1
EXHIBIT 10.5
MANAGEMENT AGREEMENT
AGREEMENT made as of the _____ day of July, 1998 among ▇▇▇▇▇ ▇▇▇▇▇▇
FUTURES MANAGEMENT INC., a Delaware corporation ("SBFM"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY
GLOBAL DIVERSIFIED FUTURES FUND L. P., a New York limited partnership (the
"Partnership") and EAGLE TRADING SYSTEMS INC., a Delaware corporation (the
"Advisor").
W I T N E S S E T H :
WHEREAS, SBFM is the general partner of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Global
Diversified Futures Fund L. P., 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, the Limited Partnership Agreement establishing the
Partnership (the "Limited Partnership Agreement") permits SBFM to delegate to
one or more commodity trading advisors SBFM's 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, SBFM is registered as a commodity pool operator with the
CFTC and is a member of the NFA; and
WHEREAS, SBFM, 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 the General Partner in commodity interests, including commodity futures
contracts, options and forward contracts, including currency contracts in the
global interbank markets. SBFM shall not allocate to the Advisor more than $25
million of the Partnership's assets and funds. All such trading on behalf of the
Partnership shall be in accordance with the trading strategies and trading
policies set forth in the
2
Prospectus and Disclosure Document to be dated on or about August 21, 1998, as
supplemented (the "Prospectus"), 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 or strategies selected by SBFM and
agreed upon in writing by the Advisor to be utilized by the Advisor in managing
the Partnership's assets. SBFM has initially selected the Advisor's Global and
Foreign Exchange Programs as described in the Advisor's Disclosure Document
dated July 30, 1998, 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 materially from the trading policies set forth in the Prospectus 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 July 30, 1998 as filed with the NFA and 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, 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. 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).
(c) The initial allocation of the Partnership's assets to the
Advisor will be made one-third to the Advisor's Foreign Exchange Program and
two-thirds to the Advisor's Global Program, with a minimum combined allocation
between the Advisor's Foreign Exchange and Global Programs of $3 million. In the
event the Advisor wishes to use a trading system or methodology other than or in
addition to the systems or methodologies outlined in the Prospectus in
connection with its trading for the Partnership, either in whole or in part, it
may not do so unless the Advisor
-2-
3
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
systems or methodologies to be utilized for the Partnership which the Advisor
deems material. If the Advisor deems such change in systems or methodologies or
in markets traded to be material, the changed systems or methodologies or
markets traded will not be utilized for the Partnership without the prior
written consent of SBFM. In addition, the Advisor will notify SBFM of any
changes to the trading systems or methodologies that would require a change in
the description of the trading strategy or methods described in the Prospectus.
Further, the Advisor will provide the Partnership with a current list of all
commodity interests to be traded for the Partnership's account and will not
trade any additional commodity interests for such account without providing
notice thereof to SBFM and receiving SBFM's written approval. The Advisor also
agrees to provide SBFM, on a monthly basis, with a written report of the assets
under the Advisor's management together with all other matters deemed by the
Advisor to be material changes to its business not previously reported to SBFM.
(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 unless SBFM reasonably determines that such disclosure
is required in order to fulfill its fiduciary obligations to the Partnership or
the reporting, filing or other obligations imposed on it by Federal or state law
or NFA rule or order. 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. Further, SBFM
agrees to treat as confidential any results of proprietary accounts and/or
proprietary information with respect to trading systems obtained from the
Advisor.
(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)
-3-
4
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 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.
(g) The Advisor will not be liable for trading losses in the
Partnership's account including losses caused by errors; provided, however, that
the Advisor will be liable to the Partnership with respect to losses incurred
due to errors committed or caused by it or any of its principals or employees in
communicating improper trading instructions or orders to any broker on behalf of
the Partnership. The Advisor will provide SBFM with a complete list of executing
(or "give-up") brokers it intends to use in connection with its trading on
behalf of the Partnership. The Advisor will place orders for the Partnership's
account only with executing brokers that have executed give-up agreements with
the Partnership. In the event of losses incurred due to errors committed or
caused by any executing broker (other than any SBFM affiliate) selected by the
Advisor, the Advisor will assist SBFM in recovering such losses from such
executing broker (on the condition that the volume of transactions executed by
non-SBFM affiliates for the Advisor will be de minimis).
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, SBFM, or any other trading advisor. The Advisor shall not be
responsible to the Partnership, the General Partner, any trading advisor or any
limited partners for any acts or omissions of any other trading advisor, whether
or not they are still acting as an advisor to the Partnership.
-4-
5
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 annual incentive fee
equal to 23% 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
of the Partnership allocated to the Advisor. The management fee shall be reduced
by the Advisor's pro rata share of administrative and filing fees to the extent
such reduction is necessary to comply with the fee guidelines of the North
American Securities Administrators Association. No incentive fee shall be paid
until the end of nearest calendar quarter ending at least twelve months after
trading commences (the "Initial Payment Date"), which fee shall be based on New
Trading Profits earned from the commencement of trading operations by the
Partnership through the end of that period. From that point on, incentive fees
will be paid as of the end of each twelve months following the Initial Payment
Date.
(b) "Net Assets" shall have the meaning set forth in Paragraph
7(d)(1) of the Limited Partnership Agreement dated as of June 15, 1998, 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 highest previous fiscal period 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. 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
-5-
6
proportional reduction in the related loss carryforward amount that must be
recouped before the Advisor is eligible to receive another incentive fee.
(d) Annual 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 fiscal year or a
calendar month, as the case may be, the annually incentive fee shall be computed
as if the effective date of termination were the last day of the then current
year and the monthly management fee shall be prorated to the effective date of
termination. The monthly management fee shall be prorated by the ratio which the
number of business days during which SBFM conducted the Partnership's business
operations or utilized the Advisor's services bears in the month to the total
number of business days in such month.
(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 or different 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 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
-6-
7
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 under no circumstances will it
knowingly or deliberately use trading strategies or methods for the Partnership
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 accounts managed by the Advisor or its principals 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,
1999. 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
-7-
8
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 $400 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;
(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, except as provided in Section 10
hereof, (ii) both ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 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 Prospectus are changed in such manner that the
Advisor reasonably believes will adversely affect the performance of its trading
strategies; (ii) after June 30, 1999; or (iii) in the event that the General
Partner or Partnership fails to comply with the terms of this Agreement. The
Advisor may immediately terminate this Agreement if SBFM's registration as a
commodity pool operator or its membership 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
-8-
9
or in connection with this Agreement or 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 and its shareholders, directors, officers and employees
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 breach of its fiduciary obligations to the
Partnership as a commodity trading advisor, unless and only to the extent that
the court or administrative forum in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, the Advisor is fairly and reasonably
entitled to indemnity for such expenses which such court or administrative forum
shall deem proper; and further provided that no indemnification shall be
available from the Partnership if such indemnification is prohibited by Section
16 of the Partnership Agreement. 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 business days of SBFM's telecopying to the Advisor of the
-9-
10
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, 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, 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
-10-
11
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
Prospectus are accurate in all material respects and as to them the Prospectus
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 Prospectus, this representation and
warranty extends only to the underlying 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 Prospectus will, after review and approval of such references by the Advisor
prior to the use of such Prospectus 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 Prospectus 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
-11-
12
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.
(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 reasonable request of
SBFM to provide the Partnership with such information as shall be requested.
(b) SBFM represents and warrants for itself and the Partnership
that:
(i) The Prospectus (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 Prospectus,
made in reliance upon, and in conformity with, information furnished to SBFM by
or on behalf of the Advisor expressly for use in the Prospectus (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.
-12-
13
(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 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.
(vi) It is registered as a commodity pool operator and is a member
of the NFA, and it will maintain and renew such registration and membership
during the term of this Agreement.
(vii) 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.
(c) The parties represent that they have taken (and will continue to
take) any necessary steps to remedy potential problems that could occur in their
respective computer applications as a result of the change in the year from 1999
to 2000, commonly referred to as Year 2000 problems.
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
-13-
14
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
in the account) between its records and the information reported on the
account's daily and monthly broker statements.
(iv) The Advisor will maintain a net worth of not less than $500,000
during the term of this Agreement.
(b) SBFM agrees for itself and the Partnership that:
(i) SBFM and the Partnership will comply with all applicable rules
and regulations 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 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:
▇▇▇▇▇ ▇▇▇▇▇▇ Futures Management Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
-14-
15
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Advisor:
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Eagle Trading Systems, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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, 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-
16
15. NO THIRD PARTY BENEFICIARIES. There are no third party
beneficiaries to this Agreement.
16. SALES MATERIALS. SBFM will provide a copy of all sales materials
referring to the Advisor and used in connection with the offering to the Advisor
for its review and written consent prior to SBFM's public use of the sales
materials.
IN WITNESS WHEREOF, this Agreement has been executed for and on
behalf of the undersigned as of the day and year first above written.
▇▇▇▇▇ ▇▇▇▇▇▇ FUTURES
MANAGEMENT INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Director
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY GLOBAL
DIVERSIFIED FUTURES FUND L. P.
By ▇▇▇▇▇ ▇▇▇▇▇▇
Futures Management Inc.
(General Partner)
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Director
EAGLE TRADING SYSTEMS, INC.
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
-16-
