Exhibit 10.01
AMENDED AND RESTATED CUSTOMER AGREEMENT
THIS AMENDED AND RESTATED CUSTOMER AGREEMENT (this "Agreement") made
as of the 1st day of September, 1996, by and between XXXX XXXXXX PORTFOLIO
STRATEGY FUND L.P., a Delaware limited partnership (the "Partnership"), and XXXX
XXXXXX XXXXXXXX INC., a Delaware corporation (the "Broker" or "DWR");
W I T N E S S E T H:
WHEREAS, the Partnership has been organized pursuant to a Limited
Partnership Agreement dated as of August 28, 1990 (which may be amended; the
"Limited Partnership Agreement"), and a Certificate of Limited Partnership filed
in the office of the Secretary of State of the State of Delaware on August 28,
1990, and amended on July 24, 1996 (which may be further amended) with Demeter
Management Corporation, a Delaware corporation ("Demeter" or the "General
Partner"), acting as general partner, 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 now, or may hereafter
be, the subject of futures contract trading), 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 (collectively "futures interests") and
securities (such as United States Treasury securities) approved by the Commodity
Futures Trading Commission (the "CFTC") for investment of customer funds;
WHEREAS, the Partnership has entered into one or more management
agreements (each, a "Management Agreement") (which may be amended) with one or
more certain trading advisors (each, a "Trading Advisor") which provide that
each such Trading Advisor has authority and responsibility, except in certain
situations specified therein, to direct the investment and reinvestment of the
assets of the Partnership which are allocated to each such Trading Advisor in
futures interests for the period set forth in such Management Agreement;
WHEREAS, the Partnership and the Broker entered into that certain
Customer Agreement, dated as of October 30, 1990 (the "Original Customer
Agreement"), whereby the Broker agreed to perform futures interest brokerage and
certain other services for the Partnership; and
WHEREAS, the Partnership and the Broker wish to amend and restate
the Original Customer Agreement to set forth the terms and conditions upon which
the Broker will continue to perform futures interest brokerage and certain other
services for the Partnership.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Duties of the Broker. The Broker agrees to execute futures
interests brokerage transactions on behalf of the Partnership in accordance with
instructions provided by a Trading Advisor, and the Partnership agrees to retain
the Broker as commodity broker for the term of this Agreement.
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The Broker agrees to furnish to the Partnership as soon as
practicable all of the information from time to time in its possession which
Demeter, as the general partner of the Partnership, is required to furnish to
the limited partners of the Partnership pursuant to the Partnership's Limited
Partnership Agreement as from time to time in effect, or as required by
applicable law, rules or regulations, and to perform such other services for the
Partnership as are set forth herein and in the Partnership's then 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 Partnership (the "Units"), and in any amendment or supplement to the
Prospectus. Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to such terms in the Prospectus.
Notwithstanding any provision of this Agreement to the contrary, the
Broker shall assume financial responsibility for any error committed by it in
executing or clearing orders for the purchase or sale of futures interests for
the Partnership's account. However, the Broker shall not be responsible for
errors committed by a Trading Advisor. The Broker and each Trading Advisor each
shall have an affirmative obligation to promptly notify the other party of its
own errors.
2. Obligations and Expenses. Except as otherwise set forth herein
and in the Prospectus, the Partnership, and not the Broker, shall be responsible
for all taxes, and all other obligations or expenses of the Partnership,
including, without limitation, brokerage commissions to the Broker, management
and incentive fees to the Trading Advisors, floor brokerage fees, exchange fees,
clearinghouse fees, "give up" or transfer fees, NFA fees,
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forward contract transaction fees, costs associated with taking delivery of
futures interests, fees for the use of DWR's institutional execution desk and
for overnight execution facilities, and fees for the execution of cash contract
transactions relating to exchange of futures for physicals ("EFP") transactions
(collectively, "transaction fees and costs").
3. Agreement Non-exclusive. The Broker shall be free to render
services of the nature to be rendered to the Partnership hereunder to other
persons or entities in addition to the Partnership, and the parties acknowledge
that the Broker may render such services to additional entities similar in
nature to the Partnership, including without limitation other partnerships
organized with Demeter as their general partner. It is expressly understood and
agreed that this Agreement is non-exclusive and that the Partnership has no
obligation to execute any or all of its trades for futures interests through the
Broker. The parties acknowledge that the Partnership may execute and clear
trades for futures interests through such other broker or brokers as Demeter may
direct from time to time. The Partnership's utilization of one or more
additional commodity brokers shall neither terminate this Agreement nor modify
in any regard the respective rights and obligations of the Partnership and the
Broker hereunder.
4. Compensation of the Broker. The Partnership will pay the Broker
brokerage commissions at a roundturn rate of 80% of the Broker's published
non-member rates for speculative accounts, which covers both the taking and
liquidation of a position. The Partnership will pay separately for all
transaction fees and costs. The Partnership will pay to the Broker a fee for
each roundturn forward contract which will average between $3 and $6
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per roundturn contract, depending upon the size of the trades. The Broker will
not charge the Partnership a xxxx-up or spread on such forward trading. The
Broker will charge a transaction fee of approximately $2.50 for each cash
contract transaction relating to an EFP transaction, and will charge for the use
of the institutional execution desk and overnight execution facilities at rates
of up to $3 per roundturn.
The Partnership will pay the Broker brokerage commissions for
currency forward contract transactions at rates established with reference to
the brokerage commission rate charged on exchange-traded currency futures
contracts. The Broker may from time to time adjust the United States dollar size
of currency forward contracts so that the brokerage commission rate charged on
such contracts will approximate the rate charged on exchange-traded currency
futures contracts of similar United States dollar value.
Brokerage commissions, together with transaction fees and costs,
with respect to the Trading Advisor's allocated Net Assets will be capped at
13/20 of 1% per month (in the event that the Trading Advisor employs multiple
trading systems in trading on behalf of the Partnership, the foregoing cap is
applied on a per trading system basis) of the Partnership's Net Assets
(determined before redemptions and distributions as of month-end) allocated to
the Trading Advisor or trading system as of the last day of each month (a
maximum 7.8% annual rate). In addition, the aggregate of (i) brokerage
commissions and transaction fees and costs payable by the Partnership and (ii)
the net excess interest and compensating balance benefits to DWR, after
crediting the Partnership with interest, shall not exceed 14% annually of the
Partnership's average monthly Net Assets as of the last day of each month during
a calendar
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year. Any brokerage commissions and transaction fees and costs in excess of such
caps shall be borne or paid by the Broker or an affiliate and shall not be
reimbursed by the Partnership. As long as redemption charges are imposed on
Limited Partners, the foregoing caps may not be increased. Thereafter, none of
such caps may be increased unless Limited Partners are given notice thereof
(including a description of redemption and voting rights of Limited Partners)
and an opportunity to redeem their Units.
If at any time an amount is due and owing to the Broker for services
rendered pursuant to the terms of this Agreement, the Broker shall only have
recourse against the assets of the Partnership.
5. Investment Discretion. The parties recognize that the Broker
shall have no authority to direct the futures interests investments to be made
for the Partnership's account, but shall execute only such orders for the
Partnership's account as the Trading Advisor and the General Partner may direct
from time to time. However, the parties agree that the Broker, and not the
Trading Advisor, shall have the authority and responsibility with regard to the
investment, maintenance, and management of the Partnership's assets that are
held in securities approved by the CFTC for the investment of customer funds or
in cash as provided in Section 6 hereof.
6. Investment of Partnership Funds. The Partnership shall deposit
its assets in a commodity trading account with the Broker. The Partnership's
assets deposited with the Broker will be segregated in accordance with Section
4d(2) of the Commodity Exchange Act and CFTC regulations and will either be
invested in securities approved by the CFTC
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for investment of customer funds or will be held in non-interest bearing bank
accounts at a bank or banks selected by DWR.
Prior to the date of the Closing (as defined in the Prospectus), the
Broker will credit the Partnership with interest income at month-end in an
amount equal to 80% of the Partnership's average daily Net Assets at a rate
equal to the average yield on 13-week U.S. Treasury Bills issued during such
month. Effective as of the date of the Closing, the Broker will credit the
Partnership at each month-end with interest income as if 80% of the
Partnership's average daily Net Assets for the month were invested at the rate
earned by the Broker on its U.S. Treasury Xxxx investments with customer
segregated funds. The Broker will retain any interest earned in excess of the
interest paid to the Partnership. All of such funds will be available for margin
for the Partnership's trading. For the purpose of such interest payments, Net
Assets will not include monies due to the Partnership on or with respect to
forward contracts and other futures interests but not actually received by it
from banks, brokers, dealers, and other persons. If the Partnership directly
invests in securities approved by the CFTC for investment of customer funds, the
Partnership will receive the interest on such securities. The Partnership
understands that it will not receive any other interest income on its assets
held by the Broker. The Partnership's assets held by the Broker may be used as
margin solely for the Partnership's trading.
Ownership of the right to receive interest on the Partnership's
assets pursuant to the preceding paragraph shall be reflected and maintained,
and may be transferred only, on the books and records of the Broker. Any
purported transfer of such ownership shall not be
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effective or recognized until such transfer shall have been recorded on the
books and records of the Broker.
7. Customer Agreements. Upon the request of the Broker, the
Partnership shall execute and deliver to the Broker the Futures Customer
Agreement referred to in Section 16 hereof and annexed hereto and such other
similar documents as the Broker shall reasonably require from time to time.
8. Standard of Liability and Indemnity. Subject to Section 1 hereof,
the Broker and its affiliates (as defined below) shall not be liable to the
Partnership, the Limited Partners, or any of its or their respective successors
or assigns, for any act, omission, conduct, or activity undertaken by the Broker
on behalf of the Partnership which the Broker determines, in good faith, to be
in the best interests of the Partnership, unless such act, omission, conduct, or
activity by the Broker or its affiliates constituted misconduct or negligence.
The Partnership shall indemnify, defend and hold harmless the Broker
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 the Broker on behalf
of the Partnership, including, without limitation, any demands, claims or
lawsuits initiated by a Limited Partner of the Partnership (or assignee
thereof); provided that (i) the Broker 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 Partnership, and (ii) the act, omission,
conduct or activity that was the basis for such loss,
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liability, damage, cost or expense was not the result of misconduct or
negligence. Notwithstanding the foregoing, no indemnification of the Broker or
its affiliates by the Partnership shall be permitted for any losses, liabilities
or expenses arising from or out of an alleged violation of federal or state
securities laws unless (i) there has been a successful adjudication on the
merits of each count involving alleged securities law violations as to the
particular indemnitee, or (ii) such claims have been dismissed with prejudice on
the merits by a court of competent jurisdiction as to the particular indemnitee,
or (iii) a court of competent jurisdiction approves a settlement of the claims
against the particular indemnitee and finds that indemnification of the
settlement and related costs should be made, provided, with regard to such court
approval, the indemnitee must apprise the court of the position of the SEC and
the positions of the respective securities administrators of Massachusetts,
Missouri, Tennessee and/or those other states and jurisdictions in which the
plaintiffs claim that they were offered or sold Units, with respect to
indemnification for securities laws violations before seeking court approval for
indemnification. Furthermore, in any action or proceeding brought by a Limited
Partner in the right of the Partnership to which the Broker or any affiliate
thereof is a party defendant, any such person shall be indemnified only to the
extent and subject to the conditions specified in the Delaware Revised Uniform
Limited Partnership Act, as amended, and this Section 8. The Partnership shall
make advances to the Broker 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 Partnership; (ii) such demand, claim, lawsuit or legal
action is not initiated by a Limited Partner; and (iii) such advances are
repaid, with interest at
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the legal rate under Delaware law, if the person receiving such advance is
ultimately found not to be entitled to indemnification hereunder.
The Broker shall indemnify, defend and hold harmless the Partnership
and its successors or assigns from and against any losses, liabilities, damages,
costs and expenses (including in connection with the defense or settlement of
claims; provided the Broker has approved such settlement) incurred as a result
of the activities of the Broker or its affiliates, provided 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 Partnership to the
Broker 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 the Broker contained
in this Agreement to the extent caused by such event. Likewise, the indemnities
provided in this Section 8 by the Broker to the Partnership 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 Partnership
contained in this Agreement to the extent caused by such event.
As used in this Section 8, the term "affiliate" of the Broker 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 the Broker; (ii) any
partnership, corporation, association, or other legal entity
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10% or more of whose outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote by the Broker; (iii) any natural
person, partnership, corporation, association, or other legal entity directly or
indirectly controlling, controlled by, or under common control with, the Broker;
or (iv) any officer or director of the Broker. Notwithstanding the foregoing,
"affiliates" for purposes of this Section 8 shall include only those persons
acting on behalf of the Broker and performing services for the Partnership
within the scope of the authority of the Broker, 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.
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 Limited Partnership Agreement.
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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 Partnership:
XXXX XXXXXX PORTFOLIO STRATEGY FUND L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attention: Xxxx X. Xxxxxx
if to the Broker:
XXXX XXXXXX XXXXXXXX INC.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
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
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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.
XXXX XXXXXX PORTFOLIO STRATEGY FUND L.P.
By: Demeter Management Corporation,
General Partner
By: __________________________________
Xxxx X. Xxxxxx
President
XXXX XXXXXX XXXXXXXX INC.
By: __________________________________
Xxxx X. Xxxxxx
Executive Vice President
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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 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 an agent of DWR, who refers or
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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
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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 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
-5-
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
-6-
commissioner of the Commodity Futures Trading Commission (the
"CFTC"), except as previously disclosed in writing to DWR;
(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
-7-
fault, delay, omission, inaccuracy or termination of a 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 warranties
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.
-8-
21. TERMINATION - This Agreement shall continue in force until written notice
of termination is given by Customer or DWR. 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 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
-9-
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.
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
-10-
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
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)
_____________________________________
AUTHORIZATION TO TRANSFER FUNDS:
(Agreement Paragraph 26)
_____________________________________
ACKNOWLEDGEMENT TO SUBORDINATION AGREEMENT
(Agreement Paragraph 27)
_____________________________________
(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 Futures
and Options (in the form prescribed by
CFTC Regulation 1.55(c))
o LME Risk Warning Notice
o Xxxx Xxxxxx Order Presumption for After
Hours Electronic Markets
o NYMEX ACCESS(SM) Risk Disclosure Statement
o Globex(R) Customer Information and Risk
Disclosure Statement
o Project A(TM) Customer Information
Statement
o Questions & Answers on Flexible Options
Trading at the CBOT
o CME Average Pricing System Disclosure
Statement
o Special Notice to Foreign Brokers and
Foreign Traders
================================================================================
REQUIRED SIGNATURES
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)
______________________________________________ _______________________________
AUTHORIZED SIGNATURE(S) DATE
________________________________________________________________________________
(If applicable, print name and title of signatory)
