Document:

glc.htm

    
      CONFIDENTIAL
TREATMENT REQUESTED.  Confidential portions of this document have been
redacted and have been separately filed with the Commission.

    

     

    ADVISORY AGREEMENT

     

    THIS
AGREEMENT, made as of October 1, 2009, among Morgan
Stanley Smith Barney GLC I, LLC, a Delaware limited liability company (the
“Trading Company”), Demeter Management LLC, a Delaware limited liability company
(the “Trading Manager”), and GLC Ltd., a limited company organized under the
laws of England and Wales, having its registered office at Ingeni Building, 17
Broadwick Street, London W1F 0AX, United Kingdom (the “Trading
Advisor”).

     

    W I T N E S S E T H
:

     

    WHEREAS, the Trading Company
has been organized pursuant to a Certificate of Formation filed with Secretary
of State of the State of Delaware on September 10, 2009 (the “Certificate of
Formation”) and an operating agreement (the “Operating Agreement”) to, among
other things, directly or indirectly through a commodity trading advisor, trade,
buy, sell, spread, or otherwise acquire, hold, or dispose of commodities
(including, but not limited to, foreign currencies, mortgage-backed securities,
money market instruments, financial instruments, and any other securities or
items which are now, or may hereafter be, the subject of futures contract
trading), domestic and foreign commodity futures contracts, forward contracts,
foreign exchange commitments, options on physical commodities and on futures
contracts, spot (cash) commodities and currencies, exchange of futures contracts
for physicals transactions, exchange of physicals for futures contracts
transactions, and any rights pertaining thereto, whether traded on an organized
exchange or otherwise (hereinafter referred to collectively as “futures
interests;” provided, however, such
definition shall exclude securities futures products as defined by the Commodity
Futures Trading Commission (“CFTC”), options in securities futures and options
in equities) and securities (such as United States Treasury securities) approved
by the CFTC for investment of customer funds and other securities on a limited
basis, and to engage in all activities incident thereto;

     

    WHEREAS, the Trading Company
is a commodity pool operated by the Trading Manager in which other commodity
pool investment vehicles sponsored and/or managed by the Trading Manager and/or
its affiliates will invest (each such investment vehicle, a “Member,” and
collectively, the “Members”);

     

    WHEREAS, the principals of the
Trading Advisor have extensive experience trading in futures interests and the
Trading Advisor is willing to provide the services and undertake the obligations
as set forth herein;

     

    WHEREAS, the Trading Company
and the Trading Manager each desires the Trading Advisor to act as a trading
advisor for the Trading Company and to make investment decisions with respect to
futures interests for the Trading Company and the Trading Advisor desires so to
act; and

     

    WHEREAS, the Trading Company,
the Trading Manager and the Trading Advisor wish to enter into this Agreement
which, among other things, sets forth certain terms and conditions upon which
the Trading Advisor will conduct the Trading Company’s futures interest
trading.

     

    NOW, THEREFORE, the parties
hereto hereby agree as follows:

     

    
      	
              1.  

            	
              Undertakings in
      Connection with the Continuing Offering of
  Units.

            

    

     

    (a) The
Trading Advisor agrees with respect to the continuing offering of interests
(“Units”) in the Members: (i) to make all disclosures regarding itself, its
principals and affiliates, its trading performance, its trading systems, methods
and strategies (subject to the need, in the reasonable discretion of the Trading
Advisor, to preserve the secrecy of Proprietary Information (as defined in
Section 1(c) hereof) concerning such systems, methods and strategies), any
client accounts over which it has discretionary trading authority (other than
the names of or identifying information with respect to any such clients), and
otherwise, as the Members may reasonably require (x) in connection with any
Member’s offering materials (collectively, the “Offering Memoranda”) as required
by Rule 4.21 of the regulations under the Commodity Exchange Act (the “CEAct”),
including in connection with any amendments or supplements thereto, or (y) to
comply with any other applicable law or rule or regulation, including those of
the CFTC, the Securities and Exchange Commission, the National Futures
Association (the “NFA”) or any other regulatory or self-regulatory body,
exchange, or board with jurisdiction over its members (or to comply with the
reasonable request of the aforementioned organizations); and (ii) to otherwise
cooperate with the Trading Company, the Trading Manager and the Members by
providing information regarding the Trading Advisor in connection with the
preparation of the Offering Memoranda, including any amendments or supplements
thereto, as part of making application for registration of the Units under the
securities or blue sky laws of any jurisdictions, including foreign
jurisdictions, as the Members may deem appropriate; provided that all such
disclosures are subject to the need, in the reasonable discretion of the Trading
Advisor, to preserve the secrecy of Proprietary Information concerning its
clients, systems methods and strategies. As used herein, unless otherwise
provided, the term “principal” shall have the meaning as defined in Rule 4.10(e)
of the CFTC’s regulations and the term “affiliate” shall mean an individual or
entity that directly or indirectly controls, is controlled by, or is under
common control with, such party.

     

    (b) If 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
Disclosure Information (as defined in Section 19 hereof), 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 Disclosure
Information regarding itself or any of its principals or affiliates, the Trading
Advisor shall promptly notify the Trading Manager and shall cooperate with the
Trading Manager in the preparation of any necessary amendments or supplements to
the Offering Memoranda. Neither the Trading Advisor nor any of its principals,
or affiliates, or any stockholders, officers, directors, or employees shall
distribute the Offering Memoranda or selling literature or shall engage in any
selling activities whatsoever in connection with the continuing offering of
Units except as may be specifically approved by the Trading Manager and agreed
to by the Trading Advisor.

     

    (c) For
purposes of this Agreement, and notwithstanding any of the provisions hereof,
all non-public information relating to the Trading Advisor including, but not
limited to, records, whether original, duplicated, computerized, handwritten, or
in any other form, and information contained therein, business and/or marketing
and/or sales plans and proposals, names of past and current clients, names of
past, current and prospective contacts, trading methodologies, systems,
strategies and programs, trading advice, trading instructions, results of
proprietary accounts, training materials, research data bases, portfolios, and
computer software, and all written and oral information, furnished by the
Trading Advisor to the Trading Company, the Trading Manager, the Members and/or
their officers, directors, employees, agents (including, but not limited to,
attorneys, accountants, consultants, and financial advisors) or controlling
persons (each a “Recipient”), regardless of the manner in which it is furnished,
together with any analysis, compilations, studies or other documents or records
which are prepared by a Recipient of such information and which contain or are
generated from such information, regardless of whether explicitly identified as
confidential, with the exception of information which (i) is or becomes
generally available to the public other than as a result of acts by the
Recipient in violation of this Agreement, (ii) is not knowingly in the
possession of the Recipient prior to its disclosure pursuant to the terms
hereof, (iii) to Recipient’s knowledge is, or does not knowingly become,
available to the Recipient from a source that is not bound by a confidentiality
agreement with regard to such information or by any other legal obligation of
confidentiality prohibiting such disclosure, or (iv) that is independently
developed by the Recipient without use of the confidential information described
in this Section 1(c), are and shall be confidential information and/or trade
secrets and the exclusive property of the Trading Advisor (“Confidential
Information” and/or “Proprietary Information”).

     

    (d) The
Trading Company and the Trading Manager each warrants and agrees that they and
their respective officers, directors, members, equity holders, employees and
agents (including for purposes of this Agreement, but not limited to, attorneys,
accountants, consultants, and financial advisors) will protect and preserve the
Confidential Information and will disclose Confidential Information or otherwise
make Confidential Information available only to the Trading Company’s or the
Trading Manager’s officers, directors, members, equity holders, employees and
agents (including for purposes of this Agreement, but not limited to, attorneys,
accountants, consultants, and financial advisors), who need to know the
Confidential Information (or any part of it) for the purpose of satisfying their
fiduciary, legal, reporting, filing or other obligations hereunder or to monitor
performance in the account during the term of this Agreement or thereafter, or
to the Trading Company, Trading Manager or a Recipient, as the case may be, is
required to disclose such Confidential Information due to a fiduciary obligation
or legal or regulatory request. Additionally, the Trading Company and the
Trading Manager each warrants and agrees that it and any Recipient will use the
Confidential Information solely for the purpose of satisfying the Trading
Company’s or the Trading Manager’s obligations under this Agreement and not in a
manner which violates the terms of this Agreement.

     

    
      	
              2.  

            	
              Duties of the Trading
      Advisor.

            

    

     

    (a) Upon the
commencement of trading operations on or about October 1, 2009, by the Trading
Advisor on behalf of  the Trading Company, the Trading Advisor hereby
agrees to act as a Trading Advisor for the Trading Company and, as such, shall
have authority and responsibility for directing the investment and reinvestment
of the Trading Company’s assets, which shall consist of the Trading Company’s
Net Assets (as defined in Section 6(c) hereof) plus “notional” funds, if any, as
specified in writing by the Trading Manager and consented to by the Trading
Advisor (the “Assets”), on the terms and conditions and in accordance with the
prohibitions and the trading policies set forth in Exhibit A to this Agreement
as amended from time to time and provided in writing to the Trading Advisor by
the Trading Manager (the “Trading Policies”); provided, however, that the
Trading Manager may override the instructions of the Trading Advisor without
notice to the Trading Advisor to the extent necessary (i) to comply with the
Trading Policies and with applicable speculative position limits, (ii) to fund
any distributions or redemptions, (iii) to pay the Trading Company’s expenses,
(iv) to the extent the Trading Manager believes doing so is necessary for the
protection of the Trading Company, (v) to terminate the futures interest trading
of the Trading Company with the Trading Advisor, or (vi) to comply with any
applicable law or regulation. The Trading Manager agrees not to override any
such instructions for the reasons specified in clauses (ii) or (iii) of the
preceding sentence unless the Trading Advisor fails to comply with a request of
the Trading Manager to make the necessary amount of funds available to the
Trading Company within two trading days of such request.  The Trading
Manager agrees to inform the Trading Advisor as soon as reasonably practicable
in circumstances where it has overridden the instructions of the Trading
Advisor.  The Trading Advisor shall not be liable for the consequences
of any decision by the Trading Manager to override instructions of the Trading
Advisor, except to the extent that such consequences result from a material
breach of this Agreement by the Trading Advisor or the Trading Advisor fails to
comply with the Trading Manager’s decision to override an
instruction.

     

    (b) The
Trading Advisor shall:

     

    (i) Exercise
good faith and due care in trading futures interests for the account of the
Trading Company in accordance with the prohibitions and Trading Policies, and
the trading systems, methods, and strategies of the Trading Advisor described in
the Disclosure Information, with such changes and additions to such trading
systems, methods or strategies as the Trading Advisor, from time to time,
incorporates into its trading approach for accounts the size of the Trading
Company.

     

    (ii) Provide
the Trading Manager, within 45 days of the end of a calendar quarter, and within
45 days of a separate request which the Trading Manager may reasonably make from
time to time, with information comparing the performance of the Trading
Company’s account and the performance of all other client accounts (“Other
Accounts”) directed by the Trading Advisor using the trading systems used by the
Trading Advisor on behalf of the Trading Company over a specified period of time
for the purpose of confirming that the Trading Company has been treated
equitably compared to such Other Accounts.  In providing such
information, the Trading Advisor may take such steps as are necessary to assure
the confidentiality of the Trading Advisor’s clients’ identities. The Trading
Advisor shall, upon the Trading Manager’s request, consult with the Trading
Manager concerning any discrepancies between the performance of such Other
Accounts and the Trading Company’s account. The Trading Advisor shall promptly
inform the Trading Manager in writing of any material discrepancies of which the
Trading Advisor is aware. The Trading Manager acknowledges that the following
differences in accounts may cause divergent trading
results:  different trading strategies, methods or degrees of
leverage, different trading policies, accounts experiencing differing inflows or
outflows of equity, different risk profiles, accounts which commence trading at
different times and accounts which have different portfolios or different fiscal
years.

     

    (iii) Inform
the Trading Manager when the Trading Advisor’s open positions maintained by the
Trading Advisor exceed the Trading Advisor’s applicable speculative position
limits.

     

    (iv) Upon
reasonable request of the Trading Manager, promptly provide the Trading Manager
with all information concerning the Trading Advisor and its activities
reasonably requested by the Trading Manager (including, without limitation,
information relating to changes in control, key personnel, trading approach, or
financial condition).

     

    (c) All
purchases and sales of futures interests pursuant to this Agreement shall be for
the account, and at the risk, of the Trading Company and not for the account, or
at the risk of the Trading Advisor or any of its affiliates or each of their
principals, stockholders, directors, officers, or employees, or any other
person, if any, who controls the Trading Advisor. All brokerage commissions and
related transaction fees arising from such trading by the Trading Advisor shall
be for the account of the Trading Company.

     

    (d) *1

     

    (e) Prior to
the commencement of trading by the Trading Company, the Trading Manager, on
behalf of the Trading Company, shall deliver to the Trading Advisor a trading
authorization appointing the Trading Advisor the Trading Company’s
attorney-in-fact for such purpose (a form of which is attached hereto as Exhibit
B).

     

    (f) In
performing services to the Trading Company, the Trading Advisor shall utilize
its GLC Global Macro program (the “Trading Program”), as described in the
Disclosure Information, and as modified from time to time. The Trading Advisor
shall give the Trading Manager prior written notice of any change in the Trading
Program that the Trading Advisor considers to be material (and shall not effect
such change on behalf of the Trading Company without the Trading Manager’s
consent (such consent not to be unreasonably withheld)), including any
additional futures interests to be traded by the Trading Advisor not already
listed on Exhibit C.  Changes in the futures interests traded,
provided that such futures interests are listed on Exhibit C, shall not be
deemed a modification of the Trading Program.

     

    (g) The
Trading Advisor has in operation a written procedure in accordance with the
rules of the Financial Services Authority in the United Kingdom (the “FSA”) (the
“Rules”) for the effective consideration and proper handling of complaints from
customers. Any complaint should be referred to the Compliance Officer of the
Trading Advisor. The parties hereto agree that the Trading Company is a
Professional Client within the Rules and is not an eligible complainant as
defined in “Dispute Resolution: Complaints Sourcebook” of the Rules.
Accordingly, the Trading Company has no right of complaint to the Financial
Ombudsmen Service in respect of any dispute arising out of the Trading Advisor’s
performance of its obligations under this Agreement.

     

    
      	
              3.  

            	
              Designation of
      Additional or Replacement Trading Advisors and Reallocation of
      Assets.

            

    

     

    (a) If the
Trading Manager at any time deems it to be in the best interests of the Trading
Company, the Trading Manager may designate an additional or replacement trading
advisor or advisors for the Trading Company and may apportion to such additional
or replacement trading advisor(s) the management of such amounts of Assets as
the Trading Manager shall determine in its absolute discretion.  The
designation of an additional trading advisor or advisors or replacement of any
trading advisor for the Trading Company by the Trading Manager shall not require
any approval of, but shall require notification of such to, any existing trading
advisor (including the Trading Advisor).  Subject to Section 7(c)
hereof, the designation and retention of an additional or replacement trading
advisor(s) and the apportionment of 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 Trading
Company, the Trading Manager and the Trading Advisor hereunder with respect to
the Net Assets that remain under the management of the Trading
Advisor.  In the event that an additional or replacement trading
advisor(s) is so designated:

     

    (i) the
Trading Advisor shall thereafter receive Management Fees and Incentive Fees
based, respectively, on that portion of the Net Assets managed by the Trading
Advisor and that portion of the New Trading Profit (as defined in
Section 6(d) hereof) attributable to the trading done by the Trading
Advisor; and

     

    (ii)           the
name of the Trading Company shall be amended accordingly.

     

    (b) The
Trading Manager may at any time and from time to time upon three Business Days’
(as defined in Section 6(a)(i) below) prior notice reduce Assets allocated to
the Trading Advisor (whether or not such Assets are allocated to any other
trading advisor or advisors of the Trading Company ) or allocate additional
Assets upon three Business Days’ prior notice to the Trading Advisor (whether or
not such additional Assets are allocated away from such other trading advisor or
advisors); provided that any such addition to or withdrawal from Assets
allocated to the Trading Advisor will only take place on the last day of a month
unless the Trading Manager determines that the best interests of the Trading
Company require otherwise.

    

    

    
      	
              4.  

            	
              Trading Advisor as an
      Independent Contractor.

            

    

     

    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 Trading Company or its
Members in any way or otherwise be deemed an agent of the Trading Company or its
Members.  Nothing contained herein shall be deemed to require the
Trading Company to take any action contrary to the Operating Agreement or the
Certificate of Formation of the Trading Company as from time to time in effect,
or any applicable law or rule or regulation of any regulatory or self-regulatory
body, exchange, or board. Nothing herein contained shall constitute the Trading
Advisor, the Trading Manager, or the Members, as members of any partnership,
joint venture, association, syndicate or other entity, or be deemed to confer on
any of them any express, implied, or apparent authority to incur any obligation
or liability on behalf of any other. It is expressly agreed that the Trading
Advisor is neither a promoter, sponsor, or issuer with respect to the Trading
Company or its Members, nor does the Trading Advisor have any authority or
responsibility with respect to the offer, sale or issuance of
Units.

     

    
      	
              5.  

            	
              Commodity
      Broker.

            

    

     

    The
Trading Advisor shall effect all transactions in futures interests for the
Trading Company through the Trading Company’s separate account maintained with
such commodity broker or brokers as the Trading Manager shall direct and appoint
from time to time. Morgan Stanley & Co., Incorporated (“MS & Co.”),
Morgan Stanley & Co. International plc, and Morgan Stanley Capital Group
Inc. (“MSCG” and collectively, the “Commodity Brokers”) may act as the clearing
commodity brokers for the Trading Company, and MS & Co. and its affiliates
may act as foreign exchange forward contract counterparty for the Trading
Company.  MSCG and its affiliates may act as an options on foreign
exchange forward contract counterparty for the Trading
Company.  Morgan Stanley Smith Barney LLC, its affiliates and the
Commodity Brokers, may act as the Trading Company’s non-clearing commodity
broker.  The Trading Manager shall provide the Trading Advisor with
copies of brokerage statements.

     

    Notwithstanding
the foregoing, the Trading Advisor may execute trades through F/X brokers other
than those employed by MS & Co. and its affiliates so long as arrangements
(including executed give-up agreements) are made for such floor brokers to
“give-up” or transfer the positions to MS & Co. in conformity with the
Trading Policies set forth in Exhibit B attached hereto.

     

    
      	
              6.  

            	
              Fees.

            

    

     

    (a) For the
services to be rendered to the Trading Company by the Trading Advisor under this
Agreement:

     

    (i) The
Trading Company shall pay the Trading Advisor a monthly management fee equal to
1/12 of the applicable rate on Annex I (as may be amended from time to time) to
this Agreement as of the first day of each month (the “Management
Fee”).  The Management Fee is payable in arrears within 30 Business Days of the end
of the month for which it was calculated.  For purposes of this
Agreement, “Business Day” shall mean any day which the securities markets are
open in the United States.

     

    (ii) The
Trading Company shall pay the Trading Advisor an incentive fee equal to 20% of
the “New Trading Profit” (as defined in Section 6(d) hereof) that shall accrue
monthly but is not otherwise payable until the end of each calendar quarter (the
“Incentive Fee”). The initial incentive period will commence on the date of the
Trading Company’s initial closing and shall end on the last day of the calendar
quarter after such initial closing occurs.  The Incentive Fee is
payable within 30 Business Days of the end
of the calendar quarter for which it was calculated.

     

    (b) If this
Agreement is terminated on a date other than the last day of a calendar quarter,
the Incentive Fee shall be determined as if such date were the end of a calendar
quarter. If this Agreement is terminated on a date other than the end of a
month, the Management Fee described above shall be determined as if such date
were the end of a month, but such fee 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 calendar days in the month. If, during any month after the
Trading Company commences trading operations (including the month in which the
Trading Company commences such operations), the Trading Company does not conduct
business operations, or suspends trading for the account of the Trading Company
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 calendar days of that period for any reason,
the Management Fee shall be prorated based on the ratio of the number of
calendar days in the month which the Trading Company account managed by the
Trading Advisor engaged in trading operations or utilizes the trading advice of
the Trading Advisor to the total number of calendar days in the month. The
Management Fee payable to the Trading Advisor for the month in which the Trading
Company begins to receive trading advice from the Trading Advisor pursuant to
this Agreement shall be prorated based on the ratio of the number of calendar
days in the month from the day the Trading Company begins to receive such
trading advice to the total number of calendar days in the month. In the event
that there is an increase or decrease in the Assets as of any day other than the
first day of a month, the Trading Advisor shall be paid a pro rata Management
Fee on such increase or decrease in the Assets for such month.

     

    (c) The term
“Net Assets” shall mean the total assets of the Trading Company allocated to the
Trading Advisor (including, but not limited to, all cash and cash equivalents,
accrued interest and amortization of original issue discount, and the market
value of all open futures interest positions and other assets of the Trading
Company) less all liabilities of the Trading Company determined in accordance
with generally accepted accounting principles consistently applied under the
accrual basis of accounting. Unless generally accepted accounting principles
require otherwise, the market value of a futures or option contract traded on a
United States exchange shall mean the settlement price on the exchange on which
the particular futures or option contract shall be traded by the Trading Company
on the day with respect to which the Net Assets are being determined; provided, however, that if a
contract could not be liquidated on such day due to the operation of daily
limits or other rules of the exchange on which that contract shall be traded or
otherwise, the settlement price on the first subsequent day on which the
contract could be  liquidated shall be the market value of such
contract for such day, or if a contract could not be liquidated on such day due
to the exchange being closed for an exchange holiday, the settlement price on
the most recent preceding day on which the contract could have been liquidated
shall be the market value of such contract for such day.  The market
value of a forward contract or a futures or option contract traded on a foreign
exchange or market shall mean its market value as determined by the Trading
Manager on a basis consistently applied for each different variety of
contract.

     

    (d) As used
herein, the term “New Trading Profit” shall mean net futures interest trading
profits (realized and unrealized) on the Assets traded by the Trading Advisor,
decreased by the Trading Advisor’s monthly management fees, brokerage
commissions allocable to the Assets traded by the Trading Advisor, transaction
costs and administrative fees, with such trading profits and items of decrease
determined from the end of the last calendar quarter 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 Trading Advisor
commenced managing the Assets on behalf of the Trading Company to the end of the
calendar quarter as of which such Incentive Fee calculation is being made.
Extraordinary expenses do not reduce New Trading Profit. Interest income is not
included in New Trading Profit. New Trading Profit shall be calculated before
reduction for Incentive Fees paid or accrued. Incentive Fees shall be paid to
the Trading Advisor upon any withdrawal of assets from the Trading Company at
the end of any month when such withdrawal of assets is made as if such month-end
is the end of the calendar quarter.

     

    (e) If any
payment of Incentive Fees is made to the Trading Advisor on account of New
Trading Profit earned by the Trading Advisor for the Trading Company and the
Trading Advisor thereafter fails to earn New Trading Profit for the Trading
Company or experiences losses for any subsequent incentive period for the
Trading Company, the Trading Advisor shall be entitled to retain such amounts of
Incentive Fees previously paid to the Trading Advisor in respect of such New
Trading Profit. No subsequent Incentive Fees shall be payable to the Trading
Advisor until the Trading Advisor has again earned New Trading Profit for the
Trading Company; provided, however, that if the
Assets are reduced because of redemptions that occur at the end of, and/or
subsequent to, a calendar quarter in which the Trading Advisor experiences a
futures interest trading loss for the Trading Company, the trading loss that
must be recovered before the Trading Advisor will be deemed to experience New
Trading Profit for the Trading Company in a subsequent calendar quarter will be
equal to the amount determined by (x) dividing the Assets after such decrease by
the Assets immediately before such decrease and (y) multiplying that fraction by
the amount of the unrecovered futures interest trading loss prior to such
decrease. In the event that the Trading Advisor experiences a trading loss for
the Trading Company in more than one calendar quarter without the Trading
Company paying an intervening Incentive Fee and Assets are reduced in more than
one such calendar quarter because of redemptions, then the trading loss for each
such calendar quarter shall be adjusted in accordance with the formula described
above and such reduced amount of futures interest trading loss shall be carried
forward and used to offset subsequent futures interest trading
profits.

     

    
      	
              7.  

            	
              Term

            

    

     

    (a) This
Agreement shall continue in effect for a period of one year from the date the
Agreement was entered into unless otherwise terminated as set forth in this
Section 7. If the Agreement is not terminated upon the expiration of such
one-year period, 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.  The Trading Advisor may terminate this Agreement at the end
of any such one-year period by providing prior written notice of termination to
the Trading Company at least sixty days prior to the expiration of such one-year
period.  This Agreement shall automatically terminate if the Trading
Company is dissolved.

     

    (b) The
Trading Company and Trading Manager each shall have the right to terminate this
Agreement in its discretion (i) at any month end upon ten days’ prior written
notice to the Trading Advisor, or (ii) at any time upon reasonable prior written
notice to the Trading Advisor upon the occurrence of any of the following
events: (A) if any person described as a “principal” of the Trading Advisor in
the Offering Memoranda ceases for any reason to be an active “principal” of the
Trading Advisor; (B) if the Trading Advisor becomes bankrupt or insolvent; (C)
if the Trading Advisor is unable to use its trading systems or methods as in
effect on the date hereof and as modified in the future for the benefit of the
Trading Company; (D) if the registration, as a commodity trading advisor (if
applicable), of the Trading Advisor with the CFTC, its membership in the NFA or
its registration with the FSA, is revoked, suspended, terminated, or not
renewed, or limited or qualified in any respect; (E) if the Trading Advisor
determines that it was required to be registered as a commodity trading advisor
with the CFTC and was not properly registered, (F) 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 interest
trading systems or methods, or its goodwill to, any individual or entity; (G)
if, at any time, the Trading Advisor violates any Trading Policy or
administrative policy, except with the prior express written consent of the
Trading Manager; or (H) if the Trading Advisor fails in a material manner to
perform any of its obligations under this Agreement.

     

    (c) The
Trading Advisor may terminate this Agreement at any time, upon thirty days’
prior written notice to the Trading Company and Trading Manager, in the event:
(A) that the Trading Manager imposes additional trading limitation(s) 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 the Assets; (B) the
Trading Manager objects to the Trading Advisor implementing a proposed material
change to the Trading Program and the Trading Advisor certifies to the Trading
Manager in writing that it believes such change is in the best interests of the
Trading Company; (C) the Trading Manager or the Trading Company materially
breaches this Agreement and does not correct the breach within ten days of
receipt of a written notice of such breach from the Trading Advisor; (D) the
Assets fall below $*2(after adding back trading losses) at any time;
(E) the Trading Company becomes bankrupt or insolvent, or (F) the registration
of the Trading Manager with the CFTC as a commodity pool operator or its
membership in the NFA is revoked, suspended, terminated or not renewed, or
limited or qualified in any respect.  If the Trading Manager or
Trading Company merges, consolidates or sells a substantial portion of its
assets pursuant to Section 12 of this Agreement, the Trading Advisor may
terminate this Agreement upon prior written notice to the Trading Manager and
Trading Company.

     

    (d) Except as
otherwise provided in this Agreement, any termination of this Agreement in
accordance with this Section 7 shall be without penalty or liability to any
party, on account of such termination.

     

    (e) 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 the Trading Company, the Trading Advisor shall not
be liable to the Trading Company or the Trading Manager or their partners,
directors, officers, principals, managers, members, shareholders, employees,
controlling persons or successors and assigns except that the Trading Advisor
shall be liable for acts or omissions that constitute a material breach of this
Agreement or a representation, warranty or covenant herein, willful misconduct
or negligence, or are the result of the Trading Advisor 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 Trading Company.

     

    (b) Trading Advisor Indemnity in
Respect of Management Activities. The Trading Advisor shall indemnify,
defend and hold harmless the Trading Company and the Trading Manager, their
controlling persons, their affiliates and their respective directors, officers,
principals, managers, members, 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,
accounting and other expenses incurred in connection with, and any amounts paid
in, any litigation or other proceeding or any settlement; provided that, solely
in the case of a settlement, the Trading Advisor 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 this Agreement (except as covered by paragraph
(d) below); provided that a court of competent jurisdiction upon entry of a
final judgment (or, if no final judgment is entered, by an opinion rendered by
counsel who is approved by the Trading Company and the Trading Advisor, such
approval not to be unreasonably withheld) to the effect that the action or
inaction of such indemnified party that was the subject of the demand, claim,
lawsuit, action, or proceeding did not constitute negligence, misconduct, or a
breach of this Agreement or a representation, warranty or covenant of the
Trading Company or the Trading Manager, their controlling persons, their
affiliates and their respective directors, officers, shareholders, employees,
and controlling persons and was done in good faith.

     

    (c) Trading Company Indemnity in
Respect of Management Activities.  The Trading Company shall
indemnify, defend and hold harmless the Trading Advisor, its controlling
persons, their affiliates and their respective directors, officers, principals,
managers, members, 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, accounting
and other expenses incurred in connection with, and any amounts paid in, any
litigation or other proceeding or any settlement; provided that, solely in the
case of a settlement, the Trading Company 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 this Agreement (except as covered by paragraph (e) below);
provided that a court of competent jurisdiction upon entry of a final judgment
finds (or, if no final judgment is entered, by an opinion rendered by counsel
who is approved by the Trading Company and the Trading Advisor, such approval
not to be unreasonably withheld) to the effect that the action or inaction of
such indemnified party that was the subject of the demand, claim, lawsuit,
action, or proceeding did not constitute negligence, misconduct, or a breach of
this Agreement or a representation, warranty or covenant of the Trading Advisor,
its controlling persons, its affiliates and directors, officers, shareholders,
employees, and controlling persons and was done in good faith.

     

    (d) Trading Advisor Indemnity in
Respect of Sale of Units. The Trading Advisor shall indemnify, defend and
hold harmless the Trading Company, the Trading Manager, any selling agent, their
controlling persons and their affiliates and their respective directors,
officers, principals, managers, members, shareholders, employees 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 (including any reasonable investigatory, legal, accounting and
other expenses incurred in connection with, and any amounts paid in, any
litigation or other proceeding or any settlement; provided that, solely in the
case of a settlement, 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 losses, claims, damages, liabilities, costs,
or expenses (or action in respect thereof) arise out of, or are based upon: (i)
a breach by the Trading Advisor of any applicable laws or regulations or any
representation, warranty or agreement in this Agreement; or (ii) any materially
untrue statement or omission relating or with respect to the Trading Advisor, or
any of its principals, or their operations, trading systems, methods or
performance, which was made in the Offering Memoranda or any amendment or
supplement thereto or any other sales literature and furnished by the Trading
Advisor for inclusion therein.

     

    (e)  Trading Company Indemnity in
Respect of Sale of Units. The Trading Company shall indemnify, defend and
hold harmless the Trading Advisor its controlling persons, their affiliates and
their respective directors, officers, principals, managers, members
shareholders, employees 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 (including any reasonable investigatory,
legal, accounting and other expenses incurred in connection with, and any
amounts paid in, any litigation or other proceeding or any settlement; provided
that, solely in the case of a settlement, the Trading Company shall have
approved such settlement, and in connection with any administrative
proceedings), in respect of the offer or sale of Units, unless 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 applicable laws
or regulations or any representation, warranty or agreement in this Agreement;
or (ii) any materially untrue statement or omission relating or with respect to
the Trading Advisor, or any of its principals or their operations, trading
systems, methods or performance that was made in the Offering Memoranda or in
any other sales literature and furnished by the Trading Advisor for inclusion
therein.

     

    (f) Subject
to Section 8(a) hereof, the foregoing agreements of indemnity shall be in
addition to, and shall in no respect limit or restrict, any other remedies which
may be available to an indemnified person.

     

    (g) Promptly
after receipt by an indemnified person of notice of the commencement of any
action, claim, or proceeding to which any of the indemnities may apply, the
indemnified person will, as soon as reasonably practicable, 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 that 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 that 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 (provided the indemnified person is
so entitled) 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 clients 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 clients
(including affiliates and the stockholders, officers, directors, and employees
of the Trading Advisor and its affiliates and their families) and trading for
their own accounts. The Trading Advisor will use its commercially reasonable
best efforts to implement a fair and consistent allocation policy that seeks to
ensure that all clients are treated equitably and positions allocated as nearly
as possible in proportion to the assets available for trading of the accounts
managed or controlled by the Trading Advisor.  Upon written request,
the Trading Manager may request a copy of the Trading Advisor’s procedures
regarding the equitable treatment of trades across accounts.  Such
procedures shall be provided to the Trading Manager within 30 days of such
request by the Trading Manager.  Except as otherwise set forth herein,
the Trading Advisor and its principals and affiliates agree to treat the Trading
Company in a fiduciary capacity to the extent recognized by applicable law, but
subject to that standard.  Under no circumstances shall the Trading
Advisor by any act or omission knowingly or intentionally favor any account
advised or managed by the Trading Advisor over the account of the Trading
Company in any way or manner. Nothing contained in this Section 9(a) shall
preclude the Trading Advisor from charging different management and/or incentive
fees to its clients. Subject to the Trading Advisor’s obligations under
applicable law, the Trading Advisor or any of its principals or affiliates shall
be free to advise and manage accounts for other clients and shall be free to
trade on the basis of the same trading systems, methods, or strategies employed
by the Trading Advisor for the account of the Trading Company, or trading
systems, methods, or strategies that are entirely independent of, or materially
different from, those employed for the account of the Trading Company, and shall
be free to compete for the same futures interests as the Trading Company or to
take positions opposite to the Trading Company, where such actions do not
knowingly or intentionally prefer any of such accounts over the account of the
Trading Company on an overall basis.

     

    (b) The
Trading Advisor shall not be restricted as to the number or nature of its
clients, except that: (i) so long as the Trading Advisor acts as a trading
advisor for the Trading Company, neither the Trading Advisor nor any of its
principals or affiliates shall knowingly hold any position or control any other
account that would cause the Trading Company, 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 other applicable law, or any
applicable rule or regulation of the CFTC or any other regulatory or self
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 that
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 or self regulatory body, exchange, or board so as to require the
significant modification of positions taken or intended for the account of the
Trading Company; provided that the Trading Advisor may modify its trading
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, (ii) the CFTC, or
(iii) any other regulatory or self regulatory body, exchange, or board, the
Trading Advisor and its principals and affiliates shall promptly liquidate
positions in all of their accounts, including the Trading Company’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 and
Warranties of the Trading Advisor. The Trading Advisor represents and
warrants to and agrees with the Trading Manager and the Trading Company as
follows:

     

    (i) It will
exercise good faith and due care in implementing the Trading Program on behalf
of the Trading Company as described in the Disclosure Information (as modified
from time to time) or any other trading programs agreed to by the Trading
Manager and the Trading Advisor.

     

    (ii) The
Trading Advisor shall follow and comply with, at all times, the Trading
Policies.

     

    (iii) The
Trading Advisor shall trade the Assets pursuant to the same trading programs
described in the Disclosure Information unless the Trading Manager and the
Trading Advisor agree otherwise.

     

    (iv) The
Trading Advisor is duly organized, validly existing and in good standing under
the laws of the state of its organization and is qualified to do business as a
foreign corporation or and is 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
power and authority to perform its obligations under this Agreement. The only
principals of the Trading Advisor are those set forth in the Offering Memoranda
and Disclosure Information (the “Trading Advisor Principals”).

     

    (v) The
Disclosure Information contains all statements and information required to be
included therein under the CEAct and other applicable laws, and such information
is accurate and complete in all material respects.

     

    (vi) All
references to the Trading Advisor and the Trading Advisor Principals and trading
systems, methods and performance in the Offering Memoranda are accurate and
complete in all material respects. With respect to the Trading Advisor, the
Trading Advisor Principals, and its trading systems, methods and
performance:  (i) the Offering Memoranda contains all statements and
information required to be included therein under the CEAct and the rules and
regulations thereunder, and (ii) the Offering Memoranda do not contain, and will
not during the term of this Agreement contain, any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein, in the light of the circumstances under which such statements
were made, not misleading. Except as otherwise disclosed in the Offering
Memoranda, the actual performance of each discretionary account directed by the
Trading Advisor or any principal or affiliate of the Trading Advisor over the
past five  years and year-to-date is disclosed in the Offering
Memoranda on either a composite or a stand alone basis. The information
regarding the actual performance of such accounts set forth in the Offering
Memoranda has been calculated and presented in accordance with the descriptions
therein and is complete and accurate in all material respects.

     

    (vii) 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.

     

    (viii) Each of
the Trading Advisor and the Trading Advisor Principals has all federal, state
and foreign governmental, regulatory and exchange licenses and approvals and has
effected all filings and registrations with federal, state and foreign
governmental and regulatory agencies required to conduct its business and to act
as described in the Offering Memoranda or required to perform its or his
obligations under this Agreement. The Trading Advisor is authorized and
regulated in the United Kingdom by the FSA.

     

    (ix) The
execution and delivery of this Agreement, the incurrence of the obligations set
forth herein, the consummation of the transactions contemplated herein and in
the Offering Memoranda and the payment of the fees hereunder will not violate,
or constitute a breach of, or default under, the certificate of incorporation or
bylaws (or any other organizational documents) of the Trading Advisor or any
agreement or instrument by which it is bound or of any order, rule, law or
regulation binding on it of any court or any governmental body or administrative
agency or panel or self-regulatory organization having jurisdiction over
it.

     

    (x) Since the
respective dates as of which information is given in the Disclosure Information,
and except as may otherwise be stated in or contemplated by the Disclosure
Information, 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.

     

    (xi) Except as
set forth in the Disclosure Information there have not been and there is not
pending, or to the best of the Trading Advisor’s knowledge after due inquiry,
threatened, any action, suit or proceeding before or by any court or other
governmental body to which the Trading Advisor or any Trading Advisor Principal
is or was a party, or to which any of the assets of the Trading Advisor is or
was subject and which resulted in or might reasonably be expected to result in
any material adverse change in the condition, financial or otherwise, business
or prospects of the Trading Advisor.  None of the Trading Advisor or
any Trading Advisor Principal has received any notice of an investigation by the
NFA, CFTC or other administrative agency or self-regulatory body (whether United
States or foreign) regarding noncompliance by the Trading Advisor or any of the
Trading Advisor Principals with the CEAct or any other applicable
law.

     

    (xii) 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 Trading Company.

     

    (xiii) Participation
by the Trading Advisor in accordance with the terms hereof and as described in
the Offering Memoranda will not violate any provisions of the Investment
Advisers Act of 1940, as amended.

     

    (xiv) Neither
the Trading Advisor nor any Trading Advisor Principal will use or distribute the
Offering Memoranda or any selling literature or engage in any selling activities
whatsoever in connection with the offering of the Units.

     

    (xv) The
information in the Offering Memoranda about the Trading Advisor does not contain
any misleading or untrue statements of a material fact or omit to state a
material fact required to be stated therein to make the statements not
misleading.

     

    

    (xvi)           The
Trading Advisor is not required to register as a commodity trading advisor under
the CEAct, has made all necessary filings in connection with such exemption, and
as a result is exempt from all of the disclosure, reporting and record-keeping
requirements of the CEA.

    

    (xvii)           The
foregoing representations and warranties shall be continuing during the term of
this Agreement and if at any time any event shall occur which could make any of
the foregoing representations or warranties inaccurate, the Trading Advisor
shall promptly notify the Trading Manager and the Trading Company of the nature
of such event.

    

    (b) Covenants of the Trading
Advisor.  The Trading Advisor covenants and agrees
that:

     

    (i) The
Trading Advisor shall 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 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 Trading Manager promptly as soon as the Trading
Advisor or any Trading Advisor Principal 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 (or which may, with the passage of time, materially affect)
the business of the Trading Advisor. The Trading Advisor shall also inform the
Trading Manager promptly if the Trading Advisor or any of its officers becomes
aware of any breach of this Agreement by the Trading Advisor.

     

    (iii) The
Trading Advisor agrees to cooperate by providing information regarding itself
and its performance in the preparation of any amendments or supplements to the
Offering Memoranda (subject to the limitation set forth in Section 1
hereof).

     

    
      	
              11.  

            	
              Representations and
      Warranties of the Trading Company and the Trading Manager; Covenants of
      the Trading Manager.

            

    

     

    (a) The
Trading Company and the Trading Manager represent and warrant to the Trading
Advisor, as follows:

     

    (i) The
Trading Company has provided to the Trading Advisor the Offering Memoranda in
its current form. The Trading Company will ensure that the Members will not
utilize any amendment or supplement to the Offering Memoranda regarding the
Trading Advisor unless the Trading Advisor has received reasonable prior notice
of and a copy of such amendments or supplements and has approved any description
of the Trading Advisor contained therein.

     

    (ii) Each
Member’s organizational agreement provides for the subscription for and sale of
the Units in the respective Member; all material actions required to be taken by
each Member as a condition to the sale of its Units to qualified subscribers
therefor has been, or prior to each closing described in the Member’s
Confidential Private Placement Memorandum shall have been taken; and, upon
payment of the consideration therefor specified in each accepted subscription
agreement in such form as attached to the respective Member’s Confidential
Private Placement Memorandum, the Units will constitute valid interests in the
Member. Each Member is in material compliance with all laws, rules, regulations
and orders of any governmental agency or self-regulatory organization applicable
to the Member’s business and the offering, sale, issuance and distribution of
its Units.

     

    (iii) The
Trading Company is a limited liability company duly formed pursuant to its
Certificate of Formation, Operating Agreement and the Delaware Limited Liability
Company Act and is validly existing and in good standing 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 Offering Memoranda; the Trading Company 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 Trading Company’s ability to perform its
obligations hereunder.

     

    (iv) The
Trading Manager is duly formed and validly existing and in good standing as a
limited liability company under the laws of the State of Delaware and is
qualified to do business and is in good standing as a foreign entity 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 Trading Manager’s ability to perform its obligations
hereunder.

     

    (v) The
Trading Company and the Trading Manager have full power and authority under
applicable law to conduct their business and to perform their respective
obligations under this Agreement and as described in the Offering
Memoranda.

     

    (vi) As of the
date hereof, the Offering Memoranda contain all statements and information
required to be included therein by the CEAct or other applicable law and at all
times subsequent thereto up to and including each closing, the Offering
Memoranda will comply in all material respects with the requirements of the
rules of the NFA, the CEAct or other applicable laws. The Offering Memoranda as
of the initial closing (as described therein), date of issue, and at each
closing will not contain any misleading or untrue statements 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. Any supplemental sales literature,
when read in conjunction with the Offering Memoranda, will not contain any
untrue statements 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. This representation and warranty shall
not, however, apply to any statement or omission in the Offering Memoranda or
supplemental sales literature made in reliance upon information furnished by and
relating to the Trading Advisor, its trading methods or its trading
performance.

     

    (vii) Since the
respective dates as of which information is given in the Offering Memoranda,
there has not been any material adverse change in the condition, financial or
otherwise, or business of the Trading Manager or the Trading Company, whether or
not arising in the ordinary course of business.

     

    (viii) This
Agreement has been duly and validly authorized, executed and delivered by the
Trading Manager on behalf of the Trading Company and constitutes a valid,
binding and enforceable agreement of the Trading Company and the Trading Manager
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 Offering Memoranda will not violate, or constitute a breach of, or default
under, the Trading Manager’s certificate of formation or operating
agreement,  or the Trading Company’s Certificate of Formation or
Operating Agreement, or any material agreement or instrument by which either the
Trading Manager or the Trading Company, as the case may be, is bound or any
material order, rule, law or regulation applicable to the Trading Manager or the
Trading Company of any court or any governmental body or administrative agency
or panel or self-regulatory organization having jurisdiction over the Trading
Manager or the Trading Company.

     

    (x) Except as
set forth in the Offering Memoranda, there has not been in the five years
preceding the date of the Offering Memoranda and there is not pending or, to the
Trading Manager’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 Trading Manager or the Trading Company is or was a
party, or to which any of the assets of the Trading Manager or the Trading
Company is or was subject; and neither the Trading Manager nor any of the
principals of the Trading Manager (“Trading Manager Principals”) has received
any notice of an investigation by the NFA, CFTC or any other administrative or
self-regulatory organization regarding non-compliance by the Trading Manager or
the Trading Manager Principals or the Trading Company with the CEAct, the
Securities Act of 1933, as amended, or any applicable laws which are material to
an investor’s decision to invest in a Member.

     

    (xi) The
Trading Manager and the Trading Manager Principals have all federal, state and
foreign governmental, regulatory and exchange approvals and licenses, and have
effected all filings and registrations with federal, state and foreign
governmental agencies required to conduct their business and to act as described
in the Offering Memoranda 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 Trading Manager’s principals
identified in the Offering Memoranda are all of the Trading Manager
Principals.

     

    (xii) The
Trading Company is and shall remain in material compliance in all respects with
all laws, rules, regulations and orders of any government, governmental agency
or self-regulatory organization applicable to its business as described in the
Offering Memoranda and this Agreement.

     

    (xiii) The
foregoing representations and warranties shall be continuing during the term of
this Agreement and if at any time any event shall occur which could make any of
the foregoing representations or warranties inaccurate, the Trading Manager
shall promptly notify the Trading Advisor of the nature of such
event.

     

    

    (b) Covenants of the Trading
Manager. The Trading Manager covenants and

     

    agrees
that:

    (i) The
Trading Manager shall maintain all registrations and memberships necessary for
the Trading Manager to continue to act as described herein and in the Offering
Memoranda and to all times comply in all 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 Manager’s ability to act as described
herein and in the Offering Memoranda.

     

    (ii) The
Trading Manager shall inform the Trading Advisor immediately as soon as the
Trading Manager, the Trading Company or any of their principals becomes the
subject of any lawsuit, investigation, claim, or proceeding of any regulatory
authority having jurisdiction over such person or becomes a named party to any
litigation materially affecting the business of the Trading Manager or the
Trading Company. The Trading Manager shall also inform the Trading Advisor
immediately if the Trading Manager or the Trading Company or any of their
officers become aware of any material breach of this Agreement by the Trading
Manager or the Trading Company.

     

    (iii) The
Trading Company will furnish to the Trading Advisor copies of the Offering
Memoranda regarding the Trading Advisor, and all amendments and supplements
thereto, in each case as soon as available and will ensure that the Members do
not use any such amendments or supplements as to which the Trading Advisor in
writing has reasonably objected.

     

    
      	
              12.  

            	
              Merger or Transfer of
      Assets.

            

    

     

    The
Trading Manager, Trading Company or the Trading Advisor may merge or consolidate
with, or sell or otherwise transfer its business, or all or a substantial
portion of its assets, to any entity upon written notice to the other
parties.

     

    
      	
              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.

            

    

     

    Subject
to Section 12, hereof, this Agreement may not be assigned by any party hereto
without the express prior written consent of the other parties hereto; however,
the Trading Manager may assign this Agreement to any affiliate upon prior
written notice to any other party hereto.

     

    
      	
              15.  

            	
              Amendment.

            

    

     

    This
Agreement may not be amended except by the written consent of the parties
hereto.  No waiver of any provision of this Agreement shall be implied
from any course of dealings between the parties, from any failure by any party
to assert its rights hereunder or any occasion or series of
occasions.

     

    
      	
              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.

            

    

     

    (a) The
Trading Advisor shall, at the Members’ initial closing and at the request of the
Trading Manager at any monthly closing (as described in the Offering Memoranda),
provide the following:

     

    (i) To the
Trading Manager, the Trading Company and the Members, a certificate, dated the
date of any such closing and in form and substance satisfactory to such parties,
to the effect that;

     

    (A) 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; and

     

    (B) 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.

     

    (ii) To the
Trading Manager, the Trading Company and the Members, a report as of the closing
date which shall present, for the period from the date after the last day
covered by the historical performance records in the Offering Memoranda to the
latest practicable day before closing, figures which shall be a continuation of
such historical performance records and which shall certify that such figures
are, to the best of such Trading Advisor’s knowledge, accurate in all material
respects.

     

    (b) The
Trading Advisor shall, at or before the Members’ initial closing (as described
in the Offering Memoranda), provide a legal opinion of the Trading Advisor’s
counsel in a form acceptable to the Trading Manager.

     

    (c) The
Trading Manager shall, at the Members’ initial closing and at the request of the
Trading Advisor at any closing (as described in the Offering Memoranda), provide
the following:

     

    (i) 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:

     

    (A) the
representations and warranties by the Trading Company and the Trading Manager 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;

     

    (B) no order
preventing or suspending the use of the Offering Memoranda has been issued by
the CFTC, the Securities Exchange Commission, any state securities commission,
or the NFA or other self-regulatory organization and no proceedings for that
purpose shall have been instituted or are pending or, to the knowledge of the
Trading Manager, are contemplated or threatened under the CEAct;
and

     

    (C) The
Trading Company and the Trading Manager 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.

     

    
      	
              18.  

            	
              Inconsistent
      Filings.

            

    

     

    If the
Trading Advisor intends to file, to participate in the filing of, or to publish
any description of the Trading Advisor, or of its respective principals or
trading approaches that is materially inconsistent with those in the Disclosure
Information, the Trading Advisor shall inform the Trading Manager of such
intention and shall furnish copies of all such filings or publications at least
ten Business Days prior to the date of filing or publication.

     

    
      	
              19.  

            	
              Disclosure
      Information.

            

    

     

    (a) During
the term of this Agreement, the Trading Advisor shall furnish to the Trading
Manager promptly copies of all disclosure-documents as filed in final form with
the CFTC, NFA or other self-regulatory organization by the Trading Advisor,
where required. Additionally, the Trading Advisor shall furnish to the Trading
Manager copies of all disclosure-related materials pertaining to the
Trading Advisor.  “Disclosure Information” shall include the information
described in the first sentence of this Section 19(a), as well as any other
information about the Trading Advisor provided by the Trading Advisor to the
Trading Manager.  The Trading Advisor shall furnish to the Trading
Manager copies of all communications sent to existing or prospective investors
pertaining to any  material information regarding
the Trading Advisor or its trading programs/strategies that may not be included
in the disclosure-documents or disclosure- related materials, including but not
limited to changes in principals, organizational structure, regulatory standing,
change in contact information or location/address, and current research
initiatives

     

    (b) The
Trading Manager and the Trading Company will not distribute or supplement any
promotional material relating to the Trading Advisor unless the Trading Advisor
has approved reasonable prior notice of and a copy of such promotional material
and has received such material in writing.

     

    20. Track
Record.  The track record and other performance information of
the Members shall be the property of the Trading Manager and not the Trading
Advisor.

     

    
      	
              21.  

            	
              Use of
      Name.

            

    

     

    (a) The
Trading Advisor hereby consents to the non-exclusive use by the Trading Company
of (a) the name “Morgan Stanley Smith Barney GLC I, LLC”, with respect to the
Trading Company and (b) the name “GLC Ltd.” in any documentation regarding the
Trading Company, only so long as the Trading Advisor serves as a sole trading
advisor to the Trading Company.  Each of the Trading Company and the
Trading Manager agree to indemnify and hold harmless, jointly and severally, the
Trading Advisor, its partners, directors, officers, affiliates, employees and
agents from and against any and all costs, losses, claims, damages or
liabilities, joint or several, including, without limitation, attorneys' fees
and disbursements, which may arise out of the Trading Company's or the Trading
Manager's misuse of the name “GLC Ltd.” or out of any breach of, or failure to
comply with, this Section 21.

     

    (b) Upon
termination of this Agreement, the Trading Company, at its expense, as promptly
as practicable:  (i) shall take all necessary action to cause the
Offering Memoranda and organizational documents of the Trading Company to be
amended in order to eliminate any reference to “GLC Ltd.” (except to the extent
required by law, regulation or rule); and (ii) shall cease to use in any other
manner, including, but not limited to, use in any supplemental sales material,
the name “GLC Ltd.” or any name, mark or logo type derived from it or similar to
it (except to the extent required by law, regulation or rule).

     

    
      	
              22.  

            	
              Notices.

            

    

     

    All
notices required to be delivered under this Agreement shall be in writing and
shall be effective when delivered personally on the day delivered, by facsimile
on receipt confirmation, by email followed by delivery of an original, or when
given by registered or certified mail, postage prepaid, return receipt
requested, on the second business day following the day on which it is so
mailed, 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 Trading Company:

            
	 
      	
              Morgan
      Stanley Smith Barney GLC I, LLC

               c/o
      Demeter Management LLC

              Managed
      Futures Department

              522
      Fifth Avenue, 13th
      Floor

              New
      York, NY  10036

              Attn:  Jeremy
      Beal

              Facsimile:
      (212) 296-6868

              Email:
      Jeremy.Beal@morganstanley.com;

            
	 
      	 
      
	 
      	
              if
      to the Trading Manager:

            
	 
      	 
      
	 
      	
              Demeter
      Management LLC

            
	 
      	
              Managed
      Futures Department

              522
      Fifth Avenue, 13th
      Floor

              New
      York, NY  10036

              Attn:  Jeremy
      Beal

              Facsimile:
      (212) 296-6868

              Email:
      Jeremy.Beal@morganstanley.com;

            
	 
      	 
      
	 
      	
              With
      a copy to:

            
	 
      	 
      
	 
      	
              Timothy
      P. Selby

              Alston
      & Bird LLP

              90
      Park Avenue

              New
      York, NY 10016

              Facsimile:
      (212) 922-3894

              Email:
      timothy.selby@alston.com

            
	 
      	
              if
      to the Trading Advisor:

               

            
	 
      	
              GLC
      Limited

              Ingeni
      Building

              17
      Broadwick Street

              London
      W1F 0AX

              United
      Kingdom

              Attn:
      Caroline Hoare and David Trudeau

              Facsimile:
      44(0)20 7942 8229

              Email:
      caroline.hoare@glcuk.com;
      david.trudeau@glcuk.com

               

               

            

    

    
      	
              23.  

            	
              Continuing Nature of
      Representations Warranties and Covenants:
  Survival.

            

    

     

    All
representations, warranties and covenants contained in this Agreement shall be
continuing during the term of this Agreement and the provisions of this
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.  Each party hereby
agrees that as of the date of this Agreement it is, and during its term shall
be, in compliance with its representations, warranties and covenants herein
contained.  In addition, if at any time any event occurs which would
make any of such representations, warranties or covenants not true, the affected
party will use its best efforts to promptly notify the other parties of such
fact.

     

    
      	
              24.  

            	
              Third-Party
      Beneficiaries.

            

    

     

    Except
for each of the Members who shall be a third-party beneficiary of the applicable
provisions of this Agreement, this Agreement is not intended and shall not
convey any rights to a party to this Agreement.

     

    
      	
              25.  

            	
              Governing
      Law.

            

    

     

    This
Agreement shall be governed by, and construed in accordance with, the laws 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.

     

    
      	
              26.  

            	
              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, except that Trading Advisor may seek a declaratory judgment with
respect to the indemnification provisions of this Agreement.

     

    
      	
              27.  

            	
              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.

     

    
      	
              28.  

            	
              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 no other person shall have any right
or obligation under this Agreement.

     

    
      	
              29.  

            	
              Counterparts.

            

    

     

    This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

     

    
      	
              30.  

            	
              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 of the right to insist upon strict
adherence.

     

    

      

    

      
      1
Confidential material redacted and filed separately with the
Commission.

    

      
      2
Confidential material redacted and filed separately with the
Commission.

    

    
      
        
          A-

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Agreement has been executed for and on behalf of the
undersigned as of the day and year first above written.

     

    
      	 
      	
              MORGAN
      STANLEY SMITH BARNEY GLC I,
      LLC

              by
      Demeter Management LLC

              Trading
      Manager

            
	 
      	
              By                                                      

              Walter Davis

              Chairman and
      President

            
	 
      	 
      
	 
      	
              DEMETER
      MANAGEMENT LLC

               

            
	 
      	
              By                                                      

              Walter Davis

              Chairman and
      President

            
	 
      	 
      
	 
      	
              GLC
      LTD.

              By                                                      

              Name:

              Title:

            

    

    

    
      
        
          A-

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Annex
I

    

    

    *3

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    EXHIBIT
A

     

    Morgan
Stanley Smith Barney Managed Futures

    MSC
Fund Operations Procedures

    08/20/09

    

    

    Following
is a list of abbreviations used in this document:

    
      	
              ·  

            	
               “Fund(s)”
      refers to Morgan Stanley Smith Barney Managed Futures Funds that utilize
      MS&Co/MSIP/MSCG as a clearing commodity
  broker.

            

    

    
      	
              ·  

            	
              “Futures”
      is used to identify exchange traded futures, or forward contracts, and
      options on the same, that are cleared through a clearing
      house.

            

    

    
      	
              ·  

            	
              “FX”
      is used to identify non-exchange traded forward currency contracts, and
      options on the same, which are settled directly between the principals of
      the trades.

            

    

    
      	
              ·  

            	
              “General
      Partner” shall mean Demeter Management
LLC.

            

    

    
      	
              ·  

            	
              “Trading
      Manager” shall mean Demeter Management
LLC.

            

    

    
      	
              ·  

            	
               “MF”
      is Morgan Stanley Smith Barney Managed
Futures.

            

    

    
      	
              ·  

            	
              “MSC”
      is MS&Co. and/or MSIP and/or MSCG (the Clearing Commodity Broker or FX
      Counterparty, as appropriate).

            

    

    
      	
              ·  

            	
              “MS&Co”
      is Morgan Stanley & Co., Inc. a subsidiary of Morgan Stanley (the
      Clearing Commodity Broker or FX (Non-Options) Counterparty as
      appropriate).

            

    

    
      	
              ·  

            	
              “MSIP”
      is Morgan Stanley & Co. International plc a subsidiary of Morgan
      Stanley (a sub Clearing Commodity Broker).  MSIP clears LME
      transactions on behalf of the
Funds.

            

    

    
      	
              ·  

            	
              “MSCG”
      is Morgan Stanley Capital Group a subsidiary of Morgan Stanley (the FX
      Options Counterparty).

            

    

    

    CONTACT
INFORMATION:

    

    Following
are the Morgan Stanley departments involved in servicing the Funds and the
corresponding contact information.

    

    
      	
              Abbreviation

            	
              Department

            	
              Primary
      Contact

            	
              Telephone

            	
              E-mail

            
	
              Futures
      Desk

            	
              MSC
      Futures Trading Desk

            	
              Brian
      Jackman

              James
      Stedman

            	
              +1
      212 761-1782

              +1
      212 761-1093

            	
              Brian.Jackman@morganstanley.com

              James.Stedman@morganstanley.com

            
	
              Futures
      Ops

            	
              MSC
      Futures Operations

            	
              Steve
      Bucello

               

            	
              +1
      212 276-0477

               

            	
              Steve.Bucello@morganstanley.com

               

            
	
              FX
      Desk

            	
              MSC
      Foreign Exchange Trading Desk

            	
              Richard
      Condon

              Julia
      Clancy Sands

              John
      Silver

            	
              +1
      212 761-2700

              +1
      212 761-2700

              +1
      212 761-2700

            	
              Richard.Condon@morganstanley.com

              Julia.Sands@morganstanley.com

              John.Silver@morganstanley.com

            
	
              FX
      Ops

            	
              MSC
      Foreign Exchange Operations

            	
              John
      Fusco

            	
              +1
      718 754-4868

            	
              John.Fusco@morganstanley.com

            
	
              MF
      Accounting

            	
              MF
      Accounting

            	
              Joe
      Tromello

              Kevin
      Scully

            	
              +1
      212 276-5184

              +1
      212 276-5121

            	
              Joe.Tromello@morganstanley.com

              Kevin.Scully@morganstanley.com

            
	
              MF
      Ops

            	
              MF
      Trading Operations

            	
              Laura
      Finne

               

            	
              +1
      212 296-6813

            	
              Laura.Finne@morganstaley.com

            
	
              MF
      IM

            	
              MF
      Investment Management

            	
              Patrick
      Egan

              Alper
      Daglioglu

            	
              +1
      212 296-6808

              +1
      212 296-6807

            	
              Patrick.Egan@morganstanley.com

              Alper.Daglioglu@morganstanley.com

            
	
              MF
      Strat Plan

            	
              MF
      Strategic Planning

            	
              Chris
      Barry

            	
              +1
      212 296-6812

            	
              Chris.Barry@morganstanley.com

            

    

    

    FUND
ACCOUNTS:

    Account
Configuration

    
      	
              ·  

            	
              Futures and Futures Options
      Trading - For each CTA trading program three Fund trading accounts
      will be assigned.  A MS&Co segregated account, prefix
      052.  A MS&Co secured account, prefix
      05A.   A MSIP non-regulated (by the CFTC) account, prefix
      045.

            

    

    
      	
              ·  

            	
              FX (Non-Options) Trading
      - One Fund account for each CTA trading program will be assigned at
      MS&Co, prefix 058.

            

    

    
      	
              ·  

            	
              FX Options Trading – One
      Fund account for each CTA trading program will be assigned at MSCG (if
      needed), prefix 057.

            

    

    
      	
              ·  

            	
              Excess and FX Custody Accounts
      – For each CTA trading program two Fund accounts will be set up at
      MS&Co.  One account will be designated as a custody account
      for MS&Co FX.  MF Ops will maintain equity in the custody
      account sufficient to cover margin requirements of the FX trading
      account.  The second account will contain the balance of excess
      equity that is not required in the custody and futures trading
      accounts.

            

    

    Statements

    
      	
              ·  

            	
              Futures – The CTA should
      contact Futures Ops regarding access to Fund futures account
      statements.

            

    

    
      	
              ·  

            	
              FX – The CTA should
      contact FX Ops regarding access to Fund FX account
    statements.

            

    

    
      	
              ·  

            	
              Excess and Custody – The
      CTA should contact MF Ops regarding access to the Fund account statements
      at MS&Co.

            

    

    

    FX
TRADING:

    FX
Order Execution

    
      	
              ·  

            	
              FX
      trading of the Funds must be executed through the MSC FX Desk, unless the
      General Partner and/or Trading Manager otherwise agrees in a form
      acceptable to the General Partner and/or Trading Manager.  The
      Trading Advisor may execute trades through F/X brokers other than those
      employed by MS & Co. and its affiliates so long as arrangements
      (including executed give-up agreements) are made for such floor brokers to
      “give-up” or transfer the positions to MS & Co. in conformity with the
      Trading Policies.

            

    

    
      	
              ·  

            	
              When
      trading FX Options, all premiums (on outright trades and cross currency
      trades) must be booked at the clearing broker so that the premium is
      stated in USD.

            

    

    EFP
Order Execution

    
      	
              ·  

            	
              The
      CTA may utilize the FX Desk to execute EFP transactions. The futures leg
      of an EFP will be subject to the futures brokerage fee.  The CTA
      should contact the FX Desk for information on EFP trade execution
      procedures.

            

    

    

    Foreign
Currency Conversions

    
      	
              ·  

            	
              The
      CTA is responsible for conversion into US dollars of Fund foreign currency
      balances created as a result of futures and/or FX
  trading.

            

    

    

    FUTURES
TRADING:

    Order
Execution Service

    
      	
              ·  

            	
              The
      MSC Futures Desk can provide the CTA with order execution
      facilities.  The CTA should contact the Futures Desk for
      information on trade execution
procedures.

            

    

    “Give
Up” Order Execution

    
      	
              ·  

            	
              The
      CTA shall ensure that a “give-up” execution agreement is in place prior to
      the execution of any trade outside of MSC’s execution facilities in
      accordance with this Agreement or as otherwise provided in writing to the
      CTA by the General Partner and/or Trading
  Manager.

            

    

    
      	
              ·  

            	
              On
      exchanges allowing “give up” execution, the CTA may have orders executed
      away from MSC and give up trades to MSC for clearing.  The CTA
      should contact Futures Ops for information on trade “give up”
      procedures.  The CTA should ensure that executing brokers give
      trades up on a timely basis.  The CTA should ensure that
      executing brokers make timely payment on price adjustments, when
      applicable.   For futures trades at exchanges where give up
      execution is not allowed, the CTA must use the execution facilities
      provided by the Clearing Commodity
Broker.

            

    

     “Give
Up” Agreements

    
      	
              ·  

            	
              The
      four party FIA/FOA uniform “give up” agreement is the acceptable form for
      futures “give ups”.  The trader version FIA/FOA EFP agreement is
      the acceptable form for EFP “give ups”.  The CTA should send
      agreements that have been signed by both the CTA and executing broker to
      MF Ops, attention Laura Finne , Morgan Stanley Smith Barney, Managed
      Futures, 522 Fifth Avenue, 13th Floor, New York, NY 10036 or through EGUS
      (FIA Electronic Give Up System).

            

    

    “Give
Up” Execution Payment

    
      	
              ·  

            	
              For
      Chicago Markets (CBT, CME and affiliated exchange divisions), payment for
      floor brokerage will be handled via the ATOM system or current
      exchange/clearing payment method at its standard rate to the party from
      whom it directly receives the trade.  Payment of an execution
      service fee (“Give Up Fee”) will be handled exclusively through the GAINS
      system or current exchange/clearing payment method at a rate not to exceed
      the amount permitted by the General Partner and/or Trading Manager from
      time to time (the “Execution Allowance”).  The “Execution
      Allowance” shall be based on the General Partner’s and/or Trading
      Manager’s assessment for prevailing competitive rates for “Give Up
      Fees”.

            

    

    
      	
              ·  

            	
              For
      New York Markets (NYBOT, NYMEX, NYFE and affiliated exchange divisions),
      payment of “Give Up Fees” will be handled exclusively through the ATOM
      system or current exchange/ clearing payment method at a rate not to
      exceed the “Execution Allowance” to the party from whom it directly
      receives the trade.

            

    

    
      	
              ·  

            	
              For
      all other markets, MSC or its carrying broker, when utilized by MSC, will
      handle payment of “Give Up Fees” to the party from whom it directly
      receives the trade at a rate not to exceed the “Execution
      Allowance”.  Bills for “Give Up Fees” should be sent directly to
      MSC or its applicable carrying
broker.

            

    

    
      	
              ·  

            	
              Futures
      Ops will handle payment of “Give Up
Fees”.

            

    

    

    

    ACCOUNT
MAINTENANCE:

    Trade
Allocations

    
      	
              ·  

            	
              The
      CTA is responsible for determining the trade allocation procedure for Fund
      trading accounts.  The CTA should ensure that the procedure was
      followed correctly, and that trades are booked accordingly in Fund
      accounts.

            

    

    Trade
Reporting; (Futures)

    
      	
              ·  

            	
              The
      CTA is responsible for reporting all trades to Futures Ops on a timely
      basis to facilitate clearing and reduce operational risk.  The
      CTA should contact Futures Ops for additional
  information.

            

    

    Daily
Trade Checkout

    
      	
              ·  

            	
              The
      CTA is responsible for daily, end of trading day, checkout of all trades
      (including currency conversion trades) with Futures and FX
      Ops.  The CTA should contact Futures and FX Ops to determine
      specific checkout procedures.

            

    

    Daily
Statement Reconciliation

    
      	
              ·  

            	
              The
      CTA is responsible for daily statement trade activity and position
      balancing with FX and Futures Operations.  The CTA should
      contact FX and Futures Ops to determine specific balancing
      procedures.

            

    

    
      	
              ·  

            	
              The
      CTA should provide a daily, trade reconciliation for each Fund account to
      MF Ops, by 10:00 a.m. EST/EDT.  Reconciliation reports can be
      emailed to mf.ops@morganstanley.com and should specify trades to be added
      or canceled in each account, with a valuation versus the current
      settlement price of the product, and any pending cash adjustments due from
      executing brokers or for bookkeeping corrections.  (MF Ops
      provides MF Accounting/the Administrator with adjusting information for
      the calculation of NAV.)  Please contact MF Ops if you have any
      questions regarding this procedure.

            

    

    
      	
              ·  

            	
              The
      CTA should notify MF Ops of any incorrect settlement prices it becomes
      aware of with regard to the MSC account statements of a
    Fund.

            

    

    Monitoring
of Delivery Periods and Option Expirations

    
      	
              ·  

            	
              The
      CTA is responsible for monitoring delivery periods (first notice dates and
      last trade dates), option expirations (option expiration and last trade
      dates), and forward settlement and/or maturity
  dates.

            

    

    
      	
              ·  

            	
              The
      CTA should take appropriate actions to ensure that futures contracts do
      not result in delivery.

            

    

    
      	
              ·  

            	
              The
      CTA should ensure that their intentions regarding any open option
      positions, at the time of expiration, have been communicated appropriately
      to the Futures or FX Ops areas.  Contact Futures and FX Ops for
      specific communication procedures.

            

    

    Margin
Maintenance and Cash Transaction (Journal) Reconciliation

    
      	
              ·  

            	
              MF
      Ops is responsible for balancing of all journal entries in all Fund
      accounts and for ensuring the requisite corrective action is taken for
      each reconciling item.  Please note, the CTA is responsible for
      reconciling all cash entries resulting from trading activity, such as APS
      residuals and FX settlements.

            

    

    
      	
              ·  

            	
              MF
      Ops is responsible for the authorization of Fund margin transfers between
      MSC and MS&Co accounts for maintaining equity (and/or collateral) in
      amounts sufficient to meet Fund margin requirements in the MSC Futures
      accounts and the FX custody
accounts.

            

    

    

    TRADING LEVEL
NOTIFICATION:

    
      	
              ·  

            	
              For
      new trading allocations, MF IM will provide notification to the CTA of
      trading authorization and the trading commencement date, along with
      notification of the initial trading
level.

            

    

    
      	
              ·  

            	
              Thereafter,
      notification of estimated monthly net additions/withdrawals will be
      distributed by MF Strat Plan.  On the third to last business day
      of each month a preliminary estimate will be provided.  On the
      first business day of each month a final estimate will be
      given.  Any material adjustment (1% of account equity) from the
      final estimate to the actual will be provided.  Notification
      will be made via fax or email and the CTA will be asked to acknowledge
      receipt via fax or email.  Questions regarding this procedure
      can be directed to MF Strat Plan.

            

    

    
      	
              ·  

            	
              Subsequent
      to a Fund’s monthly closing, actual additions and withdrawals will be
      processed by MF Accounting/the Administrator via journal entry in the Fund
      “excess” account at MS&Co.

            

    

    
      	
              ·  

            	
              Any
      other trading level/asset allocation changes will be communicated in
      writing from MF IM or MF Strat
Plan.

            

    

     
 

    FUND
ACCOUNTING:

    Net
Asset Value Calculation

    
      	
              ·  

            	
              MF
      Accounting/the Administrator is responsible for determination of daily NAV
      estimates for the Funds.

            

    

    
      	
              ·  

            	
              MF
      Accounting/the Administrator will determine the actual month end NAV of a
      Fund during the monthly closing
process.

            

    

    Brokerage
Commission and Transaction Fees

    
      	
              ·  

            	
              Brokerage
      commissions for each Fund will be charged in a manner consistent with the
      prospectus or offering memorandum.  The CTA should contact MF
      Accounting/the Administrator for additional
  information.

            

    

    Fund
Fee Processing

    
      	
              ·  

            	
              Fund
      interest and all Fund fees, exclusive of brokerage commissions and
      transaction fees, will be processed in a Funds “excess” account at
      MS&Co.

            

    

    
      	
              ·  

            	
              MF
      Accounting/the Administrator will determine fees due to the CTA during the
      monthly closing process and notify the CTA of the fees via the monthly
      performance tables.  The CTA should provide contact information
      regarding fees to MF Accounting/the
  Administrator.

            

    

    
      	
              ·  

            	
              MF
      Accounting/the Administrator will make payment of fees to the CTA via wire
      transfer.  The CTA should provide wire instructions to MF
      Accounting/the Administrator.

            

    

    

    BORROWING:

    
      	
              ·  

            	
              The
      CTA shall not use borrowed money to leverage any trades, unless otherwise
      approved by the General Partner and/or Trading
  Manager.

            

    

    

      

    

      
      3
Confidential material redacted and filed separately with the
Commission.

    

    
      
        
          A-

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
B

     

    COMMODITY
TRADING AUTHORITY

     

    Dear GLC
Ltd.:

     

    Morgan
Stanley Smith Barney GLC I, LLC (the “Trading Company”) and Demeter Management
LLC, the Trading Company’s Trading Manager (the “Trading Manager”) do hereby
make, constitute and appoint you as the Trading Company’s attorney-in-fact to
buy and sell futures and forward contracts through such futures commission
merchants as shall be agreed on by you and the Trading Manager on behalf of the
Trading Company, pursuant to the trading program identified in the Agreement
among the Trading Company, the Trading Manger and you as of the ____ day of
_________, 2009, as amended or supplemented, and in accordance with the terms
and conditions of said Agreement.

     

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

     

    
      	 
      	
              Very
      truly yours,

               

            
	 
      	
              MORGAN
      STANLEY SMITH BARNEY GLC I,
      LLC

              by
      Demeter Management LLC

              Trading
      Manager

            
	 
      	
              By                                                      

              Walter Davis

              Chairman and
      President

            
	 
      	 
      
	 
      	
              DEMETER
      MANAGEMENT LLC

               

            
	 
      	
              By                                                      

              Walter Davis

              Chairman and
      President

            

    

    

     

    
      
        
          B-

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C

     

    FUTURES
INTERSTS TRADED

     

    
      	
              Instrument

            
	
              Listed
      futures and exchange traded options: equity indices, currencies,
      government bonds, interest rates

               

            
	
              FX
      Spot

            
	
              FX
      Forwards

            

    

    

     

    
      
        
          C-augustus.htm

    
      CONFIDENTIAL
TREATMENT REQUESTED.  Confidential portions of this document have been
redacted and have been separately filed with the Commission.

    

    
 

    ADVISORY
AGREEMENT

     

    THIS
AGREEMENT, made as of September 28, 2009, among Morgan Stanley Smith Barney
Augustus I, LLC, a Delaware limited liability company (the “Trading Company”),
Demeter Management LLC, a Delaware limited liability company (the “Trading
Manager”), and Augustus Asset Managers Limited, a limited company incorporated
in England and Wales (the “Trading Advisor”).

     

    W I T N E S S E T H
:

     

    WHEREAS, the Trading Company
has been organized pursuant to a Certificate of Formation filed with Secretary
of State of the State of Delaware on September 25, 2009 (the “Certificate of
Formation”) and an operating agreement (the “Operating Agreement”) to, among
other things, directly or indirectly through a commodity trading advisor, trade,
buy, sell, spread, or otherwise acquire, hold, or dispose of commodities
(including, but not limited to, foreign currencies, mortgage-backed securities,
money market instruments, financial instruments, and any other securities or
items which are now, or may hereafter be, the subject of futures contract
trading), domestic and foreign commodity futures contracts, forward contracts,
foreign exchange commitments, options on physical commodities and on futures
contracts, spot (cash) commodities and currencies, exchange of futures contracts
for physicals transactions, exchange of physicals for futures contracts
transactions, and any rights pertaining thereto, whether traded on an organized
exchange or otherwise (hereinafter referred to collectively as “futures
interests;” provided, however, such
definition shall exclude securities futures products as defined by the Commodity
Futures Trading Commission (“CFTC”), options in securities futures and options
in equities) and securities (such as United States Treasury securities) approved
by the CFTC for investment of customer funds and other securities on a limited
basis, and to engage in all activities incident thereto;

     

    WHEREAS, the Trading Company
is a commodity pool operated by the Trading Manager in which other commodity
pool investment vehicles sponsored and/or managed by the Trading Manager and/or
its affiliates will invest (each such investment vehicle, a “Member,” and
collectively, the “Members”);

     

    WHEREAS, the Trading Advisor
has extensive experience trading in futures interests and the Trading Advisor is
willing to provide the services and undertake the obligations as set forth
herein;

     

    WHEREAS, the Trading Company
and the Trading Manager each desires the Trading Advisor to act as a trading
advisor for the Trading Company and to make investment decisions with respect to
futures interests for the Trading Company and the Trading Advisor desires so to
act; and

     

    WHEREAS, the Trading Company,
the Trading Manager and the Trading Advisor wish to enter into this Agreement
which, among other things, sets forth certain terms and conditions upon which
the Trading Advisor will conduct the Trading Company’s futures interest
trading.

     

    NOW, THEREFORE, the parties
hereto hereby agree as follows:

     

    
      	
              1.  

            	
              Undertakings in
      Connection with the Continuing Offering of
  Units.

            

    

     

    (a) The
Trading Advisor agrees with respect to the continuing offering of interests
(“Units”) in the Members: (i) to make all disclosures regarding itself, its
principals and affiliates, its trading performance, its trading systems, methods
and strategies (subject to the need, in the reasonable discretion of the Trading
Advisor, to preserve the secrecy of Proprietary Information (as defined in
Section 1(c) hereof) concerning such systems, methods and strategies), any
client accounts over which it has discretionary trading authority (other than
the names of or identifying information with respect to any such clients), and
otherwise, as the Members may reasonably require (x) in connection with any
Member’s offering materials (collectively, the “Offering Memoranda”) as required
by Rule 4.21 of the regulations under the Commodity Exchange Act (the “CEAct”),
including in connection with any amendments or supplements thereto, or (y) to
comply with any other applicable law or rule or regulation, including those of
the CFTC, the Securities and Exchange Commission, the National Futures
Association (the “NFA”) or any other regulatory or self-regulatory body,
exchange, or board with jurisdiction over its members (or to comply with the
reasonable request of the aforementioned organizations); and (ii) to otherwise
cooperate with the Trading Company, the Trading Manager and the Members by
providing information regarding the Trading Advisor in connection with the
preparation of the Offering Memoranda, including any amendments or supplements
thereto, as part of making application for registration of the Units under the
securities or blue sky laws of any jurisdictions, including foreign
jurisdictions, as the Members may deem appropriate; provided that all such
disclosures are subject to the need, in the reasonable discretion of the Trading
Advisor, to preserve the secrecy of Proprietary Information concerning its
clients, systems methods and strategies. As used herein, unless otherwise
provided, the term “principal” shall have the meaning as defined in Rule 4.10(e)
of the CFTC’s regulations and the term “affiliate” shall mean an individual or
entity that directly or indirectly controls, is controlled by, or is under
common control with, such party.

     

    (b) If 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
Disclosure Information (as defined in Section 19 hereof), 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 Disclosure
Information regarding itself or any of its principals or affiliates, the Trading
Advisor shall promptly notify the Trading Manager and shall cooperate with the
Trading Manager in the preparation of any necessary amendments or supplements to
the Offering Memoranda. Neither the Trading Advisor nor any of its principals,
or affiliates, or any stockholders, officers, directors, or employees shall
distribute the Offering Memoranda or selling literature or shall engage in any
selling activities whatsoever in connection with the continuing offering of
Units except as may be specifically approved by the Trading Manager and agreed
to by the Trading Advisor.

     

    (c) For
purposes of this Agreement, and notwithstanding any of the provisions hereof,
all non-public information relating to the Trading Advisor including, but not
limited to, records, whether original, duplicated, computerized, handwritten, or
in any other form, and information contained therein, business and/or marketing
and/or sales plans and proposals, names of past and current clients, names of
past, current and prospective contacts, trading methodologies, systems,
strategies and programs, trading advice, trading instructions, results of
proprietary accounts, training materials, research data bases, portfolios, and
computer software, and all written and oral information, furnished by the
Trading Advisor to the Trading Company, the Trading Manager, the Members and/or
their officers, directors, employees, agents (including, but not limited to,
attorneys, accountants, consultants, and financial advisors) or controlling
persons (each a “Recipient”), regardless of the manner in which it is furnished,
together with any analysis, compilations, studies or other documents or records
which are prepared by a Recipient of such information and which contain or are
generated from such information, regardless of whether explicitly identified as
confidential, with the exception of information which (i) is or becomes
generally available to the public other than as a result of acts by the
Recipient in violation of this Agreement, (ii) is in the possession of the
Recipient prior to its disclosure pursuant to the terms hereof, (iii) is or
becomes available to the Recipient from a source that is not bound by a
confidentiality agreement with regard to such information or by any other legal
obligation of confidentiality prohibiting such disclosure, or (iv) that is
independently developed by the Recipient without use of the confidential
information described in this Section 1(c), are and shall be confidential
information and/or trade secrets and the exclusive property of the Trading
Advisor (“Confidential Information” and/or “Proprietary
Information”).

     

    (d) The
Trading Company and the Trading Manager each warrants and agrees that they and
their respective officers, directors, members, equity holders, employees and
agents (including for purposes of this Agreement, but not limited to, attorneys,
accountants, consultants, and financial advisors) will protect and preserve the
Confidential Information and will disclose Confidential Information or otherwise
make Confidential Information available only to the Trading Company’s or the
Trading Manager’s officers, directors, members, equity holders, employees and
agents (including for purposes of this Agreement, but not limited to, attorneys,
accountants, consultants, and financial advisors), who need to know the
Confidential Information (or any part of it) for the purpose of satisfying their
fiduciary, legal, reporting, filing or other obligations hereunder or to monitor
performance in the account during the term of this Agreement or thereafter, or
to the Trading Company, Trading Manager or a Recipient, as the case may be, who
is required to disclose such Confidential Information due to a fiduciary
obligation or legal or regulatory request. Additionally, the Trading Company and
the Trading Manager each warrants and agrees that it and any Recipient will use
the Confidential Information solely for the purpose of satisfying the Trading
Company’s or the Trading Manager’s obligations under this Agreement and not in a
manner which violates the terms of this Agreement.

     

    
      	
              2.  

            	
              Duties of the Trading
      Advisor.

            

    

     

    (a) Upon the
commencement of trading operations on or about October 1, 2009, by the Trading Advisor on
behalf of  the Trading Company, the Trading Advisor hereby agrees to
act as a Trading Advisor for the Trading Company and, as such, shall have
authority and responsibility for directing the investment and reinvestment of
the Trading Company’s assets, which shall consist of the Trading Company’s Net
Assets (as defined in Section 6(c) hereof) plus “notional” funds, if any, as
specified in writing by the Trading Manager and consented to by the Trading
Advisor (the “Assets”), on the terms and conditions and in accordance with the
prohibitions and Trading Operations Procedures set forth in Exhibit A to this
Agreement as amended from time to time and provided in writing to the Trading
Advisor by the Trading Manager (the “Trading Operations Procedures”); provided, however, that the
Trading Manager may override the instructions of the Trading Advisor without
notice to the Trading Advisor to the extent necessary (i) to comply with the
Trading Operations Procedures and with applicable speculative position limits
(as set forth by the respective regulatory authorities or exchanges), (ii) to
fund any distributions or redemptions, (iii) to pay the Trading Company’s
expenses, (iv) to the extent the Trading Manager believes doing so is necessary
for the protection of the Trading Company, (v) to terminate the futures interest
trading of the Trading Company with the Trading Advisor, or (vi) to comply with
any applicable law or regulation. The Trading Manager agrees not to override any
such instructions for the reasons specified in clauses (ii) or (iii) of the
preceding sentence unless the Trading Advisor fails (or is not able) to comply
with a request of the Trading Manager to make the necessary amount of funds
available to the Trading Company within two trading days of such
request.  The Trading Advisor shall not be liable for the consequences
of any decision by the Trading Manager to override instructions of the Trading
Advisor, except to the extent that such consequences result from a material
breach of this Agreement by the Trading Advisor or the Trading Advisor fails
(where it would otherwise be possible) to comply with the Trading Manager’s
decision to override an instruction.

     

    (b) The
Trading Advisor shall:

     

    (i) Exercise
good faith and due care in trading futures interests for the account of the
Trading Company in accordance with the prohibitions and Trading Operations
Procedures, and the trading systems, methods, and strategies of the Trading
Advisor described in the Disclosure Information, with such changes and additions
to such trading systems, methods or strategies as the Trading Advisor, from time
to time, incorporates into its trading approach for accounts the size of the
Trading Company.

     

    (ii) Provide
the Trading Manager, within 45 days of the end of a calendar quarter, and within
45 days of a separate reasonable request which the Trading Manager may make from
time to time, with information in a format agreed to by the Trading Manager and
Trading Advisor comparing the performance of the Trading Company’s account and
the performance of JB Global Rates Fund (the “Benchmark Fund”), as well as all
other discretionary accounts directed by the Trading Advisor that utilizes the
strategy as the Trading Program (as defined herein) over a specified period of
time for the purpose of confirming that the Trading Company has been treated
equitably compared to such Other Accounts.  In providing such
information, the Trading Advisor may take whatever steps it deems necessary to
assure the confidentiality of the Trading Advisor’s clients’
identities.  The Trading Advisor shall, upon the Trading Manager’s
request, consult with the Trading Manager concerning any discrepancies between
the performance of such Other Accounts and the Trading Company’s account. The
Trading Advisor shall promptly inform the Trading Manager in writing, or any
acceptable manner agreed to by the Trading Manager and Trading Advisor, of any
material discrepancies of which the Trading Advisor is aware. The Trading
Manager acknowledges, among other things, that the following differences in
accounts may cause divergent trading results:  different trading
strategies, different markets traded, methods or degrees of leverage, different
trading policies, accounts experiencing differing inflows or outflows of equity,
different risk profiles, accounts which commence trading at different times and
accounts which have different portfolios or different fiscal years.

     

    (iii) Inform
the Trading Manager when the Trading Advisor’s open positions maintained by the
Trading Advisor exceed the Trading Advisor’s applicable speculative position
limits.

     

    (iv) Upon
request of the Trading Manager, promptly provide the Trading Manager with all
information concerning the Trading Advisor and its activities reasonably
requested by the Trading Manager (including, without limitation, information
relating to changes in control, key personnel, trading approach, or financial
condition).

     

    (c) All
purchases and sales of futures interests pursuant to this Agreement shall be for
the account, and at the risk, of the Trading Company and not for the account, or
at the risk of the Trading Advisor or any of its affiliates or each of their
principals, stockholders, directors, officers, or employees, or any other
person, if any, who controls the Trading Advisor. All brokerage commissions and
related transaction fees arising from such trading by the Trading Advisor shall
be for the account of the Trading Company.

     

    (d) *1

     

    (e) Prior to
the commencement of trading by the Trading Company, the Trading Manager, on
behalf of the Trading Company, shall deliver to the Trading Advisor a trading
authorization appointing the Trading Advisor the Trading Company’s
attorney-in-fact for such purpose (a form of which is attached hereto as Exhibit
B).

     

    (f) In
performing services to the Trading Company, the Trading Advisor shall utilize
its Global Rate Program (the “Trading Program”), as described in the Disclosure
Information, and as modified from time to time. The Trading Advisor shall give
the Trading Manager prior written notice of any change in the Trading Program
that the Trading Advisor considers to be material (and shall not effect such
change on behalf of the Trading Company without the Trading Manager’s consent),
including any additional futures interests to be traded by the Trading Advisor
not already listed on Exhibit C.  Changes in the futures interests
traded, provided that such futures interests are listed on Exhibit C, shall not
be deemed a modification of the Trading Program.

     

    
      	
              3.  

            	
              Designation of
      Additional or Replacement Trading Advisors and Reallocation of
      Assets.

            

    

     

    (a) If the
Trading Manager at any time deems it to be in the best interests of the Trading
Company, the Trading Manager may designate an additional or replacement trading
advisor or advisors for the Trading Company and may apportion to such additional
or replacement trading advisor(s) the management of such amounts of Assets as
the Trading Manager shall determine in its absolute discretion.  The
designation of an additional trading advisor or advisors or replacement of any
trading advisor for the Trading Company by the Trading Manager shall not require
any approval of any existing trading advisor (including the Trading
Advisor).  Subject to Section 7(c) hereof, the designation and
retention of an additional or replacement trading advisor(s) and the
apportionment of 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 Trading Company, the Trading
Manager and the Trading Advisor hereunder with respect to the Net Assets that
remain under the management of the Trading Advisor.  In the event that
an additional or replacement trading advisor(s) is so designated, the Trading
Advisor shall thereafter receive Management Fees and Incentive Fees based,
respectively, on that portion of the Net Assets managed by the Trading Advisor
and that portion of the New Trading Profit (as defined in Section 6(d)
hereof) attributable to the trading done by the Trading Advisor.

     

     

    (b) The
Trading Manager may at any time and from time to time upon three Business Days’
(as defined in Section 6(a)(i) below) prior notice reduce Assets allocated to
the Trading Advisor (whether or not such Assets are allocated to any other
trading advisor or advisors of the Trading Company ) or allocate additional
Assets upon three Business Days’ prior notice to the Trading Advisor (whether or
not such additional Assets are allocated away from such other trading advisor or
advisors); provided that any such addition to or withdrawal from Assets
allocated to the Trading Advisor will only become effective on the last day of a
month unless the Trading Manager determines that the best interests of the
Trading Company require otherwise.

    

    
      	
              4.  

            	
              Trading Advisor as an
      Independent Contractor.

            

    

     

    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 Trading Company or its
Members in any way or otherwise be deemed an agent of the Trading Company or its
Members.  Nothing contained herein shall be deemed to require the
Trading Company to take any action contrary to the Operating Agreement or the
Certificate of Formation of the Trading Company as from time to time in effect,
or any applicable law or rule or regulation of any regulatory or self-regulatory
body, exchange, or board. Nothing herein contained shall constitute the Trading
Advisor, the Trading Manager, or the Members, as members of any partnership,
joint venture, association, syndicate or other entity, or be deemed to confer on
any of them any express, implied, or apparent authority to incur any obligation
or liability on behalf of any other. It is expressly agreed that the Trading
Advisor is neither a promoter, sponsor, or issuer with respect to the Trading
Company or its Members, nor does the Trading Advisor have any authority or
responsibility with respect to the offer, sale or issuance of
Units.

     

    
      	
              5.  

            	
              Commodity
      Broker.

            

    

     

    The
Trading Advisor shall effect all transactions in futures interests for the
Trading Company through the Trading Company’s separate account maintained with
such commodity broker or brokers as the Trading Manager shall direct and appoint
from time to time. Both Morgan Stanley & Co., Incorporated (“MS & Co.”),
Morgan Stanley & Co. International plc, and Morgan Stanley Capital Group
Inc. (“MSCG” and collectively, the “Commodity Brokers”) may act as the clearing
commodity brokers for the Trading Company, and MS & Co. and its affiliates
may act as foreign exchange forward contract counterparty for the Trading
Company.  MSCG and its affiliates may act as an options on foreign
exchange forward contract counterparty for the Trading
Company.  Morgan Stanley Smith Barney LLC, its affiliates and the
Commodity Brokers, may act as the Trading Company’s non-clearing commodity
broker.  The Trading Manager shall provide the Trading Advisor with
copies of brokerage statements.

     

    Notwithstanding
the foregoing, the Trading Advisor may execute trades through floor brokers
other than those employed by MS & Co. and its affiliates so long as
arrangements (including executed give-up agreements) are made for such floor
brokers to “give-up” or transfer the positions to MS & Co. in conformity
with the Trading Operations Procedures set forth in Exhibit A attached
hereto.

     

    
      	
              6.  

            	
              Fees.

            

    

     

    (a) For the
services to be rendered to the Trading Company by the Trading Advisor under this
Agreement:

     

    (i) The
Trading Company shall pay the Trading Advisor a monthly management fee equal to
1/12 of the applicable annual rate on Annex I (as may be amended from time to
time) to this Agreement as of the first day of each month (the “Management
Fee”).  The Management Fee is payable in arrears within 30 Business Days of the end
of the month for which it was calculated.  For purposes of this
Agreement, “Business Day” shall mean any day which the securities markets are
open in the United States.

     

    (ii) The
Trading Company shall pay the Trading Advisor an incentive fee equal to 20% of
the “New Trading Profit” (as defined in Section 6(d) hereof) that shall accrue
monthly but is not otherwise payable until the end of each calendar quarter (the
“Incentive Fee”). The initial incentive period will commence on the date of the
Trading Company’s initial closing and shall end on the last day of the calendar
quarter after such initial closing occurs.  The Incentive Fee is
payable within 30 Business Days of the end
of the calendar quarter for which it was calculated.

     

    (b) If this
Agreement is terminated on a date other than the last day of a calendar quarter,
the Incentive Fee shall be determined as if such date were the end of a calendar
quarter. If this Agreement is terminated on a date other than the end of a
month, the Management Fee described above shall be determined as if such date
were the end of a month, but such fee shall be prorated based on the ratio of
the number of days in the month through the date of termination to the total
number of calendar days in the month. The Management Fee payable to the Trading
Advisor for the month in which the Trading Company begins to receive trading
advice from the Trading Advisor pursuant to this Agreement shall be prorated
based on the ratio of the number of calendar days in the month from the day the
Trading Company begins to receive such trading advice to the total number of
calendar days in the month.  In the event that there is an increase or
decrease in the Net Assets, as initiated by the Trading Manager, as of any day
other than the first day of a month, the Trading Advisor shall be paid a pro
rata Management Fee on such increase or decrease in the Net Assets for such
month.

     

    (c) The term
“Net Assets” shall mean the total assets of the Trading Company allocated to the
Trading Advisor (including, but not limited to, all cash and cash equivalents,
accrued interest and amortization of original issue discount, and the market
value of all open futures interest positions and other assets of the Trading
Company) less all liabilities of the Trading Company determined in accordance
with generally accepted accounting principles consistently applied under the
accrual basis of accounting. Unless generally accepted accounting principles
require otherwise, the market value of a futures or option contract traded on a
United States exchange shall mean the settlement price on the exchange on which
the particular futures or option contract shall be traded by the Trading Company
on the day with respect to which the Net Assets are being determined; provided, however, that if a
contract could not be liquidated on such day due to the operation of daily
limits or other rules of the exchange on which that contract shall be traded or
otherwise, the settlement price on the first subsequent day on which the
contract could be  liquidated shall be the market value of such
contract for such day, or if a contract could not be liquidated on such day due
to the exchange being closed for an exchange holiday, the settlement price on
the most recent preceding day on which the contract could have been liquidated
shall be the market value of such contract for such day.  The market
value of a forward contract or a futures or option contract traded on a foreign
exchange or market shall mean its market value as determined by the Trading
Manager on a basis consistently applied for each different variety of
contract.

     

    (d) As used
herein, the term “New Trading Profit” shall mean net futures interest trading
profits (realized and unrealized) on the Assets traded by the Trading Advisor,
decreased by the Trading Advisor’s monthly management fees, brokerage
commissions allocable to the Assets traded by the Trading Advisor, transaction
costs and administrative fees, with such trading profits and items of decrease
determined from the end of the last calendar quarter 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 Trading Advisor
commenced managing the Assets on behalf of the Trading Company to the end of the
calendar quarter as of which such Incentive Fee calculation is being made.
Extraordinary expenses do not reduce New Trading Profit. Interest income is not
included in New Trading Profit. New Trading Profit shall be calculated before
reduction for Incentive Fees paid or accrued. Incentive Fees shall be paid to
the Trading Advisor upon any withdrawal of assets from the Trading Company at
the end of any month when such withdrawal of assets is made as if such month-end
is the end of the calendar quarter.

     

    (e) If any
payment of Incentive Fees is made to the Trading Advisor on account of New
Trading Profit earned by the Trading Advisor for the Trading Company and the
Trading Advisor thereafter fails to earn New Trading Profit for the Trading
Company or experiences losses for any subsequent incentive period for the
Trading Company, the Trading Advisor shall be entitled to retain such amounts of
Incentive Fees previously paid to the Trading Advisor in respect of such New
Trading Profit. No subsequent Incentive Fees shall be payable to the Trading
Advisor until the Trading Advisor has again earned New Trading Profit for the
Trading Company; provided, however, that if the
Assets are reduced because of redemptions that occur at the end of, and/or
subsequent to, a calendar quarter in which the Trading Advisor experiences a
futures interest trading loss for the Trading Company, the trading loss that
must be recovered before the Trading Advisor will be deemed to experience New
Trading Profit for the Trading Company in a subsequent calendar quarter will be
equal to the amount determined by (x) dividing the Assets after such decrease by
the Assets immediately before such decrease and (y) multiplying that fraction by
the amount of the unrecovered futures interest trading loss prior to such
decrease. In the event that the Trading Advisor experiences a trading loss for
the Trading Company in more than one calendar quarter without the Trading
Company paying an intervening Incentive Fee and Assets are reduced in more than
one such calendar quarter because of redemptions, then the trading loss for each
such calendar quarter shall be adjusted in accordance with the formula described
above and such reduced amount of futures interest trading loss shall be carried
forward and used to offset subsequent futures interest trading
profits.

     

    
      	
              7.  

            	
              Term

            

    

     

    (a) This
Agreement shall continue in effect for a period of one year from the date the
Agreement was entered into unless otherwise terminated as set forth in this
Section 7. If the Agreement is not terminated upon the expiration of such
one-year period, 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.  The Trading Advisor may terminate this Agreement at the end
of the first one year period by providing prior written notice of termination to
the Trading Company at least ninety days prior to the expiration of such
one-year period.  Following the first year of this Agreement, the
Trading Advisor may terminate this Agreement at any month end by providing prior
written notice of termination to the Trading Company at least ninety days prior
to such month end. This Agreement shall automatically terminate if the Trading
Company is dissolved.

     

    (b) The
Trading Company and Trading Manager each shall have the right to terminate this
Agreement in its discretion (i) upon five days’ prior written notice to the
Trading Advisor, or (ii) at any time upon prior written notice to the Trading
Advisor upon the occurrence of any of the following events: (A) if any person
described as a “principal” of the Trading Advisor in the Offering Memoranda
ceases for any reason to be an active “principal” of the Trading Advisor; (B) if
the Trading Advisor becomes bankrupt or insolvent; (C) if the Trading Advisor is
unable to use its trading systems or methods as in effect on the date hereof and
as modified in the future for the benefit of the Trading Company; (D) if the
registration, as a commodity trading advisor (if applicable), of the Trading
Advisor with the CFTC, its membership in the NFA or its registration with the
FSA, is revoked, suspended, terminated, or not renewed, or limited or qualified
in any respect; (E) if the Trading Advisor determines that it was required to be
registered as a commodity trading advisor with the CFTC and was not properly
registered; (F) 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 interest trading systems or methods, or
its goodwill to, any individual or entity; (G) if, at any time, the Trading
Advisor violates any Trading Policy or administrative policy, except with the
prior express written consent of the Trading Manager; or (H) if the Trading
Advisor fails in a material manner to perform any of its obligations under this
Agreement.

     

    (c) The
Trading Advisor may terminate this Agreement at any time, upon thirty days’
prior written notice to the Trading Company and Trading Manager, in the event:
(A) that the Trading Manager imposes additional trading limitation(s) in the
form of one or more Trading Operations Procedures or administrative policies
that the Trading Advisor does not agree to follow in its management of the
Assets; (B) the Trading Manager objects to the Trading Advisor implementing a
proposed material change to the Trading Program and the Trading Advisor
certifies to the Trading Manager in writing that it believes such change is in
the best interests of the Trading Company; (C) the Trading Manager or the
Trading Company materially breaches this Agreement and does not correct the
breach within ten days of receipt of a written notice of such breach from the
Trading Advisor; (D) the Assets fall below $*2(after adding back trading losses) at any time;
(E) the Trading Company becomes bankrupt or insolvent, or (F) the registration
of the Trading Manager with the CFTC as a commodity pool operator or its
membership in the NFA is revoked, suspended, terminated or not renewed, or
limited or qualified in any respect.  If the Trading Manager or
Trading Company merges, consolidates or sells a substantial portion of its
assets pursuant to Section 12 of this Agreement, the Trading Advisor may
terminate this Agreement upon prior written notice to the Trading Manager and
Trading Company.

     

    (d) Except as
otherwise provided in this Agreement, any termination of this Agreement in
accordance with this Section 7 shall be without penalty or liability to any
party, on account of such termination.

     

    (e) 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 the Trading Company, the Trading Advisor shall not
be liable to the Trading Company or the Trading Manager or their partners,
directors, officers, principals, managers, members, shareholders, employees,
controlling persons or successors and assigns except that the Trading Advisor
shall be liable for acts or omissions that constitute a breach of this Agreement
or a representation, warranty or covenant herein, misconduct or negligence, or
are the result of the Trading Advisor 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 Trading Company.

     

    (b) Trading Advisor Indemnity in
Respect of Management Activities. The Trading Advisor shall indemnify,
defend and hold harmless the Trading Company and the Trading Manager, their
controlling persons, their affiliates and their respective directors, officers,
principals, managers, members, 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,
accounting and other expenses incurred in connection with, and any amounts paid
in, any litigation or other proceeding or any settlement; provided that, solely
in the case of a settlement, the Trading Advisor 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 this Agreement (except as covered by paragraph
(d) below); provided that a court of competent jurisdiction upon entry of a
final judgment (or, if no final judgment is entered, by an opinion rendered by
counsel who is approved by the Trading Company and the Trading Advisor, such
approval not to be unreasonably withheld) to the effect that the action or
inaction of such indemnified party that was the subject of the demand, claim,
lawsuit, action, or proceeding did not constitute negligence, misconduct, or a
breach of this Agreement or a representation, warranty or covenant of the
Trading Company or the Trading Manager, their controlling persons, their
affiliates and their respective directors, officers, shareholders, employees,
and controlling persons and was done in good faith.

     

    (c) Trading Company Indemnity in
Respect of Management Activities.  The Trading Company shall
indemnify, defend and hold harmless the Trading Advisor, its controlling
persons, their affiliates and their respective directors, officers, principals,
managers, members, 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, accounting
and other expenses incurred in connection with, and any amounts paid in, any
litigation or other proceeding or any settlement; provided that, solely in the
case of a settlement, the Trading Company 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 this Agreement (except as covered by paragraph (e) below);
provided that a court of competent jurisdiction upon entry of a final judgment
finds (or, if no final judgment is entered, by an opinion rendered by counsel
who is approved by the Trading Company and the Trading Advisor, such approval
not to be unreasonably withheld) to the effect that the action or inaction of
such indemnified party that was the subject of the demand, claim, lawsuit,
action, or proceeding did not constitute negligence, misconduct, or a breach of
this Agreement or a representation, warranty or covenant of the Trading Advisor,
its controlling persons, its affiliates and directors, officers, shareholders,
employees, and controlling persons and was done in good faith.

     

    (d) Trading Advisor Indemnity in
Respect of Sale of Units. The Trading Advisor shall indemnify, defend and
hold harmless the Trading Company, the Trading Manager, any selling agent, their
controlling persons and their affiliates and their respective directors,
officers, principals, managers, members, shareholders, employees 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 (including any reasonable investigatory, legal, accounting and
other expenses incurred in connection with, and any amounts paid in, any
litigation or other proceeding or any settlement; provided that, solely in the
case of a settlement, 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 losses, claims, damages, liabilities, costs,
or expenses (or action in respect thereof) arise out of, or are based upon: (i)
a breach by the Trading Advisor of any applicable laws or regulations or any
representation, warranty or agreement in this Agreement; or (ii) any materially
untrue statement or omission relating or with respect to the Trading Advisor, or
any of its principals, or their operations, trading systems, methods or
performance, which was made in the Offering Memoranda or any amendment or
supplement thereto or any other sales literature and furnished by the Trading
Advisor for inclusion therein.

     

    (e)  Trading Company Indemnity in
Respect of Sale of Units. The Trading Company shall indemnify, defend and
hold harmless the Trading Advisor its controlling persons, their affiliates and
their respective directors, officers, principals, managers, members
shareholders, employees 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 (including any reasonable investigatory,
legal, accounting and other expenses incurred in connection with, and any
amounts paid in, any litigation or other proceeding or any settlement; provided
that, solely in the case of a settlement, the Trading Company shall have
approved such settlement, and in connection with any administrative
proceedings), in respect of the offer or sale of Units, unless 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 applicable laws
or regulations or any representation, warranty or agreement in this Agreement;
or (ii) any materially untrue statement or omission relating or with respect to
the Trading Advisor, or any of its principals or their operations, trading
systems, methods or performance that was made in the Offering Memoranda or in
any other sales literature and furnished by the Trading Advisor for inclusion
therein.

     

    (f) Subject
to Section 8(a) hereof, the foregoing agreements of indemnity shall be in
addition to, and shall in no respect limit or restrict, any other remedies which
may be available to an indemnified person.

     

    (g) Promptly
after receipt by an indemnified person of notice of the commencement of any
action, claim, or proceeding to which any of the indemnities may apply, the
indemnified person will notify the indemnifying party in writing of the
commencement thereof if a claim in respect thereof is to be made against the
indemnifying party hereunder; but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability that 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 that 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 (provided the indemnified person is
so entitled) 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 clients 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 clients
(including affiliates and the stockholders, officers, directors, and employees
of the Trading Advisor and its affiliates and their families) and trading for
their own accounts. The Trading Advisor will use its best efforts to implement a
fair and consistent allocation policy that seeks to ensure that all clients are
treated equitably and positions allocated as nearly as possible in proportion to
the assets available for trading of the accounts managed or controlled by the
Trading Advisor.  Upon written request, the Trading Manager may
request a copy of the Trading Advisor’s procedures regarding the equitable
treatment of trades across accounts.  Such procedures shall be
provided to the Trading Manager within 30 days of such request by the Trading
Manager.  Except as otherwise set forth herein, the Trading Advisor
and its principals and affiliates agree to treat the Trading Company in a
fiduciary capacity to the extent recognized by applicable law, but subject to
that standard.  Under no circumstances shall the Trading Advisor by
any act or omission knowingly or intentionally favor any account advised or
managed by the Trading Advisor over the account of the Trading Company in any
way or manner. Nothing contained in this Section 9(a) shall preclude the Trading
Advisor from charging different management and/or incentive fees to its clients.
Subject to the Trading Advisor’s obligations under applicable law, the Trading
Advisor or any of its principals or affiliates shall be free to advise and
manage accounts for other clients and shall be free to trade on the basis of the
same trading systems, methods, or strategies employed by the Trading Advisor for
the account of the Trading Company, or trading systems, methods, or strategies
that are entirely independent of, or materially different from, those employed
for the account of the Trading Company, and shall be free to compete for the
same futures interests as the Trading Company or to take positions opposite to
the Trading Company, where such actions do not knowingly or intentionally prefer
any of such accounts over the account of the Trading Company on an overall
basis.

     

    (b) The
Trading Advisor shall not be restricted as to the number or nature of its
clients, except that: (i) so long as the Trading Advisor acts as a trading
advisor for the Trading Company, neither the Trading Advisor nor any of its
principals or affiliates shall knowingly hold any position or control any other
account that would cause the Trading Company, 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 other applicable law, or any
applicable rule or regulation of the CFTC or any other regulatory or self
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 that
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 or self regulatory body, exchange, or board so as to require the
significant modification of positions taken or intended for the account of the
Trading Company; provided that the Trading Advisor may modify its trading
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, (ii) the CFTC, or
(iii) any other regulatory or self regulatory body, exchange, or board, the
Trading Advisor and its principals and affiliates shall promptly liquidate
positions in all of their accounts, including the Trading Company’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 and
Warranties of the Trading Advisor. The Trading Advisor represents and
warrants to and agrees with the Trading Manager and the Trading Company as
follows:

     

    (i) It will
exercise good faith and due care in implementing the Trading Program on behalf
of the Trading Company as described in the Disclosure Information (as modified
from time to time) or any other trading programs agreed to by the Trading
Manager and the Trading Advisor.

     

    (ii) The
Trading Advisor shall follow and comply with, at all times, the Trading
Operations Procedures.

     

    (iii) The
Trading Advisor shall trade the Assets pursuant to the same trading programs
described in the Disclosure Information unless the Trading Manager and the
Trading Advisor agree otherwise.

     

    (iv) The
Trading Advisor is duly organized, validly existing and in good standing under
the laws of the state of its organization and is qualified to do business as a
foreign corporation or and is 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
power and authority to perform its obligations under this Agreement. The only
principals of the Trading Advisor are those set forth in the Offering Memoranda
and Disclosure Information (the “Trading Advisor Principals”).

     

    (v) All
information provided to the Trading Manager by the Trading Advisor specifically
relating to the Trading Advisor and the Trading Advisor Principals and trading
systems, methods and performance for inclusion in the Offering Memoranda are
accurate and complete in all material respects at each time such information is
provided. With respect to the Trading Advisor, the Trading Advisor Principals,
and its trading systems, methods and performance:  (i) the Offering
Memoranda contains all statements and information required to be included
therein under the CEAct and the rules and regulations thereunder, and (ii) the
Offering Memoranda do not contain, and will not during the term of this
Agreement contain, any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein, in the light
of the circumstances under which such statements were made, not
misleading.  Except as otherwise disclosed in the Offering Memoranda,
the actual performance of each discretionary account directed by the
Trading Advisor or any principal of the Trading Advisor, on either a composite
or a stand alone basis, as provided by the Trading Advisor to the Trading
Manager for inclusion in the Offering Memoranda, is or will be in accordance
with the then current CFTC Rules.  The information regarding the
actual performance of such accounts set forth in the Offering Memoranda has been
calculated and presented in accordance with the descriptions therein and is
complete and accurate in all material respects.

     

    (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 the Trading Advisor Principals has all federal, state
and foreign governmental, regulatory and exchange licenses and approvals and has
effected all filings and registrations with federal, state and foreign
governmental and regulatory agencies required to conduct its business and to act
as described in the Offering Memoranda or required to perform its or his
obligations under this Agreement. The Trading Advisor is authorized and
regulated in the United Kingdom by the Financial Services
Authority.

     

    (viii) The
execution and delivery of this Agreement, the incurrence of the obligations set
forth herein, the consummation of the transactions contemplated herein and in
the Offering Memoranda and the payment of the fees hereunder will not violate,
or constitute a breach of, or default under, the certificate of incorporation or
bylaws (or any other organizational documents) of the Trading Advisor or any
agreement or instrument by which it is bound or of any order, rule, law or
regulation binding on it of any court or any governmental body or administrative
agency or panel or self-regulatory organization having jurisdiction over
it.

     

    (ix) Since the
respective dates as of which information is given in the Disclosure Information,
and except as may otherwise be stated in or contemplated by the Disclosure
Information, 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 Disclosure Information there have not been and there is not
pending, or to the best of the Trading Advisor’s knowledge, threatened, any
action, suit or proceeding before or by any court or other governmental body to
which the Trading Advisor or any Trading Advisor Principal is or was a party, or
to which any of the assets of the Trading Advisor is or was subject and which
resulted in or might reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, business or prospects of the
Trading Advisor.  None of the Trading Advisor or any Trading Advisor
Principal has received any notice of an investigation by the NFA, CFTC or other
administrative agency or self-regulatory body (whether United States or foreign)
regarding noncompliance by the Trading Advisor or any of the Trading Advisor
Principals with the CEAct or any other applicable law.

     

    (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 Trading Company.

     

    (xii) Participation
by the Trading Advisor in accordance with the terms hereof and as described in
the Offering Memoranda will not violate any provisions of the Investment
Advisers Act of 1940, as amended.

     

    (xiii) Neither
the Trading Advisor nor any Trading Advisor Principal will use or distribute the
Offering Memoranda or any selling literature or engage in any selling activities
whatsoever in connection with the offering of the Units.

     

    (xiv) The
information in the Offering Memoranda about the Trading Advisor does not contain
any misleading or untrue statements of a material fact or omit to state a
material fact required to be stated therein to make the statements not
misleading.

     

    (xvi)           The
Trading Advisor is not required to register as a commodity trading advisor under
the CEAct, has made all necessary filings in connection with such exemption, and
as a result is exempt from all of the disclosure, reporting and record-keeping
requirements of the CEAct.

    

    (xvii)           The
foregoing representations and warranties shall be continuing during the term of
this Agreement and if at any time any event shall occur which could make any of
the foregoing representations or warranties inaccurate, the Trading Advisor
shall promptly notify the Trading Manager and the Trading Company of the nature
of such event.

    

    (b) Covenants of the Trading
Advisor.  The Trading Advisor covenants and agrees
that:

     

    (i) The
Trading Advisor shall 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 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 Trading Manager immediately as soon as the
Trading Advisor or any Trading Advisor Principal 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 (or which may, with the passage of time, materially affect)
the business of the Trading Advisor. The Trading Advisor shall also inform the
Trading Manager immediately if the Trading Advisor or any of its officers
becomes aware of any breach of this Agreement by the Trading
Advisor.

     

    (iii) The
Trading Advisor agrees to cooperate by providing information regarding itself
and its performance in the preparation of any amendments or supplements to the
Offering Memoranda (subject to the limitation set forth in Section 1
hereof).

     

    
      	
              11.  

            	
              Representations and
      Warranties of the Trading Company and the Trading Manager; Covenants of
      the Trading Manager.

            

    

     

    (a) The
Trading Company and the Trading Manager represent and warrant to the Trading
Advisor, as follows:

     

    (i) The
Trading Company has provided to the Trading Advisor the Offering Memoranda in
its current form. The Trading Company will ensure that the Members will not
utilize any amendment or supplement to the Offering Memoranda regarding the
Trading Advisor unless the Trading Advisor has received reasonable prior notice
of and a copy of such amendments or supplements and has approved any description
of the Trading Advisor contained therein.

     

    (ii) Each
Members’ organizational agreement provides for the subscription for and sale of
the Units in the respective Member; all material actions required to be taken by
each Member as a condition to the sale of its Units to qualified subscribers
therefor has been, or prior to each closing described in the Member’s
Confidential Private Placement Memorandum shall have been taken; and, upon
payment of the consideration therefor specified in each accepted subscription
agreement in such form as attached to the respective Member’s Confidential
Private Placement Memorandum, the Units will constitute valid interests in the
Member. Each Member is in material compliance with all laws, rules, regulations
and orders of any governmental agency or self-regulatory organization applicable
to the Member’s business and the offering, sale, issuance and distribution of
its Units.

     

    (iii) The
Trading Company is a limited liability company duly formed pursuant to its
Certificate of Formation, Operating Agreement and the Delaware Limited Liability
Company Act and is validly existing and in good standing 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 Offering Memoranda; the Trading Company 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 Trading Company’s ability to perform its
obligations hereunder.

     

    (iv) The
Trading Manager is duly formed and validly existing and in good standing as a
limited liability company under the laws of the State of Delaware and is
qualified to do business and is in good standing as a foreign entity 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 Trading Manager’s ability to perform its obligations
hereunder.

     

    (v) The
Trading Company and the Trading Manager have full power and authority under
applicable law to conduct their business and to perform their respective
obligations under this Agreement and as described in the Offering
Memoranda.

     

    (vi) As of the
date hereof, the Offering Memoranda contain all statements and information
required to be included therein by the CEAct or other applicable law and at all
times subsequent thereto up to and including each closing, the Offering
Memoranda will comply in all material respects with the requirements of the
rules of the NFA, the CEAct or other applicable laws. The Offering Memoranda as
of the initial closing (as described therein), date of issue, and at each
closing will not contain any misleading or untrue statements 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. Any supplemental sales literature,
when read in conjunction with the Offering Memoranda, will not contain any
untrue statements 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. This representation and warranty shall
not, however, apply to any statement or omission in the Offering Memoranda or
supplemental sales literature made in reliance upon information furnished by and
relating to the Trading Advisor, its trading methods or its trading
performance.

     

    (vii) Since the
respective dates as of which information is given in the Offering Memoranda,
there has not been any material adverse change in the condition, financial or
otherwise, or business of the Trading Manager or the Trading Company, whether or
not arising in the ordinary course of business.

     

    (viii) This
Agreement has been duly and validly authorized, executed and delivered by the
Trading Manager on behalf of the Trading Company and constitutes a valid,
binding and enforceable agreement of the Trading Company and the Trading Manager
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 Offering Memoranda will not violate, or constitute a breach of, or default
under, the Trading Manager’s certificate of formation or operating
agreement,  or the Trading Company’s Certificate of Formation or
Operating Agreement, or any material agreement or instrument by which either the
Trading Manager or the Trading Company, as the case may be, is bound or any
material order, rule, law or regulation applicable to the Trading Manager or the
Trading Company of any court or any governmental body or administrative agency
or panel or self-regulatory organization having jurisdiction over the Trading
Manager or the Trading Company.

     

    (x) Except as
set forth in the Offering Memoranda, there has not been in the five years
preceding the date of the Offering Memoranda and there is not pending or, to the
Trading Manager’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 Trading Manager or the Trading Company is or was a
party, or to which any of the assets of the Trading Manager or the Trading
Company is or was subject; and neither the Trading Manager nor any of the
principals of the Trading Manager (“Trading Manager Principals”) has received
any notice of an investigation by the NFA, CFTC or any other administrative or
self-regulatory organization regarding non-compliance by the Trading Manager or
the Trading Manager Principals or the Trading Company with the CEAct, the
Securities Act of 1933, as amended, or any applicable laws which are material to
an investor’s decision to invest in a Member.

     

    (xi) The
Trading Manager and the Trading Manager Principals have all federal, state and
foreign governmental, regulatory and exchange approvals and licenses, and have
effected all filings and registrations with federal, state and foreign
governmental agencies required to conduct their business and to act as described
in the Offering Memoranda 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 Trading Manager’s principals
identified in the Offering Memoranda are all of the Trading Manager
Principals.

     

    (xii) The
Trading Company is and shall remain in material compliance in all respects with
all laws, rules, regulations and orders of any government, governmental agency
or self-regulatory organization applicable to its business as described in the
Offering Memoranda and this Agreement.

     

    (xiii) The
foregoing representations and warranties shall be continuing during the term of
this Agreement and if at any time any event shall occur which could make any of
the foregoing representations or warranties inaccurate, the Trading Manager
shall promptly notify the Trading Advisor of the nature of such
event.

     

    

    (b) Covenants of the Trading
Manager. The Trading Manager covenants and

     

    agrees
that:

    (i) The
Trading Manager shall maintain all registrations and memberships necessary for
the Trading Manager to continue to act as described herein and in the Offering
Memoranda and to all times comply in all 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 Manager’s ability to act as described
herein and in the Offering Memoranda.

     

    (ii) The
Trading Manager shall inform the Trading Advisor immediately as soon as the
Trading Manager, the Trading Company or any of their principals becomes the
subject of any lawsuit, investigation, claim, or proceeding of any regulatory
authority having jurisdiction over such person or becomes a named party to any
litigation materially affecting the business of the Trading Manager or the
Trading Company. The Trading Manager shall also inform the Trading Advisor
immediately if the Trading Manager or the Trading Company or any of their
officers become aware of any material breach of this Agreement by the Trading
Manager or the Trading Company.

     

    (iii) The
Trading Company will furnish to the Trading Advisor copies of the Offering
Memoranda regarding the Trading Advisor, and all amendments and supplements
thereto, in each case as soon as available and will ensure that the Members do
not use any such amendments or supplements as to which the Trading Advisor in
writing has reasonably objected.

     

    
      	
              12.  

            	
              Merger or Transfer of
      Assets.

            

    

     

    The
Trading Manager, Trading Company or the Trading Advisor may merge or consolidate
with, or sell or otherwise transfer its business, or all or a substantial
portion of its assets, to any entity upon written notice to the other
parties.

     

    
      	
              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.

            

    

     

    Subject
to Section 12, hereof, this Agreement may not be assigned by any party hereto
without the express prior written consent of the other parties hereto (such
consent not to be unreasonably withheld or delayed); however, the Trading
Manager may assign this Agreement to any affiliate without the prior written
consent of any other party hereto.

     

    
      	
              15.  

            	
              Amendment.

            

    

     

    This
Agreement may not be amended except by the written consent of the parties
hereto.  No waiver of any provision of this Agreement shall be implied
from any course of dealings between the parties, from any failure by any party
to assert its rights hereunder or any occasion or series of
occasions.

     

    
      	
              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.

            

    

     

    (a) The
Trading Advisor shall, at the Members’ initial closing and at the request of the
Trading Manager at any monthly closing (as described in the Offering Memoranda),
provide the following:

     

    (i) To the
Trading Manager, the Trading Company and the Members, a certificate, dated the
date of any such closing and in form and substance satisfactory to such parties,
to the effect that;

     

    (A) 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; and

     

    (B) 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.

     

    (ii) To the
Trading Manager, the Trading Company and the Members, a report as of the closing
date which shall present, for the period from the date after the last day
covered by the historical performance records in the Offering Memoranda to the
latest practicable day before closing, figures which shall be a continuation of
such historical performance records and which shall certify that such figures
are, to the best of such Trading Advisor’s knowledge, accurate in all material
respects.

     

    (b) The
Trading Advisor shall, within one month following the Members’ initial closing
(as described in the Offering Memoranda), provide a legal opinion of the Trading
Advisor’s counsel in a form acceptable to the Trading Manager.

     

    (c) The
Trading Manager shall, at the Members’ initial closing and at the request of the
Trading Advisor at any closing (as described in the Offering Memoranda), provide
the following:

     

    (i) 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:

     

    (A) the
representations and warranties by the Trading Company and the Trading Manager 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;

     

    (B) no order
preventing or suspending the use of the Offering Memoranda has been issued by
the CFTC, the Securities Exchange Commission, any state securities commission,
or the NFA or other self-regulatory organization and no proceedings for that
purpose shall have been instituted or are pending or, to the knowledge of the
Trading Manager, are contemplated or threatened under the CEAct;
and

     

    (C) The
Trading Company and the Trading Manager 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.

     

    
      	
              18.  

            	
              Inconsistent
      Filings.

            

    

     

    If the
Trading Advisor intends to file, to participate in the filing of, or to publish
any description of the Trading Advisor, or of its respective principals or
trading approaches that is materially inconsistent with those in the Disclosure
Information, the Trading Advisor shall inform the Trading Manager of such
intention and shall furnish copies of all such filings or publications at least
ten Business Days prior to the date of filing or publication.

     

    
      	
              19.  

            	
              Disclosure
      Information.

            

    

     

    (a) During
the term of this Agreement, the Trading Advisor shall furnish to the Trading
Manager promptly copies of all disclosure-documents, if applicable, as filed in
final form with the CFTC, NFA or other self-regulatory organization by the
Trading Advisor, where required.  Additionally, the Trading Advisor
shall furnish to the Trading Manager copies of all disclosure-related materials
provided to prospective investors by the Trading Advisor related to the Trading
Program.  “Disclosure Information” shall include the information
described in the first and second sentences of this Section 19(a), as well as
any other information about the Trading Advisor provided by the Trading Advisor
to the Trading Manager with respective to the Trading Program.  The
Trading Advisor shall furnish to the Trading Manager copies of all
communications sent to existing or prospective investors pertaining to any material information regarding the
Trading Advisor or its trading programs/strategies that may not be included in
the Disclosure Information, including but not limited to changes in principals,
organizational structure, regulatory standing, and change in contact information
or location/address.

     

    (b) The
Trading Manager and the Trading Company will not distribute or supplement any
promotional material relating to the Trading Advisor unless the Trading Advisor
has approved reasonable prior notice of and a copy of such promotional material
and has received such material in writing.

     

    20. Track
Record.  The track record and other performance information of
the Members shall be the property of the Trading Manager and not the Trading
Advisor; provided, however, the track record and performance information may be
disseminated or used by the Trading Advisor as part of a composite of the
performance of all accounts managed by the Trading Advisor.   The
Trading Advisor agrees that the track record and other performance information
shall be deemed to be Confidential Information under this
Agreement.

     

    
      	
              21.  

            	
              Use of
      Name.

            

    

     

    (a) The
Trading Advisor hereby consents to the non-exclusive use by the Trading Company
of (a) the name “Morgan Stanley Smith Barney Augustus I, LLC”, with respect to
the Trading Company and (b) the name “Morgan Stanley Smith Barney Augustus I,
LLC” in any documentation regarding the Trading Company, only so long as the
Trading Advisor serves as a sole trading advisor to the Trading
Company.  Each of the Trading Company and the Trading Manager agree to
indemnify and hold harmless, jointly and severally, the Trading Advisor, its
partners, directors, officers, affiliates, employees and agents from and against
any and all costs, losses, claims, damages or liabilities, joint or several,
including, without limitation, attorneys' fees and disbursements, which may
arise out of the Trading Company's or the Trading Manager's misuse of the name
“Augustus” or out of any breach of, or failure to comply with, this Section
21.

     

    (b) Upon
termination of this Agreement, the Trading Company, at its expense, as promptly
as practicable:  (i) shall take all necessary action to cause the
Offering Memoranda and organizational documents of the Trading Company to be
amended in order to eliminate any reference to “Morgan Stanley Smith Barney
Augustus I, LLC” (except to the extent required by law, regulation or rule); and
(ii) shall cease to use in any other manner, including, but not limited to, use
in any supplemental sales material, the name “Augustus” or any name, mark or
logo type derived from it or similar to it (except to the extent required by
law, regulation or rule).

     

    (c) During
the term of this Agreement, each of the Trading Manager and the Trading Company
hereby consents to the use by the Trading Advisor, or any affiliate thereof, of
the Trading Manager’s and the Trading Company’s name in connection with the
marketing activities of any such person, and hereby grants each such person a
limited license to use such name for this purpose.  Such use may
include the inclusion, from time to time, of the  name on a list of
representative clients that the Trading Advisor or any affiliate may distribute
to prospective investors in funds, products or services offered by the Trading
Advisor or any affiliate thereof.

     

    
      	
              22.  

            	
              Notices.

            

    

     

    All
notices required to be delivered under this Agreement shall be in writing and
shall be effective when delivered personally on the day delivered, by facsimile
on receipt confirmation, by email followed by delivery of an original, or when
given by registered or certified mail, postage prepaid, return receipt
requested, on the second business day following the day on which it is so
mailed, 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 Trading Company:

            
	 
      	
              Morgan
      Stanley Smith Barney Augustus I, LLC

               c/o
      Demeter Management LLC

              Managed
      Futures Department

              522
      Fifth Avenue, 13th
      Floor

              New
      York, NY  10036

              Attn:  Jeremy
      Beal

              Facsimile:
      (212) 296-6868

              Email:
      Jeremy.Beal@morganstanley.com;

            
	 
      	 
      
	 
      	
              if
      to the Trading Manager:

            
	 
      	 
      
	 
      	
              Demeter
      Management LLC

            
	 
      	
              Managed
      Futures Department

              522
      Fifth Avenue, 13th
      Floor

              New
      York, NY  10036

              Attn:  Jeremy
      Beal

              Facsimile:
      (212) 296-6868

              Email:
      Jeremy.Beal@morganstanley.com;

            
	 
      	 
      
	 
      	
              With
      a copy to:

            
	 
      	 
      
	 
      	
              Timothy
      P. Selby

              Alston
      & Bird LLP

              90
      Park Avenue

              New
      York, NY 10016

              Facsimile:
      (212) 922-3894

              Email:
      timothy.selby@alston.com

            
	 
      	 
      
	 
      	
              if
      to the Trading Advisor:

               

            
	 
      	
              Augustus
      Asset Managers Limited

              12
      St. James’s Place

              London

              2W1A
      1NX

              Attn:
      Legal Department

              Facsimile:  44
      (0) 20 7499 9114

              Email:

               

            
	 
      	 
      
	 
      	
              With
      a copy to:

            
	 
      	
              Augustus
      Asset Managers Limited

              12
      St. James’s Place

              London

              2W1A
      1NX

              Attn:
      Michael Allen

              Facsimile:  44
      (0) 20 7499 9114

              Email:
      michael.allen@augustus.co.uk

               

            

    

    
      	
              23.  

            	
              Continuing Nature of
      Representations Warranties and Covenants:
  Survival.

            

    

     

    All
representations, warranties and covenants contained in this Agreement shall be
continuing during the term of this Agreement and the provisions of this
Agreement shall survive the termination of this Agreement with respect to any
matter arising while this Agreement was in effect.  Each party hereby
agrees that as of the date of this Agreement it is, and during its term shall
be, in compliance with its representations, warranties and covenants herein
contained.  In addition, if at any time any event occurs which would
make any of such representations, warranties or covenants not true, the affected
party will use its best efforts to promptly notify the other parties of such
fact.

     

    
      	
              24.  

            	
              Third-Party
      Beneficiaries.

            

    

     

    Except
for each of the Members who shall be a third-party beneficiary of the applicable
provisions of this Agreement, this Agreement is not intended and shall not
convey any rights to a party to this Agreement.

     

    
      	
              25.  

            	
              Governing
      Law.

            

    

     

    This
Agreement shall be governed by, and construed in accordance with, the laws 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.

     

    
      	
              26.  

            	
              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, except that Trading Advisor may seek a declaratory judgment with
respect to the indemnification provisions of this Agreement.

     

    
      	
              27.  

            	
              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.

     

    
      	
              28.  

            	
              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 no other person shall have any right
or obligation under this Agreement.

     

    
      	
              29.  

            	
              Counterparts.

            

    

     

    This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

     

    
      	
              30.  

            	
              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 of the right to insist upon strict
adherence.

     

    

      

    

      
      1
Confidential material redacted and filed separately with the
Commission.

    

      
      2
Confidential material redacted and filed separately with the
Commission.

    

    
      
        
          A-

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Agreement has been executed for and on behalf of the
undersigned as of the day and year first above written.

     

    
      	 
      	
              MORGAN
      STANLEY SMITH BARNEY AUGUSTUS I,
      LLC

              by
      Demeter Management LLC

              Trading
      Manager

            
	 
      	
              By                                                      

              Walter Davis

              Chairman and
      President

            
	 
      	 
      
	 
      	
              DEMETER
      MANAGEMENT LLC

               

            
	 
      	
              By                                                      

              Walter Davis

              Chairman and
      President

            
	 
      	 
      
	 
      	
              AUGUSTUS
      ASSET MANAGERS LIMITED 

              By                                                      

              Name:

              Title:

            

    

    

    
      
        
          A-

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Annex
I

    

    

    *3

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    EXHIBIT
A

     

    Morgan
Stanley Smith Barney Managed Futures

    MSC Fund Operations Trading
Operations Procedures

    9/22/09

    

    Following
is a list of abbreviations used in this document:

    
      	
              ·  

            	
               “Fund(s)”
      refers to Morgan Stanley Smith Barney Managed Futures Funds that utilize
      MS&Co/MSIP/MSCG as a clearing commodity
  broker.

            

    

    
      	
              ·  

            	
              “Futures”
      is used to identify exchange traded futures, or forward contracts, and
      options on the same, that are cleared through a clearing
      house.

            

    

    
      	
              ·  

            	
              “FX”
      is used to identify non-exchange traded forward currency contracts, and
      options on the same, which are settled directly between the principals of
      the trades.

            

    

    
      	
              ·  

            	
              “General
      Partner” shall mean Demeter Management
LLC.

            

    

    
      	
              ·  

            	
              “Trading
      Manager” shall mean Demeter Management
LLC.

            

    

    
      	
              ·  

            	
               “MF”
      is Morgan Stanley Smith Barney Managed
Futures.

            

    

    
      	
              ·  

            	
              “MSC”
      is MS&Co. and/or MSIP and/or MSCG (the Clearing Commodity Broker or FX
      Counterparty, as appropriate).

            

    

    
      	
              ·  

            	
              “MS&Co”
      is Morgan Stanley & Co., Inc. a subsidiary of Morgan Stanley (the
      Clearing Commodity Broker or FX (Non-Options) Counterparty as
      appropriate).

            

    

    
      	
              ·  

            	
              “MSIP”
      is Morgan Stanley & Co. International plc a subsidiary of Morgan
      Stanley (a sub Clearing Commodity Broker).  MSIP clears LME
      transactions on behalf of the
Funds.

            

    

    
      	
              ·  

            	
              “MSCG”
      is Morgan Stanley Capital Group a subsidiary of Morgan Stanley (the FX
      Options Counterparty).

            

    

    

    CONTACT
INFORMATION:

    

    Following
are the Morgan Stanley departments involved in servicing the Funds and the
corresponding contact information.

    

    
      	
              Abbreviation

            	
              Department

            	
              Primary
      Contact

            	
              Telephone

            	
              E-mail

            
	
              Futures
      Desk

            	
              MSC
      Futures Trading Desk

            	
              Brian
      Jackman

              James
      Stedman

            	
              +1
      212 761-1782

              +1
      212 761-1093

            	
              Brian.Jackman@morganstanley.com

              James.Stedman@morganstanley.com

            
	
              Futures
      Ops

            	
              MSC
      Futures Operations

            	
              Steve
      Bucello

               

            	
              +1
      212 276-0477

               

            	
              Steve.Bucello@morganstanley.com

               

            
	
              FX
      Desk

            	
              MSC
      Foreign Exchange Trading Desk

            	
              Richard
      Condon

              Julia
      Clancy Sands

              John
      Silver

            	
              +1
      212 761-2700

              +1
      212 761-2700

              +1
      212 761-2700

            	
              Richard.Condon@morganstanley.com

              Julia.Sands@morganstanley.com

              John.Silver@morganstanley.com

            
	
              FX
      Ops

            	
              MSC
      Foreign Exchange Operations

            	
              John
      Fusco

            	
              +1
      718 754-4868

            	
              John.Fusco@morganstanley.com

            
	
              MF
      Accounting

            	
              MF
      Accounting

            	
              Joe
      Tromello

              Kevin
      Scully

            	
              +1
      212 276-5184

              +1
      212 276-5121

            	
              Joe.Tromello@morganstanley.com

              Kevin.Scully@morganstanley.com

            
	
              MF
      Ops

            	
              MF
      Trading Operations

            	
              Laura
      Finne

               

            	
              +1
      212 296-6813

            	
              Laura.Finne@morganstaley.com

            
	
              MF
      IM

            	
              MF
      Investment Management

            	
              Patrick
      Egan

              Alper
      Daglioglu

            	
              +1
      212 296-6808

              +1
      212 296-6807

            	
              Patrick.Egan@morganstanley.com

              Alper.Daglioglu@morganstanley.com

            
	
              MF
      Strat Plan

            	
              MF
      Strategic Planning

            	
              Chris
      Barry

            	
              +1
      212 296-6812

            	
              Chris.Barry@morganstanley.com

            

    

    

    FUND
ACCOUNTS:

    Account
Configuration

    
      	
              ·  

            	
              Futures and Futures Options
      Trading - For each CTA trading program three Fund trading accounts
      will be assigned.  A MS&Co segregated account, prefix
      052.  A MS&Co secured account, prefix
      05A.   A MSIP non-regulated (by the CFTC) account, prefix
      045.

            

    

    
      	
              ·  

            	
              FX (Non-Options) Trading
      - One Fund account for each CTA trading program will be assigned at
      MS&Co, prefix 058.

            

    

    
      	
              ·  

            	
              FX Options Trading – One
      Fund account for each CTA trading program will be assigned at MSCG (if
      needed), prefix 057.

            

    

    
      	
              ·  

            	
              Excess and FX Custody Accounts
      – For each CTA trading program two Fund accounts will be set up at
      MS&Co.  One account will be designated as a custody account
      for MS&Co FX.  MF Ops will maintain equity in the custody
      account sufficient to cover margin requirements of the FX trading
      account.  The second account will contain the balance of excess
      equity that is not required in the custody and futures trading
      accounts.

            

    

    Statements

    
      	
              ·  

            	
              Futures – The CTA should
      contact Futures Ops regarding access to Fund futures account
      statements.

            

    

    
      	
              ·  

            	
              FX – The CTA should
      contact FX Ops regarding access to Fund FX account
    statements.

            

    

    
      	
              ·  

            	
              Excess and Custody – The
      CTA should contact MF Ops regarding access to the Fund account statements
      at MS&Co.

            

    

    

    FX
TRADING:

    FX
Order Execution

    
      	
              ·  

            	
              FX
      trading of the Funds must be executed through the MSC FX Desk, unless the
      General Partner and/or Trading Manager otherwise agrees in a form
      acceptable to the General Partner and/or Trading
  Manager.

            

    

    
      	
              ·  

            	
              When
      trading FX Options, all premiums (on outright trades and cross currency
      trades) must be booked at the clearing broker so that the premium is
      stated in USD.

            

    

    EFP
Order Execution

    
      	
              ·  

            	
              The
      CTA may utilize the FX Desk to execute EFP transactions. The futures leg
      of an EFP will be subject to the futures brokerage fee.  The CTA
      should contact the FX Desk for information on EFP trade execution
      procedures.

            

    

    Foreign
Currency Conversions

    
      	
              ·  

            	
              The
      CTA is responsible for conversion into US dollars of Fund foreign currency
      balances created as a result of futures and/or FX trading.  The
      CTA, at its own discretion, should place conversion orders directly to the
      FX desk.

            

    

    

    FUTURES
TRADING:

    Order
Execution Service

    
      	
              ·  

            	
              The
      MSC Futures Desk can provide the CTA with order execution
      facilities.  The CTA should contact the Futures Desk for
      information on trade execution
procedures.

            

    

    “Give
Up” Order Execution

    
      	
              ·  

            	
              The
      CTA shall ensure that a “give-up” execution agreement is in place prior to
      the execution of any trade outside of MSC’s execution facilities in
      accordance with this Agreement or as otherwise provided in writing to the
      CTA by the General Partner and/or Trading
  Manager.

            

    

    
      	
              ·  

            	
              On
      exchanges allowing “give up” execution, the CTA may have orders executed
      away from MSC and give up trades to MSC for clearing.  The CTA
      should contact Futures Ops for information on trade “give up”
      procedures.  The CTA should ensure that executing brokers give
      trades up on a timely basis.  The CTA should ensure that
      executing brokers make timely payment on price adjustments, when
      applicable.   For futures trades at exchanges where give up
      execution is not allowed, the CTA must use the execution facilities
      provided by the Clearing Commodity
Broker.

            

    

     “Give
Up” Agreements

    
      	
              ·  

            	
              The
      four party FIA/FOA uniform “give up” agreement is the acceptable form for
      futures “give ups”.  The trader version FIA/FOA EFP agreement is
      the acceptable form for EFP “give ups”.  The CTA should send
      agreements that have been signed by both the CTA and executing broker to
      MF Ops, attention Laura Finne , Morgan Stanley Smith Barney, Managed
      Futures, 522 Fifth Avenue, 13th Floor, New York, NY 10036 or through EGUS
      (FIA Electronic Give Up System).

            

    

    “Give
Up” Execution Payment

    
      	
              ·  

            	
              For
      Chicago Markets (CBT, CME and affiliated exchange divisions), payment for
      floor brokerage will be handled via the ATOM system or current
      exchange/clearing payment method at its standard rate to the party from
      whom it directly receives the trade.  Payment of an execution
      service fee (“Give Up Fee”) will be handled exclusively through the GAINS
      system or current exchange/clearing payment method at a rate not to exceed
      the amount permitted by the General Partner and/or Trading Manager from
      time to time (the “Execution Allowance”).  The “Execution
      Allowance” shall be based on the General Partner’s and/or Trading
      Manager’s assessment for prevailing competitive rates for “Give Up
      Fees”.

            

    

    
      	
              ·  

            	
              For
      New York Markets (NYBOT, NYMEX, NYFE and affiliated exchange divisions),
      payment of “Give Up Fees” will be handled exclusively through the ATOM
      system or current exchange/ clearing payment method at a rate not to
      exceed the “Execution Allowance” to the party from whom it directly
      receives the trade.

            

    

    
      	
              ·  

            	
              For
      all other markets, MSC or its carrying broker, when utilized by MSC, will
      handle payment of “Give Up Fees” to the party from whom it directly
      receives the trade at a rate not to exceed the “Execution
      Allowance”.  Bills for “Give Up Fees” should be sent directly to
      MSC or its applicable carrying
broker.

            

    

    
      	
              ·  

            	
              Futures
      Ops will handle payment of “Give Up
Fees”.

            

    

    

    

    

    

    

    ACCOUNT
MAINTENANCE:

    Trade
Allocations

    
      	
              ·  

            	
              The
      CTA is responsible for determining the trade allocation procedure for Fund
      trading accounts.  The CTA should ensure that the procedure was
      followed correctly, and that trades are booked accordingly in Fund
      accounts.

            

    

    Trade
Reporting; (Futures)

    
      	
              ·  

            	
              The
      CTA is responsible for reporting all trades to Futures Ops on a timely
      basis to facilitate clearing and reduce operational risk.  The
      CTA should contact Futures Ops for additional
  information.

            

    

    Daily
Trade Checkout

    
      	
              ·  

            	
              The
      CTA is responsible for daily, end of trading day, checkout of all trades
      (including currency conversion trades) with Futures and FX
      Ops.  The CTA should contact Futures and FX Ops to determine
      specific checkout procedures.

            

    

    Daily
Statement Reconciliation

    
      	
              ·  

            	
              The
      CTA is responsible for daily statement trade activity and position
      balancing with FX and Futures Operations.  The CTA should
      contact FX and Futures Ops to determine specific balancing
      procedures.

            

    

    
      	
              ·  

            	
              The
      CTA should provide a daily, trade reconciliation for each Fund account to
      MF Ops, by 10:00 a.m. EST/EDT.  Reconciliation reports can be
      emailed to mf.ops@morganstanley.com and should specify trades to be added
      or canceled in each account, with a valuation versus the current
      settlement price of the product, and any pending cash adjustments due from
      executing brokers or for bookkeeping corrections.  (MF Ops
      provides MF Accounting/the Administrator with adjusting information for
      the calculation of NAV.)  Please contact MF Ops if you have any
      questions regarding this procedure.

            

    

    
      	
              ·  

            	
              The
      CTA should notify MF Ops of any incorrect settlement prices it becomes
      aware of with regard to the MSC account statements of a
    Fund.

            

    

    Monitoring
of Delivery Periods and Option Expirations

    
      	
              ·  

            	
              The
      CTA is responsible for monitoring delivery periods (first notice dates and
      last trade dates), option expirations (option expiration and last trade
      dates), and forward settlement and/or maturity
  dates.

            

    

    
      	
              ·  

            	
              The
      CTA should take appropriate actions to ensure that futures contracts do
      not result in delivery.

            

    

    
      	
              ·  

            	
              The
      CTA should ensure that their intentions regarding any open option
      positions, at the time of expiration, have been communicated appropriately
      to the Futures or FX Ops areas.  Contact Futures and FX Ops for
      specific communication procedures.

            

    

    Margin
Maintenance and Cash Transaction (Journal) Reconciliation

    
      	
              ·  

            	
              MF
      Ops is responsible for balancing of all journal entries in all Fund
      accounts and for ensuring the requisite corrective action is taken for
      each reconciling item.  Please note, the CTA is responsible for
      reconciling all cash entries resulting from trading activity, such as APS
      residuals and FX settlements.

            

    

    
      	
              ·  

            	
              MF
      Ops is responsible for the authorization of Fund margin transfers between
      MSC and MS&Co accounts for maintaining equity (and/or collateral) in
      amounts sufficient to meet Fund margin requirements in the MSC Futures
      accounts and the FX custody
accounts.

            

    

    

    

    

    

    

    TRADING LEVEL
NOTIFICATION:

    
      	
              ·  

            	
              For
      new trading allocations, MF IM will provide notification to the CTA of
      trading authorization and the trading commencement date, along with
      notification of the initial trading
level.

            

    

    
      	
              ·  

            	
              Thereafter,
      notification of estimated monthly net additions/withdrawals will be
      distributed by MF Strat Plan.  On the third to last business day
      of each month a preliminary estimate will be provided.  On the
      first business day of each month a final estimate will be
      given.  Any material adjustment (1% of account equity) from the
      final estimate to the actual will be provided.  Notification
      will be made via fax or email and the CTA will be asked to acknowledge
      receipt via fax or email.  Questions regarding this procedure
      can be directed to MF Strat Plan.

            

    

    
      	
              ·  

            	
              Subsequent
      to a Fund’s monthly closing, actual additions and withdrawals will be
      processed by MF Accounting/the Administrator via journal entry in the Fund
      “excess” account at MS&Co.

            

    

    
      	
              ·  

            	
              Any
      other trading level/asset allocation changes will be communicated in
      writing from MF IM or MF Strat
Plan.

            

    

     
 

    FUND
ACCOUNTING:

    Net
Asset Value Calculation

    
      	
              ·  

            	
              MF
      Accounting/the Administrator is responsible for determination of daily NAV
      estimates for the Funds.

            

    

    
      	
              ·  

            	
              MF
      Accounting/the Administrator will determine the actual month end NAV of a
      Fund during the monthly closing
process.

            

    

    Brokerage
Commission and Transaction Fees

    
      	
              ·  

            	
              Brokerage
      commissions for each Fund will be charged in a manner consistent with the
      prospectus or offering memorandum.  The CTA should contact MF
      Accounting/the Administrator for additional
  information.

            

    

    Fund
Fee Processing

    
      	
              ·  

            	
              Fund
      interest and all Fund fees, exclusive of brokerage commissions and
      transaction fees, will be processed in a Funds “excess” account at
      MS&Co.

            

    

    
      	
              ·  

            	
              MF
      Accounting/the Administrator will determine fees due to the CTA during the
      monthly closing process and notify the CTA of the fees via the monthly
      performance tables.  The CTA should provide contact information
      regarding fees to MF Accounting/the
  Administrator.

            

    

    
      	
              ·  

            	
              MF
      Accounting/the Administrator will make payment of fees to the CTA via wire
      transfer.  The CTA should provide wire instructions to MF
      Accounting/the Administrator.

            

    

    

    ERROR
POLICY:

    
      	
              ·  

            	
              The
      provisions of Section 2(d) of this Agreement shall be interpreted to mean
      that the benefit of profitable trading errors made by the CTA when trading
      on behalf of the Funds shall be awarded to the Funds, whereas the
      detriment of unprofitable trading errors made by the CTA when trading on
      behalf of the Funds must be borne by the
CTA.

            

    

    

    

    BORROWING:

    
      	
              ·  

            	
              The
      CTA shall not use borrowed money to leverage any trades, unless otherwise
      approved by the General Partner and/or Trading
  Manager.

            

    

    

      

    

      
      3
Confidential material redacted and filed separately with the
Commission.

    

    
      
        
          A-

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
B

     

    COMMODITY
TRADING AUTHORITY

     

    Dear Augustus Asset Managers
Limited:

     

    Morgan
Stanley Smith Barney
Augustus I, LLC  (the “Trading Company”) and Demeter Management
LLC, the Trading Company’s Trading Manager (the “Trading Manager”) do hereby
make, constitute and appoint you as the Trading Company’s attorney-in-fact to
buy and sell futures and forward contracts through such futures commission
merchants as shall be agreed on by you and the Trading Manager on behalf of the
Trading Company, pursuant to the trading program identified in the Agreement
among the Trading Company, the Trading Manger and you as of the ____ day of
_________, 2009, as amended or supplemented, and in accordance with the terms
and conditions of said Agreement.

     

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

     

    
      	 
      	
              Very
      truly yours,

               

            
	 
      	
              MORGAN
      STANLEY SMITH BARNEY AUGUSTUS I,
      LLC

              by
      Demeter Management LLC

              Trading
      Manager

            
	 
      	
              By                                                      

              Walter Davis

              Chairman and
      President

            
	 
      	 
      
	 
      	
              DEMETER
      MANAGEMENT LLC

               

            
	 
      	
              By                                                      

              Walter Davis

              Chairman and
      President

            

    

    

     

    
      
        
          B-

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C

     

    FUTURES
INTERSTS TRADED

     

    

     

    CFTC Approved or
Certified
futures or options on futures products on the following
futures exchanges:

     

    Chicago
Mercantile Exchange (CME) / Chicago Board of Trade (CBOT)

     

    Bourse
de Montreal (MSE)

     

    EUREX

     

    London
International Financial Futures Exchange (LIFFE)

     

    Sydney
Futures Exchange (SFE)

     

    Tokyo
Stock Exchange (TSE )

     

    Hong
Kong Futures Exchange (HKFE)

     

    

     

    Currencies

     

    AUD,
CAD, CHF, EUR, GBP, JPY, NZD, USD, DKK, NOK, SEK, MXN, CLP, HKD, PLN, CZK, SKK,
HUF, ZAR, KRW, INR, SGD, TWD, ARS, BRL, TRL, RUB, IDR, ILS, CNY, MYR, PHP, ISK,
COP, SAR, PEN

     

    

    

    
      
        
          C-

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