CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement"), made as of the 1st
day of December, 1997, by and among XXXX XXXXXX SPECTRUM BALANCED L.P., a
Delaware limited partnership (the "Customer"), XXXX FUTURES INC., a Delaware
corporation ("CFI"), and XXXX XXXXXX XXXXXXXX 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 Secretary of State of the
State of Delaware on April 29, 1994, and a Limited Partnership Agreement dated
as of May 27, 1994 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, spread, or otherwise acquire, hold, or dispose of commodities (including,
but not limited to, foreign currencies, mortgage-backed securities, money market
instruments, financial instruments, and any other securities or items which are,
or may become, the subject of futures contract trading), domestic and foreign
commodity futures contracts, commodity forward contracts, foreign exchange
commitments, options on physical commodities and on futures contracts, spot
(cash) commodities and currencies, and any rights pertaining thereto
(hereinafter referred to collectively as "futures interests"), and securities
(such as United States Treasury bills) approved by the Commodity Futures Trading
Commission (the "CFTC") for investment of customer funds and other securities on
a limited basis, and to engage in all activities incident thereto;
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
advisors (each, a "Trading Advisor" and collectively, the "Trading Advisors"),
which provide that the Trading Advisors have authority and responsibility,
except in certain limited situations, to direct the investment and reinvestment
of the assets of the Customer in futures 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 futures
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
futures 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 futures
interests brokerage transactions on behalf of the Customer in accordance with
instructions provided by DWR or the Trading Advisors, 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 Advisor 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 Advisor 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 futures 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 Advisors.
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 and in the Prospectus, the Customer, and not CFI, shall be responsible
for all taxes, management and incentive fees to the Trading Advisors, the
brokerage fees to DWR pursuant to the DWR Customer Agreement, and all
extraordinary expenses incurred by it. DWR shall pay all of the organizational,
initial and continuing offering, and ordinary administrative expenses of the
Customer (including, but not limited to, legal, accounting, and auditing fees,
printing costs, filing fees, escrow fees, marketing costs and expenses, and
other related expenses), and all charges of CFI (as described in paragraph 6
below), and shall not be reimbursed therefor.
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 futures interests through CFI. The parties acknowledge that the
Customer may execute and clear trades for futures 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, DWR shall pay to CFI such fees and costs as DWR and
CFI shall agree from time to time, and the Customer shall pay CFI all floor
brokerage fees, exchange fees, clearinghouse fees, NFA fees, "give-up" fees, any
taxes (other than income taxes), any third party clearing costs incurred by CFI,
costs associated with taking delivery of futures interests, fees for execution
of forward contract transactions (in the aggregate, "Transaction Costs"). DWR
shall reimburse the Customer at each month-end for all Transaction Costs
incurred by the Customer. 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 futures 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 Advisors may direct from time to time.
However, the parties agree that CFI, and not the Trading Advisors, 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. Interest on Customer Funds. The Customer's assets deposited
with CFI will be segregated or secured in accordance with the Commodity Exchange
Act and CFTC regulations. All of such funds will be available for margin for the
Customer's trading. CFI shall pay to DWR such interest income on the Customer's
assets held by CFI as CFI and DWR shall agree from time to time. The Customer
understands that it will not receive any interest income on its assets held by
CFI other than that paid by DWR pursuant to the DWR Customer Agreement. The
Customer's assets held by CFI may be used solely as margin for the Customer's
trading.
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, 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 60 days' prior written notice of
termination to the other parties. The Customer shall have the right to terminate
this Agreement
(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
(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 and provided such amendment is consistent
with the Prospectus.
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:
XXXX XXXXXX SPECTRUM BALANCED L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Xxxx X. Xxxxxx
President
if to DWR:
XXXX XXXXXX XXXXXXXX INC.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx
Executive Vice President
if to CFI:
XXXX FUTURES INC
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal/Compliance Department
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.
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.
XXXX XXXXXX SPECTRUM BALANCED L.P
By: Demeter Management Corporation,
General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------
Xxxx X. Xxxxxx
President
XXXX XXXXXX XXXXXXXX INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------
Xxxx X. Xxxxxx
Executive Vice President
XXXX FUTURES INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Name: Xxxxx X. Xxxxxx
-----------------------
Title: General Counsel
-----------------------
XXXX FUTURES INC.
FUTURES ACCOUNT AGREEMENT
In consideration of the acceptance by Xxxx Futures Inc. ("Xxxx") of one or more
accounts of the undersigned ("Customer") (if more than one account is at any
time opened or reopened with Xxxx, all are covered by this Agreement and are
referred to individually and collectively as the "Account"), and Xxxx'x
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 Xxxx'x protection and Xxxx'x failure to comply therewith
shall not constitute a breach of this Agreement or relieve Customer of
any obligation or responsibility under this Agreement. Xxxx shall not
be liable to Customer as a result of any action by Xxxx, its officers,
directors, employees or agents to comply with any rule or regulation.
2. PAYMENTS TO XXXX
Customer agrees to pay to Xxxx 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 Xxxx 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 Xxxx 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
Xxxx, 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 Xxxx for Customer. Xxxx may change
such requirements from time to time at Xxxx'x discretion. Such margin
requirements may exceed the margin requirements set by any exchange or
other regulatory authority and may vary from Xxxx'x 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 Xxxx) margin funds, and
to furnish Xxxx with names of bank officers for immediate verification
of such transfers. Customer acknowledges and agrees that Xxxx may
receive and retain as its own any interest, increment, profit, gain or
benefit, directly or indirectly, accruing from any of the funds Xxxx
receives from Customer.
4. DELIVERY; OPTION EXERCISE
Liquidating instructions on open positions maturing in a current
delivery month must be given to Xxxx 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 Xxxx within the same
period described above. If funds, documents or instructions are not
received, Xxxx 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 Xxxx, in its sole discretion, determines.
If, at any time, Customer fails to deliver to Xxxx any property
previously sold by Xxxx on Customer's behalf in compliance with
commodity interest contracts, or Xxxx shall deem 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 Xxxx
for the Account of Customer with other property of like or equivalent
kind or amount, Customer hereby authorizes Xxxx, 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. Xxxx may
subsequently repay any borrowing or purchase thereof with property
purchased or otherwise acquired for the amount of Customer. Customer
shall pay Xxxx for any cost, loss and damages from the foregoing,
including, but not limited to, consequential damages, penalties and
fines which Xxxx may incur or which Xxxx 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 Xxxx 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 Xxxx 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 Xxxx customer's short options
positions which are subject to exercise. A more detailed description of
Xxxx'x allocation procedures is available upon request.
5. FOREIGN CURRENCY
If Xxxx 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 Xxxx'x
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 Xxxx in its discretion
on the basis of then prevailing market rates of exchange for such
foreign currency.
6. XXXX MAY LIMIT POSITIONS HELD
Customer agrees that Xxxx, 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
Xxxx may require Customer to reduce open positions carried with Xxxx
and (c) that Xxxx may refuse to accept orders to establish new
positions. Xxxx 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 Xxxx 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 Xxxx may
communicate to Customer, although based upon information
obtained from sources believed by Xxxx to be reliable, may be
incomplete and not subject to verification;
(b) Xxxx 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 Xxxx'x personnel due to
diversity in analysis of fundamental and technical factors and
may vary from any standard recommendation made by Xxxx in its
research reports or otherwise; and
(d) Xxxx has no obligation or responsibility to update any market
recommendations, research or information it communicates to
Customer.
Customer understands that Xxxx 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 Xxxx or any such officer, director, affiliate,
stockholder, representative or associated person may or may not be
consistent with the recommendations furnished to Customer by Xxxx.
8. LIMITS ON XXXX DUTIES; LIABILITY
Customer agrees:
(a) That Xxxx 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 Xxxx 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 Xxxx.
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 Xxxx is in
no way responsible for any loss to Customer occasioned by the
actions of the Account Manager and Xxxx 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 Xxxx 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 Xxxx,
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
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 XXXX, CONTRIBUTION AND REIMBURSEMENT
(a) To the extent permitted by law, Customer agrees to indemnify
and hold harmless Xxxx 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 Xxxx 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 Xxxx'x 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 Xxxx, 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 Xxxx 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
Xxxx 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 Xxxx regarding this Agreement (except
routine inquiries concerning the Account) to 00 Xxxxx Xxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000; facsimile (000) 000-0000,
Attention: Legal/Compliance Department. All payments and deliveries to
Xxxx shall be made as instructed by Xxxx from time to time and shall be
deemed received only when actually received by Xxxx.
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 Xxxx 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 Xxxx 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 Xxxx 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 Xxxx shall be bound by any
transaction or price reported in error.
13. SECURITY INTEREST
Customer hereby grants to Xxxx 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 Xxxx
or in Xxxx'x control or carried in any of Customer's Accounts, or in
Customer's accounts carried under other agreements with Xxxx 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 Xxxx, 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 Xxxx in order to perfect and maintain
perfected the foregoing lien and security interest. Xxxx, 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 Xxxx.
In the event that the provisions of Section 13, which relate to
Collateral in any account carried by Xxxx for Customer other than an
Account instituted hereunder, conflict with the agreement under which
such other account was instituted, such other agreement between Xxxx
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,
Xxxx may transfer from one Account to another Account in which Customer
has any interest, such excess funds, equities, securities or other
property as in Xxxx'x 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 Xxxx is effecting such transfer to enforce
Xxxx'x security interest pursuant to Section 13. Xxxx promptly shall
confirm all transfers of funds made pursuant hereto to Customer in
writing.
15. XXXX'X RIGHT TO LIQUIDATE CUSTOMER POSITIONS
In addition to all other rights of Xxxx set forth in this Agreement:
(a) When directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over Xxxx or
the Account;
(b) Whenever Xxxx reasonably 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 Xxxx;
(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) Xxxx 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 Xxxx;
Xxxx shall have the right to (i) satisfy any obligations due Xxxx out
of any Customer's property (also referred to as "Collateral") in Xxxx'x
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 Xxxx as immediately due and payable, (v)
sell any or all of Customer's property in Xxxx'x custody or control in
such manner as Xxxx determines to be commercially reasonable, and/or
(vi) terminate any or all of Xxxx'x obligations for future performance
to Customer, all without any notice to or demand on Customer if deemed
necessary by Xxxx. 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 Xxxx'x 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 Xxxx for Customer other than an Account instituted
hereunder, conflict with the agreement under which such other account
was instituted, such other agreement between Xxxx 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 Xxxx 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 organized
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 at 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 Xxxx 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 Customer to Xxxx
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 Xxxx 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 Xxxx;
(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 Xxxx to contact such
banks, financial institutions and credit agencies as Xxxx
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
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 Xxxx'x
discretion, of any or all telephone conversations with Xxxx
(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 Xxxx'x 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 Xxxx
with respect to give-ups, Xxxx, 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 Xxxx
for clearance and/or carrying in the Account;
(h) Xxxx, 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 Xxxx 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 Xxxx'x 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 Xxxx 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 XXXX; 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
Xxxx 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.
21. TERMINATION
This Agreement shall continue in force until written notice of
termination is given by Customer or Xxxx. 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 Xxxx 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 Xxxx 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 Xxxx in, and Customer hereby consents in
any legal proceeding by Xxxx 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 Xxxx shall be 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 Xxxx 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 Xxxx) 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 Xxxx 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 Xxxx at 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, Attention: Legal/Compliance Department, within 45 days
after demand by Xxxx that the Customer make such election, then Xxxx
may make such election. Xxxx 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 OF THIS ARBITRATION AGREEMENT BE
VOLUNTARY.
BY SIGNING THIS AGREEMENT, YOU (1) MAY BE WAIVING YOUR RIGHT TO XXX IN
A COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY
CLAIMS OR COUNTERCLAIMS WHICH YOU OR XXXX 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 XXXX 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 XXXX.
See 17 CFR 1890.1-180.5.
Acceptance of this arbitration agreement requires a separate signature
on page 15.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL)
Without its prior notice, Customer agrees that when Xxxx executes sell
or buy orders on Customer's behalf, Xxxx, 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, Xxxx is authorized to
transfer from any segregated Account subject to the Commodity Exchange
Act carried by Xxxx for the Customer to any other Account carried by
Xxxx for the Customer such amount of excess funds as in Xxxx'x 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 Xxxx 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 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 Xxxx.
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) Xxxx 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 Xxxx'x
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 Xxxx.
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)
CONSENT TO TAKE THE OTHER SIDE OF ORDERS
(Agreement Paragraph 25) /S/ XXXX X. XXXXXX 12/1/97
------------------------------
(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. /S/ XXXX X. XXXXXX 12/1/97
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 Xxxx 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
Xxxx'x 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.)
ACKNOWLEDGMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned hereby acknowledges its separate receipt from Xxxx, and its
understanding of each of the following documents prior to opening of the
Account:
o Risk Disclosure Statement for Futures and Options
o LME Risk Warning Notice
o NYMEX ACCESS (SM) Risk Disclosure Statement
o Globex(R)Customer Information and Risk Disclosure Statement
o Project A(TM)Customer Information Statement
o Questions & Answers on Flexible Options Trading at the CBOT
o CME Average Pricing System Disclosure Statement
o 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 Xxxx in writing if any of the warranties and
representations contained herein become inaccurate or in any way cease to be
true, complete and correct.
Xxxx Xxxxxx Spectrum Global Balanced L.P.
--------------------------------------------------------------------------------
Customer name(s)
By: DEMETER MANAGEMENT CORPORATION
By: /s/ Xxxx X. Xxxxxx December 1, 1997
------------------------------------------ --------------------------
Authorized signature(s) Date
Xxxx X. Xxxxxx, President
--------------------------------------------------------------------------------
[If applicable, print name and title of signatory]
XXXX FUTURES INC.
Accepted and Agreed:
Xxxx Futures Inc.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxx
------------------------------ ---------------------------
Title: Xxxxx X. Xxxxxx Title: Xxxxx Xxxxxxx
--------------------------- -------------------------
General Counsel Associate General Counsel
---------------------------
Date: December 1, 1997 Date: December 1, 1997
----------------------------- --------------------------
