Exhibit 10.01(a)
FORM OF
CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement"), made as of the 1st day
of December, 1997, by and among XXXX XXXXXX SPECTRUM _____________ 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 ______________, and a Limited Partnership Agreement dated as of
_______________ between Demeter Management Corporation, a Delaware corporation
("Demeter"), acting as general partner (in such capacity, the "General
Partner"), and the limited partners of the Customer, to trade, buy, sell,
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,
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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.
Ownership of the right to receive interest on the Customer's assets
pursuant to the preceding paragraph shall be reflected and maintained and may be
transferred only on the books and records of CFI. Any purported transfer of such
ownership shall not be effective or recognized until such transfer shall have
been recorded on the books and records of CFI.
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.
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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,
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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
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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
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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 ______________ 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: _________________________
_________________________
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.
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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 ___________ L.P.
By: Demeter Management Corporation,
General Partner
By:
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Xxxx X. Xxxxxx
President
XXXX XXXXXX XXXXXXXX INC.
By:
---------------------------------
Xxxx X. Xxxxxx
Executive Vice President
XXXX FUTURES INC.
By:
---------------------------------
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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 xxxx 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
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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;
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(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
-4-
organization; communications or power failure; equipment or software
malfunction; error, omission or delay in the report of transactions;
prices, exchange rates or other market or transaction information; or the
insolvency, bankruptcy, receivership, liquidation or other financial
difficulty of any bank, clearing broker, exchange, market, clearinghouse
or clearing organization.
10. INDEMNIFICATION OF 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.
-5-
12. CONFIRMATION CONCLUSIVE
Confirmation of trades and any other notices sent to Customer shall be
conclusive and binding on Customer unless customer or Customer's agent
notifies 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,
-6-
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, in its discretion, Xxxx 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
-7-
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 organize and in
good standing under the laws of the jurisdiction in which it
is established and in every state in which it does business;
(b) is empowered to enter into and perform this Agreement and
to effectuate transactions in commodity interests, financial
instruments and foreign currency as contemplated hereby; (c)
that Customer has determined that trading in commodity
interests is appropriate for Customer, is prudent in all
respects and does not and will not violate any statute, rule,
regulation, judgment or decree to which Customer is subject or
bound; (d) that Customer has had a least one year's prior
experience in effectuating transactions in commodity
interests, financial instruments, and foreign currency as
contemplated hereby; and (e) no person or entity has any
interest in or control of the Account to which this Agreement
pertains except as disclosed by Customer to 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
-8-
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 an documents of title) with
respect to cash transactions underlying exchanges of futures for
cash commodities or exchange of futures in connection with cash
commodity transactions;
(f) Customer consents to the electronic recording, at 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
-9-
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 an on behalf of Customer, is authorized and empowered to
place orders for commodity interest transactions through one or more
electronic or automated trading systems maintained or operated by or
under the auspices of an exchange, that 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.
-10-
19. SEVERABILITY
If any term or provision hereof or the application thereof to any persons
or circumstances shall to any extent be contrary to any exchange,
government or self-regulatory regulation or contrary to any federal, state
or local law or otherwise be invalid or unenforceable, the remainder of
this Agreement or the application of such term or provision to persons or
circumstances other than those as to which it is contrary, invalid or
unenforceable, shall not be affected thereby.
20. CAPTIONS
All captions used herein are for convenience only, are not a part of this
Agreement, and are not to be used in construing or interpreting any aspect
of this Agreement.
21. TERMINATION
This Agreement shall continue in force until written notice of termination
is given by Customer or 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
-11-
deemed a proper service of process on the undersigned. Customer
agrees that venue of all proceedings shall be in Chicago, Illinois.
(b) Notwithstanding the provisions of Section 23(a)(ii), Customer may
elect at this time to have all disputes described in this Section
resolved by arbitration. To make such election, Customer must sign
the Arbitration Agreement set forth in Section 24. Notwithstanding
such election, any question relating to whether Customer or 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 OT THIS ARBITRATION AGREEMENT BE VOLUNTARY.
-12-
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 12.
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 a prevailing prices in accordance with and subject to the
limitations and conditions, if any, contained in applicable rules and
regulations.
26. AUTHORIZATION TO TRANSFER FUNDS (OPTIONAL)
Without limiting other provisions herein, 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
-13-
electronic mail or facsimile. Customer shall not incur any costs or fees
in connection with the receipt of such statements by electronic
transmission. Customer shall receive such statements by electronic
transmission until such time as it revokes its consent in writing to 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 --------------------------------------
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(Agreement Paragraph 24)
(Date)
CONSENT TO TAKE THE OTHER SIDE OF
ORDERS (Agreement Paragraph 25) --------------------------------------
(Date)
AUTHORIZATION TO TRANSFER FUNDS
(Agreement Paragraph 26) --------------------------------------
(Date)
CONSENT TO RECEIVE STATEMENTS BY
ELECTRONIC TRANSMISSION --------------------------------------
(Agreement Paragraph 27) (Date)
ACKNOWLEDGMENT OF SUBORDINATION
AGREEMENT (Agreement Paragraph 28)
(Required for accounts holding --------------------------------------
non-U.S. currency) (Date)
HEDGE ELECTION
|_| Customer confirms that all transactions in the Account will represent bona
fide hedging transactions, as defined by the Commodity Futures Trading
Commission, unless 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 checks, 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
-15-
o Questions & Answers on Flexible Options Trading at the CBOT
o CME Average Pricing System Disclosure Statement
o Special Notice to Foreign Brokers andForeign 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.
______________________________________________________________________________
Customer name(s)
_____________________________________________ _____________________________
Authorized signature(s) Date
______________________________________________________________________________
[If applicable, print name and title of signatory]
XXXX FUTURES INC.
Accepted and Agreed:
Xxxx Futures Inc.
By: By:
--------------------------------- ---------------------------------
Title: Title:
-------------------------------- --------------------------------
Date: Date:
-------------------------------- --------------------------------
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