MANAGEMENT AGREEMENT
Exhibit 10
AGREEMENT made as of the 31st day of March, 2008 among CITIGROUP MANAGED FUTURES LLC, a
Delaware limited liability company (“CMF”), XXXXX XXXXXX DIVERSIFIED FUTURES FUND X.X. XX, a New
York limited partnership (the “Partnership”) and XXXXXXXX TRADING COMPANY, an Illinois corporation
(“Xxxxxxxx” or the “Advisor”).
W
I T N E S S E
T H :
WHEREAS, CMF is the general partner of the Partnership, a limited partnership organized for
the purpose of speculative trading of futures, options on futures, forward contracts and currencies
with the objective of achieving substantial capital appreciation, such trading to be conducted
directly or through investment in CMF Xxxxxxxx Master Fund L.P., a New York limited partnership of
which CMF is the general partner and Xxxxxxxx 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 in the United States 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 Management Agreement
(the “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 in futures contracts on U.S. and non-U.S. exchanges, options on futures, forward
contracts on commodities and currencies, cash currencies and transactions in physical commodities,
including exchange of physicals for futures transactions (“EFP”) (in addition to EFPs on
currencies). All such trading on behalf of the Partnership shall be (i) in accordance with the
trading strategies set forth in the Advisor’s disclosure document dated March 11, 2008 (the
“Disclosure Document”) and in accordance with the trading policies set forth in the Partnership’s
Prospectus dated as of May 31, 1996, as supplemented (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 (ii) 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 Standard Program—Higher Leveraged (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, which consent shall not be unreasonably withheld or delayed and may be
provided by CMF by email. 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 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 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, which approval shall not be unreasonably withheld or
delayed and may be provided by CMF by email. 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). CMF will cause the Partnership’s commodity brokers to provide
the Advisor with copies of all confirmation, purchase and sale, monthly and similar statements at
the time such statements are available to CMF.
(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 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, which consent shall not be unreasonably withheld or delayed and may be
provided by CMF by email. 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 require a change in the description
of the trading strategy or methods described in the Disclosure Document. Further, 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 five days’ prior written notice thereof to CMF and receiving CMF’s written
approval, which approval shall not be unreasonably withheld or delayed and may be provided by CMF
by email. 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
use commercially reasonable efforts to convert foreign currency balances (not required to margin
positions denominated in a foreign currency) to U.S. dollars no less frequently than monthly.
(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 Paragraphs 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 and
will not make use of such advice in any manner or disclose such advice to third parties. 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 require the Advisor to disclose the details of its trading methodologies, programs
or 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 Paragraph 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 Paragraph 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 meet margin calls on the Partnership’s account, fund redemptions,
withdrawals or for any other reason, except that CMF will not require the liquidation of specific
positions by the Advisor. CMF and the Partnership acknowledge that any such request to liquidate
positions by CMF may result in the Partnership incurring losses which it might otherwise not have
incurred. 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 the Advisor will be liable to the Partnership with
respect to losses incurred due to negligent 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. The Advisor shall promptly notify CMF and the
Partnership of any errors committed by it and of any order or trade it believes was not executed in
accordance with its instructions.
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 to the Partnership. 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 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.
(b) “Net Assets” shall have the meaning set forth in Paragraph 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 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 above will not include expenses of litigation
not involving the activities of the Advisor on behalf of the Partnership. Ongoing expenses include
offering and organizational expenses of the Partnership. No incentive fee shall be paid until the
end of the first full calendar quarter of trading by the Advisor on behalf of the Partnership,
which fee shall be based on New Trading Profits earned from the commencement of trading by the
Advisor 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 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 a
redemption, reallocation, distribution or the termination of this Agreement as of any date which
shall not be the end of a fiscal quarter or a month, as the case may be, the quarterly incentive
fee shall be computed as if the effective date of the redemption, reallocation, distribution or
termination were the last day of the then current quarter and the monthly management fee shall be
prorated to the effective date of the redemption, reallocation, distribution or 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 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 and 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. The Partnership and CMF acknowledge that all
such trading for other accounts may increase the level of competition with respect to priorities of
order entry and may restrict the ability of the Advisor to obtain or maintain positions in futures
due to the application of CFTC or exchange imposed speculative position limits and daily trading
limits. 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 on an overall basis, it being acknowledged, however,
that different trading strategies or programs, liquidity constraints, rounding of the number of
positions to be established, methods and degrees of leverage may be utilized for differing sizes of
accounts, accounts with different trading policies and restrictions, accounts with differing fee
structures, 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. CMF further
acknowledges that the Advisor offers trading programs other than the Program which it has selected
and that such other trading programs may obtain more favorable results than the Program.
(c) It is acknowledged that the Advisor and/or its principals, officers, employees, directors,
associated persons 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 client accounts
managed by the Advisor or its principals pursuant to the Program 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.
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 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 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, consolidates with another entity, sells a substantial
portion of its assets, or becomes bankrupt or insolvent, (ii)
Xxxxxxx Xxxxxxxx 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 established from time to time are
changed in such manner that the Advisor reasonably believes will adversely affect the performance
of its trading strategies; (ii) after June 30, 2009; (iii) in the event that the General Partner or
Partnership fails to comply with the terms of this Agreement; or (iv) if CMF provides a written
objection to a change in the Advisor’s Program specified in Paragraph 1(a) 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) In the event of the termination of this Agreement, CMF shall promptly amend the name of
the Partnership to remove the word “Xxxxxxxx” and shall provide the Advisor with proof of such name
change within ten (10) business days of the termination of this Agreement.
(d) 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, except for any
fees due to the Advisor pursuant to Paragraph 3 hereof.
6. INDEMNIFICATION. (a)(i) The Advisor shall not be liable to CMF, the Partnership
or their respective members, partners, successors or assigns under this Agreement for any act or
failure to act taken or omitted in good faith in a manner reasonably believed to be in or not
opposed to the best interests of the Partnership if such act or failure to act did not constitute
negligence, intentional misconduct or a breach of the Advisor’s fiduciary obligations to the
Partnership as a commodity trading advisor. In any threatened, pending or completed action,
arbitration, claim, demand, dispute, suit or proceeding (each, a “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 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 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 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 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 sub-paragraph (i) above, to the extent that the Advisor has been
successful on the merits or otherwise in defense of any 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 Proceeding or otherwise incurs any loss
or expense as a result of, or in connection with, the Partnership’s or CMF’s (or their officers,
directors, partners, shareholders or employees) activities or claimed activities unrelated to the
Advisor, CMF shall indemnify 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 term “Advisor” shall include the Advisor, its
principals, officers, directors, stockholders, employees, affiliates and associated persons and the
term “CMF” shall include the Partnership.
(b)(i) The Advisor agrees to indemnify 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 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 constituted negligence, intentional misconduct or a breach of the Advisor’s fiduciary
obligations to the Partnership as a commodity trading advisor (except as otherwise provided in
Paragraph 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 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 to the Partnership and CMF that:
(i) The Disclosure Document complies with Part 4 of the CFTC’s regulations in all material
respects and 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. All references to the
Advisor in any supplemental materials (the “Supplemental Materials”) prepared by the general
partner will, after review and approval by the Advisor, be accurate in all material respects and
will 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 with respect to any pro forma
or hypothetical performance information in the Supplemental Materials, 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 made by CMF. Subject to such
exception, all references to the Advisor and its principals in the Supplemental Materials will,
after review and approval of such references by the Advisor prior to the use of such Supplemental
Materials in connection with the offering of the Partnership’s units, be accurate in all material
respects.
(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. During the term of this Agreement,
the Advisor will prepare performance tables that comply with all applicable CFTC rules no less frequently than quarterly.
(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 in all material respects
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 Illinois 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.
(b) CMF represents and warrants to the Advisor 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) 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 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 in Table B 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 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 limited partnership power and authority to enter into
this Agreement and to perform its obligations under this Agreement.
(c) All representations, warranties and covenants contained in this Agreement shall be
continuing during the term of this Agreement and shall survive the termination of this Agreement
with respect to any matter arising while this Agreement was in effect. Each party hereby agrees
that as of the date of this Agreement it is, and during its term shall be, in compliance with its
representations, warranties and covenants herein contained. In addition, if at any time any event
occurs which would make such representations, warranties or covenants not true, the party promptly
will notify the other parties of such facts in the manner provided below. All representations,
warranties and covenants herein contained shall inure to the benefit of the party to whom they are
addressed and their respective heirs, executors, administrators, legal representatives, successors
and permitted assigns.
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 or as soon thereafter as practicable 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:
(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.
(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 or the Partnership:
Citigroup Managed Futures LLC
000 Xxxxxxxxx Xxxxxx — 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxxx Xxxxx
000 Xxxxxxxxx Xxxxxx — 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxxx Xxxxx
If to the Advisor:
Xxxxxxxx Trading Co.
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxx
13. GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to principles of conflicts of laws.
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 arbitrator(s) shall be knowledgeable in industry
standards and practices and the matters giving rise to the dispute, and that the power of the
arbitrator(s) 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.
16. NO THIRD PARTY BENEFICIARIES. Except as otherwise provided in Paragraph 6, there
are no third party beneficiaries to this Agreement.
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/ Xxxxxxxx Xxxxx | |||
| Xxxxxxxx Xxxxx | ||||
| Chief Financial Officer and Director | ||||
| XXXXX XXXXXX DIVERSIFIED FUTURES FUND X. X. XX |
||||
| By: Citigroup Managed Futures LLC | ||||
| (General Partner) | ||||
| By: | /s/ Xxxxxxxx Xxxxx | |||
| Xxxxxxxx Xxxxx | ||||
| Chief Financial Officer and Director | ||||
| XXXXXXXX TRADING COMPANY |
||||
| By: | /s/ Xxxxxxx Xxxxxxxx | |||
| Name: Xxxxxxx Xxxxxxxx | ||||
| Title: Chairman and CEO | ||||
