XXXX FUTURES INC.
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile (000) 000-0000
INTERNATIONAL FOREIGN EXCHANGE MASTER AGREEMENT
MASTER AGREEMENT dated as of August 1, 1997, by and between
XXXX FUTURES INC., a Delaware corporation and XXXX XXXXXX SPECTRUM GLOBAL
BALANCED L.P.
SECTION 1. DEFINITIONS
Unless otherwise required by the context, the following terms
shall have the following meanings in the Agreement:
"Agreement" has the meaning given to it in Section 2.2.
"Base Currency", as to a Party, means the Currency agreed to
as such in relation to it in Part VII of the Schedule.
"Business Day" means for purposes of: (i) clauses (i), (viii)
and (xii) of the definition of Event of Default, a day which is a Local Banking
Day for the Non-Defaulting Party; (ii) solely in relation to delivery of a
Currency, a day which is a Local Banking Day in relation to that Currency; and
(iii) any other provision of the Agreement, a day which is a Local Banking Day
for the applicable Designated Offices of both Parties; provided, however, that
neither Saturday nor Sunday shall be considered a Business Day for any purpose.
"Close-Out Amount" has the meaning given to it in Section
5.1.
"Close-Out Date" means a day on which, pursuant to the
provisions of Section 5.1, the Non-Defaulting Party closes out Currency
Obligations or such a close-out occurs automatically.
"Closing Gain", as to the Non-Defaulting Party, means the
difference described as such in relation to a particular Value Date under the
provisions of Section 5.1.
"Closing Loss", as to the Non-Defaulting Party, means the
difference described as such in relation to a particular Value Date under the
provisions of Section 5.1.
"Confirmation" means a writing (including telex, facsimile, or
other electronic means from which it is possible to produce a hard copy)
evidencing an FX Transaction, and specifying:
(i) the Parties thereto and their Designated Offices through
which they are respectively acting,
(ii) the amounts of the Currencies being bought or sold and
by which Party,
(iii) the Value Date, and
(iv) any other term generally included in such a writing in
accordance with the practice of the relevant foreign exchange market.
"Credit Support" has the meaning given to it in Section 5.2.
"Credit Support Document", as to a Party (the "first Party"),
means a guaranty, hypothecation agreement, margin or security agreement or
document, or any other document containing an obligation of a third party
("Credit Support Provider") or of the first Party in favor of the other Party
supporting any obligations of the first Party under the Agreement.
"Credit Support Provider" has the meaning given to it in the
definition of Credit Support Document.
"Currency" means money denominated in the lawful currency of
any country or the Ecu.
"Currency Obligation" means any obligation of a Party to
deliver a Currency pursuant to an FX Transaction or the application of Section
3.3(a) or (b).
"Custodian" has the meaning given to it in the definition of
Insolvency Proceeding.
"Defaulting Party" has the meaning given to it in the
definition of Event of Default.
"Designated Office(s)", as to a Party, means the office or
offices specified in Part II of the Schedule.
"Effective Date" means the date of this Master Agreement.
"Event of Default" means the occurrence of any of the
following with respect to a Party (the "Defaulting Party", the other Party being
the "Non-Defaulting Party"):
(i) the Defaulting Party shall (A) default in any payment
when due under the Agreement to the Non-Defaulting Party with respect
to any Currency Obligation and such failure shall continue for two (2)
Business Days after the Non-Defaulting Party has given the Defaulting
Party written notice of non-payment, or (B) fail to perform or comply
with any other obligation assumed by it under the Agreement and such
failure is continuing thirty (30) days after the Non-Defaulting Party
has given the Defaulting Party written notice thereof;
(ii) the Defaulting Party shall commence a voluntary
Insolvency Proceeding or shall take any corporate action to authorize
any such Insolvency Proceeding;
(iii) a governmental authority or self-regulatory
organization having jurisdiction over either the Defaulting Party or
its assets in the country of its organization or principal office (A)
shall commence an Insolvency Proceeding with respect to the Defaulting
Party or its assets or (B) shall take any action under any bankruptcy,
insolvency or other similar law or any banking, insurance or similar
law or regulation governing the operation of the Defaulting Party which
may prevent the Defaulting Party from performing its obligations under
the Agreement as and when due;
(iv) an involuntary Insolvency Proceeding shall be
commenced with respect to the Defaulting Party or its assets by a
person other than a governmental authority or self-regulatory
organization having jurisdiction over either the Defaulting Party or
its assets in the country of its organization or principal office and
such Insolvency Proceeding (A) results in the appointment of a
Custodian or a judgment of insolvency or bankruptcy or the entry of an
order for winding-up, liquidation, reorganization or other similar
relief, or (B) is not dismissed within five (5) days of its institution
or presentation;
(v) the Defaulting Party is bankrupt or insolvent, as
defined under any bankruptcy or insolvency law applicable to it;
(vi) the Defaulting Party fails, or shall otherwise be
unable, to pay its debts as they become due;
(vii) the Defaulting Party or any Custodian acting on
behalf of the Defaulting Party shall disaffirm, disclaim or repudiate
any Currency Obligation;
(viii) any representation or warranty made or given or
deemed made or given by the Defaulting Party pursuant to the Agreement
or any Credit Support Document shall prove to have been false or
misleading in any material respect as at the time it was made or given
or deemed made or given and one (1) Business Day has elapsed after the
Non-Defaulting Party has given the Defaulting Party written notice
thereof;
(ix) the Defaulting Party consolidates or amalgamates with
or merges into or transfers all or substantially all its assets to
another entity and (A) the creditworthiness of the resulting, surviving
or transferee entity is materially weaker than that of the Defaulting
Party prior to such action, or (B) at the time of such consolidation,
amalgamation, merger or transfer the resulting, surviving or transferee
entity fails to assume all the obligations of the Defaulting Party
under the Agreement by operation of law or pursuant to an agreement
satisfactory to the Non-Defaulting Party;
(x) by reason of any default, or event of default or other
similar condition or event, any Specified Indebtedness (being Specified
Indebtedness of an amount which, when expressed in the Currency of the
Threshold Amount, is in aggregate equal to or in excess of the
Threshold Amount) of the Defaulting Party or any Credit Support
Provider in relation to it: (A) is not paid on the due date therefor
and remains unpaid after any applicable grace period has elapsed, or
(B) becomes, or becomes capable at any time of being declared, due and
payable under agreements or instruments evidencing such Specified
Indebtedness before it would otherwise have been due and payable;
(xi) the Defaulting Party is in breach of or default under
any Specified Transaction and any applicable grace period has elapsed,
and there occurs any liquidation or early termination of, or
acceleration of obligations under, that Specified Transaction or the
Defaulting Party (or any Custodian on its behalf) disaffirms, disclaims
or repudiates the whole or any part of a Specified Transaction;
(xii) (A) any Credit Support Provider of the Defaulting
Party or the Defaulting Party itself fails to comply with or perform
any agreement or obligation to be complied with or performed by it in
accordance with the applicable Credit Support Document and such failure
is continuing after any applicable grace period has elapsed; (B) any
Credit Support Document relating to the Defaulting Party expires or
ceases to be in full force and effect prior to the satisfaction of all
obligations of the Defaulting Party under the Agreement, unless
otherwise agreed in writing by the Non-Defaulting Party; (C) the
Defaulting Party or any Credit Support Provider of the Defaulting Party
(or, in either case, any Custodian acting on its behalf) disaffirms,
disclaims or repudiates, in whole or in part, or challenges the
validity of, any Credit Support Document; (D) any representation or
warranty made or given or deemed made or given by any Credit Support
Provider of the Defaulting Party pursuant to any Credit Support
Document shall prove to have been false or misleading in any material
respect as at the time it was made or given or deemed made or given and
one (1) Business Day has elapsed after the Non-Defaulting Party has
given the Defaulting Party written notice thereof; or (E) any event set
out in (ii) to (vii) or (ix) to (xi) above occurs in respect of any
Credit Support Provider of the Defaulting Party; or
(xiii) any other condition or event specified in Part IX of
the Schedule or in Section 8.14 if made applicable to the Agreement in
Part XI of the Schedule.
"FX Transaction" means any transaction between the Parties for
the purchase by one Party of an agreed amount in one Currency against the sale
by it to the other of an agreed amount in another Currency, both such amounts
either being deliverable on the same Value Date or, if the Parties have so
agreed in Part VI of the Schedule, being cash-settled in a single Currency,
which is or shall become subject to the Agreement and in respect of which
transaction the Parties have agreed (whether orally, electronically or in
writing): the Currencies involved, the amounts of such Currencies to be
purchased and sold, which Party will purchase which Currency and the Value Date.
"Insolvency Proceeding" means a case or proceeding seeking a
judgment of or arrangement for insolvency, bankruptcy, composition,
rehabilitation, reorganization, administration, winding-up, liquidation or other
similar relief with respect to the Defaulting Party or its debts or assets, or
seeking the appointment of a trustee, receiver, liquidator, conservator,
administrator, custodian or other similar official (each, a "Custodian") of the
Defaulting Party or any substantial part of its assets, under any bankruptcy,
insolvency or other similar law or any banking, insurance or similar law
governing the operation of the Defaulting Party.
"LIBOR", with respect to any Currency and date, means the
average rate at which deposits in the Currency for the relevant amount and time
period are offered by major banks in the London interbank market as of 11:00
a.m. (London time) on such date, or, if major banks do not offer deposits in
such Currency in the London interbank market on such date, the average rate at
which deposits in the Currency for the relevant amount and time period are
offered by major banks in the relevant foreign exchange market at such time on
such date as may be determined by the Party making the determination.
"Local Banking Day" means (i) for any Currency, a day on which
commercial banks effect deliveries of that Currency in accordance with the
market practice of the relevant foreign exchange market, and (ii) for any Party,
a day in the location of the applicable Designated Office of such Party on which
commercial banks in that location are not authorized or required by law to
close.
"Master Agreement" means the terms and conditions set forth in
this Master Agreement, including the Schedule.
"Matched Pair Novation Netting Office(s)", in respect of a
Party, means the Designated Office(s) specified in Part V of the Schedule.
"Non-Defaulting Party" has the meaning given to it in the
definition of Event of Default.
"Novation Netting Office(s)", in respect of a Party, means the
Designated Office(s) specified in Part V of the Schedule.
"Parties" means the parties to the Agreement, including their
successors and permitted assigns (but without prejudice to the application of
clause (ix) of the definition Event of Default); and the term "Party" shall mean
whichever of the Parties is appropriate in the context in which such expression
may be used.
"Proceedings" means any suit, action or other proceedings
relating to the Agreement or any FX Transaction.
"Schedule" means the Schedule attached to and part of this
Master Agreement, as it may be amended from time to time by agreement of the
Parties.
"Settlement Netting Office(s)", in respect of a Party, means
the Designated Office(s) specified in Part V of the Schedule.
"Specified Indebtedness" means any obligation (whether present
or future, contingent or otherwise, as principal or surety or otherwise) in
respect of borrowed money, other than in respect of deposits received.
"Specified Transaction" means any transaction (including an
agreement with respect thereto) between one Party to the Agreement (or any
Credit Support Provider of such Party) and the other Party to the Agreement (or
any Credit Support Provider of such Party) which is a rate swap transaction,
basis swap, forward rate transaction, commodity swap, commodity option, equity
or equity linked swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option with
respect to any of these transactions) or any combination of any of the foregoing
transactions.
"Spot Date" means the spot delivery day for the relevant pair
of Currencies as generally used by the relevant foreign exchange market.
"Threshold Amount" means the amount specified as such for each
Party in Part VIII of the Schedule.
"Value Date" means, with respect to any FX Transaction, the
Business Day (or where market practice in the relevant foreign exchange market
in relation to the two Currencies involved provides for delivery of one Currency
on one date which is a Local Banking Day in relation to that Currency but not to
the other Currency and for delivery of the other Currency on the next Local
Banking Day in relation to that other Currency ("Split Settlement") the two (2)
Local Banking Days in accordance with that market practice) agreed by the
Parties for delivery of the Currencies to be purchased and sold pursuant to such
FX Transaction, and, with respect to any Currency Obligation, the Business Day
(or, in the case of Split Settlement, Local Banking Day) upon which the
obligation to deliver Currency pursuant to such Currency Obligation is to be
performed.
SECTION 2. FX TRANSACTIONS
2.1 Scope of the Agreement. The Parties (through their
respective Designated Offices) may enter into FX Transactions, for such
quantities of such Currencies, as may be agreed subject to the terms of the
Agreement; provided that neither Party shall be required to enter into any FX
Transaction with the other Party. Unless otherwise agreed in writing by the
Parties, each FX Transaction entered into between Designated Offices of the
Parties on or after the Effective Date shall be governed by the Agreement. Each
FX Transaction between any two Designated Offices of the Parties outstanding on
the Effective Date which is identified in Part I of the Schedule shall also be
governed by the Agreement.
2.2 Single Agreement. This Master Agreement, the terms agreed
between the Parties with respect to each FX Transaction (and, to the extent
recorded in a Confirmation, each such Confirmation), and all amendments to any
of such items shall together form the agreement between the Parties (the
"Agreement") and shall together constitute a single agreement between the
Parties. The Parties acknowledge that all FX Transactions are entered into in
reliance upon such fact, it being understood that the Parties would not
otherwise enter into any FX Transaction.
2.3 Confirmations. FX Transactions shall be promptly confirmed
by the Parties by Confirmations exchanged by mail, telex, facsimile or other
electronic means from which it is possible to produce a hard copy. The failure
by a Party to issue a Confirmation shall not prejudice or invalidate the terms
of any FX Transaction.
2.4 Inconsistencies. In the event of any inconsistency between
the provisions of the Schedule and the other provisions of the Agreement, the
Schedule will prevail. In the event of any inconsistency between the terms of a
Confirmation and the other provisions of the Agreement, the other provisions of
the Agreement shall prevail, and the Confirmation shall not modify the other
terms of the Agreement.
SECTION 3. SETTLEMENT AND NETTING
3.1 Settlement. Subject to Sections 3.2 and 3.3, each Party
shall deliver to the other Party the amount of the Currency to be delivered by
it under each Currency Obligation on the Value Date for such Currency
Obligation.
3.2 Settlement Netting. If, on any date, more than one
delivery of a particular Currency under Currency Obligations is to be made
between a pair of Settlement Netting Offices, then each Party shall aggregate
the amounts of such Currency deliverable by it and only the difference between
these aggregate amounts shall be delivered by the Party owing the larger
aggregate amount to the other Party, and, if the aggregate amounts are equal, no
delivery of the Currency shall be made.
3.3 Novation Netting.
(a) By Currency. If the Parties enter into an FX Transaction
through a pair of Novation Netting Offices giving rise to a Currency Obligation
for the same Value Date and in the same Currency as a then existing Currency
Obligation between the same pair of Novation Netting Offices, then immediately
upon entering into such FX Transaction, each such Currency Obligation shall
automatically and without further action be individually canceled and
simultaneously replaced by a new Currency Obligation for such Value Date
determined as follows: the amounts of such Currency that would otherwise have
been deliverable by each Party on such Value Date shall be aggregated and the
Party with the larger aggregate amount shall have a new Currency Obligation to
deliver to the other Party the amount of such Currency by which its aggregate
amount exceeds the other Party's aggregate amount, provided that if the
aggregate amounts are equal, no new Currency Obligation shall arise. This
Section 3.3 shall not affect any other Currency Obligation of a Party to deliver
any different Currency on the same Value Date.
(b) By Matched Pair. If the Parties enter into an FX
Transaction between a pair of Matched Pair Novation Netting Offices then the
provisions of Section 3.3(a) shall apply only in respect of Currency Obligations
arising by virtue of FX Transactions entered into between such pair of Matched
Pair Novation Netting Offices and involving the same pair of Currencies and the
same Value Date.
3.4 General.
(a) Inapplicability of Sections 3.2 and 3.3. The provisions of
Sections 3.2 and 3.3 shall not apply if a Close-Out Date has occurred or a
voluntary or involuntary Insolvency Proceeding or action of the kind described
in clause (ii), (iii) or (iv) of the definition of Event of Default has occurred
without being dismissed in relation to either Party.
(b) Failure to Record. The provisions of Section 3.3 shall
apply notwithstanding that either Party may fail to record the new Currency
Obligations in its books.
(c) Cutoff Date and Time. The provisions of Section 3.3 are
subject to any cut-off date and cut-off time agreed between the applicable
Novation Netting Offices and Matched Pair Novation Netting Offices of the
Parties.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties. Each Party represents and
warrants to the other Party as of the Effective Date and as of the date of each
FX Transaction that: (i) it has authority to enter into the Agreement (including
such FX Transaction); (ii) the persons entering into the Agreement (including
such FX Transaction) on its behalf have been duly authorized to do so; (iii) the
Agreement (including such FX Transaction) is binding upon it and enforceable
against it in accordance with its terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and applicable principles of equity) and does not and will not
violate the terms of any agreements to which such Party is bound; (iv) no Event
of Default, or event which, with notice or lapse of time or both, would
constitute and Event of Default, has occurred and is continuing with respect to
it; and (v) it acts as principal in entering into each FX Transaction; and (vi)
if the Parties have so specified in Part XV of the Schedule, it makes the
representations and warranties set forth in such Part XV.
4.2 Covenants. Each Party covenants to the other Party that:
(i) it will at all times obtain and comply with the terms of and do all that is
necessary to maintain in full force and effect all authorizations, approvals,
licenses and consents required to enable it lawfully to perform its obligations
under the Agreement; (ii) it will promptly notify the other Party of the
occurrence of any Event of Default with respect to itself or any Credit Support
Provider in relation to it; and (iii) if the Parties have set forth additional
covenants in Part XVI of the Schedule, it makes the covenants set forth in such
Part XVI.
SECTION 5. CLOSE-OUT AND LIQUIDATION
5.1 Manner of Close-Out and Liquidation. (a) Close-Out. If an
Event of Default has occurred and is continuing, then the Non-Defaulting Party
shall have the right to close-out all, but not less than all, outstanding
Currency Obligations (including any Currency Obligation which has not been
performed and in respect of which the Value Date is on or precedes the Close-Out
Date) except to the extent that in the good faith opinion of the Non-Defaulting
Party certain of such Currency Obligations may not be closed-out under
applicable law. Such close-out shall be effective upon receipt by the Defaulting
Party of notice that the Non-Defaulting Party is terminating such Currency
Obligations. Notwithstanding the foregoing, unless otherwise agreed by the
Parties in Part X of the Schedule, in the case of an Event of Default in clause
(ii), (iii) or (iv) of the definition thereof with respect to a Party and, if
agreed by the Parties in Part IX of the Schedule, in the case of any other Event
of Default specified and so agreed in Part IX with respect to a Party, close-out
shall be automatic as to all outstanding Currency Obligations, as of the time
immediately preceding the institution of the relevant Insolvency Proceeding or
action. The Non-Defaulting Party shall have the right to liquidate such
closed-out Currency Obligations as provided below.
(b) Liquidation. Liquidation of Currency Obligations
terminated by close-out shall be effected as follows:
(i) Calculating Closing Gain or Loss. The Non-Defaulting
Party shall calculate in good faith, with respect to each such
terminated Currency Obligation, except to the extent that in the good
faith opinion of the Non-Defaulting Party certain of such Currency
Obligations may not be liquidated as provided herein under applicable
law, as of the Close-Out Date or as soon thereafter as reasonably
practicable, the Closing Gain, or, as appropriate, the Closing Loss, as
follows:
(A) for each Currency Obligation calculate a
"Close-Out Amount" as follows:
(1) in the case of a Currency Obligation
whose Value Date is the same as or is later than the
Close-Out Date, the amount of such Currency
Obligation; or
(2) in the case of a Currency Obligation
whose Value Date precedes the Close-Out Date, the
amount of such Currency Obligation increased, to the
extent permitted by applicable law, by adding
interest thereto from and including the Value Date to
but excluding the Close-Out Date at overnight LIBOR;
and
(3) for each such amount in a Currency other
than the Non-Defaulting Party's Base Currency,
convert such amount into the Non-Defaulting Party's
Base Currency at the rate of exchange at which, at
the time of the calculation, the Non-Defaulting Party
can buy such Base Currency with or against the
Currency of the relevant Currency Obligation for
delivery (x) if the Value Date of such Currency
Obligation is on or after the Spot Date as of such
time of calculation for the Base Currency, on the
Value Date of that Currency Obligation or (y) if such
Value Date precedes such Spot Date, for delivery on
such Spot Date (or, in either case, if such rate of
exchange is not available, conversion shall be
accomplished by the Non-Defaulting Party using any
commercially reasonable method); and
(B) determine in relation to each Value Date: (1) the
sum of all Close-Out Amounts relating to Currency Obligations
under which the Non-Defaulting Party would otherwise have been
entitled to receive the relevant amount on that Value Date;
and (2) the sum of all Close-Out Amounts relating to Currency
Obligations under which the Non-Defaulting Party would
otherwise have been obliged to deliver the relevant amount to
the Defaulting Party on that Value Date; and
(C) if the sum determined under (B)(1) is greater
than the sum determined under (B)(2), the difference shall be
the Closing Gain for such Value Date; if the sum determined
under (B)(1) is less than the sum determined under (B)(2), the
difference shall be the Closing Loss for such Value Date.
(ii) Determining Present Value. To the extent permitted by
applicable law, the Non-Defaulting Party shall adjust the Closing Gain
or Closing Loss for each Value Date falling after the Close-Out Date to
present value by discounting the Closing Gain or Closing Loss from and
including the Value Date to but excluding the Close-Out Date, at LIBOR
with respect to the Non-Defaulting Party's Base Currency as at the
Close-Out Date or at such other rate as may be prescribed by applicable
law.
(iii) Netting. The Non-Defaulting Party shall aggregate the
following amounts so that all such amounts are netted into a single
liquidated amount payable to or by the Non-Defaulting Party: (x) the
sum of the Closing Gains for all Value Dates (discounted to present
value, where appropriate, in accordance with the provisions of Section
5.1(b)(ii)) (which for the purposes of this aggregation shall be a
positive figure); and (y) the sum of the Closing Losses for all Value
Dates (discounted to present value, where appropriate, in accordance
with the provisions of Section 5.1(b)(ii)) (which for the purposes of
the aggregation shall be a negative figure).
(iv) Settlement Payment. If the resulting net amount is
positive, it shall be payable by the Defaulting Party to the
Non-Defaulting Party, and if it is negative, then the absolute value of
such amount shall be payable by the Non-Defaulting Party to the
Defaulting Party.
5.2 Set-Off Against Credit Support. Where close-out and
liquidation occurs in accordance with Section 5.1, the Non-Defaulting Party
shall also be entitled (i) to set off the net payment calculated in accordance
with Section 5.1(b)(iv) which the Non-Defaulting Party owes to the Defaulting
Party, if any, against any credit support or other collateral ("Credit Support")
held by the Defaulting Party pursuant to a Credit Support Document or otherwise
(including the liquidated value of any non-cash Credit Support) in respect of
the Non-Defaulting Party's obligations under the Agreement or (ii) to set off
the net payment calculated in accordance with Section 5.1(b)(iv) which the
Defaulting Party owes to the Non-Defaulting Party, if any, against any Credit
Support held by the Non-Defaulting Party (including the liquidated value of any
non-cash Credit Support) in respect of the Defaulting Party's obligations under
the Agreement; provided that, for purposes of either such set-off, any Credit
Support denominated in a Currency other than the Non-Defaulting Party's Base
Currency shall be converted into such Base Currency at the spot price determined
by the Non-Defaulting Party at which, at the time of calculation, the
Non-Defaulting Party could enter into a contract in the foreign exchange market
to buy the Non-Defaulting Party's Base Currency in exchange for such Currency.
5.3 Other Foreign Exchange Transactions. Where close-out and
liquidation occurs in accordance with Section 5.1, the Non-Defaulting Party
shall also be entitled to close-out and liquidate, to the extent permitted by
applicable law, any other foreign exchange transaction entered into between the
Parties which is then outstanding in accordance with provisions of Section 5.1,
with each obligation of a Party to deliver a Currency under such a foreign
exchange transaction being treated as if it were a Currency Obligation under the
Agreement.
5.4 Payment and Late Interest. The net amount payable by one
Party to the other Party pursuant to the provisions of Sections 5.1 and 5.3
above shall be paid by the close of business on the Business Day following the
receipt by the Defaulting Party of notice of the Non-Defaulting Party's
settlement calculation, with interest at overnight LIBOR from and including the
Close-Out Date to but excluding such Business Day (and converted as required by
applicable law into any other Currency, any costs of conversion to be borne by,
and deducted from any payment to, the Defaulting Party). To the extent permitted
by applicable law, any amounts owed but not paid when due under this Section 5
shall bear interest at overnight LIBOR (or, if conversion is required by
applicable law into some other Currency, either overnight LIBOR with respect to
such other Currency or such other rate as may be prescribed by such applicable
law) for each day for which such amount remains unpaid. Any addition of interest
or discounting required under this Section 5 shall be calculated on the basis of
a year of such number of days as is customary for transactions involving the
relevant Currency in the relevant foreign exchange market.
5.5 Suspension of Obligations. Without prejudice to the
foregoing, so long as a Party shall be in default in payment or performance to
the other Party under the Agreement and the other Party has not exercised its
rights under this Section 5, or, if "Adequate Assurances" is specified as
applying to the Agreement in Part XI of the Schedule, during the pendency of a
reasonable request to a Party for adequate assurances of its ability to perform
its obligations under the Agreement, the other Party may, at its election and
without penalty, suspend its obligation to perform under the Agreement.
5.6 Expenses. The Defaulting Party shall reimburse the
Non-Defaulting Party in respect of all out-of-pocket expenses incurred by the
Non-Defaulting Party (including fees and disbursements of counsel, including
attorneys who may be employees of the Non-Defaulting Party) in connection with
any reasonable collection or other enforcement proceedings related to the
payments required under the Agreement.
5.7 Reasonable Pre-Estimate. The Parties agree that the
amounts recoverable under this Section 5 are a reasonable pre-estimate of loss
and not a penalty. Such amounts are payable for the loss of bargain and the loss
of protection against future risks and, except as otherwise provided in the
Agreement, neither Party will be entitled to recover any additional damages as a
consequence of such losses.
5.8 No Limitation of Other Rights; Set-Off. The Non-Defaulting
Party's rights under this Section 5 shall be in addition to, and not in
limitation or exclusion of, any other rights which the Non-Defaulting Party may
have (whether by agreement, operation of law or otherwise), and, to the extent
not prohibited by law, the Non-Defaulting Party shall have a general right of
set-off with respect to all amounts owed by each Party to the other Party,
whether due and payable or not due and payable (provided that any amount not due
and payable at the time of such set-off shall, if appropriate, be discounted to
present value in a commercially reasonable manner by the Non-Defaulting Party).
The Non-Defaulting Party's rights under this Section 5.8 are subject to Section
5.7.
SECTION 6. FORCE MAJEURE, ACT OF STATE, ILLEGALITY OR
IMPOSSIBILITY
6.1 Force Majeure, Act of State, Illegality or Impossibility.
If either Party is prevented from or hindered or delayed by reason of force
majeure or act of state in the delivery or receipt of any Currency in respect of
a Currency Obligation or if it becomes or, in the good faith judgment of one of
the Parties, may become unlawful or impossible for either Party to make or
receive any payment in respect of a Currency Obligation, then the Party for whom
such performance has been prevented, hindered or delayed or has become illegal
or impossible shall promptly give notice thereof to the other Party and either
Party may, by notice to the other Party, require the close-out and liquidation
of each affected Currency Obligation in accordance with the provisions of
Sections 5.1 and, for such purposes, the Party unaffected by such force majeure,
act of state, illegality or impossibility (or, if both Parties are so affected,
whichever Party gave the relevant notice) shall perform the calculation required
under Section 5.1 as if it were the Non-Defaulting Party. Nothing in this
Section 6.1 shall be taken as indicating that the Party treated as the
Defaulting Party for the purpose of calculations required by Section 5.1 has
committed any breach or default.
6.2 Transfer to Avoid Force Majeure, Act of State, Illegality
or Impossibility. If Section 6.1 becomes applicable, unless prohibited by law,
the Party which has been prevented, hindered or delayed from performing shall,
as a condition to its right to designate a close-out and liquidation of any
affected Currency Obligation, use all reasonable efforts (which will not require
such Party to incur a loss, excluding immaterial, incidental expenses) to
transfer as soon as practicable, and in any event before twenty (20) days after
it gives notice under Section 6.1, all its rights and obligations under the
Agreement in respect of the affected Currency Obligations to another of its
Designated Offices so that such force majeure, act of state, illegality or
impossibility ceases to exist. Any such transfer will be subject to the prior
written consent of the other Party, which consent will not be withheld if such
other Party's policies in effect at such time would permit it to enter into
transactions with the transferee Designated Office on the terms proposed, unless
such transfer would cause the other Party to incur a material tax or other cost.
SECTION 7. PARTIES TO RELY ON THEIR OWN EXPERTISE
Each Party will be deemed to represent to the other Party on
the date on which it enters into an FX Transaction that (absent a written
agreement between the Parties that expressly imposes affirmative obligations to
the contrary for that FX Transaction): (i)(A) it is acting for its own account,
and it has made its own independent decisions to enter into that FX Transaction
and as to whether that FX Transaction is appropriate or proper for it based upon
its own judgment and upon advice from such advisors as it has deemed necessary;
(B) it is not relying on any communication (written or oral) of the other Party
as investment advice or as a recommendation to enter into that FX Transaction,
it being understood that information and explanations related to the terms and
conditions of an FX Transaction shall not be considered investment advice or a
recommendation to enter into that FX Transaction; and (C) it has not received
from the other Party any assurance or guarantee as to the expected results of
that FX Transaction; (ii) it is capable of evaluating and understanding (on its
own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of that FX Transaction; and (iii) the
other Party is not acting as a fiduciary or an advisor for it in respect of that
FX Transaction.
SECTION 8. MISCELLANEOUS
8.1 Currency Indemnity. The receipt or recovery by either
Party (the "first Party") of any amount in respect of an obligation of the other
Party (the "second Party") in a Currency other than that in which such amount
was due, whether pursuant to a judgment of any court or pursuant to Section 5 or
6, shall discharge such obligation only to the extent that, on the first day on
which the first Party is open for business immediately following such receipt or
recovery, the first Party shall be able, in accordance with normal banking
practice, to purchase the Currency in which such amount was due with the
Currency received or recovered. If the amount so purchasable shall be less than
the original amount of the Currency in which such amount was due, the second
Party shall, as a separate obligation and notwithstanding any judgment of any
court, indemnify the first Party against any loss sustained by it. The second
Party shall in any event indemnify the first Party against any costs incurred by
it in making any such purchase of Currency.
8.2 Assignment. Neither Party may assign, transfer or charge
or purport to assign, transfer or charge its rights or its obligations under the
Agreement to a third party without the prior written consent of the other Party
and any purported assignment, transfer or charge in violation of this Section
8.2 shall be void.
8.3 Telephonic Recording. The Parties agree that each Party
and its agents may electronically record all telephonic conversations between
them and that any such recordings may be submitted in evidence to any court or
in any Proceedings for the purpose of establishing any matters pertinent to the
Agreement.
8.4 Notices. Unless otherwise agreed, all notices,
instructions and other communications to be given to a Party under the Agreement
shall be given to the address, telex (if confirmed by the appropriate
answerback), facsimile (confirmed if requested) or telephone number and to the
individual or department specified by such Party in Part III of the Schedule.
Unless otherwise specified, any notice, instruction or other communication given
in accordance with this Section 8.4 shall be effective upon receipt.
8.5 Termination. Each of the Parties may terminate the
Agreement at any time by seven (7) days' prior written notice to the other Party
delivered as prescribed in Section 8.4, and termination shall be effective at
the end of such seventh day; provided, however, that any such termination shall
not affect any outstanding Currency Obligations, and the provisions of the
Agreement shall continue to apply until all the obligations of each Party to the
other under the Agreement have been fully performed.
8.6 Severability. In the event any one or more of the
provisions contained in the Agreement should be held invalid, illegal or
unenforceable in any respect under the law of any jurisdiction, the validity,
legality and enforceability of the remaining provisions contained in the
Agreement under the law of such jurisdiction, and the validity, legality and
enforceability of such and any other provisions under the law of any other
jurisdiction shall not in any way be affected or impaired thereby. The Parties
shall endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
8.7 No Waiver. No indulgence or concession granted by a Party
and no omission or delay on the part of a Party in exercising any right, power
or privilege under the Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.
8.8 Master Agreement. Where one of the Parties to the
Agreement is domiciled in the United States, the Parties intend that the
Agreement shall be a master agreement, as referred to in 11 U.S.C. Section
101(53B)(C) and 12 U.S.C. Section 1821(e)(8)(D)(vii).
8.9 Time of Essence. Time shall be of the essence in
the Agreement.
8.10 Headings. Headings in the Agreement are for ease
of reference only.
8.11 Payments Generally. All payments to be made under the
Agreement shall be made in same day (or immediately available) and freely
transferable funds and, unless otherwise specified, shall be delivered to such
office of such bank, and in favor of such account as shall be specified by the
Party entitled to receive such payment in Part IV of the Schedule or in a notice
given in accordance with Section 8.4.
8.12 Amendments. No amendment, modification or waiver of the
Agreement will be effective unless in writing executed by each of the Parties.
8.13 Credit Support. A Credit Support Document between the
Parties may apply to obligations governed by the Agreement. If the Parties have
executed a Credit Support Document, such Credit Support Document shall be
subject to the terms of the Agreement and is hereby incorporated by reference in
the Agreement. In the event of any conflict between a Credit Support Document
and the Agreement, the Agreement shall prevail, except for any provision in such
Credit Support Document in respect of governing law.
8.14 Adequate Assurances. If the Parties have so agreed in
Part XI of the Schedule, the failure by a Party to give adequate assurances of
its ability to perform any of its obligations under the Agreement within two (2)
Business Days of a written request to do so when the other Party has reasonable
grounds for insecurity shall be an Event of Default under the Agreement.
8.15 Correction of Confirmations. Unless either Party objects
to the terms contained in any Confirmation sent by the other Party or sends a
corrected Confirmation within three (3) Business Days of receipt of such
Confirmation, or such shorter time as may be appropriate given the Value Date of
the FX Transaction, the terms of such Confirmation shall be deemed correct and
accepted absent manifest error. If the Party receiving a Confirmation sends a
corrected Confirmation within such three (3) Business Days, or shorter period,
as appropriate, then the Party receiving such corrected Confirmation shall have
three (3) Business Days, or shorter period, as appropriate, after receipt
thereof to object to the terms contained in such corrected Confirmation.
SECTION 9. LAW AND JURISDICTION
9.1 Governing Law. The Agreement shall be governed by, and
construed in accordance with the laws of the jurisdiction set forth in Part XII
of the Schedule without giving effect to conflict of laws principles.
9.2 Consent to Jurisdiction. (a) With respect to any
Proceedings, each Party irrevocably (i) submits to the non-exclusive
jurisdiction of the courts of the jurisdiction set forth in Part XIII of the
Schedule and (ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such court
does not have jurisdiction over such Party. Nothing in the Agreement precludes
either Party from bringing Proceedings in any other jurisdiction nor will the
bringing of Proceedings in any one or more jurisdictions preclude the bringing
of Proceedings in any other jurisdiction.
(a) Each Party irrevocably appoints the agent for service of
process (if any) specified with respect to it in Part XIV of the Schedule. If
for any reason any Party's process agent is unable to act as such, such Party
will promptly notify the other Party and within thirty (30) days will appoint a
substitute process agent acceptable to the other Party.
9.3 Waiver of Jury Trial. Each Party irrevocably
waives any and all right to trial by jury in any Proceedings.
9.4 Waiver of Immunities. Each Party irrevocably waives, to
the fullest extent permitted by applicable law, with respect to itself and its
revenues and assets (irrespective of their use or intended use), all immunity on
the grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any courts, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its assets
(whether before or after judgment) and (v) execution or enforcement of any
judgment to which it or its revenues or assets might otherwise be entitled in
any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the
extent permitted by applicable law, that it will not claim any such immunity in
any Proceedings.
IN WITNESS WHEREOF, the Parties have caused the Agreement to
be duly executed by their respective authorized officers as of the date first
written above.
XXXX FUTURES INC.
By /s/ Xxxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Executive Vice President
XXXX XXXXXX SPECTRUM GLOBAL
BALANCED
By Demeter Management Corporation
General Partner
By /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
SCHEDULE
Schedule to the International Foreign Exchange Master Agreement
dated as of August 1, 1997
between Xxxx Xxxxxx Spectrum Global Balanced L.P. ("Party A") and Xxxx
Futures Inc.
("Party B").
Part I Scope of Agreement
The Agreement shall apply to all foreign exchange
transactions outstanding between any two Designated Offices
of the Parties on the Effective Date.
It shall be understood that Party A shall typically be
conducting its foreign exchange transactions under the
Agreement through its Trading Advisors who shall be
disclosed by Party A to Party B from time to time by
notice. The Trading Advisors will act as Party A's agents
for all purposes hereunder until further notice.
Part II Designated Offices
Each of the following shall be a Designated Office
Party A:
c/o Demeter Management Corporation
Two Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Party B:
Xxxx Futures Inc.
Xxx Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Part III Notices:
With copies to Party A's designated Trading Advisors
Address: c/o Demeter Management Corporation
Two World Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
Name of Individual or Department to
whom Notices
are to be sent: Xxxxxx X. Xxxxxxx
With copies to Party A's designated Trading Advisors
If sent to Party B:
Address: Xxxx Futures Inc.
Xxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
Name of Individual or Department to
whom Notices
are to be sent: Xxxxx Xxxxxxx
Payment Instructions
Name of Bank and Office, Account Number and Reference with respect
to relevant Currencies:
Party A Party B
Citibank, X.X. Xxxxxx Trust & Savings Bank,
ABA: 021-000089 Chicago
Account Name: Xxxx Xxxxxx ABA: 071.000.228
Xxxxxxxx For the Account of Xxxx Futures
Account Bi, 00000000 Inc., Chicago
FFC: Xxxx Xxxxxx Customer Segregated
Spectrum Global Account No. 000-000-0
Balanced L.P., FFC: Xxxx Xxxxxx
Account # (As Party B is Spectrum Global
notified from time to time) Balanced L.P.,
Account # (As Party A is
notified from time to time.
Part V. Netting
-------
A. Settlement Netting Offices
--------------------------
Each of the following shall be a Settlement Netting Office:
Party A: Same as in Part II.
Party B: Same as in Part II.
B. Novation Netting Offices
------------------------
Each of the following shall be a Novation Netting Office:
Party A: Same as in Part V-A.
Party B: Same as in Part V-A.
C. Matched Pair Novation Netting Offices
-------------------------------------
Each of the following shall be a Matched Pair Novation
Netting Office:
Party A: Not Applicable.
Party B: Not Applicable.
Part VI Cash Settlement of FX Transactions
The following provision shall apply:
The definition of FX Transaction in Section 1 shall include
foreign exchange transactions for the purchase and sale of
one Currency against another but which shall be settled by
the delivery of only one Currency based on the difference
between exchange rates as agreed by the Parties as
evidenced in a Confirmation. Section 3.1 is modified so
that only one Currency shall be delivered for any such FX
Transaction in accordance with the formula agreed by the
Parties. Section 5.1(b)(I)(A) is modified so that the
Close-Out Amount for any such FX Transaction for which the
cash settlement amount has been fixed on or before the
Close-Out Date pursuant to the terms of such FX Transaction
shall be equal to the Currency Obligation arising therefrom
(increased by adding interest in the manner provided in
clause (A)(2) if the Value Date precedes the Close-Out
Date) and for any such FX Transaction for which the cash
settlement amount has not yet been fixed on the Close-Out
Date pursuant to the terms of such FX Transaction, the
Close-Out Amount shall be as determined by the
Non-Defaulting Party in good faith and in a commercially
reasonable manner.
Part VII Base Currency
-------------
Party A's Base Currency is the United States dollar.
Party B's Base Currency is the United States dollar.
Part VIII Threshold Amount
----------------
Threshold Amount
For purposes of clause (x) of the definition of Event of
Default:
Party A's Threshold Amount is 3% of Party A's equity
capital as evidenced by Party A's latest financial
statements.
Party B's Threshold Amount is 3% of Party B's equity
capital as evidenced by Party B's latest financial
statements.
Part IX Additional Events of Default
----------------------------
The following provisions which are checked shall constitute
Events of Default:
None.
[ ] (a) occurrence of garnishment or provisional
garnishment against a claim against the Defaulting
Party acquired by the Non-Defaulting Party. The
automatic termination provisions of Section 5.1
[shall] [shall not] apply to either Party that is
a Defaulting Party in respect of this Event of
Default.
[ ] (b) suspension of payment by the Defaulting
Party or any Credit Support provider in accordance
with the Bankruptcy Law or the Corporate
Reorganization Law in Japan. The automatic
termination provision of Section 5.1 [shall]
[shall not] apply to either Party that is a
Defaulting Party in respect of this Event of
Default.
[ ] (c) disqualification of the Defaulting Party or
any Credit Support Provider by any relevant xxxx
clearing house located in Japan. The automatic
termination provision of Section 5.2 [shall][shall
not] apply to either Party that is a Defaulting
Party in respect of this Event of Default.
Part X. Automatic Termination
---------------------
The automatic termination provision of Section 5.1 shall
not apply to Party A as Defaulting Party in respect of
clause (ii), (iii) or (iv) of the definition of Event of
Default.
The automatic termination provision of Section 5.1 shall
not apply to Party B as Defaulting Party in respect of
clause (ii), (iii) or (iv) of the definition of Event of
Default.
Part XI. Adequate Assurances
-------------------
Adequate Assurances under Section 8.14 shall apply to the
Agreement.
Part XII Governing Law.
--------------
In accordance with Section 9.1 of the Agreement, the
Agreement shall be governed by the laws of the State of New
York.
Part XIII Consent Jurisdiction.
---------------------
In accordance with Section 9.2 of the Agreement, each Party
irrevocably submits to the non-exclusive jurisdiction of
the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New
York City.
Part XIV Agent for Service of Process.
----------------------------
Not applicable.
A. The following FDICIA representations shall not apply:
1. Party A represents and warrants that it qualifies as a
"financial institution" within the meaning of the
Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA") by virtue of being a:
[ ] broker or dealer within the meaning of FDICIA;
[ ] depository institution within the meaning of FDICIA;
[ ] futures commission merchant within the meaning of
FDICIA;
[ ] "financial institution" within the meaning of
Regulation EE (see below).
2. Party B hereby represents and warrants that it
qualifies as a "financial institution" by virtue of
being a:
[ ] broker or dealer within the meaning of FDICIA;
[ ] depository institution within the meaning of FDICIA;
[ ] futures commission merchant within the meaning of
FDICIA;
[ ] "financial institution" within the meaning of
Regulation EE (see below).
3. A Party representing that it is a "financial institution"
as that term is defined in 12 C.F.R. Section 231.3 of
Regulation EE issued by the Board of Governors of the
Federal Reserve System ("Regulation EE") represents that:
(a) it is willing to enter into financial contracts"
as a counterparty "on both sides of one or more
financial markets" as those terms are used in
Section 231.3 of Regulation EE; and
(b) during the 15-month period immediately preceding
the date it makes or is deemed to make this
representation, it has had on at least one (1) day
during such period, with counterparties that are
not its affiliates (as defined in Section 231.2(b)
of Regulation EE) either:
(i) one or more financial contracts of a total
gross notional principal amount of $1 billion
outstanding; or
(ii) total xxxxx xxxx-to-market positions
(aggregated across counter parties) of $100
million; and
(c) agrees that it will notify the other Party if it
no longer meets the requirements for status as a
financial institution under Regulation EE.
4. If both Parties are financial institutions in
accordance with the above, the Parties agree that the
Agreement shall be a netting contract, as defined in
12 U.S.C. Section 4402(14), and each receipt or
payment or delivery obligation under the Agreement
shall be a covered contractual payment entitlement or
covered contractual payment obligation, respectively,
as defined in FDICIA.
B. The following ERISA representation shall apply:
Each Party represents and warrants that it is neither (i)
an "employee benefit plan" as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974 which
is subject to Part 4 of Subtitle B of Title I of such Act;
(ii) a "plan" as defined in Section 4975(e)(1) of the
Internal Revenue Code of 1986; nor (iii) an entity the
assets of which are deemed to be assets of any such
"employee benefit plan" or "plan" by reason of the U.S.
Department of Labor's plan asset regulation, 29 C.F.R.
Section 2510.3-101.
C. The following CFTC eligible swap participant representation
shall apply:
Each Party represents and warrants that it is an "eligible
swap participant" under, and as defined in, 17 C.F.R.
Section 35.1.
Part XVI Additional Covenants
--------------------
A. Party B covenants and agrees that when Party A or an agent
for Party A requests Party B to an FX Transaction, Party B
will do a back-to-back principal trade and the price of the
FX Transaction to Party A will be the same price at which
Party B effects its back-to-back trade with its
counterparty, and Party B will not profit from any xxxx-up
or spread on the FX Transaction.
B. With respect to each FX Transaction, Party A shall pay to
Party B a round-turn fee as follows. For FX Transactions
not having a Party B-imposed forward date, the fee shall be
$4.30 per round-turn ($2.15 per side) for each $85,000
equivalent of the Currency in the FX Transaction. For FX
Transactions with a Party B-imposed forward date
restriction, the fee shall be $5.00 per round-turn ($2.50
per side) for each $135,000 equivalent of the Currency in
the FX Transaction.
C. Party A shall post margin with Party B with respect to all
FX Transactions in an amount equal to 3.0% of the value of
such FX Transactions on major currencies and 5.0% of the
value of such FX Transactions on minor currencies. All calls
for margin shall be made by Party B orally or by written
notice to Xxxx Xxxxxx Xxxxxxxx, and each such call for
margin shall be met by Party A within three hours after Xxxx
Xxxxxx Xxxxxxxx has received such call by wire transfer (by
federal bank wire system) to the account of Party B. Party B
shall accept as margin any instrument deemed acceptable as
margin under the rules of the Chicago Mercantile Exchange.
Upon oral or written request by Xxxx Xxxxxx Xxxxxxxx, Party
B shall, within three hours after receipt of any such
request, wire transfer (by federal bank wire system) to Xxxx
Xxxxxx Xxxxxxxx for Party A's account any margin funds held
by Party B in excess of the margin requirements specified
hereby. Notwithstanding Part VI above, all payments, unless
otherwise agreed to, shall be paid in U.S. dollars.
