<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, 1995
Commission File Number: 0-14738
THE FUTURES DIMENSION FUND
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Illinois 36-3428400
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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 was organized
in 1982 to serve as the general partner and pool operator for public and
private commodity pools sponsored by Heinold Commodities, Inc. The General
Partner is a wholly owned 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 with headquarters in New York, New York.
Until June 1, 1995, Geldermann acted as the Partnership's
futures commission merchant or commodity broker. On that date, E.D. & F. Man
International, Inc. (the "Commodity Broker") replaced Geldermann as the
Partnership's commodity broker. The General Partner and the Commodity Broker
perform various services related to the Partnership's Limited Partnership
Agreement and customer agreement with the Commodity Broker. References to the
"Commodity Broker" refer to Geldermann, Inc. for the period prior to June 1,
1995 and to E.D. & F. Man International Inc. for the period on and after June
1, 1995.
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 $99,770 as of December 31, 1995.
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Under the terms of the Customer Agreement, the Partnership
will not pay brokerage commissions on the basis of the number of trades made on
its behalf, but will instead pay the Commodity Broker 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, the Commodity Broker 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 ("ARA"), LaSalle Portfolio Management,
Inc.("LaSalle"), Sunrise Capital Management Inc. ("Sunrise") and Welton
Investment Systems Corporation ("Welton"), 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. ("Parthenon") and Michael Tym, Jr. ("Tym") were retained as trading
advisors for the Partnership. The Advisory Agreement with Welton was
terminated on September 15, 1994 and Lawless Commodities, Inc. ("Lawless") was
retained as a trading advisor effective January 24, 1995.
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On February 28, 1995, the Trading Manager terminated the
Advisory Agreements with ARA, LaSalle, Sunrise, Parthenon and Lawless. On March
10, 1995, the Trading Manager retained Sabre Fund Management Limited ("Sabre"),
Telesis Management, Inc. ("Telesis"), Gandon Fund Management, Ltd. ("Gandon")
and First October Trading Company, Inc. ("First October") to trade on behalf
of the Partnership. The Advisory Agreements with Sabre and First October were
terminated on July 31, 1995 and September 30, 1995, respectively. The Advisory
Agreements with Telesis, Tym and Gandon were terminated on October 31, 1995.
On November 1, 1995, the Trading Manager entered into
Management Contracts with Hyman, Beck & Company, Inc., Marathon Capital Growth
Partners, L.L.C., RXR, Inc. and Willowbridge Associates, Inc. These four
trading advisors are collectively referred to herein as 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, 1995, 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 Advisors, recognized with respect
to the assets of the Partnership allocated to each of the
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<PAGE> 5
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 the Commodity Broker, to be registered and to comply with various
reporting and record keeping requirements. The General Partner, the Trading
Advisors and the Commodity Broker 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 the Commodity Broker 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 which are not subject to
regulation by any United States government agency.
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(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, 1995 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 the Commodity Broker
(pursuant to which the Commodity Broker 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 aggregate
management fees, incentive fees, brokerage commissions and other expenses
incurred or accrued by the Partnership during the month.
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(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 addition, there are no pending legal proceedings involving the
General Partner or the Commodity Broker.
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 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.
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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, 1996, there were 365 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.
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, 1995.
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<TABLE>
<CAPTION>
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
Ended Ended Ended Ended Ended
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net trading gain (loss)
on futures and
forward contracts $ (120,044) $ 460,008 $3,406,786 $ 263,807 $ 2,736,403
Interest income 298,247 307,314 226,370 391,251 692,442
---------- ---------- ---------- ----------- -----------
Total income (loss) 178,203 767,322 3,633,156 655,058 3,428,845
Brokerage commissions 606,997 735,811 869,772 1,047,306 1,371,702
Management fee 108,608 190,485 517,992 620,402 810,207
Incentive fee 83,493 287,295 249,920 0 0
Other administrative
expenses 39,868 35,449 57,027 43,602 92,150
---------- ---------- ---------- ----------- -----------
Total expenses 838,966 $1,249,040 $1,694,711 $ 1,711,310 $ 2,274,059
---------- ---------- ---------- ----------- -----------
Income (loss) before
equity in income
(loss) of Advisors
L.P., net N/A N/A N/A N/A 1,154,786
---------- ---------- ---------- ----------- -----------
Equity in income (loss)
of Advisors L.P.,
net at allocated
expenses N/A N/A N/A N/A (1,315,153)
---------- ---------- ---------- ----------- -----------
Net income (loss) $ (660,763) $ (481,718) $1,938,445 $(1,056,252) $ (160,367)
========== ========== ========== =========== ===========
Net income (loss)
allocated to
General Partner $ (10,351) $ (17,301) $ 43,094 $ (14,044) $ (33,009)
========== ========== ========== =========== ===========
Net income (loss)
allocated to
limited partners $ (650,412) $ (464,417) $1,895,351 $(1,042,208) $ (127,358)
========== ========== ========== =========== ===========
Increase (decrease) in
Net Asset Value for
a Unit outstanding
throughout each year/
period $ (16.94) $ (9.61) $ 38.79 $ (12.64) $ .75
========== ========== ========== =========== ===========
Total assets $5,737,944 $7,369,654 $9,066,332 $ 8,776,900 $16,554,929
========== ========== ========== =========== ===========
</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 years ended
December 31, 1995 and December 31, 1994 and a gain for the fiscal year ended
December 31, 1993.
The Net Asset Value per Unit as of December 31, 1995 and
December 31, 1994 was $163.29 and $180.23, respectively.
The Partnership had a net loss for the fiscal year ended
December 31, 1995 as the Partnership's unprofitable trading in the agricultural
and metals sectors more than offset its
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profitable trading in the currency and financial sectors. The Partnership
realized profits in short positions in the British pound and Japanese yen and
long positions in U. S. treasury notes. Losses were greater, however, in long
Swiss franc and coffee positions as well as short aluminum, nickel and zinc
positions.
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.
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.
Item 11. Executive Compensation
The Partnership has no directors or officers. The General
Partner performs the services described in "Item 2. Properties" herein. The
Commodity Broker acts as the Partnership's commodity broker pursuant to the
Customer Agreement described in "Item l(a). Business - General development of
business."
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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 611 Unit-equivalents valued at $99,770 as of December
31, 1996, 1.8% of the Partnership's total equity.
(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.
(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.
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(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 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.
(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.
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The above exhibits are incorporated herein by reference from 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 incorporated herein by reference from the
Partnership's report on Form 10-K filed on March 30, 1995.
(m) Advisory Agreement dated March 10, 1995 between the
Partnership and First October Trading Company, Inc.
(n) Advisory Agreement dated March 10, 1995 between the
Partnership and Gandon Fund Management, Ltd.
(o) Advisory Agreement dated March 10, 1995 between the
Partnership and Telesis Management, Inc.
(p) Advisory Agreement dated March 10, 1995 between the
Partnership and Michael Tym, Jr.
(q) Management Contract dated November 1, 1995 between the
Partnership and Hyman, Beck & Company, Inc.
(r) Management Contract dated November 1, 1995 between the
Partnership and Marathon Capital Growth Partners, L.L.C.
(s) Management Contract dated November 1, 1995 between the
Partnership and RXR, Inc.
(t) Management Contract dated November 1, 1995 between the
Partnership and Willowbridge Associates Inc.
(27) Financial Data Schedule
The above exhibits are filed herewith.
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(b) Reports on Form 8-K
The Partnership did not file a report on Form 8-K during the
quarter ended December 31, 1995.
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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 28th day of March, 1996.
THE FUTURES DIMENSION FUND
By HEINOLD ASSET MANAGEMENT, INC.
General Partner
By /s/ Daniel E. Ragen
--------------------------
Daniel E. Ragen
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 28, 1996
- ------------------- Officer and Director
James R. Curley
/s/ Robert Ledvora Chief Financial Officer March 28, 1996
- ------------------ (principal accounting
Robert Ledvora officer)
/s/ Thomas M. Harte Director March 28, 1996
- -------------------
Thomas M. Harte
/s/ Ira Polk Director March 28, 1996
- ------------
Ira Polk
/s/ Ned W. Bennett Director March 28, 1996
- ------------------
Ned W. Bennett
/s/ Daniel E. Ragen President (principal March 28, 1996
- ------------------- executive officer)
Daniel E. Ragen 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> <C>
Heinold Asset Management, Inc. General Partner March 28, 1996
of Registrant
</TABLE>
By /s/ Daniel E. Ragen
- ----------------------
Daniel E. Ragen
President
-16-
<PAGE> 17
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1995 AND 1994 AND FOR THE
THREE YEARS ENDED DECEMBER 31, 1995 AND
INDEPENDENT AUDITORS' REPORT
<PAGE> 18
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS:
Statements of Financial Condition as of December 31, 1995 and 1994 F-2
Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993 F-3
Statements of Partners' Capital for the Years Ended
December 31, 1995, 1994 and 1993 F-4
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 F-5
Notes to Financial Statements F-6 - F-8
<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, 1995 and 1994, and the related statements of operations,
partners' capital and cash flows for each of the three years in the period
ended December 31, 1995. 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, such financial statements present fairly, in all material
respects, the financial position of The Futures Dimension Fund as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
February 9, 1996
F-1
<PAGE> 20
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND 1994
<TABLE>
<S> <C> <C>
ASSETS 1995 1994
CASH $ - $ 23,013
EQUITY IN FUTURES AND FORWARD TRADING ACCOUNTS:
Net unrealized appreciation on open futures and forward contracts 367,101 719,050
Amount due from broker E.D. & F. Man
International (previously Geldermann) 5,370,843 6,627,591
---------------- ----------------
5,737,944 7,346,641
---------------- ----------------
TOTAL ASSETS $ 5,737,944 $ 7,369,654
================ ================
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued brokerage commissions payable to
E.D. & F. Man International (previously Geldermann) $ 47,784 $ 62,450
Redemption payable 73,481 45,058
Accrued management fee 12,091 11,165
Other accrued expenses 3,892 6,078
Accrued incentive fee 2,169 22,959
---------------- ----------------
Total liabilities 139,417 147,710
PARTNERS' CAPITAL:
Limited Partners (33,674 and 39,459 units outstanding
at December 31, 1995 and 1994, respectively) 5,498,757 7,111,823
General Partner (611 unit equivalents outstanding
at December 31, 1995 and 1994) 99,770 110,121
---------------- ----------------
Total partners' capital 5,598,527 7,221,944
---------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 5,737,944 $ 7,369,654
================ ================
NET ASSET VALUE PER OUTSTANDING UNIT OF
PARTNERSHIP INTEREST $ 163.29 $ 180.23
================ ================
</TABLE>
See notes to financial statements.
F-2
<PAGE> 21
THE FUTURES DIMENSION FUND
(aN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
REVENUES:
Net realized trading gains on closed
futures and forward contracts $ 372,388 $ 942,873 $ 2,604,738
Increase (decrease) in net
unrealized appreciation on open
futures and forward contracts (492,432) (482,865) 802,048
Interest income 298,247 307,314 226,370
----------- ------------ -----------
178,203 767,322 3,633,156
EXPENSES:
Brokerage commissions 606,997 735,811 869,772
Management fee 108,608 190,485 517,992
Incentive fee 83,493 287,295 249,920
Other administrative expenses 39,868 35,449 57,027
----------- ------------ -----------
838,966 1,249,040 1,694,711
----------- ------------ -----------
NET INCOME (LOSS) $ (660,763) $ (481,718) $ 1,938,445
=========== ============ ===========
NET INCOME (LOSS) ALLOCATED TO:
General Partner $ (10,351) $ (17,301) $ 43,094
=========== ============ ===========
Limited Partners $ (650,412) $ (464,417) $ 1,895,351
=========== ============ ===========
INCREASE (DECREASE) IN
NET ASSET VALUE FOR A
UNIT OUTSTANDING
THROUGHOUT EACH YEAR $ (16.94) $ (9.61) $ 38.79
=========== ============ ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 22
THE FUTURES DIMENSION FUND
(aN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
TOTAL
LIMITED GENERAL PARTNERS'
PARTNERS PARTNER CAPITAL
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1993 $ 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 partner 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
Redemption of 5,785 units of limited partnership
interest (962,654) - (962,654)
Net loss (650,412) (10,351) (660,763)
-------------- ----------- --------------
BALANCE, DECEMBER 31, 1995 $ 5,498,757 $ 99,770 $ 5,598,527
============== =========== ==============
</TABLE>
See notes to financial statements.
F-4
<PAGE> 23
THE FUTURES DIMENSION FUND
(aN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (660,763) $ (481,718) $ 1,938,445
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Decrease (increase) in equity in
futures and forward trading accounts 1,608,697 1,696,678 (289,432)
(Decrease) increase in accrued expenses (36,716) (197,107) 203,783
------------- ------------- -------------
Net cash flows from
operating activities 911,218 1,017,853 1,852,796
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of limited and
general partnership units (934,231) (1,017,853) (1,852,796)
------------- ------------- -------------
NET CHANGE IN CASH (23,013) - -
CASH - Beginning of year 23,013 23,013 23,013
------------- ------------- -------------
CASH - End of year $ - $ 23,013 $ 23,013
============= ============= =============
</TABLE>
See notes to financial statements.
F-5
<PAGE> 24
THE FUTURES DIMENSION FUND
(AN ILLINOIS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
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 Man, previously 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 Man, previously
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 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 includable 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, 1995, cash includes only cash on
deposit at financial institutions.
F-6
<PAGE> 25
3. FAIR VALUE AND OFF-BALANCE SHEET RISK
The Partnership trades both cash and derivative financial instruments.
The Company's principal source of revenues by reporting category is as
follows:
<TABLE>
<CAPTION>
CHANGE IN
REALIZED UNREALIZED
TRADING APPRECIATION
GAINS (LOSSES) (DEPRECIATION) TOTAL
<S> <C> <C> <C>
Futures contracts $ 248,962 $ (475,305) $ (226,343)
Forward contracts 250,139 (18,333) 231,806
Option contracts (126,713) 1,206 (125,507)
---------- ----------- -----------
Total $ 372,388 $ (492,432) $ (120,044)
========== =========== ===========
</TABLE>
The Partnership was organized to engage in speculative trading of a
diversified portfolio of futures and forward contracts and commodity
options. SFAS 119, "Disclosure About Derivative Financial Instruments
and Fair Value of Financial Instruments," defines a derivative as a
future, forward, swap or option contract, or other financial instruments
with similar characteristics such as caps, floors and collars.
Generally, these financial instruments represent future commitments to
exchange interest payment streams or currencies or to purchase or to sell
other financial instruments at specific terms at specified future dates.
Option contracts provide the holder with the right, but not the
obligation, to purchase or sell a financial instrument at a specific
price before or on an established date. These financial instruments may
have market and/or credit risk in excess of amounts recorded in the
Statements of Financial Condition.
MARKET RISK - Derivative financial instruments involve varying degrees
of off-balance sheet market risk whereby changes in the level or
volatility of interest rates, foreign currency exchange rates or market
values of the underlying financial instruments or commodities may result
in changes in the value of the financial instrument in excess of the
amounts currently reflected in the Statements of Financial Condition.
The Partnership's exposure to market risk is influenced by a number of
factors, including the relationships among financial instruments with
off-balance sheet risk and between financial instruments with off-balance
sheet risk and the Partnership's proprietary commodities, as well as the
volatility and liquidity in the markets in which the financial
instruments are traded.
FAIR VALUE - The derivative instruments used in the Partnership's
trading activities are marked to market daily with the resulting
unrealized gains or losses recorded in the Statements of Financial
Condition and the related income or loss reflected in revenues derived
from these transactions. The fair value of derivative financial
instruments held or issued for trading purposes as of December 31, 1995
and the average monthly fair value of the instruments for the fiscal year
ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
FAIR VALUES AT YEAR-END AVERAGE FAIR VALUES
ASSETS LIABILITIES ASSETS LIABILITIES
<S> <C> <C> <C> <C>
Futures contracts $ - $ 18,334 $ 313,460 $ 61,048
Forward contracts 422,664 37,229 37,813 58,718
Option contracts - - 11,451 3,711
</TABLE>
F-7
<PAGE> 26
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 Partners are liable for
obligations of the Partnership in excess of their capital contribution
and profits, if any, and such other amounts for which they 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 - Limited Partners (or any assignee thereof) may cause any
or all of their 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.
5. MANAGEMENT AGREEMENT
The Partnership enters into various advisory agreements (the "Advisory
Agreements"). As of December 31, 1995, the Partnership's trading
advisors are Hyman Beck & Co., Inc., RXR, Inc., Willowbridge Associates,
Inc., and Marathon Capital Growth Partners.
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 .166% (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.
******
F-8
<PAGE> 27
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 Chief Financial Officer
F-9
<PAGE> 28
THE FUTURES DIMENSION FUND
EXHIBIT INDEX
Exhibits Included Herein
- --------------------------
10(m) Advisory Agreement dated March 10, 1995 between the Partnership and First
October Trading Company, Inc.
10(n) Advisory Agreement dated March 10, 1995 between the Partnership and
Gandon Fund Management, Ltd.
10(o) Advisory Agreement dated March 10, 1995 between the Partnership and
Telesis Management, Inc.
10(p) Advisory Agreement dated March 10, 1995 between the Partnership and
Michael Tym, Jr.
10(q) Management Contract dated November 1, 1995 between the Partnership and
Hyman, Beck & Company, Inc.
10(r) Management Contract dated Nobember 1, 1995 between the Partnership and
Marathon Capital Growth Partners, L.L.C.
10(s) Management Contract dated November 1, 1995 between the Partnership and
RXR Inc.
10(t) Management Contract dated November 1, 1995 between the Partnership and
Willowbridge Associates, Inc.
27 Financial Data Schedule
Exhibits Incorporated Reference
- --------------------------------
See pages 13-14 for a list of exhibits incorporated by reference.
<PAGE> 1
EXHIBIT 10(m)
MANAGEMENT CONTRACT
THIS MANAGEMENT CONTRACT ("Agreement"), is made and entered into
effective as of the 8th day of March 1995, by and between The Futures Dimension
Fund, an Illinois limited partnership (the "Partnership"), and First October
Trading Company, Inc. (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the purpose and business of the Partnership is to
seek capital appreciation by trading speculatively in futures contracts,
commodities and commodity options and forward contracts, and any other items
which are currently, or may later become, the subject of futures, forward or
options trading, and other related investments (sometimes hereinafter referred
to as "Contracts") on United States and non-United States exchanges and
markets; and
WHEREAS, the Partnership, through Heinold Asset Management,
Inc., its general partner (the "General Partner"), pursuant to the Limited
Partnership Agreement of the Partnership, is authorized to utilize the services
of professional trading advisors in connection with the trading activities of
the Partnership; and
WHEREAS, the Partnership has heretofore offered units of
limited partnership interest in the Partnership for sale to investors; and
WHEREAS, the Trading Advisor is engaged in the business of
making trading decisions on behalf of itself and others regarding the purchase
and sale of Contracts; and
WHEREAS, the Partnership and the Trading Advisor each desire
the Trading Advisor to make trading decisions for the Partnership with respect
to the assets of the Partnership allocated to be managed by the Trading Advisor
(the "Allocated Assets") on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
agreements set forth herein, the parties hereto do agree as follows:
1. DUTIES OF THE TRADING ADVISOR.
(a) The Partnership hereby appoints the Trading Advisor,
and the Trading Advisor hereby accepts appointment, as a trading advisor of the
Partnership in connection with the trading activities of the Partnership.
(b) Upon the Trading Advisor's commencing of trading
operations for the Partnership and for the period and on the terms and
conditions set forth in this Agreement, the Trading Advisor shall have sole
authority and responsibility, as the Partnership's agent and
<PAGE> 2
attorney-in-fact, for trading the Allocated Assets in Contracts and in
accordance with the Trading Advisor's Futures Options Portfolio ("Trading
Approach"; which term, for purposes of this Agreement, shall include trading
approaches, systems, instructions, methods, models, strategies, methodologies
and formulas) as described in the disclosure notice dated April 1995 relating
to the appointment of the Trading Advisor as a commodity trading advisor of the
Partnership (the "Disclosure Notice"), subject to the trading policies of the
Partnership furnished to the Trading Advisor in writing ("Trading Policies").
The parties hereto acknowledge that the Trading Advisor will trade Contracts
for the Partnership independently of any other trading advisor retained by the
Partnership. For purposes of this Agreement, the term "Contracts" shall not
include securities and options thereon.
(c) The Trading Advisor acknowledges and agrees that the
aggregate amount of Allocated Assets which the Trading Advisor shall treat as
equity and manage on behalf of the Partnership pursuant to this Agreement may
include "notional" funds. The Trading Advisor agrees to describe to the
General Partner its practices with respect to the leverage used by the Trading
Advisor in managing the Partnership's account relative to other accounts
managed by the Trading Advisor using the Trading Approach to enable the General
Partner to determine whether the "trading level" at which the Trading Advisor
is currently managing the Partnership's account is the level currently
designated by the General Partner.
(d) The General Partner and the Partnership acknowledge
receipt of the Trading Advisor's Disclosure Document dated March 3, 1995
(the "Disclosure Document"). The Trading Advisor shall promptly furnish the
Partnership with a copy of each amended, supplemented or updated Disclosure
Document of the Trading Advisor filed with the Commodity Futures Trading
Commission (the "CFTC") and the National Futures Association ("NFA") upon
acceptance thereof by the CFTC. Prior to the commencement of trading on behalf
of the Partnership, the Partnership shall deliver to the Trading Advisor, and
renew when necessary, a Commodity Trading Authorization, in the form attached
hereto as Exhibit 1, appointing the Trading Advisor as the Partnership's agent
and attorney-in-fact for such purpose. All trades for the account of the
Partnership shall be made through such banks, brokers and dealers as the
General Partner shall direct, and the Trading Advisor shall have no authority
or responsibility for selecting any such banks, brokers or dealers in
connection with the execution of transactions for the Partnership or for the
negotiation of commission rates charged therefor; provided, however, that the
General Partner shall notify the Trading Advisor of any applicable changes in
the commission rates charged by the Partnership's banks, brokers and dealers
with respect to transactions entered into with respect to the Allocated Assets.
(e) In the event the Trading Advisor and its principals
[as that term is defined in Regulation Section 4.10(e) promulgated by the CFTC
under the Commodity Exchange Act, as amended (the "Act")], shareholders,
partners, employees and affiliates or any person who controls the foregoing
(collectively, "Principals and Affiliates"), wish to use trading programs,
systems or strategies other than or in addition to the Trading Approach in
connection with its trading for the Partnership, either in whole or in part, it
may not do so unless the Trading Advisor gives the General Partner 15 days'
prior written notice of its intention to utilize such different trading
programs, systems or strategies and the General Partner consents thereto in
writing. Non-material changes in the Trading Approach may be instituted
without prior written approval.
2
<PAGE> 3
(f) The Trading Advisor agrees to make all material
disclosures to the Partnership regarding itself and its Principals and
Affiliates, their trading performance and general trading methods, their
accounts (but not the identities of customers) and otherwise as are required in
the reasonable judgment of the General Partner or the Partnership to be made in
any filings required by any governmental body or by any applicable law,
regulation, rule or order. Nothing contained in this Agreement shall be
construed or deemed to require the Trading Advisor to disclose the confidential
or proprietary details of its trading strategies.
(g) The Trading Advisor understands and agrees that the
General Partner intends to designate other trading advisors and to apportion
from time to time to such other trading advisors the management of such portion
of the Partnership's assets as the General Partner shall determine in its
absolute discretion. The designation of other trading advisors and
apportionment and reapportionment of a portion of the Partnership's assets to
such trading advisors shall neither terminate this Agreement nor modify in any
regard the respective rights and obligations of the parties hereto.
(h) The General Partner shall have the right to make
additions to, or withdrawals from, the Allocated Assets (including any
"notional" funds comprising part of the Allocated Assets) at any time. The
General Partner agrees that the Trading Advisor may refuse any additional
allocation of funds for any reason. The General Partner, in its sole
discretion, may at any time remove all assets from the management of the
Trading Advisor and may require the Trading Advisor to liquidate existing
positions.
(i) Upon receipt of instructions from the General
Partner, the Trading Advisor shall immediately cease its trading activities
with respect to the Allocated Assets, close out all existing positions in an
orderly manner and not initiate any new positions unless otherwise instructed
by the General Partner or the Partnership.
(j) The Trading Advisor shall review on a daily basis the
positions held by the Allocated Assets and shall immediately notify the General
Partner of any errors committed by the Trading Advisor or of any trade not
executed in accordance with the Trading Advisor's instructions.
2. OTHER ACCOUNTS AND ACTIVITIES OF THE TRADING ADVISOR.
(a) The services provided by the Trading Advisor
hereunder are not to be deemed exclusive. Subject to the terms of this
Agreement, the Trading Advisor and its Principals and Affiliates shall be free
to trade for their own accounts and to advise other persons and manage other
accounts during the term of this Agreement and to use the same or different
degrees of leverage, information, computer programs and trading strategies or
formulas which they obtain, produce or utilize in the performance of services
for the Partnership. However, the Trading Advisor represents, warrants and
agrees that the rendering of such consulting, advisory and management services
to others will not require any material change in the Trading Approach and will
not materially adversely affect the capacity of the Trading Advisor to continue
to render services to the Partnership of the quality and nature contemplated by
this Agreement.
3
<PAGE> 4
(b) If, at any time during the term of this Agreement,
the Trading Advisor is required to aggregate the Partnership's Contract
positions with the positions of any other person or entity for purposes of
applying CFTC- or exchange-imposed position limits, the Trading Advisor agrees
that it will promptly notify the General Partner if the Partnership's positions
are included in an aggregate amount which equals or exceeds ninety percent
(90%) of the applicable limit. The Trading Advisor agrees that, if its trading
recommendations are altered because of the application of any position limit,
it will not modify the trading instructions with respect to the Partnership's
account in such manner as to affect the Partnership substantially
disproportionately as compared with the Trading Advisor's other accounts. The
Trading Advisor presently believes and represents that existing speculative
position limits will not materially adversely affect its ability to manage the
Partnership's account given the potential size of the Partnership's account and
the Trading Advisor's and its Principals' and Affiliates' current accounts and
all proposed accounts for which they have contracted to act as trading advisor.
The Trading Advisor further represents, warrants and agrees that under no
circumstances will it knowingly or deliberately use trading strategies or
systems for the Partnership that are inferior to trading strategies or systems
employed for any other client or account and that it will not knowingly or
deliberately favor any client or account managed by it over any other client or
account, it being acknowledged, however, that different trading strategies,
methods or degrees of leverage may be utilized for differing sizes of accounts,
accounts with different trading policies, accounts experiencing differing
inflows or outflows of equity, accounts which commence trading at different
times, accounts which have different portfolios or different fiscal years and
accounts with other differences, and that such differences may cause divergent
trading results.
(c) The Partnership and the General Partner acknowledge
and agree that the Trading Advisor and/or its Principals and Affiliates
presently act and that they may continue to act as advisors for other accounts
managed by them and may continue to receive compensation with respect to
services for such accounts in amounts which may be more or less than the
amounts received from the Partnership. The Trading Advisor agrees that in the
management of such other accounts by it and its Principals and Affiliates, it
will act in good faith to seek to achieve an equitable treatment of all
accounts under management including the Partnership's account with respect to,
among other things, priorities of order entry and position limits.
(d) The Trading Advisor agrees that it shall make such
information available to the General Partner respecting the performance of the
Partnership's account as compared to the performance of all other accounts
managed by the Trading Advisor and its Principals and Affiliates as shall be
reasonably requested by the General Partner or the Partnership. The Trading
Advisor shall not be required to disclose the identity of its clients.
3. ALLOCATION OF ASSETS TO THE TRADING ADVISOR. The
Trading Advisor's Allocated Assets initially shall be a total of approximately
$1,108,706 of which $0 is notional funding.
4
<PAGE> 5
4. FEES.
(a) Commencing with the commencement of trading by the
Trading Advisor for the Partnership, the Partnership agrees to pay to the
Trading Advisor as follows:
(i) Management Fee. A monthly management fee equal to
0.166% of the Net Asset Value of the Allocated Assets as of the close of
business on the last business day of each calendar month (an approximate 2%
annual rate). The definition of the term "Net Asset Value" is set forth in
Exhibit 2, hereto.
(ii) For purposes of calculating the management fee, Net
Asset Value of the Allocated Assets shall be determined before reduction for
the management fees or incentive fees, if any, accrued or payable with respect
to the Allocated Assets as of such month-end, and before giving effect to any
distributions and redemptions paid or payable at such month-end. In the event
that (A) the Trading Advisor commences trading as of any day other than the
first day of a calendar month, (B) this Agreement is terminated as of any date
other than the last day of a calendar month, or (C) the Partnership reallocates
assets to or from the Trading Advisor as of any day other than the first or
last day of any calendar month, the amount of the management fee shall be
prorated on the basis of the number of business days during such month that the
Allocated Assets (as adjusted in the case of reallocation of assets) were
traded by the Trading Advisor as compared to the total number of business days
in such calendar month. To the extent that the Partnership instructs the
Trading Advisor to trade the Allocated Assets at a "nominal account size" in
excess of the actual assets comprising Allocated Assets, the Trading Advisor's
management fee shall be calculated based upon the "nominal account size" of the
Allocated Assets.
(iii) Incentive Fee. A quarterly incentive fee equal to
20% of any New Trading Profits (as defined below) achieved during each
calendar quarter. New Trading Profits during a quarter shall mean the sum of
(A) the net of any profits and losses realized on trades closed out during the
period, plus or minus (B) the change in the net of any unrealized profits and
losses on trades which remained open as of the end of the period (net of
accrued brokerage commissions and other allocated expenses) from the net of any
unrealized profits and losses on trades initiated by the Trading Advisor which
remained open as of the end of the immediately preceding period (net of accrued
brokerage commissions and other allocated expenses), (C) any Trading Advisor
management fees paid or accrued through the end of the period, and (D) the
Trading Advisor's carryforward loss (as hereinafter defined) from the
immediately preceding period. If the sum of subparagraphs (A) through (D) for
any period is negative, such amount shall be the Trading Advisor's carryforward
loss for the next period. For purposes of calculating incentive fees, interest
income earned on the Allocated Assets will be disregarded. In the event of a
withdrawal from the Allocated Assets at a time when the Trading Advisor has a
carryforward loss in effect, the amount thereof shall be reduced by an amount
determined by multiplying the carryforward loss by a fraction, the numerator of
which shall be the amount of the withdrawal and the denominator of which shall
be the Net Asset Value of the Allocated Assets immediately prior to giving
effect to the withdrawal. In the event that an addition is made to the
Allocated Assets subsequent to a reduction in the Trading Advisor's
carryforward loss by reason of a withdrawal, the Trading Advisor's carryforward
loss shall be increased by or created in an amount (up to the aggregate amount
of prior carryforward loss reductions)
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determined by multiplying the aggregate amount of prior carryforward
loss reductions by a fraction, the numerator of which shall be the amount of
the addition and the denominator of which shall be the sum of the previous
withdrawals which resulted in carryforward loss reductions. The incentive fee
charged to the Partnership with respect to the Allocated Assets will be
dependent upon the performance of the Trading Advisor and will not be affected
by the performance of any other trading advisor appointed by the Partnership or
the Partnership as a whole. The initial incentive period shall commence on the
date the Trading Advisor commences trading activity for the Partnership and
shall end at the immediate following quarter-end (even though such period may
not be a full quarter). Subsequent incentive periods shall commence on the
first day of the next succeeding calendar quarter and end on the last day of
such calendar quarter. In the event this Agreement is terminated as of any
date which is not the end of an incentive period, an incentive fee will be paid
by the Partnership, if earned, with respect to the Allocated Assets as though
such termination date were the last day of the incentive period.
(b) Payment of Fees. The management fees and incentive
fees due to the Trading Advisor shall be paid by the Partnership within thirty
(30) days of the end of the calendar period to which they relate. The
Partnership expressly agrees that any such fees due the Trading Advisor shall
survive the termination or other expiration of this Agreement.
5. TRADING ADVISOR INDEPENDENT. The Trading Advisor
shall for all purposes herein be deemed to be an independent contractor to the
Partnership and the General Partner and shall, except as otherwise expressly
provided herein, have no authority to act for or represent the Partnership or
the General Partner in any way or otherwise be deemed a sponsor of the
Partnership or an agent, joint venturer or partner of the Partnership, the
General Partner or of any other trading advisor retained by the Partnership.
6. BROKER.
(a) The Trading Advisor agrees to enter all Contract
orders through Geldermann, Inc. ("Geldermann"), or such other brokers and
forward contract dealers as may be designated, from time to time, in writing by
the Partnership. The Partnership must consent in writing to the use of other
floor brokers who will give up such trades to Geldermann in accordance with
exchange rules and the give-up procedures established by the Partnership from
time to time. The Trading Advisor shall be responsible for any errors
committed by any executing broker who gives-up to Geldermann on behalf of the
Partnership. In placing trades for the Partnership's account, the Trading
Advisor agrees that it shall use its standard procedures for allocating orders
among the Trading Advisor's various accounts and not knowingly favor any other
such account over the Partnership's account.
(b) All forward contract and other trades for the
Partnership will be executed through the forward trading and other facilities
of such affiliates of Geldermann or other entities as the Partnership may
designate from time to time.
7. STANDARD OF LIABILITY; INDEMNIFICATIONS.
(a) Standard of Liability. Neither the Trading Advisor
nor any of its Principals and Affiliates shall be liable to the Partnership,
the General Partner or any of their
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respective successors or assigns under this Agreement except by reason of (i)
acts or omissions to act which constitute bad faith, negligence or misconduct
or (ii) a breach of any of the representations, warranties, covenants or
agreements of the Trading Advisor set forth in this Agreement.
(b) Indemnity. (i) The Partnership agrees to indemnify
and hold harmless the Trading Advisor and each of its Principals and Affiliates
from and against any and all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, attorneys' and accountants' fees and
disbursements), judgments and amounts paid in settlement (collectively,
"Losses") to which an indemnified person may become subject arising out of this
Agreement, the transactions contemplated hereby or the fact the Trading Advisor
is or was a trading advisor to the Partnership, unless any such Losses arise
out of, relate to, or are based upon the Trading Advisor's failure to meet the
standard of liability applicable to it under SECTION 7(A).
(ii) The Trading Advisor agrees to indemnify and hold
harmless the Partnership, the General Partner and each of their respective
Principals and Affiliates from and against any and all Losses to which they may
become subject, if any such Losses arise out of, relate to, or are based upon
the Trading Advisor's failure to meet the standard of liability applicable to
it under SECTION 7(A).
(c) Promptly after receipt by a party to be indemnified
under SECTION 7(B), above, of any notice of the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnified party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. The
requirement that an indemnifying party be given written notice of the
commencement of any action shall be deemed to be satisfied if such indemnifying
party shall have actual knowledge thereof or shall have been given written
notice of the commencement of any action or proceeding within a reasonable time
after the commencement thereof. If any such action shall be brought against
any indemnified party and the indemnified party notifies the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to such indemnified party, and shall have the
right to negotiate and consent to a settlement thereof, provided that the
indemnified party shall have consented to the settlement. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent it,
if, in the indemnified party's reasonable judgment, it is advisable for such
party to be represented by separate counsel, in which event the fees and
expenses of such separate counsel shall be borne by the indemnified party. No
indemnifying party shall be liable for any settlement of any such action
effected without its consent, but if any such action or proceeding is settled
with the consent of any indemnifying party or if there be a final judgment for
the plaintiff in any such action or proceeding (of which an indemnifying party
shall have been notified), such indemnifying party shall indemnify and hold
harmless each
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<PAGE> 8
indemnified party from and against any Losses incurred or suffered by reason of
such settlement or judgment.
(d) Any indemnification required by this SECTION 7,
unless ordered or expressly permitted by a court, shall be made by the
indemnifying party only upon a determination by independent legal counsel in a
written opinion that the conduct which is the subject of the claim, demand,
lawsuit, action or proceeding with respect to which indemnification is sought
meets the applicable standard set forth in this SECTION 7.
(e) The provisions of this SECTION 7 shall survive the
termination or other expiration of this Agreement.
8. THE TRADING ADVISOR'S REPRESENTATIONS AND WARRANTIES.
The Trading Advisor represents and warrants to the Partnership and the General
Partner as follows:
(a) The Trading Advisor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business as described in
this Agreement and the Disclosure Notice, and the Trading Advisor is qualified
to conduct its business and is in good standing in every jurisdiction in which
the nature or conduct of its business requires such qualification and failure
to so qualify would 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 by the Trading Advisor and is a valid and binding
agreement of the Trading Advisor enforceable in accordance with its terms.
(c) The execution and delivery of this Agreement and the
performance of the obligations and the consummation of the transactions
contemplated in this Agreement and in the Disclosure Notice will not conflict
with, violate, breach or constitute a default under, any term or provision of
the Trading Advisor's certificate of incorporation, by-laws, or other charter
documents, or any indenture, mortgage, deed of trust, loan agreement, or other
agreement or instrument to which the Trading Advisor or any of its Principals
and Affiliates is a party or by which any of them are bound, or to which any of
the property (including, but not limited to, its Trading Approach) or assets of
the Trading Advisor or its Principals and Affiliates are subject, or any order,
rule, law, statute, regulation, or other legal requirement applicable to the
Trading Advisor or any of its Principals or to the property or assets of the
Trading Advisor or its Principals and Affiliates of any court or any
governmental or administrative body or agency or panel or any regulatory or
self-regulatory organization or exchange having jurisdiction over the Trading
Advisor or any of its Principals and Affiliates.
(d) The Trading Advisor is registered as a commodity
trading advisor under the Act, its Principals are identified on the Trading
Advisor's most recent CFTC Form 7-R filed with the NFA pursuant to the Act, and
it is a member of the NFA in such capacity and such
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<PAGE> 9
registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(e) The Trading Advisor is not bankrupt or insolvent.
(f) The Disclosure Document is complete and accurate in
all material respects, does not contain any misstatement of any material fact,
does not omit to state any material fact necessary to be stated therein in
order to make the statements made therein, in light of the circumstances under
which they are made, not misleading, and complies in all material respects with
the applicable requirements of the Act and the rules promulgated thereunder and
may be relied upon by the Partnership and the General Partner in preparing the
Disclosure Notice and allocating assets of the Partnership to the Trading
Advisor and there has not been, since the date of the Disclosure Document's
issuance, any material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or any of its Principals and
Affiliates, whether or not arising in the ordinary course of business, or
relating to the historical performance and operations of the Trading Advisor.
(g) The Trading Advisor and each Principal has complied
and will continue to comply with all orders, rules, laws, statutes, regulations
or other legal requirements applicable to the Trading Advisor or any of its
Principals and Affiliates or to their respective businesses, properties, or
assets, including the Act and the rules promulgated by the CFTC and the NFA,
the violation of which would materially and adversely affect its or their
ability to comply with, and perform its or their obligations under this
Agreement, and there are no actions, suits, proceedings, or notices of
investigations or investigations pending or threatened against the Trading
Advisor, or any of its Principals or Affiliates, by the NFA, the CFTC or any
governmental, regulatory or self-regulatory agency regarding noncompliance by
the Trading Advisor or any of its Principals or Affiliates with any law,
statute, rule or regulation, or at law or in equity or before or by any court,
any federal, state, municipal or other governmental department commission,
board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its or their ability to comply with or to
perform its or their obligations under this Agreement or that would be required
to be disclosed in the Disclosure Notice, which is not so disclosed, would
result in a material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor.
(h) The Trading Advisor and each Principal has all
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all governmental,
regulatory and self-regulatory agencies required to conduct their respective
businesses and to act as described in the Disclosure Notice and to perform its
or their respective obligations under this Agreement.
(i) With respect to information contained in the
Disclosure Notice relating to the Trading Advisor, including, without
limitation, the tables and notes thereto, the Disclosure Notice does not
contain any untrue statement of material fact or omit to state therein a
material fact required to be stated therein or necessary to be stated therein
in order to prevent the statements made therein, in light of the circumstances
under which they are made, from being misleading.
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(j) In the placement of orders and the allocation of
executed trades for the Partnership and for the accounts of any other client,
the Trading Advisor shall utilize a fair and reasonable order entry system and
trade allocation system, which shall be no less favorable to the Partnership
than to any other account managed by the Trading Advisor.
(k) The Trading Advisor shall promptly notify the other
parties hereto of the commencement of any suit, action or proceeding involving
it or its Principals and Affiliates, whether or not any such suit, action or
proceeding also involves any of the other parties hereto.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the Trading Advisor shall promptly notify the
Partnership and the General Partner of the occurrence of such event.
9. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
The Partnership represents and warrants to the Trading Advisor as follows:
(a) The Partnership is duly organized, validly existing
and in good standing as a limited partnership under the laws of Illinois. The
Partnership has full power and authority to perform its obligations under this
Agreement and to conduct its business and to act as described in the Disclosure
Notice.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Partnership and is a valid and binding
agreement of it enforceable in accordance with its terms.
(c) The Partnership has complied and will continue to
comply with all orders, rules, laws, statutes, regulations or other legal
requirements applicable to it, to its business, properties, and assets,
including the Act and the rules promulgated by the CFTC and the NFA, the
violation of which would materially and adversely affect its ability to comply
with, and perform its obligations under this Agreement, and there are no
actions, suits, proceedings, or notices of investigations or investigations
pending or threatened against it, by the NFA, the CFTC or any governmental,
regulatory or self-regulatory agency regarding noncompliance by it with any
law, statute, rule or regulation, or at law or in equity or before or by any
court, any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its ability to comply with or to perform its
obligations under this Agreement or that would be required to be disclosed in
the Disclosure Notice, which is not so disclosed, or would result in a
material adverse change in the condition, financial or otherwise, business or
prospects of the Partnership.
(d) The Partnership has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
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(e) Except with respect to information contained in the
Disclosure Notice relating to the Trading Advisor or any other advisor, the
Disclosure Notice does not contain any untrue statement of material fact or
omit to state therein a material fact required to be stated therein or
necessary to be stated therein in order to prevent the statements made therein,
in light of the circumstances under which they are made, from being misleading.
(f) The General Partner is registered as a commodity pool
operator under the Act and is a member of the NFA in such capacity and such
registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(g) The General Partner has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the General Partner will promptly notify the
Trading Advisor thereof.
10. TERM AND TERMINATION.
(k) Unless terminated earlier as provided below, the term
of this Agreement shall be until the end of the twelfth full calendar month
after the Trading Advisor commences trading activity and is automatically
renewable thereafter for successive one-year periods unless (i) the Partnership
terminates this Agreement during the initial one-year term thereof by giving
thirty days' prior written notice to the Trading Advisor, or (ii) either the
Trading Advisor or the Partnership terminates the Agreement at the end of the
initial one-year term or at any time thereafter by giving thirty days' prior
written notice to such other party.
(l) Notwithstanding the foregoing, this Agreement may be
terminated by the Partnership immediately upon written notice to the Trading
Advisor if (i) the Trading Advisor, if other than a natural person, merges,
consolidates with or sells a substantial portion of its assets to any
individual or entity, or there is a material adverse change relating to the
Trading Advisor or a material adverse change in control, organizational
structure, financial condition, regulatory compliance or personnel of the
Trading Advisor, (ii) any of the Trading Advisor's registrations under the Act
or otherwise are suspended, terminated, lapsed or not renewed, (iii) the
Trading Advisor's membership in the NFA or other self-regulatory organization
is suspended, terminated, lapsed or not renewed, (iv) the Trading Advisor
otherwise becomes unable to serve as a trading advisor to the full extent
contemplated by this Agreement, (v) the Trading Advisor breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, or (vi) the General Partner determines doing so is in the best
interests of the Partnership.
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19. NOTICES. Except as otherwise provided herein, all
notices, demands or requests required to be made or delivered under this
Agreement shall be effective only if in writing and delivered personally or by
facsimile or mail, postage prepaid (airmail if the addressee is in another
country), to the respective addresses below or to such other addresses as may
be designated by the party entitled to receive the same by notice similarly
given and shall be deemed given by the party required to provide notice when
received by the party to whom notice is required to be given.
If to the Partnership or the General Partner to:
Heinold Asset Management, Inc.
One Financial Plaza
440 South LaSalle Street
Chicago, Illinois 60605
Attn: Ned Bennett, President
Fax No.: 312-902-6697
If to the Trading Advisor to:
First October Trading Company, Inc.
45 Bell Street
Chagrin Falls, Ohio 44022
Attn: Ralph Vince, President
Fax No.: 216-247-0076
12. ASSIGNMENT. No party hereto may transfer, sell,
encumber, appoint agents or assign any of its rights or obligations hereunder
in whole or in part without the express written consent of each of the other
parties hereto.
13. AMENDMENT; MODIFICATION. This Agreement may not be
amended or modified, nor any of the provisions hereof waived, except by the
written consent of all of the parties hereto.
14. COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject hereof
and supersedes all prior agreements written or oral, and no other agreement,
verbal or otherwise, shall be binding as between the parties hereto unless in
writing and signed by the party against whom enforcement is sought.
15. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns. No other person other than the persons indemnified under SECTION 7
hereof for matters relating to that Section shall have any right or obligation
under this Agreement.
16. HEADINGS. Headings to sections herein are for the
convenience of the parties only, and are not intended to be a part of or to
affect the meanings or interpretation of this Agreement.
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17. GOVERNING LAW: CONSENT TO JURISDICTION. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Illinois without giving effect to principles of conflicts of laws.
18. ARBITRATION. The parties agree that all
controversies which may arise in connection with any transaction contemplated
by this Agreement or the construction, performance or breach of this Agreement
shall be determined by arbitration, to be held in the City of Chicago, State of
Illinois unless otherwise agreed to by the parties hereto, and in accordance
with the rules then obtaining of the NFA, or if no such rules are then in
effect or if jurisdiction is declined, then the rules then obtaining of the
American Arbitration Association; provided, however, that (a) the arbitrator(s)
shall be knowledgeable in industry standards and practices and the matters
giving rise to the dispute, (b) the arbitrator(s) shall not have the power and
authority to award punitive damages, (c) the authority of the arbitrator(s)
shall be limited to construing and enforcing the terms and conditions of this
Agreement as expressly set forth herein, and (d) the arbitrator(s) shall state
the reasons for their award and their legal and factual conclusions underlying
the award in a written opinion. The award of the arbitrator(s), or a majority
of them, shall be final, and judgment upon the award may be confirmed and
entered in any court, state or federal, having jurisdiction.
19. CONSENT TO JURISDICTION. Each party hereto expressly
and irrevocably agrees (a) that it waives any objection, and specifically
consents, to venue in the United States federal or state courts located in the
City of Chicago, State of Illinois, United States of America, so that any
action at law or in equity may be brought and maintained in any such court, and
(b) that service of process in any such action may be effected against such
party by certified or registered mail or in any other manner permitted by
applicable United States Federal Rules of Civil Procedure or Rules of the
Courts of the State of Illinois. In addition, each party hereto expressly and
irrevocably waives, in respect of any action brought in any United States
federal or state court located in the City of Chicago, State of Illinois or any
resulting judgment, any objection, and hereby specifically consents, to the
jurisdiction of any such court, and agrees not to seek to change the situs of
such action or to assert that any other court in any other jurisdiction is a
more suitable forum for the hearing and adjudication of any claim or dispute
raised in such action.
20. SURVIVAL. The indemnity provisions 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 the
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
21. WAIVER OF BREACH. The waiver by a party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party. The failure of a party to insist
upon strict adherence to any provision of this Agreement shall not constitute a
waiver or thereafter deprive such party of the right to insist upon a strict
adherence.
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22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Ned W. Bennett
------------------
Ned W. Bennett
President
FIRST OCTOBER TRADING COMPANY, INC.
By: /s/ Ralph Vince
---------------
Ralph Vince
President
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EXHIBIT 1
March 8, 1995
First October Trading Company Inc.
45 Bell Street
Chagrin Falls, Ohio 44022
Re: Commodity Trading Authorization
Gentlemen:
The Futures Dimension Fund, an Illinois limited partnership
(the "Partnership"), does hereby make, constitute, and appoint you as its
Attorney-in-Fact to purchase and sell futures contracts, commodities and
commodity options and forward contracts, and any other items which are
currently, or may later become, the subject of futures, forward or options
trading, and other related investments on domestic and international exchanges,
through Geldermann, Inc., or such other brokers and forward contract dealers as
may be designated, from time to time, in writing by the Partnership, as
brokers, in accordance with the Management Contract between us dated March 8,
1995.
Very truly yours,
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Ned W. Bennett
-------------------
Ned W. Bennett
President
<PAGE> 1
EXHIBIT 10 (n)
MANAGEMENT CONTRACT
THIS MANAGEMENT CONTRACT ("Agreement"), is made and entered into
effective as of the 8th day of March 1995, by and between The Futures Dimension
Fund, an Illinois limited partnership (the "Partnership"), and Gandon Fund
Management Ltd. (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the purpose and business of the Partnership is to
seek capital appreciation by trading speculatively in futures contracts,
commodities and commodity options and forward contracts, and any other items
which are currently, or may later become, the subject of futures, forward or
options trading, and other related investments (sometimes hereinafter referred
to as "Contracts") on United States and non-United States exchanges and
markets; and
WHEREAS, the Partnership, through Heinold Asset Management,
Inc., its general partner (the "General Partner"), pursuant to the Limited
Partnership Agreement of the Partnership, is authorized to utilize the services
of professional trading advisors in connection with the trading activities of
the Partnership; and
WHEREAS, the Partnership has heretofore offered units of
limited partnership interest in the Partnership for sale to investors; and
WHEREAS, the Trading Advisor is engaged in the business of
making trading decisions on behalf of itself and others regarding the purchase
and sale of Contracts; and
WHEREAS, the Partnership and the Trading Advisor each desire
the Trading Advisor to make trading decisions for the Partnership with respect
to the assets of the Partnership allocated to be managed by the Trading Advisor
(the "Allocated Assets") on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
agreements set forth herein, the parties hereto do agree as follows:
1. DUTIES OF THE TRADING ADVISOR.
(a) The Partnership hereby appoints the Trading Advisor,
and the Trading Advisor hereby accepts appointment, as a trading advisor of the
Partnership in connection with the trading activities of the Partnership.
(b) Upon the Trading Advisor's commencing of trading
operations for the Partnership and for the period and on the terms and
conditions set forth in this Agreement, the Trading Advisor shall have sole
authority and responsibility, as the Partnership's agent and
<PAGE> 2
attorney-in-fact, for trading the Allocated Assets in Contracts and in
accordance with the Trading Advisor's Currency Program ("Trading Approach";
which term, for purposes of this Agreement, shall include trading approaches,
systems, instructions, methods, models, strategies, methodologies and formulas)
as described in the disclosure notice dated March 1995 relating to the
appointment of the Trading Advisor as a commodity trading advisor of the
Partnership (the "Disclosure Notice"), subject to the trading policies of the
Partnership furnished to the Trading Advisor in writing ("Trading Policies").
The parties hereto acknowledge that the Trading Advisor will trade Contracts
for the Partnership independently of any other trading advisor retained by the
Partnership. For purposes of this Agreement, the term "Contracts" shall not
include securities and options thereon.
(c) The Trading Advisor acknowledges and agrees that the
aggregate amount of Allocated Assets which the Trading Advisor shall treat as
equity and manage on behalf of the Partnership pursuant to this Agreement may
include "notional" funds. The Trading Advisor agrees to describe to the
General Partner its practices with respect to the leverage used by the Trading
Advisor in managing the Partnership's account relative to other accounts
managed by the Trading Advisor using the Trading Approach to enable the General
Partner to determine whether the "trading level" at which the Trading Advisor
is currently managing the Partnership's account is the level currently
designated by the General Partner.
(d) The General Partner and the Partnership acknowledge
receipt of the Trading Advisor's Disclosure Document dated February 1, 1995
(the "Disclosure Document"). The Trading Advisor shall promptly furnish the
Partnership with a copy of each amended, supplemented or updated Disclosure
Document of the Trading Advisor filed with the Commodity Futures Trading
Commission (the "CFTC") and the National Futures Association ("NFA") upon
acceptance thereof by the CFTC. Prior to the commencement of trading on behalf
of the Partnership, the Partnership shall deliver to the Trading Advisor, and
renew when necessary, a Commodity Trading Authorization, in the form attached
hereto as Exhibit 1, appointing the Trading Advisor as the Partnership's agent
and attorney-in-fact for such purpose. All trades for the account of the
Partnership shall be made through such banks, brokers and dealers as the
General Partner shall direct, and the Trading Advisor shall have no authority
or responsibility for selecting any such banks, brokers or dealers in
connection with the execution of transactions for the Partnership or for the
negotiation of commission rates charged therefor; provided, however, that the
General Partner shall notify the Trading Advisor of any applicable changes in
the commission rates charged by the Partnership's banks, brokers and dealers
with respect to transactions entered into with respect to the Allocated Assets.
(e) In the event the Trading Advisor and its principals
[as that term is defined in Regulation Section 4.10(e) promulgated by the CFTC
under the Commodity Exchange Act, as amended (the "Act")], shareholders,
partners, employees and affiliates or any person who controls the foregoing
(collectively, "Principals and Affiliates"), wish to use trading programs,
systems or strategies other than or in addition to the Trading Approach in
connection with its trading for the Partnership, either in whole or in part, it
may not do so unless the Trading Advisor gives the General Partner 15 days'
prior written notice of its intention to utilize such different trading
programs, systems or strategies and the General Partner consents thereto in
writing. Non-material changes in the Trading Approach may be instituted
without prior written approval.
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(f) The Trading Advisor agrees to make all material
disclosures to the Partnership regarding itself and its Principals and
Affiliates, their trading performance and general trading methods, their
accounts (but not the identities of customers) and otherwise as are required in
the reasonable judgment of the General Partner or the Partnership to be made in
any filings required by any governmental body or by any applicable law,
regulation, rule or order. Nothing contained in this Agreement shall be
construed or deemed to require the Trading Advisor to disclose the confidential
or proprietary details of its trading strategies.
(g) The Trading Advisor understands and agrees that the
General Partner intends to designate other trading advisors and to apportion
from time to time to such other trading advisors the management of such portion
of the Partnership's assets as the General Partner shall determine in its
absolute discretion. The designation of other trading advisors and
apportionment and reapportionment of a portion of the Partnership's assets to
such trading advisors shall neither terminate this Agreement nor modify in any
regard the respective rights and obligations of the parties hereto.
(h) The General Partner shall have the right to make
additions to, or withdrawals from, the Allocated Assets (including any
"notional" funds comprising part of the Allocated Assets) at any time. The
General Partner agrees that the Trading Advisor may refuse any additional
allocation of funds for any reason. The General Partner, in its sole
discretion, may at any time remove all assets from the management of the
Trading Advisor and may require the Trading Advisor to liquidate existing
positions.
(i) Upon receipt of instructions from the General
Partner, the Trading Advisor shall immediately cease its trading activities
with respect to the Allocated Assets, close out all existing positions in an
orderly manner and not initiate any new positions unless otherwise instructed
by the General Partner or the Partnership.
(j) The Trading Advisor shall review on a daily basis the
positions held by the Allocated Assets and shall immediately notify the General
Partner of any errors committed by the Trading Advisor or of any trade not
excluded in accordance with the Trading Advisor's instructions.
2. OTHER ACCOUNTS AND ACTIVITIES OF THE TRADING ADVISOR.
(a) The services provided by the Trading Advisor
hereunder are not to be deemed exclusive. Subject to the terms of this
Agreement, the Trading Advisor and its Principals and Affiliates shall be free
to trade for their own accounts and to advise other persons and manage other
accounts during the term of this Agreement and to use the same or different
degrees of leverage, information, computer programs and trading strategies or
formulas which they obtain, produce or utilize in the performance of services
for the Partnership. However, the Trading Advisor represents, warrants and
agrees that the rendering of such consulting, advisory and management services
to others will not require any material change in the Trading Approach and will
not materially adversely affect the capacity of the Trading Advisor to continue
to render services to the Partnership of the quality and nature contemplated by
this Agreement.
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(b) If, at any time during the term of this Agreement,
the Trading Advisor is required to aggregate the Partnership's Contract
positions with the positions of any other person or entity for purposes of
applying CFTC- or exchange-imposed position limits, the Trading Advisor agrees
that it will promptly notify the General Partner if the Partnership's positions
are included in an aggregate amount which equals or exceeds ninety percent
(90%) of the applicable limit. The Trading Advisor agrees that, if its trading
recommendations are altered because of the application of any position limit,
it will not modify the trading instructions with respect to the Partnership's
account in such manner as to affect the Partnership substantially
disproportionately as compared with the Trading Advisor's other accounts. The
Trading Advisor presently believes and represents that existing speculative
position limits will not materially adversely affect its ability to manage the
Partnership's account given the potential size of the Partnership's account and
the Trading Advisor's and its Principals' and Affiliates' current accounts and
all proposed accounts for which they have contracted to act as trading advisor.
The Trading Advisor further represents, warrants and agrees that under no
circumstances will it knowingly or deliberately use trading strategies or
systems for the Partnership that are inferior to trading strategies or systems
employed for any other client or account and that it will not knowingly or
deliberately favor any client or account managed by it over any other client or
account, it being acknowledged, however, that different trading strategies,
methods or degrees of leverage may be utilized for differing sizes of accounts,
accounts with different trading policies, accounts experiencing differing
inflows or outflows of equity, accounts which commence trading at different
times, accounts which have different portfolios or different fiscal years and
accounts with other differences, and that such differences may cause divergent
trading results.
(c) The Partnership and the General Partner acknowledge
and agree that the Trading Advisor and/or its Principals and Affiliates
presently act and that they may continue to act as advisors for other accounts
managed by them and may continue to receive compensation with respect to
services for such accounts in amounts which may be more or less than the
amounts received from the Partnership. The Trading Advisor agrees that in the
management of such other accounts by it and its Principals and Affiliates, it
will act in good faith to seek to achieve an equitable treatment of all
accounts under management including the Partnership's account with respect to,
among other things, priorities of order entry and position limits.
(d) The Trading Advisor agrees that it shall make such
information available to the General Partner respecting the performance of the
Partnership's account as compared to the performance of all other accounts
managed by the Trading Advisor and its Principals and Affiliates as shall be
reasonably requested by the General Partner or the Partnership. The Trading
Advisor shall not be required to disclose the identity of its clients.
3. ALLOCATION OF ASSETS TO THE TRADING ADVISOR. The
Trading Advisor's Allocated Assets initially shall be a total of approximately
$1,163,961 of which $0 is notional funding.
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4. FEES.
(a) Commencing with the commencement of trading by the
Trading Advisor for the Partnership, the Partnership agrees to pay to the
Trading Advisor as follows:
(i) Management Fee. A monthly management fee equal to
0.166% of the Net Asset Value of the Allocated Assets as of the close of
business on the last business day of each calendar month (an approximate 2%
annual rate). The definition of the term "Net Asset Value" is set forth in
Exhibit 2, hereto.
(ii) For purposes of calculating the management fee, Net
Asset Value of the Allocated Assets shall be determined before reduction for
the management fees or incentive fees, if any, accrued or payable with respect
to the Allocated Assets as of such month-end, and before giving effect to any
distributions and redemptions paid or payable at such month-end. In the event
that (A) the Trading Advisor commences trading as of any day other than the
first day of a calendar month, (B) this Agreement is terminated as of any date
other than the last day of a calendar month, or (C) the Partnership reallocates
assets to or from the Trading Advisor as of any day other than the first or
last day of any calendar month, the amount of the management fee shall be
prorated on the basis of the number of business days during such month that the
Allocated Assets (as adjusted in the case of reallocation of assets) were
traded by the Trading Advisor as compared to the total number of business days
in such calendar month. To the extent that the Partnership instructs the
Trading Advisor to trade the Allocated Assets at a "nominal account size" in
excess of the actual assets comprising Allocated Assets, the Trading Advisor's
management fee shall be calculated based upon the "nominal account size" of the
Allocated Assets.
(iii) Incentive Fee. A quarterly incentive fee equal to
20% of any New Trading Profits (as defined below) achieved during each fiscal
quarter. New Trading Profits during a quarter shall mean the sum of (A) the
net of any profits and losses realized on trades closed out during the period,
plus or minus (B) the change in the net of any unrealized profits and losses on
trades which remained open as of the end of the period (net of accrued
brokerage commissions and other allocated expenses) from the net of any
unrealized profits and losses on trades initiated by the Trading Advisor which
remained open as of the end of the immediately preceding period (net of accrued
brokerage commissions and other allocated expenses), (C) any Trading Advisor
management fees paid or accrued through the end of the period, and (D) the
Trading Advisor's carryforward loss (as hereinafter defined) from the
immediately preceding period. If the sum of subparagraphs (A) through (D) for
any period is negative, such amount shall be the Trading Advisor's carryforward
loss for the next period. For purposes of calculating incentive fees, interest
income earned on the Allocated Assets will be disregarded. In the event of a
withdrawal from the Allocated Assets at a time when the Trading Advisor has a
carryforward loss in effect, the amount thereof shall be reduced by an amount
determined by multiplying the carryforward loss by a fraction, the numerator of
which shall be the amount of the withdrawal and the denominator of which shall
be the Net Asset Value of the Allocated Assets immediately prior to giving
effect to the withdrawal. In the event that an addition is made to the
Allocated Assets subsequent to a reduction in the Trading Advisor's
carryforward loss by reason of a withdrawal, the Trading Advisor's carryforward
loss shall be increased by or created in an amount (up to the aggregate amount
of prior carryforward loss reductions)
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determined by multiplying the aggregate amount of prior carryforward loss
reductions by a fraction, the numerator of which shall be the amount of the
addition and the denominator of which shall be the sum of the previous
withdrawals which resulted in carryforward loss reductions. The incentive fee
charged to the Partnership with respect to the Allocated Assets will be
dependent upon the performance of the Trading Advisor and will not be affected
by the performance of any other trading advisor appointed by the Partnership or
the Partnership as a whole. The initial incentive period shall commence on the
date the Trading Advisor commences trading activity for the Partnership and
shall end at the immediate following quarter-end (even though such period may
not be a full quarter). Subsequent incentive periods shall commence on the
first day of the next succeeding fiscal quarter and end on the last day of such
fiscal quarter. In the event this Agreement is terminated as of any date which
is not the end of an incentive period, an incentive fee will be paid by the
Partnership, if earned, with respect to the Allocated Assets as though such
termination date were the last day of the incentive period.
(b) Payment of Fees. The management fees and incentive
fees due to the Trading Advisor shall be paid by the Partnership within thirty
(30) days of the end of the calendar period to which they relate. The
Partnership expressly agrees that any such fees due the Trading Advisor shall
survive the termination or other expiration of this Agreement.
5. TRADING ADVISOR INDEPENDENT. The Trading Advisor
shall for all purposes herein be deemed to be an independent contractor to the
Partnership and the General Partner and shall, except as otherwise expressly
provided herein, have no authority to act for or represent the Partnership or
the General Partner in any way or otherwise be deemed a sponsor of the
Partnership or an agent, joint venturer or partner of the Partnership, the
General Partner or of any other trading advisor retained by the Partnership.
6. BROKER.
(a) The Trading Advisor agrees to enter all Contract
orders through Geldermann, Inc. ("Geldermann"), or such other brokers and
forward contract dealers as may be designated, from time to time, in writing by
the Partnership. The Partnership must consent in writing to the use of other
floor brokers who will give up such trades to Geldermann in accordance with
exchange rules and the give-up procedures established by the Partnership from
time to time. The Trading Advisor shall be responsible for any errors
committed by any executing broker who gives-up to Geldermann on behalf of the
Partnership. In placing trades for the Partnership's account, the Trading
Advisor agrees that it shall use its standard procedures for allocating orders
among the Trading Advisor's various accounts and not knowingly favor any other
such account over the Partnership's account.
(b) All forward contract and other trades for the
Partnership will be executed through the forward trading and other facilities
of such affiliates of Geldermann or other entities as the Partnership may
designate from time to time.
7. STANDARD OF LIABILITY; INDEMNIFICATIONS.
(a) Standard of Liability. Neither the Trading Advisor
nor any of its Principals and Affiliates shall be liable to the Partnership,
the General Partner or any of their
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respective successors or assigns under this Agreement except by reason of (i)
acts or omissions to act which constitute bad faith, negligence or misconduct
or (ii) a breach of any of the representations, warranties, covenants or
agreements of the Trading Advisor set forth in this Agreement.
(b) Indemnity. (i) The Partnership agrees to indemnify
and hold harmless the Trading Advisor and each of its Principals and Affiliates
from and against any and all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, attorneys' and accountants' fees and
disbursements), judgments and amounts paid in settlement (collectively,
"Losses") to which an indemnified person may become subject arising out of this
Agreement, the transactions contemplated hereby or the fact the Trading Advisor
is or was a trading advisor to the Partnership, unless any such Losses arise
out of, relate to, or are based upon the Trading Advisor's failure to meet the
standard of liability applicable to it under SECTION 7(a).
(ii) The Trading Advisor agrees to indemnify and hold
harmless the Partnership, the General Partner and each of their respective
Principals and Affiliates from and against any and all Losses to which they may
become subject, if any such Losses arise out of, relate to, or are based upon
the Trading Advisor's failure to meet the standard of liability applicable to
it under SECTION 7(a).
(c) Promptly after receipt by a party to be indemnified
under SECTION 7(b), above, of any notice of the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnified party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. The
requirement that an indemnifying party be given written notice of the
commencement of any action shall be deemed to be satisfied if such indemnifying
party shall have actual knowledge thereof or shall have been given written
notice of the commencement of any action or proceeding within a reasonable time
after the commencement thereof. If any such action shall be brought against
any indemnified party and the indemnified party notifies the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to such indemnified party, and shall have the
right to negotiate and consent to a settlement thereof, provided that the
indemnified party shall have consented to the settlement. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent it,
if, in the indemnified party's reasonable judgment, it is advisable for such
party to be represented by separate counsel, in which event the fees and
expenses of such separate counsel shall be borne by the indemnified party. No
indemnifying party shall be liable for any settlement of any such action
effected without its consent, but if any such action or proceeding is settled
with the consent of any indemnifying party or if there be a final judgment for
the plaintiff in any such action or proceeding (of which an indemnifying party
shall have been notified), such indemnifying party shall indemnify and hold
harmless each
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indemnified party from and against any Losses incurred or suffered by reason of
such settlement or judgment.
(d) Any indemnification required by this SECTION 7,
unless ordered or expressly permitted by a court, shall be made by the
indemnifying party only upon a determination by independent legal counsel in a
written opinion that the conduct which is the subject of the claim, demand,
lawsuit, action or proceeding with respect to which indemnification is sought
meets the applicable standard set forth in this SECTION 7.
(e) The provisions of this SECTION 7 shall survive the
termination or other expiration of this Agreement.
8. THE TRADING ADVISOR'S REPRESENTATIONS AND WARRANTIES.
The Trading Advisor represents and warrants to the Partnership and the General
Partner as follows:
(a) The Trading Advisor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business as described in
this Agreement and the Disclosure Notice, and the Trading Advisor is qualified
to conduct its business and is in good standing in every jurisdiction in which
the nature or conduct of its business requires such qualification and failure
to so qualify would 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 by the Trading Advisor and is a valid and binding
agreement of the Trading Advisor enforceable in accordance with its terms.
(c) The execution and delivery of this Agreement and the
performance of the obligations and the consummation of the transactions
contemplated in this Agreement and in the Disclosure Notice will not conflict
with, violate, breach or constitute a default under, any term or provision of
the Trading Advisor's certificate of incorporation, by-laws, or other charter
documents, or any indenture, mortgage, deed of trust, loan agreement, or other
agreement or instrument to which the Trading Advisor or any of its Principals
and Affiliates is a party or by which any of them are bound, or to which any of
the property (including, but not limited to, its Trading Approach) or assets of
the Trading Advisor or its Principals and Affiliates are subject, or any order,
rule, law, statute, regulation, or other legal requirement applicable to the
Trading Advisor or any of its Principals or to the property or assets of the
Trading Advisor or its Principals and Affiliates of any court or any
governmental or administrative body or agency or panel or any regulatory or
self-regulatory organization or exchange having jurisdiction over the Trading
Advisor or any of its Principals and Affiliates.
(d) The Trading Advisor is registered as a commodity
trading advisor under the Act, its Principals are identified on the Trading
Advisor's most recent CFTC Form 7-R filed with the NFA pursuant to the Act, and
it is a member of the NFA in such capacity and such
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registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(e) The Trading Advisor is not bankrupt or insolvent.
(f) The Disclosure Document is complete and accurate in
all material respects, does not contain any misstatement of any material fact,
does not omit to state any material fact necessary to be stated therein in
order to make the statements made therein, in light of the circumstances under
which they are made, not misleading, and complies in all material respects with
the applicable requirements of the Act and the rules promulgated thereunder and
may be relied upon by the Partnership and the General Partner in preparing the
Disclosure Notice and allocating assets of the Partnership to the Trading
Advisor and there has not been, since the date of the Disclosure Document's
issuance, any material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or any of its Principals and
Affiliates, whether or not arising in the ordinary course of business, or
relating to the historical performance and operations of the Trading Advisor.
(g) The Trading Advisor and each Principal has complied
and will continue to comply with all orders, rules, laws, statutes, regulations
or other legal requirements applicable to the Trading Advisor or any of its
Principals and Affiliates or to their respective businesses, properties, or
assets, including the Act and the rules promulgated by the CFTC and the NFA,
the violation of which would materially and adversely affect its or their
ability to comply with, and perform its or their obligations under this
Agreement, and there are no actions, suits, proceedings, or notices of
investigations or investigations pending or threatened against the Trading
Advisor, or any of its Principals or Affiliates, by the NFA, the CFTC or any
governmental, regulatory or self-regulatory agency regarding noncompliance by
the Trading Advisor or any of its Principals or Affiliates with any law,
statute, rule or regulation, or at law or in equity or before or by any court,
any federal, state, municipal or other governmental department commission,
board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its or their ability to comply with or to
perform its or their obligations under this Agreement or that would be required
to be disclosed in the Disclosure Notice, which is not so disclosed, would
result in a material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor.
(h) The Trading Advisor and each Principal has all
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all governmental,
regulatory and self-regulatory agencies required to conduct their respective
businesses and to act as described in the Disclosure Notice and to perform its
or their respective obligations under this Agreement.
(i) With respect to information contained in the
Disclosure Notice relating to the Trading Advisor, including, without
limitation, the tables and notes thereto, the Disclosure Notice does not
contain any untrue statement of material fact or omit to state therein a
material fact required to be stated therein or necessary to be stated therein
in order to prevent the statements made therein, in light of the circumstances
under which they are made, from being misleading.
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(j) In the placement of orders and the allocation of
executed trades for the Partnership and for the accounts of any other client,
the Trading Advisor shall utilize a fair and reasonable order entry system and
trade allocation system, which shall be no less favorable to the Partnership
than to any other account managed by the Trading Advisor.
(k) The Trading Advisor shall promptly notify the other
parties hereto of the commencement of any suit, action or proceeding involving
it or its Principals and Affiliates, whether or not any such suit, action or
proceeding also involves any of the other parties hereto.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the Trading Advisor shall promptly notify the
Partnership and the General Partner of the occurrence of such event.
9. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
The Partnership represents and warrants to the Trading Advisor as follows:
(a) The Partnership is duly organized, validly existing
and in good standing as a limited partnership under the laws of Illinois. The
Partnership has full power and authority to perform its obligations under this
Agreement and to conduct its business and to act as described in the Disclosure
Notice.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Partnership and is a valid and binding
agreement of it enforceable in accordance with its terms.
(c) The Partnership has complied and will continue to
comply with all orders, rules, laws, statutes, regulations or other legal
requirements applicable to it, to its business, properties, and assets,
including the Act and the rules promulgated by the CFTC and the NFA, the
violation of which would materially and adversely affect its ability to comply
with, and perform its obligations under this Agreement, and there are no
actions, suits, proceedings, or notices of investigations or investigations
pending or threatened against it, by the NFA, the CFTC or any governmental,
regulatory or self-regulatory agency regarding noncompliance by it with any
law, statute, rule or regulation, or at law or in equity or before or by any
court, any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its ability to comply with or to perform its
obligations under this Agreement or that would be required to be disclosed in
the Disclosure Notice, which is not so disclosed, or would result in a
material adverse change in the condition, financial or otherwise, business or
prospects of the Partnership.
(d) The Partnership has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
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(e) Except with respect to information contained in the
Disclosure Notice relating to the Trading Advisor or any other advisor, the
Disclosure Notice does not contain any untrue statement of material fact or
omit to state therein a material fact required to be stated therein or
necessary to be stated therein in order to prevent the statements made therein,
in light of the circumstances under which they are made, from being misleading.
(f) The General Partner is registered as a commodity pool
operator under the Act and is a member of the NFA in such capacity and such
registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(g) The General Partner has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the General Partner will promptly notify the
Trading Advisor thereof.
10. TERM AND TERMINATION.
(a) Unless terminated earlier as provided below, the term
of this Agreement shall be until the end of the twelfth full calendar month
after the Trading Advisor commences trading activity and is automatically
renewable thereafter for successive one-year periods unless (i) the Partnership
terminates this Agreement during the initial one-year term thereof by giving
thirty days' prior written notice to the Trading Advisor, or (ii) either the
Trading Advisor or the Partnership terminates the Agreement at the end of the
initial one-year term or at any time thereafter by giving thirty days' prior
written notice to such other party.
(b) Notwithstanding the foregoing, this Agreement may be
terminated by the Partnership immediately upon written notice to the Trading
Advisor if (i) the Trading Advisor, if other than a natural person, merges,
consolidates with or sells a substantial portion of its assets to any
individual or entity, or there is a material adverse change relating to the
Trading Advisor or a material adverse change in control, organizational
structure, financial condition, regulatory compliance or personnel of the
Trading Advisor, (ii) any of the Trading Advisor's registrations under the Act
or otherwise are suspended, terminated, lapsed or not renewed, (iii) the
Trading Advisor's membership in the NFA or other self-regulatory organization
is suspended, terminated, lapsed or not renewed, (iv) the Trading Advisor
otherwise becomes unable to serve as a trading advisor to the full extent
contemplated by this Agreement, (v) the Trading Advisor breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, or (vi) the General Partner determines doing so is in the best
interests of the Partnership.
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11. NOTICES. Except as otherwise provided herein, all
notices, demands or requests required to be made or delivered under this
Agreement shall be effective only if in writing and delivered personally or by
facsimile or mail, postage prepaid (airmail if the addressee is in another
country), to the respective addresses below or to such other addresses as may
be designated by the party entitled to receive the same by notice similarly
given and shall be deemed given by the party required to provide notice when
received by the party to whom notice is required to be given.
If to the Partnership or the General Partner to:
Heinold Asset Management, Inc.
One Financial Plaza
440 South LaSalle Street
Chicago, Illinois 60605
Attn: Ned Bennett, President
Fax No.: 312-902-6697
If to the Trading Advisor to:
Gandon Fund Management Ltd.
Andersen House
1 Harbour Master Place
International Financial Services Centre
Dublin 1 Ireland
Attn: David Carroll
Fax No.: 01-670-1330
12. ASSIGNMENT. No party hereto may transfer, sell,
encumber, appoint agents or assign any of its rights or obligations hereunder
in whole or in part without the express written consent of each of the other
parties hereto.
13. AMENDMENT; MODIFICATION. This Agreement may not be
amended or modified, nor any of the provisions hereof waived, except by the
written consent of all of the parties hereto.
14. COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject hereof
and supersedes all prior agreements written or oral, and no other agreement,
verbal or otherwise, shall be binding as between the parties hereto unless in
writing and signed by the party against whom enforcement is sought.
15. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns. No other person other than the persons indemnified under SECTION 7
hereof for matters relating to that Section shall have any right or obligation
under this Agreement.
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16. HEADINGS. Headings to sections herein are for the
convenience of the parties only, and are not intended to be a part of or to
affect the meanings or interpretation of this Agreement.
17. GOVERNING LAW: CONSENT TO JURISDICTION. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Illinois without giving effect to principles of conflicts of laws.
18. ARBITRATION. The parties agree that all
controversies which may arise in connection with any transaction contemplated
by this Agreement or the construction, performance or breach of this Agreement
shall be determined by arbitration, to be held in the City of Chicago, State of
Illinois unless otherwise agreed to by the parties hereto, and in accordance
with the rules then obtaining of the NFA, or if no such rules are then in
effect or if jurisdiction is declined, then the rules then obtaining of the
American Arbitration Association; provided, however, that (a) the arbitrator(s)
shall be knowledgeable in industry standards and practices and the matters
giving rise to the dispute, (b) the arbitrator(s) shall not have the power and
authority to award punitive damages, (c) the authority of the arbitrator(s)
shall be limited to construing and enforcing the terms and conditions of this
Agreement as expressly set forth herein, and (d) the arbitrator(s) shall state
the reasons for their award and their legal and factual conclusions underlying
the award in a written opinion. The award of the arbitrator(s), or a majority
of them, shall be final, and judgment upon the award may be confirmed and
entered in any court, state or federal, having jurisdiction.
19. CONSENT TO JURISDICTION. Each party hereto expressly
and irrevocably agrees (a) that it waives any objection, and specifically
consents, to venue in the United States federal or state courts located in the
City of Chicago, State of Illinois, United States of America, so that any
action at law or in equity may be brought and maintained in any such court, and
(b) that service of process in any such action may be effected against such
party by certified or registered mail or in any other manner permitted by
applicable United States Federal Rules of Civil Procedure or Rules of the
Courts of the State of Illinois. In addition, each party hereto expressly and
irrevocably waives, in respect of any action brought in any United States
federal or state court located in the City of Chicago, State of Illinois or any
resulting judgment, any objection, and hereby specifically consents, to the
jurisdiction of any such court, and agrees not to seek to change the situs of
such action or to assert that any other court in any other jurisdiction is a
more suitable forum for the hearing and adjudication of any claim or dispute
raised in such action.
20. SURVIVAL. The indemnity provisions 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 the
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
21. WAIVER OF BREACH. The waiver by a party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party. The failure of a party to insist
upon strict adherence to any provision of this Agreement
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shall not constitute a waiver or thereafter deprive such party of the right to
insist upon a strict adherence.
22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Ned W. Bennett
------------------
Ned W. Bennett
President
GANDON FUND MANAGEMENT LTD.
By: /s/ Michael Cullen
------------------
Michael Cullen
Chief Executive
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EXHIBIT 1
March 8, 1995
Gandon Fund Management Ltd.
Andersen House
1 Harbour Master Place
International Financial Services Centre
Dublin 1 Ireland
Re: Commodity Trading Authorization
Gentlemen:
The Futures Dimension Fund, an Illinois limited partnership
(the "Partnership"), does hereby make, constitute, and appoint you as its
Attorney-in-Fact to purchase and sell futures contracts, commodities and
commodity options and forward contracts, and any other items which are
currently, or may later become, the subject of futures, forward or options
trading, and other related investments on domestic and international exchanges,
through Geldermann, Inc., or such other brokers and forward contract dealers as
may be designated, from time to time, in writing by the Partnership, as
brokers, in accordance with the Management Contract between us dated March 8,
1995.
Very truly yours,
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Ned W. Bennett
------------------
Ned W. Bennett
<PAGE> 1
EXHIBIT 10(o)
MANAGEMENT CONTRACT
THIS MANAGEMENT CONTRACT ("Agreement"), is made and entered into
effective as of the 8th day of March 1995, by and between The Futures Dimension
Fund L.P., an Illinois limited partnership (the "Partnership"), and Telesis
Management, Inc. (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the purpose and business of the Partnership is to
seek capital appreciation by trading speculatively in futures contracts,
commodities and commodity options and forward contracts, and any other items
which are currently, or may later become, the subject of futures, forward or
options trading, and other related investments (sometimes hereinafter referred
to as "Contracts") on United States and non-United States exchanges and
markets; and
WHEREAS, the Partnership, through Heinold Asset Management,
Inc., its general partner (the "General Partner"), pursuant to the Limited
Partnership Agreement of the Partnership, is authorized to utilize the services
of professional trading advisors in connection with the trading activities of
the Partnership; and
WHEREAS, the Partnership has heretofore offered units of
limited partnership interest in the Partnership for sale to investors; and
WHEREAS, the Trading Advisor is engaged in the business of
making trading decisions on behalf of itself and others regarding the purchase
and sale of Contracts; and
WHEREAS, the Partnership and the Trading Advisor each desire
the Trading Advisor to make trading decisions for the Partnership with respect
to the assets of the Partnership allocated to be managed by the Trading Advisor
(the "Allocated Assets") on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
agreements set forth herein, the parties hereto do agree as follows:
1. DUTIES OF THE TRADING ADVISOR.
(a) The Partnership hereby appoints the Trading Advisor,
and the Trading Advisor hereby accepts appointment, as a trading advisor of the
Partnership in connection with the trading activities of the Partnership.
(b) Upon the Trading Advisor's commencing of trading
operations for the Partnership and for the period and on the terms and
conditions set forth in this Agreement, the Trading Advisor shall have sole
authority and responsibility, as the Partnership's agent and
<PAGE> 2
attorney-in-fact, for trading the Allocated Assets in Contracts and in
accordance with the Trading Advisor's Leveraged Program ("Trading Approach";
which term, for purposes of this Agreement, shall include trading approaches,
systems, instructions, methods, models, strategies, methodologies and formulas)
as described in the disclosure notice dated April 1995 relating to the
appointment of the Trading Advisor as a commodity trading advisor of the
Partnership (the "Disclosure Notice"), subject to the trading policies of the
Partnership furnished to the Trading Advisor in writing ("Trading Policies").
The parties hereto acknowledge that the Trading Advisor will trade Contracts
for the Partnership independently of any other trading advisor retained by the
Partnership. For purposes of this Agreement, the term "Contracts" shall not
include securities and options thereon.
(c) The Trading Advisor agrees to describe to the General
Partner its practices with respect to the leverage used by the Trading Advisor
in managing the Partnership's account relative to other accounts managed by the
Trading Advisor using the Trading Approach to enable the General Partner to
determine whether the "trading level" at which the Trading Advisor is currently
managing the Partnership's account is the level currently designated by the
General Partner.
(d) The General Partner and the Partnership acknowledge
receipt of the Trading Advisor's Disclosure Document dated April 17, 1995 (the
"Disclosure Document"). The Trading Advisor shall promptly furnish the
Partnership with a copy of each amended, supplemented or updated Disclosure
Document of the Trading Advisor filed with the Commodity Futures Trading
Commission (the "CFTC") and the National Futures Association ("NFA") upon
acceptance thereof by the CFTC. Prior to the commencement of trading on behalf
of the Partnership, the Partnership shall deliver to the Trading Advisor, and
renew when necessary, a Commodity Trading Authorization, in the form attached
hereto as Exhibit 1, appointing the Trading Advisor as the Partnership's agent
and attorney-in-fact for such purpose. All trades for the account of the
Partnership shall be made through such banks, brokers and dealers as the
General Partner shall direct, and the Trading Advisor shall have no authority
or responsibility for selecting any such banks, brokers or dealers in
connection with the execution of transactions for the Partnership or for the
negotiation of commission rates charged therefor; provided, however, that the
General Partner shall notify the Trading Advisor of any applicable changes in
the commission rates charged by the Partnership's banks, brokers and dealers
with respect to transactions entered into with respect to the Allocated Assets.
(e) In the event the Trading Advisor and its principals
[as that term is defined in Regulation Section 4.10(e) promulgated by the CFTC
under the Commodity Exchange Act, as amended (the "Act")], shareholders,
partners, employees and affiliates or any person who controls the foregoing
(collectively, "Principals and Affiliates"), wish to use trading programs,
systems or strategies other than or in addition to the Trading Approach in
connection with its trading for the Partnership, either in whole or in part, it
may not do so unless the Trading Advisor gives the General Partner 15 days'
prior written notice of its intention to utilize such different trading
programs, systems or strategies and the General Partner consents thereto in
writing. Non-material changes in the Trading Approach may be instituted
without prior written approval.
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(f) The Trading Advisor agrees to make all material
disclosures to the Partnership regarding itself and its Principals and
Affiliates, their trading performance and general trading methods, their
accounts (but not the identities of customers) and otherwise as are required in
the reasonable judgment of the General Partner or the Partnership to be made in
any filings required by any governmental body or by any applicable law,
regulation, rule or order. Nothing contained in this Agreement shall be
construed or deemed to require the Trading Advisor to disclose the confidential
or proprietary details of its trading strategies.
(g) The Trading Advisor understands and agrees that the
General Partner intends to designate other trading advisors and to apportion
from time to time to such other trading advisors the management of such portion
of the Partnership's assets as the General Partner shall determine in its
absolute discretion. The designation of other trading advisors and
apportionment and reapportionment of a portion of the Partnership's assets to
such trading advisors shall neither terminate this Agreement nor modify in any
regard the respective rights and obligations of the parties hereto.
(h) The General Partner shall have the right to make
additions to, or withdrawals from, the Allocated Assets (including any
"notional" funds comprising part of the Allocated Assets) at any time. The
General Partner shall, however, use its best efforts to make such additions or
withdrawals at month-end. The General Partner agrees that the Trading Advisor
may refuse any additional allocation of funds for any reason. The General
Partner, in its sole discretion, may at any time remove all assets from the
management of the Trading Advisor and may require the Trading Advisor to
liquidate existing positions.
(i) Upon receipt of instructions from the General
Partner, the Trading Advisor shall immediately cease its trading activities
with respect to the Allocated Assets, close out all existing positions in an
orderly manner and not initiate any new positions unless otherwise instructed
by the General Partner or the Partnership.
(j) The Trading Advisor shall review on a daily basis the
positions held by the Allocated Assets and shall immediately notify the General
Partner of any errors committed by the Trading Advisor or of any trade not
executed in accordance with the Trading Advisor's instructions.
2. OTHER ACCOUNTS AND ACTIVITIES OF THE TRADING ADVISOR.
(a) The services provided by the Trading Advisor
hereunder are not to be deemed exclusive. Subject to the terms of this
Agreement, the Trading Advisor and its Principals and Affiliates shall be free
to trade for their own accounts and to advise other persons and manage other
accounts during the term of this Agreement and to use the same or different
degrees of leverage, information, computer programs and trading strategies or
formulas which they obtain, produce or utilize in the performance of services
for the Partnership. However, the Trading Advisor represents, warrants and
agrees that the rendering of such consulting, advisory and management services
to others will not require any material change in the Trading Approach and will
not materially adversely affect the capacity of the Trading Advisor to continue
to render services to the Partnership of the quality and nature contemplated by
this Agreement.
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<PAGE> 4
(b) If, at any time during the term of this Agreement,
the Trading Advisor is required to aggregate the Partnership's Contract
positions with the positions of any other person or entity for purposes of
applying CFTC- or exchange-imposed position limits, the Trading Advisor agrees
that it will promptly notify the General Partner if the Partnership's positions
are included in an aggregate amount which equals or exceeds ninety percent
(90%) of the applicable limit. The Trading Advisor agrees that, if its trading
recommendations are altered because of the application of any position limit,
it will not modify the trading instructions with respect to the Partnership's
account in such manner as to affect the Partnership substantially
disproportionately as compared with the Trading Advisor's other accounts. The
Trading Advisor presently believes and represents that existing speculative
position limits will not materially adversely affect its ability to manage the
Partnership's account given the potential size of the Partnership's account and
the Trading Advisor's and its Principals' and Affiliates' current accounts and
all proposed accounts for which they have contracted to act as trading advisor.
The Trading Advisor further represents, warrants and agrees that under no
circumstances will it knowingly or deliberately use trading strategies or
systems for the Partnership any time during the term of this Agreement, the
Trading Advisor is required to aggregate the Partnership's Contract positions
with the positions of any other person or entity for purposes of applying CFTC-
or exchange-imposed position limits, the Trading Advisor agrees that it will
promptly notify the General Partner if the Partnership's positions are included
in an aggregate amount which equals or exceeds ninety percent (90%) of the
applicable limit. The Trading Advisor agrees that, if its trading
recommendations are altered because of the application of any position limit,
it will not modify the trading instructions with respect to the Partnership's
account in such manner as to affect the Partnership substantially
disproportionately as compared with the Trading Advisor's other accounts. The
Trading Advisor presently believes and represents that existing speculative
position limits will not materially adversely affect its ability to manage the
Partnership's account given the potential size of the Partnership's account and
the Trading Advisor's and its Principals' and Affiliates' current accounts and
all proposed accounts for which they have contracted to act as trading advisor.
The Trading Advisor further represents, warrants and agrees that under no
circumstances will it knowingly or deliberately use trading strategies or
systems for the Partnership that are inferior to trading strategies or systems
employed for any other client or account and that it will not knowingly or
deliberately favor any client or account managed by it over any other client or
account, it being acknowledged, however, that different trading strategies,
methods or degrees of leverage may be utilized for differing sizes of accounts,
accounts with different trading policies, accounts experiencing differing
inflows or outflows of equity, accounts which commence trading at different
times, accounts which have different portfolios or different fiscal years and
accounts with other differences, and that such differences may cause divergent
trading results.
(c) The Partnership and the General Partner acknowledge
and agree that the Trading Advisor and/or its Principals and Affiliates
presently act and that they may continue to act as advisors for other accounts
managed by them and may continue to receive compensation with respect to
services for such accounts in amounts which may be more or less than the
amounts received from the Partnership. The Trading Advisor agrees that in the
management of such other accounts by it and its Principals and Affiliates, it
will act in good faith to seek to achieve an equitable treatment of all
accounts under management including the Partnership's account with respect to,
among other things, priorities of order entry and position limits.
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<PAGE> 5
(d) The Trading Advisor agrees that it shall make such
information available to the General Partner respecting the performance of the
Partnership's account as compared to the performance of all other accounts
managed by the Trading Advisor and its Principals and Affiliates as shall be
reasonably requested by the General Partner or the Partnership. The Trading
Advisor shall not be required to disclose the identity of its clients.
3. ALLOCATION OF ASSETS TO THE TRADING ADVISOR. The
Trading Advisor's Allocated Assets initially shall be a total of approximately
$1,108,706 of which $0 is notional funding.
4. FEES.
(a) Commencing with the commencement of trading by the
Trading Advisor for the Partnership, the Partnership agrees to pay to the
Trading Advisor as follows:
(i) Management Fee. A monthly management fee equal to
0.166% of the Net Asset Value of the Allocated Assets as of the close of
business on the last business day of each calendar month (an approximate 2%
annual rate). The definition of the term "Net Asset Value" is set forth in
Exhibit 2, hereto.
(ii) For purposes of calculating the management fee, Net
Asset Value of the Allocated Assets shall be determined before reduction for
the management fees or incentive fees, if any, accrued or payable with respect
to the Allocated Assets as of such month-end, and before giving effect to any
distributions and redemptions paid or payable at such month-end. In the event
that (A) the Trading Advisor commences trading as of any day other than the
first day of a calendar month, (B) this Agreement is terminated as of any date
other than the last day of a calendar month, or (C) the Partnership reallocates
assets to or from the Trading Advisor as of any day other than the first or
last day of any calendar month, the amount of the management fee shall be
prorated on the basis of the number of business days during such month that the
Allocated Assets (as adjusted in the case of reallocation of assets) were
traded by the Trading Advisor as compared to the total number of business days
in such calendar month. To the extent that the Partnership instructs the
Trading Advisor to trade the Allocated Assets at a "nominal account size" in
excess of the actual assets comprising Allocated Assets, the Trading Advisor's
management fee shall be calculated based upon the "nominal account size" of the
Allocated Assets.
(iii) Incentive Fee. A quarterly incentive fee equal to
20% of any New Trading Profits (as defined below) achieved during each calendar
quarter. New Trading Profits during a quarter shall mean the sum of (A) the
net of any profits and losses realized on trades closed out during the period,
plus or minus (B) the change in the net of any unrealized profits and losses on
trades which remained open as of the end of the period (net of accrued
brokerage commissions and other allocated expenses) from the net of any
unrealized profits and losses on trades initiated by the Trading Advisor which
remained open as of the end of the immediately
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preceding period (net of accrued brokerage commissions and other allocated
expenses), (C) any Trading Advisor management fees paid or accrued through the
end of the period, and (D) the Trading Advisor's carryforward loss (as
hereinafter defined) from the immediately preceding period. If the sum of
subparagraphs (A) through (D) for any period is negative, such amount shall be
the Trading Advisor's carryforward loss for the next period. For purposes of
calculating incentive fees, interest income earned on the Allocated Assets will
be disregarded. In the event of a withdrawal from the Allocated Assets at a
time when the Trading Advisor has a carryforward loss in effect, the amount
thereof shall be reduced by an amount determined by multiplying the
carryforward loss by a fraction, the numerator of which shall be the amount of
the withdrawal and the denominator of which shall be the Net Asset Value of the
Allocated Assets immediately prior to giving effect to the withdrawal. In the
event that an addition is made to the Allocated Assets subsequent to a
reduction in the Trading Advisor's carryforward loss by reason of a withdrawal,
the Trading Advisor's carryforward loss shall be increased by or created in an
amount (up to the aggregate amount of prior carryforward loss reductions)
determined by multiplying the aggregate amount of prior carryforward loss
reductions by a fraction, the numerator of which shall be the amount of the
addition and the denominator of which shall be the sum of the previous
withdrawals which resulted in carryforward loss reductions. The incentive fee
charged to the Partnership with respect to the Allocated Assets will be
dependent upon the performance of the Trading Advisor and will not be affected
by the performance of any other trading advisor appointed by the Partnership or
the Partnership as a whole. The initial incentive period shall commence on the
date the Trading Advisor commences trading activity for the Partnership and
shall end at the immediate following quarter-end (even though such period may
not be a full quarter). Subsequent incentive periods shall commence on the
first day of the next succeeding calendar quarter and end on the last day of
such calendar quarter. In the event this Agreement is terminated as of any
date which is not the end of an incentive period, an incentive fee will be paid
by the Partnership, if earned, with respect to the Allocated Assets as though
such termination date were the last day of the incentive period.
(b) Payment of Fees. The management fees and incentive
fees due to the Trading Advisor shall be paid by the Partnership within thirty
(30) days of the end of the calendar period to which they relate. The
Partnership expressly agrees that any such fees due the Trading Advisor shall
survive the termination or other expiration of this Agreement.
5. TRADING ADVISOR INDEPENDENT. The Trading Advisor
shall for all purposes herein be deemed to be an independent contractor to the
Partnership and the General Partner and shall, except as otherwise expressly
provided herein, have no authority to act for or represent the Partnership or
the General Partner in any way or otherwise be deemed a sponsor of the
Partnership or an agent, joint venturer or partner of the Partnership, the
General Partner or of any other trading advisor retained by the Partnership.
6. BROKER.
(a) The Trading Advisor agrees to enter all Contract
orders through Geldermann, Inc. ("Geldermann"), or such other brokers and
forward contract dealers as may be designated, from time to time, in writing by
the Partnership. The Partnership must consent in writing to the use of other
floor brokers who will give up such trades to Geldermann in accordance with
exchange rules and the give-up procedures established by the Partnership from
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time to time. The Trading Advisor shall be responsible for any errors
committed by any executing broker who gives-up to Geldermann on behalf of the
Partnership. In placing trades for the Partnership's account, the Trading
Advisor agrees that it shall use its standard procedures for allocating orders
among the Trading Advisor's various accounts and not knowingly favor any other
such account over the Partnership's account.
(b) All forward contract and other trades for the
Partnership will be executed through the forward trading and other facilities
of such affiliates of Geldermann or other entities as the Partnership may
designate from time to time.
7. STANDARD OF LIABILITY; INDEMNIFICATIONS.
(a) Standard of Liability. Neither the Trading Advisor
nor any of its Principals and Affiliates shall be liable to the Partnership,
the General Partner or any of their respective successors or assigns under this
Agreement except by reason of (i) acts or omissions to act which constitute bad
faith, negligence or misconduct or (ii) a breach of any of the representations,
warranties, covenants or agreements of the Trading Advisor set forth in this
Agreement.
(b) Indemnity. (i) The Partnership agrees to indemnify
and hold harmless the Trading Advisor and each of its Principals and Affiliates
from and against any and all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, attorneys' and accountants' fees and
disbursements), judgments and amounts paid in settlement (collectively,
"Losses") to which an indemnified person may become subject arising out of this
Agreement, the transactions contemplated hereby or the fact the Trading Advisor
is or was a trading advisor to the Partnership, unless any such Losses arise
out of, relate to, or are based upon the Trading Advisor's failure to meet the
standard of liability applicable to it under SECTION 7(A).
(ii) The Trading Advisor agrees to indemnify and hold
harmless the Partnership, the General Partner and each of their respective
Principals and Affiliates from and against any and all Losses to which they may
become subject, if any such Losses arise out of, relate to, or are based upon
the Trading Advisor's failure to meet the standard of liability applicable to
it under SECTION 7(A).
(c) Promptly after receipt by a party to be indemnified
under SECTION 7(B), above, of any notice of the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnified party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. The
requirement that an indemnifying party be given written notice of the
commencement of any action shall be deemed to be satisfied if such indemnifying
party shall have actual knowledge thereof or shall have been given written
notice of the commencement of any action or proceeding within a reasonable time
after the commencement thereof. If any such action shall be brought against
any indemnified party and the indemnified party notifies the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to such indemnified party, and shall have
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<PAGE> 8
the right to negotiate and consent to a settlement thereof, provided that the
indemnified party shall have consented to the settlement. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent it,
if, in the indemnified party's reasonable judgment, it is advisable for such
party to be represented by separate counsel, in which event the fees and
expenses of such separate counsel shall be borne by the indemnified party. No
indemnifying party shall be liable for any settlement of any such action
effected without its consent, but if any such action or proceeding is settled
with the consent of any indemnifying party or if there be a final judgment for
the plaintiff in any such action or proceeding (of which an indemnifying party
shall have been notified), such indemnifying party shall indemnify and hold
harmless each indemnified party from and against any Losses incurred or
suffered by reason of such settlement or judgment.
(d) Any indemnification required by this SECTION 7,
unless ordered or expressly permitted by a court, shall be made by the
indemnifying party only upon a determination by independent legal counsel in a
written opinion that the conduct which is the subject of the claim, demand,
lawsuit, action or proceeding with respect to which indemnification is sought
meets the applicable standard set forth in this SECTION 7.
(e) The provisions of this SECTION 7 shall survive the
termination or other expiration of this Agreement.
8. THE TRADING ADVISOR'S REPRESENTATIONS AND WARRANTIES.
The Trading Advisor represents and warrants to the Partnership and the General
Partner as follows:
(a) The Trading Advisor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business as described in
this Agreement and the Disclosure Notice, and the Trading Advisor is qualified
to conduct its business and is in good standing in every jurisdiction in which
the nature or conduct of its business requires such qualification and failure
to so qualify would 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 by the Trading Advisor and is a valid and binding
agreement of the Trading Advisor enforceable in accordance with its terms.
(c) The execution and delivery of this Agreement and the
performance of the obligations and the consummation of the transactions
contemplated in this Agreement and in the Disclosure Notice will not conflict
with, violate, breach or constitute a default under, any term or provision of
the Trading Advisor's certificate of incorporation, by-laws, or other charter
documents, or any indenture, mortgage, deed of trust, loan agreement, or other
agreement or
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instrument to which the Trading Advisor or any of its Principals and Affiliates
is a party or by which any of them are bound, or to which any of the property
(including, but not limited to, its Trading Approach) or assets of the Trading
Advisor or its Principals and Affiliates are subject, or any order, rule, law,
statute, regulation, or other legal requirement applicable to the Trading
Advisor or any of its Principals or to the property or assets of the Trading
Advisor or its Principals and Affiliates of any court or any governmental or
administrative body or agency or panel or any regulatory or self-regulatory
organization or exchange having jurisdiction over the Trading Advisor or any of
its Principals and Affiliates.
(d) The Trading Advisor is registered as a commodity
trading advisor under the Act, its Principals are identified on the Trading
Advisor's most recent CFTC Form 7-R filed with the NFA pursuant to the Act, and
it is a member of the NFA in such capacity and such registration and membership
has not expired or been revoked, lapsed, suspended, terminated, or not renewed
or limited or qualified in any respect.
(e) The Trading Advisor is not bankrupt or insolvent.
(f) The Disclosure Document is complete and accurate in all
material respects, does not contain any misstatement of any material fact, does
not omit to state any material fact necessary to be stated therein in order to
make the statements made therein, in light of the circumstances under which
they are made, not misleading, and complies in all material respects with the
applicable requirements of the Act and the rules promulgated thereunder and may
be relied upon by the Partnership and the General Partner in preparing the
Disclosure Notice and allocating assets of the Partnership to the Trading
Advisor and there has not been, since the date of the Disclosure Document's
issuance, any material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or any of its Principals and
Affiliates, whether or not arising in the ordinary course of business, or
relating to the historical performance and operations of the Trading Advisor.
(g) The Trading Advisor and each Principal has complied
and will continue to comply with all orders, rules, laws, statutes, regulations
or other legal requirements applicable to the Trading Advisor or any of its
Principals and Affiliates or to their respective businesses, properties, or
assets, including the Act and the rules promulgated by the CFTC and the NFA,
the violation of which would materially and adversely affect its or their
ability to comply with, and perform its or their obligations under this
Agreement, and there are no actions, suits, proceedings, or notices of
investigations or investigations pending or threatened against the Trading
Advisor, or any of its Principals or Affiliates, by the NFA, the CFTC or any
governmental, regulatory or self-regulatory agency regarding noncompliance by
the Trading Advisor or any of its Principals or Affiliates with any law,
statute, rule or regulation, or at law or in equity or before or by any court,
any federal, state, municipal or other governmental department commission,
board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its or their ability to comply with or to
perform its or their obligations under this Agreement or that would be required
to be disclosed in the Disclosure Notice, which is not so disclosed, would nd
reasonable order entry system and trade allocation system, which shall be no
less favorable to the Partnership than to any other account managed by the
Trading Advisor.
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<PAGE> 10
(k) The Trading Advisor shall promptly notify the other
parties hereto of the commencement of any suit, action or proceeding involving
it or its Principals and Affiliates, whether or not any such suit, action or
proceeding also involves any of the other parties hereto.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the Trading Advisor shall promptly notify the
Partnership and the General Partner of the occurrence of such event.
9. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
The Partnership represents and warrants to the Trading Advisor as follows:
(a) The Partnership is duly organized, validly existing
and in good standing as a limited partnership under the laws of Illinois. The
Partnership has full power and authority to perform its obligations under this
Agreement and to conduct its business and to act as described in the Disclosure
Notice.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Partnership and is a valid and binding
agreement of it enforceable in accordance with its terms.
(c) The Partnership has complied and will continue to
comply with all orders, rules, laws, statutes, regulations or other legal
requirements applicable to it, to its business, properties, and assets,
including the Act and the rules promulgated by the CFTC and the NFA, the
violation of which would materially and adversely affect its ability to comply
with, and perform its obligations under this Agreement, and there are no
actions, suits, proceedings, or notices of investigations or investigations
pending or threatened against it, by the NFA, the CFTC or any governmental,
regulatory or self-regulatory agency regarding noncompliance by it with any
law, statute, rule or regulation, or at law or in equity or before or by any
court, any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its ability to comply with or to perform its
obligations under this Agreement or that would be required to be disclosed in
the Disclosure Notice, which is not so disclosed, or would result in a
material adverse change in the condition, financial or otherwise, business or
prospects of the Partnership.
(d) The Partnership has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
(e) Except with respect to information contained in the
Disclosure Notice relating to the Trading Advisor or any other advisor, the
Disclosure Notice does not contain any untrue statement of material fact or
omit to state therein a material fact required to be stated
10
<PAGE> 11
therein or necessary to be stated therein in order to prevent the statements
made therein, in light of the circumstances under which they are made, from
being misleading.
(f) The General Partner is registered as a commodity pool
operator under the Act and is a member of the NFA in such capacity and such
registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(g) The General Partner has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the General Partner will promptly notify the
Trading Advisor thereof.
10. TERM AND TERMINATION.
(a) Unless terminated earlier as provided below, the term
of this Agreement shall be until the end of the twelfth full calendar month
after the Trading Advisor commences trading activity and is automatically
renewable thereafter for successive one-year periods unless (i) the Partnership
terminates this Agreement during the initial one-year term thereof by giving
thirty days' prior written notice to the Trading Advisor, or (ii) either the
Trading Advisor or the Partnership terminates the Agreement at the end of the
initial one-year term or at any time thereafter by giving thirty days' prior
written notice to such other party.
(b) Notwithstanding paragraph (k) of this Section 10,
this Agreement may be terminated by the Partnership immediately upon written
notice to the Trading Advisor if (i) the Trading Advisor, if other than a
natural person, merges, consolidates with or sells a substantial portion of its
assets to any individual or entity, or there is a material adverse change
relating to the Trading Advisor or a material adverse change in control,
organizational structure, financial condition, regulatory compliance or
personnel of the Trading Advisor, (ii) any of the Trading Advisor's
registrations under the Act or otherwise are suspended, terminated, lapsed or
not renewed, (iii) the Trading Advisor's membership in the NFA or other
self-regulatory organization is suspended, terminated, lapsed or not renewed,
(iv) the Trading Advisor otherwise becomes unable to serve as a trading advisor
to the full extent contemplated by this Agreement, (v) the Trading Advisor
breaches any of its representations, warranties, covenants or agreements
contained in this Agreement, or (vi) the General Partner determines doing so is
in the best interests of the Partnership.
(c) Notwithstanding paragraph (k) of this Section 10,
this Agreement may be terminated by the Trading Advisor immediately upon
written notice to the Partnership if (i) the General Partner, if other than a
natural person, merges, consolidates with or sells a substantial portion of its
assets to any individual or entity, or there is a material adverse change
relating to
11
<PAGE> 12
the General Partner or a material adverse change in control, organizational
structure, financial condition, regulatory compliance or personnel of the
General Partner, (ii) any of the General Partner's registrations under the Act
or otherwise are suspended, terminated, lapsed or not renewed, (iii) the
General Partner's membership in the NFA or other self-regulatory organization
is suspended, terminated, lapsed or not renewed, (iv) the General Partner
otherwise becomes unable to serve as a limited partnership to the full extent
contemplated by this Agreement, (v) the General Partner breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, or (vi) the Trading Advisor determines doing so is in its best
interests.
11. NOTICES. Except as otherwise provided herein, all
notices, demands or requests required to be made or delivered under this
Agreement shall be effective only if in writing and delivered personally or by
facsimile or mail, postage prepaid (airmail if the addressee is in another
country), to the respective addresses below or to such other addresses as may
be designated by the party entitled to receive the same by notice similarly
given and shall be deemed given by the party required to provide notice when
received by the party to whom notice is required to be given.
If to the Partnership or the General Partner to:
Heinold Asset Management, Inc.
One Financial Plaza
440 South LaSalle Street
Chicago, Illinois 60605
Attn: Ned Bennett, President
Fax No.: 312-902-6697
If to the Trading Advisor to:
Telesis Management, Inc.
1236 Coast Village Circle
Suite F
Montecito, California 93108
Attn: Eric Sanborn
Fax No.: 805-565-1905
12. ASSIGNMENT. No party hereto may transfer, sell,
encumber, appoint agents or assign any of its rights or obligations hereunder
in whole or in part without the express written consent of each of the other
parties hereto.
13. AMENDMENT; MODIFICATION. This Agreement may not be
amended or modified, nor any of the provisions hereof waived, except by the
written consent of all of the parties hereto.
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<PAGE> 13
14. COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject hereof
and supersedes all prior agreements written or oral, and no other agreement,
verbal or otherwise, shall be binding as between the parties hereto unless in
writing and signed by the party against whom enforcement is sought.
15. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns. No other person other than the persons indemnified under SECTION 7
hereof for matters relating to that Section shall have any right or obligation
under this Agreement.
16. HEADINGS. Headings to sections herein are for the
convenience of the parties only, and are not intended to be a part of or to
affect the meanings or interpretation of this Agreement.
17. GOVERNING LAW: CONSENT TO JURISDICTION. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Illinois without giving effect to principles of conflicts of laws.
18. ARBITRATION. The parties agree that all
controversies which may arise in connection with any transaction contemplated
by this Agreement or the construction, performance or breach of this Agreement
shall be determined by arbitration, to be held in the City of Chicago, State of
Illinois unless otherwise agreed to by the parties hereto, and in accordance
with the rules then obtaining of the NFA, or if no such rules are then in
effect or if jurisdiction is declined, then the rules then obtaining of the
American Arbitration Association; provided, however, that (a) the arbitrator(s)
shall be knowledgeable in industry standards and practices and the matters
giving rise to the dispute, (b) the arbitrator(s) shall not have the power and
authority to award punitive damages, (c) the authority of the arbitrator(s)
shall be limited to construing and enforcing the terms and conditions of this
Agreement as expressly set forth herein, and (d) the arbitrator(s) shall state
the reasons for their award and their legal and factual conclusions underlying
the award in a written opinion. The award of the arbitrator(s), or a majority
of them, shall be final, and judgment upon the award may be confirmed and
entered in any court, state or federal, having jurisdiction.
19. Consent to Jurisdiction. Each party hereto expressly
and irrevocably agrees (a) that it waives any objection, and specifically
consents, to venue in the United States federal or state courts located in the
City of Chicago, State of Illinois, United States of America, so that any
action at law or in equity may be brought and maintained in any such court, and
(b) that service of process in any such action may be effected against such
party by certified or registered mail or in any other manner permitted by
applicable United States Federal Rules of Civil Procedure or Rules of the
Courts of the State of Illinois. In addition, each party hereto expressly and
irrevocably waives, in respect of any action brought in any United States
federal or state court located in the City of Chicago, State of Illinois or any
resulting judgment, any objection, and hereby specifically consents, to the
jurisdiction of any such court, and agrees not to seek to change the situs of
such action or to assert that any other court in any other jurisdiction is a
more suitable forum for the hearing and adjudication of any claim or dispute
raised in such action.
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<PAGE> 14
20. SURVIVAL. The indemnity provisions 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 the
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
21. WAIVER OF BREACH. The waiver by a party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party. The failure of a party to insist
upon strict adherence to any provision of this Agreement shall not constitute a
waiver or thereafter deprive such party of the right to insist upon a strict
adherence.
22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
THE FUTURES DIMENSION FUND L.P.
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Ned W. Bennett
------------------
Ned W. Bennett
President
TELESIS MANAGEMENT, INC.
By: /s/ Eric Sanborn
----------------
Eric Sanborn
President
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<PAGE> 15
EXHIBIT 1
March 8, 1995
Telesis Management, Inc.
1236 Coast Village Circle
Suite F
Montecito, California 93108
Re: Commodity Trading Authorization
Gentlemen:
The Futures Dimension Fund L.P., an Illinois limited
partnership (the "Partnership"), does hereby make, constitute, and appoint you
as its Attorney-in-Fact to purchase and sell futures contracts, commodities and
commodity options and forward contracts, and any other items which are
currently, or may later become, the subject of futures, forward or options
trading, and other related investments on domestic and international exchanges,
through Geldermann, Inc., or such other brokers and forward contract dealers as
may be designated, from time to time, in writing by the Partnership, as
brokers, in accordance with the Management Contract between us dated March 8,
1995.
Very truly yours,
THE FUTURES DIMENSION FUND L.P.
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Ned W. Bennett
------------------
Ned W. Bennett
President
<PAGE> 1
EXHIBIT 10(p)
MANAGEMENT CONTRACT
THIS MANAGEMENT CONTRACT ("Agreement"), is made and entered into
effective as of the 8th day of March 1995, by and between The Futures Dimension
Fund, an Illinois limited partnership (the "Partnership"), and Michael Tym, Jr.
(the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the purpose and business of the Partnership is to
seek capital appreciation by trading speculatively in futures contracts,
commodities and commodity options and forward contracts, and any other items
which are currently, or may later become, the subject of futures, forward or
options trading, and other related investments (sometimes hereinafter referred
to as "Contracts") on United States and non-United States exchanges and
markets; and
WHEREAS, the Partnership, through Heinold Asset Management,
Inc., its general partner (the "General Partner"), pursuant to the Limited
Partnership Agreement of the Partnership, is authorized to utilize the services
of professional trading advisors in connection with the trading activities of
the Partnership; and
WHEREAS, the Partnership has heretofore offered units of
limited partnership interest in the Partnership for sale to investors; and
WHEREAS, the Trading Advisor is engaged in the business of
making trading decisions on behalf of itself and others regarding the purchase
and sale of Contracts; and
WHEREAS, the Partnership and the Trading Advisor each desire
the Trading Advisor to make trading decisions for the Partnership with respect
to the assets of the Partnership allocated to be managed by the Trading Advisor
(the "Allocated Assets") on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
agreements set forth herein, the parties hereto do agree as follows:
1. DUTIES OF THE TRADING ADVISOR.
(a) The Partnership hereby appoints the Trading Advisor,
and the Trading Advisor hereby accepts appointment, as a trading advisor of the
Partnership in connection with the trading activities of the Partnership.
(b) Upon the Trading Advisor's commencing of trading
operations for the Partnership and for the period and on the terms and
conditions set forth in this Agreement, the Trading Advisor shall have sole
authority and responsibility, as the Partnership's agent and attorney-in-fact,
for trading the Allocated Assets in Contracts and in accordance with the
Trading
<PAGE> 2
Advisor's Global A Trading Program ("Trading Approach"; which term, for
purposes of this Agreement, shall include trading approaches, systems,
instructions, methods, models, strategies, methodologies and formulas) as
described in the disclosure notice dated April 1995 relating to the appointment
of the Trading Advisor as a commodity trading advisor of the Partnership (the
"Disclosure Notice"), subject to the trading policies of the Partnership
furnished to the Trading Advisor in writing ("Trading Policies"). The parties
hereto acknowledge that the Trading Advisor will trade Contracts for the
Partnership independently of any other trading advisor retained by the
Partnership. For purposes of this Agreement, the term "Contracts" shall not
include securities and options thereon.
(c) The Trading Advisor acknowledges and agrees that the
aggregate amount of Allocated Assets which the Trading Advisor shall treat as
equity and manage on behalf of the Partnership pursuant to this Agreement may
include "notional" funds. The Trading Advisor agrees to describe to the
General Partner its practices with respect to the leverage used by the Trading
Advisor in managing the Partnership's account relative to other accounts
managed by the Trading Advisor using the Trading Approach to enable the General
Partner to determine whether the "trading level" at which the Trading Advisor
is currently managing the Partnership's account is the level currently
designated by the General Partner.
(d) The General Partner and the Partnership acknowledge
receipt of the Trading Advisor's Disclosure Document dated February 28, 1995
(the "Disclosure Document"). The Trading Advisor shall promptly furnish the
Partnership with a copy of each amended, supplemented or updated Disclosure
Document of the Trading Advisor filed with the Commodity Futures Trading
Commission (the "CFTC") and the National Futures Association ("NFA") upon
acceptance thereof by the CFTC. Prior to the commencement of trading on behalf
of the Partnership, the Partnership shall deliver to the Trading Advisor, and
renew when necessary, a Commodity Trading Authorization, in the form attached
hereto as Exhibit 1, appointing the Trading Advisor as the Partnership's agent
and attorney-in-fact for such purpose. All trades for the account of the
Partnership shall be made through such banks, brokers and dealers as the
General Partner shall direct, and the Trading Advisor shall have no authority
or responsibility for selecting any such banks, brokers or dealers in
connection with the execution of transactions for the Partnership or for the
negotiation of commission rates charged therefor; provided, however, that the
General Partner shall notify the Trading Advisor of any applicable changes in
the commission rates charged by the Partnership's banks, brokers and dealers
with respect to transactions entered into with respect to the Allocated Assets.
(e) In the event the Trading Advisor and its principals
[as that term is defined in Regulation Section 4.10(e) promulgated by the CFTC
under the Commodity Exchange Act, as amended (the "Act")], shareholders,
partners, employees and affiliates or any person who controls the foregoing
(collectively, "Principals and Affiliates"), wish to use trading programs,
systems or strategies other than or in addition to the Trading Approach in
connection with its trading for the Partnership, either in whole or in part, it
may not do so unless the Trading Advisor gives the General Partner 15 days'
prior written notice of its intention to utilize such different trading
programs, systems or strategies and the General Partner consents thereto in
writing. Non-material changes in the Trading Approach may be instituted
without prior written approval.
2
<PAGE> 3
(f) The Trading Advisor agrees to make all material
disclosures to the Partnership regarding itself and its Principals and
Affiliates, their trading performance and general trading methods, their
accounts (but not the identities of customers) and otherwise as are required in
the reasonable judgment of the General Partner or the Partnership to be made in
any filings required by any governmental body or by any applicable law,
regulation, rule or order. Nothing contained in this Agreement shall be
construed or deemed to require the Trading Advisor to disclose the confidential
or proprietary details of its trading strategies.
(g) The Trading Advisor understands and agrees that the
General Partner intends to designate other trading advisors and to apportion
from time to time to such other trading advisors the management of such portion
of the Partnership's assets as the General Partner shall determine in its
absolute discretion. The designation of other trading advisors and
apportionment and reapportionment of a portion of the Partnership's assets to
such trading advisors shall neither terminate this Agreement nor modify in any
regard the respective rights and obligations of the parties hereto.
(h) The General Partner shall have the right to make
additions to, or withdrawals from, the Allocated Assets (including any
"notional" funds comprising part of the Allocated Assets) at any time. The
General Partner agrees that the Trading Advisor may refuse any additional
allocation of funds for any reason. The General Partner, in its sole
discretion, may at any time remove all assets from the management of the
Trading Advisor and may require the Trading Advisor to liquidate existing
positions.
(i) Upon receipt of instructions from the General
Partner, the Trading Advisor shall immediately cease its trading activities
with respect to the Allocated Assets, close out all existing positions in an
orderly manner and not initiate any new positions unless otherwise instructed
by the General Partner or the Partnership.
(j) The Trading Advisor shall review on a daily basis the
positions held by the Allocated Assets and shall immediately notify the General
Partner of any errors committed by the Trading Advisor or of any trade not
executed in accordance with the Trading Advisor's instructions.
2. OTHER ACCOUNTS AND ACTIVITIES OF THE TRADING ADVISOR.
(a) The services provided by the Trading Advisor
hereunder are not to be deemed exclusive. Subject to the terms of this
Agreement, the Trading Advisor and its Principals and Affiliates shall be free
to trade for their own accounts and to advise other persons and manage other
accounts during the term of this Agreement and to use the same or different
degrees of leverage, information, computer programs and trading strategies or
formulas which they obtain, produce or utilize in the performance of services
for the Partnership. However, the Trading Advisor represents, warrants and
agrees that the rendering of such consulting, advisory and management services
to others will not require any material change in the Trading Approach and will
not materially adversely affect the capacity of the Trading Advisor to continue
to render services to the Partnership of the quality and nature contemplated by
this Agreement.
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<PAGE> 4
(b) If, at any time during the term of this Agreement,
the Trading Advisor is required to aggregate the Partnership's Contract
positions with the positions of any other person or entity for purposes of
applying CFTC- or exchange-imposed position limits, the Trading Advisor agrees
that it will promptly notify the General Partner if the Partnership's positions
are included in an aggregate amount which equals or exceeds ninety percent
(90%) of the applicable limit. The Trading Advisor agrees that, if its trading
recommendations are altered because of the application of any position limit,
it will not modify the trading instructions with respect to the Partnership's
account in such manner as to affect the Partnership substantially
disproportionately as compared with the Trading Advisor's other accounts. The
Trading Advisor presently believes and represents that existing speculative
position limits will not materially adversely affect its ability to manage the
Partnership's account given the potential size of the Partnership's account and
the Trading Advisor's and its Principals' and Affiliates' current accounts and
all proposed accounts for which they have contracted to act as trading advisor.
The Trading Advisor further represents, warrants and agrees that under no
circumstances will it knowingly or deliberately use trading strategies or
systems for the Partnership that are inferior to trading strategies or systems
employed for any other client or account and that it will not knowingly or
deliberately favor any client or account managed by it over any other client or
account, it being acknowledged, however, that different trading strategies,
methods or degrees of leverage may be utilized for differing sizes of accounts,
accounts with different trading policies, accounts experiencing differing
inflows or outflows of equity, accounts which commence trading at different
times, accounts which have different portfolios or different fiscal years and
accounts with other differences, and that such differences may cause divergent
trading results.
(c) The Partnership and the General Partner acknowledge
and agree that the Trading Advisor and/or its Principals and Affiliates
presently act and that they may continue to act as advisors for other accounts
managed by them and may continue to receive compensation with respect to
services for such accounts in amounts which may be more or less than the
amounts received from the Partnership. The Trading Advisor agrees that in the
management of such other accounts by it and its Principals and Affiliates, it
will act in good faith to seek to achieve an equitable treatment of all
accounts under management including the Partnership's account with respect to,
among other things, priorities of order entry and position limits.
(d) The Trading Advisor agrees that it shall make such
information available to the General Partner respecting the performance of the
Partnership's account as compared to the performance of all other accounts
managed by the Trading Advisor and its Principals and Affiliates as shall be
reasonably requested by the General Partner or the Partnership. The Trading
Advisor shall not be required to disclose the identity of its clients.
3. ALLOCATION OF ASSETS TO THE TRADING ADVISOR. The
Trading Advisor's Allocated Assets initially shall be a total of approximately
$1,454,952 of which $0 is notional funding.
4
<PAGE> 5
4. FEES.
(a) Commencing with the commencement of trading by the
Trading Advisor for the Partnership, the Partnership agrees to pay to the
Trading Advisor as follows:
(i) Management Fee. A monthly management fee equal to
0.166% of the Net Asset Value of the Allocated Assets as of the close of
business on the last business day of each calendar month (an approximate 2%
annual rate). The definition of the term "Net Asset Value" is set forth in
Section 4 of the Partnership's Limited Partnership Agreement which is attached
as Exhibit 2, hereto.
(ii) For purposes of calculating the management fee, Net
Asset Value of the Allocated Assets shall be determined before reduction for
the management fees or incentive fees, if any, accrued or payable with respect
to the Allocated Assets as of such month-end, and before giving effect to any
distributions and redemptions paid or payable at such month-end. In the event
that (A) the Trading Advisor commences trading as of any day other than the
first day of a calendar month, (B) this Agreement is terminated as of any date
other than the last day of a calendar month, or (C) the Partnership reallocates
assets to or from the Trading Advisor as of any day other than the first or
last day of any calendar month, the amount of the management fee shall be
prorated on the basis of the number of business days during such month that the
Allocated Assets (as adjusted in the case of reallocation of assets) were
traded by the Trading Advisor as compared to the total number of business days
in such calendar month. To the extent that the Partnership instructs the
Trading Advisor to trade the Allocated Assets at a "nominal account size" in
excess of the actual assets comprising Allocated Assets, the Trading Advisor's
management fee shall be calculated based upon the "nominal account size" of the
Allocated Assets.
(iii) Incentive Fee. A quarterly incentive fee equal to
20% of any New Trading Profits (as defined below) achieved during each calendar
quarter. New Trading Profits during a quarter shall mean the sum of (A) the
net of any profits and losses realized on trades closed out during the period,
plus or minus (B) the change in the net of any unrealized profits and losses on
trades which remained open as of the end of the period (net of accrued
brokerage commissions and other allocated expenses) from the net of any
unrealized profits and losses on trades initiated by the Trading Advisor which
remained open as of the end of the immediately preceding period (net of accrued
brokerage commissions and other allocated expenses), (C) any Trading Advisor
management fees paid or accrued through the end of the period, and (D) the
Trading Advisor's carryforward loss (as hereinafter defined) from the
immediately preceding period (including any carryforward loss which the Trading
Advisor has incurred prior to the date of this Agreement in trading on behalf
of the Partnership). If the sum of subparagraphs (A) through (D) for any
period is negative, such amount shall be the Trading Advisor's carryforward
loss for the next period. For purposes of calculating incentive fees, interest
income earned on the Allocated Assets will be disregarded. In the event of a
withdrawal from the Allocated Assets at a time when the Trading Advisor has a
carryforward loss in effect, the amount thereof shall be reduced by an amount
determined by multiplying the carryforward loss by a fraction, the numerator of
which shall be the amount of the withdrawal and the denominator of which shall
be the Net Asset Value of the Allocated Assets immediately prior to giving
effect to the withdrawal. In the event that an addition is made to the
Allocated Assets subsequent to a
5
<PAGE> 6
reduction in the Trading Advisor's carryforward loss by reason of a withdrawal,
the Trading Advisor's carryforward loss shall be increased by or created in an
amount (up to the aggregate amount of prior carryforward loss reductions)
determined by multiplying the aggregate amount of prior carryforward loss
reductions by a fraction, the numerator of which shall be the amount of the
addition and the denominator of which shall be the sum of the previous
withdrawals which resulted in carryforward loss reductions. The incentive fee
charged to the Partnership with respect to the Allocated Assets will be
dependent upon the performance of the Trading Advisor and will not be affected
by the performance of any other trading advisor appointed by the Partnership or
the Partnership as a whole. The initial incentive period shall commence on the
date the Trading Advisor commences trading activity for the Partnership and
shall end at the immediate following quarter-end (even though such period may
not be a full quarter). Subsequent incentive periods shall commence on the
first day of the next succeeding calendar quarter-end on the last day of such
calendar quarter. In the event this Agreement is terminated as of any date
which is not the end of an incentive period, an incentive fee will be paid by
the Partnership, if earned, with respect to the Allocated Assets as though such
termination date were the last day of the incentive period.
(b) Payment of Fees. The management fees and incentive
fees due to the Trading Advisor shall be paid by the Partnership within thirty
(30) days of the end of the calendar period to which they relate. The
Partnership expressly agrees that any such fees due the Trading Advisor shall
survive the termination or other expiration of this Agreement.
5. TRADING ADVISOR INDEPENDENT. The Trading Advisor
shall for all purposes herein be deemed to be an independent contractor to the
Partnership and the General Partner and shall, except as otherwise expressly
provided herein, have no authority to act for or represent the Partnership or
the General Partner in any way or otherwise be deemed a sponsor of the
Partnership or an agent, joint venturer or partner of the Partnership, the
General Partner or of any other trading advisor retained by the Partnership.
6. BROKER.
(a) The Trading Advisor agrees to enter all Contract
orders through Geldermann, Inc. ("Geldermann"), or such other brokers and
forward contract dealers as may be designated, from time to time, in writing by
the Partnership. The Partnership must consent in writing to the use of other
floor brokers who will give up such trades to Geldermann in accordance with
exchange rules and the give-up procedures established by the Partnership from
time to time. The Trading Advisor shall be responsible for any errors
committed by any executing broker who gives-up to Geldermann on behalf of the
Partnership. In placing trades for the Partnership's account, the Trading
Advisor agrees that it shall use its standard procedures for allocating orders
among the Trading Advisor's various accounts and not knowingly favor any other
such account over the Partnership's account.
(b) All forward contract and other trades for the
Partnership will be executed through the forward trading and other facilities
of such affiliates of Geldermann or other entities as the Partnership may
designate from time to time.
7. STANDARD OF LIABILITY; INDEMNIFICATIONS.
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(a) Standard of Liability. Neither the Trading Advisor
nor any of its Principals and Affiliates shall be liable to the Partnership,
the General Partner or any of their respective successors or assigns under this
Agreement except by reason of (i) acts or omissions to act which constitute bad
faith, negligence or misconduct or (ii) a breach of any of the representations,
warranties, covenants or agreements of the Trading Advisor set forth in this
Agreement.
(b) Indemnity. (i) The Partnership agrees to indemnify
and hold harmless the Trading Advisor and each of its Principals and Affiliates
from and against any and all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, attorneys' and accountants' fees and
disbursements), judgments and amounts paid in settlement (collectively,
"Losses") to which an indemnified person may become subject arising out of this
Agreement, the transactions contemplated hereby or the fact the Trading Advisor
is or was a trading advisor to the Partnership, unless any such Losses arise
out of, relate to, or are based upon the Trading Advisor's failure to meet the
standard of liability applicable to it under SECTION 7(a).
(ii) The Trading Advisor agrees to indemnify and hold
harmless the Partnership, the General Partner and each of their respective
Principals and Affiliates from and against any and all Losses to which they may
become subject, if any such Losses arise out of, relate to, or are based upon
the Trading Advisor's failure to meet the standard of liability applicable to
it under SECTION 7(a).
(c) Promptly after receipt by a party to be indemnified
under SECTION 7(b), above, of any notice of the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnified party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. The
requirement that an indemnifying party be given written notice of the
commencement of any action shall be deemed to be satisfied if such indemnifying
party shall have actual knowledge thereof or shall have been given written
notice of the commencement of any action or proceeding within a reasonable time
after the commencement thereof. If any such action shall be brought against
any indemnified party and the indemnified party notifies the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to such indemnified party, and shall have the
right to negotiate and consent to a settlement thereof, provided that the
indemnified party shall have consented to the settlement. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent it,
if, in the indemnified party's reasonable judgment, it is advisable for such
party to be represented by separate counsel, in which event the fees and
expenses of such separate counsel shall be borne by the indemnified party. No
indemnifying party shall be liable for any settlement of any such action
effected without its consent, but if any such action or proceeding is settled
with the consent of any indemnifying party or if there be a final judgment for
the plaintiff in any such action or proceeding (of which an indemnifying party
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<PAGE> 8
shall have been notified), such indemnifying party shall indemnify and hold
harmless each indemnified party from and against any Losses incurred or
suffered by reason of such settlement or judgment.
(d) Any indemnification required by this SECTION 7,
unless ordered or expressly permitted by a court, shall be made by the
indemnifying party only upon a determination by independent legal counsel in a
written opinion that the conduct which is the subject of the claim, demand,
lawsuit, action or proceeding with respect to which indemnification is sought
meets the applicable standard set forth in this SECTION 7.
(e) The provisions of this SECTION 7 shall survive the
termination or other expiration of this Agreement.
8. THE TRADING ADVISOR'S REPRESENTATIONS AND WARRANTIES.
The Trading Advisor represents and warrants to the Partnership and the General
Partner as follows:
(a) The Trading Advisor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business as described in
this Agreement and the Disclosure Notice, and the Trading Advisor is qualified
to conduct its business and is in good standing in every jurisdiction in which
the nature or conduct of its business requires such qualification and failure
to so qualify would 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 by the Trading Advisor and is a valid and binding
agreement of the Trading Advisor enforceable in accordance with its terms.
(c) The execution and delivery of this Agreement and the
performance of the obligations and the consummation of the transactions
contemplated in this Agreement and in the Disclosure Notice will not conflict
with, violate, breach or constitute a default under, any term or provision of
the Trading Advisor's certificate of incorporation, by-laws, or other charter
documents, or any indenture, mortgage, deed of trust, loan agreement, or other
agreement or instrument to which the Trading Advisor or any of its Principals
and Affiliates is a party or by which any of them are bound, or to which any of
the property (including, but not limited to, its Trading Approach) or assets of
the Trading Advisor or its Principals and Affiliates are subject, or any order,
rule, law, statute, regulation, or other legal requirement applicable to the
Trading Advisor or any of its Principals or to the property or assets of the
Trading Advisor or its Principals and Affiliates of any court or any
governmental or administrative body or agency or panel or any regulatory or
self-regulatory organization or exchange having jurisdiction over the Trading
Advisor or any of its Principals and Affiliates.
(d) The Trading Advisor is registered as a commodity
trading advisor under the Act, its Principals are identified on the Trading
Advisor's most recent CFTC Form 7-R filed with the NFA pursuant to the Act, and
it is a member of the NFA in such capacity and such
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<PAGE> 9
registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(e) The Trading Advisor is not bankrupt or insolvent.
(f) The Disclosure Document is complete and accurate in
all material respects, does not contain any misstatement of any material fact,
does not omit to state any material fact necessary to be stated therein in
order to make the statements made therein, in light of the circumstances under
which they are made, not misleading, and complies in all material respects with
the applicable requirements of the Act and the rules promulgated thereunder and
may be relied upon by the Partnership and the General Partner in preparing the
Disclosure Notice and allocating assets of the Partnership to the Trading
Advisor and there has not been, since the date of the Disclosure Document's
issuance, any material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or any of its Principals and
Affiliates, whether or not arising in the ordinary course of business, or
relating to the historical performance and operations of the Trading Advisor.
(g) The Trading Advisor and each Principal has complied
and will continue to comply with all orders, rules, laws, statutes, regulations
or other legal requirements applicable to the Trading Advisor or any of its
Principals and Affiliates or to their respective businesses, properties, or
assets, including the Act and the rules promulgated by the CFTC and the NFA,
the violation of which would materially and adversely affect its or their
ability to comply with, and perform its or their obligations under this
Agreement, and there are no actions, suits, proceedings, or notices of
investigations or investigations pending or threatened against the Trading
Advisor, or any of its Principals or Affiliates, by the NFA, the CFTC or any
governmental, regulatory or self-regulatory agency regarding noncompliance by
the Trading Advisor or any of its Principals or Affiliates with any law,
statute, rule or regulation, or at law or in equity or before or by any court,
any federal, state, municipal or other governmental department commission,
board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its or their ability to comply with or to
perform its or their obligations under this Agreement or that would be required
to be disclosed in the Disclosure Notice, which is not so disclosed, would
result in a material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor.
(h) The Trading Advisor and each Principal has all
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all governmental,
regulatory and self-regulatory agencies required to conduct their respective
businesses and to act as described in the Disclosure Notice and to perform its
or their respective obligations under this Agreement.
(i) With respect to information contained in the
Disclosure Notice relating to the Trading Advisor, including, without
limitation, the tables and notes thereto, the Disclosure Notice does not
contain any untrue statement of material fact or omit to state therein a
material fact required to be stated therein or necessary to be stated therein
in order to prevent the statements made therein, in light of the circumstances
under which they are made, from being misleading.
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(j) In the placement of orders and the allocation of
executed trades for the Partnership and for the accounts of any other client,
the Trading Advisor shall utilize a fair and reasonable order entry system and
trade allocation system, which shall be no less favorable to the Partnership
than to any other account managed by the Trading Advisor.
(k) The Trading Advisor shall promptly notify the other
parties hereto of the commencement of any suit, action or proceeding involving
it or its Principals and Affiliates, whether or not any such suit, action or
proceeding also involves any of the other parties hereto.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the Trading Advisor shall promptly notify the
Partnership and the General Partner of the occurrence of such event.
9. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
The Partnership represents and warrants to the Trading Advisor as follows:
(a) The Partnership is duly organized, validly existing
and in good standing as a limited partnership under the laws of Illinois. The
Partnership has full power and authority to perform its obligations under this
Agreement and to conduct its business and to act as described in the Disclosure
Notice.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Partnership and is a valid and binding
agreement of it enforceable in accordance with its terms.
(c) The Partnership has complied and will continue to
comply with all orders, rules, laws, statutes, regulations or other legal
requirements applicable to it, to its business, properties, and assets,
including the Act and the rules promulgated by the CFTC and the NFA, the
violation of which would materially and adversely affect its ability to comply
with, and perform its obligations under this Agreement, and there are no
actions, suits, proceedings, or notices of investigations or investigations
pending or threatened against it, by the NFA, the CFTC or any governmental,
regulatory or self-regulatory agency regarding noncompliance by it with any
law, statute, rule or regulation, or at law or in equity or before or by any
court, any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its ability to comply with or to perform its
obligations under this Agreement or that would be required to be disclosed in
the Disclosure Notice, which is not so disclosed, or would result in a
material adverse change in the condition, financial or otherwise, business or
prospects of the Partnership.
(d) The Partnership has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
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(e) Except with respect to information contained in the
Disclosure Notice relating to the Trading Advisor or any other advisor, the
Disclosure Notice does not contain any untrue statement of material fact or
omit to state therein a material fact required to be stated therein or
necessary to be stated therein in order to prevent the statements made therein,
in light of the circumstances under which they are made, from being misleading.
(f) The General Partner is registered as a commodity pool
operator under the Act and is a member of the NFA in such capacity and such
registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(g) The General Partner has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the General Partner will promptly notify the
Trading Advisor thereof.
10. TERM AND TERMINATION.
(k) Unless terminated earlier as provided below, the term
of this Agreement shall be until the end of the twelfth full calendar month
after the Trading Advisor commences trading activity and is automatically
renewable thereafter for successive one-year periods unless (i) the Partnership
terminates this Agreement during the initial one-year term thereof by giving
thirty days' prior written notice to the Trading Advisor, or (ii) either the
Trading Advisor or the Partnership terminates the Agreement at the end of the
initial one-year term or at any time thereafter by giving thirty days' prior
written notice to such other party.
(l) Notwithstanding the foregoing, this Agreement may be
terminated by the Partnership immediately upon written notice to the Trading
Advisor if (i) the Trading Advisor, if other than a natural person, merges,
consolidates with or sells a substantial portion of its assets to any
individual or entity, or there is a material adverse change relating to the
Trading Advisor or a material adverse change in control, organizational
structure, financial condition, regulatory compliance or personnel of the
Trading Advisor, (ii) any of the Trading Advisor's registrations under the Act
or otherwise are suspended, terminated, lapsed or not renewed, (iii) the
Trading Advisor's membership in the NFA or other self-regulatory organization
is suspended, terminated, lapsed or not renewed, (iv) the Trading Advisor
otherwise becomes unable to serve as a trading advisor to the full extent
contemplated by this Agreement, (v) the Trading Advisor breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, or (vi) the General Partner determines doing so is in the best
interests of the Partnership.
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19. NOTICES. Except as otherwise provided herein, all
notices, demands or requests required to be made or delivered under this
Agreement shall be effective only if in writing and delivered personally or by
facsimile or mail, postage prepaid (airmail if the addressee is in another
country), to the respective addresses below or to such other addresses as may
be designated by the party entitled to receive the same by notice similarly
given and shall be deemed given by the party required to provide notice when
received by the party to whom notice is required to be given.
If to the Partnership or the General Partner to:
Heinold Asset Management, Inc.
One Financial Plaza
440 South LaSalle Street
Chicago, Illinois 60605
Attn: Ned Bennett, President
Fax No.: 312-902-6697
If to the Trading Advisor to:
Michael Tym, Jr.
141 West Jackson Boulevard
Suite 1570
Chicago, Illinois 60604
Attn: Michael Tym, Jr.
Fax No.: 312-663-5906
12. ASSIGNMENT. No party hereto may transfer, sell,
encumber, appoint agents or assign any of its rights or obligations hereunder
in whole or in part without the express written consent of each of the other
parties hereto.
13. AMENDMENT; MODIFICATION. This Agreement may not be
amended or modified, nor any of the provisions hereof waived, except by the
written consent of all of the parties hereto.
14. COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject hereof
and supersedes all prior agreements written or oral, and no other agreement,
verbal or otherwise, shall be binding as between the parties hereto unless in
writing and signed by the party against whom enforcement is sought.
15. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns. No other person other than the persons indemnified under SECTION 7
hereof for matters relating to that Section shall have any right or obligation
under this Agreement.
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16. HEADINGS. Headings to sections herein are for the
convenience of the parties only, and are not intended to be a part of or to
affect the meanings or interpretation of this Agreement.
17. GOVERNING LAW: CONSENT TO JURISDICTION. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Illinois without giving effect to principles of conflicts of laws.
18. ARBITRATION. The parties agree that all
controversies which may arise in connection with any transaction contemplated
by this Agreement or the construction, performance or breach of this Agreement
shall be determined by arbitration, to be held in the City of Chicago, State of
Illinois unless otherwise agreed to by the parties hereto, and in accordance
with the rules then obtaining of the NFA, or if no such rules are then in
effect or if jurisdiction is declined, then the rules then obtaining of the
American Arbitration Association; provided, however, that (a) the arbitrator(s)
shall be knowledgeable in industry standards and practices and the matters
giving rise to the dispute, (b) the arbitrator(s) shall not have the power and
authority to award punitive damages, (c) the authority of the arbitrator(s)
shall be limited to construing and enforcing the terms and conditions of this
Agreement as expressly set forth herein, and (d) the arbitrator(s) shall state
the reasons for their award and their legal and factual conclusions underlying
the award in a written opinion. The award of the arbitrator(s), or a majority
of them, shall be final, and judgment upon the award may be confirmed and
entered in any court, state or federal, having jurisdiction.
19. CONSENT TO JURISDICTION. Each party hereto expressly
and irrevocably agrees (a) that it waives any objection, and specifically
consents, to venue in the United States federal or state courts located in the
City of Chicago, State of Illinois, United States of America, so that any
action at law or in equity may be brought and maintained in any such court, and
(b) that service of process in any such action may be effected against such
party by certified or registered mail or in any other manner permitted by
applicable United States Federal Rules of Civil Procedure or Rules of the
Courts of the State of Illinois. In addition, each party hereto expressly and
irrevocably waives, in respect of any action brought in any United States
federal or state court located in the City of Chicago, State of Illinois or any
resulting judgment, any objection, and hereby specifically consents, to the
jurisdiction of any such court, and agrees not to seek to change the situs of
such action or to assert that any other court in any other action is a more
suitable forum for the hearing and adjudication of any claim or dispute raised
in such action.
20. SURVIVAL. The indemnity provisions 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 the
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
21. WAIVER OF BREACH. The waiver by a party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party. The failure of a party to insist
upon strict adherence to any provision of this Agreement
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shall not constitute a waiver or thereafter deprive such party of the right to
insist upon a strict adherence.
22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Ned W. Bennett
------------------
Ned W. Bennett
President
MICHAEL TYM, JR.
By: /s/ Michael Tym, Jr.
--------------------
Michael Tym, Jr.
Sole Proprietor
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EXHIBIT 1
March 8, 1995
Michael Tym, Jr.
141 West Jackson Boulevard
Suite 1570
Chicago, Illinois 60604
Re: Commodity Trading Authorization
Gentlemen:
The Futures Dimension Fund, an Illinois limited partnership
(the "Partnership"), does hereby make, constitute, and appoint you as its
Attorney-in-Fact to purchase and sell futures contracts, commodities and
commodity options and forward contracts, and any other items which are
currently, or may later become, the subject of futures, forward or options
trading, and other related investments on domestic and international exchanges,
through Geldermann, Inc., or such other brokers and forward contract dealers as
may be designated, from time to time, in writing by the Partnership, as
brokers, in accordance with the Management Contract between us dated March 8,
1995.
Very truly yours,
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Ned W. Bennett
------------------
Ned W. Bennett
President
<PAGE> 1
EXHIBIT 10(q)
MANAGEMENT CONTRACT
THIS MANAGEMENT CONTRACT ("Agreement"), is made and entered into
effective as of November 1, 1995, by and between The Futures Dimension Fund, an
Illinois limited partnership (the "Partnership"), and Hyman Beck & Company,
Inc. (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the purpose and business of the Partnership is
to seek capital appreciation by trading speculatively in futures
contracts, commodities and commodity options and forward contracts, and any
other items which are currently, or may later become, the subject of futures,
forward or options trading, and other related investments (sometimes
hereinafter referred to as "Contracts") on United States and non-United States
exchanges and markets; and
WHEREAS, the Partnership, through Heinold Asset
Management, Inc., its general partner (the "General Partner"), pursuant
to the Limited Partnership Agreement of the Partnership, is authorized to
utilize the services of professional trading advisors in connection with the
trading activities of the Partnership; and
WHEREAS, the Partnership has heretofore offered units
of limited partnership interest in the Partnership for sale to investors; and
WHEREAS, the Trading Advisor is engaged in the business of
making trading decisions on behalf of itself and others regarding the purchase
and sale of Contracts; and
WHEREAS, the Partnership and the Trading Advisor each
desire the Trading Advisor to make trading decisions for the Partnership
with respect to the assets of the Partnership allocated to be
managed by the Trading Advisor (the "Allocated Assets") on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises
and agreements set forth herein, the parties hereto do agree as follows:
1. DUTIES OF THE TRADING ADVISOR.
(a) The Partnership hereby appoints the Trading Advisor,
and the Trading Advisor hereby accepts appointment, as a trading
advisor of the Partnership in connection with the trading activities of the
Partnership.
(b) Upon the Trading Advisor's commencing of trading
operations for the Partnership and for the period and on the terms and
conditions set forth in this Agreement, the Trading Advisor shall have sole
authority and responsibility, as the Partnership's agent and attorney-in-fact,
for trading the Allocated Assets in Contracts and in accordance with the
Trading
<PAGE> 2
Advisor's Global Portfolio Trading Program ("Trading Approach"; which
term, for purposes of this Agreement, shall include trading approaches,
systems, instructions, methods, models, strategies, methodologies and formulas)
as described in the disclosure notice dated November 1995 relating to the
appointment of the Trading Advisor as a commodity trading advisor of the
Partnership (the "Disclosure Notice"), subject to the trading policies of the
Partnership furnished to the Trading Advisor in writing ("Trading Policies").
The parties hereto acknowledge that the Trading Advisor will trade Contracts
for the Partnership independently of any other trading advisor retained by the
Partnership. For purposes of this Agreement, the term "Contracts" shall not
include securities and options thereon.
(c) The Trading Advisor acknowledges and agrees
that the aggregate amount of Allocated Assets which the Trading Advisor
shall treat as equity and manage on behalf of the Partnership pursuant to this
Agreement may include "notional" funds. The General Partner shall inform the
Trading Advisor of the amount of "notional" funds included in Allocated Assets
from time to time. The Trading Advisor agrees to describe to the General
Partner its practices with respect to the leverage used by the Trading Advisor
in managing the Partnership's account relative to other accounts managed by the
Trading Advisor using the Trading Approach to enable the General Partner to
determine whether the "trading level" at which the Trading Advisor is currently
managing the Partnership's account is the level currently designated by the
General Partner.
(d) The General Partner and the Partnership acknowledge
receipt of the Trading Advisor's Disclosure Document dated August 5, 1995 (the
"Disclosure Document"). The Trading Advisor shall promptly furnish the
Partnership with a copy of each amended, supplemented or updated Disclosure
Document of the Trading Advisor filed with the Commodity Futures Trading
Commission (the "CFTC") and the National Futures Association ("NFA") upon
acceptance thereof by the CFTC. Prior to the commencement of trading on behalf
of the Partnership, the Partnership shall deliver to the Trading Advisor, and
renew when necessary, a Commodity Trading Authorization, in the form attached
hereto as Exhibit 1, appointing the Trading Advisor as the Partnership's agent
and attorney-in-fact for such purpose. All trades for the account of the
Partnership shall be made through such banks, brokers and dealers as the
General Partner shall direct, and the Trading Advisor shall have no authority
or responsibility for selecting any such banks, brokers or dealers in
connection with the execution of transactions for the Partnership or for the
negotiation of commission rates charged therefor; provided, however, that the
General Partner shall notify the Trading Advisor of any applicable changes in
the commission rates charged by the Partnership's banks, brokers and dealers
with respect to transactions entered into with respect to the Allocated Assets.
(e) In the event the Trading Advisor and its principals
[as that term is defined in Regulation Section 4.10(e) promulgated by
the CFTC under the Commodity Exchange Act, as amended (the "Act")],
shareholders, partners, employees and affiliates or any person who controls the
foregoing (collectively, "Principals and Affiliates"), wish to use trading
programs, systems or strategies other than or in addition to the Trading
Approach in connection with its trading for the Partnership, either in whole or
in part, it may not do so unless the Trading Advisor gives the General Partner
15 days' prior written notice of its intention to utilize such different
trading programs, systems or strategies ad the General Partner consents thereto
in writig. Non-material changes in the Trading Approach may be instituted
without prior written approval.
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(f) The Trading Advisor agrees to make all material
disclosures to the Partnership regarding itself and its Principals and
Affiliates, their trading performance and general trading methods, their
accounts (but not the identities of customers) and otherwise as are required in
the reasonable judgment of the General Partner or the Partnership to be made in
any filings required by any governmental body or by any applicable law,
regulation, rule or order. Nothing contained in this Agreement shall be
construed or deemed to require the Trading Advisor to disclose the confidential
or proprietary details of its trading strategies.
(g) The Trading Advisor understands and agrees that the
General Partner intends to designate other trading advisors and to
apportion from time to time to such other trading advisors the management of
such portion of the Partnership's assets as the General Partner shall determine
in its absolute discretion. The designation of other trading advisors and
apportionment and reapportionment of a portion of the Partnership's assets to
such trading advisors shall neither terminate this Agreement nor modify in any
regard the respective rights and obligations of the parties hereto.
(h) The General Partner shall have the right to make
additions to, or withdrawals from, the Allocated Assets (including any
"notional" funds comprising part of the Allocated Assets) at any time. The
General Partner agrees that the Trading Advisor may refuse any additional
allocation of funds for any reason. The General Partner, in its sole
discretion, may at any time remove all assets from the management of the
Trading Advisor and may require the Trading Advisor to liquidate existing
positions.
(i) Upon receipt of instructions from the General
Partner, the Trading Advisor shall immediately cease its trading
activities with respect to the Allocated Assets, close out all existing
positions in an orderly manner and not initiate any new positions unless
otherwise instructed by the General Partner or the Partnership.
(j) The Trading Advisor shall review the positions held
by the Allocated Assets in accordance with its standard policies and
procedures and shall immediately notify the General Partner of any errors
committed by the Trading Advisor or of any trade not executed in accordance
with the Trading Advisor's instructions.
2. OTHER ACCOUNTS AND ACTIVITIES OF THE TRADING ADVISOR.
(a) The services provided by the Trading Advisor
hereunder are not to be deemed exclusive. Subject to the terms of this
Agreement, the Trading Advisor and its Principals and Affiliates shall be free
to trade for their own accounts and to advise other persons and manage other
accounts during the term of this Agreement and to use the same or different
degrees of leverage, information, computer programs and trading strategies or
formulas which they obtain, produce or utilize in the performance of services
for the Partnership. However, the Trading Advisor represents, warrants and
agrees that the rendering of such consulting, advisory and management services
to others should not, in the judgement of the Trading Advisor, require any
material change in the Trading Approach and should not, in the judgement of the
Trading Advisor, materially adversely affect the capacity of the Trading
Advisor to continue to render services to the Partnership of the quality and
nature contemplated by this Agreement. The Trading Advisor makes no
representation
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that the trading to be directed by it on behalf of the Partnership will
be profitable or will not result in losses.
(b) If, at any time during the term of this Agreement,
the Trading Advisor is required to aggregate the Partnership's Contract
positions with the positions of any other person or entity for purposes of
applying CFTC- or exchange-imposed position limits, the Trading Advisor agrees
that it will promptly notify the General Partner if the Partnership's positions
are included in an aggregate amount which equals or exceeds the applicable
limit. The Trading Advisor agrees that, if its trading recommendations are
altered because of the application of any position limit, it will not modify
the trading instructions with respect to the Partnership's account in such
manner as to affect the Partnership substantially disproportionately as
compared with the Trading Advisor's other accounts. The Trading Advisor
presently believes and represents that existing speculative position limits
will not materially adversely affect its ability to manage the Partnership's
account given the potential size of the Partnership's account and the Trading
Advisor's and its Principals' and Affiliates' current accounts and all proposed
accounts for which they have contracted to act as trading advisor. The Trading
Advisor further represents, warrants and agrees that under no circumstances
will it knowingly or deliberately use trading strategies or systems for the
Partnership that are inferior to trading strategies or systems employed for any
other client or account and that it will not knowingly or deliberately favor
any client or account managed by it over any other client or account, it being
acknowledged, however, that different trading strategies, methods or degrees of
leverage may be utilized for differing sizes of accounts, accounts with
different trading policies, accounts experiencing differing inflows or outflows
of equity, accounts funded at less than the Trading Advisor's recommended
minimum account size, accounts which commence trading at different times,
accounts which have different portfolios or different fiscal years and accounts
with other differences, and that such differences may cause divergent trading
results.
(c) The Partnership and the General Partner
acknowledge and agree that the Trading Advisor and/or its Principals
and Affiliates presently act and that they may continue to act as advisors for
other accounts managed by them and may continue to receive compensation with
respect to services for such accounts in amounts which may be more or less than
the amounts received from the Partnership. The Trading Advisor agrees that in
the management of such other accounts by it and its Principals and Affiliates,
it will act in good faith to seek to achieve an equitable treatment of all
accounts under management including the Partnership's account with respect to,
among other things, priorities of order entry and position limits.
(d) The Trading Advisor agrees that it shall make
such information available to the General Partner respecting the
performance of the Partnership's account as compared to the performance of all
other client accounts managed by the Trading Advisor and its Principals and
Affiliates as shall be reasonably requested by the General Partner or the
Partnership. The Trading Advisor shall not be required to disclose the
identity of its clients or the performance of proprietary/experimental
accounts.
3. ALLOCATION OF ASSETS TO THE TRADING ADVISOR. The
Trading Advisor's Allocated Assets initially shalll be a total of approximately
$1,000,000 of which $0 is notional funding.
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4. FEES.
(a) Commencing with the commencement of trading by
the Trading Advisor for the Partnership, the Partnership agrees to pay
to the Trading Advisor as follows:
(i) Management Fee. A monthly management fee equal to
0.166% of the Net Asset Value of the Allocated Assets as of the close
of business on the last business day of each calendar month (an approximate
2.0% annual rate). The definition of the term "Net Asset Value" is set forth
in Section 4 of the Partnership's Limited Partnership Agreement which is
attached as Exhibit 2, hereto.
(ii) For purposes of calculating the management fee, Net
Asset Value of the Allocated Assets shall be determined before
reduction for the management fees or incentive fees, if any, accrued or payable
with respect to the Allocated Assets as of such month-end, and before giving
effect to any distributions and redemptions paid or payable at such month-end.
In the event that (A) the Trading Advisor commences trading as of any day other
than the first day of a calendar month, (B) this Agreement is terminated as of
any date other than the last day of a calendar month, or (C) the Partnership
reallocates assets to or from the Trading Advisor as of any day other than the
first or last day of any calendar month, the amount of the management fee shall
be prorated on the basis of the number of business days during such month that
the Allocated Assets (as adjusted in the case of reallocation of assets) were
traded by the Trading Advisor as compared to the total number of business days
in such calendar month. To the extent that the Partnership instructs the
Trading Advisor to trade the Allocated Assets at a "nominal account size" in
excess of the actual assets comprising Allocated Assets, the Trading Advisor's
management fee shall be calculated based upon the "nominal account size" of the
Allocated Assets.
(iii) Incentive Fee. A quarterly incentive fee equal to
20% of any New Trading Profits (as defined below) achieved during each
fiscal quarter. New Trading Profits during a quarter shall mean the sum of (A)
the net of any profits and losses realized on trades closed out during the
period, plus or minus (B) the change in the net of any unrealized profits and
losses on trades which remained open as of the end of the period (net of
accrued brokerage commissions and other allocated expenses) from the net of any
unrealized profits and losses on trades initiated by the Trading Advisor which
remained open as of the end of the immediately preceding period (net of accrued
brokerage commissions and other allocated expenses), (C) any Trading Advisor
management fees paid or accrued through the end of the period, and (D) the
Trading Advisor's carryforward loss (as hereinafter defined) from the
immediately preceding period. If the sum of subparagraphs (A) through (D) for
any period is negative, such amount shall be the Trading Advisor's carryforward
loss for the next period. For purposes of calculating incentive fees, interest
income earned on the Allocated Assets will be disregarded. In the event of a
withdrawal from the Allocated Assets at a time when the Trading Advisor has a
carryforward loss in effect, the amount thereof shall be reduced by an amount
determined by multiplying the carryforward loss by a fraction, the numerator of
which shall be the amount of the withdrawal and the denominator of which shall
be the Net Asset Value of the Allocated Assets immediately prior to giving
effect to the withdrawal. In the event that an addition is made to the
Allocated Assets subsequent to a reduction in th Trading Advisor's carryforward
loss by reason of a withdrawal, the Trading Advisor's carryforward loss shall
be increased by or created in an amount (up to the aggregate amount of prior
carryforward loss reductions) determined by multiplying
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the aggregate amount of prior carryforward loss reductions by a
fraction, the numerator of which shall be the amount of the addition and the
denominator of which shall be the sum of the previous withdrawals which
resulted in carryforward loss reductions. The incentive fee charged to the
Partnership with respect to the Allocated Assets will be dependent upon the
performance of the Trading Advisor and will not be affected by the performance
of any other trading advisor appointed by the Partnership or the Partnership as
a whole. The initial incentive period shall commence on the date the Trading
Advisor commences trading activity for the Partnership and shall end at the
immediate following quarter-end (even though such period may not be a full
quarter). Subsequent incentive periods shall commence on the first day of the
next succeeding fiscal quarter and end on the last day of such fiscal quarter.
In the event this Agreement is terminated (or if there is a withdrawal from the
Allocated Assets) as of any date which is not the end of an incentive period,
an incentive fee will be paid by the Partnership, if earned, with respect to
the Allocated Assets as though such termination date (or date of withdrawal)
were the last day of the incentive period. For purposes of calculating the
first incentive fee, the Trading Advisor hereby agrees that it shall assume an
initial carryforward loss (constituting a portion of the Partnership's current
overall carryforward loss) equal to $150,000; which carryforward loss shall not
exceed 15% of the Allocated Assets hereunder.
(b) Payment of Fees. The management fees and
incentive fees due to the Trading Advisor shall be paid by the
Partnership within thirty (30) days of the end of the calendar period to which
they relate. The Partnership expressly agrees that any such fees due the
Trading Advisor shall survive the termination or other expiration of this
Agreement.
5. TRADING ADVISOR INDEPENDENT. The Trading Advisor
shall for all purposes herein be deemed to be an independent contractor
to the Partnership and the General Partner and shall, except as otherwise
expressly provided herein, have no authority to act for or represent the
Partnership or the General Partner in any way or otherwise be deemed a sponsor
of the Partnership or an agent, joint venturer or partner of the Partnership,
the General Partner or of any other trading advisor retained by the
Partnership.
6. BROKER.
(a) The Trading Advisor agrees to enter all Contract
orders through E.D. & F. Man International Inc. ("Man"), or such other
brokers and forward contract dealers as may be designated, from time to time,
in writing by the Partnership. The Partnership must consent in writing to the
use of other floor brokers who will give up such trades to Man in accordance
with exchange rules and the give-up procedures established by the Partnership
from time to time. The Trading Advisor shall be responsible for any errors
committed by any executing broker not previously approved by Man in writing who
gives-up to Man on behalf of the Partnership. In placing trades for the
Partnership's account, the Trading Advisor agrees that it shall use its
standard procedures for allocating orders among the Trading Advisor's various
accounts and not knowingly favor any other such account over the Partnership's
account.
(b) All forward contract and other trades forthe
Partnership will be executed through the forward trading and other facilities
of such affiliates of Man or other entities as the Partnership may designate
from time to time.
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(c) The Trading Advisor must consent to any banks,
brokers and dealers not set forth herein (such consent not to be
unreasonably withheld). The Trading Advisor shall be permitted to trade on a
"give-up" basis upon prior written consent from the Partnership (such consent
not to be unreasonably withheld).
7. STANDARD OF LIABILITY; INDEMNIFICATIONS.
(a) Standard of Liability. The Trading Advisor shall not
be liable to the Partnership, the General Partner or any of their
respective successors or assigns under this Agreement except by reason of (i)
acts or omissions to act which constitute bad faith, negligence or misconduct
or (ii) a breach of any of the representations, warranties, covenants or
agreements of the Trading Advisor set forth in this Agreement.
(b) Indemnity. (i) The Partnership agrees to indemnify
and hold harmless the Trading Advisor and each of its Principals and
Affiliates from and against any and all losses, claims, damages, liabilities,
costs and expenses (including, without limitation, attorneys' and accountants'
fees and disbursements), judgments and amounts paid in settlement
(collectively, "Losses") to which an indemnified person may become subject
arising out of this Agreement, the transactions contemplated hereby or the fact
the Trading Advisor is or was a trading advisor to the Partnership, unless any
such Losses arise out of, relate to, or are based upon the Trading Advisor's
failure to meet the standard of liability applicable to it under SECTION 7(a).
(ii) The Trading Advisor agrees to indemnify and hold
harmless the Partnership, the General Partner and each of their
respective Principals and Affiliates from and against any and all Losses to
which they may become subject, if any such Losses arise directly out of, relate
directly to, or are based directly upon the Trading Advisor's failure to meet
the standard of liability applicable to it under SECTION 7(a).
(c) Promptly after receipt by a party to be indemnified
under SECTION 7(b), above, of any notice of the commencement of any
action or proceeding, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnified party under such subsection,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under such
subsection. The requirement that an indemnifying party be given written notice
of the commencement of any action shall be deemed to be satisfied if such
indemnifying party shall have actual knowledge thereof or shall have been given
written notice of the commencement of any action or proceeding within a
reasonable time after the commencement thereof. If any such action shall be
brought against any indemnified party and the indemnified party notifies the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, to assume
the defense thereof with counsel satisfactory to such indemnified party, and
shall have the right to negotiate and consent to a settlement thereof, provided
that the indemnified party shall have consented to the settlement. After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party
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shall have the right to employ counsel to represent it, if, in the indemnified
party's reasonable judgment, it is advisable for such party to be represented
by separate counsel, in which event the fees and expenses of such separate
counsel shall be borne by the indemnified party. No indemnifying party shall
be liable for any settlement of any such action effected without its consent,
but if any such action or proceeding is settled with the consent of any
indemnifying party or if there be a final judgment for the plaintiff in any
such action or proceeding (of which an indemnifying party shall have been
notified), such indemnifying party shall indemnify and hold harmless each
indemnified party from and against any Losses incurred or suffered by reason of
such settlement or judgment.
(d) Any indemnification required by this SECTION 7,
unless ordered or expressly permitted by a court, shall be made by the
indemnifying party only upon a determination by independent legal counsel in a
written opinion that the conduct which is the subject of the claim, demand,
lawsuit, action or proceeding with respect to which indemnification is sought
meets the applicable standard set forth in this SECTION 7.
(e) The provisions of this SECTION 7 shall survive the
termination or other expiration of this Agreement.
8. THE TRADING ADVISOR'S REPRESENTATIONS AND WARRANTIES.
The Trading Advisor represents and warrants to the Partnership and the
General Partner as follows:
(a) The Trading Advisor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business as described in
this Agreement and the Disclosure Notice, and the Trading Advisor is qualified
to conduct its business and is in good standing in every jurisdiction in which
the nature or conduct of its business requires such qualification and failure
to so qualify would 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 by the Trading Advisor and is a
valid and binding agreement of the Trading Advisor enforceable in accordance
with its terms.
(c) The execution and delivery of this Agreement
and the performance of the obligations and the consummation of the
transactions contemplated in this Agreement and in the Disclosure Notice will
not conflict with, violate, breach or constitute a default under, any term or
provision of the Trading Advisor's certificate of incorporation, by-laws, or
other charter documents, or any indenture, mortgage, deed of trust, loan
agreement, or other agreement or instrument to which the Trading Advisor or any
of its Principals and Affiliates is a party or by which any of them are bound,
or to which any of the property (including, but not limited to, its Trading
Approach) or assets of the Trading Advisor or its Principals and Affiliates are
subject, or any order, rule, law, statute, regulation, or other legal
requirement applicable to the Trading Advisor or any of its Principals or to
the property or assets of the Trading Advisor or its Principals and Affiliates
of any court or any governmental or administrative body or agency or panel or
any regulatory or self-regulatory
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organization or exchange having jurisdiction over the Trading Advisor
or any of its Principals and Affiliates.
(d) The Trading Advisor is registered as a commodity
trading advisor under the Act, its Principals are identified on the
Trading Advisor's most recent CFTC Form 7-R filed with the NFA pursuant to the
Act, and it is a member of the NFA in such capacity and such registration and
membership has not expired or been revoked, lapsed, suspended, terminated, or
not renewed or limited or qualified in any respect.
(e) The Trading Advisor is not bankrupt or insolvent.
(f) The Disclosure Document is complete and accurate in
all material respects and does not contain any misstatement of any
material fact and complies in all material respects with the applicable
requirements of the Act and the rules promulgated thereunder (as in effect on
the date on which such Disclosure Document was last filed with the CFTC)
including the requirement to include all material information and may be relied
upon by the Partnership and the General Partner in preparing the Disclosure
Notice and allocating assets of the Partnership to the Trading Advisor and
there has not been, since the date of the Disclosure Document's issuance, any
material adverse change in the condition, financial or otherwise, business or
prospects of the Trading Advisor or any of its Principals and Affiliates,
whether or not arising in the ordinary course of business, or relating to the
historical performance and operations of the Trading Advisor; provided, that,
with respect to information concerning the Trading Advisor, the Partnership
and/or the General Partner have determined the extent of the information
regarding the Trading Advisor and its historical trading performance that is
necessary and adequate for inclusion in the Disclosure Notice.
(g) The Trading Advisor and each Principal has complied
and will continue to comply with all orders, rules, laws, statutes,
regulations or other legal requirements applicable to the Trading Advisor or
any of its Principals and Affiliates or to their respective businesses,
properties, or assets, including the Act and the rules promulgated by the CFTC
and the NFA, the violation of which would materially and adversely affect its
or their ability to comply with, and perform its or their obligations under
this Agreement, and there are no actions, suits, proceedings, or notices of
investigations or investigations pending or threatened against the Trading
Advisor, or any of its Principals or Affiliates, by the NFA, the CFTC or any
governmental, regulatory or self-regulatory agency regarding noncompliance by
the Trading Advisor or any of its Principals or Affiliates with any law,
statute, rule or regulation, or at law or in equity or before or by any court,
any federal, state, municipal or other governmental department commission,
board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its or their ability to comply with or to
perform its or their obligations under this Agreement or that would be required
to be disclosed in the Disclosure Notice, which is not so disclosed, would
result in a material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor.
(h) The Trading Advisor and each Principal has all
governmental, regulatory, self-regulatory and exchange licenses and
approvals and has effected all filings and registrations with all governmental,
regulatory and self-regulatory agencies required to conduct their respective
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businesses and to act as described in the Disclosure Notice and to
perform its or their respective obligations under this Agreement.
(i) The information contained in the Disclosure
Notice relating to the Trading Advisor, including, without limitation,
the tables and notes thereto, has been reviewed and approved by the Trading
Advisor and is complete and accurate in all material respects and does not
contain any untrue statement of material fact.
(j) In the placement of orders and the allocation of
executed trades for the Partnership and for the accounts of any other
client, the Trading Advisor shall utilize a fair and reasonable order entry
system and trade allocation system, which shall be no less favorable to the
Partnership than to any other account managed by the Trading Advisor.
(k) The Trading Advisor shall promptly notify the other
parties hereto of the commencement of any suit, action or proceeding
involving it or its Principals and Affiliates, if such action or proceeding
might reasonably be expected to have a materially adverse effect on the Trading
Advisor's ability to comply with or perform its obligations under this
Agreement, whether or not any such suit, action or proceeding also involves any
of the other parties hereto.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and
if at any time any event shall occur which would make or tend to make any of
the foregoing not true or incomplete, the Trading Advisor shall promptly notify
the Partnership and the General Partner of the occurrence of such event.
9. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES. The
General Partner and the Partnership represent and warrant to the
Trading Advisor as follows:
(a) The Partnership is duly organized, validly existing
and in good standing as a limited partnership under the laws of
Illinois. The Partnership has full power and authority to perform its
obligations under this Agreement and to conduct its business and to act as
described in the Disclosure Notice.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Partnership and is a valid and
binding agreement of it enforceable in accordance with its terms.
(c) The Partnership has complied and will continue to
comply with all orders, rules, laws, statutes, regulations or other
legal requirements applicable to it, to its business, properties, and assets,
including the Act and the rules promulgated by the CFTC and the NFA, the
violation of which would materially and adversely affect its ability to comply
with, and perform its obligations under this Agreement, and there are no
actions, suits, proceedings, or notices of investigations or investigations
pending or threatened against it, by the NFA, the CFTC or any governmental,
regulatory or self-regulatory agency regarding noncompliance by it with any
law, statute, rule or regulation, or at law or in equity or before or by any
court, any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
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materially and adversely affect its ability to comply with or to
perform its obligations under this Agreement or that would be required to be
disclosed in the Disclosure Notice, which is not so disclosed, or would result
in a material adverse change in the condition, financial or otherwise, business
or prospects of the Partnership.
(d) The Partnership has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and
approvals and has effected all filings and registrations with all federal and
state governmental and regulatory and self-regulatory agencies required to
conduct its business and to act as described in the Disclosure Notice and to
perform its obligations under this Agreement.
(e) Except with respect to information contained in the
Disclosure Notice relating to the Trading Advisor, the Disclosure
Notice does not contain any untrue statement of material fact or omit to state
therein a material fact required to be stated therein or necessary to be stated
therein in order to prevent the statements made therein, in light of the
circumstances under which they are made, from being misleading.
(f) The General Partner is registered as a commodity pool
operator under the Act and is a member of the NFA in such capacity and
such registration and membership has not expired or been revoked, lapsed,
suspended, terminated, or not renewed or limited or qualified in any respect.
(g) The General Partner has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and
approvals and has effected all filings and registrations with all federal and
state governmental and regulatory and self-regulatory agencies required to
conduct its business and to act as described in the Disclosure Notice and to
perform its obligations under this Agreement.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and
if at any time any event shall occur which would make or tend to make any of
the foregoing not true or incomplete, the General Partner will promptly notify
the Trading Advisor thereof.
10. TERM AND TERMINATION.
(a) Unless terminated earlier as provided below, the term
of this Agreement shall be until the end of the twelfth full calendar
month after the Trading Advisor commences trading activity and is
automatically renewable thereafter for successive one-year periods unless (i)
the Partnership terminates this Agreement during the initial one-year term
thereof by giving thirty days' prior written notice to the Trading Advisor, or
(ii) either the Trading Advisor or the Partnership terminates the Agreement at
the end of the initial one-year term or at any time thereafter by giving thirty
days' prior written notice to such other party.
(b) Notwithstanding the foregoing, this Agreement may be
terminated by the Partnership immediately upon written notice to the
Trading Advisor if (i) the Trading Advisor, if other than a natural person,
merges, consolidates with or sells a substantial portion of its assets to any
individual or entity, or there is a material adverse change relating to the
Trading Advisor or a material
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adverse change in control, organizational structure, financial
condition, regulatory compliance or personnel of the Trading Advisor, (ii) any
of the Trading Advisor's registrations under the Act or otherwise are
suspended, terminated, lapsed or not renewed, (iii) the Trading Advisor's
membership in the NFA or other self-regulatory organization is suspended,
terminated, lapsed or not renewed, (iv) the Trading Advisor otherwise becomes
unable to serve as a trading advisor to the full extent contemplated by this
Agreement, (v) the Trading Advisor breaches any of its representations,
warranties, covenants or agreements contained in this Agreement, or (vi) the
General Partner determines doing so is in the best interests of the
Partnership.
(c) The Trading Advisor may terminate this Agreement in
its discretion, (i) upon thirty days' prior written notice to the
Partnership in the event that the trading or accounting policies applicable to
the Partnership as in effect on the date hereof or as amended from time to time
in the reasonable judgment of the Trading Advisor adversely affect the
performance of the Trading Advisor's Trading Approach, (ii) immediately upon
written notice to the Partnership if the Partnership or the General Partner
materially breaches any representation, warranty or covenant or otherwise fails
to comply with the terms of this Agreement, or (iii) upon thirty days' prior
written notice to the Partnership if the Allocated Assets allocated to the
Trading Advisor shall be less than $250,000 (after adding back trading losses
in the current quarter and applicable loss carryforwards).
11. NOTICES. Except as otherwise provided herein, all
notices, demands or requests required to be made or delivered under
this Agreement shall be effective only if in writing and delivered personally
or by facsimile or mail, postage prepaid (airmail if the addressee is in
another country), to the respective addresses below or to such other addresses
as may be designated by the party entitled to receive the same by notice
similarly given and shall be deemed given by the party required to provide
notice when received by the party to whom notice is required to be given.
If to the Partnership or the General Partner to:
Heinold Asset Management, Inc.
One Financial Plaza
440 South LaSalle Street
Chicago, Illinois 60605
Attn: Daniel E. Ragen, President
Fax No.: 312-663-7904
If to the Trading Advisor to:
Hyman Beck & Company, Inc.
Prudential Business Campus
6 Campus Drive
Parsippany, New Jersey 07054
Attn: Alexander Hyman, President
Fax No.: 201-644-3366
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12. ASSIGNMENT. No party hereto may transfer,
sell, encumber, appoint agents or assign any of its rights or
obligations hereunder in whole or in part without the express written consent
of each of the other parties hereto.
13. AMENDMENT; MODIFICATION. This Agreement may not be
amended or modified, nor any of the provisions hereof waived, except by
the written consent of all of the parties hereto.
14. COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject
hereof and supersedes all prior agreements written or oral, and no other
agreement, verbal or otherwise, shall be binding as between the parties hereto
unless in writing and signed by the party against whom enforcement is sought.
15. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and
permitted assigns. No other person other than the persons indemnified under
SECTION 7 hereof for matters relating to that Section shall have any right or
obligation under this Agreement.
16. HEADINGS. Headings to sections herein are for the
convenience of the parties only, and are not intended to be a part of
or to affect the meanings or interpretation of this Agreement.
17. GOVERNING LAW. This Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Illinois without giving effect to principles of conflicts of laws.
18. ARBITRATION. The parties agree that all
controversies which may arise in connection with any transaction
contemplated by this Agreement or the construction, performance or breach of
this Agreement shall be determined by arbitration, to be held in the City of
Chicago, State of Illinois unless otherwise agreed to by the parties hereto,
and in accordance with the rules then obtaining of the NFA, or if no such rules
are then in effect or if jurisdiction is declined, then the rules then
obtaining of the American Arbitration Association; provided,
however, that (a) the arbitrator(s) shall be knowledgeable in industry
standards and practices and the matters giving rise to the dispute, (b) the
arbitrator(s) shall not have the power and authority to award punitive damages,
(c) the authority of the arbitrator(s) shall be limited to construing and
enforcing the terms and conditions of this Agreement as expressly set forth
herein, and (d) the arbitrator(s) shall state the reasons for their award and
their legal and factual conclusions underlying the award in a written opinion.
The award of the arbitrator(s), or a majority of them, shall be final, and
judgment upon the award may be confirmed and entered in any court, state or
federal, having jurisdiction.
19. CONSENT TO JURISDICTION. Each party hereto expressly
and irrevocably agrees (a) that it waives any objection, and
specifically consents, to venue in the United States federal or state courts
located in the City of Chicago, State of Illinois, United States of America, so
that any action at law or in equity may be brought and maintained in any such
court, and (b) that service of process in any such action may be effected
against such party by certified or registered mail or in any other manner
permitted by applicable United States Federal Rules of Civil Procedure or Rules
of the Courts of the State of Illinois. In addition, each party hereto
expressly and irrevocably waives, in
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respect of any action brought in any United States federal or state
court located in the City of Chicago, State of Illinois or any resulting
judgment, any objection, and hereby specifically consents, to the jurisdiction
of any such court, and agrees not to seek to change the situs of such action or
to assert that any other court in any other action is a more suitable forum for
the hearing and adjudication of any claim or dispute raised in such action.
20. SURVIVAL. The indemnity provisions 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 the Agreement shall survive the termination of this Agreement
with respect to any matter arising while this Agreement was in effect.
21. WAIVER OF BREACH. The waiver by a party of a breach
of any provisions of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by a party. The failure of a party to
insist upon strict adherence to any provision of this Agreement shall not
constitute a waiver or thereafter deprive such party of the right to insist
upon a strict adherence.
22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
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<PAGE> 15
IN WITNESS WHEREOF, this Agreement has been executed as
of the day and year first above written.
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Daniel E. Ragen
-------------------------------
Daniel E. Ragen
President
HYMAN BECK & COMPANY, INC.
By: /s/ Alexander Hyman
-------------------------------
Alexander Hyman
Principal
HEINOLD ASSET MANAGEMENT, INC.
By: /s/ Daniel E. Ragen
-------------------------------
Daniel E. Ragen
President
<PAGE> 16
EXHIBIT 1
----------
November 1, 1995
Hyman Beck & Company, Inc.
Prudential Business Campus
6 Campus Drive
Parsippany, New Jersey 07054
Re: Commodity Trading Authorization
Gentlemen:
The Futures Dimension Fund, an Illinois limited
partnership (the "Partnership"), does hereby make, constitute, and
appoint you as its Attorney-in-Fact to purchase and sell futures contracts,
commodities and commodity options and forward contracts, and any other items
which are currently, or may later become, the subject of futures, forward or
options trading, and other related investments on domestic and international
exchanges, through E.D. & F. Man International Inc., or such other brokers and
forward contract dealers as may be designated, from time to time, in writing by
the Partnership, as brokers, in accordance with the Management Contract between
us dated November 1, 1995.
Very truly yours,
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Daniel E. Ragen
-----------------------------
Daniel E. Ragen
President
<PAGE> 17
ACKNOWLEDGMENT OF RECEIPT
OF DISCLOSURE DOCUMENT
The undersigned hereby acknowledges receipt of Hyman Beck &
Company, Inc.'s Disclosure Document dated August 5, 1995.
The Futures Dimension Fund
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Daniel E. Ragen
-----------------------------
Daniel E. Ragen
President
<PAGE> 1
EXHIBIT 10(r)
MANAGEMENT CONTRACT
THIS MANAGEMENT CONTRACT ("Agreement"), is made and entered into
effective as of November 1, 1995, by and between The Futures Dimension Fund, an
Illinois limited partnership (the "Partnership"), and Marathon Capital Growth
Partners, L.L.C. (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the purpose and business of the Partnership is to
seek capital appreciation by trading speculatively in futures contracts,
commodities and commodity options and forward contracts, and any other items
which are currently, or may later become, the subject of futures, forward or
options trading, and other related investments (sometimes hereinafter referred
to as "Contracts") on United States and non-United States exchanges and
markets; and
WHEREAS, the Partnership, through Heinold Asset Management,
Inc., its general partner (the "General Partner"), pursuant to the Limited
Partnership Agreement of the Partnership, is authorized to utilize the services
of professional trading advisors in connection with the trading activities of
the Partnership; and
WHEREAS, the Partnership has heretofore offered units of
limited partnership interest in the Partnership for sale to investors; and
WHEREAS, the Trading Advisor is engaged in the business of
making trading decisions on behalf of itself and others regarding the purchase
and sale of Contracts; and
WHEREAS, the Partnership and the Trading Advisor each desire
the Trading Advisor to make trading decisions for the Partnership with respect
to the assets of the Partnership allocated to be managed by the Trading Advisor
(the "Allocated Assets") on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
agreements set forth herein, the parties hereto do agree as follows:
1. DUTIES OF THE TRADING ADVISOR.
(a) The Partnership hereby appoints the Trading Advisor,
and the Trading Advisor hereby accepts appointment, as a trading advisor of the
Partnership in connection with the trading activities of the Partnership.
(b) Upon the Trading Advisor's commencing of trading
operations for the Partnership and for the period and on the terms and
conditions set forth in this Agreement, the Trading Advisor shall have sole
authority and responsibility, as the Partnership's agent and
attorney-in-fact, for
<PAGE> 2
trading the Allocated Assets in Contracts and in accordance with the
Trading Advisor's Diversified System ("Trading Approach"; which term, for
purposes of this Agreement, shall include trading approaches, systems,
instructions, methods, models, strategies, methodologies and formulas) as
described in the disclosure notice dated November 1995 relating to the
appointment of the Trading Advisor as a commodity trading advisor of the
Partnership (the "Disclosure Notice"), subject to the trading policies of the
Partnership furnished to the Trading Advisor in writing ("Trading Policies").
The parties hereto acknowledge that the Trading Advisor will trade Contracts
for the Partnership independently of any other trading advisor retained by the
Partnership. For purposes of this Agreement, the term "Contracts" shall not
include securities and options thereon.
(c) The Trading Advisor agrees to describe to the General
Partner its practices with respect to the leverage used by the Trading Advisor
in managing the Partnership's account relative to other accounts managed by the
Trading Advisor using the Trading Approach to enable the General Partner to
determine whether the "trading level" at which the Trading Advisor is currently
managing the Partnership's account is the level currently designated by the
General Partner.
(d) The General Partner and the Partnership acknowledge
receipt of the Trading Advisor's Disclosure Document dated October 9, 1995 (the
"Disclosure Document"). The Trading Advisor shall promptly furnish the
Partnership with a copy of each amended, supplemented or updated Disclosure
Document of the Trading Advisor filed with the Commodity Futures Trading
Commission (the "CFTC") and the National Futures Association ("NFA") upon
acceptance thereof by the CFTC. Prior to the commencement of trading on behalf
of the Partnership, the Partnership shall deliver to the Trading Advisor, and
renew when necessary, a Commodity Trading Authorization, in the form attached
hereto as Exhibit 1, appointing the Trading Advisor as the Partnership's agent
and attorney-in-fact for such purpose. All trades for the account of the
Partnership shall be made through such banks, brokers and dealers as the
General Partner shall direct, and the Trading Advisor shall have no authority
or responsibility for selecting any such banks, brokers or dealers in
connection with the execution of transactions for the Partnership or for the
negotiation of commission rates charged therefor; provided, however, that the
General Partner shall notify the Trading Advisor of any applicable changes in
the commission rates charged by the Partnership's banks, brokers and dealers
with respect to transactions entered into with respect to the Allocated Assets.
(e) In the event the Trading Advisor and its principals
[as that term is defined in Regulation Section 4.10(e) promulgated by the CFTC
under the Commodity Exchange Act, as amended (the "Act")], shareholders,
partners, employees and affiliates or any person who controls the foregoing
(collectively, "Principals and Affiliates"), wish to use trading programs,
systems or strategies other than or in addition to the Trading Approach in
connection with its trading for the Partnership, either in whole or in part, it
may not do so unless the Trading Advisor gives the General Partner 15 days'
prior written notice of its intention to utilize such different trading
programs, systems or strategies and the General Partner consents thereto in
writing. Non-material changes in the Trading Approach may be instituted
without prior written approval.
(f) The Trading Advisor agrees to make all material
disclosures to the Partnership regarding itself and its Principals and
Affiliates, their trading performance and general trading methods, their
accounts (but not the identities of customers) and otherwise as are required in
the reasonable
2
<PAGE> 3
judgment of the General Partner or the Partnership to be made in any
filings required by any governmental body or by any applicable law, regulation,
rule or order. Nothing contained in this Agreement shall be construed or
deemed to require the Trading Advisor to disclose the confidential or
proprietary details of its trading strategies.
(g) The Trading Advisor understands and agrees that the
General Partner intends to designate other trading advisors and to apportion
from time to time to such other trading advisors the management of such portion
of the Partnership's assets as the General Partner shall determine in its
absolute discretion. The designation of other trading advisors and
apportionment and reapportionment of a portion of the Partnership's assets to
such trading advisors shall neither terminate this Agreement nor modify in any
regard the respective rights and obligations of the parties hereto.
(h) The General Partner shall have the right to make
additions to, or withdrawals from, the Allocated Assets (including any
"notional" funds comprising part of the Allocated Assets) at any time. The
General Partner shall, however, use its best efforts to make such additions or
withdrawals at month-end. The General Partner agrees that the Trading Advisor
may refuse any additional allocation of funds for any reason. The General
Partner, in its sole discretion, may at any time remove all assets from the
management of the Trading Advisor and may require the Trading Advisor to
liquidate existing positions.
(i) Upon receipt of instructions from the General
Partner, the Trading Advisor shall immediately cease its trading activities
with respect to the Allocated Assets, close out all existing positions in an
orderly manner and not initiate any new positions unless otherwise instructed
by the General Partner or the Partnership.
(j) The Trading Advisor shall review on a daily basis the
positions held by the Allocated Assets and shall immediately notify the General
Partner of any errors committed by the Trading Advisor or of any trade not
executed in accordance with the Trading Advisor's instructions.
2. OTHER ACCOUNTS AND ACTIVITIES OF THE TRADING ADVISOR.
(a) The services provided by the Trading Advisor
hereunder are not to be deemed exclusive. Subject to the terms of this
Agreement, the Trading Advisor and its Principals and Affiliates shall be free
to trade for their own accounts and to advise other persons and manage other
accounts during the term of this Agreement and to use the same or different
degrees of leverage, information, computer programs and trading strategies or
formulas which they obtain, produce or utilize in the performance of services
for the Partnership. However, the Trading Advisor represents, warrants and
agrees that the rendering of such consulting, advisory and management services
to others will not require any material change in the Trading Approach and will
not materially adversely affect the capacity of the Trading Advisor to continue
to render services to the Partnership of the quality and nature contemplated by
this Agreement.
(b) If, at any time during the term of this Agreement,
the Trading Advisor is required to aggregate the Partnership's Contract
positions with the positions of any other person or entity for purposes of
applying CFTC- or exchange-imposed position limits, the Trading Advisor
3
<PAGE> 4
agrees that it will promptly notify the General Partner if the
Partnership's positions are included in an aggregate amount which equals or
exceeds ninety percent (90%) of the applicable limit. The Trading Advisor
agrees that, if its trading recommendations are altered because of the
application of any position limit, it will not modify the trading instructions
with respect to the Partnership's account in such manner as to affect the
Partnership substantially disproportionately as compared with the Trading
Advisor's other accounts. The Trading Advisor presently believes and
represents that existing speculative position limits will not materially
adversely affect its ability to manage the Partnership's account given the
potential size of the Partnership's account and the Trading Advisor's and its
Principals' and Affiliates' current accounts and all proposed accounts for
which they have contracted to act as trading advisor. The Trading Advisor
further represents, warrants and agrees that under no circumstances will it
knowingly or deliberately use trading strategies or systems for the Partnership
that are inferior to trading strategies or systems employed for any other
client or account and that it will not knowingly or deliberately favor any
client or account managed by it over any other client or account, it being
acknowledged, however, that different trading strategies, methods or degrees of
leverage may be utilized for differing sizes of accounts, accounts with
different trading policies, accounts experiencing differing inflows or outflows
of equity, accounts which commence trading at different times, accounts which
have different portfolios or different fiscal years and accounts with other
differences, and that such differences may cause divergent trading results.
(c) The Partnership and the General Partner acknowledge
and agree that the Trading Advisor and/or its Principals and Affiliates
presently act and that they may continue to act as advisors for other accounts
managed by them and may continue to receive compensation with respect to
services for such accounts in amounts which may be more or less than the
amounts received from the Partnership. The Trading Advisor agrees that in the
management of such other accounts by it and its Principals and Affiliates, it
will act in good faith to seek to achieve an equitable treatment of all
accounts under management including the Partnership's account with respect to,
among other things, priorities of order entry and position limits.
(d) The Trading Advisor agrees that it shall make such
information available to the General Partner respecting the performance of the
Partnership's account as compared to the performance of all other accounts
managed by the Trading Advisor and its Principals and Affiliates as shall be
reasonably requested by the General Partner or the Partnership. The Trading
Advisor shall not be required to disclose the identity of its clients.
3. ALLOCATION OF ASSETS TO THE TRADING ADVISOR. The
Trading Advisor's Allocated Assets initially shall be a total of approximately
$1,000,000 of which $0 is notional funding.
4. FEES.
(a) Commencing with the commencement of trading by the
Trading Advisor for the Partnership, the Partnership agrees to pay to the
Trading Advisor as follows:
(b) Management Fee. A monthly management fee equal to
0.166% of the Net Asset Value of the Allocated Assets as of the close of
business on the last business day of each calendar month (an approximate 2%
annual rate).
4
<PAGE> 5
(i) For purposes of calculating the management fee, Net
Asset Value of the Allocated Assets shall be determined before reduction for
the management fees or incentive fees, if any, accrued or payable with respect
to the Allocated Assets as of such month-end, and before giving effect to any
distributions and redemptions paid or payable at such month-end. In the event
that (A) the Trading Advisor commences trading as of any day other than the
first day of a calendar month, (B) this Agreement is terminated as of any date
other than the last day of a calendar month, or (C) the Partnership reallocates
assets to or from the Trading Advisor as of any day other than the first or
last day of any calendar month, the amount of the management fee shall be
prorated on the basis of the number of business days during such month that the
Allocated Assets (as adjusted in the case of reallocation of assets) were
traded by the Trading Advisor as compared to the total number of business days
in such calendar month. To the extent that the Partnership instructs the
Trading Advisor to trade the Allocated Assets at a "nominal account size" in
excess of the actual assets comprising Allocated Assets, the Trading Advisor's
management fee shall be calculated based upon the "nominal account size" of the
Allocated Assets.
(ii) Incentive Fee. A quarterly incentive fee equal to
20% of any New Trading Profits (as defined below) achieved during each fiscal
quarter. New Trading Profits during a quarter shall mean the sum of (A) the
net of any profits and losses realized on trades closed out during the period,
plus or minus (B) the change in the net of any unrealized profits and losses on
trades which remained open as of the end of the period (net of accrued
brokerage commissions and other allocated expenses) from the net of any
unrealized profits and losses on trades initiated by the Trading Advisor which
remained open as of the end of the immediately preceding period (net of accrued
brokerage commissions and other allocated expenses), (C) any Trading Advisor
management fees paid or accrued through the end of the period, and (D) the
Trading Advisor's carryforward loss (as hereinafter defined) from the
immediately preceding period. If the sum of subparagraphs (A) through (D) for
any period is negative, such amount shall be the Trading Advisor's carryforward
loss for the next period. For purposes of calculating incentive fees, interest
income earned on the Allocated Assets will be disregarded. In the event of a
withdrawal from the Allocated Assets at a time when the Trading Advisor has a
carryforward loss in effect, the amount thereof shall be reduced by an amount
determined by multiplying the carryforward loss by a fraction, the numerator of
which shall be the amount of the withdrawal and the denominator of which shall
be the Net Asset Value of the Allocated Assets immediately prior to giving
effect to the withdrawal. In the event that an addition is made to the
Allocated Assets subsequent to a reduction in the Trading Advisor's
carryforward loss by reason of a withdrawal, the Trading Advisor's carryforward
loss shall be increased by or created in an amount (up to the aggregate amount
of prior carryforward loss reductions) determined by multiplying the aggregate
amount of prior carryforward loss reductions by a fraction, the numerator of
which shall be the amount of the addition and the denominator of which shall be
the sum of the previous withdrawals which resulted in carryforward loss
reductions. The incentive fee charged to the Partnership with respect to the
Allocated Assets will be dependent upon the performance of the Trading Advisor
and will not be affected by the performance of any other trading advisor
appointed by the Partnership or the Partnership as a whole. The initial
incentive period shall commence on the date the Trading
Advisor commences trading activity for the Partnership and shall end at the
immediate following quarter-end (even though such period may not be a full
quarter). Subsequent incentive periods shall commence on the first day of the
next succeeding fiscal quarter and end on the last day of such fiscal quarter.
In the
5
<PAGE> 6
event this Agreement is terminated as of any date which is not the end
of an incentive period, an incentive fee will be paid by the Partnership, if
earned, with respect to the Allocated Assets as though such termination date
were the last day of the incentive period. For purposes of calculating the
first incentive fee, the Trading Advisor hereby agrees that it shall assume a
carryforward loss equal to $150,000.
(iii) Payment of Fees. The management fees and incentive
fees due to the Trading Advisor shall be paid by the Partnership within thirty
(30) days of the end of the calendar period to which they relate. The
Partnership expressly agrees that any such fees due the Trading Advisor shall
survive the termination or other expiration of this Agreement.
5. TRADING ADVISOR INDEPENDENT. The Trading Advisor
shall for all purposes herein be deemed to be an independent contractor to the
Partnership and the General Partner and shall, except as otherwise expressly
provided herein, have no authority to act for or represent the Partnership or
the General Partner in any way or otherwise be deemed a sponsor of the
Partnership or an agent, joint venturer or partner of the Partnership, the
General Partner or of any other trading advisor retained by the Partnership.
6. BROKER.
(a) The Trading Advisor agrees to enter all Contract
orders through E.D. & F. Man International Inc. ("Man"), or such other brokers
and forward contract dealers as may be designated, from time to time, in
writing by the Partnership. The Partnership must consent in writing to the use
of other floor brokers who will give up such trades to Man in accordance with
exchange rules and the give-up procedures established by the Partnership from
time to time. The Trading Advisor shall be responsible for any errors
committed by any executing broker who gives-up to Man on behalf of the
Partnership. In placing trades for the Partnership's account, the Trading
Advisor agrees that it shall use its standard procedures for allocating orders
among the Trading Advisor's various accounts and not knowingly favor any other
such account over the Partnership's account.
(b) All forward contract and other trades for the
Partnership will be executed through the forward trading and other facilities
of such affiliates of Man or other entities as the Partnership may designate
from time to time.
7. STANDARD OF LIABILITY; INDEMNIFICATIONS.
(a) Standard of Liability. Neither the Trading Advisor
nor any of its Principals and Affiliates shall be liable to the Partnership,
the General Partner or any of their respective successors or assigns under this
Agreement except by reason of (i) acts or omissions to act which constitute bad
faith, negligence or misconduct or (ii) a breach of any of the representations,
warranties, covenants or agreements of the Trading Advisor set forth in this
Agreement.
(b) Indemnity. (i) The Partnership agrees to indemnify
and hold harmless the Trading Advisor and each of its Principals and Affiliates
from and against any and all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, attorneys' and accountants' fees
6
<PAGE> 7
and disbursements), judgments and amounts paid in settlement
(collectively, "Losses") to which an indemnified person may become subject
arising out of this Agreement, the transactions contemplated hereby or the fact
the Trading Advisor is or was a trading advisor to the Partnership, unless any
such Losses arise out of, relate to, or are based upon the Trading Advisor's
failure to meet the standard of liability applicable to it under SECTION 7(a).
(ii) The Trading Advisor agrees to indemnify and hold
harmless the Partnership, the General Partner and each of their respective
Principals and Affiliates from and against any and all Losses to which they may
become subject, if any such Losses arise out of, relate to, or are based upon
the Trading Advisor's failure to meet the standard of liability applicable to
it under SECTION 7(a).
(c) Promptly after receipt by a party to be indemnified
under SECTION 7(b), above, of any notice of the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnified party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. The
requirement that an indemnifying party be given written notice of the
commencement of any action shall be deemed to be satisfied if such indemnifying
party shall have actual knowledge thereof or shall have been given written
notice of the commencement of any action or proceeding within a reasonable time
after the commencement thereof. If any such action shall be brought against
any indemnified party and the indemnified party notifies the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to such indemnified party, and shall have the
right to negotiate and consent to a settlement thereof, provided that the
indemnified party shall have consented to the settlement. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent it,
if, in the indemnified party's reasonable judgment, it is advisable for such
party to be represented by separate counsel, in which event the fees and
expenses of such separate counsel shall be borne by the indemnified party. No
indemnifying party shall be liable for any settlement of any such action
effected without its consent, but if any such action or proceeding is settled
with the consent of any indemnifying party or if there be a final judgment for
the plaintiff in any such action or proceeding (of which an indemnifying party
shall have been notified), such indemnifying party shall indemnify and hold
harmless each indemnified party from and against any Losses incurred or
suffered by reason of such settlement or judgment.
(d) Any indemnification required by this SECTION 7, unless
ordered or expressly permitted by a court, shall be made by the indemnifying
party only upon a determination by independent legal counsel in a written
opinion that the conduct which is the subject of the claim, demand, lawsuit,
action or proceeding with respect to which indemnification is sought meets the
applicable standard set forth in this SECTION 7.
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<PAGE> 8
(e) The provisions of this SECTION 7 shall survive the
termination or other expiration of this Agreement.
8. THE TRADING ADVISOR'S REPRESENTATIONS AND WARRANTIES.
The Trading Advisor represents and warrants to the Partnership and the General
Partner as follows:
(a) The Trading Advisor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business as described in
this Agreement and the Disclosure Notice, and the Trading Advisor is qualified
to conduct its business and is in good standing in every jurisdiction in which
the nature or conduct of its business requires such qualification and failure
to so qualify would 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 by the Trading Advisor and is a valid and binding
agreement of the Trading Advisor enforceable in accordance with its terms.
(c) The execution and delivery of this Agreement and the
performance of the obligations and the consummation of the transactions
contemplated in this Agreement and in the Disclosure Notice will not conflict
with, violate, breach or constitute a default under, any term or provision of
the Trading Advisor's certificate of incorporation, by-laws, or other charter
documents, or any indenture, mortgage, deed of trust, loan agreement, or other
agreement or instrument to which the Trading Advisor or any of its Principals
and Affiliates is a party or by which any of them are bound, or to which any of
the property (including, but not limited to, its Trading Approach) or assets of
the Trading Advisor or its Principals and Affiliates are subject, or any order,
rule, law, statute, regulation, or other legal requirement applicable to the
Trading Advisor or any of its Principals or to the property or assets of the
Trading Advisor or its Principals and Affiliates of any court or any
governmental or administrative body or agency or panel or any regulatory or
self-regulatory organization or exchange having jurisdiction over the Trading
Advisor or any of its Principals and Affiliates.
(d) The Trading Advisor is registered as a commodity
trading advisor under the Act, its Principals are identified on the Trading
Advisor's most recent CFTC Form 7-R filed with the NFA pursuant to the Act, and
it is a member of the NFA in such capacity and such registration and membership
has not expired or been revoked, lapsed, suspended, terminated, or not renewed
or limited or qualified in any respect.
(e) The Trading Advisor is not bankrupt or insolvent.
(f) The Disclosure Document is complete and accurate in
all material respects, does not contain any misstatement of any material fact,
does not omit to state any material fact necessary to be stated therein in
order to make the statements made therein, in light of the circumstances under
which they are made, not misleading, and complies in all material respects with
the
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<PAGE> 9
applicable requirements of the Act and the rules promulgated thereunder
and may be relied upon by the Partnership and the General Partner in preparing
the Disclosure Notice and allocating assets of the Partnership to the Trading
Advisor and there has not been, since the date of the Disclosure Document's
issuance, any material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or any of its Principals and
Affiliates, whether or not arising in the ordinary course of business, or
relating to the historical performance and operations of the Trading Advisor.
(g) The Trading Advisor and each Principal has complied
and will continue to comply with all orders, rules, laws, statutes, regulations
or other legal requirements applicable to the Trading Advisor or any of its
Principals and Affiliates or to their respective businesses, properties, or
assets, including the Act and the rules promulgated by the CFTC and the NFA,
the violation of which would materially and adversely affect its or their
ability to comply with, and perform its or their obligations under this
Agreement, and there are no actions, suits, proceedings, or notices of
investigations or investigations pending or threatened against the Trading
Advisor, or any of its Principals or Affiliates, by the NFA, the CFTC or any
governmental, regulatory or self-regulatory agency regarding noncompliance by
the Trading Advisor or any of its Principals or Affiliates with any law,
statute, rule or regulation, or at law or in equity or before or by any court,
any federal, state, municipal or other governmental department commission,
board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its or their ability to comply with or to
perform its or their obligations under this Agreement or that would be required
to be disclosed in the Disclosure Notice, which is not so disclosed, would
result in a material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor.
(h) The Trading Advisor and each Principal has all
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all governmental,
regulatory and self-regulatory agencies required to conduct their respective
businesses and to act as described in the Disclosure Notice and to perform its
or their respective obligations under this Agreement.
(i) With respect to information contained in the
Disclosure Notice relating to the Trading Advisor, including, without
limitation, the tables and notes thereto, the Disclosure Notice does not
contain any untrue statement of material fact or omit to state therein a
material fact required to be stated therein or necessary to be stated therein
in order to prevent the statements made therein, in light of the circumstances
under which they are made, from being misleading.
(j) In the placement of orders and the allocation of
executed trades for the Partnership and for the accounts of any other client,
the Trading Advisor shall utilize a fair and reasonable order entry system and
trade allocation system, which shall be no less favorable to the Partnership
than to any other account managed by the Trading Advisor.
(k) The Trading Advisor shall promptly notify the other
parties hereto of the commencement of any suit, action or proceeding involving
it or its Principals and Affiliates, whether or not any such suit, action or
proceeding also involves any of the other parties hereto.
9
<PAGE> 10
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the Trading Advisor shall promptly notify the
Partnership and the General Partner of the occurrence of such event.
9. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
The Partnership represents and warrants to the Trading Advisor as follows:
(a) The Partnership is duly organized, validly existing
and in good standing as a limited partnership under the laws of Illinois. The
Partnership has full power and authority to perform its obligations under this
Agreement and to conduct its business and to act as described in the Disclosure
Notice.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Partnership and is a valid and binding
agreement of it enforceable in accordance with its terms.
(c) The Partnership has complied and will continue to
comply with all orders, rules, laws, statutes, regulations or other legal
requirements applicable to it, to its business, properties, and assets,
including the Act and the rules promulgated by the CFTC and the NFA, the
violation of which would materially and adversely affect its ability to comply
with, and perform its obligations under this Agreement, and there are no
actions, suits, proceedings, or notices of investigations or investigations
pending or threatened against it, by the NFA, the CFTC or any governmental,
regulatory or self-regulatory agency regarding noncompliance by it with any
law, statute, rule or regulation, or at law or in equity or before or by any
court, any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its ability to comply with or to perform its
obligations under this Agreement or that would be required to be disclosed in
the Disclosure Notice, which is not so disclosed, or would result in a
material adverse change in the condition, financial or otherwise, business or
prospects of the Partnership.
(d) The Partnership has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
(e) Except with respect to information contained in the
Disclosure Notice relating to the Trading Advisor or any other advisor, the
Disclosure Notice does not contain any untrue statement of material fact or
omit to state therein a material fact required to be stated therein or
necessary to be stated therein in order to prevent the statements
made therein, in light of the circumstances under which they are made, from
being misleading.
10
<PAGE> 11
(f) The General Partner is registered as a commodity pool
operator under the Act and is a member of the NFA in such capacity and such
registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(g) The General Partner has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the General Partner will promptly notify the
Trading Advisor thereof.
10. TERM AND TERMINATION.
(a) Unless terminated earlier as provided below, the term
of this Agreement shall be until the end of the twelfth full calendar month
after the Trading Advisor commences trading activity and is automatically
renewable thereafter for successive one-year periods unless (i) the Partnership
terminates this Agreement during the initial one-year term thereof by giving
thirty days' prior written notice to the Trading Advisor, or (ii) either the
Trading Advisor or the Partnership terminates the Agreement at the end of the
initial one-year term or at any time thereafter by giving thirty days' prior
written notice to such other party.
(b) Notwithstanding the foregoing, this Agreement may be
terminated by the Partnership immediately upon written notice to the Trading
Advisor if (i) the Trading Advisor, if other than a natural person, merges,
consolidates with or sells a substantial portion of its assets to any
individual or entity, or there is a material adverse change relating to the
Trading Advisor or a material adverse change in control, organizational
structure, financial condition, regulatory compliance or personnel of the
Trading Advisor, (ii) any of the Trading Advisor's registrations under the Act
or otherwise are suspended, terminated, lapsed or not renewed, (iii) the
Trading Advisor's membership in the NFA or other self-regulatory organization
is suspended, terminated, lapsed or not renewed, (iv) the Trading Advisor
otherwise becomes unable to serve as a trading advisor to the full extent
contemplated by this Agreement, (v) the Trading Advisor breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, or (vi) the General Partner determines doing so is in the best
interests of the Partnership.
11. NOTICES. Except as otherwise provided herein, all
notices, demands or requests required to be made or delivered under this
Agreement shall be effective only if in writing and delivered personally or by
facsimile or mail, postage prepaid (airmail if the addressee is in another
country), to the respective addresses below or to such other addresses as may
be designated by the party entitled to receive the same by notice similarly
given and shall be deemed given by the party required to provide notice when
received by the party to whom notice is required to be given.
11
<PAGE> 12
If to the Partnership or the General Partner to:
Heinold Asset Management, Inc.
One Financial Place
440 South LaSalle Street, 20th Floor
Chicago, Illinois 60605
Attn: Daniel E. Ragen, President
Fax No.: 312-902-6697
If to the Trading Advisor to:
Marathon Capital Growth Partners, L.L.C.
67 Mason Street
Greenwich, Connecticut 06830
Attn: Bruce Terry, Managing Director
Fax No.: 203-629-7056
12. ASSIGNMENT. No party hereto may transfer, sell,
encumber, appoint agents or assign any of its rights or obligations hereunder
in whole or in part without the express written consent of each of the other
parties hereto.
13. AMENDMENT; MODIFICATION. This Agreement may not be
amended or modified, nor any of the provisions hereof waived, except by the
written consent of all of the parties hereto.
14. COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject hereof
and supersedes all prior agreements written or oral, and no other agreement,
verbal or otherwise, shall be binding as between the parties hereto unless in
writing and signed by the party against whom enforcement is sought.
15. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns. No other person other than the persons indemnified under SECTION 7
hereof for matters relating to that Section shall have any right or obligation
under this Agreement.
16. HEADINGS. Headings to sections herein are for the
convenience of the parties only, and are not intended to be a part of or to
affect the meanings or interpretation of this Agreement.
17. GOVERNING LAW: CONSENT TO JURISDICTION. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Illinois without giving effect to principles of conflicts of laws.
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<PAGE> 13
18. ARBITRATION. The parties agree that all
controversies which may arise in connection with any transaction contemplated
by this Agreement or the construction, performance or breach of this Agreement
shall be determined by arbitration, to be held in the City of Chicago, State of
Illinois unless otherwise agreed to by the parties hereto, and in accordance
with the rules then obtaining of the NFA, or if no such rules are then in
effect or if jurisdiction is declined, then the rules then obtaining of the
American Arbitration Association; provided, however, that (a) the arbitrator(s)
shall be knowledgeable in industry standards and practices and the matters
giving rise to the dispute, (b) the arbitrator(s) shall not have the power and
authority to award punitive damages, (c) the authority of the arbitrator(s)
shall be limited to construing and enforcing the terms and conditions of this
Agreement as expressly set forth herein, and (d) the arbitrator(s) shall state
the reasons for their award and their legal and factual conclusions underlying
the award in a written opinion. The award of the arbitrator(s), or a majority
of them, shall be final, and judgment upon the award may be confirmed and
entered in any court, state or federal, having jurisdiction.
19. CONSENT TO JURISDICTION. Each party hereto expressly
and irrevocably agrees (a) that it waives any objection, and specifically
consents, to venue in the United States federal or state courts located in the
City of Chicago, State of Illinois, United States of America, so that any
action at law or in equity may be brought and maintained in any such court, and
(b) that service of process in any such action may be effected against such
party by certified or registered mail or in any other manner permitted by
applicable United States Federal Rules of Civil Procedure or Rules of the
Courts of the State of Illinois. In addition, each party hereto expressly and
irrevocably waives, in respect of any action brought in any United States
federal or state court located in the City of Chicago, State of Illinois or any
resulting judgment, any objection, and hereby specifically consents, to the
jurisdiction of any such court, and agrees not to seek to change the situs of
such action or to assert that any other court in any other jurisdiction is a
more suitable forum for the hearing and adjudication of any claim or dispute
raised in such action.
20. SURVIVAL. The indemnity provisions 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 the
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
21. WAIVER OF BREACH. The waiver by a party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party. The failure of a party to insist
upon strict adherence to any provision of this Agreement shall not constitute a
waiver or thereafter deprive such party of the right to insist upon a strict
adherence.
22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
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<PAGE> 14
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.,
General Partner
By: /s/ Daniel E. Ragen
---------------------------
Daniel E. Ragen
President
MARATHON CAPITAL GROWTH PARTNERS, L.L.C.
By: /s/ Bruce N. Terry
----------------------------
Bruce N. Terry
Managing Director
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<PAGE> 15
EXHIBIT 1
November 1, 1995
Marathon Capital Growth Partners, L.L.C.
67 Mason Street
Greenwich, Connecticut 06830
Re: Commodity Trading Authorization
Gentlemen:
The Futures Dimension Fund, an Illinois limited partnership
(the "Partnership"), does hereby make, constitute, and appoint you as its
Attorney-in-Fact to purchase and sell futures contracts, commodities and
commodity options and forward contracts, and any other items which are
currently, or may later become, the subject of futures, forward or options
trading, and other related investments on domestic and international exchanges,
through E.D. & F. Man International Inc., or such other brokers and forward
contract dealers as may be designated, from time to time, in writing by the
Partnership, as brokers, in accordance with the Management Contract between us
dated November 1, 1995.
Very truly yours,
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.,
General Partner
By: /s/ Daniel E. Ragen
------------------------------
Daniel E. Ragen
President
<PAGE> 16
ACKNOWLEDGEMENT OF RECEIPT
OF DISCLOSURE DOCUMENT
The undersigned hereby acknowledges receipt of Marathon Capital Growth
Partners, L.L.C.'s Disclosure Document dated October 9, 1995.
The Futures Dimension Fund
By: Heinold Asset Management, Inc.
By: /s/ Daniel E. Ragen
-----------------------------
Daniel E. Ragen
President
Dated: November 1, 1995
<PAGE> 1
EXHIBIT 10(s)
MANAGEMENT CONTRACT
THIS MANAGEMENT CONTRACT ("Agreement"), is made and entered into
effective as of the 1st day of November 1995, by and among The Futures
Dimension Fund, an Illinois limited partnership (the "Partnership"), Heinold
Asset Management, Inc., a Delaware corporation and the general partner of the
Partnership (the "General Partner") and RXR, Inc. (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the purpose and business of the Partnership is to
seek capital appreciation by trading speculatively in futures contracts,
commodities and commodity options and forward contracts, and any other items
which are currently, or may later become, the subject of futures, forward or
options trading, and other related investments (sometimes hereinafter referred
to as "Contracts") on United States and non-United States exchanges and
markets; and
WHEREAS, the Partnership, through the General Partner,
pursuant to the Limited Partnership Agreement of the Partnership, is authorized
to utilize the services of professional trading advisors in connection with the
trading activities of the Partnership; and
WHEREAS, the Partnership has heretofore offered units of
limited partnership interest in the Partnership for sale to investors; and
WHEREAS, the Trading Advisor is engaged in the business of
making trading decisions on behalf of itself and others regarding the purchase
and sale of Contracts; and
WHEREAS, the Partnership and the Trading Advisor each desire
the Trading Advisor to make trading decisions for the Partnership with respect
to the assets of the Partnership allocated to be managed by the Trading Advisor
(the "Allocated Assets") on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
agreements set forth herein, the parties hereto do agree as follows:
1. DUTIES OF THE TRADING ADVISOR.
(a) The Partnership hereby appoints the Trading Advisor,
and the Trading Advisor hereby accepts appointment, as a trading advisor of the
Partnership in connection with the trading activities of the Partnership.
(b) Upon the Trading Advisor's commencing of trading
operations for the Partnership and for the period and on the terms and
conditions set forth in this Agreement, the Trading Advisor shall have sole
authority and responsibility, as the Partnership's agent and
<PAGE> 2
attorney-in-fact, for trading the Allocated Assets in Contracts and in
accordance with the Trading Advisor's Diversified Trading Program ("Trading
Approach"; which term, for purposes of this Agreement, shall include trading
approaches, systems, instructions, methods, models, strategies, methodologies
and formulas) as described in the disclosure notice dated November 1995
relating to the appointment of the Trading Advisor as a commodity trading
advisor of the Partnership (the "Disclosure Notice"), subject to the trading
policies of the Partnership furnished to the Trading Advisor in writing
("Trading Policies"). The parties hereto acknowledge that the Trading Advisor
will trade Contracts for the Partnership independently of any other trading
advisor retained by the Partnership. For purposes of this Agreement, the term
"Contracts" shall not include securities and options thereon.
(c) The Trading Advisor acknowledges and agrees that the
aggregate amount of Allocated Assets which the Trading Advisor shall treat as
equity and manage on behalf of the Partnership pursuant to this Agreement may
include "notional" funds. The Trading Advisor agrees to describe to the
General Partner its practices with respect to the leverage used by the Trading
Advisor in managing the Partnership's account relative to other accounts
managed by the Trading Advisor using the Trading Approach to enable the General
Partner to determine whether the "trading level" at which the Trading Advisor
is currently managing the Partnership's account is the level currently
designated by the General Partner.
(d) The General Partner and the Partnership acknowledge
receipt of the Trading Advisor's Disclosure Document dated November 1, 1995
(the "Disclosure Document"). The Trading Advisor shall promptly furnish the
Partnership with a copy of each amended, supplemented or updated Disclosure
Document of the Trading Advisor filed with the Commodity Futures Trading
Commission (the "CFTC") and the National Futures Association ("NFA") upon
acceptance thereof by the CFTC. Prior to the commencement of trading on behalf
of the Partnership, the Partnership shall deliver to the Trading Advisor, and
renew when necessary, a Commodity Trading Authorization, in the form attached
hereto as Exhibit 1, appointing the Trading Advisor as the Partnership's agent
and attorney-in-fact for such purpose. All trades for the account of the
Partnership shall be made through such banks, brokers and dealers as the
General Partner shall direct, and the Trading Advisor shall have no authority
or responsibility for selecting any such banks, brokers or dealers in
connection with the execution of transactions for the Partnership or for the
negotiation of commission rates charged therefor; provided, however, that the
General Partner shall notify the Trading Advisor of any applicable changes in
the commission rates charged by the Partnership's banks, brokers and dealers
with respect to transactions entered into with respect to the Allocated Assets.
(e) In the event the Trading Advisor and its principals
[as that term is defined in Regulation Section 4.10(e) promulgated by the CFTC
under the Commodity Exchange Act, as amended (the "Act")], shareholders,
partners, employees and affiliates or any person who controls the foregoing
(collectively, "Principals and Affiliates"), wish to use trading programs,
systems or strategies other than or in addition to the Trading Approach in
connection with its trading for the Partnership, either in whole or in part, it
may not do so unless the Trading Advisor gives the General Partner 15 days'
prior written notice of its intention to utilize such different trading
programs, systems or strategies and the General Partner consents thereto in
writing which consent shall not be unreasonably withheld. Non-material changes
in the Trading Approach may be instituted without prior written approval.
Changes in Contracts traded pursuant
2
<PAGE> 3
to the Trading Approach shall be considered non-material changes in the Trading
Approach; however, the Trading Advisor agrees to notify the General Partner of
such changes in Contracts within three business days of such change.
(f) The Trading Advisor agrees to make all material
disclosures to the Partnership regarding itself and its Principals and
Affiliates, their trading performance and general trading methods, their
accounts (but not the identities of customers) and otherwise as are required in
the reasonable judgment of the General Partner or the Partnership to be made in
any filings required by any governmental body or by any applicable law,
regulation, rule or order. Nothing contained in this Agreement shall be
construed or deemed to require the Trading Advisor to disclose the confidential
or proprietary details of its trading systems, strategies, methods and
programs.
(g) The Trading Advisor understands and agrees that the
General Partner intends to designate other trading advisors and to apportion
from time to time to such other trading advisors the management of such portion
of the Partnership's assets as the General Partner shall determine in its
absolute discretion. The designation of other trading advisors and
apportionment and reapportionment of a portion of the Partnership's assets to
such trading advisors shall neither terminate this Agreement nor modify in any
regard the respective rights and obligations of the parties hereto.
(h) The General Partner shall have the right to make
additions to, or withdrawals from, the Allocated Assets (including any
"notional" funds comprising part of the Allocated Assets) at any time;
provided, that the General Partner shall use its best efforts to do so only at
calendar month-ends. The General Partner agrees that the Trading Advisor may
refuse any additional allocation of funds for any reason. The General Partner,
in its sole discretion, may at any time remove all assets from the management
of the Trading Advisor and may require the Trading Advisor to liquidate
existing positions; provided, that the General Partner shall use its best
efforts to do so only at calendar month-ends.
(i) Upon receipt of instructions from the General
Partner, the Trading Advisor shall immediately cease its trading activities
with respect to the Allocated Assets, close out all existing positions in an
orderly manner and not initiate any new positions unless otherwise instructed
by the General Partner or the Partnership.
(j) The Trading Advisor shall review on a daily basis the
positions held by the Allocated Assets and shall immediately notify the General
Partner of any errors committed by the Trading Advisor or of any trade not
executed in accordance with the Trading Advisor's instructions.
2. OTHER ACCOUNTS AND ACTIVITIES OF THE TRADING ADVISOR.
(a) The services provided by the Trading Advisor
hereunder are not to be deemed exclusive. Subject to the terms of this
Agreement, the Trading Advisor and its Principals and Affiliates shall be free
to trade for their own accounts and to advise other persons and manage other
accounts during the term of this Agreement and to use the same or different
degrees of leverage, information, computer programs and trading strategies or
formulas which
3
<PAGE> 4
they obtain, produce or utilize in the performance of services for the
Partnership. However, the Trading Advisor represents, warrants and agrees that
the rendering of such consulting, advisory and management services to others
will not require any material change in the Trading Approach and will not
materially adversely affect the capacity of the Trading Advisor to continue to
render services to the Partnership of the quality and nature contemplated by
this Agreement.
(b) If, at any time during the term of this Agreement,
the Trading Advisor is required to aggregate the Partnership's Contract
positions with the positions of any other person or entity for purposes of
applying CFTC- or exchange-imposed position limits, the Trading Advisor agrees
that it will promptly notify the General Partner if the Partnership's positions
are included in an aggregate amount which equals or exceeds ninety percent
(90%) of the applicable limit. The Trading Advisor agrees that, if its trading
recommendations are altered because of the application of any position limit,
it will not modify the trading instructions with respect to the Partnership's
account in such manner as to affect the Partnership substantially
disproportionately as compared with the Trading Advisor's other accounts. The
Trading Advisor presently believes and represents that existing speculative
position limits will not materially adversely affect its ability to manage the
Partnership's account given the potential size of the Partnership's account and
the Trading Advisor's and its Principals' and Affiliates' current accounts and
all proposed accounts for which they have contracted to act as trading advisor.
The Trading Advisor further represents, warrants and agrees that under no
circumstances will it knowingly or deliberately use trading strategies or
systems for the Partnership that are inferior to trading strategies or systems
employed for any other client or account and that it will not knowingly or
deliberately favor any client or account managed by it on an overall basis over
any other client or account, it being acknowledged, however, that different
trading strategies, methods or degrees of leverage may be utilized for
differing sizes of accounts, accounts with different trading policies, accounts
experiencing differing inflows or outflows of equity, accounts which commence
trading at different times, accounts which have differing fee and expense
structures, accounts which have different portfolios or different fiscal years
and accounts with other differences, and that such differences may cause
divergent trading results; provided, that the Partnership hereby acknowledges
that the Trading Advisor offers trading programs other than the Trading
Approach selected by the Partnership and that such other trading programs may
obtain more favorable results than the Trading Approach.
(c) The Partnership and the General Partner acknowledge
and agree that the Trading Advisor and/or its Principals and Affiliates
presently act and that they may continue to act as advisors for other accounts
managed by them and may continue to receive compensation with respect to
services for such accounts in amounts which may be more or less than the
amounts received from the Partnership. The Trading Advisor agrees that in the
management of such other accounts by it and its Principals and Affiliates, it
will act in good faith to seek to achieve an equitable treatment of all
accounts under management on an overall basis including the Partnership's
account with respect to, among other things, priorities of order entry and
position limits.
(d) The Trading Advisor agrees that it shall make such
information available to the General Partner respecting the performance of the
Partnership's account as compared to the performance of all other accounts
managed by the Trading Advisor and its Principals and
4
<PAGE> 5
Affiliates as shall be reasonably requested by the General Partner or the
Partnership. The Trading Advisor shall not be required to disclose the
identity of its clients.
3. ALLOCATION OF ASSETS TO THE TRADING ADVISOR. The
Trading Advisor's Allocated Assets initially shall be a total of approximately
$1,000,000 of which $0 is notional funding.
4. FEES.
(a) Commencing with the commencement of trading by the
Trading Advisor for the Partnership, the Partnership agrees to pay to the
Trading Advisor as follows:
(i) Management Fee. A monthly management fee equal to
0.16% of the Net Asset Value of the Allocated Assets as of the close of
business on the last business day of each calendar month (an approximate 2%
annual rate). The definition of the term "Net Asset Value" is set forth in
Section 4 of the Partnership's Limited Partnership Agreement which is attached
as Exhibit 2, hereto.
(ii) For purposes of calculating the management fee, Net
Asset Value of the Allocated Assets shall be determined before reduction for
the management fees or incentive fees, if any, accrued or payable with respect
to the Allocated Assets as of such month-end, and before giving effect to any
distributions and redemptions paid or payable at such month-end. In the event
that (A) the Trading Advisor commences trading as of any day other than the
first day of a calendar month, (B) this Agreement is terminated as of any date
other than the last day of a calendar month, or (C) the Partnership reallocates
assets to or from the Trading Advisor as of any day other than the first or
last day of any calendar month, the amount of the management fee shall be
prorated on the basis of the number of business days during such month that the
Allocated Assets (as adjusted in the case of reallocation of assets) were
traded by the Trading Advisor as compared to the total number of business days
in such calendar month. To the extent that the Partnership instructs the
Trading Advisor to trade the Allocated Assets at a "nominal account size" in
excess of the actual assets comprising Allocated Assets, the Trading Advisor's
management fee shall be calculated based upon the "nominal account size" of the
Allocated Assets.
(iii) Incentive Fee. A quarterly incentive fee equal to
20% of any New Trading Profits (as defined below) achieved during each fiscal
quarter. New Trading Profits during a quarter shall mean the sum of (A) the
net of any profits and losses realized on trades closed out during the period,
plus or minus (B) the change in the net of any unrealized profits and losses on
trades which remained open as of the end of the period (net of accrued
brokerage commissions and other allocated expenses) from the net of any
unrealized profits and losses on trades initiated by the Trading Advisor which
remained open as of the end of the immediately preceding period (net of accrued
brokerage commissions and other allocated expenses), (C) any Trading Advisor
management fees paid or accrued through the end of the period, and (D) the
Trading Advisor's carryforward loss (as hereinafter defined) from the
immediately preceding period. If the sum of subparagraphs (A) through (D) for
any period is negative, such amount shall be the Trading Advisor's carryforward
loss for the next period. For purposes of calculating incentive fees, interest
income earned on the Allocated Assets will be disregarded.
5
<PAGE> 6
In the event of a withdrawal from the Allocated Assets at a time when the
Trading Advisor has a carryforward loss in effect, the amount thereof shall be
reduced by an amount determined by multiplying the carryforward loss by a
fraction, the numerator of which shall be the amount of the withdrawal and the
denominator of which shall be the Net Asset Value of the Allocated Assets
immediately prior to giving effect to the withdrawal. In the event that an
addition is made to the Allocated Assets subsequent to a reduction in the
Trading Advisor's carryforward loss by reason of a withdrawal, the Trading
Advisor's carryforward loss shall be increased by or created in an amount (up
to the aggregate amount of prior carryforward loss reductions) determined by
multiplying the aggregate amount of prior carryforward loss reductions by a
fraction, the numerator of which shall be the amount of the addition and the
denominator of which shall be the sum of the previous withdrawals which
resulted in carryforward loss reductions. The incentive fee charged to the
Partnership with respect to the Allocated Assets will be dependent upon the
performance of the Trading Advisor and will not be affected by the performance
of any other trading advisor appointed by the Partnership or the Partnership as
a whole. The initial incentive period shall commence on the date the Trading
Advisor commences trading activity for the Partnership and shall end at the
immediate following quarter-end (even though such period may not be a full
quarter). Subsequent incentive periods shall commence on the first day of the
next succeeding fiscal quarter and end on the last day of such fiscal quarter.
In the event this Agreement is terminated as of any date which is not the end
of an incentive period, an incentive fee will be paid by the Partnership, if
earned, with respect to the Allocated Assets as though such termination date
were the last day of the incentive period. For purposes of calculating the
first incentive fee, the Trading Advisor hereby agrees that it shall assume an
initial carryforward loss equal to $150,000.
(b) Payment of Fees. The management fees and incentive
fees due to the Trading Advisor shall be paid by the Partnership within thirty
(30) days of the end of the calendar period to which they relate. The
Partnership expressly agrees that any such fees due the Trading Advisor shall
survive the termination or other expiration of this Agreement.
5. TRADING ADVISOR INDEPENDENT. The Trading Advisor
shall for all purposes herein be deemed to be an independent contractor to the
Partnership and the General Partner and shall, except as otherwise expressly
provided herein, have no authority to act for or represent the Partnership or
the General Partner in any way or otherwise be deemed a sponsor of the
Partnership or an agent, joint venturer or partner of the Partnership, the
General Partner or of any other trading advisor retained by the Partnership.
6. BROKER.
(a) The Trading Advisor agrees to enter all Contract
orders through E.D. & F. Man International Inc. ("Man"), or such other brokers
and forward contract dealers as may be designated, from time to time, in
writing by the Partnership. The Partnership must consent in writing to the use
of other floor brokers who will give up such trades to Man in accordance with
exchange rules and the give-up procedures established by the Partnership from
time to time. The Trading Advisor shall be responsible for any errors
committed by any executing broker who gives-up to Man on behalf of the
Partnership. In placing trades for the Partnership's account, the Trading
Advisor agrees that it shall use its standard procedures for allocating orders
among
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the Trading Advisor's various accounts and not knowingly favor any other such
account on an overall basis over the Partnership's account.
(b) All forward contract and other trades for the
Partnership will be executed through the forward trading and other facilities
of such affiliates of Man or other entities as the Partnership may designate
from time to time.
7. STANDARD OF LIABILITY; INDEMNIFICATIONS.
(a) Standard of Liability. Neither the Trading Advisor
nor any of its Principals and Affiliates shall be liable to the Partnership,
the General Partner or any of their respective successors or assigns under this
Agreement except by reason of (i) acts or omissions to act which constitute bad
faith, negligence or misconduct or (ii) any material breach of any of the
representations, warranties, covenants or agreements of the Trading Advisor set
forth in this Agreement.
(b) Indemnity. (i) The Partnership agrees to indemnify
and hold harmless the Trading Advisor and each of its Principals and Affiliates
from and against any and all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, attorneys' and accountants' fees and
disbursements), judgments and amounts paid in settlement (collectively,
"Losses") to which an indemnified person may become subject arising out of this
Agreement, the transactions contemplated hereby or the fact the Trading Advisor
is or was a trading advisor to the Partnership, unless any such Losses arise
out of, relate to, or are based upon the Trading Advisor's failure to meet the
standard of liability applicable to it under SECTION 7(a).
(ii) The Trading Advisor agrees to indemnify and hold
harmless the Partnership, the General Partner and each of their respective
Principals and Affiliates from and against any and all Losses to which they may
become subject, if any such Losses arise out of, relate to, or are based upon
the Trading Advisor's failure to meet the standard of liability applicable to
it under SECTION 7(a).
(c) Promptly after receipt by a party to be indemnified
under SECTION 7(b), above, of any notice of the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnified party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. The
requirement that an indemnifying party be given written notice of the
commencement of any action shall be deemed to be satisfied if such indemnifying
party shall have actual knowledge thereof or shall have been given written
notice of the commencement of any action or proceeding within a reasonable time
after the commencement thereof. If any such action shall be brought against
any indemnified party and the indemnified party notifies the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to such indemnified party, and shall have the
right to negotiate and consent to a settlement thereof, provided that the
indemnified party shall have consented to the settlement. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall
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<PAGE> 8
not be liable to such indemnified party under such subsection for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
provided, however, that the indemnified party shall have the right to employ
counsel to represent it, if, in the indemnified party's reasonable judgment, it
is advisable for such party to be represented by separate counsel, in which
event the fees and expenses of such separate counsel shall be borne by the
indemnified party. No indemnifying party shall be liable for any settlement of
any such action effected without its consent, but if any such action or
proceeding is settled with the consent of any indemnifying party or if there be
a final judgment for the plaintiff in any such action or proceeding (of which
an indemnifying party shall have been notified), such indemnifying party shall
indemnify and hold harmless each indemnified party from and against any Losses
incurred or suffered by reason of such settlement or judgment.
(d) Any indemnification required by this SECTION 7,
unless ordered or expressly permitted by a court, shall be made by the
indemnifying party only upon a determination by independent legal counsel in a
written opinion that the conduct which is the subject of the claim, demand,
lawsuit, action or proceeding with respect to which indemnification is sought
meets the applicable standard set forth in this SECTION 7.
(e) The provisions of this SECTION 7 shall survive the
termination or other expiration of this Agreement.
8. THE TRADING ADVISOR'S REPRESENTATIONS AND WARRANTIES.
The Trading Advisor represents and warrants to the Partnership and the General
Partner as follows:
(a) The Trading Advisor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business as described in
this Agreement and the Disclosure Notice, and the Trading Advisor is qualified
to conduct its business and is in good standing in every jurisdiction in which
the nature or conduct of its business requires such qualification and failure
to so qualify would 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 by the Trading Advisor and is a valid and binding
agreement of the Trading Advisor enforceable in accordance with its terms.
(c) The execution and delivery of this Agreement and the
performance of the obligations and the consummation of the transactions
contemplated in this Agreement and in the Disclosure Notice will not conflict
with, violate, breach or constitute a default under, any term or provision of
the Trading Advisor's certificate of incorporation, by-laws, or other charter
documents, or any indenture, mortgage, deed of trust, loan agreement, or other
agreement or instrument to which the Trading Advisor or any of its Principals
and Affiliates is a party or by which any of them are bound, or to which any of
the property (including, but not limited to, its Trading Approach) or assets of
the Trading Advisor or its Principals and Affiliates are subject,
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<PAGE> 9
or any order, rule, law, statute, regulation, or other legal requirement
applicable to the Trading Advisor or any of its Principals or to the property
or assets of the Trading Advisor or its Principals and Affiliates of any court
or any governmental or administrative body or agency or panel or any regulatory
or self-regulatory organization or exchange having jurisdiction over the
Trading Advisor or any of its Principals and Affiliates.
(d) The Trading Advisor is registered as a commodity
trading advisor under the Act, its Principals are identified on the Trading
Advisor's most recent CFTC Form 7-R filed with the NFA pursuant to the Act, and
it is a member of the NFA in such capacity and such registration and membership
has not expired or been revoked, lapsed, suspended, terminated, or not renewed
or limited or qualified in any respect.
(e) The Trading Advisor is not bankrupt or insolvent.
(f) The Disclosure Document is complete and accurate in
all material respects, conforms to the requirements of Part 4 of the Act and
may be relied upon by the Partnership and the General Partner in preparing the
Disclosure Notice and allocating assets of the Partnership to the Trading
Advisor and there has not been, since the date of the Disclosure Document's
issuance, any material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or any of its Principals and
Affiliates, whether or not arising in the ordinary course of business, or
relating to the historical performance and operations of the Trading Advisor.
(g) The Trading Advisor and each Principal has complied
and will continue to comply in all material respects with all orders, rules,
laws, statutes, regulations or other legal requirements applicable to the
Trading Advisor or any of its Principals and Affiliates or to their respective
businesses, properties, or assets, including the Act and the rules promulgated
by the CFTC and the NFA, the violation of which would materially and adversely
affect its or their ability to comply with, and perform its or their
obligations under this Agreement, and there are no actions, suits, proceedings,
or notices of investigations or investigations pending or threatened against
the Trading Advisor, or any of its Principals or Affiliates, by the NFA, the
CFTC or any governmental, regulatory or self-regulatory agency regarding
noncompliance by the Trading Advisor or any of its Principals or Affiliates
with any law, statute, rule or regulation, or at law or in equity or before or
by any court, any federal, state, municipal or other governmental department
commission, board, bureau, agency, or instrumentality, or by any regulatory or
self-regulatory organization, or exchange, in which an adverse decision would
materially and adversely affect its or their ability to comply with or to
perform its or their obligations under this Agreement or that would be required
to be disclosed in the Disclosure Notice, which is not so disclosed, would
result in a material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor.
(h) The Trading Advisor and each Principal has all
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all governmental,
regulatory and self-regulatory agencies required to conduct their respective
businesses and to act as described in the Disclosure Notice and to perform its
or their respective obligations under this Agreement.
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<PAGE> 10
(i) With respect to information contained in the
Disclosure Notice relating to the Trading Advisor, including, without
limitation, the tables and notes thereto, the Disclosure Notice does not
contain any untrue statement of material fact or omit to state therein a
material fact required to be stated therein or necessary to be stated therein
in order to prevent the statements made therein, in light of the circumstances
under which they are made, from being misleading.
(j) In the placement of orders and the allocation of
executed trades for the Partnership and for the accounts of any other client,
the Trading Advisor shall utilize a fair and reasonable order entry system and
trade allocation system, which shall be no less favorable on an overall basis
to the Partnership than to any other account managed by the Trading Advisor.
(k) The Trading Advisor shall promptly notify the other
parties hereto of the commencement of any suit, action or proceeding involving
it or its Principals and Affiliates, whether or not any such suit, action or
proceeding also involves any of the other parties hereto.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the Trading Advisor shall promptly notify the
Partnership and the General Partner of the occurrence of such event.
9. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
The General Partner and the Partnership represents and warrants to the Trading
Advisor as follows:
(a) The Partnership is duly organized, validly existing
and in good standing as a limited partnership under the laws of Illinois. The
Partnership has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business and to act as
described in the Disclosure Notice. The Partnership is qualified to conduct its
business and is in good standing in every jurisdiction in which the nature or
conduct of its business requires such qualification and the failure to so
qualify would 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 Partnership shall
conduct its business is within the sole discretion of the Partnership.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Partnership and is a valid and binding
agreement of it enforceable in accordance with its terms. The execution and
delivery of this Agreement and the performance of the obligations and the
consummation of the transactions contemplated in this Agreement and in the
Disclosure Notice will not conflict with, violate, breach or constitute a
default under, any term or provision of the Partnership's certificate of
limited partnership or its limited partnership agreement or of any indenture,
mortgage, deed of trust, loan agreement, or other agreement or instrument to
which the Partnership is a party or by which it is bound, or to which any of
the property or assets of the Partnership are subject, or any order, rule, law,
statute, regulation, or other legal requirement applicable to the Partnership
or to the property or assets of the Partnership of any court or any
governmental or administrative body or agency or panel or any regulatory or
self-regulatory organization or exchange having jurisdiction over the
Partnership.
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<PAGE> 11
(c) The Partnership has complied and will continue to
comply in all material respects with all orders, rules, laws, statutes,
regulations or other legal requirements applicable to it, to its business,
properties, and assets, including the Act and the rules promulgated by the CFTC
and the NFA, the violation of which would materially and adversely affect its
ability to comply with, and perform its obligations under this Agreement, and
there are no actions, suits, proceedings, or notices of investigations or
investigations pending or threatened against it, by the NFA, the CFTC or any
governmental, regulatory or self-regulatory agency regarding noncompliance by
it with any law, statute, rule or regulation, or at law or in equity or before
or by any court, any federal, state, municipal or other governmental
department, commission, board, bureau, agency, or instrumentality, or by any
regulatory or self-regulatory organization, or exchange, in which an adverse
decision would materially and adversely affect its ability to comply with or to
perform its obligations under this Agreement or that would be required to be
disclosed in the Disclosure Notice, which is not so disclosed, or would result
in a material adverse change in the condition, financial or otherwise, business
or prospects of the Partnership.
(d) The Partnership has all governmental, regulatory,
self-regulatory and exchange licenses and approvals and has effected all
filings and registrations with all federal and state governmental and
regulatory and self-regulatory agencies required to conduct its business and to
act as described in the Disclosure Notice and to perform its obligations under
this Agreement.
(e) Except with respect to information contained in the
Disclosure Notice relating to the Trading Advisor or any other advisor, the
Disclosure Notice does not contain any untrue statement of material fact or
omit to state therein a material fact required to be stated therein or
necessary to be stated therein in order to prevent the statements made therein,
in light of the circumstances under which they are made, from being misleading.
The Disclosure Notice complies in all material respects with the Act and the
rules and regulations promulgated thereunder by the CFTC.
(f) The General Partner is registered as a commodity pool
operator under the Act and is a member of the NFA in such capacity and such
registration and membership has not expired or been revoked, lapsed, suspended,
terminated, or not renewed or limited or qualified in any respect.
(g) The General Partner has all governmental, regulatory,
self-regulatory and exchange licenses and approvals and has effected all
filings and registrations with all governmental, regulatory and self-regulatory
agencies required to conduct its business and to act as described in the
Disclosure Notice and to perform its obligations under this Agreement.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the General Partner will promptly notify the
Trading Advisor thereof.
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10. TERM AND TERMINATION.
(a) Unless terminated earlier as provided below, the term
of this Agreement shall be until the end of the twelfth full calendar month
after the Trading Advisor commences trading activity and is automatically
renewable thereafter for successive one-year periods unless (i) the Partnership
or the Trading Advisor terminates this Agreement during the initial one-year
term thereof by giving thirty days' prior written notice to the other parties
hereto, or (ii) either the Trading Advisor or the Partnership terminates the
Agreement at the end of the initial one-year term or at any time thereafter by
giving thirty days' prior written notice to the other parties hereto.
(b) Notwithstanding the foregoing, this Agreement may be
terminated by the Partnership immediately upon written notice to the Trading
Advisor if (i) the Trading Advisor, if other than a natural person, merges,
consolidates with or sells a substantial portion of its assets to any
individual or entity, or there is a material adverse change relating to the
Trading Advisor or a material adverse change in control, organizational
structure, financial condition, regulatory compliance or personnel of the
Trading Advisor, (ii) any of the Trading Advisor's registrations under the Act
or otherwise are suspended, terminated, lapsed or not renewed, (iii) the
Trading Advisor's membership in the NFA or other self-regulatory organization
is suspended, terminated, lapsed or not renewed, (iv) the Trading Advisor
otherwise becomes unable to serve as a trading advisor to the full extent
contemplated by this Agreement, (v) the Trading Advisor breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, or (vi) the General Partner determines doing so is in the best
interests of the Partnership.
(c) Notwithstanding the foregoing, this Agreement may be
terminated by the Trading Advisor immediately upon written notice to the
Partnership if the General Partner's registration under the Act or otherwise is
suspended, terminated, lapsed or not renewed.
11. NOTICES. Except as otherwise provided herein, all
notices, demands or requests required to be made or delivered under this
Agreement shall be effective only if in writing and delivered personally or by
facsimile or mail, postage prepaid (airmail if the addressee is in another
country), to the respective addresses below or to such other addresses as may
be designated by the party entitled to receive the same by notice similarly
given and shall be deemed given by the party required to provide notice when
received by the party to whom notice is required to be given.
If to the Partnership or the General Partner to:
Heinold Asset Management, Inc.
One Financial Plaza
440 South LaSalle Street
Chicago, Illinois 60605
Attn: Daniel E. Ragen, President
Fax No.: 312-663-7904
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If to the Trading Advisor to:
RXR, Inc.
Financial Centre
695 East Main Street
Suite 102
Stamford, Connecticut 06901
Attn: Mark Rosenberg, President
Fax No.: 203-325-5999
12. ASSIGNMENT. No party hereto may transfer, sell,
encumber, appoint agents or assign any of its rights or obligations hereunder
in whole or in part without the express written consent of each of the other
parties hereto.
13. AMENDMENT; MODIFICATION. This Agreement may not be
amended or modified, nor any of the provisions hereof waived, except by the
written consent of all of the parties hereto.
14. COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject hereof
and supersedes all prior agreements written or oral, and no other agreement,
verbal or otherwise, shall be binding as between the parties hereto unless in
writing and signed by the party against whom enforcement is sought.
15. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns. No other person other than the persons indemnified under SECTION 7
hereof for matters relating to that Section shall have any right or obligation
under this Agreement.
16. HEADINGS. Headings to sections herein are for the
convenience of the parties only, and are not intended to be a part of or to
affect the meanings or interpretation of this Agreement.
17. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Illinois without
giving effect to principles of conflicts of laws.
18. ARBITRATION. The parties agree that all
controversies which may arise in connection with any transaction contemplated
by this Agreement or the construction, performance or breach of this Agreement
shall be determined by arbitration, to be held in the City of Chicago, State of
Illinois unless otherwise agreed to by the parties hereto, and in accordance
with the rules then obtaining of the NFA, or if no such rules are then in
effect or if jurisdiction is declined, then the rules then obtaining of the
American Arbitration Association; provided, however, that (a) the arbitrator(s)
shall be knowledgeable in industry standards and practices and the matters
giving rise to the dispute, (b) the arbitrator(s) shall not have the power and
authority to award punitive damages, (c) the authority of the arbitrator(s)
shall be limited to construing and enforcing the terms and conditions of this
Agreement as expressly set forth herein, and (d) the arbitrator(s) shall state
the reasons for their award and their legal and factual
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<PAGE> 14
conclusions underlying the award in a written opinion. The award of the
arbitrator(s), or a majority of them, shall be final, and judgment upon the
award may be confirmed and entered in any court, state or federal, having
jurisdiction.
19. CONSENT TO JURISDICTION. Except as set forth in
Section 18 above, each party hereto expressly and irrevocably agrees (a) that
it waives any objection, and specifically consents, to venue in the United
States federal or state courts located in the City of Chicago, State of
Illinois, United States of America, so that any action at law or in equity may
be brought and maintained in any such court, and (b) that service of process in
any such action may be effected against such party by certified or registered
mail or in any other manner permitted by applicable United States Federal Rules
of Civil Procedure or Rules of the Courts of the State of Illinois. In
addition, each party hereto expressly and irrevocably waives, in respect of any
action brought in any United States federal or state court located in the City
of Chicago, State of Illinois or any resulting judgment, any objection, and
hereby specifically consents, to the jurisdiction of any such court, and agrees
not to seek to change the situs of such action or to assert that any other
court in any other action is a more suitable forum for the hearing and
adjudication of any claim or dispute raised in such action.
20. SURVIVAL. The indemnity provisions 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 the
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.
21. WAIVER OF BREACH. The waiver by a party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party. The failure of a party to insist
upon strict adherence to any provision of this Agreement shall not constitute a
waiver or thereafter deprive such party of the right to insist upon a strict
adherence.
22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
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<PAGE> 15
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Daniel E. Ragen
---------------------------
Daniel E. Ragen
President
HEINOLD ASSET MANAGEMENT, INC.
By: /s/ Daniel E. Ragen
--------------------------
Daniel E. Ragen
President
RXR, INC.
By: /s/ Mark Rosenberg
----------------------------
Mark Rosenberg
President
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EXHIBIT 1
October __, 1995
RXR, Inc.
Financial Centre
695 East Main Street
Suite 102
Stamford, Connecticut 06901
Re: Commodity Trading Authorization
Gentlemen:
THE FUTURES DIMENSION FUND, an Illinois limited partnership
(the "Partnership"), does hereby make, constitute, and appoint you as its
Attorney-in-Fact to purchase and sell futures contracts, commodities and
commodity options and forward contracts, and any other items which are
currently, or may later become, the subject of futures, forward or options
trading, and other related investments on domestic and international exchanges,
through E.D. & F. Man International Inc., or such other brokers and forward
contract dealers as may be designated, from time to time, in writing by the
Partnership, as brokers, in accordance with the Management Contract between us
dated November __, 1995.
Very truly yours,
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Daniel E. Ragen
-----------------------------
Daniel E. Ragen
President
<PAGE> 1
EXHIBIT 10(t)
MANAGEMENT CONTRACT
THIS MANAGEMENT CONTRACT ("Agreement"), is made and entered into
effective as of the 8th day of November 1995, by and between The Futures
Dimension Fund, an Illinois limited partnership (the "Partnership"), Heinold
Asset Management, Inc., a Delaware corporation and Willowbridge Associates
Inc., a Delaware corporation (the "Trading Advisor").
W I T N E S S E T H:
WHEREAS, the purpose and business of the Partnership is to
seek capital appreciation by trading speculatively in futures contracts,
commodities and commodity options and forward contracts, and any other items
which are currently, or may later become, the subject of futures, forward or
options trading, and other related investments (sometimes hereinafter referred
to as "Contracts") on United States and non-United States exchanges and
markets; and
WHEREAS, the Partnership, through Heinold Asset Management,
Inc., its general partner (the "General Partner"), pursuant to the Limited
Partnership Agreement of the Partnership, is authorized to utilize the services
of professional trading advisors in connection with the trading activities of
the Partnership; and
WHEREAS, the Partnership has heretofore offered units of
limited partnership interest in the Partnership for sale to investors; and
WHEREAS, the Trading Advisor is engaged in the business of
making trading decisions on behalf of itself and others regarding the purchase
and sale of Contracts; and
WHEREAS, the Partnership and the Trading Advisor each desire
the Trading Advisor to make trading decisions for the Partnership with respect
to the assets of the Partnership allocated to be managed by the Trading Advisor
(the "Allocated Assets") on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
agreements set forth herein, the parties hereto do agree as follows:
<PAGE> 2
1. DUTIES OF THE TRADING ADVISOR.
(a) The Partnership hereby appoints the Trading Advisor,
and the Trading Advisor hereby accepts appointment, as a trading advisor of the
Partnership in connection with the trading activities of the Partnership.
(b) Upon the Trading Advisor's commencing of trading
operations for the Partnership and for the period and on the terms and
conditions set forth in this Agreement, the Trading Advisor shall have sole
authority and responsibility, as the Partnership's agent and attorney-in-fact,
for trading the Allocated Assets in Contracts and in accordance with the
Trading Advisor's Select Investment Program utilizing the Argo Trading System
("Trading Approach"; which term, for purposes of this Agreement, shall include
trading approaches, systems, instructions, methods, models, strategies,
methodologies and formulas) as described in the Trading Advisor's Disclosure
Document dated June 30, 1995 (the "Disclosure Document"), subject to the
trading policies of the Partnership furnished to the Trading Advisor in writing
("Trading Policies"). The parties hereto acknowledge that the Trading Advisor
will trade Contracts for the Partnership independently of any other trading
advisor retained by the Partnership. For purposes of this Agreement, the term
"Contracts" shall not include securities and options thereon.
(c) Subject to receipt of adequate assurances of
confidentiality, the Trading Advisor agrees, upon request, to describe to the
General Partner its practices with respect to the leverage used by the Trading
Advisor in managing the Partnership's account relative to other accounts
managed by the Trading Advisor using the Trading Approach to enable the General
Partner to determine whether the "trading level" at which the Trading Advisor
is currently managing the Partnership's account is the level currently
designated in writing by the General Partner.
(d) The General Partner and the Partnership acknowledge
receipt of the Trading Advisor's Disclosure Document. The Trading Advisor
shall promptly furnish the Partnership with a copy of each amended,
supplemented or updated Disclosure Document of the Trading Advisor filed with
the Commodity Futures Trading Commission (the "CFTC") and the National Futures
Association ("NFA") upon acceptance thereof by the CFTC. Prior to the
commencement of trading on behalf of the Partnership, the Partnership shall
deliver to the Trading Advisor, and renew when necessary, a Commodity Trading
Authorization, in the form attached hereto as Exhibit 1, appointing the Trading
Advisor as the Partnership's agent and attorney-in-fact for such purpose.
Other than "give-up" agreements with executing brokers approved by the General
Partner, all trades for the account of the Partnership shall be made through
such
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<PAGE> 3
banks, brokers and dealers as the General Partner shall direct, and the Trading
Advisor shall have no authority or responsibility for selecting any such banks,
brokers or dealers in connection with the execution of transactions for the
Partnership or for the negotiation of commission rates charged therefor;
provided, however, that the General Partner shall notify the Trading Advisor of
any applicable changes in the commission rates charged by the Partnership's
banks, brokers and dealers with respect to transactions entered into with
respect to the Allocated Assets. The General Partner will cause the
Partnership's commodity broker to provide the Trading Advisor with copies of
all confirmation, purchase and sale, monthly and similar statements at the time
such statements are available to the General Partner.
(e) In the event the Trading Advisor and its principals
[as that term is defined in Regulation Section 4.10(e) promulgated by the CFTC
under the Commodity Exchange Act, as amended (the "Act")], shareholders,
partners, employees and affiliates or any person who controls the foregoing
(collectively, "Principals and Affiliates"), wish to use trading programs,
systems or strategies other than or in addition to the Trading Approach in
connection with its trading for the Partnership, either in whole or in part, it
may not do so unless the Trading Advisor gives the General Partner 15 days'
prior written notice of its intention to utilize such different trading
programs, systems or strategies and the General Partner consents thereto in
writing. Non-material changes in the Trading Approach may be instituted
without prior written approval.
(f) The Trading Advisor agrees to make all material
disclosures to the Partnership regarding itself and its Principals and
Affiliates, their trading performance and general trading methods, their
accounts (but not the identities of customers) and otherwise as are required in
the reasonable judgment of the General Partner or the Partnership to be made in
any filings required by any governmental body or by any applicable law,
regulation, rule or order; provided, that, the General Partner and the
Partnership shall not distribute any Disclosure Notice relating to the
appointment of the Trading Advisor as a commodity trading advisor of the
Partnership or other description of the Trading Advisor, its Principals and
Affiliates or its or their trading performance without the prior written
consent of the Trading Advisor. Within three business days following receipt of
such description, the Trading Advisor shall provide the General Partner in
writing, any changes thereto and shall review and approve such changes prior to
its distribution. The Trading Advisor shall review and provide any revised
description within two business days. Failure to respond to any revised
description of the Trading Advisor within three business days shall constitute
the Trading Advisor's consent to such distribution. Nothing contained in this
Agreement shall be construed or deemed to require the Trading Advisor to
disclose the identity of customers or any confidential or proprietary details
of its trading strategies.
(g) The Trading Advisor understands and agrees that the
General Partner intends to designate other trading advisors and to
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apportion from time to time to such other trading advisors the management of
such portion of the Partnership's assets as the General Partner shall determine
in its absolute discretion. The designation of other trading advisors and
apportionment and reapportionment of a portion of the Partnership's assets to
such trading advisors shall neither terminate this Agreement nor modify in any
regard the respective rights and obligations of the parties hereto; provided,
however, the Trading Advisor may terminate this Agreement in the event that the
Allocated Assets total less than U.S. $180,000.
(h) The General Partner shall have the right to make
additions to, or withdrawals from, the Allocated Assets (including any
"notional" funds comprising part of the Allocated Assets) at any time upon two
days' written notice to the Trading Advisor. The General Partner agrees that
the Trading Advisor may refuse any additional allocation of funds for any
reason. The General Partner, in its sole discretion, may at any time upon two
days' written notice to the Trading Advisor, remove all assets from the
management of the Trading Advisor and may require the Trading Advisor to
liquidate existing positions.
(i) Upon receipt of written instructions from the General
Partner, the Trading Advisor shall immediately cease its trading activities
with respect to the Allocated Assets, close out all existing positions in an
orderly manner and not initiate any new positions unless otherwise instructed
by the General Partner or the Partnership.
(j) The Trading Advisor shall review on a daily basis the
positions held by the Allocated Assets and shall immediately notify the General
Partner of any errors committed by the Trading Advisor or of any trade not
executed in accordance with the Trading Advisor's instructions.
2. OTHER ACCOUNTS AND ACTIVITIES OF THE TRADING ADVISOR.
(a) The services provided by the Trading Advisor
hereunder are not to be deemed exclusive. Subject to the terms of this
Agreement, the Trading Advisor and its Principals and Affiliates shall be free
to trade for their own accounts and to advise other persons and manage other
accounts during the term of this Agreement and to use the same or different
degrees of leverage, information, computer programs and trading strategies or
formulas which they obtain, produce or utilize in the performance of services
for the Partnership. However, the Trading Advisor represents, warrants and
agrees that the rendering of such consulting, advisory and management services
to others will not require any material change in the Trading Approach and will
not materially adversely affect the capacity of the Trading Advisor to continue
to render services to the Partnership of the quality and nature contemplated by
this Agreement.
(b) If, at any time during the term of this Agreement,
the Trading Advisor is required to aggregate the Partnership's
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Contract positions with the positions of any other person or entity for
purposes of applying CFTC- or exchange-imposed position limits, the Trading
Advisor agrees that it will promptly notify the General Partner if the
Partnership's positions are included in an aggregate amount which equals or
exceeds ninety-five percent (95%) of the applicable limit. The Trading Advisor
agrees that, if its trading recommendations are altered because of the
application of any position limit, it will not modify the trading instructions
with respect to the Partnership's account in such manner as to affect the
Partnership substantially disproportionately as compared with the Trading
Advisor's other accounts. The Trading Advisor presently believes and
represents that existing speculative position limits will not materially
adversely affect its ability to manage the Partnership's account given the
potential size of the Partnership's account and the Trading Advisor's and its
Principals' and Affiliates' current accounts and all proposed accounts for
which they have contracted to act as trading advisor. The Trading Advisor
further represents, warrants and agrees that under no circumstances will it
knowingly or deliberately favor any client or account managed by it over any
other client or account, it being acknowledged, however, that different trading
strategies, methods or degrees of leverage may be utilized and that accounts
may have different trading policies, different inflows or outflows of equity,
commence trading at different times, different fee structures, different
portfolios, different fiscal years and other differences, and that such
differences may cause divergent trading results. The Partnership and the
General Partner acknowledge, however, that if the Allocated Assets are less
than U.S.$1,000,000, the Trading Advisor may not be able to trade the full Argo
Trading System for the Partnership. As a result, the Partnership's trading
performance may be different from the other accounts traded pursuant to the
Argo Trading System.
(c) The Partnership and the General Partner acknowledge
and agree that the Trading Advisor and/or its Principals and Affiliates
presently act and that they may continue to act as advisors for other accounts
managed by them and may continue to receive compensation with respect to
services for such accounts in amounts which may be more or less than the
amounts received from the Partnership. The Trading Advisor agrees that in the
management of such other accounts by it and its Principals and Affiliates, it
will act in good faith to seek to achieve an equitable treatment of all
accounts under management including the Partnership's account with respect to,
among other things, priorities of order entry and position limits.
(d) The Trading Advisor agrees that it shall make such
information available to the General Partner respecting the performance of the
Partnership's account as compared to the performance of all other accounts
managed by the Trading Advisor and its Principals and Affiliates as shall be
reasonably requested by the General Partner or the Partnership. The Trading
Advisor shall not be required to disclose the identity of its clients or the
performance of proprietary accounts.
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3. ALLOCATION OF ASSETS TO THE TRADING ADVISOR. The
Trading Advisor's Allocated Assets initially shall be a total of approximately
U.S. $2,300,000 of which U.S. $0 is notional funding.
4. FEES.
(a) Commencing with the commencement of trading by the
Trading Advisor for the Partnership, the Partnership agrees to pay to the
Trading Advisor as follows:
(i) Management Fee. A monthly management fee equal to
0.166% of the Net Asset Value of the Allocated Assets as of the close of
business on the last business day of each calendar month (an approximate 2%
annual rate). The definition of the term "Net Asset Value" is set forth in
Section 4 of the Partnership's Limited Partnership Agreement which is attached
as Exhibit 2, hereto.
(ii) For purposes of calculating the management fee, Net
Asset Value of the Allocated Assets shall be determined before reduction for
the management fees or incentive fees, if any, accrued or payable with respect
to the Allocated Assets as of such month-end, and before giving effect to any
distributions, redemptions or reallocations paid or payable at such month-end.
In the event that (A) the Trading Advisor commences trading as of any day other
than the first day of a calendar month, (B) this Agreement is terminated as of
any date other than the last day of a calendar month, or (C) the Partnership
reallocates assets to or from the Trading Advisor as of any day other than the
first or last day of any calendar month, the amount of the management fee shall
be prorated on the basis of the number of business days during such month that
the Allocated Assets (as adjusted in the case of reallocation of assets) were
traded by the Trading Advisor as compared to the total number of business days
in such calendar month. To the extent that the Partnership instructs the
Trading Advisor to trade the Allocated Assets at a "nominal account size" in
excess of the actual assets comprising Allocated Assets, the Trading Advisor's
management fee shall be calculated based upon the "nominal account size" of the
Allocated Assets.
(iii) Incentive Fee. A quarterly incentive fee equal to
20% of any New Trading Profits (as defined below) achieved during each fiscal
quarter. New Trading Profits during a quarter shall mean the sum of (A) the
net of any profits and losses realized on trades closed out during the period,
plus or minus (B) the change in the net of any unrealized profits and losses on
trades which remained open as of the end of the period (net of accrued
brokerage commissions and other allocated expenses) from the net of any
unrealized profits and losses on trades initiated by the Trading Advisor which
remained open as of the end of the immediately preceding period (net of accrued
brokerage commissions and other allocated expenses), (C) any Trading Advisor
management fees paid or accrued through the end of the period, and (D) the
Trading Advisor's carryforward loss (as hereinafter defined) from
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the immediately preceding period. If the sum of subparagraphs (A)
through (D) for any period is negative, such amount shall be the Trading
Advisor's carryforward loss for the next period. For purposes of calculating
incentive fees, interest income earned on the Allocated Assets will be
disregarded. In the event of a withdrawal from the Allocated Assets at a time
when the Trading Advisor has a carryforward loss in effect, the amount thereof
shall be reduced by an amount determined by multiplying the carryforward loss
by a fraction, the numerator of which shall be the amount of the withdrawal and
the denominator of which shall be the Net Asset Value of the Allocated Assets
immediately prior to giving effect to the withdrawal. In the event that an
addition is made to the Allocated Assets subsequent to a reduction in the
Trading Advisor's carryforward loss by reason of a withdrawal, the Trading
Advisor's carryforward loss shall be increased by or created in an amount (up
to the aggregate amount of prior carryforward loss reductions) determined by
multiplying the aggregate amount of prior carryforward loss reductions by a
fraction, the numerator of which shall be the amount of the addition and the
denominator of which shall be the sum of the previous withdrawals which
resulted in carryforward loss reductions. The incentive fee charged to the
Partnership with respect to the Allocated Assets will be dependent upon the
performance of the Trading Advisor and will not be affected by the performance
of any other trading advisor appointed by the Partnership or the Partnership as
a whole. The initial incentive period shall commence on the date the Trading
Advisor commences trading activity for the Partnership and shall end at the
immediate following quarter-end (even though such period may not be a full
quarter). Subsequent incentive periods shall commence on the first day of the
next succeeding fiscal quarter and end on the last day of such fiscal quarter.
In the event this Agreement is terminated as of any date which is not the end
of an incentive period, an incentive fee will be paid by the Partnership, if
earned, with respect to the Allocated Assets as though such termination date
were the last day of the incentive period. For purposes of calculating the
first incentive fee, the Trading Advisor hereby agrees that it shall assume an
initial carryforward loss (constituting a portion of the Partnership's current
overall carryforward loss) equal to $287,500; which carryforward loss shall not
exceed 12.5% of the Allocated Assets hereunder.
(b) Payment of Fees. The management fees and incentive
fees due to the Trading Advisor shall be paid by the Partnership within thirty
(30) days of the end of the calendar period to which they relate. The
Partnership expressly agrees that any such fees due the Trading Advisor shall
survive the termination or other expiration of this Agreement.
5. TRADING ADVISOR INDEPENDENT. The Trading Advisor
shall for all purposes herein be deemed to be an independent contractor to the
Partnership and the General Partner and shall, except as otherwise expressly
provided herein, have no authority to act for or represent the Partnership or
the General Partner in any way or otherwise be deemed a sponsor of the
Partnership or an
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agent, joint venturer or partner of the Partnership, the General
Partner or of any other trading advisor retained by the Partnership.
6. BROKER.
(a) The Trading Advisor agrees to enter all Contract
orders through E.D. & F. Man International Inc. ("Man"), or such other brokers
and forward contract dealers as may be designated, from time to time, in
writing by the Partnership. The Partnership must consent in writing to the use
of other floor brokers who will give up such trades to Man in accordance with
exchange rules and the give-up procedures established by the Partnership from
time to time. The Trading Advisor shall be responsible for any errors
committed by any executing broker who gives-up to Man on behalf of the
Partnership. In placing trades for the Partnership's account, the Trading
Advisor agrees that it shall use its standard procedures for allocating orders
among the Trading Advisor's various accounts and not knowingly favor any other
such account over the Partnership's account.
(b) All forward contract and other trades for the
Partnership will be executed through the forward trading and other facilities
of such affiliates of Man or other entities as the Partnership may designate in
writing from time to time.
7. STANDARD OF LIABILITY; INDEMNIFICATIONS.
(a) Standard of Liability. Neither the Trading Advisor
nor any of its Principals and Affiliates shall be liable to the Partnership,
the General Partner or any of their respective successors or assigns under this
Agreement except by reason of (i) acts or omissions to act which constitute bad
faith, negligence or misconduct or (ii) a material breach of any of the
representations, warranties, covenants or agreements of the Trading Advisor set
forth in this Agreement; it being understood that Contract transactions made by
the Trading Advisor on behalf of the Partnership shall be for the account of
the Partnership and the risk of the Partnership. The General Partner
acknowledges that the Trading Advisor makes no guarantee of profits or of
protection against losses.
(b) Indemnity. (i) The Partnership agrees to indemnify
and hold harmless the Trading Advisor and each of its Principals and Affiliates
from and against any and all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, attorneys' and accountants' fees and
disbursements), judgments and amounts paid in settlement (collectively,
"Losses") to which an indemnified person may become subject arising out of this
Agreement, the transactions contemplated hereby or the fact the Trading Advisor
is or was a trading advisor to the Partnership, unless any such Losses arise
out of, relate to, or are based upon the Trading Advisor's failure to meet the
standard of liability applicable to it under SECTION 7(a).
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(ii) The Trading Advisor agrees to indemnify and hold
harmless the Partnership, the General Partner and each of their respective
Principals and Affiliates from and against any and all Losses to which they may
become subject, if any such Losses arise out of, relate to, or are based upon
the Trading Advisor's failure to meet the standard of liability applicable to
it under SECTION 7(a).
(c) Promptly after receipt by a party to be indemnified
under SECTION 7(b), above, of any notice of the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnified party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. The
requirement that an indemnifying party be given written notice of the
commencement of any action shall be deemed to be satisfied if such indemnifying
party shall have actual knowledge thereof or shall have been given written
notice of the commencement of any action or proceeding within a reasonable time
after the commencement thereof. If any such action shall be brought against
any indemnified party and the indemnified party notifies the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to such indemnified party, and shall have the
right to negotiate and consent to a settlement thereof, provided that the
indemnified party shall have consented to the settlement. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent it,
if, in the indemnified party's reasonable judgment, it is advisable for such
party to be represented by separate counsel, in which event the fees and
expenses of such separate counsel shall be borne by the indemnified party. No
indemnifying party shall be liable for any settlement of any such action
effected without its consent, but if any such action or proceeding is settled
with the consent of any indemnifying party or if there be a final judgment for
the plaintiff in any such action or proceeding (of which an indemnifying party
shall have been notified), such indemnifying party shall indemnify and hold
harmless each indemnified party from and against any Losses incurred or
suffered by reason of such settlement or judgment.
(d) Any indemnification required by this SECTION 7,
unless ordered or expressly permitted by a court, arbitrator, or administrative
forum, shall be made by the indemnifying party only upon a determination by
independent legal counsel in a written opinion that the conduct which is the
subject of the claim, demand,
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lawsuit, action or proceeding with respect to which indemnification is
sought meets the applicable standard set forth in this SECTION 7.
8. THE TRADING ADVISOR'S REPRESENTATIONS AND WARRANTIES.
The Trading Advisor represents and warrants to the Partnership and the General
Partner as follows:
(a) The Trading Advisor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and perform its
obligations under this Agreement and to conduct its business as described in
this Agreement and the Disclosure Notice, and the Trading Advisor is qualified
to conduct its business and is in good standing in every jurisdiction in which
the nature or conduct of its business requires such qualification and failure
to so qualify would 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 by the Trading Advisor and is a valid and binding
agreement of the Trading Advisor enforceable in accordance with its terms.
(c) The execution and delivery of this Agreement and the
performance of the obligations and the consummation of the transactions
contemplated in this Agreement and in the Disclosure Notice will not conflict
with, violate, breach or constitute a default under, any term or provision of
the Trading Advisor's certificate of incorporation, by-laws, or other charter
documents, or any indenture, mortgage, deed of trust, loan agreement, or other
agreement or instrument to which the Trading Advisor or any of its Principals
and Affiliates is a party or by which any of them are bound, or to which any of
the property (including, but not limited to, its Trading Approach) or assets of
the Trading Advisor or its Principals and Affiliates are subject, or any order,
rule, law, statute, regulation, or other legal requirement applicable to the
Trading Advisor or any of its Principals or to the property or assets of the
Trading Advisor or its Principals and Affiliates of any court or any
governmental or administrative body or agency or panel or any regulatory or
self-regulatory organization or exchange having jurisdiction over the Trading
Advisor or any of its Principals and Affiliates.
(d) The Trading Advisor is registered as a commodity
trading advisor under the Act, its Principals are identified on the Trading
Advisor's most recent CFTC Form 7-R filed with the NFA pursuant to the Act or
on a CFTC Form 3-R filed subsequently, and it is a member of the NFA in such
capacity and such registration and membership has not expired or been revoked,
lapsed, suspended, terminated, or not renewed or limited or qualified in any
respect.
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(e) The Trading Advisor is not bankrupt or insolvent.
(f) The Disclosure Document is complete and accurate in
all material respects, does not contain any misstatement of any material fact,
does not omit to state any material fact necessary to be stated therein in
order to make the statements made therein, in light of the circumstances under
which they are made, not misleading, and complies in all material respects with
the applicable requirements of the Act and the rules promulgated thereunder and
may be relied upon by the Partnership and the General Partner in preparing the
Disclosure Notice and allocating assets of the Partnership to the Trading
Advisor and there has not been, since the date of the Disclosure Document's
issuance, any material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or any of its Principals and
Affiliates, whether or not arising in the ordinary course of business, or
relating to the historical performance and operations of the Trading Advisor,
except as disclosed in writing to the General Partner.
(g) The Trading Advisor and each Principal has complied
and will continue to comply in all material respects with all orders, rules,
laws, statutes, regulations or other legal requirements applicable to the
Trading Advisor or any of its Principals and Affiliates or to their respective
businesses, properties, or assets, including the Act and the rules promulgated
by the CFTC and the NFA, the violation of which would materially and adversely
affect its or their ability to comply with, and perform its or their
obligations under this Agreement, and there are no actions, suits, proceedings,
or notices of investigations or investigations pending or, to their knowledge,
threatened against the Trading Advisor, or any of its Principals or Affiliates,
by the NFA, the CFTC or any governmental, regulatory or self-regulatory agency
regarding noncompliance by the Trading Advisor or any of its Principals or
Affiliates with any law, statute, rule or regulation, or at law or in equity or
before or by any court, any federal, state, municipal or other governmental
department commission, board, bureau, agency, or instrumentality, or by any
regulatory or self-regulatory organization, or exchange, in which an adverse
decision would materially and adversely affect its or their ability to comply
with or to perform its or their obligations under this Agreement or that would
be required to be disclosed in the Disclosure Notice, which is not so
disclosed, would result in a material adverse change in the condition,
financial or otherwise, business or prospects of the Trading Advisor.
(h) The Trading Advisor and each Principal has all
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all governmental,
regulatory and self-regulatory agencies required to conduct their respective
businesses and to act as described in the Disclosure Notice and to perform its
or their respective obligations under this Agreement.
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(i) With respect to information contained in the
Disclosure Notice relating to the Trading Advisor specifically approved for use
in the Disclosure Notice by the Trading Advisor in writing, including, without
limitation, the tables and notes thereto, the Disclosure Notice does not
contain any untrue statement of material fact or omit to state therein a
material fact required to be stated therein or necessary to be stated therein
in order to prevent the statements made therein, in light of the circumstances
under which they are made, from being misleading. Within three business days
following receipt of the Disclosure Notice, the Trading Advisor shall provide
the General Partner in writing, any changes thereto and shall review and
approve such changes prior to its distribution. The Trading Advisor shall
review and provide any revised description within two business days. Failure to
respond to any revised description of the Trading Advisor within three business
days shall constitute the Trading Advisors consent to distribution of the
Disclosure Notice.
(j) In the placement of orders and the allocation of
executed trades for the Partnership and for the accounts of any other client,
the Trading Advisor shall utilize a fair and reasonable order entry system and
trade allocation system, which on an overall basis shall be no less favorable
to the Partnership than to any other account managed by the Trading Advisor.
(k) The Trading Advisor shall promptly notify the other
parties hereto of the commencement of any material suit, action or proceeding
involving it or its Principals and Affiliates, whether or not any such suit,
action or proceeding also involves any of the other parties hereto.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the Trading Advisor shall promptly notify the
Partnership and the General Partner of the occurrence of such event.
9. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
The Partnership and the General Partner each represent and warrant to the
Trading Advisor as follows:
(a) The Partnership is duly organized, validly existing
and in good standing as a limited partnership under the laws of Illinois and
has full power and authority to perform its obligations under this Agreement
and to conduct its business and to act as described in the Disclosure Notice.
The Partnership is qualified to conduct its business and is in good standing in
every jurisdiction in which the nature or conduct of its business requires such
qualification and failure to so qualify would 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
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Partnership shall conduct its business is within the sole discretion of
the Partnership.
(b) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Partnership and is a valid
and binding agreement of it enforceable in accordance with its terms.
(c) The Partnership has complied and will continue to
comply in all material respects with all orders, rules, laws, statutes,
regulations or other legal requirements applicable to it, to its business,
properties, and assets, including the Act and the rules promulgated by the CFTC
and the NFA, the violation of which would materially and adversely affect its
ability to comply with, and perform its obligations under this Agreement, and
there are no actions, suits, proceedings, or notices of investigations or
investigations pending or threatened against it, by the NFA, the CFTC or any
governmental, regulatory or self-regulatory agency regarding noncompliance by
it with any law, statute, rule or regulation, or at law or in equity or before
or by any court, any federal, state, municipal or other governmental
department, commission, board, bureau, agency, or instrumentality, or by any
regulatory or self-regulatory organization, or exchange, in which an adverse
decision would materially and adversely affect its ability to comply with or to
perform its obligations under this Agreement or that would be required to be
disclosed in the Disclosure Notice, which is not so disclosed, or would result
in a material adverse change in the condition, financial or otherwise, business
or prospects of the Partnership.
(d) The Partnership has all federal and state
governmental, regulatory, self-regulatory and exchange licenses and approvals
and has effected all filings and registrations with all federal and state
governmental and regulatory and self-regulatory agencies required to conduct
its business and to act as described in the Disclosure Notice and to perform
its obligations under this Agreement.
(e) Except with respect to information contained in the
Disclosure Notice relating to the Trading Advisor or any other advisor, the
Disclosure Notice does not contain any untrue statement of material fact or
omit to state therein a material fact required to be stated therein or
necessary to be stated therein in order to prevent the statements made therein,
in light of the circumstances under which they are made, from being misleading.
(f) The execution and delivery of this Agreement and the
performance of the obligations and the consummation of the transactions
contemplated in this Agreement and in the Disclosure Notice will not conflict
with, violate, breach or constitute a default under, any term or provision of
the Partnership's certificate of incorporation, or other charter documents, or
any indenture, mortgage, deed of trust, loan agreement, or other agreement or
instrument to which the Partnership is a party or by which it is bound, or to
which any of the property or assets of the
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Partnership is subject, or any order, rule, law, statute, regulation,
or other legal requirement applicable to the Partnership or to the property or
assets of the Partnership of any court or any governmental or administrative
body or agency or panel or any regulatory or self-regulatory organization or
exchange having jurisdiction over the Partnership.
(g) The General Partner is registered as a commodity pool
operator under the Act, its Principals are identified on the General Partner's
most recent CFTC Form 7-R filed with the NFA pursuant to the Act or on a CFTC
Form 3-R filed subsequently, and is a member of the NFA in such capacity and
such registration and membership has not expired or been revoked, lapsed,
suspended, terminated, or not renewed or limited or qualified in any respect.
(h) The General Partner and each Principal has all
federal and state governmental, regulatory, self-regulatory and exchange
licenses and approvals and has effected all filings and registrations with all
federal and state governmental and regulatory and self-regulatory agencies
required to conduct its business and to act as described in the Disclosure
Notice and to perform its obligations under this Agreement.
(i) The General Partner shall promptly notify the other
parties hereto of the commencement of any material suit, action or proceeding
involving it or its Principals and Affiliates, whether or not any such suit,
action or proceeding also involves any of the other parties hereto.
The foregoing representations and warranties shall be
continuing during the term of this Agreement and any renewal hereof and if at
any time any event shall occur which would make or tend to make any of the
foregoing not true or incomplete, the General Partner will promptly notify the
Trading Advisor thereof.
10. TERM AND TERMINATION.
(a) Unless terminated earlier as provided below, the term
of this Agreement shall be until the end of the twelfth full calendar month
after the Trading Advisor commences trading activity and is automatically
renewable thereafter for successive one-year periods unless (i) the Partnership
terminates this Agreement during the initial one-year term thereof by giving
thirty days' prior written notice to the Trading Advisor, or (ii) either the
Trading Advisor or the Partnership terminates the Agreement at the end of the
initial one-year term or at any time thereafter by giving thirty days' prior
written notice to such other party. The parties shall use best efforts to
terminate this Agreement at month-end.
(b) Notwithstanding paragraph (a) of this Section 10,
this Agreement may be terminated by the Partnership immediately upon written
notice to the Trading Advisor if (i) the Trading Advisor, if other than a
natural person, merges, consolidates with or sells a substantial portion of its
assets to any individual or entity, or there is a material adverse change
relating to the
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Trading Advisor or a material adverse change in control, organizational
structure, financial condition, regulatory compliance or key personnel of the
Trading Advisor, (ii) any of the Trading Advisor's registrations under the Act
are suspended, terminated, lapsed or not renewed, (iii) the Trading Advisor's
membership in the NFA is suspended, terminated, lapsed or not renewed, (iv) the
Trading Advisor otherwise becomes unable to serve as a trading advisor to the
full extent contemplated by this Agreement, (v) the Trading Advisor materially
breaches any of its representations, warranties, covenants or agreements
contained in this Agreement, or (vi) the General Partner determines doing so is
in the best interests of the Partnership.
(c) Notwithstanding paragraph (a) of this Section 10,
this Agreement may be terminated by the Trading Advisor immediately upon
written notice to the Partnership if (i) the General Partner, if other than a
natural person, merges, consolidates with or sells a substantial portion of its
assets to any individual or entity, or there is a material adverse change
relating to the General Partner or a material adverse change in control,
organizational structure, financial condition, regulatory compliance or key
personnel of the General Partner, (ii) any of the General Partner's
registrations under the Act are suspended, terminated, lapsed or not renewed,
(iii) the General Partner's membership in the NFA is suspended, terminated,
lapsed or not renewed, (iv) the General Partner otherwise becomes unable to
serve as general partner of the Partnership to the full extent contemplated by
this Agreement, (v) the General Partner materially breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, (vii) the Allocated Assets total less than U.S.$180,000, (vii) the
Trading Advisor's license agreement with Caxton Corporation is terminated, or
(viii) the Trading Advisor determines doing so is in the best interests of the
Partnership.
11. NOTICES. Except as otherwise provided herein, all
notices, demands or requests required to be made or delivered under this
Agreement shall be effective only if in writing and delivered personally or by
facsimile or mail, postage prepaid (airmail if the addressee is in another
country), to the respective addresses below or to such other addresses as may
be designated by the party entitled to receive the same by notice similarly
given and shall be deemed given by the party required to provide notice when
received by the party to whom notice is required to be given.
If to the Partnership or the General Partner to:
Heinold Asset Management, Inc.
One Financial Plaza
440 South LaSalle Street
Chicago, Illinois 60605
Attn: Daniel E. Ragen, President
Fax No.: 312-663-7904
15
<PAGE> 16
If to the Trading Advisor to:
Willowbridge Associates Inc.
101 Morgan Lane
Suite 180
Plainsboro, New Jersey 08536
Attn: Theresa C. Morris, Vice President
Fax No.: 609-936-9088
12. ASSIGNMENT. No party hereto may transfer, sell,
encumber, appoint agents or assign any of its rights or obligations hereunder
in whole or in part without the express written consent of each of the other
parties hereto.
13. AMENDMENT; MODIFICATION. This Agreement may not be
amended or modified, nor any of the provisions hereof waived, except by the
written consent of all of the parties hereto.
14. COMPLETE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject hereof
and supersedes all prior agreements written or oral, and no other agreement,
verbal or otherwise, shall be binding as between the parties hereto unless in
writing and signed by the party against whom enforcement is sought.
15. SUCCESSORS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns. No other person other than the persons indemnified under SECTION 7
hereof for matters relating to that Section shall have any right or obligation
under this Agreement.
16. HEADINGS. Headings to sections herein are for the
convenience of the parties only, and are not intended to be a part of or to
affect the meanings or interpretation of this Agreement.
17. GOVERNING LAW: CONSENT TO JURISDICTION. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Illinois without giving effect to principles of conflicts of laws.
18. ARBITRATION. The parties agree that all
controversies which may arise in connection with any transaction contemplated
by this Agreement or the construction, performance or breach of this Agreement
shall be determined by arbitration, to be held in the City of Chicago, State of
Illinois unless otherwise agreed to by the parties hereto, and in accordance
with the rules then obtaining of the NFA, or if no such rules are then in
effect or if jurisdiction is declined, then the rules then obtaining of the
American Arbitration Association; provided, however, that (a) the arbitrator(s)
shall be knowledgeable in industry standards and practices and the matters
giving rise to the dispute, (b) the arbitrator(s) shall not have the power and
authority to award punitive damages, (c) the authority of the arbitrator(s)
shall be limited to construing and enforcing the terms and conditions of
16
<PAGE> 17
this Agreement as expressly set forth herein, and (d) the arbitrator(s)
shall state the reasons for their award and their legal and factual conclusions
underlying the award in a written opinion. The award of the arbitrator(s), or
a majority of them, shall be final, and judgment upon the award may be
confirmed and entered in any court, state or federal, having jurisdiction.
19. CONSENT TO JURISDICTION. Each party hereto expressly
and irrevocably agrees (a) that it waives any objection, and specifically
consents, to venue in the United States federal or state courts located in the
City of Chicago, State of Illinois, United States of America, so that any
action at law or in equity may be brought and maintained in any such court, and
(b) that service of process in any such action may be effected against such
party by certified or registered mail or in any other manner permitted by
applicable United States Federal Rules of Civil Procedure or Rules of the
Courts of the State of Illinois. In addition, each party hereto expressly and
irrevocably waives, in respect of any action brought in any United States
federal or state court located in the City of Chicago, State of Illinois or any
resulting judgment, any objection, and hereby specifically consents, to the
jurisdiction of any such court, and agrees not to seek to change the situs of
such action or to assert that any other court in any such action is a more
suitable forum for the hearing and adjudication of any claim or dispute raised
in such action.
20. SURVIVAL. The indemnity provisions of this Agreement
shall survive the termination or expiration of this Agreement with respect to
any matter existing prior to such termination or expiration; the payment
obligations under this Agreement shall continue until satisfied; and the other
provisions of the Agreement shall survive the termination of this Agreement
with respect to any matter arising while this Agreement was in effect.
21. WAIVER OF BREACH. The waiver by a party of a breach
of any provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party. The failure of a party to insist
upon strict adherence to any provision of this Agreement shall not constitute a
waiver or thereafter deprive such party of the right to insist upon a strict
adherence.
22. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
23. CONFIDENTIALITY. Nothing in this Agreement shall
require the Trading Advisor to disclose the details of its trading systems,
methods, models, strategies and formulas. The General Partner and the
Partnership acknowledge that the trading systems, methods, models, strategies
and formulas of the Trading Advisor are the sole and exclusive property of the
Trading Advisor. The General Partner and the Partnership further agree that it
will keep
17
<PAGE> 18
confidential and will not disseminate information regarding such
systems, methods, models, strategies and formulas to any person; provided,
however, such restrictions shall not apply to information which (a) is or
becomes generally available to the public other than as a result of disclosure
by the General Partner or the Partnership, (b) was available to the General
Partner or the Partnership on a non-confidential basis prior to its disclosure
by the Trading Advisor, or (c) becomes available to the General Partner or the
Partnership on a non-confidential basis from a person other than the Trading
Advisor, unless such information was specifically provided to the General
Partner or the Partnership on a confidential basis.
18
<PAGE> 19
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
THE FUTURES DIMENSION FUND
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Daniel E. Ragen
---------------------------
Daniel E. Ragen
President
HEINOLD ASSET MANAGEMENT, INC.
Its General Partner
By: /s/ Daniel E. Ragen
--------------------------
Daniel E. Ragen
President
WILLOWBRIDGE ASSOCIATES INC.
By: /s/ Theresa C. Morris
----------------------------
Theresa C. Morris
Vice President
19
<PAGE> 20
EXHIBIT 1
November 7, 1995
Willowbridge Associates Inc.
101 Morgan Lane
Suite 180
Plainsboro, New Jersey 08536
Re: Commodity Trading Authorization
Ladies and Gentlemen:
The Futures Dimension Fund, an Illinois limited partnership
(the "Partnership"), does hereby make, constitute, and appoint you as its
Attorney-in-Fact to purchase and sell futures contracts, commodities and
commodity options and forward and spot contracts, and any other items which are
currently, or may later become, the subject of futures, forward, spot or
options trading, and other related investments on domestic and international
exchanges and markets, through E.D. & F. Man International Inc., or such other
brokers and forward or spot contract dealers as may be designated, from time to
time, in writing by the Partnership, as brokers, in accordance with the
Management Contract between us dated November 8, 1995.
Very truly yours,
The Futures Dimension Fund
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Daniel E. Ragen
-----------------------------
Daniel E. Ragen
President
<PAGE> 21
ACKNOWLEDGMENT OF RECEIPT
OF DISCLOSURE DOCUMENT
The undersigned hereby acknowledges receipt of Willowbridge Associates
Inc.'s Disclosure Document dated June 30, 1995.
The Futures Dimension Fund
By: Heinold Asset Management, Inc.
Its General Partner
By: /s/ Daniel E. Ragen
------------------------
Daniel E. Ragen
President
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<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
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