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EXHIBIT 10.1
CUSTOMER AGREEMENT
XXXXX XXXXXX WESTPORT FUTURES FUND L. P.
This Agreement made and entered into as of the ___ day of
_______, 1997, by and between XXXXX XXXXXX WESTPORT FUTURES FUND L. P., a New
York limited partnership (the "Partnership"), and XXXXX XXXXXX INC., a Delaware
corporation ("SB").
W I T N E S S E T H :
WHEREAS, the Partnership has been organized to engage in the
speculative trading of commodity interests, including, but not limited to,
futures contracts, options and forward contracts; and
WHEREAS, the Partnership and SB wish to enter into this
Agreement setting forth the terms and conditions upon which SB will perform
brokerage and other services for the Partnership;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, it is agreed as follows:
1. Appointment of Broker/Dealer and Opening of Account. The
Partnership hereby appoints SB as its commodity broker/dealer through whom the
Partnership will execute trades in commodity interests including futures
contracts, options and forward contracts. As soon as practicable following the
conclusion of the Initial Offering Period (as defined in the Selling Agreement)
of the units of limited partnership interest in the Partnership (the "Units"),
provided at least 20,000 Units are sold, the Partnership shall deposit or cause
to be deposited the partners' capital contributions in a commodity brokerage
account with SB, and will maintain all of its assets, as they from time to time
exist, in such account except for such amounts as may be necessary or desirable
to be maintained in a bank account to facilitate the payment of Partnership
expenses, redemptions or distributions. The Partnership shall execute such
other documents as shall be necessary or appropriate to permit SB to perform
its services hereunder.
2. Services of SB. SB agrees to use its best efforts to
effect transactions for the Partnership's account and agrees to assist the
Partnership or its general partner, Xxxxx Xxxxxx Futures Management Inc. (the
"General Partner"), in (a) calculating the Partnership's Net Assets and Net
Asset Value (as such terms are defined in the Partnership's Limited Partnership
Agreement) at such times as may be required, (b) calculating any fees due the
Partnership's trading advisors (the "Advisors"; each individually an
"Advisor"), (c) preparing and confirming financial information for annual or
interim audits and reports and (d) establishing procedures for effecting
redemptions, cash distributions and the liquidation of the Partnership upon
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termination. SB further agrees to furnish clerical and bookkeeping support for
the administration of the Partnership.
3. Brokerage and Other Fees. The Partnership shall pay to SB
a monthly brokerage fee equal to 13/24 of 1% of month-end Net Assets of the
Partnership (6.5% per year) in lieu of brokerage commissions on a per trade
basis. The Partnership shall also pay all National Futures Association,
exchange, clearing, user, give-up and floor brokerage fees, or shall reimburse
SB for all such fees previously paid by SB on behalf of the Partnership. This
fee may be increased or decreased at any time at SB's discretion upon notice to
the Partnership.
4. Payment of Interest. All of the assets of the Partnership
which are deposited in the Partnership's accounts at SB will be deposited and
maintained in cash. During the term of this Agreement, SB will, within ten
(10) days following the end of each calendar month, credit the Partnership's
brokerage accounts with a sum representing interest on eighty percent (80%) of
the average daily equity maintained in cash in such accounts during such month
(i.e., the sum of the daily cash balances in such accounts divided by the total
number of calendar days in that month) at a 30-day Treasury xxxx rate
determined weekly by SB based on the average non-competitive yield on 3-month
U. S. Treasury bills maturing in 30 days (or on the maturity date closest
thereto) from the date on which such weekly rate is determined. Interest paid
to the Partnership by SB will be used to reimburse SB for the total amount of
offering and organizational expenses (but not selling commissions) of the
Initial Offering Period, plus interest at the prime rate quoted by The Chase
Manhattan Bank. The equity maintained in cash in the account on Saturdays,
Sundays and holidays shall be the equity maintained in cash in the account as
of the close of business on the next preceding business day.
5. Trading Authorization. The General Partner has entered
into a Management Agreement with Xxxx X. Xxxxx & Company, Inc. as the
Partnership's Advisors pursuant to which the Advisor shall have discretion to
order purchases and sales of commodity interests including futures contracts,
options and forward contracts. SB is hereby authorized to execute all orders
placed by the Advisor for the account of the Partnership until notified by the
General Partner to the contrary, and shall have no obligation to inquire into
the reason for or method of determining such orders, nor any obligation to
monitor such orders in relation to the Partnership's trading policies. The
provisions of this Paragraph 5 shall apply with equal force and effect to any
other commodity trading advisor designated in the future by the General
Partner.
6. Terms of the Account. The following terms and conditions
shall be applicable to the Partnership's account:
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(a) The word "property" is used herein to mean securities of
all kinds, monies, options, commodities and contracts for the future delivery
of, or otherwise relating to, commodities or securities and all property
usually and customarily dealt in by brokerage firms.
(b) All transactions for the Partnership's account shall be
subject to the regulations of all applicable federal, state and self-regulatory
agencies including, but not limited to, the various commodity exchanges and the
constitution, rules and customs, as the same may be constituted from time to
time, of the exchange or market (and its clearing house, if any) where
executed. Actual deliveries are intended on all transactions. The Partnership
also agrees not to exceed the speculative position limits for its own account,
acting alone or in concert with others, and promptly to advise SB if it is
required to file reports of its commodity positions with the Commodity Futures
Trading Commission.
(c) Any and all property belonging to the Partnership, or in
which it may have an interest, held by SB or carried in the Partnership's
account (either individually or jointly with others) shall be subject to a
general lien for the discharge of the Partnership's obligations to SB, wherever
or however arising and without regard to whether or not SB has made advances
with respect to such property, and SB is hereby authorized to sell and/or
purchase any and all property in the Partnership's account without notice to
satisfy such general lien.
(d) The Partnership agrees to maintain such collateral and/or
margin as SB may, in its discretion, require from time to time and will pay on
demand any amount owing with respect to its account. Against a "short"
position in any commodity contract, prior to the maturity thereof, the
Partnership will give SB instructions to cover, or furnish SB with all
necessary delivery documents, and in default thereof, SB may, without demand or
notice, cover the contracts, or if an order to buy in such contracts cannot be
executed under prevailing conditions, SB may procure the actual commodity and
make delivery thereof upon any terms and by any method which may be feasible.
It is further agreed that if the Partnership fails to receive sufficient funds
to pay for any commodities and commodity futures contracts and/or to satisfy
any demands for original and/or variation margin, SB may, without prior demand
and notice, sell any property held by it in the Partnership's account and any
loss resulting therefrom will be charged to the Partnership's account.
(e) SB may, whenever in its discretion it considers it
necessary for its protection, sell any or all property held in the
Partnership's account, cancel any open orders for the purchase or sale of any
property with or without notice to the Partnership, and SB may borrow or buy in
any property required to make delivery against any sales, including a short
sale, effected for the Partnership. Such sale or purchase may be public or
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private and may be made without advertising or notice to the Partnership and in
such manner as SB may, in its discretion, determine, and no demands, calls,
tenders or notices which SB may make or give in any one or more instances shall
invalidate the aforesaid waiver on the Partnership's part. At any such sale SB
may purchase the property free of any right of redemption and the Partnership
shall be liable for any deficiency in its account.
(f) SB and the Partnership agree that the parties shall have
the right to offset any unrealized gains and losses on the Partnership's open
positions and to net any open orders for the purchase or sale of any property of
the Partnership.
(g) The Partnership agrees to pay service fees and/or
interest charges upon its account monthly at the prevailing and/or allowable
rates according to the laws of the State of New York, as determined by SB at
the time of the acceptance of this Agreement in its New York office and
thereafter.
(h) If any provisions herein are or should become
inconsistent with any present or future law, rule or regulation of any
sovereign government or a regulatory body having jurisdiction over the subject
matter of this Agreement, such provision shall be deemed to be rescinded or
modified in accordance with any such law, rule or regulation. In all other
respects, this Agreement shall continue and remain in full force and effect.
7. Indemnification. (a) In any action, suit, or proceeding
to which SB was or is a party or is threatened to be made a party by reason of
the fact that it is or was the commodity broker for the Partnership (other than
an action by or in the right of the Partnership), the Partnership shall
indemnify and hold harmless SB, subject to subparagraph (c), against any loss,
liability, damage, cost, expense (including attorneys' fees and accountants'
fees), judgments and amounts paid in settlement actually and reasonably
incurred by it in connection with such action, suit or proceeding if SB acted
in good faith and in a manner it reasonably believed to be in the best
interests of the Partnership, except that no indemnification shall be made in
respect of any claim, issue or matter which as to SB constituted negligence,
misconduct or breach of its fiduciary obligations to the Partnership, unless,
and only to the extent that, the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all circumstances of the case, SB is fairly and reasonably
entitled to indemnification for such expenses which such court shall deem
proper; and further provided that no indemnification shall be available from
the Partnership if such indemnification is prohibited by Section 16 of the
Partnership Agreement. The termination of any action, suit or proceeding by
judgment, order or settlement shall not, of itself, create a presumption that
SB did not act in good faith, and in a manner which it reasonably believed to
be in or not opposed to the best interests of the Partnership.
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(b) To the extent that SB has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
subparagraph (a) above, or in defense of any claim, issue or matter therein,
the Partnership shall indemnify it against the expenses, including attorneys'
fees, actually and reasonably incurred by it in connection therewith.
(c) Any indemnification under subparagraph (a) above, unless
ordered by a court, shall be made by the Partnership only as authorized in the
specific case and only upon a determination by independent legal counsel in a
written opinion that indemnification is proper in the circumstances because SB
has met the applicable standard of conduct set forth in subparagraph (a) above.
(d) The term SB as used in this Paragraph 7 shall include SB,
its officers, directors, stockholders, employees and affiliates.
8. Termination. This Agreement may be terminated at any time
by either party hereto upon notice to the other, in which event the brokerage
accounts shall be closed and all positions open at such time shall be
liquidated or shall be transferred to another broker as directed by the
Partnership.
9. Miscellaneous. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. This Agreement shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the day and year first above written.
XXXXX XXXXXX WESTPORT
FUTURES FUND X. X. XX
By: Xxxxx Xxxxxx Futures
Management Inc.
(General Partner)
By:
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Xxxxx X. Xxxxx, President
XXXXX XXXXXX INC.
By:
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RISK DISCLOSURE STATEMENT
THE RISK OF LOSS IN TRADING COMMODITY FUTURES CONTRACTS CAN BE
SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS
SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU
SHOULD BE AWARE OF THE FOLLOWING POINTS:
(1) You may sustain a total loss of the funds that you deposit with
your broker to establish or maintain a position in the commodity futures
market, and you may incur losses beyond these amounts. If the market moves
against your position, you may be called upon by your broker to deposit a
substantial amount of additional margin funds, on short notice, in order to
maintain your position. If you do not provide the required funds within the
time required by your broker, your position may be liquidated at a loss, and
you will be liable for any resulting deficit in your account.
(2) Under certain market conditions, you may find it difficult or
impossible to liquidate a position. This can occur, for example, when the
market reaches a daily price fluctuation limit ("limit move").
(3) Placing contingent orders, such as "stop-loss" or "stop-limit"
orders, will not necessarily limit your losses to the intended amounts, since
market conditions on the exchange where the order is placed may make it
impossible to execute such orders.
(4) All futures positions involve risk, and a "spread" position may
not be less risky than an outright "long" or "short" position.
(5) The high degree of leverage (gearing) that is often obtainable in
futures trading because of the small margin requirements can work against you
as well as for you. Leverage (gearing) can lead to large losses as well as
gains.
(6) You should consult your broker concerning the nature of the
protections available to safeguard funds or property deposited for your
account.
ALL OF THE POINTS NOTED ABOVE APPLY TO ALL FUTURES TRADING WHETHER
FOREIGN OR DOMESTIC. IN ADDITION, IF YOU ARE CONTEMPLATING TRADING FOREIGN
FUTURES OR OPTIONS CONTRACTS, YOU SHOULD BE AWARE OF THE FOLLOWING ADDITIONAL
RISKS:
(7) Foreign futures transactions involve executing and clearing
trades on a foreign exchange. This is the case even if the foreign exchange is
formally "linked" to a domestic exchange, whereby a trade executed on one
exchange liquidates or establishes a position on the other exchange. No
domestic organization regulates the activities of a foreign exchange,
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including the execution, delivery, and clearing of transactions on such an
exchange, and no domestic regulator has the power to compel enforcement of the
rules of the foreign exchange or the laws of the foreign country. Moreover,
such laws or regulations will vary depending on the foreign country in which
the transactions occurs. For these reasons, customers who trade on foreign
exchanges may not be afforded certain of the protections which apply to
domestic transactions, including the right to use domestic alternative dispute
resolution procedures. In particular, funds received from customers to margin
foreign futures transactions may not be provided the same protections as funds
received to margin futures transactions on domestic exchanges. Before you
trade, you should familiarize yourself with the foreign rules which will apply
to your particular transaction.
(8) Finally, you should be aware that the price of any foreign
futures or option contract and, therefore, the potential profit and loss
resulting therefrom, may be affected by any fluctuation in the foreign exchange
rate between the time the order is placed and the foreign futures contract is
liquidated or the foreign option contract is liquidated or exercised.
THIS BRIEF STATEMENT CANNOT, OF COURSE, DISCLOSE ALL THE RISKS AND OTHER
ASPECTS OF THE COMMODITY MARKETS.
I hereby acknowledge that I have received and understood this risk
disclosure statement.
XXXXX XXXXXX WESTPORT
FUTURES FUND L. P.
By: Xxxxx Xxxxxx Futures
Management Inc.
(General Partner)
, 1997 By:
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Date Xxxxx X. Xxxxx
President
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