Document:

<PAGE> 1

                               GUARANTEE AGREEMENT

                              CENTRAL BANCORP, INC.

                         Dated as of September 16, 2004

<PAGE> 2

                                TABLE OF CONTENTS

<TABLE>
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                                                                                    PAGE

                                                 ARTICLE I
                                       DEFINITIONS AND INTERPRETATION
<S>               <C>
SECTION 1.1.      Definitions and Interpretation......................................1

                                                 ARTICLE II
                              POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1.      Powers and Duties of the Guarantee Trustee..........................4

SECTION 2.2.      Certain Rights of the Guarantee Trustee.............................5

SECTION 2.3.      Not Responsible for Recitals or Issuance of Guarantee...............7

SECTION 2.4.      Events of Default; Waiver...........................................7

SECTION 2.5.      Events of Default; Notice...........................................8

                                                 ARTICLE III
                                            THE GUARANTEE TRUSTEE

SECTION 3.1.      The Guarantee Trustee; Eligibility..................................8

SECTION 3.2.      Appointment, Removal and Resignation of the Guarantee Trustee.......9

                                                 ARTICLE IV
                                                 GUARANTEE

SECTION 4.1.      Guarantee...........................................................9

SECTION 4.2.      Waiver of Notice and Demand........................................10

SECTION 4.3.      Obligations Not Affected...........................................10

SECTION 4.4.      Rights of Holders..................................................11

SECTION 4.5.      Guarantee of Payment...............................................11

SECTION 4.6.      Subrogation........................................................11

SECTION 4.7.      Independent Obligations............................................12

SECTION 4.8.      Enforcement........................................................12

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<TABLE>
<CAPTION>
                               TABLE OF CONTENTS
                                  (continued)

                                                 ARTICLE V
                                   LIMITATION OF TRANSACTIONS; SUBORDINATION
<S>               <C>
SECTION 5.1.      Limitation of Transactions.........................................12

SECTION 5.2.      Ranking............................................................13

                                                 ARTICLE VI
                                                TERMINATION

SECTION 6.1.      Termination........................................................13

                                                 ARTICLE VII
                                               INDEMNIFICATION

SECTION 7.1.      Exculpation........................................................14

SECTION 7.2.      Indemnification....................................................14

SECTION 7.3.      Compensation; Reimbursement of Expenses............................15

                                                 ARTICLE VIII
                                                 MISCELLANEOUS

SECTION 8.1.      Successors and Assigns.............................................16

SECTION 8.2.      Amendments.........................................................16

SECTION 8.3.      Notices............................................................16

SECTION 8.4.      Benefit............................................................17

SECTION 8.5.      Governing Law......................................................17

SECTION 8.6.      Counterparts.......................................................17

</TABLE>

                                      -ii-

<PAGE> 4

                               GUARANTEE AGREEMENT
                               -------------------

         This GUARANTEE  AGREEMENT (the "Guarantee"),  dated as of September 16,
2004,  is executed  and  delivered by Central  Bancorp,  Inc.,  incorporated  in
Massachusetts  (the  "Guarantor"),  and  JPMorgan  Chase Bank,  as trustee  (the
"Guarantee  Trustee"),  for the benefit of the Holders (as defined  herein) from
time to time of the Capital  Securities (as defined  herein) of Central  Bancorp
Capital Trust I, a Delaware statutory trust (the "Issuer").

         WHEREAS,  pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of September 16, 2004, among the trustees named therein
of the Issuer,  Central Bancorp,  Inc., as sponsor, and the Holders from time to
time of undivided  beneficial  interests in the assets of the Issuer, the Issuer
is issuing on the date hereof securities, having an aggregate liquidation amount
of up to $5,100,000,  designated the TP Securities  (the "Capital  Securities");
and

         WHEREAS,   as  incentive  for  the  Holders  to  purchase  the  Capital
Securities,  the Guarantor desires  irrevocably and unconditionally to agree, to
the  extent  set  forth in this  Guarantee,  to pay to the  Holders  of  Capital
Securities the Guarantee  Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.

         NOW, THEREFORE,  in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.    Definitions and Interpretation.
                ------------------------------

         In this Guarantee, unless the context otherwise requires:

         (a)  capitalized  terms used in this  Guarantee  but not defined in the
    preamble above have the respective meanings assigned to them in this Section
    1.1;

         (b)  a term defined  anywhere in this  Guarantee  has the same  meaning
    throughout;

         (c)  all references to "the Guarantee" or "this  Guarantee" are to this
    Guarantee as modified, supplemented or amended from time to time;

         (d)  all references  in this  Guarantee to Articles and Sections are to
    Articles and Sections of this Guarantee, unless otherwise specified;

         (e)  terms defined in the  Declaration  as of the date of  execution of
    this  Guarantee have the same meanings when used in this  Guarantee,  unless
    otherwise  defined  in  this  Guarantee  or  unless  the  context  otherwise
    requires; and

         (f)  a reference to the singular includes the plural and vice versa.

<PAGE> 5

         "Beneficiaries"  means any  Person to whom the  Issuer is or  hereafter
becomes indebted or liable.

         "Corporate  Trust Office" means the office of the Guarantee  Trustee at
which the  corporate  trust  business of the  Guarantee  Trustee  shall,  at any
particular time, be principally administered.

         "Covered Person" means any Holder of Capital Securities.

         "Debentures"  means  the  junior  subordinated  debentures  of  Central
Bancorp, Inc., designated the Junior Subordinated Debt Securities due 2034, held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.

         "Event of Default" has the meaning set forth in Section 2.4.

         "Guarantee  Payments"  means the following  payments or  distributions,
without duplication,  with respect to the Capital Securities,  to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration)  which are required to be paid on such Capital Securities to
the extent the Issuer has funds available in the Property Account (as defined in
the Declaration) therefor at such time, (ii) the Redemption Price (as defined in
the  Indenture)  to the extent the Issuer has funds  available  in the  Property
Account therefor at such time, with respect to any Capital Securities called for
redemption by the Issuer,  (iii) the Special Redemption Price (as defined in the
Indenture) to the extent the Issuer has funds available in the Property  Account
therefor at such time, with respect to Capital  Securities called for redemption
upon the occurrence of a Special Event (as defined in the  Indenture),  and (iv)
upon  a  voluntary  or  involuntary  liquidation,   dissolution,  winding-up  or
termination  of the Issuer (other than in connection  with the  distribution  of
Debentures  to the Holders of the  Capital  Securities  in exchange  therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment,  to the extent the Issuer has funds  available  in the Property
Account  therefor  at such  time,  and (b) the  amount of  assets of the  Issuer
remaining  available for  distribution  to Holders in  liquidation of the Issuer
after  satisfaction  of  liabilities  to  creditors of the Issuer as required by
applicable law (in either case, the "Liquidation Distribution").

         "Guarantee  Trustee"  means  JPMorgan  Chase  Bank,  until a  Successor
Guarantee Trustee has been appointed and has accepted such appointment  pursuant
to the  terms  of this  Guarantee  and  thereafter  means  each  such  Successor
Guarantee Trustee.

         "Holder"  means any holder,  as  registered on the books and records of
the Issuer, of any Capital Securities;  provided,  however, that, in determining
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

         "Indemnified  Person"  means the  Guarantee  Trustee  (including in its
individual  capacity),  any Affiliate of the Guarantee Trustee, or any officers,
directors,   shareholders,   members,  partners,   employees,   representatives,
nominees, custodians or agents of the Guarantee Trustee.

<PAGE> 6

         "Indenture"  means  the  Indenture,  dated as of  September  16,  2004,
between the Guarantor and JPMorgan Chase Bank,  not in its  individual  capacity
but solely as trustee, and any indenture  supplemental thereto pursuant to which
the Debentures are to be issued to the Institutional Trustee of the Issuer.

         "Liquidation  Distribution" has the meaning set forth in the definition
of "Guarantee Payments" herein.

         "Majority  in  liquidation  amount  of the  Capital  Securities"  means
Holder(s) of outstanding  Capital  Securities,  voting together as a class,  but
separately  from the  holders  of  Common  Securities,  of more  than 50% of the
aggregate  liquidation amount (including the stated amount that would be paid on
redemption,  liquidation or otherwise, plus accrued and unpaid Distributions to,
but excluding, the date upon which the voting percentages are determined) of all
Capital Securities then outstanding.

         "Obligations"  means  any  costs,  expenses  or  liabilities  (but  not
including liabilities related to taxes) of the Issuer, other than obligations of
the  Issuer to pay to  holders  of any Trust  Securities  the  amounts  due such
holders pursuant to the terms of the Trust Securities.

         "Officer's   Certificate"   means,   with  respect  to  any  Person,  a
certificate  signed by one  Authorized  Officer of such  Person.  Any  Officer's
Certificate  delivered  with respect to compliance  with a condition or covenant
provided for in this Guarantee shall include:

         (a) a statement that each officer signing the Officer's Certificate has
    read the covenant or condition and the definitions relating thereto;

         (b) a brief  statement  of the nature and scope of the  examination  or
    investigation   undertaken  by  each  officer  in  rendering  the  Officer's
    Certificate;

         (c) a statement  that each such  officer has made such  examination  or
    investigation  as, in such  officer's  opinion,  is necessary to enable such
    officer to express an informed opinion as to whether or not such covenant or
    condition has been complied with; and

         (d) a  statement  as to whether,  in the opinion of each such  officer,
    such condition or covenant has been complied with.

         "Person" means a legal person,  including any individual,  corporation,
estate, partnership,  joint venture,  association,  joint stock company, limited
liability  company,  trust,  unincorporated  association,  or  government or any
agency or political subdivision thereof, or any other entity of whatever nature.

         "Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate  Trust Office of the Guarantee  Trustee with direct
responsibility for the administration of any matters relating to this Guarantee,
including any vice president,  any assistant vice president,  any secretary, any
assistant secretary,  the treasurer,  any assistant treasurer, any trust officer
or  other  officer  of the  Corporate  Trust  Office  of the  Guarantee  Trustee
customarily  performing functions similar to those performed by any of the above
designated

                                      -3-

<PAGE> 7

officers and also means,  with respect to a particular  corporate  trust matter,
any other  officer to whom such  matter is  referred  because of that  officer's
knowledge of and familiarity with the particular subject.

         "Successor  Guarantee  Trustee"  means a  successor  Guarantee  Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

         "Trust   Securities"  means  the  Common  Securities  and  the  Capital
Securities.

                                   ARTICLE II
               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1.    Powers and Duties of the Guarantee Trustee.
                ------------------------------------------

                (a) This  Guarantee  shall be held by the Guarantee  Trustee for
         the benefit of the Holders of the Capital Securities, and the Guarantee
         Trustee shall not transfer this Guarantee to any Person except a Holder
         of Capital Securities  exercising his or her rights pursuant to Section
         4.4(b)  or to a  Successor  Guarantee  Trustee  on  acceptance  by such
         Successor  Guarantee  Trustee of its  appointment  to act as  Successor
         Guarantee  Trustee.  The right,  title and  interest  of the  Guarantee
         Trustee shall  automatically  vest in any Successor  Guarantee Trustee,
         and such vesting and  cessation of title shall be effective  whether or
         not conveyancing documents have been executed and delivered pursuant to
         the appointment of such Successor Guarantee Trustee.

                (b)   If an Event of  Default actually  known  to a  Responsible
         Officer of the Guarantee  Trustee has occurred and is  continuing,  the
         Guarantee  Trustee shall enforce this  Guarantee for the benefit of the
         Holders of the Capital Securities.

                (c) The Guarantee Trustee, before the occurrence of any Event of
         Default  and after the curing or waiving of all Events of Default  that
         may have occurred,  shall  undertake to perform only such duties as are
         specifically  set forth in this  Guarantee,  and no  implied  covenants
         shall be read into this  Guarantee  against the Guarantee  Trustee.  In
         case an Event of  Default  has  occurred  (that  has not been  cured or
         waived  pursuant  to  Section  2.4(b))  and  is  actually  known  to  a
         Responsible  Officer of the Guarantee  Trustee,  the Guarantee  Trustee
         shall  exercise  such of the  rights  and  powers  vested in it by this
         Guarantee,  and use the same  degree of care and skill in its  exercise
         thereof,   as  a  prudent  person  would  exercise  or  use  under  the
         circumstances in the conduct of his or her own affairs.

                (d) No provision of this Guarantee shall be construed to relieve
         the Guarantee Trustee from liability for its own negligent action,  its
         own  negligent  failure to act, or its own willful  misconduct,  except
         that:

                    (i)  prior to the  occurrence  of any Event of  Default  and
                after the curing or  waiving  of all Events of Default  that may
                have occurred:

                         (A) the duties and obligations of the Guarantee Trustee
                    shall be determined solely by the express provisions of this
                    Guarantee, and the

                                       -4-

<PAGE> 8

                    Guarantee  Trustee  shall  not  be  liable  except  for  the
                    performance   of  such   duties  and   obligations   as  are
                    specifically  set forth in this  Guarantee,  and no  implied
                    covenants or  obligations  shall be read into this Guarantee
                    against the Guarantee Trustee; and

                         (B) in the  absence  of bad  faith  on the  part of the
                    Guarantee  Trustee,  the Guarantee  Trustee may conclusively
                    rely, as to the truth of the statements and the  correctness
                    of the opinions expressed therein,  upon any certificates or
                    opinions  furnished to the Guarantee  Trustee and conforming
                    to the  requirements of this  Guarantee;  but in the case of
                    any such certificates or opinions furnished to the Guarantee
                    Trustee,  the  Guarantee  Trustee  shall  be under a duty to
                    examine the same to  determine  whether or not on their face
                    they conform to the requirements of this Guarantee;

                    (ii) the Guarantee Trustee shall not be liable for any error
                of judgment made in good faith by a  Responsible  Officer of the
                Guarantee   Trustee,   unless  it  shall  be  proved  that  such
                Responsible  Officer of the  Guarantee  Trustee or the Guarantee
                Trustee was negligent in  ascertaining  the pertinent facts upon
                which such judgment was made;

                    (iii) the Guarantee Trustee shall not be liable with respect
                to any  action  taken or omitted to be taken by it in good faith
                in accordance  with the written  direction of the Holders of not
                less  than a  Majority  in  liquidation  amount  of the  Capital
                Securities  relating to the time, method and place of conducting
                any  proceeding  for  any  remedy  available  to  the  Guarantee
                Trustee,  or exercising  any trust or power  conferred  upon the
                Guarantee Trustee under this Guarantee; and

                    (iv)  no  provision  of this  Guarantee  shall  require  the
                Guarantee  Trustee to expend or risk its own funds or  otherwise
                incur personal financial  liability in the performance of any of
                its duties or in the exercise of any of its rights or powers, if
                the  Guarantee   Trustee  shall  have  reasonable   grounds  for
                believing  that the  repayment  of such funds is not  reasonably
                assured to it under the terms of this Guarantee, or security and
                indemnity,  reasonably  satisfactory  to the Guarantee  Trustee,
                against such risk or liability is not reasonably assured to it.

SECTION 2.2.    Certain Rights of the Guarantee Trustee.
                ---------------------------------------

                (a) Subject to the provisions of Section 2.1:

                    (i) The Guarantee  Trustee may conclusively  rely, and shall
                be fully protected in acting or refraining from acting upon, any
                resolution, certificate, statement, instrument, opinion, report,
                notice,  request,  direction,  consent,  order, bond, debenture,
                note,  other evidence of indebtedness or other paper or document
                believed  by it to be genuine and to have been  signed,  sent or
                presented by the proper party or parties.

                    (ii) Any direction or act of the Guarantor  contemplated  by
                this Guarantee shall be  sufficiently  evidenced by an Officer's
                Certificate.

                                       -5-

<PAGE> 9

                    (iii) Whenever, in the administration of this Guarantee, the
                Guarantee  Trustee  shall  deem it  desirable  that a matter  be
                proved or established  before taking,  suffering or omitting any
                action  hereunder,  the Guarantee Trustee (unless other evidence
                is herein  specifically  prescribed)  may, in the absence of bad
                faith  on its  part,  request  and  conclusively  rely  upon  an
                Officer's  Certificate of the Guarantor  which,  upon receipt of
                such request, shall be promptly delivered by the Guarantor.

                    (iv) The Guarantee  Trustee shall have no duty to see to any
                recording,  filing or  registration  of any  instrument or other
                writing  (or  any   rerecording,   refiling  or   reregistration
                thereof).

                    (v) The  Guarantee  Trustee may consult  with counsel of its
                selection,  and the  advice  or  opinion  of such  counsel  with
                respect   to  legal   matters   shall   be  full  and   complete
                authorization  and  protection  in respect of any action  taken,
                suffered  or  omitted  by it  hereunder  in  good  faith  and in
                accordance  with such  advice or  opinion.  Such  counsel may be
                counsel  to the  Guarantor  or any of  its  Affiliates  and  may
                include any of its employees.  The Guarantee  Trustee shall have
                the  right  at any  time to  seek  instructions  concerning  the
                administration  of this  Guarantee  from any court of  competent
                jurisdiction.

                    (vi) The  Guarantee  Trustee shall be under no obligation to
                exercise  any of the  rights  or  powers  vested  in it by  this
                Guarantee at the request or direction of any Holder, unless such
                Holder  shall  have  provided  to  the  Guarantee  Trustee  such
                security and indemnity, reasonably satisfactory to the Guarantee
                Trustee,  against the costs, expenses (including attorneys' fees
                and expenses and the expenses of the Guarantee Trustee's agents,
                nominees or custodians) and  liabilities  that might be incurred
                by it in  complying  with such request or  direction,  including
                such  reasonable  advances as may be requested by the  Guarantee
                Trustee;  provided,  however,  that  nothing  contained  in this
                Section  2.2(a)(vi)  shall  be taken to  relieve  the  Guarantee
                Trustee,  upon the  occurrence  of an Event of  Default,  of its
                obligation  to  exercise  the rights and powers  vested in it by
                this Guarantee.

                    (vii) The  Guarantee  Trustee shall not be bound to make any
                investigation   into  the  facts  or   matters   stated  in  any
                resolution, certificate, statement, instrument, opinion, report,
                notice,  request,  direction,  consent,  order, bond, debenture,
                note, other evidence of indebtedness or other paper or document,
                but the  Guarantee  Trustee,  in its  discretion,  may make such
                further inquiry or  investigation  into such facts or matters as
                it may see fit.

                    (viii) The  Guarantee  Trustee may execute any of the trusts
                or powers  hereunder  or  perform  any duties  hereunder  either
                directly  or by  or  through  agents,  nominees,  custodians  or
                attorneys,  and the Guarantee  Trustee shall not be  responsible
                for any  misconduct  or  negligence  on the part of any agent or
                attorney appointed with due care by it hereunder.

                                      -6-

<PAGE> 10

                    (ix) Any action taken by the Guarantee Trustee or its agents
                hereunder shall bind the Holders of the Capital Securities,  and
                the signature of the Guarantee Trustee or its agents alone shall
                be sufficient and effective to perform any such action. No third
                party shall be required  to inquire as to the  authority  of the
                Guarantee  Trustee to so act or as to its compliance with any of
                the terms and provisions of this Guarantee,  both of which shall
                be  conclusively  evidenced  by the  Guarantee  Trustee's or its
                agent's taking such action.

                    (x) Whenever in the  administration  of this  Guarantee  the
                Guarantee   Trustee   shall   deem  it   desirable   to  receive
                instructions  with respect to  enforcing  any remedy or right or
                taking any other action hereunder, the Guarantee Trustee (A) may
                request   instructions   from  the  Holders  of  a  Majority  in
                liquidation  amount of the Capital  Securities,  (B) may refrain
                from  enforcing such remedy or right or taking such other action
                until such  instructions are received and (C) shall be protected
                in  conclusively  relying on or acting in  accordance  with such
                instructions.

                    (xi) The  Guarantee  Trustee  shall  not be  liable  for any
                action  taken,  suffered,  or  omitted to be taken by it in good
                faith and  reasonably  believed by it to be authorized or within
                the  discretion  or rights or powers  conferred  upon it by this
                Guarantee.

                (b) No provision of this Guarantee shall be deemed to impose any
          duty or obligation on the Guarantee Trustee to perform any act or acts
          or exercise any right, power, duty or obligation  conferred or imposed
          on it, in any  jurisdiction  in which it shall be  illegal or in which
          the  Guarantee   Trustee  shall  be   unqualified  or  incompetent  in
          accordance  with  applicable law to perform any such act or acts or to
          exercise any such right,  power,  duty or  obligation.  No  permissive
          power  or  authority  available  to the  Guarantee  Trustee  shall  be
          construed to be a duty.

SECTION 2.3.    Not Responsible for Recitals or Issuance of Guarantee.
                -----------------------------------------------------

                The recitals  contained in this Guarantee  shall be taken as the
statements  of the  Guarantor,  and the  Guarantee  Trustee  does not assume any
responsibility   for  their   correctness.   The  Guarantee   Trustee  makes  no
representation as to the validity or sufficiency of this Guarantee.

SECTION 2.4.    Events of Default; Waiver.
                -------------------------

                (a) An Event of Default under this Guarantee will occur upon the
          failure  of the  Guarantor  to  perform  any of its  payment  or other
          obligations hereunder.

                (b) The  Holders  of a  Majority  in  liquidation  amount of the
          Capital  Securities may, voting or consenting as a class, on behalf of
          the Holders of all of the Capital Securities,  waive any past Event of
          Default  and its  consequences.  Upon such  waiver,  any such Event of
          Default shall cease to exist,  and shall be deemed to have been cured,
          for every purpose of this  Guarantee,  but no such waiver shall extend
          to any  subsequent  or other default or Event of Default or impair any
          right consequent thereon.

                                      -7-

<PAGE> 11

SECTION 2.5.    Events of Default; Notice.
                -------------------------

                (a) The  Guarantee  Trustee  shall,  within  90 days  after  the
          occurrence  of an Event of  Default,  transmit  by mail,  first  class
          postage prepaid, to the Holders of the Capital Securities,  notices of
          all Events of Default  actually known to a Responsible  Officer of the
          Guarantee  Trustee,  unless such  defaults  have been cured before the
          giving of such notice;  provided,  however, that the Guarantee Trustee
          shall be  protected  in  withholding  such  notice if and so long as a
          Responsible  Officer of the Guarantee Trustee in good faith determines
          that the withholding of such notice is in the interests of the Holders
          of the Capital Securities.

                (b) The Guarantee Trustee shall not be charged with knowledge of
          any Event of Default unless the Guarantee  Trustee shall have received
          written  notice  thereof from the Guarantor or a Holder of the Capital
          Securities,  or a Responsible Officer of the Guarantee Trustee charged
          with the  administration of this Guarantee shall have actual knowledge
          thereof.

                                  ARTICLE III
                              THE GUARANTEE TRUSTEE

SECTION 3.1.    The Guarantee Trustee; Eligibility.
                ----------------------------------

                (a) There shall at all times be a Guarantee Trustee which shall:

                    (i) not be an Affiliate of the Guarantor; and

                    (ii) be a corporation or national association  organized and
                doing business under the laws of the United States of America or
                any state or  territory  thereof or of the District of Columbia,
                or Person authorized under such laws to exercise corporate trust
                powers,  having a combined capital and surplus of at least Fifty
                Million U.S. Dollars  ($50,000,000),  and subject to supervision
                or  examination  by federal,  state,  territorial or District of
                Columbia authority.  If such corporation or national association
                publishes  reports of condition at least  annually,  pursuant to
                law  or to the  requirements  of the  supervising  or  examining
                authority  referred  to above,  then,  for the  purposes of this
                Section  3.1(a)(ii),  the  combined  capital and surplus of such
                corporation  or national  association  shall be deemed to be its
                combined  capital  and  surplus as set forth in its most  recent
                report of condition so published.

                (b) If at any  time  the  Guarantee  Trustee  shall  cease to be
          eligible to so act under Section 3.1(a),  the Guarantee  Trustee shall
          immediately  resign in the  manner  and with the  effect  set forth in
          Section 3.2(c).

                (c)  If  the   Guarantee   Trustee  has  or  shall  acquire  any
          "conflicting  interest'  within the  meaning of Section  310(b) of the
          Trust Indenture Act, the Guarantee Trustee shall either eliminate such
          interest  or resign to the extent and in the manner  provided  by, and
          subject to, this Guarantee.

                                      -8-

<PAGE> 12

SECTION 3.2.    Appointment, Removal and Resignation of the Guarantee Trustee.
                -------------------------------------------------------------

                (a)  Subject to Section  3.2(b),  the  Guarantee  Trustee may be
          appointed or removed without cause at any time by the Guarantor except
          during an Event of Default.

                (b) The  Guarantee  Trustee  shall not be removed in  accordance
          with  Section  3.2(a)  until a  Successor  Guarantee  Trustee has been
          appointed  and has accepted  such  appointment  by written  instrument
          executed by such  Successor  Guarantee  Trustee and  delivered  to the
          Guarantor.

                (c) The Guarantee  Trustee appointed to office shall hold office
          until a Successor Guarantee Trustee shall have been appointed or until
          its  removal or  resignation.  The  Guarantee  Trustee may resign from
          office  (without  need  for  prior  or  subsequent  accounting)  by an
          instrument in writing executed by the Guarantee  Trustee and delivered
          to the  Guarantor,  which  resignation  shall not take effect  until a
          Successor  Guarantee  Trustee has been appointed and has accepted such
          appointment  by an  instrument in writing  executed by such  Successor
          Guarantee  Trustee and  delivered to the  Guarantor  and the resigning
          Guarantee Trustee.

                (d) If no Successor  Guarantee Trustee shall have been appointed
          and  accepted  appointment  as provided in this  Section 3.2 within 60
          days after  delivery of an instrument of removal or  resignation,  the
          Guarantee Trustee resigning or being removed may petition any court of
          competent  jurisdiction  for  appointment  of  a  Successor  Guarantee
          Trustee.  Such court may thereupon,  after prescribing such notice, if
          any, as it may deem proper, appoint a Successor Guarantee Trustee.

                (e) No  Guarantee  Trustee  shall  be  liable  for  the  acts or
          omissions to act of any Successor Guarantee Trustee.

                (f) Upon termination of this Guarantee or removal or resignation
          of the Guarantee  Trustee  pursuant to this Section 3.2, the Guarantor
          shall pay to the Guarantee  Trustee all amounts owing to the Guarantee
          Trustee  under  Sections  7.2  and  7.3  accrued  to the  date of such
          termination, removal or resignation.

                                   ARTICLE IV
                                    GUARANTEE

SECTION 4.1.    Guarantee.
                ---------

                (a) The Guarantor irrevocably and unconditionally  agrees to pay
          in full to the Holders the Guarantee Payments (without  duplication of
          amounts  theretofore paid by the Issuer),  as and when due, regardless
          of any defense (except as defense of payment by the Issuer),  right of
          set-off  or  counterclaim  that the  Issuer  may have or  assert.  The
          Guarantor's obligation to make a Guarantee Payment may be satisfied by
          direct payment of the required amounts by the Guarantor to the Holders
          or by causing the Issuer to pay such amounts to the Holders.

                                      -9-

<PAGE> 13

                (b) The  Guarantor  hereby  also  agrees to  assume  any and all
          Obligations of the Issuer and in the event any such  Obligation is not
          so assumed,  subject to the terms and conditions hereof, the Guarantor
          hereby irrevocably and unconditionally  guarantees to each Beneficiary
          the full payment,  when and as due, of any and all Obligations to such
          Beneficiaries.  This Guarantee is intended to be for the Beneficiaries
          who have received notice hereof.

SECTION 4.2.    Waiver of Notice and Demand.
                ---------------------------

                The  Guarantor  hereby  waives  notice  of  acceptance  of  this
Guarantee  and of any  liability to which it applies or may apply,  presentment,
demand for payment,  any right to require a proceeding  first against the Issuer
or any other Person before proceeding against the Guarantor,  protest, notice of
nonpayment,  notice of dishonor,  notice of redemption and all other notices and
demands.

SECTION 4.3.    Obligations Not Affected.
                ------------------------

                The  obligations,   covenants,  agreements  and  duties  of  the
Guarantor under this Guarantee shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:

                (a) the release or waiver, by operation of law or otherwise,  of
          the  performance or observance by the Issuer of any express or implied
          agreement,  covenant,  term  or  condition  relating  to  the  Capital
          Securities to be performed or observed by the Issuer;

                (b) the  extension  of time for the payment by the Issuer of all
          or  any  portion  of  the  Distributions,  Redemption  Price,  Special
          Redemption Price,  Liquidation  Distribution or any other sums payable
          under the terms of the Capital Securities or the extension of time for
          the performance of any other obligation  under,  arising out of, or in
          connection  with, the Capital  Securities  (other than an extension of
          time for the payment of the Distributions,  Redemption Price,  Special
          Redemption Price,  Liquidation Distribution or other sums payable that
          results  from the  extension  of any  interest  payment  period on the
          Debentures  or any  extension of the maturity  date of the  Debentures
          permitted by the Indenture);

                (c) any  failure,  omission,  delay or lack of  diligence on the
          part  of the  Holders  to  enforce,  assert  or  exercise  any  right,
          privilege,  power or remedy  conferred on the Holders  pursuant to the
          terms of the  Capital  Securities,  or any  action  on the part of the
          Issuer granting indulgence or extension of any kind;

                (d) the voluntary or involuntary liquidation,  dissolution, sale
          of any collateral,  receivership,  insolvency,  bankruptcy, assignment
          for the benefit of creditors, reorganization, arrangement, composition
          or  readjustment of debt of, or other similar  proceedings  affecting,
          the Issuer or any of the assets of the Issuer;

                (e) any  invalidity  of, or defect or deficiency in, the Capital
          Securities;

                                      -10-

<PAGE> 14

                (f) the  settlement or compromise of any  obligation  guaranteed
          hereby or hereby incurred; or

                (g) any  other  circumstance  whatsoever  that  might  otherwise
          constitute a legal or  equitable  discharge or defense of a guarantor,
          it being the intent of this  Section 4.3 that the  obligations  of the
          Guarantor  hereunder shall be absolute and unconditional under any and
          all circumstances.

                There shall be no  obligation  of the Holders to give notice to,
or obtain  consent of, the Guarantor with respect to the happening of any of the
foregoing.

SECTION 4.4.    Rights of Holders.
                -----------------

                (a) The  Holders  of a  Majority  in  liquidation  amount of the
          Capital Securities have the right to direct the time, method and place
          of conducting any proceeding for any remedy available to the Guarantee
          Trustee in respect of this  Guarantee or to direct the exercise of any
          trust or  power  conferred  upon  the  Guarantee  Trustee  under  this
          Guarantee;  provided,  however, that (subject to Sections 2.1 and 2.2)
          the  Guarantee  Trustee  shall have the right to decline to follow any
          such  direction if the  Guarantee  Trustee  shall  determine  that the
          actions so directed  would be unjustly  prejudicial to the Holders not
          taking  part in  such  direction  or if the  Guarantee  Trustee  being
          advised by legal counsel  determines  that the action or proceeding so
          directed may not lawfully be taken or if the Guarantee Trustee in good
          faith by its board of directors or trustees,  executive committee or a
          trust committee of directors or trustees and/or  Responsible  Officers
          shall  determine  that the  action or  proceeding  so  directed  would
          involve the Guarantee Trustee in personal liability.

                (b) Any  Holder of  Capital  Securities  may  institute  a legal
          proceeding  directly  against the  Guarantor to enforce the  Guarantee
          Trustee's  rights under this  Guarantee,  without first  instituting a
          legal  proceeding  against the Issuer,  the  Guarantee  Trustee or any
          other Person. The Guarantor waives any right or remedy to require that
          any such action be brought  first  against the Issuer,  the  Guarantee
          Trustee or any other Person before so proceeding  directly against the
          Guarantor.

SECTION 4.5.    Guarantee of Payment.
                --------------------

                This  Guarantee  creates  a  guarantee  of  payment  and  not of
          collection.

SECTION 4.6.    Subrogation.
                -----------

                The Guarantor  shall be subrogated to all (if any) rights of the
Holders of Capital  Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Guarantee;  provided,  however, that
the Guarantor shall not (except to the extent required by applicable  provisions
of law) be entitled to enforce or exercise  any right that it may acquire by way
of subrogation or any indemnity,  reimbursement or other agreement, in all cases
as a result of payment under this Guarantee, if, after giving effect to any such
payment,  any amounts  are due and unpaid  under this  Guarantee.  If any amount
shall be paid to the  Guarantor

                                      -11-

<PAGE> 15

in violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.

SECTION 4.7.    Independent Obligations.
                -----------------------

                The Guarantor  acknowledges  that its obligations  hereunder are
independent  of the  obligations  of the  Issuer  with  respect  to the  Capital
Securities  and that the  Guarantor  shall be liable as principal  and as debtor
hereunder to make  Guarantee  Payments  pursuant to the terms of this  Guarantee
notwithstanding  the  occurrence  of any event  referred to in  subsections  (a)
through (g), inclusive, of Section 4.3 hereof.

SECTION 4.8.    Enforcement.
                -----------

                A  Beneficiary  may enforce  the  Obligations  of the  Guarantor
contained in Section 4.1(b)  directly  against the Guarantor,  and the Guarantor
waives any right or remedy to require  that any  action be brought  against  the
Issuer or any other person or entity before proceeding against the Guarantor.

                The Guarantor  shall be subrogated to all rights (if any) of any
Beneficiary   against  the  Issuer  in  respect  of  any  amounts  paid  to  the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent  required by applicable  provisions of
law) be entitled to enforce or exercise any rights that it may acquire by way of
subrogation or any indemnity,  reimbursement or other agreement, in all cases as
a result of payment  under  this  Guarantee,  if,  after  giving  effect to such
payment, any amounts are due and unpaid under this Guarantee.

                                   ARTICLE V
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1.    Limitation of Transactions.
                --------------------------

                So long as any Capital  Securities  remain  outstanding,  if (a)
there  shall  have  occurred  and be  continuing  an Event of Default or (b) the
Guarantor shall have selected an Extension Period as provided in the Declaration
and  such  period,  or  any  extension  thereof,  shall  have  commenced  and be
continuing,  then the  Guarantor  may not (x)  declare or pay any  dividends  or
distributions on, or redeem,  purchase,  acquire,  or make a liquidation payment
with respect to, any of the Guarantor's capital stock or (y) make any payment of
principal of or interest or premium,  if any, on or repay,  repurchase or redeem
any debt  securities of the Guarantor  that rank pari passu in all respects with
or junior in interest to the  Debentures  (other  than (i)  payments  under this
Guarantee,  (ii)  repurchases,  redemptions or other  acquisitions  of shares of
capital stock of the Guarantor (A) in connection  with any employment  contract,
benefit plan or other similar arrangement with or for the benefit of one or more
employees,  officers,  directors,  or  consultants,  (B)  in  connection  with a
dividend  reinvestment  or stockholder  stock purchase plan or (C) in connection
with the issuance of capital stock of the Guarantor (or  securities  convertible
into or exercisable for such capital stock),  as consideration in an acquisition
transaction  entered into prior to the occurrence of the Event of Default or the
applicable   Extension   Period,   (iii)   as  a   result   of   any   exchange,
reclassification,  combination  or  conversion  of any  class or  series  of the
Guarantor's  capital  stock  (or  any  capital  stock  of a

                                      -12-

<PAGE> 16

subsidiary of the Guarantor) for any class or series of the Guarantor's  capital
stock or of any class or series of the Guarantor's indebtedness for any class or
series  of the  Guarantor's  capital  stock,  (iv) the  purchase  of  fractional
interests in shares of the Guarantor's  capital stock pursuant to the conversion
or exchange  provisions of such capital stock or the security being converted or
exchanged,   (v)  any   declaration  of  a  dividend  in  connection   with  any
stockholder's  rights plan, or the issuance of rights,  stock or other  property
under any  stockholder's  rights plan, or the redemption or repurchase of rights
pursuant thereto, or (vi) any dividend in the form of stock,  warrants,  options
or other rights where the dividend  stock or the stock issuable upon exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock).

SECTION 5.2.    Ranking.
                -------

                This  Guarantee will  constitute an unsecured  obligation of the
Guarantor  and will  rank  subordinate  and  junior in right of  payment  to all
present and future  Senior  Indebtedness  (as defined in the  Indenture)  of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the  foregoing  provisions  of this  Guarantee  and the other terms set forth
herein.

                The right of the Guarantor to participate in any distribution of
assets of any of its  subsidiaries  upon any such  subsidiary's  liquidation  or
reorganization  or otherwise is subject to the prior claims of creditors of that
subsidiary,  except to the extent the  Guarantor  may itself be  recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee  will  be  effectively   subordinated   to  all  existing  and  future
liabilities of the Guarantor's  subsidiaries,  and claimants should look only to
the assets of the Guarantor for payments  thereunder.  This  Guarantee  does not
limit the  incurrence  or issuance  of other  secured or  unsecured  debt of the
Guarantor,  including Senior Indebtedness of the Guarantor,  under any indenture
or agreement that the Guarantor may enter into in the future or otherwise.

                                   ARTICLE VI
                                   TERMINATION

SECTION 6.1.    Termination.
                -----------

                This Guarantee shall terminate as to the Capital  Securities (i)
upon full payment of the Redemption  Price or the Special  Redemption  Price, as
the case may be,  of all  Capital  Securities  then  outstanding,  (ii) upon the
distribution  of all of the  Debentures  to the  Holders  of all of the  Capital
Securities or (iii) upon full payment of the amounts  payable in accordance with
the Declaration upon dissolution of the Issuer.  This Guarantee will continue to
be  effective  or will be  reinstated,  as the case  may be,  if at any time any
Holder of Capital  Securities  must  restore  payment of any sums paid under the
Capital Securities or under this Guarantee.

                                      -13-

<PAGE> 17

                                  ARTICLE VII
                                 INDEMNIFICATION

SECTION 7.1.    Exculpation.
                -----------

                (a) No  Indemnified  Person  shall  be  liable,  responsible  or
          accountable  in damages or otherwise  to the  Guarantor or any Covered
          Person for any loss,  damage or claim incurred by reason of any act or
          omission of such  Indemnified  Person in good faith in accordance with
          this Guarantee and in a manner that such Indemnified Person reasonably
          believed  to be within the scope of the  authority  conferred  on such
          Indemnified  Person  by  this  Guarantee  or by  law,  except  that an
          Indemnified  Person shall be liable for any such loss, damage or claim
          incurred by reason of such Indemnified  Person's negligence or willful
          misconduct with respect to such acts or omissions.

                (b) An Indemnified Person shall be fully protected in relying in
          good faith upon the  records of the Issuer or the  Guarantor  and upon
          such  information,  opinions,  reports or statements  presented to the
          Issuer or the  Guarantor  by any Person as to matters the  Indemnified
          Person reasonably believes are within such other Person's professional
          or expert competence and who, if selected by such Indemnified  Person,
          has been selected with  reasonable  care by such  Indemnified  Person,
          including information, opinions, reports or statements as to the value
          and amount of the assets,  liabilities,  profits, losses, or any other
          facts  pertinent  to the  existence  and  amount of assets  from which
          Distributions to Holders of Capital Securities might properly be paid.

SECTION 7.2.    Indemnification.
                ---------------

                (a) The Guarantor  agrees to indemnify each  Indemnified  Person
          for, and to hold each Indemnified Person harmless against, any and all
          loss, liability,  damage, claim or expense incurred without negligence
          or willful misconduct on the part of the Indemnified  Person,  arising
          out of or in connection with the acceptance or  administration  of the
          trust or trusts hereunder,  including but not limited to the costs and
          expenses  (including  reasonable  legal  fees  and  expenses)  of  the
          Indemnified  Person defending itself against,  or  investigating,  any
          claim or liability in connection  with the exercise or  performance of
          any of the  Indemnified  Person's  powers  or  duties  hereunder.  The
          obligation to indemnify as set forth in this Section 7.2 shall survive
          the   resignation  or  removal  of  the  Guarantee   Trustee  and  the
          termination of this Guarantee.

                (b) Promptly after receipt by an  Indemnified  Person under this
          Section  7.2  of  notice  of the  commencement  of  any  action,  such
          Indemnified  Person will, if a claim in respect  thereof is to be made
          against the Guarantor  under this Section 7.2, notify the Guarantor in
          writing of the commencement  thereof; but the failure so to notify the
          Guarantor  (i) will not relieve the  Guarantor  from  liability  under
          paragraph  (a) above unless and to the extent that the  Guarantor  did
          not  otherwise  learn of such action and such  failure  results in the
          forfeiture  by the  Guarantor of  substantial  rights and defenses and
          (ii)  will  not,  in  any  event,   relieve  the  Guarantor  from  any
          obligations to any Indemnified  Person other than the  indemnification
          obligation  provided in paragraph (a) above.  The  Guarantor  shall be
          entitled  to  appoint  counsel  of  the  Guarantor's   choice  at  the
          Guarantor's

                                      -14-
<PAGE> 18

          expense to represent  the  Indemnified  Person in any action for which
          indemnification  is sought  (in  which  case the  Guarantor  shall not
          thereafter  be  responsible  for the fees and expenses of any separate
          counsel  retained by the  Indemnified  Person or Persons except as set
          forth  below);   provided,   however,   that  such  counsel  shall  be
          satisfactory   to  the   Indemnified   Person.   Notwithstanding   the
          Guarantor's  election to appoint  counsel to represent the Indemnified
          Person in any action,  the Indemnified  Person shall have the right to
          employ separate counsel  (including local counsel),  and the Guarantor
          shall bear the  reasonable  fees,  costs and expenses of such separate
          counsel (and local  counsel),  if (i) the use of counsel chosen by the
          Guarantor  to represent  the  Indemnified  Person  would  present such
          counsel  with a conflict  of  interest,  (ii) the actual or  potential
          defendants  in,  or  targets  of,  any such  action  include  both the
          Indemnified  Person and the Guarantor and the Indemnified Person shall
          have reasonably  concluded that there may be legal defenses  available
          to it and/or other  Indemnified  Persons which are  different  from or
          additional to those  available to the  Guarantor,  (iii) the Guarantor
          shall not have employed counsel satisfactory to the Indemnified Person
          to represent the  Indemnified  Person  within a reasonable  time after
          notice of the  institution of such action or (iv) the Guarantor  shall
          authorize the  Indemnified  Person to employ  separate  counsel at the
          expense of the Guarantor.  The Guarantor  will not,  without the prior
          written  consent of the Indemnified  Persons,  settle or compromise or
          consent to the entry of any  judgment  with  respect to any pending or
          threatened  claim,  action,  suit or  proceeding  in  respect of which
          indemnification  or contribution may be sought  hereunder  (whether or
          not the  Indemnified  Persons are actual or potential  parties to such
          claim  or  action)  unless  such  settlement,  compromise  or  consent
          includes an unconditional  release of each Indemnified Person from all
          liability arising out of such claim, action, suit or proceeding.

SECTION 7.3.    Compensation; Reimbursement of Expenses.
                ---------------------------------------

                Other  than as  provided  in the  Fee  Agreement  of  even  date
herewith  between  Cohen Bros.  & Company,  the  Guarantee  Trustee and Delaware
Trustee (as defined in the Declaration), the Guarantor agrees:

                (a) to pay to the  Guarantee  Trustee  from  time to  time  such
          compensation for all services  rendered by it hereunder as the parties
          shall  agree to from  time to time  (which  compensation  shall not be
          limited by any  provision  of law in regard to the  compensation  of a
          trustee of an express trust); and

                (b) except as otherwise  expressly provided herein, to reimburse
          the  Guarantee  Trustee  upon  request  for all  reasonable  expenses,
          disbursements  and advances  incurred or made by it in accordance with
          any provision of this Guarantee (including the reasonable compensation
          and the expenses and disbursements of its agents and counsel),  except
          any such expense,  disbursement  or advance as may be  attributable to
          its negligence or willful misconduct.

                The provisions of this Section 7.3 shall survive the resignation
or removal of the Guarantee Trustee and the termination of this Guarantee.

                                      -15-

<PAGE> 19

                                  ARTICLE VIII
                                  MISCELLANEOUS

SECTION 8.1.    Successors and Assigns.
                ----------------------

                All guarantees and agreements  contained in this Guarantee shall
bind the successors,  assigns,  receivers,  trustees and  representatives of the
Guarantor  and  shall  inure  to the  benefit  of  the  Holders  of the  Capital
Securities   then   outstanding.   Except  in  connection  with  any  merger  or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's  assets or capital stock to another entity,  in each
case to the extent  permitted under the Indenture,  the Guarantor may not assign
its rights or delegate its  obligations  under this Guarantee  without the prior
approval of the Holders of not less than a Majority in liquidation amount of the
Capital Securities.

SECTION 8.2.    Amendments.
                ----------

                Except with respect to any changes that do not adversely  affect
the rights of Holders of the  Capital  Securities  in any  material  respect (in
which case no  consent  of Holders  will be  required),  this  Guarantee  may be
amended only with the prior  approval of the Holders of not less than a Majority
in  liquidation  amount  of  the  Capital  Securities.  The  provisions  of  the
Declaration with respect to amendments  thereof shall apply equally with respect
to amendments of the Guarantee.

SECTION 8.3.    Notices.
                -------

                All notices  provided for in this Guarantee shall be in writing,
duly signed by the party giving such notice, and shall be delivered,  telecopied
or mailed by first class mail, as follows:

                (a)  If  given  to  the  Guarantee  Trustee,  at  the  Guarantee
          Trustee's  mailing  address set forth below (or such other  address as
          the Guarantee Trustee may give notice of to the Holders of the Capital
          Securities):

                           JPMorgan Chase Bank
                           600 Travis Street, 50th Floor
                           Houston, Texas 77002
                           Attention:  Institutional Trust Services
                           Central Bancorp Capital Trust I
                           Telecopy:  (713) 216-2101
                           Telephone: (713) 216-4181

                (b) If  given  to the  Guarantor,  at  the  Guarantor's  mailing
          address set forth below (or such other  address as the  Guarantor  may
          give  notice of to the Holders of the  Capital  Securities  and to the
          Guarantee Trustee):

                                      -16-

<PAGE> 20

                           Central Bancorp, Inc.
                           399 Highland Avenue
                           Somerville, Massachusetts 02144
                           Attention: Michael K. Devlin
                           Telecopy: (617) 629-4391
                           Telephone: (617) 528-4000

                (c) If given to any  Holder of the  Capital  Securities,  at the
          address set forth on the books and records of the Issuer.

                All such  notices  shall  be  deemed  to have  been  given  when
received in person,  telecopied with receipt confirmed, or mailed by first class
mail,  postage  prepaid,  except  that if a notice or other  document is refused
delivery or cannot be delivered  because of a changed address of which no notice
was given,  such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.

SECTION 8.4.    Benefit.
                -------

                This  Guarantee  is solely for the benefit of the Holders of the
Capital   Securities  and,   subject  to  Section  2.1(a),   is  not  separately
transferable from the Capital Securities.

SECTION 8.5.    Governing Law.
                -------------

                THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH,  THE LAW OF THE STATE OF NEW YORK,  WITHOUT  REGARD  TO  CONFLICT  OF LAWS
PRINCIPLES THEREOF.

SECTION 8.6.    Counterparts.
                ------------

                This  Guarantee  may contain  more than one  counterpart  of the
signature  page  and this  Guarantee  may be  executed  by the  affixing  of the
signature of the Guarantor and the Guarantee  Trustee to any of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one,  and they shall have the same force and effect as though all of the signers
had signed a single signature page.

                                      -17-

<PAGE> 21

                THIS  GUARANTEE  is  executed as of the day and year first above
written.

                                               CENTRAL BANCORP, INC.,
                                               as Guarantor

                                               By: /s/ John D. Doherty
                                               Name:  John D. Doherty
                                               Title: Chairman, President and
                                                      Chief Executive Officer

                                               JPMORGAN CHASE BANK, as Guarantee
                                               Trustee

                                               By: /s/ Maria D. Calzado
                                               Name:  Maria D. Calzado
                                               Title: Vice President

                                      -18-Exhibit 10.04

                              MANAGEMENT AGREEMENT

            THIS AGREEMENT, made as of the 7th 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

<PAGE>

            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

                                       -2-
<PAGE>

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,

                                       -3-
<PAGE>

            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.")

                                       -4-
<PAGE>

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,

                                       -5-
<PAGE>

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.

                                       -6-
<PAGE>

                  (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 a 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

                                       -7-
<PAGE>

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 three
(3) years 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

                                       -8-
<PAGE>

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

                                       -9-
<PAGE>

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-
<PAGE>

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,

                                      -11-
<PAGE>

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

                                      -12-
<PAGE>

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-
<PAGE>

      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

                                      -14-
<PAGE>

      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.

                                      -15-
<PAGE>

            (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

                                      -16-
<PAGE>

      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-
<PAGE>

      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

                                      -18-
<PAGE>

      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.

                                      -19-
<PAGE>

            12.  Merger or Transfer of Assets of Trading Advisor.
                 -----------------------------------------------

            The Trading Advisor may merge or consolidate with, or sell or
otherwise transfer its advisory business, or all or a substantial portion of its
assets, any portion of its commodity trading programs, systems or methods, or
its goodwill, to any entity that is directly or indirectly controlled by,
controlling, or under common control with, the Trading Advisor, provided that
such entity expressly assumes all obligations of the Trading Advisor under this
Agreement and agrees to continue to operate the business of the Trading Advisor,
substantially as such business is being conducted on the date hereof.

            13.  Complete Agreement.
                 ------------------

            This Agreement constitutes the entire agreement between the parties
with respect to the matters referred to herein, and no other agreement, verbal
or otherwise, shall be binding as between the parties unless in writing and
signed by the party against whom enforcement is sought.

            14.  Assignment.
                 ----------

            This Agreement may not be assigned by any party hereto without the
express written consent of the other parties hereto.

            15.  Amendment.
                 ---------

            This Agreement may not be amended except by the written consent of
the parties hereto.

            16.  Severability.
                 ------------

            The invalidity or unenforceability of any provision of this
Agreement or any covenant herein contained shall not affect the validity or
enforceability of any other provision or covenant hereof or herein contained and
any such invalid provision or covenant shall be deemed to be severable.

            17.  Closing Certificates and Opinions.
                 ---------------------------------

            (1) The Trading Advisor shall, at the 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.

                                      -20-
<PAGE>

                  (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-
<PAGE>

      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-
<PAGE>

            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-
<PAGE>

      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-
<PAGE>

      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-
<PAGE>

      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-
<PAGE>

            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 April,
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-
<PAGE>

            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-
<PAGE>

                                       MORGAN STANLEY SPECTRUM STRATEGIC L.P.
                                          by Demeter Management Corporation,
                                          General Partner

                                       By /s/ Jeffrey A. Rothman
                                          -----------------------------------
                                          Name:  Jeffrey A. Rothman
                                          Title: President

                                       DEMETER MANAGEMENT CORPORATION

                                       By  /s/ Jeffrey A. Rothman
                                          -----------------------------------
                                          Name:  Jeffrey A. Rothman
                                          Title: President

                                       FX CONCEPTS (TRADING ADVISOR), INC.

                                       By  /s/ Hugh J. Tilney
                                          -----------------------------------
                                          Name:  Hugh J. Tilney
                                          Title: Secretary

                                      -29-
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

                                Trading Policies

1.    Futures Trade Execution through Clearing Commodity Broker:
      ---------------------------------------------------------

      o     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.

      o     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.

      o     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:
      --------------------------------------------

      o     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.

      o     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:
      ---------------------------------

      o     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.

      o     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.

<PAGE>

      o     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.

      o     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:
      -----------------

      o     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:
      ----------------------------------

      o     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.

      o     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:
      ---------------

      o     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-
<PAGE>

      o     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:
      ----------------------------

      o     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:
      -----------------------------------------------------------------------

      o     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:
      --------------

      o     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-
<PAGE>

                                                                       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

<PAGE>

                                                                       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 October 7, 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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]