EXHIBIT 10.01
FORM OF
AMENDED AND RESTATED CUSTOMER AGREEMENT
THIS AMENDED AND RESTATED CUSTOMER AGREEMENT (this
"Agreement"), made as of the 1st day of December, 1997, by and between ▇▇▇▇
▇▇▇▇▇▇ CORNERSTONE FUND _______, a New York limited partnership (the
"Customer"), and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC., a Delaware corporation ("DWR")
[Bracketed language relates only to Cornerstone IV];
W I T N E S S E T H :
WHEREAS, the Customer was organized pursuant to a Certificate
of Limited Partnership filed in the office of the County Clerk of New York on
__________________, and a Limited Partnership Agreement dated as of
_________________ between Demeter Management Corporation, a Delaware corporation
("Demeter"), acting as general partner (in such capacity, the "General
Partner"), and the limited partners of the Customer to trade, buy, sell, or
otherwise acquire, hold, or dispose of commodities (including, but not limited,
to foreign currencies, mortgage-backed securities, money market instruments, and
any other securities or items which are, or may become, the subject of futures
contract trading), commodity futures contracts, commodity forward contracts,
[exchange commitments,] commodity options, [spot (cash) commodities and
currencies,] and any rights pertaining thereto (hereinafter referred to
collectively as "commodity interests"); [initially the Customer's principal
business is to trade, buy, sell, or otherwise acquire, hold, or dispose of
commodity interest contracts on, for, or with respect to domestic and foreign
currencies and currency-related items;]
WHEREAS, the Customer (which is a commodity pool) and the
General Partner (which is a registered commodity pool operator) have entered
into management agreements (the "Management Agreements") with certain trading
managers (each, a "Trading Manager" and collectively, the "Trading Managers"),
which provide that the Trading Managers have authority and responsibility,
except in certain limited situations, to direct the investment and reinvestment
of the assets of the Customer in commodity interests under the terms set forth
in the Management Agreements;
WHEREAS, the Customer and DWR entered into that certain
Customer Agreement, dated as of ____________, which was amended and restated
effective September 1, 1996 (the "Customer Agreement"), whereby DWR agreed to
perform commodity interests brokerage and certain other services for the
Customer; and
WHEREAS, the Customer and DWR wish to amend and restate the
Customer Agreement to set forth the terms and conditions upon which DWR will
continue to perform certain non-clearing commodity interests brokerage and
certain other services for the Customer;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not defined herein shall
have the meaning given to them in the Customer's most recent prospectus as filed
with the Securities and Exchange Commission (the "Prospectus") relating to the
offering of units of limited partnership interest of the Customer (the "Units")
and in any amendment or supplement to the Prospectus.
2. Duties of DWR. DWR agrees to act as a non-clearing
commodity broker for the Customer and introduce the Customer's account to ▇▇▇▇
Futures, Inc. ("CFI") for execution and clearing of commodity interests
transactions on behalf of the Customer in accordance with instructions provided
by the Trading Managers, and the Customer agrees to retain DWR as a non-clearing
commodity broker for the term of this Agreement.
DWR agrees to furnish to the Customer as soon as practicable
all of the information from time to time in its possession which Demeter, as the
general partner of the Customer, is required to furnish to the Limited Partners
pursuant to the Limited Partnership Agreement as from time to time in effect and
as required by applicable law, rules, or regulations and to perform such other
services for the Customer as are set forth herein and in the Prospectus.
3. Obligations and Expenses. Except as otherwise set forth
herein and in the Prospectus, the Customer, and not DWR, shall be responsible
for all taxes, management and incentive fees to the Trading Managers, brokerage
fees to DWR, fees and expenses specified in the Exchange Agreement among the
Customer, ▇▇▇▇ ▇▇▇▇▇▇ Cornerstone Fund __, ▇▇▇▇ ▇▇▇▇▇▇ Cornerstone Fund __ and
the General Partner, dated as of May 31, 1984, and as amended, and all
extraordinary expenses incurred by it. In addition, the Customer, and not DWR,
shall pay the charges of CFI for executing and clearing its commodity interests
trades (as described in paragraph 5(b) below).
4. Agreement Nonexclusive. DWR shall be free to render
services of the nature to be rendered to the Customer hereunder to other persons
or entities in addition to the Customer, and the parties acknowledge that DWR
may render such services to additional entities similar in nature to the
Customer, including other partnerships organized with Demeter as their general
partner. It is expressly understood and agreed that this Agreement is
nonexclusive and that the Customer has no obligation to execute any or all of
its trades for commodity interests through DWR. The parties acknowledge that the
Customer may utilize such other broker or brokers as Demeter may direct from
time to time. The Customer's utilization of an additional commodity broker shall
neither terminate this Agreement nor modify in any regard the respective rights
and obligations of the Customer and DWR hereunder.
5. (a) Compensation of DWR. The Customer will pay brokerage
commissions to DWR at a roundturn rate (but charged on a half-turn basis) of 80%
of DWR's published non-member rates for speculative accounts (which covers both
the taking and liquidation of a position), and substantially equivalent rates
for currency forward contract transactions in the forward contract and interbank
markets.
The Customer will pay DWR brokerage commissions for currency
forward contract transactions at rates established with reference to the
brokerage commission rate charged on exchange-traded currency futures contracts.
DWR may from time to time adjust the United States dollar size of currency
forward contracts so that the brokerage commission rate charged on such
contracts will approximate the rate charged on exchange-traded currency futures
contracts of similar United States dollar value. DWR shall also charge the
Partnership brokerage commissions for rollovers of forward contract positions.
(b) Compensation of CFI. The Customer will pay certain charges
of CFI for executing and clearing trades for the Customer pursuant to that
certain Customer Agreement dated as of December 1, 1997, among the Customer, CFI
and DWR. In addition, DWR shall pay CFI certain charges with respect to the
execution and clearance of trades for the Customer as agreed from time to time
between DWR and CFI.
(c) Notwithstanding the foregoing, brokerage commissions,
together with transaction fees and costs including those paid by the Customer to
CFI, with respect to each Trading Manager's allocated Net Assets will be capped
at 13/20 of 1% per month (in the
2
case of Tradin Managers that employ multiple trading systems in trading on
behalf of the Customer, the foregoing cap is applied on a per trading system
basis) of the Customer's Net Assets allocated to such Trading Manager or trading
system as of the last day of each month (a maximum 7.8% annual rate). In
addition, the aggregate of (i) brokerage commissions and transaction fees and
costs payable by the Customer, and (ii) net excess interest and compensating
balance benefits to DWR (after crediting the Customer with interest) shall not
exceed 14% annually of the Customer's average month-end Net Assets during each
calendar year.
(d) From time to time, DWR may increase or decrease brokerage
fees to be charged to the Customer; provided, however, that: (i) notice of such
increase is mailed to each Limited Partner at least five business days prior to
the last date on which a "Request for Redemption" must be received by the
General Partner with respect to the applicable Redemption Date; and (ii) such
notice shall describe the redemption and voting rights of Limited Partners.
6. Investment Discretion. The parties recognize that DWR shall
have no authority to direct the commodity interests investments to be made for
the Customer's account. However, the parties agree that DWR, and not the Trading
Managers, shall have the authority and responsibility with regard to the
investment, maintenance, and management of the Customer's assets that are held
in segregated or secured accounts, as provided in Section 7 hereof.
7. Investment of Customer Funds. The Customer shall deposit
its assets in accounts with DWR. The Customer's assets deposited with DWR will
be segregated or secured in accordance with the Commodity Exchange Act and CFTC
regulations. The Customer's assets deposited with DWR will be held in
non-interest bearing accounts or invested in securities approved for investment
by the CFTC for investment of customer funds. In any event, DWR will credit the
Customer with interest income at month-end in an amount equal to 80% of the
Customer's average daily Net Assets at a rate equal to the average yield on
13-week U.S. Treasury Bills issued during such month. All of such funds will be
available for margin for the Customer's trading. [For the purpose of such
interest payments, Net Assets will not include monies due to the Customer on or
with respect to forward contracts and other commodity interests but not actually
received by it from banks, brokers, dealers and other persons.] The Customer
understands that it will not receive any other interest income on its assets and
that DWR will receive interest income from CFI, as agreed from time to time by
DWR and CFI, on the Customer's assets deposited as margin with CFI. The
Customer's assets held by DWR may be used solely as margin for the Customer's
trading.
Ownership of the right to receive interest on the Customer's
assets pursuant to the preceding paragraph shall be reflected and maintained and
may be transferred only on the books and records of DWR. Any purported transfer
of such ownership shall not be effective or recognized until such transfer shall
have been recorded on the books and records of DWR.
8. Standard of Liability and Indemnity. DWR and its
stockholder, directors, officers, employees, and its or their respective
successors or assigns shall not be liable to the Customer, the General Partner
or the Limited Partners, or any of its or their respective successors or
assigns, except by reason of acts, or omissions due to, bad faith, misconduct,
or negligence, or for not having acted in good faith in the reasonable belief
that such acts or omissions were in, or not opposed to, the best interests of
the Customer, or by reason of any material breach of this Agreement.
The Customer shall indemnify and hold harmless DWR and its
stockholder, directors, officers, employees, and its or their respective
successors or assigns from and against any loss, liability, damage, cost or
expense (including attorneys' and accountants' fees and expenses incurred in the
defense of any demands, claims, or lawsuits) actually and reasonably incurred
arising from any act, omission or conduct undertaken by DWR on behalf
3
of the Customer pursuant to this Agreement, including, without limitation,
any demands, claims or lawsuits initiated by a Limited Partner (or assignee
thereof), provided that a court of competent jurisdiction upon entry of final
judgment shall find (or, if no final judgment is entered, an opinion is rendered
to the Customer by independent counsel who shall be other than counsel to the
Customer, the General Partner or DWR) to the effect that the conduct that was
the basis for such liability was not the result of bad faith, misconduct, or
negligence, and was done in a good faith belief that it was in, or not opposed
to, the best interests of the Customer. Furthermore, in any action or proceeding
brought by a Limited Partner in the right of the Customer to which DWR is a
party defendant, DWR shall be indemnified only to the extent and subject to the
conditions specified in the New York Uniform Limited Partnership Act, as amended
and in effect on the date of the formation of the Customer.
DWR shall indemnify and hold harmless the Customer, the
General Partner and the Limited Partners, and its or their respective successors
or assigns from and against any loss, liability, damage, cost or expense
(including attorneys' and accountants' fees and expenses incurred in the defense
of any demands, claims, or lawsuits) actually and reasonably incurred arising
from any act, omission or conduct undertaken by DWR on behalf of the Customer
pursuant to this Agreement, provided that a court of competent jurisdiction upon
entry of final judgment shall find (or, if no final judgment is entered, by an
opinion rendered to the Customer by independent counsel who shall be other than
counsel to the Customer, the General Partner or DWR) to the effect that the
conduct that was the basis for such liability was the result of bad faith,
misconduct, or negligence, or was not done in a good faith belief that it was
in, or not opposed to, the best interests of the Customer, or was by reason of
any material breach of this Agreement by DWR.
The indemnities provided in this Section 8 by the Customer to
DWR and its stockholder, directors, officers, employees, and its or their
respective successors and assigns shall be inapplicable in the event of any
liability arising out of, or based upon, any material breach of any warranty,
covenant, or agreement of DWR contained in this Agreement to the extent caused
by such event. Likewise, the indemnities provided in this Section 8 by DWR to
the Customer, the General Partner and the Limited Partners, and any of its or
their respective successors and assigns shall be inapplicable in the event of
any liability arising out of, or based upon, any material breach of any
warranty, covenant, or agreement of the Customer contained in this Agreement to
the extent caused by such event.
9. Term. This Agreement shall continue in effect until
terminated by either party giving not less than 60 days' prior written notice of
termination to the other party. Any such termination by either party shall be
without penalty.
10. Complete Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the matters referred to herein,
and no other agreement, verbal or otherwise, shall be binding as between the
parties unless in writing and signed by the party against whom enforcement is
sought.
11. Assignment. This Agreement may not be assigned by either
party without the express written consent of the other party.
12. Amendment. This Agreement may not be amended except by the
written consent of the parties.
13. Notices. All notices required or desired to be delivered
under this Agreement shall be in writing and shall be effective when delivered
personally on the day delivered, or when given by registered or certified mail,
postage prepaid, return receipt requested, on the day of receipt, addressed as
follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
4
if to the Customer:
▇▇▇▇ ▇▇▇▇▇▇ CORNERSTONE FUND _____________
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
President
if to DWR:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
14. Survival. The provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
15. Headings. Headings of Sections herein are for the
convenience of the parties only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
16. Incorporation by Reference. The Futures Customer Agreement
annexed hereto is hereby incorporated by reference herein and made a part hereof
to the same extent as if such document were set forth in full herein. If any
provision of this Agreement is or at any time becomes inconsistent with the
annexed document, the terms of this Agreement shall control.
IN WITNESS WHEREOF, this Agreement has been executed for and
on behalf of the undersigned as of the day and year first above written.
▇▇▇▇ ▇▇▇▇▇▇ CORNERSTONE FUND _____
By: Demeter Management Corporation,
General Partner
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
5
Futures Customer Agreement
In consideration of the acceptance by ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. ("DWR") of one
or more accounts of the undersigned ("Customer") (if more than one account is
carried by DWR, all are covered by this Agreement and are referred to
collectively as the "Account") and DWR's agreement to act as Customer's broker
for the execution, clearance and/or carrying of transactions for the purchase
and sale of commodity interests, including commodities, commodity futures
contracts and commodity options, Customer agrees as follows:
1. APPLICABLE RULES AND REGULATIONS - The Account and each transaction therein
shall be subject to the terms of this Agreement and to (a) all applicable
laws and the regulations, rules and orders (collectively "regulations") of
all regulatory and self-regulatory organizations having jurisdiction and
(b) the constitution, by-laws, rules, regulations, orders, resolutions,
interpretations and customs and usages (collectively "rules") of the market
and any associated clearing organization (each an "exchange") on or subject
to the rules of which such transaction is executed and/or cleared. The
reference in the preceding sentence to exchange rules is solely for DWR's
protection and DWR's failure to comply therewith shall not constitute a
breach of this Agreement or relieve Customer of any obligation or
responsibility under this Agreement. DWR shall not be liable to Customer as
a result of any action by DWR, its officers, directors, employees or agents
to comply with any rule or regulation.
2. PAYMENTS TO DWR - Customer agrees to pay to DWR immediately on request (a)
commissions, fees and service charges as are in effect from time to time
together with all applicable regulatory and self-regulatory organization
and exchange fees, charges and taxes; (b) the amount of any debit balance
or any other liability that may result from transactions executed for the
account; and (c) interest on such debit balance or liability at the
prevailing rate charged by DWR at the time such debit balance or liability
arises and service charges on any such debit balance or liability together
with any reasonable costs and attorney's fees incurred in collecting any
such debit balance or liability. Customer acknowledges that DWR may charge
commissions at other rates to other customers.
3. CUSTOMER'S DUTY TO MAINTAIN ADEQUATE MARGIN - Customer shall at all times
and without prior notice or demand from DWR maintain adequate margins in
the account so as continually to meet the original and maintenance margin
requirements established by DWR for Customer. DWR may change such
requirements from time to time at DWR's discretion. Such margin
requirements may exceed the margin requirements set by any exchange or
other regulatory authority and may vary from DWR's requirements for other
customers. Customer agrees, when so requested, immediately to wire transfer
margin funds and to furnish DWR with names of bank officers for immediate
verification of such transfers. Customer acknowledges and agrees that DWR
may receive and retain as its own any interest, increment, profit, gain
or benefit directly or indirectly, accruing from any of the funds DWR
receives from Customer.
4. DELIVERY; OPTION EXERCISE
(a) Customer acknowledges that the making or accepting of delivery
pursuant to a futures contract may involve a much higher
degree of risk than liquidating a position by offset. DWR has
no control over and makes no warranty with respect to grade,
quality or tolerances of any commodity delivered in
fulfillment of a contract.
(b) Customer agrees to give DWR timely notice and immediately on
request to inform DWR if Customer intends to make or take
delivery under a futures contract or to exercise an option
contract. If so requested, Customer shall provide DWR with
satisfactory assurances that Customer can fulfill Customer's
obligation to make or take delivery under any contract.
Customer shall furnish DWR with property deliverable by it
under any contract in accordance with DWR's instructions.
(c) DWR shall not have any obligation to exercise any long option
contract unless Customer has furnished DWR with timely
exercise instructions and sufficient initial margin with
respect to each underlying futures contract.
5. FOREIGN CURRENCY - If DWR enters into any transaction for Customer effected
in a currency other than U.S. dollars: (a) any profit or loss caused by
changes in the rate of exchange for such currency shall be for Customer's
account and risk and (b) unless another currency is designated in DWR's
confirmation of such transaction, all margin for such transaction and the
profit or loss on the liquidation of such transaction shall be in U.S.
dollars at a rate of exchange determined by DWR in its discretion on the
basis of then prevailing market rates of exchange for such foreign
currency.
6. DWR MAY LIMIT POSITIONS HELD - Customer agrees that DWR, at its discretion,
may limit the number of open positions (net or gross) which Customer may
execute, clear and/or carry with or acquire through it. Customer agrees (a)
not to make any trade which would have the effect of exceeding such limits,
(b) that DWR may require Customer to reduce open positions carried with DWR
and (c) that DWR may refuse to accept orders to establish new positions.
DWR may impose and enforce such limits, reduction or refusal whether or not
they are required by applicable law, regulations or rules. Customer shall
comply with all position limits established by any regulatory or
self-regulatory organization or any exchange. In addition, Customer agrees
to notify DWR promptly if customer is required to file position reports
with any regulatory or self-regulatory organization or with any exchange.
7. NO WARRANTY AS TO INFORMATION OR RECOMMENDATION - Customer acknowledges
that:
- 2 -
(a) Any market recommendations and information DWR may communicate
to Customer, although based upon information obtained from
sources believed by DWR to be reliable, may be incomplete and
not subject to verification;
(b) DWR makes no representation, warranty or guarantee as to,
and shall not be responsible for, the accuracy or
completeness of any information or trading recommendation
furnished to Customer;
(c) recommendations to Customer as to any particular transaction
at any given time may differ among DWR's personnel due to
diversity in analysis of fundamental and technical factors and
may vary from any standard recommendation made by DWR in its
market letters or otherwise; and
(d) DWR has no obligation or responsibility to update any market
recommendations or information it communicates to Customer.
Customer understands that DWR and its officers, directors,
affiliates, stockholders, representatives or associated persons may have
positions in and may intend to buy or sell commodity interests which are the
subject of market recommendations furnished to Customer, and that the market
positions of DWR or any such officer, director, affiliate, stockholder,
representative or associated person may or may not be consistent with the
recommendations furnished to Customer by DWR.
8. LIMITS ON DWR DUTIES; LIABILITY - Customer agrees:
(a) that DWR has no duty to apprise Customer of news or of the
value of any commodity interests or collateral pledged or in
any way to advise Customer with respect to the market;
(b) that the commissions which DWR receives are consideration
solely for the execution, reporting and carrying of
Customer's trades;
(c) that if Customer has authorized any third party or parties
to place orders or effect transactions on behalf of Customer
in any Account, each such party has been selected by
Customer based on its own evaluation and assessment of such
party and that such party is solely the agent of Customer,
and if any such party allocates commodity interests among
its customers, Customer has reviewed each such party's
commodity interest allocation system, has satisfied itself
that such allocation system is fair and will seek recovery
solely from such party to recover any damages sustained by
Customer as the result of any allocation made by such party;
and
(d) to waive any and all claims, rights or causes of action
which Customer has or may have against DWR or its officers,
employees and agents (i) arising in whole or in part,
directly or indirectly, out of any act or omission of any
person, whether or not legally deemed an agent of DWR, who
refers or
- 3 -
introduces Customer to DWR or places orders for
Customer and (ii) for any punitive damages and to limit any
claims arising out of this Agreement or the Account to
Customer's direct out-of-pocket damages.
9. EXTRAORDINARY EVENTS - Customer shall have no claim against DWR for any
loss, damage, liability, cost, charge, expense, penalty, fine or tax caused
directly or indirectly by (a) governmental, court, exchange, regulatory or
self-regulatory organization restrictions, regulations, rules, decisions or
orders, (b) suspension or termination of trading, (c) war or civil or labor
disturbance, (d) delay or inaccuracy in the transmission or reporting of
orders due to a breakdown or failure of computer services, transmission or
communication facilities, (e) the failure or delay by any exchange to
enforce its rules or to pay to DWR any margin due in respect of Customer's
Account, (f) the failure or delay by any bank, trust company, clearing
organization or other person which, pursuant to applicable exchange rules,
is holding Customer funds, securities or other property to pay or deliver
the same to DWR or (g) any other cause or causes beyond DWR's control.
10. INDEMNIFICATION OF DWR - Customer agrees to indemnify, defend and hold
harmless DWR and its officers, employees and agents from and against any
loss, cost, claim, damage (including any consequential cost, loss or
damage), liability or expense (including reasonable attorneys' fees) and
any fine, sanction or penalty made or imposed by any regulatory or
self-regulatory authority or any exchange as the result, directly or
indirectly, of:
(a) Customer's failure or refusal to comply with any provision of
this Agreement or perform any obligation on its part to be
performed pursuant to this Agreement; and
(b) Customer's failure to timely deliver any security, commodity
or other property previously sold by DWR on Customer's behalf.
11 NOTICES; TRANSMITTALS - DWR shall transmit all communications to Customer
at Customer's address, telefax or telephone number set forth in the
accompanying Futures Account Application or to such other address as
Customer may hereafter direct in writing. Customer shall transmit all
communications to DWR (except routine inquiries concerning the Account) to
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Futures Compliance
Officer. All payments and deliveries to DWR shall be made as instructed by
DWR from time to time and shall be deemed received only when actually
received by DWR.
12. CONFIRMATION CONCLUSIVE - Confirmation of trades and any other notices sent
to Customer shall be conclusive and binding on Customer unless Customer or
Customer's agent notifies DWR to the contrary (a) in the case of an oral
report, orally at the time received by Customer or its agent or (b) in the
case of a written report or notice, in writing prior to opening of trading
on the business day next following receipt
- 4 -
of the report. In addition, if Customer has not received a written
confirmation that a commodity interest transaction has been executed within
three business days after Customer has placed an order with DWR to effect
such transaction, and has been informed or believes that such order has
been or should have been executed, then Customer immediately shall notify
DWR thereof. Absent such notice, Customer conclusively shall be deemed
estopped to object and to have waived any such objection to the failure to
execute or cause to be executed such transaction. Anything in this Section
12 withstanding, neither Customer nor DWR shall be bound by any transaction
or price reported in error.
13. SECURITY INTEREST - All money and property ("collateral") now or at any
future time held in Customer's Account, or otherwise held by DWR for
Customer, is subject to a security interest in DWR's favor to secure any
indebtedness at any time owing to it by Customer. DWR, in its discretion,
may liquidate any collateral to satisfy any margin or Account deficiencies
or to transfer the collateral to the general ledger account of DWR.
14. TRANSFER OF FUNDS - At any time and from time to time and without prior
notice to Customer, DWR may transfer from one account to another account in
which Customer has any interest, such excess funds, equities, securities or
other property as in DWR's judgment may be required for margin, or to
reduce any debit balance or to reduce or satisfy any deficits in such other
accounts except that no such transfer may be made from a segregated account
subject to the Commodity Exchange Act to another account maintained by
Customer unless either Customer has authorized such transfer in writing or
DWR is effecting such transfer to enforce DWR's security interest pursuant
to Section 13. DWR promptly shall confirm all transfers of funds made
pursuant hereto to Customer in writing.
15. DWR'S RIGHT TO LIQUIDATE CUSTOMER POSITIONS - In addition to all other
rights of DWR set forth in this Agreement:
(a) when directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over DWR or the Account;
(b) whenever, in its discretion, DWR considers it necessary for its
protection because of margin requirements or otherwise;
(c) if Customer or any affiliate of Customer repudiates, violates,
breaches or fails to perform on a timely basis any term, covenant
or condition on its part to be performed under this Agreement or
another agreement with DWR;
(d) if a case in bankruptcy is commenced or if a proceeding under any
insolvency or other law for the protection of creditors or for
the appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer is filed by or against Customer or
any affiliate of Customer, or if Customer or any affiliate of
Customer makes or proposes to make any arrangement or composition
for the
- 5 -
benefit of its creditors, or if Customer (or any such
affiliate) or any or all of its property is subject to any
agreement, order, judgment or decree providing for Customer's
dissolution, winding-up, liquidation, merger, consolidation,
reorganization or for the appointment of a receiver, liquidator,
trustee, conservator, custodian or similar officer of Customer,
such affiliate or such property;
(e) DWR is informed of Customer's death or mental incapacity; or
(f) if an attachment or similar order is levied against the Account
or any other account maintained by Customer or any affiliate of
Customer with DWR;
DWR shall have the right to (i) satisfy any obligations due DWR out of
any Customer's property in DWR's custody or control, (ii) liquidate any
or all of Customer's commodity interest positions, (iii) cancel any or
all of Customer's outstanding orders, (iv) treat any or all of
Customer's obligations due DWR as immediately due and payable, (v) sell
any or all of Customer's property in DWR's custody or control in such
manner as DWR determines to be commercially reasonable, and/or (vi)
terminate any or all of DWR's obligations for future performance to
Customer, all without any notice to or demand on Customer. Any sale
hereunder may be made in any commercially reasonable manner. Customer
agrees that a prior demand, call or notice shall not be considered a
waiver of DWR's right to act without demand or notice as herein
provided, that Customer shall at all times be liable for the payment of
any debit balance owing in each account upon demand whether occurring
upon a liquidation as provided under this Section 15 or otherwise under
this Agreement, and that in all cases Customer shall be liable for any
deficiency remaining in each Account in the event of liquidation
thereof in whole or in part together with interest thereon and all
costs relating to liquidation and collection (including reasonable
attorneys' fees).
16. CUSTOMER REPRESENTATIONS, WARRANTIES AND AGREEMENTS - Customer represents
and warrants to and agrees with DWR that:
(a) Customer has full power and authority to enter into this Agreement and
to engage in the transactions and perform its obligations hereunder
and contemplated hereby and (i) if a corporation or a limited
liability company, is duly organized under the laws of the
jurisdiction set forth in the accompanying Futures Account
Application, or (ii) if a partnership, is duly organized pursuant to a
written partnership agreement and the general partner executing this
Agreement is duly authorized to do so under the partnership agreement;
(b) Neither Customer nor any partner, director, officer, member, manager
or employee of Customer nor any affiliate of Customer is a partner,
director, officer, member, manager or employee of a futures commission
merchant introducing broker, exchange or self-regulatory organization
or an employee or
- 6 -
commissioner of the Commodity Futures Trading Commission (the
"CFTC"), except as previously disclosed in writing to DWR;
(c) The accompanying Futures Account Application and Personal Financial
Statements, if applicable, (including any financial statements
furnished in connection therewith) are true, correct and complete.
Except as disclosed on the accompanying Futures Account Application or
otherwise provided in writing, (i) Customer is not a commodity pool or
is exempt from registration under the rules of the Commission, and
(ii) Customer is acting solely as principal and no one other than
Customer has any interest in any Account of Customer. Customer hereby
authorizes DWR to contact such banks, financial institutions and
credit agencies as DWR shall deem appropriate for verification of the
information contained herein.
(d) Customer has determined that trading in commodity interests is
appropriate for Customer, is prudent in all respects and does not and
will not violate Customer's charter or by-laws (or other comparable
governing document) or any law, rule, regulation, judgment, decree,
order or agreement to which Customer or its property is subject or
bound;
(e) As required by CFTC regulations, Customer shall create, retain and
produce upon request of the applicable contract market, the CFTC or
the United States Department of Justice documents (such as contracts,
confirmations, telex printouts, invoices and documents of title) with
respect to cash transactions underlying exchanges of futures for cash
commodities or exchange of futures in connection with cash commodity
transactions;
(f) Customer consents to the electronic recording, at DWR's discretion, of
any or all telephone conversations with DWR (without automatic tone
warning device), the use of same as evidence by either party in any
action or proceeding arising out of the Agreement and in DWR's
erasure, at its discretion, of any recording as part of its regular
procedure for handling of recordings;
(g) Absent a separate written agreement between Customer and DWR with
respect to give-ups, DWR, in its discretion, may, but shall have no
obligation to, accept from other brokers commodity interest
transactions executed by such brokers on an exchange for Customer and
proposed to be "given-up" to DWR for clearance and/or carrying in the
Account;
(h) DWR, for and on behalf of Customer, is authorized and empowered to
place orders for commodity interest transactions through one or more
electronic or automated trading systems maintained or operated by or
under the auspices of an exchange, that DWR shall not be liable or
obligated to Customer for any loss, damage, liability, cost or expense
(including but not limited to loss of profits, loss of use, incidental
or consequential damages) incurred or sustained by Customer and
arising in whole or in part, directly or indirectly, from any
- 7 -
fault, delay, omission, inaccuracy or termination of a system or DWR's
inability to enter, cancel or modify an order on behalf of Customer on
or through a system. The provisions of this Section 16(h) shall apply
regardless of whether any customer claim arises in contract,
negligence, tort, strict liability, breach of fiduciary obligations or
otherwise; and
(i) If Customer is subject to the Financial Institution Reform, Recovery
and Enforcement Act of 1989, the certified resolutions set forth
following this Agreement have been caused to be reflected in the
minutes of Customer's Board of Directors (or other comparable
governing body) and this Agreement is and shall be, continuously from
the date hereof, an official record of Customer.
Customer agrees to promptly notify DWR in writing if any of the
warranties and representations contained in this Section 16 becomes
inaccurate or in any way ceases to be true, complete and correct.
17. SUCCESSORS AND ASSIGNS - This Agreement shall inure to the benefit of DWR,
its successors and assigns, and shall be binding upon Customer and
Customer's executors, trustees, administrators, successors and assigns,
provided, however, that this Agreement is not assignable by Customer
without the prior written consent of DWR.
18. MODIFICATION OF AGREEMENT BY DWR; NON-WAIVER PROVISION - This Agreement may
only be altered, modified or amended by mutual written consent of the
parties, except that if DWR notifies Customer of a change in this Agreement
and Customer thereafter effects a commodity interest transaction in an
account, Customer agrees that such action by Customer will constitute
consent by Customer to such change. No employee of DWR other than DWR's
General Counsel or his or her designee, has any authority to alter, modify,
amend or waive in any respect any of the terms of this Agreement. The
rights and remedies conferred upon DWR shall be cumulative, and its
forbearance to take any remedial action available to it under this
Agreement shall not waive its right at any time or from time to time
thereafter to take such action.
19. SEVERABILITY - If any term or provision hereof or the application thereof
to any persons or circumstances shall to any extent be contrary to any
exchange, government or self-regulatory regulation or contrary to any
federal, state or local law or otherwise be invalid or unenforceable, the
remainder of this Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is contrary,
invalid or unenforceable, shall not be affected thereby.
20. CAPTIONS - All captions used herein are for convenience only, are not a
part of this Agreement, and are not to be used in construing or
interpreting any aspect of this Agreement.
-8-
21. TERMINATION - This Agreement shall continue in force until written notice
of termination is given by Customer or DWR. Termination shall not relieve
either party of any liability or obligation incurred prior to such notice.
Upon giving or receiving notice of termination, Customer will promptly take
all action necessary to transfer all open positions in each account to
another futures commission merchant.
22. ENTIRE AGREEMENT - This Agreement constitutes the entire agreement between
Customer and DWR with respect to the subject matter hereof and supersedes
any prior agreements between the parties with respect to such subject
matter.
23. GOVERNING LAW; CONSENT TO JURISDICTION -
(a) In case of a dispute between Customer and DWR arising out of or
relating to the making or performance of this Agreement or any
transaction pursuant to this Agreement (i) this Agreement and its
enforcement shall be governed by the laws of the State of New York
without regard to principles of conflicts of laws, and (ii) Customer
will bring any legal proceeding against DWR in, and Customer hereby
consents in any legal proceeding by DWR to the jurisdiction of, any
state or federal court located within the State and City of New York
in connection with all legal proceedings arising directly, indirectly
or otherwise in connection with, out of, related to or from Customer's
Account, transactions contemplated by this Agreement or the breach
thereof. Customer hereby waives all objections Customer, at any time,
may have as to the propriety of the court in which any such legal
proceedings may be commenced. Customer also agrees that any service of
process mailed to Customer at any address specified to DWR shall be
deemed a proper service of process on the undersigned.
(b) Notwithstanding the provisions of Section 23 (a)(ii), Customer may
elect at this time to have all disputes described in this Section
resolved by arbitration. To make such election, Customer must sign the
Arbitration Agreement set forth in Section 24. Notwithstanding such
election, any question relating to whether Customer or DWR has
commenced an arbitration proceeding in a timely manner, whether a
dispute is within the scope of the Arbitration Agreement or whether a
party (other than Customer or DWR) has consented to arbitration and
all proceedings to compel arbitration shall be determined by a court
as specified in Section 23 (a)(ii).
24. ARBITRATION AGREEMENT (OPTIONAL) - Every dispute between Customer and DWR
arising out of or relating to the making or performance of this Agreement
or any transaction pursuant to this Agreement, shall be settled by
arbitration in accordance with the rules, then in effect, of the National
Futures Association, the contract market upon which the transaction giving
rise to the claim was executed, or the National Association of Securities
Dealers as Customer may elect. If Customer does not make such election by
registered mail addressed to DWR at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇; Attention: Deputy General Counsel, within 45 days after
- 9 -
demand by DWR that the Customer make such election, then DWR may make such
election. DWR agrees to pay any incremental fees which may be assessed by a
qualified forum for making available a "mixed panel" of arbitrators, unless
the arbitrators determine that Customer has acted in bad faith in
initiating or conducting the proceedings. Judgment upon any award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.
IN ADDITION TO FOREIGN FORUMS, THREE FORUMS EXIST FOR THE RESOLUTION OF
COMMODITY DISPUTES: CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY
FUTURES TRADING COMMISSION ("CFTC") AND ARBITRATION CONDUCTED BY A
SELF-REGULATORY OR OTHER PRIVATE ORGANIZATION.
THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY ARBITRATION
MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS, INCLUDING THE ABILITY
TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF DISPUTES WITHOUT INCURRING
SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH CUSTOMER
INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF ARBITRATION AND THAT YOUR
CONSENT TO THIS ARBITRATION AGREEMENT BE VOLUNTARY.
BY SIGNING THIS AGREEMENT, YOU (1) MAY BE WAIVING YOUR RIGHT TO ▇▇▇ IN A
COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY CLAIMS
OR COUNTERCLAIMS WHICH YOU OR DWR MAY SUBMIT TO ARBITRATION UNDER THIS
AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO
PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER SECTION 14 OF
THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE WHICH MAY BE
ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU
WILL BE NOTIFIED IF DWR INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF
YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF
YOU PREFER TO REQUEST A SECTION 14 "REPARATIONS" PROCEEDINGS BEFORE THE
CFTC, YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE
THAT ELECTION.
YOU NEED NOT AGREE TO THIS ARBITRATION AGREEMENT TO OPEN AN ACCOUNT WITH
DWR. See 17 CFR 180.1-180.5. ACCEPTANCE OF THIS ARBITRATION AGREEMENT
REQUIRES A SEPARATE SIGNATURE ON PAGE 8.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL) - Without its prior
notice, Customer agrees that when DWR executes sell or buy orders on
- 10 -
Customer's behalf, DWR, its directors, officers, employees, agents,
affiliates, and any floor broker may take the other side of Customer's
transaction through any account of such person subject to its being
executed at prevailing prices in accordance with and subject to the
limitations and conditions, if any, contained in applicable rules and
regulations.
26. AUTHORIZATION TO TRANSFER FUNDS (OPTIONAL) - Without limiting other
provisions herein, DWR is authorized to transfer from any segregated
account subject to the Commodity Exchange Act carried by DWR for the
Customer to any other account carried by DWR for the Customer such amount
of excess funds as in DWR's judgment may be necessary at any time to avoid
a margin call or to reduce a debit balance in said account. It is
understood that DWR will confirm in writing each such transfer of funds
made pursuant to this authorization within a reasonable time after such
transfer.
27. SUBORDINATION AGREEMENT (Applies only to Accounts with funds held in
foreign countries) - Funds of customers trading on United States contract
markets may be held in accounts denominated in a foreign currency with
depositories located outside the United States or its territories if the
customer is domiciled in a foreign country or if the funds are held in
connection with contracts priced and settled in a foreign currency. Such
accounts are subject to the risk that events could occur which hinder or
prevent the availability of these funds for distribution to customers. Such
accounts also may be subject to foreign currency exchange rate risks.
If authorized below, Customer authorizes the deposit of funds into such
foreign depositories. For customers domiciled in the United States, this
authorization permits the holding of funds in regulated accounts offshore
only if such funds are used to margin, guarantee, or secure positions in
such contracts or accrue as a result of such positions. In order to avoid
the possible dilution of other customer funds, a customer who has funds
held outside the United States agrees by accepting this subordination
agreement that his claims based on such funds will be subordinated as
described below in the unlikely event both of the following conditions are
met: (1) DWR is placed in receivership or bankruptcy, and (2) there are
insufficient funds available for distribution denominated in the foreign
currency as to which the customer has a claim to satisfy all claims against
those funds.
By initialing the Subordination Agreement below, Customer agrees that if
both of the conditions listed above occur, its claim against DWR's assets
attributable to funds held overseas in a particular foreign currency may be
satisfied out of segregated customer funds held in accounts denominated in
dollars or other foreign currencies only after each customer whose funds
are held in dollars or in such other foreign currencies receives its
pro-rata portion of such funds. It is further agreed that in no event may a
customer whose funds are held overseas receive more than its pro-rata share
of the aggregate pool consisting of funds held in dollars, funds held in
the particular foreign currency, and non-segregated assets of DWR.
- 11 -
OPTIONAL ELECTIONS
The following provisions, which are set forth in this agreement, need not be
entered into to open the Account. Customer agrees that its optional elections
are as follows:
Signature required for each election
ARBITRATION AGREEMENT:
(Agreement Paragraph 24)
----------------------------------------
CONSENT TO TAKE THE OTHER SIDE OF ORDERS:
(Agreement Paragraph 25)
----------------------------------------
AUTHORIZATION TO TRANSFER FUNDS:
(Agreement Paragraph 26)
----------------------------------------
ACKNOWLEDGEMENT TO SUBORDINATION AGREEMENT
(Agreement Paragraph 27)
----------------------------------------
(Required for accounts holding non-U.S. currency)
--------------------------------------------------------------------------------
HEDGE ELECTION
Customer confirms that all transactions in the Account will represent / /
bona fide hedging transactions, as defined by the Commodity Futures
Trading Commission, unless DWR is notified otherwise not later than the
time an order is placed for the Account [check box if applicable]:
Pursuant to CFTC Regulation 190.06(d), Customer specifies and agrees, with
respect to hedging transactions in the Account, that in the unlikely event of
DWR's bankruptcy, it prefers that the bankruptcy trustee [check appropriate
box]:
A. Liquidate all open contracts without first seeking instructions / /
either from or on behalf of Customer.
B. Attempt to obtain instructions with respect to the disposition of / /
all open contracts. (If neither box is checked, Customer shall be
deemed to elect A)
--------------------------------------------------------------------------------
ACKNOWLEDGEMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned each hereby acknowledges its separate receipt from DWR, and its
understanding of each of the following documents prior to the opening of the
account:
* Risk Disclosure Statement for Futures and Options (in the * Project ATM Customer Information Statement
form prescribed by CFTC Regulation 1.55(c))
* LME Risk Warning Notice * Questions & Answers on Flexible Options Trading at the CBOT
▇▇▇▇ ▇▇▇▇▇▇ Order Presumption for After Hours Electronic * CME Average Pricing System Disclosure Statement
Markets
* NYMEX ACCESSSM Risk Disclosure Statement * Special Notice to Foreign Brokers and Foreign Traders
Globex(R) Customer Information and Risk Disclosure Statement
-------------------------------------------------------------------------------
REQUIRED SIGNATURES
The undersigned has received, read, understands and agrees to all the provisions
of this Agreement and the separate risk disclosure statements enumerated above
and agrees to promptly notify DWR in writing if any of the warranties and
representations contained herein become inaccurate or in any way cease to be
true, complete and correct.
--------------------------------------------------------------------------------
CUSTOMER NAME(S)
------------------------------------------ -----------------------------------
AUTHORIZED SIGNATURE(S) DATE
--------------------------------------------------------------------------------
(If applicable, print name and title of signatory)
EXHIBIT 10.01(a)
FORM OF
CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement"), made as of the 1st
day of December, 1997, by and among ▇▇▇▇ ▇▇▇▇▇▇ CORNERSTONE FUND ________, a New
York limited partnership (the "Customer"), ▇▇▇▇ FUTURES INC., a Delaware
corporation ("CFI"), and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC., a Delaware corporation
("DWR");
W I T N E S S E T H :
WHEREAS, the Customer was organized pursuant to a Certificate
of Limited Partnership filed in the office of the County Clerk of New York
County, New York on ______________, and a Limited Partnership Agreement dated as
of _______________ between Demeter Management Corporation, a Delaware
corporation ("Demeter"), acting as general partner (in such capacity, the
"General Partner"), and the limited partners of the Customer, to trade, buy,
sell, or otherwise acquire, hold, or dispose of commodities (including, but not
limited to, foreign currencies, mortgage-backed securities, money market
instruments, and any other securities or items which are, or may become, the
subject of futures contract trading), commodity futures contracts, commodity
forward contracts, commodity options, and any rights pertaining thereto
(hereinafter referred to collectively as "commodity interests");
WHEREAS, the Customer (which is a commodity pool) and the
General Partner (which is a registered commodity pool operator) have entered
into management agreements (the "Management Agreements") with certain trading
managers (each, a "Trading Manager" and collectively, the "Trading Managers"),
which provide that the Trading Managers have authority and responsibility,
except in certain limited situations, to direct the investment and reinvestment
of the assets of the Customer in commodity interests under the terms set forth
in the Management Agreements;
WHEREAS, the Customer and DWR have entered into that certain
Amended and Restated Customer Agreement, dated as of December 1, 1997 (the "DWR
Customer Agreement"), whereby DWR agreed to perform certain non-clearing
commodity interests brokerage and other services for the Customer; and
WHEREAS, the Customer, DWR and CFI wish to enter into this
Agreement to set forth the terms and conditions upon which CFI will perform
commodity interests execution and clearing services for the Customer;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not defined herein shall
have the meaning given to them in the Customer's most recent prospectus as filed
with the Securities and Exchange Commission (the "Prospectus") relating to the
offering of units of limited partnership interest of the Customer (the "Units")
and in any amendment or supplement to the Prospectus.
2. Duties of CFI. CFI agrees to execute and clear all
commodity interests brokerage transactions on behalf of the Customer in
accordance with instructions provided by DWR, Demeter or the Trading Managers,
and the Customer agrees to retain CFI as its clearing broker for the term of
this Agreement. CFI agrees to maintain such number of subaccounts for the
Customer as DWR reasonably shall request. The execution and clearing services of
CFI provided hereunder shall be in accordance with applicable exchange rules.
CFI agrees to furnish to the Customer as soon as practicable
all of the information from time to time in its possession which Demeter, as the
general partner of the Customer, is required to furnish to the Limited Partners
pursuant to the Limited Partnership Agreement as from time to time in effect and
as required by applicable law, rules, or regulations and to perform such other
services for the Customer as are set forth herein and in the Prospectus. CFI
shall disclose such information (including, without limitation, financial
statements) regarding itself and its affiliates as may be required by the
Customer for SEC, CFTC and state blue sky disclosure purposes.
CFI agrees to notify the applicable Trading Manager and DWR
immediately upon discovery of any error committed by CFI or any of its agents
with respect to a trade executed or cleared by CFI on behalf of the Customer and
to notify DWR promptly of any order or trade for the Customer's account which
CFI believes was not executed or cleared in accordance with proper instructions
given by DWR, Demeter or any Trading Manager or other agent for the Customer's
account. Notwithstanding any provision of this Agreement to the contrary, CFI
shall assume financial responsibility for any errors committed or caused by it
in executing or clearing orders for the purchase or sale of commodity interests
for the Customer's account and shall credit the Customer's account with any
profit resulting from an error of CFI. Errors made by floor brokers appointed or
selected by CFI shall constitute errors made by CFI. However, CFI shall not be
responsible for errors committed by the Trading Managers.
CFI acknowledges that other partnerships of which the General
Partner is the general partner are not affiliates of the Customer.
3. Margins. The futures and futures option trades for the
Customer's account shall be margined at the applicable exchange or clearinghouse
minimum rates for speculative accounts; all subaccounts shall be combined for
determining such margin requirements. All margin calls for the Customer's
account shall be made to DWR by CFI, and each such call for margin shall be met
by Customer within three hours after DWR has received such call. CFI shall
accept as margin for the Customer's account any instrument deemed acceptable
under exchange or clearinghouse rules pertaining to such account. Upon oral or
written request by DWR, CFI shall, within three hours after receipt of any such
request, wire transfer (by federal bank wire system) to DWR for Customer's
account any funds in the Customer's account with CFI in excess of the margin
requirements for such account.
4. Obligations and Expenses. Except as otherwise set forth
herein, the Customer, and not CFI, shall be responsible for all taxes,
management and incentive fees to the Trading Managers, the brokerage fees to DWR
pursuant to the DWR Customer Agreement, and all extraordinary expenses incurred
by it.
5. Agreement Nonexclusive. CFI shall be free to render
services of the nature to be rendered to the Customer hereunder to other persons
or entities in addition to the Customer, and the parties acknowledge that CFI
may render such services to additional entities similar in nature to the
Customer, including other partnerships organized with Demeter as their general
partner. It is expressly understood and agreed that this Agreement is
nonexclusive and that the Customer has no obligation to execute any or all of
its trades for commodity interests through CFI. The parties acknowledge that the
Customer may execute and clear trades for
- 2 -
commodity interests through such other broker or brokers as Demeter may
direct from time to time. The Customer's utilization of an additional commodity
broker shall neither terminate this Agreement nor modify in any regard the
respective rights and obligations of the Customer and CFI hereunder.
6. Compensation of CFI. In compensation of CFI's services
pursuant to this Agreement, the Customer shall pay CFI (i) all NFA fees,
clearinghouse fees, exchange fees or other regulatory fees, taxes (other than
income taxes), floor brokerage fee, third-party clearing fees and give-up fees;
and (ii) with respect to each futures contract or option on futures contracts
which CFI executes on an exchange located in Chicago, an execution service fee
(over floor brokerage) equal to $1.00 per contract and, if the special services
desk of CFI assists with the execution of an order on an exchange outside of
Chicago, a service fee of $1.00 per contract. DWR shall pay to CFI such charges
with respect to the clearance of trades for the Customer as DWR and CFI shall
agree from time to time. DWR shall have no obligation to reimburse the Customer
for any payments made by the Customer to CFI. The Customer shall have no
obligation to reimburse DWR for any payments made by DWR to CFI.
7. Investment Discretion. The parties recognize that CFI shall
have no authority to direct the commodity interests investments to be made for
the Customer's account, but shall execute only such orders for the Customer's
account as DWR, Demeter or the Trading Managers may direct from time to time.
However, the parties agree that CFI, and not the Trading Managers, shall have
the authority and responsibility with regard to the investment, maintenance, and
management of the Customer's assets that are held in segregated or secured
accounts, as provided in Section 8 hereof.
8. Standard of Liability and Indemnity. Subject to Section 2
hereof, CFI and its stockholder, directors, officers, employees, and its or
their respective successors or assigns shall not be liable to the Customer, the
General Partner or the Limited Partners, or any of its or their respective
successors or assigns, except by reason of acts, or omissions due to, bad faith,
misconduct, or negligence, or for not having acted in good faith in the
reasonable belief that such acts or omissions were in, or not opposed to, the
best interests of the Customer, or by reason of any material breach of this
Agreement.
The Customer shall indemnify and hold harmless CFI and its
stockholder, directors, officers, employees, and its or their respective
successors or assigns from and against all liabilities (including in connection
with the defense or settlement of claims) incurred in the performance of the
services required by this Agreement, provided that a court of competent
jurisdiction upon entry of final judgment shall find (or, if no final judgment
is entered, an opinion is rendered to the Customer by independent counsel who
shall be other than counsel to the Customer) to the effect that such liability
was not the result of bad faith, misconduct, or negligence, or that the conduct
was done in the good faith belief that it was in, or not opposed to, the best
interests of the Customer.
CFI shall indemnify and hold harmless the Customer, the
General Partner and the Limited Partners, and its or their respective successors
or assigns from and against all liabilities (including in connection with the
defense or settlement of claims) incurred as a result of the activities of CFI
or its stockholder, directors, officers, employees, or its or their respective
successors or assigns pursuant to this Agreement, provided that such liability
arises from conduct of CFI or its stockholder, directors, officers, employees,
or its or their respective successors or assigns which is found by a court of
competent jurisdiction upon entry of final judgment (or, if no final judgment is
entered, by an opinion rendered to the Customer by independent counsel who shall
be other than counsel to the Customer) to be the result of bad faith,
misconduct, or negligence, or conduct not done in the good faith belief that it
was in, or
- 3 -
not opposed to, the best interests of the Customer, or by reason of any material
breach of this Agreement.
The indemnities provided in this Section 8 by the Customer to
CFI and its stockholder, directors, officers, employees, and its or their
respective successors and assigns shall be inapplicable in the event of any
liability arising out of, or based upon, any material breach of any warranty,
covenant, or agreement of CFI contained in this Agreement to the extent caused
by such event. Likewise, the indemnities provided in this Section 8 by CFI to
the Customer, the General Partner and the Limited Partners, and any of its or
their respective successors and assigns shall be inapplicable in the event of
any liability arising out of, or based upon, any material breach of any
warranty, covenant, or agreement of the Customer contained in this Agreement to
the extent caused by such event.
9. Recording Conversations. CFI consents to the electronic
recording, at the discretion of the Customer, Customer's agents or DWR, of any
or all telephone conversations with CFI (without automatic tone warning device),
the use of same as evidence by either party in any action or proceeding arising
out of this Agreement, and in the Customer's, Customer's agents' or DWR's
erasure, at its discretion, of any recording as a part of its regular procedure
for handling of recordings.
10. Delivery; Option Exercise.
(a) The Customer acknowledges that the making or accepting of
delivery pursuant to a futures contract may involve a much higher degree of risk
than liquidating a position by offset. CFI has no control over and makes no
warranty with respect to grade, quality or tolerances of any commodity delivered
in fulfillment of a contract.
(b) The Customer agrees to give CFI timely notice and
immediately on request to inform CFI if the Customer intends to make or take
delivery under a futures contract or to exercise an option contract. If so
requested, the Customer shall provide CFI with satisfactory assurances that the
Customer can fulfill the Customer's obligation to make or take delivery under
any contract. The Customer shall furnish CFI with property deliverable by it
under any contract in accordance with CFI's instructions.
(c) CFI shall not have any obligation to exercise any long
option contract unless the Customer has furnished CFI with timely exercise
instructions and sufficient initial margin with respect to each underlying
futures contract.
11. Standard of Liability and Indemnity. Subject to Section 2
hereof, CFI and its affiliates (as defined below) shall not be liable to the
Customer, the General Partner or Limited Partners, or any of its or their
respective successors or assigns, for any act, omission, conduct, or activity
undertaken by or on behalf of the Customer pursuant to this Agreement which CFI
determines, in good faith, to be in the best interests of the Customer, unless
such act, omission, conduct, or activity by CFI or its affiliates constituted
misconduct or negligence.
The Customer shall indemnify, defend and hold harmless CFI and
its affiliates from and against any loss, liability, damage, cost or expense
(including attorneys' and accountants' fees and expenses incurred in the defense
of any demands, claims, or lawsuits) actually and reasonably incurred arising
from any act, omission, conduct, or activity undertaken by CFI on behalf of the
Customer pursuant to this Agreement, including, without limitation, any demands,
claims or lawsuits initiated by a Limited Partner (or assignee thereof),
provided that (i) CFI has determined, in good faith, that the act, omission,
conduct, or activity giving rise to the claim for indemnification was in the
best interests of the Customer, and (ii) the act, omission, conduct, or activity
that was the basis for such loss,
- 4 -
liability, damage, cost, or expense was not the result of misconduct or
negligence. Notwithstanding anything to the contrary contained in the foregoing,
neither CFI nor any of its affiliates shall be indemnified by the Customer for
any losses, liabilities, or expenses arising from or out of an alleged violation
of federal or state securities laws unless (a) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee, or (b) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee, or (c) a court of competent jurisdiction approves
a settlement of the claims against the particular indemnitee and finds that
indemnification of the settlement and related costs should be made, provided,
with regard to such court approval, the indemnitee must apprise the court of the
position of the SEC, and the positions of the respective securities
administrators of Massachusetts, Missouri, Tennessee and/or those other states
and jurisdictions in which the plaintiffs claim they were offered or sold Units,
with respect to indemnification for securities laws violations before seeking
court approval for indemnification. Furthermore, in any action or proceeding
brought by a Limited Partner in the right of the Customer to which CFI or any
affiliate thereof is a party defendant, any such person shall be indemnified
only to the extent and subject to the conditions specified in this Section 11.
The Customer shall make advances to CFI or its affiliates hereunder only if: (i)
the demand, claim, lawsuit, or legal action relates to the performance of duties
or services by such persons to the Customer; (ii) such demand, claim, lawsuit,
or legal action is not initiated by a Limited Partner; and (iii) such advances
are repaid, with interest at the legal rate under Delaware law, if the person
receiving such advance is ultimately found not to be entitled to indemnification
hereunder.
CFI shall indemnify, defend and hold harmless the Customer and
its successors or assigns from and against any losses, liabilities, damages,
costs or expenses (including in connection with the defense or settlement of
claims; provided CFI has approved such settlement) incurred as a result of the
activities of CFI or its affiliates, provided, further, that the act, omission,
conduct, or activity giving rise to the claim for indemnification was the result
of bad faith, misconduct or negligence.
The indemnities provided in this Section 11 by the Customer to
CFI and its affiliates shall be inapplicable in the event of any losses,
liabilities, damages, costs, or expenses arising out of, or based upon, any
material breach of any warranty, covenant, or agreement of CFI contained in this
Agreement to the extent caused by such breach. Likewise, the indemnities
provided in this Section 11 by CFI to the Customer and any of its successors and
assigns shall be inapplicable in the event of any losses, liabilities, damages,
costs, or expenses arising out of, or based upon, any material breach of any
warranty, covenant, or agreement of the Customer contained in this Agreement to
the extent caused by such breach.
As used in this Section 11, the term "affiliate" of CFI shall
mean: (i) any natural person, partnership, corporation, association, or other
legal entity directly or indirectly owning, controlling, or holding with power
to vote 10% or more of the outstanding voting securities of CFI; (ii) any
partnership, corporation, association, or other legal entity 10% or more of
whose outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote by CFI; (iii) any natural person,
partnership, corporation, association, or other legal entity directly or
indirectly controlling, controlled by, or under common control with, CFI; or
(iv) any officer or director of CFI. Notwithstanding the foregoing, "affiliates"
for purposes of this Section 11 shall include only those persons acting on
behalf of CFI within the scope of the authority of CFI, as set forth in this
Agreement.
12. Term. This Agreement shall continue in effect until
terminated by any party giving not less than sixty (60) days' prior written
notice of termination to the other parties. The Customer shall have the right to
terminate this Agreement
- 5 -
(i) at any time, effective upon thirty (30) days' prior written notice to
CFI, in the event that:
(A) CFI announces plans to discontinue the provision of execution and
clearing services with respect to futures contracts, options on
futures contracts or acting as a dealer counterparty for foreign
exchange cash and forward contracts; or
(B) CFI merges or consolidates with or into or acquires or is
acquired by, another entity or entities acting in concert
(excluding any intergroup reorganizations with any affiliates of
CFI or any capital contributions by, or sale of CFI stock to any
affiliates of CFI, provided that the guarantee agreement between
DWR and Credit Agricole Indosuez S.A. dated as of July 31, 1997
remains in place or a comparable guaranty is substituted by a
bank with a net worth and credit rating equal to Credit Agricole
Indosuez S.A.) in a transaction involving the purchase or sale of
stock or substantially all of the assets of the acquired entity
or which involves a capital contribution to or by such entity or
entities (in an amount representing fifty percent (50%) or more
of the book value of CFI's or such entity's (or their respective
affiliate's) net worth), or the purchase or sale of stock
representing fifty percent (50%) or more of CFI's or such
entity's (or their respective affiliate's) outstanding equity
securities; and
(ii) at any time effective immediately upon written notice to CFI in the
event:
(A) CFI ceases to be registered or conduct business as a futures
commission merchant or discontinues its membership or clearing
membership on any major futures interest exchange in the United
States (or any affiliated clearing corporation) or in the NFA; or
(B) a receiver, liquidator or trustee of CFI is appointed by court
order and such order remains in effect for more than thirty (30)
days; or CFI is adjudicated bankrupt or insolvent; or any of
CFI's property is sequestered by court order and such order
remains in effect for more than thirty (30) days; or a petition
is filed against CFI under any bankruptcy, reorganization,
arrangement, insolvency, readjustment or debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, and is not dismissed within thirty (30) days after such
filing; or CFI files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now
or hereafter in effect, or consents to the filing of any petition
against it under any such law; or
- 6 -
(C) CFI, DWR or the Customer is ordered or otherwise directed to
terminate this Agreement by any governmental, regulatory, or
self-regulatory authority.
Any such termination by any party shall be without penalty.
13. Complete Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the matters referred to herein, and
no other agreement, verbal or otherwise, shall be binding as among the parties
unless in writing and signed by the party against whom enforcement is sought.
14. Assignment. This Agreement may not be assigned by any
party without the express written consent of the other parties.
15. Amendment. This Agreement may not be amended except by the
written consent of the parties.
16. Notices. All notices required or desired to be delivered
under this Agreement shall be in writing and shall be effective when delivered
personally on the day delivered, or when given by registered or certified mail,
postage prepaid, return receipt requested, on the day of receipt, addressed as
follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
if to the Customer:
▇▇▇▇ ▇▇▇▇▇▇ CORNERSTONE FUND ____
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
President
if to DWR:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
if to CFI:
▇▇▇▇ FUTURES INC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
-------------------------
17. Survival. The provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
18. Headings. Headings of Sections herein are for the
convenience of the parties only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
- 7 -
19. Incorporation by Reference. The Futures Account Agreement
annexed hereto is hereby incorporated by reference herein and made a part hereof
to the same extent as if such document were set forth in full herein. If any
provision of this Agreement is or at any time becomes inconsistent with the
annexed document, the terms of this Agreement shall control.
20. Governing Law; Venue. This Agreement shall be governed by,
and construed in accordance with, the law of the State of New York (without
regard to its choice of law principles). If any action or proceeding shall be
brought by a party to this Agreement or to enforce any right or remedy under
this Agreement, each party hereto hereby consents and will submit to the
jurisdiction of the courts of the State of New York or any federal court sitting
in the County, City and State of New York. Any action or proceeding brought by
any party to this Agreement to enforce any right, assert any claim, or obtain
any relief whatsoever in connection with this Agreement shall be brought by such
party exclusively in the courts of the State of New York or any federal court
sitting in the County, City and State of New York.
IN WITNESS WHEREOF, this Agreement has been executed for and
on behalf of the undersigned as of the day and year first above written.
▇▇▇▇ ▇▇▇▇▇▇ CORNERSTONE FUND ____
By: Demeter Management Corporation,
General Partner
By:
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
By:
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
▇▇▇▇ FUTURES INC.
By:
--------------------------------
--------------------------------
--------------------------------
▇▇▇▇ FUTURES INC.
FUTURES ACCOUNT AGREEMENT
In consideration of the acceptance by ▇▇▇▇ Futures Inc. ("▇▇▇▇") of one or more
accounts of the undersigned ("Customer") (if more than one account is at any
time opened or reopened with ▇▇▇▇, all are covered by this Agreement and are
referred to individually and collectively as the "Account"), and ▇▇▇▇'▇
agreement to act as broker, directly or indirectly, or as dealer, for the
execution, clearance and/or carrying of transactions for the purchase and sale
of commodity interests, including commodities, forward contracts, commodity
futures contracts, options on commodity futures contracts and transaction
involving the exchange of futures for cash commodities or the exchange of
futures in connection with cash commodity transactions, Customer agrees as
follows:
1. APPLICABLE RULES AND REGULATIONS
The Account and each transaction therein shall be subject to the terms
of this Agreement and to (a) all applicable laws and the regulations,
rules and orders (collectively "regulations") of all regulatory and
self-regulatory organizations having jurisdiction and (b) the
constitution, by-laws, rules, regulations, orders, resolutions,
interpretations and customs and usages (collectively "rules") of the
market and any associated clearing organization (each an "exchange") on
or subject to the rules of which such transaction is executed and/or
cleared. The reference in the preceding sentence to exchange rules is
solely for ▇▇▇▇'▇ protection and ▇▇▇▇'▇ failure to comply therewith
shall not constitute a breach of this Agreement or relieve Customer of
any obligation or responsibility under this Agreement. ▇▇▇▇ shall not
be liable to Customer as a result of any action by ▇▇▇▇, its officers,
directors, employees or agents to comply with any rule or regulation.
2. PAYMENTS TO ▇▇▇▇
Customer agrees to pay to ▇▇▇▇ immediately on request (a) commissions,
give-up charges, fees and service charges as are in effect from time to
time, together with all applicable regulatory and self-regulatory
organization and exchange fees, charges and taxes; (b) the amount of
any debit balance or any other liability that may result from
transactions executed for the Account; and (c) interest on such debit
balance or liability at the prevailing rate charged by ▇▇▇▇ at the time
such debit balance or liability arises and service charges on any such
debit balance or liability together with any reasonable costs and
attorneys' fees incurred in collecting any such debit balance or
liability. Customer acknowledges that ▇▇▇▇ may charge commissions at
other rates to other customers.
3. CUSTOMER'S DUTY TO MAINTAIN ADEQUATE MARGIN
Customer shall at all times, and without prior notice or demand from
▇▇▇▇, maintain adequate margin (also known as "performance bond") in
the Account so as to continually to meet the original and maintenance
margin requirements established by
▇▇▇▇ for Customer. ▇▇▇▇ may change such requirements from time to time
at ▇▇▇▇'▇ discretion. Such margin requirements may exceed the margin
requirements set by any exchange or other regulatory authority and may
vary from ▇▇▇▇'▇ requirements for other customers. Customer agrees,
when so requested, orally or by written notice, immediately (in no
less than one hour) to wire transfer (by federal bank wire system to
the account of ▇▇▇▇) margin funds, and to furnish ▇▇▇▇ with names of
bank officers for immediate verification of such transfers. Customer
acknowledges and agrees that ▇▇▇▇ may receive and retain as its own
any interest, increment, profit, gain or benefit, directly or
indirectly, accruing from any of the funds ▇▇▇▇ receives from
Customer.
4. DELIVERY; OPTION EXERCISE
Liquidating instructions on open positions maturing in a current
delivery month must be given to ▇▇▇▇ at least five business days prior
to the first notice day in the case of long positions, and at least
five business days prior to the last trading day in the case of short
positions. Alternatively, sufficient funds to take delivery or the
necessary delivery documents must be delivered to ▇▇▇▇ within the same
period described above. If funds, documents or instructions are not
received, ▇▇▇▇ may, without notice, either liquidate Customer's
position or make or receive delivery on behalf of Customer upon such
terms and by such methods as ▇▇▇▇, in its sole discretion, determines.
If, at any time, Customer fails to deliver to ▇▇▇▇ any property
previously sold by ▇▇▇▇ on Customer's behalf in compliance with
commodity interest contracts, or ▇▇▇▇ shall ▇▇▇▇ it necessary (whether
by reason of the requirements of any exchange, clearing house or
otherwise) to replace any securities, commodity interest contracts,
financial instruments, or other property previously delivered by ▇▇▇▇
for the Account of Customer with other property of like or equivalent
kind or amount, Customer hereby authorizes ▇▇▇▇, in its sole judgment,
to borrow or to buy any property necessary to make delivery thereof, or
to replace any such property previously delivered, or to deliver the
same to such other party or to whom delivery is to be made. ▇▇▇▇ may
subsequently repay any borrowing or purchase thereof with property
purchased or otherwise acquired for the amount of Customer. Customer
shall pay ▇▇▇▇ for any cost, loss and damages from the foregoing,
including, but not limited to, consequential damages, penalties and
fines which ▇▇▇▇ may incur or which ▇▇▇▇ may sustain from its inability
to borrow or buy any such property.
Customer understands that some exchanges and clearing houses have
established cut-off times for the tender of exercise instructions, and
that an option will become worthless if instructions are not delivered
before such expiration time. Customer also understands that certain
exchanges and clearing houses automatically will exercise some
"in-the-money" options unless instructed otherwise. Customer
acknowledges full responsibility for taking action either to exercise
or to prevent the exercise of an option contract, as the case may be,
and ▇▇▇▇ is not required to take any action with respect to an option
contract, including without limitations any action to exercise an
option prior to its expiration date, or to prevent the automatic
exercise of an option, except upon
Customer's express instructions. Customer further understands that
▇▇▇▇ may establish exercise cut-off times which may be different from
the times established by exchanges and clearing houses.
Customer understands that (a) all short option positions are subject
to assignment at any time, including positions established on the same
day that exercises are assigned, and (b) exercised assignment notices
are allocated randomly from among all ▇▇▇▇ customer's short options
positions which are subject to exercise. A more detailed description of
▇▇▇▇'▇ allocation procedures is available upon request.
5. FOREIGN CURRENCY
If ▇▇▇▇ enters into any transaction for Customer effected in a
currency other than U.S. dollars: (a) any profit or loss caused by
changes in the rate of exchange for such currency shall be for
Customer's Account and risk and (b) unless another currency is
designated in ▇▇▇▇'▇ confirmation of such transaction, all margin for
such transaction and the profit or loss on the liquidation of such
transaction shall be in U.S. dollars at a rate of exchange determined
by ▇▇▇▇ in its discretion on the basis of then prevailing market rates
of exchange for such foreign currency.
6. ▇▇▇▇ MAY LIMIT POSITIONS HELD
Customer agrees that ▇▇▇▇, at its discretion, may limit the number of
open positions (net or gross) which Customer may execute, clear and/or
carry with or acquire through it. Customer agrees (a) not to make any
trade which would have the effect or exceeding such limits, (b) that
▇▇▇▇ may require Customer to reduce open positions carried with ▇▇▇▇
and (c) that ▇▇▇▇ may refuse to accept orders to establish new
positions. ▇▇▇▇ may impose and enforce such limits, reduction or
refusal whether or not they are required by applicable law, regulations
or rules. Customer shall comply with all position limits established by
any regulatory or self-regulatory organization or any exchange. In
addition, Customer agrees to notify ▇▇▇▇ promptly if Customer is
required to file position reports with any regulatory or
self-regulatory organization or with any exchange.
7. NO WARRANTY AS TO INFORMATION OR RECOMMENDATION
Customer acknowledges that:
(a) Any market recommendations and information ▇▇▇▇ may communicate
to Customer, although based upon information obtained from
sources believed by ▇▇▇▇ to be reliable, may be incomplete and
not subject to verification;
(b) ▇▇▇▇ makes no representation, warranty or guarantee as to, and
shall not be responsible for, the accuracy or completeness of any
information or trading recommendation furnished to Customer;
- 3 -
(c) Recommendations to Customer as to any particular transaction at
any given time may differ among ▇▇▇▇'▇ personnel due to diversity
in analysis of fundamental and technical factors and may vary
from any standard recommendation made by ▇▇▇▇ in its research
reports or otherwise; and
(d) ▇▇▇▇ has no obligation or responsibility to update any market
recommendations, research or information it communicates to
Customer.
Customer understands that ▇▇▇▇ and its officers, directors,
affiliates, stockholders, representatives or associated persons may
have positions in and may intend to buy or sell commodity interests
that are the subject of market recommendations furnished to Customer,
and that the market positions of ▇▇▇▇ or any such officer, director,
affiliate, stockholder, representative or associated person may or may
not be consistent with the recommendations furnished to Customer by
▇▇▇▇.
8. LIMITS ON ▇▇▇▇ DUTIES; LIABILITY
Customer agrees:
(a) That ▇▇▇▇ has no duty to apprise Customer of news or of the value
of any commodity interests or collateral pledged or in any way to
advise Customer with respect to the market;
(b) That the commissions which ▇▇▇▇ receives are consideration solely
for the execution, reporting and carrying of Customer's trades;
(c) If there is an Account Manager, an Account Manager's Agreement
for the Account Manager will be provided to ▇▇▇▇. Customer
represents it has received: (1) a disclosure document concerning
such Account Manager's trading advice, including, in the event
the Account Manager will trade options, the options strategies to
be utilized, or (2) a written statement explaining why Account
Manager is not required under applicable law to provide such a
disclosure document to Customer; and
(d) Customer acknowledges, understands and agrees that ▇▇▇▇ is in no
way responsible for any loss to Customer occasioned by the
actions of the Account Manager and ▇▇▇▇ does not by implication
or otherwise endorse the operating methods or trading strategies
or programs of the Account Manager.
9. EXTRAORDINARY EVENTS
Customer agrees that ▇▇▇▇ shall have no liability for damages, claims,
losses or expenses caused by any errors, omissions or delays resulting
from an act, condition or cause beyond the reasonable control of ▇▇▇▇,
including, but not limited to: war; insurrection; riot; strike; act of
God; fire; flood; extraordinary weather conditions; accident; action of
government authority; action of exchange, clearinghouse or clearing
- 4 -
organization; communications or power failure; equipment or software
malfunction; error, omission or delay in the report of transactions;
prices, exchange rates or other market or transaction information; or
the insolvency, bankruptcy, receivership, liquidation or other
financial difficulty of any bank, clearing broker, exchange, market,
clearinghouse or clearing organization.
10. INDEMNIFICATION OF ▇▇▇▇, CONTRIBUTION AND REIMBURSEMENT
(a) To the extent permitted by law, Customer agrees to indemnify and
hold harmless ▇▇▇▇ and its shareholders, directors, officers,
employees, agents, affiliates and controlling persons against any
liability for damages, claims, losses or expenses which they may
incur as the result of: (x) Customer's violation of federal or
state laws or regulations, or of rules of any exchange or
self-regulatory organization; (y) any other breach of this
Agreement by Customer; or (z) any breach by ▇▇▇▇ of federal or
state laws or regulations, or of the charter provisions, by-laws,
rules, margin or other requirements, of the exchanges or
self-regulatory organizations, provided that such violation was
caused by ▇▇▇▇'▇ acting in good faith on Customer's behalf. Such
damages, claims, losses or expenses shall include legal fees and
expenses, costs of settling claims, interest, and fines or
penalties imposed by the exchanges, self-regulatory organization
or governmental authority.
(b) Customer agrees that if the indemnification provided in paragraph
(a) above is held to be unavailable to ▇▇▇▇, the parties hereto
shall share in and contribute to such damages, claims, losses or
expenses in proportion to their relative benefits from the
transactions involved and their relative degree of fault in
causing the liability.
(c) Customer agrees to reimburse ▇▇▇▇ and its shareholders,
directors, officers, employees, agents, affiliates and
controlling persons on demand for any costs incurred in
collecting any sums Customer owes under this Agreement and any
costs of successfully defending against claims asserted against
them by Customer.
11. NOTICES; TRANSMITTALS
▇▇▇▇ shall transmit all communications to Customer at Customer's
address, facsimile or telephone number set forth below or to such other
address as Customer may hereafter direct in writing. Customer shall
transmit all communications to ▇▇▇▇ regarding this Agreement (except
routine inquiries concerning the Account) to ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; facsimile, (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: Legal/Compliance Department. All payments and deliveries to
▇▇▇▇ shall be made as instructed by ▇▇▇▇ from time to time and shall be
deemed received only when actually received by ▇▇▇▇.
- 5 -
12. CONFIRMATION CONCLUSIVE
Confirmation of trades and any other notices sent to Customer shall be
conclusive and binding on Customer unless customer or Customer's agent
notifies ▇▇▇▇ to the contrary (a) in the case of an oral report, orally
at the time received by Customer or its agent; or (b) in the case of a
written report or notice, in writing prior to opening of trading on the
business day next following receipt of the report. In addition, if
Customer has not received a written confirmation that a commodity
interest transaction has been executed within three business days after
Customer has placed an order with ▇▇▇▇ to effect such transaction, and
has been informed or believes that such order has been or should have
been executed, then Customer immediately shall notify ▇▇▇▇ thereof.
Absent such notice, Customer conclusively shall be deemed estopped to
object and to have waived any such objection to the failure to execute
or cause to be executed such transaction. Anything in this Section 12
notwithstanding, neither Customer nor ▇▇▇▇ shall be bound by any
transaction or price reported in error.
13. SECURITY INTEREST
Customer hereby grants to ▇▇▇▇ a first lien upon and a security
interest in any and all cash, securities, whether certificated or
uncertificated, security entitlements, investment property, financial
assets, foreign currencies, commodity interests and other property
(including securities and options) and the proceeds of all of the
foregoing (together the "Collateral") belonging to Customer or in which
Customer may have an interest, now or in the future, and held by ▇▇▇▇
or in ▇▇▇▇'▇ control or carried in any of Customer's Accounts, or in
Customer's accounts carried under other agreements with ▇▇▇▇ or its
affiliates. Such security interest is granted as security for the
performance by Customer of its obligations hereunder and for the
payment of all loans and other liabilities which Customer has or may in
the future have to ▇▇▇▇, whether under this Agreement or any other
agreement between the parties hereto. Customer agrees to execute such
further instruments, documents, filings and agreements as may be
requested at any time by ▇▇▇▇ in order to perfect and maintain
perfected the foregoing lien and security interest. ▇▇▇▇, in its
discretion, may liquidate any Collateral to satisfy any margin or
Account deficiencies or to transfer the Collateral to the general
ledger account of ▇▇▇▇.
In the event that the provisions of Section 13, which relate to
Collateral in any account carried by ▇▇▇▇ for Customer other than an
Account instituted hereunder, conflict with the agreement under which
such other account was instituted, such other agreement between ▇▇▇▇
and Customer shall take precedence over the provisions of this Section
13.
14. TRANSFER OF FUNDS
At any time and from time to time and without prior notice to
Customer, ▇▇▇▇ may transfer from one Account to another Account in
which Customer has any interest, such excess funds, equities,
securities or other property as in ▇▇▇▇'▇ judgment may be
- 6 -
required for margin, or to reduce any debit balance or to reduce or
satisfy any deficits in such other Accounts except that no such
transfer may be made from a segregated Account subject to the
Commodity Exchange Act to another Account maintained by Customer
unless either Customer has authorized such transfer in writing or ▇▇▇▇
is effecting such transfer to enforce ▇▇▇▇'▇ security interest
pursuant to Section 13. ▇▇▇▇ promptly shall confirm all transfers of
funds made pursuant hereto to Customer in writing.
15. ▇▇▇▇'▇ RIGHT TO LIQUIDATE CUSTOMER POSITIONS
In addition to all other rights of ▇▇▇▇ set forth in this Agreement:
(a) When directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over ▇▇▇▇ or the
Account;
(b) Whenever, in its discretion, ▇▇▇▇ considers it necessary for its
protection because of margin requirements or otherwise;
(c) If Customer or any affiliate of Customer repudiates, violates,
breaches or fails to perform on a timely basis any term, covenant
or condition on its part to be performed under this Agreement or
another agreement with ▇▇▇▇;
(d) If a case in bankruptcy is commenced or if a proceeding under any
insolvency or other law for the protection of creditors or for
the appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer is filed by or against Customer or
any affiliate of Customer, or if Customer or any affiliate of
Customer makes or proposes to make any arrangement or composition
for the benefit of its creditors, or if Customer (or any such
affiliate) or any or all of its property is subject to any
agreement, order, judgment or decree providing for Customer's
dissolution, winding-up, liquidation, merger, consolidation,
reorganization or for the appointment of a receiver, liquidator,
trustee, conservator, custodian or similar officer of Customer,
such affiliate or such property;
(e) ▇▇▇▇ is informed of Customer's death or mental incapacity; or
(f) If an attachment or similar order is levied against the Account
or any other account maintained by a Customer or any affiliate of
Customer with ▇▇▇▇;
▇▇▇▇ shall have the right to (i) satisfy any obligations due ▇▇▇▇ out
of any Customer's property (also referred to as "Collateral") in ▇▇▇▇'▇
custody or control, (ii) liquidate any or all of Customer's commodity
interest positions, such liquidation shall include transactions
involving the exchange of futures for cash commodities or the exchange
of futures in connection with cash commodity transactions, (iii) cancel
any or all of Customer's outstanding orders, (iv) treat any or all of
Customer's obligations due ▇▇▇▇ as immediately due and payable, (v)
sell any or all of Customer's property in ▇▇▇▇'▇
- 7 -
custody or control in such manner as ▇▇▇▇ determines to be
commercially reasonable, and/or (vi) terminate any or all of ▇▇▇▇'▇
obligations for future performance to Customer, all without any notice
to or demand on Customer if deemed necessary by ▇▇▇▇. Any sale
hereunder may be made in any commercially reasonable manner. Customer
agrees that a prior demand, call or notice shall not be considered a
waiver of ▇▇▇▇'▇ right to act without demand or notice as herein
provided, that Customer shall at all times be liable for the payment
of any debit balance owing in each Account upon demand whether
occurring upon a liquidation as provided under this Section 15 or
otherwise under this Agreement, and that in all cases Customer shall
be liable for any deficiency remaining in each Account in the event of
liquidation thereof in whole or in part together with interest thereon
and all costs relating to liquidation and collection (including
reasonable attorneys' fees). In the event that the provisions of
Section 15, which relate to Collateral in any account carried by ▇▇▇▇
for Customer other than an Account instituted hereunder, conflict with
the agreement under which such other account was instituted, such
other agreement between ▇▇▇▇ and Customer shall take precedence over
the provisions of this Section 15.
16. CUSTOMER REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Customer represents and warrants to and agrees with ▇▇▇▇ that:
(a) Customer has full power and authority to enter into this
Agreement and to engage in the transactions and perform its
obligations hereunder and contemplated hereby, and:
(1) If Customer is a corporation or partnership, Customer
represents and warrants that (a) it is duly organize
and in good standing under the laws of the
jurisdiction in which it is established and in every
state in which it does business; (b) is empowered to
enter into and perform this Agreement and to
effectuate transactions in commodity interests,
financial instruments and foreign currency as
contemplated hereby; (c) that Customer has determined
that trading in commodity interests is appropriate
for Customer, is prudent in all respects and does not
and will not violate any statute, rule, regulation,
judgment or decree to which Customer is subject or
bound; (d) that Customer has had a least one year's
prior experience in effectuating transactions in
commodity interests, financial instruments, and
foreign currency as contemplated hereby; and (e) no
person or entity has any interest in or control of
the Account to which this Agreement pertains except
as disclosed by Customer to ▇▇▇▇ in writing.
(2) If Customer is a trust, Customer represents and
warrants that (a) it is a duly formed and existing
trust under the laws of the state of its formation or
such other laws as are applicable, including ERISA or
similar state law, and the party or parties
designated as trustee or trustees by
- 8 -
Customer to ▇▇▇▇ in writing submitted herewith constitute
the only or all of the proper trustees thereof; (b) the
trustee or trustees are empowered to enter into and perform
this Agreement and to effectuate transactions in commodity
interests, financial instruments, and foreign currency as
contemplated hereby; (c) the trustee or trustees make the
representations set forth in Section 1 hereof as if the term
trustee(s) were substituted for the term Customer therein;
and (d) no person or entity has any interest in or control
of the Account to which this Agreement pertains except as
disclosed by Customer to ▇▇▇▇ in writing.
(b) Neither Customer nor any partner, director, officer, member,
manager or employee of Customer nor any affiliate of Customer is
a partner, director, officer, member, manager or employee of a
futures commission merchant, introducing broker, bank,
broker-dealer, exchange or self-regulatory organization or an
employee or commissioner of the Commodity Futures Trading
Commission (the "CFTC"), except as previously disclosed in
writing to ▇▇▇▇;
(c) Any financial statements or other information furnished in
connection therewith are true, correct and complete. Except as
disclosed in writing, (i) Customer is not a commodity pool or is
exempt from registration under the rules of the CFTC, and (ii)
Customer is acting solely as principal and no one other than
Customer has any interest in any Account of Customer. Customer
hereby authorizes ▇▇▇▇ to contact such banks, financial
institutions and credit agencies as ▇▇▇▇ shall deem appropriate
for verification of the information contained herein;
(d) Customer has determined that trading in commodity interests is
appropriate for Customer, is prudent in all respects and does not
and will not violate Customer's charter or by-laws (or other
comparable governing document) or any law, rule, regulation,
judgment, decree, order or agreement to which Customer or its
property is subject or bound;
(e) As required by CFTC regulations, Customer shall create, retain
and produce upon request of the applicable contract market, the
CFTC or other regulatory authority documents (such as contracts,
confirmations, telex printouts, invoices an documents of title)
with respect to cash transactions underlying exchanges of futures
for cash commodities or exchange of futures in connection with
cash commodity transactions;
(f) Customer consents to the electronic recording, at ▇▇▇▇'▇
discretion, of any or all telephone conversations with ▇▇▇▇
(without automatic tone warning device); the use of same as
evidence by either party in any action or proceeding arising out
of the Agreement and in ▇▇▇▇'▇ erasure, at its discretion, of any
recording as part of its regular procedure for handling of
recordings;
- 9 -
(g) Absent a separate written agreement between Customer and ▇▇▇▇
with respect to give-ups, ▇▇▇▇, in its discretion, may, but shall
have no obligation to, accept from other brokers commodity
interest transactions executed by such brokers on an exchange for
Customer and proposed to be "given-up" to ▇▇▇▇ for clearance
and/or carrying in the Account;
(h) ▇▇▇▇, for an on behalf of Customer, is authorized and empowered
to place orders for commodity interest transactions through one
or more electronic or automated trading systems maintained or
operated by or under the auspices of an exchange, that ▇▇▇▇ shall
not be liable or obligated to Customer for any loss, damage,
liability, cost or expense (including but not limited to loss of
profits, loss of use, incidental or consequential damages)
incurred or sustained by Customer and arising in whole or in
part, directly or indirectly, from any fault, delay, omission,
inaccuracy or termination of a system or ▇▇▇▇'▇ inability to
enter, cancel or modify an order on behalf of Customer on or
through a system. The provisions of this Section 16(h) shall
apply regardless of whether any customer claim arises in
contract, negligence, tort, strict liability, breach or fiduciary
obligations or otherwise; and
(i) If Customer is subject to the Financial Institution Reform,
Recovery and Enforcement Act of 1989, the certified resolutions
set forth following this Agreement have been caused to be
reflected in the minutes of Customer's Board of Directors (or
other comparable governing body) and this Agreement is and shall
be, continuously from the date hereof, an official record of
Customer.
Customer agrees to promptly notify ▇▇▇▇ in writing if any of the
warranties and representations contained in this Section 16 become
inaccurate or in any way cease to be true, complete and correct.
17. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of the parties hereto, their
successors and assigns, and shall be binding upon the parties hereto,
their successors and assigns, provided, however, that this Agreement is
not assignable by any party without the prior written consent of the
other parties..
18. MODIFICATION OF AGREEMENT BY ▇▇▇▇; NON-WAIVER PROVISION
This Agreement may only be altered modified or amended by mutual
written consent of the parties. The rights and remedies conferred upon
▇▇▇▇ shall be cumulative, and its forbearance to take any remedial
action available to it under this Agreement shall not waive its right
at any time or from time to time thereafter to take such action.
- 10 -
19. SEVERABILITY
If any term or provision hereof or the application thereof to any
persons or circumstances shall to any extent be contrary to any
exchange, government or self-regulatory regulation or contrary to any
federal, state or local law or otherwise be invalid or unenforceable,
the remainder of this Agreement or the application of such term or
provision to persons or circumstances other than those as to which it
is contrary, invalid or unenforceable, shall not be affected thereby.
20. CAPTIONS
All captions used herein are for convenience only, are not a part of
this Agreement, and are not to be used in construing or interpreting
any aspect of this Agreement.
21. TERMINATION
This Agreement shall continue in force until written notice of
termination is given by Customer or ▇▇▇▇. Termination shall not relieve
either party of any liability or obligation incurred prior to such
notice. Upon giving or receiving notice of termination, Customer will
promptly take all action necessary to transfer all open positions in
each Account to another futures commission merchant.
22. ENTIRE AGREEMENT
This Agreement (as amended by the attached Customer Agreement dated
the date hereof into which this Agreement is incorporated by reference)
constitutes the entire agreement between Customer and ▇▇▇▇ with respect
to the subject matter hereof and supersedes any prior agreements
between the parties with respect to such subject matter.
23. GOVERNING LAW; CONSENT TO JURISDICTION
(a) In case of a dispute between Customer and ▇▇▇▇ arising out of or
relating to the making or performance of this Agreement or any
transaction pursuant to this Agreement (i) this Agreement and its
enforcement shall be governed by the laws of the State of
Illinois without regard to principles of conflicts of laws, and
(ii) Customer will bring any legal proceeding against ▇▇▇▇ in,
and Customer hereby consents in any legal proceeding by ▇▇▇▇ to
the jurisdiction of, any state or federal court located within
Chicago, Illinois, in connection with all legal proceedings
arising directly, indirectly or otherwise in connection with, out
of, related to or from Customer's Account, transactions
contemplated by this Agreement or the breach thereof. Customer
hereby waives all objections Customer, at any time, may have as
to the propriety of the court in which any such legal proceedings
may be commenced. Customer also agrees that any service of
process mailed to Customer at any address specified to ▇▇▇▇ shall
be
- 11 -
deemed a proper service of process on the undersigned.
Customer agrees that venue of all proceedings shall be in
Chicago, Illinois.
(b) Notwithstanding the provisions of Section 23(a)(ii), Customer may
elect at this time to have all disputes described in this Section
resolved by arbitration. To make such election, Customer must
sign the Arbitration Agreement set forth in Section 24.
Notwithstanding such election, any question relating to whether
Customer or ▇▇▇▇ has commenced an arbitration proceeding in a
timely manner, whether a dispute is within the scope of the
Arbitration Agreement or whether a party (other than Customer or
▇▇▇▇) has consented to arbitration and all proceedings to compel
arbitration shall be determined by a court as specified in
Section 23(a)(ii).
24. ARBITRATION AGREEMENT (OPTIONAL)
Every dispute between Customer and ▇▇▇▇ arising out of or relating to
the making or performance of this Agreement or any transaction pursuant
to this Agreement, shall be settled by arbitration in accordance with
the rules, then in effect, of the National Futures Association, the
contract market upon which the transacting giving rise to the claim was
executed, or the National Association of Securities Dealers as Customer
may elect. If Customer does not make such election by registered mail
addressed to ▇▇▇▇ at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Legal/Compliance Department, within 45 days
after demand by ▇▇▇▇ that the Customer make such election, then ▇▇▇▇
may make such election. ▇▇▇▇ agrees to pay any incremental fees which
may be assessed by a qualified forum for making available a "mixed
panel" of arbitrators, unless the arbitrators determine that Customer
has acted in bad faith in initiating or conducting the proceedings.
Judgment upon any aware rendered by the arbitrators may be entered in
any court having jurisdiction thereof.
THREE FORUMS EXIST FOR THE RESOLUTION OF COMMODITY DISPUTES: CIVIL
COURT LITIGATION, REPARATIONS AT THE COMMODITY FUTURES TRADING
COMMISSION("CFTC") AND ARBITRATION CONDUCTED BY A SELF-REGULATORY OR
OTHER PRIVATE ORGANIZATION.
THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY
ARBITRATION MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS,
INCLUDING THE ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF
DISPUTES WITHOUT INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES,
HOWEVER, THAT EACH CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF
ARBITRATION AND THAT YOUR CONSENT OT THIS ARBITRATION AGREEMENT BE
VOLUNTARY.
- 12 -
BY SIGNING THIS AGREEMENT, YOU (1) MAY BE WAIVING YOUR RIGHT TO ▇▇▇ IN
A COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY
CLAIMS OR COUNTERCLAIMS WHICH YOU OR ▇▇▇▇ MAY SUBMIT TO ARBITRATION
UNDER THIS AGREEMENT. YOU ARE NOT HOWEVER, WAIVING YOUR RIGHT TO ELECT
INSTEAD TO PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER
SECTION 14 OF THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE
WHICH MAY BE ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A
DISPUTE ARISES, YOU WILL BE NOTIFIED IF ▇▇▇▇ INTENDS TO SUBMIT THE
DISPUTE TO ARBITRATION. IF YOU BELIEVE A VIOLATION OF THE COMMODITY
EXCHANGE ACT IS INVOLVED AND IF YOU PREFER TO REQUEST A SECTION 14
"REPARATIONS" PROCEEDINGS BEFORE THE CFTC, YOU WILL HAVE 45 DAYS FROM
THE DATE OF SUCH NOTICE IN WHICH TO MAKE THAT ELECTION.
YOU NEED NOT AGREE TO THIS ARBITRATION AGREEMENT TO OPEN AN ACCOUNT
WITH ▇▇▇▇.
See 17 CFR 1890.1-180.5.
Acceptance of this arbitration agreement requires a separate signature
on page 12.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL)
Without its prior notice, Customer agrees that when ▇▇▇▇ executes sell
or buy orders on Customer's behalf, ▇▇▇▇, its directors, officers,
employees, agents, affiliates, and any floor broker may take the other
side of customer's transaction through any Account of such person
subject to its being executed a prevailing prices in accordance with
and subject to the limitations and conditions, if any, contained in
applicable rules and regulations.
26. AUTHORIZATION TO TRANSFER FUNDS (OPTIONAL)
Without limiting other provisions herein, ▇▇▇▇ is authorized to
transfer from any segregated Account subject to the Commodity Exchange
Act carried by ▇▇▇▇ for the Customer to any other Account carried by
▇▇▇▇ for the Customer such amount of excess funds as in ▇▇▇▇'▇ judgment
may be necessary at any time to avoid a margin call or to reduce a
debit balance in said Account. It is understood that ▇▇▇▇ will confirm
in writing each such transfer of funds made pursuant to this
authorization within a reasonable time after such transfer.
27. ELECTRONIC TRANSMISSION OF STATEMENTS (OPTIONAL)
Customer elects and consents to receive transmission of statements of
transactions and statements of account solely by electronic means,
including without limitation, by
- 13 -
electronic mail or facsimile. Customer shall not incur any
costs or fees in connection with the receipt of such
statements by electronic transmission. Customer shall
receive such statements by electronic transmission until
such time as it revokes its consent in writing to ▇▇▇▇.
28. SUBORDINATION AGREEMENT
(Applies only to Accounts with funds held in foreign currencies)
Funds of customers trading on United States contract markets may be
held in accounts denominated in a foreign currency with depositories
located outside or inside the United States or its territories if the
customer is domiciled in a foreign country or if the funds are held in
connection with contracts priced and settled in a foreign currency.
Such accounts are subject to the risk that events could occur which
hinder or prevent the availability of these funds for distribution to
customers. Such accounts also may be subject to foreign currency
exchange rate risks.
If authorized below, Customer authorizes the deposit of funds into
such depositories. For customer domiciled in the United States, this
authorization permits the holding of funds in regulated accounts only
if such funds are used to margin, guarantee, or secure positions in
such contracts or accrue as a result of such positions. In order to
avoid the possible dilution of other customer funds, a customer agrees
by accepting this subordination agreement that his claims based on such
funds will be subordinated as described below in the unlikely event
both of the following conditions are met: (1) ▇▇▇▇ is placed in
receivership or bankruptcy, and (2) there are insufficient funds
available for distribution denominated in the foreign currency as to
which the customer has a claim to satisfy all claims against those
funds.
By initialing the Subordination Agreement below, Customer agrees that
if both of the conditions listed above occur, its claim against ▇▇▇▇'▇
assets attributable to funds held overseas in a particular foreign
currency may be satisfied out of segregated customer funds held in
accounts denominated in dollars or other foreign currencies only after
each customer whose funds are held in dollars or in such other foreign
currencies receives its pro-rata portion of such funds. It is further
agreed that in no event may a customer whose funds are so held receive
more than its pro-rata share of the aggregate pool consisting of funds
held in dollars, funds held in the particular foreign currency, and
non-segregated assets of ▇▇▇▇.
OPTIONAL ELECTIONS/ACKNOWLEDGMENT
The following provisions, which are set forth in this Agreement, need not be
entered into to open the Account. Customer agrees that its optional elections
are as follows:
Signature required for each election
ARBITRATION AGREEMENT
--------------------------------
(Agreement Paragraph 24) (Date)
- 14 -
CONSENT TO TAKE THE OTHER SIDE OF ORDERS (Agreement
--------------------------------
Paragraph 25)
(Date)
AUTHORIZATION TO TRANSFER FUNDS (Agreement Paragraph 26)
--------------------------------
(Date)
CONSENT TO RECEIVE STATEMENTS BY ELECTRONIC TRANSMISSION
(Agreement Paragraph 27)
--------------------------------
(Date)
ACKNOWLEDGMENT OF SUBORDINATION AGREEMENT (Agreement
Paragraph 28) (Required for accounts holding non-U.S.
currency)
--------------------------------
(Date)
HEDGE ELECTION
/_/ Customer confirms that all transactions in the Account will represent
bona fide hedging transactions, as defined by the Commodity Futures
Trading Commission, unless ▇▇▇▇ is notified otherwise not later than
the time an order is placed for the Account:
Pursuant to CFTC Regulation 190.06(d), Customer specifies and agrees, with
respect to hedging transactions in the Account, that in the unlikely event of
▇▇▇▇'▇ bankruptcy, it prefers that the bankruptcy trustee [check appropriate
box]:
A) /_/ Liquidate all open contracts without first seeking instructions either
from or on behalf of Customer.
B) /_/ Attempt to obtain instructions with respect to the disposition of all
open contracts.
(If neither box is checks, Customer shall be deemed to elect A).)
ACKNOWLEDGMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned hereby acknowledges its separate receipt from ▇▇▇▇, and its
understanding of each of the following documents prior to opening of the
Account:
* Risk Disclosure Statement for Futures and Options
* LME Risk Warning Notice
* NYMEX ACCESS SM Risk Disclosure Statement
* Globex(R) Customer Information and Risk Disclosure Statement
* Project A(TM) Customer Information Statement
* Questions & Answers on Flexible Options Trading at the CBOT
* CME Average Pricing System Disclosure Statement
* Special Notice to Foreign Brokers and Foreign Traders
REQUIRED SIGNATURES
CUSTOMER
The undersigned has received, read, understands and agrees to all the provisions
of this Agreement and the separate risk disclosure statements enumerated above
and agrees to promptly notify ▇▇▇▇ in writing if any of the warranties and
representations contained herein become inaccurate or in any way cease to be
true, complete and correct.
------------------------------------------------------------------------------
Customer name(s)
---------------------------------------- ---------------------------------
Authorized signature(s) Date
------------------------------------------------------------------------------
[If applicable, print name and title of signatory]
▇▇▇▇ FUTURES INC.
Accepted and Agreed:
▇▇▇▇ Futures Inc.
By: By:
------------------------------------ -----------------------------------
Title: Title:
--------------------------------- --------------------------------
Date: Date:
--------------------------------- ---------------------------------
EXHIBIT 10.01(b)
▇▇▇▇ FUTURES INC.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
INTERNATIONAL FOREIGN EXCHANGE MASTER AGREEMENT
MASTER AGREEMENT dated as of __________________, by and
between ▇▇▇▇ FUTURES INC., a Delaware corporation and ▇▇▇▇ ▇▇▇▇▇▇ CORNERSTONE
FUND _____ L.P.
SECTION 1. DEFINITIONS
Unless otherwise required by the context, the following
terms shall have the following meanings in the Agreement:
"Agreement" has the meaning given to it in Section 2.2.
"Base Currency", as to a Party, means the Currency agreed to
as such in relation to it in Part VII of the Schedule.
"Business Day" means for purposes of: (i) clauses (i),
(viii) and (xii) of the definition of Event of Default, a
day which is a Local Banking Day for the Non-Defaulting
Party; (ii) solely in relation to delivery of a Currency, a
day which is a Local Banking Day in relation to that
Currency; and (iii) any other provision of the Agreement, a
day which is a Local Banking Day for the applicable
Designated Offices of both Parties; provided, however, that
neither Saturday nor Sunday shall be considered a Business
Day for any purpose.
"Close-Out Amount" has the meaning given to it in Section
5.1.
"Close-Out Date" means a day on which, pursuant to the
provisions of Section 5.1, the Non-Defaulting Party closes
out Currency Obligations or such a close-out occurs
automatically.
"Closing Gain", as to the Non-Defaulting Party, means the
difference described as such in relation to a particular
Value Date under the provisions of Section 5.1.
"Closing Loss", as to the Non-Defaulting Party, means the
difference described as such in relation to a particular
Value Date under the provisions of Section 5.1.
"Confirmation" means a writing (including telex, facsimile,
or other electronic means from which it is possible to
produce a hard copy) evidencing an FX Transaction, and
specifying:
(i) the Parties thereto and their Designated Offices
through which they are respectively acting,
(ii) the amounts of the Currencies being bought or sold
and by which Party,
(iii) the Value Date, and
(iv) any other term generally included in such a writing
in accordance with the practice of the relevant
foreign exchange market.
"Credit Support" has the meaning given to it in Section 5.2.
"Credit Support Document", as to a Party (the "first
Party"), means a guaranty, hypothecation agreement,
margin or security agreement or document, or any
other document containing an obligation of a third
party ("Credit Support Provider") or of the first
Party in favor of the other Party supporting any
obligations of the first Party under the Agreement.
"Credit Support Provider" has the meaning given to it in
the definition of Credit Support Document.
"Currency" means money denominated in the lawful currency of
any country or the Ecu.
"Currency Obligation" means any obligation of a Party to
deliver a Currency pursuant to an FX Transaction or the
application of Section 3.3(a) or (b).
"Custodian" has the meaning given to it in the definition of
Insolvency Proceeding.
"Defaulting Party" has the meaning given to it in the
definition of Event of Default.
"Designated Office(s)", as to a Party, means the office or
offices specified in Part II of the Schedule.
"Effective Date" means the date of this Master Agreement.
"Event of Default" means the occurrence of any of the
following with respect to a Party (the "Defaulting Party",
the other Party being the "Non-Defaulting Party"):
-2-
(i) the Defaulting Party shall (A) default in any payment
when due under the Agreement to the Non-Defaulting
Party with respect to any Currency Obligation and
such failure shall continue for two (2) Business Days
after the Non-Defaulting Party has given the
Defaulting Party written notice of non-payment, or
(B) fail to perform or comply with any other
obligation assumed by it under the Agreement and such
failure is continuing thirty (30) days after the
Non-Defaulting Party has given the Defaulting Party
written notice thereof;
(ii) the Defaulting Party shall commence a voluntary
Insolvency Proceeding or shall take any corporate
action to authorize any such Insolvency Proceeding;
(iii) a governmental authority or self-regulatory
organization having jurisdiction over either the
Defaulting Party or its assets in the country of its
organization or principal office (A) shall commence
an Insolvency Proceeding with respect to the
Defaulting Party or its assets or (B) shall take any
action under any bankruptcy, insolvency or other
similar law or any banking, insurance or similar law
or regulation governing the operation of the
Defaulting Party which may prevent the Defaulting
Party from performing its obligations under the
Agreement as and when due;
(iv) an involuntary Insolvency Proceeding shall be
commenced with respect to the Defaulting Party or its
assets by a person other than a governmental
authority or self-regulatory organization having
jurisdiction over either the Defaulting Party or its
assets in the country of its organization or
principal office and such Insolvency Proceeding (A)
results in the appointment of a Custodian or a
judgment of insolvency or bankruptcy or the entry of
an order for winding-up, liquidation, reorganization
or other similar relief, or (B) is not dismissed
within five (5) days of its institution or
presentation;
(v) the Defaulting Party is bankrupt or insolvent, as
defined under any bankruptcy or insolvency law
applicable to it;
(vi) the Defaulting Party fails, or shall otherwise be
unable, to pay its debts as they become due;
(vii) the Defaulting Party or any Custodian acting on
behalf of the Defaulting Party shall disaffirm,
disclaim or repudiate any Currency Obligation;
(viii) any representation or warranty made or given or
deemed made or given by the Defaulting Party pursuant
to the Agreement or any Credit Support Document shall
prove to have been false or misleading in any
material respect as at the time it was made or given
or deemed made or given and one (1) Business Day has
-3-
elapsed after the Non-Defaulting Party has given the
Defaulting Party written notice thereof;
(ix) the Defaulting Party consolidates or amalgamates with
or merges into or transfers all or substantially all
its assets to another entity and (A) the
creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of
the Defaulting Party prior to such action, or (B) at
the time of such consolidation, amalgamation, merger
or transfer the resulting, surviving or transferee
entity fails to assume all the obligations of the
Defaulting Party under the Agreement by operation of
law or pursuant to an agreement satisfactory to the
Non-Defaulting Party;
(x) by reason of any default, or event of default or
other similar condition or event, any Specified
Indebtedness (being Specified Indebtedness of an
amount which, when expressed in the Currency of the
Threshold Amount, is in aggregate equal to or in
excess of the Threshold Amount) of the Defaulting
Party or any Credit Support Provider in relation to
it: (A) is not paid on the due date therefor and
remains unpaid after any applicable grace period has
elapsed, or (B) becomes, or becomes capable at any
time of being declared, due and payable under
agreements or instruments evidencing such Specified
Indebtedness before it would otherwise have been due
and payable;
(xi) the Defaulting Party is in breach of or default under
any Specified Transaction and any applicable grace
period has elapsed, and there occurs any liquidation
or early termination of, or acceleration of
obligations under, that Specified Transaction or the
Defaulting Party (or any Custodian on its behalf)
disaffirms, disclaims or repudiates the whole or any
part of a Specified Transaction;
(xii) (A) any Credit Support Provider of the Defaulting
Party or the Defaulting Party itself fails to comply
with or perform any agreement or obligation to be
complied with or performed by it in accordance with
the applicable Credit Support Document and such
failure is continuing after any applicable grace
period has elapsed; (B) any Credit Support Document
relating to the Defaulting Party expires or ceases to
be in full force and effect prior to the satisfaction
of all obligations of the Defaulting Party under the
Agreement, unless otherwise agreed in writing by the
Non-Defaulting Party; (C) the Defaulting Party or any
Credit Support Provider of the Defaulting Party (or,
in either case, any Custodian acting on its behalf)
disaffirms, disclaims or repudiates, in whole or in
part, or challenges the validity of, any Credit
Support Document; (D) any representation or warranty
made or given or deemed made or given by any Credit
Support Provider of the Defaulting Party pursuant to
-4-
any Credit Support Document shall prove to have been
false or misleading in any material respect as at the
time it was made or given or deemed made or given and
one (1) Business Day has elapsed after the
Non-Defaulting Party has given the Defaulting Party
written notice thereof; or (E) any event set out in
(ii) to (vii) or (ix) to (xi) above occurs in respect
of any Credit Support Provider of the Defaulting
Party; or
(xiii) any other condition or event specified in Part IX of
the Schedule or in Section 8.14 if made applicable to
the Agreement in Part XI of the Schedule.
"FX Transaction" means any transaction between the Parties
for the purchase by one Party of an agreed amount in one
Currency against the sale by it to the other of an agreed
amount in another Currency, both such amounts being
deliverable on the same Value Date or, if the Parties have
so agreed in Part VI of the Schedule, being cash-settled in
a single Currency, which is or shall become subject to the
Agreement and in respect of which transaction the Parties
have agreed (whether orally, electronically or in writing):
the Currencies involved, the amounts of such Currencies to
be purchased and sold, which Party will purchase which
Currency and the Value Date.
"Insolvency Proceeding" means a case or proceeding seeking a
judgment of or arrangement for insolvency, bankruptcy,
composition, rehabilitation, reorganization, administration,
winding-up, liquidation or other similar relief with respect
to the Defaulting Party or its debts or assets, or seeking
the appointment of a trustee, receiver, liquidator,
conservator, administrator, custodian or other similar
official (each, a "Custodian") of the Defaulting Party or
any substantial part of its assets, under any bankruptcy,
insolvency or other similar law or any banking, insurance or
similar law governing the operation of the Defaulting Party.
"LIBOR", with respect to any Currency and date, means the
average rate at which deposits in the Currency for the
relevant amount and time period are offered by major banks
in the London interbank market as of 11:00 a.m. (London
time) on such date, or, if major banks do not offer deposits
in such Currency in the London interbank market on such
date, the average rate at which deposits in the Currency for
the relevant amount and time period are offered by major
banks in the relevant foreign exchange market at such time
on such date as may be determined by the Party making the
determination.
"Local Banking Day" means (i) for any Currency, a day on
which commercial banks effect deliveries of that Currency in
accordance with the market practice of the relevant foreign
exchange market, and (ii) for any Party, a day in the
location of the applicable Designated Office of such Party
on which commercial banks in that location are not
authorized or required by law to close.
-5-
"Master Agreement" means the terms and conditions set forth
in this Master Agreement, including the Schedule.
"Matched Pair Novation Netting Office(s)", in respect of a
Party, means the Designated Office(s) specified in Part V of
the Schedule.
"Non-Defaulting Party" has the meaning given to it in the
definition of Event of Default.
"Novation Netting Office(s)", in respect of a Party, means
the Designated Office(s) specified in Part V of the
Schedule.
"Parties" means the parties to the Agreement, including
their successors and permitted assigns (but without
prejudice to the application of clause (ix) of the
definition Event of Default); and the term "Party" shall
mean whichever of the Parties is appropriate in the context
in which such expression may be used.
"Proceedings" means any suit, action or other proceedings
relating to the Agreement or any FX Transaction.
"Schedule" means the Schedule attached to and part of this
Master Agreement, as it may be amended from time to time by
agreement of the Parties.
"Settlement Netting Office(s)", in respect of a Party, means
the Designated Office(s) specified in Part V of the
Schedule.
"Specified Indebtedness" means any obligation (whether
present or future, contingent or otherwise, as principal or
surety or otherwise) in respect of borrowed money, other
than in respect of deposits received.
"Specified Transaction" means any transaction (including an
agreement with respect thereto) between one Party to the
Agreement (or any Credit Support Provider of such Party) and
the other Party to the Agreement (or any Credit Support
Provider of such Party) which is a rate swap transaction,
basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity linked swap, equity or
equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of these transactions) or any combination of any of
the foregoing transactions.
-6-
"Spot Date" means the spot delivery day for the relevant
pair of Currencies as generally used by the relevant foreign
exchange market.
"Threshold Amount" means the amount specified as such for
each Party in Part VIII of the Schedule.
"Value Date" means, with respect to any FX Transaction, the
Business Day (or where market practice in the relevant
foreign exchange market in relation to the two Currencies
involved provides for delivery of one Currency on one date
which is a Local Banking Day in relation to that Currency
but not to the other Currency and for delivery of the other
Currency on the next Local Banking Day in relation to that
other Currency ("Split Settlement") the two (2) Local
Banking Days in accordance with that market practice) agreed
by the Parties for delivery of the Currencies to be
purchased and sole pursuant to such FX Transaction, and,
with respect to any Currency Obligation, the Business Day
(or, in the case of Split Settlement, Local Banking Day)
upon which the obligation to deliver Currency pursuant to
such Currency Obligation is to be performed.
SECTION 2. FX TRANSACTIONS
2.1 Scope of the Agreement. The Parties (through their
respective Designated Offices) may enter into FX
Transactions, for such quantities of such Currencies, as may
be agreed subject to the terms of the Agreement; provided
that neither Party shall be required to enter into any FX
Transaction with the other Party. Unless otherwise agreed in
writing by the Parties, each FX Transaction entered into
between Designated Offices of the Parties on or after the
Effective Date shall be governed by the Agreement. Each FX
Transaction between any two Designated Offices of the
Parties outstanding on the Effective Date which is
identified in Part I of the Schedule shall also be governed
by the Agreement.
2.2 Single Agreement. This Master Agreement, the terms
agreed between the Parties with respect to each FX
Transaction (and, to the extent recorded in a Confirmation,
each such Confirmation), and all amendments to any of such
items shall together form the agreement between the Parties
(the "Agreement") and shall together constitute a single
agreement between the Parties. The Parties acknowledge that
all FX Transactions are entered into in reliance upon such
fact, it being understood that the Parties would not
otherwise enter into any FX Transaction.
2.3 Confirmations. FX Transactions shall be promptly
confirmed by the Parties by Confirmations exchanged by mail,
telex, facsimile or other electronic means from which it is
possible to produce a hard copy. The failure by a Party to
issue a Confirmation shall not prejudice or invalidate the
terms of any FX Transaction.
-7-
2.4 Inconsistencies. In the event of any inconsistency
between the provisions of the Schedule and the other
provisions of the Agreement, the Schedule will prevail. In
the event of any inconsistency between the terms of a
Confirmation and the other provisions of the Agreement, the
other provisions of the Agreement shall prevail, and the
confirmation shall not modify the other terms of the
Agreement.
SECTION 3. SETTLEMENT AND NETTING
3.1 Settlement. Subject to Sections 3.2 and 3.3, each Party
shall deliver to the other Party the amount of the Currency
to be delivered by it under each Currency Obligation on the
Value Date for such Currency Obligation.
3.2 Settlement Netting. If on any date, more than one
delivery of a particular Currency under Currency Obligations
is to be made between a pair of Settlement Netting Offices,
then each Party shall aggregate the amounts of such Currency
deliverable by it and only the difference between these
aggregate amounts shall be delivered by the Party owing the
larger aggregate amount to the other Party, and, if the
aggregate amounts are equal, no delivery of the Currency
shall be made.
3.3 Novation Netting.
(a) By Currency. If the Parties enter into an FX
Transaction through a pair of Novation Netting
Offices giving rise to a Currency Obligation for the
same Value Date and in the same Currency as a then
existing Currency Obligation between the same pair of
Novation Netting Offices, then immediately upon
entering into such FX Transaction, each such Currency
Obligation shall automatically and without further
action be individually canceled and simultaneously
replaced by a new Currency Obligation for such Value
Date determined as follows: the amounts of such
Currency that would otherwise have been deliverable
by each Party on such Value Date shall be aggregated
and the Party with the larger aggregate amount shall
have a new Currency Obligation to deliver to the
other Party the amount of such Currency by which its
aggregate amount exceeds the other Party's aggregate
amount, provided that if the aggregate amounts are
equal, no new Currency Obligation shall arise. This
Section 3.3 shall not affect any other Currency
Obligation of a Party to deliver any different
Currency on the same Value Date.
(b) By Matched Pair. If the Parties enter into an FX
Transaction between a pair of Matched Pair Novation
Netting Offices then the provisions of Section 3.3(a)
shall apply only in respect of Currency Obligations
arising by virtue of FX Transactions entered into
between such pair of Matched Pair Novation Netting
Offices and involving the same pair of Currencies and
the same Value Date.
-8-
3.4 General.
(a) Inapplicability of Sections 3.2 and 3.3. The
provisions of Sections 3.2 and 3.3 shall not apply if
a Close-Out Date has occurred or a voluntary or
involuntary Insolvency Proceeding or action of the
kind described in clause (ii), (iii) or (iv) of the
definition of Event of Default has occurred without
being dismissed in relation to either Party.
(b) Failure to Record. The provisions of Section 3.3
shall apply notwithstanding that either Party may
fail to record the new Currency Obligations in its
books.
(c) Cutoff Date and Time. The provisions of Section 3.3
are subject to any cut-off date and cut-off time
agreed between the applicable Novation Netting
Offices and Matched Pair Novation Netting Offices of
the Parties.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties. Each Party represents
and warrants to the other Party as of the Effective Date and
as of the date of each FX Transaction that: (i) it has
authority to enter into the Agreement (including such FX
Transaction); (ii) the persons entering into the Agreement
(including such FX Transaction) on its behalf have been duly
authorized to do so; (iii) the Agreement (including such FX
Transaction) is binding upon it and enforceable against it
in accordance with its terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and
applicable principles of equity) and does not and will not
violate the terms of any agreements to which such Party is
bound; (iv) no Event of Default, or event which, with notice
or lapse of time or both, would constitute and Event of
Default, has occurred and is continuing with respect to it;
and (v) it acts as principal in entering into each FX
Transaction; and (vi) if the Parties have so specified in
Part XV of the Schedule, it makes the representations and
warranties set forth in such Part XV.
4.2 Covenants. Each Party covenants to the other Party that:
(i) it will at all times obtain and comply with the terms of
and do all that is necessary to maintain in full force and
effect all authorizations, approvals, licenses and consents
required to enable it lawfully to perform its obligations
under the Agreement; (ii) it will promptly notify the other
Party of the occurrence of any Event of Default with respect
to itself or any Credit Support Provider in relation to it;
and (iii) if the Parties have set forth additional covenants
in Part XVI of the Schedule, it makes the covenants set
forth in such Part XVI.
-9-
SECTION 5 CLOSE-OUT AND LIQUIDATION
5.1 Manner of Close-Out and Liquidation. (a) Close-Out. If
an Event of Default has occurred and is continuing, then the
Non-Defaulting Party shall have the right to close-out all,
but not less than all, outstanding Currency Obligations
(including any Currency Obligation which has not been
performed and in respect of which the Value Date is on or
precedes the Close-Out Date) except to the extent that in
the good faith opinion of the Non-Defaulting Party certain
of such Currency Obligations may not be closed-out under
applicable law. Such close-out shall be effective upon
receipt by the Defaulting Party of notice that the
Non-Defaulting Party is terminating such Currency
Obligations. Notwithstanding the foregoing, unless otherwise
agreed by the Parties in Part X of the Schedule, in the case
of an Event of Default in clause (ii), (iii) or (iv) of the
definition thereof with respect to a Party and, if agreed by
the Parties in Part IX of the Schedule, in the case of any
other Event of Default specified and so agreed in Part IX
with respect to a Party, close-out shall be automatic as to
all outstanding Currency Obligations, as of the time
immediately preceding the institution of the relevant
Insolvency Proceeding or action. The Non-Defaulting Party
shall have the right to liquidate such closed-out Currency
Obligations as provided below.
(b) Liquidation. Liquidation of Currency Obligations
terminated by close-out shall be effected as follows:
(i) Calculating Closing Gain or Loss. The
Non-Defaulting Party shall calculate in good faith,
with respect to each such terminated Currency
Obligation, except to the extent that in the good
faith opinion of the Non-Defaulting Party certain
of such Currency Obligations may not be liquidated
as provided herein under applicable law, as of the
Close-Out Date or as soon thereafter as reasonably
practicable, the Closing Gain, or, as appropriate,
the Closing Loss, as follows:
(A) for each Currency Obligation calculate a
"Close-Out Amount" as follows:
(1) in the case of a Currency Obligation
whose Value Date is the same as or
is later than the Close-Out Date,
the amount of such Currency
Obligation; or
(2) in the case of a Currency Obligation
whose Value Date precedes the
Close-Out Date, the amount of such
Currency Obligation increased, to
the extent permitted by applicable
law, by adding interest thereto from
and including the Value Date to but
not excluding the Close-Out Date at
overnight LIBOR; and
-10-
(3) for each such amount in a Currency
other than the Non-Defaulting
Party's Base Currency, convert such
amount into the Non-Defaulting
Party's Base Currency at the rate of
exchange at which, at the time of
the calculation, the Non-Defaulting
Party can buy such Base Currency
with or against the Currency of the
relevant Currency Obligation for
delivery (x) if the Value Date of
such Currency Obligation is on or
after the Spot Date as of such time
of calculation for the Base
Currency, on the Value Date of that
Currency Obligation or (y) if such
Value Date precedes such Spot Date,
for delivery on such Spot Date (or,
in either case, if such rate of
exchange is not available,
conversion shall be accomplished by
the Non-Defaulting Party using any
commercially reasonable method); and
(B) determine in relation to each Value Date: (1)
the sum of all Close-Out Amounts relating to
Currency Obligations under which the
Non-Defaulting Party would otherwise have
been entitled to receive the relevant amount
on that Value Date; and (2) the sum of all
Close-Out Amounts relating to Currency
Obligations under which the Non-Defaulting
Party would have been obliged to deliver the
relevant amount to the Defaulting Party on
that Value Date; and
(C) if the sum determined under (B)(1) is greater
than the sum determined under (B)(2), the
difference shall be the Closing Gain for such
Value Date; if the sum determined under
(B)(1) is less than the sum determined under
(B)(2), the difference shall be the Closing
Loss for such Value Date.
(ii) Determining Present Value. To the extent permitted by
applicable law, the Non-Defaulting Party shall adjust
the Closing Gain or Closing Loss for each Value Date
falling after the Close-Out Date to present value by
discounting the Closing Gain or Closing Loss from and
including the Value Date to but excluding the
Close-Out Date, at LIBOR with respect to the
Non-Defaulting Party's Base Currency as at the
Close-Out Date or at such other rate as may be
prescribed by applicable law.
(iii) Netting. The Non-Defaulting Party shall aggregate the
following amounts so that all such amounts are netted
into a single liquidated amount payable to or by the
Non-Defaulting Party: (x) the sum of the Closing
Gains for all Value Dates (discounted to present
value, where appropriate, in accordance with the
provisions of Section 5.1(b)(ii)) (which for the
-11-
purposes of this aggregation shall be a positive
figure); and (y) the sum of the Closing Losses for
all Value Dates (discounted to present value, where
appropriate, in accordance with the provisions of
Section 5.1(b)(ii)) (which for the purposes of the
aggregation shall be a negative figure).
(iv) Settlement Payment. If the resulting net amount is
positive, it shall be payable by the Defaulting Party
to the Non-Defaulting Party, and if it is negative,
then the absolute value of such amount shall be
payable by the Non-Defaulting Party to the Defaulting
Party.
5.2 Set-Off Against Credit Support. Where close-out and
liquidation occurs in accordance with Section 5.1, the
Non-Defaulting Party shall also be entitled (i) to set off
the net payment calculated in accordance with Section
5.1(b)(iv) which the Non-Defaulting Party owes to the
Defaulting Party, if any, against any credit support or
other collateral ("Credit Support") held by the Defaulting
Party pursuant to a Credit Support Document or otherwise
(including the liquidated value of any non-cash Credit
Support) in respect of the Non-Defaulting Party's
obligations under the Agreement or (ii) to set off the net
payment calculated in accordance with Section 5.1(b)(iv)
which the Defaulting Party owes to the Non-Defaulting Party,
if any, against any Credit Support held by the
Non-Defaulting Party (including the liquidated value of any
non-cash Credit Support) in respect of the Defaulting
Party's obligations under the Agreement; provided that, for
purposes of either such set-off, any Credit Support
denominated in a Currency other than the Non-Defaulting
Party's Base Currency shall be converted into such Base
Currency at the spot price determined by the Non-Defaulting
Party at which, at the time of calculation, the
Non-Defaulting Party could enter into a contract in the
foreign exchange market to buy the Non-Defaulting Party's
Base Currency in exchange for such Currency.
5.3 Other Foreign Exchange Transactions. Where close-out and
liquidation occurs in accordance with Section 5.1, the
Non-Defaulting Party shall also be entitled to close-out and
liquidate, to the extent permitted by applicable law, any
other foreign exchange transaction entered into between the
Parties which is then outstanding in accordance with
provisions of Section 5.1, with each obligation of a Party
to deliver a Currency under such a foreign exchange
transaction being treated as if it were a Currency
Obligation under the Agreement.
5.4 Payment and Late Interest. The net amount payable by one
Party to the other Party pursuant to the provisions of
Sections 5.1 and 5.3 above shall be paid by the close of
business on the Business Day following the receipt by the
Defaulting Party of notice of the Non-Defaulting Party's
settlement calculation, with interest at overnight LIBOR
from and including the Close-Out Date to but excluding such
-12-
Business Day (and converted as required by applicable law
into any other Currency, any costs of conversion to be borne
by, and deducted from any payment to, the Defaulting Party).
To the extent permitted by applicable law, any amounts owed
but not paid when due under this Section 5 shall bear
interest at overnight LIBOR (or, if conversion is required
by applicable law into some other Currency, either overnight
LIBOR with respect to such other Currency or such other rate
as may be prescribed by such applicable law) for each day
for which such amount remains unpaid. any addition of
interest or discounting required under this Section 5 shall
be calculated on the basis of a year of such number of days
as is customary for transactions involving the relevant
Currency in the relevant foreign exchange market.
5.5 Suspension of Obligations. Without prejudice to the
foregoing, so long as a Party shall be in default in payment
or performance to the other Party under the Agreement and
the other Party has not exercised its rights under this
Section 5, or, if "Adequate Assurances" is specified as
applying to the Agreement in Part XI of the Schedule, during
the pendency of a reasonable request to a Party for adequate
assurances of its ability to perform its obligations under
the Agreement, the other Party may, at its election and
without penalty, suspend its obligation to perform under the
Agreement.
5.6 Expenses. The Defaulting Party shall reimburse the
Non-Defaulting Party in respect of all out-of-pocket
expenses incurred by the Non-Defaulting Party (including
fees and disbursements of counsel, including attorneys who
may be employees of the Non-Defaulting Party) in connection
with any reasonable collection or other enforcement
proceedings related to the payments required under the
Agreement.
5.7 Reasonable Pre-Estimate. The Parties agree that the
amounts recoverable under this Section 5 are a reasonable
pre-estimate of loss and not a penalty. Such amounts are
payable for the loss of bargain and the loss of protection
against future risks and, except as otherwise provided in
the Agreement, neither Party will be entitled to recover any
additional damages as a consequence of such losses.
5.8 No Limitation of Other Rights; Set-Off. The
Non-Defaulting Party's rights under this Section 5 shall be
in addition to, and not in limitation or exclusion of, any
other rights which the Non-Defaulting Party may have
(whether by agreement, operation of law or otherwise), and,
to the extent not prohibited by law, the Non-Defaulting
Party shall have a general right of set-off with respect to
all amounts owed by each Party to the other Party, whether
due and payable or not due and payable (provided that any
amount not due and payable at the time of such set-off
shall, if appropriate, be discounted to present value in a
commercially reasonable manner by the Non-Defaulting Party).
The Non-Defaulting Party's rights under this Section 5.8 are
subject to Section 5.7.
-13-
SECTION 6. ILLEGALITY, IMPOSSIBILITY AND FORCE MAJEURE
6.1 Force Majeure, Act of State, Illegality or
Impossibility. If either Party is prevented from or hindered
or delayed by reason of force majeure or act of state in the
delivery or receipt of any Currency in respect of a Currency
Obligation or if it becomes or, in the good faith judgment
of one of the Parties, may become unlawful or impossible for
either Party to make or receive any payment in respect of a
Currency Obligation, then the Party for whom such
performance has been prevented, hindered or delayed or has
become illegal or impossible shall promptly give notice
thereof to the other Party and either Party may, by notice
to the other Party, require the close-out and liquidation of
each affected Currency Obligation in accordance with the
provisions of Sections 5.1 and, for such purposes, the Party
unaffected by such force majeure, act of state, illegality
or impossibility (or, if both Parties are so affected,
whichever Party gave the relevant notice) shall perform the
calculation required under Section 5.1 as if it were the
Non-Defaulting Party. Nothing in this Section 6.1 shall be
taken as indicating that the Party treated as the Defaulting
Party for the purpose of calculations required by Section
5.1 has committed any breach or default.
6.2 Transfer to Avoid Force Majeure, Act of State,
Illegality or Impossibility. If Section 6.1 becomes
applicable, unless prohibited by law, the Party which has
been prevented, hindered or delayed from performing shall,
as a condition to its right to designate a close-out and
liquidation of any affected Currency Obligation, use all
reasonable efforts (which will not require such Party to
incur a loss, excluding immaterial, incidental expenses) to
transfer as soon as practicable, and in any event before
twenty (20) days after it gives notice under Section 6.1,
all its rights and obligations under the Agreement in
respect of the affected Currency Obligations to another of
its Designated Offices so that such force majeure, act of
state, illegality or impossibility ceases to exist. Any such
transfer will be subject to the prior written consent of the
other Party, which consent will not be withheld if such
other Party's policies in effect at such time would permit
it to enter into transactions with the transferee Designated
Office on the terms proposed, unless such transfer would
cause the other Party to incur a material tax or other cost.
SECTION 7. PARTIES TO RELY ON THEIR OWN EXPERTISE
Each Party will be deemed to represent to the other Party on
the date on which it enters into an FX Transaction that
(absent a written agreement between the Parties that
expressly imposes affirmative obligations to the contrary
-14-
for that FX Transaction): (i)(A) it is acting for its own
account, and it has made its own independent decisions to
enter into that FX Transaction and as to whether that FX
Transaction is appropriate or proper for it based upon its
own judgment and upon advice from such advisors as it has
deemed necessary; (B) it is not relying on any communication
(written or oral) of the other Party as investment advice or
as a recommendation to enter into that FX Transaction, it
being understood that information and explanations related
to the terms and conditions of an FX Transaction shall not
be considered investment advice or a recommendation to enter
into that FX Transaction; and (C) it has not received from
the other Party any assurance or guarantee as to the
expected results of that FX Transaction; (ii) it is capable
of evaluating and understanding (on its own behalf or
through independent professional advice), and understands
and accepts, the terms, conditions and risks of that FX
Transaction; and (iii) the other Party is not acting as a
fiduciary or an advisor for it in respect of that FX
Transaction.
SECTION 8. MISCELLANEOUS
8.1 Currency Indemnity. The receipt or recovery by either
Party (the "first Party") of any amount in respect of an
obligation of the other Party (the "second Party") in a
Currency other than that in which such amount was due,
whether pursuant to a judgment of any court or pursuant to
Section 5 or 6, shall discharge such obligation only to the
extent that, on the first day on which the first Party is
open for business immediately following such receipt or
recovery, the first Party shall be able, in accordance with
normal banking practice, to purchase the Currency in which
such amount was due with the Currency received or recovered.
If the amount so purchasable shall be less than the original
amount of the Currency in which such amount was due, the
second Party shall, as a separate obligation and
notwithstanding any judgment of any court, indemnify the
first Party against any loss sustained by it. The second
Party shall in any event indemnify the first Party against
any costs incurred by it in making any such purchase of
Currency.
8.2 Assignments. Neither Party may assign, transfer or
charge or purport to assign, transfer or charge its rights
or its obligations under the Agreement to a third party
without the prior written consent of the other Party and any
purported assignment, transfer or charge in violation of
this Section 8.2 shall be void.
8.3 Telephonic Recording. The Parties agree that each may
electronically record all telephonic conversations between
them and that any such recordings may be submitted in
evidence to any court or in any Proceedings for the purpose
of establishing any matters pertinent to the Agreement.
-15-
8.4 Notices. Unless otherwise agreed, all notices,
instructions and other communications to be given to a Party
under the Agreement shall be given to the address, telex (if
confirmed by the appropriate answerback), facsimile
(confirmed if requested) or telephone number and to the
individual or department specified by such Party in Part III
of the Schedule. Unless otherwise specified, any notice,
instruction or other communication given in accordance with
this Section 8.4 shall be effective upon receipt.
8.5 Termination. Each of the Parties may terminate the
Agreement at any time by seven (7) days' prior written
notice to the other Party delivered as prescribed in Section
8.4, and termination shall be effective at the end of such
seventh day; provided, however, that any such termination
shall not affect any outstanding Currency Obligations, and
the provisions of the Agreement shall continue to apply
until all the obligations of each Party to the other under
the Agreement have been fully performed.
8.6 Severability. In the event any one or more of the
provisions contained in the Agreement should be held
invalid, illegal or unenforceable in any respect under the
law of any jurisdiction, the validity, legality and
enforceability of the remaining provisions contained in the
Agreement under the law of such jurisdiction, and the
validity, legality and enforceability of such and any other
provisions under the law of any other jurisdiction shall not
in any way be affected or impaired thereby. The Parties
shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable
provisions.
8.7 No Waiver. No indulgence or concession granted by a
Party and no omission or delay on the part of a Party in
exercising any right, power or privilege under the Agreement
shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
8.8 Master Agreement. Where one of the Parties to the
Agreement is domiciled in the United States, the Parties
intend that the Agreement shall be a master agreement, as
referred to in 11 U.S.C. Section 101(53B)(C) and 12 U.S.C.
Section 1821(e)(8)(D)(vii).
8.9 Time of Essence. Time shall be of the essence in the
Agreement.
8.10 Headings. Headings in the Agreement are for ease of
reference only.
8.11 Payments Generally. All payments to be made under the
Agreement shall be made in same day (or immediately
available) and freely transferable funds and, unless
otherwise specified, shall be delivered to such office of
-16-
such bank, and in favor of such account as shall be
specified by the Party entitled to receive such payment in
Part IV of the Schedule or in a notice given in accordance
with Section 8.4.
8.12 Amendments. No amendment, modification or waiver of the
Agreement will be effective unless in writing executed by
each of the Parties.
8.13 Credit Support. A Credit Support Document between the
Parties may apply to obligations governed by the Agreement.
If the Parties have executed a Credit Support Document, such
Credit Support Document shall be subject to the terms of the
Agreement and is hereby incorporated by reference in the
Agreement. In the event of any conflict between a Credit
Support Document and the Agreement, the Agreement shall
prevail, except for any provision in such Credit Support
Document in respect of governing law.
8.14 Adequate Assurances. If the Parties have so agreed in
Part XI of the Schedule, the failure by a Party to give
adequate assurances of its ability to perform any of its
obligations under the Agreement within two (2) Business Days
of a written request to do so when the other Party has
reasonable grounds for insecurity shall be an Event of
Default under the Agreement.
8.15 Correction of Confirmations. Unless either Party
objects to the terms contained in any Confirmation sent by
the other Party or sends a corrected Confirmation within
three (3) Business Days of receipt of such Confirmation, or
such shorter time as may be appropriate given the Value Date
of the FX Transaction, the terms of such Confirmation shall
be deemed correct and accepted absent manifest error. If the
Party receiving a Confirmation sends a corrected
Confirmation within such three (3) Business Days, or shorter
period, as appropriate, then the Party receiving such
corrected Confirmation shall have three (3) Business Days,
or shorter period, as appropriate, after receipt thereof to
object to the terms contained in such corrected
Confirmation.
SECTION 9. LAW AND JURISDICTION
9.1 Governing Law. The Agreement shall be governed by, and
construed in accordance with the laws of the jurisdiction
set forth in Part XII of the Schedule without giving effect
to conflict of laws principles.
9.2 Consent to Jurisdiction. (a) With respect to any
Proceedings, each Party irrevocably (i) submits to the
non-exclusive jurisdiction of the courts of the jurisdiction
set forth in Part XIII of the Schedule and (ii) waives any
objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an
inconvenient forum and further waives the right to object,
with respect to such Proceedings, that such court does not
have jurisdiction over such Party. Nothing in the Agreement
-17-
precludes either Party from bringing Proceedings in any
other jurisdiction nor will the bringing of Proceedings in
any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(b) Each Party irrevocably appoints the agent for service of
process (if any) specified with respect to it in Part XIV of
the Schedule. If for any reason any Party's process agent is
unable to act as such, such Party will promptly notify the
other Party and within thirty (30) days will appoint a
substitute process agent acceptable to the other Party.
9.3 Waiver of Jury Trial. Each Party irrevocably waives any
and all right to trial by jury in any Proceedings.
9.4 Waiver of Immunities. Each Party irrevocably waives, to
the fullest extent permitted by applicable law, with respect
to itself and its revenues and assets (irrespective of their
use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any courts, (iii) relief by way of
injunction, order for specific performance or for recovery
of property, (iv) attachment of its assets (whether before
or after judgment) and (v) execution or enforcement of any
judgment to which it or its revenues or assets might
otherwise be entitled in any Proceedings in the courts of
any jurisdiction and irrevocably agrees, to the extent
permitted by applicable law, that it will not claim any such
immunity in any Proceedings.
IN WITNESS WHEREOF, the Parties have caused the Agreement to
be duly executed by their respective authorized officers as of the date first
written above.
▇▇▇▇ FUTURES INC.
By ______________________________
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇ CORNERSTONE FUND _____ L.P.
By Demeter Management Corporation
General Partner
By _______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
-18-
SCHEDULE
Schedule to the International Foreign Exchange Master Agreement
dated as of __________________, _____
between ▇▇▇▇ ▇▇▇▇▇▇ Cornerstone Fund ___ L.P. ("Party A") and ▇▇▇▇ Futures Inc.
("Party B").
Part I. Scope of Agreement
The Agreement shall apply to all foreign exchange
transactions outstanding between any two Designated Offices
of the Parties on the Effective Date.
Part II. Designated Offices
Each of the following shall be a Designated Office:
Party A:
c/o Demeter Management Corporation
Two ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ____________________________
Telephone No.: ___________________
Facsimile No.: ___________________
Party B:
▇▇▇▇ Futures Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ____________________________
Telephone No.: ___________________
Facsimile No.: ___________________
-19-
Part III. Notices:
If sent to Party A:
Address:
Telephone Number:
Telex Number:
Facsimile Number:
Name of Individual or Department to whom Notices are to be
sent:
If sent to Party B:
Address:
Telephone Number:
Telex Number:
Facsimile Number:
Name of Individual or Department to whom Notices are to be
sent:
Part IV. Payment Instructions
[ ] Name of Bank and Office, Account Number and Reference
with respect to relevant Currencies:
[ ] With respect to each Party, as may be set forth in such
Standard Settlement Instructions as may be specified by such
Party in a notice given in accordance with Section 8.4.
Part V. Netting
A. Settlement Netting Offices
Each of the following shall be a Settlement Netting Office:
Party A: Same as in Part II.
Party B: Same as in Part II.
-20-
B. Novation Netting Offices
Each of the following shall be a Novation Netting Office:
Party A: Same as in Part V-A.
Party B: Same as in Part V-A.
.
C. Matched Pair Novation Netting Offices
Each of the following shall be a Matched Pair Novation
Netting Office:
Party A: Not Applicable.
Party B: Not Applicable.
.
Part VI. Cash Settlement of FX Transactions
The following provision [shall][shall not] apply:
The definition of FX Transaction in Section 1 shall include
foreign exchange transactions for the purchase and sale of
one Currency against another but which shall be settled by
the delivery of only one Currency based on the difference
between exchange rates as agreed by the Parties as evidenced
in a Confirmation. Section 3.1 is modified so that only one
Currency shall be delivered for any such FX Transaction in
accordance with the formula agreed by the Parties. Section
5.1(b)(i)(A) is modified so that the Close-Out Amount for
any such FX Transaction for which the cash settlement amount
has been fixed on or before the Close-Out Date pursuant to
the terms of such FX Transaction shall be equal to the
Currency Obligation arising therefrom (increased by adding
interest in the manner provided in clause (A)(2) if the
Value Date precedes the Close-Out Date) and for any such FX
Transaction for which the cash settlement amount has not yet
been fixed on the Close-Out Date pursuant to the terms of
such FX Transaction, the Close-Out Amount shall be as
determined by the Non-Defaulting Party in good faith and in
a commercially reasonable manner.
Part VII. Base Currency
Party A's Base Currency is the United States dollar.
Party B's Base Currency is the United States dollar.
-21-
Part VIII. Threshold Amount
For purposes of clause (x) of the definition of Event of
Default:
Party A's Threshold Amount is [$]
Party B's Threshold Amount is [$]
Part IX. Additional Events of Default
The following provisions which are checked shall constitute
Events of Default:
[ ] (a) occurrence of garnishment or provisional
garnishment against a claim against the Defaulting
Party acquired by the Non-Defaulting Party. The
automatic termination provisions of Section 5.1
[shall] [shall not] apply to either Party that is a
Defaulting Party in respect of this Event of
Default.
[ ] (b) suspension of payment by the Defaulting Party
or any Credit Support provider in accordance with
the Bankruptcy Law or the Corporate Reorganization
Law in Japan. The automatic termination provision
of Section 5.1 [shall] [shall not] apply to either
Party that is a Defaulting Party in respect of this
Event of Default.
[ ] (c) disqualification of the Defaulting Party or
any Credit Support Provider by any relevant ▇▇▇▇
clearing house located in Japan. The automatic
termination provision of Section 5.2 [shall][shall
not] apply to either Party that is a Defaulting
Party in respect of this Event of Default.
Part X. Automatic Termination
The automatic termination provision of Section 5.1
[shall][shall not] apply to Party A as Defaulting Party in
respect of clause (ii), (iii) or (iv) of the definition of
Event of Default.
The automatic termination provision of Section 5.1
[shall][shall not] apply to Party B as Defaulting Party in
respect of clause (ii), (iii) or (iv) of the definition of
Event of Default.
Part XI. Adequate Assurances
Adequate Assurances under Section 8.14 [shall][shall not]
apply to the Agreement.
-22-
Part XII. Governing Law
In accordance with Section 9.1 of the Agreement, the
Agreement shall be governed by the laws of the State of New
York.
Part XIII. Consent to Jurisdiction
In accordance with Section 9.2 of the Agreement, each Party
irrevocably submits to the non-exclusive jurisdiction of the
courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New
York City.
Part XIV. Agent for Service of Process
Not applicable.
Part XV. Certain Regulatory Representations
A. The following FDICIA representation [shall][shall not]
apply:
1. Party A represents and warrants that it qualifies as a
"financial institution" within the meaning of the
Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA") by virtue of being a:
[ ] broker or dealer within the meaning of FDICIA;
[ ] depository institution within the meaning of
FDICIA;
[ ] futures commission merchant within the meaning
of FDICIA;
[ ] "financial institution" within the meaning
of Regulation EE (see below).
2. Party B hereby represents and warrants that it qualifies
as a "financial institution" by virtue of being a:
[ ] broker or dealer within the meaning of FDICIA;
[ ] depository institution within the meaning of
FDICIA;
[ ] futures commission merchant within the meaning
of FDICIA;
[ ] "financial institution" within the meaning
of Regulation EE (see below).
-23-
3. A Party representing that it is a "financial
institution" as that term is defined in 12 C.F.R.
Section 231.3 of Regulation EE issued by the Board of
Governors of the Federal Reserve System ("Regulation
EE") represents that:
(a) it is willing to enter into financial
contracts" as a counterparty "on both sides
of one or more financial markets" as those
terms are used in Section 231.3 of Regulation
EE; and
(b) during the 15-month period immediately
preceding the date it makes or is deemed to
make this representation, it has had on at
least one (1) day during such period, with
counterparties that are not its affiliates
(as defined in Section 231.2(b) of Regulation
EE) either:
(i) one or more financial contracts of a
total gross notional principal
amount of $1 billion outstanding; or
(ii) total ▇▇▇▇▇ ▇▇▇▇-to-market positions
(aggregated across counterparties) of
$100 million; and
(c) agrees that it will notify the other Party if
it no longer meets the requirements for
status as a financial institution under
Regulation EE.
4. If both Parties are financial institutions in accordance
with the above, the Parties agree that the Agreement
shall be a netting contract, as defined in 12 U.S.C.
Section 4402(14), and each receipt or payment or
delivery obligation under the Agreement shall be a
covered contractual payment entitlement or covered
contractual payment obligation, respectively, as defined
in FDICIA.
B. The following ERISA representation [shall][shall not] apply:
Each Party represents and warrants that it is neither (i) an
"employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 which is
subject to Part 4 of Subtitle B of Title I of such Act; (ii)
a "plan" as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986; nor (iii) an entity the assets of
which are deemed to be assets of any such "employee benefit
plan" or "plan" by reason of the U.S. Department of Labor's
plan asset regulation, 29 C.F.R. Section 2510.3-101.
-24-
C. The following CFTC eligible swap participant representation
[shall][shall not] apply:
Each Party represents and warrants that it is an "eligible
swap participant" under, and as defined in, 17 C.F.R.
Section 35.1.
Part XVI. Additional Covenants
The following covenant[s] shall apply to the Agreement:
A. Party B covenants and agrees that when Party A or an agent
for Party A requests Party B to an FX Transaction, Party B
will do a back-to-back principal trade and the price of the
FX Transaction to Party A will be the same price at which
Party B effects its back-to-back trade with its
counterparty, and Party B will not profit from any ▇▇▇▇-up
or spread on the FX Transaction.
B. With respect to each FX Transaction, Party A shall pay to
Party B a round-turn fee as follows. For FX Transactions not
having a Party B-imposed forward date, the fee shall be
$4.30 per round-turn ($2.15 per side) for each $85,000
equivalent of the Currency in the FX Transaction. For FX
Transactions with a Party B-imposed forward date
restriction, the fee shall be $5.00 per round-turn ($2.50
per side) for each $135,000 equivalent of the Currency in
the FX Transaction.
C. Party A shall post margin with Party B with respect to
all FX Transactions in an amount equal to 3.5% of the value
of such FX Transactions. All calls for margin shall be made
by Party B orally or by written notice to ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, and each such call for margin shall be met by
Party A within three hours after ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ has
received such call by wire transfer (by federal bank wire
system) to the account of Party B. Party B shall accept as
margin any instrument deemed acceptable as margin under the
rules of the Chicago Mercantile Exchange. Upon oral or
written request by ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Party B shall,
within three hours after receipt of any such request, wire
transfer (by federal bank wire system) to ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ for Party A's account any margin funds held by
Party B in excess of the margin requirements specified
hereby.
-25-
