AMENDED AND RESTATED CUSTOMER AGREEMENT
THIS AMENDED AND RESTATED CUSTOMER AGREEMENT (this
"Agreement"), made as of the 1st day of December, 1997, by and between XXXX
XXXXXX SPECTRUM BALANCED 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 April 29, 1994, and a Limited Partnership Agreement dated
as of May 27, 1994, as amended, between Demeter Management Corporation, a
Delaware corporation ("Demeter"), acting as general partner (in such capacity,
the "General Partner"), and the limited partners of the Customer to trade, buy,
sell, spread or otherwise acquire, hold, or dispose of commodities (including,
but not limited, to foreign currencies, mortgage-backed securities, money market
instruments, financial instruments, and any other securities or items which are,
or may become, the subject of futures contract trading), domestic and foreign
commodity futures contracts, commodity forward contracts, foreign exchange
commitments, options on physical commodities and on futures contracts, spot
(cash) commodities and currencies, and any rights pertaining thereto
(hereinafter referred to collectively as "futures interests") and securities
(such as United States Treasury bills) approved by the Commodity Futures Trading
Commission (the "CFTC") for investment of customer funds and other securities on
a limited basis, and to engage in all activities incident thereto;
WHEREAS, the Customer (which is a commodity pool) and the
General Partner (which is a registered commodity pool operator) have entered
into management agreements (the "Management Agreements") with certain trading
advisors (each, a "Trading Advisor" and collectively, the "Trading Advisors"),
which provide that the Trading Advisors have authority and responsibility,
except in certain limited situations, to direct the investment and reinvestment
of the assets of the Customer in futures interests under the terms set forth in
the Management Agreements;
WHEREAS, the Customer and DWR entered into that certain
Amended and Restated Customer Agreement dated as of September 1, 1996 (the
"Customer Agreement"), whereby DWR agreed to perform futures interests brokerage
and certain other services for the Customer; and
WHEREAS, the Customer and DWR wish to amend and restate the
Customer Agreement to set forth the terms and conditions upon which DWR will
continue to 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 Advisors, and the Customer agrees to retain DWR as a non-clearing
commodity broker for the term of this Agreement.
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 Advisors, 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 1.25% of the Customer's Net Assets (a 1.25% 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 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 in the Prospectus)
shall not exceed 14% annually of the Customer's average month-end Net Assets
during each calendar year.
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
Advisors, shall have the authority and responsibility with regard to the
investment, maintenance, and management of the Customer's assets that are held
in segregated or secured accounts, as provided in Section 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. DWR will 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 Net Assets for the
month were invested in U.S. Treasury Bills. All of such funds will be available
for margin for the Customer's trading. For the purpose of such interest
payments, Net Assets will not include monies due to the Customer on or with
respect to forward contracts and other futures interests but not actually
received by it from banks, brokers, dealers and other persons. The Customer
understands that it will not receive any other interest income on its assets and
that Broker will receive interest income from CFI, as agreed from time to time
by Broker and CFI, on the Customer's assets deposited as margin with CFI. 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. 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 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.
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:
XXXX XXXXXX SPECTRUM BALANCED L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Xxxx X. Xxxxxx
President
if to DWR:
XXXX XXXXXX XXXXXXXX INC.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx
Executive Vice President
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.
IN WITNESS WHEREOF, this Agreement has been executed for and
on behalf of the undersigned as of the day and year first above written.
XXXX XXXXXX SPECTRUM BALANCED
L.P.
By:Demeter Management Corporation,
General Partner
By /s/ Xxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx
President
XXXX XXXXXX XXXXXXXX, INC.
By /s/ Xxxx X. Xxxxxx
---------------------------------
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 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:
(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 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 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 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;
(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 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.
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 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 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.
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 /s/ Xxxx X. Xxxxxx
-----------------------------------
AUTHORIZATION TO TRANSFER FUNDS:
(Agreement Paragraph 26)
-----------------------------------
ACKNOWLEDGEMENT TO SUBORDINATION AGREEMENT
(Agreement Paragraph 27) X /s/ Xxxx X. Xxxxxx
-----------------------------------
(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 |o| Project A(TM) Customer Information
for Futures and Options Statement
(in the form 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 |o| CME Average Pricing System Disclosure
for After Hours Statement
Electronic Markets
|o| NYMEX ACCESS(SM) 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.
XXXX XXXXXX SPECTRUM GLOBAL BALANCED L. P.
--------------------------------------------------------------------------------
CUSTOMER NAME(S)
By: DEMETER MANAGEMENT CORPORATION
By: /s/ Xxxx X. Xxxxxx December 1, 1997
----------------------------------------- ------------------------------------
AUTHORIZED SIGNATURE(S) DATE
--------------------------------------------------------------------------------
Xxxx X. Xxxxxx, President
--------------------------------------------------------------------------------
(If applicable, print name and title of signatory)
