Exhibit 10.24
MANAGED ACCOUNT
AGREEMENT
This Managed Account Agreement (this
“Agreement”) is entered into as of September 1,
2006, by and between Horizon Fund III, Inc., a Nevada corporation
(the “Client”), and United Capital Asset Management
LLC, a Florida limited liability company (the
“Adviser”).
WITNESSETH
:
WHEREAS, the Client desires to
engage the services of the Adviser in connection with the
management of certain of its investment activities and to work as
its investment adviser with respect to such investment activities,
and the Adviser is willing to furnish its investment advisory and
portfolio management services to the Client.
NOW THEREFORE, in consideration of
the mutual promises and agreements herein contained, the
sufficiency of which is hereby acknowledged, the parties hereby
mutually agree as follows:
1. Appointment. Subject to
the terms, provisions and conditions set forth herein, the Client
hereby appoints and engages the Adviser to, and the Adviser hereby
agrees to, provide certain non-discretionary and discretionary
investment advisory and portfolio management services to the
Client. The Client requests the Adviser to make certain
non-discretionary and discretionary investment decisions with the
Client’s funds in the account specified for such purposes in
Exhibit A and such other accounts as may be designated by
the Client in writing (collectively, the “Account”)
pursuant to and in accordance with a set of guidelines attached
hereto and incorporated herein by reference as Exhibit B
(the “Guidelines”). The Adviser will have full power
and authority to supervise and direct the investment of the assets
in the Account in accordance with the Guidelines, including,
without limitation, the power and authority to buy, sell, exchange,
convert and otherwise effect transactions in any stocks, bonds,
options, warrants, futures or other securities, all without prior
consultation with the Client, except as may otherwise be provided
in the Guidelines. In addition, the Client hereby appoints the
Adviser as the Client’s attorney-in-fact, which appointment
is coupled with an interest, for purposes of exercising the
foregoing power and authority and discharging the Adviser’s
obligations under this Agreement. The Client acknowledges that
there can be no assurance that the Adviser will be successful in
pursuing the Client’s investment objectives or that the
Adviser’s strategies will be successful. The Client shall
also notify the Adviser in writing of any specific restrictions
governing the Account under the current or future laws of any
jurisdiction applicable to Client or by virtue of the terms of any
other contract or instrument purporting to bind the Client or the
Adviser.
2. Nature of Investments. The
nature of investments will be as set forth in the Guidelines. The
investment may be in equity and debt securities, monetary
instruments and other investment instruments and may be highly
speculative and subject to risks, including, without limitation,
the risk of losing the entire value of the investment. The Client
has had the opportunity to discuss and consult with such advisers
as it has deemed necessary in connection with the risks involved
with the Account, and hereby acknowledges and represents that it
fully
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understands such risks. It is intended that the
Adviser will utilize its investment expertise and services to
manage the Account. The Adviser may, however, if the Adviser
considers it advisable in its judgment, to contract out for certain
investment advice on behalf of the Client at the Adviser’s
expense.
3. Principal and Cross
Trades. The Client understands that the Adviser may engage in
principal and cross trades (i.e., securities transactions wherein
the Adviser or broker-dealers are representing, as agents, both the
Client and the counterparty to a securities transaction). The
Client hereby appoints Spectrum Global Fund Administration
(“Spectrum”) as its agent and representative for
purposes of providing consent to principal transactions, as
contemplated under Section 206(3) of the Investment Advisers
Act of 1940, as amended. The Client can (i) terminate this
appointment of Spectrum on two days’ written notice to the
Adviser and Spectrum and (ii) appoint any other party,
including itself or any affiliate, to serve in this
capacity.
4. Custody; Transaction
Procedures. The Client has appointed or will appoint a
custodian (the “Custodian”) to take and maintain
possession of all the assets in the Account and will provide the
Adviser with a true and complete copy of each agreement with the
Custodian, the names of persons authorized to act on behalf of the
Custodian and such other information as the Adviser may request.
Neither the Adviser nor any affiliate (as such term is defined in
the rules and regulations promulgated under the Securities Act of
1933, as amended) will be the Custodian. The Adviser will have no
liability with respect to custodial arrangements or the acts,
conduct, or omissions of such Custodian. The Adviser may issue
instructions to the Custodian as may be appropriate in connection
with the settlement of transactions initiated by the Adviser
pursuant to the authority conveyed by this Agreement. The Adviser
will be under no duty to supervise or direct the investment of any
assets that are not in the Account in the custody of the Custodian
or readily available for delivery to the Custodian by the
settlement date of any proposed transaction.
5. Brokerage. Adviser will
enter orders for securities transactions in the Account with such
brokers, dealers or issuers as the Adviser may select. Orders will
be entered for execution on such markets, at such prices, and at
such rates of broker-dealer compensation as the Adviser deems
appropriate. In selecting brokers or dealers, and in determining
appropriate level of broker-dealer compensation, the Adviser will
seek to obtain the lowest commission, but will also take into
account not only the available prices and rates of broker-dealer
compensation, but also other relevant factors, including, without
limitation, execution and operational capabilities, reputation,
availability of margin or other leverage, and the range and quality
of research and other services provided by such brokers or dealers
that are expected to provide the Adviser with lawful and
appropriate assistance in the Adviser’s investment
decision-making process. The Client understands that, under some
circumstances, the broker-dealer compensation it pays may exceed
the compensation that could be obtained from another broker or
dealer, particularly if such other broker or dealer were not
providing research or other services. The Adviser may enter orders
with brokers or dealers with which the Adviser is affiliated, and
the Client acknowledges that such brokers or dealers may profit
from such transactions by charging their usual and customary rates
of compensation, including mark-ups or mark-downs on principal
transactions. If the Client was referred to the Adviser by a broker
or dealer, Client understands that the Adviser could have a
conflict of interest in negotiating broker-dealer compensation with
such broker or dealer on the Client’s behalf.
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6. Account Service
Fees.
(a) The Adviser will receive the
following fees from the Client:
(i) A fee equal to 1/12 of 2.00% of
the Net Asset Value of the Account calculated as of the last
business day of each calendar month (the “Management
Fee”). The Management Fee shall accrue monthly and be payable
quarterly in arrears no later than the fifth business day following
the Client’s receipt of a report from the Adviser calculating
the Net Asset Value of the Account as of the last business day of
each of the three months in the quarter and the corresponding
Management Fee. The Management Fee may be waived, shared or
rebated, at the discretion of the Adviser; and
(ii) A fee equal to 20% of the
amount by which (i) the Aggregate Net Capital Appreciation of
the Account exceeds (ii) the Account’s remaining
Previous High Peak (the “Performance Fee”). The
Performance Fee shall be payable quarterly in arrears and shall be
paid to the Adviser promptly but no later than the tenth business
day following the Client’s receipt of a report from the
Adviser calculating such Performance Fee.
(b) “Aggregate Net Capital
Appreciation” shall mean the excess, if any, of the
Account’s Net Capital Appreciation for such Performance
Period over the sum of the Account’s Net Capital Depreciation
for such Performance Period and any Net Capital Depreciation for
each prior consecutive Performance Period for which no Performance
Fee was paid.
(c) “Aggregate Net Capital
Depreciation” for any given Performance Period shall mean the
excess, if any, of the Account’s Net Capital Depreciation for
such Performance Period over the sum of the Account’s Net
Capital Appreciation for such Performance Period.
(d) “Loss Recovery
Amount” for the Account shall mean, the amount, if any, of
Aggregate Net Capital Depreciation for the applicable Loss Recovery
Period, if any, adjusted to reflect any withdrawals from the
Account.
(e) “Loss Recovery
Period” for the Account shall mean a period of time that
includes the present Performance Period for the Account and each
prior consecutive Performance Period for the Account for which no
Performance Fee was paid. Performance Periods preceding a
Performance Period for which a Performance Fee was paid shall not
be included in the Account’s Loss Recovery Period.
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(f) “Net Asset Value”
shall be determined in accordance with the United Capital Asset
Management Pricing Policies, dated December 2005 (the
“Pricing Policies”), a copy of which is attached hereto
as Exhibit C . During the term of this Agreement, the
Pricing Policies shall be used not only to value the Account, but
also to value the assets of Horizon Fund, L.P. and Horizon ABS
Fund, L.P.
(g) “Net Capital
Appreciation” shall mean the increase in the Net Asset Value
of the Account, including unrealized gains and losses, from the
beginning of a Performance Period to the end of such Performance
Period determined (except for certain reserves that may be
established or abolished for estimated or accrued expenses and for
unknown or contingent liabilities) in accordance with generally
accepted accounting principles.
(h) “Net Capital
Depreciation” shall mean the decrease in the Net Asset Value
of the Account, including unrealized gains and losses, from the
beginning of a Performance Period to the end of such Performance
Period determined (except for certain reserves that may be
established or abolished for estimated or accrued expenses and for
unknown or contingent liabilities) in accordance with generally
accepted accounting principles.
(i) A “Performance
Period” with respect to the Account shall mean the period of
time for which a Performance Fee was paid. The first Performance
Period shall begin on the date hereof and end on September 30,
2006. Each successive Performance Period shall be a calendar
quarter. In the quarter that the Account is terminated, the
Performance Period shall end on the date of termination.
(j) “Previous High Peak”
shall mean the Account’s Loss Recovery Amount for such
Account’s Loss Recovery Period.
7. Distributions and
Withdrawals. Unless the Client notifies the Adviser otherwise
in writing, distributions of any realized gains or profits will be
reinvested in the Account. The Client may withdraw any cash and
cash equivalents from the Account upon five (5) days’
prior written notice. The Client may withdraw assets (other than
cash or cash equivalents) from the Account upon thirty
(30) days’ written notice prior to the end of the month
that the Client intends to effect such withdrawal, provided that
(i) the Adviser can waive all or part of such notice period
with respect to all or part of the proposed withdrawal and
(ii) the Client, in its sole discretion, can extend the date
of withdrawal. In the event that the Client notifies the Adviser
that it intends to withdraw assets (other than cash and cash
equivalents) from the Account, the Adviser shall have the option to
monetize such assets and provide cash and/or cash equivalents in
lieu of such assets to the Client, provided that the value of the
cash and/or cash equivalents disbursed to the Client equals or
exceeds the Net Asset Value of such assets according to the monthly
report (provided in accordance with Section 8) for the month
in which the withdrawal notice was provided (the “Withdrawal
Value”). Notwithstanding the previous sentence, within ten
(10) days of the notice of withdrawal, the Adviser shall have
the option to request one fifteen (15) day extension of the
withdrawal date if it requires the additional time in
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order to monetize the assets to be withdrawn at
the Withdrawal Value. In the event that the Client refuses to grant
such extension request, the Client acknowledges that the amount of
cash or cash equivalents distributed to the Client in lieu of the
assets to be withdrawn may be less than the Withdrawal
Value.
8. Reporting Services to
Client. As soon as reasonably practicable after the end of each
calendar month, the Adviser will provide the Client with a full
account statement reflecting the cash and market values of
securities in the Account computed as of the last business day of
such month. The Adviser will also provide the Client with detailed
trading confirmations, including the following information for the
securities: general description, face amount, principal amount and
accrued interest amount. The Adviser will also provide the Client
with such other reports as the Client may reasonably request. The
Adviser
