As Filed with the Securities and Exchange Commission on Novmeber 24, 2003
Registration No. 333-59976
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE
[State of organization]
6289 51-0380494
(Primary SIC Number) (IRS EIN)
5916 N. 300 West
Fremont, Indiana 46737
Telephone: (260) 833-1306
(address and telephone number of registrant's principal executive offices)
Mr. Michael Pacult
5916 N. 300 West
Fremont, Indiana 46737
Telephone: (260) 833-1306; Facsimile (260) 833-4411
(Name, address and telephone number of agent for service of process)
Copies to:
William Sumner Scott, Esquire
The Scott Law Firm, P. A.
940 Northeast 79th Street, Suite A
Miami, FL 33138
Telephone (305) 754-3603; Facsimile (305) 754-2668
If any of the securities being offered on the Form are to be offered on a
continuous basis pursuant to Rule 415 under the Securities Act of 1933,
check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission acting
pursuant to said section 8(a), may determine.
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Atlas Futures Fund, Limited Partnership
Prospectus to Offer
$15,000,000 of Units of Limited Partnership Interest
To Be Sold at the Net Asset Value per Unit
Computed At the End of Each Month During the Offering
The Offering
The partnership is a registered commodity pool that trades futures, options
on futures, and forward contracts.
The partnership is managed by two general partners, Ashley Capital
Management, Inc. and Mr. Michael P. Pacult. We refer to them collectively as
"the general partner." The general partner is authorized by the partnership
agreement to employ, establish the terms of employment, and terminate
investment managers called commodity trading advisors and clearing brokers
called futures commission merchants.
Futures Investment Company, an affiliated broker dealer, will use its best
efforts to sell the partnership interests. Neither it nor anyone else has
the obligation to purchase or support the price of the partnership interests.
You must purchase at least $25,000 in partnership interests, though the
general partner may reduce this to no less than $5,000. You have the right
to rescind your subscription for five days after it is submitted. After five
days, your subscription is irrevocable and you may only withdraw from the
partnership after twelve months by redeeming your partnership interests.
There is no redemption fee. See the redemption, lock-in and allocation of
expenses provisions in this prospectus.
All subscriptions received will be placed in an escrow account maintained by
the general partner until we accept them. Interest accrued on your
subscription amount will be used to buy additional partnership interests for
you. Partnership interests are offered for sale at their net asset value as
of the close of business on the last day of the month in which the
subscription is received and become effective on the open of business on the
first day of the subsequent month.
The Risks - These securities are highly speculative and involve a high degree
of risk. Consider carefully the risk factors below and the complete
description beginning on page 5 of this prospectus.
* Our business is the speculative trading in futures, commodity options and
unregulated currency contracts selected by registered commodity trading
advisors.
* This partnership pays substantial commission and other costs. There is no
guarantee that you will receive a return on your investment.
* To receive your investment back after one year, the partnership must
generate a return of 14.62%.
* Transfer of your partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests exists and none is expected to develop.
* This partnership will not make distributions. To receive a return of your
investment, you must use our redemption procedure.
* Although you will not receive distributions, you must pay annual Federal
and state income taxes on your share of any profits, if any, earned by this
partnership.
* The general partner and affiliates have conflicts of interest with regard
to the management of this partnership.
You are required to understand fully the terms of this investment.
Therefore, you are encouraged to discuss this investment with your
independent financial and tax advisers.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission or agency, nor have
any of them confirmed or passed upon the accuracy or adequacy of this
supplement to prospectus. Any representation to the contrary is a criminal
offense.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR
ACCURACY OF THIS SUPPLEMENT TO THE DISCLOSURE DOCUMENT.
Price to Public Sales Commissions Proceeds to Partnership
Per Limited Net Asset Value 6% of Net Asset Value Net Asset Value
Total Maximum* $15,000,000 $428,589 $6,714,556
A maximum of $15,000,000 in units of limited partnership interest may be
sold, of which $7,856,855 has already been sold, as of September 30, 2003;
and, the partnership has broken escrow and has commenced trading. The
balance, reflected in the above table, is offered pursuant to this prospectus
to also be used for trading.
FUTURES INVESTMENT COMPANY
5916 N. 300 West - Fremont, Indiana 46737
Telephone: (260) 833-1306
Best Efforts Sales Agent/Broker-Dealer
Commodity Futures Trading Commission - Risk Disclosure Statement
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS
GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE
POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION,
RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR
PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE
POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS
TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT
CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT
PAGE 5 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT
IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 12.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE,
BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY
STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK
FACTORS OF THIS INVESTMENT, AT PAGE 5.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES
OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED
STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE
SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE
POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY
BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR
MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL
MAY BE EFFECTED.
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Table of Contents
Commodity Futures Trading Commission - Risk Disclosure Statement i
Table Of Contents ii
Notice To All Purchasers v
Specific Notices vi
Notice To California Investors vi
Notice To Michigan Investors vi
Notice To Oregon Investors vi
Notice To Tennessee Investors vi
Notice To Texas Investors vi
Notice To Foreign Investors vi
Summary Of The Offering 1
The Partnership 1
Description Of Securities Offered For Sale 1
Plan For Sale Of Partnership Interests And Use Of Escrow 1
Subscription Procedure 1
Who Will Benefit From An Investment In The Partnership 1
Business Objectives And Expenses 1
Business Objectives And Expenses 2
Summary Risk Factors 2
Charges To The Partnership 2
Use Of Proceeds 2
Selection Of Commodity Trading Advisor And Allocation Of Equity 2
Federal Income Tax Aspects 2
Redemptions 2
Diagram Of Partnership Structure & Commissions Atlas Futures Fund, Limited
Partnership 4
The Risks You Face 5
We must pay substantial charges, which may limit your ability to receive a
return on your investment. 5
You may not transfer your partnership interests and must rely on our
redemption procedures to receive your investment back. 5
Your right of redemption is limited. 5
The partnership depends upon Mr. Pacult, and his absence could cause the
partnership to cease operations. 5
General partner and commodity trading advisor will serve other businesses and
may not have adequate time to devote to the partnership. 5
There are conflicts of interest in the partnership structure which may limit
our profits. 6
You will be taxed on profits regardless of whether they are distributed. 6
You will have to pay taxes on profits in a current year which may be lost in
future years. 6
If the general partner selects a new trading advisor, it may not be as
profitable as the one replaced, and the new advisor will not be responsible
for recouping any previous losses. 6
The general partner may change the commodity trading advisor and its
allocation of equity without notice. 6
You will not participate in management and may not contest the business
decisions of the general partner. 6
Commodity futures trading is speculative. 6
During partnership trading, a small price movement can lead to large losses.
6
The general partner does not control the trading advisor or its methods and
may not be able to prevent large losses. 6
The partnership may be unable to execute a trade before large losses are
incurred due to market illiquidity. 7
Changes in trading equity may adversely affect performance. 7
Failure of commodity brokers or banks could result in loss of assets. 7
When trading in foreign exchanges, if the creditworthiness of the other
parties is not maintained, we may lose the value of our positions in those
markets. 7
Options trading is highly risky and requires less equity to secure a trade,
thus providing greater potential for loss. 7
If the price of a contract changes dramatically, we may not be able to exit
the position without sustaining substantial loss due to government imposed
price limits. 8
We may not be able to compete with others with greater resources. 8
Resignation of Mr. Pacult as a general partner and subsequent failure of
ashley to maintain its net worth may cause suspension of trading or taxation
as a corporation. 8
The general partner will not advise you, and you must rely upon your own
counsel before investing in the partnership. 8
The partnership is not covered by the Investment Company Act of 1940. 9
Possibility of audit - you may be subject to audit and penalties. 9
General partner may settle irs claim not in your best interest. 9
You may be subject to back taxes and penalties. 9
The general partner may raise the incentive fee to 27% without prior notice
to you. 9
Conflicts Of Interest 9
General partner, the commodity trading advisor, the introducing broker and
their principals may preferentially trade for themselves and others. 9
Possible retention of voting control by the general partner may limit your
ability to control issues. 9
The general partner is not likely to resign, even if it would be in your best
interest. 9
Partnership fees may be higher than they would be if they were negotiated.
10
Our profitability may be limited due to competition among the traders for
similar trades and their unaccountability for previous losses. 10
Your ability to redeem your partnership interests may be lessened due to the
nature of the general partner's compensation. 10
The commodity trading advisor may engage in high risk trading to generate
fees. 10
Mr. Pacult has sole control over the time he will allocate to the management
of the affairs of the partnership. 10
No resolution of conflicts procedures 10
Interests Of Named Experts And Counsel 11
Management's Discussion And Analysis 11
The Partnership 11
The General Partners 11
Experience 11
Authority 11
Partnership Books And Records 12
The Commodity Trading Advisor 12
The Advisory Contract 12
Business Objective And Expenses 12
Explanatory Notes: 13
Securities Offered 13
You, The Investor: 13
Your Subscription Agreement And Check: 14
Management's Discussion 14
Description Of Intended Operations 14
Risk Control 14
Trading Risks 14
Fiduciary Responsibility Of The General Partner 15
Indemnification 15
Provisions Of Limited Partnership Agreement 15
Provisions Of Law 15
Provisions Of Federal And State Securities Laws 16
Provisions Of The Securities Act Of 1933 And Nasaa Guidelines 16
Provisions Of The Clearing Agreement 16
Other Indemnification Provisions 16
Relationship With The Futures Commission Merchant And Theselling Agent 16
Fixed Commissions Are Competitive 16
Relationship With The Commodity Trading Advisor 17
The Commodity Trading Advisor Will Trade For Other Accounts 17
Non-Disclosure Of The Commodity Trading Advisor's Methods 17
Charges To The Partnership 17
Compensation Of General Partner 17
Compensation Of The Commodity Trading Advisor 17
Restrictions On Management Fees 18
Fees To Futures Commission Merchant And Compensation Of General Partner 18
Fee Paid By Partnership To The Corporate General Partner 18
Brokerage Fees Paid By The Corporate General Partner To The Futures
Commission Merchant 18
Continuing Service Fees 18
Miscellaneous Fees To Futures Commission Merchant 18
Rights Of General Partner 18
Other Expenses 19
Charges To The Partnership 19
Investor Suitability 20
Potential Advantages 20
Equity Management 20
Investment Diversification 20
Limited Liability 20
Administrative Convenience 20
Access To The Commodity Trading Advisor 20
Use Of Proceeds 20
Determination Of The Offering Price 21
The General Partner 21
Identification 21
Michael P. Pacult 21
Ownership In Commodity Trading Advisor And Futures Commission Merchant 22
Trading By The General Partner; Interest In The Pool 22
Regulatory Notice 22
Trading Management 22
No Affiliation With Commodity Trading Advisor 22
Rights Of The General Partner With Respect To Commodity Trading Advisor
Selection And Allocation Of Equity 22
Performance Record Of The Partnership 23
The Commodity Trading Advisor - Clarke Capital Management, Inc. 23
Business Background 23
Description Of Trading Program 24
Performance Record Of Other Programs Sponsored By The General Partner 27
Performance Record Of Bromwell Financial Fund, Limited Partnership 27
The Futures Commission Merchant 28
Federal Income Tax Aspects 29
Scope Of Tax Presentation 29
No Legal Opinion As To Certain Material Tax Aspects 29
Partnership Tax Status And Net Worth Of The General Partner 29
No Irs Ruling 30
Tax Opinion 30
Passive Loss And Unrelated Business Income Taxes Rules 30
Basis Loss Limitation 31
At-Risk Limitation 31
Income And Losses From Passive Activities 31
Allocation Of Profits And Losses 31
Taxation Of Futures And Forward Transactions 31
Section 988 Foreign Currency Transactions 32
Capital Gain And Loss Provisions 32
Business For Profit 32
Self-Employment Income And Tax 32
Individual Alternative Minimum Tax 32
Interest Related To Tax Exempt Obligations 33
Not A Tax Shelter 33
Taxation Of Foreign Partners 33
Partnership Entity-Audit Provisions-Penalties 33
Employee Benefit, Retirement Plans And IRA's 33
The Limited Partnership Agreement 34
Formation Of The Partnership 34
Units Of Partnership Interests 34
Management Of Partnership Affairs 34
General Prohibitions 34
Additional Offerings 35
Partnership Accounting, Reports, And Distributions 35
Federal Tax Allocations 35
Transfer Of Partnership Interests Only With Consent Of The General Partner
35
Termination Of The Partnership 35
Meetings 35
Redemptions 36
Plan For Sale Of Partnership Interests 36
The Selling Agent 36
Escrow 36
Subscription Procedure 37
Subscription Amounts 37
Revocation And Acceptance Of Subscription 37
Net Worth Tests 37
Investor Warranties 37
Legal Matters 38
Litigation And Claims 38
Legal Opinion 40
Experts 40
Additional Information 40
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Notice To All Purchasers
Until 90 days after the date hereof, all dealers effecting transactions in
the Units, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters or best efforts sellers.
The selling agent and additional sellers must also deliver any supplemented
or amended prospectus issued by the partnership.
No dealer, salesman, officer, employee or agent of the partnership or the
general partner and or any other person has been authorized, in connection
with this offering, to give any information or to make any representations
other than those contained in this prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized by the partnership, the general partner, the selling agents, or
any other person connected with this offering. This prospectus speaks as of
the date of its issuance. Neither the delivery of this prospectus nor any
sale made hereunder shall, under any circumstances, create any implication
that the information contained herein is correct as of any time subsequent to
the date hereof or that there has been no change in the affairs of the
partnership since the date of this prospectus. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any Units by
anyone in any state in which such offer, solicitation, or purchase is not
authorized or in which the person making the offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such
offer or solicitation.
The regulations of the Commodity Futures Trading Commission require that no
commodity pool operator may solicit, accept or receive funds, securities or
other property from a prospective participant in a commodity pool without
first delivering a disclosure document (this "prospectus") to such
prospective participant. The general partner must furnish all partners
annual and monthly reports complying with Commodity Futures Trading
Commission and National Futures Association requirements. The annual reports
will contain certified and audited, and the monthly reports unaudited,
financial information in regard to the operation of the partnership and its
general partner.
Atlas Futures Fund, Limited Partnership, is not a mutual fund and is not
subject to regulation under the Investment Company Act of 1940. Consequently,
investors will not have the benefit of the protective provisions of such
legislation.
Investors must rely on their own examination of the issuer and the terms of
the offering, including the merits and risks involved. Investors should be
aware that they will be required to bear the financial risks of this
investment for an indefinite period of time. The Units may be sold,
assigned, transferred or otherwise disposed of only in accordance with the
terms of the limited partnership agreement, which includes the required
consent of the general partner. No public market exists or is expected to
develop for the Units and, consequently, prospective investors who desire
liquidity should not purchase the Units. Each investor (purchaser of Units)
must meet the following suitability standards: (i) an investor must have (a)
had an annual gross income in excess of $45,000 in the last calendar year and
reasonably expects to have gross income in excess of $45,000 for the current
year together with a net worth, exclusive of principal residence, home
furnishings, and automobile of $45,000; or (b) the investor has a net worth
(exclusive of principal residence, home furnishings and automobile) in excess
of $150,000; and (ii) the investor is represented by a purchaser
representative or otherwise demonstrates to the general partner sufficient
knowledge to accept the risks of this investment. A general partnership or
other entity making investment or the donor of a, qualified pension, profit-
sharing or Keogh employee plan, must meet the financial suitability
requirements prescribed for natural persons. "Accredited investors", as that
term is defined under regulation D of the act, who have a net worth in excess
of $1,000,000 are deemed to have such knowledge and experience in financial
business matters as to be capable of evaluating the merits and risks of the
proposed investment and, at the time of purchase of a $25,000 Unit, can
afford a complete loss.
The act and the securities laws of certain states grant purchasers of
securities sold, either in violation of the registration or qualification
provisions of such laws or within certain time limitations, the right to
rescind their purchase of such securities and to receive back their
consideration paid, plus interest. Many of these laws which grant the right
of rescission also provide that suits for such violations must be brought
within a specified time, usually one year from discovery of facts
constituting such violation. Should any investor institute an action on the
theory that the offering conducted as described herein was required to be
registered or qualified, the partnership will contend that the contents of
this prospectus provided notice of sufficient facts to commence the time from
which an action for rescission should have been brought. Also, should any
investor contend the offer was not qualified for presentation or the investor
not suitable to make such investment, the general partner will plead reliance
upon the information supplied by the investor in the subscription documents
and the information supplied by the general partner to the investor in this
prospectus.
Specific Notices
Notice to California Investors
California residents are required to have a liquid net worth of $225,000
(exclusive of home, furnishings and automobiles) or an annual income of
$60,000 and a liquid net worth of $60,000 (computed similarly as above) to be
able to purchase partnership interests in this commodity pool. The transfer
of the limited partnership interests offered and sold pursuant to this
offering can not be resold or transferred without permission of the general
partner and fulfillment of other terms and conditions contained in the
partnership agreement. Accordingly, (a) the limited partnership, as issuer
of a security upon which a restriction on transfer has been imposed must
cause a copy of rule 260.141.11 to be delivered to each issuee or transferee
of such security at the time the certificate evidencing the security is
delivered to the issuee or transferee; and, (b) it is unlawful for the holder
of any such security to consummate a sale or transfer of such security, or
any interest therein, without the prior written consent of the commissioner
(until this condition is removed pursuant to section 260.141.12 of these
rules), except as provided in the code. The certificates, whether upon
initial issuance or upon any transfer, shall bear on their face, in capital
letters of 10-point size, as follows: "it is unlawful to consummate a sale
or transfer of this security, or any interest therein, or to receive any
consideration therefore, without the prior written consent of the
commissioner of corporations of the state of California, except as permitted
in the commissioner's rules".
Notice to Michigan Investors
Once the partnership interests are qualified for sale in Michigan, Investors
who are residents of Michigan will be required to have a net worth of
$225,000 or net worth of $60,000 and taxable annual income of $60,000 to be
eligible to invest in this offering of partnership interests in a commodity
pool. Net worth in all cases must be calculated exclusive of home, home
furnishings and automobiles. In addition, no more than ten percent (10%) of
the investor's net worth may be invested in this limited partnership.
Notice to Oregon Investors
Investors who are residents of Oregon are required to have a net worth of
$225,000 or net worth of $60,000 and annual income of $60,000 to be eligible
to invest in this offering of partnership interests in this commodity pool.
Notice to Tennessee Investors
Once the partnership interests are qualified for sale in Tennessee, investors
who are residents in Tennessee will be required to have a liquid net worth of
$225,000 (exclusive of home, furnishings and automobiles) or an annual income
of $60,000 and a liquid net worth of $60,000 (computed similarly as above) to
be able to purchase partnership interests in this commodity pool.
Notice to Texas Investors
Texas residents are required to have a liquid net worth of $225,000
(exclusive of home, furnishings and automobiles) or an annual income of
$60,000 and a liquid net worth of $60,000 (computed similarly as above) to be
able to purchase partnership interests in this commodity pool.
Notice to foreign investors
The securities have been registered with the United States Securities and
Exchange Commission and several selected states. However, the securities may
not be offered, sold, renounced or transferred, directly or indirectly, in
the United States of America, its territories, possessions, and all areas
subject to its jurisdiction ("United States" or in Canada (collectively,
"North America"), or to or for the benefit of any person who is a national
citizen or a resident or normally a resident thereof, the estates of such a
person or any corporation or other entity created or organized under any law
of the United states or Canada or any political subdivision thereof
(collectively referred to as "North American persons") unless (i) the
securities are duly registered under the applicable state act, or (ii) an
exemption from registration under the applicable state act and the company
has received an opinion of counsel to such effect reasonably satisfactory to
it, or (iii) such securities are sold on foreign exchange in accordance with
procedures approved by such foreign stock exchange.
Summary of the Offering
This summary is to assist your understanding of the offer. To be certain you
have a full understanding of the risks of this investment, you must carefully
review the entire document, including the exhibits.
The Partnership
Atlas Futures Fund, Limited Partnership:
* is a Delaware limited partnership organized on January 12, 1998
* maintains its main business office at 5916 N. 300 West, Fremont, Indiana
46737, (219) 833-1306 with duplicate copies of its financial records kept
with James Hepner, CPA, 1824 N. Normandy, Chicago, IL 60635, (773) 804-0074
* is operated pursuant to a limited partnership agreement which is included
as Exhibit A
* is managed and controlled by Ashley Capital Management, Inc., a Delaware
corporation, and Michael P. Pacult, who we collectively refer to as the
general partner.
The general partner employs independent registered trading managers called
commodity trading advisors to select trades for the partnership
Description of Securities Offered for Sale
By our previous prospectus and supplements, we sold a total of $7,856,855 of
partnership interests at a value per unit that was initially established by
the general partner at $1,000. We are currently offering an additional
$7,143,145, to bring the total offered since the commencement of sales to
$15,000,000. The balance of the interests will be sold at the partnership's
net asset value per partnership interest on the close of business on the last
day of the month in which the subscription agreement is received.
Plan For Sale of Partnership Interests And Use of Escrow
All sales will be made through a broker dealer that will use its best
efforts, which means it will try, but not guarantee, to sell all the
partnership interests. To have good funds available on the last day of the
month when your subscription will be accepted, the corporate general partner
will maintain an escrow account at Star Financial Bank, Angola, IN to hold
your subscription from the date of submission to the date you become a
partner.
Subscription Procedure
To purchase partnership interests, you must:
* complete and execute a subscription agreement (Exhibit D), and deliver
your executed subscription documents and check for your investment, which
should be made payable to "Escrow Account for Atlas Futures Fund, LP"
* pay for at least $25,000 in partnership interests, though the general
partner may reduce this amount to not less than $5,000.
And you must have the higher of:
* the minimum net worth and income provided in the Notice to Residents of
the State of your residence if it is listed at the front of this prospectus
* or, either of the following:
* a minimum net worth, exclusive of your home, home furnishings and
automobiles, of $150,000, or
* a minimum annual gross income of $45,000 and a minimum net worth of
$45,000, both exclusive of your home, home furnishings and automobiles.
The State where you live may impose a higher net worth and income requirement
although it is not listed in the front of this prospectus.
Who Will Benefit From An Investment In The Partnership
You are likely to benefit from an investment in the partnership if you want
to diversify your portfolio and if you have investment money available that
you can afford to lose without adverse consequences to your ability to
support your family and your lifestyle. This investment presents the
opportunity to participate in markets which are typically not represented in
most investors' portfolios and which can be profitable in both rising and
falling markets.
However, if you cannot afford the risk of losing your entire investment in
this partnership, you should not purchase these partnership interests.
Business Objectives and Expenses
We are organized to be a commodity pool to engage in the speculative trading
of:
* futures and forward contracts, which are instruments designed to permit
producers to hedge or investors to speculate in various interest rates,
commodities, currencies, stock indices and other financial instruments
* options on futures and forward contracts, which give the purchaser the
right to acquire or sell a given contract at a specified time at a specified
price, and
* other financial instruments.
We do not anticipate you will receive distributions and cannot guarantee that
we will meet our objectives or avoid substantial losses.
Business Objectives and Expenses
We are subject to substantial charges. To return after one year an initial
investment at $1,810.52 per unit of partnership interest, we must earn a
profit of 14.62%, or $264.70 per partnership interest. Although you will not
receive distributions, you will pay Federal, state and local taxes upon the
profits earned by the partnership, if any.
Summary Risk Factors
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests only if you can afford to
lose your entire investment. For a complete description of the risks of an
investment in the partnership, see the Risk Factors section beginning on page
1.
* Our business is the speculative trading in futures and forward contracts,
and options on those contracts, selected by a registered commodity trading
advisor. This trading is highly leveraged and takes place in very volatile
markets.
* Past results of the commodity trading advisor and the general partner do
not guarantee future results.
* This partnership pays substantial fixed management fees and commission
costs. There is no guarantee that you will receive a return on your
investment.
* Transfer of your partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests exists and none is expected to develop.
* This partnership will not make distributions. To receive a return on
your investment, you must use our redemption procedure.
* Although you will not receive distributions, you must pay Federal and
state income taxes on your share of any profits earned by this partnership.
* The general partner and affiliates have conflicts of interest with
regard to the management of this partnership. Specifically, the general
partner is affiliated with the selling agent, and no due diligence will be
performed.
* The general partner has limited experience in the management of commodity
pools.
Charges To The Partnership
The following table identifies who is paid by the partnership, what they do
for the partnership, and their rate of compensation:
<Table>
Entity Nature of Service Amount of Compensation
The general partner
(Ashley Capital Management, Inc. Manages the partnership Retention of the difference between the 11%
and Mr. Michael P. Pacult) commission and the payments of continuing
service compensation to selling brokers
and the brokerage commissions and fees to
the futures commission merchant to clear
trades.
The commodity trading advisor Makes trades for the partnership 25% quarterly incentive fee on all new net
(Clarke Capital Management, Inc.) profits it has generated (this includes
all profits generated during the quarter,
adjusted for changes in trading equity and
losses in previous quarters)
The corporate general partner Negotiates and pays trading costs; assumes 11% annual charge, paid monthly, on the
(Ashley Capital Management, Inc.) credit risk of the partnership to the assets on deposit with the futures futures
commission merchant commission merchant.
If money remains after payment of clearing
costs to the futures commission merchant,
4% is paid to Futures Investment Company as
a continuing service fee for maintaining
investment in the partnership
The futures commission merchant Accepts trades from the advisor, clears the From its 11%, the corporate general
(Citigroup Global Markets, Inc.) trades; holds the partnership's trading partner pays the futures commission
equity merchant for the per round turn
commissions incurred by the trading
advisor.
The selling agent Solicits investment in the partnership You pay a 6% selling commission in addition
(Futures Investment Company as a to the cost of the partnership interests
National Association of Securities when your purchase is accepted.
Dealers registered broker/dealer)
Lawyers and Accountants Continuing legal and accounting work The annual accounting and legal costs are
(The Scott Law Firm, P.A., estimated to be $18,000 and $5,000,
Frank L. Sassetti & Co., respectively.
James D. Hepner & Co.)
</Table>
Use Of Proceeds
The partnership has paid $78,556 for organizational and offering expenses.
Upon the sale of additional partnership interests and the lapse of twelve
months from the date of each investor's investment, we will charge each new
limited partner their allocated portion of the previously paid expenses to
reimburse the prior partners. This will be done as follows:
The incoming partners' subscriptions, less commissions, will be divided by
the amount of the total subscriptions, less commissions, made by both the
incoming and the prior partners to obtain the percentage of the costs to be
paid by all partners. This percentage will be multiplied by the organization
cost to produce the dollar amount to be deducted from the subscription of the
incoming partners. The cash produced by that deduction will be added to the
net asset value of the partnership. This will result in an increase in the
net asset value for all partnership interests previously sold. The cash
subscription amount remaining for each incoming partner will be used to
purchase partnership interests at the increased net asset value. The
incoming partners will join with the previously admitted partners to share in
the increase of net asset value that results from the admission of future
partners until either the maximum number of partnership interests are sold or
the offering terminates.
As of September 30, 2003, prior partners paid 1.52% of their total investment
in the partnership for offering expenses. Should the maximum of $15,000,000
in total partnership interests be sold, every partner will have been
allocated approximately 0.54% of their total investment to pay for offering
expenses.
The general partner will apply all partnership assets not allocated to pay
expenses toward trading commodities and cash reserves.
Selection Of Commodity Trading Advisor And Allocation Of Equity
The general partner has selected Clarke Capital Management, Inc. to serve as
commodity trading advisor to the partnership. The trading advisor is solely
responsible for making trades, and neither the general partner nor you will
have notice or the opportunity to approve the trades made. The advisor is
expected to make short sales on behalf of the partnership. The general
partner, without prior notice to you, may terminate or add trading advisors,
or change the amount of equity allocated to any advisor.
Federal Income Tax Aspects
Although you will not be paid distributions, you will have to pay income
taxes on profits and interest, if any.
Redemptions
You may request the general partner to accept the surrender of your
partnership interests for cash. The general partner will try to comply with
all redemption requests, but may not be able to do so because of insufficient
liquid assets. No redemptions will be made during the first 12 months of
your investment. There will be no charge for redemptions. See, The Limited
Partnership Agreement, Redemptions.
[The balance of this page has been intentionally left blank.]
Diagram of Partnership Structure & Commissions
Atlas Futures Fund, Limited Partnership
Please see the previous table under Charges to the Partnership for a
description of the below parties.
[Diagram omitted]
The Risks You Face
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests only if you can afford to
lose your entire investment. All of the following risks, except payment of
fixed expenses, are present without regard to the amount of partnership
interests sold.
We must pay substantial charges, which may limit your ability to receive a
return on your investment.
We must pay substantial charges, which must be paid before you will realize a
profit. They are:
* fixed brokerage commissions of 11% per year upon the assets on deposit
with the futures commission merchant that includes yearly continuing service
fees of 4% to the selling agent
* a sales commission of 6% to the selling agent
* yearly expenses estimated at $23,000, of which $18,000 is paid for
accounting and audit services and $5,000 is paid for legal services
* variable operating expenses such as incentive fees to the commodity
trading advisor, telephone, postage, and office supplies, and
* extra-ordinary expenses such as claims and defense of claims from brokers,
partners, and other parties.
The incentive fees are determined on a quarterly basis and are paid to the
commodity trading advisor. We may be subject to substantial incentive fees
in the initial quarters of any given year which will not be refunded, even if
we experience subsequent losses which produce a net loss for that year. See
Charges to the Partnership.
You may not transfer your partnership interests and must rely on our
redemption procedures to receive your investment back.
You can assign or transfer your partnership interests only with the consent
of the general partner, which will be granted only to immediate members of
the family, upon death of the owner or other limited circumstances. See The
Limited Partnership Agreement, Transfer Of Units Only With Consent Of The
General Partner and the Limited Partnership Agreement (Exhibit A).
Therefore, you must rely on our redemption procedures to receive your initial
investment adjusted to reflect profits, payment of expenses, and losses. See
The Limited Partnership Agreement, Redemptions.
Your right of redemption is limited.
Our redemption procedures provide:
* the redemption amount will be based upon the net asset value of the
partnership interests as calculated at the end of the month in which the
redemption request is received
* it must be received no less than 10 business days prior to the redemption
effective date and be approved by the general partner, and
* it may not be granted if we do not have enough liquid assets.
Subject to the foregoing limitations, the general partner attempts to grant
all redemption requests within twenty days after the last day of the month in
which the redemption request was received. You may be prevented from
redeeming your partnership interests before they are significantly devalued.
See The Limited Partnership Agreement, Exhibit A, Redemptions.
Further, substantial redemption requests could adversely affect us by:
* the liquidation of positions too rapidly or on unfavorable terms which
prevent us from satisfaction of all redemption requests, or
* the reduction of our available trading equity at a time when we have an
opportunity to earn substantial profit.
The partnership depends upon Mr. Pacult, and his absence could cause the
partnership to cease operations.
You will be relying entirely on the ability of the general partner to select
and monitor the commodity trading advisor selected for the partnership. Mr.
Pacult is the individual general partner and the sole principal and officer
of the corporate general partner. If Mr. Pacult becomes unable to perform
his duties, we could be required to cease operations and trading until a
replacement for him is found.
General partner and commodity trading advisor will serve other businesses and
may not have adequate time to devote to the partnership.
The individual general partner currently manages other commodity pools and
both general partners expect to manage additional pools in the future that
may use the commodity trading advisor. Thus, they may use trading methods
similar to ours. They may also negotiate better terms for clearing and other
services. The commodity trading advisor currently manages other commodity
accounts and may manage new accounts, including personal accounts and other
commodity pools. Although the commodity trading advisor intends to use
similar trading methods for all accounts it manages, it may vary those
methods. We cannot guarantee our trading results will be similar to or
better than any of the trading advisor's other accounts. Our business could
be adversely affected by the failure of either Mr. Pacult, who is the
individual general partner and also the sole principal of the corporate
general partner, or the trading advisor to devote sufficient time to the
partnership affairs. See Risk Factors, Trading Management, and The Commodity
Trading Advisor.
There are conflicts of interest in the partnership structure which may limit
our profits.
Before investing in this partnership, you must consider the actual and
potential conflicts of interest that exist in our structure and operation.
Specifically, Mr. Pacult is also a principal and 50% owner of Futures
Investment Company, the selling agent. Therefore, the general partner will
probably not replace Futures Investment Company because as the principal
selling agent it is paid a 6% selling commission.
In addition, because Futures Investment Company is the principal selling
agent and is affiliated with the general partner, no independent due
diligence of this offering will be conducted for your protection. See Risk
Factors, Conflicts of Interest, and the Limited Partnership Agreement
(Exhibit A).
You will be taxed on profits regardless of whether they are distributed.
We do not intend to make cash distributions from profits. Regardless of
whether distributions have been made, if we realize profits for a fiscal
year, you will pay taxes.
You will have to pay taxes on profits in a current year which may be lost in
future years.
We might sustain losses that offset our profits after the end of the year.
So you might never receive a distribution equal to your share of our prior
year's taxable income. See Federal Income Tax Aspects and The Limited
Partnership Agreement (Exhibit A).
If the general partner selects a new trading advisor, it may not be as
profitable as the one replaced, and the new advisor will not be responsible
for recouping any previous losses.
We rely upon a single commodity trading advisor to generate profits pursuant
to an Advisory Contract and Power of Attorney (Exhibit F). Either the
general partner or the trading advisor may terminate the relationship at any
time. If this happens, or if the trading advisor becomes unable to serve us
for any other reason, the general partner would have to find one or more
alternate trading advisors. We cannot guarantee that any alternate trading
advisor will trade as profitably as the original trading advisor, or that it
would be retained on terms which are as favorable. Also, any new trading
advisor will not be obligated to recoup losses, if any, incurred by the prior
trading advisor before it is paid incentive fees.
The general partner may change the commodity trading advisor and its
allocation of equity without notice.
Without prior notice to you, the general partner may change the commodity
trading advisor and the amount of equity allocated to it at any time, for any
reason.
You will not participate in management and may not contest the business
decisions of the general partner.
You may not manage or conduct our business in any way or you would be deemed
a general partner, which is not allowed by the Limited Partnership Agreement
(Exhibit A). Accordingly, you are bound by the business decisions of the
general partner.
Commodity futures trading is speculative.
Commodity futures, forward, and option contract prices are highly volatile.
Specifically:
* price movements are influenced by such unpredictable variables as: changes
in supply and demand; weather; agricultural trade, fiscal, monetary and
exchange control programs and policies of governments; national and
international political and economic events; and, changes in interest rates,
governments, exchanges, and other market authorities that intervene to
influence prices
* even if the analysis of the fundamental conditions by a commodity trading
advisor is correct, prices still may not react as predicted
* it is possible for most of our open positions to be unprofitable at the
same time
* price changes may reach a limit upon which trading rules require a
suspension of trading for a specified period of time. It is possible for
these limits to be reached in the same direction for successive days. This
may prevent us from exiting a position, and when the market reopens, we could
suffer a substantial loss on the position.
* losses are not limited to the margin allocated to hold the position and
may exceed the total equity in our account.
During partnership trading, a small price movement can lead to large losses.
A small amount of money, called margin, must be deposited to hold or short a
contract relative to its value. The margin amount is typically between 3%
and 20%. This permits a large percentage gain or loss relative to the margin
deposit. For example, if at the time of purchase, 5% of the futures contract
price is deposited as margin, a 5% decrease in the position's value will
cause a loss of all the equity allocated to the trade, which could equal the
entire value of the account. The losses could be substantially more than the
margin deposited and the total value of the account.
The general partner does not control the trading advisor or its methods and
may not be able to prevent large losses.
The commodity trading advisor enters trades on our behalf directly with the
futures commission merchant. The general partner does not know the trades
before they are made, nor does it know the trading advisor's methods, the
number of contracts bought or sold, or the margin required. The trading
advisor will not notify the general partner of any modifications, additions
or deletions to its trading methods and money management principles. We may
suddenly suffer large losses before the general partner knows remedial action
must be taken.
The partnership may be unable to execute a trade before large losses are
incurred due to market illiquidity.
It is not always possible to execute a buy or sell order. Such illiquidity
can be caused by:
* a lack of interest in the contract caused by market conditions which
produce no persons willing to buy or sell, or
* the suspension of trading which may occur because the price limit for a
contract has been reached.
Most United States commodity exchanges limit price movement in a single
direction by rules referred to as price limits. Once these limits have been
reached, no trades may be executed at prices beyond the limits for a
specified amount of time, usually until the next trading day. However, given
sufficient price movement the following day, price limits may be imposed
again. Accordingly, price limits may be in effect for protracted time
periods. No trading may be made in the direction of the price movement while
the limit is in place. The frequency of the imposition of price limits or
the length of time they will be in effect cannot be predicted. This causes
illiquidity and exposure to substantial losses. These losses could exceed the
total equity in our account.
Changes in trading equity may adversely affect performance.
Commodity trading advisors often are unable to adjust to changes in the
amount of money they manage. This is because:
* the larger amount of equity under management requires larger trades to be
made, which may be more difficult to execute
* there are legal limits called position limits upon the number of positions
that may be taken on a particular commodity, and
* it may be more difficult to scale in positions, which is when a trading
advisor takes positions at different prices at different times and then
allocates those positions on a ratable basis when a change in its allocated
equity occurs.
See Appendix I for the full definitions of position limits and scale in
positions.
The commodity trading advisor will not limit the total equity it accepts and
may suffer losses which cause a withdrawal of the equity it manages. A
commodity trading advisor's rate of return tends to decrease as the amount of
equity under management increases.
Failure of commodity brokers or banks could result in loss of assets.
If the futures commission merchant or other entity with which our money is on
deposit becomes bankrupt, we might only recover some, if any, of the equity
in our account. The deposits in our bank accounts will be insured for only
$100,000 and payment on insured deposits may be delayed.
When trading in foreign exchanges, if the creditworthiness of the other
parties is not maintained, we may lose the value of our positions in those
markets.
Trading commodities involves entering a contract, or option to contract, for
the delivery of goods or money at a future date. The value of the contract
or option depends directly upon the creditworthiness of the parties. The
commodity trading advisor trades commodities on United States commodity
exchanges, foreign commodity exchanges, and the inter-bank currency markets.
The commodity exchange contracts and options traded on United States
exchanges are guaranteed by the members' credit. Contracts and options upon
foreign commodity exchanges and the inter-bank currency markets are usually
not regulated by specific laws and are backed only by the parties to the
contracts. It is possible for a price movement in a particular contract or
option to be large enough to destroy the creditworthiness of
* the contracts and options issued by a particular party, or
* all of the contracts and options of an entire market.
In that situation, we could lose the entire value of a position with little
recourse to regain any of its value.
Options trading is highly risky and requires less equity to secure a trade,
thus providing greater potential for loss.
We expect to trade options, both puts and calls. After a position is taken,
a liquid market may not exist for any particular commodity option or at any
particular time. In an illiquid market, we may not be able to buy or sell to
offset, or liquidate, the positions we have taken.
Options trading allows us to trade with less equity on deposit. Accordingly,
the risk of loss of the entire account is great.
If the price of a contract changes dramatically, we may not be able to exit
the position without sustaining substantial loss due to government imposed
price limits.
The Commodity Futures Trading Commission and the United States commodity
exchanges have established limits referred to as Speculative Position Limits
or Position Limits. These are different from the price limits described
before. They are limits on the maximum net long or net short futures or
options positions which any person or group of persons may own, hold, or
control in futures contracts. The positions taken among all commodity
accounts owned, controlled or managed by a trading advisor and its principals
are combined for position limit purposes. Thus, a trading advisor may not be
able to hold sufficient positions for us to maximize the return on a
particular trade because it may be taking similar positions for others.
We may not be able to compete with others with greater resources.
Commodity futures trading is highly competitive. We compete with others who
may have
* greater experience
* more extensive information about developments affecting the futures
markets
* more sophisticated means of analyzing and interpreting the futures
markets, and
* greater financial resources.
Those with greater experience and financial resources have a better chance at
trading profitably. For instance, we will not maintain a warehouse to take
delivery of commodities and will not have a large capital base to allow us to
hold positions through bad times.
Resignation of Mr. Pacult as a general partner and subsequent failure of
Ashley to maintain its net worth may cause suspension of trading or taxation
as a corporation.
The North American Securities Administrators Association has established
guidelines for commodity pools structured as limited partnerships. Those
guidelines require that a sole corporate general partner maintain a net worth
during the offering period of either 5% of the offering amount or not less
than $50,000, but in no case no more than $1,000,000. Ashley presently has
insufficient capital to meet this guideline and, therefore, the loss of Mr.
Pacult as an individual general partner could result in the suspension of
sales in states which follow the guidelines.
Any general partner wishing to voluntarily withdraw from the partnership must
give 120 days prior written notice to the limited partners. If a general
partner withdraws and the limited partners or remaining general partner
elects to continue the partnership, the withdrawing general partner shall pay
all expenses incurred as a result of its withdrawal.
When the sole general partner of a partnership is a corporation, the tax
rules require conditions to be met to allow the partnership to be taxed as a
partnership and not as a corporation. To be taxed as a partnership requires
that two or more of the following tests be met:
* decentralized management
* unlimited liability
* limited transferability of shares, and
* limited continuation of existence.
If we were not taxed as a partnership, the partnership income would be taxed
at corporate rates and would be distributed to the partners as dividends.
The partnership has an individual general partner and, therefore, the
unlimited liability test of a partnership is met. If Mr. Pacult resigned or
otherwise could not serve as a general partner, the partnership must either
have a substitute individual partner or be structured to satisfy all but the
decentralized management test to meet the guidelines to be taxed as a
partnership.
Our tax status has not been confirmed by an IRS ruling. No such ruling has
been or will be requested on our behalf. If we are taxed as a corporation
for Federal income tax purposes in any taxable year(s),
* our income or loss would not be passed through to you
* we would be taxed at corporate rates
* all or a portion of any distributions made to you would be taxed to you as
dividend income, and
* the amount of such distributions would not be deductible by us in
computing our taxable income.
See Federal Income Tax Aspects.
If Mr. Pacult resigns and Ashley becomes the sole general partner, it will
use its best efforts to satisfy the requirements necessary to permit us to be
taxed as a partnership.
The general partner will not advise you, and you must rely upon your own
counsel before investing in the partnership.
Purchasing partnership interests does not create an Individual Retirement
Account, commonly called an IRA, and the creation and administration of an
IRA are solely your responsibility. The assets of a retirement account
should be carefully diversified and you should only allocate high risk
capital to this partnership. If you invest a significant portion of your
retirement plan or IRA assets in this partnership, you could be exposing that
portion to significant loss. The general partner will not advise you in any
manner on an investment in this partnership, including matters of
diversification, prudence, interpretation of the partnership agreement, and
liquidity. Accordingly, you must rely upon the experience of qualified
legal, investment and tax counsel you select.
The partnership is not covered by the Investment Company Act of 1940.
Stock investment companies and investment advisors must be registered under
the Investment Company Act of 1940, as amended. Because the business of the
partnership, Ashley Capital Management, Inc., Mr. Pacult and the commodity
trading advisor involves only the trade of futures regulated pursuant to the
Commodity Exchange Act, none of them are required, nor do they intend, to be
registered under the Investment Company Act of 1940 or any similar state law.
Therefore, you are not protected by any such legislation.
Possibility of audit - you may be subject to audit and penalties.
If our return is audited, the IRS may make adjustments to our reported items.
If an audit results in an adjustment, you may be:
* required to file amended returns
* subject to a separate audit, and
* required to pay back taxes, plus penalty and interest.
General partner may settle IRS claim not in your best interest.
Ashley Capital Management, Inc. is named tax matters partner. This grants it
the power to settle any IRS claim on your behalf if you hold 1% or less
interest in this partnership and do not timely object to the tax matters
partner's authority, after notice. Such settlement may not necessarily be in
your best interest. See Federal Income Tax Aspects.
You may be subject to back taxes and penalties.
The Scott Law Firm, P.A. has delivered an opinion to the general partner that
this partnership, as it is intended to be operated by the general partner,
will be taxed as a partnership and not as a corporation. This opinion does
not include the tax treatment of expenses to prepare the prospectus and
selling expenses because they have to be allocated between expenses attendant
to formation and ordinary business expenses by the general partner. In
addition, commodity trading advisor fees are combined with employee business
expenses and other expenses of producing income and are deductible only if
the operation of the partnership is the conduct of a trade or business. The
general partner believes that our intended operations qualify as a trade or
business.
The general partner may raise the incentive fee to 27% without prior notice
to you.
The general partner has reserved the right to raise, without prior notice to
you, the incentive fee to a maximum of 27% while lowering the total
management fees between the commodity trading advisor and general partner to
0%. The general partner will notify you of any change in fees within seven
business days.
Conflicts Of Interest
There are present and potential future conflicts of interest in our structure
and operation you should consider before you purchase partnership interests.
The general partner will use this as a defense against any claim or other
proceeding made against Mr. Pacult, Ashley Capital Management, Inc., the
commodity trading advisor, the futures commission merchant, the introducing
broker, or any principal or affiliate, agent or employee of any of them.
General partner, the commodity trading advisor, the introducing broker and
their principals may preferentially trade for themselves and others.
Because the general partner, the commodity trading advisor, the introducing
broker, and their principals and affiliates may trade for themselves and
others, conflicts of interest may exist or be created in the future. None of
these people are limited in trading commodities for their own account, and
you will not have access to any of their personal trading records. They
could possibly take their personal positions prior to the positions they know
they will place for you, although, they have stated they will not do so.
Possible retention of voting control by the general partner may limit your
ability to control issues.
The general partner, its principal and its affiliates may purchase an
unlimited amount of partnership interests. These persons include Mr. Pacult
as general partner, and as a principal of Futures Investment Company, the
selling agent. It is possible that they could purchase enough partnership
interests to retain voting control. They could then vote, individually or as
a block, to create a conflict with our best interests. Such voting control
may limit the limited partners' ability to achieve a majority vote on such
issues as:
* amendment of the Limited Partnership Agreement
* change in our basic investment policy
* dissolution of this partnership, or
* the sale or distribution of our assets.
However, neither general partner may vote on the issue of their removal.
The general partner is not likely to resign, even if it would be in your best
interest.
It is unlikely that either general partner, Mr. Pacult or Ashley Capital
Management, Inc., would voluntarily resign, even if it would be in your best
interest, because Ashley is paid a 2% management fee and Mr. Pacult serves as
both a general partner and the sole principal of Ashley.
Partnership fees may be higher than they would be if they were negotiated.
The 11% fee to Ashley Capital Management, Inc., corporate general partner and
commodity pool operator has not been negotiated at arm's length. The general
partner:
* accepts the credit risk of the partnership to the futures commission
merchant
* maintains the day to day contact with the selling agents
* reviews the daily positions and margin requirements of the partnership
* pays the futures commission merchant's charges, and
* pays the continuing service fees to the selling agent for communicating
with the investors and maintaining investment in the partnership.
Ms. Pacult is a principal and 50% owner of Futures Investment Company, the
selling agent. As such, Ms. Pacult has a conflict of interest between his
obligation to manage this partnership and his financial interest in receiving
both the 11% annual fee as principal of the corporate general partner. From
the 11% annual fee paid to the corporate general partner, it must pay round
turn brokerage commissions to the futures commission merchant, and 4% per
year to the associated persons, which will include Mr. Pacult's wife, Mrs.
Shira Del Pacult, for the partnership interests they sell. Any remaining
portion of the 11% will be kept by the corporate general partner.
Conversely, the corporate general partner will pay the futures commission
merchant any round turn commissions incurred that exceed the 11% per year.
Our profitability may be limited due to competition among the traders for
similar trades and their unaccountability for previous losses.
The general partner has sole and absolute discretion to select and terminate
commodity trading advisors. If it appoints multiple trading advisors, each
will trade independently of the others. Also, they may compete for similar
positions or take positions opposite each other, which may limit our
profitability. If a trading advisor is replaced, the new trading advisor
will receive any earned incentive fees regardless of the previous trading
advisor's performance. As incentive fees are paid based upon each trading
advisor's performance, it would be possible for us to experience a net loss
and be required to pay out incentive fees to one or more of the traders.
Your ability to redeem your partnership interests may be lessened due to the
nature of the general partner's compensation.
The general partner receives a fee based upon our net asset value available
for trading. This gives it an incentive to withhold distributions and to
discourage redemption. The general partner will try to honor all redemption
requests within twenty days after the last day of the preceding month in
which the request was made. However, if the partnership does not have enough
liquid assets, it may not be able to honor the request on time, or possibly
at all.
The commodity trading advisor may engage in high risk trading to generate
fees.
As a general rule, the greater the risk assumed, the greater the potential
for profit. Because the commodity trading advisor receives 25% of our new
net profits, it might select trades which are too risky for us.
Mr. Pacult has sole control over the time he will allocate to the management
of the affairs of the partnership.
Mr. Pacult is responsible for:
* managing this partnership
* managing two other commodity pools:
* Bromwell Financial Fund, LP, and
* Providence Select Fund, LP
* selling limited partnership interests in all the above commodity pools,
from time to time
* performing other investor relations services as a principal and registered
representative of Futures Investment Company.
Mr. Pacult has also reserved the right to trade for his own account and to
form and manage other commodity pools and ventures. Mr. Pacult is solely
responsible for the allocation of his time to the management of this
partnership as well as the other projects she currently manages and will
manage in the future. Mr. Pacult manages his time, in part, by the
delegation of many of the tasks, such as trade selection and preparation of
financial reports and offering documentation, to independent commodity
trading advisors, accountants, and attorneys. Mr. Pacult believes he
presently has and will, in the future, have sufficient time to devote to the
affairs of the partnership.
No Resolution Of Conflicts Procedures
As is typical in many futures partnerships, the general partner has not and
will not establish formal procedures to resolve potential conflicts of
interest. These future potential conflicts may adversely affect both you and
us. However, the general partner has taken steps to alleviate any real or
potential conflict of interest by the establishment of segregated accounts to
hold partnership equity at the banks and futures commission merchant. Also,
the general partner has assured the selling agent that all money on deposit
is in the name of and for the beneficial use of the partnership.
The previous risk factors and conflicts of interest are complete as of the
date of this prospectus, however, additional risks and conflicts may occur
which are not presently foreseen by the general partner. You may not
construe this prospectus as legal or tax advice. Before making an investment
in this partnership, you should read this entire prospectus, including the
Limited Partnership Agreement (Exhibit A) and the subscription agreement.
You should also consult with your personal legal, tax, and other professional
advisors. See Investor Suitability.
Interests Of Named Experts And Counsel
The general partner has employed The Scott Law Firm, P.A. to prepare this
prospectus, provide tax advice and opine upon the legality of issuing the
partnership interests. Neither the law firm, its principal, any accountant,
nor any other expert hired by the partnership to give advice on the
preparation of this offering document have been hired on a contingent fee
basis. Nor do any of them have any present or future expectation of interest
in the general partner, the selling agent, the commodity trading advisor, the
introducing broker, or the futures commission merchant.
Management's Discussion And Analysis
The Partnership
Atlas Futures Fund, Limited Partnership is a Delaware limited partnership
organized on January 12, 1998 and maintains its main business office at 5916
N. 300 West, P. O. Box C, Fremont, IN 46737, (219) 833-1306. It is qualified
to be a commodity pool to engage in the speculative trading of futures,
commodity options and forward contracts on currencies, interest rates, energy
and agriculture products, metals, and stock indices.
Our business objective is to let our invested capital appreciate while
controlling losses; however, there can be no assurance that we will meet this
objective.
The partnership is managed by Ashley Capital Management, Inc., a Delaware
corporation, and Mr. Michael P. Pacult.
We do not have officers or employees, which is why there is no report of
executive compensation in this prospectus.
We operate pursuant to the terms of the limited partnership agreement
attached as Exhibit A, which:
* grants full management control to the general partner including the right
to employ independent trading managers called commodity trading advisors, and
* will terminate at 11:59 p.m. on January 12, 2019, or upon an event causing
an earlier termination.
Except for the limited partnership agreement, the partnership may not enter
any contract with the general partner or commodity trading advisor that is
greater than one year in duration. However, all such contracts are expected
to be renewed yearly and are terminable without penalty upon sixty days, or
less, written notice by the partnership.
The General Partners
The corporate general partner is Ashley Capital Management, Inc., a Delaware
corporation incorporated on October 15, 1996. It was registered as a
commodity pool operator on January 15, 1998 and maintains its main business
office at 5916 N. 300 West, P.O. Box C, Fremont, IN 46737, (260) 833-1306.
It is managed by Michael P. Pacult, its sole shareholder, director and
president.
The individual general partner is Michael P. Pacult, who was registered as a
commodity pool operator on July 28, 2003 and maintains his main business
office at 5916 N. 300 West, P.O. Box C, Fremont, IN 46737, (260) 833-1306.
Both the individual and corporate general partners, as well as the
partnership, will comply with all applicable registration requirements under
the Commodity Exchange Act as amended.
Experience
Ashley has managed this commodity pool since its inception on January 12,
1998. Mr. Pacult has been supervising individual managed commodity accounts
for over 22 years and serves in several capacities in two other commodity
pools, as follows:
Commodity Pool Mr. Pacult Serves As
Bromwell Financial Fund, LP Individual general partner and sole
(publicly offered, began principal of the corporate general
operations 7/00) partner
Providence Select Fund, L. P. Individual general partner and sole
(to be publicly offered, principal of the corporate general
presently in registration) partner
Authority
Ms. Pacult is the sole principal of Ashley Capital Management, Inc. and also
the individual general partner, therefore, Mr. Pacult is the sole decision
maker of this partnership. Having said that, the signature of either Ashley
or Mr. Pacult, individually, may legally bind this partnership.
The general partner is authorized to take all actions necessary to manage the
affairs of the partnership. See Article II of the Limited Partnership
Agreement attached as Exhibit A.
Partnership Books and Records
Our books and records will be maintained for six years at 5916 N. 300 West,
Fremont, IN 46737. A duplicate set of the books will be maintained by Mr.
James Hepner, Certified Public Accountant, 1824 N. Normandy, Chicago, IL
60635, (773) 804-0074. Mr. Hepner also prepares the Form K-1 for each
partner in the partnership. You may access our books and records by visiting
either office at a time convenient for both parties, and you may have copies
made at that time at ten cents per page. The general partner serves as tax
partner for the partnership. Frank L. Sassetti, & Co., 6611 West North
Avenue, Oak Park, IL 60302 conducts our annual audit, the annual audit of the
corporate general partner, and prepares our tax returns.
The Commodity Trading Advisor
To conduct trading on our behalf, the general partner has initially selected
one independent commodity trading advisor, Clarke Capital Management, Inc.
Without prior notice to you, the general partner has sole discretion to
employ additional trading advisors, terminate any trading advisor, and change
the amount of equity any advisor may trade. However, the general partner
will give you notice of any change in trading advisor within seven days of
such change. Such notice will include a description of your right to:
* redemption
* vote to amend the limited partnership agreement
* remove one or both general partners
* elect a new general partner
* cancel any contract with a general partner or any of its affiliates upon
60 days notice, and
* dissolve the partnership.
No change in trading advisor will constitute a material change to the limited
partnership agreement or the structure of our operation. Any trading advisor
employed to trade for the partnership will be registered with the Commodity
Futures Trading Commission and will have at least three years of experience
as a trading advisor.
The Advisory Contract
The general partner has assigned a substantial portion of our assets to the
trading advisor, the terms of which are governed by an advisory contract and
power of attorney between us and the trading advisor. See Exhibit F.
This agreement provides the trading advisor with a revocable power of
attorney, which gives it sole authority to determine
* the markets to be traded
* the location of those markets
* the size of the position to be taken in each market, and
* the timing of entry and exit in a market.
The agreement may be terminated, at any time, upon notice from one party to
the other and to the futures commission merchant.
Business Objective And Expenses
Our objective is to achieve the potentially high rates of return which are
possible through the speculative trading of futures, commodity options and
forward contracts. We do not expect to engage in any other business.
The general partner organized this partnership to be a commodity pool, as
that term is defined under the Commodity Exchange Act. As such, it employs
an independent commodity trading advisor to trade for us.
The general partner intends to allocate substantially all of our net assets
to the trading advisor to conduct this trading. The trading advisor
typically allocates between 20% to 30% of the trading equity assigned to it
to secure the trading positions it selects. Although we do not expect to
make distributions, you will nevertheless be required to pay yearly Federal,
state and local taxes upon income, if any, earned by this partnership.
Accordingly, you should purchase partnership interests as a long-term
investment only.
There can be no assurance that we will achieve our business objectives, be
able to pay the substantial fixed and other costs to do business, or avoid
substantial trading losses. See Charges to the Partnership.
Below is a chart explaining the expenses we expect to incur during our twelve
months of trading beginning September 30, 2003. All interest income is paid
to the partnership. The chart below assumes the value of each unit of
partnership interest will remain constant during the next twelve months.
[The balance of this page has been intentionally left blank.]
Expenses Per Unit of Partnership Interest
For The Next 12-Month Period Of Operations
Based Upon Based Upon
Minimum Units Sold Maximum Units Sold
Units 4,444 Units 8,389 Units
($7,563,219) ($15,000,000)
Selling Price per Unit (1) $ 1,810.52 $ 1,810.52
Annual Expenses (2) 5.18 2.74
Trading Advisor's Incentive Fees on
New Net Profits (3) 20.92 20.10
Brokerage Commissions and Trading Fees (4) 181.59 181.59
Selling Commission (5) 108.63 108.63
Interest Income (6) (51.06) (51.06)
Amount of Trading Income Required to
Redeem Unit At Selling Price After One
Year (7) $ 264.70 $ 261.11
Percentage of Initial Selling
Price Per Unit 14.62% 14.42%
Explanatory Notes:
(1) Investors will purchase partnership interests at the partnership's month
end net asset value per partnership interest, plus a 6% selling commission.
As of September 30, 2003, this was $1,810.52, which is the value used in the
table.
(2) The partnership must also pay yearly expenses of approximately $18,000
for accounting and $5,000 for legal.
(3) The commodity trading advisor receives an incentive fee of 25% of new net
profits earned each quarter upon the trading equity assigned to it. The
$20.92 of incentive fee shown above is the amount the trading advisor would
earn if it produced enough profits to allow you to redeem your partnership
interests at the original price of $1,810.52 per unit of partnership
interest, including selling commissions, after one year.
(4) Brokerage commissions and trading fees are fixed by the general partner
at 11/12% monthly, 11% annually, of our assets on deposit with the futures
commission merchant. For purposes of this calculation, we assumed 97% of our
assets will be deposited with the futures commission merchant.
(5) A one time selling commission of 6% will be charged to you and paid to
the selling agent.
(6) We earn interest on margin deposits with the futures commission merchant
and on our bank deposits. Based on current interest rates, interest income
is estimated at 3% annually of our net assets.
(7) This computation assumes there will be no claims or other extra-ordinary
expenses during the first year.
We do not represent that the above table will reflect our actual operating
expenses or interest income. There can be no assurance that our expenses
will not exceed the amounts projected or that there will not be claims or
other extra-ordinary expenses.
Securities Offered
We, Atlas Futures Fund, Limited Partnership, will offer and sell limited
partnership interests in this partnership at a value determined by the month
end net asset value of the partnership. See Determination Of The Offering
Price.
You, the Investor:
* will have:
* pro rata rights to profit and losses which will vary with your
investment amount
* the right to vote on partnership matters such as the replacement of the
general partner. See The Limited Partnership agreement attached as Exhibit
A.
* will not:
* be responsible for our debts in excess of your investment amount;
unless:
* we become insolvent; and
* you receive distributions which represent a return on your investment,
in which case you would have to return the distributions to pay our debts
* acquire any interest in the corporate general partner, Ashley Capital
Management, Inc., and
* manage this partnership
See Plan For Sale of Partnership Interests and Subscription Requirements.
Your subscription agreement and check:
* must be approved by the general partner before you will become a partner
and will be accepted or rejected within five business days of receipt
* becomes irrevocable and may not be withdrawn five days after submission;
unless, a longer statutory withdrawal period applies to you, and
* will be deposited and held until you are admitted into the partnership in
a segregated escrow account maintained by the general partner as escrow
agent.
There cannot be any assurance that additional partnership interests will be
sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of partnership interests.
Management's Discussion
This is the continuation of the offering of our partnership interests. We:
* may conduct future offerings after the close of this offering
* intend to raise money only through offerings, such as this one, and do not
intend to borrow any money
* must pay expenses to qualify our partnership interests for sale, such as
office equipment, fees for the preparation of this prospectus, as well as
other expenses
* allocate all our net assets to trading and other investments, except those
assets used to pay capital and operating expenses
* have no directors, officers or employees, which is why there is no report
of executive compensation in this prospectus, and
* conduct all our business through the general partner.
Description of Intended Operations
The general partner has selected Citigroup Capital Markets, Inc. to serve as
the futures commission merchant. The partnership has deposited its funds to
the futures commission merchant to hold as security for the trades selected
by the commodity trading advisor. The futures commission merchant has been
directed to send the general partner, before the open of business each day, a
computer or fax report which describes
* the positions held
* the margin allocated, and
* the profit or loss on the positions from the date the positions were taken
Risk Control
The general partner reviews the daily transmissions provided by the futures
commission merchant and makes appropriate adjustments to the allocation of
trading equity. Based upon the amount of available trading equity, the
trading advisor has sole discretion to:
* make specific trades,
* determine the number of positions taken, and
* decide the timing of entry and departure from each trade made.
The general partner will use its best efforts to monitor the daily net asset
value of the partnership, which it will calculate from the daily information
provided by the futures commission merchant, and will make such information
available to limited partners upon request. However, the net asset value is
calculated only at the end of the last business day of each month by the
partnership's accountant. If the daily net unit value falls to less than 50%
of the highest value earned through trading, then the general partner will:
* immediately suspend all trading
* provide you with immediate notice of the reduction in net unit value, and
* give you the opportunity, for 15 days after the date of such notice, to
redeem your partnership interests according to the provisions of Article IX,
Sections 9.5 and 9.6 of the Limited Partnership Agreement.
No trading shall commence until after such fifteen day period. See Exhibit A
attached.
Trading Risks
Most United States commodity exchanges limit daily fluctuations in commodity
futures contracts prices by regulations referred to as daily price
fluctuation limits or daily limits. Once the price of a futures contract has
reached the daily limit for that day, positions in that contract can neither
be taken nor liquidated. Commodity futures prices have occasionally moved
the daily limit for several consecutive days with little or no trading.
Such an occurrence could prevent us from promptly liquidating unfavorable
positions and subject us to substantial losses. These losses could exceed
the margin initially required to make the trade. In addition, even if
commodity futures prices have not moved the daily limit, we may not be able
to execute futures trades at favorable prices. This may be caused by light
trading in such contracts or by a sudden and substantial price move in a
futures or forward contract. These limitations on liquidity are inherent in
our proposed commodity futures trading operations. Otherwise, our assets are
expected to be highly liquid.
Except for payment of offering and other expenses, the general partner is
unaware of any anticipated:
* known demands, commitments or required capital expenditures,
* material trends, favorable or unfavorable, which will affect our capital
resources, or
* trends or uncertainties that will have a material effect on operations.
Each United States commodity exchange, with the approval of the Commodity
Futures Trading Commission, establishes minimum margin requirements for each
traded contract, which futures commission merchants require to be on deposit
before a trade will be accepted. The futures commission merchant may
increase the margin requirements above these minimums for any or all
contracts for its customers. Because we generally use a small percentage of
assets for margin, we do not believe that any increase in margin requirements
will materially affect our proposed operations. Management cannot predict
whether the value of our partnership interests will increase or decrease.
Inflation is not projected to be a significant factor in our operations,
except to the extent inflation influences futures prices.
Fiduciary Responsibility Of The General Partner
You have legal rights under Delaware partnership and applicable Federal and
state securities laws. In all dealings affecting this partnership, the
general partner has a fiduciary responsibility to you and all other partners
to exercise good faith and fairness. No contract shall permit the general
partner to contract away its fiduciary obligation under common law. The
limited partnership agreement conforms with the Uniform Limited Partnership
Act for the State of Delaware in regard to the definition of the fiduciary
duties of the general partner.
You have a right to initiate legal proceedings related to the partnership in
the following circumstances:
In the event, after demand from you, the general partner:
fails to take action to recover damages from third parties, you may initiate
proceedings on behalf of the partnership and, upon an appropriate award from
the court pursuant to Delaware law, obtain reimbursement of your legal fees
and costs from the amount recovered.
You may bring an action against the general partner in either Federal or
state court should you believe the general partner or others have breached
its fiduciary duty to the partnership or committed a breach of any Federal or
state securities laws.
You may seek reparations for the amount of your investment and damages should
the general partner or others breach of the Commodity Exchange Act or order
of the Commodity Exchange Commission in regard to your investment.
If the general partner acts in good faith and exercises its best judgment, it
will not be liable merely because we lost money or otherwise did not meet our
business objectives. Additionally, there are substantial and inherent
conflicts of interest in the partnership's structure which are inconsistent
with the general partners' fiduciary duties. The general partner intends to
raise the disclosures made in this prospectus and the representations you
made in the subscription agreement as a defense in any proceeding brought
which seeks relief based on the existence of such conflicts of interest. See
Conflicts of Interest.
The responsibility of a general partner to you and other partners is a
changing area of the law. If you have questions concerning the
responsibilities of the general partner, you should consult your legal
counsel.
Indemnification
Provisions of Limited Partnership Agreement
The limited partnership agreement protects the general partner from being
responsible or accountable for any act or omission, for which you, other
limited partners or the partnership itself may claim it is liable, provided
that:
* the general partner determined such act or omission was within the scope
of its authority and in the best interest of this partnership, and
* such action or failure to act does not constitute misconduct or a breach
of the Federal or state securities laws related to the sale of partnership
interests.
Specifically, if the general partner
* has acted within the scope of its authority and
* is being assessed a demand, claim or lawsuit by a partner or other entity,
the partnership will defend, indemnify and hold the general partner harmless
from and against any
* loss, liability, damage, cost or
* expense, including attorneys' and accountants' fees and expenses incurred
in defense of any demands, claims or lawsuits
which were actually and reasonably incurred and arising from any
* act, omission, activity or conduct undertaken by or on behalf of the
partnership.
Provisions of Law
According to applicable law, indemnification of the general partner is
payable only if:
* the general partner determined, in good faith, that the act, omission or
conduct that gave rise to the claim for indemnification was in the best
interest of the partnership
* the act, omission or activity that was the basis for such loss, liability,
damage, cost or expense was not the result of negligence or misconduct
* such liability or loss was not the result of negligence or misconduct by
the general partner, and
* such indemnification or agreement to hold harmless is recoverable only out
of the assets of the partnership and not from the partners, individually.
Provisions of Federal and State Securities Laws
This offering is made pursuant to Federal and state securities laws. If any
indemnification of the general partner arises out of an alleged violation of
such laws, it is subject to the following legal conditions.
Those conditions require that no indemnification may be made in respect of
any losses, liabilities or expenses arising from or out of an alleged
violation of Federal or state securities laws unless:
* there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the general partner or
other particular indemnitee, or
* such claim has been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the general partner or other particular
indemnitee, or
* a court of competent jurisdiction approves a settlement of the claims
against the general partner or other agent of the partnership and finds that
indemnification of the settlement and related costs should be made, provided,
* before seeking such approval, the general partner or other indemnitee
must apprise the court of the position held by regulatory agencies against
such indemnification. These agencies are the Securities and Exchange
Commission and the securities administrator of the state or states in which
the plaintiffs claim they were offered or sold partnership interests.
Provisions of the Securities Act of 1933 and NASAA Guidelines
The Securities and Exchange Commission and the various state securities
administrators believe that indemnification for liabilities arising under the
Securities Act of 1933 are unenforceable because such indemnification is
against public policy as expressed in the Securities Act of 1933 and the
North American Securities Administrators Association, Inc. commodity pool
guidelines.
Provisions of the Clearing Agreement
We clear trades through our futures commission merchant, Citigroup Global
Markets, Inc. According to the clearing agreements that governs these
trades, we must indemnify Citigroup Global Markets, Inc. for any reasonable
outside and in-house attorney's fees incurred by it arising from any failure
for the partnership to perform its duties under the clearing agreement.
Other Indemnification Provisions
The general partner has indemnified the selling agent, Futures Investment
Company, and expects to indemnify any other selling agents it selects that
there are no misstatements or omissions of material fact in this prospectus.
Relationship With The Futures Commission Merchant And The Selling Agent
The general partner has initially engaged Futures Investment Company as the
sole broker dealer. It sells partnership interests and supervise regulatory
compliance.
Mr. Michael P. Pacult serves as:
* a stockholder, director and officer of Futures Investment Company
* a general partner and commodity pool operator to this partnership, and
* the sole principal of Ashley Capital Management, Inc., the corporate
general partner and commodity pool operator.
Ashley Capital Management, Inc., the corporate general partner, has engaged
Citigroup Capital Markets, Inc. to act as the futures commission merchant.
Fixed Commissions are Competitive
The general partner believes the introducing broker rates for fixed
commissions are competitive.
In that regard, the general partner is obligated by the North American
Securities Administrators Association guidelines to obtain the best
commission rates available to us. Accordingly, the general partner is free
to select any substitute or additional selling agents, futures commission
merchants or introducing brokers at any time, for any reason. However,
neither the corporate general partner, nor Mr. Pacult acting as a general
partner, is likely to dismiss the current principal selling agent because of
their affiliation with Mr. Pacult as a principal of the principal selling
agent.
The futures commission merchant and the selling agent act for other commodity
pools that have retained either or both of the general partners of this
partnership. Either general partner or any other commodity pool may obtain
rates to clear trades from the general partner which are more favorable to
their accounts, as opposed to the fixed commissions the general partner
charges us in lieu of round-turn commissions.
Relationship With The Commodity Trading Advisor
The Commodity Trading Advisor Will Trade For Other Accounts
The commodity trading advisor will trade for its own account and for others
on a discretionary basis. It may use trading methods, policies and
strategies for others which differ from those used for us. Consequently,
such accounts may have different trading results from those experienced by
us.
Because the trading advisor trades for itself and others, it is possible for
it to take positions ahead of or opposite positions taken on our behalf,
which presents a potential conflict of interest. See Appendix I for Taking
Positions Ahead of the Partnership.
Pursuant to Commodity Futures Trading Commission Regulation 421.03, the
trading advisor will use the average price system for those futures and
options contracts where its use is authorized, when:
* trades taken on behalf of both the partnership and the trading advisor's
other accounts are identical, and
* the prices of such trades are different.
See Appendix I for the definition of Average Price System.
The commodity trading advisor has also informed the general partner that when
the average price system is not available, trades will be filled in order
based on the numerical account numbers, with the lowest price allocated to
the lowest account number and in numerical matching sequence, thereafter.
Non-Disclosure Of The Commodity Trading Advisor's Methods
We have provided a general description of the commodity trading advisor's
methods and strategies under The Commodity Trading Advisor, Description of
Trading Program. However, the specific details of its trading methods are
proprietary and complex in nature and will not be disclosed to us or you. No
notice will be given to you of any changes the trading advisor may make in
its trading methods. See Risk Factors, No Notice of Trades or Trading
Method.
Charges To The Partnership
As an investor in this partnership, you will pay your prorate share of the
cost of our operation. These charges are described in narrative form and in
the chart which follows this narrative. In this prospectus, we have
disclosed all compensation, fees, profits and other benefits, including
reimbursement of out-of-pocket expenses, which the general partner and its
affiliates will earn in connection with this offering. Most of these charges
were not negotiated at arm's length, but rather were determined by the two
general partners and their affiliates.
Compensation Of General Partner
We pay the corporate general partner, Ashley Capital Management, Inc., a
yearly brokerage commission of 11% payable monthly computed upon our net
asset value available for trading as of the close of business of the last
trading day during the previous month.
Compensation Of The Commodity Trading Advisor
Clarke Capital Management, Inc., the commodity trading advisor, has been
allocated equity to trade, which has been deposited in an account with the
futures commission merchant. Though no management fee is currently paid to
the trading advisor, the general partner has reserved the right to change
this fee at its sole discretion. See Charges to the Partnership,
Restrictions on Management Fees.
For those quarters in which a commodity trading advisor operates profitably,
the partnership pays that advisor a 25% incentive fee based on the
new net profit produced by the trading advisor. New net profit:
* is calculated to determine how much a trading advisor has increased our
net assets through trading alone
* is based upon the net value of the equity assigned to the trading advisor
to trade
* is calculated quarterly
* is only paid when any losses in previous quarters have been offset by new
profits by the trading advisor, regardless of whether:
* the general partner has changed the trading advisor's compensation, or
* the partnership and trading advisor have entered a new contract
* is adjusted to eliminate the effects of:
* any new subscriptions for partnership interests
* redemptions by partners
* interest income paid by the futures commission merchant, and
* any other income earned on our assets which are not related to such
trading activity, regardless of whether such assets are held separately or in
a margin account.
The following hypothetical table illustrates the quarterly incentive fee that
would be earned by a trading advisor based on the net income, as calculated
above, that it has earned for the partnership.
Qtr Net Income Incentive Fee (25%)
1 $ 1,000 $ 250
2 (200) 0
3 1,000 200
4 500 125
Restrictions on Management Fees
Some of the states in which we sell partnership interests require that we
comply with the North American Securities Administrators Association
Guidelines for commodity pools. These guidelines provide that subject to an
increase in the incentive fee of 2% for every 1% decrease in the management
fee:
* the total management fees, including that of the general partner and the
commodity trading advisor, may not exceed 6% of our net assets, and
* incentive fees based upon profits earned may not exceed 15% of new net
profits.
Without prior notice to you, the general partner has reserved the right to
raise the current incentive fee to a maximum of 27%, provided the management
fees are correspondingly lowered to 0%. However, the general partner will
notify you of any change in fees within seven business days. Currently the
management fee is 0% and the incentive fee is 25% to the commodity trading
advisor.
Fees To Futures Commission Merchant And Compensation of General Partner
Fee Paid By Partnership To The Corporate General Partner
The corporate general partner, Ashley Capital Management, Inc., is
responsible for introduction and payment of the trades made through the
futures commission merchant, Citigroup Global Capital Markets, Inc.
Accordingly, we pay the corporate general partner a monthly fixed commission
of 11/12%, or 11% annually, upon the assets on deposit with the futures
commission merchant. See The Futures Commission Merchant.
The fixed commission which we pay is fair and reasonable. This is an area of
judgment which depends upon:
* the value of similar services provided to partnerships and other accounts
managed by the same commodity trading advisor, or
* the value of similar services provided by other clearing firms for other
public commodity pools.
Brokerage Fees Paid By the Corporate General Partner To The Futures
Commission Merchant
Citigroup Global Markets, Inc. charges the corporate general partner the
round turn commission at the time the trade is made. The round turn charge
covers all clearing costs, including the pit brokerage fees, National Futures
Association fees, and exchange fees.
Continuing Service Fees
The corporate general partner pays monthly continuing service fees of 4% per
year, payable monthly, to the selling agents and introducing brokers who are
qualified to provide services to us and the investors. Such persons include
Mr. Pacult and his wife, both of whom are principals of the selling agent,
Futures Investment Company. The monthly continuing service fees are 1/3% of
the assets on deposit with the futures commission merchant per month and are
paid by the corporate general partner from the 11/12% monthly fixed brokerage
commission.
The recipients of the continuing service fee are responsible for maintaining
investment in this partnership. This must be done to:
* spread the potential risk of losses over a large number of investors to
protect our ability to continue in business, and
* allow the long-term trading strategies of the commodity trading advisor to
be profitable so additional investments can be solicited.
The corporate general partner pays continuing service fees to the persons
responsible for selling the partnership interests as compensation for:
* maintaining continuous contact with the partners to whom they sold
interests in the partnership
* reviewing the daily runs to be aware of the partnership results to discuss
with the investors
* explaining changes in trading advisors and results from operations
* answering questions regarding the partnership, and
* working to retain investment in the partnership.
Miscellaneous Fees To Futures Commission Merchant
We will reimburse the futures commission merchant for all delivery,
insurance, storage or other charges incidental to trading and paid to third
parties. The general partner has instructed the trading advisor to avoid
these charges and, therefore, no significant charges of this nature are
anticipated.
Rights of General Partner
Without prior notification to you, the general partner has reserved the right
to:
* add an introducing broker
* add a management fee
* increase or lower the incentive fee
* change the commodity trading advisor
* change the futures commission merchant
* change the fixed commission rate
* have the partnership pay a per round-turn brokerage commission as opposed
to a fixed percentage, at any time, with or without a change in
circumstances; provided, however, such brokerage commissions cannot exceed
80% of the published retail rate of the introducing broker and other similar
introducing brokers, excluding pit brokerage fees, charged to accounts
similar to the partnership.
Other Expenses
We must pay legal and accounting fees, as well as other expenses and claims.
For each year of normal operations, we must pay yearly legal and accounting
costs of approximately $23,000, which includes $18,000 for accounting and
audit and $5,000 for legal services. We must also pay customary and routine
administrative expenses, and other direct expenses.
We will reimburse the general partner for direct expenses, such as periodic
amendments to the disclosure document and prospectus used to solicit
investment, audit fees, delivery charges, statement preparation and mailing
costs, telephone toll charges, and postage.
Charges To The Partnership
The following table includes all charges to the partnership.
<Table>
Entity Form of Compensation Amount of Compensation
General Partner
(Ashley Capital Management, Inc.) Fixed Brokerage Commission 11% annual charge, paid monthly, upon the
assets on deposit with the futures
commission merchant. From this amount it
will pay brokerage commissions to Citigroup
Global Markets, Inc. and, subject to
availability after payments to the futures
commission merchant, 4% trailing
commissions to those who sold partnership
interests, including Mrs. Pacult. [$2,750+]
Selling Agent Selling Commissions 6% selling commission paid from the
(Futures Investment Company) subscription amount. [$1,500+]
Futures Commission Merchant Round-turn commissions paid from the fixed From the 11% the partnership pays the
(Citigroup Global Markets, Inc.) commissions paid by the partnership corporate general partner, are paid round
turn brokerage commissions.
Reimbursement of delivery, insurance, storage Reimbursement by the partnership of actual
and any other charges incidental to trading payments to third parties in connection
and paid to third parties with partnership trading
Commodity Trading Advisor Incentive Fee 25% of the new net profits of the account
(Clarke Capital Management, Inc.) for each quarterly period that the net
value of the trading equity at the end of
such quarterly period for the advisor
exceeds the highest previous quarterly
net value of the trading equity for that
advisor
Third Parties Legal, accounting fees, and other actual The partnership has paid $78,556 for
(The Scott Law Firm, P.A., expenses necessary to the operation of the offering and organizational expenses. Each
Frank L. Sassetti & Co., partnership, and all claims and other year the partnership will pay $18,000 for
& James D. Hepner, CPA) extraordinary expenses of the partnership. accounting and $5,000 for legal. Claims
and other costs can not be estimated and
will be paid as incurred. [$260+ for
initial organizational and offering
expenses; $76+ for yearly expenses]
+ Each $25,000 investment pays this amount per year for this particular
charge. When the charge is not based on a percentage, but rather a fixed
amount, we have computed the expense upon the partnership's current net asset
value.
</Table>
Investor Suitability
You should only invest a limited amount of the risk portion of your total
portfolio and should not invest more you can afford to lose.
To invest the minimum $25,000 in this partnership, you must have either:
* a net worth of at least $150,000, exclusive of your home, furnishings and
automobiles, or
* an annual gross income of at least $45,000 and a net worth, as calculated
above, of at least $45,000.
You may not invest more than 10% of your net worth in this partnership. The
foregoing standard and the additional standards applicable to residents of
certain states as set forth in this prospectus and the subscription documents
are regulatory minimums only.
Potential Advantages
Commodity trading is speculative and involves a high degree of risk. See
Risk Factors. However, your investment in this partnership will offer the
following potential advantages:
Equity Management
We offer the opportunity for you to:
* place equity with a registered commodity trading advisor which has
demonstrated an ability to trade profitably in the judgment of the general
partner, and
* have that equity allocated to the trading advisor in a manner which is
intended by the general partner to optimize future profit potential.
Mr. Pacult has experience managing several other commodity pools and has over
twenty-two years of experience in selecting commodity trading advisors to
manage individual investor accounts and describing to investors how
individual managed futures accounts work.
We expect this experience to benefit us in the quality of trading advisors
selected and in the explanation to prospective investors of our operation and
the attendant risks of investment.
Investment Diversification
If you are not prepared to spend substantial time trading various commodity
contracts or options, you may participate in these markets through a $25,000
investment in the partnership, thereby obtaining diversification from
investments in stocks, bonds and real estate.
Limited Liability
You will not be subject to margin calls and cannot lose more than your
original investment amount plus your share of distributed and undistributed
profits; provided the below bulleted legal conditions are met.
In the opinion of our legal counsel, there are no circumstances, including
bankruptcy of this partnership, which will subject your personal assets to
our debts, provided:
* the partnership's structure is maintained by the general partner, and
* no limited partner is affiliated with any phase of our management.
See the Limited Partnership Agreement (Exhibit A).
Administrative Convenience
We are structured to provide you with services which alleviate the
administrative details involved in trading commodities contracts directly,
including:
* providing monthly and annual financial reports showing, among other
things:
* the value of each unit of partnership interest
* trading profits or losses, and
* expenses; and
* preparing all tax information relating to your investment in this
partnership.
Access To The Commodity Trading Advisor
The commodity trading advisor selected by the general partner requires a
minimum account size substantially greater than the $25,000 minimum
investment required by us. For instance, Clarke currently requires a minimum
investment of $250,000 to open an account, depending on the investment
program. Accordingly, you have access to the trading advisor for a smaller
investment than is available by a direct investment in a managed account with
the trading advisor.
Use Of Proceeds
The partnership has paid $78,556 in offering and organizational expenses.
Effective for partners admitted after December 23, 2003, there will be no
redemption charge and they must retain their full initial investment in the
partnership for more than twelve months.
At the close of business on the last day of the twelfth month, the offering
expenses of will be allocated pro rate among all partners as follows:
The incoming partners' subscriptions, less commissions, will be divided by
the amount of the total subscriptions, less commissions, made by both the
incoming and the prior partners to obtain the percentage of the costs to be
paid by all partners. This percentage will be multiplied by the organization
cost to produce the dollar amount to be deducted from the subscription of the
incoming partners. The cash produced by that deduction will be added to the
net asset value of the partnership. This will result in an increase in the
net asset value for all partnership interests previously sold. The cash
subscription amount remaining for each incoming partner will be used to
purchase partnership interests at the increased net asset value. The
incoming partners will join with the previously admitted partners to share in
the increase of net asset value that results from the admission of future
partners until either the maximum number of partnership interests are sold or
the offering terminates.
As of September 30, 2003, prior partners paid 1.52% of their total investment
in the partnership for offering expenses. Should the maximum of $15,000,000
in total partnership interests be sold, every partner will have been
allocated approximately 0.54% of their total investment to pay for offering
expenses.
After the subscriptions are deposited in good funds to the partnership bank
account, the general partner will transfer the money to the partnership
accounts at the futures commission merchant and allocate trading equity to
the commodity trading advisor.
At the end of each month, the actual management fees, brokerage commissions
and fixed commissions identified under Charges to the Partnership are paid by
the Partnership.
The general partner has sole authority to determine the percentage of our
assets that will be:
* held on deposit with the futures commission merchant
* used for other investments, and
* held in bank accounts to pay current obligations.
The general partner expects to deposit substantially all of our net assets
with the futures commission merchant for trading by the trading advisor.
However, 3% of the previous month's net assets are expected to be retained in
our bank accounts to pay expenses and redemptions.
All entities that will hold or trade our assets will be based in the United
States and will be subject to United States regulations.
The general partner believes that between 20% to 40% of our assets will
normally be committed as margin for commodity futures contracts. However,
from time to time, the percentage of assets committed as margin may be
substantially more, or less, than such range. All interest income is used
for the partnership's benefit. To estimate interest income earned upon our
deposits, the general partner has assumed that:
* between 20% and 40% of our net assets will be used for margin upon trades,
and
* we will receive 3% interest on our available balances.
Note that the futures commission merchant may increase margins applicable to
us at any time.
Determination Of The Offering Price
Currently, we are offering partnership interests at their net unit value, or
the price per unit equal to our net assets divided by the number of
outstanding units of partnership interests. This amount is calculated after
the close of business on the last business day of the month in which the
general partner accepts a duly executed subscription agreement and
subscription amount from you. You are admitted as a partner on the open of
business on the first day of business of the following month.
The General Partner
Identification
We are managed by two general partners, Ashley Capital Management, Inc. and
Mr. Michael P. Pacult. See Management's Discussion and Analysis of Financial
Condition, The General Partners.
Current audited financials for Ashley are included in this prospectus. Also,
see Experts.
You will not acquire or otherwise have any interest in Ashley, the corporate
general partner, or any partnership other than Atlas, by purchasing the
partnership interests offered by the prospectus.
Michael P. Pacult
Mr. Pacult, age 59, is:
* one of the general partners
* the sole shareholder, director, principal, and officer of the corporate
general partner, and
* a principal, officer, director and 50% shareholder of Futures Investment
Company, the selling agent.
Mr. Pacult grew up in Detroit, MI and went to high school at Howe Military
School in Howe, IN. In 1969 he received a B.A. Degree from the University of
California, Berkeley, where he majored in English and in Zoology. Prior to
moving to Chicago in 1980 to become involved in the futures industry, he was
a part owner and Senior Vice President of a California real estate
development company.
In 1983, Mr. Pacult and his wife, Shira Del Pacult, established Futures
Investment Company, an Illinois corporation, to sell futures investments
managed by independent commodity trading advisors to retail clients. Futures
Investment Company serves as the principal selling agent of partnership Units
and maintains clearing agreements with Refco, Inc., Vision Limited
Partnership, and Lawrence-Bonfitto Trading Co.
In addition to the partnership interests offered pursuant to this prospectus,
Futures Investment Company offers for sale, on a best efforts basis,
securities of other issuers and engages in other broker-dealer activities.
In 1995, Mr. and Mrs. Pacult were featured in a book titled Interviews with
Top Futures Brokers by John Walsh that was published by the Center for
Futures Education. Mr. Pacult is a principal, an affiliated person and
registered representative of Futures Investment Company, now located at 5916
N. 300 West, P.O. Box C, Fremont, Indiana, 46737 an introducing broker and
member of the National Futures Association and a broker/dealer and member of
the National Association of Securities Dealers, Inc.
As of November 21, 2003, Mr. Pacult had a net worth of $3,976.000, which
consists primarily of real estate that is not readily marketable.
Mr. Pacult also manages two other commodity pools. Though Mr. Pacult
provides less than his full time to the business affairs of the partnership,
he devotes what time he believes is necessary to properly handle his
responsibilities as a general partner and as the principal of the corporate
general partner. See Management's Discussion and Analysis of Financial
Condition, The General Partners.
Ownership In Commodity Trading Advisor And Futures Commission Merchant
Neither Mr. Pacult, nor any of his affiliates, has any ownership in the
commodity trading advisor or the futures commission merchant. Mrs. Shira
Del Pacult, Mr. Pacult's wife, will have no ownership or role in the
management of the partnership or Ashley Capital Management, Inc. However,
she is an associated person, officer and fifty percent shareholder in Futures
Investment Company. Mr. and Mrs. Pacult are expected to sell partnership
interests in jurisdictions where they are licensed to sell securities.
Trading By The General Partner; Interest In The Pool
Ashley Capital Management, Inc. and Mr. Pacult, may, from time to time, trade
commodity interests for their own accounts. The records of any such trading
activities will not be made available to you. As stated earlier, neither
general partner will knowingly take positions on their behalf that would be
ahead of identical positions taken on behalf of the partnership.
Regulatory Notice
The regulations of the Commodity Futures Trading Commission and the National
Futures Association prohibit any representation by a person registered with
the Commodity Futures Trading Commission or by any member of the National
Futures Association, respectively, that such registration or membership in
any respect indicates that the Commodity Futures Trading Commission or the
National Futures Association, as the case may be, has approved or endorsed
such person or such person's trading programs or objectives. The
registrations and memberships described in this prospectus must not be
considered as constituting any such approval or endorsement. Likewise, no
commodity or securities exchange, nor the Securities and Exchange Commission,
nor any other regulatory agency has given or will give any such approval or
endorsement.
Trading Management
No Affiliation With Commodity Trading Advisor
The trading advisor is not affiliated with either general partner.
Additionally, the general partner will not serve as a trading advisor or
select any other trading advisors to trade that are affiliated with either
general partner or the introducing broker. See The Commodity Trading Advisor
for a summary of the trading advisor's performance information.
Rights of the General Partner With Respect To Commodity Trading Advisor
Selection And Allocation Of Equity
The general partner believes that a trading advisor should be retained on a
medium to long-term basis and should be allowed to implement fully its
trading strategy. However, the general partner may, in its sole discretion
and without prior notice to you:
* terminate the current or any future trading advisor
* select additional trading advisors, or
* change the allocation of equity to any trading advisor.
The general partner periodically reviews our performance to determine if a
current trading advisor should be changed or if others should be added. In
doing so, the general partner may use computer generated correlation analysis
or other types of automated review procedures to evaluate trading advisors.
If a trading advisor is replaced, the new trading advisor will receive
incentive fees independent of the previous trading advisor's performance.
As the general partner may engage more than one trading advisor, the
following may possibly occur:
* we may pay an incentive fee to one trading advisor which is trading
profitably while the other trading advisor produces losses which cause us to
be unprofitable overall
* as the trading advisors will trade independently, they may compete for
similar positions or take positions opposite each other, which may limit our
profitability.
Performance Record of the Partnership
The following capsule shows our past performance for the period from
inception of trading in October, 1999, through September 30, 2003. Past
performance is not necessarily indicative of future results.
Atlas Futures Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 2003 2002 2001 2000 1999
January 4.08 (4.86) (7.36) (2.88) N/A
February 21.04 (5.41) (4.44) (1.04) N/A
March (3.47) 3.42 7.62 (4.46) N/A
April 2.92 (5.24) (4.29) 1.47 N/A
May 12.60 0.00 0.86 12.16 N/A
June (5.23) 12.85 (2.93) 4.95 N/A
July (3.93) 5.22 3.91 (7.90) N/A
August (2.37) 3.32 1.92 9.72 N/A
September 3.58 7.65 (5.98) (0.68) N/A
October (12.94) 11.62 (7.23) (0.66)
November (5.65) (4.05) 8.44 2.36
December 15.99 (0.95) 18.97 (6.45)
Year 29.77 10.97 (5.70) 31.76 (4.88)
Name of Pool: Atlas Futures Fund, LP
How Offered: Publicly offered pursuant to Form S-1 Registration Statement
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Principal Protected: No
Date of Inception of trading: October, 1999
Aggregate Subscriptions: $7,856,855
Net Asset Value of the pool: $7,563,219 on total units outstanding: 4,444
Net Asset Value Per Unit: $1,701.89
Largest Monthly Draw-Down**: 10-02/12.94%
Worst Peak-to-Valley Draw-Down***: 9-02 to 11-02/17.86%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
The Commodity Trading Advisor - Clarke Capital Management, Inc.
The general partner has engaged a single commodity trading advisor, Clarke
Capital Management, Inc. to trade for the partnership, and has assigned
substantially all the partnership's equity, minus a 3% reserve, to it.
Clarke Capital Management, Inc., an Illinois corporation, maintains its main
business office and main business telephone at: 116 W. 2nd Street, Hinsdale,
Illinois 60521; (630) 323-5913. The books and records of Clarke will be kept
and made available for inspection at its main business office.
Business Background
The business background of Clarke and its principal for at least five (5)
years is as follows:
Mr. Clarke spent the period of 2/83 through 2/85 as an independent contractor
trading equities and options for Rice, Naegele & Associates of Chicago, a
firm involved in private speculation. From 2/85 through 3/89, Mr. Clarke, as
an independent contractor, traded equities and options in a firm account of
Shatkin Investment Corp., then a clearing member of the Chicago Board Options
Exchange. From 3/89 to 11/89, Mr. Clarke, as an independent contractor,
traded equities and options in a firm account of French-American Securities,
a private investment company based in Chicago. From 11/89 to 12/9/93, Mr.
Clarke was self-employed, developing methods to trade futures and other
commodity interests and trading various personal accounts. As of December 9,
1993, Mr. Clarke has been employed as an associated person and principal of
Clarke Capital Management, Inc., a registered commodity trading advisor.
Clarke Capital Management, Inc. was incorporated in September 1993 for the
purpose of acting as a commodity trading advisor. It was registered with the
Commodity Futures Trading Commission on October 25, 1993. Clarke's required
performance disclosure is located below under Performance Record of the
Trading Advisor.
There have never been any administrative, civil, or criminal proceedings
against Clarke Capital Management, Inc. or Mr. Clarke.
Description Of Trading Program
The exact nature of Clarke's trading strategy is proprietary and
confidential. The following description is of necessity general and is not
intended to be all-inclusive.
Although the programs offered by Clarke differ in certain respects, they
share a number of common elements. Under all programs, Clarke's trading
strategy is strictly technical in nature. No fundamental analysis is used.
The strategy was developed from analysis of patterns of actual price
movements, and is not based on analysis of supply and demand factors, general
economic factors, or world events. Clarke has conducted analysis of these
price patterns to determine procedures for initiating and liquidating
positions in the markets in which it trades.
The general trading strategy of all of Clarke's programs is trend following.
Most, but not all, trade initiations and liquidations are in the direction of
the trend. Clarke employs techniques that utilize a number of trading models
acting independently. Each model generates it own entry and exit signals and
trades both sides of the market (long and short). With minor differences only
for long or short positions, a particular model trades all markets with the
same rules and parameters, regardless of the program. Clarke reserves the
right to make adjustments in the exact entry or exit price a model uses from
program to program in order to attempt to reduce the impact of slippage from
large block orders being executed at the same price. The models vary from
intermediate through long-term to very long-term in time-frame focus and
testing has been done in order to select only those models that have good
performance characteristics across a wide range of conditions and
complementary performance with all other models in a program. None of the
models has been custom tailored to any individual market or group of markets.
Performance Record Of The Trading Advisor
Clarke Capital Management, Inc. - Domestic Diversified Program
(Closed as of June, 2000)
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Clarke Capital Management, Inc. - Domestic Diversified Program
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2000(Jan - Jun) 1999 1998 1997 1996 1995 1994 1993
2.40 2.04 15.86 13.76 13.84 18.76 3.51 (0.01)
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Name of Trading Program: Domestic Diversified Program (Closed)
Inception of Client Account Trading: December, 1993
Inception of Trading Pursuant to Program: December, 1993
Accounts Under Management: 0
Total Assets Managed by CTA (Actual Value): $220,077,058
Total Assets Traded Pursuant to Program (Actual Value): $0
Worst Monthly Percentage Draw-down**: 4-98/12.09%
Worst Peak-to-Valley % Draw-down***: 2-97 to 4-98/22.14%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Clarke Capital Management, Inc. - Worldwide Program
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Clarke Capital Management, Inc. - Worldwide Program
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2003(Sep) 2002 2001 2000 1999 1998 1997 1996
17.70 15.80 (9.49) 17.03 12.74 33.09 24.65 44.53
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Name of Trading Program: Worldwide Program
Inception of Client Account Trading: December, 1993
Inception of Trading Pursuant to Program: January, 1996
Accounts Under Management: 86
Total Assets Managed by CTA (as of 8/03): $220,077,058
Total Assets Traded Pursuant to Program (as of 8/03): $29,913,555
Worst Monthly Percentage Draw-down**: 12-96/8.48%
Worst Peak-to-Valley % Draw-down***: 3-01 to 12-01/16.63%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Clarke Capital Management, Inc. - Global Basic Program
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Clarke Capital Management, Inc. - Global Basic Program
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2003(Sep) 2002 2001 2000 1999 1998 1997 1996
28.06 13.66 (0.25) 50.59 6.89 42.64 52.22 152.52
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Name of Trading Program: Global Basic Program
Inception of Client Account Trading: December, 1993
Inception of Trading Pursuant to Program: February, 1996
Accounts Under Management: 82
Total Assets Managed by CTA (as of 8/03): $220,077,058
Total Assets Traded Pursuant to Program (as of 8/03): $9,012,796
Worst Monthly Percentage Draw-down**: 8-97/18.94%
Worst Peak-to-Valley % Draw-down***: 3-01 to 11-02/31.89%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Clarke Capital Management, Inc. - Global Magnum Program
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Clarke Capital Management, Inc. - Global Magnum Program
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2003(Sep) 2002 2001 2000 1999 1998 1997
38.71 10.10 17.10 39.51 2.39 45.97 25.18
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Name of Trading Program: Global Magnum Program
Inception of Client Account Trading: December, 1993
Inception of Trading Pursuant to Program: August, 1997
Accounts Under Management: 52
Total Assets Managed by CTA (as of 8/03): $220,077,058
Total Assets Traded Pursuant to Program (as of 8/03): $9,479,780
Worst Monthly Percentage Draw-down**: 10-97/9.89%
Worst Peak-to-Valley % Draw-down***: 10-01 to 10-02/25.43%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Clarke Capital Management, Inc. - Millennium Program
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Clarke Capital Management, Inc. - Millennium Program
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2003(Sep) 2002 2001 2000 1999 1998
23.72 35.28 2.88 42.75 5.85 37.29
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Name of Trading Program: Millennium Program
Inception of Client Account Trading: December, 1993
Inception of Trading Pursuant to Program: January, 1998
Accounts Under Management: 25
Total Assets Managed by CTA (as of 8/03): $220,077,058
Total Assets Traded Pursuant to Program (as of 8/03): $141,902,316
Worst Monthly Percentage Draw-down**: 3-03/19.33%
Worst Peak-to-Valley % Draw-down***: 3-01 to 4-02/24.67%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Clarke Capital Management, Inc. - Orion Program
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Clarke Capital Management, Inc. - Orion Program
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2003(Sep) 2002 2001 2000 1999 (Jul - Dec)
14.81 10.54 (1.14) 18.31 (4.19)
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Name of Trading Program: Orion Program
Inception of Client Account Trading: December, 1993
Inception of Trading Pursuant to Program: July, 1999
Accounts Under Management: 14
Total Assets Managed by CTA (as of 8/03): $220,077,058
Total Assets Traded Pursuant to Program (as of 8/03): $1,942,951
Worst Monthly Percentage Draw-down**: 10-02/7.56%
Worst Peak-to-Valley % Draw-down***: 5-01 to 2-02/9.51%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Clarke Capital Management, Inc. - MJC Aggressive Multi-Sector Fund, L.P.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Clarke Capital Management, Inc. - MJC Aggressive Multi-Sector Fund, L.P.
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2003 2002 2001 2000 1999 1998 1997 1996 1995
20.01 43.94 5.51 46.22 10.43 61.99 51.89 108.64 17.54
Name of Pool: MJC Aggressive Multi-Sector Fund, L.P.
Type of Pool: Privately offered to accredited investors
Inception of Trading: July, 1995
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Aggregate Gross Additions (May 03): $21,266,658
Aggregate Gross Withdrawals (May 03): $19,116,566
Current Net Asset Value (May 03): $22,100,000
Worst Monthly Percentage Draw-down**: 12-96/11.07%
Worst Peak-to-Valley % Draw-down***: 11-01 to 4-02/18.40%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Clarke Capital Management, Inc. - Triumph Futures Fund - Clarke Venture LLC
(Closed as of Dec, 2000)
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Clarke Capital Management, Inc. - Triumph Futures Fund - Clarke Venture LLC
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2000 1999 1998 (Sep - Dec)
20.79 (0.16) 14.74
Name of Pool: Triumph Futures Fund - Clarke Venture LLC
Type of Pool: Offshore Fund
Inception of Trading: September, 1998
Name of Commodity Trading Advisor: Clarke Capital Management, Inc.
Current Net Asset Value (Dec 2000): $333,405
Worst Monthly Percentage Draw-down**: 7-00/6.11%
Worst Peak-to-Valley % Draw-down***: 1-99 to 5-99/16.21%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
Performance Record Of Other Programs Sponsored By The General Partner
The following is a summary of the prior performance of the other programs
sponsored by the general partner and its affiliates.
Mr. Michael Pacult has sponsored two other public commodity pools, Bromwell
Financial Fund, LP which is actively trading and Providence Select Fund, LP,
which has not yet commenced business.
Performance Record Of Bromwell Financial Fund, Limited Partnership
Mr. Pacult serves as an individual general partner and as the principal of a
corporate general partner, Belmont Capital Management, Inc., both of which
manage another commodity pool called Bromwell Financial Fund, Limited
Partnership. Bromwell was declared effective by the Securities and Exchange
Commission on March 16, 2000 and commenced business on July 11, 2000.
Bromwell is traded by Fall River Capital, LLC.
Bromwell pays various expenses in relation its operation including:
* a monthly management fee of 1/12%, or 1% annually, to its trading advisors
* a quarterly incentive fee of 20% on all new net profits to its trading
advisors
* a quarterly incentive fee of 5% on all new net profits to its corporate
general partner
* a 4% annual continuing service fee to the selling agents
* round turn brokerage commissions of approximately $22 per contract plus
give up fees (foreign exchange commission rates are expected to be higher).
The following capsule shows the past performance of Bromwell Financial Fund,
LP for the period from inception of trading in July, 2000 through September
30, 2003. Past Performance Is Not Necessarily Indicative Of Future Results.
You will receive no interest in Bromwell Financial Fund or any other entity
except Atlas Futures Fund by your purchase of partnership interests offered
by the Atlas Prospectus and supplements including this supplement.
Bromwell Financial Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
2003 (Sep) 2002 2001 2000 (Jul - Dec)
2.98 (4.82) (1.84) (2.71)
Name of Pool: Bromwell Financial Fund, LP
How Offered: Publicly offered pursuant to Form S-1 Registration Statement
Name of Commodity Trading Advisors: Fall River Capital, LLC
Principal Protected: No
Date of Inception of trading: July, 2000
Net Asset Value of the pool: $1,233,806 on total units outstanding: 1,318
Net Asset Value Per Unit: $936
Largest Monthly Draw-Down**: 4-01/16.49%
Worst Peak-to-Valley Draw-Down***: 9-02 to 11-02/23.20%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
The Futures Commission Merchant
The general partner has selected Citigroup Global Markets, Inc. 388 Greenwich
St., New York, New York 10013 to serve as our futures commission merchant.
It holds, supervises and controls approximately 97% of all of our equity on
deposit which is used for trading by the commodity trading advisor.
Citigroup Global Markets, Inc. is registered as a futures commission merchant
pursuant to the Commodity Exchange Act and is a member of the National
Futures Association. As required by law, the general partner will provide
notice to you within 21 days of any change in the futures commission
merchant.
Regulations of the Commodity Futures Trading Commission require disclosure of
any material administrative, civil, or criminal actions against the futures
commission merchant, or any of its principals, within five years of the date
of this prospectus. These disclosures are made in the prospectus under the
caption Legal Matters - Litigation and Claims.
The inclusion in this prospectus of the identity and certain disclosure
information for Citigroup Global Markets, Inc. as the futures commission
merchant does not mean that it has endorsed or passed upon the sufficiency of
this prospectus or the suitability of an investment in this partnership for
any prospective purchaser, or that it will be involved in the management of
the partnership or the sale of units.
All equity of the partnership used for trading by the commodity trading
advisor is held on deposit under the supervision and control of Citigroup
Global Markets, Inc. The margin requirements to hold futures positions are
revised by the various exchanges and Refco, Inc., from time to time. The
commodity trading advisor makes trades outside the U.S. that are margined in
non-U.S. currency. Accordingly, for trades selected by the trading advisor
on those exchanges, the partnership is exposed to changes in the exchange
rate for those currencies while any of those positions are held.
Federal Income Tax Aspects
Scope Of Tax Presentation
This presentation is based on:
* the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder which were in effect on September 30,
2003, and
* the express intent of the general partner to:
* operate the partnership as authorized and limited by the limited
partnership agreement, and
* cause us to invest only our equity capital and not to borrow money to
operate the partnership , and
* the belief by the general partner that no less than ninety percent of the
income generated by us will be from interest income and the trade of
commodities.
Any change in the Internal Revenue Code or deviation from the above
intentions could alter this presentation and also have adverse tax
consequences on this partnership and you. For instance, if we were taxed as
a corporation, we would pay tax and you would have to pay a second tax. In
addition, if we were taxed as a corporation, none of the deductions for
expenses would pass through to your tax return.
If we are audited by the IRS, significant factual questions may arise which,
if challenged by the IRS, might only be resolved at considerable legal and
accounting expense to both you and us. Any adjustment made to our return
will flow through to your return and could result in a separate audit of your
individual return. We will report our income for tax and book purposes under
the accrual method of accounting and our tax year will be the calendar year,
or such other period as is required under section 706(b) of the Internal
Revenue Code. During taxable years in which little or no profit is generated
from trading activities, you may still have interest income which will be
taxed to you as ordinary income.
This discussion assumes you are an individual and is not intended as a
substitute for careful planning; particularly, since the income tax
consequences of an investment in the partnership will not be the same for all
taxpayers. Accordingly, you are urged to consult your tax advisors with
specific reference to your tax situation.
All matters upon which we have obtained an opinion of tax counsel are
discussed under the caption Tax Opinion below.
No Legal Opinion As To Certain Material Tax Aspects
We will not request a legal opinion in regard to any State income tax issue.
In addition, our tax counsel cannot opine upon:
* any Federal income tax issue which involves a determination by the IRS of
the facts related to our operation, or
* any other matter which may be subject to IRS interpretation or adjustment
upon audit.
For example, commodity trading advisor fees are aggregated with employee
business expenses and other expenses of producing income, and the aggregate
of such expenses is deductible only to the extent such amount exceeds 2% of
the your adjusted gross income. The Federal income tax deductibility of
these expenses depends upon factual determinations related to our operation
by the general partner.
Partnership Tax Status And Net Worth Of The General Partner
The Internal Revenue Code, at Section 7701, provides the criteria used to
identify a corporation which cannot be present if a partnership is to be
taxed as a partnership. A partnership must have two or more of the
following:
* decentralized management
* unlimited liability
* limited transferability of shares, and
* limited continuation of existence.
The limited partnership agreement obligates the general partner to operate
the partnership in a manner which meets this test.
If we were taxed as a corporation:
* we would pay taxes at the corporate rates upon our income and gains
* items of deduction and losses would be deductible only by us and not by
you
* tax credits would be available only to us and not to you, and
* all or a part of any distributions we make to you could be taxable as
dividend income and would not be deductible by us in computing our taxable
income.
This would substantially increase the total amount of taxes paid on your
investment income and potentially limit your expense deductions.
Historically, the right of redemption, similar to your right to redeem your
partnership interests, renders a pool, such as ours, to be deemed a publicly
traded partnership, taxed as a corporation. However, the Revenue Act of 1987
provides an exception. The exception requires 90% or more of our gross
income to be derived from interest and the trade of commodities. If the
principal activity of the partnership is buying and selling commodities,
qualifying income includes interest, dividends, and income from futures,
options or forward contracts on commodities. The general partner intends to
limit the sources of income so that this exception will apply to us. In
addition, the general partner has placed restrictions upon the right of
redemption. See The Limited Partnership Agreement, Redemptions and Exhibit
A, Right of Redemption.
No IRS Ruling
We have not applied for a ruling from the Internal Revenue Service regarding
our status as a partnership or with regard to any other tax aspect, nor do we
intend to seek a ruling. In the absence of a ruling, there can be no
assurance that the IRS will not attempt to take a position adverse to the
partnership.
Tax Opinion
This prospectus accurately summarizes all material Federal matters and tax
consequences to you. In the opinion of The Scott Law Firm, P.A.:
* we will be treated as a partnership for Federal income tax purposes;
* the allocations of profits and losses made when partners redeem their
partnership interests should be upheld for Federal income tax purposes;
* based upon our contemplated trading activities, the IRS should consider us
as conducting a trade or business; and, as a result, the ordinary and
necessary business expenses we incur while conducting our commodity futures
trading business should not be subject to limitation under Section 67 or
Section 68 of the Internal Revenue Code;
* the profit share should be respected as a distributive share of our income
allocable to Atlas Futures Fund, Limited Partnership; and
* the contracts we trade, as described in this prospectus, should satisfy
the commodities trading safe harbor as described in section 864(b) of the
Internal Revenue Code.
Such opinion is based on the Internal Revenue Code as of December 31, 2003
and a review of the Limited Partnership Agreement, and is conditioned upon
the following representations of facts by the general partner:
* at all times, we will be operated in accordance with the Delaware Uniform
Limited Partnership Act and the Limited Partnership Agreement attached hereto
as Exhibit A
* for our first two years of operation, the aggregate deductions claimed by
the partners as their distributive shares of our net losses will not exceed
the equity capital invested in the partnership
* no creditor who makes us a loan, including margin accounts, will have or
acquire, as a result of making the loan, any direct or indirect interest in
our capital, profits or property, other than as a secured creditor
* the general partner will at all times actively direct the affairs of the
Partnership
* the general partner:
* will possess substantial assets, exclusive of its interest in us or any
other limited partnership, which can be reached by our general creditors
within the meaning of Treasury Regulation Section 301.7701 2(d)(2) or
* will otherwise comply with the tax code general partner requirements
imposed upon sole corporate general partners of limited partnerships
* interests in the partnership:
* will be transferable only upon approval of the general partner
* will not be traded on an established securities market, and
* will not be readily tradable on a secondary market or the substantial
equivalent thereof
* we will not be registered under the Investment Advisor's Act of 1940; and
* over 90% of our earned income will be qualifying income as that term is
defined in the IRS Act of 1987.
The Scott Law Firm, P.A. is not able to opine upon the tax treatment of
expenses as that determination depends upon questions of fact to be resolved
by the general partner on our behalf. In addition, commodity trading advisor
fees are aggregated with employee business expenses and other expenses of
producing income, and the aggregate of such expenses is deductible only to
the extent such amount exceeds 2% of your adjusted gross income. It is the
general partner's position that our intended operations will qualify as a
trade or business. If this position is sustained, the brokerage commissions
and performance fees will be deductible as ordinary and necessary business
expenses. Syndication costs to organize the partnership and offering
expenses will not be deductible or amortizable by us or you.
Any change in these representations or the operative facts will prevent us
and you from relying upon the legal opinion from The Scott Law Firm, P.A.
Passive Loss And Unrelated Business Income Taxes Rules
In addition to the imposition of a corporate level tax on publicly traded
partnerships, special rules apply to partnerships in regard to the
application of the passive loss and unrelated business income tax rules. In
Notice 88-75 issued on June 17, 1988, the IRS provided guidance as to
partnership operation. The general partner intends to cause us to comply
with the applicable provisions of these guidelines. In the event our
expenses were deemed not to qualify as deductions from trading profits, your
total taxes would increase while your distributions would remain the same.
Basis Loss Limitation
Generally, the basis of your interest in the partnership for tax purposes is
equal to the cost
* decreased, but not below zero, by your share of any partnership losses and
distributions, and
* increased by your share of any partnership income.
You may not deduct losses in excess of the adjusted basis for your interest
in the partnership at the end of the partnership year in which such losses
occurred. However, you may carry forward any excess to such time, if ever,
as the basis for the interest in the partnership is sufficient to absorb the
loss. Upon the sale or liquidation of your interest in the partnership, you
will recognize a gain or loss for Federal income tax purposes equal to the
difference between the amount you realize in the transaction and the basis
for your interest in the partnership at the time of such sale. For
individuals, capital losses would offset capital gains on a dollar for dollar
basis, with any excess capital losses subject to a $3,000 annual limitation.
Accordingly, it is possible for you to sustain a loss from our operation
which will not be allowed as a deduction for tax purposes or will be limited
to a $3,000 annual limitation.
At-Risk Limitation
If you borrow money to invest in the partnership, there are at risk
limitations that will apply to you. Section 465 of the Internal Revenue Code
provides that the amount of any loss allowable for any year to be included in
your personal tax return is limited to the amount paid for the partnership
interests, or tax basis, of the amount at risk. Losses already claimed may
be subject to recapture if the amount at risk is reduced as a result of:
* cash distributions from the activity
* deduction of losses from the activity
* changes in the status of indebtedness from recourse to non-recourse
* the commencement of a guarantee, or
* other events that affect your risk of loss.
You should consider the at risk provisions in arranging debt financing for
purchasing a partnership interest.
Income And Losses From Passive Activities
Internal Revenue Code Section 469 limits the deductibility of what are called
passive losses from business activities in which the taxpayer does not
materially participate. Under temporary Treasury regulations,
* the trading of personal property, such as futures contracts, will not be
treated as a passive activity,
* partnership gains allocable to you will not be available to offset passive
losses from sources outside the partnership, and
* partnership losses will not be subject to limitation under the passive
loss rules.
Allocation Of Profits And Losses
The allocation of profits, losses, deductions and credits contained in the
Limited Partnership Agreement will be recognized for tax purposes only if the
allocations have substantial economic effect. While the general partner
believes that the Limited Partnership Agreement either meets the requirements
or satisfies a substitute capital account equivalency test, the Limited
Partnership Agreement does not meet a third requirement, that a partner must
make a capital contribution to the partnership equal to any deficit in its
capital account. Accordingly, under the regulations and the Limited
Partnership Agreement, losses would not be allocable to you in excess of your
capital contribution plus properly allocated profits less any prior
distributions. The general partner intends to allocate income and losses in
accordance with the Limited Partnership Agreement which it believes complies
with applicable Internal Revenue Code Section 704. However, no assurances
can be given that the IRS will not attempt to change any allocation that is
made among partners admitted on different dates, which could adversely affect
the amount of taxable income to one partner as opposed to another partner.
Taxation Of Futures And Forward Transactions
The commodity trading advisor selected to trade for us is expected to trade
primarily, but not exclusively, in Section 1256 Contracts, which is any:
* regulated futures contract
* foreign currency contract
* non-equity option, or
* dealer equity option.
A regulated futures contract is a futures contract:
* if it is traded on or subject to the rules of:
* a national securities exchange which is registered with the Securities
and Exchange Commission,
* a domestic board of trade designated as a contract market by the
Commodity Futures Trading Commission or any other board of trade, exchange or
other market designated by the Secretary of Treasury, and
* which is marked-to-market to determine the amount of margin which must be
deposited or may be withdrawn. Marked-to-market means that the position is
taken in the account on day one at that price. Each day the position is
held, it is valued for account purposes at the price of the contract on the
close of that day.
A foreign currency contract is negotiated between banks and accepted for
trade among banks and private investors. The partnership is expected to
purchase or sell these contracts to speculate on the value of foreign
currency as contrasted with the U. S. dollar. These contracts are exempt
from the Commodity Exchange Act and are excluded from marked-to-market
treatment.
A non-equity option means an option which is treated on a qualified board or
exchange and the value of which is not determined directly or indirectly by
reference to any stock, group of stocks, or stock index unless there is in
effect a designation by the Commodity Futures Trading Commission of a
contract market for a contract bond or such group of stocks or stock index.
A dealer equity option means, with respect to an options dealer, only a
listed option which is an equity option, is purchased or granted by such
options dealer in the normal course of his activity of dealing in options,
and is listed on the qualified board or exchange on which such options dealer
is registered.
All Section 1256 contracts will be marked-to-market upon the closing of every
contract, including closing by taking an offsetting position or by making or
taking delivery, by exercise or being exercised, by assignment or being
assigned; or by lapse or otherwise. Also, all open Section 1256 contracts
held by us at our fiscal year-end will be treated as sold for their fair
market value on the last business day of such taxable year. This will result
in all unrealized gains and losses being recognized for Federal income tax
purposes for the taxable year. As a consequence, you may have tax liability
relating to unrealized partnership profits in open positions at year-end.
Sixty percent of any gain or loss from a Section 1256 contract will be
treated as long-term capital gain or loss, and 40% as short-term capital gain
or loss, regardless of the actual holding period of the individual contracts.
The character of a your distributive share of profits or losses of the
partnership from Section 1256 contracts will thus be 60% long-term capital
gain or loss and 40% short-term capital gain or loss. Your distributive
share of such gain or loss for a taxable year will be combined with your
other items of capital gain or loss for such year in computing your Federal
income tax liability. The Internal Revenue Code contains rules designed to
eliminate the tax benefits flowing to high-income taxpayers from the
graduated tax rate schedule and from the personal and dependency exemptions.
The effect of these rules is to tax a portion of a high-income taxpayer's
income at a marginal tax rate of 39.6%. However, long-term capital gains are
now subject to a maximum tax rate of 28%. A limited partner, other than a
corporation, estate or trust, may elect to carry-back any net Section 1256
contract losses to each of the three preceding years. However, the marked-
to-market rules do not apply to interests in personal property of a nature
which are actively traded other than Section 1256 contracts.
Section 988 Foreign Currency Transactions
A Section 988 transaction is defined as the entering or acquiring of any
forward contract, futures contract, option or similar financial instrument if
the amount to be received or to be paid by reason of a transaction is
denominated in a nonfunctional currency or is determined by reference to one
or more nonfunctional currencies. If the Section 988 transaction results in
a gain or loss, it is considered to be a foreign currency gain or loss to the
extent it does not exceed gain or loss realized by reason of changes in
exchange rates.
Capital Gain And Loss Provisions
If long-term capital gains exceed short-term capital losses, the net capital
gain will be taxed at the same rates as ordinary income. Subject to an
annual limitation of $3,000, you may deduct the excess of capital losses over
capital gains against ordinary income. Excess capital losses which are not
used to reduce ordinary income in a particular taxable year may be carried
forward to, and treated as capital losses incurred in, future years.
Business For Profit
Internal Revenue Code Section 183 sets forth the general rule that no
deduction is allowable to an individual for an activity not engaged in for
profit. These are activities other than those constituting a trade or
business or engaged in for the production or collection of income or for the
management, conservation, or maintenance of property held for the production
of income. The determination of whether an activity is engaged in for profit
is based on all facts and circumstances, and no single factor is
determinative. The general partner believes that by employing independent
commodity trading advisors with strong track records of production of
profits, it is more likely than not, that our activity will be considered an
activity engaged for profit.
Self-Employment Income And Tax
Section 1402 of the Internal Revenue Code provides that an individual's net
earnings from self-employment shall not include the distributive share of
income or loss from any trade or business carried on by a partnership of
which he is a limited partner. Therefore, you should not consider that the
ordinary income from the partnership constitutes net earnings from self-
employment for purposes of either the Social Security Act or the Internal
Revenue Code.
Individual Alternative Minimum Tax
Non-corporate taxpayers are subject to the alternative minimum tax to the
extent it exceeds their regular tax. For an entity taxable as an estate or
trust, the first $22,500 of alternative minimum taxable income is exempt from
the alternative minimum tax, while for an individual it is the first $33,750
of such income, $45,000 for a joint return, or $22,500 for married taxpayers
filing separately. The exemption amounts will be phased out at the rate of
$.25 for each dollar of alternative minimum taxable income in excess of
$150,000 for married taxpayers filing jointly, $112,500 for single taxpayers,
and $75,000 for married taxpayers filing separately, estates and trusts.
Alternative minimum taxable income in excess of the exemption amount, after
any applicable phase-out, will be subject to a two-tiered rate schedule.
Alternative minimum taxable income, net of exemption, up to and including
$175,000 will be taxed at a rate of 26% and alternative minimum taxable
income over $175,000 will be taxed at a 28% rate. Taxpayers liable for the
alternative minimum tax are required to make estimated tax payments.
Interest Related To Tax Exempt Obligations
Section 265(a)(2) of the Internal Revenue Code will disallow any deduction
for interest on indebtedness of a taxpayer incurred or continued to purchase
or carry obligations the interest on which is wholly exempt from tax. The
IRS announced in Revenue Procedure 72-18 that the proscribed purpose will be
deemed to exist with respect to indebtedness incurred to finance a portfolio
investment. The Revenue Procedure further states that a limited partnership
interest will be regarded as a portfolio investment, unless rebutted by other
evidence. Therefore, if you own tax-exempt obligations, the IRS might take
the position that any interest expense incurred by you to purchase or carry
partnership interests should be viewed as incurred by you to continue
carrying tax exempt obligations, and that you should not be allowed to deduct
all or a portion of the interest on any such loans.
Not A Tax Shelter
In the opinion of tax counsel, we do not constitute a tax shelter, as defined
in Internal Revenue Code Section 6111(c), since the general partner intends
to operate the partnership so that the tax shelter ratio will not exceed two-
to-one at the close of any of the first five years. Accordingly, the general
partner does not plan to register us as a tax shelter with the IRS.
Taxation Of Foreign Partners
An investment in the partnership should not, by itself, cause a foreign
partner to be engaged in a trade or business within the United States. A
foreign person is subject to a 30% withholding tax, unless reduced or
exempted by treaty, on United States source income which is not effectively
connected with the conduct of a United States trade or business. This tax
must be withheld by the person having control over the payment of such
income. Accordingly, we may be required to withhold tax on items of such
income which are included in the distributive share of a foreign partner,
whether or not the income was actually distributed. If we are required to
withhold tax on such income of a foreign partner, the general partner may pay
such tax out of its own funds and then be reimbursed out of the proceeds of
any distribution to or redemption of partnership interests by the foreign
partner.
Partnership Entity-Audit Provisions-Penalties
The Internal Revenue Code provides that the tax treatment of items of
partnership income, gain, loss, deduction and credit will be determined at
the partnership level in a single partnership proceeding. The Limited
Partnership Agreement has appointed Ashley Capital Management, Inc. as the
tax matters partner to settle any issue involving any partner with less than
a 1% profits interest unless such a partner, upon notice, properly elects not
to give such authority to the tax matters partner. The tax matters partner
may seek judicial review for any adjustment to partnership income, but there
will be only one such action for judicial review to which all partners will
be bound. The Internal Revenue Code provides that a partner must report a
partnership item consistently with its treatment on the partnership return,
unless the partner specifically identifies the inconsistency or can show that
its treatment of the partnership item on its return is consistent with a
schedule furnished to the partner by the partnership. Failure to comply with
this requirement may result in penalties for underpayment of tax and could
result in an extended statute of limitations. The statute of limitations for
adjustment of tax with respect to partnership items will generally be three
years from the date of filing the partnership return.
Internal Revenue Code Section 6662 imposes a penalty for a substantial
understatement of income tax equal to 20% of the amount of any underpayment
attributable to that understatement. Understatement is defined as meaning
the excess of the correct amount of tax required to be shown on the return
over the amount of tax which is actually shown on the return. A substantial
understatement exists for any taxable year if the amount of the
understatement for the taxable year exceeds the greater of:
* 10% of the correct tax, or
* $5,000, or $10,000, in the case of a corporation other than an S
corporation or a personal holding company.
Employee Benefit, Retirement Plans And IRA's
The Employee Retirement Income Security Act of 1974 governs:
* employee benefit plans, such as:
* a qualified pension, profit-sharing or stock bonus plan, or
* a qualified health and welfare plan; and
* individual retirement accounts, commonly called IRAs.
Before you invest in us through one of these qualified plans, you should
consult your own legal and financial advisors, and the fiduciary of your plan
should take into account the facts and circumstances of your plan, and
consider applicable fiduciary standards under the above act.
Acceptance of subscriptions on behalf of employee benefit plans is not a
representation by the general partner or any other party that this investment
meets all legal requirements or is appropriate with respect to investments by
any particular plan. The person with investment discretion should consult
the attorney for the plan as to the propriety of an investment in this
partnership.
The Limited Partnership Agreement
This prospectus explains all material terms of the Limited Partnership
Agreement; however, you are urged to read the entire agreement. See Exhibit
A.
Formation Of The Partnership
Our Certificate of Limited Partnership is dated and was filed on January 12,
1998 pursuant to the Delaware Uniform Limited Partnership Act.
You are not liable for our losses, debts and obligations beyond your
investment amount and your share of any of our undistributed assets, so long
as you do not take part in the management of the business of the partnership
or transact any business for the partnership.
According to the Limited Partnership Agreement, this partnership will not
terminate or dissolve upon any limited partner's death, incompetence,
withdrawal, insolvency, bankruptcy, termination, liquidation, dissolution or
other legal incapacity. Also, legal representatives of such limited partner
may redeem their partnership interests, but will not have the right to
withdraw their interest or become a substituted limited partner solely by
reason of such incapacity.
Units of Partnership Interests
The amount of partnership interests you hold will determine your percentage
interest in our net assets. The percentage interest will be calculated from
time to time by dividing the number of units of partnership interests you
hold by the aggregate number of outstanding units of partnership interests.
Management Of Partnership Affairs
Only the general partner may manage this partnership. You will not take part
in our business or affairs nor will you have any voice in our management or
operations.
The limited partners who collectively hold a majority of the partnership
interests must give written approval of any material change in either the
Limited Partnership Agreement or the partnership structure.
Without the limited partners' approval, the general partner is allowed to:
* change the management and incentive fees within the limits prescribed by
law
* add, change and delete trading advisors
* add, change and delete introducing brokers
* add, change and delete futures commission merchants
* redeem and return a limited partner account
* change the commodity contracts traded, or
* change the diversification of our assets among the various types of or in
the positions held in commodity contracts.
To the extent the law permits, such limited partners who hold a majority of
the partnership interests may vote to amend any term in the Limited
Partnership Agreement and, if necessary, the Certificate of Limited
Partnership without the agreement of the general partner. This includes
removing the general partner and electing a new general partner.
The general partner may not make trades on our behalf. Trading must be done
by independent commodity trading advisors selected by the general partner.
General Prohibitions
We may not borrow from or loan money or any other assets to any person.
However, this shall not apply to the incurrence of debt to a partner or an
affiliate with respect to:
* the offering of partnership interests for sale
* registration, or
* initiation and maintenance of our trading positions.
We may not permit rebates or give-ups to be received by the general partner
or any of its affiliates. Nor may we permit the general partner or any of
its affiliates to engage in reciprocal business arrangements that would
circumvent the foregoing prohibition. However, an affiliate or the general
partner may provide goods or services, including brokerage, at a competitive
cost to us.
The general partner or its affiliates are not required to advance or loan
funds to the partnership. If the general partner makes any advance or loan
to the partnership, it will not receive interest in excess of its interest
costs, nor will it receive interest in excess of the amounts which would be
charged the partnership by unrelated banks on comparable loans for the same
purpose. The general partner shall not receive points or other financing
charges or fees regardless of the amount.
Additional Offerings
The general partner may has sole discretion to:
* end any offering of partnership interests
* register additional partnership interests, and
* make additional public or private offerings of partnership interests.
You will not have any preemptive, preferential or other rights with respect
to the issuance or sale of any additional partnership interests. We have not
limited the amount of capital contributions or the maximum amount of
partnership interests that may be issued, offered or sold.
Partnership Accounting, Reports, And Distributions
You will have a capital account, and its initial balance will be the amount
you paid for your partnership interests. The net assets of this partnership
will be determined monthly, and any change from the previous month will be
passed on to your account in the ratio that your account bears to all
accounts.
The general partner has sole discretion to make distributions from profits or
net assets. On a monthly basis the you will receive a report containing:
* the net unit value as of the end of both the current and previous month
* the percentage change in net unit value between the two months
* the amount of distributions during the month
* the aggregate fixed commission in lieu of round-turn brokerage
commissions, other fees, administrative expenses, and reserves for claims and
other extra-ordinary expenses incurred or accrued by us during the month, and
* any other information required by the rules of the Commodity Futures
Trading Commission.
You or your duly authorized representative may inspect our books and records
and any records related to your account, provided:
* you give adequate notice
* you do so at a reasonable time, and
* you make copies at your expense.
Federal Tax Allocations
At the end of each fiscal year, our capital gain or loss and ordinary income
or loss will be allocated among the partners, while compensating for our fees
and expenses. You must include your share of such items in your personal
income tax return.
Transfer Of Partnership Interests Only With Consent Of The General Partner
You are admitted to this partnership and are registered on the partnership
records as the owner of the partnership interests you purchase. As a
registered investor in this partnership, you may:
* receive all distributions, allocations of losses and withdrawals, and
reductions of capital contributions, and
* vote on any matters submitted to the limited partners for voting.
You may transfer your partnership interests only with the written consent of
the general partner. The general partner may not approve the transfer if it:
* is requested before two years from the date of purchase
* is not made for all of your partnership interests or, if you are not
assigning all of your partnership interests, you will not retain more than
five units of partnership interests
* will violate any applicable laws or governmental rules or regulations,
including without limitation:
* any applicable Federal or state securities laws, or
* the Delaware limited partnership laws
* will jeopardize our ability to be taxed as a partnership and not as a
corporation, or
* will affect characterizations or treatment of income or loss.
Termination Of The Partnership
This partnership will terminate:
* at 11:59 p.m. twenty-one years from the date of the Limited Partnership
Agreement
* by election of the general partner, in its sole discretion, to terminate
and dissolve this partnership
* upon the dissolution, death, resignation, withdrawal, bankruptcy or
insolvency of the general partner, unless the limited partners unanimously
elect to carry on the business and a new general partner has been substituted
* if it does not pay its annual franchise fee and file its annual report
with the State of Delaware, which will cause it to be dissolved under
Delaware law
* upon any event which makes the continued existence of the partnership
unlawful, or
* upon the unanimous vote of the Limited Partners.
Meetings
We are not required to hold regular meetings, however, partners may call
meetings to vote on certain issues, including:
* amendment of the limited partnership agreement; provided, however, any
amendment which modifies the compensation or distributions to the general
partner or which affects the duties of the general partner requires its
consent
* removal of the general partner and election of a new general partner
* cancellation of any contract for services with the general partner,
without penalty, upon 60 days written notice; provided, however, the maximum
period of any contract between the general partner and the partnership is one
year; and, provided further, should any amendment to this partnership
agreement attempt to modify the compensation or distributions to which the
general partner is entitled or which affects the duties of the general
partner, such amendment will become effective only upon the consent of the
general partner.
* the right to approve, prior to sale, the sale or distribution, outside the
ordinary course of business, of all or substantially all of the assets of the
partnership.
* dissolution of the partnership.
* change of any of the partnership's basic investment policies or in the
structure of the partnership.
See Management of Partnership Affairs.
The general partner must receive in person or by certified mail a written
request with a check to cover the cost of sending notice of the meeting to
all partners. The written request must be signed by one or more partners who
collectively own 10% or more of the outstanding partnership interests. The
general partner then has 15 days to call the meeting
Redemptions
Redemption allows you to receive your share of the net assets of this
partnership. You may not redeem or liquidate any partnership interests until
twelve months after you have been allocated partnerships interests from your
subscription proceeds. The general partner must receive a written request
for redemption no less than ten business days prior to the desired effective
date of redemption. The effective date of redemption must be the last day of
the then current or a future month.
The general partner will try its best to comply with the redemption request
within twenty days following the effective date. However, you should be
aware that the general partner may be unable to timely comply with the
request if there is not enough cash. This may be because the trading advisor
cannot liquidate the positions it has taken, or because there are contingent
claims on partnership assets.
If the general partner notifies you in writing, it may declare additional
redemption dates or cause the partnership to redeem fractions of units of
partnership interests. If the general partner notifies you in writing prior
to registering partnership interests for public sale, it may redeem your
partnership interests if you don't hold the required minimum amount of
partnership interests which it has established.
We will not charge a redemption fee.
Plan For Sale Of Partnership Interests
The Selling Agent
We are offering and selling the partnership interests through Futures
Investment Company, 5916 N. 300 West, P.O. Box C, Fremont, Indiana 46737, a
broker/dealer registered with the National Association of Securities Dealers.
The general partner or Futures Investment Company may also select other
broker dealers to sell the partnership interests. However, no other selling
agents have been appointed to date and none are expected to be appointed.
All partnership interests will be sold on a best efforts basis, which means
the selling agent will try, but not guarantee, to sell all the partnership
interests.
Although we are offering a maximum of $15,000,000 in partnership interests,
the Limited Partnership Agreement authorizes the general partner to sell
additional partnership interests. Accordingly, the partnership may sell an
unlimited amount of partnership interests.
Futures Investment Company is owned solely by Mr. Michael Pacult and his
wife, Mrs. Pacult, who is an individual general partner and the sole
shareholder, director, and officer of the corporate general partner. Mr. and
Ms. Pacult are also registered with the National Futures Association as
associated persons and with the National Association of Securities Dealers,
Inc. as registered representatives of Futures Investment Company. In those
capacities, they earn sales and trailing commissions on the partnership
interests they sell and service.
Futures Investment Company is an Illinois corporation which was incorporated
on December 6, 1983. It was officially registered as a fully disclosed
broker dealer with the National Association of Securities Dealers on July 24,
1997. Currently, Futures Investment Company principally offers and trades
securities and commodities as a Commodity Futures Trading Commission
registered introducing broker. It has and will continue to participate in
offerings of other commodity pools sponsored by the general partner or other
persons or entities in competition with us.
Escrow
New partners will be admitted to the partnership on the first business day of
the month following the month in which their subscription documents were
accepted. Until they are admitted to the partnership and assigned
partnership interests, all cash and subscription documents will be held in a
segregated escrow account maintained by the general partner as escrow agent.
No escrow funds will be available to pay partnership debts or claims.
The interest earned on your subscription during the escrow period will be
deposited in our account, and you will receive a corresponding amount of
additional partnership interests at the current month end net asset value per
partnership interest.
If you are investing in the partnership by transferring funds from an account
at Vision Limited Partnership, your funds may not be placed in escrow.
Cash from subscriptions held in the escrow account will be invested in short-
term investments which meet applicable regulatory requirements. These
include United States Treasury Bills or other comparable interest-bearing
instruments which are expected to be liquid, substantially risk-less
instruments, with correspondingly low yields.
There cannot be any assurance that any additional partnership interests will
be sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of partnership interests.
Subscription Procedure
To purchase partnership interests, you must:
* complete and execute a suitability questionnaire and a subscription
agreement (Exhibit D), and
* deliver the executed subscription documents and check to the sales agent.
You should make out the check to "Escrow Account for Atlas Futures Fund, LP".
Your check will then be delivered to the escrow agent within 24 hours of
receipt.
Under no circumstances should you:
* make payment in cash, or
* make any checks payable to the partnership, the general partner, the
selling agent or any of their registered representatives or affiliates.
Subscription Amounts
You must purchase at least $25,000 in partnership interests; however, the
general partner may reduce this to not less than the regulatory minimum of
$5,000. You may make additional investments above $25,000 in $1,000
increments. However, you may not invest more than 10% of your net worth in
the partnership. If you have not provided collectible funds, whether in the
form of a bad check or draft, or otherwise, any partnership interests
recorded in our books in your favor shall be cancelled.
Revocation and Acceptance of Subscription
Once you have purchased partnership interests, you may revoke your
subscription within five business days after you send it to us, or longer, if
there are Federal or state securities laws which allow you to do so. After
the lapse of five business days from submission, your subscription will be
irrevocable and, thereafter, you must redeem pursuant to the terms of the
Limited Partnership Agreement. The partnership interests offered to you are
subject to prior sale. The general partner has sole discretion to reject any
subscription, in whole or in part, within five days. If your subscription is
accepted, the general partner will send you written confirmation of your
purchase, and you will be admitted as a limited partner on the first business
day of the following month.
Net Worth Tests
To purchase partnership interests, you must have at least:
* a minimum net worth of $150,000, exclusive of home, home furnishings and
automobiles, or
* a minimum annual gross income of $45,000 and a minimum net worth of
$45,000, exclusive of home, home furnishings and automobiles.
You may have to satisfy higher amounts if you live in certain states. See
Exhibit D.
In the case of sales to fiduciary accounts, the net worth and income
standards may be met by the beneficiary, the fiduciary account, or the donor
or grantor who supplies the funds to purchase the partnership interests, if
the donor or grantor is the fiduciary.
Investor Warranties
When you execute and deliver your Subscription Agreement and Power of
Attorney, you are making representations and warranties to the general
partner, the futures commission merchant and the selling agent.
Specifically:
(a) you are of legal age to execute the Subscription Agreement and Power of
Attorney and are legally competent to do so
(b) you acknowledge that you have received, read and understand the
prospectus, including the Limited Partnership Agreement, prior to subscribing
for partnership interests
(c) all information you have given to the general partner or that is set
forth in the Subscription Agreement and Power of Attorney submitted by you is
correct and complete as of the date of the agreement. Also, if there are any
change in such information prior to acceptance of your subscription, you will
immediately furnish the revised or corrected information to the general
partner
(d) unless (e) or (f) below apply to you, your subscription is made with your
own funds for your own account and not as trustee, custodian or nominee for
another.
(e) the subscription, if made as custodian for a minor, is a gift you have
made to the minor and is not made with the minor's funds; or, if not a gift,
the representations as to net worth and annual income apply only to such
minor.
(f) if you are subscribing in a representative capacity:
* you have full power and authority to purchase the partnership interests
and enter and be bound by the Subscription Agreement and Power of Attorney on
behalf of the entity for which you are purchasing the partnership interests,
and
* such entity has full right and power to purchase the partnership
interests and enter and be bound by the Subscription Agreement and Power of
Attorney and become a limited partner pursuant to the Limited Partnership
Agreement attached as Exhibit A.
The general partner, the futures commission merchant and the selling agent
may rely upon any of the above representations and warranties as a defense to
any claim made against it.
Legal Matters
Litigation And Claims
Within the past 5 years as of the date of this prospectus, there have been no
material administrative, civil or criminal actions against either general
partner, the commodity trading advisor, the principal selling agent, or any
principal or affiliate of any of them. This includes any actions pending, on
appeal, concluded, threatened, or otherwise known to them. The futures
commission merchant, Citigroup Capital Markets, Inc., does have litigation
material to it which is unrelated to us.
In the ordinary course of its business, Citigroup is a party to various
claims and regulatory inquiries.
Both the Department of Labor and the Internal Revenue Service ("IRS") have
advised Citigroup that they were or are reviewing transactions in which
Ameritech Pension Trust purchased from Citigroup and certain affiliates
approximately $20.9 million in participations in a portfolio of motels owned
by Motels of America, Inc. and Best Inns, Inc. With respect to the IRS
review, Citigroup and certain affiliated entities have consented to
extensions of time for the assessment of excise taxes that may be claimed to
be due with respect to the transactions for the years 1987, 1988 and 1989.
In December 1998, Citigroup was one of twenty-eight market-making firms that
reached a settlement with the US Securities and Exchange Commission In the
Matter of Certain Market Making Activities on NASDAQ. Citigroup without
admitting or denying the factual allegations, agreed to an order that
required that it:
(1) cease and desist from committing or causing any violations of Sections
15(c)(1) and (2) of the Securities Exchange Act of 1934 and Rules 15c1-2,
15c2-7 and 17a-3 thereunder,
(2) pay penalties totaling approximately $760,000, and
(3) submit certain policies and procedures to an independent consultant for
review.
In April 2000, CGM and several other broker-dealers entered into a settlement
with the IRS and the US Securities and Exchange Commission concluding an
industry-wide investigation into the pricing of Treasury securities in
advanced refunding transactions.
Beginning in April 2002, Citigroup and several other broker dealers received
subpoenas and/or requests for information from various governmental and self-
regulatory agencies and Congressional committees as part of their research,
initial public offerings allocation and spinning-related inquiries. With
respect to issues raised by the US Securities and Exchange Commission, the
National Association of Securities Dealers and the New York Stock Exchange
about Citigroup's and the other firms' e-mail retention practices, Citigroup
and several other broker/dealers and the above regulatory agencies entered
into a settlement agreement in December 2002. Salomon Smith Barney Inc. (now
Citigroup) agreed to pay a penalty in the amount of $1.65 million but did not
admit to any allegations of wrongdoing.
On April 28, 2003, Citigroup announced final agreements with the US
Securities and Exchange Commission, the National Association of Securities
Dealers, the New York Stock Exchange and the New York Attorney General (as
lead state among the 50 states, the District of Columbia and Puerto Rico) to
resolve on a civil basis all of their outstanding investigations into its
research and Initial Public Offering allocation and distribution practices
(the "Research Settlement"). As part of the Research Settlement, Citigroup
has consented to the entry of
(1) an injunction under the Federal securities laws to be entered in the
United States District Court for the Southern District of New York, barring
Solomon Smith Barney (now Citigroup) from violating provisions of the Federal
securities laws and related National Association of Securities Dealers and
New York Stock Exchange rules relating to research, certain Initial Public
Offering allocation practices, the safeguarding of material nonpublic
information, and the maintenance of required books and records and requiring
Citigroup to adopt and enforce new restrictions on the operation of research;
(2) an National Association of Securities Dealers Acceptance Waiver and
Consent requiring Citigroup to cease and desist from violations of
corresponding National Association of Securities Dealer rules and requiring
Citigroup to adopt and enforce the same new restrictions;
(3) an New York Stock Exchange Stipulation and Consent requiring Citigroup
to cease and desist from violations of corresponding New York Stock Exchange
rules and requiring Citigroup to adopt and enforce the same new restrictions;
and
(4) an Assurance of Discontinuance with the New York Attorney General
containing substantially the same or similar restrictions.
As required by the Research Settlement, Citigroup expects to enter into
related settlements with each of the other states, the District of Columbia
and Puerto Rico. Consistent with the settlement-in-principle announced in
December 2002, the Research Settlement requires Citigroup to pay $300 million
for retrospective relief, plus $25 million for investor education, and commit
to spend $75 million to provide independent third-party research to its
clients at no charge. Citigroup reached these final settlement agreements
without admitting or denying any wrongdoing or liability. The Research
Settlement does not establish wrongdoing or liability for purposes of any
other proceeding. The $300 million was accrued during the 2002 fourth
quarter.
To effectuate the Research Settlement, the US Securities and Exchange
Commission filed a Complaint and Final Judgment in the United States District
Court for the Southern District of New York. The Court has not yet entered
the Final Judgment and the Court has asked for certain additional
information. The National Association of Securities Dealers has accepted the
Letter of Acceptance, Waiver and Consent entered into with Citigroup in
connection with the Research Settlement, and in May 2003, the New York Stock
Exchange advised Citigroup that the Hearing Panel's Decision, in which it
accepts the Research Settlement, has become final. Citigroup is currently in
discussions with various states with respect to completion of the state
components of the Research Settlement. Payment will be made in conformance
with the payment provision of the Final Judgment to be entered by the Court.
In May 2003, the US Securities and Exchange Commission, New York Stock
Exchange and National Association of Securities Dealers issued subpoenas and
letters to Citigroup requesting documents and information with respect to
their continuing investigation of individuals in connection with the
supervision of the research and investment banking department of Citigroup.
On June 23, 2003, the West Virginia Attorney General filed an action against
Citigroup and nine other firms that were parties to the Research Settlement.
The West Virginia Attorney General alleges that the firms violated the West
Virginia Consumer Credit and Protection Act in connection with their research
activities and seeks monetary penalties.
On July 28, 2003, Citigroup's parent corporation, Citibank, N.A., 390
Greenwich Street, 5th Floor, New York, New York 10013 entered into a final
settlement with the US Securities and Exchange Commission to resolve an
outstanding investigation into Citigroup's transactions with Enron and Dynegy
Inc. Pursuant to the settlement, Citigroup has, among other terms,
(1) consented to the entry of an administrative cease and desist order, which
bars Citigroup from committing or causing violations of provisions of the
Federal securities laws, and
(2) agreed to pay $120 million ($101.25 million allocable to Enron and $18.75
million allocable to Dynegy).
Citibank, N.A. entered into this settlement without admitting or denying any
wrongdoing or liability, and the settlement does not establish wrongdoing or
liability for purposes of any other proceeding.
On July 28, 2003, Citibank, N.A. entered into an agreement with the United
States Office of the Comptroller of the Currency and Citigroup entered into
an agreement with the Federal Reserve Bank of New York to resolve their
inquiry into certain of Citigroup's transactions with Enron. Pursuant to the
agreements, Citibank and Citigroup have agreed to submit plans to the these
two regulators regarding the handling of complex structured finance
transactions. Also on July 28, 2003, Citigroup entered into a settlement
agreement with the Manhattan District Attorney's Office to resolve its
investigation into certain of Citigroup's transactions with Enron. Pursuant
to that settlement, Citigroup has agreed to pay $25.5 million and to abide by
its agreements with the US Securities and Exchange Commission, US Office of
the Comptroller of the Currency and Federal Reserve Bank of New York.
There are no other pending or threatened legal matters against Citigroup, its
parent or any principal or affiliate of any of them that are reportable.
Having said that, additional lawsuits containing similar claims to those
described above may be filed in the future.
Citigroup does not believe that the foregoing matters are material to the
clearing and execution services it will render to the Partnership.
Legal Opinion
The Scott Law Firm, P.A., 940 Northeast 79th Street, Miami, FL 33138, serves
as special counsel to us and the general partner with respect to:
* the offering of partnership interests
* the preparation of this prospectus
* the legality of the partnership interests offered, and
* the classification of the partnership as a partnership for tax purposes.
From time to time, the firm will also advise us and the general partner
regarding the maintenance of our tax status, the legality of any subsequent
offers, and the legality of any transfers by partners.
The general partner has granted the firm the right to employ other law firms
to help in matters that relate to the sale of partnership interests or our
operation.
The Scott Law Firm, P.A. will not give you or any other partner legal advice.
You should seek investment, legal, and tax advice from your own legal counsel
and other professionals of your choice.
Experts
We rely on various experts to perform services for us.
Frank L. Sassetti, & Co., 6611 West North Avenue, Oak Park, IL 60302 is our
accounting and auditing expert, and is responsible for auditing the books and
records of both us and Ashley Capital Management, Inc. It has also prepared
the audited financial statements in this prospectus and prepares our tax
returns.
Mr. James Hepner, certified public accountant, 1824 N. Normandy, Chicago, IL
60635 is another accounting expert who:
* has established our original books and records
* handles the journal entries
* prepares the monthly and annual financial statements and statements of
account, and
* prepares our K-1s.
The corporate general partner serves as our tax partner. The general partner
is required by the rules and regulations of the Commodity Futures Trading
Commission to send you unaudited monthly and annual account statements, and
financial statements audited by an independent certified public accountant.
We will send you the unaudited monthly statements as soon as practicable
after the end of each month, and will send you the audited annual financial
statements within 90 days after the end of each calendar year.
Additional Information
By our general partner, we have filed a registration statement on Form S-1
with the Securities and Exchange Commission under the Securities Act of 1933
to allow us to issue and sell our limited partnership interests.
This prospectus does not contain all of the information in the Form S-1
filing, for example, the Selling Agreement and the futures commission
merchant Customer Agreements which established the partnership accounts. The
description in this prospectus of these exhibits are summaries. For further
information regarding the partnership and the partnership interests offered,
you may inspect and copy, without charge, our complete filings, including
this prospectus, the exhibits and periodic reports, at the public reference
facilities of the Securities and Exchange Commission at 450 Fifth Street, NW,
Washington, D.C. 20549.
Also, the Securities and Exchange Commission offices will send you copies of
all or any part of this filing by mail, upon payment of the prescribed rates.
This prospectus and other electronic filings made through the Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system are publicly available
through the Commission's Web site, http://www.sec.gov.
In addition, our books and records will be maintained for six years at the
office of the corporate general partner Ashley Capital Management, Inc., 5916
N. 300 west, P.O. Box C, Fremont, IN 46737, (219) 833-1306, with a duplicate
set maintained at the offices of Mr. James Hepner, Certified Public
Accountant, at 1824 N. Normandy, Chicago, IL 60635, (773) 804-0074.
You are invited to review any materials available to the general partner
relating to:
* this partnership
* our operations
* this offering
* the commodity experience and trading history of:
* the commodity trading advisor
* the general partner
* the commodity brokers, and
* their respective officers, directors and affiliates
* the Advisory Agreement between us and the commodity trading advisor
* the Customer Agreements between us and our Commodity Brokers
* the commodity trading advisor's disclosure document
* the forms filed with the National Futures Association for any registered
entity or person related to this partnership, and
* any other matters relating to the laws applicable to this offering or this
partnership.
The officer and staff of the general partner will answer all reasonable
inquiries you may have. All the above materials will be made available at
any mutually convenient location at any reasonable hour after reasonable
prior notice.
The general partner will allow you to obtain any additional information
necessary to verify any representations or information in this prospectus and
its exhibits, assuming the general partner possess such information or can
acquire it with reasonable effort and expense. However, your review is
limited by the proprietary and confidential nature of the commodity trading
advisor's trading systems and by the confidentiality of personal information
relating to other investors.
[The balance of this page has been intentionally left blank.]
********************************************************************************
Part II
Statement of Additional Information
Atlas Futures Fund, Limited Partnership
This Statement of Additional Information is the second part of a two-part
document and should be read in conjunction with Part I of Atlas Futures
Fund's disclosure document, both of which are combined in this single
prospectus.
Table of Contents
Financial Statements
A. Atlas Futures Fund, Limited Partnership
Audited Financial Statements as of December 31, 1999, 2000 and 2001
Financial Statements for the Nine Months Ended
September 30, 2003 (Unaudited-Reviewed)
and the Year Ended December 31, 2002 (Audited)
B. Ashley Capital Management, Inc.
Audited Financial Statements as of December 31, 1999, 2000 and 2001
Financial Statements for the Nine Months Ended
September 30, 2003 (Unaudited-Reviewed)
and the Year Ended December 31, 2002 (Audited)
Appendix I - Commodity Terms And Definitions; State Regulatory Glossary
Exhibit A - Limited Partnership Agreement
Exhibit B - Request For Redemption
Exhibit C - Suitability Information
Exhibit D - Subscription Agreement And Power Of Attorney
Exhibit E - Escrow Agreement
Exhibit F - Investment Advisory Contract
The date of this Statement of Additional Information is December ___, 2003.
********************************************************************************
ATLAS FUTURES FUND,
LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2003 AND 2002
(A Review)
GENERAL PARTNER:
Ashley Capital Management, Inc.
% Corporate Systems, Inc.
101 North Fairfield Drive
Dover, Kent County, Delaware 19901
To The Partners
Atlas Futures Fund, Limited Partnership
Dover, Kent County, Delaware
We have reviewed the balance sheet, including
the schedule of investments, of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of
September 30, 2003 and the related statements of operations for the three and
nine months ended September 30, 2003 and 2002, and the statements of
partners' equity and cash flows for the nine months ended September 30, 2003
and 2002. These financial statements are the responsibility of the
Partnership's management.
We conducted our review in accordance with
standards established by the American Institute of Certified Public
Accountants. A review of interim financial information consists principally
of applying analytical procedures to financial data and making inquires of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
auditing standards generally accepted in the United States, the objective of
which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review we are not aware of any
material modifications that should be made to the financial statements
referred to above for them to be in conformity with accounting principles
generally accepted in the United States.
We have previously audited, in accordance with
auditing standards generally accepted in the United States, the balance
sheet, including the schedule of investments, of ATLAS FUTURES FUND, LIMITED
PARTNERSHIP as of December 31, 2002 and the related statements of operations,
partner's equity and cash flows for the year then ended (not presented
herein); and in our report dated February 11, 2003, we expressed an
unqualified opinion on these financial statements. In our opinion, the
information set forth in the accompanying balance sheet as of December 31,
2002 is fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.
s/ Frank L. Sassetti & Co.
October 21, 2003
Oak Park, Illinois
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
ASSETS
September 30,
2003 December 31,
(A Review) 2002
Cash and cash equivalents (Note 7) $ 8,212 $ 111,876
United States Treasury Obligations (Note 6) 4,988,422 3,190,667
Accrued interest receivable 6,641 6,860
Due from limited partners 10,001 -
Prepaid trading commissions 3,294 252
Equity in Commodity Futures Trading Accounts -
Cash (Note 6) 2,208,663 1,785,556
Net unrealized gains on open commodity
futures contracts (Note 8) 512,850 1,183,957
$7,738,083 $6,279,168
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accrued accounting and auditing fees payable $ 6,000 $ 6,500
Sales commissions payable 976 -
Partner redemptions payable 167,890 72,578
Total Liabilities 174,866 79,078
PARTNERS' CAPITAL
Limited partners - (4,443.83 and 4,699.63 units) 7,563,217 6,200,090
General partner - (0 units) (Note 2)
Total Partners' Capital 7,563,217 6,200,090
$7,738,083 $6,279,168
The accompanying notes are an integral
part of the financial statements
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, 2003 September 30, 2002
REVENUES
Realized gain (loss) from
trading in futures $ (554,809)$3,519,865 $1,313,395 $ 807,767
Realized gain on exchange rate
fluctuation 10,076 76,997 2,550 42,116
Changes in unrealized gains
(losses) on open commodity
futures contracts 542,223 (671,107) 158,443 766,093
Interest income 14,886 51,622 23,004 63,780
Redemption penalty 148 14,537 667 3,923
Total Revenues 12,524 2,991,914 1,498,059 1,683,679
EXPENSES
Commissions (Note 4) 167,901 488,869 232,589 432,735
Incentive fees (Note 4) 597,100 269,367 269,367
Management fees (Note 4) 38,210 106,720 30,934 85,133
Professional accounting and
legal fees 24,589 74,196 23,416 53,906
Other operating and
administrative expenses 642 2,009 625 963
Total Expenses 231,342 1,268,894 556,931 842,104
NET INCOME (LOSS) $ (218,818)$1,723,020 $ 941,128 $ 841,575
NET INCOME (LOSS) -
Limited partnership unit $ (48.46)$ 388.81 $ 203.09 $ 173.50
General partnership unit $ $ $ $
The accompanying notes are an integral
part of the financial statements
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(A Review)
2003 2002
Amount Units Amount Units
Beginning balance-
December 31 $6,200,090 4,727.47 $6,102,458 5,186.28
Partner additions 1,114,348 649.40 393,536 316.95
Partner withdrawals (1,468,381) (933.04) (863,273) (803.60)
Syndication costs paid (5,860) (5,250)
Net income 1,723,020 841,575
Ending Balance -
September 30 $7,563,217 4,443.83 $6,469,046 4,699.63
2003 2002
Value per unit $1,701.96 $1,376.50
Total partnership units 4,443.83 4,699.63
The accompanying notes are an integral
part of the financial statements
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(A Review)
2003 2002
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $1,723,020 $ 841,575
Adjustments to reconcile net income
to net cash provided by
operating activities
Changes in operating assets and
liabilities
Equity in Commodity Futures
Trading Accounts 248,000 (617,900)
Accrued interest receivable 219 282
U.S. Treasury Obligations (1,797,755) (1,789)
Prepaid expense (3,042) (1,890)
Accrued commissions payable 976 (10,597)
Management and incentive
fees payable 259,293
Accounting and auditing
fees payable (500) 58
Net Cash Provided By
Operating Activities 170,918 469,032
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from sale of units, net
of sales commissions 1,104,347 428,740
Syndication and registration costs (5,860) (5,250)
Cash partner redemptions (1,373,069) (863,273)
Net Cash (Used in)
Financing Activities (274,582) (439,783)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (103,664) 29,249
CASH AND CASH EQUIVALENTS
Beginning of period 111,876 32,224
End of period $ 8,212 $ 61,473
The accompanying notes are an integral
part of the financial statements
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
September 30, 2003
(A Review)
Contracts Value Percent
United States Commodity Futures Positions, Held Long
26 Dec '03 Soybean Meal $ 43,680 0.57 %
52 Dec '03 Brent Crude 46,644 0.60
26 Dec '03 U.S. Treasury Bond 24,469 0.32
26 Dec '03 10 - Year Treasury Notes 16,250 0.21
26 Nov '03 Soybeans 82,875 1.07
26 Dec '03 Live Cattle 8,320 0.11
52 Dec '03 New York Cotton 50,440 0.65
26 Dec '03 New York Gold 28,860 0.37
26 Dec '03 Euro Foreign Exchange 44,200 0.57
52 Dec '03 Eurodollar 3,575 0.05
52 Dec '03 Japanese Yen 134,225 1.74
Total United States Commodity Futures Positions 483,538 6.26
European Commodity Futures Positions, Held Long
26 Dec '03 Eurex German Federal Bond 18,486 0.24
Total European Commodity Futures Positions 18,486 0.24
British Commodity Futures Positions, Held Long
26 Mar '04 Sterling (1,081) (0.01)
Total British Commodity Futures Positions (1,081) (0.01)
Total Commodity Futures Positions 500,943 6.49
The accompanying notes are an integral part
of the financial statements
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
September 30, 2003
(A Review)
Contracts Value Percent
Japanese Commodity Futures Positions, Sold Short
26 Sep '04 Corn 11,907 0.15
Total Commodity Futures Positions Sold Short 11,907 0.15
Net Commodity Futures Positions $512,850 6.64 %
The accompanying notes are an integral part
of the financial statements
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
September 30, 2003
(A Review)
Maturity
Value Value Percent
$5,000,000 United States Treasury Bills $4,988,422 64.71 %
Cash in Trading Accounts
United States Markets 1,392,473 18.06
Canadian Markets (39,882) (0.52)
Euro Dollar Markets 1,170,138 15.18
British Pound Markets (144,087) (1.87)
Japanese Yen Markets (35,692) (0.46)
Australian Dollar Markets (134,287) (1.74)
Total Cash in Trading Accounts 2,208,663 28.65
Total Investments $7,709,935 100.00 %
The accompanying notes are an integral part
of the financial statements
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Contracts Value Percent
United States Commodity Futures Positions, Held Long
42 March '03 US Treasury Bond $ 17,719 0.29%
42 March '03 10-Year Treasury Notes 32,813 0.53
41 March '03 5-Year Treasury Notes 54,484 0.88
83 March '03 2-Year Treasury Notes 79,281 1.29
21 March '03 New York Sugar 1,176 0.02
21 February '03 New York Unleaded Gas (36,427) (0.59)
21 February '03 New York #2 Heating Oil (45,335) (0.74)
21 March '03 New York Cotton (4,350) (0.07)
21 March '03 New York Silver 5,360 0.09
41 February '03 New York Gold 75,420 1.22
41 March '03 British Pound 48,800 0.79
102 March '03 Swiss Franc 366,275 5.95
81 March '03 Euro Foreign Exchange 359,588 5.84
106 March '03 Eurodollar 16,788 0.27
21 January '03 Gas Oil (17,325) (0.28)
21 February '03 Brent Crude 22,680 0.37
Total United States Commodity Futures Positions 976,947 15.86
Australian Commodity Futures Positions, Held Long
21 March '03 90 Day Australian Bill 857 0.01
42 March '03 3-Year Australian Treasury Bond 7,027 0.12
Total Australian Commodity Futures Positions 7,884 0.13
European Commodity Futures Positions, Held Long
40 March '03 Euribor 12,838 0.21
21 March '03 2-Year German Euro Schatz 4,622 0.08
20 March '03 10-Year German Euro Bund 34,794 0.56
Total European Commodity Futures Positions 52,254 0.85
The accompanying notes are an integral part
of the financial statements.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Contracts Value Percent
British Commodity Futures Positions, Held Long
61 June '03 Short Sterling $ 12,933 0.21%
41 March '03 Long Gilt 42,788 0.69
Total British Commodity Futures Positions 55,721 0.90
Japanese Commodity Futures Positions, Held Long
21 April '03 Rubber 2,658 0.04
22 October '03 Gold 20,053 0.33
Total Japanese Commodity Futures Positions 22,711 0.37
Total Commodity Futures Positions Held Long 1,115,517 18.11
United States Commodities Futures Positions, Sold Short
20 March '03 New York Coffee 64,125 1.04
21 March '03 Mexican Peso 4,938 0.08
Total United States Commodity Futures Positions 69,063 1.12
Japanese Commodity Futures Positions, Sold Short
21 March '03 Euro Yen (623) (0.01)
Total Commodity Futures Positions Sold Short 68,440 1.11
Net Commodity Futures Positions 1,183,957 19.22
The accompanying notes are an integral part
of the financial statements.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
Maturity
Value Value Percent
$3,200,000 United States Treasury Bills $3,190,667 51.80%
Cash in Trading Accounts
United States Markets 1,163,497 18.89
Canadian Markets (34,209) (0.55)
Eurodollar Markets 676,612 10.98
British Pound Markets 84,526 1.37
Japanese Yen Markets (35,561) (0.58)
Australian Dollar Markets (69,309) (1.13)
Total Cash in Trading Accounts 1,785,556 28.98
Total Investments $6,160,180 100.00%
The accompanying notes are an integral part
of the financial statements.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND 2002
(A Review)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Atlas Futures Fund, Limited Partnership (the Fund) was formed January
12, 1998 under the laws of the State of Delaware. The Fund is engaged in the
speculative trading of futures contracts in commodities, which commenced in
October, 1999. Ashley Capital Management, Inc. is the corporate general
partner and one of the commodity pool operators (CPO) of Atlas Futures Fund,
Limited Partnership. The commodity trading advisor (CTA) is Clarke Capital
Management, who has the authority to trade so much of the Fund's equity as is
allocated to it by the general partner.
Income Taxes - In accordance with the generally accepted method of
presenting partnership financial statements, the financial statements do not
include assets and liabilities of the partners, including their obligation
for income taxes on their distributive shares of the net income of the Fund
or their rights to refunds on its net loss.
Registration Costs - Costs incurred for the initial filings with the
Securities and Exchange Commission, Commodity Futures Trading Commission,
National Futures Association (the "NFA") and the states where the offering
was made were accumulated, deferred and charged against the gross proceeds of
offering at the initial closing as part of the offering expenses. The Fund
remains open to new partners, and incurs costs required to retain the ability
to issue new units. Such costs are treated in a similar manner. Costs of
recurring annual and quarterly filings with regulatory agencies are expensed
as incurred.
Revenue Recognition - Commodity futures contracts are recorded on the
trade date and are reflected in the balance sheet at the difference between
the original contract amount and the market value on the last business day of
the reporting period.
Market value of commodity futures contracts is based upon exchange or
other applicable market best available closing quotations.
Use of Accounting Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND 2002
(A Review)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Statement of Cash Flows - For purposes of the Statement of Cash Flows,
the Fund considers only cash and money market funds to be cash equivalents.
Net cash provided by operating activities includes no cash payments for
interest or income taxes for the nine months ended September 30, 2003 and
2002.
2. GENERAL PARTNER DUTIES
The responsibilities of the General Partner, in addition to directing
the trading and investment activity of the Fund, including suspending all
trading, include executing and filing all necessary legal documents,
statements and certificates of the Fund, retaining independent public
accountants to audit the Fund, employing attorneys to represent the Fund,
reviewing the brokerage commission rates to determine reasonableness,
maintaining the tax status of the Fund as a limited partnership, maintaining
a current list of the names, addresses and numbers of units owned by each
Limited Partner and taking such other actions as deemed necessary or
desirable to manage the business of the Partnership.
3. THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement provides, among other things, that -
Capital Account - A capital account shall be established for each
partner. The initial balance of each partner's capital account shall be the
amount of the initial contributions to the partnership.
Monthly Allocations - Any increase or decrease in the Partnership's net
asset value as of the end of a month shall be credited or charged to the
capital account of each Partner in the ratio that the balance of each account
bears to the total balance of all accounts.
Any distribution from profits or partners' capital will be made solely
at the discretion of the General Partners.
Allocation of Profit and Loss for Federal Income Tax Purposes - As of
the end of each fiscal year, the Partnership's capital gain or loss and
ordinary income or loss shall be allocated among the Partners, after having
given effect to the fees of the General Partner and the Commodity Trading
Advisors and each Partner's share of such items are includable in the
Partner's personal income tax return.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND 2002
(A Review)
3. THE LIMITED PARTNERSHIP AGREEMENT - CONTINUED
Redemption - No partner may redeem or liquidate any units until after
the lapse of six months from the date of the investment. Thereafter, a
Limited Partner may withdraw, subject to certain restrictions, any part or
all of his units from the partnership at the Net Asset Value per Unit on the
last day of any month with ten days prior written request to the General
Partner. A redemption fee payable to the Partnership of a percentage of the
value of the redemption request is charged during the first 24 months of
investment pursuant to the following schedule:
4% if such request is received ten days prior to the last trading day
of the sixth month after the date of the partner's investment in the Fund.
3% if such request is received during the seventh to twelfth month
after the investment.
2% if such request is received during the thirteenth to eighteenth
month.
1% if such request is received during the nineteenth to twenty-fourth
month.
0% thereafter.
4. FEES
The Fund is charged the following fees on a monthly basis since the
commencement of trading.
A management fee of 3% (annual rate) of the Fund's net assets allocated
to each CTA to trade will be paid to each CTA and 1% of equity to the Fund's
General Partner. Effective November 1, 2000, the management fee allocated to
each CTA was decreased to 0% (annual rate) and the management fee allocated
to the Fund's General Partner was increased to 2% (annual rate) of the Fund's
net assets.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND 2002
(A Review)
4. FEES - CONTINUED
An incentive fee of 25% of "new trading profits" will be paid to the
CTA. "New trading profits" includes all income earned by the CTA and expense
allocated to his activity. "New trading profits" are computed and paid
quarterly. In the event that trading produces a loss, no incentive fees will
be paid and all losses will be carried over to the following months until
profits from trading exceed the loss.
The Fund will pay fixed commissions of 9% (annual rate) of assets
assigned to be traded, payable monthly, to the Introducing Broker affiliated
with the General Partner. The Affiliated Introducing Broker will pay the
costs to clear the trades to the futures commission merchant and all PIT
Brokerage costs which shall include the NFA and exchange fees.
5. REALIZED GAIN ON EXCHANGE RATE FLUCTUATIONS
Certain trades executed by the Fund are denominated in foreign
currencies. Gains and losses on these transactions are recorded as futures
trading gains or losses at the U. S. dollar equivalent on the date the trade
is settled. Exchange rate fluctuation gain or loss is reflected when
residual amounts of foreign currencies are reconverted to U. S. dollars.
6. PLEDGED ASSETS
The U. S. Treasury Obligations and Cash in trading accounts are pledged
as collateral for commodities trading on margin.
7. CONCENTRATIONS
The Fund maintains its cash balances at a high credit quality financial
institution. The balances may, at times, exceed federally insured credit
limits.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND 2002
(A Review)
8. OFF BALANCE SHEET RISK
As discussed in Note 1, the Fund is engaged in speculative trading of
futures contracts in commodities. The carrying amounts of the Fund's
financial instruments and commodity contracts generally approximate their
fair values. Open commodity contracts had gross contract value of $40,230,800
on long positions and $335,277 on short positions at September 30, 2003.
Open commodity contracts had gross contract value of $93,764,073 on long
positions and $396,060 on short positions at September 30, 2002.
Although the gross contract values of open commodity contracts
represent market risk, they do not represent exposure to credit risk, which
is limited to the current cost of replacing those contracts in a gain
position. The unrealized gain on open commodity futures contracts at
September 30, 2003 and 2002 was $512,850 and $888,189, respectively.
********************************************************************************
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
YEARS ENDED
DECEMBER 31, 2001, 2000 AND 1999
(With Auditors' Report Thereon)
GENERAL PARTNER:
Ashley Capital Management, Inc.
% Corporate Systems, Inc.
101 North Fairfield Drive
Dover, Kent County, Delaware 19901
To The Partners
Atlas Futures Fund, Limited Partnership
Dover, Kent County, Delaware
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet, including the
schedule of investments, of ATLAS FUTURES FUND, LIMITED PARTNERSHIP as of
December 31, 2001 and the balance sheet, without the schedule of investments
as of December 31, 2000, and the related statements of operations, partners'
equity and cash flows for the years ended December 31, 2001, 2000 and 1999.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of ATLAS
FUTURES FUND, LIMITED PARTNERSHIP as of December 31, 2001 and 2000, and the
results of its operations and its cash flows for the years ended December 31,
2001, 2000 and 1999, in conformity with accounting principles generally
accepted in the United States.
Accountants: Frank L. Sassetti & Co.
Certified Public Accountants
Date: February 16, 2002 By: /s/ Frank L. Sassetti & Co.
Frank L. Sassetti & Co.
Certified Public Accountants
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
ASSETS
2001 2000
Cash (Note 7) $ 32,224 $ 560
United States Treasury Obligations (Note 6) 3,185,359 3,199,558
Accrued interest receivable 10,229 36,401
Due from limited partners 124,985 142,503
Equity in Commodity Futures Trading Accounts -
Cash (Note 6) 2,659,778 1,187,154
Net unrealized gain on open commodity futures
contracts (Note 8) 122,096 1,375,352
$6,134,671 $5,941,528
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accrued trading commissions payable $ 2,803 $ 14,268
Accrued management fees payable 10,074 7,672
Accrued incentive fees payable 318,405
Accrued accounting and auditing fees payable 8,542 4,193
Sales commissions payable 10,794 11,617
Partner redemption payable 27,591
Total Liabilities 32,213 383,746
PARTNERS' EQUITY
Limited partners - (5,186.28 and 4,434.4 units) 6,102,458 5,557,782
General partner - (0 units)
Total Partners' Equity 6,102,458 5,557,782
$6,134,671 $5,941,528
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2001 2000 1999
REVENUES
Realized gain from trading in futures $1,220,627 $ 356,986 $ 37,130
Realized gain/(loss) on exchange rate
fluctuation (5,679) 1,600 8
Changes in unrealized gain/(loss) on
open commodity futures contracts (1,253,256) 1,371,772 3,580
Interest income 182,304 162,762 8,709
Redemption penalty 4,947 9,567
Total Revenues 148,943 1,902,687 49,427
EXPENSES
Commissions 298,949 171,976 18,953
Management fees 110,751 104,921 8,816
Incentive fees 390,501 6,573
Professional accounting and legal fees 58,991 39,496 4,968
Organization costs 1,200
Other operating and administrative
expenses 2,824 5,456 257
Total Expenses 471,515 712,350 40,767
NET INCOME (LOSS) $ (322,572)$1,190,337 $ 8,660
NET INCOME (LOSS)-
Limited partnership unit $ (68.51)$ 361.85 $ 6.29
General partnership unit $ $ 97.04 $ 9.04
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
LIMITED PARTNERS GENERAL PARTNERS TOTAL PARTNERS' EQUITY
Amount Units Amount Units Amount Units
Balance -
Dec 31, 1998 $ $ 1,647 2.00 $ 1,647 2.00
Addition -
of 1789.234 units 1,651,584 1738.59 47,601 50.64 1,699,185 1,789.23
Net income (loss) 7,665 995 8,660
Balance -
Dec 31, 1999 1,659,249 1,738.59 50,243 52.64 1,709,492 1,791.23
Addition -
of 3092.404 units 3,138,897 3,092.41 3,138,897 3,092.41
Syndication costs
paid (16,864) (16,864)
Withdrawal -
of 449.237 units (409,154) (396.60) (54,926) (52.64) (464,080) (449.24)
Net income (loss) 1,185,654 4,683 1,190,337
Balance -
Dec 31, 2000 5,557,782 4,434.40 5,557,782 4,434.40
Addition -
of 1,233.673
units 1,466,150 1,233.67 1,466,150 1,233.67
Syndication costs
paid (24,501) (24,501)
Withdrawal -
of 481.785 units (574,401) (481.79) (574,401) (481.79)
Net income (loss) (322,572) (322,572)
Balance -
Dec 31, 2001 $6,102,458 5,186.28 $ $6,102,458 5,186.28
December 31, December 31, December 31,
2001 2000 1999
Value per unit $1,176.65 $1,253.33 $954.37
Total partnership units 5,186.28 4,434.40 1,791.23
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (322,572) $1,190,337 $ 8,660
Adjustments to reconcile net income
(loss) to net cash used in operating
activities -
Changes in operating assets and
liabilities -
Equity in Commodity Futures
Trading Accounts (219,368) (1,768,461) (794,045)
Accrued interest receivable 26,172 (29,904) (6,497)
U.S. Treasury Obligations 14,199 (2,508,449) (691,109)
Accrued commissions payable (12,288) 3,864 22,021
Management and incentive fees
payable (316,003) 312,002 14,075
Partner redemption payable (27,591) 27,591
Accounting and auditing fees payable 4,349 2,716 1,477
Net Cash Used In
Operating Activities (853,102) (2,770,304) (1,445,418)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of units, net
of sales commissions 1,483,668 3,189,059 1,587,749
Syndication and registration costs (24,501) (16,864) (80,941)
Partner cash redemptions (574,401) (464,080)
Net Cash Provided By
Financing Activities 884,766 2,708,115 1,506,808
NET INCREASE (DECREASE) IN CASH 31,664 (62,189) 61,390
CASH
Beginning of period 560 62,749 1,359
End of period $ 32,224 $ 560 $ 62,749
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2001
Contracts Value
United States Commodity Futures Position Held Long
21 March '02 Mexican Peso $ 4,462
Japanese Commodity Futures Positions Held Long
69 October '02 Gold 25,237
46 October '02 Platinum 45,305
46 November '02 Corn 13,320
Total Japanese Commodity Futures Positions 83,862
Total Commodity Futures Positions Held Long 88,324
U.S. Commodities Futures Positions Sold Short
23 March '02 Corn 5,750
23 March '02 Soybeans 6,325
23 February '02 NY #2 Heating Oil 19,996
Total U.S. Commodity Futures Positions Sold Short 32,071
Australian Commodity Futures Positions Sold Short
23 March '02 90 Day Aussie Bills 1,701
Total Commodity Futures Positions Sold Short 33,772
Net Commodity Futures Positions 122,096
$3,200,000 United States Treasury Bills 3,185,359
Cash in Trading Accounts
United States Markets 2,287,254
Canadian Markets (33,810)
Eurodollar Markets 374,838
British Pound Markets 74,787
Japanese Yen Markets (30,400)
Australian Dollar Markets (12,891)
Total Cash in Trading Accounts 2,659,778
Total Investments $5,967,233
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Atlas Futures Fund, Limited Partnership (the Fund) was formed January 12,
1998 under the laws of the State of Delaware. The Fund is engaged in
speculative trading of futures contracts in commodities, which commenced in
October, 1999. Ashley Capital Management, Inc. is the General Partner and
the commodity pool operator (CPO) of Atlas Futures Fund, Limited Partnership.
The commodity trading advisor (CTA) is Clarke Capital Management, who has the
authority to trade so much of the Fund's equity as is allocated to it by the
General Partner.
Income Taxes - In accordance with the generally accepted method of
presenting partnership financial statements, the financial statements do not
include assets and liabilities of the partners, including their obligation
for income taxes on their distributive shares of the net income of the Fund
or their rights to refunds on its net loss.
Registration Costs - Costs incurred for the initial filings with the
Securities and Exchange Commission, Commodity Futures Trading Commission,
National Futures Association (the "NFA") and the states where the offering
was made were accumulated, deferred and charged against the gross proceeds of
offering at the initial closing as part of the offering expense. Recurring
registration costs, if any, will be charged to expense as incurred.
Revenue Recognition - Commodity futures contracts are recorded on the trade
date and are reflected in the balance sheet at the difference between the
original contract amount and the market value on the last business day of the
reporting period.
Market value of commodity futures contracts is based upon exchange or other
applicable market best available closing quotations.
Use of Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund considers only cash and money market funds to be cash equivalents. Net
cash provided by operating activities include no cash payments for interest
or income taxes for the years ended December 31, 2001, 2000 and 1999.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Reclassification - Certain items in the previously issued 2000 financial
statements have been reclassified to conform to current year presentation.
2. GENERAL PARTNER DUTIES
The responsibilities of the General Partner, in addition to directing the
trading and investment activity of the Fund, include executing and filing all
necessary legal documents, statements and certificates of the Fund, retaining
independent public accountants to audit the Fund, employing attorneys to
represent the Fund, reviewing the brokerage commission rates to determine
reasonableness, maintaining the tax status of the Fund as a limited
partnership, maintaining a current list of names, addresses and numbers of
units owned by each Limited Partner and taking such other actions as deemed
necessary or desirable to manage the business of the Partnership.
3. THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement provides, among other things, that -
Capital Account - A capital account shall be established for each partner.
The initial balance of each partner's capital account shall be the amount of
the initial contributions to the partnership.
Monthly Allocations - Any increase or decrease in the Partnership's net
asset value as of the end of a month shall be credited or charged to the
capital account of each Partner in the ratio that the balance of each account
bears to the total balance of all accounts.
Any distribution from profits or partners' capital will be made solely at
the discretion of the General Partner.
Allocation of Profit and Loss for Federal Income Tax Purposes - As of the
end of each fiscal year, the Partnership's capital gain or loss and ordinary
income or loss shall be allocated among the Partners, after having given
effect to the fees of the General Partner and the Commodity Trading Advisors
and each Partner's share of such items are includable in the Partner's
personal income tax return.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
3. THE LIMITED PARTNERSHIP AGREEMENT - CONTINUED
Redemption - No partner may redeem or liquidate any Units until after the
lapse of six months from the date of the investment. Thereafter, a Limited
Partner may withdraw, subject to certain restrictions, any part or all of his
units from the Partnership at the Net Asset Value per Unit on the last day of
any month with ten days prior written request to the General Partner. A
redemption fee payable to the Partnership of a percentage of the value of
the redemption request is charged during the first 24 months of investment
pursuant to the following schedule:
4% if such request is received ten days prior to the last trading day of
the sixth month after the date of the partner's investment in the Fund
3% if such request is received during the seventh to twelfth month after
the investment.
2% if such request is received during the thirteenth to eighteenth month.
1% if such request is received during the nineteenth to twenty-fourth
month.
0% thereafter.
4. FEES
The Fund is charged the following fees on a monthly basis since the
commencement of trading.
A management fee of 3% (annual rate) of the Fund's net assets allocated to
each CTA to trade will be paid to each CTA and 1% of equity to the Fund's
General Partner. Effective November 1, 2000, the management fee allocated to
each CTA was decreased to 0% (annual rate) and the management fee allocated
to the Fund's General Partner was increased to 2% (annual rate) of the Fund's
net assets.
An incentive fee of 20% of "new trading profits" will be paid to each CTA.
"New trading profits" includes all income earned by each CTA and expense
allocated to his activity. In the event that trading produces a loss, no
incentive fees will be paid and all losses will be carried over to the
following months until profits from trading exceed the loss. It is possible
for one CTA to be paid an incentive fee during a quarter of a year when the
Fund experienced a loss. Effective November 1, 2000, the incentive fee was
increased to 25% of "new trading profits."
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999
4. FEES - CONTINUED
The Fund will pay fixed commissions of 9% (annual rate) of assets assigned
to be traded, payable monthly, to the Introducing Broker affiliated with the
General Partner. The Affiliated Introducing Broker will pay the costs to
clear the trades to the futures commission merchant and all PIT Brokerage
costs which shall include the NFA and exchange fees.
5. REALIZED GAIN ON EXCHANGE RATE FLUCTUATIONS
Certain trades executed by the Fund are denominated in foreign currencies.
Gains and losses on these transactions are recorded as futures trading gains
or losses at the U. S. dollar equivalent on the date the trade is settled.
Exchange rate fluctuation gain or loss is reflected when residual amounts of
foreign currencies are reconverted to U. S. dollars.
6. PLEDGED ASSETS
The U. S. Treasury Obligations and Cash in trading accounts are pledged as
collateral for commodities trading on margin.
7. CONCENTRATIONS
The Fund maintains its cash balances at a high credit quality financial
institution. The balances may, at times, exceed federally insured credit
limits.
8. OFF BALANCE SHEET RISK
As discussed in Note 1, the Fund is engaged in speculative trading of
futures contracts in commodities. The carrying amounts of the Fund's
financial instruments and commodity contracts generally approximate their
fair values. Open commodity contracts had gross contract value of $1,770,800
on short positions at December 31, 1999. Open commodity contracts had gross
contract value of $81,103,765 on long positions and $7,068,373 on short
positions at December 31, 2000. Open commodity contracts had gross contract
value of $2,586,066 on long positions and $4,031,682 on short positions at
December 31, 2001.
Although the gross contract values of open commodity contracts represent
market risk, they do not represent exposure to credit risk, which is limited
to the current cost of replacing those contracts in a gain position. The
unrealized gain on open commodity futures contracts at December 31, 2001,
2000 and 1999 was $122,096, $1,375,352 and $3,580, respectively.
********************************************************************************
APPENDIX I
Commodity Terms And Definitions
Identification of the parties and knowledge of various terms and concepts
relating to trading in futures and forward contracts and this offering are
necessary for a potential investor to identify the risks of investment in the
Fund.
1256 Contract. See Taxation - Section 1256 Contract.
Additional Sellers. See definition of Selling Agent.
Associated Persons. The persons registered pursuant to the Commodity
Exchange Act with the futures commission merchant, the selling agent, or
additional sellers, who are eligible to service the partnership, the partners
and to receive trailing commissions.
Average Price System. The method approved by the Commodity Futures Trading
Commission to permit the commodity trading advisor to place positions sold or
purchased in a block to the numerous accounts managed by the advisor. See
The Commodity Trading Advisor in the main body of the prospectus.
Best Efforts. The term to describe that the party is liable only in the
event they intentionally fail or are grossly negligent in the performance of
the task described.
Broker. See definitions of Futures Commission Merchant.
Capital means cash invested in the partnership by any partner and placed at
risk for the business of the partnership.
Commodity Futures trading Commission. Commodity Futures Trading Commission,
2033 K Street, Washington, D.C., 20581. An independent regulatory commission
of the United States government empowered to regulate commodity futures
transactions under the Commodity Exchange Act.
Commodity. Goods, wares, merchandise, produce, currencies, and stock indices
and in general everything that is bought and sold in commerce. Traded
commodities on U. S. Exchanges are sold according to uniform established
grade standards, in convenient predetermined lots and quantities such as
bushels, pounds or bales, are fungible and, with a few exceptions, are
storable over periods of time.
Commodity Broker. See definitions of Futures Commission Merchant and
Introducing Broker.
Commodity Exchange Act. The statute providing the regulatory scheme for
trading in commodity futures and options contracts in the United States under
the administration of the Commodity Futures Trading Commission which will
provide the opportunity for reparations and other redress for claims.
Commodity Pool Operator. Ashley Capital Management, Inc., 5916 N. 300 West
,P. O. Box C, Fremont, IN 46737, (219) 833-1306; and, Mr. Michael P. Pacult,
5916 N. 300 West, P.O. Box C, Fremont, IN 46737. A person that raises
capital through the sale of interests in an investment trust, partnership,
corporation, syndicate or similar form of enterprise, and uses that capital
to invest either entirely or partially in futures contracts.
Commodity Trading Advisor. Clarke Capital Management, Inc., 116 W. 2nd
Street, Hinsdale, Illinois 60521; (630) 323-5913. A person or entity which
renders advice about commodities or about the trading of commodities, as part
of a regular business, for profit. Particularly, those who will be
responsible for the analysis and placement of trades for the partnership.
Continuing Service Fee. The share of the fixed commissions to be paid to
the individual associated persons who work for the National Association of
Securities Dealers member broker dealers or the introducing brokers who have
either sold the partnership interests to the partners or are providing
services to the general partner or the other partners.
Daily Price Limit. The maximum permitted movement in a single direction
(imposed by an exchange and approved by the CFTC) in the price of a commodity
futures contract for a given commodity that can occur on a commodity exchange
on a given day in relation to the previous day's settlement price, which is
subject to change, from time to time, by the exchange (with CFTC approval).
Escrow Agent and Escrow Account. The corporate general partner will maintain
an escrow account which will hold all the subscription documents and proceeds
until such time as either the subscription is accepted or the offering is
terminated.
Exchange for Physicals. A practice whereby positions in futures contracts
may be initiated or liquidated by first executing the transaction in the
appropriate cash market and then arbitraging the position into the futures
market (simultaneously buying the cash position and selling the futures
position, or vice versa).
Form K-1. The section of the Federal Income Tax Return filed by the
partnership which identifies the amount of investment in the partnership, the
gains and losses for the tax year, and the amount of such gains and losses
reportable by a partner on the partner's tax return.
Fully-Committed Position. Each commodity trading advisor has an objective
percentage of equity to be placed at risk. In addition, the CFTC places
limits upon the number of positions a single commodity trading advisor may
have in commodities. When either the objective percentage of equity is
placed at risk or the commodity trading advisor reaches the limit in number
of positions, the account or accounts have a fully-committed position.
Futures Commission Merchant. Citigroup Global Markets, Inc. 388 Greenwich
St., New York, New York 10013. The person that solicits or accepts orders
for the purchase or sale of any commodity for future delivery subject to the
rules of any contract market and in connection with such solicitation or
acceptance of orders, accepts money or other assets to margin, guarantee, or
secure any trades or contracts that result from such orders for a commission.
The introducing broker is responsible for the negotiation and payment of the
commission to the futures commission merchant.
Futures Contract. A contract providing for (1) the delivery or receipt at a
future date of a specified amount and grade of a traded Commodity at a
specified price and delivery point, or (2) cash settlement of the change in
the value of the contract. The terms of these contracts are standardized for
each commodity traded on each exchange and vary only with respect to price
and delivery months. A futures contract should be distinguished from the
actual physical commodity, which is termed a cash commodity. Trading in
futures contracts involves trading in contracts for future delivery of
commodities and not the buying and selling of particular physical lots of
commodities. A contract to buy or sell may be satisfied either by making or
taking delivery of the commodity and payment or acceptance of the entire
purchase price therefore, or by offsetting the contractual obligation with a
countervailing contract on the same exchange prior to delivery.
Futures Investment Company. The principal selling agent 5916 N. 300 West,
P.O. Box C, Fremont, IN 46737 which will receive a 6% selling commission on
interests is sells.
General Partner. Ashley Capital Management, Inc., 5916 N. 300 West, P. O.
Box C, Fremont, IN 46737, (219) 833-1306; and, Mr. Michael P. Pacult, 5916 N.
300 West, P.O. Box C, Fremont, IN 46737. The managers of the fund.
Gross Profits. The income or loss from all sources, including interest
income and profit and loss from non-trading activities, if any.
Initial Closing. When the minimum offering amount has been raised and escrow
funds are released to the partnership for commencement of trading.
Limited Partner. Persons admitted without management authority pursuant to
the partnership agreement.
Margin. A good faith deposit with a broker to assure fulfillment of the
terms of a futures contract.
Margin Call. A demand for additional monies to hold positions taken to
maintain a customer's account in compliance with the requirements of a
particular commodity exchange or of an futures commission merchant.
Minimum Offering/Maximum Offering. The Minimum is the amount required to be
invested before trading will commence, and the Maximum is the amount the
general partner establishes as the amount which will terminate this offering.
National Association of Securities Dealers or NASD. National Association of
Security Dealers, Inc., the self regulatory organization responsible for the
legal and fair operation of broker dealers, such as the selling agent.
Net Assets or Net Asset Value means the total assets, including all cash and
cash equivalents (valued at cost plus accrued interest and earned discount),
less total liabilities, of the partnership (each determined on the basis of
generally accepted accounting principles, consistently applied under the
accrual method of accounting or as required by applicable laws, regulations
and rules including those of any authorized self regulatory organization).
See Exhibit A, The Limited Partnership Agreement, 1.2(e).
Net Unit Value. The net assets of the partnership divided by the total
number of units of partnership interests outstanding.
Net Gains. The net profit from all sources.
New Net Profit. The amount of income earned from trading, less the trading
losses and brokerage commissions and fees paid to clear the trades which are
incurred or accrued during the then current accounting period. See Charges
to the Partnership.
Net Worth. The excess of total assets over total liabilities as determined
by generally accepted accounting principles. Net worth for a prospective
investor shall be exclusive of home, home furnishings and automobiles.
Offering and Organizational Expenses. The partnership has paid offering
expenses of $78,556, including organizational expenses, from the gross
proceeds of the offering at the time of the break of escrow at the initial
closing. North American Securities Administrator Association Guidelines for
Commodity Pools define offering and organizational expenses to include
selling commissions and redemption fees as well; and, for purposes of
limitation, these expenses cannot exceed 15% of capital raised pursuant to
the offering.
Option Contract. An option contract gives the purchaser the right (as
opposed to the obligation) to acquire (call) or sell (put) a given quantity
of a commodity or a futures contract for a specified period of time at a
specified price to the seller of the option contract. The seller has
unlimited risk of loss while the loss to a buyer of an option is limited to
the amount paid (premium) for the option.
Partners. The general partners and all limited partners in the partnership.
Partnership or Limited Partnership or Commodity Pool or Pool or Fund. The
Atlas Futures Fund, Limited Partnership, evidenced by Exhibit A to this
Prospectus, 5916 N. 300 West, P. O. Box C, Fremont, IN 46737, (219) 833-1306.
Position Limits. The Commodity Futures Trading Commission has established
maximum positions which can be taken in some, but not in all commodity
markets, to prevent the corner or control of the price or supply of those
commodities. These maximum number of positions are called position limits.
Principal. Mr. Michael P. Pacult, one of the general partners and the
principal of the corporate general partner. Mr. Pacult is also a principal
of the introducing broker.
Round-turn Trade. The initial purchase or sale of a futures or forward
contract and the subsequent offsetting sale or purchase of such contract.
Redemption. The right of a partner to tender its partnership interests to
the partnership for surrender at the net unit value. See the Limited
Partnership Agreement attached as Exhibit A.
Selling Agent. The National Association of Securities Dealers member broker
dealer, Futures Investment Company, 5916 N. 300 West, P.O. Box C, Fremont, IN
46737, selected by the general partner to offer the partnership interests for
sale. The general partner and the selling agent may select additional
selling agents to also offer partnership interests for sale. See Plan of
Distribution.
Selling Commissions. Six percent (6%) of the gross subscription amount
submitted by the prospective investor to be paid to the Selling Agent.
Scale in Positions. The commodity trading advisor selected by the general
partner presently has a large amount of equity under management. In some
situations, the positions desired to be taken on behalf of the partnership
and other accounts under management will be too large too be executed at one
time. The trading advisor intends to take positions at different prices, at
different times and allocate those positions on a ratable basis in accordance
with rules established by the Commodity Futures Trading Commission. This
procedure is defined as to scale in positions. The same definition and rules
apply when the trading advisor elects to exit a position.
Taxation - Section 1256 Contract is defined to mean: (1) any regulated
futures contract (RFC); (2) any foreign currency contract; (3) any non-equity
option; and (4) any dealer equity option.
The term RFC means a futures contract whether it is traded on or subject to
the rules of a national securities exchange which is registered with the
Securities and Exchange Commission, a domestic board of trade designated as a
contract market by the Commodity Futures Trading Commission or any other
board of trade, exchange or other market designated by the Secretary of
Treasury (a qualified board of exchange) and which is marked-to-market to
determine the amount of margin which must be deposited or may be withdrawn.
A "foreign currency contract" is a contract which requires delivery of, or
the settlement of, which depends upon the value of foreign currency which is
currency in which positions are also entered at arm's length at a price
determined by reference to the price in the interbank market. (The Secretary
of Treasury is authorized to issue regulations excluding certain currency
forward contracts from marked-to-market treatment.) A non-equity option means
an option which is treated on a qualified board or exchange and the value of
which is not determined directly or indirectly by reference to any stock (or
group of stocks) or stock index unless there is in effect a designation by
the Commodity Futures Trading Commission of a contract market for a contract
bond or such group of stocks or stock index. A dealer equity option means,
with respect to an options dealer, only a listed option which is an equity
option, is purchased or granted by such options dealer in the normal course
of his activity of dealing in options, and is listed on the qualified board
or exchange on which such options dealer is registered. See Federal Income
Tax Aspects.
Trading Advisor. See Commodity Trading Advisor.
Taking Positions Ahead of the Partnership. The allocation of trades by other
than legally accepted methods by the commodity trading advisor or other
trader which favors parties who took the position unfairly.
Trading Matrix. The dollar value used by a commodity trading advisor to
define the number of positions to be taken by the accounts under management.
Some commodity trading advisors have different trading matrices for different
sized accounts. For example, they may trade all accounts over one million in
size differently than accounts under one million.
Unit. The term used to describe the Net Asset Value of general and limited
partner interests of the partnership.
Unrealized Profit Or Loss. The profit or loss which would be realized on an
open position if it were closed at the current settlement price or the most
recent appropriate quotation as supplied by the broker or bank through which
the transaction is effected.
Underwriter. This term is not applicable to this offering. All sales of
partnership interests will be on a best efforts basis. The price of the
units will not be guaranteed, supported or underwritten in any way. See
Selling Agent.
State Regulatory Glossary
The following definitions are supplied by the state securities
administrators responsible for the review of public futures fund (commodity
pool) offerings made to residents of their respective states. They belong to
the North American Securities Administrators Association, Inc. which publish
"Guidelines for the Registration of Commodity Pool Programs", such as the
Fund, which contain these definitions. The following definitions are
published from the Guidelines, however, the general partner has made
additions to, but no deletions from, some of these definitions to make them
more relevant to an investment in the Fund.
Administrator-The official or agency administering the security laws of a
state. This will usually be the State of residence of the Fund or the
domicile of the broker or brokerage firm which makes the offer or the
residence of the potential investor.
Advisor-Any person who, for any consideration, engages in the business of
advising others, either directly or indirectly, as to the value, purchase, or
sale of commodity contracts or commodity options. This definition applies to
the commodity trading advisors and, when it provides such advice, to the
general partner.
Affiliate-An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities of such Person; (b) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by such Person; (c) any Person,
directly or indirectly, controlling, controlled by, or under common control
of such Person; (d) any officer, director or partner of such Person; or (e)
if such Person is an officer, director or partner, any Person for which such
Person acts in any such capacity. See "Conflicts". This applies to the fact
that Mr. Michael P. Pacult, one of the general partners, is the sole
shareholder and principal of the other general partner and also owns 50% of
the outstanding voting shares and is a principal in the affiliated selling
agent, Futures Investment Company.
Capital Contributions-The total investment in a Program by a Participant or
by all Participants, as the case may be. The purchase price, less sales
commissions, for the partnership interests.
Commodity Broker-Any Person who engages in the business of effecting
transactions in commodity contracts for the account of others or for his own
account. See Futures Commission Merchant and Introducing Broker.
Commodity Contract-A contract or option thereon providing for the delivery
or receipt at a future date of a specified amount and grade of a traded
commodity at a specified price and delivery point.
Cross Reference Sheet-A compilation of the Guideline sections, referenced
to the page of the prospectus, Program agreement, or other exhibits, and
justification of any deviation from the Guidelines. This sheet is used by
the State Administrator to review this prospectus.
Net Assets-The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net
Assets shall include any unrealized profits or losses on open positions, and
any fee or expense including Net Asset fees accruing to the Program.
Net Asset Value Per Program Interest-The Net Assets divided by the number
of Program Interests outstanding.
Net Worth-The excess of total assets over total liabilities are determined
by generally accepted accounting principles. Net Worth shall be determined
exclusive of home, home furnishings and automobiles.
New Trading Profits-The excess, if any, of Net Assets at the end of the
period over Net Assets at the end of the highest previous period or Net
Assets at the date trading commences, whichever is higher, and as further
adjusted to eliminate the effect on Net Assets resulting from new Capital
Contributions, redemptions, or capital distributions, if any, made during the
period decreased by interest or other income, not directly related to trading
activity, earned on Program assets during the period, whether the assets are
held separately or in a margin account. See New Net Profit.
Organizational and Offering Expenses-All expenses incurred by the Program
in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but not
limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriter's attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders,
depositories, experts, expenses of qualification of the sale of its Program
Interest under Federal and state law, including taxes and fees, accountants'
and attorneys' fees.
Participant-The holder of a Program Interest. A Partner in the Fund.
Person-Any natural Person, partnership, corporation, association or other
legal entity.
Pit Brokerage Fee-Pit Brokerage Fee shall include floor brokerage, clearing
fees, National Futures Association fees, and exchange fees. These fees will
be paid by the Introducing Broker from the fixed commissions.
Program-A limited partnership, joint venture, corporation, trust or other
entity formed and operated for the purpose of investing in Commodity
Contracts. The Fund.
Program Broker-A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program. See the Futures Commission Merchant.
Program Interest-A limited partnership interest or other security
representing ownership in a program. The units in the Fund. See Exhibit A,
the Limited Partnership Agreement.
Pyramiding-A method of using all or a part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.
Sponsor-Any Person directly or indirectly instrumental in organizing a
Program or any Person who will manage or participate in the management of a
Program, including a Commodity Broker who pays any portion of the
Organizational Expenses of the Program, and the general partner(s) and any
other Person who regularly performs or selects the Persons who perform
services for the Program. Sponsor does not include wholly independent third
parties such as attorneys, accountants, and underwriters whose only
compensation is for professional services rendered in connection with the
offering of the partnership interests. The term Sponsor shall be deemed to
include its Affiliates.
Valuation Date-The date as of which the Net Assets of the Program are
determined. For the Fund, this will be after the close of business on the
last business day of each month.
Valuation Period-A regular period of time between Valuation Dates. For the
Fund, this will be the close of business for each calendar month and each
calendar year.
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EXHIBIT A TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
AGREEMENT OF LIMITED PARTNERSHIP OF
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT, (the "Agreement") dated the 23rd of
December, 2003, by and between Ashley Capital Management, Incorporated
("Ashley" or "Corporate General Partner") is to amend and restate in full
that certain partnership agreement entered on the 1st day of February, 1998,
that formed Atlas Futures Fund, Limited Partnership (hereinafter called
either the "Partnership" or the "Fund") and was previously amended and
restated in full on the 15th day of May, 1999 as follows:
WITNESSETH:
IN CONSIDERATION of good and valuable consideration, the receipt of which is
hereby acknowledged, Ashley Capital Management, Incorporated, ("Ashley") the
Corporate General Partner, Michael P. Pacult, the Other General Partner, and
Ashley as agent for the Limited Partners, pursuant to the authority granted
to the General Partner by this Agreement at formation and the powers of
attorney granted by the Limited Partners to Ashley at the time of their
admission to the Partnership, hereby adopt this Amended and Fully Restated
Limited Partnership Agreement to govern and control the operation of the
Partnership pursuant and subject to the Delaware Uniform Limited Partnership
Act (the "Act").
The resignation of Shira Del Pacult ("Ms. Pacult") pursuant to her prior 120
day notice to the Partners given on August 20, 2003, became effective on the
date of this Agreement. Ms. Pacult is no longer a General Partner of the
Fund. Ashley and Michael P. Pacult continue to serve as the General Partners
of the Fund and from this date forward the term General Partner shall refer
to both Ashley and Mr. Pacult.
ARTICLE I
Definitions and Risk Disclosure Statement
Certain terms used in this Agreement shall have the special meaning
designated below:
1.1 The term AFFILIATE means (1) any person controlled by or under common
control with another person, (2) a person owning or controlling 10% or more
of the outstanding voting securities of such other person, (3) any officer or
director of such other person, and (4) if such other person is an officer or
director, any other company for which such person acts as an officer or
director.
1.2 When referring to the capital of the Partnership:
(a) the term CAPITAL shall mean cash invested in the Partnership by any
Partner and placed at risk for the business of the Partnership;
(b) the term CAPITAL CONTRIBUTION shall mean, with respect to any Partner,
the sum of all Capital contributed to the Partnership pursuant to Article I;
(c) the term CAPITAL SUBSCRIPTION shall mean the amount set forth opposite
the name of such Partner in the schedule of Partners, which amount shall be
the purchase price, less sales commissions, if any, to be paid or paid by
such Partner for the Unit or Units in the Partnership purchased by such
Partner;
(d) the term INITIAL CAPITAL shall mean the sum of all Capital Subscriptions
received by the General Partner prior to commencement of trading;
(e) the term NET ASSETS OR NET ASSET VALUE means the total assets, including
all cash and cash equivalents (valued at cost plus accrued interest and
earned discount), less total liabilities, of the Partnership (each determined
on the basis of generally accepted accounting principles, consistently
applied under the accrual method of accounting or as required by applicable
laws, regulations and rules including those of any authorized self regulatory
organization), specifically:
(i) Net Asset Value includes any unrealized profit or loss on open security
and commodity positions subject to reserves for loss established, from time
to time, by the General Partner;
(ii) All open stock, option, and commodity positions are calculated on the
then current market value, which shall be based upon the settlement price for
that particular position on the date with respect to which Net Asset Value is
being determined; provided, however, that if a position could not be
liquidated on such day due to the operation of the daily limits or other
rules of the exchange upon which that position is traded or otherwise, the
settlement price on the first subsequent day on which the position could be
liquidated shall be the basis for determining the market value of such
position for such day. As used herein, "settlement price" includes, but is
not limited to: (1) in the case of a futures contract, the settlement price
on the commodity exchange on which such futures contract is traded; and (2)
in the case of a foreign currency forward contract which is not traded on a
commodity exchange, the average between the lowest offered price and the
highest bid price, at the close of business on the day Net Asset Value is
being determined, established by the bank or broker through which such
forward contract was acquired or is then currently traded;
(iii) Brokerage commissions to close security and commodity positions, if
charged on a round-turn basis, are accrued in full at the time the position
is initiated (i.e., on a round-turn basis) as a liability of the Partnership;
(iv) Interest earned on all Partnership accounts is accrued at least
monthly;
(v) The amount of any distribution made by the Partnership is a liability of
the Partnership from the day when the distribution is declared by the General
Partner or as provided in this Agreement and the amount of any redemption is
a liability of the Partnership as of the Valuation Date; and
(vi) Syndication Costs incurred in organizing and all present and future
costs to increase or maintain the qualification of the Units available for
sale and the cost to present the initial and future offering of Units for
sale shall be capitalized when incurred and amortized and paid from Capital
or Monthly Profit as required by applicable law.
(f) The term VALUATION DATE means the date as of which the Net Assets of the
Partnership are determined, which will be after the close of business on the
last business day of each month.
(g) the term PROFIT (LOSS) ATTRIBUTABLE TO UNITS means the product of A) the
number of Units divided into B) an amount equal to the Net Profit (Loss)
determined as follows: (1) the net of profits and losses realized on all
trades closed out, plus (2) the net of any unrealized profits and losses an
open positions as of the end of the period, less (3) the net of any
unrealized profits and losses on open positions as of the end of the
preceding period, minus, (4) the Expenses attributable to Units. Profit
(Loss) shall include interest earned on Partnership assets, realized and
unrealized capital gains or losses on U.S. Treasury bills, and other
securities;
(h) the term MANAGEMENT FEE shall mean up to six percent (6%) annually of
the Net Assets of the Partnership computed on the close of business on the
last day of each month and payable to the General Partner or independent
Commodity Trading Advisor, or both, without regard to the income or loss of
the Partnership for that period; presently, the General Partners and the CTA
receive no Management Fee;
(i) the term INCENTIVE FEE means a percentage of the profits accrued and
paid to the General Partner, or its Affiliates, of up to fifteen percent
(15%) annually of New Net Profit earned from inception of trading, through
the date of the computation, based upon total Capital of the Partnership. The
General Partner has reserved the right to both reduce the Incentive Fee below
fifteen percent (15%) and increase the Incentive Fee to a maximum of twenty-
seven percent (27%), provided that in such case the Management Fee is
correspondingly lowered to 0%; presently, the Incentive Fee paid to the CTA
is twenty five percent (25%);
(j) the term GROSS PROFIT OR LOSS means the income or loss from all sources,
including interest income and profit and loss from non-trading activities, if
any.
(k) the term NEW NET PROFIT OR LOSS means the amount of income earned from
trading, less the trading losses and brokerage commissions and fees paid to
clear the trades which are incurred or accrued during the then current
accounting period; and,
(l) the term NET GAINS means net profit from all sources.
(m) the term UNIT shall mean a partnership interest in the Partnership
requiring a Capital Contribution of the Net Asset Value of the initial Unit,
as adjusted to reflect increases and decreases caused by receipt, accrual,
and payment of profit, Expenses, losses, bonuses, and fees, less a sales
commission, from time to time.
1.3 When referring to costs and expenses of the Partnership to be allocated
and charged pursuant to this Agreement:
(a) the term EXPENSES shall mean costs allocated, incurred, paid, accrued,
or reserved, including the fixed commissions payable to the Corporate General
Partner of eleven percent (11%) of the total equity placed under management
with the Commodity Trading Advisor, which are, in the opinion of the General
Partner, required, necessary or desirable to establish, manage, continue and
promote the business of the Partnership including, but not limited to, all
deferred organization costs, brokerage commissions, and all management and
incentive fees payable to the General Partner or to independent investment
and Commodity Trading Advisor by the Partnership as negotiated and determined
by the General Partner on behalf of the Partnership on a basis consistently
applied in accordance with generally accepted accounting principals under the
accrual method of accounting or as required by applicable laws, regulations
and rules including those of any authorized self regulatory organization with
proper jurisdiction over the business of the Partnership; provided, however,
Expenses shall not include salaries, rent, travel, expenses and other items
of General Partner overhead and, provided, further, management fees, advisory
fees and all other fees, except for incentive fees and commodity brokerage
commissions, the actual cost of legal and audit services and extraordinary
expenses, shall not exceed one half of one percent of Net Assets per month
(not to exceed six percent annually). If necessary, the General Partner
shall reimburse the Partnership no less frequently than quarterly, for the
amount by which such aggregate fees and expenses exceed the limitations
provided by NASAA Guideline IVC.1. During the period for which reimbursement
is made up to an amount not exceeding the aggregate compensation received by
the General Partner, including direct or indirect par icipations in commodity
brokerage commissions charged to the Partnership. In addition, if
reimbursement is required or ordinary expenses are incurred, the General
Partner shall include in the Partnership's next regular report to the
auditors a discussion of the circumstances or events which resulted in the
reimbursement or extraordinary expenses;
(b) the term NET UNIT VALUE shall mean the Net Asset Value divided, from
time to time, by the total number of Units outstanding;
(c) the term OFFERING PERIOD means the period of time established by the
General Partner after the Partnership begins to offer to sell Units at the
Net Unit Value ; and,
(d) the term SYNDICATION COSTS shall mean the promotion and syndication
costs of the Partnership and the costs of the offering of Units, and to
establish the initial business relationships on behalf of the Partnership,
including all legal and printing costs to prepare the Disclosure Documents,
registrations and filing fees, contract negotiation, and travel incurred
which are deemed necessary or desirable by the General Partner to form the
Partnership, be ready to engage in business, and to sell the Units.
1.4 The terms DISCLOSURE DOCUMENT, MEMORANDUM, OFFERING CIRCULAR, PROSPECTUS
and REGISTRATION STATEMENT shall mean the document or documents, together
with the exhibits and any subsequent continuations thereof, which describes
this Partnership to persons selected by the General Partner including, but
not limited to, potential purchasers of Units, or the Partners or to any
government or self regulatory agency or to persons selected by the General
Partner to participate in the affairs or provide services to the Partnership.
1.5 When referring to this Agreement and the Partners of the Partnership:
(a) the term ACT shall refer to the partnership act of Delaware.
(b) the term AGREEMENT refers to this Partnership agreement;
(c) the term GENERAL PARTNER shall refer to both Ashley Capital Management,
Incorporated, 5916 N. 300 West, P.O. Box C, Fremont, IN 46737 (219) 833-1306
("Ashley") and Michael P. Pacult, 5916 N. 300 West, P.O. Box C, Fremont, IN
46737 (219) 833-1306 ("Mr. Pacult") collectively or singularly, as the
context requires;
(d) the term LIMITED PARTNER shall refer to any party listed on the Schedule
of Limited Partners attached to this Agreement as Attachment I, as amended,
from time to time, pursuant to Article VI hereof;
(e) the term MAJORITY IN INTEREST shall refer to that number of Partners who
collectively hold over 50% of all of the outstanding Units held by all
Partners in the Partnership; provided, however, the Units held by the General
Partner cannot be considered to determine a MAJORITY IN INTEREST or otherwise
vote or consent regarding the question of removal of the General Partner or
other matters specifically expressed in Article V, Section 5.3. In addition,
see the rights and duties of the General Partner in Article IV and of the
Limited Partners in Articles V;
(f) the term OTHER GENERAL PARTNER refers to any General Partner other than
Ashley Capital Management, Incorporated; and
(g) the term PARTNERS refers to the General Partner, any Other General
Partner, and the Limited Partners, collectively.
1.6 RISK DISCLOSURE STATEMENT.
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS
GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE
POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION,
RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR
PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE
POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS
TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT
CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT
PAGE 6 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT
IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 14.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE,
BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY
STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK
FACTORS OF THIS INVESTMENT, AT PAGE 6.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES
OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED
STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE
SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE
POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY
BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR
MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL
MAY BE EFFECTED.
ARTICLE II
Partnership Organization and Purpose
2.1 PARTNERSHIP NAME AND LOCATION OF BOOKS AND RECORDS. The name of the
Partnership, as filed with the state of Delaware, shall be Atlas Futures
Fund, Limited Partnership. The address where the books and records of the
Partnership will be maintained for inspection by the Partners is c/o Ashley
Capital Management, Incorporated, 5916 N. 300 West, Fremont, IN 46737 (219)
833-1306 or such other address as the General Partner shall, from time to
time, determine.
2.2 PARTNERSHIP AFFILIATES.
(a) POOL OPERATOR NAME AND PRINCIPALS. The General Partner shall serve as
the commodity pool operator for the Partnership. In addition to being one of
the general partners, Michael P. Pacult is the sole principal, shareholder,
director and officer of Ashley Capital Management, Inc., the other general
partner, and is solely responsible for the business decisions of the
Partnership, including, but not limited to, selection of the Commodity
Trading Advisors (the "CTAs"). The signature of either Mr. Pacult or Ashley
may bind the Partnership. Ashley and Mr. Pacult are registered commodity
pool operators with the Federal Commodity Futures Trading Association
pursuant to the Commodity Exchange Act and members of the futures self
regulatory organization, the National Futures Association.
THE REGULATIONS OF THE FEDERAL COMMODITY FUTURES TRADING COMMISSION AND THE
NATIONAL FUTURES ASSOCIATION PROHIBIT ANY REPRESENTATION BY A PERSON
REGISTERED WITH THE CFTC OR BY ANY MEMBER OF THE NFA, RESPECTIVELY, THAT SUCH
REGISTRATION OR MEMBERSHIP IN ANY RESPECT INDICATES THAT THE CFTC OR THE NFA,
AS THE CASE MAY BE, HAS APPROVED OR ENDORSED SUCH PERSON OR SUCH PERSON'S
TRADING PROGRAMS OR OBJECTIVES. THE REGISTRATIONS AND MEMBERSHIPS DESCRIBED
IN THIS PARTNERSHIP AGREEMENT MUST NOT BE CONSIDERED AS CONSTITUTING ANY SUCH
APPROVAL OR ENDORSEMENT. LIKEWISE, NO COMMODITY EXCHANGE HAS GIVEN OR WILL
GIVE ANY SUCH APPROVAL OR ENDORSEMENT.
Mr. Pacult (i) has been engaged in supervision of individual managed
commodity accounts for over 22 years, and (ii) is currently a general partner
and principal of the corporate general partner of another publicly offered
commodity pool, Bromwell Financial Fund, Limited Partnership and intends to
serve as a general partner of a new futures fund called Providence Select
Fund, L. P. as soon as all regulatory requirements have been satisfied. See
"Performance of Other Programs Sponsored by the General Partner-Bromwell
Financial Fund, L.P. and Providence Select Fund, L. P." in the Partnership's
Prospectus.
(b) COMMODITY TRADING ADVISOR NAMES AND PRINCIPALS. The General Partner has
initially selected one independent CTA to trade the assets of the
Partnership, Clarke Capital Management, Inc. The CTA's performance record
and business background are disclosed in the Partnership's Prospectus under
"Trading Management". The CTA will have no ownership in the Partnership and
its compensation is described in 4.6(f). The CTA will enter trades on behalf
of the Partnership directly with the FCM without the prior knowledge or
approval of the General Partner of the methods used by the CTA to select the
trades, the number of contracts, or the margin required. From 5% to 40% of
the Net Asset Value on deposit with the FCM is expected to be committed to
margin to hold positions taken by the CTA for the account of the Partnership.
(c) COMMODITY POOL OPERATOR AND FUTURES COMMISSION MERCHANT NAMES AND
PRINCIPALS. Ashley Capital Management, Inc. 5916 N. 300 West, P.O. Box C,
Fremont, IN 46737 (219) 833-1306 will serve as the Commodity Pool Operator
("CPO") of the Partnership and will be paid a fixed amount for brokerage
commissions of eleven percent (11%) per year, payable monthly by the
Partnership, for introducing trades through Citigroup Global Markets, Inc., 1
S. Wacker Drive, Ste. 1000, Chicago, Illinois 60606, Telephone 312-516-6030,
Fax 312-516-6234, the futures commission merchant (the "FCM"). The CPO will
pay the round-turn brokerage commissions, pit brokerage and other clearing
expenses to the FCM, which will act in the normal capacity as a futures
commission merchant and will hold the equity assigned by the General Partner
for trading and will clear the trades entered by the CTA pursuant to the
power of attorney granted by the General Partner to the CTA to trade on
behalf of the Partnership. The General Partner has the right pursuant to
this Agreement to change the FCM at their sole discretion subject only to
notices of such change to the Partners as are required by law.
2.3 MATERIAL ADMINISTRATIVE AND/OR CIVIL ACTIONS. There have been no
material administrative, civil or criminal actions against Ashley or Mr.
Pacult (who are the general partners and Commodity Pool Operators), the
Commodity Trading Advisor, the Selling Broker or any principal or any
Affiliate of any of them, pending, on appeal, or concluded, threatened or
otherwise known to them, within the five (5) years preceding the date of this
Partnership Agreement. There have been such actions against the Futures
Commission Merchant that are fully disclosed in the Prospectus but, in the
opinion of the General Partner and the FCM, are not material to the
fulfillment of the clearing duties the FCM will perform for the Partnership.
2.4 CHARACTER OF THE BUSINESS. The Partnership's business purpose is to
increase Capital through the speculative and hedge trading of futures and
options on futures. The General Partner is authorized to do any and all
things on behalf of the Partnership incident thereto or connected therewith
including, but not limited to:
(a) trade, buy, sell or otherwise acquire, hold or dispose of all forms of
investments (including tangibles and intangibles, foreign currencies,
mortgage-backed securities, money market instruments, stock and futures
options, and any other securities or items which are now, or may hereafter
be, the subject of barter or stock or futures trading), commodity futures,
and forward contracts and any rights pertaining thereto. The Partnership
shall carry on the foregoing activities through the exercise of judgment by
its General Partner and/or the Investment and/or Commodity Trading Advisors
and consultants and brokers selected by the General Partner. The General
Partner may serve as an investment or trading advisor to the Partnership for
management fees, incentive fee, reimbursement of costs and other remuneration
at the same rates charged either by independent third parties for similar
services to other partnerships or by the General Partner to others for the
same service.
(b) invest and trade, on margin or otherwise, in capital stocks, bonds,
debentures, trust receipts and other obligations, instruments or evidences of
indebtedness, gold, silver, cattle, corn, wheat, soybeans, or any other asset
for which a trading market is maintained or otherwise paid for by cash or
otherwise including, but not limited to, the right to sell short and to cover
such short sales.
(c) possess, sell, exchange, discount, transfer, mortgage, pledge, deal in,
maintain multiple accounts for, and to exercise all rights, powers,
privileges and other rights, incidental to ownership of the assets held by
the Partnership.
(d) borrow or raise monies and, from time to time without limit as to
amount, to issue, accept, endorse and execute promissory notes, draft bills
of exchange, warrants, bonds, debentures and other negotiable or non-
negotiable instruments and evidences of indebtedness, and to secure the
payment of any thereof and the interest thereon by mortgage or pledge,
conveyance or assignment in trust of the whole or any part of the property of
the Partnership, whether at the time owned or thereafter acquired, and to
sell, pledge of otherwise dispose of such instruments issued by the
Partnership for its purposes; form and own one or more corporations to engage
in such businesses as the General Partner shall deem advisable.
(e) lend any of its properties or funds, either with or without security in
furtherance of the objects and purposes of the Partnership as the General
Partner shall deem advisable and consent.
(f) rent or own and maintain one or more offices staffed as the General
Partner shall determine and to do such other acts attendant thereto as may be
necessary or desirable.
(g) waive the sales commission to acquire investment Capital as the General
Partner, in its sole discretion, may determine.
(h) enter, make and perform all contracts, surety and guarantees as may be
necessary or advisable or incidental to the carrying out of the foregoing
objects and purposes.
2.5 ADDRESS OF PARTNERS. The General Partner's address is listed in
paragraph 2.1 hereof and the Limited Partners' addresses are on record at the
office of the General Partner to the Partnership.
2.6 TERM OF PARTNERSHIP. The term of the Partnership shall commence on the
date of this Agreement and shall continue until dissolved or terminated
pursuant to Article IX.
2.7 REGISTRATION. The General Partner, on behalf of the Partnership, shall
have the authority, but not the obligation, to cause a Registration statement
to be filed, and such amendments thereto as the General Partner deems
advisable, with the appropriate Federal and state regulatory agencies,
including the United States Securities and Exchange Commission and the
commission of securities for registration under the securities laws of the
various states and any other jurisdiction desirable or proper to the sale of
Units to qualify for public offerings. Each of the Limited Partners hereby
confirm and ratify all action taken and things done by the General Partner
with respect to such filings and public offerings. The General Partner may
make such other arrangements for the sale of Units, including the private
placement of Units, as it deems appropriate.
ARTICLE III
Capital Contributions and Allocation of Profits and Losses
3.1 CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS.
(a) Each Limited Partner has delivered to the Partnership an executed
Subscription which has been accepted by the General Partner on behalf of the
Partnership, an Amended Certificate of Limited Partnership, and a check in
the amount of his Capital Subscription. The Partnership shall use the funds
thus contributed solely to pay, sales commissions, Expenses, Organization
Costs and to otherwise make the payments required to be made by the
Partnership to engage in active trading and to pay the management fees, if
any, and, from profits, the incentive fees and distributions to Partners
Capital Accounts.
(b) The General Partner has filed a Form S-1 to qualify the Partnership
Units for public sale. Except for payment of Partnership expenses from
Capital as provided by this Agreement, there will be no required contribution
or assessments of the Limited Partners.
3.2 CAPITAL CONTRIBUTIONS OF GENERAL PARTNER.
(a) The General Partner has not made and shall not be required to make any
capital contribution to the Partnership except for purchases that are
required by law. The General Partner shall use its best efforts to maintain
its status as a partnership for tax purposes.
(b) Partnership interests shall be evidenced by Units. The General Partner,
on behalf of the Partnership, may, in accordance with applicable law and the
Offering Memorandum of the Partnership, issue Units to persons desiring to
become Limited Partners. A Partner shall contribute an amount equal to the
Net Asset Value of a Unit calculated as of the end of the last business day
of the previous month, plus the sales commission, if any, on the Valuation
Date. The General Partner will have five (5) days to review the Partner's
subscription, and the Partner will have five (5) days to rescind his
subscription, after which time period all subscriptions will be irrevocable,
subject to any applicable law which may extend the Partner's rescission
period. The General Partner and Affiliates of the General Partner may
purchase Limited Partnership Units with the same rights as other Limited
Partners.
(c) All subscriptions for Units made pursuant to the offering of the Units
must be on the form provided with the Prospectus. The partnership has offered
$15,000,000 Units (the "Maximum") for sale and has reserved the right to
increase this Maximum. Ashley maintains an escrow account to continuously
accept Partners' subscriptions until such time as they are admitted into the
Partnership.
3.3 ALLOCATION OF PROFITS AND LOSSES
(a) A distribution account shall be established for each Partner that shall
include, as the initial balance thereof, each Partner's initial contribution
to the Partnership expressed in total dollars and Units purchased. As of the
close of business each month, allocations shall be made as follows:
(i) The Incentive Fee. The incentive fee upon New Net Profit at the rate of
twenty-five percent (25%), or such other rate as may be established pursuant
to 1.2(h), shall be paid quarterly to the CTA but allocated to the Partners
monthly.
(ii) The Profit (Loss) Attributable to Units shall be added to (subtracted
from) the distribution accounts of the Partners. Items of income, gain or
loss, accrued and paid Expenses shall be added to (subtracted from) the
distribution account of each Partner in accordance with the ratio that such
distribution account bears to the sum of all of the Partners' distribution
accounts.
(iii) The amount of any cash distributions to a Partner during such month
and any amount paid upon Redemption of Units as of the end of such month
shall be subtracted from the distribution account of such Partner.
(iv) The distribution account of any Unit that was redeemed shall be reduced
by the Redemption Charge per Unit multiplied by the number of Units that were
redeemed by the Partner represented by such distribution account. The
Redemption Charge, if any, shall be first used to defray expenses and any
excess treated as interest earned by the Fund; provided, however, Partners
admitted after the date of this Agreement will not be charged a Redemption
Charge.
ARTICLE IV
Rights and Obligations of the General Partner
4.1 GENERAL. The General Partner shall have full, exclusive and complete
discretion in the management and control of the affairs of the Partnership to
the best of its ability and shall use its best efforts to carry out the
purposes of the Partnership set forth in Article II. In connection
therewith, it shall have all powers of a general partner under the Act,
including, without limitation, the power to:
(a) enter, execute and maintain contracts, agreements and any or all other
instruments, and to do and perform all such things, as may be required or
desirable in furtherance of Partnership purposes or necessary or appropriate
to the conduct of Partnership activities including, but not limited to,
contracts with third parties for:
(i) brokerage services on behalf of the Partnership (which brokerage
services may be performed by the General Partner or an Affiliate of the
General Partner), or any successor to its business, and an Affiliated
introducing broker or futures commission merchant of the General Partner may
clear the trades and pay trailing commissions or continuing service fees to
its associated persons, including Affiliates of the General Partner and the
General Partner, in consideration of the payment of eleven percent (11%) of
the total equity placed with the Commodity Trading Advisor or advisors it
selects, will cause and pay for the trades to be cleared through one or more
futures commission merchants selected by the General Partner;
(ii) trading advisory services relating to the purchase and sale of all
stocks, options, commodity futures contracts, commodity options and contracts
for forward delivery of foreign currencies on behalf of the Partnership
(which advisory services may be performed by the General Partner or an
Affiliate of the General Partner); and
(iii) rent, salaries, computer, accounting, legal and other services
attendant to the maintenance of the Fund.
(b) open and maintain bank accounts on behalf of the Partnership with banks
and money market funds.
(c) deposit, withdraw, pay, retain and distribute the Partnership's funds in
any manner consistent with the provisions of this Agreement.
(d) supervise the preparation and filing of all documentation required by
law including, but not limited to, Registration Statements to be filed with
Federal and state agencies.
(e) pay or authorize the payment of distributions to the Partners and pay
Expenses of the Partnership.
(f) invest or direct the investment of funds of the Partnership not
involving the purchases or sale of stocks, futures contracts, options, and
contracts for forward delivery of foreign currencies.
(g) purchase, at the expense of the Partnership, liability and other
insurance to protect the Partnership's proprieties and business.
(h) borrow money from banks and other lenders for Partnership purposes, and
may pledge any or all of the Partnership's assets for such loans. No bank or
other lender to which application is made for a loan by the lender to which
application is made for a loan by the General Partner shall be required to
inquire as to the purposes for which such loan is sought and, as between the
Partnership and such bank or other lender, it shall be conclusively presumed
that the proceeds of such loan are to be and will be used for the purposes
authorized under this Agreement.
(i) confess judgment for and against the Partnership and control any matters
affecting the rights and obligations of the Partnership, including the
employment of attorneys, in the conduct of litigation and otherwise incur
legal expenses and costs of consultation, settlement of claims, and
litigation against or on behalf of the Partnership.
4.2 LOANS BY GENERAL PARTNER. The General Partner or its Affiliates will be
not be required to advance or loan funds to the Partnership. In the event
the General Partner makes any advance or loan to the Partnership, the General
Partner will not receive interest in excess of its interest costs, nor will
the General Partner receive interest in excess of the amounts which would be
charged the Partnership (without reference to the General Partner's financial
abilities or guarantees) by unrelated banks on comparable loans for the same
purpose and the General Partner shall not receive points or other financing
charges or fees regardless of the amount.
4.3 TRANSACTION WITH PARTNERSHIP. Notwithstanding anything to the contrary
which may be contained herein, the General Partner shall not:
(a) sell, or otherwise dispose of, any of the Partnership's assets to the
General Partner or its Affiliates.
(b) subject to the provisions regarding and without diminishment of the
right of the General Partner or any Affiliate to compensation for services
provided to the Partnership as set forth in this Agreement, cause or permit
the Partnership to enter any agreement with the General Partner or an
Affiliate which is not in the best interest of and for the benefit of the
Partnership or which would be in contravention of the General Partner's
fiduciary obligations to the Partnership or pursuant to which the General
Partner or any Affiliate;
(i) would provide or sell any services, equipment, or supplies at other than
rates charged to others; or
(ii) would receive from the Partnership, Units of Partnership interest in
consideration for services rendered.
4.4 OBLIGATIONS OF GENERAL PARTNER. In addition to the obligations provided
by law or this Agreement, the General Partner shall:
(a) Devote such of its time to the business and affairs of the Partnership
as it shall, in its discretion exercised in good faith, determine to be
necessary to conduct the business and affairs of the Partnership for the
benefit of the Partnership and the Limited Partners.
(b) Execute, file, record and/or publish all certificates, statements and
other documents and do any and all other things as may be appropriate for the
formation , qualification and operation of the Partnership and for the
conduct of its business in all appropriate jurisdictions including, but not
limited to, the compliance, at its expense, with all laws related to its
qualification to serve as the commodity pool operator of the Fund.
(c) Retain independent public accountants to audit the accounts of the
Partnership.
(d) Employ attorneys to represent the Partnership.
(e) Use its best efforts to maintain the status of the Partnership as a
partnership for United States Federal income tax purposes.
(f) Employ only CTAs which are registered pursuant to the Commodity Exchange
Act to conduct trading and to otherwise establish and monitor the trading
policies of the Partnership; and the activities of the partnership's trading
advisor(s) in carrying out those policies.
(g) Review, not less often than annually, the brokerage commission rates
charged to comparable funds to determine that the commission rates paid by
the Partnership are comparable with such other rates.
(h) Have fiduciary responsibility for the safekeeping and use of all funds
and assets of the Partnership, whether or not in the General Partner's
immediate possession or control, and the General Partner will not employ or
permit others to employ such funds or assets in any manner except for the
benefit of the Partnership.
(i) Agree that if it becomes the sole General Partner of the Partnership, it
will use its best efforts to maintain the Partnership as a limited
partnership as required by all applicable laws including, but not limited to
the requirement of the United States Department of the Treasury, Internal
Revenue Service, for a sole corporate general partner of a limited
partnership to maintain its "Net Worth" (as defined below) to establish the
sufficient assets test for a sole corporate general partner to be liable for
the debts of the Partnership. Mr. Pacult intends to resign as a general
partner once Ashley has sufficient net assets to meet the NASAA Guidelines to
continue to offer Units in the Partnership. Although there can be no
assurance that Ashley, as the sole corporate General Partner, will satisfy
the IRS "safe harbor" test to permit the Partnership to continue to be taxed
as a partnership, before Mr. Pacult resigns, Ashley will secure an opinion of
counsel to the effect that sufficient other IRS elements exist to permit the
Partnership to continue to be taxed as a partnership and not as a
corporation. The Units owned by either general partner in the Partnership
and in other partnerships in which they act as a general partner shall not be
included in calculating their Net Worth. A letter of credit may be included.
The requirements of this subparagraph (i) may be modified if the General
Partner obtains an opinion of counsel for the Partnership to effect that a
proposed modification will not (1) adversely affect the classification of the
Partnership as a partnership for Federal income tax purposes; (2) will not
adversely affect the status of the Limited Partners as limited partners under
the Act; (3) will not violate any applicable state securities or Blue Sky law
or any rules, regulations, guidelines or statements of policy promulgated or
applied thereunder including, but not limited to, the net worth required by
Section II.B of the Guidelines for Registration of Commodity Pool Programs,
as adopted in revised form by the North American Securities Administrators
Association, Inc. as are in effect on the date of such proposed modification.
(j) Maintain a current list of the name, address, and number of Units owned
by each Limited Partner at the General Partner's principal office. Such list
shall be disclosed to any Partner or their representative at reasonable
times, upon request, either in person or by mail, upon payment, in advance,
of the reasonable cost of reproduction and mailing. The Partners and their
representatives shall be permitted access to all other records of the
Partnership, after adequate notice, at any reasonable time, at the offices of
the Partnership. The General Partner shall maintain and preserve such
records for a period of not less than six (6) years.
4.5 GENERAL PROHIBITIONS. The Partnership shall not:
(a) borrow from or loan to any person, except that the foregoing is not
intended to prohibit the incurring of any indebtedness to a Partner or an
Affiliate with respect to the offering of Units for sale, Registration, or
initiation and maintenance of the Partnership's trading positions.
(b) commingle its assets with those of any other person, except to the
extent permitted under the Securities and Exchange Act or the Commodity
Exchange Act and the regulations promulgated under each.
(c) permit rebates or give-ups to be received by the General Partner or any
Affiliate of the General Partner, or permit the General Partner or any
Affiliate of the General Partner to engage in reciprocal business
arrangements which would circumvent the foregoing prohibition; provided,
however, that an Affiliate or the General Partner may provide goods or
services, including brokerage, at a competitive cost to the Partnership.
(d) engage in the pyramiding of its positions (i.e., the use of unrealized
profits on existing positions to provide margins for additional positions in
the same or a related stock or commodity); provided, however, that there may
be taken into account the Partnership's open trade equity on existing
positions in determining whether to acquire additional unrelated stock or
commodity positions.
(e) margins of all open positions in all stocks and commodities combined
would exceed 250% of the partnership's Net Asset Value at the time such
position would otherwise be initiated.
(f) permit churning of the Partnership's trading account for the purpose of
generating brokerage commissions to any person.
(g) directly or indirectly pay or award any finder's fees, commissions or
other compensation to any persons engaged by a potential limited partner for
independent investment advice as an inducement to such advisor to advise the
potential limited partner to purchase Units in the Partnership without the
knowledge of such potential limited partner.
(h) No Partnership funds will be held outside the United States. The
Partnership funds committed to trading will be on deposit with and under the
control of a futures commission merchant regulated pursuant to the Commodity
Exchange Act, as may be amended, from time to time. The funds not committed
to trading will be in investments that are properly registered under the
United States securities or other financial institution regulations.
(i) The CTA may not receive a management fee pursuant to the terms of this
Partnership Agreement if it shares or participates, directly or indirectly,
in any commodity brokerage commissions generated by the Partnership.
4.6 FEES AND EXPENSES.
(a) The Partnership shall pay all Organization Costs and offering Expenses
incurred in the creation of the Partnership and sale of Units. The foregoing
expenses may be paid directly by the Partnership or may be reimbursed by the
Partnership to the General Partner or an Affiliate of the General Partner.
Notwithstanding the foregoing, in no event will reimbursement by the
Partnership to the General Partner for Organization Costs and offering
Expenses charged to the Partnership exceed an amount equal to 15% of the
gross proceeds from the sale of Units. Organization Costs and Offering
Expenses shall mean those Expenses incurred in connection with the formation,
qualification and Registration of the Partnership and in distributing and
processing the Units under applicable Federal and state law, sales
commissions, and any other expenses such as: (i) registration fees, filing
fees and taxes; (ii) the costs of qualifying, printing, amending,
supplementing, mailing and distributing the Registration Statement and
Prospectus; (iii) the costs of qualifying, printing, amending, supplementing,
mailing and distributing sales materials used in connection with the issuance
of the Units; (iv) salaries of officers and employees of the General Partner
and any Affiliate of the General Partner while directly engaged in
distributing and processing the Units and establishing its records; (v) rent,
travel, remuneration of personnel, telegraph, telephone and other expenses in
connection with the offering of the Units; (vi) accounting, auditing, and
legal fees incurred in connection therewith; and (vii) any extraordinary
expenses related thereto. Organization Costs and Offering Expenses do not
include salaries, rent, travel, expenses and other items of General Partner
overhead.
(b) All operating expenses of the Partnership shall be billed directly to
and paid by the Partnership.
(c) The General Partner or any Affiliate of the General Partner may be
reimbursed for the actual costs of any Expense including, but not limited to,
legal, accounting and auditing services used for or by the Partnership, as
well as printing and filing fees and extraordinary expenses incurred for or
by the Partnership; provided, however, the limitations of contained in
Article X - Exoneration and Indemnification contained in this Agreement will
apply to restrict the purchase of certain insurance coverage and the
assumption of the defense of certain claims.
(d) The General Partner may establish its compensation, from time to time,
for its services; provided, however, such charges shall be no more than:
(i) A sales commission of up to six percent (6%) to be established, from
time to time, by the General Partner, for sales of Units;
(ii) A management fee of one half of one percent (1/2 of 1%) per month (6%
per year) of the Net Asset Value of the Partnership, computed and paid to the
General Partner and/or non-affiliated independent investment or trading
advisor on the close of business on the last day of each month;
(iii) An incentive fee, paid quarterly, of up to fifteen percent (15%) of
the first one hundred percent (100%) of New Net Profit, or less earned upon
Capital, and prorated to consider the date of deposit of such Capital to the
Partnership each year. The incentive fee may be increased up to 27%,
provided that the management fee is correspondingly reduced to 0%. Each
trading sub-account established by the General Partner shall be considered
separately for purposes of incentive fee. The incentive fee will be non-
refundable; i.e., in the event that the Partnership earns substantial New Net
Profit during the first month of any year and, thereafter, suffers losses,
the General Partner will not refund any of the profit incentive fee paid for
the prior month or months. However, the Partnership will not pay or accrue
to the General Partner any further incentive fee during that year until such
time as the New Net Profit, when added to Net Asset Value, after additions,
deductions of Redemptions and distributions, exceeds the highest Net Asset
Value, computed for that year; i.e., incentive fees will only be earned and
paid or accrued upon New Net Profit for that year; and
(iv) A share of the brokerage commissions paid for trades made by the
Partnership. Such commissions shall not be more than the average published
fixed rate per month or per round-turn charged, from time to time, to public
commodity pools by national brokerage firms for similar trading size,
frequency, and style.
(e) The General Partner is hereby authorized to employ brokers, attorneys,
accountants, consultants, and administrative personnel who may be Affiliated
with the General partner to perform Partnership business at the expense of
the Partnership. Ashley has advanced the initial offering and organizational
expenses, which were $78,556. The offering expenses were reimbursed by the
Partnership immediately upon the Initial Closing and the organizational
expenses are being repaid to the corporate General Partner monthly over the
first sixty months of operation by the Partnership at the rate of
approximately $1000 per year, until paid in full. The Partnership is subject
to yearly legal and accounting fees of $18,000 and $5,000, respectively.
(f) The General Partner is hereby authorized, individually or through an
Affiliate, to employ non-affiliated independent investment and trading
advisors to trade the assets of all or a portion of the Fund to be paid (i)
an annual management fee not to exceed six percent (6%) of the assigned
trading equity when combined with the General Partner's management fee, if
any; and, (ii) an incentive fee of up to fifteen percent (15%) on New Net
Profit earned by such advisor, which may be increased by 2% for each 1%
reduction of management fee from 6% or decreased pursuant to the terms of
this Agreement. All incentive fees may be prorated monthly but must be paid
quarterly.
4.7 ACTIVITIES OF PARTNERS.
(a) The General Partner and its Affiliates shall devote to the Partnership
only such time as shall be reasonably required to fulfill their
responsibilities hereunder.
(b) Any Partner may, notwithstanding the existence of this Agreement, engage
in whatever other activities they may choose, whether the same be competitive
with the Partnership or otherwise, without having or incurring any obligation
or conflict of interest in such activities with the Partnership or to any
party hereto. The Partners are specifically authorized to deal with other
partnerships and to acquire interests in positions and trading without having
to offer participation therein to the Partnership or the other Partners.
Neither this Agreement nor any activities undertaken pursuant hereto shall
prevent any Partner, including the General Partner and its Affiliates and
their officers, directors and employees, from engaging in the trading
contemplated by this Partnership individually, jointly with others, or as a
part of any other association to which any of them are or may become parties,
in the same trades as the Partnership, or require any of them to permit the
Partnership, the General Partner or any other Partner to participate in any
of the foregoing. As a material part of the consideration for each party's
execution hereof, each Partner hereby waives, relinquishes and renounces any
such right or claim of conflict of interest and participation from any other
Partner.
(c) Ashley is a corporation which was formed on October 15, 1996, and prior
to that date, it didn't have any experience in the management of a
partnership which trades commodity futures or options, or any other
securities; however, on the date of this Agreement, Ashley has over three
years of successful operation of this Fund. In addition, Mr. Pacult, has
been engaged in supervision of individual managed commodity accounts for over
22 years and has managed one other commodity pool. The past and future
results of trading by the principals of the General Partner, both within and
without the partnership, will be confidential and not disclosed to the other
Partners. Such positions taken by the principals may be the same as or
different from any positions taken by the General Partner or any advisor to
the Fund. Nothing in this Section, or elsewhere in this Partnership
Agreement, shall permit the General Partner to violate their fiduciary or
legal obligations to the Partnership.
4.8 CONFLICTS OF INTEREST. Significant actual and potential conflicts of
interest exist in the structure and operation of the Partnership. The
General Partner has used its best efforts to identify and describe all
potential conflicts of interest that may be present under this heading and
elsewhere in the Partnership's Prospectus and the Exhibits attached thereto.
Prospective investors should consider that the General Partner intends to
assert that Partners have, by subscribing to the Partnership, consented to
the existence of such potential conflicts of interest as are described in
this Agreement and the Prospectus and its Exhibits, in the event of any claim
or other proceeding against the General Partner, any principal of the General
Partner, the CTA, any Principal of the CTA, the Partnership's FCM, or any
principal of the FCM, the Selling Agent or any principal or any Affiliate of
any of them alleging that such conflicts violated any duty owed by any of
them to said subscriber. Specifically, the Principal Selling Agent is
Affiliated with Mr. Pacult and, therefore, absent the selection of Additional
Selling Agents, no independent due diligence of the Partnership or the
General Partner will be made by a National Association of Securities Dealers,
Inc. member.
(a) MANAGEMENT OF OTHER EQUITY AND FOR THEIR OWN ACCOUNTS BY THE GENERAL
PARTNER, THE CTAs, AND THEIR PRINCIPALS. The right of both Mr. Pacult, in
any capacity, and Ashley to manage and the actual management by the CTA of
accounts they or their Affiliates own or control and other commodity accounts
and pools presents the potential for conflicts of interest. There is no
limitation upon the right of Mr. Pacult, Ashley, the CTA, or any of their
Affiliates to engage in trading commodities for their own account. It is
possible for these persons to take their positions in their personal accounts
prior to the orders they know they are going to place for the money they
manage for others. The General Partner will obtain representations from all
of these persons and their Affiliates that no such prior orders will be
entered for their personal accounts. The Partnership's CTA will be effecting
trades for its own accounts and for others (including other commodity pools
in competition with this Pool) on a discretionary basis. It is possible that
positions taken by the CTA for other accounts may be taken ahead of or
opposite positions taken on behalf of the Partnership. Conflicts may arise
as a result of the involvement of Mr. Pacult in the management of Bromwell
Financial Fund, L. P. and Providence Select Fund, L. P. and other conflicts
could arise should either Ashley or he exercise their right to form other
commodity pools in the future. Conflicts could also arise because the CTA
may have financial incentives to favor other accounts over the Partnership.
In the event Mr. Pacult, Ashley or the CTA, or any of their principals trade
for their own account, such trading records shall not be made available for
inspection by the Partners. Ashley does not presently intend to engage in
trading for its own account; however, Mr. Pacult reserves the right to trade
for his own account. The CTA also reserves the right to trade for its own
account and other public and private commodity pools in competition with the
Fund. Any trading for their personal accounts or other commodity pools by
the General Partner, any Commodity Trading Advisor selected to trade for the
Partnership or any of their principals could present a conflict of interest
in regard to position limits, timing of the taking of positions or other
similar conflicts. The result to the Partnership could be a reduction in the
potential for profit should the entry or exit of positions be at unfavorable
prices by virtue of position limits or entry of other trades in front of the
Partnership trades by the General Partner or CTA responsible for the
management of the Partnership.
(b) POSSIBLE RETENTION OF VOTING CONTROL BY THE GENERAL PARTNER. There is
no limit upon the number of Units in the Partnership the General Partner and
its principal and Affiliates may purchase. It will be possible for them to
vote, individually or as a block, to create a conflict with the best
interests of the Partnership, in regard to the selection of Commodity Trading
Advisors which do not trade frequently to protect the eleven percent (11%)
fixed commission paid by the Partnership to the Corporate General Partner.
(c) GENERAL PARTNER TO REMAIN AGAINST POSSIBLE BEST INTEREST OF PARTNERSHIP.
As Ashley has financial interest in the operation of the Partnership in the
form of the eleven percent (11%) fixed brokerage commission and because Mr.
Pacult serves as the other general partner and is also the sole principal of
Ashley, the other general partner, it is unlikely that either general partner
would voluntarily resign, even if such resignation would be in the best
interest of the Partnership.
(d) FEES AND CHARGES TO THE PARTNERSHIP PAID TO GENERAL PARTNER NOT
NEGOTIATED. The fixed commission of eleven percent (11%) per year in lieu of
round-turn brokerage commissions, payable to Ashley that is Affiliated with
Mr. Pacult, have not been negotiated at arm's length. The General Partner
has a conflict of interest between its responsibility to manage the
Partnership for the benefit of the Limited Partners and its interest in
receiving the difference between the fixed commission charged the Partnership
and the actual transaction costs incurred by the FCM as a result of the
frequency of trades entered by the CTA. See "Charges to the Partnership" in
the Partnership's Prospectus. The General Partner will select the CTAs to
manage the Partnership assets and the CTAs determine the frequency of
trading. Because the General Partner will receive the difference between the
brokerage commissions and other costs which will be paid on behalf of the
Partnership and the fixed commission, the General Partner's best interests
are served if it selects trading advisors which will trade the Partnership's
Net Assets assigned to them in a way to minimize the frequency of trades to
maximize the difference between the fixed commission and the round-turn
commissions and other costs to trade charged by the FCM; i.e., it is in the
best interest of the General Partner to reduce the frequency of trading
rather than concentrate on the expected profitability of the CTAs without
regard to frequency of trades. This conflict is offset by the fact the
General Partner does not select any of the trades and the CTA is paid an
incentive of 25% of New Net Profits. The arrangements between the General
Partner and the Partnership with respect to the payment of the commissions
are consistent in cost with arrangements other comparable commodity pools
have made to clear their trades. These arrangements are fair to the
Partnership and its investors because the General Partner has assumed the
risk of frequency of trading, up to a maximum of three times the normal rate
by the CTA and has assumed all liability for the payment of continuing
service fees to the persons who sold Units.
(e) CONFLICTS OF INTEREST IN THE PARTNERSHIP STRUCTURE. Certain actual and
potential conflicts of interest do exist in the structure and operation of
the Partnership which must be considered by investors before they purchase
Units in the Partnership. See "Risk Factors", and "Conflicts of Interest" in
the Partnership's Prospectus. In addition, the Selling Agent is Affiliated
with Mr. Pacult and, therefore, no independent due diligence of the offering
will be conducted for the protection of the investors. The General Partner
has taken steps to insure that the Partnership equity is held in segregated
accounts at the banks and the futures commission merchant selected and has
otherwise assured the Selling Agent that all money on deposit is in the name
of and for the beneficial use of the Partnership.
(f) GENERAL PARTNER TO DISCOURAGE REDEMPTIONS. The General Partner has an
incentive to withhold distributions and to discourage Redemption because
Ashley receives compensation based on the Net Asset Value of the Partnership
assigned to the CTAs to trade.
(g) HIGH RISK TRADING BY THE CTAs TO GENERATE INCENTIVE FEES. As a general
rule, the greater the risk assumed, the greater the potential for profit.
Because the CTA is compensated by the General Partner based on 20% of the New
Net Profit of the Partnership, it is possible that the CTA will select trades
which are otherwise too risky for the Partnership to assume to earn the 20%
incentive fee on the profit should that ill-advised speculative trade prove
to be profitable.
(h) NO RESOLUTION OF CONFLICTS PROCEDURES. As is typical in many futures
partnerships, the General Partner has not established formal procedures, and
none are expected to be established in the future, to resolve the potential
conflicts of interest which may arise. It will be extremely difficult, if
not impossible, for the General Partner to assure that these and future
potential conflicts will not, in fact, result in adverse consequences to the
Partnership or the Limited Partners. The foregoing list of risk factors and
conflicts of interest is complete as of the date of this Prospectus, however,
additional risks and conflicts may occur which are not presently foreseen by
the General Partner. Investors are not to construe this Prospectus as legal
or tax advice. Before determining to invest in the Units, potential
investors should read this entire Agreement as well as the Partnership's
Prospectus and the subscription agreement, and consult with their own
personal legal, tax, and other professional advisors as to the legal, tax,
and economic aspects of a purchase of Units and the suitability of such
purchase for them. See "Investor Suitability" in the Partnership's
Prospectus.
(i) INTERESTS OF NAMED EXPERTS AND COUNSEL. The General Partner has
employed The Scott Law Firm, P.A. to prepare this Prospectus, provide certain
tax advice and opine upon the legality of the issuance of the Units. Neither
the Law Firm nor its principal, nor any accountant or other expert employed
by the General Partner to render advice in connection with the preparation of
the Prospectus or any documents attendant thereto, have been retained on a
contingent fee basis nor do they have any present interest or future
expectation of ownership in the Partnership or its General Partner or the
Underwriter or the CTAs or the IB or the FCM.
4.9 LIMITATION OF POWERS. Without concurrence of a Majority in Interest,
the General Partner may not:
(a) Amend this Agreement except for those amendments that are specifically
authorized by this Agreement or do not adversely affect the rights of the
Limited Partners.
(b) Voluntarily withdraw as a General Partner other than upon 120 days
notice.
(c) Appoint a new General Partner or additional general partners; provided,
however, additional general partners may be appointed without obtaining the
consent of a Majority in Interest if the addition of such person is necessary
to preserve the tax status of the Partnership as a partnership and not as a
corporation; and the admission of such additional general partner does not
materially adversely affect the Limited Partners.
(d) Sell all or substantially all of the Partnership assets other than in
the ordinary course of business.
(e) Cause the merger or other reorganization of the Partnership.
(f) Dissolve the Partnership other than because of an event, which by law,
requires such dissolution.
ARTICLE V
Rights and Obligations of Limited Partners
5.1 LIMITATION OF LIABILITY. No Limited Partner shall be personally liable
for any of the debts of the Partnership or any of the losses thereof.
However, the amount committed by him to the Capital of the Partnership and
his interest in Partnership assets shall be subject to liability for
Partnership debts and obligations. Limited Partners may be liable to repay
any wrongful distribution of profits to them and may be liable for
distributions (with interest thereon) considered to be a return of Capital if
necessary to satisfy creditors of the Partnership.
5.2 NO MANAGEMENT RIGHTS. No Limited Partner shall take part in the
management of the business of the Partnership or transact any business for
the Partnership. No Limited Partner, as such, shall have the power to sign
for or to bind the Partnership.
5.3 CERTAIN RIGHTS. Provided the following, does not either (i) subject the
Limited Partners to unlimited liability or (ii) subject the Partnership to be
taxable as a Corporation for purposes of Federal Income tax laws, the
Partners, by a vote of a Majority in Interest, without the necessity for
concurrence by the General Partner, shall have the following rights in
addition to those granted elsewhere in this Agreement:
(a) Amend the Partnership Agreement; provided, however, any amendment which
modifies the compensation or distributions to the General Partner or which
affects the duties of the General Partner requires the consent of the General
Partner.
(b) The General Partner may be removed and a new General Partner elected in
accordance with the terms of this Agreement.
(c) Cancel any contract for services with the General Partner, without
penalty, upon 60 days written notice; provided, however, the maximum period
of any contract between the General Partner and the Partnership is one year;
and, provided further, should any amendment to this Partnership Agreement
attempt to modify the compensation or distributions to which the General
Partner is entitled or which affects the duties of the General Partner, such
amendment will become effective only upon the consent of the General Partner.
(d) The right to approve, prior to sale, the sale or distribution, outside
the ordinary course of business, of all or substantially all of the assets of
the Partnership.
(e) Dissolve the Partnership.
(f) Any material changes in the Partnership's basic investment policies
identified in Article III including, but not limited to, the speculation and
trade in commodity futures, forward futures contracts, and options upon those
contracts both within and without the United States or the structure of the
Partnership as a limited partnership requires prior written notification of a
meetings which identifies the purpose of the meeting and the approval by a
vote of the Majority in Interest of the Partners.
5.4 GENERAL PARTNER ACTION WITHOUT LIMITED PARTNER APPROVAL.
Notwithstanding anything in this Agreement, particularly section 5.3, to the
contrary, the General Partner may amend this Agreement without any vote,
consent, approval, authorization or other action of any other Partner and
without notice to any other Partner to:
(a) add to the representations, duties or obligations of the General Partner
or its Affiliates or surrender any right or power granted to the General
Partner or its Affiliates in this Agreement for the benefit of the Limited
Partners;
(b) cure any ambiguity, correct or supplement any provision in this
Agreement which may be inconsistent with any other provision in this
Agreement, or make any other provisions with respect to matters or questions
arising under this Agreement which will not be inconsistent with the intent
of this Agreement;
(c) delete or add any provision of this Agreement required to be so deleted
or added by the staff of the Securities and Exchange Commission, or by a
state securities law administrator or similar such official, which addition
or deletion is deemed by such official to be for the benefit or protection of
the Limited Partner or does not have a material adverse effect on the Limited
Partners generally or the Partnership;
(d) reflect the withdrawal, expulsion, addition or substitution of Partners;
(e) reflect the proposal, promulgation or amendment of Regulations under
Code section 704, or otherwise, to preserve the uniformity of interest in the
Partnership issued or sold from time to time, if, in the opinion of the
General Partner, the amendment does not have a material adverse effect on the
Limited Partners generally;
(f) elect for the Partnership to be bound by any successor statute to the
Act, if, in the opinion of the General Partner, the amendment does not have a
material adverse effect on the Limited Partners generally;
(g) conform this Agreement to changes in the Act or interpretations thereof
which, in the exclusive desecration of the General Partner, it believe
appropriate, necessary or desirable, if, in the General Partner's reasonable
opinion, such amendment does not have a materially adverse effect on the
Limited Partners generally or the Partnership;
(h) change the name of the Partnership;
(i) conform the provisions of this Agreement to any applicable requirements
of Federal of state law which, in the exclusive discretion of the General
Partner, it believes appropriate, necessary or desirable, if, in the General
Partner's reasonable opinion, such amendment does not have a material adverse
effect on the Limited Partners generally or the Partnership; and
(j) make any change which, in the exclusive discretion of the General
Partner, is advisable to qualify or to continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited
Partners have limited liability under the laws of any state or that is
necessary or advisable, in the exclusive discretion of the General Partner,
so that the Partnership will not be treated as an association taxable as a
corporation for Federal income tax purposes.
5.5 EXPULSION OF LIMITED PARTNERS. Anything herein to the contrary
notwithstanding,
(a) no Partner, including any corporation, partnership, trust or other
entity may, at any time, have an ownership percentage of ten percent or more
of the aggregate ownership percentages of the Limited Partners. If, at any
time, the General Partner determines that any Limited Partner has an
ownership percentage of ten percent or more, the Partnership, in the General
Partner's exclusive discretion, may cause a Redemption by that Limited
Partner of the number of Units necessary or advisable to reduce that Limited
Partner's ownership percentage to less than ten percent. The Redemption
shall be effective as of the next Valuation Date or such other Valuation
Date, at the discretion of the General Partner.
(b) the General Partner has the right, in its sole discretion, to raise or
lower the minimum investment in the Partnership required for the admission or
retention of Units in the Partnership by a Partner; however such minimum
investment may not be lowered below $5,000. In the event the General Partner
does raise the minimum investment in the Partnership to an amount in excess
of any Partners Capital account, the Partnership shall provide notice to the
Partner of such event and allow the Partner 30 days to raise the Capital
account for that Partner to such raised amount, or more. In the event the
Partner does not so raise his Capital account to such minimum amount, the
Partner shall be deemed to have elected to withdraw from the Partnership and
all of his Units shall be redeemed at the next redemption date as provided in
this Agreement.
(c) notwithstanding the foregoing, the General Partner, at its sole
discretion, may expel any Partner at anytime, by causing the redemption of
that Partner's Units as of the next Valuation Date, or such other Valuation
Date as the General Partner may determine.
5.6 NOTIFICATION. Notice shall be sent to each Partner within seven
business days from the date of:
(a) any decline in the Net Unit Value to less than 50% of the Net Asset
Value on the last Valuation Date;
(b) any material change in contracts with the FCM or CTA including, but not
limited to, any change in CTAs or any modification in connection with the
method of calculating the incentive fee;
(c) any other material change affecting the compensation of the General
Partner, FCM, CTA or any Affiliated party;
5.7 NOTIFICATION CONTENTS.
(a) a material change related to brokerage commissions shall not be made
until notice is given and the Partners, after such notice, have the
opportunity to Redeem pursuant to Article IX;
(b) in addition, in regard to all other changes, the required notification
shall describe the change in detail, include a description of the Partners'
Redemption rights pursuant to Article IX and voting rights pursuant to this
Article V and a description of any material effect such changes may have on
the interests of the Partners.
5.8 EXERCISE OF RIGHTS. Upon receipt of a written request, executed by the
holders of Units aggregating ten percent (10%) or more of the Units, for a
vote upon and to take action with respect to any rights of the Partners under
this Agreement, the General Partner shall call a meeting of all Partners of
the Partnership in the time and manner as provided in Section 8.7 hereof.
The General Partner will assume the cost for distribution of the request for
the meeting.
5.9 EXAMINATION OF BOOKS AND RECORDS. A Limited Partner shall have the
right to examine the books and records of the Partnership at all reasonable
times, including the right to have such examination conducted at his sole
expense by any reasonable number of representatives. Notwithstanding the
foregoing, the General Partner may keep and withhold the names of the other
Partners, specific trading and other designed information confidential from
the Partners.
ARTICLE VI
Assignment of Limited Partnership Units;
Admission of Limited Partners
6.1 RESTRICTION ON ASSIGNMENT. A Partner may not assign or transfer some or
all of his Units in the Partnership without the written consent of the
General Partner; provided, however, that in no event may an assignment be
made or permitted until after six months from the date of purchase of such
assigned or transferred Units(s) by said Partner; and, provided, further,
that full Units must be assigned and the assignor, if he is not assigning all
of his Units, will retain more than five Units. Any such assignment shall be
subject to all applicable securities, commodity, and tax laws and the
regulations promulgated under each such law. The General Partner shall
review any proposed assignment and shall withhold its consent in the event it
determines, in its sole discretion, that such assignment could have an
adverse effect on the business activities or the legal or tax status of the
Partnership.
6.2 QUALIFIED PLAN RESTRICTIONS. In no event shall a Partner be entitled to
transfer all or part of a Partnership interest if, under applicable United
States Department of Labor regulations, such transfer would result in
Partnership interests, excluding the interests of the General Partner, valued
at or in excess of twenty-five percent of the value of all outstanding
Partnership interests, excluding the interests of the General Partner, being
held by the following persons or entities:
(a) employee benefit plans (as defined in section 3(3) of the Federal
Employee Treatment Income Security Act of 1974, as amended ("ERISA"), whether
or not such plans are subject to the provisions of Title I of ERISA,
(b) plans described in section 4975 (e)(1) of the Code, and
(c) entities (such as a common or collective trust funds of a bank) whose
underlying assets include plan assets by reason of a plan's investment in the
entity.
6.3 DOCUMENTATION OF ASSIGNMENT. The General Partner shall furnish to the
assigning Limited partner a proper form to duly effect such assignment. The
General Partner shall not be required to recognize any assignment and shall
not be liable to the assignee for any distributions made to the assigning
Limited Partner until the General Partner has received such form of
assignment, properly executed with signature guaranteed, together with the
Certificate of Ownership originally issued to the Limited Partner (or an
indemnity bond in lieu therefor) and such evidence of authority as the
General Partner may reasonably request and the General Partner shall have
accepted such assignment.
ARTICLE VII
Accounting Records, Reports and Distributions
7.1 DISTRIBUTIONS. Each Partner will have a Capital account, and its
initial balance will be the amount the Partner paid for the Partner's Units.
The Net Assets of the Partnership will be determined monthly, and any
increase or decrease from the end of the preceding month will be added to or
subtracted from the accounts of the Partners in the ratio that each account
bears to all accounts. Distributions from profits or Capital will be made
solely at the discretion of the General Partner.
7.2 BOOKS OF ACCOUNT. Proper books of account shall be kept and there shall
be entered therein all transactions, matters and things relating to the
Partnership's business as required by applicable law and the regulations
promulgated thereunder and as are usually entered into books of account kept
by persons engaged in business of like character. The books of account shall
be kept at the principal office of the General Partner and each Limited
Partner (or any duly constituted agent of a Limited Partner) shall have, at
all times during reasonable business hours, free access, subject to rules of
confidentiality established by the General Partner, the right to inspect and
copy the same. Such books of account shall be kept on an accrual basis. A
Capital account shall be established and maintained from each Partner, as set
forth above.
(a) Each Partner shall be furnished as of the end of each Fiscal Year with
(1) annual financial statements, audited by a certified public accountant,
within 90 days from the end of such year; together with such other reports
(in such detail) as are required to be given to Partners by applicable law,
specifically, annual and periodic reports will be supplied by the General
Partner to the other Partners in conformance with the provisions of CFTC
regulations for eporting to Pool Participants, 17 C.F.R. Section 4.22, as
amended, from time to time, and, (2) any other reports or information which
the General Partner, in its sole discretion, determines to be necessary or
appropriate.
(b) Appropriate tax information (adequate to enable each Partner to complete
and file his Federal tax return) shall be delivered to such Partner no later
than January 31 following the end of each Calendar Year.
7.3 CALCULATION OF NET ASSET VALUE. Net Asset Value shall be calculated
daily and reports delivered to Partners as of the last day of each month by
the 20th of the following month. Upon request, the General Partner shall
make available to any Partner the Net Unit Value.
7.4 MAINTENANCE OF RECORDS. The General Partner shall maintain all records
as required by law including, but not limited to, (1) all books of account
required by paragraph 7.1 of this Article VII; and, (2) a record of the
information obtained to indicate that a Partner meets the applicable investor
suitability standards.
7.5 TAX RETURNS The General Partner shall cause tax returns for the
Partnership to be prepared and timely filed with the appropriate authorities.
The General Partner shall cause the Partnership to pay any taxes payable by
the Partnership; provided, however, that the General Partner shall not be
required to cause the Partnership to pay any tax so long as the General
Partner or the Partnership shall be in good faith and by appropriate means
contesting the applicability, validity or amount thereof and such contest
shall not materially endanger any right or interest of the Partnership.
7.6 TAX ELECTIONS The General Partner shall from time to time, make such
tax elections or allocations deemed necessary or desirable to carry out the
business of the Partnership or the purposes of this Agreement. Ashley shall
be authorized to perform all duties imposed by Sections 6221 through 6232 of
the Internal Revenue Code on the General Partner as "tax matters partner" of
the Partnership, including, but not limited to, the following: (i) the power
to conduct all audits and other administrative proceedings with respect to
Partnership tax items; (ii) the power to extend the statute of limitations
for all Limited Partners with respect to Partnership tax items; (iii) the
power to file a petition with an appropriate federal court for a review of a
final Partnership administrative adjustment; and, (iv) a power of attorney on
behalf of each Limited Partner having less than a 1% interest in the
Partnership to enter a settlement with the Internal Revenue Service on behalf
of, and binding upon, those Limited Partners unless any said Limited Partner
shall have notified the Internal Revenue Service and the General Partner,
within 30 days of service of the notice of claim up said Limited Partner,
that the General Partner may not act on such Limited Partner's behalf.
ARTICLE VIII
Amendments of Partnership Agreement
8.1 RESTRICTION ON AMENDMENTS. No amendment to this Agreement shall be
effective or binding upon the partners unless the same shall have been
approved by a Majority in Interest of the Partners; provided, however, the
General Partner may adopt amendments without such approval which are, in the
sole judgment of the General Partner, deemed necessary or desirable to
maintain the business or limited partnership or other favorable tax status of
the Partnership, or permit a Public Offering of the Units, or to maintain the
Partnership and the General Partner and its principals in compliance with the
laws which govern the business, including the requirements of any self
regulatory organization, or to substitute or add persons as Limited Partners.
8.2 ADMISSION OF ADDITIONAL PARTNERS. At any time, the General Partner may,
in its sole discretion and subject to applicable law, admit additional
Partners. Each newly admitted Partner shall contribute cash equal to the Net
Unit Value of the Partnership for each Unit to be acquired. The terms of any
additional offering may be different from the terms of the initial offering.
All expenses of any such additional offering shall be borne by the either the
Partnership or the subscribers thereto, as determined in the sole discretion
of the General Partner. Pursuant to Article VI, the General Partner may
consent to and admit any assignee of Units as a substituted Partner. There
is no maximum aggregate amount of Units which may be offered and sold by the
Partnership or on the amount of contributions which may be received by the
Partnership.
8.3 TERMINATION OF OFFERINGS; ADDITIONAL OFFERINGS. Notwithstanding
anything stated herein to the contrary, the General Partner may from time to
time, in its sole discretion, limit the number of Units to be offered,
terminate any offering of Units, or register additional Units and/or make
additional public or private offerings of Units. No Limited Partner shall
have any preemptive, preferential or other rights with respect to the
issuance or sale of any additional Units. No Limited Partner shall have the
right to consent to the admission of any additional Limited Partners.
8.4 NOTICE OF RESTRICTED TRANSFER. Should the General Partner elect to
issue certificates of Limited Partnership, each certificate shall be subject
to and contain the following notice:
THESE LIMITED PARTNERSHIP INTERESTS SHALL NOT BE TRANSFERABLE BY THE
REGISTERED HOLDER EXCEPT BY CONSENT OF THE GENERAL PARTNER AND AS OTHERWISE
PROVIDED IN THE PARTNERSHIP AGREEMENT.
8.5 MEETINGS OF PARTNERS. Upon receipt of a written request, together with
the costs to distribute such request to all Partners, executed by Partners
holding ten percent (10%) or more of the Units, for the calling of a meeting
of the Partners or should the General Partner desire a meeting for any
purpose, the General Partner shall, within fifteen (15) days thereafter,
provide written notice, either in person or by certified mail, after the date
of receipt of said notice. Such written notice shall state the purpose of
the meeting, specify a reasonable time, place, and date, which shall be not
less than thirty (30) or more than sixty (60) days thereafter. An Amendment
shall be adopted and binding upon all parties hereto if a Majority in
Interest of the Partners vote for the adoption of such amendment. Partners
may vote in person or by written proxy delivered to any such meeting.
Meetings of Partners may also be held by conference telephone where all
Partners can hear one another.
8.6 RIGHT OF GENERAL PARTNER TO RESIGN. The individual General Partner, Mr.
Pacult, may resign upon one hundred twenty (120) days notice to all other
Partners. The corporate General Partner, Ashley, may resign or assign any
portion of its interest in the Partnership at anytime to a third party and
become a Limited Partner with respect to the balance of its interest in the
Partnership, if any, if it provides one hundred twenty (120) days prior
written notice to all other Partners of its intention to resign and states in
such notice the name of the intended assignee who is to become substitute
corporate General Partner and the information reasonably appropriate to
enable the Partners to decide whether or not to approve the substitution or,
in the alternative, provide that the partners must elect a successor general
partner. In the event of the voluntary withdrawal by the corporate General
Partner, the corporate General Partner shall pay the legal fees, recording
fees and all other expenses incurred as a result of its withdrawal. Upon
resignation, the corporate General Partner shall be paid the items identified
in Section 8.7 below.
8.7 AMENDMENT INVOLVING SUCCESSOR CORPORATE GENERAL PARTNER. Should a
resignation or an amendment to the Agreement provide for a change in the
general partner upon the conditions provided in this Agreement, the election
and admission of a person or persons as a successor or successors to the
corporate General Partner, shall require the following conditions: the
General Partner shall retire and withdraw as General Partner and the
Partnership business shall be continued by the successor general partner or
general partners, and such amendment shall expressly provide that on or
before the effective date of removal.
(a) The corporate General Partner shall be permitted to Redeem 100% of its
Units as of the Valuation Date following its removal or resignation in cash
equal to the Net Asset Value of such corporate General Partner's interest in
the Partnership.
(b) The Partnership shall pay to the removed corporate General Partner an
amount equal to the Appraised Value of such General Partner's assets to be
transferred to the successor General Partner to enable the successor to
continue the business of the Partnership. The Appraised Value of the
withdrawing corporate General Partner's interest in the Partnership shall
equal such General Partner's interest in the sum of (1) the Expenses advanced
by the corporate General Partner to the Partnership, (2) all cash items, (3)
all prepaid expenses and accounts receivable less a reasonable discount for
doubtful accounts, and (4) the net book value of all other assets, unless the
withdrawing General Partner of the successor corporate General Partner
believes that the net book value of an asset does not fairly represent its
fair market value in which event such corporate General Partner shall cause,
at the expense of the Partnership, an independent appraisal to be made by a
person selected by the General Partner with approval of a Majority in
Interest of the Partners to determine its value.
(c) The successor General Partner or Partners shall indemnify the former
General Partner for all future activities of the Fund.
ARTICLE IX
Dissolution, Liquidation and Redemption
9.1 DISSOLUTION. The Partnership shall be dissolved, and shall terminate
and wind-up its affairs, upon the first to occur of the following:
(a) the affirmative vote of a Majority in Interest of the Partners adopting
an amendment to this Agreement providing for the dissolution of the
Partnership;
(b) the sale, exchange, forfeiture or other disposition of all or
substantially all the properties of the Partnership out of the ordinary
course of business;
(c) the resignation of the General Partner after one hundred twenty days
notice to the Partners, of the bankruptcy, insolvency or dissolution, or
failure of the General Partner to maintain sufficient Net Worth to qualify
the Partnership as a partnership for Federal Income Tax purposes or as
required by the NASAA Guidelines in effect at the time the Units were sold,
without a successor, promptly after any such event, but in no event beyond
one hundred twenty (120) days after the effective date of such event;
(d) at 11:59 p.m. on the day which is twenty-one (21) years from the 1st day
of February, 1998; or
(e) any event which legally dissolves the Partnership.
9.2 EFFECT OF LIMITED PARTNER STATUS. The death, legal disability,
bankruptcy, insolvency, dissolution, or withdrawal of any Limited Partner
shall not result in the dissolution or termination of the Partnership, and
such Limited Partner, his estate, custodian or personal representative shall
have no right to withdraw or value such Limited Partner's interest in the
Partnership except as provided in Paragraph 9.3. Each Limited Partner (any
assignee thereof) expressly agrees that the provisions of the Act, as
amended, titled "Powers of Legal Representative or Successor of Deceased,
Incompetent, Dissolved or Terminated Partner", shall not apply to his
interest in the Partnership and expressly waives any rights and benefits
thereunder. Each Limited Partner (and any assignee of such Partner's
interest) expressly agrees that in the event of his death, that he waives on
behalf of himself and his estate, and he directs the legal representative of
his estate and any person interested therein to waive the furnishing of any
inventory, accounting or appraisal of the assets and any right to an audit or
examination of the books of the Partnership. The General Partner may assign,
sell, or otherwise dispose of all or any portion of its shares of common
stock without any legal effect upon the operation of the Partnership and no
Limited Partner may object to any such transfer.
9.3 LIQUIDATION. Upon the termination and dissolution of the Partnership,
the General Partner (or in the event the dissolution is caused by the
dissolution or the cessation to exist as a legal entity of the General
Partner, voluntary withdrawal, bankruptcy or insolvency, such person as the
Majority in Interest of the Partners may select) shall act as liquidating
trustee and shall take full charge of the Partnership assets and liabilities.
Thereafter, the business and affairs of the Partnership shall be wound up and
all assets shall be liquidated as promptly as is consistent with obtaining
the fair value thereof, and the proceeds therefrom shall be applied and
distributed in the following order: (i) to the expenses of liquidation and
termination and to creditors, including the General Partner, in order or
priority as provided by law, and (ii) to the Partners pro rata in accordance
with his or its Capital account, less any amount owed by such Partner to the
Partnership.
9.4 RETURN OF CAPITAL CONTRIBUTION SOLELY OUT OF ASSETS. A Partner shall
look solely to the properties and assets of the Partnership for the return of
his Capital Contribution, and if the properties and assets of the Partnership
remaining after the payment or discharge of the debts and liabilities of the
Partnership are insufficient to return his Capital Contribution, he shall
have no recourse against the General Partner or any other Limited Partner for
that purpose.
9.5 REDEMPTION. A Partner (including any approved assignee who becomes a
Limited Partner) may withdraw any part or all of his Capital Contribution and
undistributed profits, if any, by requiring the Partnership to redeem any or
all of his Units at the Net Asset Value thereof (such withdrawal being herein
referred to as "Redemption"). The General Partner has the right to establish
the notice cut-off date and the Redemption effective date. Such Redemptions
shall be no less often than quarterly; provided, however, Redemption may be
deferred until after the lapse of twelve months from the date of purchase of
the Units.
9.6 REDEMPTION PROCEDURES. Redemption shall be after all liabilities,
contingent, accrued, reserved in amounts determined by the General Partner
have been deducted and there remains property of the Partnership sufficient
to pay the Net Unit Value as defined in Paragraph 1.3(b). As used herein,
"request for Redemption" shall mean a letter mailed or delivered by a Partner
and received by the General Partner no less than 10 business days prior to
the effective date for which Redemption is requested. Upon Redemption, a
Partner shall receive, on or before the last day of the following month, an
amount equal to the Net Unit Value redeemed as of the date for which the
request for Redemption was received, less accrued expenses and any amount
owed by such Partner to the Partnership. Redemption is subject to a
Redemption fee to be paid by the Partners as provided below; provided,
however, no Partner other than the initial Limited Partner, may redeem any
Units until the last day of the sixth month after the commencement of
trading. All Redemption requests shall be subject to the following:
(a) Under special circumstances including, but not limited to, the inability
to liquidate positions as of such Redemption date or default or delay in
payments due the Partnership from banks, brokers, or other persons, the
Partnership may in turn delay payment to Partners requesting Redemption of
Units of the proportionate part of the Net Unit Value represented by the sums
which are the subject of such delay or default.
(b) The General Partner in its sole discretion may, upon notice to the
Partners, declare additional Redemption dates and may cause the Partnership
to redeem fractions of Units and, prior to registration of Units for public
sale, redeem Units held by Partners who do not hold the required minimum
amount of Units established, from time to time, by the General Partner.
(c) For Partners admitted after the date of this Agreement, there will be no
redemption charge or fee. The General Partner may withdraw from the
Partnership at any time and have return of the proceeds attributable to his
Units without any delay or payment of fees..
9.7 SPECIAL REDEMPTION. In the event the Net Unit Value falls to less than
fifty percent (50%) of the Net Asset Value established by the greater of the
initial offering price of one thousand dollars ($1,000), less commissions and
other charges, or such higher value earned after payment of the incentive fee
for the addition of profits, the General Partner shall immediately suspend
all trading, provide immediate notice, in accordance with the terms of this
Agreement, to all Partners of the reduction in Net Asset Value, and afford
all Partners the opportunity for fifteen (15) days after the date of such
notice to Redeem their Units in accordance with the provisions of Section 9.5
and 9.6, above. No trading shall commence until after such fifteen day
period.
ARTICLE X
Nature of Partner's Liabilities for Claims
10.1 PROSECUTION OF CLAIMS. The General Partner shall arrange to prosecute,
defend, settle or compromise actions at law or in equity or with any self
regulatory organizations at the expense of the Partnership as such may be
necessary or desirable to enforce, protect, or maintain Partnership
interests.
10.2 SATISFACTION OF CLAIMS. The General Partner shall satisfy any claims
against, errors asserted, or other liability of the Partnership and any
judgment, decree, decision or settlement, first out of any insurance proceeds
available therefor, next, out of Partnership assets and income, and finally
out of the assets and income of the General Partner.
10.3 GENERAL PARTNER DECISION. The decisions made by the General Partner in
regard to the prosecution or settlement of claims, errors, and other
liabilities, will be final unless contested and put to a vote pursuant to
Section 5.8, in which case the outcome of the vote will determine the course
of action.
10.4 EXONERATION, INDEMNIFICATION, AND NO ANTICIPATION OF PAYMENTS. The
General Partner shall not be liable to the Partnership or the Partners for
any failure to comply with its obligations hereunder except for breach of
fiduciary obligation owed to the partnership or negligence on its part in the
management of Partnership affairs or violation of Federal and state
securities laws in connection with the offering of Units for sale. In
addition:
(a) The General Partner will be indemnified for liabilities and expenses
arising from any threatened, pending or completed action or suit in which it
or any affiliate is a party or is threatened to be made a party by reason of
the fact that it is or was the General Partner of the Partnership (other than
an action by the Partnership or a Partner against the General Partner which
is finally resolved in favor of the Partnership or Partner). The Partnership
will indemnify the General Partner and its affiliates against expenses,
including attorney's fees, judgments and amounts paid in settlement of an
action, suit or proceeding if it has acted in good faith and in a manner it
reasonably believed to be in or not opposed to the best interest of the
Partnership, and provided that its conduct did not constitute negligence or a
breach of fiduciary obligations in the performance of its duty to the
Partnership or a violation of the securities laws. The termination of any
action, suit or proceeding by judgment, order or settlement against the
Partnership shall not of itself create a presumption that the General Partner
or any affiliate did not act in good faith and not in the best interest of
the Partnership.
Notwithstanding any provision of this Agreement to the contrary, the
Partnership shall advance or pay the General Partner or any of its Affiliates
for legal expenses and other costs incurred as a result of any legal action
which alleges a breach of the Federal or state securities laws only if the
following conditions are satisfied: (i) the legal action relates to acts or
omissions with respect to the performance of duties or services on behalf of
the Partnership; (ii) the legal action is initiated by a third party who is
not a Limited Partner, or the legal action is initiated by a Limited Partner
and an independent arbitration panel, administrative law judge, or court of
competent jurisdiction specifically approves such advancement; and, (iii) the
General Partner or its Affiliates undertake to repay the advanced funds to
the Partnership, together with the applicable legal rate of interest thereon,
in cases which such party is not entitled to indemnification under NASAA
Guideline II.F.
To the extent that a General Partner or an Affiliate has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred
to above or in defense of any claim, issue or other matter related to the
Partnership or any other Partner or person who applied to be a Partner, the
Partnership shall indemnify such General Partner against the expenses,
including attorneys' fees and costs, actually and reasonably incurred by it
in connection therewith.
(b) The indemnification of a General Partner shall be limited to and
recoverable only out of the assets of the Partnership. Notwithstanding the
foregoing, the Partnership's indemnification of the General Partner shall be
limited to the amount of such loss, liability or damage which is not
otherwise compensated for by insurance carried for the benefit of the
Partnership. Additionally, the Partnership may not incur the cost of that
portion of liability insurance which insures the General Partner for any
liability as to which the General Partner is prohibited from being
indemnified under this Agreement.
(c) Notwithstanding any provision in this Agreement to the contrary, the
Partnership shall not advance the expenses or pay for any insurance to pay
for the costs of the defense or any liability which is prohibited from being
indemnified pursuant to NASAA Guideline II.F. Specifically, no
indemnification which is the result of negligence or misconduct by the
General Partner or for any allegation of a violation of the Federal or state
securities laws by or against the General Partner, any broker/dealer or any
other party unless there has been a successful adjudication on the merits of
each count involving alleged securities law violation as to the General
Partner or broker/dealer or such other party; or a court of competent
jurisdiction approves a settlement of the claims against the General Partner
or any broker/dealer or any other party and finds, specifically, that the
indemnification of the settlement and related costs should be made after the
court of law has been made aware that the Securities and Exchange Commission
opposes such indemnification and the position of any applicable state
securities regulatory authority where the Partnership Interests were offered
or sold without the compliance with specific conditions upon such
indemnification and the action covered satisfies the provisions of Section
10.4 (a) of this Agreement. Any change in the requirements imposed by the
Securities and Exchange Commission and the state securities administrators in
regard to indemnification shall cause a corresponding change in the right of
the General Partner to indemnification.
(d) The indemnification of the General Partner provided in this Article
shall extend to any employee, agent, attorney, certified public accountant,
or Affiliate of the Partnership and the General Partner.
(e) The Partnership shall indemnify, to the extent of the Partnership
assets, each Partner against any claims of liability asserted against a
Partner solely because he is a Partner in the Partnership.
(f) In the event the Partnership or any Partner is made a party to any
claim, dispute or litigation or otherwise incurs any loss or expense, as a
result of or in connection with any Partner's activities unrelated to the
Partnership business or as a result of an unfounded claim against the
Partnership or any other Partner brought as a result of alleged actions by
said Partner, the Partner which was responsible for the allegations which
caused such loss or expense shall indemnify and reimburse the Partnership and
all other Partners for all loss and expense incurred, including attorneys'
fees and costs.
(g) No creditor of a Partner shall have a right to vote Units. Nor may any
Partner or creditor of a Partner anticipate any principal or income from the
Fund prior to the approval of a Redemption Request or the payment of a
distribution from the Fund.
ARTICLE XI
Power of Attorney
11.1 POWER OF ATTORNEY EXECUTED CONCURRENTLY. Concurrent with the written
acceptance and adoption of the provisions of this Agreement, each Partner
shall execute and deliver to the General Partner, a Power of Attorney
(paragraph 5 of the Subscription Agreement). Said Power of Attorney
irrevocably constitutes and appoints the General Partner as a true and lawful
attorney-in-fact and agent for such Partner with full power and authority to
act in his name and on his behalf in the execution, acknowledgment and filing
of documents, which will include, but shall not be limited to, the following:
(a) Any certificates and other instruments, including but not limited to, a
Certificate of Limited partnership and amendments thereto and a certificate
of doing business under an assumed name, which the General Partner deems
appropriate to qualify or continue the Partnership as a limited partnership
in the jurisdictions in which the Partnership may conduct business, so long
as such qualifications and continuations are in accordance with the terms of
this Agreement or any amendment hereto, or which may be required to be filed
by the Partnership or the Partners under the laws of any jurisdiction;
(b) Any other instrument which may be required to be filed by the
Partnership under Federal or any state laws or by any governmental agency or
which the General Partner deems advisable to file; and
(c) Any documents required to effect the continuation of the Partnership,
the admission of the signer of the Power as a Limited Partner or of others as
additional or substituted Partners or Limited Partners, or the dissolution
and termination of the Partnership, provided such continuation, admission,
dissolution or termination is pursuant to the terms of this Agreement.
11.2 EFFECT OF POWER OF ATTORNEY. The Power of Attorney concurrently
granted by each Partner to the General Partner is a special Power of Attorney
coupled with an interest, is irrevocable, and shall survive the death or
legal incapacity of the Partner; and may be exercised by the General Partner
for each Partner by a facsimile signature of one of its officers or by
listing all of the Partners executing any instrument with a single signature
of one of its officers acting as attorney-in-fact for all of them; and shall
survive the delivery of an assignment by a Partner of the whole or any
portion of his interest in the Partnership; except that where the assignee
thereof has been approved by the General Partner for admission to the
Partnership as a substituted partner, the Power of Attorney shall survive the
delivery of such assignment for the sole purpose of enabling the General
Partner to execute, acknowledge and file an instrument necessary to effect
such substitution.
11.3 FURTHER ASSURANCES. Upon request, each Limited Partner agrees to
execute and deliver to the Partnership, within thirty (30) days after receipt
of a written request from the General Partner, a separate form of power of
attorney granting the same powers described above; and such other further
statements of interest, holdings, designations, powers of attorney and other
instruments as the General Partner deems necessary or desirable.
ARTICLE XII
Miscellaneous Provisions
12.1 NOTICES. Notices, requests, reports, payments or other communications
required to be given or made hereunder shall be in writing and shall be
deemed to be delivered when properly addressed and posted by United States
registered or certified mail or delivered by independent courier which
provides an record of receipt, postage or delivery fees prepaid, properly
addressed to the party being given such notice at its last known address.
Addresses shown on the Schedule of Limited Partners records of the
Partnership shall be considered the last known address of each said party
unless the General Partner is otherwise notified in writing.
12.2 NATURE OF INTEREST OF PARTNERS. The interest of each Partner in the
Partnership is personal property. No Partner may anticipate the distribution
or redemption of principal or income from the Partnership and no assignment
to secure the position of a lender to a Partner shall be valid without the
express written consent of the General Partner.
12.3 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed in all respects by the laws of the State of Delaware. All
Partners agree to consent to the jurisdiction and to bring all actions for
claims related to the Partnership and the sale of the Units in the State and
County of the principal office of the Partnership as it is established, from
time to time, by the General Partner. Currently, the principal office of the
Partnership is located in Kent County, Delaware.
12.4 SUCCESSORS IN INTEREST. This Agreement shall be binding on and inure
to the benefit of he parties hereto and, to the extent permitted by this
Agreement, their respective heirs, executors, administrators, personal
representatives, successors and assigns.
12.5 INTEGRATION. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of such parties in connection
herewith. Any amendment or supplement made hereto must be in writing.
12.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts. In such event, each counterpart shall constitute an original
and all such counterparts shall constitute one agreement. The addition of
Limited Partners pursuant to the power of attorney granted to the General
Partner shall not be deemed amendments to alter the rights of the other
Partners under this Agreement.
12.7 SEVERABILITY. Any provision of this Agreement which is invalid,
illegal, or unenforceable in any respect in any jurisdiction shall be, as to
such jurisdiction, ineffective to the extent of such invalidity, illegality
or unenforceability. The remaining provisions hereof in such jurisdiction
shall be and remain effective. Any such invalidity, illegality or
unenforceability in any jurisdiction shall not invalidate or in any way
effect the validity, legality or enforceability of such provision or the
remainder of this Agreement in any other jurisdiction.
12.8 WAIVERS. The failure of any Partner to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
12.9 HEADINGS. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any
provision hereof.
12.10 RIGHTS AND REMEDIES CUMULATIVE. This rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
Partner shall not preclude or waive his right to use addition to any other
rights such Partner may have by law, statute, ordinance or otherwise.
12.11 WAIVER OF RIGHT TO PARTITION. Each of the Partners irrevocably
waives, during the term of the Partnership, any right that it may have to
maintain any action for partition with respect to the property and assets of
the Partnership.
12.12 INTEREST OF CERTAIN SECURED CREDITORS. No creditor who makes
nonrecourse loan to the Partnership shall have or acquire at any time as a
result of making the loan, any direct or indirect interest in the profits,
Capital, or property of the Partnership other than as a secured creditor.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
General Partner:
ASHLEY CAPITAL MANAGEMENT, INCORPORATED
By: _____________________________
Michael P. Pacult
President
Other General Partner:
By: _____________________________
Michael P. Pacult
Agent for Limited Partners:
Ashley Capital Management, Inc.
By: _____________________________
Michael P. Pacult
President
*******************************************************************************
EXHIBIT B TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
REQUEST FOR REDEMPTION
To: Ashley Capital Management, Inc.
General Partner _____________________________
5916 N. 300 West Our Social Security Number or
P. O. Drawer C Taxpayer ID Number
Fremont, IN 46737
Dear General Partner:
The undersigned hereby requests redemption ("Redemption"), as defined
in and subject to all the terms and conditions disclosed in the Offering
Circular (the "Prospectus") delivered to the undersigned at the time of our
purchase of limited partnership interests (the "Units") in Atlas Futures
Fund, Limited Partnership, (the "Fund"), of _______________ Units (insert the
number of Units to be Redeemed). This Redemption request, once approved and
accepted by you as General Partner, will be at the Net Asset Value per Unit,
as described in the Prospectus, as of the close of business at the end of the
current month following such approval.
The undersigned hereby represents and warrants that the undersigned is
the true, lawful and beneficial owner of the Units to which this Request
relates with full power and authority to request Redemption of such Units.
Such Units are not subject to any pledge or otherwise encumbered.
United States Taxable Limited Partners Only - Under penalty of perjury,
the undersigned hereby certifies that the Social Security Number or Taxpayer
ID Number indicated on this Request for Redemption is the undersigned's true,
cared and complete Social Security Number or Taxpayer ID Number and that the
undersigned is not subject to backup withholding under the provisions of
section 3406(a)(1)(C) of the Internal Revenue Code.
Non United States Limited Partners Only - Under penalty of perjury, the
undersigned hereby certifies that (a) the undersigned is not a citizen or
resident of the United States or (b) (in the case of an investor which is not
an individual) the investor is not a United States corporation, partnership,
estate or trust.
SIGNATURE(S) MUST BE IDENTICAL TO NAME(S) IN WHICH UNITS ARE REGISTERED
Please forward redemption funds by mail to the undersigned at:
_____________________________________________________________________________
Name Street City, State and Zip Code
Entity Limited Partner Individual Limited Partners(s)
________________________________ _______________________________
(Name of Entity) (Signature of Limited Partner)
By:
________________________________ ________________________________
(Authorized corporate officer, partner, (Signature of Limited Partner)
custodian or trustee)
________________________________
(Title)
*******************************************************************************
EXHIBIT C TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
SUBSCRIPTION REQUIREMENTS
By executing the Subscription Agreement and Power of Attorney for Atlas
Futures Fund Limited Partnership (the "Fund"), each purchaser ("Purchaser")
of Limited Partnership Interests (the "Units") in the Partnership irrevocably
subscribes for Units at a price equal to the Net Asset Value per Unit as of
the end of the month in which the subscription is accepted as described in
the Partnership's Offering Circular dated December __, 2003(the "Prospectus").
The minimum subscription is $25,000, however, it may be lowered to not less
than $5,000 by the General Partner; additional Units may be purchased in
multiples of $1,000. Subscriptions must be accompanied by a check in the
full amount of the subscription and made payable to "Escrow Account for
Atlas". Purchaser is also delivering to the Selling Agent an executed
Subscription Agreement and Power of Attorney (Exhibit D to the Prospectus).
Upon acceptance of Purchaser's Subscription Agreement and Power of Attorney
Purchaser agrees to contribute Purchaser's subscription to the Partnership
and to be bound by the terms of the Partnership's Limited Partnership
Agreement, attached as Exhibit A to the Prospectus. Purchaser agrees to
reimburse the Partnership and Ashley Capital Management, Incorporated (the
"General Partner") for any expense or loss incurred as a result of the
cancellation of Purchaser's Units due to a failure of Purchaser to deliver
good funds in the amount of the subscription price. By execution of the
Subscription Agreement and Power of Attorney, Purchaser shall be deemed to
have executed the Limited Partnership Agreement.
As an inducement to the General Partner to accept this subscription,
Purchaser (for the Purchaser and, if Purchaser is an entity, on behalf of and
with respect to each of Purchaser's shareholders, partners or beneficiaries),
by executing and delivering Purchaser's Subscription Agreement and Power of
Attorney, represents and warrants to the General Partner, the Commodity
Broker and the Selling Agent who solicited Purchaser's subscription and the
Fund, as follows:
(a) Purchaser is of legal age to execute the Subscription Agreement
and Power of Attorney and is legally competent to do so. Purchaser
acknowledges that Purchaser has received a copy of the Prospectus,
including the Limited Partnership Agreement, prior to subscribing for
Units.
(b) All information that Purchaser has heretofore furnished to the
General Partner or that is set forth in the Subscription Agreement and
Power of Attorney submitted by Purchaser is correct and complete as of
the date of such Subscription Agreement and Power of Attorney, and if
there should be any change in such information prior to acceptance of
Purchaser's subscription, Purchaser will immediately furnish such
revised or corrected information to the General Partner.
(c) Unless (d) or (e) below is applicable, Purchaser's subscription
is made with Purchaser's funds for Purchaser's own account and not as
trustee, custodian or nominee for another.
(d) The subscription, if made as custodian for a minor, is a gift
Purchaser has made to such minor and is not made with such minor's
funds or, if not a gift, the representations as to net worth and
annual income set forth below apply only to such minor.
(e) If Purchaser is subscribing in a representative capacity,
Purchaser has full power and authority to purchase the Units and enter
and be bound by the Subscription Agreement and Power of Attorney on
behalf of the entity for which he is purchasing the Units, and such
entity has full right and power to purchase such Units and enter and
be bound by the Subscription Agreement and Power of Attorney and
become a Limited Partner pursuant to the Limited Partnership Agreement
which is attached to the Prospectus as Exhibit A.
*******************************************************************************
EXHIBIT D TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
SUBSCRIPTION INSTRUCTIONS
Any person considering subscribing for
Units should carefully read and review the Prospectus.
The Units are speculative and involve a high degree of risk. No person
may invest more than 10% of his or her liquid net worth (exclusive of home,
furnishings and automobiles) in the Partnership. No entity and, in
particular, no ERISA plan-may invest more than 10% of its liquid net worth
(readily marketable securities) in the Partnership. If a purchaser is allowed
to purchase less than $25,000 in Units, then the purchaser must have a
minimum annual gross income of $45,000 and a minimum net worth of $45,000 or,
in the alternative, a minimum net worth of $150,000.
A Subscription Agreement and Power of Attorney Signature Page (the
"Signature Page") is attached to these Subscription Instructions and the
following Subscription Agreement and Power of Attorney. The Signature Page is
the document which you must execute if you wish to subscribe for Units. One
copy of such Signature Page should be retained by you for your records and
the others delivered to your Registered Representative.
FILL IN ALL OF THE INFORMATION ON THE ATTACHED SIGNATURE PAGE, USING
BLACK INK ONLY, AS FOLLOWS
Item 1 - Enter the dollar amount (no cents) of the purchase.
Items 2 - Enter the Social Security Number or Taxpayer ID Number and
check the appropriate box to indicate the type of individual ownership
desired or of the entity that is subscribing. In the case of joint ownership,
either Social Security Number may be used.
The Signature Page is self-explanatory for most ownership types;
however, the following specific instructions are provided for certain of the
ownership types identified on the Signature Page:
Trusts-Enter the trust's name on Line 3 and the trustee's name on Line
4, followed by "Ttee." If applicable, use Line 7 also for the custodian's
name. Be sure to furnish the Taxpayer ID Number of the trust.
Custodian Under Uniform Gifts to Minors Act-Complete Line 3 with the
name of minor followed by "UGMA." On Line 7, enter the custodian's name
followed by "Custodian." Be sure to furnish the minor's Social Security
Number.
Partnership or Corporation-The partnership's or corporation's name is
required on Line 4. Enter a partner's or officer's name on Line 4. Be sure to
furnish the Taxpayer ID Number of the partnership or corporation. A
subscriber who is not an individual must provide a copy of documents
evidencing the authority of such entity to invest in the Partnership.
Item 8 - The investor(s) must execute the Subscription Agreement and
Power of Attorney Signature Page and review the representations relating to
backup withholding tax or non-resident alien status underneath the signature
and telephone number lines in Item 8.
Item 9 - Registered Representative must complete.
The Selling Agent's copy of the Subscription Agreement and Power of Attorney
Signature Page may be required to be retained in the Branch Office.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
BY EXECUTING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SUBSCRIBERS ARE NOT WAIVING ANY RIGHTS UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934
SUBSCRIPTION AGREEMENT AND
POWER OF ATTORNEY
Ashley Capital Management, Inc.
General Partner ____________________________
5916 N. 300 West Your Social Security Number or
P. O. Drawer C Taxpayer ID Number
Fremont, IN 46737
Dear General Partner:
1. Subscription For Units. I hereby subscribe for the number of Limited
Partnership Units ("Units") in Atlas Futures Fund, Limited Partnership (the
"Fund") set forth below (minimum $25,000) in the Subscription Agreement and
Power of Attorney Signature Page, at a price per Unit as set forth in the
Fund's prospectus dated December __, 2003, (collectively, the "Prospectus").
I have completed and executed a Subscription Agreement and Power of Attorney
Signature Page in the form attached hereto as Exhibit "D", and delivered the
executed Subscription Documents to the Sales Agent and executed a check made
payable to "Escrow Account for Atlas" to be delivered by the Sales Agent to
the Escrow Agent within 24 hours after receipt for deposit to the Escrow
Account. The General Partner may, in its sole and absolute discretion,
accept or reject this subscription, in whole or in part. If this
subscription is accepted, I understand subscribers will earn additional Units
in lieu of interest earned on the undersigned's subscription during any
period of time, if any, such subscription is held in escrow. If this
subscription is rejected, all funds remitted by the undersigned will be
returned, together with any interest earned from escrow, if any.
2. Representations and Warranties of Subscriber. I have received and read a
copy of the Prospectus. I understand that by submitting this Subscription
Agreement and Power of Attorney I am making the representations and
warranties set forth in "Exhibit C - Subscription Requirements" contained in
the Prospectus, including, without limitation, representations and warranties
relating to my net worth and annual income. Additionally, I understand that
my broker/dealer account application will be forwarded to the General Partner
to review my suitability for this investment.
3. Power of Attorney. In connection with my acceptance of an Interest in the
Partnership, I do hereby irrevocably constitute and appoint the General
Partner, and its successors and assigns, as my true and lawful Attorney-in-
Fact, with full power of substitution, in my name, place and stead, to (i)
file, prosecute, defend, settle or compromise litigation, claims or
arbitration on behalf of the Partnership; and, (ii) make, execute, sign,
acknowledge, swear to, deliver, record and file any documents or instruments
which may be considered necessary or desirable by the General Partner to
carry out fully the provisions of the Limited Partnership Agreement of the
Partnership, which is attached as Exhibit A to the Prospectus dated December
__, 2003, including, without limitation, the execution of the said Agreement
itself and by effecting all amendments permitted by the terms thereof. The
Power of Attorney granted hereby shall be deemed to be coupled with an
interest and shall be irrevocable and shall survive, and shall not be
affected by, my subsequent death, incapacity, disability, insolvency or
dissolution or any delivery by me of an assignment of the whole or any
portion of my interest in the Partnership.
4. Irrevocability; Governing Law. You may revoke your subscription for five
business days after you send it to us (the "Revocation Period"). After the
lapse of five business days from submission, your subscription will be
irrevocable. The Units offered to you are subject to prior sale. I hereby
acknowledge and agree that after the Revocation Period I am not entitled to
cancel, terminate or revoke this subscription or any of my agreements
hereunder and that this subscription and such agreements shall survive my
death or disability. This Subscription Agreement and Power of Attorney shall
be governed by and interpreted in accordance with the laws of the State of
Delaware.
5. Suitability and Acceptance of Risks. In addition to the suitability
requirements set forth in Exhibit C, I represent and warrant to the General
Partner and Selling Agent that (i) I have the capacity of understanding the
fundamental aspects of the Partnership (or, if I do not have such fundamental
understanding, I have so advised the Selling Agent of such fact); and, (ii) I
understand the fundamental risks and possible financial hazards of an
investment in the Partnership (disclosed in the prospectus dated December __,
2003 under "Risk Factors" identified on the face page, in the Summary, and
described therein at page 5), including, but not limited to, the lack of
liquidity of my investment in the Partnership, the management and control by
the General Partner, and the tax consequences of the investment.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP
Units of Limited Partnership Interests
Subscription Agreement and Power of Attorney
Signature Page
The investor named below, by execution and delivery of this Subscription
Agreement and Power of Attorney, by payment of the purchase price for Limited
Partnership Interests (the "Units") in Atlas Futures Fund, Limited
Partnership (the "Partnership"), and by enclosing a check payable to "Escrow
Account for Atlas", hereby subscribes for the purchase of Units, at a price
per Unit as set forth in the Prospectus.
The named investor further, by signature below, acknowledges (i) receipt and
that he has read the Prospectus of the Partnership dated December __, 2003;
(ii) that such Prospectus includes the Partnership's Limited Partnership
Agreement, the Subscription Requirements, and the Subscription Agreement and
Power of Attorney set forth therein, the terms of which govern the investment
in the Units being subscribed for hereby; (iii) that this subscription may be
revoked within five business days after submission; and, (iv) after the lapse
of five business days from submission, this subscription will be irrevocable.
By my signature below, I represent that I satisfy the requirements relating
to net worth and annual income as set forth in Exhibit C to the Prospectus.
1) Total $ Amount __________________ (minimum of $25,000, unless lowered to
less than $25,000 but not less than $5,000 by the General Partner; $1,000
minimum for investors making an additional investment)
2) Social Security Number _____-___-_____
Taxpayer ID # _____-___-_____
Taxable Investors (check one):
O Individual Ownership
O Trust other than a Grantor or Revocable Trust
O Joint Tenants with Right of Survivorship
O Estate
O UGMA/UTMA (Minor)
O Tenants in Common
O Community Property
O Partnership
O Corporation
O Grantor or Other Revocable Trust
Non-Taxable Investors (check one):
O IRA
O Profit Sharing
O IRA Rollover
O Defined Benefit
O Pension
O Other (specify)
O SEP
3) Investor's Name _________________________________________________________
4) _________________________________________________________________________
Additional Information (for Estates, Trusts, Partnerships and Corporations)
5) Resident Address of Investor
_________________________________________________________________________
Street (P.O. Box not acceptable) City State Zip Code
6) Mailing Address(if different)
_________________________________________________________________________
Street City State Zip Code
7) Custodian Name and Mailing Address
_________________________________________________________________________
Name Street (P.O. Box not acceptable) City State Zip Code
Signature(s) - do not sign without familiarizing yourself with the
information in the Prospectus, including: (i) the fundamental risks and
financial hazards of this investment, including the risk of losing your
entire investment; (ii) that the Partnership is the first client account to
trade in the Atlas Futures Fund portfolio; (iii) the Partnership's
substantial charges; (iv) the Partnership's highly leveraged trading
activities; (v) the lack of liquidity of the Units including lock-in period
and redemption charges; (vi) the existence of actual and potential conflicts
of interest in the structure and operation of the Partnership; (vii) that
Limited Partners may not take part in the management of the Partnership; and
(viii) the tax consequences of the Partnership.
8) INVESTOR(S) MUST SIGN
X_________________________________________________________
Signature of Investor Date Telephone No.
X_________________________________________________________
Signature of Joint Investor (if any) Date
Executing and delivering this Subscription Agreement and Power of Attorney
shall in no respect be deemed to constitute a waiver of any rights under the
Securities Act of 1933 or under the Securities Exchange Act of 1934.
UNITED STATES INVESTORS ONLY
I have checked the following box if I am subject to backup withholding under
the provisions of Section 3406(a)(1)(C) of the Internal Revenue Code: __.
Under the penalties of perjury, by signature above I hereby certify that the
Social Security Number or Taxpayer ID Number set forth in Item 2 above is my
true, correct and complete Social Security Number of Taxpayer ID Number and
that the information given in the immediately preceding sentence is true,
correct and complete.
NON-UNITED STATES INVESTORS ONLY
Under the penalties of perjury, by signature above, I hereby certify that (a)
I am not a citizen or resident of the United States or (b) (in the case of an
investor which is not an individual) the investor is not a United States
corporation, partnership, estate or trust: __.
9) REGISTERED REPRESENTATIVE MUST SIGN
I hereby certify that I have informed the investor of all pertinent facts
relating to the: risks; tax consequences; liquidity and marketability;
management; and control of the Managing Owner with respect to an investment
in the Units, as set forth in the Prospectus. I have also informed the
investor of the unlikelihood of a public trading market developing for the
Units. I do not have discretionary authority over the account of the
investor.
I have reasonable grounds to believe, based on information obtained from the
investor concerning his/her investment objectives, other investments,
financial situation and needs and any other information known by me, that an
investment in the Partnership is suitable for such investor in light of
his/her financial position, net worth and other suitability characteristics.
The Registered Representative MUST sign below in order to substantiate
compliance with Article III, Section 34 of the NASD's Rules of Fair
Practice.
X__________________________________________________________
Registered Representative Signature Date
X__________________________________________________________
Office Manager Signature Date
(if required by Selling Agent procedures)
10) REGISTERED REPRESENTATIVE
Name: Shira Del Pacult
Address: 5916 N. 300 West, Fremont, IN 46737
Tel. Number: (219) 833-1306
Registered Representative Number: 334
11) SELLING AGENT
Name: Futures Investment Company
Address: 5916 N. 300 West
Fremont, IN 46737
Tel. Number: (219) 833-1306
*******************************************************************************
EXHIBIT E TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
FIRST AMENDMENT TO ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of
the 1st day of May, 2000, by and among Futures Investment Company, an Illinois
corporation (the "Broker Dealer"); and, Ashley Capital Management, Inc., a
Delaware Corporation, ("Escrow Agent") acting for the benefit of investors
during the time between when their check is received and they are admitted as
Limited Partners to Atlas Futures Fund, Limited Partnership (the
"Partnership").
A. WHEREAS, the Partnership, through the Broker Dealer, presently offers to
sell to subscribers limited partnership interests (the "Securities" or
"Units") in the Partnership at an offering price equal to the Net Asset Value
per Unit computed after the close of business on the last business day of each
month until a total of $7,000,000 in value of Units are sold (the "Offering");
and
B. WHEREAS, the Partnership and the Broker Dealer desire to establish an
escrow account with the General Partner acting as the Escrow Agent in which
checks or wire transfer of funds will be received from subscribers for sales
which will be deposited and cleared to be held until the close of business at
the end of that month at which time the deposits will be delivered to the
Partnership and the investors will be admitted as Limited Partners to the
Partnership; and
C. WHEREAS, the escrow is to exist for the benefit of investors during the
period between receipt of their investment and their acceptance into the
Partnership until the Offering is sold or is withdrawn or terminates,
whichever occurs first, (the "Escrow Period"); and,
D. WHEREAS, Escrow Agent desires to serve as escrow agent, all in
accordance with the terms and conditions set forth herein.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree, as
follows:
1. Establishment of Escrow Account. Within ten (10) days following the
signing of this Escrow Agreement, the parties shall establish an interest-
bearing escrow account with the Escrow Agent, which escrow account shall be
entitled the "Escrow Account for Atlas" (the "Escrow Account"). During the
Escrow Period, the Broker Dealer, through its registered representatives, will
instruct subscribers, pursuant to the disclosures made in the Subscription
Agreement to the Disclosure Document, Prospectus, or Offering Circular, as the
case may be, and the Broker/Dealer Selling Agreement, to make checks for
subscriptions payable to "Escrow Account for Atlas". Any checks received that
are made payable other than to the Escrow Account shall be returned to the
subscriber by the Broker Dealer.
2. Escrow Period. The escrow period shall begin with the commencement of
the Offering and shall terminate upon the earlier to occur of the following
dates (the "Escrow Period"):
A. the date upon which the General Partner confirms that a total in face
amount of $7,000,000 in Units have been sold and accepted by the Partnership;
B. The expiration of nine (9) months from the date of the Offering
Circular, or any extension thereof, utilized by the Partnership in offering
the Securities; or
C. The date upon which the General Partner has elected to terminate the
Offering.
3. Deposits into the Escrow Account. The Partnership and the Broker Dealer
agree that they shall promptly review the subscription documents to determine
the suitability of the subscriber for admission to the Partnership and reject
or accept and transmit (and in all events by 12:00 noon of the next business
day after receipt by them) all monies received from subscribers for the
payment of Securities to the Escrow Agent for deposit in the Escrow Account
together with a written account of each sale, which account shall set forth,
among other things, the subscriber's name and address, the number of
Securities purchased, the amount paid therefor, and whether the consideration
received was in the form of a check, draft, or money order. All monies so
deposited in the Escrow Account are hereinafter referred to as the "Escrow
Funds".
4. Collection Procedure. The Escrow Agent is hereby authorized to forward
each check, draft, or money order for collection and, upon collection of the
proceeds of such instrument, deposit the collected proceeds in the Escrow
Account. As an alternative, the Escrow Agent may telephone the bank on which
the instrument is drawn to confirm that it has been paid.
Any instrument returned unpaid to the Escrow Agent shall be returned to the
Broker Dealer. In such cases, the Escrow Agent will promptly notify the
Partnership of such return.
If, for any reason, the Partnership elects to reject any subscription for
which the Escrow Agent has already collected funds, the Escrow Agent shall
promptly issue a refund check to the rejected subscriber. If the Partnership
rejects any subscription for which the Escrow Agent has not yet collected
funds but has submitted the subscriber's check for collection, the Escrow
Agent shall promptly issue a check in the amount of the subscriber's check to
the rejected subscriber after the Escrow Agent has cleared such funds. If the
Escrow Agent has not yet submitted a rejected subscriber's check for
collection, the Escrow Agent shall promptly return the subscriber's check
directly to the subscriber.
Only collected funds will be released from the Escrow Account to the
Partnership. "Collected funds" shall mean all funds received by the Escrow
Agent which have cleared normal banking channels and are in the form of good
funds on deposit.
During the Escrow Period, the Partnership and the Broker Dealer are aware and
they understand and agree that they are not entitled to any funds received
into escrow and no amounts deposited in the Escrow Account shall become the
property of the Partnership, the Broker Dealer, or any other entity or person,
or be subject to the debts of the Partnership, the Broker Dealer, or any other
entity or person.
5. Investment of Escrow Funds. The Escrow Agent may invest the Escrow
Funds only in such accounts or investments as the Partnership may specify by
written notice from a list of investments made available by the Escrow Agent
for such purpose. The Partnership may only specify and the Escrow Agent may
only make available investments in (1) bank accounts, (2) bank money market
accounts, (3) short-term certificates of deposit issued by a bank, or (4)
short-term securities issued or guaranteed by the U.S. Government. Upon
release of the subscription amount from escrow, the interest will either be
used to purchase additional Units or returned to the subscriber, as the case
may be. The Partnership shall be solely responsible for the allocation of the
interest earned on the deposits to the subscribers.
6. Compensation of Escrow Agent. The Escrow Agent will collect no fees for
performing its duties.
7. Disbursements from the Escrow Account.
A. The Escrow Agent shall pay the escrow funds in a written statement as of
the close of business each month which shall identify the amount to be paid to
the Broker Dealer for commissions, the amount to be paid to the Partnership to
purchase Units, the amount to be returned to subscribers, if any, and the
amount to be retained in the Escrow Account. The Escrow Agent will be
responsible for the payments pursuant to the written direction, only. It will
have no responsibility for the application of the funds paid. None of the
money on deposit in the Escrow Account may be anticipated or made available to
pay the creditors of the Partnership or its general partners.
B. In the event the Escrow Agent is directed to return any portion of the
escrow account to a subscriber, such return will be without deduction,
penalty, or expense to the subscriber, along with each subscriber's pro-rata
share of any interest earned on the Escrow Account at the rate established by
the Escrow Agent, and the Escrow Agent shall notify the Partnership and the
Broker Dealer of the completion of the return and the amount paid. The
purchase money returned to each subscriber shall be free and clear of any and
all claims of the Partnership, the Broker Dealer, and the Escrow Agent or any
of their creditors.
8. Obligations of Escrow Agent. Escrow Agent shall be obligated only for
the performance of such duties as are specifically set forth in this
Agreement, and no additional duties shall be inferred herefrom or implied
hereby. The Escrow Agent may rely upon and shall be protected in acting or
refraining from acting on any instrument believed by it to be genuine and to
have been signed or presented by the proper party or parties.
9. Controversies. Should any controversy arise among the undersigned with
respect to this Agreement, or with respect to the right to receive all or part
of the Escrow Funds, including accrued interest thereon, Escrow Agent shall
have the right to institute an interpleader action in any court of competent
jurisdiction in Steuben County, IN, to determine the rights of the parties.
Should such an action be instituted, or should the General Partner acting as
Escrow Agent become involved in litigation in any manner on account of this
Agreement or the Escrow Funds (not involving willful misconduct, fraud, gross
negligence or bad faith on the part of Escrow Agent), the Partnership shall
either assume the defense or pay to Escrow Agent the reasonable attorneys'
fees incurred by Escrow Agent, whichever the Partnership shall elect, together
with any other expenses, losses, costs and damages suffered by Escrow Agent,
in connection with and resulting from such litigation.
10. Limit of Escrow Agent Liability. The duties of Escrow Agent are purely
ministerial in nature, and that Escrow Agent shall incur no liability
whatsoever under this Agreement, except for acts or omissions of the Escrow
Agent involving or constituting willful misconduct, fraud, gross negligence or
bad faith.
11. Resignation. Escrow Agent may, at any time, resign hereunder by giving
written notice of its intent to resign to the other parties hereto, at their
respective addresses set forth below, at least ten (10) days prior to the date
specified for such resignation to take effect, and upon the effective date of
such resignation the Escrow Funds, including all accrued interest, shall be
delivered by Escrow Agent to the person designated in writing by the Broker
Dealer and the Partnership, whereupon all of Escrow Agent's obligations
hereunder shall cease and terminate (except as hereinafter provided in this
paragraph). If no such person shall have been designated prior to the
effective date of such resignation, all obligations of Escrow Agent hereunder
shall, nevertheless, cease and terminate (except as hereinafter provided in
this paragraph). Escrow Agent's sole responsibility thereafter shall be to
hold the Escrow Funds until such time as the Escrow Agent delivers the Escrow
Funds and accrued interest to a person designated by the Partnership and the
Broker Dealer or to the person designated by a court of competent
jurisdiction. Notwithstanding the foregoing, nothing in this paragraph
releases Escrow Agent or relieves it of any of its obligations that existed
prior to the effective date of Escrow Agent's resignation, including, without
limitation, liability for willful misconduct, fraud, gross negligence or bad
faith.
12. Indemnification. The Broker Dealer and the Partnership agree to
indemnify, defend and hold Escrow Agent harmless from and against any and all
loss, damage, tax, liability and expense that may be incurred by Escrow Agent
and arising out of or in connection with its acceptance of appointment as
escrow agent hereunder, including reasonable attorneys' fees and other legal
costs and expenses of defending itself against any claim or liability in
connection with its performance hereunder, except in the case of willful
misconduct, fraud, gross negligence or bad faith on the part of Escrow Agent.
The Partnership, and not the Broker Dealer, shall pay for the cost of any
indemnification of the Escrow Agent pursuant to this Agreement. The
provisions of this paragraph shall survive the termination of this Agreement.
Escrow Agent may consult with and rely on its attorneys with respect to any
dispute not assumed or defended by the Partnership and the indemnification
referred in this paragraph 12 shall include all reasonable and necessary
attorneys' fees of Escrow Agent in connection with such consultation.
13. Notices. Any notice or demand desired or required to be given hereunder
shall be in writing and deemed given when personally delivered (including
delivery by commercial overnight courier service), or when deposited in the
United States mail, postage prepaid, sent certified or registered, and
addressed as follows:
(a) If to the Partnership, to:
Atlas Futures Fund, Limited Partnership, 5916 N. 300 West, Fremont,
IN 46737 with a copy to
William S. Scott of The Scott Law Firm, P.A., 940 Northeast 79th
Street, Miami, FL 33138.
(b) If to the Broker Dealer, to:
Futures Investment Company, 5916 N. 300 West, Fremont, IN 46737,
Attn.: Compliance Department
(c) If to the Escrow Agent/General Partner, to:
Ashley Capital Management, Inc., 5916 N. 300 West, Fremont, IN 46737
or to such other address or person as hereafter shall be designated in writing
by the party providing notice.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
15. Titles or Captions. The titles or captions of sections and paragraphs
in this Agreement are provided for convenience of reference only and should
not be considered a part hereof for purposes of interpreting or applying this
Agreement, and such titles or captions do not define, limit, extend, explain
or describe the scope or extent of this Agreement or any of its terms or
conditions.
16. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and in making proof
hereof it shall not be necessary to produce or account for more than one such
counterpart.
17. Amendments. No amendment, modification, supplement, termination or
waiver of or to any provision of this Agreement nor consent to any departure
therefrom, shall be effective unless the same shall be in writing and signed
by or on behalf of each of the parties to this Agreement.
18. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns.
19. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matters hereof and
supersedes all negotiations, preliminary agreements and all prior or
contemporaneous discussions and understandings of the parties hereto in
connection with the subject matters hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ATLAS FUTURES FUND, LIMITED PARTNERSHIP ASHLEY CAPITAL MANAGEMENT, INC.
By: Ashley Capital Management, Inc.
The General Partner
By: /s/ Shira Del Pacult By: /s/ Shira Del Pacult
Ms. Shira Del Pacult Ms. Shira Del Pacult
President President
FUTURES INVESTMENT COMPANY
By: /s/ Shira Del Pacult
Ms. Shira Del Pacult
Vice President
*******************************************************************************
EXHIBIT F TO ATLAS FUTURES FUND DISCLOSURE DOCUMENT
INVESTMENT ADVISORY CONTRACT
CLARKE CAPITAL MANAGEMENT, INC.
THIS AGREEMENT is made and entered as of this 1st day of November, 1999
between Atlas Futures Fund, Limited Partnership, (the "Fund") and Clarke
Capital Management, Inc., an Illinois corporation, (the "CTA").
WITNESSETH:
In consideration of the deposit by the Fund of equity to Refco, Inc.
(the "FCM") account number _________ in the name of the Fund (this account and
any other accounts, which may be assigned to the CTA in the future are
collectively hereinafter called the "Account") and the grant of the power of
attorney on the standard form of the FCM to the CTA to permit the CTA to enter
trades for the Fund in the Account, the parties hereto agree as follows:
1. The Fund shall initially deposit in the Account with the FCM, U.S. funds
in the amount of _____________________ dollars ($_______). Subsequent
deposits and accumulation of profits in the Account, less withdrawals and
losses, shall be subject to this Agreement. At its sole discretion, the Fund
may add or withdraw funds at any time from the Account by written request to
the FCM with a copy to the CTA.
2. The CTA will cause futures contracts, and when deemed advisable, options
on futures and forward contracts, to be bought and sold on behalf of the Fund
in the Account. The CTA will have the sole authority to issue all necessary
instructions to effect trading with the FCM for the Account. All such
transactions shall be for the account and risk of the Fund. During the term
of this agreement, the Fund agrees that it will not place orders in the
Account without the prior written consent of the CTA.
3. The CTA's services are not rendered exclusively for the Fund, and the
CTA shall be free to render similar services to others. The General Partner
may change the FCM for the account assigned to the CTA at any time upon
written direction to the FCM and the CTA, and CTA agrees to effect the
transfer and sign the forms necessary to complete such change, provided such
transfer does not conflict with any prior agreements the CTA has with the FCM.
4. On the close of the last business day of each month, Futures Investment
Company (the "IB") shall charge the Fund a fixed commission of 9% of the Net
Equity in the account assigned to the CTA payable at the rate of _% per month.
This payment to the IB will be for all round turns, pit brokerage, exchange,
NFA fees and other clearing expenses arising from the trades placed by the CTA
in the account for domestic trades. This does not include delivery or other
exchange for physicals or trades made on foreign exchanges or forward markets.
Those costs will be at rates to be negotiated by the General Partner with the
IB or other party, as the facts determine, and charged separately, if at all,
to the Fund. No trades for physicals is to be made without the written consent
of the General Partner.
5. The CTA will use its best efforts to obtain an equity run from the FCM
before the opening of business the next trading day. Unless authorized in
writing by the General Partner, the CTA will use only the equity in the
Account assigned to the CTA by the General Partner for margins to hold the
positions taken by the CTA. No equity in the Account assigned to the CTA will
be commingled or margined, for any purpose, with any other account at the FCM.
The General Partner, upon written instruction to the FCM, may terminate, for
any reason, the power of attorney and suspend the trading authority of the CTA
to enter trades with the FCM. In the event of a termination of the power of
attorney, the CTA agrees that the FCM shall accept no further instructions
from the CTA but shall place the Account upon liquidation only to be handled
in written instructions from the General Partner to the FCM.
6. The Fund agrees to execute, from time to time, the Acknowledgment of
Receipt of Disclosure Document from the CTA. By signing, the Fund agrees that
it has received and understands the most recent copy of the CTA's Risk
Disclosure Document.
7. The Fund agrees to execute the CTA's Managed Account Compensation
Agreement authorizing the CTA to be paid its management fee from the Account.
The CTA will not be paid an annual management fee. The CTA will be paid an
incentive fee of twenty-five percent (25%), of the New Net Profit earned each
quarter. James D. Hepner, certified accountant will calculate the fee subject
to approval by the CTA, and the fee shall not be deducted from the Account,
but will be paid upon submission of an invoice by the CTA to the General
Partner of the Fund.
8. The Fund and the CTA agree that they have properly executed all the
necessary account forms for opening the Account with the FCM; provided,
however, any disputes between the Fund and the CTA will be submitted to
arbitration before a single arbitrator selected by the American Arbitration
Association and only upon written agreement of the parties at the time such
dispute arises. The terms of this Agreement will supersede, and in the event
of conflicts with any other agreement, the terms of this Agreement shall
control. This Agreement will be governed by the laws of the State of Illinois
and any dispute concerning arbitration will be resolved by a Federal or State
court of competent jurisdiction located in Chicago, Illinois.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
Atlas Futures Fund, Limited Partnership Clarke Capital Management, Inc.
By: Ashley Capital Management, Inc.
_____________________________ _____________________________
Ms. Shira Del Pacult Michael J. Clarke
President President
The undersigned acknowledges a copy of the foregoing agreement and agrees to
use its best efforts to comply with the terms which apply to the FCM.
Refco, Inc.
By: _____________________________
Print name: _____________________
Print title: ____________________
*******************************************************************************
FORM S-1
Registration No. 333-59976
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
(b) The Selling Agreement between Futures Investment Company and the
Registrant contains an indemnification from the General Partner to the
effect that the disclosures in the Prospectus are in compliance with Rule
10b5 and otherwise true and complete. This indemnification speaks from
the date of the first offering of the Units through the end of the
applicable statute of limitations. The Partnership has assumed no
responsibility for any indemnification to Futures Investment Company
and the General Partner is prohibited by the Partnership Agreement from
receiving indemnification for breach of any securities laws or for
reimbursement for insurance for coverage for any such claims. See
Article X, Section 10.4 (b) and (e).
(d) There are no indemnification agreements which are not contained in the
Limited Partnership Agreement attached as Exhibit A, the Selling
Agreement or the Clearing Agreement.
Item 16. Exhibits and Financial Statement Schedules.
The following documents (unless indicated) are filed herewith and made a part
of this Registration Statement:
(a) Exhibits.
Exhibit
Number Description of Document
(1) - 01 Selling Agreement dated February 1, 1998, among the Partnership,
the General Partner, and Futures Investment Company, the Selling
Agent
(2) None
(3) - 01 Articles of Incorporation of the General Partner
(3) - 02 By-Laws of the General Partner
(3) - 03 Board Resolution of General Partner to authorize formation of
Delaware Limited Partnership
(3) - 04 Amended and Restated Agreement of Limited Partnership of the
Registrant dated February 1, 1998 (included as Exhibit A to the
Prospectus)
(3) - 05 Certificate of Limited Partnership, Designation of Registered
Agent, Certificate of Initial Capital filed with the Delaware
Secretary of State, and Delaware Secretary of State acknowledgment
of filing of Certificate of Limited Partnership
(4) - 01 Amended and Restated Agreement of Limited Partnership of the
Registrant dated February 1, 1998 (included as Exhibit A to the
Prospectus)
(5) - 01 Opinion of The Scott Law Firm, P.A. relating to the legality of the
Partnership Units.
(6) Not Applicable
(7) Not Applicable
(8) - 01 Opinion of The Scott Law Firm, P.A. with respect to Federal income
tax consequences.
(9) None
(10) - 01 Form of Advisory Agreements between the Partnership and the CTAs
(included as Exhibit F to the Prospectus)
(10) - 02 Form of New Account Agreement between the Partnership and the FCM
(10) - 03 Form of Subscription Agreement and Power of Attorney
(included as Exhibit D to the Prospectus).
(10) - 04 Escrow Agreement among Escrow Agent, Underwriter, and the Partnership.
(included as Exhibit E to the Prospectus).
(10) - 05 Introducing Broker Clearing Agreement by and between Refco, Inc. as
futures commission merchant (the "FCM") and Futures Investment
Company as introducing broker (the "IB")
(11) Not Applicable - start-up business
(12) Not Applicable
(13) Not Required
(14) None
(15) None
(16) Not Applicable
(17) Not Required
(18) Not Required
(19) Not Required
(20) Not Required
(21) None
(22) Not Required
(23) - 01 Consent of Frank L. Sassetti & Co., Certified Public Accountants
(23) - 02 Consent of James Hepner, Certified Public Accountant
(23) - 03 Consent of The Scott Law Firm, P.A.
(23) - 04 Consent of Clarke Capital Management, Inc., Commodity Trading Advisor
(23) - 05 Consent of Futures Investment Company, as Selling Agent
(23) - 06 Consent of Futures Investment Company, as Introducing Broker
(23) - 07 Consent of Refco, Inc., Futures Commission Merchant
(24) None
(25) None
(26) None
(27) Not Applicable
(28) Not Applicable
(99) - 01 Subordinated Loan Agreement for Equity Capital
(99) - 02 Representative's Agreement between Futures Investment Company and
Shira Del Pacult
(b) Financial Statement Schedules.
No Financial Schedules are required to be filed herewith.
Item 17. Undertakings.
(a) (1) The undersigned registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental:
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each post-
effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The General Partner has provided an indemnification to Futures Investment
Company, the best efforts selling agent. The Partnership (issuer) has
not made any indemnification to Futures Investment Company.
Insofar as indemnification for liabilities under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
the Registrant including, but not limited to, the General Partner
pursuant to the provisions described in Item 14 above, or otherwise, the
Registrant had been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
*******************************************************************************
Pursuant to the requirements of the Securities Act of 1933, in the City of
Fremont in the State of Indiana on this 24th day of November, 2003, Mr. Michael
Pacult, the individual general partner of the Registrant, signed this
Registration Statement; and Ashley Capital Management, Inc., the corporate
general partner of the Registrant, has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
ASHLEY CAPITAL MANAGEMENT, INC. ATLAS FUTURES FUND, L.P.
BY ASHLEY CAPITAL MANAGEMENT, INC.
GENERAL PARTNER
BY: /s/ Michael Pacult BY: /s/ Michael Pacult
MR. MICHAEL PACULT MR. MICHAEL PACULT
PRESIDENT PRESIDENT
ATLAS FUTURES FUND, L.P.
BY MR. MICHAEL PACULT
GENERAL PARTNER
BY: /s/ Michael Pacult BY: /s/ Michael Pacult
MR. MICHAEL PACULT MR. MICHAEL PACULT
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person on behalf of Ashley
Capital Management, Inc., General Partner of the Registrant in the capacities
and on the date indicated.
/s/ Michael Pacult
MR. MICHAEL PACULT
PRESIDENT
Date: November 24, 2003
(Being the principal executive officer, the principal financial and accounting
officer and the sole director of Ashley Capital Management, Inc., General
Partner of the Fund)