EXHIBIT 10.01
CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement"), made as of the
______ day of _______________, 1998, by and between XXXXXX XXXXXXX XXXX
XXXXXX CHARTER __________ L.P., a Delaware limited partnership (the
"Customer"), 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 _____________________, 1998, and a Limited
Partnership Agreement dated as of ________________, 1998, 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 a management agreement (the "Management Agreement") with a
certain trading advisor (the "Trading Advisor"), which provides that the
Trading Advisor has 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 Agreement;
WHEREAS, the Customer and DWR wish to set forth the terms and
conditions upon which DWR will perform certain non-clearing futures
interests brokerage and certain other services for the Customer;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not defined herein
shall have the meaning given to them in the Customer's most recent prospectus
as filed with the Securities and Exchange Commission (the "Prospectus")
relating to the offering of units of limited partnership interest of the
Customer (the "Units") and in any amendment or supplement to the
Prospectus.
2. Duties of DWR. DWR agrees to act as a non-clearing
commodity broker for the Customer and introduce the Customer's account to
Xxxx Futures, Inc. ("CFI") for execution and clearing of futures
interests transactions on behalf of the Customer in accordance with instructions
provided by the Trading Advisor, and the Customer agrees to retain DWR as
a non-clearing commodity broker for the term of this Agreement.
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DWR agrees to furnish to the Customer as soon as practicable
all of the information from time to time in its possession which Demeter, as
the general partner of the Customer, is required to furnish to the
Limited Partners pursuant to the Limited Partnership Agreement as from time to
time in effect and as required by applicable law, rules, or regulations
and to perform such other services for the Customer as are set forth
herein and in the Prospectus.
3. Obligations and Expenses. Except as otherwise set forth
herein and in the Prospectus, the Customer, and not DWR, shall be
responsible for all taxes, management and incentive fees to the Trading
Advisor, brokerage fees to DWR, and all extraordinary expenses incurred
by it. DWR shall pay all of the organizational, initial and continuing
offering, and ordinary administrative expenses of the Customer
(including, but not limited to, legal, accounting, and auditing fees, printing
costs, filing fees, escrow fees, marketing costs and expenses and other related
expenses) and all charges of CFI for executing and clearing the
Customer's futures interests trades (as described in paragraph 5 below), and
shall not be reimbursed therefor.
4. Agreement Nonexclusive. DWR shall be free to render
services of the nature to be rendered to the Customer hereunder to other
persons or entities in addition to the Customer, and the parties
acknowledge that DWR may render such services to additional entities
similar in nature to the Customer, including other partnerships organized
with Demeter as their general partner. It is expressly understood and
agreed that this Agreement is nonexclusive and that the Customer has no
obligation to execute any or all of its trades for futures interests
through DWR. The parties acknowledge that the Customer may utilize such
other broker or brokers as Demeter may direct from time to time.
The Customer's utilization of an additional commodity broker shall
neither terminate this Agreement nor modify in any regard the respective rights
and obligations of the Customer and DWR hereunder.
5. Compensation of DWR. The Customer will pay brokerage fees
to DWR at a monthly flat-rate. The Customer will pay to DWR a monthly
flat-rate fee of 1/12 of 7.0% of the Customer's Net Assets (a 7.0% annual
rate) as of the first day of each month. DWR will receive such brokerage
fees irrespective of the number of trades executed on the Customer's
behalf.
DWR will pay, from brokerage fees received by it, all charges
of CFI for executing and clearing trades for the Customer, including 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, and fees for execution of forward contract transactions.
From time to time, DWR may increase or decrease brokerage fees
to be charged to the Customer; provided, however, that: (i) notice of any
such increase is mailed to each Limited Partner at least five business
days prior to the last date on which a "Request for Redemption" must be
received by the General Partner with respect to the applicable Redemption
Date; and (ii) such notice shall describe the redemption and voting
rights of Limited Partners.
Notwithstanding the foregoing, the Customer's expenses are
subject to the following limits: (a) if the Customer were to pay
roundturn brokerage commissions, the brokerage commissions (excluding
transaction fees and costs) payable by the Customer to DWR shall not exceed 80%
of DWR's published non-member rates for speculative accounts and (b) the
aggregate of (i) brokerage commissions (or fees) payable to DWR, (ii)
transaction fees and costs payable by the Customer, and (iii) net excess
interest and compensating balance benefits to DWR (after crediting the
Customer with interest as described below) shall not exceed 14% annually
of the Customer's average month-end Net Assets during each calendar year.
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6. Investment Discretion. The parties recognize that DWR
shall have no authority to direct the futures interests investments to be made
for the Customer's account. However, the parties agree that DWR, and not
the Trading Advisor, shall have the authority and responsibility with
regard to the investment, maintenance, and management of the Customer's
assets that are held in segregated or secured accounts, as provided in
Section 7 hereof.
7. Investment of Customer Funds. The Customer shall deposit
its assets in accounts with DWR. The Customer's assets deposited with
DWR will be segregated or secured in accordance with the Commodity Exchange
Act and CFTC regulations and the Customer's funds will either be invested
along with other customer segregated and secured funds of DWR or held in
non-interest bearing bank accounts. DWR shall credit the Customer with
interest income at month-end at the rate earned by DWR on its U.S.
Treasury Xxxx investments with customer segregated funds as if 100% of
the Customer's average daily funds (including cash and securities) held in
the Customer's account with DWR during the month were invested in U.S.
Treasury Bills at such rate. All of such funds will be available for
margin for the Customer's trading. In addition, DWR shall credit the
Customer with 100% of the interest income DWR receives from CFI, as
agreed from time to time by DWR and CFI, on the Customer's assets deposited as
margin with CFI. The Customer understands that it will not receive any
other interest income on its assets. The Customer's assets held by DWR
may be used solely as margin for the Customer's trading.
Ownership of the right to receive interest on the Customer's
assets pursuant to the preceding paragraph shall be reflected and
maintained and may be transferred only on the books and records of DWR.
Any purported transfer of such ownership shall not be effective or
recognized until such transfer shall have been recorded on the books and
records of DWR.
8. Standard of Liability and Indemnity. Subject to Section 2
hereof, DWR 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 DWR determines, in good faith, to be in the best
interests of the customer, unless such act, omission, conduct, or activity by
DWR or its affiliates constituted misconduct or negligence.
The Customer shall indemnify, defend and hold harmless DWR 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 DWR 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) DWR 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 DWR 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
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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 DWR 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 8. The Customer
shall make advances to DWR or its affiliates hereunder only if: (i) the demand,
claim, lawsuit, or legal action relates to the performance of duties or
services by such persons to the Customer; (ii) such demand, claim,
lawsuit, or legal action is not initiated by a Limited Partner; and (iii)
such advances are repaid, with interest at the legal rate under Delaware
law, if the person receiving such advance is ultimately found not to be
entitled to indemnification hereunder.
DWR 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 DWR has approved such settlement) incurred
as a result of the activities of DWR 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 8 by the Customer to
DWR 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 DWR
contained in this Agreement to the extent caused by such breach.
Likewise, the indemnities provided in this Section 8 by DWR 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 8, the term "affiliate" of DWR 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
DWR; (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 DWR; (iii)
any natural person, partnership, corporation, association, or other legal
entity directly or indirectly controlling, controlled by, or under common
control with, DWR; or (iv) any officer or director of DWR.
Notwithstanding the foregoing, "affiliates" for purposes of this Section
8 shall include only those persons acting on behalf of DWR within the scope
of the authority of DWR, as set forth in this Agreement.
9. Term. This Agreement shall continue in effect until
terminated by either party giving not less than 60 days' prior written
notice of termination to the other party. Any such termination by either
party shall be without penalty.
10. Complete Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the matters referred to
herein, and no other agreement, verbal or otherwise, shall be binding as
between the parties unless in writing and signed by the party against
whom enforcement is sought.
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11. Assignment. This Agreement may not be assigned by either
party without the express written consent of the other party.
12. Amendment. This Agreement may not be amended except by
the written consent of the parties and provided such amendment is consistent
with the Prospectus.
13. Notices. All notices required or desired to be delivered
under this Agreement shall be in writing and shall be effective when
delivered personally on the day delivered, or when given by registered or
certified mail, postage prepaid, return receipt requested, on the day of
receipt, addressed as follows (or to such other address as the party
entitled to notice shall hereafter designate in accordance with the terms
hereof):
if to the Customer:
XXXXXX XXXXXXX XXXX XXXXXX CHARTER __________ L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Xxxxxx X. Xxxxxx
if to DWR:
XXXX XXXXXX XXXXXXXX INC.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Senior Vice President
14. Survival. The provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising
while this Agreement was in effect.
15. Headings. Headings of Sections herein are for the
convenience of the parties only and are not intended to be a part of or
to affect the meaning or interpretation of this Agreement.
16. Incorporation by Reference. The Futures Customer Agreement
annexed hereto is hereby incorporated by reference herein and made a part
hereof to the same extent as if such document were set forth in full
herein. If any provision of this Agreement is or at any time becomes
inconsistent with the annexed document, the terms of this Agreement shall
control.
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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.
XXXXXX XXXXXXX XXXX XXXXXX CHARTER
__________ L.P.
By: Demeter Management
Corporation,
General Partner
By: _______________________________
Xxxx X. Xxxxxx
President
XXXX XXXXXX XXXXXXXX INC.
By: _______________________________
Xxxx X. Xxxxxx
Executive Vice President
Futures Customer Agreement
In consideration of the acceptance by Xxxx Xxxxxx Xxxxxxxx Inc. ("DWR")
of one or more accounts of the undersigned ("Customer") (if more than one
account is carried by DWR, all are covered by this Agreement and are
referred to collectively as the "Account") and DWR's agreement to act as
Customer's broker for the execution, clearance and/or carrying of
transactions for the purchase and sale of commodity interests, including
commodities, commodity futures contracts and commodity options, Customer
agrees as follows:
1. APPLICABLE RULES AND REGULATIONS - The Account and each transaction
therein shall be subject to the terms of this Agreement and to (a) all
applicable laws and the regulations, rules and orders (collectively
"regulations") of all regulatory and self-regulatory organizations
having jurisdiction and (b) the constitution, by-laws, rules,
regulations, orders, resolutions, interpretations and customs and
usages (collectively "rules") of the market and any associated
clearing organization (each an "exchange") on or subject to the rules
of which such transaction is executed and/or cleared. The reference in
the preceding sentence to exchange rules is solely for DWR's
protection and DWR's failure to comply therewith shall not constitute
a breach of this Agreement or relieve Customer of any obligation or
responsibility under this Agreement. DWR shall not be liable to
Customer as a result of any action by DWR, its officers, directors,
employees or agents to comply with any rule or regulation.
2. PAYMENTS TO DWR - Customer agrees to pay to DWR immediately on request
(a) commissions, fees and service charges as are in effect from time
to time together with all applicable regulatory and self- regulatory
organization and exchange fees, charges and taxes; (b) the amount of
any debit balance or any other liability that may result from
transactions executed for the account; and (c) interest on such debit
balance or liability at the prevailing rate charged by DWR at the time
such debit balance or liability arises and service charges on any such
debit balance or liability together with any reasonable costs and
attorney's fees incurred in collecting any such debit balance or
liability. Customer acknowledges that DWR may charge commissions at
other rates to other customers.
3. CUSTOMER'S DUTY TO MAINTAIN ADEQUATE MARGIN - Customer shall at all
times and without prior notice or demand from DWR maintain adequate
margins in the account so as continually to meet the original and
maintenance margin requirements established by DWR for Customer. DWR
may change such requirements from time to time at DWR's discretion.
Such margin requirements may exceed the margin requirements set by any
exchange or other regulatory authority and may vary from DWR's
requirements for other customers. Customer agrees, when so requested,
immediately to wire transfer margin funds and to furnish DWR with
names of bank officers for immediate verification of such transfers.
Customer acknowledges and agrees that DWR may receive and retain as
its own any interest, increment, profit, gain or benefit directly or
indirectly, accruing from any of the funds DWR receives from Customer.
4. DELIVERY; OPTION EXERCISE
(a) Customer acknowledges that the making or accepting of delivery
pursuant to a futures contract may involve a much higher degree
of risk than liquidating a position by offset. DWR has no control
over and makes no warranty with respect to grade, quality or
tolerances of any commodity delivered in fulfillment of a
contract.
(b) Customer agrees to give DWR timely notice and immediately o On
request to inform DWR if Customer intends to make or take
delivery under a futures contract or to exercise an option
contract. If so requested, Customer shall provide DWR with
satisfactory assurances that Customer can fulfill Customer's
obligation to make or take delivery under any contract. Customer
shall furnish DWR with property deliverable by it under any
contract in accordance with DWR's instructions.
(c) DWR shall not have any obligation to exercise any long option
contract unless Customer has furnished DWR with timely exercise
instructions and sufficient initial margin with respect to each
underlying futures contract.
5. FOREIGN CURRENCY - If DWR enters into any transaction for Customer
effected in a currency other than U.S. dollars: (a) any profit or loss
caused by changes in the rate of exchange for such currency shall be
for Customer's account and risk and (b) unless another currency is
designated in DWR's confirmation of such transaction, all margin for
such transaction and the profit or loss on the liquidation of such
transaction shall be in U.S. dollars at a rate of exchange determined
by DWR in its discretion on the basis of then prevailing market rates
of exchange for such foreign currency.
6. DWR MAY LIMIT POSITIONS HELD - Customer agrees that DWR, at its
discretion, may limit the number of open positions (net or gross)
which Customer may execute, clear and/or carry with or acquire through
it. Customer agrees (a) not to make any trade which would have the
effect of exceeding such limits, (b) that DWR may require Customer to
reduce open positions carried with DWR and (c) that DWR may refuse to
accept orders to establish new positions. DWR may impose and enforce
such limits, reduction or refusal whether or not they are required by
applicable law, regulations or rules. Customer shall comply with all
position limits established by any regulatory or self-regulatory
organization or any exchange. In addition, Customer agrees to notify
DWR promptly if customer is required to file position reports with any
regulatory or self-regulatory organization or with any exchange.
7. NO WARRANTY AS TO INFORMATION OR RECOMMENDATION - Customer
acknowledges that:
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(a) Any market recommendations and information DWR may communicate to
Customer, although based upon information obtained from sources
believed by DWR to be reliable, may be incomplete and not subject
to verification;
(b) DWR makes no representation, warranty or guarantee as to, and
shall not be responsible for, the accuracy or completeness of any
information or trading recommendation furnished to Customer;
(c) recommendations to Customer as to any particular transaction at
any given time may differ among DWR's personnel due to diversity
in analysis of fundamental and technical factors and may vary
from any standard recommendation made by DWR in its market
letters or otherwise; and
(d) DWR has no obligation or responsibility to update any market
recommendations or information it communicates to Customer.
Customer understands that DWR and its officers, directors,
affiliates, stockholders, representatives or associated persons may have
positions in and may intend to buy or sell commodity interests which are the
subject of market recommendations furnished to Customer, and that the market
positions of DWR or any such officer, director, affiliate, stockholder,
representative or associated person may or may not be consistent with the
recommendations furnished to Customer by DWR.
8. LIMITS ON DWR DUTIES; LIABILITY - Customer agrees:
(a) that DWR has no duty to apprise Customer of news or of the value
of any commodity interests or collateral pledged or in any way to
advise Customer with respect to the market;
(b) that the commissions which DWR receives are consideration solely
for the execution, reporting and carrying of Customer's trades;
(c) that if Customer has authorized any third party or parties to
place orders or effect transactions on behalf of Customer in any
Account, each such party has been selected by Customer based on
its own evaluation and assessment of such party and that such
party is solely the agent of Customer, and if any such party
allocates commodity interests among its customers, Customer has
reviewed each such party's commodity interest allocation system,
has satisfied itself that such allocation system is fair and will
seek recovery solely from such party to recover any damages
sustained by Customer as the result of any allocation made by
such party; and
(d) to waive any and all claims, rights or causes of action which
Customer has or may have against DWR or its officers, employees
and agents (i) arising in whole or in part, directly or
indirectly, out of any act or omission of any person, whether or
not legally deemed
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an agent of DWR, who refers or introduces Customer to DWR or
places orders for Customer and (ii) for any punitive damages and
to limit any claims arising out of this Agreement or the Account
to Customer's direct out-of-pocket damages.
9. EXTRAORDINARY EVENTS - Customer shall have no claim against DWR for any
loss, damage, liability, cost, charge, expense, penalty, fine or tax
caused directly or indirectly by (a) governmental, court, exchange,
regulatory or self-regulatory organization restrictions, regulations,
rules, decisions or orders, (b) suspension or termination of trading,
(c) war or civil or labor disturbance, (d) delay or inaccuracy in the
transmission or reporting of orders due to a breakdown or failure of
computer services, transmission or communication facilities, (e) the
failure or delay by any exchange to enforce its rules or to pay to DWR
any margin due in respect of Customer's Account, (f) the failure or
delay by any bank, trust company, clearing organization or other person
which, pursuant to applicable exchange rules, is holding Customer funds,
securities or other property to pay or deliver the same to DWR or (g)
any other cause or causes beyond DWR's control.
10. INDEMNIFICATION OF DWR - Customer agrees to indemnify, defend and hold
harmless DWR and its officers, employees and agents from and against any
loss, cost, claim, damage (including any consequential cost, loss or
damage), liability or expense (including reasonable attorneys' fees) and
any fine, sanction or penalty made or imposed by any regulatory or self-
regulatory authority or any exchange as the result, directly or
indirectly, of:
(a) Customer's failure or refusal to comply with any provision of this
Agreement or perform any obligation on its part to be performed
pursuant to this Agreement; and
(b) Customer's failure to timely deliver any security, commodity or
other property previously sold by DWR on Customer's behalf.
11. NOTICES; TRANSMITTALS - DWR shall transmit all communications to
Customer at Customer's address, telefax or telephone number set forth in
the accompanying Futures Account Application or to such other address as
Customer may hereafter direct in writing. Customer shall transmit all
communications to DWR (except routine inquiries concerning the Account)
to 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Futures Compliance
Officer. All payments and deliveries to DWR shall be made as instructed
by DWR from time to time and shall be deemed received only when actually
received by DWR.
12. CONFIRMATION CONCLUSIVE - Confirmation of trades and any other notices
sent to Customer shall be conclusive and binding on Customer unless
Customer or Customer's agent notifies DWR to the contrary (a) in the
case of an oral report, orally at the time received by Customer or its
agent or (b) in the case of a written report or notice, in writing prior
to opening of trading on the business day next following receipt of the
report. In
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addition, if Customer has not received a written confirmation that a
commodity interest transaction has been executed within three business
days after Customer has placed an order with DWR to effect such
transaction, and has been informed or believes that such order has been
or should have been executed, then Customer immediately shall notify DWR
thereof. Absent such notice, Customer conclusively shall be deemed
estopped to object and to have waived any such objection to the failure
to execute or cause to be executed such transaction. Anything in this
Section 12 withstanding, neither Customer nor DWR shall be bound by any
transaction or price reported in error.
13. SECURITY INTEREST - All money and property ("collateral") now or at any
future time held in Customer's Account, or otherwise held by DWR for
Customer, is subject to a security interest in DWR's favor to secure any
indebtedness at any time owing to it by Customer. DWR, in its
discretion, may liquidate any collateral to satisfy any margin or
Account deficiencies or to transfer the collateral to the general ledger
account of DWR.
14. TRANSFER OF FUNDS - At any time and from time to time and without prior
notice to Customer, DWR may transfer from one account to another account
in which Customer has any interest, such excess funds, equities,
securities or other property as in DWR's judgment may be required for
margin, or to reduce any debit balance or to reduce or satisfy any
deficits in such other accounts except that no such transfer may be made
from a segregated account subject to the Commodity Exchange Act to
another account maintained by Customer unless either Customer has
authorized such transfer in writing or DWR is effecting such transfer to
enforce DWR's security interest pursuant to Section 13. DWR promptly
shall confirm all transfers of funds made pursuant hereto to Customer in
writing.
15. DWR'S RIGHT TO LIQUIDATE CUSTOMER POSITIONS - In addition to all
other rights of DWR set forth in this Agreement:
(a) when directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over DWR or the
Account;
(b) whenever, in its discretion, DWR considers it necessary for its
protection because of margin requirements or otherwise;
(c) if Customer or any affiliate of Customer repudiates, violates,
breaches or fails to perform on a timely basis any term, covenant
or condition on its part to be performed under this Agreement or
another agreement with DWR;
(d) if a case in bankruptcy is commenced or if a proceeding under any
insolvency or other law for the protection of creditors or for the
appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer is filed by or against Customer or any
affiliate of Customer, or if Customer or any affiliate of Customer
makes or proposes to make any arrangement or composition for the
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benefit of its creditors, or if Customer (or any such affiliate) or
any or all of its property is subject to any agreement, order,
judgment or decree providing for Customer's dissolution,
winding-up, liquidation, merger, consolidation, reorganization or
for the appointment of a receiver, liquidator, trustee,
conservator, custodian or similar officer of Customer, such
affiliate or such property;
(e) DWR is informed of Customer's death or mental incapacity; or
(f) if an attachment or similar order is levied against the Account or
any other account maintained by Customer or any affiliate of
Customer with DWR;
DWR shall have the right to (i) satisfy any obligations due DWR out of
any Customer's property in DWR's custody or control, (ii) liquidate any
or all of Customer's commodity interest positions, (iii) cancel any or
all of Customer's outstanding orders, (iv) treat any or all of
Customer's obligations due DWR as immediately due and payable, (v) sell
any or all of Customer's property in DWR's custody or control in such
manner as DWR determines to be commercially reasonable, and/or (vi)
terminate any or all of DWR's obligations for future performance to
Customer, all without any notice to or demand on Customer. Any sale
hereunder may be made in any commercially reasonable manner. Customer
agrees that a prior demand, call or notice shall not be considered a
waiver of DWR's right to act without demand or notice as herein
provided, that Customer shall at all times be liable for the payment of
any debit balance owing in each account upon demand whether occurring
upon a liquidation as provided under this Section 15 or otherwise under
this Agreement, and that in all cases Customer shall be liable for any
deficiency remaining in each Account in the event of liquidation thereof
in whole or in part together with interest thereon and all costs
relating to liquidation and collection (including reasonable attorneys'
fees).
16. CUSTOMER REPRESENTATIONS, WARRANTIES AND AGREEMENTS - Customer
represents and warrants to and agrees with DWR that:
(a) Customer has full power and authority to enter into this Agreement
and to engage in the transactions and perform its obligations
hereunder and contemplated hereby and (i) if a corporation or a
limited liability company, is duly organized under the laws of the
jurisdiction set forth in the accompanying Futures Account
Application, or (ii) if a partnership, is duly organized pursuant
to a written partnership agreement and the general partner
executing this Agreement is duly authorized to do so under the
partnership agreement;
(b) Neither Customer nor any partner, director, officer, member,
manager or employee of Customer nor any affiliate of Customer is a
partner, director, officer, member, manager or employee of a
futures commission merchant introducing broker, exchange or
self-regulatory organization or an employee or commissioner of the
Commodity Futures Trading Commission (the "CFTC"), except as
previously disclosed in writing to DWR;
-6-
(c) The accompanying Futures Account Application and Personal Financial
Statements, if applicable, (including any financial statements
furnished in connection therewith) are true, correct and complete.
Except as disclosed on the accompanying Futures Account Application
or otherwise provided in writing, (i) Customer is not a commodity
pool or is exempt from registration under the rules of the
Commission, and (ii) Customer is acting solely as principal and no
one other than Customer has any interest in any Account of
Customer. Customer hereby authorizes DWR to contact such banks,
financial institutions and credit agencies as DWR shall deem
appropriate for verification of the information contained herein.
(d) Customer has determined that trading in commodity interests is
appropriate for Customer, is prudent in all respects and does not
and will not violate Customer's charter or by-laws (or other
comparable governing document) or any law, rule, regulation,
judgment, decree, order or agreement to which Customer or its
property is subject or bound;
(e) As required by CFTC regulations, Customer shall create, retain and
produce upon request of the applicable contract market, the CFTC or
the United States Department of Justice documents (such as
contracts, confirmations, telex printouts, invoices and documents
of title) with respect to cash transactions underlying exchanges of
futures for cash commodities or exchange of futures in connection
with cash commodity transactions;
(f) Customer consents to the electronic recording, at DWR's discretion,
of any or all telephone conversations with DWR (without automatic
tone warning device), the use of same as evidence by either party
in any action or proceeding arising out of the Agreement and in
DWR's erasure, at its discretion, of any recording as part of its
regular procedure for handling of recordings;
(g) Absent a separate written agreement between Customer and DWR with
respect to give-ups, DWR, in its discretion, may, but shall have no
obligation to, accept from other brokers commodity interest
transactions executed by such brokers on an exchange for Customer
and proposed to be "given-up" to DWR for clearance and/or carrying
in the Account;
(h) DWR, for and on behalf of Customer, is authorized and empowered to
place orders for commodity interest transactions through one or
more electronic or automated trading systems maintained or operated
by or under the auspices of an exchange, that DWR shall not be
liable or obligated to Customer for any loss, damage, liability,
cost or expense (including but not limited to loss of profits, loss
of use, incidental or consequential damages) incurred or sustained
by Customer and arising in whole or in part, directly or
indirectly, from any fault, delay, omission, inaccuracy or
termination of a
-7-
system or DWR's inability to enter, cancel or modify an order on
behalf of Customer on or through a system. The provisions of this
Section 16(h) shall apply regardless of whether any customer claim
arises in contract, negligence, tort, strict liability, breach of
fiduciary obligations or otherwise; and
(i) If Customer is subject to the Financial Institution Reform,
Recovery and Enforcement Act of 1989, the certified resolutions set
forth following this Agreement have been caused to be reflected in
the minutes of Customer's Board of Directors (or other comparable
governing body) and this Agreement is and shall be, continuously
from the date hereof, an official record of Customer.
Customer agrees to promptly notify DWR in writing if any of the
warrantie and representations contained in this Section 16 becomes
inaccurate or in any way ceases to be true, complete and correct.
17. SUCCESSORS AND ASSIGNS - This Agreement shall inure to the benefit of
DWR, its successors and assigns, and shall be binding upon Customer and
Customer's executors, trustees, administrators, successors and assigns,
provided, however, that this Agreement is not assignable by Customer
without the prior written consent of DWR.
18. MODIFICATION OF AGREEMENT BY DWR; NON-WAIVER PROVISION - This
Agreement may only be altered, modified or amended by mutual written
consent of the parties, except that if DWR notifies Customer of a change
in this Agreement and Customer thereafter effects a commodity interest
transaction in an account, Customer agrees that such action by Customer
will constitute consent by Customer to such change. No employee of DWR
other than DWR's General Counsel or his or her designee, has any
authority to alter, modify, amend or waive in any respect any of the
terms of this Agreement. The rights and remedies conferred upon DWR
shall be cumulative, and its forbearance to take any remedial action
available to it under this Agreement shall not waive its right at any
time or from time to time thereafter to take such action.
19. SEVERABILITY - If any term or provision hereof or the application
thereof to any persons or circumstances shall to any extent be contrary
to any exchange, government or self-regulatory regulation or contrary to
any federal, state or local law or otherwise be invalid or
unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as
to which it is contrary, invalid or unenforceable, shall not be affected
thereby.
20. CAPTIONS - All captions used herein are for convenience only, are not a
part of this Agreement, and are not to be used in construing or
interpreting any aspect of this Agreement.
21. TERMINATION - This Agreement shall continue in force until written
notice of termination is given by Customer or DWR. Termination shall not
relieve
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either party of any liability or obligation incurred prior to such
notice. Upon giving or receiving notice of termination, Customer will
promptly take all action necessary to transfer all open positions in
each account to another futures commission merchant.
22. ENTIRE AGREEMENT - This Agreement constitutes the entire agreement
between Customer and DWR with respect to the subject matter hereof and
supersedes any prior agreements between the parties with respect to such
subject matter.
23. GOVERNING LAW; CONSENT TO JURISDICTION -
(a) In case of a dispute between Customer and DWR arising out of or
relating to the making or performance of this Agreement or any
transaction pursuant to this Agreement (i) this Agreement and its
enforcement shall be governed by the laws of the State of New
York without regard to principles of conflicts of laws, and (ii)
Customer will bring any legal proceeding against DWR in, and
Customer hereby consents in any legal proceeding by DWR to the
jurisdiction of, any state or federal court located within the
State and City of New York in connection with all legal
proceedings arising directly, indirectly or otherwise in
connection with, out of, related to or from Customer's Account,
transactions contemplated by this Agreement or the breach
thereof. Customer hereby waives all objections Customer, at any
time, may have as to the propriety of the court in which any such
legal proceedings may be commenced. Customer also agrees that any
service of process mailed to Customer at any address specified to
DWR shall be deemed a proper service of process on the
undersigned.
(b) Notwithstanding the provisions of Section 23 (a)(ii), Customer
may elect at this time to have all disputes described in this
Section resolved by arbitration. To make such election, Customer
must sign the Arbitration Agreement set forth in Section 24.
Notwithstanding such election, any question relating to whether
Customer or DWR has commenced an arbitration proceeding in a
timely manner, whether a dispute is within the scope of the
Arbitration Agreement or whether a party (other than Customer or
DWR) has consented to arbitration and all proceedings to compel
arbitration shall be determined by a court as specified in
Section 23 (a)(ii).
24. ARBITRATION AGREEMENT (OPTIONAL) - Every dispute between Customer and
DWR arising out of or relating to the making or performance of this
Agreement or any transaction pursuant to this Agreement, shall be
settled by arbitration in accordance with the rules, then in effect, of
the National Futures Association, the contract market upon which the
transaction giving rise to the claim was executed, or the National
Association of Securities Dealers as Customer may elect. If Customer
does not make such election by registered mail addressed to DWR at 000
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000; Attention: Deputy
General Counsel, within 45 days after demand by DWR that the Customer
make such election, then DWR may make such election. DWR agrees to pay
any incremental fees which may be assessed by a qualified forum for
making available a "mixed panel" of arbitrators, unless the arbitrators
determine that Customer has acted in bad faith in initiating or
conducting the proceedings. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
-9-
IN ADDITION TO FOREIGN FORUMS, THREE FORUMS EXIST FOR THE RESOLUTION OF
COMMODITY DISPUTES: CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY
FUTURES TRADING COMMISSION ("CFTC") AND ARBITRATION CONDUCTED BY A SELF-
REGULATORY OR OTHER PRIVATE ORGANIZATION.
THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY
ARBITRATION MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS,
INCLUDING THE ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF
DISPUTES WITHOUT INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES,
HOWEVER, THAT EACH CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF
ARBITRATION AND THAT YOUR CONSENT TO THIS ARBITRATION AGREEMENT BE
VOLUNTARY.
BY SIGNING THIS AGREEMENT, YOU (1) MAY BE WAIVING YOUR RIGHT TO XXX IN A
COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY
CLAIMS OR COUNTERCLAIMS WHICH YOU OR DWR MAY SUBMIT TO ARBITRATION UNDER
THIS AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT
INSTEAD TO PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER
SECTION 14 OF THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE
WHICH MAY BE ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A
DISPUTE ARISES, YOU WILL BE NOTIFIED IF DWR INTENDS TO SUBMIT THE
DISPUTE TO ARBITRATION. IF YOU BELIEVE A VIOLATION OF THE COMMODITY
EXCHANGE ACT IS INVOLVED AND IF YOU PREFER TO REQUEST A SECTION 14
"REPARATIONS" PROCEEDINGS BEFORE THE CFTC, YOU WILL HAVE 45 DAYS FROM
THE DATE OF SUCH NOTICE IN WHICH TO MAKE THAT ELECTION.
YOU NEED NOT AGREE TO THIS ARBITRATION AGREEMENT TO OPEN AN ACCOUNT WITH
DWR. See 17 CFR 180.1-180.5. ACCEPTANCE OF THIS ARBITRATION AGREEMENT
REQUIRES A SEPARATE SIGNATURE ON PAGE 8.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL) - Without its
prior notice, Customer agrees that when DWR executes sell or buy orders
on Customer's behalf, DWR, its directors, officers, employees, agents,
affiliates, and any floor broker may take the other side of Customer's
transaction through any account of such person subject to its being
-10-
executed at prevailing prices in accordance with and subject to the
limitations and conditions, if any, contained in applicable rules and
regulations.
26. AUTHORIZATION TO TRANSFER FUNDS (OPTIONAL) - Without limiting other
provisions herein, DWR is authorized to transfer from any segregated
account subject to the Commodity Exchange Act carried by DWR for the
Customer to any other account carried by DWR for the Customer such
amount of excess funds as in DWR's judgment may be necessary at any time
to avoid a margin call or to reduce a debit balance in said account. It
is understood that DWR will confirm in writing each such transfer of
funds made pursuant to this authorization within a reasonable time after
such transfer.
27. SUBORDINATION AGREEMENT (Applies only to Accounts with funds held
in foreign countries) - Funds of customers trading on United States
contract markets may be held in accounts denominated in a foreign
currency with depositories located outside the United States or its
territories if the customer is domiciled in a foreign country or if the
funds are held in connection with contracts priced and settled in a
foreign currency. Such accounts are subject to the risk that events
could occur which hinder or prevent the availability of these funds for
distribution to customers. Such accounts also may be subject to foreign
currency exchange rate risks.
If authorized below, Customer authorizes the deposit of funds into such
foreign depositories. For customers domiciled in the United States, this
authorization permits the holding of funds in regulated accounts
offshore only if such funds are used to margin, guarantee, or secure
positions in such contracts or accrue as a result of such positions. In
order to avoid the possible dilution of other customer funds, a customer
who has funds held outside the United States agrees by accepting this
subordination agreement that his claims based on such funds will be
subordinated as described below in the unlikely event both of the
following conditions are met: (1) DWR is placed in receivership or
bankruptcy, and (2) there are insufficient funds available for
distribution denominated in the foreign currency as to which the
customer has a claim to satisfy all claims against those funds.
By initialing the Subordination Agreement below, Customer agrees that if
both of the conditions listed above occur, its claim against DWR's
assets attributable to funds held overseas in a particular foreign
currency may be satisfied out of segregated customer funds held in
accounts denominated in dollars or other foreign currencies only after
each customer whose funds are held in dollars or in such other foreign
currencies receives its pro-rata portion of such funds. It is further
agreed that in no event may a customer whose funds are held overseas
receive more than its pro-rata share of the aggregate pool consisting of
funds held in dollars, funds held in the particular foreign currency,
and non-segregated assets of DWR.
-11-
OPTIONAL ELECTIONS
The following provisions, which are set forth in this agreement, need not be
entered into to open the Account. Customer agrees that its optional elections
are as follows:
Signature required for each election
ARBITRATION AGREEMENT:
(Agreement Paragraph 24) ____________________________________
CONSENT TO TAKE THE OTHER SIDE OF ORDERS:
(Agreement Paragraph 25) X___________________________________
AUTHORIZATION TO TRANSFER FUNDS:
(Agreement Paragraph 26) ____________________________________
ACKNOWLEDGEMENT TO SUBORDINATION AGREEMENT
(Agreement Paragraph 27) X___________________________________
(Required for accounts holding
non-U.S. currency)
HEDGE ELECTION
Customer confirms that all transactions in the Account will
represent bona fide hedging transactions, as defined by the
Commodity Futures Trading Commission, unless DWR is notified
otherwise not later than the time an order is placed for the
Account [check box if applicable]: /_ /
Pursuant to CFTC Regulation 190.06(d), Customer specifies and agrees, with
respect to hedging transactions in the Account, that in the unlikely event
of DWR's bankruptcy, it prefers that the bankruptcy trustee [check
appropriate box]:
A. Liquidate all open contracts without first seeking
instructions either from or on behalf of Customer. /_ /
B. Attempt to obtain instructions with respect to the
disposition of all open contracts.
(If neither box is checked, Customer shall be deemed
to elect A) /_ /
ACKNOWLEDGEMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned each hereby acknowledges its separate receipt from DWR, and its
understanding of each of the following documents prior to the opening of the
account:
O Risk Disclosure Statement for O Project ATM Customer Information
Futures and Options (in the form Statement
prescribed by CFTC
Regulation 1.55(c))
O LME Risk Warning Notice O Questions & Answers on Flexible
Options Trading at the CBOT
O Xxxx Xxxxxx Order Presumption for O CME Average Pricing System
After Hours Electronic Markets Disclosure Statement
O NYMEX ACCESSSM Risk Disclosure O Special Notice to Foreign Brokers
Statement and Foreign Traders
O Globex(r) Customer Information and
Risk Disclosure Statement
REQUIRED SIGNATURES
The undersigned has received, read, understands and agrees to all the provisions
of this Agreement and the separate risk disclosure statements enumerated above
and agrees to promptly notify DWR in writing if any of the warranties and
representations contained herein become inaccurate or in any way cease to be
true, complete and correct.
-------------------------------------------------------------------------------
CUSTOMER NAME(S)
By: DEMETER MANAGEMENT CORPORATION
By:
------------------------------------------ --------------------------------
AUTHORIZED SIGNATURE(S) DATE
Xxxx X. Xxxxxx, President
(If applicable, print name and title of signatory)
Exhibit 10.01(a)
CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement"), made as of the ____
day of ________________, 1998, by and among XXXXXX XXXXXXX XXXX XXXXXX
CHARTER ____________ 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 ________________, 1998, and a Limited Partnership
Agreement dated as of _______________, 1998 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 a management agreement (the "Management Agreement") with a
certain trading advisor (the "Trading Advisor"), which provides that the
Trading Advisor has 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 Agreement;
WHEREAS, the Customer and DWR have entered into that certain
Customer Agreement, dated as of _________________, 1998 (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 Advisor, 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 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 the 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 Advisor.
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
Advisor, the brokerage fees to DWR pursuant to the DWR Customer Agreement,
and all extraordinary expenses incurred by it. DWR shall pay all of the
organizational, initial and continuing offering, and ordinary
administrative expenses of the Customer (including, but not limited to,
legal, accounting, and auditing fees, printing costs, filing fees, escrow
fees, marketing costs and expenses, and other related expenses), and all
charges of CFI (as described in paragraph 6 below), and shall not be
reimbursed therefor.
5. Agreement Nonexclusive. CFI shall be free to render
services of the nature to be rendered to the Customer hereunder to other
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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 Advisor may direct from
time to time. However, the parties agree that CFI, and not the Trading
Advisor, 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 and may be used solely as margin for
the Customer's trading.
CFI shall pay interest to DWR monthly based upon a daily
calculation of the U.S. Dollar balance equity (i.e., cash and open trade
equity) in the Customer's account as principal and the then prevailing 13-
week Treasury xxxx weekly auction discount rate, less 10 basis points,
divided by 360 as the interest rate. CFI shall pay to or earn interest
from DWR, as the case may be, monthly based upon a daily calculation of
the positive or negative non-U.S. Dollar balance (in each currency) in the
account and any U.S. Dollar balance on deposit at a foreign clearinghouse
at the actual interest rate at which earned or borrowed by CFI less actual
haircuts applied by a third-party other than CFI. If CFI lends foreign
currency to the account, CFI shall be entitled to charge the account the
prevailing borrowing rate for such currency, plus 10 basis points, in
accordance with the schedule of such rates provided by CFI.
The Customer understands that it will not receive any interest
income on its assets held by CFI other than that required to be paid by
DWR to Customer pursuant to Section 7 of the DWR Customer Agreement.
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.
-3-
10. Delivery; Option Exercise.
(a) The Customer acknowledges that the making or accepting of
delivery pursuant to a futures contract may involve a much higher degree
of risk than liquidating a position by offset. CFI has no control over
and makes no warranty with respect to grade, quality or tolerances of any
commodity delivered in fulfillment of a contract.
(b) The Customer agrees to give CFI timely notice and
immediately on request to inform CFI if the Customer intends to make or
take delivery under a futures contract or to exercise an option contract.
If so requested, the Customer shall provide CFI with satisfactory
assurances that the Customer can fulfill the Customer's obligation to make
or take delivery under any contract. The Customer shall furnish CFI with
property deliverable by it under any contract in accordance with CFI's
instructions.
(c) CFI shall not have any obligation to exercise any long
option contract unless the Customer has furnished CFI with timely exercise
instructions and sufficient initial margin with respect to each underlying
futures contract.
11. Standard of Liability and Indemnity. Subject to Section 2
hereof, CFI and its affiliates (as defined below) shall not be liable to
the Customer, the General Partner or Limited Partners, or any of its or
their respective successors or assigns, for any act, omission, conduct, or
activity undertaken by or on behalf of the Customer pursuant to this
Agreement which CFI determines, in good faith, to be in the best interests
of the Customer, unless such act, omission, conduct, or activity by CFI or
its affiliates constituted misconduct or negligence.
The Customer shall indemnify, defend and hold harmless CFI and
its affiliates from and against any loss, liability, damage, cost or
expense (including attorneys' and accountants' fees and expenses incurred
in the defense of any demands, claims, or lawsuits) actually and
reasonably incurred arising from any act, omission, conduct, or activity
undertaken by CFI on behalf of the Customer pursuant to this Agreement,
including, without limitation, any demands, claims or lawsuits initiated
by a Limited Partner (or assignee thereof), provided that (i) CFI has
determined, in good faith, that the act, omission, conduct, or activity
giving rise to the claim for indemnification was in the best interests of
the Customer, and (ii) the act, omission, conduct, or activity that was
the basis for such loss, liability, damage, cost, or expense was not the
result of misconduct or negligence. Notwithstanding anything to the
contrary contained in the foregoing, neither CFI nor any of its affiliates
shall be indemnified by the Customer for any losses, liabilities, or
expenses arising from or out of an alleged violation of federal or state
securities laws unless (a) there has been a successful adjudication on the
merits of each count involving alleged securities law violations as to the
particular indemnitee, or (b) such claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee, or (c) a court of competent jurisdiction approves a
settlement of the claims against the particular indemnitee and finds that
indemnification of the settlement and related costs should be made,
provided, with regard to such court approval, the indemnitee must apprise
the court of the position of the SEC, and the positions of the respective
securities administrators of Massachusetts, Missouri, Tennessee and/or
those other states and jurisdictions in which the plaintiffs claim they
were offered or sold Units, with respect to indemnification for securities
laws violations before seeking court approval for indemnification.
Furthermore, in any action or proceeding brought by a Limited Partner in
the right of the Customer to which CFI or any affiliate thereof is a party
defendant, any such person shall be indemnified only to the extent and
subject to the conditions specified in this Section 11. The Customer
shall make advances to CFI or its affiliates hereunder only if: (i) the
demand, claim, lawsuit, or legal action relates to the performance of
duties or services by such persons to the Customer; (ii) such demand,
claim, lawsuit, or legal action is not initiated by a Limited Partner; and
(iii) such advances are repaid, with interest at the legal rate under
-4-
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
-5-
substituted by a bank with a net worth and credit
rating equal to Credit Agricole Indosuez S.A.) in
a transaction involving the purchase or sale of
stock or substantially all of the assets of the
acquired entity or which involves a capital
contribution to or by such entity or entities (in
an amount representing fifty percent (50%) or
more of the book value of CFI's or such entity's
(or their respective affiliate's) net worth), or
the purchase or sale of stock representing fifty
percent (50%) or more of CFI's or such entity's
(or their respective affiliate's) outstanding
equity securities; and
(ii) at any time effective immediately upon written
notice to CFI in the event:
(A) CFI ceases to be registered or conduct business
as a futures commission merchant or discontinues
its membership or clearing membership on any
major futures interest exchange in the United
States (or any affiliated clearing corporation)
or in the NFA; or
(B) a receiver, liquidator or trustee of CFI is
appointed by court order and such order remains
in effect for more than thirty (30) days; or CFI
is adjudicated bankrupt or insolvent; or any of
CFI's property is sequestered by court order and
such order remains in effect for more than thirty
(30) days; or a petition is filed against CFI
under any bankruptcy, reorganization,
arrangement, insolvency, readjustment or debt,
dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect,
and is not dismissed within thirty (30) days
after such filing; or CFI files a petition in
voluntary bankruptcy or seeking relief under any
provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect,
or consents to the filing of any petition against
it under any such law; or
(C) CFI, DWR or the Customer is ordered or otherwise
directed to terminate this Agreement by any
governmental, regulatory, or self-regulatory
authority.
Any such termination by any party shall be without penalty.
13. Complete Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the matters referred to
herein, and no other agreement, verbal or otherwise, shall be binding as
among the parties unless in writing and signed by the party against whom
enforcement is sought.
14. Assignment. This Agreement may not be assigned by any
party without the express written consent of the other parties.
15. Amendment. This Agreement may not be amended except by the
written consent of the parties and provided such amendment is consistent
with the Prospectus.
16. Notices. All notices required or desired to be delivered
under this Agreement shall be in writing and shall be effective when
delivered personally on the day delivered, or when given by registered or
certified mail, postage prepaid, return receipt requested, on the day of
receipt, addressed as follows (or to such other address as the party
entitled to notice shall hereafter designate in accordance with the terms
hereof):
-6-
if to the Customer:
XXXXXX XXXXXXX XXXX XXXXXX CHARTER ____________ L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Xxxxxx X. Xxxxxx
if to DWR:
XXXX XXXXXX XXXXXXXX INC.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Senior Vice President
if to CFI:
XXXX FUTURES INC
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal/Compliance Department
17. Survival. The provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while
this Agreement was in effect.
18. Headings. Headings of Sections herein are for the
convenience of the parties only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
19. Incorporation by Reference. The Futures Account Agreement
annexed hereto is hereby incorporated by reference herein and made a part
hereof to the same extent as if such document were set forth in full
herein. If any provision of this Agreement is or at any time becomes
inconsistent with the annexed document, the terms of this Agreement shall
control.
20. Governing Law; Venue. This Agreement shall be governed by,
and construed in accordance with, the law of the State of New York
(without regard to its choice of law principles). If any action or
proceeding shall be brought by a party to this Agreement or to enforce any
right or remedy under this Agreement, each party hereto hereby consents
and will submit to the jurisdiction of the courts of the State of New York
or any federal court sitting in the County, City and State of New York.
Any action or proceeding brought by any party to this Agreement to enforce
any right, assert any claim, or obtain any relief whatsoever in connection
with this Agreement shall be brought by such party exclusively in the
courts of the State of New York or any federal court sitting in the
County, City and State of New York.
-7-
IN WITNESS WHEREOF, this Agreement has been executed for and on
behalf of the undersigned as of the day and year first above written.
XXXXXX XXXXXXX XXXX XXXXXX CHARTER
____________ L.P.
By: Demeter Management Corporation,
General Partner
By: _______________________________
Xxxx X. Xxxxxx
President
XXXX XXXXXX XXXXXXXX INC.
By: _______________________________
Xxxx X. Xxxxxx
Executive Vice President
XXXX FUTURES INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
-8-
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 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.
-2-
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;
-3-
(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, such excess funds, equities,
securities or other property as in Xxxx'x judgment may be required for
-6-
margin, or to reduce any debit balance or to reduce or satisfy any
deficits in such other Accounts except that no such transfer may be
made from a segregated Account subject to the Commodity Exchange Act to
another Account maintained by Customer unless either Customer has
authorized such transfer in writing or Xxxx is effecting such transfer
to enforce Xxxx'x security interest pursuant to Section 13. Xxxx
promptly shall confirm all transfers of funds made pursuant hereto to
Customer in writing.
15. XXXX'X RIGHT TO LIQUIDATE CUSTOMER POSITIONS
In addition to all other rights of Xxxx set forth in this Agreement:
(a) When directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over Xxxx or
the Account;
(b) Whenever Xxxx reasonably considers it necessary for its
protection because of margin requirements or otherwise;
(c) If Customer or any affiliate of Customer repudiates, violates,
breaches or fails to perform on a timely basis any term,
covenant or condition on its part to be performed under this
Agreement or another agreement with Xxxx;
(d) If a case in bankruptcy is commenced or if a proceeding under
any insolvency or other law for the protection of creditors or
for the appointment of a receiver, liquidator, trustee,
conservator, custodian or similar officer is filed by or
against Customer or any affiliate of Customer, or if Customer
or any affiliate of Customer makes or proposes to make any
arrangement or composition for the benefit of its creditors,
or if Customer (or any such affiliate) or any or all of its
property is subject to any agreement, order, judgment or
decree providing for Customer's dissolution, winding-up,
liquidation, merger, consolidation, reorganization or for the
appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer of Customer, such affiliate or
such property;
(e) Xxxx is informed of Customer's death or mental incapacity; or
(f) If an attachment or similar order is levied against the
Account or any other account maintained by a Customer or any
affiliate of Customer with Xxxx;
Xxxx shall have the right to (i) satisfy any obligations due Xxxx out
of any Customer's property (also referred to as "Collateral") in Xxxx'x
custody or control, (ii) liquidate any or all of Customer's commodity
interest positions, such liquidation shall include transactions
involving the exchange of futures for cash commodities or the exchange
of futures in connection with cash commodity transactions, (iii) cancel
any or all of Customer's outstanding orders, (iv) treat any or all of
Customer's obligations due Xxxx as immediately due and payable, (v)
sell any or all of Customer's property in Xxxx'x custody or control in
-7-
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
similar state law, and the party or parties
designated as trustee or trustees by Customer to Xxxx
-8-
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 of the Agreement and in Xxxx'x erasure, at its discretion,
of any recording as part of its regular procedure for handling
of recordings;
-9-
(g) Absent a separate written agreement between Customer and 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 deemed a
proper service of process on the undersigned. Customer agrees
that venue of all proceedings shall be in Chicago, Illinois.
-11-
(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 15.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL)
Without its prior notice, Customer agrees that when Xxxx executes sell
or buy orders on Customer's behalf, Xxxx, its directors, officers,
employees, agents, affiliates, and any floor broker may take the other
side of customer's transaction through any Account of such person
subject to its being executed 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 electronic mail or facsimile. Customer
-13-
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.
-14-
OPTIONAL ELECTIONS/ACKNOWLEDGMENT
The following provisions, which are set forth in this Agreement, need not be
entered into to open the Account. Customer agrees that its optional elections
are as follows:
SIGNATURE REQUIRED FOR EACH ELECTION
ARBITRATION AGREEMENT --------------------------------------------------
(Agreement Paragraph 24) (Date)
CONSENT TO TAKE THE OTHER SIDE OF ORDERS (Agreement
Paragraph 25) X 12-1-97
--------------------------------------------------
(Date)
AUTHORIZATION TO TRANSFER FUNDS (Agreement Paragraph 26)
--------------------------------------------------
(Date)
CONSENT TO RECEIVE STATEMENTS BY ELECTRONIC TRANSMISSION
(Agreement Paragraph 27)
--------------------------------------------------
(Date)
ACKNOWLEDGMENT OF SUBORDINATION AGREEMENT
(Agreement Paragraph 28) (Required for
accounts holding non-U.S. currency) X 12-1-97
--------------------------------------------------
(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:
* Risk Disclosure Statement for Futures and Options
* LME Risk Warning Notice
* NYMEX ACCESSSM Risk Disclosure Statement
* Globex(R) Customer Information and Risk Disclosure Statement
* Project A(TM) Customer Information Statement
* Questions & Answers on Flexible Options Trading at the CBOT
* CME Average Pricing System Disclosure Statement
* Special Notice to Foreign Brokers and Foreign Traders
REQUIRED SIGNATURES
CUSTOMER
The undersigned has received, read, understands and agrees to all the provisions
of this Agreement and the separate risk disclosure statements enumerated above
and agrees to promptly notify 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)
By: DEMETER MANAGEMENT CORPORATION
December 1, 1997
By: ______________________________________________________ ________________
Authorized signature(s) Date
Xxxx X. Xxxxxx, President
[If applicable, print name and title of signatory]
XXXX FUTURES INC.
Accepted and Agreed:
Xxxx Futures Inc.
By: _________________________________ By: _________________________________
Title: _______________________________ Title: _______________________________
Date: December 1, 1997 Date: ________________________________
Exhibit 10.01(b)
XXXX FUTURES INC.
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile (000) 000-0000
INTERNATIONAL FOREIGN EXCHANGE MASTER AGREEMENT
MASTER AGREEMENT dated as of __________________, by and
between XXXX FUTURES INC., a Delaware corporation and XXXXXX XXXXXXX XXXX XXXXXX
CHARTER L.P.
SECTION 1. DEFINITIONS
Unless otherwise required by the context, the following
terms shall have the following meanings in the Agreement:
"Agreement" has the meaning given to it in Section 2.2.
"Base Currency", as to a Party, means the Currency agreed to
as such in relation to it in Part VII of the Schedule.
"Base Currency Rate" means as to a Party and any amount the
cost (expressed as a percentage rate per annum) at which
that Party would be able to fund that amount from such
sources and for such periods as it in its reasonable
discretion from time to time decide, as determined in good
faith by it.
"Business Day" means (i) a day which is a Local Banking day
for the applicable Designated Office of both Parties, or
(ii) solely in relation to delivery of a Currency, a day
which is a Local Banking Day in relation to that Currency.
"Close-Out Amount" has the meaning given to it in Section
5.1.
"Close-Out Date" means a day on which, pursuant to the
provisions of Section 5.1, the Non-Defaulting Party closes
out and liquidates Currency Obligations or such a close-out
and liquidation occurs automatically.
"Closing Gain" means, as to the Non-Defaulting Party, the
difference described as such in relation to a particular
Value Date under the provisions of Section 5.1.
"Closing Loss" means, as to the Non-Defaulting Party, the
difference described as such in relation to a particular
Value Date under the provisions of Section 5.1.
"Confirmation" means a writing (including telex, facsimile,
or other electronic means from which it is possible to
produce a hard copy) evidencing an FX Transaction governed
by the Agreement which shall specify (i) the Parties thereto
and their Designated Offices through which they are
respectively acting, (ii) the amounts of the Currencies
being bought or sold and by which Party, (iii) the Value
Date, and (iv) any other term generally included in such a
writing in accordance with the practice of the relevant
foreign exchange market.
"Credit Support Document" means, as to a Party (the "first
Party") a guaranty, hypothecation agreement, margin or
security agreement or document, or any other document
containing an obligation of a third party ("Credit Support
Provider") or of the first Party in favor of the other Party
supporting any obligations of the first Party hereunder.
"Credit Support Provider" has the meaning given to it in the
definition of Credit Support Document.
"Currency" means money denominated in the lawful currency of
any country or the Ecu.
"Currency Obligation" means any obligation of a Party to
deliver a Currency pursuant to an FX Transaction governed by
the Agreement, or pursuant to the application of Sections
3.3(a) or 3.3(b).
"Custodian" has the meaning given to it in the definition of
Event of Default.
"Defaulting Party" has the meaning given to it in the
definition of Event of Default.
"Designated Office(s)" means, as to a Party, the office(s)
specified in Part II of the Schedule hereto, as such
Schedule may be modified from time to time by agreement of
the Parties.
"Effective Date" means the date of this Master agreement.
"Event of Default" means the occurrence of any of the
following with respect to a Party (the "Defaulting Party",
the other Party being the "Non-Defaulting Party"):
(i) the Defaulting Party shall default in
any payment under the Agreement to the
Non-Defaulting Party with respect to any
sum when due under any Currency
Obligation or pursuant to the Agreement
and such failure shall continue for two
(2) Business Days after written notice
of non-payment given by the
Non-Defaulting Party to the Defaulting
Party;
-2-
(ii) the Defaulting Party shall commence a
voluntary case or other proceeding
seeking liquidation, reorganization or
other similar relief with respect to
itself or to its debts under any
bankruptcy, insolvency or similar law,
or seeking the appointment of a trustee,
receiver, liquidator, conservator,
administrator, custodian or other
similar official (each, a "Custodian")
of it or any substantial part of its
assets; or shall take any corporate
action to authorize any of the
foregoing;
(iii) an involuntary case or other proceeding
shall be commenced against the
Defaulting Party seeking liquidation,
reorganization or other similar relief
with respect to it or its debts under
any bankruptcy, insolvency or similar
law or seeking the appointment of a
Custodian of it or any substantial part
of its assets, and such involuntary case
or other proceeding is not dismissed
within five (5) days of its institution
or presentation;
(iv) the Defaulting Party is bankrupt or
insolvent, as defined under any
bankruptcy or insolvency law applicable
to such party;
(v) the Defaulting Party shall otherwise be
unable to pay its debts as they become
due;
(vi) the Defaulting Party or any Custodian
acting on behalf of the Defaulting Party
shall disaffirm, disclaim or repudiate
any Currency Obligation;
(vii) (a) any representation or warranty made
or deemed made by the Defaulting Party
pursuant to the Agreement or pursuant to
any Credit Support Documents shall prove
to have been false or misleading in any
material respect as at the time it was
made or given and one (1) Business Day
has elapsed after the Non-Defaulting
Party has given the Defaulting Party
written notice thereof, or (b) the
Defaulting Party fails to perform or
comply with any obligation assumed by it
under the Agreement (other than an
obligation to make payment of the kind
referred to in clause (i) of this
definition of Event of Default), and
such failure is continuing thirty (30)
days after the Non-Defaulting Party has
given the Defaulting Party written
notice thereof;
(viii) the Defaulting Party consolidates or
amalgamates with or merges into or
transfers all or substantially all its
assets to another entity and (a) the
creditworthiness of the resulting,
surviving or transferee entity is
materially weaker than that of the
Defaulting Party prior to such action,
or (b) at the time of such
consolidation, amalgamation, merger or
transfer the resulting, surviving or
transferee entity fails to assume all
the obligations of the Defaulting Party
under the Agreement by operation of law
or pursuant to an agreement satisfactory
to the Non-Defaulting Party;
-3-
(ix) by reason of any default, or event of
default or other similar condition or
event, any Specified Indebtedness (being
Specified Indebtedness of an amount
which, when expressed in the Currency of
the Threshold Amount, is in aggregate
equal to or in excess of the Threshold
amount) of the Defaulting Party or any
Credit Support Provider in relation to
it; (a) is not paid on the due date
therefor and remains unpaid after any
applicable grace period has elapsed, or
(b) becomes, or becomes capable at any
time of being declared, due and payable
under agreements or instruments
evidencing such Specified Indebtedness
before it would otherwise have been due
and payable.
(x) the Defaulting Party is in breach of or
default under any Specified Transaction
and any applicable grace period has
elapsed, and there occurs any
liquidation or early termination of, or
acceleration of obligations under that
Specified Transaction or the Defaulting
Party (or any Custodian on its behalf)
disaffirms, disclaims or repudiates the
whole or any part of a Specified
Transaction; or
(xi) (a) any Credit Support Provider in
relation to the Defaulting Party or the
Defaulting Party itself fails to comply
with or perform any agreement or
obligation to be complied with or
performed by it in accordance with the
applicable Credit Support Document and
such failure is continuing after any
applicable grace period has elapsed; (b)
any Credit Support Document relating to
the Defaulting Party expires or ceases
to be in full force and effect prior to
the satisfaction of all obligations of
the Defaulting Party under the
Agreement, unless otherwise agreed in
writing by the Non-Defaulting Party; (c)
the Defaulting Party or its Credit
Support Provider (or, in either case,
any Custodian acting on its behalf)
disaffirms, disclaims or repudiates, in
whole or in part, or challenges the
validity of, the Credit Support
Document; (d) any representation or
warranty made or deemed made by any
Credit Support Provider pursuant to any
Credit Support Document shall prove to
have been false or misleading in any
material respect as at the time it was
made or given or deemed made or given
and one (1) Business Day has elapsed
after the Non-Defaulting Party has given
the Defaulting Party written notice
thereof; or (e) any event set out in
(ii) to (vi) or (viii) to (x) above
occurs in respect of the Credit Support
Provider.
"FX Transaction" means any transaction between the Parties
for the purchase by one Party of an agreed amount in one
Currency against the sale by it to the other of an agreed
amount in another Currency both such amounts being
deliverable on the same Value Date, and in respect of which
transaction the Parties have agreed (whether orally,
electronically or in writing): the Currencies involved, the
amounts of such Currencies to be purchased and sold, which
Party will purchase which Currency and the Value Date.
-4-
"Local Banking Day" means (i) for any Currency a day on
which commercial banks effect deliveries of that Currency in
accordance with the market practice of the relevant foreign
exchange market, and (ii) for any Party, a day in the
location of the applicable Designated Office of such Party
on which commercial banks in that location are not
authorized or required by law to close.
"Master Agreement" means the terms and conditions set forth
in this master agreement.
"Matched Pair Novation Netting Office(s)" means in respect
of a Party the Designated Office(s) specified in Part V of
the Schedule, as such Schedule may be modified from time to
time by agreement of the Parties.
"Non-Defaulting Party" has the meaning given to it in the
definition of Event of Default.
"Novation Netting Office(s)" means in respect of a Party the
Designated Office(s) specified in Part IV of the Schedule,
as such Schedule may be modified from time to time by
agreement of the Parties.
"Parties" means the parties to the Agreement and shall
include their successors and permitted assigns (but without
prejudice to the application of Clause (viii) of the
definition Event of Default); and the term "Party" shall
mean whichever of the Parties is appropriate in the context
in which such expression may be used.
"Proceedings" means any suit, action or other proceedings
relating to the Agreement.
"Settlement Netting Office(s)" means, in respect of a Party,
the Designated Office(s) specified in Part III of the
Schedule, as such Schedule may be modified from time to time
by agreement of the Parties.
"Specified Indebtedness" means any obligation (whether
present or future, contingent or otherwise, as principal or
surety or otherwise) in respect of borrowed money, other
than in respect of deposits received.
"Specified Transaction" means any transaction (including an
agreement with respect thereto) between one Party to the
Agreement (or any Credit Support Provider of such Party) and
the other Party to the Agreement (or any Credit Support
Provider of such Party) which is a rate swap transaction,
basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity linked swap, equity or
equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
-5-
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of these transactions) or any combination of any of
the foregoing transactions.
"Split Settlement" has the meaning given to it in the
definition of Value Date.
"Threshold Amount" means the amount specified as such for
each Party in Part IX of the Schedule.
"Value Date" means, with respect to any FX Transaction, the
Business Day (or where market practice in the relevant
foreign exchange market in relation to the two Currencies
involved provides for delivery of one Currency on one date
which is a Local Banking Day in relation to that Currency
but not to the other Currency and for delivery of the other
Currency on the next Local Banking Day in relation to that
other Currency ("Split Settlement") the two Local Banking
Days in accordance with that market practice) agreed by the
Parties for delivery of the Currencies to be purchased and
sole pursuant to such FX Transaction, and, with respect to
any Currency Obligation, the Business Day (or, in the case
of Split Settlement, Local Banking Day) upon which the
obligation to deliver Currency pursuant to such Currency
Obligation is to be performed.
SECTION 2. FX TRANSACTIONS
2.1 Scope of the Agreement. (a) Unless otherwise agreed in
writing by the Parties, each FX Transaction entered into
between two Designated Offices of the Parties on or after
the Effective Date shall be governed by the Agreement. (b)
All FX Transaction between any two Designated Offices of the
Parties outstanding on the Effective Date which are
identified in Part I of the Schedule shall be FX
Transactions governed by the Agreement and every obligation
of the Parties thereunder to deliver a Currency shall be a
Currency Obligation under the Agreement.
2.2 Single Agreement. This Master Agreement, the particular
terms agreed between the Parties in relation to each and
every FX Transaction governed by this Master Agreement (and,
insofar as such terms are recorded in a Confirmation, each
such Confirmation), the Schedule to this Master Agreement
and all amendments to any of such items shall together form
the agreement between the Parties (the "Agreement") and
shall together constitute a single agreement between the
Parties. The Parties acknowledge that all FX Transactions
governed by the Agreement are entered into in reliance upon
the fact that all items constitute a single agreement
between the Parties.
2.3 Confirmations. FX Transactions governed by the Agreement
shall be promptly confirmed by the Parties by Confirmations
exchanged by mail, telex, facsimile or other electronic
means. The failure by a Party to issue a Confirmation shall
-6-
not prejudice or invalidate the terms of any FX Transaction
governed by the Agreement.
SECTION 3. SETTLEMENT AND NETTING
3.1 Settlement. Subject to Section 3.2, each Party shall
deliver to the other Party the amount of the Currency to be
delivered by it under each Currency Obligation on the Value
Date for such Currency Obligation.
3.2 Net Settlement/Payment Netting. If on any Value Date
more than one delivery of a particular Currency is to be
made between a pair of Settlement Netting Offices, then each
Party shall aggregate the amounts of such Currency
deliverable by it and only the difference between these
aggregate amounts shall be delivered by the Party owing the
larger aggregate amount to the other Party, and, if the
aggregate amounts are equal, no delivery of the Currency
shall be made.
3.3 Novation Netting.
(a) By Currency. If the Parties enter into an FX
Transaction governed by the Agreement through a pair of
Novation Netting Offices giving rise to a Currency
Obligation for the same Value Date and in the same
Currency as a then existing Currency Obligation between
the same pair of Novation Netting Offices, then
immediately upon entering into such FX Transaction,
each such Currency Obligation shall automatically and
without further action be individually canceled and
simultaneously replaced by a new Currency Obligation
for such Value Date determined as follows: the amounts
of such Currency that would otherwise have been
deliverable by each Party on such Value Date shall be
aggregated and the Party with the larger aggregate
amount shall have a new Currency Obligation to deliver
to the other Party the amount of such Currency by which
its aggregate amount exceeds the other Party's
aggregate amount, provided that if the aggregate
amounts are equal, no new Currency Obligation shall
arise. This Clause (a) shall not affect any other
Currency Obligation of a Party to deliver any different
Currency on the same Value Date.
(b) By Matched Pair. If the Parties enter into an FX
Transaction governed by the Agreement between a pair of
Matched Pair Novation Netting Offices then the
provisions of Section 3.3(a) shall apply only in
respect of Currency Obligations arising by virtue of FX
Transactions governed by the Agreement entered into
between such pair of Matched Pair Novation Netting
Offices and involving the same pair of Currencies and
the same Value Date.
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3.4 General.
(a) Inapplicability of Sections 3.2 and 3.3. The provisions
of Sections 3.2 and 3.3 shall not apply if a Close-Out
Date has occurred or an involuntary case or other
proceeding of the kind described in Clause (iii) of the
definition of Event of Default has occurred without
being dismissed in relation to either Party.
(b) Failure to Record. The provisions of Section 3.3 shall
apply notwithstanding that either Party may fail to
record the new Currency Obligations in its books.
(c) Cutoff Date and Time. The provisions of Section 3.3 are
subject to any cut-off date and cut-off time agreed
between the applicable Novation Netting Offices and
Matched Pair Novation Netting Offices of the Parties.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties. Each Party represents
and warrants to the other Party as of the date of the
Agreement and as of the date of each FX Transaction governed
by the Agreement that: (i) it has authority to enter into
the Agreement and such FX Transaction; (ii) the persons
executing the Agreement and entering into such FX
Transaction have been duly authorized to do so; (iii) the
Agreement and the Currency Obligations created under the
Agreement are binding upon it and enforceable against it in
accordance with their terms (subject to applicable
principals of equity) and do not and will not violate the
terms of any agreements to which such Party is bound; (iv)
no Event of Default has occurred and is continuing with
respect to it; and (v) it acts as principal in entering into
each and every FX Transaction governed by the Agreement.
4.2 Covenants. Each Party covenants to the other Party that:
(i) it will at all times obtain and comply with the terms of
and do all that is necessary to maintain in full force and
effect all authorization, approvals, licenses and consents
required to enable it to lawfully perform its obligations
under the Agreement; and (ii) it will promptly notify the
other Party of the occurrence of any Event of Default with
respect to itself or any Credit Support Provider in relation
to it.
SECTION 5 CLOSE-OUT AND LIQUIDATION
5.1 Circumstances of Close-Out and Liquidation. If an Event
of Default has occurred and is continuing then the
Non-Defaulting Party shall have the right to close-out and
liquidate in the manner described below all, but not less
than all, outstanding Currency Obligations (except to the
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extent that in the good faith opinion of the Non-Defaulting
Party certain of such Currency Obligations may not be
closed-out and liquidated under applicable law), by notice
to the Defaulting Party. If "Automatic Termination" is
specified as applying to a Party in Part VI of the Schedule,
then, in the case of an Event of Default specified in
Clauses (ii) or (iii) of the definition thereof with respect
to such Party, such close-out and liquidation shall be
automatic as to all outstanding Currency Obligations. Where
such close-out and liquidation is to be effected, it shall
be effected by:
(i) closing out each outstanding Currency Obligation
(including any Currency Obligation which has not been
performed and in respect of which the Value Date is
on or precedes the Close-Out Date) so that each such
Currency Obligation is canceled and the
Non-Defaulting Party shall calculate in good faith
with respect to each such canceled Currency
Obligation, the Closing Gain or, as appropriate, the
Closing Loss, as follows:
(x) for each Currency Obligation in a Currency other than
the Non-Defaulting Party's Base Currency calculate a
"Close-Out Amount" by converting:
(A) in the case of a Currency Obligation whose Value
Date is the same as or is later than the
Close-Out Date, the amount of such Currency
Obligation; or
(B) in the case of a Currency Obligation whose Value
Date precedes the Close-Out Date, the amount of
such Currency Obligation increased, to the extent
permitted by applicable law, by adding interest
thereto from the Value Date to the Close-Out Date
at the rate representing the cost (expressed as a
percentage rate per annum) at which the
Non-Defaulting Party would have been able, on
such Value Date, to fund the amount of such
Currency Obligation for the period from the Value
Date to the Close-Out Date
into such Base Currency at the rate of exchange at
which the Non-Defaulting Party can buy or sell, as
appropriate, such Base Currency with or against the
Currency of such Currency Obligation for delivery on
the Value Date of that Currency Obligation, or if such
Value Date precedes the Close-Out Date, for delivery on
the Close-Out Date; and
(y) determine in relation to each Value Date: (A) the sum
of all Close-Out Amounts relating to Currency
Obligations under which, and of all Currency
Obligations in the Non-Defaulting Party's Base Currency
under which, the Non-Defaulting Party would otherwise
have been obliged to deliver the relevant amount to the
Defaulting Party on that Value Date, adding (to the
extent permitted by applicable law), in the case of a
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Currency Obligation in the Non-Defaulting Party's Base
Currency whose Value Date precedes the Close-Out Date,
interest for the period from the Value Date to the
Close-Out Date at the Non-Defaulting Party's Base
Currency Rate as at such Value Date for such period;
and (B) the sum of all Close-Out Amounts relating to
Currency Obligations under which, and of all Currency
Obligations in the Non-Defaulting Party's Base Currency
under which, the Non-Defaulting Party would otherwise
have been entitled to receive the relevant amount on
that Value Date, adding (to extent permitted by
applicable law), in the case of a Currency Obligation
in the Non-Defaulting Party's Base Currency whose Value
Date precedes the Close-Out Date, interest for the
period from the Value Date to the Close-Out Date at the
Non-Defaulting Party's Base Currency Rate as at such
Value Date for such period;
(z) if the sum determined under (y)(A) is greater than the
sum determined under (y)(B), the differences shall be
the Closing Loss for such Value Date; if the sum
determined under (y)(A) is less than the sum under
(y)(B), the difference shall be the Closing Gain for
such Value Date;
(ii) to the extent permitted by applicable law, adjusting
the Closing Gain or Closing Loss for each Value Date
falling after the Close-Out Date to present value by
discounting the Closing Gain or Closing Loss from the
Value Date to the Close-Out Date, at the Non-Defaulting
Party's Base Currency Rate, or at such other rate as
may be prescribed by applicable law;
(iii) aggregating the following amounts so that all such
amounts are netted into a single liquidated amount
payable by or to the Non-Defaulting Party: (x) the sum
of the Closing Gains for all Value Dates (discounted to
present value, where appropriate, in accordance with
the provisions of Clause (ii) of this Section 5.1)
which for the purposes of this aggregation shall be a
positive figure) and (y) the sum of the Closing Losses
for all Value Dates (discounted to present value, where
appropriate, in accordance with the provision of Clause
(ii) of the Section 5.1) (which for the purposes of the
aggregation shall be negative figure); and
(iv) if the resulting net amount is positive, it shall be
payable by the Defaulting Party to the Non-Defaulting
Party, and if it is negative, then the absolute value
of such amount shall be payable by the Non-Defaulting
Party to the Defaulting Party.
5.2 Calculation of Interest. Any addition of interest or
discounting required under Clause (i) or (ii) or Section 5.1
shall be calculated on the basis of the actual number of
days elapsed and of a year of such number of days as is
customary for transactions involving the relevant Currency
in the relevant foreign exchange market.
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5.3 Other FX Transactions. Where close-out and liquidation
occurs in accordance with Section 5.1, the Non-Defaulting
Party shall also be entitled to close-out and liquidate, to
the extent permitted by applicable law, any other FX
Transactions entered into between the Parties which are then
outstanding in accordance with provisions of Section 5.1, as
if each obligation of a Party to deliver a Currency
thereunder were a Currency Obligation.
5.4 Payment and Late Interest. The amount payable by one
Party to the other Party pursuant to the provisions of
Sections 5.1 and 5.3 shall be paid by the close of business
on the Business Day following such close-out and liquidation
(converted as required by applicable law into any other
Currency, any costs of such conversion to be borne by, and
deducted from any payment to, the Defaulting Party). To the
extent permitted by applicable law, any amount required to
be paid under Sections 5.1 or 5.3 and not paid on the due
date therefor, shall bear interest at the Non-Defaulting
Party's Base Currency Rate plus 1% per annum (or, if
conversion is required by applicable law into some other
Currency, either (x) the average rate at which overnight
deposits in such other Currency are offered by major banks
in the London interbank market as of 11:00 a.m. (London
time) plus 1% per annum or (y) such other rate as may be
prescribed by such applicable law) for each day for which
such amount remains unpaid.
5.5 Suspension of Obligations. Without prejudice to the
foregoing, so long as a Party shall be, in default in
payment or performance to the Non-Defaulting Party under the
Agreement and so long as the Non-Defaulting Party has not
exercised its rights under Section 5.1, the Non-Defaulting
Party may, at its election and without penalty, suspend its
obligation to perform under the Agreement.
5.6 Expenses. The Defaulting Party shall reimburse the
Non-Defaulting Party in respect of all out-of-pocket
expenses incurred by the Non-Defaulting Party (including
fees and disbursements of counsel, including attorneys who
may be employees of the Non-Defaulting Party) in connection
with any reasonable collection or other enforcement
proceedings related to the payments required under this
Section 5.
5.7 Reasonable Pre-Estimate. The Parties agree that the
amounts recoverable under this Section 5 are a reasonable
preestimate of loss and not a penalty. Such amounts are
payable for the loss of bargain and the loss of protection
against future risks and, except as otherwise provided in
the Agreement, neither Party will be entitled to recover any
additional damages as a consequence of such losses.
-11-
5.8 No Limitation of Other Rights; Set-Off. The
Non-Defaulting Party's rights under this Section 5 shall be
in addition to, and not in limitation or exclusion of, any
other rights which the Non-Defaulting Party may have
(whether by agreement, operation of law or otherwise). To
the extent not prohibited by applicable law, the
Non-Defaulting Party shall have a general right of set-off
with respect to all amounts owed by each Party to the other
Party, whether due and payable or not due and payable
(provided that any amount not due and payable at the time of
such set-off shall, if appropriate, be discounted to present
value in a commercially reasonable manner by the
Non-Defaulting Party). The Non-Defaulting Party's rights
under this Section 5.8 are subject to Section 5.7.
SECTION 6. ILLEGALITY, IMPOSSIBILITY AND FORCE MAJEURE
If either Party is prevented from or hindered or delayed by
reason of force majeure or act of State in the delivery or
receipt of any Currency in respect of a Currency Obligation
or if it becomes or, in the good faith judgment of one of
the Parties, may become unlawful or impossible for either
Party to deliver or receive any Currency which is the
subject of a Currency Obligation, then either Party may, by
notice to the other Party, require the close-out and
liquidation of each affected Currency Obligation in
accordance with the provisions of Sections 5.1, 5.2 and 5.4
and, for the purposes of enabling the calculations
prescribed by Sections 5.1, 5.2 and 5.4 to be effected, the
Party unaffected by such force majeure, act of State,
illegality or impossibility (or if both Parties are so
affected, whichever Party gave the relevant notice) shall
effect the relevant calculations as if it were the
Non-Defaulting Party. Nothing in this Section 6 shall be
taken as indicating that the Party treated as the Defaulting
Party for the purposes of calculations required hereby has
committed any breach or default.
SECTION 7. PARTIES TO RELY ON THEIR OWN EXPERTISE
Each Party shall enter into each FX Transaction governed by
the Agreement in reliance only upon its own judgment.
Neither Party holds itself out as advising, or any of its
employees or agents as having the authority to advise, the
other Party as to whether or not it should enter into any
such FX Transaction or as to any subsequent actions relating
thereto or on any other commercial matters concerned with
any FX Transaction governed by the Agreement, and neither
Party shall have any responsibility or liability whatsoever
in respect of any advice of this nature given, or views
expressed, by it or any of such persons to the other Party,
whether or not such advice is given or such views are
expressed at the request of the other Party.
-12-
SECTION 8. MISCELLANEOUS
8.1 Currency Indemnity. The receipt or recovery by either
Party (the "first Party") of any amount in respect of an
obligation of the other Party (the "second Party") in a
Currency other than that in which such amount was due,
whether pursuant to a judgment of any court or pursuant to
Section 5 or 6, shall discharge such obligation only to the
extent that on the first day on which the first Party is
open for business immediately following such receipt, the
first Party shall be able, in accordance with normal banking
practice, to purchase the Currency in which such amount was
due with the Currency received. If the amount so purchasable
shall be less than the original amount of the Currency in
which such amount was due, the second party shall, as a
separate obligation and notwithstanding any judgment of any
court, indemnify the first Party against any loss sustained
by it. The second Party shall in any event indemnify the
first Party against any costs incurred by it in making any
such purchase of Currency.
8.2 Assignments. Neither Party may assign, transfer or
charge, or purport to assign, transfer or charge, its rights
or its obligations under the Agreement or any interest
therein without the prior written consent of the other
Party, and any purported assignment, transfer or charge in
violation of this Section 8.2 shall be void.
8.3 Telephonic Recording. The Parties agree that each may
electronically record all telephonic conversations between
them and that any such tape recordings may be submitted in
evidence in any Proceedings relating to the Agreement. In
the event of any dispute between the Parties as to the terms
of an FX Transaction governed by the Agreement or the
Currency Obligations thereby created, the Parties may use
electronic recordings between the persons who entered into
such FX Transaction as the preferred evidence of the terms
of such FX Transaction, notwithstanding the existence of any
writing to the contrary.
8.4 No Obligation. Neither Party to this Agreement shall be
required to enter into any FX Transaction with the other.
8.5 Notices. Unless otherwise agreed, all notices,
instructions and other communications to be given to a Party
under the Agreement shall be given to the address, telex (if
confirmed by the appropriate answerback), facsimile
(confirmed if requested) or telephone number and to the
individual or department specified by such Party in Part VII
of the Schedule attached hereto. Unless otherwise specified,
any notice, instruction or other communication given in
accordance with this Section 8.5 shall be effective upon
receipt.
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8.6 Termination. Each of the Parties hereto may terminate
this Agreement at any time by seven days' prior written
notice to the other Party delivered as prescribed above, and
termination shall be effective at the end of such seventh
day; provided, however, that any such termination shall not
affect any outstanding Currency Obligations, and the
provisions of the Agreement shall continue to apply until
all the obligations of each Party to the other under the
Agreement have been fully performed.
8.7 Severability. In the event any one or more of the
provisions contained in the Agreement should be held
invalid, illegal or unenforceable in any respect under the
law of any jurisdiction, the validity, legality and
enforceability of the remaining provisions under the law of
such jurisdiction, and the validity, legality and
enforceability of such and any other provisions under the
law of any other jurisdiction, shall not in any way be
affected or impaired thereby.
8.8 Waiver. No indulgence or concession granted by a Party
and no omission or delay on the part of a Party in
exercising any right, power or privilege under the Agreement
shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
8.9 Master Agreement. Where one of the Parties to the
Agreement is domiciled in the United States, the Parties
intend that the Agreement shall be a master agreement as
defined in 11 U.S. C. Section 101(55) (C) and 12 U.S.C
Section 1821(e) (8) (D) (vii).
8.10 Time of Essence. Time shall be of the essence in the
Agreement.
8.11 Headings. Headings in the Agreement are for ease of
reference only.
8.12 Wire Transfers. Every payment or delivery of Currency
to be made by a Party under the Agreement shall be made by
wire transfer, or its equivalent, of same day (or
immediately available) and freely transferable funds to the
bank account designated by the other Party for such purpose.
8.13 Adequate Assurances. If the Parties have so agreed in
Part X of the Schedule, the failure by a Party ("first
Party") to give adequate assurances of its ability to
perform any of its obligations under the Agreement within
two (2) Business Days of a written request to do so when the
other Party ("second Party") has reasonable grounds for
insecurity shall be an Event of Default under the Agreement,
in which case during the pendency of a reasonable request by
the second party to the first Party for adequate assurances
of the first Party's ability to perform its obligations
under the Agreement, the second Party may, at its election
and without penalty, suspend its obligations under the
Agreement.
-14-
8.14 FDICIA Representation. If the Parties have so agreed in
Part XI of the Schedule, each Party represents and warrants
to the other Party that it is a financial institution under
the provisions of Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), and the
Parties agree that this Agreement shall be a netting
contract, as defined in FDICIA, and each receipt or payment
or delivery obligation under the Agreement shall be a
covered contractual payment entitlement or covered
contractual payment obligation, respectively, as defined in
and subject to FDICIA.
8.15 Confirmation Procedures. In relation to Confirmations,
unless either Party objects to the terms contained in any
Confirmation within three (3) Business Days of receipt
thereof, or such shorter time as may be appropriate given
the Value Date of the FX Transaction, the terms of such
Confirmation shall be deemed correct and accepted absent
manifest error, unless a corrected Confirmation is sent by a
Party within such three Business Days, or shorter period, as
appropriate, in which case the Party receiving such
corrected Confirmation shall have three (3) Business Days,
or shorter period, as appropriate, after receipt thereof to
object to the terms contained in such corrected
Confirmation. In the event of any conflict between the terms
of a Confirmation and this Master Agreement, the terms of
this Master Agreement shall prevail and the Confirmation
shall not modify the terms of this Master Agreement.
8.16 Amendments. No amendment, modification or waiver of the
Agreement will be effective unless in writing executed by
each of the Parties.
SECTION 9. LAW AND JURISDICTION
9.1 Governing Law. The Agreement shall be governed by, and
construed in accordance with the laws of the State of New
York without giving effect to conflict of laws provisions.
9.2 Consent to Jurisdiction. With respect to any
Proceedings, each Party irrevocably (i) submits to the
non-exclusive jurisdiction or the courts of the State of New
York and the United States District Court located in the
Borough of Manhattan in New York City, and (ii) waives any
objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives
any claim that such court does not have jurisdiction over
such Party. Nothing in the Agreement precludes either Party
from bringing Proceedings in any other jurisdiction.
9.3 Waiver of Immunities. Each Party irrevocably waives to
the fullest extent permitted by applicable law, with respect
to itself and its revenues and assets (irrespective of their
use or intended use) all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any courts, (iii) relief by way of
injunction, order for specific performance or for recovery
-15-
of property, (iv) attachment of its assets (whether before
or after judgment) and (v) execution or enforcement of any
judgment to which it or its revenues or assets might
otherwise be entitled in any Proceedings in the courts of
any jurisdiction, and irrevocably agrees to the extent
permitted by applicable law that it will not claim any such
immunity in any Proceedings. Each Party consents generally
in respect of any Proceedings to the giving of any relief or
the issue of any process in connection with such
Proceedings, including, without limitation, the making,
enforcement or execution against any property whatsoever of
any order or judgment which may be made or given in such
Proceedings.
9.4 Waiver of Jury Trial. Each Party hereby irrevocably
waives any and all right to trial by jury in any
Proceedings.
IN WITNESS WHEREOF, the Parties have caused the Agreement to
be duly executed by their respective authorized officers as of the date first
written above.
XXXX FUTURES INC.
By ______________________________
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX CHARTER
___________________ L.P.
By_______________________________
Name:
Title:
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SCHEDULE
Part I: Scope of Agreement
The Agreement shall apply to all FX Transactions outstanding
between any two Designated Offices of the Parties on the
Effective Date.
Part II: Designated Offices
Each of the following shall be Designated Office:
Party A Part B
_________________________ X.X. Xxxx Futures Inc.
c/o Demeter Management Corporation ______________________________
Two World Trade Center ______________________________
62nd Floor ______________________________
Xxx Xxxx, XX 00000 ______________________________
Attn: __________________________ Telephone No: (___) ____________
Telephone No.: (212) _____________ Facsimile No: (___) ____________
Facsimile No.: (212) _____________
Part III: Settlement Netting Offices
Net settlement provisions of Section 3.2 shall apply to the
following Settlement Netting Offices:
Party A Part B
Same as above. Same as above.
Part IV: Novation Netting Offices
Netting by novation provisions of Section 3.3(a) shall apply
to the following Novation Netting Offices and shall apply to
all FX Transactions:
Party A Part B
Same as Part III Same as Part III
-17-
Part V: Matched Pair Novation Netting Offices
Not applicable
Part VI: Automatic Termination
The "Automatic Termination" provision in Section 5.1 shall
not apply to _____________ and shall not apply to Xxxx
Xxxxxx Xxxxxxxx Inc.
Part VII: Notices
Address specified in the Confirmation or otherwise by the
Designated Office sending the same; provided that any notice
sent to _____________________ under Section 1 ("Event of
Default"), 5,6,8.6 or 9.2 shall be copied to:
Xxxx Xxxxxx Xxxxxxxx Inc., Two World Trade Center, 65th
Floor, New York, New York 10048, Attn: Deputy General
Counsel
Party A Part B
Same as in Part II Same as in Part II
Provided that any notice sent to Party B under Section 1
("Event of Default"), 5, 6, 8..6, or 9.2 shall be copied to:
Xxxx Futures Inc., ___________________
________________________________
Attn: __________________________
Part VIII: Base Currency
Party A Part B
U.S. Dollars U.S Dollars
-18-
Exhibit 10.02
FORM OF
MANAGEMENT AGREEMENT
THIS AGREEMENT, made as of the ___ day of ____, 1998 among
XXXXXX XXXXXXX XXXX XXXXXX CHARTER ______________ L.P., a Delaware limited
partnership (the "Partnership"), DEMETER MANAGEMENT CORPORATION, a Delaware
corporation (the "General Partner"), and ___________________________, a
________________ (the "Trading Advisor").
WITNESSETH:
WHEREAS, the Partnership has been organized pursuant to the
Limited Partnership Agreement dated as of ______ ___, 1998 (the "Limited
Partnership Agreement"), to trade, buy, sell, spread, or otherwise acquire,
hold, or dispose of commodities (which may include foreign currencies,
mortgage-backed securities, money market instruments, financial instruments and
any other securities or items which are now, or may hereafter be, 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;
WHEREAS, the Partnership is a member partnership of the Xxxxxx
Xxxxxxx Xxxx Xxxxxx Charter Series (the "Fund Group") pursuant to which units of
limited partnership interest ("Units") of such member partnerships will be sold
to investors in a common prospectus. Units of the Partnership are being offered
pursuant to a Registration Statement on Form S-1 (No. 333-_____) (as amended
from time to time, the "Registration Statement") filed under the Securities Act
of 1933, as amended (the "Securities Act"), and a final Prospectus dated _____
___, 1998, constituting a part thereof (as amended and supplemented from time to
time) (the "Prospectus). Such Units can be exchanged by a limited partner of a
member partnership of the Fund Group for Units of other member partnerships of
the Fund Group at 100% of the respective Net Asset Value thereof;
WHEREAS, the Trading Advisor has extensive experience trading
in futures interests and is willing to provide certain services and undertake
certain obligations as set forth herein;
WHEREAS, the Partnership desires the Trading Advisor to act as
trading advisor for the Partnership and to make investment decisions with
respect to futures interests for the Partnership's Net Assets and the Trading
Advisor desires so to act; and
WHEREAS, the Partnership, the General Partner and the Trading
Advisor wish to enter into this Management Agreement which, among other things,
sets forth certain terms and conditions upon which the Trading Advisor will
conduct futures interests trading for the Partnership;
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Undertakings in Connection with the Initial and
Continuing Offering of Units.
(a) The Trading Advisor agrees with respect to the initial and
continuing offering of Units: (i) to make all disclosures regarding itself, its
principals and affiliates, its trading performance, its trading programs,
systems, methods, and strategies (subject to the need, in the reasonable
discretion of the Trading Advisor, to preserve the secrecy of proprietary
information concerning such programs, systems, methods, and strategies), any
client accounts over which it has discretionary trading authority (other than
the names of any such clients), and otherwise, as the Partnership may reasonably
require to comply with any applicable federal or state law or rule or
regulation, including those of the Securities and Exchange Commission (the
"SEC"), the CFTC, the National Futures Association (the "NFA"), the National
Association of Securities Dealers, Inc. (the "NASD") or any other regulatory
body, exchange, or board; and (ii) otherwise to cooperate with the Partnership,
the General Partner, and Xxxx Xxxxxx Xxxxxxxx Inc., the selling agent for the
Partnership ("DWR") by providing information regarding the Trading Advisor in
connection with the preparation and filing of the Registration Statement and
Prospectus, including any pre-or post-effective amendments or supplements
thereto, with the SEC, CFTC, NFA, NASD, and with appropriate governmental
authorities as part of making application for registration of the Units under
the securities or Blue Sky laws of such jurisdictions as the Partnership may
deem appropriate. As used herein, the term "principal" shall have the meaning as
defined in Section 4.10(e) of the CFTC's Regulations and the term "affiliate"
shall mean an individual or entity that directly or indirectly controls, is
controlled by, or is under common control with, the Trading Advisor.
(b) The General Partner, in its sole discretion and at any
time may (i) withdraw the SEC registration of the Units, or (ii) discontinue the
offering of Units.
(c) If, while Units continue to be offered and sold, the
Trading Advisor becomes aware of any materially untrue or misleading statement
or omission regarding itself or any of its principals or affiliates in the
Registration Statement or Prospectus, or of the occurrence of any event or
change in circumstances which would result in there being any materially untrue
or misleading statement or omission in the Registration Statement or Prospectus
regarding itself or any of its principals or affiliates, the Trading Advisor
shall promptly notify the General Partner and shall cooperate with it in the
preparation of any necessary amendments or supplements to the Registration
Statement or Prospectus. Neither the Trading Advisor nor any of its principals,
or affiliates, or any stockholders, officers, directors, or employees thereof
shall distribute the Prospectus or selling literature or shall engage in any
selling activities whatsoever in connection with the continuing offering of
Units except as may be specifically requested by the General Partner.
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2. Duties of the Trading Advisor.
(a) The Trading Advisor hereby agrees to act as Trading
Advisor for the Partnership and, as such, shall have sole authority and
responsibility for directing the investment and reinvestment of the Net Assets
of the Partnership on the terms and conditions and in accordance with the
prohibitions and trading policies set forth in this Agreement, or the Prospectus
or as otherwise provided in writing to the Trading Advisor; provided, however,
that the General Partner may override the instructions of the Trading Advisor to
the extent necessary (i) to comply with the trading policies of the Partnership
and with applicable speculative position limits, (ii) to pay the Partnership's
expenses, (iii) to the extent the General Partner believes doing so is necessary
for the protection of the Partnership, (iv) to terminate the futures interests
trading of the Partnership, or (v) to comply with any applicable law or
regulation. The General Partner agrees not to override any such instructions for
the reasons specified in clause (ii) of the preceding sentence unless the
Trading Advisor fails to comply with a request of the General Partner to make
the necessary amount of funds available to the Partnership within five calendar
days of such request. The Trading Advisor shall not be liable for the
consequences of any decision by the General Partner to override instructions of
the Trading Advisor, except to the extent that the Trading Advisor is in breach
of this Agreement. In performing services to the Partnership the Trading Advisor
may not materially alter the trading program(s) used by the Trading Advisor in
investing and reinvesting the Partnership's Net Assets in futures interests as
described in the Prospectus without the prior written consent of the General
Partner, it being understood that changes in the futures interests traded shall
not be deemed an alteration in the Trading Advisor's trading program(s).
(b) The Trading Advisor shall:
(i) Exercise good faith and due care in trading
futures interests for the account of the Partnership in accordance with
the prohibitions and trading policies of the Partnership described in
the Prospectus and as otherwise provided in writing to the Trading
Advisor. The Trading Advisor shall trade the Partnership's Net Assets
pursuant to the specified trading program(s) described in the
Prospectus (with such changes and additions to such trading program(s)
as the Trading Advisor, from time to time, incorporates into its
trading program(s) for accounts the size of the Partnership), unless
the Trading Advisor is instructed by the General Partner to trade the
Partnership's Net Assets pursuant to any one or more of the Trading
Advisor's other trading programs described in the Prospectus.
(ii) Subject to reasonable assurances of
confidentiality by the General Partner and the Partnership, provide the
General Partner, within 30 calendar days of a request therefor by the
General Partner, with information comparing the performance of the
Partnership's account and the performance of all other client accounts
directed by the Trading Advisor using the trading programs used by the
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Trading Advisor for the Partnership over a specified period of time. In
providing such information, the Trading Advisor may take such steps as
are necessary to assure the confidentiality of the Trading Advisor's
clients' identities. The Trading Advisor shall, upon the General
Partner's request, consult with the General Partner concerning any
discrepancies between the performance of such other accounts and the
Partnership's account. The Trading Advisor shall promptly inform the
General Partner of any material discrepancies of which the Trading
Advisor is aware. The General Partner acknowledges that different
trading programs, strategies or implementation methods may be utilized
for different accounts, accounts with different trading policies,
accounts experiencing differing inflows or outflows of equity, accounts
that commence trading at different times, accounts which have different
portfolios or different fiscal years and that such differences may
cause divergent trading results.
(iii) Upon request of the General Partner and subject
to reasonable assurances of confidentiality by the General Partner and
the Partnership, provide the General Partner with all material
information concerning the Trading Advisor other than proprietary
information (including, without limitation, information relating to
changes in control, personnel, trading approach, or financial
condition). The General Partner acknowledges that all trading
instructions made by the Trading Advisor will be held in confidence by
the General Partner, except to the extent necessary to conduct the
business of the Partnership or as required by law.
(iv) Inform the General Partner when the Trading
Advisor's open positions maintained by the Trading Advisor exceed the
Trading Advisor's applicable speculative position limits.
(c) All purchases and sales of futures interests pursuant to
this Agreement shall be for the account, and at the risk, of the Partnership and
not for the account, or at the risk, of the Trading Advisor or any of its
stockholders, directors, officers, or employees, or any other person, if any,
who controls the Trading Advisor within the meaning of the Securities Act. All
brokerage fees arising from trading by the Trading Advisor shall be for the
account of the Partnership. The Trading Advisor makes no representations as to
whether its trading will produce profits or avoid losses.
(d) Notwithstanding anything in this Agreement to the
contrary, the Trading Advisor shall assume financial responsibility for any
errors committed or caused by it in transmitting orders for the purchase or sale
of futures interests for the Partnership's account, including payment of the
floor brokerage commissions, exchange and NFA fees, and other transaction
charges and give-up charges incurred on such trades. The Trading Advisor's
errors shall include, but not be limited to, inputting improper trading signals
or communicating incorrect orders for execution. The Trading Advisor shall not
be responsible for errors committed or caused by DWR or Xxxx Futures, Inc.
("CFI"). In addition, the Trading Advisor shall not be responsible for errors
committed or caused by any other floor broker or futures commission merchant
executing trades unless such other floor broker or futures commission merchant
was selected by the Trading Advisor and the Partnership is unable, after
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reasonable effort, to recover from the floor broker or futures commission
merchant any losses or costs resulting from such errors, notwithstanding any
give-up agreement. The Trading Advisor shall have an affirmative obligation
promptly to notify the General Partner of its own errors, and the Trading
Advisor shall use its best efforts to identify and promptly notify the General
Partner of any order or trade which the Trading Advisor reasonably believes was
not executed in accordance with its instructions.
(e) Prior to the commencement of trading, the General Partner
on behalf of the Partnership shall deliver to the Trading Advisor a trading
authorization appointing the Trading Advisor the Partnership's attorney-in-fact
for such purpose.
3. Designation of Additional Trading Advisors and
Reallocation of Net Assets.
If the General Partner at any time deems it to be in the best
interests of the Partnership, the General Partner may designate an additional
trading advisor or advisors for the Partnership and may apportion to such
additional trading advisor(s) the management of such amounts of Net Assets (as
defined in Section 6(c) hereof) as the General Partner shall determine in its
absolute discretion. The designation of an additional trading advisor or
advisors and the apportionment of Net Assets to any such trading advisor(s)
pursuant to this Section 3 shall neither terminate this Agreement nor modify in
any regard the respective rights and obligations of the Partnership, the General
Partner and the Trading Advisor hereunder. In the event that an additional
trading advisor is so designated, the Trading Advisor shall thereafter receive
management and incentive fees based, respectively, on that portion of the Net
Assets managed by the Trading Advisor and that portion of the Net Profits
properly attributable to the trading done by the Trading Advisor.
4. Trading Advisor Independent.
For all purposes of this Agreement, the Trading Advisor shall
be deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized, have no authority to act for or represent the
Partnership in any way or otherwise be deemed an agent of the Partnership.
Nothing contained herein shall be deemed to require the Partnership to take any
action contrary to the Limited Partnership Agreement, the Certificate of Limited
Partnership of the Partnership as from time to time in effect (the "Certificate
of Limited Partnership"), or any applicable law or rule or regulation of any
regulatory body, exchange, or board. Nothing herein contained shall constitute
the Trading Advisor as a member of any partnership, joint venture, association,
syndicate or other entity with the Partnership or the General Partner, or be
deemed to confer on any of them any express, implied, or apparent authority to
incur any obligation or liability on behalf of any other. It is expressly agreed
that the Trading Advisor is neither a promoter, sponsor, or issuer with respect
to the Partnership.
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5. Commodity Brokers.
The Trading Advisor shall effect all transactions in futures
interests for the Partnership through, and shall maintain a separate account
with, such commodity broker or brokers as the General Partner shall direct. At
the present time, DWR shall act as the non-clearing commodity broker and CFI
shall act as the clearing commodity broker for the Partnership. The General
Partner shall provide the Trading Advisor with copies of brokerage statements.
Notwithstanding that CFI shall act as the clearing commodity broker for the
Partnership, the Trading Advisor may execute trades through floor brokers other
than those employed by CFI so long as arrangements are made for such floor
brokers to "give-up" or transfer the positions to CFI and provided that the
rates charged by such floor brokers have been approved in writing by DWR. The
Trading Advisor will not be responsible for paying give-up fees at rates
approved by DWR.
6. Fees.
(a) For the services to be rendered to the Partnership by the
Trading Advisor under this Agreement, the Partnership shall pay the Trading
Advisor the following fees:
(i) A monthly management fee, without regard to the
profitability of the Trading Advisor's trading for the Partnership's
account, equal to 1/12 of 2% (a 2% annual rate) of the Partnership's
"Net Assets" (as defined in Section 6(c)) as of the opening of business
on the first day of each calendar month, commencing with the month in
which the Partnership begins to receive trading advice from the Trading
Advisor pursuant to this Agreement.
(ii) A monthly incentive fee equal to 20% of the
"Trading Profits" (as defined in Section 6(d)) experienced by the
Partnership as of the end of each calendar month.
(b) If this Agreement is terminated on a date other than the
last day of a month, the incentive fee described above shall be determined as if
such date were the end of a month. If this Agreement is terminated on a date
other than the end of a month, the management fee described above shall be
determined as if such date were the end of a month, but such fee shall be
prorated based on the ratio of the number of trading days in the month through
the date of termination to the total number of trading days in the month. If,
during any month after the Partnership commences trading operations (including
the month in which the Partnership commences such operations), the Partnership
does not conduct business operations, or suspends trading for the account of the
Partnership managed by the Trading Advisor, or, as a result of an act or
material failure to act by the Trading Advisor, is otherwise unable to utilize
the trading advice of the Trading Advisor on any of the trading days of that
period for any reason, the management fee described above shall be prorated
based on the ratio of the number of trading days in the month which the
Partnership account managed by the Trading Advisor engaged in trading operations
or utilized the trading advice of the Trading Advisor to the total number of
trading days in the month.
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(c) As used herein, the term "Net Assets" shall have the same
meaning ascribed thereto in Section 7(d)(1) of the Limited Partnership
Agreement.
(d) As used herein, the term "Trading Profits" shall mean net
futures interests trading profits (realized and unrealized) earned on a
Partnership's Net Assets, decreased by the monthly management fees, brokerage
fees and any transaction fees and costs, if any, not included in the brokerage
fees; with such trading profits and items of decrease determined from the end of
the last calendar month in which an incentive fee was earned by the Trading
Advisor or, if no incentive fee has been earned previously by the Trading
Advisor, from the date that the Partnership commenced trading to the end of the
month as of which such incentive fee calculation is being made. Extraordinary
expenses of the Partnership, if any, will not be deducted in determining Trading
Profits. No incentive fee will be paid on interest income earned by the
Partnership.
(e) If any payment of incentive fees is made to the Trading
Advisor on account of Trading Profits and such Trading Advisor thereafter fails
to earn Trading Profits or experiences losses for any subsequent incentive
period, the Trading Advisor shall be entitled to retain such amounts of
incentive fees previously paid to the Trading Advisor in respect of such Trading
Profits. However, no subsequent incentive fees shall be payable to the Trading
Advisor until the Partnership has again earned Trading Profits; provided,
however, that if the Partnership's Net Assets are reduced or increased because
of redemptions or additions that occur at the end of, or subsequent to, an
incentive period in which the Trading Advisor experiences a futures interests
trading loss, the trading loss for that incentive period which must be recovered
before the Trading Advisor will be deemed to experience Trading Profits will be
equal to the amount determined by (x) dividing the Partnership's Net Assets
after such increase or decrease by the Partnership's Net Assets immediately
before such increase or decrease and (y) multiplying that fraction by the amount
of the unrecovered futures interests trading loss experienced in the month prior
to such increase or decrease. In the event that the Partnership experiences a
futures interests trading loss in more than one month without the payment of an
intervening incentive fee and the Partnership's Net Assets are increased or
reduced in more than one such month because of redemptions or additions, then
the trading loss for each such month shall be adjusted in accordance with the
formula described above and such increased or reduced amount of futures
interests trading loss shall be carried forward and used to offset subsequent
futures interests trading profits.
(f) The Partnership will remit the management and incentive
fees to the Trading Advisor as soon as practicable, but in no event later than
30 days, in the case of the management fee, or 45 days, in the case of the
incentive fee, of the month-end as of which they are due, together with an
itemized statement showing the calculations.
7. Term.
This Agreement shall continue in effect until _______ ___,
2001 (the "Initial Termination Date"). If this Agreement is not terminated on
the Initial Termination Date, as provided for herein, then, this Agreement shall
automatically renew for an additional one-year period and shall continue to
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renew for additional one-year periods until this Agreement is otherwise
terminated, as provided for herein. At least 30 calendar days prior to the
expiration of the Initial Termination Date or any subsequent one-year period, as
the case may be, the Trading Advisor may terminate this Agreement at the end of
the current period by providing written notice to the Partnership indicating
that the Trading Advisor desires to terminate this Agreement at the end of such
period. This Agreement shall also terminate if the Partnership terminates. The
Partnership shall have the right to terminate this Agreement at its discretion
(a) at any month-end upon 5 calendar days' prior written notice to the Trading
Advisor or (b) at any time upon written notice to the Trading Advisor upon the
occurrence of any of the following events: (i) if any person described as a
"principal" of the Trading Advisor in the Prospectus ceases for any reason to be
an active executive officer of the Trading Advisor; (ii) if the Trading Advisor
becomes bankrupt or insolvent; (iii) if the Trading Advisor is unable to use its
trading programs, systems or methods as in effect on the date hereof and as
refined and modified in the future for the benefit of the Partnership; (iv) if
the registration, as a commodity trading advisor, of the Trading Advisor with
the CFTC or its membership in the NFA is revoked, suspended, terminated, or not
renewed, or limited or qualified in any respect; (v) except as provided in
Section 12 hereof, if the Trading Advisor merges or consolidates with, or sells
or otherwise transfers its advisory business, or all or a substantial portion of
its assets, any portion of its futures interests trading programs, systems or
methods, or its goodwill, to any individual or entity; (vi) if the Net Asset
value of a Unit, after adjusting for distributions if any, shall be less than
$5.00; (vii) if, at any time, the Trading Advisor violates any trading or
administrative policy described in the Prospectus or otherwise provided in
writing to the Trading Advisor by the General Partner, except with the prior
express written consent of the General Partner; or (viii) if the Trading Advisor
fails in a material manner to perform any of its obligations under this
Agreement. The Trading Advisor may terminate this Agreement at any time, upon
written notice to the Partnership, in the event: (i) that the General Partner
imposes additional trading limitation(s) (not in effect on the date hereof) in
the form of one or more trading policies or administrative policies which the
Trading Advisor does not agree to follow in its management of the Partnership's
Net Assets; (ii) the General Partner objects to the Trading Advisor implementing
a proposed material change in the Trading Advisor's trading program(s) used by
the Partnership and Trading Advisor certifies to the General Partner in writing
that it believes such change is in the best interests of the Partnership; (iii)
the General Partner overrides a trading instruction of the Trading Advisor for
reasons unrelated to a determination by the General Partner that the Trading
Advisor has violated the Partnership's trading policies and the Trading Advisor
certifies to the General Partner in writing that as a result the Trading Advisor
believes the performance results of the Trading Advisor relating to the
Partnership will be materially adversely affected; (iv) the Partnership
materially breaches this Agreement and does not correct the breach within 10
business days of receipt of a written notice of such breach from the Trading
Advisor; or (v) the Trading Advisor has amended its trading program to include a
foreign futures or option contract which may lawfully be traded by the
Partnership under CFTC regulations and counsel, mutually acceptable to the
parties, has not opined that such inclusion would cause adverse tax consequences
to Limited Partners and the General Partner does not consent to the Trading
Advisor's trading such contract for the Partnership within 5 business days of a
written request by the Trading Advisor to do so, and, if
-8-
such consent is given, does not make arrangements to facilitate such trading
within 90 calendar days of such notice; or (vi) the Partnership's Net Assets
fall below $1,000,000 at any time.
The indemnities set forth in Section 8 hereof shall survive
any termination of this Agreement.
8. Standard of Liability; Indemnifications.
(a) Limitation of Trading Advisor Liability. In respect of the
Trading Advisor's role in the futures interests trading of the Partnership's
assets, none of the Trading Advisor, or its controlling persons, its affiliates,
and their respective directors, officers, shareholders, employees or controlling
persons shall be liable to the Partnership or the General Partner or their
partners, officers, shareholders, directors or controlling persons except that
the Trading Advisor shall be liable for acts or omissions of any such person
provided that such act or omission constitutes a breach of this Agreement or a
representation, warranty or covenant herein, misconduct or negligence or is the
result of any such person not having acted in good faith and in the reasonable
belief that such actions or omissions were in, or not opposed to, the best
interests of the Partnership.
(b) Trading Advisor Indemnity in Respect of Management
Activities. The Trading Advisor shall indemnify, defend and hold harmless the
Partnership and the General Partner, their controlling persons, their affiliates
and their respective directors, officers, shareholders, employees, and
controlling persons from and against any and all losses, claims, damages,
liabilities (joint and several), costs, and expenses (including any reasonable
investigatory, legal, and other expenses incurred in connection with, and any
amounts paid in, any settlement; provided that the Trading Advisor shall have
approved such settlement) incurred as a result of any action or omission
involving the Partnership's futures interests trading by the Trading Advisor, or
any of its controlling persons or affiliates or their respective directors,
officers, partners, shareholders, or employees; provided that such liability
arises from an act or omission of the Trading Advisor, or any of its controlling
persons or affiliates or their respective directors, officers, partners,
shareholders, or employees which is found by a court of competent jurisdiction
upon entry of a final judgment (or, if no final judgment is entered, by an
opinion rendered by counsel who is approved by the Partnership and the Trading
Advisor, such approval not to be unreasonably withheld) to be a breach of this
Agreement or a representation, warranty or covenant herein, or the result of
misconduct or negligence or conduct not done in good faith in the reasonable
belief that it was in, or not opposed to, the best interests of the Partnership.
(c) Partnership Indemnity in Respect of Management Activities.
The Partnership shall indemnify, defend, and hold harmless the Trading Advisor,
its controlling persons, their affiliates and their respective directors,
officers, shareholders, employees, and controlling persons, from and against any
and all losses, claims, damages, liabilities (joint and several), costs, and
expenses (including any reasonable investigatory, legal, and other expenses
incurred in connection with, and any amounts paid in, any settlement; provided
that the Partnership shall have approved such settlement) resulting from a
demand, claim, lawsuit, action, or proceeding (other than those incurred as a
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result of claims brought by or in the right of an indemnified party) relating to
the futures interests trading activities of the Partnership undertaken by the
Trading Advisor; provided that a court of competent jurisdiction upon entry of a
final judgment finds (or, if no final judgment is entered, an opinion is
rendered to the Partnership by independent counsel reasonably acceptable to both
parties) to the effect that the action or inaction of such indemnified party
that was the subject of the demand, claim, lawsuit, action, or proceeding did
not constitute negligence, misconduct, or a breach of this Agreement or a
representation, warranty or covenant of the Trading Advisor herein and was done
in good faith and in a manner such indemnified party reasonably believed to be
in, or not opposed to, the best interests of the Partnership.
(d) Trading Advisor Indemnity in Respect of Sale of Units. The
Trading Advisor shall indemnify, defend and hold harmless DWR, Xxxxxx Xxxxxxx &
Co., Incorporated ("MS&Co."), CFI, the Partnership, the General Partner, any
Additional Seller, and their affiliates and each of their officers, directors,
principals, shareholders, and controlling persons from and against any loss,
claim, damage, liability, cost, and expense, joint and several, to which any
indemnified person may become subject under the Securities Act, the Securities
and Exchange Act of 1934 Act, as amended (the "Exchange Act"), the Commodity
Exchange Act, as amended, and rules promulgated thereunder (the "CEAct"), the
securities or Blue Sky law of any jurisdiction, or otherwise (including any
reasonable investigatory, legal, and other expenses incurred in connection with,
and any amounts paid in, any settlement, provided that the Trading Advisor shall
have approved such settlement, and in connection with any administrative
proceedings), in respect of the offer or sale of Units, insofar as such loss,
claim, damage, liability, cost, or expense (or action in respect thereof) arises
out of, or is based upon: (i) a breach by the Trading Advisor of any
representation, warranty, or agreement in this Agreement relating to the
offering of Units or any certificate delivered pursuant to this Agreement at a
Closing (as such term is defined in the Prospectus); (ii) a misleading or untrue
statement or alleged misleading or untrue statement of a material fact made in
the Registration Statement, the Prospectus, or any related selling material or
an omission or alleged omission to state a material fact therein which is
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus and any selling material, in light of the
circumstances under which they were made) not misleading, and such statement or
omission relates specifically to the Trading Advisor, or its Trading Advisor
Principals (as defined below) (including the historical performance capsules) or
was made in reliance upon, and in conformity with, written information or
instructions furnished by the Trading Advisor (provided, however, that with
respect to any related selling material only such related selling material as
shall have been approved in writing by the Trading Advisor).
(e) Partnership Indemnity in Respect of Sale of Units. The
Partnership agrees to indemnify, defend and hold harmless the Trading Advisor
and each of its officers, directors, principals, shareholders, and controlling
persons from and against any loss, claim, damage, liability, cost, and expense,
joint and several, to which any indemnified person may become subject under the
Securities Act, the Exchange Act, the CEAct, the securities or Blue Sky law of
any jurisdiction, or otherwise (including any reasonable investigatory, legal,
and other expenses incurred in connection with, and any amounts paid in, any
settlement, provided that the Partnership shall have approved such settlement,
and in connection with any administrative proceedings), in respect of the offer
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or sale of Units, insofar as such loss, claim, damage, liability, cost, or
expense (or action in respect thereof) arises out of, or is based upon: (i) a
breach by the Partnership or the General Partner of any representation,
warranty, or agreement in this Agreement relating to the offering of Units; or
(ii) a misleading or untrue statement or alleged misleading or untrue statement
of a material fact made in the Registration Statement, the Prospectus, or any
related selling material or an omission or alleged omission to state a material
fact therein which is required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus or the selling material, in
light of the circumstances under which they were made) not misleading, provided
that such materially misleading or untrue statement or alleged materially
misleading or untrue statement or omission or alleged omission does not relate
to the Trading Advisor or its Trading Advisor Principals (including the
historical performance tables) or was not made in reliance upon, and in
conformity with, information or instructions furnished by the Trading Advisor
(provided, however, that with respect to any related selling material, only such
related selling material as shall have been approved in writing by the Trading
Advisor), or does not result from a breach by the Trading Advisor of any
representation, warranty, or agreement in this Agreement relating to the
offering of Units or any certificate delivered pursuant to this Agreement at a
Closing.
(f) The foregoing agreements of indemnity shall be in addition
to, and shall in no respect limit or restrict, any other remedies which may be
available to an indemnified person.
(g) Promptly after receipt by an indemnified person of notice
of the commencement of any action, claim, or proceeding to which any of the
indemnities may apply, the indemnified person will notify the indemnifying party
in writing of the commencement thereof if a claim in respect thereof is to be
made against the indemnifying party hereunder; but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
which the indemnifying party may have to the indemnified person hereunder,
except where such omission has materially prejudiced the indemnifying party. In
case any action, claim, or proceeding is brought against an indemnified person
and the indemnified person notifies the indemnifying party of the commencement
thereof as provided above, the indemnifying party will be entitled to
participate therein and, to the extent that the indemnifying party desires, to
assume the defense thereof with counsel selected by the indemnifying party and
not unreasonably disapproved by the indemnified person. After notice from the
indemnifying party to the indemnified person of the indemnifying party's
election so to assume the defense thereof as provided above, the indemnifying
party will not be liable to the indemnified person under the indemnity
provisions hereof for any legal and other expenses subsequently incurred by the
indemnified person in connection with the defense thereof, other than reasonable
costs of investigation.
Notwithstanding the proceeding paragraph, if, in any action,
claim, or proceeding as to which indemnification is or may be available
hereunder, an indemnified person reasonably determines that its interests are or
may be adverse, in whole or in part, to the indemnifying party's interests or
that there may be legal defenses available to the indemnified person which are
inconsistent with the defenses available to the indemnifying party, the
indemnified person may retain its own counsel in connection with such action,
claim, or proceeding and will be indemnified by the indemnifying party for any
legal and other expenses reasonably incurred in connection with investigating or
defending such action, claim, or proceeding.
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In no event will the indemnifying party be liable for the fees
and expenses of more than one counsel for all indemnified persons in connection
with any one action, claim, or proceeding or in connection with separate but
similar or related actions, claims, or proceedings in the same jurisdiction
arising out of the same general allegations. The indemnifying party will not be
liable for any settlement of any action, claim, or proceeding effected without
the indemnifying party's express written consent, but if any action, claim, or
proceeding is settled with the indemnifying party's express written consent, the
indemnifying party will indemnify, defend, and hold harmless an indemnified
person as provided in this Section 8.
9. Right to Advise Others and Uniformity of Acts and
Practices.
(a) The Trading Advisor is engaged in the business of advising
investors as to the purchase and sale of futures interests. During the term of
this Agreement, the Trading Advisor, its principals and affiliates, will be
advising other investors (including affiliates and the stockholders, officers,
directors, and employees of the Trading Advisor and its affiliates and their
families) and trading for their own accounts. However, under no circumstances
shall the Trading Advisor by any act or omission favor any account advised or
managed by the Trading Advisor over the account of the Partnership in any way or
manner (other than by charging different management and/or incentive fees). The
Trading Advisor agrees to treat the Partnership in a fiduciary capacity to the
extent recognized by applicable law, but, subject to that standard, the Trading
Advisor or any of its principals or affiliates shall be free to advise and
manage accounts for other investors and shall be free to trade on the basis of
the same trading programs, systems, methods, or strategies employed by the
Trading Advisor for the account of the Partnership, or trading programs,
systems, methods, or strategies which are entirely independent of, or materially
different from, those employed for the account of the Partnership, and shall be
free to compete for the same futures interests as the Partnership or to take
positions opposite to the Partnership, where such actions do not knowingly or
deliberately prefer any of such accounts over the account of the Partnership.
(b) The Trading Advisor shall not be restricted as to the
number or nature of its clients, except that: (i) so long as the Trading Advisor
acts as a trading advisor for the Partnership, neither the Trading Advisor nor
any of its principals or affiliates shall hold knowingly any position or control
any other account which would cause the Partnership, the Trading Advisor, or the
principals or affiliates of the Trading Advisor to be in violation of the CEAct
or any regulations promulgated thereunder, any applicable rule or regulation of
the CFTC or any other regulatory body, exchange, or board; and (ii) neither the
Trading Advisor nor any of its principals or affiliates shall render futures
interests trading advice to any other individual or entity or otherwise engage
in activity which shall knowingly cause positions in futures interests to be
attributed to the Trading Advisor under the rules or regulations of the CFTC or
any other regulatory body, exchange, or board so as to require the significant
modification of positions taken or intended for the account of the Partnership;
-12-
provided that the Trading Advisor may modify its trading programs, systems,
methods or strategies to accommodate the trading of additional funds or
accounts. If applicable speculative position limits are exceeded by the Trading
Advisor in the opinion of (i) independent counsel (who shall be other than
counsel to the Partnership), (ii) the CFTC, or (iii) any other regulatory body,
exchange, or board, the Trading Advisor and its principals and affiliates shall
promptly liquidate positions in all of their accounts, including the
Partnership's account, as to which positions are attributed to the Trading
Advisor as nearly as possible in proportion to the accounts' respective amounts
available for trading (taking into account different degrees of leverage and
"notional" equity) to the extent necessary to comply with the applicable
position limits.
10. Representations, Warranties, and Covenants of the
Trading Advisor.
(a) Representations of the Trading Advisor. The Trading
Advisor with respect to itself and each of its principals represents and
warrants to and agrees with the General Partner and the Partnership as follows:
(i) It will exercise good faith and due care in using
the trading programs on behalf of the Partnership that are described in
the Prospectus (as modified from time to time) or any other trading
programs agreed to by the General Partner.
(ii) The Trading Advisor shall follow, at all times,
the trading policies of the Partnership (as described in the
Prospectus) or otherwise as furnished to the Trading Advisor in writing
from time to time.
(iii) The Trading Advisor shall trade: (A) the
Partnership's Net Assets pursuant to the specified trading program(s)
described in the Prospectus unless the Trading Advisor is instructed by
the General Partner to trade the Partnership's Net Assets pursuant to
any one or more of the Trading Advisor's other trading programs
described in the Prospectus; and (B) only in futures and option
contracts traded on U.S. contract markets, foreign currency forward
contracts traded with CFI, and such other futures interests that are
approved in writing by the General Partner and have been approved by
the CFTC for U.S. persons.
(iv) The Trading Advisor is duly organized, validly
existing and in good standing as a corporation under the laws of the
state of its incorporation and is qualified to do business as a foreign
corporation and in good standing in each other jurisdiction in which
the nature or conduct of its business requires such qualification and
the failure to so qualify would materially adversely affect the Trading
Advisor's ability to perform its duties under this Agreement. The
Trading Advisor has full corporate power and authority to perform its
obligations under this Agreement, and as described in the Registration
Statement and Prospectus. The only principals (as defined in Rule
4.10(e) under the CEAct) of the Trading Advisor are those set forth in
the Prospectus (the "Trading Advisor Principals").
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(v) All references to the Trading Advisor and each
Trading Advisor Principal, including the Trading Advisor's trading
programs, approaches, systems and performance, in the Registration
Statement and the Prospectus, and in any supplemental selling material
which has been approved in writing by the Trading Advisor, are accurate
and complete in all material respects. With respect to the information
relating to the Trading Advisor and each Trading Advisor Principal,
including the Trading Advisor's and the Trading Advisor Principals'
trading programs, approaches, systems, and performance information, as
applicable, (i) the Registration Statement and Prospectus contain all
statements and information required to be included therein under the
CEAct, (ii) the Registration Statement as of its effective date will
not contain any misleading or untrue statement of a material fact or
omit to state a material fact which is required to be stated therein or
necessary to make the statements therein not misleading and (iii) the
Prospectus at its date of issue and as of each monthly closing will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
(vi) This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Trading Advisor and
is a valid and binding agreement of the Trading Advisor enforceable in
accordance with its terms.
(vii) Each of the Trading Advisor and each
"principal" of the Trading Advisor, as defined in Rule 3.1 under the
CEAct, has all federal and state governmental, regulatory and exchange
licenses, registrations and approvals and has effected all filings with
federal and state governmental and regulatory agencies required to
conduct its or his business and to act as described in the Registration
Statement and Prospectus or required to perform its or his obligations
under this Agreement. The Trading Advisor is registered as a commodity
trading advisor under the CEAct and is a member of the NFA in such
capacity.
(viii) The execution and delivery of this Agreement,
the incurrence of the obligations set forth herein, the consummation of
the transactions contemplated herein and in the Prospectus and the
payment of the fees hereunder will not violate, or constitute a breach
of, or default under, the certificate of incorporation or bylaws of the
Trading Advisor or any agreement or instrument by which it is bound or
of any order, rule, law or regulation binding on it of any court or any
governmental body or administrative agency or panel or self-regulatory
organization having jurisdiction over it.
(ix) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as may otherwise be stated in or contemplated by the
Registration Statement and the Prospectus, there has not been any
material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or any Trading Advisor
Principal.
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(x) Except as set forth in the Registration Statement
or Prospectus there has not been in the five years preceding the date
of the Prospectus and there is not pending, or to the best of the
Trading Advisor's knowledge threatened, any action, suit or proceeding
at law or in equity before or by any court or by any federal, state,
municipal or other governmental body or any administrative,
self-regulatory or commodity exchange organization to which the Trading
Advisor or any Trading Advisor Principal is or was a party, or to which
any of the assets of the Trading Advisor or any Trading Advisor
Principal is or was subject and which resulted in or might reasonably
be expected to result in any materially adverse change in the
condition, financial or otherwise, of the Trading Advisor or which is
required under the Securities Act or CEAct to be disclosed in the
Prospectus. None of the Trading Advisor or any Trading Advisor
Principal has received any notice of an investigation by the NFA or the
CFTC regarding noncompliance by the Trading Advisor or any of the
Trading Advisor Principals with the CEAct.
(xi) Neither the Trading Advisor nor any Trading
Advisor Principal has received, or is entitled to receive, directly or
indirectly, any commission, finder's fee, similar fee, or rebate from
any person in connection with the organization or operation of the
Partnership, other than as described in the Prospectus.
(xii) The actual performance of each discretionary
account of a client directed by the Trading Advisor and the Trading
Advisor Principals since at least the later of (i) the date of
commencement of trading for each such account or (ii) a date five years
prior to the effective date of the Registration Statement, is disclosed
in the Prospectus (other than such discretionary accounts the
performance of which are exempt from the CEAct disclosure
requirements); all of the information regarding the actual performance
of the accounts of the Trading Advisor and the Trading Advisor
Principals set forth in the Prospectus is complete and accurate in all
material respects and is in accordance with and in compliance with the
disclosure requirements under the CEAct and the Securities Act,
including the Division of Trading and Markets "notional equity"
advisories and interpretations and the rules and regulations of the
NFA.
(b) Covenants of the Trading Advisor. The Trading Advisor
covenants and agrees that:
(i) The Trading Advisor shall use its best efforts to
maintain all registrations and memberships necessary for the Trading
Advisor to continue to act as described herein and to at all times
comply in all material respects with all applicable laws, rules, and
regulations, to the extent that the failure to so comply would have a
materially adverse effect on the Trading Advisor's ability to act as
described herein.
(ii) The Trading Advisor shall inform the General
Partner immediately as soon as the Trading Advisor or any of its
principals becomes the subject of any investigation, claim or
proceeding of any regulatory authority having jurisdiction over such
person or becomes a named party to any litigation materially affecting
the business of the Trading Advisor. The Trading Advisor shall also
inform the General Partner immediately if the Trading Advisor or any of
its officers becomes aware of any breach of this Agreement by the
Trading Advisor.
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(iii) The Trading Advisor agrees reasonably to
cooperate by providing information regarding itself and its performance
in the preparation of any amendments or supplements to the Registration
Statement and the Prospectus.
(iv) The Trading Advisor agrees to participate, to
the extent that the General Partner may reasonably request, in "road
shows" and other promotional activities relating to the marketing of
the Units, provided that such participation shall not in the reasonable
judgment of the Trading Advisor require the registration of the Trading
Advisor or any of its principals or agents as a broker-dealer or
salesman or interfere materially with the trading activities of the
Trading Advisor. The Trading Advisor shall pay the costs of its
reasonably requested participation in such road shows.
11. Representations, Warranties, and Covenants of the
General Partner and the Partnership.
(a) Representations of the Partnership and the General
Partner. The General Partner and the Partnership represent and warrant to the
Trading Advisor, as follows:
(i) The Partnership has provided to the Trading
Advisor, and filed with SEC, the Registration Statement and has filed
copies thereof with: (i) the CFTC under the CEAct; (ii) the NASD
pursuant to its Conduct Rules; and (iii) the NFA in accordance with NFA
Compliance Rule 2-13. The Partnership will not file any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus unless the Trading Advisor has received reasonable prior
notice of and a copy of such amendments or supplements and has not
reasonably objected thereto in writing.
(ii) The Limited Partnership Agreement provides for
the subscription for and sale of the Units; all action required to be
taken by the General Partner and the Partnership as a condition to the
sale of the Units to qualified subscribers therefor has been, or prior
to each Closing will have been taken; and, upon payment of the
consideration therefor specified in each accepted Subscription and
Exchange Agreement and Power of Attorney, in such form as attached to
the Prospectus, the Units will constitute valid limited partnership
interests in the Partnership.
(iii) The Partnership is a limited partnership duly
organized pursuant to the Certificate of Limited Partnership, the
Limited Partnership Agreement and the Delaware Revised Uniform Limited
Partnership Act ("DRULPA") and is validly existing under the laws of
the State of Delaware with full power and authority to engage in the
trading of futures interests and to engage in its other contemplated
activities as described in the Prospectus; the Partnership has received
a certificate of authority to do business in the State of New York as
provided by Article 8-A of the New York Revised Limited Partnership Act
and is qualified to do business in each jurisdiction in which the
nature or conduct of its business requires such qualification and where
failure to be so qualified could materially adversely affect the
Partnership's ability to perform its obligations hereunder.
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(iv) The General Partner is duly organized and
validly existing and in good standing as a corporation under the laws
of the State of Delaware and in good standing and qualified to do
business as a foreign corporation under the laws of the State of New
York and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the nature or conduct
of its business requires such qualification and where the failure to be
so qualified could materially adversely affect the General Partner's
ability to perform its obligations hereunder.
(v) The Partnership and the General Partner have full
partnership or corporate power and authority under applicable law to
conduct their business and to perform their respective obligations
under this Agreement.
(vi) The Registration Statement and Prospectus
contain all statements and information required to be included therein
by the CEAct. When the Registration Statement becomes effective under
the Securities Act and at all times subsequent thereto up to and
including the Initial Closing and each Monthly Closing, the
Registration Statement and Prospectus will comply in all material
respects with the requirements of the Securities Act, the rules and
regulations promulgated thereunder (the "SEC Regulations"), the rules
of the NFA and the CEAct. The Registration Statement as of its
effective date will not contain any misleading or untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus as of its date of issue and at the Initial Closing and each
Monthly Closing will not contain any misleading or untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not misleading. The supplemental selling
material, when read in conjunction with the Prospectus, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
The supplemental selling material will comply with the CEAct and the
regulations and rules of the NFA and NASD. The representation, and
warranties in this clause (vi) shall not, however, apply to any
statement or omission in the Registration Statement, Prospectus or
supplemental selling material relating to the Trading Advisor, or its
Trading Advisor Principals or its trading programs or made in reliance
upon and in conformity with information furnished by the Trading
Advisor.
(vii) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there has not been any material adverse change in the condition,
financial or otherwise, business or prospects of the General Partner or
the Partnership, whether or not arising in the ordinary course of
business.
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(viii) This Agreement has been duly and validly
authorized, executed and delivered by the General Partner for itself
and on behalf of the Partnership and constitutes a valid, binding and
enforceable agreement of the Partnership and the General Partner in
accordance with its terms.
(ix) The execution and delivery of this Agreement,
the incurrence of the obligations set forth herein and the consummation
of the transactions contemplated herein and in the Registration
Statement and Prospectus will not violate, or constitute a breach of,
or default under, the General Partner's certificate of incorporation or
bylaws, the Certificate of Limited Partnership, the Limited Partnership
Agreement, or any agreement or instrument by which either the General
Partner or the Partnership, as the case may be, is bound or any order,
rule, law or regulation applicable to the General Partner or the
Partnership of any court or any governmental body or administrative
agency or panel or self-regulatory organization having jurisdiction
over the General Partner or the Partnership.
(x) Except as set forth in the Registration Statement
or Prospectus, there has not been in the five years preceding the date
of the Prospectus and there is not pending or, to the best of the
General Partner's knowledge, threatened, any action, suit or proceeding
at law or in equity before or by any court or by any federal, state,
municipal or other governmental body or any administrative,
self-regulatory or commodity exchange organization to which the General
Partner or the Partnership is or was a party, or to which any of the
assets of the General Partner or the Partnership is or was subject and
which resulted in or might reasonably be expected to result in any
materially adverse change in the condition, financial or otherwise, of
the General Partner or the Partnership or which is required under the
Securities Act or the CEAct to be disclosed in the Prospectus; and
neither the General Partner nor any of the principals of the General
Partner, as "principals" is defined under Rule 4.10 under the CEAct
("General Partner Principals") has received any notice of an
investigation by the NFA, NASD, SEC or CFTC regarding non-compliance by
the General Partner or the General Partner Principals or the
Partnership with the Securities Act or the CEAct which is required
under the Securities Act or the CEAct to be disclosed in the
Prospectus.
(xi) The General Partner and each principal of the
General Partner, as defined in Rule 3.1 under the CEAct, have all
federal and state governmental, regulatory and exchange approvals,
registrations, and licenses, and have effected all filings with federal
and state governmental agencies and regulatory agencies required to
conduct their business and to act as described in the Registration
Statement and Prospectus or required to perform their obligations under
this Agreement (including, without limitation, registration as a
commodity pool operator under the CEAct and membership in the NFA as a
commodity pool operator) and will maintain all such required approvals,
licenses, filings and registrations for the term of this Agreement. The
General Partner's principals identified in the Registration Statement
are all of the General Partner Principals.
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(b) Covenants of the General Partner and the Partnership. The
General Partner for itself and the Partnership covenants and agrees that:
(i) The General Partner shall use its best efforts to
maintain all registrations and memberships necessary for the General
Partner to continue to act as described herein and in the Prospectus
and to all times comply in all material respects with all applicable
laws, rules, and regulations, to the extent that the failure to so
comply would have a materially adverse effect on the General Partner's
ability to act as described herein and in the Prospectus.
(ii) The General Partner shall inform the Trading
Advisor immediately as soon as the General Partner or any of its
principals becomes the subject of any investigation, claim, or
proceeding of any regulatory authority having jurisdiction over such
person or becomes a named party to any litigation materially affecting
the business of the General Partner. The General Partner shall also
inform the Trading Advisor immediately if the General Partner or any of
its officers become aware of any breach of this Agreement by the
General Partner.
(iii) The Partnership will furnish to the Trading
Advisor copies of the Registration Statement, the Prospectus, and all
amendments and supplements thereto, in each case as soon as available.
12. Merger or Transfer of Assets of Trading Advisor.
The Trading Advisor may merge or consolidate with, or sell or
otherwise transfer its advisory business, or all or a substantial portion of its
assets, any portion of its commodity trading programs, systems or methods, or
its goodwill, to any entity that is directly or indirectly controlled by,
controlling, or under common control with, the Trading Advisor, provided that
such entity expressly assumes all obligations of the Trading Advisor under this
Agreement and agrees to continue to operate the business of the Trading Advisor,
substantially as such business is being conducted on the date hereof.
13. Complete Agreement.
This Agreement constitutes the entire agreement between the
parties with respect to the matters referred to herein, and no other agreement,
verbal or otherwise, shall be binding as between the parties unless in writing
and signed by the party against whom enforcement is sought.
14. Assignment.
This Agreement may not be assigned by any party hereto without
the express written consent of the other parties hereto.
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15. Amendment.
This Agreement may not be amended except by the written
consent of the parties hereto.
16. Severability.
The invalidity or unenforceability of any provision of this
Agreement or any covenant herein contained shall not affect the validity or
enforceability of any other provision or covenant hereof or herein contained and
any such invalid provision or covenant shall be deemed to be severable.
17. Closing Certificates and Opinions.
(1) The Trading Advisor shall, at the Initial Closing and at
the request of the General Partner at any Monthly Closing, provide the
following:
(a) To DWR, the General Partner and the Partnership a
certificate, dated the date of any such closing and in form and substance
satisfactory to such parties, to the effect that:
(i) The representations and warranties by the Trading
Advisor in this Agreement are true, accurate, and complete on and as of
the date of the closing, as if made on the date of the closing.
(ii) The Trading Advisor has performed all of its
obligations and satisfied all of the conditions on its part to be
performed or satisfied under this Agreement, at or prior to the date of
such closing.
(b) To DWR, the General Partner and the Partnership an opinion
of counsel to the Trading Advisor, in form and substance satisfactory to such
parties, to the effect that:
(i) The Trading Advisor is a corporation duly
organized and validly existing under the laws of the state of its
incorporation and is qualified to do business and in good standing in
each other jurisdiction in which the nature or conduct of its business
requires such qualification and the failure to be duly qualified would
materially adversely affect the Trading Advisor's ability to perform
its obligations under this Agreement. The Trading Advisor has full
corporate power and authority to conduct its business as described in
the Registration Statement and Prospectus and to perform its
obligations under this Agreement.
(ii) The Trading Advisor (including the Trading
Advisor Principals) has all governmental, regulatory, self-regulatory
and commodity exchange and clearing association licenses,
registrations, and memberships required by law, and the Trading Advisor
(including the Trading Advisor Principals) has made all filings
necessary to perform its obligations under this Agreement and to
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conduct its business as described in the Registration Statement and
Prospectus, except for such licenses, memberships, filings and
registrations, the absence of which would not have a material adverse
effect on its ability to act as described in the Registration Statement
and Prospectus or to perform its obligations under this Agreement, and,
to the best of such counsel's knowledge, after due investigations, none
of such licenses, memberships or registrations have been rescinded,
revoked or suspended.
(iii) This Agreement has been duly authorized,
executed and delivered by or on behalf of the Trading Advisor and
constitutes a valid and binding agreement of the Trading Advisor
enforceable in accordance with its terms, subject only to bankruptcy,
insolvency, reorganization, moratorium or similar laws at the time in
effect affecting the enforceability generally of rights of creditors
and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and
except as enforceability of the indemnification and exculpation
provisions contained in this Agreement may be limited by applicable law
or public policy.
(iv) To such counsel's knowledge, based upon due
inquiry of certain officers of the Trading Advisor, except as disclosed
in the Prospectus, there are no actions, suits or proceedings at law or
in equity pending or threatened before or by any court, governmental
body, administrative agency, panel or self-regulatory organization, nor
have there been any such actions, suits or proceedings within the five
years preceding the date of the Prospectus against the Trading Advisor
or any Trading Advisor Principal which are required to be disclosed in
the Registration Statement or Prospectus.
(v) The execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the consummation of
the transactions contemplated herein and in the Prospectus will not be
in contravention of any of the provisions of the certificate of
incorporation or bylaws of the Trading Advisor and, based upon due
inquiry of certain officers of the Trading Advisor, to the best of such
counsel's knowledge, will not constitute a breach of, or default under,
or a violation of any instrument or agreement known to such counsel by
which the Trading Advisor is bound and will not violate any order, law,
rule or regulation applicable to the Trading Advisor of any court or
any governmental body or administrative agency or panel or
self-regulatory organization having jurisdiction over the Trading
Advisor.
(vi) Based upon reliance of certain SEC "no-action"
letters, as of the closing, the performance by the Trading Advisor of
the transactions contemplated by this Agreement and as described in the
Prospectus will not require the Trading Advisor to be registered as an
"investment adviser" as that term is defined in the Investment Advisers
Act of 1940, as amended.
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(vii) Nothing has come to such counsel's attention
that would lead them to believe that, (A) the Registration Statement at
the time it became effective, insofar as the Trading Advisor and the
Trading Advisor Principals are concerned, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (B) the Prospectus at the time it was issued
or at the closing contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein relating to the Trading Advisor or the Trading
Advisor Principals, in light of the circumstances under which they were
made, not misleading; provided, however, that such counsel need express
no opinion or belief as to the performance data and notes or
descriptions thereto set forth in the Registration Statement and
Prospectus, except that such counsel shall opine, without rendering any
opinion as to the accuracy of the information in such tables, that the
actual performance tables of the Trading Advisor set forth in the
Prospectus comply as to form in all material respects with applicable
CFTC rules and all CFTC and NFA interpretations thereof, except as
disclosed in the Prospectus or as otherwise permitted by the CFTC
staff.
In giving the foregoing opinion, counsel may rely on
information obtained from public officials, officers of the Trading Advisor, and
other resources believed by it to be responsible and may assume that signatures
on all documents examined by it are genuine.
(c) To DWR, the General Partner and the Partnership, a report
dated the date of the closing which shall present, for the period from the date
after the last day covered by the historical performance capsules in the
Prospectus to the latest practicable day before closing, updated performance
information, and which shall certify that such information is, to the best of
such Trading Advisor's knowledge, accurate in all material respects.
(2) The General Partner shall, at the Initial Closing
following the effective date of the Registration Statement, provide the
following:
(a) To the Trading Advisor a certificate, dated the date of
such closing and in form and substance satisfactory to the Trading Advisor, to
the effect that:
(i) The representations and warranties by the
Partnership and the General Partner in this Agreement are true,
accurate, and complete on and as of the date of the closing as if made
on the date of the closing.
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued by the SEC and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the General Partner, are contemplated or threatened
under the Securities Act. No order preventing or suspending the use of
the Prospectus has been issued by the SEC, NASD, CFTC, or NFA and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the General Partner, are contemplated or threatened
under the Securities Act or the CEAct.
(iii) The Partnership and the General Partner have
performed all of their obligations and satisfied all of the conditions
on their part to be performed or satisfied under this Agreement at or
prior to the date of the closing.
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(b) To the parties hereto, an opinion of Cadwalader,
Xxxxxxxxxx & Xxxx, counsel to the General Partner and the Partnership, in form
and substance satisfactory to such parties, to the effect that:
(i) The Partnership is a limited partnership duly
formed pursuant to the Certificate of Limited Partnership, the Limited
Partnership Agreement and the DRULPA and is validly existing under the
laws of the State of Delaware with full partnership power and authority
to conduct the business in which it proposes to engage as described in
the Registration Statement and Prospectus and to perform its
obligations under this Agreement; the Partnership has received a
Certificate of Authority as contemplated under the New York Revised
Limited Partnership Act and is qualified to do business in New York and
need not affect any other filings or qualifications under the laws of
any other jurisdictions to conduct its business as described in the
Registration Statement and Prospectus.
(ii) The General Partner is duly organized and
validly existing and in good standing as a corporation under the laws
of the State of Delaware and is qualified to do business and is in good
standing as a foreign corporation in the State of New York and in each
other jurisdiction in which the nature or conduct of its business
requires such qualification and the failure to so qualify might
reasonably be expected to result in material adverse consequences to
the Partnership or the General Partner's ability to perform its
obligations as described in the Registration Statement and Prospectus.
The General Partner has full corporate power and authority to conduct
its business as described in the Registration Statement and Prospectus
and to perform its obligations under this Agreement.
(iii) The General Partner and each of its principals
as defined in Rule 3.1 under the CEAct, and the Partnership have all
federal and state governmental and regulatory licenses, registrations
and memberships required by law and have made all filings necessary in
order for the General Partner and the Partnership to perform their
obligations under this Agreement to conduct their business as described
in the Registration Statement and Prospectus, except for such licenses,
memberships, filings, and registrations, the absence of which would not
have a material adverse effect on the ability of the Partnership or the
General Partner to act as described in the Registration Statement and
Prospectus, or to perform their obligations under this Agreement, and,
to the best of such counsel's knowledge, after due investigation, none
of such licenses and memberships or registrations have been rescinded,
revoked or suspended.
(iv) This Agreement has been duly authorized,
executed and delivered by or on behalf of the General Partner and the
Partnership, and constitutes a valid and binding agreement of the
General Partner and the Partnership, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws at the time in effect affecting the enforceability
generally of rights of creditors and by general principals of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law), and except as enforceability of the
indemnification and exculpation provisions contained in this Agreement
may be limited by applicable law or public policy.
-23-
(v) The execution and delivery of this Agreement and
the offer and sale of the Units by the Partnership and the incurrence
of the obligations herein set forth and the consummation of the
transactions contemplated herein and in the Prospectus will not be in
contravention of the General Partner's certificate of incorporation or
bylaws, the Certificate of Limited Partnership, or the Limited
Partnership Agreement and, to the best of such counsel's knowledge
based upon due inquiry of certain officers of the General Partner, will
not constitute a breach of, or default under, or a violation of any
agreement or instrument known to such counsel by which the General
Partner or the Partnership is bound and will not violate any order
known to such counsel or any law, rule or regulation applicable to the
General Partner or the Partnership of any court, governmental body,
administrative agency, panel or self-regulatory organization having
jurisdiction over the General Partner or the Partnership.
(vi) To such counsel's knowledge, based upon due
inquiry of certain officers of the General Partner, except as disclosed
in the Prospectus, there are no actions, suits or proceedings at law or
in equity pending or threatened before or by any court, governmental
body, administrative agency, panel or self-regulatory organization, nor
have there been any such actions, suits or proceedings within the five
years preceding the date of the Prospectus against the General Partner
or the Partnership which are required to be disclosed in the
Registration Statement or Prospectus.
(vii) The Registration Statement is effective under
the Securities Act and, to the best of such counsel's knowledge, no
proceedings for a stop order are pending or threatened under Section
8(d) of the Securities Act or any similar state securities laws.
(viii) At the time the Registration Statement became
effective, the Registration Statement, and at the time the Prospectus
was issued and as of the closing, the Prospectus, complied as to form
in all material respects with the requirements of the Securities Act,
the Securities Regulations, the CEAct and the regulations of the NFA
and NASD.
(ix) Based upon reliance on certain SEC "no-action"
letters, as of the closing, the Partnership need not register as an
"investment company" under the Investment Company Act of 1940, as
amended.
(x) Nothing has come to such counsel's attention that
would lead them to believe that the Registration Statement at the time
it became effective contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus at the time it was issued or at the closing contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they where made, not misleading; provided, however, that
Cadwalader, Xxxxxxxxxx & Xxxx need express no opinion or belief (a) as
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to information in the Registration Statement or the Prospectus
regarding any Trading Advisor or its principals, or (b) as to the
financial statements, notes thereto and other financial or statistical
data set forth in the Registration Statement and Prospectus, or (c) as
to the performance data and notes or descriptions thereto set forth in
the Registration Statement and Prospectus.
In rendering its opinion, such counsel may rely on information
obtained from public officials, officers of the General Partner and other
sources believed by it to be responsible and may assume that signatures on all
documents examined by it are genuine, and that a Subscription and Exchange
Agreement and Power of Attorney in the form attached to the Prospectus has been
duly authorized, completed, dated, executed, and delivered and funds
representing the full subscription price for the Units purchased have been
delivered by each purchaser of Units in accordance with the requirements set
forth in the Prospectus.
18. Inconsistent Filings.
The Trading Advisor agrees not to file, participate in the
filing of, or publish any description of the Trading Advisor, or of its
respective principals or trading approaches that is materially inconsistent with
those in the Registration Statement and Prospectus, without so informing the
General Partner and furnishing to it copies of all such filings within a
reasonable period prior to the date of filing or publication.
19. Disclosure Document.
During the term of this Agreement, the Trading Advisor shall
furnish to the General Partner promptly copies of all disclosure documents filed
with the CFTC or NFA by the Trading Advisor. The General Partner acknowledges
receipt of the Trading Advisor's disclosure document dated ________ ___, _____.
20. Notices.
All notices required to be delivered under this Agreement
shall be in writing and shall be effective when delivered personally on the day
delivered, or when given by registered or certified mail, postage prepaid,
return receipt requested, on the day actually received, 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 Partnership:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Charter ____________ L.P.
c/o Demeter Management Corporation
Two World Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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if to the General Partner:
Demeter Management Corporation
Two World Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
if to the Trading Advisor:
Attn:
21. 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.
22. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 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.
23. Remedies.
In any action or proceeding arising out of any of the
provisions of this Agreement, the Trading Advisor agrees not to seek any
prejudgment equitable or ancillary relief. The Trading Advisor agrees that its
sole remedy in any such action or proceeding shall be to seek actual monetary
damages for any breach of this Agreement.
24. Headings.
Headings to sections herein are for the convenience of the
parties only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
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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.
XXXXXX XXXXXXX XXXX XXXXXX CHARTER
______________________ L.P.
by Demeter Management Corporation,
General Partner
By
DEMETER MANAGEMENT CORPORATION
By
[TRADING ADVISOR]
By
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Exhibit 10.04
FORM OF
ESCROW AGREEMENT
_________ __, 1998
The Chase Manhattan Bank
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx Xxxxxxxx
Re: Xxxxxx Xxxxxxx Xxxx Xxxxxx Charter Series
Escrow Account
Gentlemen:
In accordance with arrangements made by Demeter Management
Corporation, a Delaware corporation (the "General Partner"), on behalf of
Xxxxxx Xxxxxxx Xxxx Xxxxxx Charter Xxxxxx X.X. ("Charter Xxxxxx"), Xxxxxx
Xxxxxxx Xxxx Xxxxxx Charter Millburn L.P. ("Charter Millburn"), and Xxxxxx
Xxxxxxx Xxxx Xxxxxx Charter Xxxxxx X.X. ("Charter Xxxxxx"; together with
Charter Xxxxxx and Charter Millburn, the "Partnerships" and individually, a
Partnership"), and Xxxx Xxxxxx Xxxxxxxx Inc., the selling agent for the
Partnerships (the "Depositor"; together with the Partnerships herein
sometimes collectively referred to as the "Parties" and, individually, as
a "Party"), the Depositor shall: (i) deliver to you, as escrow agent
("Escrow Agent"), all subscription funds (by the direct transfer of
immediately available funds into a non-interest-bearing escrow account
established by you for the Partnerships, for investment in your interest-
bearing money market account) received by the Depositor from each
subscriber ("Subscriber" or, collectively, the "Subscribers") during the
"Initial Offering Period" and thereafter during the "Continuing Offering"
Prospectus, as the same may be updated, supplemented, and amended from
ime to time (the "Prospectus")), in connection with the offering to the
public of Units of Limited Partnership Interest of the Partnerships (the
"Units"); and (ii) also promptly transmit to the General Partner a
complete report of all funds deposited with you during the Initial
Offering Period and the Continuing Offering. Except as otherwise
determined herein, all capitalized terms used in this Agreement are
defined in the Prospectus. You, as Escrow Agent, shall hold such
subscription funds, together with any additions, substitutions, or other
financial instruments in which such funds may be invested or for which
such funds may be exchanged (collectively referred to herein as the
"Fund"), IN ESCROW upon the following terms:
1. (a) Following receipt by you of written notice from the
General Partner that the General Partner has rejected a Subscriber's
subscription, in whole or in part, during the Initial Offering Period or
the Continuing Offering, you shall transmit to the Depositor, as soon as
practicable but in no event later than three business days following
receipt by you of such notice (i) the amount of such Subscriber's
subscription funds that shall have been deposited with you hereunder and
that the General Partner shall have notified you of as having been
rejected, and (ii) any interest earned on the Fund and allocated to the
rejected amount of such subscription in accordance with Section 2 hereof.
You shall at the same time give notice to the Depositor of the amount of
aggregate subscription funds and/or interest so returned.
(b) On the second business day before the scheduled day of
each Closing during the Initial Offering Period and the Continuing
Offering, the General Partner shall notify you of the portion of the Fund
that represents subscriptions to be accepted by the General Partner for
each Partnership equal to the number of Units subscribed for, multiplied
by a price per Unit equal to $10 with respect to the Initial Closing, and
thereafter at 100% of the Net Asset Value per Unit thereof as of the
close of business on the date of the Monthly Closing. Upon receipt by
you of joint written notice from the General Partner and the Depositor on
the date of each such Closing to the effect that all of the terms and
conditions with respect to the release of subscription funds from escrow
set forth in the Prospectus have been fulfilled, you shall promptly pay
and deliver to each Partnership the portion of the Fund specified in the
General Partner's prior instructions (excluding any interest earned on
the Fund and funds relating to rejected subscriptions).
(c) On the date of each Closing, or as soon thereafter as
practicable, you shall transmit to the Depositor an amount
representing: (i) for each Subscriber whose subscription shall be
accepted by the General Partner in whole or in part, any interest earned
on the Fund and allocated to the accepted portion of such Subscriber's
subscription in accordance with Section 2 hereof, and (ii) for each
Subscriber whose subscription shall have been rejected by the General
Partner in whole or in part but whose subscription funds shall not have
been previously returned to the Depositor by you in accordance with the
first paragraph of this Section 1, such Subscriber's subscription funds
hat shall have been deposited with you hereunder and that shall have been
rejected by the General Partner, together with any interest earned on the
Fund and allocated to the rejected amount of such subscription in
accordance with Section 2 hereof. You shall at the same time give notice
to the Depositor of the aggregate amount of subscription funds and/or
interest so returned.
(d) Notwithstanding subparagraph (a) of this Paragraph 1, upon
receipt by you of written notice from the General Partner that a
Subscriber has been rejected (because good funds representing payment for
Units have not been deposited in the Subscriber's customer account with
the Depositor or because such Subscriber has provided bad funds in the
form of a bad check, draft, or otherwise to the Depositor), you shall
transmit to the Depositor, within three business days following receipt
by you of such notice, the amount of subscription funds deposited with
you hereunder relating to that amount (the portion of such Subscriber's
subscription for which good funds have not been provided), together with
any interest earned on the Fund and allocated to such portion of such a
subscription in accordance with Section 2 hereof to the date of such
return, and shall immediately notify the General Partner of the return of
such funds.
-2-
2. You shall hold the Fund (including any interest earned
thereon) for the account of the Partnerships pending delivery to either
the Partnerships or the Depositor, pursuant to Paragraphs 1 or 3 hereof,
as the case may be. On each day that subscription funds are transferred
to you hereunder in immediately available funds and receipt is confirmed
before 2:00 P.M., New York City time, you shall immediately invest such
subscription funds solely in your interest-bearing money market account.
If subscription funds are transferred to you in immediately available
funds and receipt is confirmed after 2:00 P.M., New York City time, you
shall so invest such funds on the next day. Interest earned on the Fund
shall be allocated by the Depositor among the subscribers proportionately
based on (A) the amount of their respective subscriptions on deposit in
the Fund, and (B) the period of time from the date that their respective
subscriptions shall have been deposited in the Fund to the earlier of the
delivery of the Fund to the Partnerships at a Closing or the Depositor in
accordance with Sections 1 or 3 hereof, as the case may be.
3. If, during the Initial Offering Period, you are notified in
writing jointly by the Parties that subscriptions for fewer than 400,000
Units of any of Charter Xxxxxx, Charter Millburn or Charter Xxxxxx have
been subscribed for and not rejected by the General Partner, that the
offering of Units for any such Partnership(s) have been terminated, and
that no Initial Closing with respect to any such Partnership(s) will be
held, you shall transmit to the Depositor, as soon as practicable but in
no event later than three business days after receipt by you of such
notice, an amount representing the full amount of all subscription funds
that shall have been deposited with you hereunder for any such
Partnership(s), together with any interest earned on the Fund in
accordance with Paragraph 2 hereof for any such Partnership(s). You
shall at the same time give notice to the Depositor of the aggregate
amounts of subscription funds and/or interest so returned.
4. The Parties further agree with you as follows:
(a) Your duties and responsibilities shall be limited solely
to those expressly set forth in this Agreement and are ministerial in
nature. You shall neither be subject to nor obliged to recognize any
other agreement between, or other direction or instruction of, any or all
of the Parties or any Subscriber even though reference thereto may be
made herein; provided, however, that with your written consent, this
Agreement may be amended at any time or times by an instrument in writing
signed by the Parties.
(b) You are authorized, in your sole discretion, to disregard
any and all notices or instructions given by any of the Parties or by any
other person, firm, or corporation, except only such notices or
instructions as are hereunder provided for and orders or process of any
court entered or issued with or without jurisdiction. If the Fund or any
part thereof is at any time attached, garnished, or levied upon under any
court order or in case the payment, assignment, transfer, conveyance, or
delivery of the Fund shall be stayed or enjoined by any court order, or
in case any order, judgment, or decree shall be made or entered by any
court affecting the Fund or any part thereof, then and in any such event
you are authorized, in your sole discretion, to rely upon and comply with
any such order, writ, judgment, or decree that you are advised by legal
counsel of your own choosing is binding upon you, and if you comply with
any such order, writ, judgment, or decree you
-3-
shall not be liable to any of the Parties or to any other person, firm,
or corporation by reason of such compliance even though such order, writ,
judgment, or decree may be subsequently reversed, modified, annulled, set
aside, or vacated.
(c) You shall be fully protected in relying upon any written
notice, demand, certificate, document, or instrument believed by you in
good faith to be genuine and to have been signed or presented by the
proper person or persons or Party or Parties. The Parties shall provide
you with a list of officers and employees who shall be authorized to
deliver instructions hereunder. You shall not be liable for any action
taken or omitted by you in connection herewith in good faith and in the
exercise of your own best judgment.(d) Should any dispute arise with
respect to the delivery, ownership, right of possession, and/or
disposition of the subscription funds deposited with you hereunder, or
should any claim be made upon any such subscription funds by a third
party, you, upon receipt of written notice of such dispute by any of the
Parties or by a third party, are authorized and directed to retain in
your possession all or any of such subscription funds until such dispute
shall have been settled either by mutual agreement of the parties
involved or by final order, decree, or judgment of any court in the
United States.
(e) If for any reason funds are deposited in the escrow
account other than by transfer of immediately available funds, you shall
proceed as soon as practicable to collect checks, drafts, and other
collection items at any time deposited with you hereunder. All such
collections shall be subject to the usual collection agreement regarding
items received by your commercial banking department for deposit or
collection; provided, however, that if any check, draft, or other
collection item at any time deposited with you hereunder is returned to
you as being uncollectible (except by reason of an account closing), you
shall attempt a second time to collect such item before returning such
item to the Depositor as uncollectible. Subject to the foregoing, you
shall promptly notify the Parties of any uncollectible check, draft, or
other collection item deposited with you hereunder and shall promptly
return such uncollectible item to the Depositor, in which case you shall
not be liable to pay any interest on the subscription funds represented
by such uncollectible item. In no event, however, shall you be required
or have a duty to take any legal action to enforce payment of any check
or note deposited hereunder.
(f) You shall not be responsible for the sufficiency or
accuracy of the form, execution, validity, or genuineness of documents
now or hereafter deposited with you hereunder, or for any lack of
endorsement thereon or for any description therein, nor shall you be
responsible or liable in any respect on account of the identity,
authority, or rights of the persons executing or delivering or purporting
to execute or deliver any such document, or endorsement or this
Agreement. You shall not be liable for any loss sustained as a result of
any investment made pursuant to the instructions of the Parties or as a
result of any liquidation of an investment prior to its maturity, or the
failure of the Parties to give you any instructions to invest or reinvest
the Fund or any earnings thereon.
-4-
(g) All notices required or desired to be delivered hereunder
shall be in writing and shall be effective when delivered personally on
the day delivered, or when given by registered or certified mail, postage
prepaid, return receipt requested, on the day of receipt, addressed as
follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
if to a Partnership, the Partnerships or the General Partner:
Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Xx. Xxxx X. Xxxxxx
President
if to the Depositor:
Xxxx Xxxxxx Xxxxxxxx Inc.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Senior Vice President
in either case with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
if to you:
The Chase Manhattan Bank
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx Xxxxxxxx
Whenever, under the terms hereof, the time for giving a notice or
performing an act falls on a Saturday, Sunday, or legal holiday, such
time shall be extended to the next business day.
(h) The Depositor agrees to indemnify, defend, and hold you
harmless from and against, any and all loss, damage, tax, liability, and
expense that may be incurred by you arising out of or in connection with
your duties hereunder, except as caused by your gross negligence, bad
faith, or willful misconduct, including the legal costs and expenses of
defending yourself against any claim or liability in connection with your
performance hereunder.
-5-
(i) You shall be paid by the Depositor a single fee of $3,000
in advance for your services with respect to the first year from the date
hereof or any portion thereof in connection herewith. In addition, the
Depositor shall pay an additional $3,000 fee for any services provided
hereunder in any subsequent year.
(j) It is understood that you may at any time resign hereunder
as Escrow Agent by giving written notice of your resignation to the
Parties at their address set forth above at least 20 days prior to the
date specified for such resignation to take effect, and upon the
effective date of such resignation, all property then held by you
hereunder shall be delivered by you to such person as may be designated
jointly by the Parties in writing, whereupon all your obligations
hereunder shall cease and terminate. If you shall resign prior to the
conclusion of the first 60 days of the Initial Offering Period, you shall
pay back to the Depositor an amount equal to the product of $50 and the
number of days remaining until the 60th day of the Initial Offering
Period. If you shall resign at or after the conclusion of the first 60
days of the Initial Offering Period, you shall have no obligation to pay
any amount back to the Depositor. If no successor Escrow Agent has been
appointed or has accepted such appointment by such date, all your
obligations hereunder shall nevertheless cease and terminate. Your sole
responsibility thereafter shall be to keep safely all property then held
by you and to deliver the same to a person designated by the Parties
hereto or in accordance with the directions of a final order or judgment
of a court of competent jurisdiction.
5. This Agreement shall be governed by and construed in
accordance with the law of the State of New York and any action brought
hereunder shall be brought in the courts of the State of New York,
sitting in the County of New York.
6. The undersigned Escrow Agent hereby acknowledges and agrees
to hold, deal with, and dispose of, the Fund (including any interest
earned thereon) and any other property at any time held by the Escrow
Agent hereunder in accordance with this Agreement.
-6-
If the foregoing Agreement is satisfactory to you, please so indicate
by signing at the place provided below.
Sincerely,
XXXXXX XXXXXXX XXXX XXXXXX CHARTER
XXXXXX X.X.
By: Demeter Management Corporation
By:________________________________
Xxxx X. Xxxxxx
President
XXXXXX XXXXXXX XXXX XXXXXX CHARTER
MILLBURN L.P.
By: Demeter Management Corporation
By:________________________________
Xxxx X. Xxxxxx
President
XXXXXX XXXXXXX XXXX XXXXXX CHARTER
XXXXXX X.X.
By: Demeter Management Corporation
By:________________________________
Xxxx X. Xxxxxx
President
XXXX XXXXXX XXXXXXXX INC.
By:________________________________
Xxxxxx X. Xxxxxx
Senior Vice President
Accepted:
THE CHASE MANHATTAN BANK
By:________________________
Name: Xxxx Xxxxxxxx
Title: Vice-President
