MANAGEMENT AGREEMENT


     AGREEMENT made as of the 1st day of March,  2001 among SMITH BARNEY FUTURES
MANAGEMENT  LLC, a Delaware  limited  liability  company ("SBFM" or the "General
Partner"),  SALOMON SMITH BARNEY  DIVERSIFIED 2000 FUTURES FUND L.P., a New York
limited partnership (the  "Partnership") and GRAHAM CAPITAL MANAGEMENT,  L.P., a
Delaware limited partnership (the "Advisor").

                              W I T N E S S E T H :
                               - - - - - - - - - -

     WHEREAS,  SBFM is the general  partner of Salomon Smith Barney  Diversified
2000  Futures  Fund L.P.,  a limited  partnership  organized  for the purpose of
speculative trading of commodity interests, including futures contracts, options
and forward  contracts  with the  objective  of  achieving  substantial  capital
appreciation; and

     WHEREAS,  the Limited  Partnership  Agreement  establishing the Partnership
(the "Limited  Partnership  Agreement")  permits SBFM to delegate to one or more
commodity  trading advisors SBFM'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,  SBFM is registered as a commodity pool operator with the CFTC and
is a member of the NFA; and

     WHEREAS,  SBFM,  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 trading of 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. All such trading on
behalf of the Partnership shall be in accordance with the trading strategies and
trading  policies set forth in the  Prospectus  and  Disclosure  Document  dated
January  31,  2000,  as  supplemented  October  31,  2000 and March 1, 2001 (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 SBFM to be  utilized  by the  Advisor in
managing the  Partnership's  assets.  SBFM has initially  selected the Advisor's
Global  Diversified  Program  at 150% of the  leverage  normally  applied by the
Advisor (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  SBFM.  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.  SBFM and the Advisor
each  acknowledge  that the descriptions of the Advisor in the Prospectus are in
draft form as of the time of the signing of this Agreement.
                                       1
<PAGE>


     (b) SBFM acknowledges  receipt of the Advisor's  Disclosure  Document dated
January 19, 2001,  (the  "Disclosure  Document") as filed with the NFA and CFTC.
All trades made by the Advisor for the account of the Partnership  shall be made
through such commodity  broker or brokers as SBFM 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 SBFM, 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 SBFM, provided that the futures commission merchant or independent
floor broker and any give-up or floor  brokerage fees are approved in advance by
SBFM. 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  Advisor's  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  description  of the Program 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  SBFM  prior  written  notice  of its
intention to utilize  such  different  trading  system or  methodology  and SBFM
consents  thereto in writing.  In addition,  the Advisor will provide five days'
prior written  notice to SBFM 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 SBFM.  In
addition,  the Advisor will notify SBFM 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 the  Partnership  with a current list of all  commodity  interests to be
traded for the Partnership's account and will not trade any additional commodity
interests  for  such  account  without  providing  notice  thereof  to SBFM  and
receiving SBFM's written approval. The Advisor also agrees to provide SBFM, 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 SBFM.  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.
                                       2
<PAGE>

     (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 SBFM 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  SBFM  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 SBFM 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,  SBFM  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 SBFM 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)  SBFM  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. SBFM 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 SBFM's
sole  discretion so that SBFM may  reallocate  the  Partnership's  assets,  meet
margin calls on the Partnership's  account,  fund redemptions,  or for any other
reason,  except that SBFM will not require the liquidation of specific positions
by the Advisor. SBFM 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 SBFM  affiliate)  selected by the Advisor,  it also being
understood that SBFM, with the assistance of the Advisor,  will first attempt to
recover such losses from the executing broker.
                                       3
<PAGE>

     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,  SBFM, 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,  no
longer acting as an advisor to the Partnership.

     3. COMPENSATION. (a) In consideration of and as compensation for all of the
services to be rendered by the Advisor to the Partnership  under this Agreement,
the Partnership shall pay the Advisor (i) an annual incentive fee payable at the
end of each calendar  year equal to 20% of New Trading  Profits (as such term is
defined below) earned by the Advisor for the  Partnership and (ii) a monthly fee
for  professional  management  services  equal to 1/6 of 1% (2% per year) of the
month-end Net Assets of the Partnership allocated to the Advisor.

     (b) "Net Assets"  shall have the meaning set forth in Paragraph  7(d)(1) of
the  Limited  Partnership  Agreement  dated as of August 25,  1999,  and without
regard to further  amendments  thereto,  provided  that in  determining  the Net
Assets of the  Partnership  on any date, no adjustment  shall be made to reflect
any distributions,  redemptions or incentive fees payable as of the date of such
determination.

     (c) "New  Trading  Profits"  shall mean the  excess,  if any, of Net Assets
managed by the Advisor at the end of the fiscal  period over Net Assets  managed
by the Advisor at the end of the highest  previous  fiscal  period or Net Assets
allocated to the Advisor at the date trading commences, whichever is higher, and
as further  adjusted to eliminate  the effect on Net Assets  resulting  from new
capital contributions,  redemptions,  reallocations or capital distributions, if
any, made during the fiscal period,  decreased by interest or other income,  not
directly related to trading activity,  earned on the Partnership's assets during
the fiscal period, whether the assets are held separately or in margin accounts.
Ongoing  expenses  will be  attributed  to the  Advisor  based on the  Advisor's
proportionate  share of Net  Assets.  Ongoing  expenses  above will not  include
expenses of litigation  not involving the activities of the Advisor on behalf of
the  Partnership.  Ongoing  expenses  will include  offering and  organizational
expenses of the Partnership. No incentive fee shall be paid until the end of the
first  calendar year in which trading  commences by the Advisor on behalf of the
Partnership,  which fee shall be based on New  Trading  Profits  earned from the
commencement of trading by the Advisor on behalf of the Partnership  through the
end of such calendar year.  Interest  income  earned,  if any, will not be taken
into  account in computing  New Trading  Profits  earned by the Advisor.  If Net
Assets allocated to the Advisor are reduced due to redemptions, distributions or
reallocations  (net of additions),  or if leverage is reduced at SBFM's request,
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.
                                       4
<PAGE>

     (d) Annual incentive fees and monthly  management fees shall be paid within
twenty (20) business days  following the end of the period,  as the case may be,
for which such fee is payable. In the event of the termination of this Agreement
as of any date which shall not be the end of a fiscal year or a calendar  month,
as the case may be,  the  annual  incentive  fee  shall  be  computed  as if the
effective date of termination were the last day of the then current year and the
monthly  management fee shall be prorated to the effective date of  termination.
If, during any month, the Partnership  does not conduct  business  operations or
the Advisor is unable to provide the services  contemplated herein for more than
two successive  business  days, the monthly  management fee shall be prorated by
the ratio which the number of  business  days during  which SBFM  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.  SBFM 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 SBFM 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  SBFM  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
SBFM 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.
                                       5
<PAGE>

     (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
SBFM 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 SBFM. The Advisor presently  believes and represents
that existing  speculative  position limits will not materially adversely affect
its ability to manage the Partnership's  account given the potential size of the
Partnership's account and the Advisor's and its principals' current accounts and
all proposed accounts for which they have contracted to act as trading manager.

     5. TERM. (a) This  Agreement  shall continue in effect until June 30, 2001.
SBFM 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,  SBFM may
terminate  this  Agreement at any month-end upon 30 days' notice to the Advisor.
At any time  during the term of this  Agreement,  SBFM 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  SBFM to terminate  this  Agreement;  (iv) the Advisor  fails to
comply with the terms of this  Agreement;  (v) SBFM,  in good faith,  reasonably
determines  that the  performance  of the  Advisor  has been  such  that  SBFM's
fiduciary duties to the Partnership require SBFM to terminate this Agreement; or
(vi) SBFM  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,  SBFM 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)
Kenneth G. Tropin 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.
                                       6
<PAGE>

     (b) The Advisor may  terminate  this  Agreement  by giving not less than 30
days'  notice  to  SBFM  (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,  2001;  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 SBFM'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 Paragraph 5 or Paragraph 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,  SBFM shall,  subject to subparagraph  (a)(iii) of
this  Paragraph 6,  indemnify  and hold  harmless the Advisor  against any loss,
liability, damage, cost, expense (including, without limitation,  attorneys' and
accountants'  fees),  judgments  and amounts  paid in  settlement  actually  and
reasonably incurred by it in connection with such action, suit, or proceeding if
the Advisor acted in good faith and in a manner reasonably  believed to be in or
not opposed to the best  interests of the  Partnership,  and  provided  that its
conduct did not constitute negligence,  intentional  misconduct,  or a breach of
its fiduciary  obligations to the  Partnership as a commodity  trading  advisor,
unless and only to the extent  that the court or  administrative  forum in which
such action or suit was brought shall determine upon application  that,  despite
the adjudication of liability but in view of all  circumstances of the case, the
Advisor is fairly and  reasonably  entitled to indemnity for such expenses which
such court or administrative  forum shall deem proper; and further provided that
no   indemnification   shall  be  available   from  the   Partnership   if  such
indemnification  is prohibited by Section 16 of the Partnership  Agreement.  The
termination of any action,  suit or proceeding by judgment,  order or settlement
shall not, of itself,  create a presumption that the Advisor did not act in good
faith and in a manner  reasonably  believed  to be in or not opposed to the best
interests of the Partnership.
                                       7
<PAGE>

     (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
subparagraph  (i) above,  or in defense of any claim,  issue or matter  therein,
SBFM shall  indemnify  the Advisor  against  the  expenses  (including,  without
limitation,  attorneys' and accountants' fees) actually and reasonably  incurred
by it in connection therewith.

     (iii) Any indemnification under subparagraph (i) above, unless ordered by a
court or administrative  forum,  shall be made by SBFM 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 SBFM 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  SBFM's
selection unless the Advisor  notifies SBFM in writing,  received by SBFM within
five  days  of  SBFM's  telecopying  to the  Advisor  of the  notice  of  SBFM'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 SBFM's  activities or claimed  activities
unrelated to the Advisor,  SBFM shall  indemnify,  defend and hold  harmless the
Advisor against any loss, liability, damage, cost or expense (including, without
limitation, attorneys' and accountants' fees) incurred in connection therewith.

     (v) As used in this Paragraph  6(a), the terms  "Advisor" shall include the
Advisor,  its  principals,  officers,  partners,  directors,   stockholders  and
employees and the term "SBFM" shall include the Partnership.

     (b)(i) The Advisor agrees to indemnify,  defend and hold harmless SBFM, the
Partnership and their affiliates against any loss,  liability,  damage,  cost or
expense  (including,  without  limitation,  attorneys' and  accountants'  fees),
judgments and amounts paid in  settlement  actually and  reasonably  incurred by
them (A) as a result of the material breach of any material  representations and
warranties made by the Advisor in this Agreement,  or (B) as a result of any act
or omission of the Advisor relating to the Partnership if there has been a final
judicial or  regulatory  determination  or, in the event of a settlement  of any
action or proceeding  with the prior written  consent of the Advisor,  a written
opinion of an  arbitrator  pursuant to Paragraph  14 hereof,  to the effect that
such acts or  omissions  violated  the terms of this  Agreement  in any material
respect  or  involved  negligence,   bad  faith,   recklessness  or  intentional
misconduct on the part of the Advisor  (except as otherwise  provided in Section
1(g)).

     (ii) In the event SBFM, 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 SBFM's or the  Partnership's  business,  the Advisor
shall indemnify,  defend and hold harmless SBFM, 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.
                                       8
<PAGE>

     (c) In the event  that a person  entitled  to  indemnification  under  this
Paragraph  6 is made a party to an  action,  suit or  proceeding  alleging  both
matters for which  indemnification  can be made  hereunder and matters for which
indemnification may not be made hereunder, such person shall be indemnified only
for that portion of the loss,  liability,  damage,  cost or expense  incurred in
such  action,  suit  or  proceeding  which  relates  to the  matters  for  which
indemnification can be made.

     (d) None of the  indemnifications  contained  in this  Paragraph 6 shall be
applicable  with  respect to  default  judgments,  confessions  of  judgment  or
settlements entered into by the party claiming indemnification without the prior
written  consent,  which  shall  not be  unreasonably  withheld,  of  the  party
obligated to indemnify such party.

     (e) The  provisions of this  Paragraph 6 shall survive the  termination  of
this Agreement.

                 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
                   ------------------------------------------

                  (a) The Advisor represents and warrants that:

     (i) All  references  to the Advisor and its  principals  in the  Prospectus
will,  after  review and  approval by the  Advisor,  be accurate in all material
respects and as to them the Prospectus will not contain any untrue  statement of
a material  fact or omit to state a material fact which is necessary to make the
statements  therein not  misleading,  except  that with  respect to pro forma or
hypothetical   performance   information  in  the   Prospectus,   if  any,  this
representation  and warranty  extends only to the underlying data made available
by the Advisor for the  preparation  thereof and not to any  hypothetical or pro
forma adjustments.  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.

     (ii) Any  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.

     (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 Delaware and has full power
and authority to enter into this Agreement and to provide the services  required
of it hereunder.
                                       9
<PAGE>

     (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 SBFM 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) SBFM represents and warrants for itself and the Partnership that:

     (i) The  Prospectus  (as from time to time amended or  supplemented,  which
amendment or supplement is approved by the Advisor as to  descriptions of itself
and its actual  performance) does not contain any untrue statement of a material
fact or omit to state a material fact which is necessary to make the  statements
therein not misleading,  except that the foregoing representation does not apply
to any statement or omission  concerning the Advisor in the Prospectus,  made in
reliance upon, and in conformity  with,  information  furnished to SBFM by or on
behalf of the Advisor  expressly for use in the Prospectus (it being  understood
that the hypothetical and pro forma adjustments in the Prospectus,  if any, were
not furnished by the Advisor).

     (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 power and
authority to perform its obligations under this Agreement.

     (iii) SBFM 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 SBFM's and the  Partnership's  behalf  and is a valid and  binding
agreement of SBFM and the Partnership enforceable in accordance with its terms.

     (v) SBFM 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  power  and
authority to enter into this Agreement and to perform its obligations under this
Agreement.
                                       10
<PAGE>

     (viii) SBFM and the Partnership  acknowledge that the Partnership's  assets
managed by the Advisor may experience  results  materially  different from those
achieved  generally  by the  Program  due to  various  circumstances,  including
differences in fee and commission structures.

                  8.  COVENANTS OF THE ADVISOR, SBFM AND THE PARTNERSHIP.
                      --------------------------------------------------

                  (a) The Advisor agrees as follows:

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

     (ii) The  Advisor  will  promptly  notify SBFM of the  commencement  of any
material suit, action or proceeding  involving it, whether or not any such suit,
action or proceeding also involves SBFM.

     (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 SBFM
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) SBFM agrees for itself and the Partnership that:

     (i) SBFM 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) SBFM will  promptly  notify  the  Advisor of the  commencement  of any
material suit, action or proceeding involving it or the Partnership,  whether or
not such suit, action or proceeding also involves the Advisor.

     9. COMPLETE  AGREEMENT.  This Agreement  constitutes  the entire  agreement
between the parties pertaining to the subject matter hereof.
                                       11
<PAGE>

     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 SBFM:

                           Smith Barney Futures Management LLC
                           388 Greenwich Street
                           7th Floor
                           New York, New York  10013
                           Attention:  Mr. David J. Vogel

                  If to the Advisor:

                           Graham Capital Management, L.P.
                           Stamford Harbor Park
                           333 Ludlow Street
                           Stamford, Connecticut 06902
                           Attention: Mr. Paul Sedlack

     13.  GOVERNING  LAW. This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of New  York,  without  giving  effect to
principles of conflicts of law.

     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.
                                       12
<PAGE>

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

                                            SMITH BARNEY FUTURES MANAGEMENT LLC

                                            By /s/ David J. Vogel
                                               -------------------------------
                                                David J. Vogel
                                                President


                                            SALOMON SMITH BARNEY
                                            DIVERSIFIED 2000 FUTURES FUND L. P.

                                         By: Smith Barney Futures Management LLC
                                                  (General Partner)

                                            By /s/ David J. Vogel
                                              --------------------------------
                                                David J. Vogel
                                                President


                                            GRAHAM CAPITAL MANAGEMENT, L.P.

                                            By /s/ Kenneth G. Tropin
                                               --------------------------------
                                                 Kenneth G. Tropin
                                                 President

                                       13