| Agreements | 3. Agreements:
a. Limited Partnership Agreement:
The General Partner administers the business and affairs of the
Partnership including selecting one or more advisors to make
trading decisions for the Partnership. The Partnership pays the
General Partner a monthly administrative fee in return for its
services to the Partnership equal to 1/24 of 2% (1% per year) of
month-end Net Assets per Class, for each outstanding Class, of the
Partnership. Prior to October 1, 2014, the Partnership paid
the General Partner a monthly administrative fee equal to 1/24 of
1% (0.5% per year) of month-end Net Assets per Class, for each
outstanding Class, of the Partnership. Month-end Net Assets per
Class, for the purpose of calculating administrative fees are Net
Assets per Class, as defined in the Limited Partnership Agreement,
prior to the reduction of the current month’s advisory fee,
profit share allocation, the administrative fee and any redemptions
or distributions as of the end of such month. This fee may be
increased or decreased at the discretion of the General
Partner.
b. Management Agreement:
The Advisor or one of its affiliates, all of which are controlled
by Scott C. Kimple, has served as the Partnership’s commodity
trading advisor since inception. The General Partner and the
Partnership have entered into a management agreement (the
“Management Agreement”) with the Advisor. As
compensation for services, the Partnership pays the Advisor a
monthly advisory fee equal to 1/12 of 2% (2% per year) of month-end
Net Assets per Class, for each outstanding Class, managed by the
Advisor. Month-end Net Assets per Class, for each outstanding
Class, for the purpose of calculating advisory fees are Net Assets
per Class, for each outstanding Class, as defined in the Limited
Partnership Agreement, prior to the reduction of the current
month’s advisory fee, profit share allocation, the
administrative fee and any redemptions or distributions as of the
end of such month. The Management Agreement may be terminated upon
notice by any party thereunder.
In addition, the Special Limited Partner receives a quarterly
profit share allocation to its capital account in the Partnership
in the form of Redeemable Units of the Partnership, the value of
which shall be equal to 20% of new trading profits, as defined in
the Limited Partnership Agreement, earned for each outstanding
Class by the Advisor on behalf of the Partnership during each
calendar quarter and are issued as Special Limited Partner unit
equivalents. The Special Limited Partner will not receive a profit
share allocation until the Advisor recovers the net loss incurred
and earns additional new trading profits for the Partnership.
In allocating substantially all of the assets of the Partnership to
the Advisor, the General Partner considers the Advisor’s past
performance, trading style, volatility of the markets traded and
fee requirements. The General Partner may modify or terminate the
allocation of assets to the Advisor at any time.
c. Customer Agreement/Selling Agent
Agreement:
Prior to and during part of the third quarter of 2013, the
Partnership was party to a Customer Agreement with CGM (the
“CGM Customer Agreement”). During the third quarter of
2013, the Partnership entered into a Customer Agreement with
MS&Co. (the “MS&Co. Customer Agreement”) and
during the fourth quarter of 2013, the Partnership entered into a
Selling Agent Agreement with Morgan Stanley Wealth Management (the
“Selling Agreement”). Effective April 1, 2015, the
Partnership entered into the Wells Fargo Customer Agreement,
continuing services agreements with each of Morgan Stanley Wealth
Management and Credit Suisse Securities (USA) LLC and a selling
agreement with Robert W. Baird & Co. Incorporated
(“Baird”). The Partnership has terminated the CGM
Customer Agreement and the MS&Co. Customer Agreement.
Under the CGM Customer Agreement, the Partnership paid CGM a
monthly brokerage fee equal to (i) 5/16 of 1% (3.75% per year)
of month-end Net Assets for Class A Redeemable Units and
(ii) 1/12 of 1.50% (1.50% per year) of month-end Net Assets
for Class D Redeemable Units, in each case in lieu of brokerage
fees on a per trade basis. Month-end Net Assets, for the purpose of
calculating brokerage fees were Net Assets, as defined in the
Limited Partnership Agreement, prior to the reduction of the
current month’s brokerage fees, the profit share allocation
accrual, the monthly management fee, the administrative fee and
other expenses and any redemptions or distributions as of the end
of such month. The Partnership paid for exchange, service,
clearing, user, give-up, floor brokerage and National Futures
Association (“NFA”) fees (collectively, the “CGM
clearing fees”) directly. During the term of the CGM Customer
Agreement, all of the Partnership’s assets were deposited in
the Partnership’s account at CGM. The Partnership’s
cash was deposited by CGM in segregated bank accounts to the extent
required by Commodity Futures Trading Commission
(“CFTC”) regulations. CGM paid the Partnership interest
on 80% of the average daily equity maintained in cash in the
Partnership’s brokerage account at a 30-day
Under the MS&Co. Customer Agreement, the Partnership paid
trading fees for the clearing and, where applicable, execution of
transactions, as well as exchange, clearing, user, give-up, floor
brokerage and NFA fees (collectively, the “MS&Co.
clearing fees”) directly. During the term of the MS&Co.
Customer Agreement, all of the Partnership’s assets were
deposited in the Partnership’s account at MS&Co. The
Partnership’s cash was deposited by MS&Co. in segregated
bank accounts to the extent required by CFTC regulations. At
December 31, 2014, the amount of cash held for margin
requirements was $18,102,669. MS&Co. paid the Partnership
interest on 80% of the average daily equity maintained in cash in
the Partnership’s brokerage account at the rate equal to the
monthly average of the 4-week U.S. Treasury bill discount rate.
Under the Wells Fargo Customer Agreement, the Partnership pays
trading fees for the clearing and, where applicable, execution of
transactions, as well as exchange, clearing, user, give-up, floor
brokerage and NFA fees (collectively, the “Wells Fargo
clearing fees,” and together with the CGM clearing fees and
the MS&Co. clearing fees, the “clearing fees”)
directly. Clearing fees will be paid for the life of the
Partnership, although the rate at which such fees are paid may be
changed. The portion of the Partnership’s cash held at Wells
Fargo is in segregated bank accounts to the extent required by CFTC
regulations. At December 31, 2015 the amount of cash held for
margin requirements was $8,235,238. Wells Fargo has agreed to pay
the Partnership interest on 90% of the average daily equity
maintained in cash in the Partnership’s segregated account at
the rate equal to the monthly average of the 90-day Treasury bill
rate. The Wells Fargo Customer Agreement may generally be
terminated upon notice by either party.
Under the Selling Agreement with Morgan Stanley Wealth Management,
the Partnership paid Morgan Stanley Wealth Management a monthly
ongoing selling agent fee equal to (i) 1/6 of 1% (2% per year)
of month-end Net Assets for Class A Redeemable Units and
(ii) 1/12 of 0.75% (0.75% per year) of month-end Net Assets
for Class D Redeemable Units. For the period from April 1,
2014 to September 30, 2014, the Partnership paid Morgan
Stanley Wealth Management a monthly ongoing selling agent fee equal
to (i) 5/24 of 1% (2.5% per year) of month-end Net Assets for
Class A Redeemable Units and (ii) 1/12 of 1.25% (1.25%
per year) of month-end Net Assets for Class D Redeemable Units.
Prior to April 1, 2014, the Partnership paid Morgan Stanley
Wealth Management a monthly ongoing selling agent fee equal to
(i) 5/16 of 1% (3.75% per year) of month-end Net Assets for
Class A Redeemable Units and (ii) 1/12 of 1.50% (1.50%
per year) of month-end Net Assets for Class D Redeemable Units. The
selling agent fee received by Morgan Stanley Wealth Management was
shared with the properly registered/licensed financial advisors of
Morgan Stanley Wealth Management who sold Redeemable
Units. Month-end Net Assets, for the purpose of calculating ongoing
selling agent fees were Net Assets, as defined in the Limited
Partnership Agreement, prior to the reduction of the current
month’s ongoing selling agent fee, management fee, profit
share allocation accrual, the administrative fee and other expenses
and any redemptions or distributions as of the end of such
month.
Under the continuing services agreement with Morgan Stanley Wealth
Management, the Partnership pays Morgan Stanley Wealth Management a
monthly fee in respect of certain partnership interests which have
been sold to certain individuals and entities with an ongoing
relationship with Morgan Stanley Wealth Management (the “MS
Interests”) equal to (i) 1/12 of 2.00% (2.00% per year)
of month-end Net Assets for Class A Redeemable Units and
(ii) 1/12 of 0.75% (0.75% per year) of month-end Net Assets
for Class D Redeemable Units. The fees paid to Morgan Stanley
Wealth Management shall continue only for as long as the MS
Interests remain outstanding.
Under the continuing services agreement with Credit Suisse
Securities (USA) LLC, the Partnership pays Credit Suisse Securities
(USA) LLC a monthly fee in respect of certain partnership interests
which have been sold to certain individuals and entities with an
ongoing relationship with Credit Suisse Securities (USA) LLC (the
“CS Interests”) equal to (i) 1/12 of 2.00% (2.00% per
year) of month-end Net Assets for Class A Redeemable Units and (ii)
1/12 of 0.75% (0.75% per year) of month-end Net Assets for Class D
Redeemable Units. The fees paid to Credit Suisse Securities (USA)
LLC shall continue only for as long as the CS Interests remain
outstanding.
Under the selling agreement with Baird, the Partnership pays Baird
a monthly ongoing selling agent fee equal to (i) 1/12 of 2.00%
(2.00% per year) of month-end Net Assets for Class A Redeemable
Units and (ii) 1/12 of 0.75% (0.75% per year) of month-end Net
Assets for Class D Redeemable Units. With respect to current
Limited Partners that are customers of Baird, the Partnership shall
pay Baird a monthly ongoing maintenance fee equal to (i) 1/12 of
2.00% (2.00% per year) of month-end Net Assets for Class A
Redeemable Units and (ii) 1/12 of 0.75% (0.75% per year) of
month-end Net Assets for Class D Redeemable Units for services
provided to such current Limited Partners.
Certain prior year amounts have been reclassified to conform to
current year presentation. Amounts reported separately on the
Statements of Income and Expenses as ongoing selling agent fees and
clearing fees were previously combined and presented as brokerage
fees. |
