MANAGEMENT AGREEMENT
AGREEMENT made as of the 31st day of March, 1999 among XXXXX XXXXXX FUTURES
MANAGEMENT INC., a Delaware corporation ("SBFM" or the "Trading Manager"),
XXXXXXX XXXXX BARNEY ORION FUTURES FUND L.P., a New York limited partnership
(the "Partnership"), SFG GLOBAL INVESTMENTS, INC., a Delaware Corporation ("SFG"
or the "General Partner") and BEACON MANAGEMENT CORPORATION (USA), a Delaware
corporation (the "Advisor").
W I T N E S S E T H :
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WHEREAS, SBFM is the trading manager of the Partnership, a limited
partnership organized for the purpose of speculative trading of commodity
interests, including futures contracts, options and forward contracts with the
objective of achieving substantial capital appreciation; and
WHEREAS, SBFM and SFG, the general partner of the Partnership, have entered
into a trading manager agreement, as of March 31, 1999, which authorizes SBFM as
trading manager to negotiate advisory agreements on behalf of SFG and the
Partnership; and
WHEREAS, the Limited Partnership Agreement establishing the Partnership
(the "Limited Partnership Agreement") permits the delegation to one or more
commodity trading advisors the authority to make trading decisions for the
Partnership; and
WHEREAS, the Advisor is registered as a commodity trading advisor with the
Commodity Futures Trading Commission ("CFTC") and is a member of the National
Futures Association ("NFA"); and
WHEREAS, the General Partner is registered as a commodity pool operator
with the CFTC and is a member of the NFA; and
WHEREAS, the Trading Manager is registered as a commodity trading advisor
with the CFTC and is a member of the NFA; and
WHEREAS, the Trading Manager, the Partnership and the Advisor wish to enter
into this Agreement in order to set forth the terms and conditions upon which
the Advisor will render and implement advisory services in connection with the
conduct by the Partnership of its commodity trading activities during the term
of this Agreement;
NOW, THEREFORE, the parties agree as follows:
1. DUTIES OF THE ADVISOR. (a) Upon the commencement of trading operations
by the Partnership and for the period and on the terms and conditions of this
Agreement, the Advisor shall have sole authority and responsibility, as one of
the Partnership's agents and attorneys-in-fact, for directing the investment and
reinvestment of the assets and funds of the Partnership allocated to it by SBFM
in commodity interests, including commodity futures contracts, options and
forward contracts. All such trading on behalf of the Partnership shall be in
accordance with the trading policies set forth in the Partnership's Private
Placement Offering Memorandum and Disclosure Document to be dated on or about
March 31, 1999, as supplemented (the "Memorandum"), and as such trading policies
may be changed from time to time upon receipt by the Advisor of prior written
notice of such change and pursuant to the trading strategy selected by SBFM to
be utilized by the Advisor in managing the Partnership's assets. SBFM has
initially selected the Advisor's Meka Program (the "Program") to manage the
Partnership's assets allocated to it. Any open positions or other investments at
the time of receipt of such notice of a change in trading policy shall not be
deemed to violate the changed policy and shall be closed or sold in the ordinary
course of trading. The Advisor may not deviate from the trading policies set
forth in the Memorandum without the prior written consent of the Partnership
given by SBFM. The Advisor makes no representation or warranty that the trading
to be directed by it for the Partnership will be profitable or will not incur
losses.
(b) SBFM acknowledges receipt of the Advisor's Disclosure Document dated
February 1, 1999 as filed with the NFA and the CFTC. All trades made by the
Advisor for the account of the Partnership shall be made through such commodity
broker or brokers as SBFM shall direct, and the Advisor shall have no authority
or responsibility for selecting or supervising any such broker in connection
with the execution, clearance or confirmation of transactions for the
Partnership or for the negotiation of brokerage rates charged therefor. However,
the Advisor, with the prior written permission (by either original or fax copy)
of SBFM (such permission not to be unreasonably withheld), may direct all trades
in commodity futures and options to a futures commission merchant or independent
floor broker it chooses for execution with instructions to give-up the trades to
the broker designated by SBFM, provided that the futures commission merchant or
independent floor broker and any give-up or floor brokerage fees are approved in
advance by SBFM (such approval not to be unreasonably withheld). All give-up or
similar fees relating to the foregoing shall be paid by the Partnership after
all parties have executed the relevant give-up agreements (by either original or
fax copy). SBFM will cause the Partnership's commodity brokers to provide the
Advisor with copies of all confirmation, purchase and sale, monthly and similar
statements at the time such statements are available to SBFM.
(c) The initial allocation of the Partnership's assets to the Advisor will
be made to the Program. In the event the Advisor wishes to use a trading system
or methodology other than or in addition to the Program as outlined in the
Memorandum in connection with its trading for the Partnership, either in whole
or in part, it may not do so unless the Advisor gives SBFM prior written notice
of its intention to utilize such different trading system or methodology and
SBFM consents thereto in writing which consent shall not be unreasonably
withheld. In addition, the Advisor will provide five days' prior written notice
to SBFM of any change in the trading system or methodology to be utilized for
the Partnership which the Advisor deems material. If the Advisor deems such
change in system or methodology or in markets traded to be material, the changed
system or methodology or markets traded will not be utilized for the Partnership
without the prior written consent of SBFM which consent shall not be
unreasonably withheld. In addition, the Advisor will notify SBFM of any changes
to the trading system or methodology that would require a change in the
description of the trading strategy or methods described in the Memorandum, if
applicable. Further, the Advisor will provide the Partnership with a current
list of all commodity interests to be traded for the Partnership's account. The
Advisor also agrees to provide SBFM, on a monthly basis, with a written report
of the assets under the Advisor's management in an agreed-upon format. The
Advisor further agrees that it will convert foreign currency balances (not
required to margin positions denominated in a foreign currency) to U.S. dollars
no less frequently than monthly. U.S. dollar equivalents in individual foreign
currencies of more than $100,000 will be converted to U.S. dollars within one
business day after such funds are no longer needed to margin foreign positions.
(d) The Advisor agrees to make all material disclosures to the Partnership
regarding itself and its principals as defined in Part 4 of the CFTC's
regulations ("principals"), shareholders, directors, officers and employees,
their trading performance and general trading methods, its customer accounts
(but not the identities of or identifying information with respect to its
customers) and otherwise as are required in the reasonable judgment of SBFM to
be made in any filings required by Federal or state law or NFA rule or order.
Notwithstanding Sections 1(d) and 4(d) of this Agreement, the Advisor is not
required to disclose the actual trading results of proprietary accounts of the
Advisor or its principals. The Partnership and SBFM acknowledge that the trading
advice to be provided by the Advisor is a property right belonging to the
Advisor and that they will keep all such advice confidential, and agree that
such advice shall not be disclosed to third parties without the prior written
consent of the Advisor. Nothing in this Agreement shall require the Advisor to
disclose the non-public details of its strategies.
(e) The Advisor understands and agrees that SBFM may designate other
trading advisors for the Partnership and apportion or reapportion to such other
trading advisors the management of an amount of Net Assets (as defined in
Section 3(b) hereof) as it shall determine in its absolute discretion. The
designation of other trading advisors and the apportionment or reapportionment
of Net Assets to any such trading advisors pursuant to this Section 1 shall
neither terminate this Agreement nor modify in any regard the respective rights
and obligations of the parties hereunder.
(f) SBFM may, from time to time, in its absolute discretion, select
additional trading advisors and reapportion funds among the trading advisors for
the Partnership as it deems appropriate. SBFM shall use its best efforts to make
reapportionments, if any, as of the first day of a month. The Advisor agrees
that it may be called upon at any time promptly to liquidate positions in SBFM's
sole discretion so that SBFM may reallocate the Partnership's assets, meet
margin calls on the Partnership's account, fund redemptions, or for any other
reason, except that SBFM will not require the liquidation of specific positions
by the Advisor. SBFM will use its best efforts to give two days' prior notice to
the Advisor of any reallocations or liquidations and to require such
reallocations or liquidations only at month-end.
(g) The Advisor will not be liable for trading losses in the Partnership's
account including losses caused by errors; provided, however, that (i) the
Advisor will be liable to the Partnership with respect to losses incurred due
solely and directly to errors committed or caused by it or any of its principals
or employees in communicating trading instructions or orders to any broker on
behalf of the Partnership and (ii) the Advisor will be liable to the Partnership
with respect to losses incurred due to errors committed or caused by any
executing broker (other than Xxxxxxx Xxxxx Xxxxxx Inc. or any of its affiliates)
selected by the Advisor (it also being understood that SBFM, with the assistance
of the Advisor, will first attempt to recover such losses from the executing
broker).
2. INDEPENDENCE OF THE ADVISOR. For all purposes herein, the Advisor shall be
deemed to be an independent contractor and, unless otherwise expressly provided
or authorized, shall have no authority to act for or represent the Partnership
in any way and shall not be deemed an agent, promoter or sponsor of the
Partnership, the General Partner, SBFM, or any other trading advisor. The
Advisor shall not be responsible to the Partnership, SBFM, any trading advisor
or any limited partners for any acts or omissions of any other trading advisor
to the Partnership.
3. COMPENSATION. (a) In consideration of and as compensation for all of the
services to be rendered by the Advisor to the Partnership under this Agreement,
the Partnership shall pay the Advisor (i) an incentive fee payable quarterly
equal to 20% of New Trading Profits (as such term is defined below) earned by
the Advisor for the Partnership and (ii) a monthly fee for professional
management services equal to 1/6 of 1% (2% per year) of the month-end Net Assets
(such fee to be computed monthly by multiplying the Net Assets of the
Partnership as of the last business day of each month by 2% and multiplying the
result thereof by the ratio which the total number of calendar days in that
month bears to 365 days) of the Partnership allocated to the Advisor.
(b) "Net Assets" shall have the meaning set forth in Paragraph 7(d)(1) of
the Limited Partnership Agreement dated as of March 31, 1999, and without regard
to further amendments thereto, provided that in determining the Net Assets of
the Partnership on any date, no adjustment shall be made to reflect any
distributions, redemptions or incentive fees payable as of the date of such
determination.
(c) "New Trading Profits" shall mean the excess, if any, of Net Assets
managed by the Advisor at the end of the fiscal period over Net Assets managed
by the Advisor at the end of the fiscal period with the highest previous ending
level or Net Assets allocated to the Advisor 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, reallocations or
capital distributions, if any, made during the fiscal period decreased by
interest or other income, not directly related to trading activity, earned on
the Partnership's assets during the fiscal period, whether the assets are held
separately or in margin accounts. Ongoing expenses will be attributed to the
Advisor based on the Advisor's proportionate share of Net Assets. Ongoing
expenses above will not include expenses of litigation not involving the
activities of the Advisor on behalf of the Partnership. Ongoing expenses include
offering and organizational expenses of the Partnership. No incentive fee shall
be paid until the end of the first full calendar quarter of trading, which fee
shall be based on New Trading Profits earned from the commencement of trading
operations by the Partnership through the end of the first full calendar
quarter. Interest income earned, if any, will not be taken into account in
computing New Trading Profits earned by the Advisor. If Net Assets allocated to
the Advisor are reduced due to redemptions, distributions or reallocations (net
of additions), there will be a corresponding proportional reduction in the
related loss carryforward amount that must be recouped before the Advisor is
eligible to receive another incentive fee.
(d) Quarterly incentive fees and monthly management fees shall be paid
within twenty (20) business days following the end of the period, as the case
may be, for which such fee is payable. In the event of the termination of this
Agreement as of any date which shall not be the end of a calendar quarter or a
calendar month, as the case may be, the quarterly incentive fee shall be
computed as if the effective date of termination were the last day of the then
current quarter and the monthly management fee shall be prorated to the
effective date of termination.
(e) The provisions of this Paragraph 3 shall survive the termination of
this Agreement.
4. RIGHT TO ENGAGE IN OTHER ACTIVITIES. (a) The services provided by the Advisor
hereunder are not to be deemed exclusive. SBFM on its own behalf and on behalf
of the Partnership acknowledges that, subject to the terms of this Agreement,
the Advisor and its officers, directors, employees and shareholder(s), may
render advisory, consulting and management services to other clients and
accounts. The Advisor and its officers, directors, employees and shareholder(s)
shall be free to trade for their own accounts and to advise other investors and
manage other commodity accounts during the term of this Agreement and to use the
same information, computer programs and trading strategies, programs or formulas
which they obtain, produce or utilize in the performance of services to SBFM for
the Partnership. However, the Advisor represents, warrants and agrees that it
believes the rendering of such consulting, advisory and management services to
other accounts and entities, to the best of its present knowledge, will not
require any material change in the Advisor's basic trading strategies and will
not affect the capacity of the Advisor to continue to render services to SBFM
for the Partnership of the quality and nature contemplated by this Agreement.
(b) If, at any time during the term of this Agreement, the Advisor is
required to aggregate the Partnership's commodity positions with the positions
of any other person for purposes of applying CFTC- or exchange-imposed
speculative position limits, the Advisor agrees that it will promptly notify
SBFM if the Partnership's positions are included in an aggregate amount which
exceeds the applicable speculative position limit. The Advisor agrees that, if
its trading recommendations are altered because of the application of any
speculative position limits, it will not modify the trading instructions with
respect to the Partnership's account in such manner as to affect the Partnership
substantially disproportionately as compared with the Advisor's other accounts.
The Advisor further represents, warrants and agrees that it will not knowingly
or deliberately favor any client or account managed by it over any other client
or account in any manner, it being acknowledged, however, that different trading
strategies or methods may be utilized for differing sizes of accounts, accounts
with different trading policies, accounts experiencing differing inflows or
outflows of equity, accounts which commence trading at different times, accounts
which have different portfolios or different fiscal years, accounts utilizing
different executing brokers and accounts with other differences, and that such
differences may cause divergent trading results.
(c) It is acknowledged that the Advisor and/or its officers, employees,
directors and shareholder(s) presently act, and it is agreed that they may
continue to act, as advisor for other accounts managed by them, and may continue
to receive compensation with respect to services for such accounts in amounts
which may be more or less than the amounts received from the Partnership.
(d) The Advisor agrees that it shall make such information available to
SBFM respecting the performance of the Partnership's account as compared to the
performance of other pool accounts managed by the Advisor or its principals
using the same strategy as shall be reasonably requested by SBFM. The Advisor
presently believes and represents that existing speculative position limits will
not materially adversely affect its ability to manage the Partnership's account
given the potential size of the Partnership's account and the Advisor's and its
principals' current accounts and all proposed accounts for which they have
contracted to act as trading manager.
5. TERM. (a) This Agreement shall continue in effect until June 30, 2000. SBFM
may, in its sole discretion, renew this Agreement for additional one-year
periods upon notice to the Advisor not less than 30 days prior to the expiration
of the previous period. At any time during the term of this Agreement, SBFM may
terminate this Agreement at any month-end upon 30 days' notice to the Advisor.
At any time during the term of this Agreement, SBFM may elect to immediately
terminate this Agreement upon 30 days' notice to the Advisor if (i) the Net
Asset Value per Unit shall decline as of the close of business on any day to
$500 or less; (ii) the Net Assets allocated to the Advisor (adjusted for
redemptions, distributions, withdrawals or reallocations, if any) decline by 50%
or more as of the end of a trading day from such Net Assets' previous highest
value; (iii) limited partners owning at least 50% of the outstanding Units shall
vote to require SBFM to terminate this Agreement; (iv) the Advisor fails to
comply with the terms of this Agreement in a material manner; (v) SBFM, in good
faith, reasonably determines that the performance of the Advisor has been such
that SBFM's fiduciary duties to the Partnership require SBFM to terminate this
Agreement; or (vi) SBFM reasonably believes that the application of speculative
position limits will substantially affect the performance of the Partnership. At
any time during the term of this Agreement, SBFM may elect immediately to
terminate this Agreement if (i) the Advisor merges, consolidates with another
entity, sells a substantial portion of its assets, or becomes bankrupt or
insolvent, (ii) Xxxxx X. Xxxxxxxxxx Xx. and Xxxx X. Xxxxxxxx die, become
incapacitated, leave the employ of the Advisor, cease to control the Advisor or
are otherwise not managing the trading programs or systems of the Advisor, or
(iii) the Advisor's registration as a commodity trading advisor with the CFTC or
its membership in the NFA or any other regulatory authority, is terminated or
suspended. This Agreement will immediately terminate upon dissolution of the
Partnership or upon cessation of trading prior to dissolution.
(b) The Advisor may terminate this Agreement by giving not less than 30
days' notice to SBFM (i) in the event that the trading policies of the
Partnership as set forth in the Memorandum are changed in such manner that the
Advisor reasonably believes will adversely affect the performance of its trading
strategies; (ii) if liquidations are ordered pursuant to Section 1(f) above;
(iii) after June 30, 2000; (iv) in the event that the General Partner, SBFM or
Partnership fails to comply with the terms of this Agreement; or (v) if the
Advisor makes a material change in its trading strategy or methodology used for
the Partnership and SBFM does not consent to such change. The Advisor may
immediately terminate this Agreement if SBFM's registration as a commodity
trading advisor, or SFG's registration as a commodity pool operator or either of
their memberships in the NFA is terminated or suspended.
(c) Except as otherwise provided in this Agreement, any termination of this
Agreement in accordance with this Paragraph 5 or Paragraph 1(e) shall be without
penalty or liability to any party, except for any fees due to the Advisor
pursuant to Section 3 hereof.
6. INDEMNIFICATION. (a)(i) In any threatened, pending or completed action,
suit, or proceeding to which the Advisor was or is a party or is threatened to
be made a party arising out of or in connection with this Agreement, the
management of the Partnership's assets by the Advisor or the offering and sale
of units in the Partnership, SBFM shall, subject to subparagraph (a)(iii) of
this Paragraph 6, indemnify and hold harmless the Advisor against any loss,
liability, damage, cost, expense (including, without limitation, attorneys' and
accountants' fees), judgments and amounts paid in settlement actually and
reasonably incurred by it in connection with such action, suit, or proceeding if
the Advisor acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the Partnership, and provided that its
conduct did not constitute negligence, intentional misconduct, or a material
breach of its fiduciary obligations to the Partnership as a commodity trading
advisor. The termination of any action, suit or proceeding by judgment, order or
settlement shall not, of itself, create a presumption that the Advisor did not
act in good faith and in a manner reasonably believed to be in or not opposed to
the best interests of the Partnership.
(ii) To the extent that the Advisor has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subparagraph (i) above, or in defense of any claim, issue or matter therein,
SBFM shall indemnify it against the expenses (including, without limitation,
attorneys' and accountants' fees) actually and reasonably incurred by it in
connection therewith.
(iii) Any indemnification under subparagraph (i) above, unless ordered by a
court or administrative forum, shall be made by SBFM only as authorized in the
specific case and only upon a determination by independent legal counsel in a
written opinion that such indemnification is proper in the circumstances because
the Advisor has met the applicable standard of conduct set forth in subparagraph
(i) above. Such independent legal counsel shall be selected by SBFM in a timely
manner, subject to the Advisor's approval, which approval shall not be
unreasonably withheld. The Advisor will be deemed to have approved SBFM's
selection unless the Advisor notifies SBFM in writing, received by SBFM within
five days of SBFM's telecopying to the Advisor of the notice of SBFM's
selection, that the Advisor does not approve the selection.
(iv) In the event the Advisor 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, the Partnership's or SBFM's activities or claimed activities
unrelated to the Advisor, SBFM shall indemnify, defend and hold harmless the
Advisor against any loss, liability, damage, cost or expense (including, without
limitation, attorneys' and accountants' fees) incurred in connection therewith.
(v) As used in this Paragraph 6(a), the terms "Advisor" shall include the
Advisor, its principals, officers, directors, stockholders and employees and the
term "SBFM" shall include the Partnership.
(b)(i) The Advisor agrees to indemnify, defend and hold harmless SBFM, SFG,
the Partnership and their affiliates against any loss, liability, damage, cost
or expense (including, without limitation, attorneys' and accountants' fees),
judgments and amounts paid in settlement actually and reasonably incurred by
them (A) as a result of the material breach of any material representations and
warranties made by the Advisor in this Agreement, or (B) as a result of any act
or omission of the Advisor relating to the Partnership if there has been a final
judicial or regulatory determination or, in the event of a settlement of any
action or proceeding with the prior written consent of the Advisor, a written
opinion of an arbitrator pursuant to Paragraph 14 hereof, to the effect that
such acts or omissions violated the terms of this Agreement in any material
respect or involved negligence, bad faith, recklessness or intentional
misconduct on the part of the Advisor (except as otherwise provided in Section
1(g)).
(ii) In the event SBFM, SFG, the Partnership or any of their affiliates 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, the activities or claimed
activities of the Advisor or its principals, officers, directors, shareholder(s)
or employees unrelated to SBFM's or the Partnership's business, the Advisor
shall indemnify, defend and hold harmless SBFM, the Partnership or any of their
affiliates against any loss, liability, damage, cost or expense (including,
without limitation, attorneys' and accountants' fees) incurred in connection
therewith.
(c) In the event that a person entitled to indemnification under this
Paragraph 6 is made a party to an action, suit or proceeding alleging both
matters for which indemnification can be made hereunder and matters for which
indemnification may not be made hereunder, such person shall be indemnified only
for that portion of the loss, liability, damage, cost or expense incurred in
such action, suit or proceeding which relates to the matters for which
indemnification can be made.
(d) None of the indemnifications contained in this Paragraph 6 shall be
applicable with respect to default judgments, confessions of judgment or
settlements entered into by the party claiming indemnification without the prior
written consent, which shall not be unreasonably withheld, of the party
obligated to indemnify such party.
(e) The provisions of this Paragraph 6 shall survive the termination of
this Agreement.
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) The Advisor represents and warrants that:
(i) All references to the Advisor and its principals in the Memorandum are
accurate in all material respects and as to them the Memorandum does not contain
any untrue statement of a material fact or omit to state a material fact which
is necessary to make the statements therein not misleading, except that with
respect to Table B in the Memorandum, this representation and warranty extends
only to the underlying performance data made available by the Advisor for the
preparation thereof and not to any hypothetical or pro forma adjustments.
Subject to such exception, all references to the Advisor and its principals in
the Memorandum will, after review and approval of such references by the Advisor
prior to the use of such Memorandum in connection with the offering of the
Partnership's units, be accurate in all material respects.
(ii) The information with respect to the Advisor set forth in the actual
performance tables in the Memorandum is based on all of the customer accounts
managed on a discretionary basis by the Advisor's principals and/or the Advisor
during the period covered by such tables and required to be disclosed therein.
(iii) The Advisor will be acting as a commodity trading advisor with
respect to the Partnership and not as a securities investment adviser and is
duly registered with the CFTC as a commodity trading advisor, is a member of the
NFA, and is in compliance with such other registration and licensing
requirements as shall be necessary to enable it to perform its obligations
hereunder, and agrees to maintain and renew such registrations and licenses
during the term of this Agreement.
(iv) The Advisor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full power and
authority to enter into this Agreement and to provide the services required of
it hereunder.
(v) The Advisor will not, by acting as a commodity trading advisor to the
Partnership, breach or cause to be breached any undertaking, agreement,
contract, statute, rule or regulation to which it is a party or by which it is
bound which would materially limit or affect the performance of its duties under
this Agreement.
(vi) This Agreement has been duly and validly authorized, executed and
delivered by the Advisor and is a valid and binding agreement enforceable in
accordance with its terms.
(vii) At any time during the term of this Agreement that a prospectus
relating to the Units is required to be delivered in connection with the offer
and sale thereof, the Advisor agrees upon the request of SBFM to provide the
Partnership with such information as shall be necessary so that, as to the
Advisor and its principals, such prospectus is accurate.
(b) SBFM represents and warrants for itself and the Partnership that:
(i) The Memorandum (as from time to time amended or supplemented, which
amendment or supplement is approved by the Advisor as to descriptions of itself
and its actual performance) does not contain any untrue statement of a material
fact or omit to state a material fact which is necessary to make the statements
therein not misleading, except that the foregoing representation does not apply
to any statement or omission concerning the Advisor in the Memorandum, made in
reliance upon, and in conformity with, information furnished to SBFM by or on
behalf of the Advisor expressly for use in the Memorandum (it being understood
that the hypothetical and pro forma adjustments in Table B were not furnished by
the Advisor).
(ii) It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate power
and authority to perform its obligations under this Agreement.
(iii) SBFM and the Partnership have the capacity and authority
to enter into this Agreement on behalf of the Partnership.
(iv) This Agreement has been duly and validly authorized, executed and
delivered on SBFM's and the Partnership's behalf and is a valid and binding
agreement of SBFM and the Partnership enforceable in accordance with its terms.
(v) SBFM will not, by acting as Trading Manager to the Partnership and the
Partnership will not, breach or cause to be breached any undertaking, agreement,
contract, statute, rule or regulation to which it is a party or by which it is
bound which would materially limit or affect the performance of its duties under
this Agreement.
(vi) It is registered as a commodity trading advisor and is a member of the
NFA, and is in compliance with such other registration and licensing
requirements as shall be necessary to enable it to perform its obligations
hereunder, and agrees to maintain and renew such registrations and licenses
during the term of this Agreement.
(c) The General Partner represents and warrants for itself and the
Partnership that:
(i) The General Partner is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power and authority to perform its obligations under this Agreement.
(ii) SFG and the Partnership have the capacity and authority to enter into
this Agreement on behalf of the Partnership.
(iii) This Agreement has been duly and validly authorized, executed and
delivered on SFG's and the Partnership's behalf and is a valid and binding
agreement of SFG and the Partnership enforceable in accordance with its terms.
(iv) SFG will not, by acting as General Partner to the
Partnership and the Partnership will not, breach or cause to be breached any
undertaking, agreement, contract, statute, rule or regulation to which it is a
party or by which it is bound which would materially limit or affect the
performance of its duties under this Agreement.
(v) It is registered as a commodity pool operator and is a member of the
NFA, and is in compliance with such other registration and licensing
requirements as shall be necessary to enable it to perform its obligations
hereunder, and agrees to maintain and renew such registrations and licenses
during the term of this Agreement.
(vi) The Partnership is a limited partnership duly organized
and validly existing under the laws of the State of New York and has full power
and authority to enter into this Agreement and to perform its obligations under
this Agreement.
8. COVENANTS OF THE ADVISOR, SBFM AND THE PARTNERSHIP.
(a) The Advisor agrees as follows:
(i) In connection with its activities on behalf of the Partnership, the
Advisor will comply with all applicable rules and regulations of the CFTC and/or
the commodity exchange on which any particular transaction is executed.
(ii) The Advisor will promptly notify SBFM of the commencement of any
material suit, action or proceeding involving it, whether or not any such suit,
action or proceeding also involves SBFM.
(iii) In the placement of orders for the Partnership's account and for the
accounts of any other client, the Advisor will utilize a pre-determined,
systematic, fair and reasonable order entry system, which shall, on an overall
basis, be no less favorable to the Partnership than to any other account managed
by the Advisor. The Advisor acknowledges its obligation to review the
Partnership's positions, prices and equity in the account managed by the Advisor
daily and within two business days to notify, in writing, the broker and SBFM
and the Partnership's brokers of (i) any error committed by the Advisor or its
principals or employees; (ii) any trade which the Advisor believes was not
executed in accordance with its instructions; and (iii) any discrepancy with a
value of $10,000 or more (due to differences in the positions, prices or equity
in the account) between its records and the information reported on the
account's daily and monthly broker statements.
(iv) The Advisor will demonstrate to SBFM's satisfaction its ability to
bear its responsibilities arising under this Agreement, by causing the
Promissory Note attached hereto as Rider A to be executed.
(b) SBFM agrees for itself and the Partnership that:
(i) SBFM and the Partnership will comply with all applicable laws, rules
and regulations including those of the CFTC and/or the commodity exchange on
which any particular transaction is executed.
(ii) SBFM will promptly notify the Advisor of the commencement of any
material suit, action or proceeding involving it or the Partnership, whether or
not such suit, action or proceeding also involves the Advisor.
9. COMPLETE AGREEMENT. This Agreement constitutes the entire agreement between
the parties pertaining to the subject matter hereof.
10. ASSIGNMENT. This Agreement may not be assigned by any party without the
express written consent of the other parties.
11. AMENDMENT. This Agreement may not be amended except by the written consent
of the parties.
12. NOTICES. All notices, demands or requests required to be made or delivered
under this Agreement shall be in writing and delivered personally, by facsimile
or by registered or certified mail or expedited courier, return receipt
requested, postage prepaid, to the addresses below or to such other addresses as
may be designated by the party entitled to receive the same by notice similarly
given:
If to SBFM:
Xxxxx Xxxxxx Futures Management Inc.
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
If to the Advisor:
Beacon Management Corporation (USA)
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx Xx.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. ARBITRATION. The parties agree that any dispute or controversy arising out
of or relating to this Agreement or the interpretation thereof, shall be settled
by arbitration in accordance with the rules, then in effect, of the National
Futures Association or, if the National Futures Association shall refuse
jurisdiction, then in accordance with the rules, then in effect, of the American
Arbitration Association; provided, however, that the power of the arbitrator
shall be limited to interpreting this Agreement as written and the arbitrator
shall state in writing his reasons for his award. Judgment upon any award made
by the arbitrator may be entered in any court of competent jurisdiction.
15. NO THIRD PARTY BENEFICIARIES. There are no third party beneficiaries to this
Agreement.
IN WITNESS WHEREOF, this Agreement has been executed for and
on behalf of the undersigned as of the day and year first above written.
XXXXX XXXXXX FUTURES
MANAGEMENT INC.
By /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
President and Director
XXXXXXX XXXXX XXXXXX ORION
FUTURES FUND L.P.
By: SFG Global Investments, Inc.
(General Partner)
By s/ Xxxxx X. Mugler
Xxxxx X. Mugler
President
SFG GLOBAL INVESTMENTS, INC.
By s/ Xxxxx X. Mugler
Xxxxx X. Mugler
President
BEACON MANAGEMENT CORPORATION (USA)
By /s/ Xxxxx X. Xxxxxxxxxx Xx.
--------------------
Name: Xxxxx X. Xxxxxxxxxx Xx.
Title: Chairman
RIDER A
PROMISSORY NOTE
Princeton, New Jersey
Date: March 31, 1999
FOR VALUE RECEIVED, the undersigned, Xxxxx X. Xxxxxxxxxx Xx. and Xxxx X.
Xxxxxxxx, each promise to pay on demand, to the order of XXXXXXX XXXXX BARNEY
ORION FUTURES FUND L.P. (the "Fund") or Xxxxx Xxxxxx Futures Management Inc.
("SBFM") or SFG Global Investments, Inc. ("SFG") as the Fund or SBFM shall
elect, the sum of Two Hundred Thousand Dollars ($200,000). This note shall be
callable by the Fund or SBFM only if and to the extent that Beacon Management
Corporation (USA) ("Beacon"), a Delaware corporation, does not have sufficient
assets to fulfill Beacon's obligations associated with the Management Agreement
dated March 31, 1999 among SBFM, SFG, the Fund and Beacon.
/s/ Xxxxx X. Xxxxxxxxxx Xx. /s/ Xxxx X. Xxxxxxxx
--------------------------- ---------------------
Xxxxx X. Xxxxxxxxxx Xx. Xxxx X. Xxxxxxxx
