EXHIBIT 10.14
 

MANAGEMENT AGREEMENT
 
AGREEMENT made as of the 29th day of April, 2011, among CERES MANAGED FUTURES
LLC, a Delaware limited liability company (“CMF”), TACTICAL DIVERSIFIED FUTURES
FUND L.P., a New York limited partnership (the “Partnership”) and KROM RIVER
INVESTMENT MANAGEMENT (CAYMAN) LIMITED, an exempted company incorporated in the
Cayman Islands with limited liability (“Krom Cayman”) and KROM RIVER TRADING AG,
a company incorporated in Switzerland (“Krom Switzerland” and, together with
Krom Cayman and each separately, “Krom River” or the “Advisor”).
 
W I T N E S S E T H :
 
WHEREAS, CMF is the general partner of Tactical Diversified Futures Fund L.P., a
limited partnership organized for the purpose of speculative trading of
commodity interests, including futures contracts, options, swaps and forward
contracts with the objective of achieving substantial capital appreciation, such
trading to be conducted directly or through an investment in KR Master Fund
L.P., a Delaware limited partnership (the “Master Fund”) of which CMF is the
general partner and Krom River 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, Krom Switzerland is registered with the PolyReg General Self-Regulatory
Organisation (“PolyReg”) in Switzerland and the Advisor is exempt from
registration as a commodity trading advisor with the Commodity Futures Trading
Commission (“CFTC”); and
 
WHEREAS, CMF is registered as a commodity pool operator with the CFTC and is a
member of the National Futures Association (“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 CMF in commodity interests, including commodity
futures contracts, options and forward contracts, excluding financial futures
and forward contracts unless such contracts are traded for bona fide hedging
purposes.  The Advisor may also engage in swap transactions and other
derivatives transactions on behalf of the Partnership with the prior approval of
CMF. All such trading on behalf of the Partnership shall be in accordance with
the trading policies (the “Trading Policies”) set forth in the Partnership’s
Private Placement Offering Memorandum and Disclosure Document dated as of
January 7, 2011, as supplemented (the “Memorandum”), and 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 as
described in the Memorandum.  CMF has initially selected the Advisor’s Krom
River Commodity Program at 150% Leverage (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 Memorandum without the prior written consent of the Partnership
given by CMF.  The Advisor makes no representation or warranty that the trading
to be directed by it for the Partnership will be profitable or will not result
in losses.
 
 
 

--------------------------------------------------------------------------------

 
(b) CMF acknowledges receipt of the description of the Program, attached hereto
as Appendix A.  All trades made by the Advisor for the account of the
Partnership, whether directly or indirectly through the Master Fund, 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, email 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, email or fax copy).
 
(c) The initial allocation of the Partnership’s assets to the Advisor will be
made to the Program as described in Appendix A.  In the event the Advisor wishes
to use a trading system or methodology other than or in addition to the Program
in connection with its trading for the Partnership, either in whole or in part,
it may not do so unless the Advisor gives CMF prior written notice of its
intention to utilize such different trading system or methodology and CMF
consents thereto in writing.  In addition, the Advisor will not make any changes
to the trading system or methodology to be utilized for the Partnership or in
the markets traded for the Partnership which the Advisor deems material without
providing five days’ prior written notice to CMF and obtaining CMF’s prior
written consent.  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 Appendix A or the Memorandum, as
applicable, even if the Advisor deems such changes not to be material.  Further,
the Advisor will provide the Partnership with a current list of all commodity
interests to be traded for the Partnership’s account and the Advisor will not
trade any additional commodity interests for such account without providing
notice thereof to CMF and receiving CMF’s written approval.  The Advisor also
agrees to provide CMF, on a monthly basis, with a written report of the assets
under the Advisor’s management together with all other matters deemed by the
Advisor to be material changes to its business not previously reported to
CMF.  The Advisor further agrees that it will convert foreign currency balances
(not required to margin positions denominated in a foreign currency) to U.S.
dollars no less frequently than monthly.  U.S. dollar equivalents in individual
foreign currencies of more than $100,000 will be converted to U.S. dollars
within one business day after such funds are no longer needed to margin foreign
positions.
 
 
 

--------------------------------------------------------------------------------

 
(d)  The Advisor agrees to make all material disclosures to the Partnership
regarding itself and its principals as defined in Part 4 of the CFTC’s
regulations (“principals”), 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 or any other information which the Advisor is required by applicable
law to keep confidential) 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 all trading and investment advice and information to be
provided by the Advisor is a property right belonging to the Advisor and that
they will keep all such advice and/or information confidential.  Further, CMF
agrees to treat as confidential any results of proprietary accounts and/or
proprietary information with respect to the Advisor’s trading systems obtained
from the Advisor.
 
(e) Subject to Paragraph 8(b)(iv) hereof, 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) Subject to Paragraph 8(b)(iv) hereof, CMF may, from time to time, in its
absolute discretion, select additional trading advisors and reapportion funds
among the trading advisors for the Partnership as it deems appropriate.  CMF
shall use its best efforts to make reapportionments, if any, as of the first day
of a month.  The Advisor agrees that it may be called upon at any time promptly
to liquidate positions in CMF’s sole discretion so that CMF may reallocate the
Partnership’s assets, meet margin calls on the Partnership’s account, fund
redemptions, or for any other reason, except that CMF will not require the
liquidation of specific positions by the Advisor.  CMF will use its best efforts
to give two business days’ prior notice to the Advisor of any reallocations or
liquidations.
 
(g) The Advisor shall assume financial responsibility for any errors committed
or caused by it in transmitting orders for the purchase or sale of commodity
interests for the Partnership’s account including payment to the brokers of the
floor brokerage commissions, exchange, NFA fees, and other transaction charges
and give-up charges incurred by the brokers on such trades.  The Advisor’s
errors shall include, but not be limited to, inputting improper trading signals
or communicating incorrect orders to the commodity brokers.  The Advisor shall
have an affirmative obligation to promptly notify CMF in accordance with the
provisions of Paragraph 8(a)(iii) of any errors with respect to the account, and
the Advisor shall use its best efforts to identify and promptly notify CMF of
any order or trade which the Advisor reasonably believes was not executed in
accordance with its instructions to any broker utilized to execute orders for
the Partnership.
 
 
 

--------------------------------------------------------------------------------

 
2. INDEPENDENCE OF THE ADVISOR.  For all purposes herein, each party shall be
deemed to be an independent contractor of the others and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the others in any way and shall not be deemed an agent, promoter or
sponsor of the others or any other trading advisor to the Partnership.  The
Advisor shall not be responsible to the Partnership, CMF, any trading advisor or
any 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 Krom Cayman (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 1/12 of 2% (2% per year) of the month-end Net
Assets of the Partnership allocated to the Advisor (computed monthly by
multiplying the adjusted net assets of the Partnership as of the last business
day of each month by 2.0% and dividing the result thereof by 12).
 
(b) “Net Assets” shall have the meaning set forth in Section 7(d)(1) of the
Limited Partnership Agreement dated as of December 3, 2002 (as amended on May
31, 2009) 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 quarter over Net Assets managed by the Advisor
at the end of the highest previous quarter or Net Assets allocated to the
Advisor at the date trading commences by the Advisor for the Partnership,
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 quarter decreased by
interest or other income, not directly related to trading activity, earned on
the Partnership’s assets during the fiscal quarter, 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 and shall not
exceed a maximum of 1/12 of .50% per month of the beginning of month Net
Assets.  Ongoing expenses shall not include expenses of litigation not involving
the activities of the Advisor on behalf of the Partnership.  No incentive fee
shall be paid to Krom Cayman until the end of the first full calendar quarter of
the Advisor’s trading for the Partnership, which fee shall be based on New
Trading Profits (if any) earned from the commencement of trading by the Advisor
on behalf of the Partnership through the end of the first full calendar quarter
of such trading.  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 Krom Cayman is
eligible to receive another incentive fee.
 
 
 

--------------------------------------------------------------------------------

 
(d) Quarterly incentive fees and monthly management fees shall be paid within
twenty (20) business days following the end of the period for which such fee is
payable.  In the event of the termination of this Agreement as of any date which
shall not be the end of a calendar quarter or a calendar month, as the case may
be, the quarterly incentive fee shall be computed as if the effective date of
termination were the last day of the then current quarter and the monthly
management fee shall be prorated to the effective date of termination.  If,
during any month, the Partnership does not conduct business operations or the
Advisor is unable to provide the services contemplated herein for more than two
successive business days, the monthly management fee shall be prorated by the
ratio which the number of business days during which CMF conducted the
Partnership’s business operations or utilized the Advisor’s services bears in
the month to the total number of business days in such month.
 
(e) The provisions of this 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/or 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/or manage other accounts during the term of this Agreement and to use the
same information, computer programs and trading strategies, programs or formulas
as the Advisor uses 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 Program
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 for which it trades the Program or a program
substantially similar to the Program and that it will not knowingly or
deliberately favor any client or account managed by it for which it trades the
Program or a program substantially similar to the Program over any other client
or account for which it trades the Program or a program substantially similar to
the Program 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 manager and/or 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 the same, 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.
 
5. TERM.  (a)  This Agreement shall continue in effect until June 30, 2012.  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.  After June 30, 2012, 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 5 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
Partnership’s aggregate net assets decline to less than $1,000,000; (iii)  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; (iv) limited partners
owning at least 50% of the outstanding units shall vote to require CMF to
terminate this Agreement; (v) the Advisor fails to comply with the terms of this
Agreement; (vi) 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; (vii) CMF reasonably believes that the
application of speculative position limits will substantially affect the
performance of the Partnership; or (viii) the Advisor fails to conform to the
Trading Policies set forth in the Limited Partnership Agreement or the
Memorandum as they may be changed from time to time in accordance with this
Agreement.  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) Chris Brodie 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, (iii) Krom
Switzerland’s registration with the PolyReg or any other regulatory authority,
is terminated or suspended or the Advisor is no longer entitled to rely on an
exemption from registration with the CFTC as a commodity trading advisor and
does not become registered with the CFTC as a commodity trading advisor, (iv)
the Advisor fails to apply for registration as a commodity trading advisor with
the CFTC and apply to become a member of the NFA within a commercially
reasonable amount of time from the date of this Agreement, or (v) CMF reasonably
believes that the Advisor has or may contribute to any material operational,
business, or reputational risk to CMF or CMF’s affiliates.  This Agreement will
immediately terminate upon dissolution of the Partnership or upon cessation of
trading by the Partnership prior to dissolution.
 
 
 

--------------------------------------------------------------------------------

 
(b) The Advisor may terminate this Agreement by giving not less than 30 days’
notice to CMF (i) in the event that the Trading Policies of the Partnership as
set forth in the Memorandum are changed in such manner that the Advisor
reasonably believes will adversely affect the performance of its trading
strategies; (ii) after June 30, 2012; or (iii) in the event that CMF or the
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) 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)  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 subparagraph (a)(iii) of this
Paragraph 6, indemnify and hold harmless the Advisor against any loss,
liability, damage, fine, penalty, obligation, cost, expense (including, without
limitation, attorneys’ and accountants’ fees, collection fees, court costs and
other legal expenses), judgments, awards 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, provided further that no indemnification shall be available
from the Partnership if such indemnification is prohibited by Section 16 of the
Limited Partnership Agreement.
 
(ii)           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 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, CMF shall indemnify, defend and hold harmless the
Advisor against any loss, liability, damage, fine, penalty, obligation, cost or
expense (including, without limitation, attorneys’ and accountants’ fees,
collection fees, court costs and other legal expenses, judgments, awards and
amounts including amounts paid in settlement) incurred in connection therewith.
 
 
 

--------------------------------------------------------------------------------

 
(v)           As used in this Paragraph 6(a), the term “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, fine,
penalty, obligation, cost or expense (including, without limitation, attorneys’
and accountants’ fees, collection fees, court costs and other legal expenses),
judgments and awards and amounts paid in settlement reasonably incurred by them
(A) as a result of the breach of any representations and warranties or covenants
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 (i) there has been a final
judicial or regulatory determination, or 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 on the part of the Advisor or were not
taken or omitted, as the case may be, by the Advisor in good faith (except as
otherwise provided in Paragraph 1(g)), or (ii) there has been a settlement of
any action or proceeding with the  Advisor’s prior written consent.
 
(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, fine, penalty, obligation, cost
or expense (including, without limitation, attorneys’ and accountants’ fees,
collection fees, court costs and other legal expenses, judgments, awards and
amounts including amounts paid in settlement) 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.  A party will not be entitled to
indemnification under this Paragraph 6 in the case of default judgments,
confessions of judgment or settlements unless the party seeking to be
indemnified has obtained the consent of the other party as required by this
Paragraph 6(d).  Even if consent has been obtained, however, a party’s right to
be indemnified will still be subject to the standard of liability,
determinations and any other limitations provided for in this Paragraph 6.
 
 
 

--------------------------------------------------------------------------------

 
(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) The description of the Program in Appendix A, as well as all references to
the Advisor and its principals in the Memorandum, if any, are accurate in all
material respects and as to them neither the description of the Program in
Appendix A nor the Memorandum contains any untrue statement of a material fact
or omits to state a material fact which is necessary to make the statements
therein not misleading, except that with respect to Table B and any other pro
forma or hypothetical performance information in the Memorandum, 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.  Subject to such exception, all references to the Advisor and
its principals in the Memorandum will, after review and approval of such
references by the Advisor prior to the use of such Memorandum in connection with
the offering of the Partnership’s units, be accurate in all material respects.
 
(ii) The information with respect to the Advisor set forth in the actual
performance tables in the Memorandum, if any, 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 independent
administrators and qualified asset management finance professionals 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.  The Advisor is
exempt from registration with the CFTC as a commodity trading advisor, while
Krom Switzerland is registered with the PolyReg and is in compliance with any
such other registration and licensing requirements as shall be necessary to
enable it to perform its obligations hereunder.  Krom Switzerland agrees to
maintain and renew its registrations and licenses, as applicable, with PolyReg
or any other suitable regulator during the term of this Agreement.  The Advisor
shall apply for registration as a commodity trading advisor with the CFTC and
apply to become a member of the NFA (and use their best efforts to complete
those processes in a timely manner) the earlier of (i) when the Advisor is
required to register as commodity trading advisor with the CFTC and apply to
become a member of the NFA by applicable law, rule or regulation or (ii) a
commercially reasonable amount of time from the date of this Agreement.
 
(iv) Each of Krom Cayman and Krom Switzerland is a corporation duly organized,
validly existing and in good standing under the laws of the Cayman Islands and
Switzerland, respectively and each 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.
 
(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 an offering memorandum
or prospectus relating to the units is required to be delivered in connection
with the offer and sale thereof, the Advisor agrees upon the request of CMF to
provide the Partnership with such information as shall be necessary so that, as
to the Advisor and its principals, such offering memorandum or prospectus is
accurate.
 
(b) CMF represents and warrants for itself and the Partnership that:
 
(i) 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.
 
(ii) Each of CMF and the Partnership has the capacity and authority to enter
into this Agreement on behalf of the Partnership.
 
(iii) 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.
 
(iv) 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.
 
(v) 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.
 
(vi) The Partnership is a limited partnership duly organized and validly
existing under the laws of the State of Delaware 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, PolyReg and/or the commodity exchange on which any particular
transaction is executed.
 
(ii) The Advisor will promptly notify CMF of the commencement of any
investigation, suit, action or proceeding involving the Advisor or any of its
affiliates, officers, directors, employees, agents or representatives;
regardless of whether such investigation, suit, action or proceeding also
involves CMF.  The Advisor will provide CMF with copies of any correspondence
(including, but not limited to, any notice or correspondence regarding the
violation, or potential violation, of position limits) from or to the CFTC, NFA
or any commodity exchange in connection with an investigation or audit of the
Advisor’s business activities and, in relation to Krom Switzerland, PolyReg or
any other suitable regulator to which it may be subject from time to time.
 
(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 (A) any error resulting in a loss of $1,000 or more
committed by the Advisor or its principals or employees; (B) any trade which the
Advisor believes was not executed in accordance with its instructions; and (C)
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.
 
(v) The Advisor intends to use its best efforts to close out all futures
positions prior to any applicable delivery period, and will use its best efforts
to avoid causing the Partnership to take delivery of any commodity.
 
(vi)           CMF shall have the right for a period of 12 months following the
date of this Agreement to allocate up to $150,000,000 in funded assets to the
Advisor’s Program on behalf of any collective investment vehicle or account
operated or managed by CMF and the Advisor represents that such allocation will
not exceed the capacity limits of the Program.
 
 
 

--------------------------------------------------------------------------------

 
(b) CMF agrees for itself and the Partnership that:
 
(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 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 effective upon actual receipt and shall be made
either by electronic mail (email) copy or in writing and delivered personally or
by registered or certified mail or expedited courier, return receipt requested,
postage prepaid, to the addresses below or to such other addresses as may be
designated by the party entitled to receive the same by notice similarly given:
 
If to CMF or to the Partnership:
 
Ceres Managed Futures LLC
522 Fifth Avenue, 14th Floor
New York, New York  10036
Attention:  Ms. Jennifer Magro
 
Email:  Jennifer.magro@morganstanleysmithbarney.com
 
If to the Advisor:
 
Walker House
87 Mary Street
George Town,
Grand Cayman KY1-9002
Cayman Islands
Attention:  The Directors
Email:  info@walkerspv.com
Fax No.: (345) 945-3727
 
with a copy simultaneously to Krom Switzerland:
 
Neuhofstrasse 3D
6340
Baar
Switzerland
 
Attention:  Mike Cartier
 
Email:  info@kromriver.com
Fax No.:  00 41 41 544-2650
 

 
 
 

--------------------------------------------------------------------------------

 
13. GOVERNING LAW.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
 
14. ARBITRATION.  The parties agree that any dispute or controversy arising out
of or relating to this Agreement or the interpretation thereof, shall be settled
by arbitration in accordance with the rules, then in effect, of the National
Futures Association or, if the National Futures Association shall refuse
jurisdiction, then in accordance with the rules, then in effect, of the American
Arbitration Association; provided, however, that the power of the arbitrator
shall be limited to interpreting this Agreement as written and the arbitrator
shall state in writing his reasons for his award, and further provided, that any
such arbitration shall occur within the Borough of Manhattan in New York
City.  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, except that certain persons not parties to this Agreement may
have rights under Paragraph 6 hereof.
 
16. COUNTERPARTS.  This Agreement may be executed in any number of counterparts,
including via facsimile, each of which is an original and all of which when
taken together evidence the same 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.
 

 
CERES MANAGED FUTURES LLC
 

 
By  /s/  Walter Davis                                                        
     Walter Davis
        President and Director

 
TACTICAL DIVERSIFIED FUTURES FUND L.P.
 
By:  Ceres Managed Futures LLC
    (General Partner)
 
By  /s/  Walter Davis                                                        
     Walter Davis
        President and Director

 
KROM RIVER INVESTMENT MANAGEMENT (CAYMAN) LIMITED
 
By  /s/  Meline von
Brentano                                                                   
     Name:  Meline von Brentano
Title:  Director

KROM RIVER TRADING AG
 
By  /s/  Mike Cartier                                                        
     Name:  Mike Cartier
Title:  COO

By  /s/  Itay Simkin                                                        
     Name:  Itay Simkin
Title:  CEO