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EXHIBIT 10.6
MANAGEMENT AGREEMENT
AGREEMENT made as of the _____ day of July, 1998 among XXXXX XXXXXX
FUTURES MANAGEMENT INC., a Delaware corporation ("SBFM"), XXXXXXX XXXXX BARNEY
GLOBAL DIVERSIFIED FUTURES FUND L. P., a New York limited partnership (the
"Partnership") and XXXXXXXX TRADING COMPANY an Illinois corporation (the
"Advisor").
W I T N E S S E T H :
WHEREAS, SBFM is the general partner of Xxxxxxx Xxxxx Barney 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 and exchange of futures for physicals
transactions and exchange of physicals for futures transactions. All such
trading on behalf of the Partnership shall be in accordance with the trading
strategies and trading policies set forth in the Prospectus and Disclosure
Document to be dated on or about August 21, 1998, as supplemented (the
"Prospectus"), and as
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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 Global Financial
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 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 22, 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. SBFM and
the Partnership shall instruct any broker retained by the Partnership to furnish
copies of all statements relating to the account of the Advisor. 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 to the Advisor's Global Financial Program. In the event the
Advisor wishes to use a trading system or methodology other than or in addition
to the system or methodology outlined in the Advisor's Disclosure Document dated
July 22, 1998 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. In addition, the Advisor will provide five
days'
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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. 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 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, which approval will not be unreasonably
withheld. 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. The Advisor further agrees that it will use its
best efforts to convert foreign currency balances (not required to margin
positions denominated in a foreign currency) to U.S. dollars no less frequently
than approximately monthly.
(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 and will not make
use of such advice in any manner or disclose such advice to third parties.
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. Nothing contained in this Agreement shall require the Advisor
to disclose the details of its trading methodologies, programs or systems.
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(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 and the Partnership acknowledge that any such request to
liquidate positions by SBFM may result in the Partnership incurring losses which
it might otherwise not have incurred. SBFM will use its best efforts to give two
days' prior notice to the Advisor of any reallocations or liquidations. The
parties agree that the maximum allocation of assets which the Advisor shall be
obligated to accept for management on behalf of the Partnership shall be
$10,000,000, and that the Advisor may refuse any increase in the amount of the
allocated assets in excess thereof in its sole discretion.
(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 negligent 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 shall promptly notify SBFM and the
Partnership of any errors committed by it and of any order or trade it believes
was not executed in accordance with its instructions to any 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
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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.
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 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
of the Partnership allocated to the Advisor. 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
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Trading Profits earned by the Advisor. If Net Assets allocated to the Advisor
are reduced due to redemptions, distributions or reallocations (net of
simultaneous 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) 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. If, during any month, the Partnership does not conduct business
operations or the Advisor is unable to provide the services contemplated herein
for more than two successive business days, 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 principals, 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 and 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. The Partnership and SBFM
acknowledge that all such trading for other accounts may increase the level of
competition with respect to priorities of order entry and may restrict the
ability of the Advisor to obtain or maintain positions in futures due to the
application of CFTC or exchange imposed speculative position limits and daily
trading limits. However, the Advisor represents, warrants and agrees that it
believes the rendering of such consulting, advisory and
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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 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 are inferior to strategies or methods employed for any other
client or account and 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, programs,
methods and degrees of leverage may be utilized for differing sizes of accounts,
accounts with different trading policies and restrictions, accounts with
differing fee structures, 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. SBFM further acknowledges that the Advisor
offers trading programs other than the Global Financial Program and that such
other trading programs may obtain more favorable results than the Global
Financial Program.
(c) It is acknowledged that the Advisor and/or its principals,
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
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Partnership's account as compared to the performance of other client accounts
managed by the Advisor or its principals pursuant to the Global Financial
Program 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 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 commits a material breach 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) Xxxxxxx Xxxxxxxx dies,
becomes incapacitated, leaves the employ of the Advisor, ceases to control the
Advisor or is 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
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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 or would require a change to the Advisor's
operating procedures; (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) The Advisor shall not be liable to SBFM,
the Partnership or their respective shareholders, partners, successors or
assigns under this Agreement for any act or failure to act taken or omitted in
good faith in a manner reasonably believed to be in or not opposed to the best
interests of the Partnership if such act or failure to act did not constitute
negligence, intentional misconduct or a material breach of this Agreement. In
any threatened, pending or completed action, arbitration, claim, demand,
dispute, 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 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 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 this Agreement, 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
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faith and in a manner reasonably believed to be in or not opposed to the best
interests of the Partnership.
(ii) Without limiting sub-paragraph (i) above, 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 arbitration,
claim, demand, dispute, suit, proceeding or litigation or otherwise incurs any
loss or expense as a result of, or in connection with, the Partnership's or
SBFM's (or their principals, officers, directors, shareholders, partners or
employees) 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,
employees and affiliates and the term "SBFM" shall include the Partnership.
(b)(i) The Advisor agrees to indemnify 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
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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 or intentional misconduct on the part of the Advisor.
(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 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 to the Partnership and SBFM
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
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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 have been prepared in accordance
with the "Fully-Funded Subset" method or such other methods approved by the CFTC
as described in the Advisor's Disclosure Document dated July 22, 1998.
(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 under the Commodity Exchange Act, as amended 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 Illinois and has full
corporate 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 in all material
respects.
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(b) SBFM represents and warrants to the Advisor 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) is complete and accurate in all material
respects and 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.
(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.
(viii) The Partnership and SBFM are and shall remain in compliance
in all material respects with all statutes, laws,
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rules, regulations and orders of any governmental agency or self-regulatory
organization applicable to its business, this Agreement or the offering of units
in the Partnership.
(c) The parties represent that they are using their best efforts to
take (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.
(d) All representations, warranties and covenants contained in this
Agreement shall be continuing during the term of this Agreement and shall
survive the termination of this Agreement with respect to any matter arising
while this Agreement was in effect. Each party hereby agrees that as of the date
of this Agreement it is, and during its term shall be, in compliance with its
representations, warranties and covenants herein contained. In addition, if at
any time any event occurs which would make such representations, warranties or
covenants not true, the party promptly will notify the other parties of such
facts in the manner provided below. All representations, warranties and
covenants herein contained shall inure to the benefit of the party to whom it is
addressed and its respective heirs, executors, administrators, legal
representatives, successors and permitted assigns.
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 or as soon as practicable to notify, in
writing, the broker and SBFM
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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 maintain a net worth of not less than
$1,000,000 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:
Xxxxx Xxxxxx Futures Management Inc.
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
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If to the Advisor:
Xx. Xxxxxx Xxxx
Xxxxxxxx Trading Co.
00 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
13. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
principles of conflicts of laws.
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 that the arbitrators shall be
knowledgeable in industry standards and practices and the matters giving rise to
the dispute, that the power of the arbitrators shall be limited to interpreting
this Agreement as written and the arbitrators shall state in writing their
reasons for their award. Judgment upon any award made by the arbitrator may be
entered in any court of competent jurisdiction.
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15. NO THIRD PARTY BENEFICIARIES. Except as otherwise provided in
Paragraph 6, 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 BARNEY GLOBAL
DIVERSIFIED FUTURES FUND L. P.
By Xxxxx Xxxxxx
Futures Management Inc.
(General Partner)
By /s/ Xxxxx X. Xxxxx
-------------------------------
Xxxxx X. Xxxxx
President and Director
XXXXXXXX TRADING COMPANY
By /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxx
President
