MANAGEMENT AGREEMENT
AGREEMENT made as of the 21st day of May 2003 among CITIGROUP MANAGED
FUTURES LLC, a Delaware limited liability company ("CMF" or the "General
Partner"), XXXXXXX XXXXX XXXXXX DIVERSIFIED 2000 FUTURES FUND L.P., a New York
limited partnership (the "Partnership") and XXXX X. XXXXX & COMPANY, INC., a
Florida corporation (the "Advisor").
W I T N E S S E T H :
WHEREAS, CMF is the general partner of Xxxxxxx Xxxxx Xxxxxx Diversified
2000 Futures Fund L.P., a limited partnership organized for the purpose of
speculative trading of commodity interests, including futures contracts, options
and forward contracts with the objective of achieving substantial capital
appreciation; and
WHEREAS, the Limited Partnership Agreement establishing the Partnership
(the "Limited Partnership Agreement") permits 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, swaps and
forward contracts. The Advisor will not be allocated notional funds. All such
trading on behalf of the Partnership shall be in accordance with the trading
policies set forth in the Partnership's Prospectus and Disclosure Document dated
November 25, 2002, as supplemented from time to time (the "Prospectus"), and as
such trading policies may be changed from time to time upon receipt by the
Advisor of prior written notice of such change. 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
February 17, 2003, (the "Disclosure Document") as filed with the NFA. 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. CMF
shall also direct the Advisor in writing on Appendix A to this Agreement (which
may be revised by CMF from time to time) to direct trades in commodity futures
and options to such independent floor brokers as CMF may determine as agent for
Citigroup Global Markets Inc. for execution with instructions to give-up the
trades to the broker designated by CMF. The Partnership's futures commission
merchant is Citigroup Global Markets Inc. 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 agreement. The terms of this Section 1(b) shall
supersede any inconsistent terms in the give up agreement. The Partnership's
futures commission merchant will provide copies of all brokerage statements to
the Advisor.
(c) The initial allocation of the Partnership's assets to the Advisor will
be made to the JWH Strategic Allocation Program (the "Program") in the form of
cash and/or Treasury bills and such allocation will be traded by the Advisor
through JWH Strategic Allocation Master Fund, L.P. (the "Master Fund"). In
connection therewith, the General Partner will cause the Partnership to
contribute the Advisor's allocation and any subsequent allocations to the Master
Fund. References herein to the Partnership included the Master Fund through
which it trades unless the context otherwise requires. 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 description of the Program 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. CMF may add programs other than the
Program, or delete the Program, only upon agreement with the Advisor. 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 to be material, the changed system or methodology will not be
utilized for the Partnership without the prior written consent of CMF. Changes
in contracts traded or in the leverage employed shall not be deemed to be
material and no prior notice or consent shall be required. The Advisor also
agrees to provide CMF, upon request, 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"), 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 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 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. Nothing
contained in this Agreement shall be deemed or construed to require the Advisor
to disclose any confidential or proprietary details of the Advisor's trading
strategies or the names or identities of the Advisor's clients.
(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. The Advisor shall not be responsible for the effects of such
liquidations ordered by CMF. CMF will use its best efforts to give three days'
prior notice to the Advisor of any additions, redemptions, reallocations or
liquidations and will use its best efforts to effect such reallocations or
liquidations only at month-end. Additions and redemptions will be made only at
month-end.
(g) The Advisor will not be liable for trading losses in the Partnership's
account including losses caused by errors; provided, however, that the Advisor
will be liable to the Partnership with respect to losses incurred due to 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.
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 or to be establishing a
partnership or joint venture with any of the foregoing. The Advisor shall not be
responsible to the Partnership, the General Partner or any limited partners for
any acts or omissions of, or losses generated by, any other current or past
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 annual incentive fee payable at the
end of each calendar year equal to 20% of New Trading Profits (as such term is
defined below) earned by the Advisor for the Partnership and (ii) a monthly fee
for professional management services equal to 1/6 of 1% (2% per year) of the
month-end Net Assets of the Partnership allocated to the Advisor. The first
management fee shall be paid as of the end of the first calendar month after the
Advisor begins trading on behalf of the Partnership.
(b) "Net Assets" shall have the meaning set forth in Paragraph 7(d)(1) of
the Limited Partnership Agreement dated as of August 25, 1999, and without
regard to further amendments thereto (and as set forth in Appendix A hereto),
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 directed by the Advisor for the
assets allocated to it 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 as of the end of each month. Ongoing expenses shall not include
expenses of litigation not involving the activities of the Advisor on behalf of
the Partnership. Ongoing expenses include offering expenses of the Partnership.
No incentive fee shall be paid until the end of the first calendar year 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 such year. 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) Annual incentive fees and monthly management fees shall be paid within
twenty (20) business days following the end of the period, as the case may be,
for which such fee is payable. In the event of a redemption, reallocation or
distribution (net of additions) or the termination of this Agreement as of any
date which shall not be the end of a calendar year or month, as the case may be,
the annual incentive fee shall be computed and paid as if the effective date of
the redemption, reallocation, distribution or termination were the last day of
the then current year and the monthly management fee shall be prorated to the
effective date of termination. If, during any month, the Partnership does not
conduct business operations or the Advisor is unable to provide the services
contemplated herein for more than two successive business days, the monthly
management fee shall be prorated by the ratio which the number of business days
during which 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, it being acknowledged that under the Advisor's trading programs
there will be periods when no open positions will be maintained for the
Partnership.
(e) The provisions of this Paragraph 3 shall survive the termination of
this Agreement.
4. RIGHT TO ENGAGE IN OTHER ACTIVITIES. (a) The services provided by the
Advisor hereunder are not to be deemed exclusive. 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 or different 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
trading that program. 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 the Advisor offers
eleven different trading programs, and that different trading strategies or
methods may be utilized for differing sizes of accounts, accounts with different
trading policies, fees, commissions or levels of diversification, 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, provided that in no event shall the Advisor be
required to disclose the identity of its customers. The Advisor presently
believes and represents that existing speculative position limits will not
materially adversely affect its ability to manage the Partnership's account
given the potential size of the Partnership's account and the Advisor's and its
principals' current accounts and all proposed accounts for which they have
contracted to act as trading manager.
5. TERM. (a) This Agreement shall continue in effect until June 30, 2003.
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 (as that term is defined in Section 7(d)(2) of the Limited
Partnership Agreement) 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 more than 50% of the outstanding units of
the Partnership shall vote to require CMF to terminate this Agreement; (iv) the
Advisor fails to comply with the terms of this Agreement as to any material
term; (v) CMF, in good faith, upon due consideration by its board of directors,
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 adversely 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 not controlled by Xxxx X. Xxxxx, sells a substantial portion
of its assets to an entity not controlled by Xxxx X. Xxxxx, or becomes bankrupt
or insolvent, (ii) Xxxx X. Xxxxx 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, 2003; or (iii) in the event that the CMF or
Partnership fails to comply with the terms of this Agreement. The Advisor may
immediately terminate this Agreement if (i) CMF's registration as a commodity
pool operator or its membership in the NFA is terminated or suspended; (ii) if
CMF withholds its consent to a change in the Advisor's program specified in
Section 1(c) of this Agreement; or (iii) if CMF requires the Advisor to
liquidate positions pursuant to Section 1(f) hereof.
(c) Except as otherwise provided in this Agreement, any termination of this
Agreement in accordance with this Paragraph 5 shall be without penalty or
liability to any party.
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, the
offering and sale of units of the Partnership or the management of the
Partnership's assets by the Advisor, CMF shall, subject to subparagraph (a)(iii)
of this Paragraph 6, indemnify and hold harmless the Advisor against any loss,
liability, damage, cost, expense (including, without limitation, attorneys' and
accountants' fees), judgments and amounts paid in settlement actually and
reasonably incurred by it in connection with such action, suit, or proceeding if
the Advisor acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the Partnership, and provided that its
conduct did not constitute negligence, intentional misconduct, or a breach of
its fiduciary obligations to the Partnership as a commodity trading advisor in
accordance with applicable law, unless and only to the extent that the court or
administrative forum in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
circumstances of the case, the Advisor is fairly and reasonably entitled to
indemnity for such expenses which such court or administrative forum shall deem
proper; and further provided that no indemnification shall be available from the
Partnership if such indemnification is prohibited by Section 16 of the
Partnership Agreement. The termination of any action, suit or proceeding by
judgment, order or settlement shall not, of itself, create a presumption that
the Advisor did not act in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the Partnership.
(ii) The Advisor will not be liable to the Partnership, CMF, their
principals, officers, directors, shareholders, partners or employees except by
reason of acts constituting willful malfeasance or negligence as to its duties
under this Agreement. The foregoing sentence shall not apply to the breach of
any representation, warranty or covenant contained herein or to the provisions
of subparagraph 1(g) of this Agreement. Without limiting subparagraph (i) above,
to the extent that the Advisor has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subparagraph (i) above,
or in defense of any claim, issue or matter therein, 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 subparagraph (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 subparagraph
(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, including such activities prior to the date of the
appointment of 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 Paragraph 6(a), the terms "Advisor" shall include the
Advisor, its principals, 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 Paragraph 14 hereof, to the effect that
such acts or omissions violated the terms of this Agreement in any material
respect or involved negligence or intentional misconduct or a breach of its
fiduciary obligations established under applicable law 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
Paragraph 6 is made a party to an action, suit or proceeding alleging both
matters for which indemnification can be made hereunder and matters for which
indemnification may not be made hereunder, such person shall be indemnified only
for that portion of the loss, liability, damage, cost or expense incurred in
such action, suit or proceeding which relates to the matters for which
indemnification can be made.
(d) None of the indemnifications contained in this Paragraph 6 shall be
applicable with respect to default judgments, confessions of judgment or
settlements entered into by the party claiming indemnification without the prior
written consent, which shall not be unreasonably withheld, of the party
obligated to indemnify such party.
(e) The provisions of this Paragraph 6 shall survive the termination of
this Agreement.
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) The Advisor represents and warrants 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) Any 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.
(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 obligations
hereunder, and agrees to maintain and renew such registrations and licenses
during the term of this Agreement.
(iv) The Advisor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and has full corporate
power and authority to enter into this Agreement and to provide the services
required of it hereunder.
(v) The Advisor will not, by acting as a commodity trading advisor to the
Partnership, breach or cause to be breached any undertaking, agreement,
contract, statute, rule or regulation to which it is a party or by which it is
bound which would materially limit or affect the performance of its duties under
this Agreement.
(vi) This Agreement has been duly and validly authorized, executed and
delivered by the Advisor and is a valid and binding agreement enforceable in
accordance with its terms.
(vii) At any time during the term of this Agreement that a prospectus
relating to the Units is required to be delivered in connection with the offer
and sale thereof, the Advisor agrees upon the request of 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 to the
Advisor and its principals in the prospectus will, after review and approval of
such references by the Advisor in writing 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.
(viii) To the best of the Advisor's knowledge, there is no action, suit,
litigation or proceeding before or by any court or governmental agency, federal,
state or local, pending or threatened against, or affecting or involving the
Advisor that would materially and adversely affect the business or prospects of
the Advisor.
(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) 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 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) 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 power and
authority to enter into this Agreement and to perform its obligations under this
Agreement.
(viii) CMF and the Partnership agree that Xxxx X. Xxxxx shall have no
liability to the Partnership or SBFM under this Agreement or in connection with
the transactions contemplated herein except for fraud and willful misconduct by
Xxxx X. Xxxxx.
(ix) To the best of CMF's knowledge, there is no action, suit, litigation
or proceeding before or by any court or governmental agency, federal, state or
local, pending or threatened against, or affecting or involving the General
Partner or the Partnership that would materially and adversely affect the
business or prospects of the General Partner or the Partnership.
(x) The registration statement related to the Prospectus was declared
effective under the Securities Act of 1933, as amended, and no stop order
suspending the effectiveness of such registration statement has been issued.
(xi) To the best of CMF's knowledge, the sale of Units has been lawfully
made in all jurisdictions where Units are sold.
(xii) CMF will make all required disclosures regarding the addition of the
Advisor as an advisor to the Partnership.
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 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 promptly to notify, in
writing, the broker and CMF and the Partnership's broker of (i) any error
committed by the Advisor or its principals or employees; and (ii) any trade
which the Advisor believes was not executed in accordance with its instructions.
(iv) The Advisor shall, upon written demand of CMF related to a possible
claim arising under Section 6(b)(i) or (ii) hereof, maintain a net worth of not
less than $4,000,000.
(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.
(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:
Citigroup Managed Futures LLC
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
If to the Advisor:
Xxxx X. Xxxxx & Company, Inc.
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
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.
16. SALES MATERIALS. CMF will provide a copy of all sales materials referring to
the Advisor and used in connection with the offering to the Advisor for its
review and approval prior to CMF's public use of the sales materials.
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 X. Xxxxx
Xxxxx X. Xxxxx
President
XXXXXXX XXXXX BARNEY
DIVERSIFIED 2000 FUTURES FUND L. P.
By: Citigroup Managed Futures LLC
(General Partner)
By /s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
President
XXXX X. XXXXX & COMPANY, INC.
By /s/Xx. Xxxx X. Xxxxxxxxxxx
Xx. Xxxx X. Xxxxxxxxxxx
President
Appendix A
1. GIVE-UP BROKERS:
o UBS Warburg -Metals EFP
o Morgan Xxxxxxx- Metals EFP and LME
o Credit Suisse First Boston- Metals EFP
o Republic National Bank- Metals EFP
o XX Xxxxxx- Directed trades
o Fimat- London commodities and directed trades to Tokyo
x Xxxx Futures- Chicago, New York, and London
x Xxxxxxx- LME
o ED&F Man- London commodities
o Royal Bank of Scotland- LIFFE and Eurex
x Xxxxxx Brothers- US Fixed Income
2. NET ASSETS of the Partnership shall mean the total assets of the Partnership
including all cash, plus Treasury Bills at market, accrued interest, and the
market value of all open commodity positions maintained by the Partnership, less
brokerage charges accrued and less all other liabilities of the Partnership,
determined in accordance with generally accepted accounting principles under the
accrual basis of accounting.
