COMMODITY FUTURES CUSTOMER AGREEMENT
BETWEEN
XXXX XXXXXX WORLD CURRENCY FUND L.P.
AND
XXXXXX XXXXXXX & CO. INCORPORATED
This Commodity Futures Customer Agreement ("Agreement"),
dated as of May 1, 2000 between Xxxxxx Xxxxxxx & Co. Incorporated
("Xxxxxx Xxxxxxx"), Xxxx Xxxxxx World Currency Fund L.P.
("Customer"), and acknowledged and agreed to Xxxx Xxxxxx Xxxxxxxx
Inc., the non-clearing commodity broker for the Customer ("DWR"),
shall govern the purchase and sale by Xxxxxx Xxxxxxx of commodity
futures contracts and options thereon (collectively, "Contracts")
for the account and risk of Customer through one or more accounts
carried by Xxxxxx Xxxxxxx on behalf and in the name of Customer
(collectively, the "Account").
1. Applicable Law. The Account and all transactions and
agreements in respect of the Account shall be subject to all
applicable Federal, state, exchange, clearing house and self-
regulatory agency rules, regulations and interpretations and
custom and usage of the trade. All such rules, regulations,
interpretations, custom and usage are hereinafter collectively
referred to as "Applicable Law."
2. Customer's Representations and Warranties. Customer
represents and warrants that (a) Customer has full right, power
and authority to enter into this Agreement, and the person
executing this Agreement on behalf of Customer is authorized to
do so; (b) this Agreement is binding on Customer and enforceable
against Customer in accordance with its terms; (c) Customer may
lawfully establish and open the Account for the purpose of
effecting purchases and sales of Contracts through Xxxxxx
Xxxxxxx; (d) transactions entered into pursuant to this Agreement
will not violate any applicable law (including any Applicable
Law) to which Customer is subject or any agreement to which
Customer is subject or a party; and (e) all information provided
by Customer in the Account Application preceding this Agreement
(which Application and the information contained therein hereby
is incorporated into this Agreement) is true and correct and
Customer shall immediately (and in no event later than within one
business day) notify Xxxxxx Xxxxxxx of any change in such
information.
3. Payment and Interest Obligations.
(a) Compensation Payments to Xxxxxx Xxxxxxx.
Customer shall pay Xxxxxx Xxxxxxx upon demand (a) all floor
brokerage charges, give-up fees, contract market, clearing house,
National Futures Association ("NFA") or clearing member fees or
charges; (b) any tax imposed on such transactions by any
competent taxing authority; (c) the amount of any trading losses
in the Account; (d) any debit balance or deficiency in the
Account; and (e) any other amounts owed by Customer to Xxxxxx
Xxxxxxx with respect to the Account or any transactions therein.
DWR shall pay Xxxxxx Xxxxxxx such charges with respect to the
execution and clearing of trades for Customer as DWR and Xxxxxx
Xxxxxxx shall agree from time to time.
(b) Payment of Interest. The Customer's assets deposited with
Xxxxxx Xxxxxxx will be segregated or secured in accordance with
the Commodity Exchange Act and regulations of the Commodity
Futures Trading Commission ("CFTC") and will be invested in
accord with Xxxxxx Xxxxxxx'x customary practice for investment of
its futures customer funds. All of Customer's funds will be
available for margin for the Customer's trading. Xxxxxx Xxxxxxx
shall pay to DWR at each month-end interest on Customer's funds
in its possession as agreed between Xxxxxx Xxxxxxx and DWR from
time to time. The Customer understands that it will not receive
any interest income on its assets held by Xxxxxx Xxxxxxx other
than that paid by DWR pursuant to the Customer's DWR Customer
Agreement. DWR shall pay Xxxxxx Xxxxxxx interest on any debit
balances in the Account at such rates as Xxxxxx Xxxxxxx and DWR
shall agree from time to time.
(c) Netting. The parties agree that all payment
obligations of Customer to Xxxxxx Xxxxxxx under this Agreement
and all payment obligations of Xxxxxx Xxxxxxx to Customer under
this Agreement will be netted against each other to result in one
net payment amount.
4. Customer's Events Of Default; Xxxxxx Xxxxxxx'x Remedies.
(a) Events of Default. As used herein, each of the
following shall be deemed an "Event of Default": (i) the
commencement of a case under any Federal or state bankruptcy,
insolvency or reorganization law, or the filing of a petition for
the appointment of a receiver by or against Customer, an
assignment made by Customer for the benefit of creditors, an
admission in writing by Customer that it is insolvent or is
unable to pay its debts when they mature, or the suspension by
the Customer of its usual business or any material portion
thereof; (ii) the issuance of any warrant or order of attachment
against the Account or the levy of a judgment against the
Account; (iii) if Customer is an employee benefit plan, the
termination of Customer or the filing by Customer of a notice of
intent to terminate with a governmental agency or body, or the
receipt of a notice of intent to terminate Customer from a
governmental agency or body, or the inability of Customer to pay
benefits under the relevant employment benefit plan when due;
(iv) the failure by Customer to deposit or maintain margins, to
pay required premiums, or to make payments required by Section 3
hereof; (v) the failure by Customer to perform, in any material
respect, its obligations hereunder.
(b) Remedies. Upon the occurrence of an Event of
Default or in the event Xxxxxx Xxxxxxx, in its sole and absolute
discretion, considers it necessary for its protection, Xxxxxx
Xxxxxxx shall have the right, in addition to any other remedy
available to Xxxxxx Xxxxxxx at law or in equity, and in addition
to any other action Xxxxxx Xxxxxxx may xxxx appropriate under the
circumstances, to liquidate any or all open Contracts held in or
for the Account, sell any or all of the securities or other
property of Customer held by Xxxxxx Xxxxxxx and to apply the
proceeds thereof to any amounts owed by Customer to Xxxxxx
Xxxxxxx, borrow or buy any options, securities, Contracts or
other property for the Account and cancel any unfilled orders for
the purchase or sale of Contracts for the Account, or take such
other or further actions Xxxxxx Xxxxxxx, in its reasonable
discretion, deems necessary or appropriate for its protection,
all without demand for margin and without notice or
advertisement. Any such action may be made at the discretion of
Xxxxxx Xxxxxxx in any commercially reasonable manner. In the
event Xxxxxx Xxxxxxx'x position would not be jeopardized thereby,
Xxxxxx Xxxxxxx will make reasonable efforts under the
circumstances to notify Customer prior to taking any such action.
A prior demand or margin call of any kind from Xxxxxx Xxxxxxx or
prior notice from Xxxxxx Xxxxxxx shall not be considered a waiver
of Xxxxxx Xxxxxxx'x right to take any action without notice or
demand. In the event Xxxxxx Xxxxxxx exercises any remedies
available to it under this Agreement, Customer shall reimburse,
compensate and indemnify Xxxxxx Xxxxxxx for any and all costs,
losses, penalties, fines, taxes and damages that Xxxxxx Xxxxxxx
may incur, including reasonable attorneys' fees incurred in
connection with the exercise of its remedies and the recovery of
any such costs, losses, penalties, fines, taxes and damages.
5. Standard of Liability and Indemnification.
(a) Standard of Liability. Xxxxxx Xxxxxxx and its
affiliates (as defined below) shall not be liable to Customer,
its general partner or its 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 Xxxxxx Xxxxxxx determines, in
good faith, to be in the best interest of the Customer, unless
such act, omission, conduct, or activity by Xxxxxx Xxxxxxx or its
affiliates constituted misconduct or negligence. Without limiting
the foregoing, Xxxxxx Xxxxxxx shall have no responsibility or
liability to Customer hereunder (i) in connection with the
performance or non-performance by any contract market, clearing
house, clearing firm or other third party (including floor
brokers not selected by Xxxxxx Xxxxxxx and banks) to Xxxxxx
Xxxxxxx of its obligations in respect of any Contract or other
property of Customer; (ii) as a result of any prediction,
recommendation or advice made or given by a representative of
Xxxxxx Xxxxxxx whether or not made or given at the request of
Customer; (iii) as a result of Xxxxxx Xxxxxxx'x reliance on any
instructions, notices and communications that it believes to be
that of an individual authorized to act on behalf of Customer;
(iv) as a result of any delay in the performance or non-
performance of any of Xxxxxx Xxxxxxx'x obligations hereunder
directly or indirectly caused by the occurrence of any
contingency beyond the control of Xxxxxx Xxxxxxx including, but
not limited to, the unscheduled closure of an exchange or
contract market or delays in the transmission of orders due to
breakdowns or failures of transmission or communication
facilities, execution, and/or trading facilities or other systems
(including, without limitation, GLOBEX, ACCESS, or other
electronic trading systems, facilities or services), it being
understood that Xxxxxx Xxxxxxx shall be excused from performance
of its obligations hereunder for such period of time as is
reasonably necessary after such occurrence to remedy the effects
therefrom; (v) as a result of any action taken by Xxxxxx Xxxxxxx
or its floor brokers to comply with Applicable Law; or (vi) for
any acts or omissions of those neither employed nor supervised by
Xxxxxx Xxxxxxx. In no event xxxx Xxxxxx Xxxxxxx be liable to
Customer for consequential, incidental or special damages
hereunder.
(b) Indemnification by Customer. Customer shall
indemnify, defend and hold harmless Xxxxxx Xxxxxxx 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 Xxxxxx Xxxxxxx on behalf of
Customer, including, without limitation, any demands, claims or
lawsuits initiated by a limited partner (or assignee thereof);
provided that (i) Xxxxxx Xxxxxxx 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
the foregoing, no indemnification of Xxxxxx Xxxxxxx or its
affiliates by Customer shall be permitted for any losses,
liabilities or expenses arising from or out of any alleged
violation of federal or state securities laws unless (i) there
has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular
indemnitee, or (ii) such claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee, or (iii) 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 that 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
Customer to which Xxxxxx Xxxxxxx 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 the Delaware
Revised Uniform Limited Partnership Act, as amended, and this
Section 5. The Customer shall make advances to Xxxxxx Xxxxxxx 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 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.
(c) Indemnification by Xxxxxx Xxxxxxx. Xxxxxx
Xxxxxxx shall indemnify, defend and hold harmless 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 Xxxxxx Xxxxxxx
has approved such settlement) incurred as a direct result of the
activities of Xxxxxx Xxxxxxx 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 of Xxxxxx Xxxxxxx or its affiliates.
(d) Limitation on Indemnities. The indemnities
provided in this Section 5 by Customer to Xxxxxx Xxxxxxx 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 agreement of Xxxxxx Xxxxxxx
contained in this Agreement to the extent caused by such event.
Likewise, the indemnities provided in this Section 5 by Xxxxxx
Xxxxxxx to Customer and 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 representation, warranty or agreement of Customer
contained in this Agreement to the extent caused by such breach.
(e) Definition of "Affiliate." As used in this
Section 5, the term "affiliate" of Xxxxxx Xxxxxxx 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 Xxxxxx Xxxxxxx; (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 Xxxxxx Xxxxxxx; (iii)
any natural person, partnership, corporation, association, or
other legal entity directly or indirectly controlling, controlled
by, or under common control with, Xxxxxx Xxxxxxx; or (iv) any
officer or director of Xxxxxx Xxxxxxx. Notwithstanding the
foregoing, "affiliates" for purposes of this Section 5 shall
include only those persons acting on behalf of Xxxxxx Xxxxxxx and
performing services for Customer within the scope of the
authority of Xxxxxx Xxxxxxx, as set forth in this Agreement.
6. General Agreements. The parties agree that:
(a) Xxxxxx Xxxxxxx'x Responsibility. Xxxxxx Xxxxxxx
is not acting as a fiduciary, foundation manager, commodity pool
operator, commodity trading advisor or investment adviser in
respect of any Account opened by Customer. Xxxxxx Xxxxxxx shall
have no responsibility hereunder for compliance with any law or
regulation governing the conduct of fiduciaries, foundation
managers, commodity pool operators, commodity trading advisors or
investment advisers.
Xxxxxx Xxxxxxx agrees to furnish to the Customer
as soon as practicable all of the information from time to time
in its possession which Customer may be required to furnish to
its limited partners pursuant to its limited partnership
agreement and as otherwise required by Applicable Law. Xxxxxx
Xxxxxxx shall disclose such information regarding itself and its
affiliates (including, without limitation, financial statements)
as may be required by the Customer for SEC, CFTC and state blue
sky disclosure purposes. Xxxxxx Xxxxxxx agrees to notify the
applicable trading advisor for the Customer (each a "Trading
Advisor") immediately upon discovery of any error committed by
Xxxxxx Xxxxxxx or any of its agents with respect to a trade for
the Customer's account which Xxxxxx Xxxxxxx believes was not
executed or cleared in accordance with proper instructions given
by the Customer, its Trading Advisors or any other authorized
agent of Customer. Errors made by floor brokers appointed or
selected by Xxxxxx Xxxxxxx shall constitute errors made by Xxxxxx
Xxxxxxx. However, Xxxxxx Xxxxxxx shall not be responsible for
errors committed by the Trading Advisors.
Xxxxxx Xxxxxxx agrees to report to DWR its own
errors and the errors of any Trading Advisor for the Account
which Xxxxxx Xxxxxxx becomes aware of, provided that such
reporting may be via telephone. Notwithstanding the foregoing,
the failure to comply with such reporting obligation does not
increase Xxxxxx Xxxxxxx'x liability for its own errors beyond
that otherwise expressly set forth in this Agreement, nor does it
make Xxxxxx Xxxxxxx in any way responsible for errors committed
by the Trading Advisors.
Xxxxxx Xxxxxxx acknowledges that the other
partnerships of which Demeter Management Corporation (the general
partner of Customer) is the general partner, do not constitute
affiliates of the Customer.
(b) Advice. All advice communicated by Xxxxxx
Xxxxxxx with respect to any Account opened by Customer hereunder
is incidental to the conduct of Xxxxxx Xxxxxxx'x business as a
futures commission merchant and such advice will not serve as the
primary basis for any decision made by or on behalf of Customer
in respect of the Account, regardless of whether Customer relies
on the advice of Xxxxxx Xxxxxxx in making any such decision.
Customer acknowledges that Xxxxxx Xxxxxxx and its managing
directors, officers, employees and affiliates may take or hold
positions in, or advise other customers concerning, Contracts
that are the subject of advice from Xxxxxx Xxxxxxx to Customer.
The positions and advice of Xxxxxx Xxxxxxx and its managing
directors, officers, employees and affiliates may be inconsistent
with or contrary to positions of, and the advice given by, Xxxxxx
Xxxxxxx to Customer.
(c) Recording. Each of Xxxxxx Xxxxxxx, the Customer,
DWR and their respective officers, agents and employees, in their
sole and absolute discretion, may record, on tape or otherwise,
any telephone conversation between or among Xxxxxx Xxxxxxx, the
Customer or DWR with respect to the Account and transactions
therein and each of Xxxxxx Xxxxxxx, the Customer and DWR hereby
agrees and consents thereto.
(d) Acceptance of Orders; Position Limits.
(i) Xxxxxx Xxxxxxx shall have the right to limit
the size of open positions (net or gross) of Customer with
respect to the Account at any time and to refuse acceptance
of orders to establish new positions, whether such refusal
or limitation is required by, or based on position limits
imposed under, Applicable Law. Xxxxxx Xxxxxxx shall
immediately notify Customer of its rejection of any order.
Unless specified by Customer, Xxxxxx Xxxxxxx may designate
the exchange or other markets (including, without
limitation, GLOBEX or ACCESS) on which it will attempt to
execute orders.
(ii) Customer shall file or cause to be filed all
applications or reports required under Applicable Law with
the CFTC or the relevant contract market or clearing house,
and shall provide Xxxxxx Xxxxxxx with a copy of such
applications or reports and such other information as Xxxxxx
Xxxxxxx may reasonably request in connection therewith.
(e) Original and Variation Margin; Premiums; Other
Contract Obligations. Customer shall make, or cause to be made,
all applicable original margin, intra-day margin and premium
payments, and perform all other obligations attendant to
transactions or positions in such Contracts, as may be required
by Applicable Law or by Xxxxxx Xxxxxxx. Requests for margin
deposits and/or premium payments may, at Xxxxxx Xxxxxxx'x
election, be communicated to Customer orally, telephonically or
in writing. Customer margin deposits and/or premium payments
shall be made by wire transfer to Xxxxxx Xxxxxxx'x Customer
Segregated Account and shall be in U.S. dollars unless Xxxxxx
Xxxxxxx and the Customer specifically agree otherwise. All
Contracts for the Account shall be margined at the applicable
exchange or clearing house minimum rates for speculative
accounts.
(f) Security Interest and Rights Respecting Collateral.
Except to the extent proscribed by Applicable Law not subject to
waiver, all Contracts, cash, securities, and/or any other
property of Customer whatsoever (collectively, the "Collateral")
at any time held by Xxxxxx Xxxxxxx or its affiliates, or carried
by others for the Account, hereby are pledged to Xxxxxx Xxxxxxx
and shall be subject to a general lien and security interest in
Xxxxxx Xxxxxxx'x favor to secure any indebtedness or other
amounts, obligations and/or liabilities at any time owing from
Customer to Xxxxxx Xxxxxxx (collectively, the "Customer's
Liabilities"). Customer hereby grants Xxxxxx Xxxxxxx the right
to borrow, pledge, repledge, hypothecate, rehypothecate, loan or
invest any of the Collateral held by Xxxxxx Xxxxxxx, including
utilizing the Collateral to purchase United States Government
Treasury obligations pursuant to repurchase agreements or reverse
repurchase agreements with any party, in each case without notice
to Customer and without any obligation to pay or to account to
Customer for any interest, income or benefit that may be derived
therefrom. The rights of Xxxxxx Xxxxxxx set forth above shall be
qualified by any applicable requirements for segregation of
customers' property under Applicable Law. Xxxxxx Xxxxxxx commits
to Customer that Xxxxxx Xxxxxxx will not issue a Notice of
Exclusive Control under the Control Agreement between Xxxxxx
Xxxxxxx and DWR unless Xxxxxx Xxxxxxx determines there is a
default under this Agreement.
(g) Reports and Objections. All confirmations,
purchase and sale notices, correction notices and account
statements (collectively, "Statements") shall be submitted to
Customer and shall be conclusive and binding on Customer unless
Customer notifies Xxxxxx Xxxxxxx of any objection thereto prior
to the opening of trading on the contract market on which such
transaction occurred on the business day following the day on
which Customer receives such Statement; provided that, with
respect to monthly Statements, Customer may notify Xxxxxx Xxxxxxx
of any objection thereto within five business days after receipt
of such monthly Statement, provided the objection could not have
been raised at the time any prior Statement was received by
Customer as provided for above. Any such notice of objection, if
given orally to Xxxxxx Xxxxxxx, shall immediately (and no later
than within one business day) be confirmed in writing by
Customer.
(h) Delivery Procedures; Options Allocation Procedure.
(i) Customer will provide Xxxxxx Xxxxxxx with
instructions either to liquidate Contracts previously
established by Customer, make or take delivery under any
such Contracts, or exercise options entered into by
Customer, within such time limits as may be specified by
Xxxxxx Xxxxxxx. Xxxxxx Xxxxxxx shall have no responsibility
to take any action on behalf of Customer or positions in the
Account unless and until Xxxxxx Xxxxxxx receives oral or
written instructions reasonably acceptable to Xxxxxx Xxxxxxx
indicating the action Xxxxxx Xxxxxxx is to take. Funds
sufficient to take delivery pursuant to such Contract or
deliverable grade commodities to make delivery pursuant to
such Contract must be delivered to Xxxxxx Xxxxxxx at such
time as Xxxxxx Xxxxxxx may require in connection with any
delivery.
(ii) Short option Contracts may be subject to
exercise at any time. Exercise notices received by Xxxxxx
Xxxxxxx from the applicable contract market with respect to
option Contracts sold by Customer may be allocated to
Customer pursuant to a random allocation procedure, and
Customer shall be bound by any such allocation of exercise
notices. In the event of any allocation to Customer, unless
Xxxxxx Xxxxxxx has previously received instructions from
Customer, Xxxxxx Xxxxxxx'x sole responsibility shall be to
use its best efforts to notify Customer of such allocation.
(iii) If Customer fails to comply
with any of the foregoing obligations, Xxxxxx Xxxxxxx may,
in its sole and absolute discretion, liquidate any open
positions, make or receive delivery of any commodities or
instruments, or exercise or allow the expiration of any
options, in such manner and on such terms as Xxxxxx Xxxxxxx,
in its sole and absolute discretion, deems necessary or
appropriate, and Customer shall indemnify and hol& Title - Please Print)
Xxxxxx Xxxxxxx & Co. Incorporated
(Signature) (Date)
W. Xxxxxx Xxxxx, Managing Director
(Name & Title - Please Print)
Acknowledged and Agreed (as to Section 3(a) and (b))
Xxxx Xxxxxx Xxxxxxxx Inc.
(Signature) (Date)
Xxxxxx X. Xxxxxx, Senior Vice President
(Name & Title - Please Print)
