Exhibit 10.1
MANAGEMENT AGREEMENT
AGREEMENT made as of the 15th day of September 2008 among CITIGROUP MANAGED
FUTURES LLC, a Delaware limited liability company ("CMF" or the "General
Partner"), CITIGROUP EMERGING CTA PORTFOLIO L.P., a New York limited partnership
(the "Partnership") and SASCO ENERGY PARTNERS LLC, a Delaware limited liability
company (the "Advisor").
W I T N E S S E T H:
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WHEREAS, CMF is the general partner of the Partnership, a limited
partnership organized for the purpose of speculative trading of commodity
interests, including futures contracts, options, forward contracts, swaps and
other derivative instruments with the objective of achieving substantial capital
appreciation; and
WHEREAS, the Limited Partnership Agreement establishing the Partnership
(the "Limited Partnership Agreement") permits CMF to delegate to one or more
commodity trading advisors CMF's authority to make trading decisions for the
Partnership, which advisors may or may not have any prior experience managing
client funds; 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, CMF is registered as a commodity trading advisor and a commodity
pool operator with the CFTC and is a member of the NFA; and
WHEREAS, CMF, 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) 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, forward contracts, swaps and
other derivative instruments. All such trading on behalf of the Partnership
shall be in accordance with the trading policies set forth in the Partnership's
Private Placement Memorandum dated March 2006, as supplemented (the
"Memorandum"), as such trading policies may be changed from time to time upon
receipt by the Advisor of prior written notice of such change, and pursuant to
the trading strategy selected by CMF to be utilized by the Advisor in managing
the Partnership's assets. CMF has initially selected the Advisor's Energy
Program (the "Program"), as described in Appendix A attached hereto, to manage
the Partnership's assets allocated to it. Any open positions or other
investments at the time of receipt of such notice of a change in trading policy
shall not be deemed to violate the changed policy and shall be closed or sold in
the ordinary
course of trading. The Advisor may not deviate from the trading policies set
forth in the Memorandum without the prior written consent of the Partnership
given by CMF. 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) CMF acknowledges receipt of the description of the Advisor's Program,
attached hereto as Appendix A. All trades made by the Advisor for the account of
the Partnership shall be made through such commodity broker or brokers as CMF
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 CMF, may direct any
and 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 CMF, provided that the futures
commission merchant or independent floor broker and any give-up or floor
brokerage fees are approved in advance by CMF. 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 traded by the Advisor in accordance with the Program. In the event the
Advisor wishes to use a trading system or methodology other than or in addition
to the Program in connection with its trading for the Partnership, either in
whole or in part, it may not do so unless the Advisor gives CMF prior written
notice of its intention to utilize such different trading system or methodology
and CMF consents thereto in writing. In addition, the Advisor will provide five
days' prior written notice to CMF 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 CMF. In
addition, the Advisor will notify CMF of any changes to the trading system or
methodology that would cause the description of the trading strategy or methods
described in Appendix A to be materially inaccurate. Further, the Advisor will
provide the Partnership with a current list of all commodity interests to be
traded for the Partnership's account and the Advisor will not trade any
additional commodity interests for such account without providing notice thereof
to CMF and receiving CMF's written approval. The Advisor also agrees to provide
CMF, 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 CMF. The Advisor further
agrees that it will convert foreign currency balances (not required to margin
positions denominated in a foreign currency) to U.S. dollars no less frequently
than monthly. U.S. dollar equivalents in individual foreign currencies of more
than $100,000 will be converted to U.S. dollars within one business day after
such funds are no longer needed to margin foreign positions.
(d) The Advisor agrees to make all material disclosures to the Partnership
regarding itself and its principals as defined in Part 4 of the CFTC's
regulations ("principals"), members, directors, officers and employees, their
trading performance and general trading methods, its customer accounts (but not
the identities of or identifying information with respect
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to its customers) and otherwise as are required in the reasonable judgment of
CMF 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 CMF 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 CMF 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, CMF agrees to treat as confidential any results of proprietary accounts
and/or proprietary information with respect to the Advisor's trading systems.
(e) The Advisor understands and agrees that CMF 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) CMF 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. CMF 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 CMF's
sole discretion so that CMF may reallocate the Partnership's assets, meet margin
calls on the Partnership's account, fund redemptions, or for any other reason,
except that CMF will not require the liquidation of specific positions by the
Advisor. CMF will use its best efforts to give two business 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 (i) 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 and (ii) the Advisor will be liable to the Partnership with
respect to losses incurred due to errors committed or caused by any executing
broker (other than any CMF affiliate) selected by the Advisor, it being
understood that CMF, with the assistance of the Advisor, will first attempt to
recover such losses from the executing broker.
2. INDEPENDENCE OF THE ADVISOR. For all purposes herein, the Advisor shall
be deemed to be an independent contractor and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Partnership in any way and shall not be deemed an agent, promoter or sponsor of
the Partnership, CMF, 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 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
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Partnership shall pay the Advisor (i) an incentive fee payable quarterly
equal to 17% 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 2% per year of the month-end Net Assets of the
Partnership allocated to the Advisor (computed monthly by multiplying the
Partnership's Net Assets allocated to the Advisor as of the last business day of
each month by 2% and multiplying the result thereof by the ratio which the total
number of calendar days in that month bears to the total number of calendar days
in the year).
(b) "Net Assets" shall have the meaning set forth in Paragraph 7(d)(l) of
the Limited Partnership Agreement dated as of July 7, 2003 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 will not include expenses of
litigation not involving the activities of the Advisor on behalf of the
Partnership. No incentive fee shall be paid until the end of the first full
calendar quarter of trading, which fee shall be based on New Trading Profits
earned from the commencement of trading by the Advisor on behalf of the
Partnership through the end of the first full calendar quarter. Interest income
earned, if any, will not be taken into account in computing New Trading Profits
earned by the Advisor. If Net Assets allocated to the Advisor are reduced due to
redemptions, distributions or reallocations (net of additions), there will be a
corresponding proportional reduction in the related loss carry-forward amount
that must be recouped before the Advisor is eligible to receive another
incentive fee.
(d) Quarterly incentive fees and monthly management fees shall be paid
within twenty (20) business days following the end of the period for which such
fee is payable. In the event of the termination of this Agreement as of any date
which shall not be the end of a calendar quarter or month, as the case may be,
the quarterly incentive fee shall be computed as if the effective date of
termination were the last day of the then current quarter and the monthly
management fee shall be prorated to the effective date of termination. 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 CMF 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 Section 3 shall survive the termination of this
Agreement.
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4. RIGHT TO ENGAGE IN OTHER ACTIVITIES. (a) The services provided by the
Advisor hereunder are not to be deemed exclusive. CMF on its own behalf and on
behalf of the Partnership acknowledges that, subject to the terms of this
Agreement, the Advisor and its officers, members, directors and employees, may
render advisory, consulting and management services to other clients and
accounts. The Advisor and its officers, members, directors and employees shall
be free to trade for their own accounts and to advise other investors and manage
other commodity accounts during the term of this Agreement and to use the same
information, computer programs and trading strategies, programs or formulas
which they obtain, produce or utilize in the performance of services to CMF 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 CMF 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 CMF
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 programs, 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 that commence trading at different times, accounts that 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, members,
employees and directors 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.
(d) The Advisor agrees that it shall make such information available to CMF
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 CMF. 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.
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5. TERM. (a) This Agreement shall continue in effect until June 30, 2009.
CMF 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, CMF may
terminate this Agreement at any month-end upon 30 days' notice to the Advisor.
At any time during the term of this Agreement, CMF 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 20%
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 CMF to terminate this Agreement; (iv) the Advisor fails to
comply with the terms of this Agreement; (v) CMF, in good faith, reasonably
determines that the performance of the Advisor has been such that CMF's
fiduciary duties to the Partnership require CMF to terminate this Agreement; or
(vi) CMF 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, CMF may elect immediately to terminate this
Agreement if (i) the Advisor merges, consolidates with another entity, sells a
substantial portion of its assets, or becomes bankrupt or insolvent, (ii) Xxxx
X. Xxxx 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 by the
Partnership prior to dissolution.
(b) The Advisor may terminate this Agreement by giving not less than 30
days' notice to CMF (i) in the event that the trading policies of the
Partnership as set forth in the Memorandum are changed in such manner that the
Advisor reasonably believes will adversely affect the performance of its trading
strategies; (ii) after June 30, 2009; 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 CMF'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 Section 5 shall be without penalty or
liability to any party, except for any fees due to the Advisor pursuant to
Section 3 hereof.
6. INDEMNIFICATION. (a)(i) In any threatened, pending or completed action,
suit, or proceeding to which the Advisor was or is a party or is threatened to
be made a party arising out of or in connection with this Agreement or the
management of the Partnership's assets by the Advisor or the offering and sale
of units in the Partnership, CMF shall, subject to subsection (a)(iii) of this
Section 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
its fiduciary obligations to the Partnership as a commodity trading advisor,
unless and only to the extent that
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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
subsection (i) above, or in defense of any claim, issue or matter therein, CMF
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 subsection (i) above, unless ordered
by a court or administrative forum, shall be made by CMF 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
subsection (i) above. Such independent legal counsel shall be selected by CMF 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 CMF's
selection unless the Advisor notifies CMF in writing, received by CMF within
five days of CMF's telecopying to the Advisor of the notice of CMF'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 CMF's activities or claimed activities
unrelated to the Advisor, CMF 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 Section 6(a), the term "Advisor" shall include the
Advisor, its principals, officers, members, directors and employees and the term
"CMF" shall include the Partnership.
(b) (i) The Advisor agrees to indemnify, defend and hold harmless CMF, 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 Section 12 hereof, to the effect that such
acts or omissions violated the terms of this Agreement in any
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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 CMF, 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, members, directors or
employees unrelated to CMF's or the Partnership's business, the Advisor shall
indemnify, defend and hold harmless CMF, 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
Section 4 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 Section 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 Section 4 shall survive the termination of this
Agreement.
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) The Advisor represents and warrants that:
(i) All information with respect to the Advisor and its principals and
the trading performance of any of them that has been provided to CMF, including,
without limitation, the description of the Program contained in Appendix A, is
complete and accurate in all material respects and such information does not
contain any untrue statement of a material fact or omit to state a material fact
that is necessary to make such statements and information not misleading. All
references to the Advisor and its principals, if any, in the Memorandum or a
supplement thereto will, after review and approval of such references by the
Advisor prior to the use of such Memorandum in connection with the offering of
the Partnership's units, be accurate in all material respects, except that with
respect to pro forma or hypothetical performance information in such Memorandum,
if any, this representation and warranty extends only to any underlying data
made available by the Advisor for the preparation thereof and not to any
hypothetical or pro forma adjustments, it being understood that CMF does not
currently intend to include any identifying information about the Advisor in the
Memorandum.
(ii) 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 any such other registration and licensing
requirements as shall be necessary to enable it to
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perform its obligations hereunder, and agrees to maintain and renew such
registrations and licenses during the term of this Agreement.
(iii) The Advisor is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full limited liability company power and authority to enter into this
Agreement and to provide the services required of it hereunder.
(iv) 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.
(v) 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.
(vi) At any time during the term of this Agreement that an offering
memorandum or 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 CMF to provide the Partnership with such information as shall be necessary so
that, as to the Advisor and its principals, such offering memorandum or
prospectus is accurate.
(b) CMF represents and warrants for itself and the Partnership that:
(i) The Memorandum (as from time to time amended or supplemented,
which amendment or supplement shall be approved by the Advisor as to
descriptions, if any, 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, if any, in the Memorandum, made in reliance upon, and in conformity
with, information furnished to CMF by or on behalf of the Advisor expressly for
use in the Memorandum (it being understood that any hypothetical and pro forma
adjustments will not be furnished by the Advisor).
(ii) CMF is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full limited liability company power and authority to perform its obligations
under this Agreement.
(iii) CMF 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 CMF's and the Partnership's behalf and is a valid and binding
agreement of CMF and the Partnership enforceable in accordance with its terms.
(v) CMF 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,
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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) CMF 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 limited
partnership power and authority to enter into this Agreement and to perform its
obligations under this Agreement.
(viii) The Partnership is a qualified eligible person as defined in
CFTC Rule 4.7.
8. COVENANTS OF THE ADVISOR, CMF 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 CMF of the commencement of any
material suit, action or proceeding involving it, whether or not any such suit,
action or proceeding also involves CMF.
(iii) In the placement of orders for the Partnership's account and for
the accounts of any other client, the Advisor will utilize a pre-determined,
systematic, fair and reasonable order entry system, which shall, on an overall
basis, be no less favorable to the Partnership than to any other account managed
by the Advisor. The Advisor acknowledges its obligation to review the
Partnership's positions, prices and equity in the account managed by the Advisor
daily and within two business days to notify, in writing, the broker and CMF 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 $100,000
during the term of this Agreement.
(b) CMF agrees for itself and the Partnership that:
(i) CMF 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.
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(ii) CMF 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 CMF or to the Partnership:
Citigroup Managed Futures LLC
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
If to the Advisor:
Sasco Energy Partners LLC
00 Xxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. ARBITRATION. The parties agree that any dispute or controversy arising
out of or relating to this Agreement or the interpretation thereof, shall be
settled by arbitration in accordance with the rules, then in effect, of the
National Futures Association or, if the National Futures Association shall
refuse jurisdiction, then in accordance with the rules, then in effect, of the
American Arbitration Association; provided, however, that the power of the
arbitrator shall be limited to interpreting this Agreement as written and the
arbitrator shall state in writing his reasons for his award. Judgment upon any
award made by the arbitrator may be entered in any court of competent
jurisdiction.
15. NO THIRD PARTY BENEFICIARIES. There are no third party beneficiaries to
this Agreement.
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PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS ACCOUNT DOCUMENT IS
NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY
FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A
TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR
DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT
REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS ACCOUNT DOCUMENT.
IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of
the undersigned as of the day and year first above written.
CITIGROUP MANAGED FUTURES LLC
By /s/ Xxxxx Xxxxxxxx
---------------------------------------------
Xxxxx Xxxxxxxx
President and Director
CITIGROUP EMERGING CTA PORTFOLIO L.P.
By: Citigroup Managed Futures LLC
(General Partner)
By /s/ Xxxxx Xxxxxxxx
---------------------------------------------
Xxxxx Xxxxxxxx
President and Director
SASCO ENERGY PARTNERS LLC
By /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx
Managing Member
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Appendix A
Energy Program
Types of Investments
The Advisor's Energy Program will trade in energy related commodity
interests primarily consisting of exchange-traded futures and options,
exchange-cleared over-the-counter instruments and swaps.
Investment Strategy
The Advisor will utilize outright long and short positions,
exchange-cleared over-the-counter instruments, time spreads, swaps and other
trading strategies. The Advisor intends to focus investments in long-term core
positions while simultaneously managing short-term positions, based primarily on
fundamental analysis and employing risk management principles. The Advisor may
also utilize options in an attempt either to reduce or define trading risks.
In making trading decisions on behalf of clients, the Advisor will also
employ a technical analysis to help identify market trends.
Investment decisions will be based on an assessment of available facts and
data. The Advisor has sole discretion to trade certain markets or refrain from
making certain trades. The Advisor's exercise of such discretion may result, at
times, in a failure to identify price moves and a loss of profits. The Advisor's
trading approach is dependent in part on the existence of certain fundamental
indicators. There have been periods in the past where no such market indicators
were evident, and such periods may recur.
Effective risk management is an important aspect of the Advisor's trading
program. Expectation and volatility of the markets traded, and the overall
nature of client accounts, all are factors in determining the amount of equity
committed to each trade.
Past performance of the Advisor and its affiliates is not necessarily
indicative of future results, and investors must be prepared to lose all or
substantially all of their investment.
