EX-10.1






Exhibit 10.1




MANAGEMENT AGREEMENT




     AGREEMENT made as of the 26th day of February, 2009, among CITIGROUP MANAGED
FUTURES LLC, a Delaware limited liability company (“CMF” or the “General Partner”), CITIGROUP
DIVERSIFIED FUTURES FUND L.P., a New York limited partnership (the “Partnership”) and SANDRIDGE
CAPITAL, LP, a Texas limited partnership (“SandRidge” or the “Advisor”).



W I T N E S S E T H :




     WHEREAS, CMF is the general partner of CITIGROUP 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 CMF
SandRidge Master Fund L.P., a New York limited partnership (the “Master Fund”) of which CMF is the
general partner and SandRidge is the advisor; and



     WHEREAS, the Limited Partnership Agreement establishing the Partnership (the “Limited
Partnership Agreement”) permits CMF to delegate to one or more commodity trading advisors CMF’s
authority to make trading decisions for the Partnership; and



     WHEREAS, the Advisor is registered as a commodity trading advisor with the Commodity Futures
Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”); and



     WHEREAS, CMF is registered as a commodity pool operator with the CFTC and is a member of the
NFA; and



     WHEREAS, CMF, the Partnership and the Advisor wish to enter into this Agreement in order to
set forth the terms and conditions upon which the Advisor will render and implement advisory
services in connection with the conduct by the Partnership of its commodity trading activities
during the term of this Agreement;



     NOW, THEREFORE, the parties agree as follows:



     1. DUTIES OF THE ADVISOR. (a) For the period and on the terms and conditions of this
Agreement, the Advisor shall have sole authority and responsibility, as one of the Partnership’s
agents and attorneys-in-fact, for directing the investment and reinvestment of the assets and funds
of the Partnership allocated to it from time to time by the General Partner in commodity interests,
including commodity futures contracts, options and forward contracts. The Advisor may also engage
in swaps transactions and other derivative 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 strategies and trading policies set forth in the Partnership’s Prospectus and Disclosure
Document dated as of April 30, 2008, as supplemented (the “Prospectus”), and as such trading
policies may be changed from time to time upon receipt by the Advisor of prior written notice of
such change and pursuant to the trading strategy selected by CMF to be utilized by the Advisor in
managing the Partnership’s assets. CMF has initially selected the Advisor’s Energy Program (the
“Program”) to manage the Partnership’s assets



 









 







allocated to it. Any open positions or other investments at the time of receipt of such
notice of a change in trading policy shall not be deemed to violate the changed policy and shall be
closed or sold in the ordinary course of trading. The Advisor may not deviate from the trading
policies set forth in the Prospectus without the prior written consent of the Partnership given by
CMF. The Advisor makes no representation or warranty that the trading to be directed by it for the
Partnership will be profitable or will not result in losses.



     (b) CMF acknowledges receipt of the Advisor’s Disclosure Document dated March 15, 2006, as
filed with the NFA (the “Disclosure Document”). 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 or fax copy) of CMF, may direct any and all trades in commodity futures and options to a
futures commission merchant or independent floor broker it chooses for execution with instructions
to give-up the trades to the broker designated by CMF, provided that the futures commission
merchant or independent floor broker and any give-up or floor brokerage fees are approved in
advance by CMF. All give-up or similar fees relating to the foregoing shall be paid by the
Partnership after all parties have executed the relevant give-up agreements (by either original or
fax copy).



     (c) The initial allocation of the Partnership’s assets to the Advisor will be made to the
Program. In the event the Advisor wishes to use a trading system or methodology other than or in
addition to the system or methodology outlined in the Prospectus in connection with its trading for
the Partnership, either in whole or in part, it may not do so unless the Advisor gives CMF prior
written notice of its intention to utilize such different trading system or methodology and CMF
consents thereto in writing. In addition, the Advisor will provide five days’ prior written notice
to CMF of any change in the trading system or methodology to be utilized for the Partnership which
the Advisor deems material. If the Advisor deems such change in system or methodology or in
markets traded to be material, the changed system or methodology or markets traded will not be
utilized for the Partnership without the prior written consent of CMF. In addition, the Advisor
will 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 Prospectus. Further, the
Advisor will provide CMF with a current list of all commodity interests to be traded for the
Partnership’s account and will not trade any additional commodity interests for such account
without providing notice thereof to CMF and receiving CMF’s written approval. The Advisor also
agrees to provide CMF, on a monthly basis, with a written report of the assets under the Advisor’s
management together with all other matters deemed by the Advisor to be material changes to its
business not previously reported to CMF.



     (d) The Advisor agrees to make all material disclosures to the Partnership regarding itself
and its principals as defined in Part 4 of the CFTC’s regulations (“principals”), partners,
shareholders, directors, officers and employees, their trading performance and general trading
methods, its customer accounts (but not the identities of or identifying information with respect
to its customers) and otherwise as are required in the reasonable judgment of CMF to be



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made in any filings required by Federal or state law or NFA rule or order. Notwithstanding
Sections 1(d) and 4(d) of this Agreement, the Advisor is not required to disclose the actual
trading results of proprietary accounts of the Advisor or its principals unless CMF reasonably
determines that such disclosure is required in order to fulfill its fiduciary obligations to the
Partnership or the reporting, filing or other obligations imposed on it by Federal or state law or
NFA rule or order. The Partnership and CMF acknowledge that the trading advice to be provided by
the Advisor is a property right belonging to the Advisor and that they will keep all such advice
confidential. Further, CMF agrees to treat as confidential any results of proprietary accounts
and/or proprietary information with respect to trading systems obtained from the Advisor.



     (e) The Advisor understands and agrees that CMF may designate other trading advisors for the
Partnership and apportion or reapportion to such other trading advisors the management of an amount
of Net Assets (as defined in Section 3(b) hereof) as it shall determine in its absolute discretion.
The designation of other trading advisors and the apportionment or reapportionment of Net Assets
to any such trading advisors pursuant to this Section 1 shall neither terminate this Agreement nor
modify in any regard the respective rights and obligations of the parties hereunder.



     (f) CMF may, from time to time, in its absolute discretion, select additional trading advisors
and reapportion funds among the trading advisors for the Partnership as it deems appropriate. CMF
shall use its best efforts to make reapportionments, if any, as of the first day of a month. The
Advisor agrees that it may be called upon at any time promptly to liquidate positions in CMF’s sole
discretion so that CMF may reallocate the Partnership’s assets, meet margin calls on the
Partnership’s account, fund redemptions, or for any other reason, except that CMF will not require
the liquidation of specific positions by the Advisor. CMF will use its best efforts to give two
days’ prior notice to the Advisor of any reallocations or liquidations.



     (g) The Advisor will not be liable for trading losses in the Partnership’s account including
losses caused by errors; provided, however, that (i) the Advisor will be liable to the Partnership
with respect to losses incurred due to errors committed or caused by it or any of its principals or
employees in communicating improper trading instructions or orders to any broker on behalf of the
Partnership and (ii) the Advisor will be liable to the Partnership with respect to losses incurred
due to errors committed or caused by any executing broker (other than any CMF affiliate) selected
by the Advisor, (it also being understood that CMF, with the assistance of the Advisor, will first
attempt to recover such losses from the executing broker).



     2. INDEPENDENCE OF THE ADVISOR. For all purposes herein, the Advisor shall be deemed
to be an independent contractor and, unless otherwise expressly provided or authorized, shall have
no authority to act for or represent the Partnership in any way and shall not be deemed an agent,
promoter or sponsor of the Partnership, CMF, or any other trading advisor. The Advisor shall not
be responsible to the Partnership, the General Partner, any trading advisor or any limited partners
for any acts or omissions of any other trading advisor to the Partnership.



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     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 as of the end of each calendar quarter 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 December 3, 2002, 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 shall be attributed to the Advisor based on the Advisor’s
proportionate share of Net Assets. Ongoing expenses shall not include expenses of litigation not
involving the activities of the Advisor on behalf of the Partnership. No incentive fee shall be
paid to the Advisor until the end of the first full calendar quarter of the Advisor’s trading for
the Partnership, which incentive fee shall be based on New Trading Profits (if any) 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 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 the
termination of this Agreement as of any date which shall not be the end of a calendar quarter or
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.



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     (e) The provisions of this Section 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 information, computer programs and
trading strategies, programs or formulas which they obtain, produce or utilize in the performance
of services to CMF for the Partnership. However, the Advisor represents, warrants and agrees that
it believes the rendering of such consulting, advisory and management services to other accounts
and entities will not require any material change in the Advisor’s basic trading strategies and
will not affect the capacity of the Advisor to continue to render services to CMF for the
Partnership of the quality and nature contemplated by this Agreement.



     (b) If, at any time during the term of this Agreement, the Advisor is required to aggregate
the Partnership’s commodity positions with the positions of any other person for purposes of
applying CFTC- or exchange-imposed speculative position limits, the Advisor agrees that it will
promptly notify CMF in writing if the Partnership’s positions are included in an aggregate amount
which exceeds the applicable speculative position limit. The Advisor agrees that, if its trading
recommendations are altered because of the application of any speculative position limits, it will
not modify the trading instructions with respect to the Partnership’s account in such manner as to
affect the Partnership substantially disproportionately as compared with the Advisor’s other
accounts. The Advisor further represents, warrants and agrees that under no circumstances will it
knowingly or deliberately use trading strategies or methods for the Partnership that are inferior
to strategies or methods employed for any other client or account and that it will not knowingly or
deliberately favor any client or account managed by it over any other client or account in any
manner, it being acknowledged, however, that different trading strategies or methods may be
utilized for differing sizes of accounts, accounts with different trading policies, accounts
experiencing differing inflows or outflows of equity, accounts which commence trading at different
times, accounts which have different portfolios or different fiscal years, accounts utilizing
different executing brokers and accounts with other differences, and that such differences may
cause divergent trading results.



     (c) It is acknowledged that the Advisor and/or its officers, employees, directors and
shareholder(s) presently act, and it is agreed that they may continue to act, as advisor for other
accounts managed by them, and may continue to receive compensation with respect to services for
such accounts in amounts which may be more or less than the amounts received from the Partnership.



     (d) The Advisor agrees that it shall make such information available to CMF respecting the
performance of the Partnership’s account as compared to the performance of other accounts managed
by the Advisor or its principals as shall be reasonably requested by CMF.



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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 immediately
terminate this Agreement upon 30 days’ notice to the Advisor if (i) the Net Asset Value per unit
shall decline as of the close of business on any day to $400 or less; (ii) the Net Assets allocated
to the Advisor (adjusted for redemptions, distributions, withdrawals or reallocations, if any)
decline by 50% or more as of the end of a trading day from such Net Assets’ previous highest value;
(iii) limited partners owning at least 50% of the outstanding units shall vote to require CMF to
terminate this Agreement; (iv) the Advisor fails to comply with the terms of this Agreement; (v)
CMF, in good faith, reasonably determines that the performance of the Advisor has been such that
CMF’s fiduciary duties to the Partnership require CMF to terminate this Agreement; (vi) CMF
reasonably believes that the application of speculative position limits will substantially affect
the performance of the Partnership; or (vii) the Advisor fails to conform to the trading policies
set forth in the Limited Partnership Agreement or the Prospectus as they may be changed from time
to time. 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) Andrew M. Rowe dies, becomes
incapacitated, leaves the employ of the Advisor, ceases to control the Advisor or is otherwise not
managing the trading programs or systems of the Advisor, or (iii) the Advisor’s registration as a
commodity trading advisor with the CFTC or its membership in the NFA or any other regulatory
authority, is terminated or suspended. This Agreement will immediately terminate upon dissolution
of the Partnership or upon cessation of trading prior to dissolution.



     (b) The Advisor may terminate this Agreement by giving not less than 30 days’ notice to CMF
(i) in the event that the trading policies of the Partnership as set forth in the Prospectus are
changed in such manner that the Advisor reasonably believes will adversely affect the performance
of its trading strategies; (ii) after June 30, 2009; or (iii) in the event that 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) Except as otherwise provided in this Agreement, any termination of this Agreement in
accordance with this Section 5 or Section 1(e) shall be without penalty or liability to any party,
except for any fees due to the Advisor pursuant to Section 3 hereof.



     6. INDEMNIFICATION. (a) (i) In any threatened, pending or completed action, suit,
or proceeding to which the Advisor was or is a party or is threatened to be made a party arising
out of or in connection with this Agreement or the management of the Partnership’s assets by the
Advisor or the offering and sale of units in the Partnership, CMF shall, subject to



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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) Without limiting subsection (i) above, to the extent that the Advisor has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred to in subsection
(i) above, or in defense of any claim, issue or matter therein, CMF shall indemnify the Advisor
against the expenses (including, without limitation, attorneys’ and accountants’ fees) actually and
reasonably incurred by it in connection therewith.




          (iii) Any indemnification under subsection (i) above, unless ordered by a court or
administrative forum, shall be made by CMF only as authorized in the specific case and only upon a
determination by independent legal counsel in a written opinion that such indemnification is proper
in the circumstances because the Advisor has met the applicable standard of conduct set forth in
subsection (i) above. Such independent legal counsel shall be selected by CMF in a timely manner,
subject to the Advisor’s approval, which approval shall not be unreasonably withheld. The Advisor
will be deemed to have approved CMF’s selection unless the Advisor notifies CMF in writing,
received by CMF within five days of CMF’s telecopying to the Advisor of the notice of CMF’s
selection, that the Advisor does not approve the selection.




          (iv) In the event the Advisor is made a party to any claim, dispute or litigation or otherwise
incurs any loss or expense as a result of, or in connection with, the Partnership’s or CMF’s
activities or claimed activities unrelated to the Advisor, CMF shall indemnify, defend and hold
harmless the Advisor against any loss, liability, damage, cost or expense (including, without
limitation, attorneys’ and accountants’ fees) incurred in connection therewith.




          (v) As used in this Section 6(a), the term “Advisor” shall include the Advisor, its
principals, partners, officers, directors, stockholders and employees and the term “CMF” shall
include the Partnership.




     (b) (i) The Advisor agrees to indemnify, defend and hold harmless CMF, the Partnership and
their affiliates against any loss, liability, damage, cost or expense (including,



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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) All references to the Advisor and its principals in the Prospectus, are accurate in all
material respects and as to them the Prospectus 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 with respect to Table B and any other pro forma or hypothetical performance
information in the Prospectus, 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
Prospectus will, after review and approval of such references by the Advisor prior to the use of
such Prospectus in connection with the offering of the Partnership’s units, be accurate in all
material respects.





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          (ii) The information with respect to the Advisor set forth in the actual performance tables in
the Prospectus is based on all of the customer accounts managed on a discretionary basis by the
Advisor’s principals and/or the Advisor during the period covered by such tables and required to be
disclosed therein. The Advisor’s performance tables have been examined by an independent certified
public accountant and the report thereon has been provided to CMF. The Advisor will have its
performance tables so examined no less frequently than annually during the term of this Agreement.




          (iii) The Advisor will be acting as a commodity trading advisor with respect to the
Partnership and not as a securities investment adviser and is duly registered with the CFTC as a
commodity trading advisor, is a member of the NFA, and is in compliance with such other
registration and licensing requirements as shall be necessary to enable it to perform its
obligations hereunder, and agrees to maintain and renew such registrations and licenses during the
term of this Agreement.




          (iv) The Advisor is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Texas and has full limited partnership power and authority
to enter into this Agreement and to provide the services required of it hereunder.




          (v) The Advisor will not, by acting as a commodity trading advisor to the Partnership, breach
or cause to be breached any undertaking, agreement, contract, statute, rule or regulation to which
it is a party or by which it is bound.




          (vi) This Agreement has been duly and validly authorized, executed and delivered by the
Advisor and is a valid and binding agreement enforceable in accordance with its terms.




          (vii) At any time during the term of this Agreement that a prospectus relating to the units is
required to be delivered in connection with the offer and sale thereof, the Advisor agrees upon the
request of CMF to provide the Partnership with such information as shall be necessary so that, as
to the Advisor and its principals, such prospectus is accurate.




     (b) CMF represents and warrants for itself and the Partnership that:



          (i) The Prospectus (as from time to time amended or supplemented, which amendment or
supplement is approved by the Advisor as to descriptions, if any, 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, if any, which is 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
the hypothetical and pro forma adjustments in Table B were not furnished by the Advisor).




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          (ii) It is a limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and has full limited liability company power and authority
to perform its obligations under this Agreement.




          (iii) CMF and the Partnership have the capacity and authority to enter into this Agreement on
behalf of the Partnership.




          (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) It is registered as a commodity pool operator and is a member of the NFA, and it will
maintain and renew such registration and membership during the term of this Agreement.




          (vii) The Partnership is a limited partnership duly organized and validly existing under the
laws of the State of New York and has full limited partnership power and authority to enter into
this Agreement and to perform its obligations under this Agreement.




     8. COVENANTS OF THE ADVISOR, CMF AND THE PARTNERSHIP.



     (a) The Advisor agrees as follows:



          (i) In connection with its activities on behalf of the Partnership, the Advisor will comply
with all applicable laws, including rules and regulations of the CFTC, NFA and/or the commodity
exchange on which any particular transaction is executed.




          (ii) The Advisor will promptly notify CMF of the commencement of any material suit, action or
proceeding involving it, whether or not any such suit, action or proceeding also involves CMF. The
Advisor will provide CMF with copies of any correspondence from or to the CFTC, NFA or any
commodity exchange in connection with an investigation or audit of the Advisor’s business
activities.




          (iii) In the placement of orders for the Partnership’s account and for the accounts of any
other client, the Advisor will utilize a pre-determined, systematic, fair and reasonable order
entry system, which shall, on an overall basis, be no less favorable to the Partnership than to any
other account managed by the Advisor. The Advisor acknowledges its obligation to review the
Partnership’s positions, prices and equity in the account managed by the Advisor daily and within
two business days to notify, in writing, the broker and CMF and the Partnership’s brokers of (i)
any error committed by the Advisor or its principals or employees; (ii) any trade which the Advisor
believes was not executed in accordance with its instructions; and (iii) any discrepancy with a
value of $10,000 or more (due to differences in the positions,





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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 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 in writing and delivered personally or by registered or certified mail or
expedited courier, return receipt requested, postage prepaid, to the addresses below or to such
other addresses as may be designated by the party entitled to receive the same by notice similarly
given:



     If to CMF:


Citigroup Managed Futures LLC

55 East 59th Street

10th Floor

New York, New York 10022

Attention: Mr. Jerry Pascucci




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     If to the Advisor:


SandRidge Capital, LP

1300 Post Oak Boulevard

Suite 325

Houston, Texas 77056

Attention: Mr. Andrew M. Rowe




     with a copy to:


David R. Allen

407 East Main Street

Murfreesboro, Tennessee 37130




     13. GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.



     14. ARBITRATION. The parties agree that any dispute or controversy arising out of or
relating to this Agreement or the interpretation thereof, shall be settled by arbitration in
accordance with the rules, then in effect, of the NFA or, if the NFA shall refuse jurisdiction,
then in accordance with the rules, then in effect, of the American Arbitration Association;
provided, however, that the power of the arbitrator shall be limited to
interpreting this Agreement as written and the arbitrator shall state in writing his reasons for
his award. Judgment upon any award made by the arbitrator may be entered in any court of competent
jurisdiction.



     15. NO THIRD PARTY BENEFICIARIES. There are no third party beneficiaries to this
Agreement.



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          IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of the undersigned as
of the day and year first above written.




	 	 	 	 	 
	 	CITIGROUP MANAGED FUTURES LLC

 	 
	 	By:  	/s/ Jerry Pascucci
 	 
	 	 	Jerry Pascucci 	 
	 	 	President and Director 	 
	 
	 	CITIGROUP DIVERSIFIED FUTURES FUND L.P.

 	 
	 	By:  	Citigroup Managed Futures LLC 

(General Partner)
 	 
	 	 	 
	 	By:  	                                                   /s/ Jerry Pascucci
 	 
	 	 	Jerry Pascucci 	 
	 	 	President and Director 	 
	 
	 	SANDRIDGE CAPITAL, LP

 	 
	 	By:  	SandRidge Capital Management GP, LLC 
(General Partner)
 	 
	 
	 	By:  	                                                   /s/ Andrew M. Rowe
 	 
	 	 	Andrew M. Rowe 	 
	 	 	Managing Member 	 
	 




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