LEGAL REPRESENTATION AGREEMENT (Commercial Contingent Fee Arrangement by htt39969


									                                                                        Liquidation Committee Proposed Version

Note: This draft is under no circumstances going to be accepted by Beus Gilbert. The purpose of this
document is to highlight the limited objections of the Liquidation Committee.

                                   LEGAL REPRESENTATION AGREEMENT
                                    (Commercial Contingent Fee Arrangement)
                                       ( With/ Without Costs Retainer)

         THIS AGREEMENT is entered into as of this _____ day of March, 2007, in New York, New York, by
and between Kenneth M. Krys and Christopher Stride, as Joint Official Liquidators of SPhinx Managed Futures
Fund SPC, et al (as identified in Appendix 1)(hereinafter referred to as “Client”), whose address is RSM Cayman
Islands, P.O. Box 1370 GT, 7 Dr. Roys Drive, 2nd Floor, Commerce House, Grand Cayman, Cayman Islands and
BEUS GILBERT PLLC, 4800 North Scottsdale Road, Suite 6000, Scottsdale, Arizona 85251 (hereinafter referred
to as “Counsel”).


         1.1 Matter Involved. Client has engaged Counsel to undertake the legal representation of Client in a
matter (hereinafter referred to as the “Matter”) involving: The investigation of activities surrounding the SPhinx
Fund’s losses and litigation against those culpable for said losses, as well as related matters as directed by the
Client, advising the Client as to an overall litigation strategy, the merits of any claims/litigation to be brought and
the appropriate parties to be sued, pursuing such litigation and reporting thereon to the Client. The Client shall
have the discretion to approve all parties to be sued and claims/litigation to be brought. Nothing contained herein
shall prevent Client from pursuing any potential parties or claims which Client has not approved with a law firm
other than Counsel or otherwise. Claims/litigation against potential parties which have not been approved by
Client shall not be included in the definition of “Matter” and shall not be the subject of this Agreement. All
lawsuits, pleadings and related documents will be forwarded to the Client for review, comment and approval and
no such documents shall be served or filed without the prior consent of Client.

Counsel agrees to provide its legal services in return for the covenants and promises made by Client herein. It is
specifically understood and agreed by Client that Counsel does not, by this Agreement, promise to perform any
specific act of legal representation, nor does it promise to obtain any particular result. Client acknowledges that it
has relied upon no oral representations to the contrary in entering into this Agreement.

          1.2 Counsel Functions. By the terms of this Agreement, Counsel will perform such legal services
relative to the Matter as may in its judgment be necessary or appropriate to the Matter. Counsel will not perform
any legal services without consultation with and authorization from Client. Counsel also agrees to perform the
following functions:

                  (a) To cooperate fully with Client in representing Client in the matter;

                  (b) To perform such other functions as may be reasonably requested by Client from time to
time. This includes reporting matters to the Liquidation Committee, courts, the creditors and investors, or the
Client’s attorneys or other advisors, as the Client deems necessary.

         1.3 Client Functions. Client agrees to perform the following functions:

                 (a) To pay Counsel for the performance of such legal services, and to pay for all expenses
incurred in connection therewith, as specified in Section 2 below;

                  (b) To cooperate fully with Counsel in representing Client in the Matter;

                  (c) Such other functions as may be reasonably requested by Counsel from time to time.

                                                                      Liquidation Committee Proposed Version

          1.4 Authorization and Decision-Making. Counsel may take all actions on Client’s behalf in this Matter
only after the same are approved and authorized by Client. Counsel agrees to notify Client of all significant
developments and to consult with Client in advance as to any decisions attendant to those developments. Copies
of all motions will be provided to the Client in advance for comment and the Client will be provided with copies
of all documents filed or served.


        2.1 Method of Determining Fees. Client and Counsel agree that the following method is to be used for
determining the amount of legal fees:

                   (a) Client agrees to pay Counsel a fee contingent upon any cash recovery in this Matter on
Client’s behalf a sum equal to:

                      •    If settled within 90 days of the date of this agreement, an amount calculated on the
                           basis of two times (2) actual work hours expended at Counsel’s normal schedule of
                           hourly rates in effect at the time, and for all costs and expenses incurred pursuant to
                           Section 2.3 hereof.

                           Hourly rates may be subject to reasonable annual adjustments. A schedule of current
                           hourly rates for Counsel’s staff is attached as Appendix 2.

                      •    33 1/3% of the Gross Recovery if settlement or agreement or judgment is reached after
                           ninety (90) days after the date of this Agreement.

         For purposes of Section 2.1, “Settlement” or “Agreement” shall be construed to mean a fully executed
written agreement between Client, or its successor or assign, on the one hand, and any one or more of the named
Defendants or other Defendants which may become named or added as parties to any action covered by the Matter
wherein cash is recovered on Client’s behalf.

         If there is no cash recovery, there shall be no fees owed by Client to Counsel for representation in this
Matter. Client agrees, however, that, regardless of cash recovery, Client is responsible for and will pay all other
costs and expenses as described in Section 2.3 herein.

                  (b) Client agrees that Counsel may deduct from the proceeds of any cash recovery the
applicable fee as agreed upon above, along with all other costs and expenses as described in Section 2.3 herein for
which Client is responsible and which remain unpaid at the time the recovery proceeds is received.

                 (c) Counsel’s fee shall be computed on the basis of the “Gross Recovery.”             The Gross
Recovery shall consist only of:

                          (i) cash (or immediately negotiable instruments) actually received by Client in
connection with the resolution, by settlement or otherwise, of a claim asserted by Counsel for Client, less any
expenses advanced by Client relating to such claim, and less any amount received by Client as reimbursement of
any such expenses.;

                           (ii) “Gross Recovery” shall not include (x) any recoveries from PlusFunds or the Refco
bankruptcy estates and (y) any liabilities, shareholdings, or other claims that are reduced, rejected or otherwise
compromised in connection with, or resulting in whole or in part from, any effort by Client or its consultants,
attorneys (other than Counsel) accountants, or professionals to reconcile, dispute, or object to Proofs of Debt,
assertions of debts or claims, or assertions of rights as shareholders submitted to Client or against any Sphinx

                 (d) Counsel agrees to make no compromise or settlement in this Matter without the approval of
Client as to the specific settlement or compromise. Counsel agrees to notify Client whenever an offer of

                                                                         Liquidation Committee Proposed Version

settlement or compromise is received by Counsel, and to inform Client of the amount of that offer, and the
recommendation of Counsel as to the acceptability thereof. Client agrees to notify Counsel whenever an offer of
settlement or compromise is received by Client, and to inform Counsel of the amount and terms of any such offer.

                    (e) Client hereby acknowledges that under NY Law Counsel has a lien upon and security
interest in the claims or causes of action and on any sum recovered by way of settlement and on any judgment that
may be recovered thereon to the extent of the sums herein provided as Counsel’s fees and other fees, charges, and
expenses incurred.

                   (f) In the event a settlement proposal is made to Client with the affirmative recommendation of
Counsel, Counsel shall have the right, if such settlement proposal is rejected by Client, to withdraw from any
further representation of Client pursuant to this Agreement upon written notice thereof by Counsel to Client. In
such event Client agrees to promptly pay Counsel for all services rendered by Counsel, calculated on the basis of
actual work hours expended at Counsel’s normal schedule of hourly rates in effect at the time of withdrawal, and
for all costs and expenses incurred pursuant to Section 2.3 hereof.

         2.2 Fee Arbitration

                   If, for any reason, the parties to this Agreement are unable to reach agreement on the legal fees
and expenses owed by Client to Counsel within thirty (30) days of the date of compromise or settlement of the
Matter, or any portion of the Matter, or within thirty (30) days of any verdict or final judgment should the Matter
proceed through trial, then in such event either party may submit written notice to the other specifying that the
issue of legal fees and expenses shall be submitted to arbitration in the manner described in this section 2.2 (the

                  (a) Except as specifically provided in this section 2.2, the Arbitration shall be conducted
pursuant to Part 137 of the Rules of the Chief Administrator for the statewide attorney/client fee dispute resolution
program for the Courts of the State of New York.

                  (b) The Arbitration shall be held in New York City.

                   (c) The Arbitration shall be held within thirty (30) days of the date the Arbitrator is selected or
as soon thereafter as is reasonably possible.

                   (d) The decision of the Arbitrator shall be final, binding and non-appealable. Each party agrees
to cooperate fully with the other in taking any and all steps necessary to effectuate the entry of the Arbitrator’s
decision as a final judgment.

                   (e) Notwithstanding anything to the contrary contained in this Section 2.2, Counsel, in its sole
and absolute discretion, shall have the right to accept the decision of the Arbitrator or, in lieu thereof, to accept an
amount equal to two point five (2.5) times the aggregate hourly rate of all attorneys and paralegals of Counsel
(including local counsel) who worked on the matter. In the event Counsel elects to receive two point five (2.5)
times its aggregate hourly rate (plus costs and expenses, as defined in Section 2.3 below), the parties agree that
said amount shall be made the award of the Arbitrator and shall be entered as a final judgment. Counsel assumes
no financial responsibility for Client’s U.S. or non-U.S. counsel not hired by Counsel. Any financial obligations
with respect to other counsel hired by client shall be the sole and exclusive responsibility of Client.

         2.3 Costs and Expenses.

                  (a) With the exception of Local Counsel (as referred to below) whose costs will be paid by
Counsel, should Counsel wish to retain or hire any other person or entity to perform necessary services related to
the matter, Counsel will obtain a budget from such person or entity and deliver such budget to Client for approval
before retaining or hiring such person or entity. If such person or entity is retained with the approval of Client,
Client agrees to pay the fees or charges of any person or entity hired by Counsel. Such persons or entities may
include but are not limited to, court reporters, appraisers, real estate agents, escrow agents, accountants,

                                                                       Liquidation Committee Proposed Version

investigators, expert witnesses, trust officers, stock brokers, title examiners, surveyors, and other attorneys hired
for ancillary matters in other localities. Client authorizes Counsel, in its discretion, to direct such persons and
companies to render statements for services rendered and expenses advanced either directly to Client or to
Counsel, in which latter event Client agrees to promptly pay to Counsel the full amount of such statements.

                    (b) Client authorizes Counsel to retain persons to serve as expert witnesses and consultants in
the Matter. Such expert witnesses and consultants shall be retained following consultation between Client and
Counsel, and after Client’s approval, and Client agrees to assist such expert witnesses and consultants in their
work on the Matter. Expert witnesses and consultants shall render statements for their services and expenses
directly to Client, and Client agrees to pay such statements promptly.

                   (c) Counsel has retained [to be determined] (“____________”) as local counsel in New York
City, New York, to represent Client in the Matter. Local Counsel will be retained following consultation between
Client and Counsel, and after Client approval. Any decision by Counsel to terminate Local Counsel may be made
only after discussion with Client. The cost of Local Counsel will be arranged directly with and paid by Counsel.
Client assumes no responsibility for the fee agreement between Counsel and Local Counsel. Client represents that
it has not entered into any agreement, oral or written, to compensate Local Counsel in any way contrary or in
addition to that provided in this Agreement.

                (d)        Counsel agrees to make its best good-faith effort to conclude a written fee agreement
with Local Counsel.

         2.4       Schedule of Billing and Payments. Client and Counsel agree to the following schedule of
         billing and payments for fees and expenses:

                   (a) Fees--Billing. Counsel’s fees determined by the method described in this Agreement, shall
be billed to Client at the above address.

                  (b) Costs and Expenses—Periodic Billings. Costs, charges, and expenses paid by Counsel for
Client in this Matter will be billed to Client as they are incurred by Counsel, or may, in Counsel’s discretion, be
cumulated and billed monthly to Client separate from or together with billings for fees.

                 (c) Payment in Full. Client agrees to pay in full the amount of each bill for other costs,
charges, and expenses immediately upon receipt.

                   (d) Late Charges to Aged Accounts. Any outstanding balances not paid within thirty (30) days
of receipt will accrue an interest charge of one and one-quarter percent (1-1/4%) per month from the due date until

          2.5 Information Provided in Statements. Counsel agrees to include in the statements sent to Client a
general identification of the services of Counsel for which Client is being charged and a specific identification of
all other fees, charges, and expenses for which Counsel seeks reimbursement.

          2.6 Payment Directly to Counsel. The parties agree that any amounts recovered, whether by settlement,
judgment, or otherwise, shall be payable directly to Counsel, to be held in trust until such time as Counsel shall
become entitled to payment for fees and expense, as provided for in this Agreement, at which time Counsel shall
be entitled to pay itself those fees and expenses from such amounts being held in trust, and to remit all remaining
amounts to Client.


         3.1 Assigned Claims. Client and Counsel recognize that some or all of the claims asserted by Counsel
on behalf of Client include claims which may be assigned by Client to others, including a liquidating trustee.
Client acknowledges that Counsel has no obligation to any party other than Client and no obligation to serve any

                                                                        Liquidation Committee Proposed Version

claim other than those claims which may lawfully be brought by Client under applicable law. The attorney/client
relationship is solely between Counsel and Client.

          3.2 Approval by the Grand Court of the Cayman Islands. Client and Counsel agree and understand that
the retention of Counsel is subject to and conditional upon Client making an application to the Grand Court of the
Cayman Islands upon notice to the Liquidation Committee and any other parties which are deemed appropriate
and obtaining the approval from the Grand Court of the Cayman Islands thereto on the terms proposed herein. In
the event that the Grand Court of the Cayman Islands does not approve the employment of Counsel, Counsel shall
be entitled to withdraw from further representation of Client. Client agrees to assist Counsel in securing approval
with its retention as Counsel and to fully cooperate in this regard.

          3.3 Information to Be Made Available to Client. Counsel agrees to make a diligent effort to keep Client
informed at all times as to the status of the Matter and as to the courses of action which are being followed, or are
being recommended, by Counsel. Counsel agrees to make available to Client all written materials sent or received
by Counsel pertaining to the Matter as required by Client. Copies of all such materials will be provided at
Client’s request and Client’s expense. All of Counsel’s work product will be owned by Counsel.

         3.4 Conflicting Engagement. Counsel agrees not to accept, without prior approval from Client, any
engagement known by Counsel to be in direct conflict with the interests of Client in the Matter. If, in the course
of representing multiple clients, Counsel determines in its sole discretion that a conflict of interest exists, Counsel
will notify all affected clients of such conflict and may withdraw from representing any one or more of the
multiple clients to the extent such a withdrawal would be permitted or required by applicable provisions of the
Code of Professional Ethics.

         3.5 Termination of Representation.       The relationship established by this Agreement is subject to
termination only as follows:

                  (a) Counsel reserves the right to withdraw from the Matter if Client fails to honor this
Agreement, or if Counsel concludes at any time that the Matter does not merit further prosecution, or if any other
condition exists which would permit or require under the rules of courts of the State of New York. Notification of
withdrawal shall be made in writing to Client. In the event of withdrawal, Client agrees to promptly pay Counsel
for costs and expenses incurred pursuant to Section 2.3 of this Agreement through the date of such withdrawal.
No payment will be made for services rendered by Counsel or costs and expenses outside section 2.3.

                   (b) Client reserves the right to terminate the representation for cause if Counsel fails to honor
this Agreement. Notification of the termination shall be made in writing to Counsel. In the event of any such
termination by Client, Counsel waives any further rights to compensation relative to the representation; provided,
however, that Client shall promptly reimburse Counsel for all other fees, charges, and expenses incurred pursuant
to Section 2.2 of this Agreement prior to the date of such termination.

                  (c) Client further reserves the right to terminate the representation without cause, and shall
notify Counsel in writing of any such termination. In the event of any such termination, Counsel’s compensation
due hereunder shall be whichever of the following counsel elects: (a) prompt payment to Counsel for all services
rendered by Counsel and all other fees, charges, and expenses incurred prior to the date of such termination, as
provided in Section 2.1(g) of this Agreement; or (b) a continuing contingent fee as provided in this agreement, to
be shared with successor Counsel on the basis of relative time spent by Counsel and successor Counsel through
the conclusion of the case. Successor Counsel must agree in writing to this arrangement.

                 (d) Upon termination of this representation for any reason, by either Client or Counsel, Counsel
agrees to cooperate with any successor counsel to accommodate a smooth transition of the representation, and
upon payment of all amounts owed counsel, to transfer Client files to such successor counsel.

          3.6 Commencement of Representation. Representation of Client by Counsel in this Matter will not
commence until Counsel receives a copy of this Agreement signed by Client and any retainer payable at the outset
of this representation is in fact paid by Client.

                                                                      Liquidation Committee Proposed Version

         3.7 Retention of Files. Counsel agrees to assert a diligent effort, subject to Section 3.5(d) hereof and
causes beyond the control of Counsel, to retain and maintain all major and significant components of the files of
Counsel relative to this Matter for a period of five years following the conclusion of this Matter, and during such
time to afford Client reasonable access to such files.

          3.8 Original Documents. Counsel agrees to deliver to Client at least one executed original counterpart
of all original agreements executed during the course of Counsel’s engagement relative to the Matters, and to
retain in Counsel’s files at least one executed counterpart thereof, or a facsimile copy thereof.

         3.9 Complete Integration; Binding Upon All Parties; Severability. This Agreement contains the entire
agreement between Client and Counsel regarding Counsel’s handling of the Matters and the fees, charges, and
expenses to be paid relative thereto. This Agreement shall not be modified, nor shall Counsel’s contractual
obligations with respect to the Matters be enlarged, except by written agreement signed by Client and by a
member of Counsel. This Agreement shall be binding upon Client and Counsel and their respective heirs,
executors, legal representatives, and successors. If any portion of this Agreement is determined to be invalid or
unenforceable, the remaining portions shall continue to be binding and enforceable in accordance with their terms.

         3.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of New York except for the provisions treating the ethical responsibilities and rights of Counsel, which
are, and shall be, governed by Arizona law.

         3.11 Counterparts and Facsimile. This Agreement may be signed in counterparts and exchanged by
facsimile copy by the parties hereto.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first
above written.

                                             COUNSEL:          BEUS GILBERT PLLC


                                            CLIENT:           KENNETH M. KRYS AND CHRISTOPHER
                                                              STRIDE IN THEIR CAPACITY AS JOINT
                                                              OFFICIAL LIQUIDATORS OF THE SPHINX
                                                              FUNDS LISTED ON APPENDIX 1 HERETO
                                                              (without personal liability)

                                                               Kenneth M. Krys

                                                               Christopher Stride

    Liquidation Committee Proposed Version

                                                    Liquidation Committee Proposed Version

                                     APPENDIX A
      Name                                                            Cause No.

1.    SPhinX Managed Futures Fund SPC                                    213

2.    SPhinX Long/Short Equity Ltd.                                      257

3.    SPhinX, Ltd.                                                       258

4.    SPhinX Long/Short Equity Fund SPC                                  259

5.    PlusFunds Manager Access Fund, SPC Ltd.                            260

6.    SPhinX Fixed Income Arbitrage Ltd.                                 261

7.    SPhinX Convertible Arbitrage Fund SPC                              262

8.    SPhinX Convertible Arbitrage Ltd.                                  263

9.    SPhinX Distressed Fund SPC                                         264

10.   SPhinX Distressed Ltd.                                             265

11.   SPhinX Equity Market Neutral Fund SPC                              266

12.   SPhinX Equity Market Neutral Ltd.                                  267

13.   SPhinX Fixed Income Arbitrage Fund SPC                             268

14.   SPhinX Macro Fund SPC                                              269

15.   SPhinX Macro, Ltd.                                                 270

16.   SPhinX Managed Futures, Ltd.                                       271

17.   SPhinX Merger Arbitrage Fund SPC                                   272

18.   SPhinX Merger Arbitrage, Ltd.                                      273

19.   SPhinX Plus SPC, Ltd.                                              274

20.   SPhinX Special Situations Fund SPC                                 275

21.   SPhinX Special Situations, Ltd.                                    276

22.   SPhinX Strategy Fund Ltd.                                          277


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