Exhibit 10.1
ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of June, 2009 among CITIGROUP MANAGED
FUTURES LLC, a Delaware limited liability company ("CMF" or the "General
Partner"), XXXXX XXXXXX DIVERSIFIED FUTURES FUND X.X. XX, a New York limited
partnership (the "Partnership") and XXXXXXXXX CAPITAL, LP, a Texas limited
partnership ("XxxxXxxxx" or 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 and forward contracts with the
objective of achieving substantial capital appreciation, such trading to be
conducted directly or through an investment in CMF XxxxXxxxx Master Fund L.P., a
New York limited partnership (the "Master Fund") of which CMF is the general
partner and XxxxXxxxx is the advisor; 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; 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 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 from time to time by the General Partner in
commodity interests, including commodity futures contracts, options and forward
contracts. All such trading on behalf of the Partnership, whether directly or
indirectly through the Master Fund, shall be in accordance with the trading
policies set forth in the Partnership's Prospectus dated as of May 31, 1996, as
supplemented from time to time (the "Prospectus"), 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") 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 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 Advisor's Disclosure Document dated
March 20, 2009, as filed with the NFA (the "Disclosure Document"). 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 made to the Program as described in the Disclosure Document. 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 Disclosure Document 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 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 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.
(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"), partners, 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 CMF
to be made in any filings required by Federal or state law or NFA rule or order.
Notwithstanding
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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 trading systems obtained from the Advisor.
(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 such term is 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 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 also 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 Partnership shall pay the Advisor (i) an incentive fee payable quarterly
equal to 20% of New
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Trading Profits (as such term is defined below) earned by the Advisor for the
Partnership and (ii) a monthly fee for professional advisory services equal to
1/6 of 1% (2% per year) of the month-end Net Assets of the Partnership allocated
to the Advisor.
(b) "Net Assets" shall have the meaning set forth in Section 7(d)(1) of the
Limited Partnership Agreement dated as of May 19, 1994 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 by the Advisor on behalf of the
Partnership 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 shall be attributed
to the Advisor based on the Advisor's proportionate share of Net Assets. Ongoing
expenses shall not include expenses of litigation not involving the activities
of the Advisor on behalf of the Partnership, and will also not include initial
offering and organizational expenses 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
operations 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 carryforward amount that must be recouped before
the Advisor is eligible to receive another incentive fee.
(d) Quarterly incentive fees and monthly advisory 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 month or quarter, as the case may be, the
quarterly incentive fee shall be computed as if the effective date of the
termination were the last day of the then current quarter and the monthly
advisory fee shall be prorated to the effective date of the 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 advisory 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, 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 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
in writing 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 or
methods may be utilized for differing sizes of accounts, accounts with different
trading policies, accounts experiencing differing inflows or outflows of equity,
accounts which commence trading at different times, accounts which have
different portfolios or different fiscal years, accounts utilizing different
executing brokers and accounts with other differences, and that such differences
may cause divergent trading results.
(c) It is acknowledged that the Advisor and/or its officers, employees,
directors and shareholder(s) presently act, and it is agreed that they may
continue to act, as advisor for other accounts managed by them, and may continue
to receive compensation with respect to services for such accounts in amounts
which may be more or less than the amounts received from the Partnership.
(d) The Advisor agrees that it shall make such information available to 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 advisor.
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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 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 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 or consolidates with another entity, sells a
substantial portion of its assets, or becomes bankrupt or insolvent, (ii) Xxxxxx
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 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 Prospectus 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 or Section 1(e) shall be without
penalty or liability to any party, except for any fees due to the Advisor
pursuant to Section 3 hereof.
6. INDEMNIFICATION. (a) (i) In any threatened, pending or completed action,
suit, or proceeding to which the Advisor was or is a party or is threatened to
be made a party arising out of 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 Limited 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) Without limiting subsection (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 subsection (i) above, or in defense of any
claim, issue or matter therein, CMF shall indemnify the Advisor 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, partners, officers, directors, stockholders 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 14 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, directors, shareholder(s)
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 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 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 6 shall survive the termination of this
Agreement.
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) The Advisor represents and warrants that:
(i) All references to the Advisor and its principals in the Disclosure
Document are accurate in all material respects and as to them the Disclosure
Document 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.
(ii) The information with respect to the Advisor set forth in the
actual performance tables in the Disclosure Document is based on all of the
customer accounts managed on a discretionary basis by the Advisor's principals
and/or the Advisor during the period covered by such tables and required to be
disclosed therein. The Advisor's performance tables have been examined by an
independent certified public accountant and the report thereon has been provided
to CMF. The Advisor will have its performance tables so examined no less
frequently than annually during the term of this Agreement.
(iii) The Advisor will be acting as a commodity trading advisor with
respect to the Partnership and not as a securities investment adviser and is
duly registered with the CFTC as a commodity trading advisor, is a member of the
NFA, and is in compliance with such other registration and licensing
requirements as shall be necessary to enable it to perform its
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obligations hereunder, and agrees to maintain and renew such registrations and
licenses during the term of this Agreement.
(iv) The Advisor is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Texas and has full
limited partnership power and authority to enter into this Agreement and to
provide the services required of it hereunder.
(v) The Advisor will not, by acting as a commodity trading advisor to
the Partnership, breach or cause to be breached any undertaking, agreement,
contract, statute, rule or regulation to which it is a party or by which it is
bound.
(vi) This Agreement has been duly and validly authorized, executed and
delivered by the Advisor and is a valid and binding agreement enforceable in
accordance with its terms.
(vii) At any time during the term of this Agreement that a prospectus
relating to the units is required to be delivered in connection with the offer
and sale thereof, the Advisor agrees upon the request of CMF to provide the
Partnership with such information as shall be necessary so that, as to the
Advisor and its principals, such prospectus is accurate. All references, if any,
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; provided that with respect to pro forma or hypothetical
performance information in the prospectus, if any, 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.
(b) CMF represents and warrants for itself and the Partnership that:
(i) The Prospectus (as from time to time amended or supplemented,
which amendment or supplement is approved by the Advisor as to descriptions of
itself and its actual performance, if any, included therein) 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 Prospectus, made in reliance upon, and in conformity
with, information furnished to CMF by or on behalf of the Advisor expressly for
use in the Prospectus (it being understood that any hypothetical or pro forma
adjustments to the Advisor's performance information in the Prospectus, if any,
were not furnished by the Advisor).
(ii) It 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.
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(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 the 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 limited
partnership power and authority to enter into this Agreement and to perform its
obligations under this Agreement.
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 laws, including rules and
regulations of the CFTC, NFA 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. The Advisor will provide CMF with copies
of any correspondence from or to the CFTC, NFA or any commodity exchange in
connection with an investigation or audit of the Advisor's business activities.
(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 $1,000,000
during the term of this Agreement.
(b) CMF agrees for itself and the Partnership that:
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(i) CMF and the Partnership will comply with all applicable laws,
including rules and regulations of the CFTC, NFA and/or the commodity exchange
on which any particular transaction is executed;
(ii) CMF will promptly notify the Advisor of the commencement of any
material suit, action or proceeding involving CMF or the Partnership, whether or
not such suit, action or proceeding also involves the Advisor; and
(iii) CMF will be responsible for compliance with the USA Patriot Act
and related anti-money-laundering regulations with respect to the Partnership
and its limited partners.
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:
Citigroup Managed Futures LLC
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx
If to the Advisor:
XxxxXxxxx Capital, LP
0000 Xxxx Xxx Xxxx.
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxx
with a copy to:
Xxxxx X. Xxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
-11-
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 NFA
or, if the NFA 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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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
XXXXX XXXXXX DIVERSIFIED FUTURES FUND X.X. XX
By: Citigroup Managed Futures LLC
(General Partner)
By /s/ Xxxxx Xxxxxxxx
---------------------------------------------------
Xxxxx Xxxxxxxx
President and Director
XXXXXXXXX CAPITAL, LP
By: XxxxXxxxx Capital Management GP, LLC
(General Partner)
By /s/ Xxxxxx X. Xxxx
----------------------------------------------------
Xxxxxx X. Xxxx
Managing Member
