fund; and
(h) The foregoing representations and warranties shall be continuing
during the term of this Agreement and if at any time any event shall occur
which would make any of the foregoing incomplete or inaccurate, the Trading
Advisor shall promptly notify the Trading Manager of the occurrence of such
event.
-9-
<PAGE> 10
15. Representations and Warranties of the Trading Manager.
The Trading Manager represents and warrants to the Trading Advisor
that:
(a) The Trading Manager is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Trading Manager has full corporate power and authority to enter into and
perform its obligations under this Agreement; and the Trading Manager is
qualified to conduct its business as a foreign corporation in good standing in
every jurisdiction in which the failure to so qualify could have a materially
adverse effect on its ability to comply with or perform its obligations under
this Agreement; it being understood that any decision as to the jurisdiction or
jurisdictions in which the Trading Manager shall conduct its business is within
the sole discretion of the Trading Manager;
(b) This Agreement has been duly and validly authorized, executed, and
delivered on behalf of the Trading Manager and is a valid and binding agreement
of the Trading Manager, enforceable in accordance with its terms;
(c) The performance of the obligations under this Agreement by the
Trading Manager will not conflict with, violate the terms or provisions of, or
constitute a default under, its Articles of Incorporation or other agreement or
instrument to which the Trading Manager is a party or by which it is bound, or
to which any of the property or assets of the Trading Manager is subject, or
any order, rule, law, regulation, or other legal requirement applicable to the
Trading Manager or the property or assets of the Trading Manager;
(d) The Trading Manager and its principals are registered as a
"commodity trading advisor" and principals, respectively, under the Act and are
members of the NFA in such capacities, and such registrations and memberships
have not expired or been revoked, suspended, terminated, or not renewed or
limited or qualified in any respect, and the Trading Advisor is not bankrupt or
insolvent;
(e) The Trading Manager has complied, and will continue to comply,
with all laws, rules and regulations having application to its business,
properties and assets, the violation of which would, to the Trading Manager's
best knowledge and belief, materially and adversely affect its ability to
comply with, and perform its obligations under, this Agreement, and there are
no actions, suits, proceedings, or investigations pending, or, to the knowledge
of the Trading Manager, threatened against the Trading Manager or its
principals or affiliates, at law or in equity or before or by any federal,
state, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, or by a self-regulatory organization,
-10-
<PAGE> 11
or by any commodity exchange, in which an adverse decision would, in the
Trading Manager's best knowledge and belief, materially and adversely
affect its ability to comply with, and perform its obligations under, this
Agreement; and
(f) The foregoing representations and warranties shall be continuing
during the term of this Agreement and if at any time any event shall occur
which would make any of the foregoing incomplete or inaccurate, the Trading
Manager will promptly notify the Trading Advisor of the occurrence of such
event.
16. Representations and Warranties of the Fund.
The Fund represents and warrants to the Trading Advisor that:
(a) The Fund is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Illinois. The Fund has full
partnership power and authority to enter into and perform its obligations under
this Agreement.
(b) This Agreement has been duly and validly authorized, executed, and
delivered on behalf of the Fund and is a valid and binding agreement of the
Fund, enforceable in accordance with its terms;
(c) The performance of the obligations under this Agreement by the
Fund will not conflict with, violate the terms or provisions of, or constitute
a default under, its limited partnership agreement or other agreement or
instrument to which the Fund is a party or by which it is bound, or to which
any of the property or assets of the Fund is subject, or any order, rule, law,
regulation, or other legal requirement applicable to the Fund or the property
or assets of the Fund.
(d) The Fund has complied, and will continue to comply, with all laws,
rules and regulations having application to its business, properties and
assets, the violation of which would, to the Fund's best knowledge and belief,
materially and adversely affect its ability to comply with, and perform its
obligations under, this Agreement, and there are no actions, suits,
proceedings, or investigations pending or, to the knowledge of the Fund,
threatened against the Fund, at law or in equity or before or by any federal,
state, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, or by a self-regulatory organization, or by any
commodity exchange, in which an adverse decision would, in the Fund's best
knowledge and belief, materially and adversely affect its ability to comply
with, and perform its obligations under, this Agreement; and
(e) The foregoing representations and warranties shall be continuing
during the term of this Agreement and if at any time any event shall occur
which would make any of the foregoing
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<PAGE> 12
incomplete or inaccurate, the Fund will promptly notify the Trading Advisor
of the occurrence of such event.
17. Term. The term of this Agreement shall be until the close of
business on May 31, 1995 subject to up to two one-year renewals in the
discretion of the Trading Manager, unless the Trading Manager has been given
notice by the Trading Advisor of the Trading Advisor's intent not to renew at
least 30 days prior to the expiration of the then current one-year term.
18. Notices. All notices required to be delivered under this
agreement shall be in writing (including telegraphic communication or by
telephone confirmed in writing, all such writings to be delivered personally or
sent by registered or certified mail, postage prepaid and return receipt
requested, as follows:
if to the Fund or the Trading Manager:
HEINOLD ASSET MANAGEMENT, INC.
440 S. LaSalle Street, 20th Floor
Chicago, Illinois 60605
Attn: Ms. Stacy L. Hatch
if to the Trading Advisor:
MICHAEL TYM JR.
141 West Jackson Boulevard
Suite 1570
Chicago, Illinois 60604
Attn: Mr. Michael Tym Jr.
19. Termination.
(a) Either the Trading Advisor or the Trading Manager may, in its
discretion, terminate this Agreement if the Trading Manager Agreement is
terminated. In this regard, the Trading Manager agrees to notify the Trading
Advisor immediately upon a termination of the Trading Manager Agreement.
(b) The Trading Advisor may terminate this Agreement on ten (10)
business days' notice in the event that the Net Assets of the Fund under the
management of the Trading Advisor, after adding back the Trading Advisor's
cumulative net trading loss, total less than $250,000.00 as of the close of
business as of any month-end. In addition, the Trading Advisor may terminate
the Trading Advisor's obligations hereunder by written notice to the Trading
Manager: (i) in the event that the trading polices applicable to the Fund are
amended without the consent of the Trading Advisor and, as amended, would, in
the opinion of the Trading Advisor, materially and adversely affect the trading
approach used by the Trading Advisor for the Fund; (ii) the brokerage fees
charged to the Fund account managed by the Trading Advisor are altered in such
a manner that the Trading Advisor believes the Trading Advisor's strategy would
generate excessive
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<PAGE> 13
commission expense; (iii) in the event any representation or warranty
made by the Fund or the Trading Manager becomes materially untrue at any time
during the term hereof or was materially untrue at the time made; or (iv) in
the event the Trading Manager or the Fund breaches any of its obligations
hereunder.
(c) Termination of this Agreement and the Trading Advisor's
obligations hereunder or reallocations of assets from the Trading Advisor may
be made by the Trading Manager at any time upon one (1) business day's notice;
provided that the Trading Manager shall use best efforts, except in the event
of a material breach hereof by the Trading Advisor, to assure that any such
reallocations are made only as of a month-end upon at least ten (10) business
days' notice.
20. Amendment and Assignment. No party hereto may amend or assign
this Agreement without the prior written consent of the other party.
21. Complete Agreement. This Agreement constitutes the entire
agreement between the Trading Manager and the Trading Advisor with respect to
the matters covered herein.
22. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and permitted assigns, and no
other person shall have any right or obligation under this Agreement.
23. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Illinois (excluding the law thereof which requires the application of, or
reference to, the law of any other jurisdiction) and each of the parties hereto
consents and submits to the jurisdiction of the federal and state courts and
any applicable arbitral body within the County of Cook, City of Chicago, and
State of Illinois over any suit, action or proceeding with respect to this
Agreement.
24. Survival. The indemnity provision of this Agreement shall survive
the termination or expiration of this Agreement with respect to any matter
existing prior to such termination; the payment obligations under this
Agreement shall continue until satisfied; and the other provisions of this
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
25. Waiver of Breach. The waiver by either party of a breach of any
provisions of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by either party. The failure of a party to insist upon
strict adherence to any provision of the Agreement shall not constitute a
waiver or thereafter deprive such party of the right to insist upon strict
adherence.
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<PAGE> 14
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
HEINOLD ASSET MANAGEMENT, INC.
By:/s/ William G. O'Donnell
---------------------------------
Name: William G. O'Donnell
Title: President
MICHAEL TYM JR.
By:/s/ Michael Tym Jr.
------------------------------
Name: Michael Tym Jr.
Title: Sole Proprietor
THE FUTURES DIMENSION FUND L.P.
By: Heinold Asset Management, Inc.
General Partner
By: /s/ William G. O'Donnell
-------------------------------
Name: William G. O'Donnell
Title: President
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<PAGE> 1
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT, made as of January 24, 1995 by and
among HEINOLD ASSET MANAGEMENT, INC. (the "Trading Manager"), THE FUTURES
DIMENSION FUND L.P. (the "Fund") and LAWLESS COMMODITIES, INC. (the "Trading
Advisor");
WITNESSETH:
WHEREAS, pursuant to a Trading Manager Agreement (the "Trading
Manager Agreement"), the Trading Manager, which is also the general partner of
the Fund, has agreed with the Fund to act as the trading manager for the Fund,
selecting advisors to direct its trading;
WHEREAS, under the Trading Manager Agreement the Fund has
authorized the Trading Manager to allocate a portion of the Fund's assets to
the Trading Advisor to provide commodity interest advisory services to the
Fund;
WHEREAS, the Trading Advisor has agreed with the Trading
Manager to act as a Trading Advisor for the Fund;
NOW, THEREFORE, the parties agree as follows:
1. Independent Contractor.
The Trading Advisor shall for all purposes be considered an
independent contractor in respect of the Trading Manager and the Fund.
2. Duties of the Trading Advisor and its Principals.
Throughout the term of this Agreement, the Trading Advisor shall perform
futures trading advisory services for the Fund as follows:
(a) The Trading Advisor shall have sole authority and
responsibility for trading the assets of the Fund allocated from time to time
to the Trading Advisor in futures transactions, including futures and forward
contracts and options thereon, in accordance with the Trading Advisor's best
judgment and trading approach as described in the Trading Advisor's Disclosure
Document dated November 29, 1994 (the "Disclosure Document"), except that the
Trading Manager may overrule the trading instructions of the Trading Advisor to
the extent the Trading Manager deems necessary for the protection of the Fund.
(b) The Trading Advisor may, with the Trading Manager's
consent, alter the trading approach used by the Trading Advisor in investing
and reinvesting the Fund's assets allocated to the Trading Advisor for
management, provided that the Trading
<PAGE> 2
Advisor determines that such alteration is in the best interests of the Fund.
(c) The Trading Advisor agrees that it will discuss with
the Trading Manager upon request, subject to reasonable assurances of
confidentiality, any trading approaches used by the Trading Advisor for trading
customer, proprietary or experimental accounts which differ from the approach
used for the Fund by the Trading Advisor, provided, that the Trading Advisor
shall not hereby be required to disclose what the Trading Advisor deems to be
proprietary information.
3. Allocation of Assets Among Trading Advisors; Replacement
Trading Advisors.
(a) The Trading Advisor shall initially be allocated $1
million of the Fund's assets as of February 3, 1995. The Trading Manager may
increase this allocation with advance notice as of the first day of any month,
provided that the Trading Advisor shall not be obligated to accept hereunder
more than $5,000,000 of additional allocations. No "notional" equity shall be
included in such allocation.
(b) Distributions and payment of Fund expenses shall be
charged against the various Fund accounts managed by its trading advisors in
proportion (subject to customary roundings and approximations) to the Fund's
total Net Assets maintained in each such account as of the time of such
distribution or payment. Redemptions may be charged to the various Fund
accounts in the discretion of the Trading Manager. The Trading Advisor agrees
to liquidate open positions in the Fund account traded by the Trading Advisor
in the allocable amount that the Trading Manager informs the Trading Advisor
the Trading Manager considers necessary or advisable to liquidate in order to
fund such distributions, payments or redemptions (the Trading Manager shall
not, however, have authority to instruct the Trading Advisor as to which
specific open positions to liquidate, except as otherwise provided herein).
(c) The Trading Manager may reallocate assets from the
Trading Advisor (i) as provided in Section 19 hereof, or (ii) as of the end of
any month in the Trading Manager's discretion.
4. Requests for Information and Notification of Material
Changes.
(a) The Trading Advisor agrees to provide the Trading
Manager with any information concerning the Trading Advisor that the Trading
Manager may reasonably request, subject to receipt of reasonable assurances of
confidentiality by the Trading Manager, including, but not limited to,
information regarding any change in control, personnel, trading approach or
materially adverse change in financial condition which the Trading Manager
reasonably deems to be material to the Fund; the Trading Advisor
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<PAGE> 3
shall also notify the Trading Manager of any such matters the Trading Advisor
believes are material to the Fund. Notwithstanding the foregoing sentence or
any other provision set forth in this Agreement, the Trading Advisor shall not
be required to disclose the details of its trading methods or practices or any
proprietary or trade secret information except to the extent that such
disclosure may be necessary in connection with any applicable state or federal
law, statute, rule or regulation, including, but not limited to, the United
States Federal securities laws or the Commodity Exchange Act, as amended (the
"Act"); provided, however, that in no event shall the Trading Advisor be
required to disclose the names or identities of its clients.
(b) The Trading Advisor agrees to give the Trading
Manager prior notice of any proposed material refinement or modification in any
trading systems, models, formulae, strategies or approaches the Trading Advisor
is using on behalf of the Fund, or any changes in the management, ownership or
control of the Trading Advisor. Changes in futures, forwards and options
traded shall not be deemed material changes unless the Trading Advisor had
specifically agreed to restrict its trading to a limited range of such
instruments.
(c) The Trading Advisor has furnished the Trading Manager
with the Disclosure Document, and the Fund and the Trading Manager acknowledge
receipt thereof. Subject to the second sentence of clause (a) above, the
Trading Advisor agrees to provide to the Trading Manager all necessary
disclosures regarding itself and its principals, trading performance, approach
and systems, customer accounts (other than the names of customers, unless such
disclosure is required by law or regulation) and otherwise as may be required,
in the reasonable judgment of the Trading Manager, to be made to investors in
the Fund; provided, that no description of the Trading Advisor may be
distributed by the Trading Manager unless such description has been approved in
writing and in advance by the Trading Advisor, in its reasonable discretion.
5. Disclosure Documents. During the term of this Agreement,
the Trading Advisor shall promptly furnish the Trading Manager with a copy of
each amended, supplemented or updated disclosure document of the Trading
Advisor filed with the CFTC or the NFA. Neither the Trading Advisor nor its
principals or affiliates, nor the partners, employees or agents of the Trading
Advisor shall use, publish, circulate, or distribute information relating to
the Fund, except in the context of the preparation of updates to the
performance records set forth in the Trading Advisor's disclosure documents as
required under the Act and the rules and regulations promulgated thereunder.
6. Commodity Brokers; Floor Brokers. The Trading
Advisor shall clear orders for all commodity interest transactions for the Fund
through such commodity broker or
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<PAGE> 4
brokers, or in the case of forward contracts through such dealers or banks, as
the Fund shall direct from time to time in its sole discretion (the Fund
initially so designating Geldermann, Inc. and Geldermann Ltd.). The Trading
Advisor will not, without the consent of the General Partner, trade on a
"give-up" basis through floor brokers not associated with Geldermann, Inc. If
any such floor brokers are permitted by the General Partner to execute trades
on behalf of the Fund, all such trades will be "given-up" so as to be carried
as Geldermann, Inc.'s account. The Trading Advisor shall receive copies of
daily and monthly brokerage statements.
7. Management and Incentive Fees. (A) Management Fees. The
Fund shall pay the Trading Advisor a monthly management fee equal to 0.167 of
1% (a 2% annual rate) of the month-end Net Assets of the Fund allocated to the
Trading Advisor, determined in accordance with generally accepted accounting
principles, managed by the Trading Advisor, including interest income, and
before any reduction for accrued management or incentive fees, but after
reduction for the brokerage commissions payable and accrued as of the end of
such month.
(B) Incentive Fees. The Trading Advisor shall receive from
the Fund a quarterly incentive fee equal to twenty percent (20%) of any New
Trading Profit recognized with respect to the assets of the Fund allocated to
the Trading Advisor as of the end of each calendar quarter-end (including
partial quarters). Trading Profit equals the net realized gains and losses
from closed futures transactions during a calendar quarter, plus or minus the
change from the beginning to the end of such calendar quarter in unrealized
profit or loss on open futures positions, minus the Trading Advisor's share of
the brokerage commissions paid or accrued by the Fund, minus the Trading
Advisor's management fee payable as of the end of such quarter. New Trading
Profit equals cumulative Trading Profit in excess of the highest cumulative
level of Trading Profit as of the most recent calendar quarter-end as of which
there existed an all-time quarter-end high in Trading Profit (the "High Water
Mark of Profit"), or if New Trading Profit had never existed as of a calendar
quarter-end, from the commencement of the Trading Advisor's management of
assets for the Fund. Redemption of Units or reallocations of assets from the
Trading Advisor will result in a proportional reduction in any short-fall
between the High Water Mark of Profit and the current level of cumulative
Trading Profit as of the date of redemption. If any redemption or reallocation
of the Fund's assets allocated to the Trading Advisor occurs as of any date
which is not the end of a calendar quarter, a proportional incentive fee, if
accrued, will be charged as if such redemption or reallocation occurred as of
the end of a quarter and the incentive fee will be paid to the Trading Advisor.
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<PAGE> 5
Management and incentive fees shall be paid within 15 calendar
days after the end of each period for which they are earned.
8. Notices of Errors. The Trading Advisor agrees immediately
to notify the Trading Manager of any error committed by the Trading Advisor or
its principals or any of its employees with respect to a trade made by the
Trading Advisor on behalf of the Fund and to notify the Trading Manager
promptly of any order or trade for the Fund which the Trading Advisor believes
was not executed in accordance with the Trading Advisor's instructions to any
futures commission merchant, floor broker or forward trading dealer.
9. Indemnification
(a) (i) In any threatened, pending or completed action, suit
or proceeding (regulatory or otherwise) to which the Trading Advisor is made a
party, relating to the services performed by the Trading Advisor for the Fund
as contemplated herein, or arising out of or relating to this Agreement, or
arising out of or relating to the Fund's operations prior to the date of this
Agreement, the Fund shall indemnify and hold harmless the Trading Advisor
against any loss, liability, damage, cost and expense (including, without
limitation, attorneys' and accountants' fees and disbursements) reasonably
incurred or suffered by the Trading Advisor in connection with the
investigation, defense or settlement of any such action, suit or proceeding if
the Trading Advisor acted or omitted to act in good faith and if the actions or
omissions did not involve negligence or misconduct; provided that if the court
or administrative forum in which such action, suit or proceeding was brought
shall determine that, despite not having met the foregoing standard of conduct,
the Trading Advisor is, in view of all the circumstances of the case,
nevertheless entitled to indemnification, the Trading Advisor shall be
indemnified for such expenses as such court or administrative forum shall deem
proper;
(ii) To the extent that the Trading Advisor has been
successful on the merits or otherwise in the defense of any action, suit or
proceeding referred to in subparagraph (i), above, or in the defense of the
claim, issue or matter therein, the Fund shall indemnify it against any
expenses (including, without limitation, attorneys' and accountants' fees and
disbursements) reasonably incurred or suffered by it in connection therewith;
(iii) Expenses incurred in defending any threatened or
pending action, suit or proceeding against the Trading Advisor shall be paid by
the Fund in advance of the final disposition of such action, suit or proceeding
if, and to the extent that, the Trading Advisor agrees in writing to reimburse
the Fund, with interest, in the event that indemnification is not permitted
under this Section 8 upon final disposition;
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(iv) As used in subsections (i) through (iii), above, the
terms "Trading Advisor" shall include the Trading Advisor, and each of the
Trading Advisor's partners or shareholders, employees and affiliates.
(b) The Trading Advisor agrees to indemnify, defend and hold
harmless the Fund and the Trading Manager against any loss, liability, damage,
cost or expense (including, without limitation, attorneys' and accountants'
fees) reasonably incurred or suffered by either of them as a result of the
breach of any representations and warranties made in this Agreement, or by
reason of any negligent act or omission of, or misconduct or act of bad faith
by, the Trading Advisor relating to the Fund (including, without limitation,
costs and expenses of investigating and defending any claims, demand or suit).
(c) In the event that a person entitled to indemnification
under this Section 9 is made a party to an action, suit or proceeding alleging
both matters for which indemnification can be made hereunder and matters for
which indemnification may not be made hereunder, such person shall be
indemnified only for that portion of the loss, liability, damage, cost or
expense incurred in such action, suit or proceeding which relates to the
matters for which indemnification can be made.
(d) None of the indemnifications contained in this Section 8
shall be applicable with respect to default judgments, confessions of judgment
or settlements entered into by the party claiming indemnification without the
prior written consent of the party obligated to indemnify such party.
(e) The provisions of this Section 8 shall survive the
termination or other expiration of this Agreement.
10. Status of the Fund, the Trading Manager and the Trading
Advisor. The Trading Advisor shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund or the Trading
Manager, except as provided herein. This Agreement shall not constitute the
Trading Advisor a promoter or sponsor with respect to the Fund.
11. Confidentiality. The Trading Manager agrees to keep
confidential and not to disseminate any details of the Trading Advisor's
approach to any of the limited partners of the Fund, any of the customers,
employees, agents, officers or directors of the Fund's commodity broker or any
others, except such details (other than proprietary information) as may, in the
reasonable judgment of the Trading Manager, be necessary or appropriate for the
conduct of the business of the Fund and the discharge of the Trading Manager's
obligations with respect to the Fund, or as requested by jurisdictional
authorities or required by law, or to the extent such details may have come to
be publicly disseminated through the actions or omissions of persons other than
the Trading Manager or the Fund, and will at
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<PAGE> 7
no time disclose to any other trading advisor the futures positions taken by
the Trading Advisor for the Fund or any other account traded by the Trading
Advisor.
12. Other Accounts of the Trading Advisor and the Trading
Manager. Without in any respect limiting or qualifying any of the
representations, warranties or agreements made hereunder by any Trading Advisor
or the Trading Manager, the Trading Manager acknowledges and agrees that the
Trading Advisor shall be free to trade other customer and proprietary futures
accounts pursuant to a trading approach similar to or different from that used
by the Trading Advisor on behalf of the Fund, subject to the restrictions
imposed by this Agreement.
The Fund acknowledges and agrees that the Trading Manager
shall be free to manage (as well as trade) accounts other than the account of
the Fund and in so doing to use the same or different combination of trading
advisors, allocation of assets and monitoring procedures as those used for the
Fund; subject, in each case, to the restrictions imposed by this Agreement.
The Trading Advisor hereby acknowledges the Trading Advisor's
fiduciary obligation to the Fund under applicable law and agrees that under no
circumstances and in no manner, in making trading decisions for the Fund, shall
the Trading Advisor favor any of its other accounts over the Fund account
allocated to it; provided that this representation shall not restrict the
Trading Advisor's freedom to trade other accounts pursuant to different
portfolios and strategies (subject to Section 2(c) hereof) and to trade its
proprietary account in a different manner than its customer accounts.
13. Speculative Position Limits; Trading Policies.
(a) The Trading Manager will establish procedures for
ensuring that the Fund does not violate speculative position limits due to
trades entered by the trading advisors.
(b) The Trading Advisor agrees that from and after notice
from the Trading Manager (such notice to be given when the Fund's positions in
a particular contract reach 60% of such contract's speculative position limit)
the Trading Advisor must submit orders for Fund trades to the Trading Manager
for clearance under applicable speculative position limits, the Trading Advisor
will so submit such orders pursuant to whatever reasonable procedures the
Trading Manager may, in its discretion, establish and will not otherwise take
positions on behalf of the Fund in any contracts subject to such clearance
procedures. The Trading Advisor shall have no liability to the Fund for the
trading results of any contract subject to the notice requirement set forth in
this paragraph.
(c) The Trading Advisor further agrees to liquidate such
open positions in the Fund's account managed by such Trading
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<PAGE> 8
Advisor as the Trading Manager informs such Trading Advisor is necessary or
advisable to liquidate for speculative position limit purposes.
(d) The Trading Advisor agrees that in the event that the
Trading Advisor exceeds speculative position limits in respect to the Trading
Advisor's futures trading taken as a whole, the Trading Advisor will liquidate
positions as necessary to comply with applicable speculative position limits in
all of the Trading Advisor's and its principals' outstanding accounts in such
manner as the Trading Advisor may deem fair and equitable.
(e) The Trading Advisor agrees that in the event that any
such liquidation becomes necessary, the Trading Advisor will so inform the
Trading Manager and will report to them the steps taken by the Trading Advisor
in order to comply with all applicable speculative position limits.
(f) The Trading Manager will monitor compliance by the
trading advisors with the trading policies established for the Fund from time
to time. The Trading Advisor agrees to comply with written procedures
established by the Trading Manager from time to time for the purpose of
preventing the Trading Advisor from violating the Fund's trading policies. The
Trading Manager will notify the Trading Advisor promptly of any changes in the
trading policies of the Fund or in the procedures established by the Trading
Manager. See Exhibit A for a list of the current Trading Policies.
14. Standard of Liability. Neither the Trading Advisor nor
any of its employees or principals nor any person who controls the Trading
Advisor shall be liable to the Trading Manager, the Fund or their respective
principals, officers, directors, employees, agents, shareholders, or partners
or to any person who controls the Trading Manager or the Fund or any of their
respective successors or assigns under this Agreement except by reason of acts
or omissions in contravention of this Agreement or due to 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 Fund; it being understood that, without limiting the Trading
Advisor's liability hereunder, futures transactions made by the Trading Advisor
on behalf of the Fund's account shall be for the account and risk of the Fund.
The Trading Advisor is not responsible for the execution or clearance of the
Fund's trades once complete orders have been transmitted to the Fund's
commodity broker for those trades in accordance with the Trading Advisor's
duties.
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<PAGE> 9
15. Representations and Warranties of the Trading Advisor.
The Trading Advisor represents and warrants that:
(a) The Trading Advisor is a corporation duly organized,
validly existing and in good standing under the laws of the state of Illinois.
The Trading Advisor has full corporate power and authority to enter into and
perform its obligations under this Agreement; and the Trading Advisor is
qualified to conduct its business as a foreign corporation in good standing in
every jurisdiction in which the failure to so qualify could have a materially
adverse effect on its ability to comply with or perform its obligations under
this Agreement; it being understood that any decision as to the jurisdiction or
jurisdictions in which the Trading Advisor shall conduct its business is within
the sole discretion of the Trading Advisor;
(b) 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, subject to applicable bankruptcy, insolvency or other similar laws
affecting creditors' rights generally;
(c) The performance of the obligations under this Agreement
by the Trading Advisor will not conflict with, violate the terms or provisions
of, or constitute a default under, its articles of incorporation or bylaws, or
any indenture, mortgage, deed or trust, loan agreement, or other agreement or
instrument to which the Trading Advisor is a party or by which it is bound, or
to which any of the property (including, but not limited to, its trading
systems, methods, models, strategies and formulas) or assets of the Trading
Advisor is subject, or any order, rule, law, regulation, or other legal
requirement applicable to the Trading Advisor or to the property or assets of
the Trading Advisor;
(d) The Trading Advisor is registered as a "commodity trading
advisor" and its principals are listed as such on its Form 7-R, under the Act
and is a member of the NFA in such capacity, and such registration and
membership has not expired or been revoked, suspended, terminated, or not
renewed or limited or qualified in any respect, and the Trading Advisor is not
bankrupt or insolvent;
(e) The information contained in the Disclosure Document,
including, without limitation, the information regarding the trading method and
its performance tables and the notes thereto (i) is accurate and complete in
all material respects, (ii) does not contain any misstatement of a material
fact or omit to state a material fact necessary to make the statements made in
the Disclosure Document, in light of the circumstances under
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<PAGE> 10
which they were made, not misleading, and (iii) is in material compliance with
the Act and the rules and regulations of the NFA;
(f) The Trading Advisor has complied, and will continue to
comply, with all laws, rules and regulations having application to its
business, properties, and assets, including the Act and of the NFA thereunder,
the violation of which would, in the Trading Advisor's best knowledge and
belief, materially and adversely affect its ability to comply with, and perform
its obligations under, this Agreement and, there are no actions, suits,
proceedings, or investigations pending or, to the knowledge of the Trading
Advisor, threatened against the Trading Advisor or its affiliates at law or in
equity or before or by any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, or by a
self-regulatory body, or by any commodity exchange, in which an adverse
decision would, in the Trading Advisor's best knowledge and belief, materially
and adversely affect its ability to comply with, and perform its obligations
under this Agreement or an investor's decision of whether to remain in the
Fund; and
(g) The foregoing representations and warranties shall be
continuing during the term of this Agreement and if at any time any event shall
occur which would make any of the foregoing incomplete or inaccurate, the
Trading Advisor shall promptly notify the Trading Manager of the occurrence of
such event.
16. Representations and Warranties of the Trading
Manager.
The Trading Manager represents and warrants to the Trading
Advisor that:
(a) The Trading Manager is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Trading Manager has full corporate power and authority to enter into and
perform its obligations under this Agreement; and the Trading Manager is
qualified to conduct its business as a foreign corporation in good standing in
every jurisdiction in which the failure to so qualify could have a materially
adverse effect on its ability to comply with or perform its obligations under
this Agreement; it being understood that any decision as to the jurisdiction or
jurisdictions in which the Trading Manager shall conduct its business is within
the sole discretion of the Trading Manager;
(b) This Agreement has been duly and validly authorized,
executed, and delivered on behalf of the Trading Manager and is a valid and
binding agreement of the Trading Manager, enforceable in accordance with its
terms;
(c) The performance of the obligations under this Agreement
by the Trading Manager will not conflict with, violate the terms or provisions
of, or constitute a default under, its
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<PAGE> 11
Articles of Incorporation or other agreement or instrument to which the Trading
Manager is a party or by which it is bound, or to which any of the property or
assets of the Trading Manager is subject, or any order, rule, law, regulation,
or other legal requirement applicable to the Trading Manager or the property or
assets of the Trading Manager;
(d) The Trading Manager and its principals are registered as
a "commodity pool operator" and principals, respectively, under the Act and are
members of the NFA in such capacities, and such registrations and memberships
have not expired or been revoked, suspended, terminated, or not renewed or
limited or qualified in any respect, and the Trading Advisor is not bankrupt or
insolvent;
(e) The Trading Manager has complied, and will continue to
comply, with all laws, rules and regulations having application to its
business, properties and assets, the violation of which would, to the Trading
Manager's best knowledge and belief, materially and adversely affect its
ability to comply with, and perform its obligations under, this Agreement, and
there are no actions, suits, proceedings, or investigations pending, or, to the
knowledge of the Trading Manager, threatened against the Trading Manager or its
principals or affiliates, at law or in equity or before or by any federal,
state, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, or by a self-regulatory organization, or by any
commodity exchange, in which an adverse decision would, in the Trading
Manager's best knowledge and belief, materially and adversely affect its
ability to comply with, and perform its obligations under, this Agreement; and
(f) The foregoing representations and warranties shall be
continuing during the term of this Agreement and if at any time any event shall
occur which would make any of the foregoing incomplete or inaccurate, the
Trading Manager will promptly notify the Trading Advisor of the occurrence of
such event.
17. Representations and Warranties of the Fund.
The Fund represents and warrants to the Trading Advisor that:
(a) The Fund is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Illinois. The Fund
has full partnership power and authority to enter into and perform its
obligations under this Agreement.
(b) This Agreement has been duly and validly authorized,
executed, and delivered on behalf of the Fund and is a valid and binding
agreement of the Fund, enforceable in accordance with its terms;
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<PAGE> 12
(c) The performance of the obligations under this Agreement
by the Fund will not conflict with, violate the terms or provisions of, or
constitute a default under, its limited partnership agreement or other
agreement or instrument to which the Fund is a party or by which it is bound,
or to which any of the property or assets of the Fund is subject, or any order,
rule, law, regulation, or other legal requirement applicable to the Fund or the
property or assets of the Fund.
(d) The Fund has complied, and will continue to comply, with
all laws, rules and regulations having application to its business, properties
and assets, the violation of which would, to the Fund's best knowledge and
belief, materially and adversely affect its ability to comply with, and perform
its obligations under, this Agreement, and there are no actions, suits,
proceedings, or investigations pending or, to the knowledge of the Fund,
threatened against the Fund, at law or in equity or before or by any federal,
state, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, or by a self-regulatory organization, or by any
commodity exchange, in which an adverse decision would, in the Fund's best
knowledge and belief, materially and adversely affect its ability to comply
with, and perform its obligations under, this Agreement;
(e) The Fund represents that the Units are not being sold as
part of an ongoing offering; and
(f) The foregoing representations and warranties shall be
continuing during the term of this Agreement and if at any time any event shall
occur which would make any of the foregoing incomplete or inaccurate, the Fund
will promptly notify the Trading Advisor of the occurrence of such event.
18. Term. The term of this Agreement shall be until the
close of business on December 31, 1995, subject to up to two one-year renewals
in the discretion of the Trading Manager, unless the Trading Manager has been
given notice by the Trading Advisor of the Trading Advisor's intent not to
renew at least 30 days prior to the expiration of the then current one-year
term.
19. Notices. All notices required to be delivered under this
agreement shall be in writing (including telegraphic communication or by
telephone confirmed in writing, all such writings to be delivered personally or
sent by registered or certified mail, postage prepaid and return receipt
requested, as follows:
if to the Fund or the Trading Manager:
HEINOLD ASSET MANAGEMENT, INC.
440 S. LaSalle Street, 20th Floor
Chicago, Illinois 60605
Attn: Ms. Stacy Hatch
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<PAGE> 13
if to the Trading Advisor:
LAWLESS COMMODITIES, INC.
1209 Park Terrace
Champaign, Illinois 61821
Attn: Mr. William Lawless
20. Termination.
(a) Either the Trading Advisor or the Trading Manager
may, in its discretion, terminate this Agreement if the Trading Manager
Agreement is terminated. In this regard, the Trading Manager agrees to notify
the Trading Advisor immediately upon a termination of the Trading Manager
Agreement.
(b) The Trading Advisor may terminate this Agreement on
ten (10) business days' notice in the event that the Net Assets of the Fund
under the management of the Trading Advisor, after adding back the Trading
Advisor's cumulative net trading loss, total less than $1,000,000.00 as of the
close of business as of any month-end. In addition, the Trading Advisor may
terminate the Trading Advisor's obligations hereunder by written notice to the
Trading Manager: (i) in the event that the trading polices applicable to the
Fund are amended without the consent of the Trading Advisor and, as amended,
would, in the opinion of the Trading Advisor, materially and adversely affect
the trading approach used by the Trading Advisor for the Fund; (ii) the
brokerage fees charged to the Fund account managed by the Trading Advisor are
altered in such a manner that the Trading Advisor believes the Trading
Advisor's strategy would generate excessive commission expense; (iii) in the
event any representation or warranty made by the Fund or the Trading Manager
becomes materially untrue at any time during the term hereof or was materially
untrue at the time made; (iv) in the event the Trading Manager or the Fund
breaches any of its obligations hereunder; or (v) in the event that the Trading
Manager overules any trading instructions of the trading advisor.
(c) Termination of this Agreement and the Trading
Advisor's obligations hereunder or reallocations of assets from the Trading
Advisor may be made by the Trading Manager at any time upon one (1) business
day's notice; provided that the Trading Manager shall use best efforts, except
in the event of a material breach hereof by the Trading Advisor, to assure that
any such reallocations are made only as of a month-end upon at least ten (10)
business days' notice.
21. Amendment and Assignment. No party hereto may amend or
assign this Agreement without the prior written consent of the other party.
22. Complete Agreement. This Agreement constitutes the
entire agreement between the Trading Manager and the Trading Advisor with
respect to the matters covered herein.
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<PAGE> 14
23. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns, and no other person shall have any right or obligation under this
Agreement.
24. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the laws of the State
of Illinois (excluding the law thereof which requires the application of, or
reference to, the law of any other jurisdiction) and each of the parties hereto
consents and submits to the jurisdiction of the federal and state courts and
any applicable arbitral body within the County of Cook, City of Chicago, and
State of Illinois over any suit, action or proceeding with respect to this
Agreement.
25. Survival. The indemnity provision of this Agreement
shall survive the termination or expiration of this Agreement with respect to
any matter existing prior to such termination; the payment obligations under
this Agreement shall continue until satisfied; and the other provisions of this
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
26. Waiver of Breach. The waiver by either party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by either party. The failure of a party to
insist upon strict adherence to any provision of the Agreement shall not
constitute a waiver or thereafter deprive such party of the right to insist
upon strict adherence.
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<PAGE> 15
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
HEINOLD ASSET MANAGEMENT, INC.
By:/s/ Ned W. Bennett
---------------------------
Name: Ned W. Bennett
Title: President
LAWLESS COMMODITIES, INC.
By:/s/ William G. Lawless
---------------------------
Name: William Lawless
Title: President
THE FUTURES DIMENSION FUND L.P.
By: Heinold Asset Management, Inc.
General Partner
By:/s/ Ned W. Bennett
---------------------------
Name: Ned W. Bennett
Title: President
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<PAGE> 16
COMMODITY TRADING AUTHORITY
Lawless Commodities, Inc.
1209 Park Terrace
Champaign, Illinois 61821
Attn: Mr. William Lawless
Dear Sir:
The Futures Dimension Fund L.P. (the "Fund") does hereby make, constitute and
appoint Lawless Commodities, Inc. as its attorney-in-fact to buy and sell
commodity futures and forward contracts and options thereon pursuant to its
trading approach as described in its Disclosure Document and the Advisory
Agreement dated as of January 24, 1995 among Heinold Asset Management, Inc.,
the Fund and Lawless Commodities, Inc.
This authorization shall terminate and be null, void and of no further effect
simultaneously with the termination of the said Advisory Agreement.
Very truly yours,
THE FUTURES DIMENSION FUND L.P.
By: Heinold Asset Management, Inc.
By: /s/ Ned W. Bennett
---------------------------
Ned W. Bennett
President
Dated as of: January 24, 1995
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