Exhibit 10.7(a)
AMENDED AND RESTATED MANAGEMENT AGREEMENT
     This AMENDED AND RESTATED MANAGEMENT AGREEMENT (this “Agreement”), made as
of the ___ day of October, 2010, is by and among CERES MANAGED FUTURES LLC
(formerly, Citigroup Managed Futures LLC), a Delaware limited liability company
(“CMF” or the “General Partner”), CMF CAPITAL FUND MANAGEMENT MASTER FUND L.P.,
a New York limited partnership (the “Partnership”) and CAPITAL FUND MANAGEMENT
SA, a French corporation (the “Advisor,” together with the General Partner and
the Partnership, the “Parties”). This Agreement amends and restates the
Management Agreement dated as of July 26, 2005 (the “Existing Agreement”) by and
among the Parties.
W I T N E S S E T H :
     WHEREAS, on September 23, 2009, the Board of Directors of CMF resolved to
change CMF’s name from Citigroup Managed Futures LLC to Ceres Managed Futures
LLC and the Certificate of Formation of CMF and the Partnership’s Certificate of
Limited Partnership were amended to make appropriate corresponding changes; and
     WHEREAS, CMF is the general partner of CMF Capital Fund Management Master
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; and
     WHEREAS, the Partnership will act as a master fund whose initial feeder
fund is expected to be the portion of Tactical Diversified Futures Fund L.P.
allocated to the Advisor for trading (the “Feeder Fund” and collectively and
with any additional feeder fund(s), the “Feeder Funds”); and
     WHEREAS, the Limited Partnership Agreement dated July 25, 2005 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, the Feeder Fund and CMF have entered into a separate
management agreement respecting the management of the Feeder Fund’s assets prior
to the effective date of this Agreement, and the Advisor, CMF and each
additional Feeder Fund shall enter into a separate management agreement
respecting the management of each additional Feeder Fund operated or managed by
CMF that desires to invest in the Partnership in the future; and
     WHEREAS, the Advisor has entered, or shall enter, into a separate
management agreement respecting the management of each fund or account that it
operates or advises that desires to invest in the Partnership, each such fund or
account shall be included within the meaning of the term “Feeder Fund” when used
herein unless the context otherwise requires; 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

66

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

 

     WHEREAS, CMF is registered as a commodity pool operator with the CFTC and
is a member of the NFA; and
     WHEREAS, the Advisor or any of its affiliates that acts as a commodity pool
operator to any of the Feeder Funds is registered as such with the CFTC and is a
member of the NFA; and
     WHEREAS, the Parties have entered into the Existing Agreement and now wish
to amend and restate the Existing Agreement as set out in this Agreement; 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. All such trading on behalf of the Partnership shall be in
accordance with the trading policies set forth in Section 3(b) of the Limited
Partnership Agreement, 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. CMF has initially selected the Advisor’s
Discus Program (the “Program”) to manage the Partnership’s assets allocated to
it. Any open positions or other investments at the time of receipt of such
notice of a change in trading policy shall not be deemed to violate the changed
policy and shall be closed or sold in the ordinary course of trading. The
Advisor may not deviate from the trading policies set forth in the Limited
Partnership Agreement 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.
Notwithstanding the authority granted to the Advisor in Section 1(a) of the
management agreement with each Feeder Fund operated or managed by CMF to direct
the investment and reinvestment of such fund’s assets, effective as of the date
of this Agreement (or the date that such fund becomes a Feeder Fund to the
Partnership, if later) and continuing through the term hereof, the Advisor shall
have no authority to trade directly the individual accounts of such funds.
     (b) CMF acknowledges receipt of the Advisor’s disclosure document for
qualified eligible persons (as defined in CFTC Rule 4.7) dated September 1, 2010
(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

67

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

 

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. All give-up or similar fees relating to the foregoing shall be
paid by the Partnership after all parties have executed the relevant give-up
agreements (by either original or fax copy).
     (c) The initial allocation of the Partnership’s assets to the Advisor will
be made to the Program, as described in the Disclosure Document. In the event
the Advisor wishes to use a trading system or methodology other than or in
addition to the 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. CMF shall, within a reasonable
time, change the name of the Partnership in the event that the Advisor no longer
acts as the sole advisor to the Partnership. 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 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 2% of the allocated assets including nominal assets 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) 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 shall not
be 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.

68

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

 

Further, CMF agrees to treat as confidential any results of proprietary accounts
and/or proprietary information with respect to trading systems obtained from the
Advisor.
     (e) The Advisor understands and agrees that CMF may designate other trading
advisors for the Partnership and apportion or reapportion to such other trading
advisors the management of an amount of Net Assets (as defined in
Section 7(d)(1) of the Limited Partnership Agreement) 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 such other trading
advisors for the Partnership as it deems appropriate. CMF shall use its best
efforts to make reapportionments, if any, as of the first day of a month. The
Advisor agrees that it may be called upon at any time promptly to liquidate
positions in CMF’s sole discretion so that CMF may reallocate the Partnership’s
assets, meet margin calls on the Partnership’s account, fund redemptions, or for
any other reason, except that CMF will not require the liquidation of specific
positions by the Advisor. CMF will use its best efforts to give two days’ prior
notice to the Advisor of any reallocations or liquidations.
     (g) The Advisor shall assume financial responsibility for any errors
(“Errors”) committed or caused by its negligence, fraud or willful misconduct in
transmitting orders for the purchase or sale of futures interests for the
Partnership’s account including payment to the Commodity Brokers of the floor
brokerage commissions, exchange, NFA fees, and other transaction charges and
give-up charges incurred by the Commodity Broker on such trades but only for the
amount of the Commodity Brokers’ out-of-pocket costs in respect thereof. The
Advisor shall have an affirmative obligation to promptly notify the General
Partner upon discovery of such Errors with respect to the account and the
Advisor shall use its best efforts to identify and promptly notify the General
Partner of any trade which the Advisor reasonably believes was not executed in
accordance with its instructions. Any such liability of the Advisor in relation
to Errors shall be limited to compensation received by the Adviser from the
Partnership during the previous 12 months.
     2. INDEPENDENCE OF THE ADVISOR. For all purposes herein, the Advisor shall
be deemed to be an independent contractor and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Partnership in any way and shall not be deemed an agent, promoter or sponsor of
the Partnership, CMF, or any other trading advisor. The Advisor shall not be
responsible to the Partnership, the General Partner, any trading advisor or any
limited partners for any acts or omissions of any other trading advisor to the
Partnership. Notwithstanding the foregoing, CMF shall have no responsibility for
the business operations of any Feeder Fund that is not also operated or managed
by CMF and for which the Advisor or one of the Advisor’s affiliates acts as
commodity pool operator.
     3. COMPENSATION. (a) The compensation to be paid by the Partnership to the
Advisor for the services rendered by the Advisor to the Partnership in
accordance with the terms of this Agreement shall be equal to the sum of the
amounts that would otherwise be payable to the Advisor by each of the Feeder
Funds in accordance with the compensation

69

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

 

provisions of the existing management agreements between the Advisor and the
Feeder Funds. During the term of this Agreement, the Partnership shall remit to
each Feeder Fund, and each Feeder Fund shall remit to the Advisor as agent of
the Partnership, the amounts that would otherwise be due to the Advisor under
the compensation provisions of the existing management agreement between the
Advisor and such Feeder Fund.
     (b) The Advisor acknowledges that certain expenses of the Partnership will
be allocated pro rata among the Feeder Funds.
     (c) CMF will provide the Advisor with a statement showing the detailed fee
calculations for each Feeder Fund, and such other information as the Advisor
shall reasonably request, together with each payment for the Advisor to review.
This Section 3 shall survive termination of this Agreement with respect to
compensation earned or accrued through the termination date.
     4. RIGHT TO ENGAGE IN OTHER ACTIVITIES. (a) The services provided by the
Advisor hereunder are not to be deemed exclusive. CMF and the Partnership
acknowledge that, subject to the terms of this Agreement, the Advisor and its
officers, directors, employees and shareholder(s), may render advisory,
consulting and management services to other clients and accounts. The Advisor
and its officers, directors, employees and shareholder(s) shall be free to trade
for their own accounts and to advise other investors and manage other commodity
accounts during the term of this Agreement and to use the same information,
computer programs and trading strategies, programs or formulas which they
obtain, produce or utilize in the performance of services to CMF for the
Partnership. However, the Advisor represents, warrants and agrees that it
believes the rendering of such consulting, advisory and management services to
other accounts and entities will not require any material change in the
Advisor’s basic trading strategies and will not affect the capacity of the
Advisor to continue to render services to CMF for the Partnership of the quality
and nature contemplated by this Agreement.
     (b) If, at any time during the term of this Agreement, the Advisor is
required to aggregate the Partnership’s commodity positions with the positions
of any other person for purposes of applying CFTC- or exchange-imposed
speculative position limits, the Advisor agrees that it will promptly notify CMF
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 programs, strategies or methods
for the Partnership that are inferior to strategies or methods employed for any
other client or account and that it will not knowingly or deliberately favor any
client or account managed by it over any other client or account in any manner,
it being acknowledged, however, that different trading programs, strategies or
methods may be utilized for differing sizes of accounts, accounts with different
trading policies, accounts experiencing differing inflows or outflows of equity,
accounts 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.

70

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

 

     (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
composite 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, 2011.
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 redemptions,
distributions, withdrawals or reallocations, if any) decline by 50% or more as
of the end of a trading day from such Net Assets’ previous highest value;
(iii) limited partners owning at least 50% of the outstanding units shall vote
to require CMF to terminate this Agreement; (iv) the Advisor fails to comply
with the terms of this Agreement; (v) CMF, in good faith, reasonably determines
that the performance of the Advisor has been such that CMF’s fiduciary duties to
the Partnership require CMF to terminate this Agreement; or (vi) CMF reasonably
believes that the application of speculative position limits will substantially
affect the performance of the Partnership. At any time during the term of this
Agreement, CMF may elect immediately to terminate this Agreement if (i) the
Advisor merges, consolidates with another entity, sells a substantial portion of
its assets, or becomes bankrupt or insolvent, (ii) both Marc Potters and
Jean-Philippe Bouchard die, become incapacitated, leave the employ of the
Advisor, cease to control the Advisor or are otherwise not managing the trading
programs or systems of the Advisor, or (iii) the Advisor’s registration as a
commodity trading advisor with the CFTC or its membership in the NFA or any
other regulatory authority, is terminated or suspended. This Agreement will
immediately terminate upon dissolution of the Partnership or upon cessation of
trading by the Partnership prior to dissolution.
     (b) The Advisor may terminate this Agreement by giving not less than
30 days’ notice to CMF (i) in the event that the trading policies of the
Partnership as 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, 2011; or (iii) in the event that the General
Partner or Partnership fails to comply with the terms of this Agreement. The
Advisor may immediately terminate this Agreement if CMF’s registration as a
commodity pool operator or its membership in the NFA is terminated or suspended.

71

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

 

     (c) Except as otherwise provided in this Agreement, any termination of this
Agreement in accordance with this Section 5 shall be without penalty or
liability to any party, except for any fees due to the Advisor pursuant to
Section 3 hereof.
     6. INDEMNIFICATION. (a) (i) In any threatened, pending or completed action,
suit, or proceeding to which the Advisor was or is a party or is threatened to
be made a party arising out of or in connection with this Agreement or the
management of the Partnership’s assets by the Advisor or the offering and sale
of units in the Partnership, CMF shall, subject to subsection (a)(iii) of this
Section 6, indemnify and hold harmless the Advisor against any loss, liability,
damage, cost, expense (including, without limitation, attorneys’ and
accountants’ fees), judgments and amounts paid in settlement actually and
reasonably incurred by it in connection with such action, suit, or proceeding if
the Advisor acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the Partnership, and provided that its
conduct did not constitute negligence, intentional misconduct, or a breach of
its fiduciary obligations to the Partnership as a commodity trading advisor,
unless and only to the extent that the court or administrative forum in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all circumstances of the case, the
Advisor is fairly and reasonably entitled to indemnity for such expenses which
such court or administrative forum shall deem proper; and further provided that
no indemnification shall be available from the Partnership if such
indemnification is prohibited by Section 16 of the Limited Partnership
Agreement. The termination of any action, suit or proceeding by judgment, order
or settlement shall not, of itself, create a presumption that the Advisor did
not act in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the Partnership.
     (ii) To the extent that the Advisor has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in subsection
(i) above, or in defense of any claim, issue or matter therein, CMF shall
indemnify the Advisor against the expenses (including, without limitation,
attorneys’ and accountants’ fees) actually and reasonably incurred by it in
connection therewith.
     (iii) Any indemnification under subsection (i) above, unless ordered by a
court or administrative forum, shall be made by CMF only as authorized in the
specific case and only upon a determination by independent legal counsel in a
written opinion that such indemnification is proper in the circumstances because
the Advisor has met the applicable standard of conduct set forth in subsection
(i) above. Such independent legal counsel shall be selected by CMF in a timely
manner, subject to the Advisor’s approval, which approval shall not be
unreasonably withheld. The Advisor will be deemed to have approved CMF’s
selection unless the Advisor notifies CMF in writing, received by CMF within
five days of CMF’s telecopying to the Advisor of the notice of CMF’s selection,
that the Advisor does not approve the selection.
     (iv) In the event the Advisor is made a party to any claim, dispute or
litigation or otherwise incurs any loss or expense as a result of, or in
connection with, the Partnership’s or CMF’s activities or claimed activities
unrelated to the Advisor, CMF shall indemnify, defend and hold harmless the
Advisor against any loss, liability, damage, cost or expense (including, without
limitation, attorneys’ and accountants’ fees) incurred in connection therewith.

72

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

 

     (v) As used in this Section 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, cost or
expense (including, without limitation, attorneys’ and accountants’ fees),
judgments and amounts paid in settlement actually and reasonably incurred by
them (A) as a result of the material breach of any material representations and
warranties made by the Advisor in this Agreement, or (B) as a result of any act
or omission of the Advisor relating to the Partnership if there has been a final
judicial or regulatory determination or, in the event of a settlement of any
action or proceeding with the prior written consent of the Advisor, a written
opinion of an arbitrator pursuant to Section 14 hereof, to the effect that such
acts or omissions violated the terms of this Agreement in any material respect
or involved negligence, bad faith, recklessness or intentional misconduct on the
part of the Advisor (except as otherwise provided in Section 1(g)).
     (ii) In the event CMF, the Partnership or any of their affiliates is made a
party to any claim, dispute or litigation or otherwise incurs any loss or
expense as a result of, or in connection with, the activities or claimed
activities of the Advisor or its principals, officers, directors, shareholder(s)
or employees unrelated to CMF’s or the Partnership’s business, the Advisor shall
indemnify, defend and hold harmless CMF, the Partnership or any of their
affiliates against any loss, liability, damage, cost or expense (including,
without limitation, attorneys’ and accountants’ fees) incurred in connection
therewith.
     (c) In the event that a person entitled to indemnification under this
Section 6 is made a party to an action, suit or proceeding alleging both matters
for which indemnification can be made hereunder and matters for which
indemnification may not be made hereunder, such person shall be indemnified only
for that portion of the loss, liability, damage, cost or expense incurred in
such action, suit or proceeding which relates to the matters for which
indemnification can be made.
     (d) None of the indemnifications contained in this Section 6 shall be
applicable with respect to default judgments, confessions of judgment or
settlements entered into by the party claiming indemnification without the prior
written consent, which shall not be unreasonably withheld, of the party
obligated to indemnify such party.
     (e) The provisions of this Section 6 shall survive the termination of this
Agreement.
     7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
     (a) The Advisor represents and warrants that:
     (i) The Disclosure Document is in compliance with the Commodity Exchange
Act and the rules and regulations promulgated thereunder; and all information
with respect to the Advisor and its principals and the trading performance of
any of them that has been provided to CMF, including, without limitation, the
description of the Program, is complete and accurate in all material respects
and such information does not contain any untrue statement of a material

73

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

 

fact or omit to state a material fact which is necessary to make the statements
therein not misleading.
     (ii) The Advisor will be acting as a commodity trading advisor with respect
to the Partnership and not as a securities investment adviser and is duly
registered with the CFTC as a commodity trading advisor, is a member of the NFA,
and is in compliance with 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.
     (iii) The Advisor is a corporation duly organized, validly existing and in
good standing under the laws of France and has full corporate power and
authority to enter into this Agreement and to provide the services required of
it hereunder.
     (iv) The Advisor will not, by acting as a commodity trading advisor to the
Partnership, breach or cause to be breached any undertaking, agreement,
contract, statute, rule or regulation to which it is a party or by which it is
bound.
     (v) This Agreement has been duly and validly authorized, executed and
delivered by the Advisor and is a valid and binding agreement enforceable in
accordance with its terms.
     (vi) At any time during the term of this Agreement that an offering
memorandum or a prospectus relating to the Partnership 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) CMF and the Partnership have 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 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 and the Partnership will comply with all laws, rules, regulations
and orders applicable to the offer and sale of units in all jurisdictions in
which units are offered or sold.

74

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

 

     (vi) CMF is registered as a commodity pool operator and is a member of the
NFA, and it will maintain and renew such registration and membership during the
term of this Agreement.
     (vii) The Partnership is a limited partnership duly organized and validly
existing under the laws of the State of New York and has full limited
partnership power and authority to enter into this Agreement and to perform its
obligations under this Agreement.
     (viii) The Partnership is a qualified eligible person as defined in CFTC
Rule 4.7.
     (ix) CMF on the behalf of the Partnership has received a copy of Part II of
the Advisor’s Form ADV at least 48 hours prior to the execution of this
Agreement and confirms having read and understood the disclosures contained
therein.
     (x) The Partnership accepts to be classified as a Professional Client
within the meaning of the General Regulations of the Authorité des Marchés
Financiers (“AMF”).
     (xi) CMF on the behalf of the Partnership has sufficient knowledge, market
sophistication, professional advice and experience to make its own evaluation of
the merits and risks of the investments carried out by the Advisor on its behalf
under this Agreement, and accordingly the Advisor will not be assessing the
suitability of any such investments for the Partnership, unless otherwise agreed
in writing.
     (xii) The Partnership is aware and consents to the Advisor effecting
transactions on its behalf outside a regulated market or a multilateral trading
facility.
     (xiii) The Partnership is aware and consents to the Advisor sending the AMF
transaction reports regarding certain trades in securities or derivatives where
the Advisor is trading on its behalf as a member of an exchange in a European
member state. CMF on the behalf of the Partnership agrees and acknowledges that
any and all proprietary right in such transaction information are owned by the
Advisor and it waives any duty of confidentiality attaching to the information
which the Advisor is required to disclose.
     (xiv) The Partnership has received a summary of the Investment Advisor’s
Execution Policy and Soft Commission Policy included in the Advisor’s MiFID
Schedule and enclosed as Appendix A to this Agreement.
     (xv) The representations and warranties above shall be continuing during
the term of this Agreement and, if, at any time, any event has occurred which
would make or tend to make any of the foregoing not true, the CMF will promptly
notify the Advisor.
     8. COVENANTS OF THE ADVISOR, CMF AND THE PARTNERSHIP.
     (a) The Advisor agrees as follows:
     (i) In connection with its activities on behalf of the Partnership, the
Advisor will comply with all applicable laws, including rules and regulations of
the CFTC, NFA and/or the commodity exchange on which any particular transaction
is executed.

75

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

 

     (ii) The Advisor will promptly notify CMF of the commencement of any
material suit, action or proceeding involving it, whether or not any such suit,
action or proceeding also involves CMF.
     (iii) In the placement of orders for the Partnership’s account and for the
accounts of any other client, the Advisor will utilize a pre-determined,
systematic, fair and reasonable order entry system, which shall, on an overall
basis, be no less favorable to the Partnership than to any other account managed
by the Advisor. The Advisor acknowledges its obligation to review the
Partnership’s positions, prices and equity in the account managed by the Advisor
daily and within two business days to notify, in writing, the broker and CMF and
the Partnership’s brokers of (i) any error committed by the Advisor or its
principals or employees; (ii) any trade which the Advisor believes was not
executed in accordance with its instructions; and (iii) any discrepancy with a
value of $10,000 or more (due to differences in the positions, prices or equity
in the account) between its records and the information reported on the
account’s daily and monthly broker statements.
     (iv) The Advisor will maintain a net worth of not less than $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 in compliance with the USA PATRIOT Act and applicable
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:

76

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

 

     If to CMF or the Partnership:
Ceres Managed Futures LLC
522 Fifth Avenue — 14th Floor
New York, New York 10036
Attention: Ms. Jennifer Magro
     If to the Advisor:
Capital Fund Management SA
6 Boulevard Haussmann
75009 Paris, France
Attention: Mr. Jacques Saulière
     13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
     14. ARBITRATION. The parties agree that any dispute or controversy arising
out of or relating to this Agreement or the interpretation thereof, shall be
settled by arbitration in accordance with the rules, then in effect, of the
National Futures Association or, if the National Futures Association shall
refuse jurisdiction, then in accordance with the rules, then in effect, of the
American Arbitration Association; provided, however, that the power of the
arbitrator shall be limited to interpreting this Agreement as written and the
arbitrator shall state in writing his reasons for his award. Judgment upon any
award made by the arbitrator may be entered in any court of competent
jurisdiction.
     15. NO THIRD PARTY BENEFICIARIES. There are no third party beneficiaries to
this Agreement.
     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.

77

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

 

     PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS ACCOUNT DOCUMENT IS
NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY
FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A
TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR
DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT
REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS ACCOUNT DOCUMENT.
     IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of
the undersigned as of the day and year first above written.

            CERES MANAGED FUTURES LLC
      By           Walter Davis        President and Director        CMF CAPITAL
FUND MANAGEMENT MASTER FUND L. P.
      By:   Ceres Managed Futures LLC         (General Partner)                 
  By           Walter Davis        President and Director        CAPITAL FUND
MANAGEMENT SA
      By           Jacques Saulière        Co-Chief Executive Officer     

78

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

 

Appendix A
MiFID SCHEDULE
Summary of Execution Policy
Capital Fund Management SA (“we”) directs all trading on your behalf
electronically.* Such electronic trading requires the availability of a certain
infrastructure, which may only be maintained with a limited number of
counterparties.
We will thus conduct all your trading electronically as members of exchanges or
with a few executing brokers that we have established electronic links with.
We shall use our reasonable endeavors to select the best executing brokers for
setting up such electronic links as described in our “Execution Policy.” The
Execution Policy specifies, amongst other things, that when selecting such
electronic brokers we will consider commissions, exchange fees, clearing fees,
taxes, the quality of execution as well as the quality of technology and
operations.
The Execution Policy also specifies that we will consider regulation, regulatory
capital and creditworthiness in selecting counterparties. We shall use our
reasonable endeavors to select the best executing venue for your trades.
 

*   Except during extraordinary circumstances such as in an emergency situation.

Summary of Soft Commission Policy
We have a policy not to accept any soft commission arrangements that are outside
the Section 28(e) safe-harbor of the US Securities Exchange Act of 1934 or
outside the MiFID safe-harbor.
Our corporate policy is that the firm and any of its officers, employees or
agents shall not in any manner solicit inducements from counterparties nor
accept any inducements which are in monetary form. The firm may only accept
benefits from counterparties in the form of services, which are for the benefit
of our clients.
As of today, certain brokers and derivatives exchanges make available, without
any direct charge, data communication lines for routing trade orders to brokers
and exchanges by us on the behalf of clients. Such communications infrastructure
is not classified as inducements under MiFID and is part of the
Section 28(e)(3)(C) safe harbor as defined by the SEC.
Trade reporting
Under MiFID Rules, we are obliged to inform the Authorités des Marchés
Financiers (“AMF”) about certain transactions. In particular, we are obliged to
send transaction reports to the AMF regarding certain trades in securities or
derivatives where we are trading on your behalf as a member of an exchange in a
European member state. You agree and acknowledge that any and all proprietary
rights to such transaction information are owned by us and you waive any duty of
confidentiality attaching to the information which we are required to disclose.

79