UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from
to___________________
Commission File No. 0-26280
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3782225
State or other jurisdiction of (I.R.S.
Employer
incorporation or organization) Identification
No.)
c/o Demeter Management Corporation
Two World Trade Center, 62 Fl., New York, NY 10048
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code (212) 392-5454
(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check-mark whether the registrant (1) has 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___________
<PAGE>
SIGNATURE
Pursuant to the requirements 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.
Morgan Stanley Dean Witter Spectrum
Strategic L.P. (Registrant)
By: Demeter Management Corporation
(General Partner)
August 14, 2000 By:/s/ Raymond E. Koch__________
Raymond E. Koch
Chief Financial Officer
The General Partner which signed the above is the only party
authorized to act for the Registrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.
<PAGE>
MANAGEMENT AGREEMENT
THIS AGREEMENT, made as of the 1st day of June, 2000
among MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P., a
Delaware limited partnership (the "Partnership"), DEMETER
MANAGEMENT CORPORATION, a Delaware corporation (the "General
Partner"), and ECLIPSE CAPITAL MANAGEMENT, INC., a Delaware
corporation (the "Trading Advisor").
WITNESSETH:
WHEREAS, the Partnership has been organized pursuant to
the Limited Partnership Agreement dated as of May 27, 1994 (the
"Limited Partnership Agreement"), to trade, buy, sell, spread, or
otherwise acquire, hold, or dispose of commodities (including,
but not limited to, foreign currencies, mortgage-backed
securities, money market instruments, financial instruments, and
any other securities or items which are now or may hereafter be
the subject of futures contract trading), domestic and foreign
commodity futures contracts, commodity forward contracts, foreign
exchange commitments, options on physical commodities and on
futures contracts, spot (cash) commodities and currencies, and
any rights pertaining thereto (hereinafter referred to
collectively as "futures interests") and securities (such as
United States Treasury bills) approved by the Commodity Futures
Trading Commission (the "CFTC") for investment of customer funds;
WHEREAS, the Partnership became a member partnership of
the Morgan Stanley Dean Witter Spectrum Series (the "Fund Group")
by entering into an agreement pursuant to which units of limited
partnership interest ("Units") of such member partnerships are
sold to investors in a common offering under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement on Form S-1 as it may be amended from time
to time (the "Registration Statement") and a final Prospectus,
constituting a part thereof as it may be amended and supplemented
from time to time (the "Prospectus"), and thereafter, pursuant to
which such Units can be exchanged by a limited partner of a
member partnership of the Fund Group for six months for Units of
other member partnerships of the Fund Group at 100% of the
respective Net Asset Value (as defined in Section 7(d)(2) of the
Limited Partnership Agreement) thereof;
WHEREAS, the Trading Advisor has extensive experience
trading in futures interests and is willing to provide certain
services and undertake certain obligations as set forth herein;
WHEREAS, the Partnership desires the Trading Advisor to
act as a trading advisor for the Partnership and to make
investment decisions with respect to futures interests for its
allocated share of the Partnership's Net Assets (as defined in
Section 6(c) hereof) and the Trading Advisor desires so to act;
and
WHEREAS, the Partnership, the General Partner and the
Trading Advisor wish to enter into this Management Agreement
which, among other things, sets forth certain terms and
<PAGE>conditions upon which the Trading Advisor will conduct a
portion of the Partnership's futures interests trading;
NOW THEREFORE, the parties hereto hereby agree as
follows:
1. Undertakings in Connection with the Continuing Offering of
Units.
(a) The Trading Advisor agrees with respect to the
continuing offering of Units: (i) to make all disclosures
regarding itself, its principals and affiliates, its trading
performance, its trading programs, systems, methods, and
strategies (subject to the need, in the reasonable discretion of
the Trading Advisor, to preserve the confidentiality of
proprietary information concerning such programs, systems,
methods, and strategies), any client accounts over which it has
discretionary trading authority (other than the names of any such
clients), and otherwise, as the Partnership may reasonably
require (x) to be made in the Partnership's Prospectus required
by Section 4.21 of the regulations of the CFTC, including any
amendments or supplements thereto, or (y) to comply with any
applicable federal or state law or rule or regulation, including
those of the Securities and Exchange Commission (the "SEC"), the
CFTC, the National Futures Association (the "NFA"), the National
Association of Securities Dealers, Inc. (the "NASD") or any other
regulatory body, exchange, or board; and (ii) otherwise to
cooperate with the Partnership, the General Partner, and Dean
Witter Reynolds Inc., the selling agent for the Partnership
("DWR") by providing information regarding the Trading Advisor in
connection with the preparation and filing of the Registration
Statement and Prospectus, including any amendments or supplements
thereto, with the SEC, CFTC, NFA, NASD, and with appropriate
governmental authorities as part of making application for
registration of the Units under the securities or Blue Sky laws
of such jurisdictions as the Partnership may deem appropriate.
As used herein, the term "principal" shall have the meaning as
defined in Section 4.10(e) of the CFTC's Regulations and the term
"affiliate" shall mean an individual or entity that directly or
indirectly controls, is controlled by, or is under common control
with, the Trading Advisor.
(b) If, while Units continue to be offered and sold,
the Trading Advisor becomes aware of any materially untrue or
misleading statement or omission regarding itself or any of its
principals or affiliates in the Registration Statement or
Prospectus, or of the occurrence of any event or change in
circumstances which would result in there being any materially
untrue or misleading statement or omission in the Registration
Statement or Prospectus regarding itself or any of its principals
or affiliates, the Trading Advisor shall promptly notify the
General Partner and shall cooperate with it in the preparation of
any necessary amendments or supplements to the Registration
Statement or Prospectus. Neither the Trading Advisor nor any of
its principals, or affiliates, or any stockholders, officers,
directors, or employees shall distribute the Prospectus or
selling literature or shall engage in any selling activities
whatsoever in connection with the continuing offering of Units
except as may be specifically requested by the General Partner.
<PAGE>2. Duties of the Trading Advisor.
(a) The Trading Advisor hereby agrees to act as a
Trading Advisor for the Partnership and, as such, shall have sole
authority and responsibility for directing the investment and
reinvestment of its allocable share of the Net Assets of the
Partnership on the terms and conditions and in accordance with
the prohibitions and trading policies set forth in this
Agreement, or the Prospectus or as otherwise provided in writing
and consented to by the Trading Advisor; provided, however, that
the General Partner may override the instructions of the Trading
Advisor to the extent necessary (i) to comply with the trading
policies of the Partnership and with applicable speculative
position limits, (ii) to fund any distributions, redemptions, or
reapportionments among other trading advisors to the Partnership,
(iii) to pay the Partnership's expenses, (iv) to the extent the
General Partner believes doing so is necessary for the protection
of the Partnership, (v) to terminate the futures interests
trading of the Partnership, or (vi) to comply with any applicable
law or regulation. The General Partner agrees not to override
any such instructions for the reasons specified in clauses (ii)
or (iii) of the preceding sentence unless the Trading Advisor
fails to comply with a request of the General Partner to make the
necessary amount of funds available to the Partnership within
five calendar days of such request. The Trading Advisor shall
not be liable for the consequences of any decision by the General
Partner to override instructions of the Trading Advisor, except
to the extent that the Trading Advisor is in breach of this
Agreement. In performing services to the Partnership the Trading
Advisor may not materially alter the trading program(s) used by
the Trading Advisor in investing and reinvesting its allocable
share of the Partnership's Net Assets in futures interests as
described in the Prospectus without the prior written consent of
the General Partner, it being understood that changes in the
futures interests or markets traded shall not be deemed an
alteration in the Trading Advisor's trading program(s).
(b) The Trading Advisor shall:
(i) Exercise good faith and due care in trading
futures interests for the account of the Partnership in
accordance with the prohibitions and trading policies of the
Partnership described in the Prospectus, Exhibit A hereto,
and as otherwise provided in writing and consented to by the
Trading Advisor and the trading programs, systems, methods,
and strategies of the Trading Advisor described in the
Prospectus, with such changes and additions to such trading
programs, systems, methods or strategies as the Trading
Advisor, from time to time, incorporates into its trading
programs for accounts the size of the Partnership.
(ii) Subject to reasonable assurances of
confidentiality by the General Partner and the Partnership,
provide the General Partner, within 30 days of a reasonable
request therefor by the General Partner, with information
comparing the performance of the Partnership's account and
the performance of all other client accounts directed by the
Trading Advisor using the trading programs used by the
Trading Advisor for the Partnership over a specified period
of time. In providing such information, the Trading Advisor
may take such steps as are necessary to assure the
confidentiality of the Trading Advisor's clients'
identities. The Trading Advisor shall, upon the General
Partner's reasonable request, consult with the General
Partner concerning any discrepancies between the performance
of such other accounts and the Partnership's account. The
<PAGE>Trading Advisor shall promptly inform the General
Partner of any material discrepancies of which the Trading
Advisor is aware. The General Partner acknowledges that
different trading programs, strategies or implementation
methods may be utilized for different accounts, accounts
with different trading policies, accounts experiencing
differing inflows or outflows of equity, accounts that
commence trading at different times, accounts which have
different portfolios or different fiscal years and that such
differences may cause divergent trading results.
(iii) Upon the reasonable request of the
General Partner and subject to reasonable assurances of
confidentiality by the General Partner and the Partnership,
provide the General Partner with all material information
concerning the Trading Advisor other than proprietary
information (including, without limitation, information
relating to changes in control, personnel, trading approach,
or financial condition). The General Partner acknowledges
that all trading instructions made by the Trading Advisor
will be held in confidence by the General Partner, except to
the extent necessary to conduct the business of the
Partnership or as required by law.
(iv) Inform the General Partner when the Trading
Advisor's open positions maintained by the Trading Advisor
exceed the Trading Advisor's applicable speculative position
limits.
(c) All purchases and sales of futures interests
pursuant to this Agreement shall be for the account, and at the
risk, of the Partnership and not for the account, or at the risk,
of the Trading Advisor or any of its stockholders, directors,
officers, or employees, or any other person, if any, who controls
the Trading Advisor within the meaning of the Securities Act.
All brokerage fees arising from trading by the Trading Advisor
shall be for the account of the Partnership. The Trading Advisor
makes no representations as to whether its trading will produce
profits or avoid losses.
(d) Notwithstanding anything in this Agreement to the
contrary, the Trading Advisor shall assume financial
responsibility for any errors committed or caused by it in
transmitting orders for the purchase or sale of futures interests
for the Partnership's account, including payment to DWR of the
floor brokerage commissions, exchange and NFA fees, and other
transaction charges and give-up charges incurred by DWR on such
trades but only for the amount of DWR's out-of-pocket costs in
respect thereof. The Trading Advisor's errors shall include, but
not be limited to, inputting improper trading signals or
communicating incorrect orders for execution. However, the
Trading Advisor shall not be responsible for errors committed or
caused by DWR or by floor brokers or other futures commission
merchants. The Trading Advisor shall have an affirmative
obligation promptly to notify the General Partner of its own
errors, and the Trading Advisor shall use its best efforts to
identify and promptly notify the General Partner of any order or
trade which the Trading Advisor reasonably believes was not
executed in accordance with its instructions.
(e) Prior to the commencement of trading, the General
Partner on behalf of the Partnership shall deliver to the Trading
Advisor a trading authorization appointing the Trading Advisor
the Partnership's attorney-in-fact for such purpose.
<PAGE>3. Designation of Additional Trading Advisors and
Reallocation of Net Assets.
(a) If the General Partner at any time deems it to be
in the best interests of the Partnership, the General Partner may
designate an additional trading advisor or advisors for the
Partnership and may apportion to such additional trading
advisor(s) the management of such amounts of Net Assets as the
General Partner shall determine in its absolute discretion. The
designation of an additional trading advisor or advisors and the
apportionment of Net Assets to any such trading advisor(s)
pursuant to this Section 3 shall neither terminate this Agreement
nor modify in any regard the respective rights and obligations of
the Partnership, the General Partner and the Trading Advisor
hereunder. In the event that an additional trading advisor or
advisors is so designated, the Trading Advisor shall thereafter
receive management and incentive fees based, respectively, on
that portion of the Net Assets managed by the Trading Advisor and
the Trading Profits attributable to the trading by the Trading
Advisor.
(b) The General Partner may at any time and from time
to time upon two business days' prior notice reallocate Net
Assets allocated to the Trading Advisor to any other trading
advisor or advisors of the Partnership or allocate additional Net
Assets upon two business days' prior notice to the Trading
Advisor from such other trading advisor or advisors; provided
that any such addition to or withdrawal from Net Assets allocated
to the Trading Advisor of the Net Assets will only take place on
the last day of a month unless the General Partner determines
that the best interests of the Partnership require otherwise.
4. Trading Advisor Independent.
For all purposes of this Agreement, the Trading Advisor
shall be deemed to be an independent contractor and shall, unless
otherwise expressly provided herein or authorized, have no
authority to act for or represent the Partnership in any way or
otherwise be deemed an agent of the Partnership. Nothing
contained herein shall be deemed to require the Partnership to
take any action contrary to the Limited Partnership Agreement,
the Certificate of Limited Partnership of the Partnership as from
time to time in effect (the "Certificate of Limited
Partnership"), or any applicable law or rule or regulation of any
regulatory body, exchange, or board. Nothing herein contained
shall constitute the Trading Advisor or any other trading advisor
or advisors for the Partnership as members of any partnership,
joint venture, association, syndicate or other entity, or be
deemed to confer on any of them any express, implied, or apparent
authority to incur any obligation or liability on behalf of any
other. It is expressly agreed that the Trading Advisor is
neither a promoter, sponsor, or issuer with respect to the
Partnership, nor does the Trading Advisor have any authority or
responsibility with respect to the sale or issuance of Units.
5. Commodity Broker.
The Trading Advisor shall effect all transactions in
futures interests for the Partnership through, and shall maintain
a separate account with, such commodity broker or brokers as the
General Partner shall direct. At the present time, DWR shall act
as non-clearing commodity broker and Morgan Stanley & Co.
Incorporated ("MS & Co."), an affiliate of the general partner,
shall act as the clearing commodity broker for the Partnership,
with the <PAGE>exception of trades on the London Metal Exchange
which will be cleared by Morgan Stanley & Co. International
Limited ("MSIL"), also an affiliate of the general partner. In
addition, MS & Co. will act as the counterparty on all of the
foreign currency forward trades for the Partnership. The General
Partner shall provide the Trading Advisor with copies of
brokerage statements. Notwithstanding that MS & Co. and MSIL
shall act as the clearing commodity brokers for the Partnership,
the Trading Advisor may execute trades through floor brokers
other than those employed by MS & Co. and MSIL so long as
arrangements are made for such floor brokers to "give-up" or
transfer the positions to MS & Co. or MSIL and provided that the
rates charged by such floor brokers have been approved in writing
by DWR. The Trading Advisor will not be responsible for paying
give-up fees.
6. Fees.
(a) For the services to be rendered to the Partnership
by the Trading Advisor under this Agreement, the Partnership
shall pay the Trading Advisor the following fees:
(i) A monthly management fee, without regard to
the profitability of the Trading Advisor's trading for the
Partnership's account, equal to 1/12 of 3% (a 3% annual
rate) of the "Net Assets" of the Partnership allocated to
the Trading Advisor (as defined in Section 6(c)) as of the
opening of business on the first day of each calendar month.
(ii) A monthly incentive fee equal to 15% of the
"Trading Profits" (as defined in Section 6(d)) as of the end
of each calendar month, payable on a non-netted basis vis-a-
vis other trading advisors(s) of the Partnership.
(b) If this Agreement is terminated on a date other
than the last day of a month, the incentive fee described above
shall be determined as if such date were the end of a month. If
this Agreement is terminated on a date other than the end of a
month, the management fee described above shall be prorated based
on the ratio of the number of trading days in the month through
the date of termination to the total number of trading days in
the month. If, during any month after the Partnership commences
trading operations (including the month in which the Partnership
commences such operations), the Partnership does not conduct
business operations, or suspends trading for the account of the
Partnership managed by the Trading Advisor, or, as a result of an
act or material failure to act by the Trading Advisor, is
otherwise unable to utilize the trading advice of the Trading
Advisor on any of the trading days of that period for any reason,
the management fee described above shall be prorated based on the
ratio of the number of trading days in the month which the
Partnership account managed by the Trading Advisor engaged in
trading operations or utilized the trading advice of the Trading
Advisor to the total number of trading days in the month.
(c) As used herein, the term "Net Assets" shall have
the same meaning ascribed thereto in Section 7(d)(1) of the
Limited Partnership Agreement.
(d) As used herein, the term "Trading Profits" shall
mean net futures interests trading profits (realized and
unrealized) earned on the Partnership's Net Assets allocated to
the Trading Advisor, decreased by the Trading Advisor's monthly
management fees and a pro rata <PAGE>portion of the monthly
brokerage fee relating to the Trading Advisor's allocated Net
Assets; with such trading profits and items of decrease
determined from the end of the last calendar month in which an
incentive fee was earned by the Trading Advisor or, if no
incentive fee has been earned previously by the Trading Advisor,
from the date that the Partnership commenced trading to the end
of the month as of which such incentive fee calculation is being
made. No incentive fee will be paid on interest income earned by
the Partnership.
(e) If any payment of incentive fees is made to the
Trading Advisor on account of Trading Profits earned by the
Partnership on Net Assets allocated to the Trading Advisor and
the Partnership thereafter fails to earn Trading Profits or
experiences losses for any subsequent incentive period with
respect to such amounts so allocated, the Trading Advisor shall
be entitled to retain such amounts of incentive fees previously
paid to the Trading Advisor in respect of such Trading Profits.
However, no subsequent incentive fees shall be payable to the
Trading Advisor until the Partnership has again earned Trading
Profits on the Trading Advisor's allocated Net Assets; provided,
however, that if the Trading Advisor's allocated Net Assets are
reduced or increased because of redemptions, additions or
reallocations that occur at the end of, or subsequent to, an
incentive period in which the Partnership experiences a futures
interests trading loss with respect to Net Assets allocated to
the Trading Advisor, the trading loss for that incentive period
which must be recovered before the Trading Advisor's allocated
Net Assets will be deemed to experience Trading Profits will be
equal to the amount determined by (x) dividing the Trading
Advisor's allocated Net Assets after such increase or decrease by
the Trading Advisor's allocated Net Assets immediately before
such increase or decrease and (y) multiplying that fraction by
the amount of the unrecovered futures interests trading loss
experienced in that month prior to such increase or decrease. In
the event that the Partnership experiences a futures interests
trading loss in more than one month with respect to the Trading
Advisor's allocated Net Assets without the payment of an
intervening incentive fee and Net Assets are increased or reduced
in more than one such month because of redemptions, additions or
reallocations, then the trading loss for each such month shall be
adjusted in accordance with the formula described above and such
increased or reduced amount of futures interests trading loss
shall be carried forward and used to offset subsequent futures
interest trading profits. The portion of redemptions to be
allocated to the Net Assets of the Partnership managed by each of
the trading advisors to the Partnership shall be in the sole
discretion of the General Partner.
7. Term.
This Agreement shall continue in effect until June 30,
2002 (the "Initial Termination Date"). If this Agreement is not
terminated on the Initial Termination Date, as provided for
herein, then, this Agreement shall automatically renew for an
additional one-year period and shall continue to renew for
additional one-year periods until this Agreement is otherwise
terminated, as provided for herein. At least thirty days prior
to the expiration of the Initial Termination Date or any
subsequent one-year period, as the case may be, the Trading
Advisor may terminate this Agreement at the end of the current
period by providing written notice to the Partnership indicating
that the Trading Advisor desires to terminate this Agreement at
the end of such period. This Agreement shall also terminate if
the Partnership terminates. The Partnership shall have the right
to terminate this Agreement at its discretion (a) at any month
end upon five calendar days' prior written notice to the Trading
Advisor or (b) at any time upon <PAGE>written notice to the
Trading Advisor upon the occurrence of any of the following
events: (i) if any person described as a "principal" of the
Trading Advisor in the Prospectus ceases for any reason to be an
active executive officer of the Trading Advisor; (ii) if the
Trading Advisor becomes bankrupt or insolvent; (iii) if the
Trading Advisor is unable to use its trading programs, systems or
methods as in effect on the date hereof and as refined and
modified in the future for the benefit of the Partnership; (iv)
if the registration, as a commodity trading advisor, of the
Trading Advisor with the CFTC or its membership in the NFA is
revoked, suspended, terminated, or not renewed, or limited or
qualified in any respect; (v) except as provided in Section 12
hereof, if the Trading Advisor merges or consolidates with, or
sells or otherwise transfers its advisory business, or all or a
substantial portion of its assets, any portion of its futures
interests trading programs, systems or methods, or its goodwill
to, any individual or entity; (vi) if the Trading Advisor's
initially allocated Net Assets, after adjusting for
distributions, additions, redemptions, or reallocations, if any,
shall decline by 50% or more as a result of trading losses or if
Net Assets allocated to the Trading Advisor fall below
$5,000,000.00 at any time; (vii) if, at any time, the Trading
Advisor violates any trading or administrative policy described
in writing to the Trading Advisor by the General Partner, except
with the prior express written consent of the General Partner; or
(viii) if the Trading Advisor fails in a material manner to
perform any of its obligations under this Agreement. The Trading
Advisor may terminate this Agreement at any time, upon written
notice to the Partnership, in the event: (i) that the General
Partner imposes additional trading limitation(s) in the form of
one or more trading policies or administrative policies which the
Trading Advisor does not agree to follow in its management of its
allocable share of the Partnership's Net Assets; (ii) the General
Partner objects to the Trading Advisor implementing a proposed
material change in the Trading Advisor's trading program(s) used
by the Partnership and the Trading Advisor certifies to the
General Partner in writing that it believes such change is in the
best interests of the Partnership; (iii) the General Partner
overrides a trading instruction of the Trading Advisor for
reasons unrelated to a determination by the General Partner that
the Trading Advisor has violated the Partnership's trading
policies and the Trading Advisor certifies to the General Partner
in writing that as a result, the Trading Advisor believes the
performance results of the Trading Advisor relating to the
Partnership will be materially adversely affected; (iv) the
Partnership materially breaches this Agreement and does not
correct the breach within 10 business days of receipt of a
written notice of such breach from the Trading Advisor; or (v)
the Trading Advisor has amended its trading program to include a
foreign futures or option contract which may lawfully be traded
by the Partnership under CFTC regulations and counsel, mutually
acceptable to the parties, has not opined that such inclusion
would cause adverse tax consequences to Limited Partners and the
General Partner does not consent to the Trading Advisor's trading
such contract for the Partnership within five business days of a
written request by the Trading Advisor to do so, and, if such
consent is given, does not make arrangements to facilitate such
trading within 90 days of such notice. In addition, the Trading
Advisor may terminate this Agreement by providing 30 days prior
written notice to the General Partner if the Partnership's Net
Assets allocated to the Trading Advisor fall below $5,000,000 at
any time.
The indemnities set forth in Section 8 hereof shall
survive any termination of this Agreement.
<PAGE>8. Standard of Liability; Indemnifications.
(a) Limitation of Trading Advisor Liability. In
respect of the Trading Advisor's role in the futures interests
trading of the Partnership's assets, none of the Trading Advisor,
or its controlling persons, its affiliates, and their respective
directors, officers, shareholders, employees or controlling
persons shall be liable to the Partnership or the General Partner
or their partners, officers, shareholders, directors or
controlling persons except that the Trading Advisor shall be
liable for acts or omissions of any such person provided that
such act or omission constitutes a breach of this Agreement or a
representation, warranty or covenant herein, misconduct or
negligence or is the result of any such person not having acted
in good faith and in the reasonable belief that such actions or
omissions were in, or not opposed to, the best interests of the
Partnership.
(b) Trading Advisor Indemnity in Respect of Management
Activities. The Trading Advisor shall indemnify, defend and hold
harmless the Partnership and the General Partner, their
controlling persons, their affiliates and their respective
directors, officers, shareholders, employees, and controlling
persons from and against any and all losses, claims, damages,
liabilities (joint and several), costs, and expenses (including
any reasonable investigatory, legal, and other expenses incurred
in connection with, and any amounts paid in, any settlement;
provided that the Trading Advisor shall have approved such
settlement) incurred as a result of any action or omission
involving the Partnership's futures interests trading of the
Trading Advisor, or any of its controlling persons or affiliates
or their respective directors, officers, partners, shareholders,
or employees; provided that such liability arises from an act or
omission of the Trading Advisor, or any of its controlling
persons or affiliates or their respective directors, officers,
partners, shareholders, or employees which is found by a court of
competent jurisdiction upon entry of a final judgment (or, if no
final judgment is entered, by an opinion rendered by counsel who
is approved by the Partnership and the Trading Advisor, such
approval not to be unreasonably withheld) to be a breach of this
Agreement or a representation, warranty or covenant herein, the
result of bad faith, misconduct or negligence, or conduct not
done in good faith in the reasonable belief that it was in, or
not opposed to, the best interests of the Partnership.
(c) Partnership Indemnity in Respect of Management
Activities. The Partnership shall indemnify, defend, and hold
harmless the Trading Advisor, its controlling persons, their
affiliates and their respective directors, officers,
shareholders, employees, and controlling persons, from and
against any and all losses, claims, damages, liabilities (joint
and several), costs, and expenses (including any reasonable
investigatory, legal, and other expenses incurred in connection
with, and any amounts paid in, any settlement; provided that the
Partnership shall have approved such settlement) resulting from a
demand, claim, lawsuit, action, or proceeding (other than those
incurred as a result of claims brought by or in the right of an
indemnified party) relating to the futures interests trading
activities of the Partnership undertaken by the Trading Advisor;
provided that a court of competent jurisdiction upon entry of a
final judgment finds (or, if no final judgment is entered, an
opinion is rendered to the Partnership by independent counsel
reasonably acceptable to both parties) to the effect that the
action or inaction of such indemnified party that was the subject
of the demand, claim, lawsuit, action, or proceeding did not
constitute negligence, misconduct, or a breach of this Agreement
or a representation, warranty or covenant of the Trading Advisor
herein and was done in good faith <PAGE>and in a manner such
indemnified party reasonably believed to be in, or not opposed
to, the best interests of the Partnership.
(d) Trading Advisor Indemnity in Respect of Sale of
Units. The Trading Advisor shall indemnify, defend and hold
harmless DWR, MS & Co., MSIL, the Partnership, the General
Partner, any additional seller, and their affiliates and each of
their officers, directors, principals, shareholders, controlling
persons from and against any loss, claim, damage, liability,
cost, and expense, joint and several, to which any indemnified
person may become subject under the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
the Commodity Exchange Act, as amended, and rules promulgated
thereunder (the "CEAct"), the securities or Blue Sky law of any
jurisdiction, or otherwise (including any reasonable
investigatory, legal, and other expenses incurred in connection
with, and any amounts paid in, any settlement, provided that the
Trading Advisor shall have approved such settlement, and in
connection with any administrative proceedings), in respect of
the offer or sale of Units, insofar as such loss, claim, damage,
liability, cost, or expense (or action in respect thereof) arises
out of, or is based upon: (i) a breach by the Trading Advisor of
any representation, warranty, or agreement in this Agreement or
any certificate delivered pursuant to this Agreement or the
failure by the Trading Advisor to perform any covenant made by
the Trading Advisor herein; (ii) a breach of the disclosure
requirements under the CEAct or NFA Rules that relate to the
Trading Advisor and the Trading Advisor Principals; (iii) a
misleading or untrue statement or alleged misleading or untrue
statement of a material fact made in the Registration Statement,
the Prospectus, or any related selling material or an omission or
alleged omission to state a material fact therein which is
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus and any selling material,
in light of the circumstances under which they were made) not
misleading, and such statement or omission relates specifically
to the Trading Advisor, or its Trading Advisor Principals (as
defined in Section 10(a)(iv) below) (including the historical
performance capsules) or was made in reliance upon, and in
conformity with, written information or instructions furnished by
the Trading Advisor (provided, however, that with respect to any
related selling material only such related selling material as
shall have been approved in writing by the Trading Advisor).
(e) Partnership Indemnity in Respect of Sale of Units.
The Partnership agrees to indemnify, defend and hold harmless the
Trading Advisor and each of its officers, directors, principals,
shareholders, controlling persons from and against any loss,
claim, damage, liability, cost, and expense, joint and several,
to which any indemnified person may become subject under the
Securities Act, the Exchange Act, the CEAct, the securities or
Blue Sky law of any jurisdiction, or otherwise (including any
reasonable investigatory, legal, and other expenses incurred in
connection with, and any amounts paid in, any settlement,
provided that the Partnership shall have approved such
settlement, and in connection with any administrative
proceedings), in respect of the offer or sale of Units, insofar
as such loss, claim, damage, liability, cost, or expense (or
action in respect thereof) arises out of, or is based upon: (i)
a breach by the Partnership or the General Partner of any
representation, warranty, or agreement in this Agreement or the
failure by the Partnership or the General Partner to perform any
covenant made by them herein; or (ii) a misleading or untrue
statement or alleged misleading or untrue statement of a material
fact made in the Registration Statement, the Prospectus, or any
related selling material or an omission or alleged omission to
state a material fact therein which is required to be stated
therein or necessary to make the statements therein (in the case
of the <PAGE>Prospectus or the selling material, in light of the
circumstances under which they were made) not misleading,
provided that such materially misleading or untrue statement or
alleged materially misleading or untrue statement or omission or
alleged omission does not relate to the Trading Advisor or its
Trading Advisor Principals (including the historical performance
capsules) or was not made in reliance upon, and in conformity
with, information or instructions furnished by the Trading
Advisor (provided, however, that with respect to any related
selling material, only such related selling material as shall
have been approved in writing by the Trading Advisor), or does
not result from a breach by the Trading Advisor of any
representation, warranty, or agreement in this Agreement or any
certificate delivered pursuant to this Agreement or the failure
by the Trading Advisor to materially perform any covenant made in
this Agreement.
(f) The foregoing agreements of indemnity shall be in
addition to, and shall in no respect limit or restrict, any other
remedies which may be available to an indemnified person.
(g) Promptly after receipt by an indemnified person of
notice of the commencement of any action, claim, or proceeding to
which any of the indemnities may apply, the indemnified person
will notify the indemnifying party in writing of the commencement
thereof if a claim in respect thereof is to be made against the
indemnifying party hereunder; but the omission so to notify the
indemnifying party will not relieve the indemnifying party from
any liability which the indemnifying party may have to the
indemnified person hereunder, except where such omission has
materially prejudiced the indemnifying party. In case any
action, claim, or proceeding is brought against an indemnified
person and the indemnified person notifies the indemnifying party
of the commencement thereof as provided above, the indemnifying
party will be entitled to participate therein and, to the extent
that the indemnifying party desires, to assume the defense
thereof with counsel selected by the indemnifying party and not
unreasonably disapproved by the indemnified person. After notice
from the indemnifying party to the indemnified person of the
indemnifying party's election so to assume the defense thereof as
provided above, the indemnifying party will not be liable to the
indemnified person under the indemnity provisions hereof for any
legal and other expenses subsequently incurred by the indemnified
person in connection with the defense thereof, other than
reasonable costs of investigation.
Notwithstanding the proceeding paragraph, if, in any
action, claim, or proceeding as to which indemnification is or
may be available hereunder, an indemnified person reasonably
determines that its interests are or may be adverse, in whole or
in part, to the indemnifying party's interests or that there may
be legal defenses available to the indemnified person which are
different from, in addition to, or inconsistent with the defenses
available to the indemnifying party, the indemnified person may
retain its own counsel in connection with such action, claim, or
proceeding and will be indemnified by the indemnifying party for
any legal and other expenses reasonably incurred in connection
with investigating or defending such action, claim, or
proceeding.
In no event will the indemnifying party be liable for
the fees and expenses of more than one counsel for all
indemnified persons in connection with any one action, claim, or
proceeding or in connection with separate but similar or related
actions, claims, or proceedings in the same jurisdiction arising
out of the same general allegations. The indemnifying party will
<PAGE>not be liable for any settlement of any action, claim, or
proceeding effected without the indemnifying party's express
written consent, but if any action, claim, or proceeding is
settled with the indemnifying party's express written consent,
the indemnifying party will indemnify, defend, and hold harmless
an indemnified person as provided in this Section 8.
9. Right to Advise Others and Uniformity of Acts and Practices.
(a) The Trading Advisor is engaged in the business of
advising investors as to the purchase and sale of futures
interests. During the term of this Agreement, the Trading
Advisor, its principals and affiliates, will be advising other
investors (including affiliates and the stockholders, officers,
directors, and employees of the Trading Advisor and its
affiliates and their families) and trading for their own
accounts. However, under no circumstances shall the Trading
Advisor by any act or omission favor any account advised or
managed by the Trading Advisor over the account of the
Partnership in any way or manner (other than by charging
different management and/or incentive fees). The Trading Advisor
agrees to treat the Partnership in a fiduciary capacity to the
extent recognized by applicable law, but, subject to that
standard, the Trading Advisor or any of its principals or
affiliates shall be free to advise and manage accounts for other
investors and shall be free to trade on the basis of the same
trading programs, systems, methods, or strategies employed by the
Trading Advisor for the account of the Partnership, or trading
programs, systems, methods, or strategies which are entirely
independent of, or materially different from, those employed for
the account of the Partnership, and shall be free to compete for
the same futures interests as the Partnership or to take
positions opposite to the Partnership, where such actions do not
knowingly or deliberately prefer any of such accounts over the
account of the Partnership.
(b) The Trading Advisor shall not be restricted as to
the number or nature of its clients, except that: (i) so long as
the Trading Advisor acts as a trading advisor for the
Partnership, neither the Trading Advisor nor any of its
principals or affiliates shall hold knowingly any position or
control any other account which would cause the Partnership, the
Trading Advisor, or the principals or affiliates of the Trading
Advisor to be in violation of the CEAct or any regulations
promulgated thereunder, any applicable rule or regulation of the
CFTC or any other regulatory body, exchange, or board; and (ii)
neither the Trading Advisor nor any of its principals or
affiliates shall render futures interests trading advice to any
other individual or entity or otherwise engage in activity which
shall knowingly cause positions in futures interests to be
attributed to the Trading Advisor under the rules or regulations
of the CFTC or any other regulatory body, exchange, or board so
as to require the significant modification of positions taken or
intended for the account of the Partnership; provided that the
Trading Advisor may modify its trading programs, systems, methods
or strategies to accommodate the trading of additional funds or
accounts. If applicable speculative position limits are exceeded
by the Trading Advisor in the opinion of (i) independent counsel
(who shall be other than counsel to the Partnership), (ii) the
CFTC, or (iii) any other regulatory body, exchange, or board, the
Trading Advisor and its principals and affiliates shall promptly
liquidate positions in all of their accounts, including the
Partnership's account, as to which positions are attributed to
the Trading Advisor as nearly as possible in proportion to the
accounts' respective amounts available for trading <PAGE>(taking
into account different degrees of leverage and "notional" equity)
to the extent necessary to comply with the applicable position
limits.
10. Representations, Warranties, and Covenants of the Trading
Advisor.
(a) Representations of the Trading Advisor. The
Trading Advisor with respect to itself and each of its principals
represents and warrants to and agrees with the General Partner
and the Partnership as follows:
(i) It will exercise good faith and due care in
using the trading programs on behalf of the Partnership that
are described in the Prospectus (as modified from time to
time) or any other trading programs agreed to by the General
Partner.
(ii) The Trading Advisor shall follow, at all
times, the trading policies of the Partnership (as described
in the Prospectus and as set forth in Exhibit A hereto) and
as amended in writing and furnished to the Trading Advisor
from time to time, provided, that the General Partner has
notified the Trading Advisor of these trading policies and
the Trading Advisor has consented thereto.
(iii) The Trading Advisor shall trade: (A)
the Partnership's Net Assets pursuant to the same trading
programs described in the Prospectus unless the General
Partner agrees otherwise and (B) only in futures and option
contracts traded on U.S. contract markets, foreign currency
forward contracts traded with MS & Co., and such other
futures interests which are approved in writing by the
General Partner.
(iv) The Trading Advisor is duly organized,
validly existing and in good standing as a corporation under
the laws of the state of its incorporation and is qualified
to do business as a foreign corporation and in good standing
in each other jurisdiction in which the nature or conduct of
its business requires such qualification and the failure to
so qualify would materially adversely affect the Trading
Advisor's ability to perform its duties under this
Agreement. The Trading Advisor has full corporate power and
authority to perform its obligations under this Agreement,
and as described in the Registration Statement and
Prospectus. The only principals (as defined in Rule 4.10(e)
under the CEAct) of the Trading Advisor are those set forth
in the Prospectus (the "Trading Advisor Principals").
(v) All references to the Trading Advisor and
each Trading Advisor Principal, including the Trading
Advisor's trading programs, approaches, systems and
performance, in the Registration Statement and the
Prospectus, and in the supplemental selling material which
has been approved in writing by the Trading Advisor, are
accurate and complete in all material respects. With
respect to the material relating to the Trading Advisor and
each Trading Advisor Principal, including the Trading
Advisor's and the Trading Advisor Principals' trading
programs, approaches, systems, and performance information,
as applicable, (i) the Registration Statement and Prospectus
contain all statements and information required to be
included therein under the CEAct, (ii) the Registration
Statement as of its effective date will not contain any
misleading or untrue <PAGE>statement of a material fact or
omit to state a material fact which is required to be stated
therein or necessary to make the statements therein not
misleading and (iii) the Prospectus at its date of issue and
as of each closing will not contain any untrue statement of
a material fact or omit to state a material fact necessary
to make the statements therein, in light of the
circumstances under which such statements were made, not
misleading.
(vi) This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Trading
Advisor and is a valid and binding agreement of the Trading
Advisor enforceable in accordance with its terms.
(vii) Each of the Trading Advisor and each
"principal" of the Trading Advisor, as defined in Rule 3.1
under the CEAct, has all federal and state governmental,
regulatory and exchange licenses, registrations and
approvals and has effected all filings with federal and
state governmental and regulatory agencies required to
conduct its or his business and to act as described in the
Registration Statement and Prospectus or required to perform
its or his obligations under this Agreement. The Trading
Advisor is registered as a commodity trading advisor under
the CEAct and is a member of the NFA in such capacity.
(viii) The execution and delivery of this
Agreement, the incurrence of the obligations set forth
herein, the consummation of the transactions contemplated
herein and in the Prospectus and the payment of the fees
hereunder will not violate, or constitute a breach of, or
default under, the certificate of incorporation or bylaws of
the Trading Advisor or any agreement or instrument by which
it is bound or of any order, rule, law or regulation binding
on it of any court or any governmental body or
administrative agency or panel or self-regulatory
organization having jurisdiction over it.
(ix) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, except as may otherwise be stated in or
contemplated by the Registration Statement and the
Prospectus, there has not been any material adverse change
in the condition, financial or otherwise, business or
prospects of the Trading Advisor or any Trading Advisor
Principal.
(x) Except as set forth in the Registration
Statement or Prospectus there has not been in the five years
preceding the date of the Prospectus and there is not
pending, or to the best of the Trading Advisor's knowledge
threatened, any action, suit or proceeding before or by any
court or other governmental body to which the Trading
Advisor or any Trading Advisor Principal is or was a party,
or to which any of the assets of the Trading Advisor is or
was subject and which resulted in or might reasonably be
expected to result in any material adverse change in the
condition, financial or otherwise, business or prospects of
the Trading Advisor or which is required under the
Securities Act or CEAct to be disclosed in the Prospectus.
Neither the Trading Advisor nor any Trading Advisor
Principal has received any notice of an investigation by the
NFA nor the CFTC regarding noncompliance by the Trading
Advisor or any of the Trading Advisor Principals with the
CEAct.
<PAGE>(xi) Neither the Trading Advisor nor any
Trading Advisor Principal has received, or is entitled to
receive, directly or indirectly, any commission, finder's
fee, similar fee, or rebate from any person in connection
with the organization or operation of the Partnership, other
than as described in the Prospectus.
(xii) The actual performance of each
discretionary account of a client directed by the Trading
Advisor and the Trading Advisor Principals since at least
the later of (i) the date of commencement of trading for
each such account or (ii) a date five years prior to the
effective date of the Registration Statement, is disclosed
in the Prospectus (other than such discretionary accounts
the performance of which are exempt from the CEAct
disclosure requirements); all of the information regarding
the actual performance of the accounts of the Trading
Advisor and the Trading Advisor Principals set forth in the
Prospectus is complete and accurate in all material respects
and is in accordance with and in compliance with the
disclosure requirements under the CEAct and the Securities
Act, including the Division of Trading and Markets "notional
equity" advisories and interpretations and the rules and
regulations of the NFA.
(b) Covenants of the Trading Advisor. The Trading
Advisor covenants and agrees that:
(i) The Trading Advisor shall use its best
efforts to maintain all registrations and memberships
necessary for the Trading Advisor to continue to act as
described herein and to at all times comply in all material
respects with all applicable laws, rules, and regulations,
to the extent that the failure to so comply would have a
materially adverse effect on the Trading Advisor's ability
to act as described herein.
(ii) The Trading Advisor shall inform the General
Partner immediately as soon as the Trading Advisor or any of
its principals becomes the subject of any investigation,
claim or proceeding of any regulatory authority having
jurisdiction over such person or becomes a named party to
any litigation materially affecting the business of the
Trading Advisor. The Trading Advisor shall also inform the
General Partner immediately if the Trading Advisor or any of
its officers becomes aware of any breach of this Agreement
by the Trading Advisor.
(iii) The Trading Advisor agrees reasonably to
cooperate by providing information regarding itself and its
performance in the preparation of any amendments or
supplements to the Registration Statement and the
Prospectus.
(iv) The Trading Advisor agrees to participate, to
the extent that the General Partner may reasonably request,
in "road shows" and other promotional activities relating to
the marketing of the Units, provided that such participation
shall not in the reasonable judgment of the Trading Advisor
require the registration of the Trading Advisor or any of
its principals or agents as a broker-dealer or salesman or
interfere materially with the trading activities of the
Trading Advisor. The Trading Advisor shall pay the costs of
its reasonably requested participation in such road shows.
<PAGE>11. Representations, Warranties, and Covenants of the
General Partner and the Partnership.
(a) Representations of the Partnership and the General
Partner. The General Partner and the Partnership represent and
warrant to the Trading Advisor, as follows:
(i) The Partnership has provided to the Trading
Advisor, and filed with the SEC, the Registration Statement
and has filed copies thereof with: (i) the CFTC under the
CEAct; (ii) the NASD pursuant to its Conduct Rules; and
(iii) the NFA in accordance with NFA Compliance Rule 2-13.
The Partnership will not file any amendment to the
Registration Statement or any amendment or supplement to the
Prospectus unless the Trading Advisor has received
reasonable prior notice of and a copy of such amendments or
supplements and has not reasonably objected thereto in
writing.
(ii) The Limited Partnership Agreement provides
for the subscription for and sale of the Units; all action
required to be taken by the General Partner and the
Partnership as a condition to the sale of the Units to
qualified subscribers therefor has been, or prior to each
Closing (as defined in the Prospectus) will have been taken;
and, upon payment of the consideration therefor specified in
each accepted Subscription and Exchange Agreement and Power
of Attorney, in such form as attached to the Prospectus, the
Units will constitute valid limited partnership interests in
the Partnership.
(iii) The Partnership is a limited partnership
duly organized pursuant to the Certificate of Limited
Partnership, the Limited Partnership Agreement and the
Delaware Revised Uniform Limited Partnership Act ("DRULPA")
and is validly existing under the laws of the State of
Delaware with full power and authority to engage in the
trading of futures interests and to engage in its other
contemplated activities as described in the Prospectus; the
Partnership has received a certificate of authority to do
business in the State of New York as provided by Article 8-A
of the New York Revised Limited Partnership Act and is
qualified to do business in each jurisdiction in which the
nature or conduct of its business requires such
qualification and where failure to be so qualified could
materially adversely affect the Partnership's ability to
perform its obligations hereunder.
(iv) The General Partner is duly organized and
validly existing and in good standing as a corporation under
the laws of the State of Delaware and in good standing and
qualified to do business as a foreign corporation under the
laws of the State of New York and is qualified to do
business and is in good standing as a foreign corporation in
each jurisdiction in which the nature or conduct of its
business requires such qualification and where the failure
to be so qualified could materially adversely affect the
General Partner's ability to perform its obligations
hereunder.
(v) The Partnership and the General Partner have
full partnership or corporate power and authority under
applicable law to conduct their business and to perform
their respective obligations under this Agreement.
<PAGE>(vi) The Registration Statement and
Prospectus contain all statements and information required
to be included therein by the CEAct. When the Registration
Statement becomes effective under the Securities Act and at
all times subsequent thereto up to and including each
Closing, the Registration Statement and Prospectus will
comply in all material respects with the requirements of the
Securities Act, the rules and regulations promulgated
thereunder (the "SEC Regulations"), the rules of the NFA and
the CEAct. The Registration Statement as of its effective
date will not contain any misleading or untrue statement of
a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading. The Prospectus as of its date of
issue and at each Closing will not contain any misleading or
untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in
light of the circumstances under which such statements were
made, not misleading. The supplemental selling material,
when read in conjunction with the Prospectus, will not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
therein, in light of the circumstances under which such
statements were made, not misleading. The supplemental
selling material will comply with the CEAct and the
regulations and rules of the NFA and NASD. The
representation, and warranties in this clause (vi) shall
not, however, apply to any statement or omission in the
Registration Statement, Prospectus or supplemental selling
material relating to the Trading Advisor, or its Trading
Advisor Principals or its trading programs or made in
reliance upon and in conformity with information furnished
by the Trading Advisor.
(vii) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, there has not been any material adverse change
in the condition, financial or otherwise, business or
prospects of the General Partner or the Partnership, whether
or not arising in the ordinary course of business.
(viii) This Agreement has been duly and validly
authorized, executed and delivered by the General Partner on
behalf of the Partnership and constitutes a valid, binding
and enforceable agreement of the Partnership in accordance
with its terms.
(ix) The execution and delivery of this Agreement,
the incurrence of the obligations set forth herein and the
consummation of the transactions contemplated herein and in
the Registration Statement and Prospectus will not violate,
or constitute a breach of, or default under, the General
Partner's certificate of incorporation, bylaws, the
Certificate of Limited Partnership, or the Limited
Partnership Agreement or any agreement or instrument by
which either the General Partner or the Partnership, as the
case may be, is bound or any order, rule, law or regulation
applicable to the General Partner or the Partnership of any
court or any governmental body or administrative agency or
panel or self-regulatory organization having jurisdiction
over the General Partner or the Partnership.
(x) Except as set forth in the Registration
Statement or Prospectus, there has not been in the five
years preceding the date of the Prospectus and there is not
pending or, to the best of the General Partner's knowledge,
threatened, any action, suit or proceeding at law or in
equity before or by any court or by any federal, state,
municipal <PAGE>or other governmental body or any
administrative, self-regulatory or commodity exchange
organization to which the General Partner or the Partnership
is or was a party, or to which any of the assets of the
General Partner or the Partnership is or was subject and
which resulted in or might reasonably be expected to result
in any materially adverse change in the condition, financial
or otherwise, of the General Partner or the Partnership or
which is required under the Securities Act or the CEAct to
be disclosed in the Prospectus; and neither the General
Partner nor any of the principals of the General Partner, as
"principals" is defined under Rule 4.10 under the CEAct
("General Partner Principals") has received any notice of an
investigation by the NFA, NASD, SEC or CFTC regarding non-
compliance by the General Partner or the General Partner
Principals or the Partnership with the CEAct or the
Securities Act which is required under the Securities Act or
the CEAct to be disclosed in the Prospectus.
(xi) The General Partner and each principal of the
General Partner, as defined in Rule 3.1 under the CEAct,
have all federal and state governmental, regulatory and
exchange approvals, registrations, and licenses, and have
effected all filings with federal and state governmental
agencies and regulatory agencies required to conduct their
business and to act as described in the Registration
Statement and Prospectus or required to perform their
obligations under this Agreement (including, without
limitation, registration as a commodity pool operator under
the CEAct and membership in the NFA as a commodity pool
operator) and will maintain all such required approvals,
licenses, filings and registrations for the term of this
Agreement. The General Partner's principals identified in
the Registration Statement are all of the General Partner
Principals.
(b) Covenants of the General Partner and the
Partnership. The General Partner covenants and agrees that:
(i) The General Partner shall use its best
efforts to maintain all registrations and memberships
necessary for the General Partner to continue to act as
described herein and in the Prospectus and to all times
comply in all material respects with all applicable laws,
rules, and regulations, to the extent that the failure to so
comply would have a materially adverse effect on the General
Partner's ability to act as described herein and in the
Prospectus.
(ii) The General Partner shall inform the Trading
Advisor immediately as soon as the General Partner or any of
its principals becomes the subject of any investigation,
claim, or proceeding of any regulatory authority having
jurisdiction over such person or becomes a named party to
any litigation materially affecting the business of the
General Partner. The General Partner shall also inform the
Trading Advisor immediately if the General Partner or any of
its officers become aware of any breach of this Agreement by
the General Partner.
(iii) The Partnership will furnish to the
Trading Advisor copies of the Registration Statement, the
Prospectus, and all amendments and supplements thereto, in
each case as soon as available.
<PAGE>12. Merger or Transfer of Assets of Trading Advisor.
The Trading Advisor may merge or consolidate with, or
sell or otherwise transfer its advisory business, or all or a
substantial portion of its assets, any portion of its commodity
trading programs, systems or methods, or its goodwill, to any
entity that is directly or indirectly controlled by, controlling,
or under common control with, the Trading Advisor, provided that
such entity expressly assumes all obligations of the Trading
Advisor under this Agreement and agrees to continue to operate
the business of the Trading Advisor, substantially as such
business is being conducted on the date hereof.
13. Complete Agreement.
This Agreement constitutes the entire agreement between
the parties with respect to the matters referred to herein, and
no other agreement, verbal or otherwise, shall be binding as
between the parties unless in writing and signed by the party
against whom enforcement is sought.
14. Assignment.
This Agreement may not be assigned by any party hereto
without the express written consent of the other parties hereto.
15. Amendment.
This Agreement may not be amended except by the written
consent of the parties hereto.
16. Severability.
The invalidity or unenforceability of any provision of
this Agreement or any covenant herein contained shall not affect
the validity or enforceability of any other provision or covenant
hereof or herein contained and any such invalid provision or
covenant shall be deemed to be severable.
17. Closing Certificates and Opinions.
(1) The Trading Advisor shall, at the Partnership's
first Monthly Closing (as defined in the Prospectus), following
the effective date of the Registration Statement and at the
request of the General Partner at any Monthly Closing, provide
the following:
(a) To DWR, the General Partner and the Partnership a
certificate, dated the date of any such closing and in form and
substance satisfactory to such parties, to the effect that:
<PAGE>(i) The representations and warranties by
the Trading Advisor in this Agreement are true, accurate,
and complete on and as of the date of the closing, as if
made on the date of the closing.
(ii) The Trading Advisor has performed all of its
obligations and satisfied all of the conditions on its part
to be performed or satisfied under this Agreement, at or
prior to the date of such closing.
(b) To DWR, the General Partner and the Partnership an
opinion of counsel to the Trading Advisor, in form and substance
satisfactory to such parties, to the effect that:
(i) The Trading Advisor is a corporation duly
organized and validly existing under the laws of the State
of Delaware and is qualified to do business and in good
standing in each other jurisdiction in which the nature or
conduct of its business requires such qualification and the
failure to be duly qualified would materially adversely
affect the Trading Advisor's ability to perform its
obligations under this Agreement. The Trading Advisor has
full power and authority to conduct its business as
described in the Registration Statement and Prospectus and
to perform its obligations under this Agreement.
(ii) The Trading Advisor (including the Trading
Advisor Principals) has all governmental, regulatory, self-
regulatory and commodity exchange and clearing association
licenses, registrations, and memberships required by law,
and the Trading Advisor (including the Trading Advisor
Principals) has made all filings necessary to perform its
obligations under this Agreement and to conduct its business
as described in the Registration Statement and Prospectus,
except for such licenses, memberships, filings and
registrations, the absence of which would not have a
material adverse effect on its ability to act as described
in the Registration Statement and Prospectus or to perform
its obligations under this Agreement, and, to the best of
such counsel's knowledge, after due investigations, none of
such licenses, memberships or registrations have been
rescinded, revoked or suspended.
(iii) This Agreement has been duly authorized,
executed and delivered by or on behalf of the Trading
Advisor and constitutes a valid and binding agreement of the
Trading Advisor enforceable in accordance with its terms,
subject only to bankruptcy, insolvency, reorganization,
moratorium or similar laws at the time in effect affecting
the enforceability generally of rights of creditors and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law), and except as enforceability of the indemnification,
exculpation, and contribution provisions contained in this
Agreement may be limited by applicable law or public policy
and the enforcement of specific terms or remedies may be
unavailable.
(iv) Based upon due inquiry of certain officers of
the Trading Advisor, to the best of such counsel's
knowledge, except as disclosed in the Prospectus, there are
no material actions, suits or proceedings at law or in
equity either threatened or pending in any court or before
or by any governmental or administrative body nor have there
been any such actions, suits or proceedings at any time
within the five years preceding the date <PAGE>of the
Prospectus against the Trading Advisor or any Trading
Advisor Principal which are required to be disclosed in the
Registration Statement or Prospectus.
(v) The execution and delivery of this Agreement,
the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein and in
the Prospectus will not be in contravention of any of the
provisions of the certificate of incorporation or bylaws of
the Trading Advisor and, based upon due inquiry of certain
officers of the Trading Advisor, to the best of such
counsel's knowledge, will not constitute a breach of, or
default under, or a violation of any instrument or agreement
known to such counsel by which the Trading Advisor is bound
and will not violate any order, law, rule or regulation
applicable to the Trading Advisor of any court or any
governmental body or administrative agency or panel or self-
regulatory organization having jurisdiction over the Trading
Advisor.
(vi) Based upon reliance of certain SEC "no-
action" letters, as of the closing, the performance by the
Trading Advisor of the transactions contemplated by this
Agreement and as described in the Prospectus will not
require the Trading Advisor to be registered as an
"investment adviser" as that term is defined in the
Investment Advisers Act of 1940, as amended.
(vii) Nothing has come to such counsel's
attention that would lead them to believe that, (A) the
Registration Statement at the time it became effective,
insofar as the Trading Advisor and the Trading Advisor
Principals are concerned, contained any untrue statement of
a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading, or (B) the Prospectus at the time it
was issued or at the closing contained an untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements therein relating
to the Trading Advisor or the Trading Advisor Principals, in
light of the circumstances under which they were made, not
misleading; provided, however, that such counsel need
express no opinion or belief as to the performance data and
notes or descriptions thereto set forth in the Registration
Statement and Prospectus, except that such counsel shall
opine, without rendering any opinion as to the accuracy of
the information in such tables, that the actual performance
tables of the Trading Advisor set forth in the Prospectus
comply as to form in all material respects with applicable
CFTC rules and all CFTC and NFA interpretations thereof,
except as disclosed in the Prospectus or as otherwise
permitted by the CFTC staff.
In giving the foregoing opinion, counsel may rely on
information obtained from public officials, officers of the
Trading Advisor, and other resources believed by it to be
responsible and may assume that signatures on all documents
examined by it are genuine.
(c) To DWR, the General Partner and the Partnership, a
report dated the date of the closing which shall present, for the
period from the date after the last day covered by the historical
performance records in the Prospectus to the latest practicable
day before closing, figures which shall be a continuation of such
historical performance records and which shall certify that such
figures are, to the best of such Trading Advisor's knowledge,
accurate in all material respects.
<PAGE>(2) The General Partner shall, at the
Partnership's first Monthly Closing following the effective date
of the Registration Statement, provide the following:
(a) To the Trading Advisor a certificate, dated the
date of such closing and in form and substance satisfactory to
the Trading Advisor, to the effect that:
(i) The representations and warranties by the
Partnership and the General Partner in this Agreement are
true, accurate, and complete on and as of the date of the
closing as if made on the date of the closing.
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued by the SEC and no
proceedings for that purpose have been instituted or are
pending or, to the knowledge of the General Partner, are
contemplated or threatened under the Securities Act. No
order preventing or suspending the use of the Prospectus has
been issued by the SEC, NASD, CFTC, or NFA and no
proceedings for that purpose have been instituted or are
pending or, to the knowledge of the General Partner, are
contemplated or threatened under the Securities Act or the
CEAct.
(iii) The Partnership and the General Partner
have performed all of their obligations and satisfied all of
the conditions on their part to be performed or satisfied
under this Agreement at or prior to the date of the closing.
(b) Cadwalader, Wickersham & Taft, counsel to the
General Partner and the Partnership, shall deliver its opinion to
the parties hereto, in form and substance satisfactory to the
parties hereto, to the effect that:
(i) The Partnership is a limited partnership duly
formed pursuant to the Certificate of Limited Partnership,
the Limited Partnership Agreement and the DRULPA and is
validly existing under the laws of the State of Delaware
with full partnership power and authority to conduct the
business in which it proposes to engage as described in the
Registration Statement and Prospectus and to perform its
obligations under this Agreement; the Partnership has
received a Certificate of Authority as contemplated under
the New York Revised Limited Partnership Act and is
qualified to do business in New York and need not affect any
other filings or qualifications under the laws of any other
jurisdictions to conduct its business as described in the
Registration Statement and Prospectus.
(ii) The General Partner is duly organized and
validly existing and in good standing as a corporation under
the laws of the State of Delaware and is qualified to do
business and is in good standing as a foreign corporation in
the State of New York and in each other jurisdiction in
which the nature or conduct of its business requires such
qualification and the failure to so qualify might reasonably
be expected to result in material adverse consequences to
the Partnership or the General Partner's ability to perform
its obligations as described in the Registration Statement
and Prospectus. The General Partner has full corporate
power and authority to conduct its business as described in
the Registration Statement and Prospectus and to perform its
obligations under this Agreement.
<PAGE>(iii) The General Partner, each of its
principals as defined in Rule 3.1 under the CEAct, and the
Partnership have all federal and state governmental and
regulatory licenses, registrations and memberships required
by law and have made all filings necessary in order for the
General Partner and the Partnership to perform their
obligations under this Agreement to conduct their business
as described in the Registration Statement and Prospectus,
except for such licenses, memberships, filings, and
registrations, the absence of which would not have a
material adverse effect on the ability of the Partnership or
the General Partner to act as described in the Registration
Statement and Prospectus, or to perform their obligations
under this Agreement, and, to the best of such counsel's
knowledge, after due investigation, none of such licenses
and memberships or registrations have been rescinded,
revoked or suspended.
(iv) This Agreement has been duly authorized,
executed and delivered by or on behalf of the General
Partner and the Partnership, and constitutes a valid and
binding agreement of the General Partner and the
Partnership, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws at the time in effect affecting
the enforceability generally of rights of creditors and by
general principals of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law), and except as enforceability of indemnification,
exculpation and contribution provisions contained in such
agreements may be limited by applicable law or public
policy.
(v) The execution and delivery of this Agreement
and the offer and sale of the Units by the Partnership and
the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein and in
the Prospectus will not be in contravention of the General
Partner's certificate of incorporation or bylaws, the
Certificate of Limited Partnership, or the Limited
Partnership Agreement and, to the best of such counsel's
knowledge based upon due inquiry of certain officers of the
General Partner, will not constitute a breach of, or default
under, or a violation of any agreement or instrument known
to such counsel by which the General Partner or the
Partnership is bound and will not violate any order known to
such counsel or any law, rule or regulation applicable to
the General Partner or the Partnership of any court,
governmental body, administrative agency, panel or self-
regulatory organization having jurisdiction over the General
Partner or the Partnership.
(vi) To such counsel's knowledge, based upon due
inquiry of certain officers of the General Partner, except
as disclosed in the Prospectus, there are no actions, suits
or proceedings at law or in equity pending or threatened
before or by any court, governmental body, administrative
agency, panel or self-regulatory organization, nor have
there been any such actions, suits or proceedings within the
five years preceding the date of the Prospectus against the
General Partner or the Partnership, which are required to
be disclosed in the Registration Statement or Prospectus.
(vii) The Registration Statement is effective
under the Securities Act and, to the best of such counsel's
knowledge, no proceedings for a stop order are pending or
threatened under Section 8(d) of the Securities Act or any
similar state securities laws.
<PAGE>(viii) At the time the Registration
Statement became effective, the Registration Statement, and
at the time the Prospectus was issued and as of the closing,
the Prospectus, complied as to form in all material respects
with the requirements of the Securities Act, the Securities
Regulations, the CEAct and the regulations of the NFA and
NASD. Nothing has come to such counsel's attention that
would lead them to believe that the Registration Statement
at the time it became effective contained any untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus at the time it was issued or at the closing
contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements
therein, in light of the circumstances under which they
where made, not misleading; provided, however, that
Cadwalader, Wickersham & Taft need express no opinion or
belief (a) as to information in the Registration Statement
or the Prospectus regarding any Trading Advisor or its
principals, or (b) as to the financial statements, notes
thereto and other financial or statistical data set forth in
the Registration Statement and Prospectus, or (c) as to the
performance data and notes or descriptions thereto set forth
in the Registration Statement and Prospectus.
(ix) Based upon reliance on certain SEC "no-
action" letters, as of the closing, the Partnership need not
register as an "investment company" under the Investment
Company Act of 1940, as amended.
In rendering its opinion, such counsel may rely on
information obtained from public officials, officers of the
General Partner and other sources believed by it to be
responsible and may assume that signatures on all documents
examined by it are genuine, and that a Subscription and Exchange
Agreement and Power of Attorney in the form attached to the
Prospectus has been duly authorized, completed, dated, executed,
and delivered and funds representing the full subscription price
for the Units purchased have been delivered by each purchaser of
Units in accordance with the requirements set forth in the
Prospectus.
18. Inconsistent Filings.
The Trading Advisor agrees not to file, participate in
the filing of, or publish any description of the Trading Advisor,
or of its respective principals or trading approaches that is
materially inconsistent with those in the Registration Statement
and Prospectus, without so informing the General Partner and
furnishing to it copies of all such filings within a reasonable
period prior to the date of filing or publication.
19. Disclosure Document.
During the term of this Agreement, the Trading Advisor
shall furnish to the General Partner promptly copies of all
disclosure documents filed with the CFTC or NFA by the Trading
Advisor. The General Partner acknowledges receipt of the Trading
Advisor's disclosure document dated April 1, 2000.
<PAGE>20. Notices.
All notices required to be delivered under this
Agreement shall be in writing and shall be effective when
delivered personally or by telecopy on the day delivered, or when
given by registered or certified mail, postage prepaid, return
receipt requested, on the day actually received, addressed as
follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof):
if to the Partnership:
Morgan Stanley Dean Witter Spectrum Strategic L.P.
c/o Demeter Management Corporation
Two World Trade Center
62nd Floor
New York, New York 10048
Attn: Robert E. Murray
if to the General Partner:
Demeter Management Corporation
Two World Trade Center
62nd Floor
New York, New York 10048
Attn: Robert E. Murray
if to the Trading Advisor:
Eclipse Capital Management, Inc.
7700 Bonhomme Avenue, Suite 500
St. Louis, Missouri 63105
Attn: James R. Klingler
21. Survival.
The provisions of this Agreement shall survive the
termination of this Agreement with respect to any matter arising
while this Agreement was in effect.
22. Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York. If any action
or proceeding shall be brought by a party to this Agreement or to
enforce any right or remedy under this Agreement, each party
hereto hereby consents and will submit to the jurisdiction of the
courts of the State of New York or any federal court sitting in
the County, City and State of New York. Any action or proceeding
brought by any party to this Agreement to enforce any right,
assert any claim or obtain any relief whatsoever in connection
with this Agreement shall be brought by such <PAGE>party
exclusively in the courts of the State of New York or any federal
court sitting in the County, City and State of New York.
23. Remedies.
In any action or proceeding arising out of any of the
provisions of this Agreement, the Trading Advisor agrees not to
seek any prejudgment equitable or ancillary relief. The Trading
Advisor agrees that its sole remedy in any such action or
proceeding shall be to seek actual monetary damages for any
breach of this Agreement.
24. Headings.
Headings to sections herein are for the convenience of
the parties only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
25. Counterparts.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all
of which together shall constitute the same agreement.
IN WITNESS WHEREOF, this Agreement has been executed
for and on behalf of the undersigned as of the day and year first
above written.
MORGAN STANLEY DEAN WITTER SPECTRUM
STRATEGIC L.P.
by Demeter Management Corporation,
General Partner
By: /s/ Robert E. Murray
Name: Robert E. Murray
Its: President
DEMETER MANAGEMENT CORPORATION
By: /s/ Robert E. Murray
Name: Robert E. Murray
Its: President
ECLIPSE CAPITAL MANAGEMENT, INC.
<PAGE>By: /s/
James R. Klingler
Name: James R. Klingler
Its: Senior Vice President
