Exhibit
10.04


FORM OF
MANAGEMENT AGREEMENT


THIS AGREEMENT, made as
of the [  ] day of October, 2004, among
MORGAN STANLEY SPECTRUM STRATEGIC L.P., a Delaware limited partnership (the
“Partnership”), DEMETER MANAGEMENT CORPORATION, a Delaware corporation (the
“General Partner”), and FX CONCEPTS TRADING ADVISOR, INC., a New York
corporation (the “Trading Advisor”).


W I T N E S S E T H:


WHEREAS, the Partnership
has been organized pursuant to the Amended and Restated Limited Partnership
Agreement dated as of February 28, 2000 (as may be amended from time to
time, the “Limited Partnership Agreement”), to trade, buy, sell, spread, or
otherwise acquire, hold, or dispose of commodities (which may include 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
is a member partnership of the Morgan Stanley Spectrum Series (the “Fund
Group”) pursuant to which units of limited partnership interest (“Units”) of
such member partnerships are sold to investors in a common prospectus.  Units of the Partnership are being offered
pursuant to a Registration Statement on Form S-1 (as it may be amended from
time to time, the “Registration Statement”) filed under the Securities Act of
1933, as amended (the “Securities Act”), and a final Prospectus constituting a
part thereof (as it may be amended and supplemented from time to time) (the
“Prospectus”).  Such Units can be exchanged
by a limited partner of a member partnership of the Fund Group 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 principals
of the Trading Advisor have extensive experience trading in futures interests
and the Trading Advisor is willing to provide certain services and undertake
certain obligations as set forth herein;


WHEREAS, the Partnership
and the General Partner desire 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 portion of the Partnership’s Net Assets (as defined
in Section 7(d)(1) of the Limited Partnership Agreement) 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 conditions
upon which the Trading Advisor will conduct a portion of the Partnership’s
futures interests trading for the Partnership;


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
General Partner may reasonably require (x) to be made in the Partnership’s
Prospectus required by Section 4.21 of the CFTC’s Regulations, 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 Morgan Stanley DW
Inc., an affiliate of the General Partner and the selling agent for the
Partnership (“Morgan Stanley DW”), by providing information regarding the Trading
Advisor in connection with the preparation and filing of the Registration
Statement and Prospectus, including any pre-or post-effective amendments or
supplements thereto, with the SEC, CFTC, NFA, NASD, and with appropriate
governmental authorities as part of making application for registration of the
Units under the securities or Blue Sky laws of such jurisdictions as the
Partnership may deem appropriate.  As
used herein, the term “principal” shall have the meaning as defined in Rule
3.1(a) of the CFTC’s Regulations and the term “affiliate” shall mean any
individual or entity that directly or indirectly controls, is controlled by, or
is under common control with the Trading Advisor.


(b)           The General Partner,
in its sole discretion and at any time may (i) withdraw the SEC
registration of the Units, or (ii) discontinue the offering of Units.


(c)           If, while Units
continue to be offered and sold, the Trading Advisor becomes aware of any
materially untrue or misleading statement or omission regarding itself or any of
its principals or affiliates in the Registration Statement or Prospectus, or of
the occurrence of any event or change in circumstances which would result in
there being any materially untrue or misleading statement or omission in the
Registration Statement or Prospectus regarding itself or any of its principals
or affiliates, the Trading Advisor shall promptly notify the General Partner
and shall cooperate with it in the preparation of any necessary amendments or
supplements to the Registration Statement or Prospectus.  Neither the Trading Advisor nor any of its
principals or affiliates or any stockholders, officers, directors, or employees
shall distribute the Prospectus or selling literature or shall engage in any
selling activities whatsoever in


 


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connection
with the continuing offering of Units except as may be specifically requested
by the General Partner.


2.                                       Duties of the
Trading Advisor.


(a)           The Trading Advisor
hereby agrees to act as Trading Advisor for the Partnership and, as such, shall
have sole authority and responsibility for directing the investment and
reinvestment of its allocable share of the Net Assets of the Partnership which
shall initially be traded pursuant to its Developed Markets Currency Program as
described in the Prospectus, and may be subsequently traded pursuant to such
other of the Trading Advisor’s trading programs described in the Prospectus as
the General Partner may instruct (with such changes and additions to such trading
programs as the Trading Advisor, from time to time, incorporates into its
trading program(s) for accounts the size of the Partnership), (collectively,
the “Trading Program”) on the terms and conditions and in accordance with the
prohibitions and trading policies set forth in Exhibit A hereto, the
Prospectus, and as otherwise provided in writing to the Trading Advisor; provided,
however, that the General Partner may override the instructions of the
Trading Advisor to the extent necessary (i) to comply with the trading
policies of the Partnership, as described in the Prospectus and the Limited
Partnership Agreement, and with applicable speculative position limits,
(ii) to fund any distributions, redemptions or reappointments 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 clause (iii) of the preceding sentence unless the Trading
Advisor fails to comply with a request of the General Partner to make the
necessary amount of funds available to the Partnership within five calendar
days of such request.  Except as
otherwise provided herein, the Trading Advisor shall not be liable for the
consequences of any decision by the General Partner to override instructions of
the Trading Advisor.  In performing
services for the Partnership, the Trading Advisor may not materially alter or
change the Trading Program without the prior written consent of the General
Partner, it being understood that changes in the futures interests traded shall
not be deemed an alteration in the Trading Program.


(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 Exhibit A hereto, the Prospectus and as otherwise
provided in writing to the Trading Advisor. 
The Trading Advisor shall trade its allocated portion of the
Partnership’s Net Assets pursuant to the Trading Program.


(ii)           Subject to
reasonable assurances of confidentiality by the General Partner and the
Partnership, provide the General Partner, within 30 calendar days of a request
therefor by the General Partner, with information comparing the performance of
the Partnership’s account and the performance of all other client accounts
directed by the Trading Advisor using the Trading Program 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,


 


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upon the General
Partner’s request, consult with the General Partner concerning any
discrepancies between the performance of such other accounts and the
Partnership’s account.  The Trading
Advisor shall promptly inform the General Partner of any material discrepancies
of which the Trading Advisor becomes 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 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.


(v)           In performing
services to the Partnership, the Trading Advisor shall utilize the Trading
Program.  The Trading Advisor shall give
the General Partner prior written notice of any change in the Trading Program
that the Trading Advisor deems to be material (and shall not effect such change
on behalf of the Partnership without the General Partner’s consent), it being
understood that changes in the futures interests traded, provided that such
futures interests are listed in Exhibit B hereto, shall not be deemed an
alteration in the Trading Program.


(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 fee, including give-up fees at rates approved by Morgan Stanley DW
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, but not limited to, payment of the
commissions, exchange and NFA fees, and other transaction charges and give-up
charges incurred on such trades.  The
Trading Advisor’s errors shall include, but not be limited to, inputting
improper trading signals or communicating incorrect orders for execution.  The Trading Advisor shall not be responsible
for errors committed or caused by Morgan Stanley DW, Morgan Stanley & Co.,
Incorporated (“MS&Co.”)


 


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or
any other floor broker or futures commission merchant executing trades.  The Trading Advisor shall have an
affirmative obligation to promptly 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 in the form attached
hereto as Exhibit C hereto, appointing the Trading Advisor the
Partnership’s attorney-in-fact for such purpose.


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 or replacement of any
trading advisor for the Partnership by the General Partner shall not require
any approval of any existing trading advisor (including the Trading
Advisor).  The designation and retention
of an additional trading advisor or replacement 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 with respect to the assets that remain under
the management of the Trading Advisor. 
In the event that an additional trading advisor 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 that portion of the Trading Profits (as defined in Section 6(c)
hereof) properly attributable to the trading done 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
interest 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 or General Partner.  Nothing contained herein shall be deemed to
require the Partnership or General Partner to take any action contrary to the
Limited Partnership Agreement,


 


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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 and any other trading advisor or advisors for the
Partnership, the General Partner, or other member partnership of the Fund Group
or their trading advisors as a member of any partnership, joint venture,
association, syndicate or other entity with the Partnership or the General
Partner, or, except as otherwise specifically provided in this Agreement, be
deemed to confer on any of them any express, implied, or apparent authority to
incur any obligation or liability on behalf of any other.  It is expressly agreed that the Trading
Advisor is neither a promoter, sponsor, nor issuer with respect to the
Partnership.


5.                                       Commodity Brokers.


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, Morgan Stanley DW, shall act as the non-clearing commodity broker
and MS&Co., an affiliate of the General Partner shall act as the clearing
commodity broker for the Partnership with the exception of trades on the London
Metal Exchange which will be cleared by Morgan Stanley & Co. International
Limited (“MSIL”), all of which are affiliates of the General Partner.  In addition, MS&Co. will act as the
counterparty on all of the foreign currency forward trades and Morgan Stanley
Capital Group Inc. (“MSCG”) will act as the counterparty on all of the options
on foreign currency forward trades for the clearing commodity broker.  The General Partner shall provide the
Trading Advisor with copies of brokerage statements.  Notwithstanding that MS&Co. shall act as the counterparty on
all of the foreign currency forward trades and MSCG shall act as the
counterparty on all of the options on foreign currency forward trades for the
clearing commodity broker for the Partnership, the Trading Advisor may execute
trades through floor brokers other than those employed by MS&Co. and MSCG
so long as arrangements are made for such floor brokers to “give-up” or
transfer the positions to MS&Co. and MSCG and provided that the rates
charged by such floor brokers have been approved in writing by Morgan Stanley
DW.  The Trading Advisor will not enter
into any Soft Commission Agreements (as such term is defined by FSA rules).


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 2% (a 2% annual rate) of
the Partnership’s “Net Assets” allocated to the Trading Advisor (as defined in
Section 7(d)(1) of the Limited Partnership Agreement) as of the opening of
business on the first day of each calendar month, commencing with the month in
which the Partnership begins to receive trading advice from the Trading Advisor
pursuant to this Agreement.


 


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(ii)           A monthly incentive
fee equal to 20% of the “Trading Profits” (as defined in Section 6(c))
experienced by the Partnership as of the end of each calendar month, payable on
a non-netted basis vis à vis other trading advisor(s) or 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, 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 that 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 “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 portion of brokerage fees and any transaction fees and
costs relating to the Trading Advisor’s allocated Net Assets, if any, not
included in the brokerage fees; with such trading profits and items of decrease
determined from the end of the last calendar month in which an incentive fee
was earned by the Trading Advisor or, if no incentive fee has been earned
previously by the Trading Advisor, from the date that the Partnership commenced
trading to the end of the month as of which such incentive fee calculation is
being made.  Extraordinary expenses of
the Partnership, if any, will not be deducted in determining Trading
Profits.  No incentive fee will be paid
on interest income earned by the Partnership.


(d)           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 or 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 the month
prior to such increase or decrease.  In
the event that the Partnership experiences a futures


 


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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
Trading Advisor’s allocated Net Assets are increased or reduced in more than
one such month because of redemptions or 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
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 sole discretion of
the General Partner.


7.                                       Term.


(a)           This Agreement shall
continue in effect for a period of (1) year from the date of this Agreement
(the “Initial Termination Date”).  If
this Agreement is not terminated on the Initial Termination Date, as provided
for herein, then, this Agreement shall automatically renew for an additional
one-year period and shall continue to renew for additional one-year periods
until this Agreement is otherwise terminated, as provided for herein.  At least 30 calendar days prior to the
expiration of the Initial Termination Date or any subsequent one-year period,
as the case may be, the Trading Advisor may terminate this Agreement at the end
of the current period by providing written notice to the Partnership indicating
that the Trading Advisor desires to terminate this Agreement at the end of such
period.  This Agreement shall also
terminate if the Partnership terminates. 
The Partnership shall have the right to terminate this Agreement at its
discretion (a) at any month-end upon 5 calendar days’ prior written notice
to the Trading Advisor or (b) at any time upon written notice to the
Trading Advisor upon the occurrence of any of the following events:  (i) if any person described as a
“principal” of the Trading Advisor in the Prospectus 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 Program, 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
materially violates any trading or administrative policy described in the
Prospectus or the Limited Partnership Agreement or otherwise provided 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.


(b)           The Trading Advisor
may terminate this Agreement at any time, upon written notice to the
Partnership, in the event: 
(i) that the General Partner imposes additional trading
limitation(s) (not in effect on the date hereof) in the form of one or more
trading policies or administrative policies that the Trading Advisor does not
agree to follow in its management of


 


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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 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 5 business days of a written request by the
Trading Advisor to do so, or, if such consent is given, does not make
arrangements to facilitate such trading within 90 calendar days of such notice;
or (vi) the Partnership’s Net Assets fall below $1,000,000 at any time.


The indemnities set forth
in Section 8 hereof shall survive any termination of this Agreement.


8.                                       Standard of
Liability; Indemnifications.


(a)           Limitation of
Trading Advisor Liability.  In
respect of the Trading Advisor’s role in the futures interests trading of its
allocated portion 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 by 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


 


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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, or the result of
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 and
General Partner 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, partners, 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, a breach of
this Agreement by the General Partner or the Partnership that relates to
futures interests trading activities or a breach of a representation, warranty
or covenant herein by the General Partner or the Partnership that relates to
the futures interests trading activities of the Partnership; provided
that a court of competent jurisdiction upon entry of a final judgment finds
(or, if no final judgment is entered, an opinion is rendered to the Partnership
by independent counsel reasonably acceptable to both parties) to the effect
that the action or inaction of such indemnified party that was the subject of
the demand, claim, lawsuit, action, or proceeding did not constitute
negligence, misconduct, or a breach of this Agreement by the Trading Advisor or
such indemnified party or a representation, warranty or covenant of the Trading
Advisor herein and was done in good faith and in a manner such indemnified
party reasonably believed to be in, or not opposed to, the best interests of
the Partnership.


(d)           Trading Advisor
Indemnity in Respect of Sale of Units. 
The Trading Advisor shall indemnify, defend and hold harmless Morgan
Stanley DW, MS& Co., MSIL, the Partnership, the General Partner, any
additional seller, and their affiliates and each of their officers, directors,
principals, shareholders, and controlling persons from and against any and all
losses, claims, damages, liabilities, costs and expenses, 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 (as defined below); or (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


 


-10-

















 


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 (including the historical performance capsules, but excluding the
pro forma performance information except to the extent the pro forma
performance information was based on information furnished by the Trading
Advisor) or was made in reliance upon, and in conformity with, written
information or instructions furnished by the Trading Advisor ( provided,
however, that with respect to any related selling material only such
related selling material as shall have been approved in writing by the Trading
Advisor).


(e)           Partnership and
General Partner Indemnity in Respect of Sale of Units.  The Partnership and the General Partner
agree, to indemnify, defend and hold harmless the Trading Advisor and each of
its officers, directors, principals, partners, shareholders, and controlling
persons from and against any loss, claim, damage, liability, cost, and expense,
joint and several, to which any indemnified person may become subject under the
Securities Act, the 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 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 specifically relate to the Trading
Advisor or its Trading Advisor Principals (including the historical performance
capsules, but excluding the pro forma performance information except to the
extent the pro forma performance information was based on information furnished
by the Trading Advisor) or was not 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), 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.  This indemnity shall not relate to any matter
for which the Partnership would be indemnified under Section 8(d).


(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,


 


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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
preceding paragraph, if, in any action, claim, or proceeding as to which
indemnification is or may be available hereunder, an indemnified person
reasonably determines that its interests are or may be adverse, in whole or in
part, to the indemnifying party’s interests or that there may be legal defenses
available to the indemnified person which are different from, in addition to,
or inconsistent with the defenses available to the indemnifying party, the
indemnified person may retain its own counsel in connection with such action,
claim, or proceeding and will be indemnified by the indemnifying party for any
legal and other expenses reasonably incurred in connection with investigating
or defending such action, claim, or proceeding.


In no event will the
indemnifying party be liable for the fees and expenses of more than one counsel
for all indemnified persons in connection with any one action, claim, or
proceeding or in connection with separate but similar or related actions,
claims, or proceedings in the same jurisdiction arising out of the same general
allegations.  The indemnifying party
will not be liable for any settlement of any action, claim, or proceeding
effected without the indemnifying party’s express written consent, but if any
action, claim, or proceeding is settled with the indemnifying party’s express
written consent, 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 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 or any of its
principals or affiliates by any act or omission favor any account advised or
managed by the Trading Advisor or any of its principals or affiliates over the
account of the Partnership in any way or manner (other than by charging
different management and/or incentive fees). 
The Trading Advisor and its principals and affiliates agrees to treat
the Partnership in a fiduciary capacity to the extent recognized by applicable
law, but, subject to that standard, the


 


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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 Program, 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
and its principals and affiliates 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 that
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 Program,
systems, methods or strategies to accommodate the trading of additional funds
or accounts.  If applicable speculative
position limits are exceeded by the Trading Advisor in the opinion of
(i) independent counsel (who shall be other than counsel to the
Partnership), (ii) the CFTC, or (iii) any other regulatory body,
exchange, or board, the Trading Advisor and its principals and affiliates shall
promptly liquidate positions in all of their accounts, including the
Partnership’s account, as to which positions are attributed to the Trading
Advisor as nearly as possible in proportion to the accounts’ respective amounts
available for trading (taking into account different degrees of leverage and
“notional” equity) to the extent necessary to comply with the applicable
position limits.


10.                                 Representations,
Warranties, and Covenants of the Trading Advisor.


(a)           Representations,
Warranties, and Agreements 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 Program on behalf of the
Partnership.


(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.


(iii)          The Trading Advisor
shall trade: (A) its allocated portion of the Partnership’s Net Assets
pursuant to the Trading Program; and (B) only in futures and option
contracts traded on U.S. contract markets, foreign currency forward contracts


 


-13-

















 


traded with
MS&Co. (which may include forward contracts initially executed with
financial institutions other than MS&Co.) Morgan Stanley DW, and such other
futures interests that are approved in writing by the General Partner and have
been approved by the CFTC for U.S. persons.


(iv)          The Trading Advisor
is duly organized, validly existing and in good standing as a corporation under
the laws of the jurisdiction 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 Program, approaches, systems and performance, in the
Registration Statement and the Prospectus, and in any supplemental selling
material which has been approved in writing by the Trading Advisor, are
accurate and complete in all material respects.  With respect to the information relating to the Trading Advisor
and each Trading Advisor Principal, including the Trading Advisor’s and each
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 will not contain
any misleading or untrue statement of a material fact or omit to state a
material fact which is required to be stated therein or necessary to make the
statements therein not misleading and (iii) the Prospectus as of each
monthly 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 4.10(e)(2)(ii) 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


 


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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 other agreement or instrument by which it
is bound or of any order, rule, law or regulation binding on it of any court or
any federal, state, municipal or other 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 at law or in equity before or by any court or by any governmental
body or any administrative, self-regulatory or commodity exchange organization
to which the Trading Advisor or any Trading Advisor Principal is or was a
party, or to which any of the assets of the Trading Advisor or any Trading
Advisor Principal is or was subject and which resulted in or might reasonably
be expected to result in any material adverse change in the condition,
financial or otherwise, 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 or the
CFTC regarding noncompliance by the Trading Advisor or any of the Trading
Advisor Principals with the CEAct.


(xi)           Neither the Trading
Advisor nor any Trading Advisor Principal has received, or is entitled to
receive, directly or indirectly, any commission, finder’s fee, similar fee, or
rebate from any person in connection with the organization or operation of the
Partnership, other than as described in the Prospectus.


(xii)          The actual
performance of each discretionary account of a client directed by the Trading
Advisor and the Trading Advisor Principals since at least the later of (i) the
date of commencement of trading for each such account or (ii) a date five years
prior to the effective date of the Registration Statement, is 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.


 


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(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 condition,
financial or otherwise, business or prospects of the Trading Advisor.  The Trading Advisor shall also inform the
General Partner immediately if the Trading Advisor or any of its officers
become 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.


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 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 (ii) 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 monthly closing will have been, taken; and, upon payment of
the


 


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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.


(vi)          The Registration
Statement and Prospectus contain all statements and information required to be
included therein by the CEAct.  When the
Registration Statement becomes effective under the Securities Act and at all
times subsequent thereto up to and including the first monthly closing
following the date in which the Partnership begins to receive trading advice
from the Trading Advisor pursuant to this Agreement (the “Initial Closing”) and
each monthly closing thereafter, 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 and as of the date of each
monthly closing 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 monthly 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


 


-17-

















 


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
for itself and on behalf of the Partnership and constitutes a valid, binding
and enforceable agreement of the Partnership and the General Partner in
accordance with its terms.


(ix)           The execution and
delivery of this Agreement, the incurrence of the obligations set forth herein
and the consummation of the transactions contemplated herein and in the
Registration Statement and Prospectus will not violate, or constitute a breach
of, or default under, the General Partner’s certificate of incorporation or
bylaws, the Certificate of Limited Partnership, the Limited Partnership Agreement,
or any agreement or instrument by which either the General Partner or the
Partnership, as the case may be, is bound or any order, rule, law or regulation
applicable to the General Partner or the Partnership of any court or any
governmental body or administrative agency or panel or self-regulatory
organization having jurisdiction over the General Partner or the Partnership.


(x)            Except as set forth
in the Registration Statement or Prospectus, there has not been in the five
years preceding the date of the Prospectus and there is not pending or, to the
best of the General Partner’s knowledge, threatened, any action, suit or
proceeding at law or in equity before or by any court or by any federal, state,
municipal or other governmental body or any administrative, self-regulatory or
commodity exchange organization to which the General Partner or the Partnership
is or was a party, or to which any of the assets of the General Partner or the
Partnership is or was subject and which resulted in or might reasonably be expected
to result in any materially adverse change in the condition, financial or
otherwise, of the General Partner or the Partnership or which is required under
the Securities Act or the CEAct to be disclosed in the Prospectus; and neither
the General Partner nor any of the principals of the General Partner, as
“trading principals” is defined under Rule 4.10(e)(i) under the CEAct
(“General Partner Principals”) has received any notice of an investigation by
the NFA, NASD, SEC or CFTC regarding non-compliance by the General Partner or
the General Partner Principals or the Partnership with the Securities Act or
the CEAct which is required under the Securities Act or the CEAct to be
disclosed in the Prospectus.


(xi)           The General Partner
and each principal of the General Partner, as defined in Rule 3.1 under
the CEAct, have all federal and state governmental, regulatory


 


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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.


(xii)          The Partnership is
a “qualified eligible person” for the purposes of Rule 4.7 under the
CEAct.  The Partnership and the General
Partner consent to the account being treated by the Trading Advisor as an
exempt account under Rule 4.7 under the CEAct.


(b)           Covenants
of the General Partner and the Partnership.  The General Partner for itself and the Partnership 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 condition, financial
or otherwise, business or prospects 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.


(iv)          The Partnership and
the General Partner will keep confidential and not disseminate any information
regarding the trading systems, strategies, methods and programs of the Trading
Advisor or specific trades made by the Trading Advisor for the account of the
Partnership to any of the limited partners of the Partnership or the customers,
employees, agents, shareholders, officers, directors or affiliates of the
General Partner or Morgan Stanley DW or any other person or entity, except such
details as may be, in the reasonable judgment of the General Partner, necessary
or appropriate for the conduct of the business of the Partnership or as
required by law.


 


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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
Initial Closing and at the request of the General Partner at any monthly
closing thereafter, provide the following:


(a)           To Morgan Stanley
DW, 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:


(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.


 


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(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 Morgan Stanley
DW, 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
jurisdiction of its incorporation 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 corporate 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
investigation, 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 legal, valid and binding agreement of the Trading
Advisor, enforceable against the Trading Advisor in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, receivership or other laws relating to or affecting
creditors’ rights generally, and to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity), and except
that the enforcement of rights with respect to indemnification and contribution
obligations and provisions (a) purporting to waive or limit rights to trial by
jury, oral amendments to written agreements or rights of set off or (b)
relating to submission to jurisdiction, venue or service of process, may be
limited by applicable law or considerations of public policy.


(iv)          To such counsel’s
knowledge, based upon due inquiry of certain officers of the Trading Advisor,
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


 


-21-

















 


the date of the
Prospectus against the Trading Advisor or any Trading Advisor Principal which
are required to be disclosed in the Registration Statement or Prospectus.


(v)           The execution and
delivery by the Trading Advisor of this Agreement, and the performance by the
Trading Advisor of its obligations hereunder and in the Prospectus (a) do
not require any Governmental Approval (as defined below) to be obtained on the
part of the Trading Advisor, except those that have been obtained and, to such
counsel’s knowledge, are in effect, (b) do not result in a violation of
any provision of the certificate or incorporation of bylaws of the Trading
Advisor or any Applicable Laws (as defined below) applicable to the Trading
Advisor, and (c) do not breach or result in a violation of, or default
under, (i) any indenture, mortgage, deed of trust, agreement or instrument
known by us to which the Trading Advisor or any of its subsidiaries is a party
or by which the Trading Advisor or any of its subsidiaries is bound or to which
any of the property or assets of the Trading Advisor or any of its subsidiaries
is subject, or (ii) any judgment, decree or order known to such counsel
which is applicable to the Trading Advisor and, pursuant to any Applicable
Laws, is issued by any Governmental Authority (as defined below) having
jurisdiction over the Trading Advisor or its properties. “Applicable Laws”
means those laws, rules and regulations of the State of New York and of the
United States of America which, in such counsel’s experience, are normally
applicable to transactions of the type contemplated by this Agreement.  “Governmental Authorities” means executive,
legislative, judicial, administrative or regulatory bodies of the State of New
York or the United States of America. 
“Governmental Approval” means any consent, approval, license,
authorization or validation of, or filing, recording or registration with, any
Governmental Authority pursuant to Applicable Laws.


(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
Advisors 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.


 


-22-

















 


In giving the foregoing
opinion, counsel may rely on information obtained from public officials,
officers of the Trading Advisor, and other sources believed by it to be
responsible and may assume that signatures on all documents examined by it are
genuine.


(c)           To Morgan Stanley
DW, the General Partner and the Partnership, a report dated the date of the
closing that shall present, for the period from the date after the last day
covered by the historical performance capsules in the Prospectus to the latest
practicable day before closing, updated performance information, and which
shall certify that such information is, to the best of such Trading Advisor’s
knowledge, accurate in all material respects.


(2)           The General Partner shall, at the
Initial Closing, 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)           To the parties
hereto, an opinion of Cadwalader, Wickersham & Taft LLP, counsel to the
General Partner and the Partnership, in form and substance satisfactory to such
parties, 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.


(ii)           The General Partner
is a corporation validly existing and in good standing as a corporation under
the laws of the State of Delaware and is duly qualified as a foreign
corporation to do business and is in good standing in the State of New York and
in each other jurisdiction in which the nature or conduct of its business
requires such


 


-23-

















 


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.


(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 and
the Limited Partnership Agreement have been duly authorized, executed and
delivered by or on behalf of the General Partner and this Agreement has been
duly authorized, executed and delivered by or on behalf of the Partnership, and
each constitutes a legal, valid and binding agreement of the General Partner
and/or the Partnership, as applicable, enforceable against the General Partner
and/or the Partnership, as applicable, in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
receivership or other laws relating to or affecting creditors’ rights
generally, and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and except that the
enforcement of rights with respect to indemnification and contribution
obligations and provisions (a) purporting to waive or limit rights to
trial by jury, oral amendments to written agreements or rights of set off or
(b) relating to submission to jurisdiction, venue or service of process,
may be limited by applicable law or considerations of public policy.


(v)           The execution and
delivery by each of the General Partner and the Partnership of this Agreement,
the offer and sale of the Units by the Partnership and the performance by the
General Partner and the Partnership of its respective obligations hereunder and
in the Prospectus (a) do not require any Governmental Approval to be
obtained on the part of the General Partner or the Partnership, except those
that have been obtained and, to such counsel’s knowledge, are in effect,
(b) do not result in a violation of any provision of the General Partner’s
certificate of incorporation or bylaws, the Certificate of Limited Partnership
or the Limited Partnership Agreement of the Partnership or any Applicable Laws
applicable to the General Partner and the Partnership, and (c) do not
breach or result in a violation of, or default under, (i) any indenture,
mortgage, deed of trust, agreement or instrument known by us to which it or any
of its subsidiaries is a party or by which it or any of its subsidiaries is
bound or to which any of the property or assets of it or any of its
subsidiaries is subject, or (ii) any


 


-24-

















 


judgment, decree
or order known to such counsel which is applicable to the General Partner or
the Partnership and, pursuant to any Applicable Laws, is issued by any
Governmental Authority having jurisdiction over it or its properties.


(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.


(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.


(ix)           Based upon reliance
on certain SEC “no-action” letters, as of the closing, the performance by the
Partnership of the transactions contemplated by this Agreement and as described
in the Prospectus will not require the Partnership to register as an
“investment company” under the Investment Company Act of 1940, as amended.


(x)            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 LLP 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.


(xi)           The General Partner
and its “principals,” as defined in CFTC Rule 3.1(a), and the Partnership
have all federal and state governmental, regulatory, self-regulatory and
exchange approvals, licenses, registrations, and memberships, and have effected
all filings with federal and state governmental regulators, self-regulatory
organizations and exchanges required to conduct their business and to act as
described in the Prospectus, or required to perform their obligations under
this Agreement and the


 


-25-

















 


Limited
Partnership Agreement, except for such approvals, licenses, registrations,
memberships, and filings the absence of which would not have a material adverse
effect on their ability to act as described in the Prospectus, or to perform
their obligations under such agreements, and, to the best of such counsel’s
knowledge, after due investigation, none of such approvals, licenses,
registrations, memberships, or filings has been rescinded, revoked, or
suspended.


(xii)          The information in
the Prospectus under the captions “Summary of the Prospectus—Tax
Considerations,” “Risk Factors—Taxation and Regulatory Risks,” “Purchases by
Employee Benefit Plans—ERISA Considerations,” “Material Federal Income Tax
Considerations,” “State and Local Income Tax Aspects,” and “The Limited
Partnership Agreements,” to the extent that such information constitutes
matters of law or legal conclusions, has been reviewed by such counsel and is
correct.


(xiii)         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 subscription for and sale of the Units to qualified
subscribers therefor has been taken; and, upon payment of the consideration
therefor specified in the accepted Subscription and Exchange Agreement and
Power of Attorney, the Units will constitute valid limited partnership
interests in the Partnership and each subscriber who purchases Units will
become a Limited Partner, subject to the requirement that each such purchaser
shall have duly completed, executed and delivered to the Partnership a
Subscription and Exchange Agreement and Power of Attorney relating to the Units
purchased by such purchaser, that such purchaser meets all applicable suitability
standards and that the representations and warranties of such purchaser in the
Subscription and Exchange Agreement and Power of Attorney are true and correct
and that such purchaser is included as a Limited Partner in the Partnership’s
records.


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.


 


-26-

















 


19.                                 Disclosure Document.


During the term of this
Agreement, the Trading Advisor shall furnish to the General Partner promptly
copies of all disclosure documents, information documents or similar documents
used by the Trading Advisor.  The
General Partner acknowledges receipt of the Trading Advisor’s information
document dated [___], 2004.


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 Spectrum Strategic L.P.

c/o Demeter Management Corporation

330 Madison Avenue

8th Floor

New York, New York  10017

Attn:  Jeffrey A. Rothman, President


if to the General Partner:


Demeter Management Corporation

330 Madison Avenue

8th Floor

New York, New York  10017

Attn:  Jeffrey A. Rothman, President


if to the Trading
Advisor:


FX Concepts Trading Advisor, Inc.

225 W. 34th Street

Suite 710

New York, New York 10122

Attn:  Philip Simotas


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.


 


-27-

















 


22.                                 Governing Law.


This Agreement shall be
governed by, and construed in accordance with, the law of the State of New
York.  If any action or proceeding shall
be brought by a party to this Agreement or to enforce any right or remedy under
this Agreement, each party hereto hereby consents and will submit to the
jurisdiction of the courts of the State of New York or any federal court
sitting in the County, City and State of New York.  Any action or proceeding brought by any party to this Agreement
to enforce any right, assert any claim or obtain any relief whatsoever in
connection with this Agreement shall be brought by such party exclusively in
the courts of the State of New York or any federal court sitting in the County,
City and State of New York.


23.                                 Remedies.


In any action or
proceeding arising out of any of the provisions of this Agreement, the Trading
Advisor agrees not to seek any prejudgment equitable or ancillary relief.  The Trading Advisor agrees that its sole
remedy in any such action or proceeding shall be to seek actual monetary
damages for any breach of this Agreement.


24.                                 Headings.


Headings to sections
herein are for the convenience of the parties only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.


25.                                 Successors.


This Agreement, including
the representations, warranties and covenants contained herein shall be binding
upon and inure to the benefit of the parties hereto, their successors and
permitted assigns, and not other person shall have any right or obligation
under this Agreement.


26.                                 Waiver of Breach.


The waiver by any party
of a breach of any provision of this Agreement shall not  operate or be construed as a waiver of any
subsequent breach or of a breach by any other party.   The Failure of a party to insist upon strict adherence to any
provision of the Agreement shall not constitute a waiver or thereafter deprive
such party o g the right to insist upon strict adherence.


27.                                 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.


 


-28-

















 


	
   

  	
  MORGAN
  STANLEY SPECTRUM STRATEGIC L.P.

  
	
   

  	
  by Demeter
  Management Corporation,

  
	
   

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey A. Rothman

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEMETER
  MANAGEMENT CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey A. Rothman

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FX
  CONCEPTS TRADING ADVISOR, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					



 


-29-

















 


EXHIBIT
A


Trading Policies


1.                                       Futures Trade Execution through Clearing
Commodity Broker:


·        
When
placing orders for futures trades with the clearing commodity broker designated
in this Agreement or by the General Partner (the “Clearing Commodity Broker”),
the Trading Advisor must follow the Clearing Commodity Broker’s order entry
procedures, of which the Trading Advisor has been advised.


·        
For
futures trades at exchanges where give-up execution is not allowed, the Trading
Advisor must use the execution facilities provided by the Clearing Commodity
Broker.


·        
The
Partnership will not incur an execution service fee from the Clearing Commodity
Broker when the Trading Advisor uses the Clearing Commodity Broker’s execution
facilities.


2.                                       FX Trade Execution through FX
Counterparties:


·        
When
placing orders for foreign currency forward contracts (“FX Trades”) with a
dealer (“FX Counterparty”), the Trading Advisor must follow the FX
Counterparty’s order entry procedures, of which the Trading Advisor has been
advised.


·        
When
executing FX Trades on behalf of the Partnership, the Trading Advisor must use
the execution facilities of the FX Counterparty(ies) designated by the General
Partner for such FX Trades, unless the General Partner otherwise agrees in
writing.


3.                                       “Give-Up” Futures Trade Execution:


·        
The
Trading Advisor shall ensure that a “give-up” execution agreement is in place
prior to the execution of any trade through a floor broker in accordance with
this Agreement or as otherwise provided in writing to the Trading Advisor by
the General Partner.


·        
The
Trading Advisor may authorize payment of an execution service fee (“Give-Up
Fee”) only to the executing clearing firm or the floor broker (the “Executing
Broker”) that directly gives the futures trade to the Clearing Commodity Broker
for such clearance, and in an amount not greater than the amount permitted by
the General Partner from time to time (the “Execution Allowance”).  The Execution Allowance shall be based on
the General Partner’s assessment for prevailing competitive rates for Give-Up
Fees.


 

















 


·        
Give-Up
Fee bills in amounts up to the Execution Allowance will be processed by the
Clearing Commodity Broker, with notice provided to the Trading Advisor.  To the extent that such bills will be
greater than the Execution Allowance, the Trading Advisor will obtain the prior
written consent of the General Partner.


·        
The
Trading Advisor shall provide that information which may reasonably be
requested by the General Partner to verify the Give-Up Fees processed by the
Clearing Commodity Broker.


4.                                       Trade Allocations:


·        
The
Trading Advisor shall be responsible for determining the procedure(s) used to
allocate trades to all customer accounts it manages, including the
Partnership’s account(s), in accordance with CFTC regulations.  In the event that either of the Clearing
Commodity Broker or the Executing Broker agrees to perform any step(s)
necessary to such allocation procedure, it remains the Trading Advisor’s
responsibility to ensure that the procedure(s) are performed correctly and that
the allocated trades are correctly booked to he Partnership’s account(s).


5.                                       Daily Trade Reporting and Checkout:


·        
The
Trading Advisor shall be responsible for the timely reporting of those futures
trades not executed by, and subsequently given-up to, the Clearing Commodity
Broker, and shall be responsible for ensuring that the Executing Broker(s)
transmit such futures trades to the Clearing Commodity Broker for clearance
within a timely basis.


·        
The
Trading Advisor shall be responsible for daily checkout of all of the
Partnership’s futures, options, and FX Trades. 
Such checkout shall be administered according to the procedures set
forth by the Clearing Commodity Broker’s and/or FX Counterparty’s designated
checkout area, of which the Trading Advisor has been advised.


6.                                       Reconciliations:


·        
The
Trading Advisor shall be responsible for trade reconciliation and account
balancing with the Clearing Commodity Broker and/or FX Counterparty’s
designated trade reconciliation area. 
The Trading Advisor shall use best efforts to provide to the General
Partner a daily reconciliation for each Partnership account by no later than
10:00 a.m. EST/EDT.  Such reconciliation
will specify those trades to be added to and/or canceled from an account,
provide a valuation versus current settlement prices of such trades, and advise
of any other pending cash adjustments due from Executing Brokers.  The 10:00 a.m. time requirement is
contingent upon the Clearing Commodity Broker fulfilling its balancing
obligations on an equally timely basis.


 


-2-

















 


·        
The
Trading Advisor shall report to the General Partner any incorrect settlement
and/or closing price of which it becomes aware with regard to the Clearing
Commodity Broker’s account statement(s) for the Partnership.


7.                                       Foreign Currency Conversions:


·        
The
Trading Advisor shall be responsible for the conversion of foreign currency
balances to U.S. dollars.  The Trading
Advisor may, at its discretion, place such foreign currency conversion trades
as may be necessary.  Such trades must
be executed with such party as the General Partner may, from time to time,
specifically designate, or otherwise with either of the Clearing Commodity
Broker or FX Counterparty as the Trading Advisor ay prefer.  Conversion trades should be verified in the
Trading Advisor’s daily checkout, account balancing, and reconciliation
procedures.


8.                                       Monitoring of Delivery Periods, Option
Expirations and Trade Settlement:


·        
The
Trading Advisor shall be responsible for monitoring first notice (delivery)
dates, last trading dates, option expiration dates, and forward settlement
and/or maturity dates.  The Trading
Advisor shall also take appropriate steps to ensure that it has exited
positions prior to delivery, expiration and settlement.  With regard to option positions, the Trading
Advisor must, in a timely fashion, communicate to the Clearing Commodity
Broker’s and/or FX Counterparty’s designated area proper notice of its
intentions regarding all such open positions that are due to expire.


9.                                       Trading Errors:


·        
The
Trading Advisor must inform the General Partner and Clearing Commodity Broker
of any such occasion in which trades are placed in error.  The provisions of Section 2(d) of this
Agreement shall be interpreted to mean that the benefit of profitable trading
errors made by the Trading Advisor when trading on behalf of the Trading
Company shall be awarded to the Partnership, whereas the detriment of
unprofitable trading errors made by the Trading Advisor when trading on behalf
of the Partnership must be borne by the Trading Advisor.


 


-3-

















EXHIBIT
B


Futures Interests Traded


	
  Developed Markets Currency Program

  
	
   

  	
   

  	
   

  
	
  Norwegian krone

  	
   

  	
  NOK

  
	
  Swedish krona

  	
   

  	
  SEK

  
	
  British pound

  	
   

  	
  GBP

  
	
  Euroland euro

  	
   

  	
  EUR

  
	
  Swiss franc

  	
   

  	
  CHF

  
	
  Australian dollar

  	
   

  	
  AUD

  
	
  New Zealand dollar

  	
   

  	
  NZD

  
	
  Canadian dollar

  	
   

  	
  CAD

  
	
  Singapore dollar

  	
   

  	
  SGD

  
	
  Japanese yen

  	
   

  	
  JPY

  
	
   

  	
   

  	
   

  



 

















 


EXHIBIT
C


TRADING AUTHORIZATION


FX Concepts Trading Advisor, Inc.

225 W. 34th Street

Suite 710

New York, New York  10122


Dear Sirs:


MORGAN STANLEY SPECTRUM STRATEGIC L.P., a Delware limited partnership (the “Partnership”), does hereby make, constitute, and
appoint FX
CONCEPTS TRADING ADVISOR, INC., (the “Trading
Advisor”) as the Partnership’s agent and attorney-in-fact to purchase
and sell commodity interests through Morgan Stanley & Co. Incorporated and
Morgan Stanley & Co. International Limited, as commodity brokers, as
described in and in accordance with the terms of the Management Agreement dated
as of [_______], 2004 among the Partnership, Demeter Management Corporation and
the Trading Advisor, until further notice to the Trading Advisor.


This authorization shall
terminate and be null, void, and of no further effect simultaneously with the
termination of the said Management Agreement.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORGAN
  STANLEY SPECTRUM STRATEGIC L.P.

  
	
   

  	
  by  Demeter
  Management Corporation,

  
	
   

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jeffrey A. Rothman, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:  [_______], 2004