[Logo of Bank of America]
Banc of America Futures, Incorporated
A Bank of America Company
Exhibit 10.21
Customer Agreement
In consideration of Banc of America Futures, Incorporated ("Broker") agreeing to
carry one or more electronic accounts ("Account(s)") for the undersigned
("Customer") and provide services to Customer in connection with the purchase
and sale of cash commodities, commodity futures contracts, options on cash
commodities, options on futures contracts, forward or leverage contracts and any
similar instruments ("Commodities") which may be purchased or sold by or through
Broker for Customer's Account(s), Customer agrees and represents that:
1. Broker authorization. Customer authorizes Broker to purchase and sell
Commodities, as either agent or principal, for Customer's Account(s) in
accordance with the oral or written instructions of Customer or persons
authorized in writing to act on Customer's behalf. All such instructions must
contain sufficient information to permit Broker to execute orders without the
exercise of discretion. Customer hereby waives any defense that any such
instruction was not in writing as may be required by the Statute of Frauds or
any other law, rule or regulation. Unless Customer specifies to the contrary,
Broker is authorized to execute all orders on any contract market, exchange,
board of trade or other market where such business is conducted which may be
deemed by Broker, in its sole and absolute discretion, to be appropriate.
Customer further authorizes Broker to employ clearing members (including,
without limitation, on exchanges where Broker is not a member), floor brokers
and other agents in connection with the execution, carrying, clearance, delivery
and settlement of any such purchases and sales of Commodities. Neither Broker
nor any managing director, officer, employee or affiliate of Broker will act as
a fiduciary, commodity pool operator, commodity trading advisor or investment
adviser in respect of Customer's Account(s) nor shall Broker have any
responsibility for compliance with any law or regulation governing the conduct
of fiduciaries, commodity pool operators, commodity trading advisors or
investment advisers.
2. Broker's responsibility. Broker will attempt to execute all orders which it
may, in its sole discretion, choose to accept for the purchase or sale of
Commodities in accordance with the oral or written instructions of the Customer.
Broker's purchase and sale of Commodities for Customer's Account(s) shall be
subject to the terms of this Agreement and to the constitution, bylaws, rules,
regulations, rulings of relevant exchanges or clearing houses, and to all
applicable governmental laws and regulations (collectively, "Rules of Law"),
including without limitation, any Rules of Law relating to the conduct of
Broker's futures trading business and Broker's status as a subsidiary of a
United States bank holding company; provided however, that Customer shall not be
relieved of any obligation hereunder by reason of Broker's failure to comply
with any of the foregoing; and provided further that Customer shall be granted
no rights under any Rules of Law solely as a consequence of having executed this
Agreement.
3. Margin. Customer, without notice or demand, shall deposit and continuously
maintain in Customer's Account(s) sufficient funds to comply with any and all
margin requirements established by Broker, in its sole and absolute discretion,
or if none has been established by Broker, to comply with all applicable
exchange or legally imposed margin requirements. Customer acknowledges and
agrees that margins required by Broker may exceed the minimum legally imposed or
exchange margin requirements and may be increased or decreased from time to time
at the sole discretion of Broker, without advance notice to Customer. No
previous margin requirement shall establish any precedent nor shall Broker be
bound by any such previous margin requirement. If requested by Broker, all
margin deposits shall be made immediately by bank wire transfer, and Customer
shall provide Broker with any information requested by Broker to confirm such
transfers. Broker shall not be liable to Customer for the loss of any margin
deposits which results, directly or indirectly, from the bankruptcy, insolvency,
liquidation, receivership, custodianship, or assignment for the benefit of
creditors of any bank, clearing broker, exchange, clearing organization or other
entity.
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[Logo of Bank of America]
Banc of America Futures, Incorporated
A Bank of America Company
4. Position limits. Broker shall have the right to limit the size of any
positions (net or gross) of Customer with respect to Customer's Account(s) and
to refuse to accept orders to establish new positions. Customer shall not,
either acting alone or in combination with others, exceed any position limits
established under any Rules of Law unless Customer has obtained an exemption
from such limits and Broker has been provided with a copy thereof. Customer will
provide Broker with copies of any and all reports filed by Customer with any
regulatory or self-regulatory authorities regarding positions in Commodities
contracts held or controlled by Customer or held or controlled by any other
person on behalf of Customer.
5. Commissions and charges. Customer agrees to pay Broker on demand; (a)
brokerage and commission charges and service fees at Broker's rates as in effect
from time to time ( whether or not other customers of Broker pay different
commissions or charges); (b) separate commissions, at Broker's rates in effect
from time to time upon the exercise or offset of a Commodity option; (c) any
fees, fines, penalties or other charges imposed on any transaction undertaken
for Customer by the exchange or clearing organization through which it is
executed and any fee or tax imposed on such transactions by any competent
authority or self-regulatory organization; (d) the amount of any trading loss
that may result from transactions in Customer's Account(s); interest and service
charges on any Customer deficit balances or on any other amounts due from
Customer at Bank of America N A's then prevailing reference rate plus one
percent together with Broker's costs and reasonable attorney's fees incurred in
collecting any such deficit.
6. Liquidation instructions/delivery. Customer shall provide Broker with
liquidating instructions on open futures positions in expiring contracts five
(5) business days prior to the last trading day or, alternatively, Customer
shall provide to Broker sufficient funds to take delivery or necessary delivery
documents by such deadline. If Customer fails to provide such instructions,
funds or documents by such deadline, Broker may, in its sole discretion, at any
time during the five-day period prior to the last trading day, without notice,
liquidate Customer's position or make or receive delivery on Customer's behalf
upon such terms and conditions as Broker deems advisable, and neither Broker's
exercise of such discretion or its timing shall impose any liability on Broker
or create a defense for Customer against any liability to Broker. If Broker
elects to make delivery on Customer's behalf, Customer authorizes Broker, in its
sole discretion, to borrow or purchase and deliver the necessary delivery
documents. Customer shall guarantee and hold Broker harmless against any costs,
losses, damages or premiums it may incur in making such delivery or may sustain
from its inability to borrow or purchase the necessary contracts and deliver the
necessary delivery documents. In the event Broker takes delivery of any property
for Customer's Account(s), Customer agrees to pay all delivery, storage,
insurance, interest and related charges, and to guarantee and hold Broker
harmless against any loss Broker may suffer directly or indirectly, from a
decline in the value of such property. Customer expressly acknowledges that,
particularly in volatile markets, the making or accepting of delivery may
involve a higher degree of risk than liquidating a position by offset.
7. Maintenance of offsetting positions. It is understood and agreed that Broker
shall liquidate any Commodities contracts for which an offsetting order is
entered by Customer, unless Customer instructs Broker not to liquidate such
Commodities contracts and to maintain the offsetting Commodities contracts as
open positions, provided, however, that Broker shall not be obligated to comply
with any such instructions given by Customer if Customer fails to provide Broker
with any representations, documentation or information reasonably requested by
Broker or if, in Broker's reasonable judgment, any failure to liquidate such
offsetting Commodities contracts against each other would result in a violation
of any Rules of Law.
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[Logo of Bank of America]
Banc of America Futures, Incorporated
A Bank of America Company
8. Options and provisions
a. Customer understands that
i. all short options positions are subject to assignment at any time during
the life of the option, including positions established on the same day that
exercise notices are assigned;
ii. exercise assignment notices shall be allocated randomly from among all
Customers' short options positions which are subject to exercise, and
iii. such assignment will automatically result in a commodity futures contract
in Customer's Account(s). Any such future contract shall be subject to
additional margin as may be required with respect to such resulting futures
contract position.
b. Customer understands that some exchanges and clearing houses have
established cutoff times for the tender of exercise instructions and that
an option will become worthless if instructions are not delivered before
such expiration time. Customer also understands that certain exchanges and
clearing houses automatically will exercise some "in-the-money" options
unless instructed otherwise. Customer acknowledges full responsibility for
taking action either to exercise or to prevent the exercise of an option
contract. Broker is not required to take any action with respect to an
option contract, including without limitation any action either to exercise
a valuable option prior to its expiration date or to prevent the automatic
exercise of an option, except upon Customer's express instructions. In the
event that Customer's offset, exercise or closeout instructions cannot be
executed under prevailing market conditions, Broker may, without notice or
demand, offset, closeout, abandon or exercise the option and dispose of the
commodity futures contract created by any such exercise upon any terms and
by any method which it deems reasonable in its sole discretion.
9. Security interest
a. All monies, securities, financial instruments, futures contracts, options,
precious metals or other property (collectively, the "Collateral")
maintained in the Customer's Account(s) or held for the benefit of the
Customer by Broker or any of its affiliates, by any clearing house through
which transactions are executed and/or positions are held by Broker or any
of its affiliates, on behalf of Customer, now or at any future time, hereby
are pledged to Broker and shall be subject to a general lien and security
interest in Broker's favor to secure any and all indebtedness at any time
owing from Customer to Broker. Customer agrees to take such actions and to
execute and deliver such documents as Broker may reasonably require from
time to time to perfect the lien and security interest granted hereunder.
b. Customer authorizes Broker to borrow, pledge, repledge, hypothecate,
rehypothecate, loan or invest any such Collateral without notice to
Customer, whenever Broker deems it necessary or advisable for its
protection. The rights of Broker set forth above shall be qualified by any
applicable Rules of Law requiring the segregation of Customer's property.
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[Logo of Bank of America]
Banc of America Futures, Incorporated
A Bank of America Company
10. Customer's events of default; Broker's remedies. In the event that:
a. Customer commences a voluntary proceeding, or an involuntary proceeding is
commenced against the Customer, under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or a receiver, liquidator,
trustee, custodian, sequestrator, or other similar official is appointed or
takes possession (before or after the commencement of any such voluntary or
involuntary case) of Customer or of any substantial part of the property of
Customer, or Customer is insolvent, makes any general assignment for the
benefit of creditors, or fails generally to pay debts as they become due,
or any similar event shall occur;
b. Customer shall take any corporate or other action to effect a dissolution,
liquidation, reorganization, winding up of its affairs or similar event;
c. Customer's Account(s) is being attached or garnished or Broker receives
notice of such attachment or garnishment;
d. Customer shall fail or refuse to pay margin or any other sum as and when
pursuant to this Agreement or shall breach or default in the performance of
any other obligation of Customer under this Agreement;
e. Broker determines, acting in good faith that it is necessary or appropriate
for any other reason, with or without regard to market quotations, that any
Collateral or margins deposited with Broker to secure any Customer
Account(s) is inadequate; then, and in any such event, Broker may at its
election (in addition to any other rights or remedies it may have at law,
in equity, under this Agreement or otherwise):
i. sell, exercise, offset or otherwise liquidate any or all property long in
any Customer Account(s) with Broker or any affiliate of Broker; or clearinghouse
on which contracts are traded, and/or
ii. buy in, offset or otherwise liquidate any or all property short in any
Customer Account(s) with Broker or any affiliate of Broker; or clearinghouse on
which contracts are traded, and/or
iii. buy or sell property to enter into and liquidate straddle or spread
positions with respect to any property long or short in any Customer Account(s)
with Broker or any affiliate of Broker; or clearinghouse on which contracts are
traded, and/or
iv. cancel any outstanding orders, close out any or all outstanding
contracts, close any Customer Account(s) with Broker or any affiliate, sell, set
off against or otherwise dispose of any property of Customer in the custody or
control of Broker or an affiliate of Broker (whether held as margin, or for
safekeeping or otherwise) and satisfy any obligation Customer may have to Broker
or an affiliate of Broker (either directly or by way of guarantee or suretyship)
out of any such property or the proceeds from the sale or other disposition
thereof; and/or
v. exercise all rights and remedies of a secured party under the Uniform
Commercial Code and under other applicable law.
Any action referred to herein may be taken without notice to Customer. In all
cases, a prior demand, call or notice of the time or place of sale or purchase
shall not be considered a waiver of Broker's right to sell or to buy without
demand, call or notice as herein provided. Any purchase, sale, offset or
liquidation of property may be made according to Broker's judgment and in acting
in good faith in a commercially reasonable manner on any exchange, other
recognized electronic market, through a clearing house, at public auction, by
private transaction, or elsewhere as Broker deems appropriate. In the event that
the property held and applied by Broker pursuant to this Agreement is
insufficient for the payment in full of all liabilities of Customer due to
Broker and any affiliates of Broker, Customer shall remain liable for and shall
promptly pay the deficit upon demand, together with interest thereon and all
costs of collection incurred by Broker in collecting any sums owed hereunder and
any cost incurred in successfully defending against
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[Logo of Bank of America]
Banc of America Futures, Incorporated
A Bank of America Company
any claims asserted by Customer, including, without limitation, interest and
expenses (including reasonable attorney's fees).
11. Communications
a. All communications, reports, statements, monies, securities, Commodities
and other property shall be mailed or otherwise transmitted to Customer
at Customer's Account(s) mailing address shown on the Customer Account(s)
Application or to such other address as Customer may designate in
writing. All communications so sent, by whatever method, shall be deemed
received by Customer personally at the time so sent whether actually
received;
b. no statement of account rendered by Broker to Customer may be objected to
by Customer, unless Customer objects to Broker in writing within ten (10)
business days. If Customer fails to object, Customer will be deemed to
have adopted and ratified all transactions reflected on such
communications, and to have waived any rights to have such transactions
removed from Customer's Account(s);
c. margin calls may not be objected to by Customer unless objected to
immediately by telephone or wire; and (d) Customer shall provide to
Broker any information requested by Broker pursuant to any applicable
Rules of Law.
12. Market recommendations and information. Customer agrees that:
a. any market recommendations or information communicated to Customer by
Broker, although based upon information obtained from sources believed by
Broker to be reliable, are opinions only and may be inaccurate,
incomplete and unverified; and
b. Broker makes no representation, warranty or guarantee as to, and shall
not be responsible for the accuracy or completeness of, or Customer's
reliance upon, any such recommendations or information. Customer agrees
that Broker, its affiliates or representatives, may have a position in
and may intend to buy or sell Commodities which are the subject of market
recommendations furnished to Customer, and that the market position of
Broker or any such affiliate or representative may or may not be
consistent with the recommendations furnished to Customer by Broker.
13. Foreign exchange rates. Sums paid to Broker by way of margin and otherwise
("Margin Accounts") shall be paid in the currency that Broker, in its sole and
absolute discretion, shall require. Any risk or cost resulting from conversion
between currencies with respect to Customer's Account(s) or with respect to any
Margin Accounts shall be borne by Customer. Broker shall debit or credit
Customer's Account(s) or Margin Accounts as Broker shall determine for such
conversions in the currency in which Customer's Account(s) or any such Margin
Accounts are maintained at rates of exchange determined by Broker, in its sole
and absolute discretion, on the basis of then prevailing money markets.
14. Credit. Customer authorizes Broker, its affiliates and its or their agents
to investigate Customer's credit standing and in connection therewith to contact
such banks, financial institutions and credit agencies as Broker shall deem
appropriate to verify information regarding Customer. Customer acknowledges that
Bank of America NA is an agent of Broker for such credit analysis. Customer
hereby consents to Bank of America NA as agent, sharing credit and other
information concerning Customer with Broker. Customer further consents to Broker
sharing credit and other information concerning Customer with its parent and
affiliated companies.
15. Recordings. Customer acknowledges, authorizes and consents to the electronic
recording of Customer's telephone conversations with Broker or any of its agents
or associated persons, on tape or otherwise, with or without the use of an
automatic tone warning device. Customer further agrees to the admissibility into
evidence and the use of such recordings and transcripts thereof as evidence by
either
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[Logo of Bank of America]
Banc of America Futures, Incorporated
A Bank of America Company
party in any dispute between Broker and Customer. Broker shall not be required
to maintain copies of such recordings and transcripts.
16. Cross-trade authorization. Customer consents to transactions whereby Broker,
its directors, officers, employees, affiliates or floor brokers may become the
buyer to Customer's sell order or the seller to Customer's buy order, provided
that such transactions are made in compliance with any applicable Rules of Law,
contract market, exchange, board of trade or other market that, from time to
time, adopts rules requiring Customer's authorization for such transactions.
17. Deleted per your request.
18. Customer representations and warranties. Customer represents and warrants
that:
a. Customer is duly organized, validly existing and in good standing in all
jurisdictions when failure to be empowered as described above would have
a material adverse effect;
b. Customer has full power, right and authority to enter into this Agreement
and to effectuate transactions in futures contracts and options as
contemplated hereby;
c. the agent signing this Agreement is authorized and duly empowered to do
so on behalf of Customer;
d. the statements contained on Customer's Account Application (including any
financial statement submitted therewith) are true and correct to the best
of the Customer's knowledge;
e. no person or entity has any interest in or control of the Customer's
Account(s) to which this Agreement pertains except as disclosed herein;
f. no person with any interest in the Customer's Account(s) is an officer,
director, partner or employee of any commodity exchange, commodity
self-regulatory organization or member firm of any such exchange or
self-regulatory organization; and
g. Customer shall promptly notify Broker in writing if any of the above
representations shall materially change or cease to be true and correct.
If more than one person or entity owns an interest in the Customer's Account(s)
to which this Agreement pertains, all such persons and entities shall execute
this Agreement and each shall be deemed to be the Customer.
19. Customer Acknowledgements. Customer acknowledges the following:
a. a contract market, exchange, board of trade or other market may, from
time to time, subject Customer to affirmative reporting obligations;
b. Broker does not permit its Account Executives to either exercise
discretion or manage a commodity account, or hold a power of attorney
over a commodity account;
c. Broker is a separate and independent corporate entity, distinct from its
affiliates;
d. Broker may purchase and sell futures contracts for its affiliates without
limitation or restriction; and
e. Customer's opening and maintaining Account(s) with Broker does not in any
way affect the providing of credit to Customer by Bank of America NA or
any other affiliate of Broker.
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[Logo of Bank of America]
Banc of America Futures, Incorporated
A Bank of America Company
20. Limitation of Liability and Indemnification. Broker shall not be responsible
for any loss or damage caused, directly or indirectly, from any delays or
inaccuracies in the transmission of orders or other information due to a
breakdown in or failure of any transmission or communication facility or any
other cause beyond Broker's control. Customer will not hold Broker responsible
for any losses incurred through following Broker's trading recommendations or
suggestions. Broker shall not be liable for any loss, cost, expense or damage to
Customer other than as a- result of Broker's gross negligence, willful
misconduct or fraud. Customer agrees that Broker will not be liable for
consequential, incidental or special damages unless due to the Broker's gross
negligence, willful misconduct or fraud. In no event shall Broker be liable for
the acts of any person other than Broker and its employees. Broker is not acting
as a fiduciary of the Customer and shall have no responsibility for compliance
with -any law or regulation governing the conduct of fiduciaries. In the event
Broker is made a party to any claim, dispute or litigation or otherwise incurs
any loss or expense in connection with Customer's obligations arising from this
Agreement, Customer hereby agrees to pay, indemnify and hold Broker harmless
from and against any and all loss, liability, damage, cost or expense incurred
(including, without limitation, Broker's reasonable attorneys fees).
21. Miscellaneous provisions
a. This Agreement, including all authorizations, shall be binding on and
inure to the benefit of Broker, its successors and assigns and shall be
binding on and inure to the benefit of Customer and Customer's legal
representatives, executors, trustees, administrators, successors and
assigns.
b. If any provision or condition of this Agreement shall be held to be
invalid or unenforceable by any court or any regulatory or
self-regulatory authority, such invalidity or unenforceability shall
attach only to such provision or condition. The validity of the remaining
provisions and conditions of this Agreement shall not be affected thereby
and this Agreement shall be carried out as if such invalid or
unenforceable provision or condition were not contained herein.
c. No amendment to this Agreement shall be effective unless in writing and
signed by both Customer and a properly authorized executive officer of
Broker. This instrument contains the entire Agreement of the parties,
superseding any and all prior agreements and there are no other terms,
conditions or obligations other than those contained herein.
d. Customer shall immediately notify Broker in writing of any intent on the
part of Customer to dissolve or of any amendments to its corporate
resolution(s) affecting its ability to act under this Agreement or to
trade Commodities.
e. Except as otherwise provided in this section, the Broker agrees to
maintain the confidentiality of all information in connection with this
Agreement or other information respecting the Customer and/or its
accounts and business with the Broker, provided to the Broker by the
Customer or otherwise known to the Broker ("Customer Information"). The
Customer acknowledges and agrees that the Broker may disclose from time
to time Customer Information to other offices and branches of the Broker
and to the Broker's subsidiaries and affiliates. The Customer further
consents to the disclosure of Customer Information by the Broker, or any
such subsidiary or affiliate of the Broker
i. at the request of any governmental, regulatory or other similar
agency or authority having jurisdiction over the Broker or such
subsidiary or affiliate,
ii. pursuant to subpoena or other court process, or to the extent
required in connection with any litigation between such Broker,
subsidiary or affiliate and the Customer, provided that such
disclosure is subject to an appropriate protective order if such
protective order is available, and (iii) when otherwise required
to do so in accordance with applicable law.
f. "The parties hereto acknowledge and agree that the Customer is a
wholly-owned subsidiary of The Frontier Fund, a Delaware statutory trust ( the
"Trust") and that the Trust is organized in series pursuant to Sections 3804(a)
and 3806(b)2 of the Delaware Statutory Trust Act. As such, the debts,
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Banc of America Futures, Incorporated
A Bank of America Company
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to each series of the Trust shall be enforceable against
the assets series of the Trust only, and not against the assets of the Trust
generally or the assets of any other series of the Trust or against the Trustee
of the Trust. There may be several series of the Trust created pursuant to the
Declaration of Trust Agreement of the Trust."
22. Term. This Agreement shall be retroactive and shall apply to any transaction
which may have been previously entered into for Customer's Account(s). Either
party may cancel this Agreement by notifying the other party in writing of its
desire to do so, but all of the rights, duties and obligations of the parties
hereunder relating to transactions effected prior to cancellation shall survive
cancellation.
This agreement is not exclusive and runs for successive one-year terms to be
renewed automatically each year unless terminated. This Agreement is terminable
by the Customer or the Banc of America Futures, Incorporated without penalty
upon (60) day's prior written notice.
23. Governing law and jurisdiction. This Agreement and its enforcement shall be
governed by the laws of the State of Illinois, U.S.A., including construction,
validity, performance and enforcement, without regard to principles of choice of
law.
24. Consent to jurisdiction and service of process. If Customer determines not
to enter into arbitration under the separate arbitration agreement or
arbitration is denied because the controversy is not arbitrable, the following
shall apply:
a. in any action or proceeding on or in connection with this Agreement, or
alleged breach thereof or default thereunder, the Customer hereby submits
and agrees to the jurisdiction and venue of the federal, state and local
courts in the City of Chicago, waives any and all objections to personal
jurisdiction within such City and agrees that process may be served on
Customer in any such action or proceeding by United States registered
mail directed to Customer at the address referred to in the Customer
Account Application in accordance with the provisions of any law or rule
applicable to the court in which such action or proceeding is brought
with respect to service of process on nonresidents;
b. in the event that Customer is not domiciled in the United States, such
Customer hereby appoints and designates Broker as Customer's true and
lawful attorney-in-fact and duly authorized agent for service of legal
process, and agrees that service of process upon Broker shall constitute
personal service of process upon such Customer; provided that Broker
shall within seven (7) business days after receipt of any such process,
forward the same by certified or registered mail to the address of such
Customer as it appears herein; and
c. Customer hereby waives trial by jury in any such action or proceeding.
25. Notices. Except as otherwise expressly provided in this Agreement, all
instructions, notices or other communications may be oral or written. All
written instructions, notices or other communications shall be sent to a party
at its address as last supplied to the other party.
26. Acceptance of agreement. This Agreement becomes effective only upon
acceptance and execution by an authorized officer of Broker.
27. Signature and additional provisions. Customer agrees to be bound by all
provisions of this Agreement and the applicable account provisions classified
hereunder.
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