EXHIBIT 10.09
FORM OF
AMENDED AND RESTATED CUSTOMER AGREEMENT
THIS AMENDED AND RESTATED CUSTOMER AGREEMENT (this
"Agreement"), made as of the ___ day of June, 2000, by and between XXXX XXXXXX
SPECTRUM _________________ 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 _________________, and a Limited Partnership Agreement
dated as of ________________, 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 December 1, 1997 (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 accounts to
Xxxxxx Xxxxxxx & Co. Incorporated ("MS & Co") and Xxxxxx Xxxxxxx & Co.
International Limited ("MSIL") 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 MS & Co. and MSIL 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 ____% of the Customer's Net Assets (a ____% 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 or reimburse Customer, from brokerage fees
received by it, all charges of MS & Co. and MSIL 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 MS & Co. and MSIL, and costs
associated with taking delivery of futures interests.
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.
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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 80% 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 DWR will receive interest income from MS & Co. and MSIL, as agreed from
time to time by DWR and MS & Co. and MSIL, on the Customer's assets deposited as
margin with MS & Co. and MSIL. 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
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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.
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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 ________________L.P.
c/o Demeter Management Corporation
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
President and Chairman
if to DWR:
XXXX XXXXXX XXXXXXXX INC.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Senior Vice President
14. Survival. The provisions of this Agreement shall survive
the termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
15. Headings. Headings of Sections herein are for the
convenience of the parties only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
16. Incorporation by Reference. The Futures Customer Agreement
annexed hereto is hereby incorporated by reference herein and made a part hereof
to the same extent as if such document were set forth in full herein. If any
provision of this Agreement is or at any time becomes inconsistent with the
annexed document, the terms of this Agreement shall control.
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IN WITNESS WHEREOF, this Agreement has been executed for and
on behalf of the undersigned as of the day and year first above written.
XXXX XXXXXX SPECTRUM ____________ L.P.
By: Demeter Management Corporation,
General Partner
By:
----------------------------------------
Xxxxxx X. Xxxxxx
President and Chairman
XXXX XXXXXX XXXXXXXX INC.
By:
----------------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President
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Futures Customer Agreement
In consideration of the acceptance by Xxxx Xxxxxx Xxxxxxxx Inc. ("DWR") of one
or more accounts of the undersigned ("Customer") (if more than one account is
carried by DWR, all are covered by this Agreement and are referred to
collectively as the "Account") and DWR's agreement to act as Customer's broker
for the execution, clearance and/or carrying of transactions for the purchase
and sale of commodity interests, including commodities, commodity futures
contracts and commodity options, Customer agrees as follows:
1. APPLICABLE RULES AND REGULATIONS - The Account and each transaction
therein shall be subject to the terms of this Agreement and to (a) all
applicable laws and the regulations, rules and orders (collectively
"regulations") of all regulatory and self-regulatory organizations
having jurisdiction and (b) the constitution, by-laws, rules,
regulations, orders, resolutions, interpretations and customs and
usages (collectively "rules") of the market and any associated clearing
organization (each an "exchange") on or subject to the rules of which
such transaction is executed and/or cleared. The reference in the
preceding sentence to exchange rules is solely for DWR's protection and
DWR's failure to comply therewith shall not constitute a breach of this
Agreement or relieve Customer of any obligation or responsibility under
this Agreement. DWR shall not be liable to Customer as a result of any
action by DWR, its officers, directors, employees or agents to comply
with any rule or regulation.
2. PAYMENTS TO DWR - Customer agrees to pay to DWR immediately on request
(a) commissions, fees and service charges as are in effect from time to
time together with all applicable regulatory and self-regulatory
organization and exchange fees, charges and taxes; (b) the amount of
any debit balance or any other liability that may result from
transactions executed for the account; and (c) interest on such debit
balance or liability at the prevailing rate charged by DWR at the time
such debit balance or liability arises and service charges on any such
debit balance or liability together with any reasonable costs and
attorney's fees incurred in collecting any such debit balance or
liability. Customer acknowledges that DWR may charge commissions at
other rates to other customers.
3. CUSTOMER'S DUTY TO MAINTAIN ADEQUATE MARGIN - Customer shall at all
times and without prior notice or demand from DWR maintain adequate
margins in the account so as continually to meet the original and
maintenance margin requirements established by DWR for Customer. DWR
may change such requirements from time to time at DWR's discretion.
Such margin requirements may exceed the margin requirements set by any
exchange or other regulatory authority and may vary from DWR's
requirements for other customers. Customer agrees, when so requested,
immediately to wire transfer margin funds and to furnish DWR with names
of bank officers for immediate verification of such transfers. Customer
acknowledges and agrees that DWR may receive and retain as its own any
interest, increment, profit, gain or benefit directly or indirectly,
accruing from any of the funds DWR receives from Customer.
4. DELIVERY; OPTION EXERCISE
(a) Customer acknowledges that the making or accepting of delivery
pursuant to a futures contract may involve a much higher
degree of risk than liquidating a position by offset. DWR has
no control over and makes no warranty with respect to grade,
quality or tolerances of any commodity delivered in
fulfillment of a contract.
(b) Customer agrees to give DWR timely notice and immediately on
request to inform DWR if Customer intends to make or take
delivery under a futures contract or to exercise an option
contract. If so requested, Customer shall provide DWR with
satisfactory assurances that Customer can fulfill Customer's
obligation to make or take delivery under any contract.
Customer shall furnish DWR with property deliverable by it
under any contract in accordance with DWR's instructions.
(c) DWR shall not have any obligation to exercise any long option
contract unless Customer has furnished DWR with timely
exercise instructions and sufficient initial margin with
respect to each underlying futures contract.
5. FOREIGN CURRENCY - If DWR enters into any transaction for Customer
effected in a currency other than U.S. dollars: (a) any profit or loss
caused by changes in the rate of exchange for such currency shall be
for Customer's account and risk and (b) unless another currency is
designated in DWR's confirmation of such transaction, all margin for
such transaction and the profit or loss on the liquidation of such
transaction shall be in U.S. dollars at a rate of exchange determined
by DWR in its discretion on the basis of then prevailing market rates
of exchange for such foreign currency.
6. DWR MAY LIMIT POSITIONS HELD - Customer agrees that DWR, at its
discretion, may limit the number of open positions (net or gross) which
Customer may execute, clear and/or carry with or acquire through it.
Customer agrees (a) not to make any trade which would have the effect
of exceeding such limits, (b) that DWR may require Customer to reduce
open positions carried with DWR and (c) that DWR may refuse to accept
orders to establish new positions. DWR may impose and enforce such
limits, reduction or refusal whether or not they are required by
applicable law, regulations or rules. Customer shall comply with all
position limits established by any regulatory or self-regulatory
organization or any exchange. In addition, Customer agrees to notify
DWR promptly if customer is required to file position reports with any
regulatory or self-regulatory organization or with any exchange.
7. NO WARRANTY AS TO INFORMATION OR RECOMMENDATION - Customer acknowledges that:
(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;
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(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.
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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.
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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;
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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.
6
(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.
7
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.
8
(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
9
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.
10
If authorized below, Customer authorizes the deposit of funds into such
foreign depositories. For customers domiciled in the United States,
this authorization permits the holding of funds in regulated accounts
offshore only if such funds are used to margin, guarantee, or secure
positions in such contracts or accrue as a result of such positions. In
order to avoid the possible dilution of other customer funds, a
customer who has funds held outside the United States agrees by
accepting this subordination agreement that his claims based on such
funds will be subordinated as described below in the unlikely event
both of the following conditions are met: (1) DWR is placed in
receivership or bankruptcy, and (2) there are insufficient funds
available for distribution denominated in the foreign currency as to
which the customer has a claim to satisfy all claims against those
funds.
By initialing the Subordination Agreement below, Customer agrees that
if both of the conditions listed above occur, its claim against DWR's
assets attributable to funds held overseas in a particular foreign
currency may be satisfied out of segregated customer funds held in
accounts denominated in dollars or other foreign currencies only after
each customer whose funds are held in dollars or in such other foreign
currencies receives its pro-rata portion of such funds. It is further
agreed that in no event may a customer whose funds are held overseas
receive more than its pro-rata share of the aggregate pool consisting
of funds held in dollars, funds held in the particular foreign
currency, and non-segregated assets of DWR.
11
OPTIONAL ELECTIONS
The following provisions, which are set forth in this agreement, need not be
entered into to open the Account. Customer agrees that its optional elections
are as follows:
Signature required for each election
ARBITRATION AGREEMENT:
(Agreement Paragraph 24)
-----------------------------------
CONSENT TO TAKE THE OTHER SIDE OF ORDERS:
(Agreement Paragraph 25) X
-----------------------------------
AUTHORIZATION TO TRANSFER FUNDS:
(Agreement Paragraph 26) X
-----------------------------------
ACKNOWLEDGEMENT TO SUBORDINATION AGREEMENT
(Agreement Paragraph 27) X
-----------------------------------
(Required for accounts holding
non-U.S. currency)
--------------------------------------------------------------------------------
HEDGE ELECTION
Customer confirms that all transactions in the Account will represent bona
fide hedging transactions, as defined by the Commodity Futures Trading
Commission, unless DWR is notified otherwise not later than the time an
order is placed for the Account [check box if applicable]: / /
Pursuant to CFTC Regulation 190.06(d), Customer specifies and agrees, with
respect to hedging transactions in the Account, that in the unlikely event of
DWR's bankruptcy, it prefers that the bankruptcy trustee [check appropriate
box]:
A. Liquidate all open contracts without first seeking instructions either
from or on behalf of Customer. / /
B. Attempt to obtain instructions with respect to the disposition of all
open contracts. (If neither box is checked, Customer shall be deemed
to elect A) / /
--------------------------------------------------------------------------------
ACKNOWLEDGEMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned each hereby acknowledges its separate receipt from DWR, and its
understanding of each of the following documents prior to the opening of the
account:
* Risk Disclosure Statement for Futures and Options (in the * Project ATM Customer Information Statement
form prescribed by CFTC Regulation 1.55(c))
* LME Risk Warning Notice * Questions & Answers on Flexible Options Trading at the
CBOT
* Xxxx Xxxxxx Order Presumption for After Hours Electronic * CME Average Pricing System Disclosure Statement
Markets
* NYMEX ACCESSSM Risk Disclosure Statement * Special Notice to Foreign Brokers and Foreign Traders
* 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.
XXXXXX XXXXXXX XXXX XXXXXX SPECTRUM ___________________ L.P.
--------------------------------------------------------------------------------
CUSTOMER NAME(S)
By: DEMETER MANAGEMENT CORPORATION
By:
------------------------------------------------- -----------------------------
AUTHORIZED SIGNATURE(S) DATE
--------------------------------------------------------------------------------
Xxxxxx X. Xxxxxx, President
--------------------------------------------------------------------------------
(If applicable, print name and title of signatory)
EXHIBIT 10.10
FORM OF
COMMODITY FUTURES CUSTOMER AGREEMENT
BETWEEN
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum _______________ L.P.
AND
XXXXXX XXXXXXX & CO. INCORPORATED
This Commodity Futures Customer Agreement ("Agreement"), dated as of
June ___, 2000 between Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx"),
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum ________________ L.P. ("Customer"), and
acknowledged and agreed to Xxxx Xxxxxx Xxxxxxxx Inc., the non-clearing commodity
broker for the Customer ("DWR"), shall govern the purchase and sale by Xxxxxx
Xxxxxxx of commodity futures contracts and options thereon (collectively,
"Contracts") for the account and risk of Customer through one or more accounts
carried by Xxxxxx Xxxxxxx on behalf and in the name of Customer (collectively,
the "Account").
1. Applicable Law. The Account and all transactions and agreements in
respect of the Account shall be subject to all applicable Federal, state,
exchange, clearing house and self-regulatory agency rules, regulations and
interpretations and custom and usage of the trade. All such rules, regulations,
interpretations, custom and usage are hereinafter collectively referred to as
"Applicable Law."
2. Customer's Representations and Warranties. Customer represents and
warrants that (a) Customer has full right, power and authority to enter into
this Agreement, and the person executing this Agreement on behalf of Customer is
authorized to do so; (b) this Agreement is binding on Customer and enforceable
against Customer in accordance with its terms; (c) Customer may lawfully
establish and open the Account for the purpose of effecting purchases and sales
of Contracts through Xxxxxx Xxxxxxx; (d) transactions entered into pursuant to
this Agreement will not violate any applicable law (including any Applicable
Law) to which Customer is subject or any agreement to which Customer is subject
or a party; and (e) all information provided by Customer in the Account
Application preceding this Agreement (which Application and the information
contained therein hereby is incorporated into this Agreement) is true and
correct and Customer shall immediately (and in no event later than within one
business day) notify Xxxxxx Xxxxxxx of any change in such information.
3. Payment and Interest Obligations.
(a) Compensation Payments to Xxxxxx Xxxxxxx. Customer shall
pay Xxxxxx Xxxxxxx upon demand (a) all floor brokerage charges, give-up fees,
contract market, clearing house, National Futures Association ("NFA") or
clearing member fees or charges; (b) any tax imposed on such transactions by any
competent taxing authority; (c) the amount of any trading losses in the Account;
(d) any debit balance or deficiency in the Account; and (e) any other amounts
owed by Customer to Xxxxxx Xxxxxxx with respect to the Account or any
transactions therein. DWR shall pay Xxxxxx Xxxxxxx such charges with respect to
the execution and clearing of trades for Customer as DWR and Xxxxxx Xxxxxxx
shall agree from time to time.
(b) Payment of Interest. The Customer's assets deposited with
Xxxxxx Xxxxxxx will be segregated or secured in accordance with the Commodity
Exchange Act and regulations of the Commodity Futures Trading Commission
("CFTC") and will be invested in accord with Xxxxxx Xxxxxxx'x customary practice
for investment of its futures customer funds. All of Customer's funds will be
available for margin for the Customer's trading. Xxxxxx Xxxxxxx shall pay to DWR
at each month-end interest on Customer's funds in its possession as agreed
between Xxxxxx Xxxxxxx and DWR from time to time. The Customer understands that
it will not receive any interest income on its assets held by Xxxxxx Xxxxxxx
other than that paid by DWR pursuant to the Customer's DWR Customer Agreement.
DWR shall pay Xxxxxx Xxxxxxx interest on any debit balances in the Account at
such rates as Xxxxxx Xxxxxxx and DWR shall agree from time to time.
(c) Netting. The parties agree that all payment obligations of
Customer to Xxxxxx Xxxxxxx under this Agreement and all payment obligations of
Xxxxxx Xxxxxxx to Customer under this Agreement will be netted against each
other to result in one net payment amount.
4. Customer's Events Of Default; Xxxxxx Xxxxxxx'x Remedies.
(a) Events of Default. As used herein, each of the following
shall be deemed an "Event of Default": (i) the commencement of a case under any
Federal or state bankruptcy, insolvency or reorganization law, or the filing of
a petition for the appointment of a receiver by or against Customer, an
assignment made by Customer for the benefit of creditors, an admission in
writing by Customer that it is insolvent or is unable to pay its debts when they
mature, or the suspension by the Customer of its usual business or any material
portion thereof; (ii) the issuance of any warrant or order of attachment against
the Account or the levy of a judgment against the Account; (iii) if Customer is
an employee benefit plan, the termination of Customer or the filing by Customer
of a notice of intent to terminate with a governmental agency or body, or the
receipt of a notice of intent to terminate Customer from a governmental agency
or body, or the inability of Customer to pay benefits under the relevant
employment benefit plan when due; (iv) the failure by Customer to deposit or
maintain margins, to pay required premiums, or to make payments required by
Section 3 hereof; (v) the failure by Customer to perform, in any material
respect, its obligations hereunder.
(b) Remedies. Upon the occurrence of an Event of Default or in
the event Xxxxxx Xxxxxxx, in its sole and absolute discretion, considers it
necessary for its protection, Xxxxxx Xxxxxxx shall have the right, in addition
to any other remedy available to Xxxxxx Xxxxxxx at law or in equity, and in
addition to any other action Xxxxxx Xxxxxxx may xxxx appropriate under the
circumstances, to liquidate any or all open Contracts held in or for the
Account, sell any or all of the securities or other property of Customer held by
Xxxxxx Xxxxxxx and to apply the proceeds thereof to any amounts owed by Customer
to Xxxxxx Xxxxxxx, borrow or buy any options, securities, Contracts or other
property for the Account and cancel any unfilled orders for the purchase or sale
of Contracts for the Account, or take such other or further actions Xxxxxx
Xxxxxxx, in its reasonable discretion, deems necessary or appropriate for its
protection, all without demand for margin and without notice or advertisement.
Any such action may be made at the discretion of Xxxxxx Xxxxxxx in any
commercially reasonable manner. In the event Xxxxxx Xxxxxxx'x position would not
be jeopardized thereby, Xxxxxx Xxxxxxx will make reasonable efforts under the
circumstances to notify Customer prior to taking any such action. A prior demand
or margin call of any kind from Xxxxxx Xxxxxxx or prior notice from Xxxxxx
Xxxxxxx shall not be considered a waiver of Xxxxxx Xxxxxxx'x right to take any
action without notice or demand. In the event Xxxxxx Xxxxxxx exercises any
remedies available to it under this Agreement, Customer shall reimburse,
compensate and indemnify Xxxxxx Xxxxxxx for any and all costs, losses,
penalties, fines, taxes and damages that Xxxxxx Xxxxxxx may incur, including
reasonable attorneys' fees incurred in connection with the exercise of its
remedies and the recovery of any such costs, losses, penalties, fines, taxes and
damages.
5. Standard of Liability and Indemnification.
(a) Standard of Liability. Xxxxxx Xxxxxxx and its affiliates
(as defined below) shall not be liable to Customer, the general partner or the
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 Xxxxxx Xxxxxxx determines, in good
faith, to be in the best interest of the Customer, unless such act, omission,
conduct, or activity by Xxxxxx Xxxxxxx or its affiliates constituted misconduct
or negligence. Without limiting the foregoing, Xxxxxx Xxxxxxx shall have no
responsibility or liability to Customer hereunder (i) in connection with the
performance or non-performance by any contract market, clearing house, clearing
2
firm or other third party (including floor brokers not selected by Xxxxxx
Xxxxxxx and banks) to Xxxxxx Xxxxxxx of its obligations in respect of any
Contract or other property of Customer; (ii) as a result of any prediction,
recommendation or advice made or given by a representative of Xxxxxx Xxxxxxx
whether or not made or given at the request of Customer; (iii) as a result of
Xxxxxx Xxxxxxx'x reliance on any instructions, notices and communications that
it believes to be that of an individual authorized to act on behalf of Customer;
(iv) as a result of any delay in the performance or non-performance of any of
Xxxxxx Xxxxxxx'x obligations hereunder directly or indirectly caused by the
occurrence of any contingency beyond the control of Xxxxxx Xxxxxxx including,
but not limited to, the unscheduled closure of an exchange or contract market or
delays in the transmission of orders due to breakdowns or failures of
transmission or communication facilities, execution, and/or trading facilities
or other systems (including, without limitation, GLOBEX, ACCESS, or other
electronic trading systems, facilities or services), it being understood that
Xxxxxx Xxxxxxx shall be excused from performance of its obligations hereunder
for such period of time as is reasonably necessary after such occurrence to
remedy the effects therefrom; (v) as a result of any action taken by Xxxxxx
Xxxxxxx or its floor brokers to comply with Applicable Law; or (vi) for any acts
or omissions of those neither employed nor supervised by Xxxxxx Xxxxxxx. In no
event xxxx Xxxxxx Xxxxxxx be liable to Customer for consequential, incidental or
special damages hereunder.
(b) Indemnification by Customer. Customer shall indemnify,
defend and hold harmless Xxxxxx Xxxxxxx 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 Xxxxxx Xxxxxxx on behalf of Customer, including, without
limitation, any demands, claims or lawsuits initiated by a limited partner (or
assignee thereof); provided that (i) Xxxxxx Xxxxxxx 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 the foregoing, no indemnification of Xxxxxx Xxxxxxx or its
affiliates by Customer shall be permitted for any losses, liabilities or
expenses arising from or out of any alleged violation of federal or state
securities laws unless (i) there has been a successful adjudication on the
merits of each count involving alleged securities law violations as to the
particular indemnitee, or (ii) such claims have been dismissed with prejudice on
the merits by a court of competent jurisdiction as to the particular indemnitee,
or (iii) a court of competent jurisdiction approves a settlement of the claims
against the particular indemnitee and finds that indemnification of the
settlement and related costs should be made, provided with regard to such court
approval, the indemnitee must apprise the court of the position of the SEC and
the positions of the respective securities administrators of Massachusetts,
Missouri, Tennessee and/or those other states and jurisdictions in which the
plaintiffs claim that they were offered or sold Units, with respect to
indemnification for securities laws violations before seeking court approval for
indemnification. Furthermore, in any action or proceeding brought by a limited
partner in the right of Customer to which Xxxxxx Xxxxxxx or any affiliate
thereof is a party defendant, any such person shall be indemnified only to the
extent and subject to the conditions specified in the Delaware Revised Uniform
Limited Partnership Act, as amended, and this Section 5. The Customer shall make
advances to Xxxxxx Xxxxxxx 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 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.
3
(c) Indemnification by Xxxxxx Xxxxxxx. Xxxxxx Xxxxxxx shall
indemnify, defend and hold harmless 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 Xxxxxx Xxxxxxx has
approved such settlement) incurred as a direct result of the activities of
Xxxxxx Xxxxxxx 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 of Xxxxxx Xxxxxxx or its affiliates.
(d) Limitation on Indemnities. The indemnities provided in
this Section 5 by Customer to Xxxxxx Xxxxxxx 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 agreement of Xxxxxx
Xxxxxxx contained in this Agreement to the extent caused by such event.
Likewise, the indemnities provided in this Section 5 by Xxxxxx Xxxxxxx to
Customer and 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 representation, warranty or agreement of
Customer contained in this Agreement to the extent caused by such breach.
(e) Definition of "Affiliate." As used in this Section 5, the
term "affiliate" of Xxxxxx Xxxxxxx 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 Xxxxxx Xxxxxxx; (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 Xxxxxx Xxxxxxx; (iii) any natural person, partnership,
corporation, association, or other legal entity directly or indirectly
controlling, controlled by, or under common control with, Xxxxxx Xxxxxxx; or
(iv) any officer or director of Xxxxxx Xxxxxxx. Notwithstanding the foregoing,
"affiliates" for purposes of this Section 5 shall include only those persons
acting on behalf of Xxxxxx Xxxxxxx and performing services for Customer within
the scope of the authority of Xxxxxx Xxxxxxx, as set forth in this Agreement.
6. General Agreements. The parties agree that:
(a) Xxxxxx Xxxxxxx'x Responsibility. Xxxxxx Xxxxxxx is not
acting as a fiduciary, foundation manager, commodity pool operator, commodity
trading advisor or investment adviser in respect of any Account opened by
Customer. Xxxxxx Xxxxxxx shall have no responsibility hereunder for compliance
with any law or regulation governing the conduct of fiduciaries, foundation
managers, commodity pool operators, commodity trading advisors or investment
advisers.
Xxxxxx Xxxxxxx agrees to furnish to the Customer as
soon as practicable all of the information from time to time in its possession
which Customer may be required to furnish to its limited partners pursuant to
its limited partnership agreement and as otherwise required by Applicable Law.
Xxxxxx Xxxxxxx shall disclose such information regarding itself and its
affiliates (including, without limitation, financial statements) as may be
required by the Customer for SEC, CFTC and state blue sky disclosure purposes.
Xxxxxx Xxxxxxx agrees to notify the applicable trading advisor for the Customer
(each a "Trading Advisor") immediately upon discovery of any error committed by
Xxxxxx Xxxxxxx or any of its agents with respect to a trade for the Customer's
account which Xxxxxx Xxxxxxx believes was not executed or cleared in accordance
with proper instructions given by the Customer, its Trading Advisors or any
other authorized agent of Customer. Errors made by floor brokers appointed or
selected by Xxxxxx Xxxxxxx shall constitute errors made by Xxxxxx Xxxxxxx.
However, Xxxxxx Xxxxxxx shall not be responsible for errors committed by the
Trading Advisors.
4
Xxxxxx Xxxxxxx agrees to report to DWR its own errors
and the errors of any Trading Advisor for the Account which Xxxxxx Xxxxxxx
becomes aware of, provided that such reporting may be via telephone.
Notwithstanding the foregoing, the failure to comply with such reporting
obligation does not increase Xxxxxx Xxxxxxx'x liability for its own errors
beyond that otherwise expressly set forth in this Agreement, nor does it make
Xxxxxx Xxxxxxx in any way responsible for errors committed by the Trading
Advisors.
Xxxxxx Xxxxxxx acknowledges that the other
partnerships of which Demeter Management Corporation (the general partner of
Customer) is the general partner, do not constitute affiliates of the Customer.
(b) Advice. All advice communicated by Xxxxxx Xxxxxxx with
respect to any Account opened by Customer hereunder is incidental to the conduct
of Xxxxxx Xxxxxxx'x business as a futures commission merchant and such advice
will not serve as the primary basis for any decision made by or on behalf of
Customer in respect of the Account, regardless of whether Customer relies on the
advice of Xxxxxx Xxxxxxx in making any such decision. Customer acknowledges that
Xxxxxx Xxxxxxx and its managing directors, officers, employees and affiliates
may take or hold positions in, or advise other customers concerning, Contracts
that are the subject of advice from Xxxxxx Xxxxxxx to Customer. The positions
and advice of Xxxxxx Xxxxxxx and its managing directors, officers, employees and
affiliates may be inconsistent with or contrary to positions of, and the advice
given by, Xxxxxx Xxxxxxx to Customer.
(c) Recording. Each of Xxxxxx Xxxxxxx, the Customer, DWR and
their respective officers, agents and employees, in their sole and absolute
discretion, may record, on tape or otherwise, any telephone conversation between
or among Xxxxxx Xxxxxxx, the Customer or DWR with respect to the Account and
transactions therein and each of Xxxxxx Xxxxxxx, the Customer and DWR hereby
agrees and consents thereto.
(d) Acceptance of Orders; Position Limits.
(i) Xxxxxx Xxxxxxx shall have the right to limit the
size of open positions (net or gross) of Customer with respect to the
Account at any time and to refuse acceptance of orders to establish new
positions, whether such refusal or limitation is required by, or based
on position limits imposed under, Applicable Law. Xxxxxx Xxxxxxx shall
immediately notify Customer of its rejection of any order. Unless
specified by Customer, Xxxxxx Xxxxxxx may designate the exchange or
other markets (including, without limitation, GLOBEX or ACCESS) on
which it will attempt to execute orders.
(ii) Customer shall file or cause to be filed all
applications or reports required under Applicable Law with the CFTC or
the relevant contract market or clearing house, and shall provide
Xxxxxx Xxxxxxx with a copy of such applications or reports and such
other information as Xxxxxx Xxxxxxx may reasonably request in
connection therewith.
(e) Original and Variation Margin; Premiums; Other Contract
Obligations. Customer shall make, or cause to be made, all applicable original
margin, intra-day margin and premium payments, and perform all other obligations
attendant to transactions or positions in such Contracts, as may be required by
Applicable Law or by Xxxxxx Xxxxxxx. Requests for margin deposits and/or premium
payments may, at Xxxxxx Xxxxxxx'x election, be communicated to Customer orally,
telephonically or in writing. Customer margin deposits and/or premium payments
shall be made by wire transfer to Xxxxxx Xxxxxxx'x Customer Segregated Account
and shall be in U.S. dollars unless Xxxxxx Xxxxxxx and the Customer specifically
agree otherwise. All Contracts for the Account shall be margined at the
applicable exchange or clearing house minimum rates for speculative accounts.
5
(f) Security Interest and Rights Respecting Collateral. Except
to the extent proscribed by Applicable Law not subject to waiver, all Contracts,
cash, securities, and/or any other property of Customer whatsoever
(collectively, the "Collateral") at any time held by Xxxxxx Xxxxxxx or its
affiliates, or carried by others for the Account, hereby are pledged to Xxxxxx
Xxxxxxx and shall be subject to a general lien and security interest in Xxxxxx
Xxxxxxx'x favor to secure any indebtedness or other amounts, obligations and/or
liabilities at any time owing from Customer to Xxxxxx Xxxxxxx (collectively, the
"Customer's Liabilities"). Customer hereby grants Xxxxxx Xxxxxxx the right to
borrow, pledge, repledge, hypothecate, rehypothecate, loan or invest any of the
Collateral held by Xxxxxx Xxxxxxx, including utilizing the Collateral to
purchase United States Government Treasury obligations pursuant to repurchase
agreements or reverse repurchase agreements with any party, in each case without
notice to Customer and without any obligation to pay or to account to Customer
for any interest, income or benefit that may be derived therefrom. The rights of
Xxxxxx Xxxxxxx set forth above shall be qualified by any applicable requirements
for segregation of customers' property under Applicable Law. Xxxxxx Xxxxxxx
commits to Customer that Xxxxxx Xxxxxxx will not issue a Notice of Exclusive
Control under the Control Agreement between Xxxxxx Xxxxxxx and DWR unless Xxxxxx
Xxxxxxx determines there is a default under this Agreement.
(g) Reports and Objections. All confirmations, purchase and
sale notices, correction notices and account statements (collectively,
"Statements") shall be submitted to Customer and shall be conclusive and binding
on Customer unless Customer notifies Xxxxxx Xxxxxxx of any objection thereto
prior to the opening of trading on the contract market on which such transaction
occurred on the business day following the day on which Customer receives such
Statement; provided that, with respect to monthly Statements, Customer may
notify Xxxxxx Xxxxxxx of any objection thereto within five business days after
receipt of such monthly Statement, provided the objection could not have been
raised at the time any prior Statement was received by Customer as provided for
above. Any such notice of objection, if given orally to Xxxxxx Xxxxxxx, shall
immediately (and no later than within one business day) be confirmed in writing
by Customer.
(h) Delivery Procedures; Options Allocation Procedure.
(i) Customer will provide Xxxxxx Xxxxxxx with
instructions either to liquidate Contracts previously established by
Customer, make or take delivery under any such Contracts, or exercise
options entered into by Customer, within such time limits as may be
specified by Xxxxxx Xxxxxxx. Xxxxxx Xxxxxxx shall have no
responsibility to take any action on behalf of Customer or positions in
the Account unless and until Xxxxxx Xxxxxxx receives oral or written
instructions reasonably acceptable to Xxxxxx Xxxxxxx indicating the
action Xxxxxx Xxxxxxx is to take. Funds sufficient to take delivery
pursuant to such Contract or deliverable grade commodities to make
delivery pursuant to such Contract must be delivered to Xxxxxx Xxxxxxx
at such time as Xxxxxx Xxxxxxx may require in connection with any
delivery.
(ii) Short option Contracts may be subject to
exercise at any time. Exercise notices received by Xxxxxx Xxxxxxx from
the applicable contract market with respect to option Contracts sold by
Customer may be allocated to Customer pursuant to a random allocation
procedure, and Customer shall be bound by any such allocation of
exercise notices. In the event of any allocation to Customer, unless
Xxxxxx Xxxxxxx has previously received instructions from Customer,
Xxxxxx Xxxxxxx'x sole responsibility shall be to use its best efforts
to notify Customer of such allocation.
6
(iii) If Customer fails to comply with any of the
foregoing obligations, Xxxxxx Xxxxxxx may, in its sole and absolute
discretion, liquidate any open positions, make or receive delivery of
any commodities or instruments, or exercise or allow the expiration of
any options, in such manner and on such terms as Xxxxxx Xxxxxxx, in its
sole and absolute discretion, deems necessary or appropriate, and
Customer shall indemnify and hold Xxxxxx Xxxxxxx harmless as a result
of any action taken or not taken by Xxxxxx Xxxxxxx in connection
therewith or pursuant to Customer's instructions.
(i) Financial and Other Information. Customer shall provide to
Xxxxxx Xxxxxxx such financial information regarding Customer as Xxxxxx Xxxxxxx
may from time to time reasonably request. Customer shall notify Xxxxxx Xxxxxxx
immediately (and no later than within one business day) if the financial
condition of Customer changes materially and adversely from that shown in the
most recent financial information theretofore provided to Xxxxxx Xxxxxxx. An
investigation may be conducted pertaining to Customer's credit standing and
business.
(j) Currency Exchange Risk. Customer shall bear all risk and
cost in respect of the conversion of currencies incident to transactions
effected on behalf of Customer pursuant hereto.
7. Termination. This Agreement may be terminated at any time by
Customer or Xxxxxx Xxxxxxx upon thirty (30) days by written notice to the other.
In the event of such notice, Customer shall either close out open positions in
the Account or arrange for such open positions to be transferred to another
futures commission merchant. Upon satisfaction by Customer of all of Customer's
Liabilities, Xxxxxx Xxxxxxx shall transfer to another futures commission
merchant all Contracts, if any, then held for the Account, and shall transfer to
Customer or to another futures commission merchant, as Customer may instruct,
all cash, securities and other property held in the Account, whereupon this
Agreement shall terminate. Notwithstanding the foregoing, in the event Xxxxxx
Xxxxxxx is required by a regulatory authority to transfer the account to another
futures commission merchant or in the event that Xxxxxx Xxxxxxx abandons the
Futures Commission Merchant ("FCM") business, then Xxxxxx Xxxxxxx shall have the
right to terminate this Agreement by written notice effective the date contained
therein, provided that Xxxxxx Xxxxxxx cooperates in the transfer of open
positions to another FCM and that the termination of the Agreement is not made
effective earlier than the completion of the transfer.
8. Miscellaneous.
(a) Severability. If any provision of this Agreement is, or at
any time becomes, inconsistent with any present or future law, rule or
regulation of any exchange or other market, sovereign government or regulatory
body thereof, and if any of these authorities have jurisdiction over the subject
matter of this Agreement, the inconsistent provision shall be deemed superseded
or modified to conform with such law, rule or regulation but in all other
respects, this Agreement shall continue and remain in full force and effect.
(b) Binding Effect. This Agreement shall be binding on and
inure to the benefit of the parties and their successors. Xxxxxx Xxxxxxx shall
have the right to transfer or assign this Agreement (and thereby the Account) to
any successor entity in its sole and absolute discretion and without obtaining
the consent of Customer.
(c) Entire Agreement. This Agreement contains the entire
agreement between the parties and supersedes any prior agreements between the
parties as to the subject matter hereof. No provision of this Agreement shall in
any respect be waived, altered, modified, or amended unless such waiver,
alteration, modification or amendment is signed by the party against whom such
waiver, alteration, modification or amendment is to be enforced.
7
(d) Currency Denomination. Unless another currency is
designated in the confirmations reporting transactions entered into by Customer,
all margin deposits in connection with such transactions, and a debit or credit
in the Account, shall be stated in United States dollars, and margin
requirements, debits or credits expressed in another currency shall be converted
into United States dollars at a rate of exchange determined by Xxxxxx Xxxxxxx,
in its sole and absolute discretion, on the basis of the then prevailing money
market rates of exchange for such foreign currency.
(e) Instructions, Notices or Communications. Except as
specifically otherwise provided in this Agreement, all instructions, notices or
other communications may be oral or written. All oral instructions, unless
custom and usage of trade dictate otherwise, shall be promptly confirmed in
writing. All written instructions, notices or other communications shall be
addressed as follows:
(i) if to Xxxxxx Xxxxxxx:
Xxxxxx Xxxxxxx & Co. Incorporated
Xxx Xxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Commodity Operations Manager
(ii) if to Customer, at the address as indicated
on the Commodity Account Application.
(f) Rights and Remedies Cumulative. All rights and remedies
arising under this Agreement as amended and modified from time to time are
cumulative and not exclusive of any rights or remedies which may be available at
law or otherwise.
(g) No Waiver. No failure on the part of Xxxxxx Xxxxxxx to
exercise, and no delay in exercising, any contractual right will operate as a
waiver thereof, nor will any single or partial exercise by Xxxxxx Xxxxxxx of any
right preclude any other or future exercise thereof or the exercise of any other
partial right.
(h) Governing Law. THE INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT AND THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAW.
(i) Consent to Jurisdiction. ANY LITIGATION BETWEEN XXXXXX
XXXXXXX AND CUSTOMER RELATING TO THIS AGREEMENT OR TRANSACTIONS HEREUNDER SHALL
TAKE PLACE IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF
MANHATTAN OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK. CUSTOMER CONSENTS TO THE SERVICE OF PROCESS BY THE MAILING TO CUSTOMER
OF COPIES OF SUCH COURT FILING BY CERTIFIED MAIL TO THE ADDRESS OF CUSTOMER AS
IT APPEARS ON THE BOOKS AND RECORDS OF XXXXXX XXXXXXX, SUCH SERVICE TO BE
EFFECTIVE TEN DAYS AFTER MAILING. CUSTOMER HEREBY WAIVES IRREVOCABLY ANY
IMMUNITY TO WHICH IT MIGHT OTHERWISE BE ENTITLED IN ANY ARBITRATION, ACTION AT
LAW, SUIT IN EQUITY OR ANY OTHER PROCEEDING ARISING OUT OF OR BASED ON THIS
AGREEMENT OR ANY TRANSACTION IN CONNECTION HEREWITH.
(j) Waiver of Jury Trial. Customer hereby waives a trial by
jury in any action arising out of or relating to this Agreement or any
transaction in connection therewith.
8
(k) Customer Acknowledgements.
(i) CUSTOMER HEREBY ACKNOWLEDGES THAT IT HAS RECEIVED
AND UNDERSTANDS THE FOLLOWING DISCLOSURE STATEMENT PRESCRIBED BY THE
CFTC AND FURNISHED HEREWITH (please initial):
|_| Risk Disclosure Statement for Futures Options
(Appendix A to CFTC Rule 1.55(c)
transcribed in full on pages 1-3
of Booklet 2 -- Risk Disclosure
Statements)
(ii) If Customer has indicated on the Commodity Futures
Account Application that
orders placed for the Account represent bona fide hedging transactions, please
complete the following. You should note that CFTC Regulation ss.190.06 permits
you to specify whether, in the unlikely event of Xxxxxx Xxxxxxx'x bankruptcy,
you prefer the bankruptcy trustee to liquidate all positions in the Account.
Accordingly, Customer hereby elects as follows: (please initial):
|_| Liquidate |_| Not Liquidate
If neither alternative is initialed, Customer will be deemed to have
elected to have all positions liquidated. This election may be changed at any
time by written notice.
IN WITNESS WHEREOF, Customer has executed this Agreement on the date
indicated below.
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum __________________ L.P.
("Customer")
By: Demeter Management Corporation, General Partner
-----------------------------------------------------------------------
(Signature) (Date)
Xxxxxx X. Xxxxxx, President and Chairman
-----------------------------------------------------------------------
(Name & Title - Please Print)
Xxxxxx Xxxxxxx & Co. Incorporated
-----------------------------------------------------------------------
(Signature) (Date)
W. Xxxxxx Xxxxx, Managing Director
-----------------------------------------------------------------------
(Name & Title - Please Print)
Acknowledged and Agreed (as to Section 3(a) and (b))
Xxxx Xxxxxx Xxxxxxxx Inc.
-----------------------------------------------------------------------
(Signature) (Date)
Xxxxxx X. Xxxxxx, Senior Vice President
-----------------------------------------------------------------------
(Name & Title - Please Print)
9
EXHIBIT 10.11
FORM OF
FOREIGN EXCHANGE AND OPTIONS
MASTER AGREEMENT
(FEOMA)
MASTER AGREEMENT dated as of June ____, 2000 by and between Xxxxxx
Xxxxxxx & Co. Incorporated, a Delaware corporation, and Xxxxxx Xxxxxxx Xxxx
Xxxxxx Spectrum _______________ L.P., Delaware Limited Liability Company.
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.
"American Style Option" means an Option which may be exercised on any
Business Day up to and including the Expiration Time.
"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) Section 3.2, a day which is a
Local Banking Day for the applicable Designated Office of the Buyer; (ii)
Section 5.1 and the definition of American Style Option, a day which is a Local
Banking Day for the applicable Designated Office of the Seller; (iii) 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; (iv) solely in relation to
delivery of a Currency, a day which is a Local Banking Day in relation to that
Currency; and (v) 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.
"Buyer" means the owner of an Option.
"Call" means an Option entitling, but not obligating (except upon
exercise), the Buyer to purchase from the Seller at the Strike Price a specified
quantity of the Call Currency.
"Call Currency" means the Currency agreed to as such at the time an
Option is entered into, as evidenced in a Confirmation.
"Close-Out Amount" has the meaning given to it in Section 8.1.
"Close-Out Date" means a day on which, pursuant to the provisions of
Section 8.1, the Non-Defaulting Party closes out Currency Obligations and/or
Options or such 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 8.1.
"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 8.1.
"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 or an Option, and specifying:
(A) in the case of an FX Transaction, the following information:
(i) the Parties thereto and the 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; and
(B) in the case of an Option, the following information:
(i) the Parties thereto and the Designated Offices through which
they are respectively acting,
(ii) whether the Option is a Call or a Put,
(iii) the Call Currency and the Put Currency that are the subject
of the Option and their respective quantities,
(iv) which Party is the Seller and which is the Buyer,
(v) the Strike Price,
(vi) the Premium and the Premium Payment Date,
(vii) the Expiration Date,
(viii) the Expiration Time,
(ix) whether the Option is an American Style Option or a European Style Option,
and (x) such other matters, if any, as the Parties may agree.
"Credit Support" has the meaning given to it in Section 8.2.
"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, the application of Section 6.3(a) or
(b), or an exercised Option (except, for the purposes of Section 8.1 only, one
that is to be settled at its In-the-Money Amount under Section 5.5).
"Currency Pair" means the two Currencies which potentially may be
exchanged in connection with an FX Transaction or upon the exercise of an
Option, one of which shall be the Put Currency and the other the Call Currency.
"Custodian" has the meaning given to it in the definition of Insolvency
Proceeding.
2
"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.
"European Style Option" means an Option for which Notice of Exercise
may be given only on the Option's Expiration Date up to and including the
Expiration Time, unless otherwise agreed.
"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 (including, but not limited to, a Premium payment) to the
Non-Defaulting Party with respect to any Currency Obligation or Option 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
or Option;
(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;
3
(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 11.14 if made applicable to the Agreement in Part XI of
the Schedule.
"Exercise Date", in respect of any Option, means the day on which a
Notice of Exercise received by the applicable Designated Office of the Seller
becomes effective pursuant to Section 5.1.
"Expiration Date", in respect of any Option, means the date agreed to
as such at the time the Option is entered into, as evidenced in a Confirmation.
4
"Expiration Time", in respect of any Option, means the latest time on
the Expiration Date on which the Seller must accept a Notice of Exercise as
agreed to at the time the Option is entered into, as evidenced in a
Confirmation.
"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.
"In-the-Money Amount" means (i) in the case of a Call, the excess of
the Spot Price over the Strike Price, multiplied by the aggregate amount of the
Call Currency to be purchased under the Call, where both prices are quoted in
terms of the amount of the Put Currency to be paid for one unit of the Call
Currency; and (ii) in the case of a Put, the excess of the Strike Price over the
Spot Price, multiplied by the aggregate amount of the Put Currency to be sold
under the Put, where both prices are quoted in terms of the amount of the Call
Currency to be paid for one unit of the Put Currency.
"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.
5
"Notice of Exercise" means telex, telephonic or other electronic
notification (excluding facsimile transmission) providing assurance of receipt,
given by the Buyer prior to or at the Expiration Time, of the exercise of an
Option, which notification shall be irrevocable.
"Novation Netting Office(s)", in respect of a Party, means the
Designated Office(s) specified in Part V of the Schedule.
"Option" means a currency option which is or shall become subject to
the Agreement.
"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 of 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.
"Premium", in respect of any Option, means the purchase price of the
Option as agreed upon by the Parties, and payable by the Buyer to the Seller
thereof.
"Premium Payment Date", in respect of any Option, means the date on
which the Premium is due and payable, as agreed to at the time the Option is
entered into, as evidenced in a Confirmation.
"Proceedings" means any suit, action or other proceedings relating to
the Agreement, any FX Transaction or any Option.
"Put" means an Option entitling, but not obligating (except upon
exercise), the Buyer to sell to the Seller at the Strike Price a specified
quantity of the Put Currency.
"Put Currency" means the Currency agreed to as such at the time an
Option is entered into, as evidenced in a Confirmation.
"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.
"Seller" means the Party granting an Option.
"Settlement Date" means, in respect of: (i) an American Style Option,
the Spot Date of the Currency Pair on the Exercise Date of such Option, and (ii)
a European Style Option, the Spot Date of the Currency Pair on the Expiration
Date of such Option; and, 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, "Settlement Date" means
such two (2) Local Banking Days.
"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.
6
"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.
"Spot Date" means the spot delivery day for the relevant Currency Pair
as generally used by the relevant foreign exchange market.
"Spot Price" means the rate of exchange at the time at which such price
is to be determined for foreign exchange transactions in the relevant Currency
Pair for value on the Spot Date, as determined in good faith: (i) by the Seller,
for purposes of Section 5, and (ii) by the Non-Defaulting Party, for purposes of
Section 8.
"Strike Price", in respect of any Option, means the price at which the
Currency Pair may be exchanged, as agreed to at the time the Option is entered
into, as evidenced in a Confirmation.
"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 AND OPTIONS
2.1 Scope of the Agreement. The Parties (through their respective
Designated Offices) may enter into (i) FX Transactions, for such quantities of
such Currencies, as may be agreed subject to the terms of the Agreement, and
(ii) Options, for such Premiums, with such Expiration Dates, at such Strike
Prices and for the purchase or sale of 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 or Option with the other
Party (other than in connection with an exercised Option). Unless otherwise
agreed in writing by the Parties, each FX Transaction and Option entered into
between Designated Offices of the Parties on or after the Effective Date shall
be governed by the Agreement. Each FX Transaction and Option 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 Option (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 and Options are
entered into in reliance upon such fact, it being understood that the Parties
would not otherwise enter into any FX Transaction or Option.
7
2.3 Confirmations. FX Transactions and Options 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 or Option.
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, (i) in the case of an FX
Transaction, the other provisions of the Agreement shall prevail, and the
Confirmation shall not modify the other terms of the Agreement and (ii) in the
case of an Option, the terms of the Confirmation shall prevail, and the other
terms of the Agreement shall be deemed modified with respect to such Option,
except for the manner of confirmation under Section 2.3 and, if applicable,
discharge of Options under Section 4.
SECTION 3. OPTION PREMIUM
3.1 Payment of Premium. Unless otherwise agreed in writing by the
Parties, the Buyer shall be obligated to pay the Premium related to an Option no
later than its Premium Payment Date.
3.2 Late Payment or Non-Payment of Premium. If any Premium is not
received on or before the Premium Payment Date, the Seller may elect: (i) to
accept a late payment of such Premium; (ii) to give written notice of such
non-payment and, if such payment shall not be received within two (2) Business
Days of such notice, treat the related Option as void; or (iii) to give written
notice of such non-payment and, if such payment shall not be received within two
(2) Business Days of such notice, treat such non-payment as an Event of Default
under clause (i) of the definition of Event of Default. If the Seller elects to
act under either clause (i) or (ii) of the preceding sentence, the Buyer shall
pay all out-of-pocket costs and actual damages incurred in connection with such
unpaid or late Premium or void Option, including, without limitation, interest
on such Premium from and including the Premium Payment Date to but excluding the
late payment date in the same Currency as such Premium at overnight LIBOR and
any other losses, costs or expenses incurred by the Seller in connection with
such terminated Option, for the loss of its bargain, its cost of funding, or the
loss incurred as a result of terminating, liquidating, obtaining or
re-establishing a delta hedge or related trading position with respect to such
Option.
SECTION 4. DISCHARGE AND TERMINATION OF OPTIONS; NETTING OF OPTION
PREMIUMS
4.1 Discharge and Termination. If agreed in Part V of the Schedule, any
Call or any Put written by a Party will automatically be discharged and
terminated, in whole or in part, as applicable, against a Call or a Put,
respectively, written by the other Party, such discharge and termination to
occur automatically upon the payment in full of the last Premium payable in
respect of such Options; provided that such discharge and termination may only
occur in respect of Options:
8
(i) each being with respect to the same Put Currency and the same
Call Currency;
(ii) each having the same Expiration Date and Expiration Time;
(iii) each being of the same style, i.e. either both being American
Style Options or both being European Style Options;
(iv) each having the same Strike Price;
(v) each being transacted by the same pair of Designated Offices
of Buyer and Seller; and
(vi) neither of which shall have been exercised by delivery of a
Notice of Exercise;
and, upon the occurrence of such discharge and termination, neither Party shall
have any further obligation to the other Party in respect of the relevant
Options or, as the case may be, parts thereof so discharged and terminated. Such
discharge and termination shall be effective notwithstanding that either Party
may fail to record such discharge and termination in its books. In the case of a
partial discharge and termination (i.e., where the relevant Options are for
different amounts of the Currency Pair), the remaining portion of the Option
which is partially discharged and terminated shall continue to be an Option for
all purposes of the Agreement, including this Section 4.1.
4.2 Netting of Option Premiums. If agreed in Part V of the Schedule and
if, on any date, Premiums would otherwise be payable under the Agreement in the
same Currency between the same respective Designated Offices of the Parties,
then, on such date, each Party's obligation to make payment of any such Premium
will be automatically satisfied and discharged and, if the aggregate Premium(s)
that would otherwise have been payable by such Designated Office of one Party
exceeds the aggregate Premium(s) that would otherwise have been payable by such
Designated Office of the other Party, replaced by an obligation upon the Party
by whom the larger aggregate Premium(s) would have been payable to pay the other
Party the excess of the larger aggregate Premium(s) over the smaller aggregate
Premium(s) and, if the aggregate Premiums are equal, no payment shall be made.
SECTION 5. EXERCISE AND SETTLEMENT OF OPTIONS
5.1 Exercise of Options. The Buyer may exercise an Option by delivery
to the Seller of a Notice of Exercise. Subject to Section 5.3, if a Notice of
Exercise with respect to an Option has not been received by the Seller prior to
or at the Expiration Time, the Option shall expire and become void and of no
effect. Any Notice of Exercise shall (unless otherwise agreed):
(i) in respect of an American Style Option, (A) if received at or prior
to 3:00 p.m. on a Business Day, be effective upon receipt thereof by the Seller,
and (B) if received after 3:00 p.m. on a Business Day, be effective only as of
the opening of business of the Seller on the first Business Day subsequent to
its receipt; and
(ii) in respect of a European Style Option, if received on or, if the
parties have so agreed, before the Expiration Date, prior to or at the
Expiration Time, be effective upon receipt thereof by the Seller.
5.2 No Partial Exercise. Unless otherwise agreed by the Parties, an
Option may be exercised only in whole.
9
5.3 Automatic Exercise. Unless otherwise agreed in Part VI of the
Schedule or unless the Seller is otherwise instructed by the Buyer, if an Option
has an In-the-Money Amount at its Expiration Time that equals or exceeds the
product of (x) 1% of the Strike Price (or such other percentage or amount as may
have been agreed by the Parties) and (y) the amount of the Call Currency or Put
Currency, as appropriate, then the Option shall be deemed automatically
exercised. In such case, the Seller may elect to settle such Option either in
accordance with Section 5.4 or by payment to the Buyer on the Settlement Date
for such Option of the In-the-Money Amount, as determined at the Expiration Time
or as soon thereafter as practicable. In the latter case, the sole obligations
of the Parties with respect to settlement of such Option shall be to deliver or
receive the In-the-Money Amount of such Option on the Settlement Date. The
Seller shall notify the Buyer of its election of the method of settlement of an
automatically exercised Option as soon as practicable after the Expiration Time.
5.4 Settlement of Exercised Options. An exercised Option shall settle
on its Settlement Date. Subject to Section 5.3 and 5.5, on the Settlement Date,
the Buyer shall pay the Put Currency to the Seller for value on the Settlement
Date and the Seller shall pay the Call Currency to the Buyer for value on the
Settlement Date. An exercised Option shall be treated as an FX Transaction and a
Currency Obligation (except, for the purposes of Section 8.1 only, if it is to
be settled at its In-the-Money Amount), and for this purpose the relevant
Settlement Date shall be treated as the Value Date of the FX Transaction.
5.5 Settlement at In-the-Money Amount. An Option shall be settled at
its In-the-Money Amount if so agreed by the Parties at the time such Option is
entered into. In such case, the In-the-Money Amount shall be determined based
upon the Spot Price at the time of exercise or as soon thereafter as
practicable. The sole obligations of the Parties with respect to settlement of
such Option shall be to deliver or receive the In-the-Money Amount of such
Option on the Settlement Date.
SECTION 6. SETTLEMENT AND NETTING OF FX TRANSACTIONS
6.1 Settlement of FX Transactions. Subject to Sections 6.2 and 6.3,
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.
6.2 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.
6.3 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 6.3 shall not affect any other Currency Obligation of a Party to deliver
any different Currency on the same Value Date.
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(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 6.3(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.
6.4 General (a) Inapplicability of Sections 6.2 and 6.3. The provisions
of Sections 6.2 and 6.3 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 6.3 shall apply
notwithstanding that either Party may fail to record the new Currency Obligation
in its books.
(c) Cut-off Date and Time. The provisions of Section 6.3 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 7. REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 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 and each Option that: (i) it has authority to enter into the
Agreement (including such FX Transaction or Option, as the case may be); (ii)
the persons entering into the Agreement (including such FX Transaction or
Option, as the case may be) on its behalf have been duly authorized to do so;
(iii) the Agreement (including such FX Transaction or Option, as the case may
be) 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 an Event of Default, has occurred and is
continuing with respect to it; (v) it acts as principal in entering into each FX
Transaction and Option and exercising each and every Option; 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.
7.2 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 8. CLOSE-OUT AND LIQUIDATION
8.1 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) and
Options, except to the extent that in the good faith opinion of the
Non-Defaulting Party certain of such Currency Obligations or Options 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
11
such Currency Obligations and Options. 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 and Options, 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 and Options as
provided below.
(b) Liquidation of Currency Obligations. 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.
12
(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 8.1(b)(ii)) (which for the purposes of the
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 8.1(b)(ii)) (which for the purposes of
the aggregation shall be a negative figure).
(c) Liquidation of Options. To liquidate unexercised Options and
exercised Options to be settled at their In-the-Money Amounts that have been
terminated by close-out, the Non-Defaulting Party shall:
(i) Calculating Settlement Amount. Calculate in good faith with respect
to each such terminated Option, except to the extent that in the good faith
opinion of the Non-Defaulting Party certain of such Options may not be
liquidated as provided herein under applicable law, as of the Close-Out Date or
as soon as reasonably practicable thereafter a settlement amount for each Party
equal to the aggregate of:
(A) with respect to each Option purchased by such Party, and
which the other Party has not elected to treat as void pursuant to Section
3.2(ii) for lack of payment of the Premium, the current market premium for such
Option;
(B) with respect to each Option sold by such Party and which
such Party has not elected to treat as void pursuant to Section 3.2(ii) for lack
of payment of the Premium, any unpaid Premium, provided that, if the Close-Out
Date occurs before the Premium Payment Date, such amount shall be discounted
from and including the Premium Payment Date to but excluding the Close-Out Date
at a rate equal to LIBOR on the Close-Out Date and, if the Close-Out Date occurs
after the Premium Payment Date, to the extent permitted by applicable law, the
settlement amount shall include interest on any unpaid Premium from and
including the Premium Payment Date to but excluding the Close-Out Date in the
same Currency as such Premium at overnight LIBOR;
(C) with respect to any exercised Option to be settled at its
In-the-Money Amount (whether or not the Close-Out Date occurs before the
Settlement Date for such Option), any unpaid amount due to such Party in
settlement of such Option and, if the Close-Out Date occurs after the Settlement
Date for such Option, to the extent permitted by applicable law, interest
thereon from and including the applicable Settlement Date to but excluding the
Close-Out Date at overnight LIBOR; and
(D) without duplication, the amount that the Non-Defaulting
Party reasonably determines in good faith, as of the Close-Out Date or as of the
earliest date thereafter that is reasonably practicable, to be its additional
losses, costs and expenses in connection with such terminated Option, for the
loss of its bargain, its cost of funding, or the loss incurred as a result of
terminating, liquidating, obtaining or re-establishing a delta hedge or related
trading position with respect to such Option;
13
(ii) Converting to Base Currency. Convert any settlement amount
calculated in accordance with clause (i) above in a Currency other than the
Non-Defaulting Party's Base Currency into such Base Currency at the Spot Price
at which, at the time of the 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 (or, if such Spot Price is not
available, conversion shall be accomplished by the Non-Defaulting Party using
any commercially reasonable method); and
(iii) Netting. Net such settlement amounts with respect to each Party
so that all such amounts are netted to a single liquidated amount payable by one
Party to the other Party.
(d) Final Netting. The Non-Defaulting Party shall net (or, if both are
payable by one Party, add) the liquidated amounts payable under Sections 8.1(b)
and 8.1(c) with respect to each Party so that such amounts are netted (or added)
to a single liquidated amount payable by one Party to the other Party as a
settlement payment.
8.2 Set-Off Against Credit Support. Where close-out and liquidation
occurs in accordance with Section 8.1, the Non-Defaulting Party shall also be
entitled (i) to set off the net payment calculated in accordance with Section
8.1(d) 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 8.1(d) 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 rate specified in
Section 8.1(c)(ii).
8.3 Other Foreign Exchange Transactions and Currency Options. Where
close-out and liquidation occurs in accordance with Section 8.1, 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 or
currency option entered into between the Parties which is then outstanding in
accordance with the provisions of Section 8.1, 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 (including exercised options, provided that
cash-settled options shall be treated analogously to Options to be settled at
their In-the-Money Amount) and each unexercised option being treated as if it
were an Option under the Agreement.
8.4 Payment and Late Interest. The net amount payable by one Party to
the other Party pursuant to the provisions of Sections 8.1 and 8.3 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 8
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 8 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.
14
8.5 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 8, 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.
8.6 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.
8.7 Reasonable Pre-Estimate. The Parties agree that the amounts
recoverable under this Section 8 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.
8.8 No Limitation of Other Rights; Set-Off. The Non-Defaulting Party's
rights under this Section 8 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 8.8 are subject to Section 8.7.
SECTION 9. FORCE MAJEURE, ACT OF STATE, ILLEGALITY AND IMPOSSIBILITY
9.1 Force Majeure, Act of State, Illegality and 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 Option 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 or Option, 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 and Option in accordance
with the provisions of Section 8.1 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 8.1 as if it were the Non-Defaulting
Party. Nothing in this Section 9.1 shall be taken as indicating that the Party
treated as the Defaulting Party for the purpose of calculations required by
Section 8.1 has committed any breach or default.
15
9.2 Transfer to Avoid Force Majeure, Act of State, Illegality or
Impossibility. If Section 9.1 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 or Option, 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 the earlier to occur
of the expiration date of the affected Options or twenty (20) days after it
gives notice under Section 9.1, all its rights and obligations under the
Agreement in respect of the affected Currency Obligations and Options 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 10. 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 or Option that (absent a written
agreement between the Parties that expressly imposes affirmative obligations to
the contrary for that FX Transaction or Option): (i)(A) it is acting for its own
account, and it has made its own independent decisions to enter into that FX
Transaction or Option and as to whether that FX Transaction or Option 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 or Option, it being understood
that information and explanations related to the terms and conditions of an FX
Transaction or Option shall not be considered investment advice or a
recommendation to enter into that FX Transaction or Option; and (C) it has not
received from the other Party any assurance or guarantee as to the expected
results of that FX Transaction or Option; (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 or Option; and (iii) the other Party is not acting as a fiduciary or
an advisor for it in respect of that FX Transaction or Option.
SECTION 11. MISCELLANEOUS
11.1 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 8 or 9, 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.
16
11.2 Assignment. Neither Party may assign, transfer or charge or
purport to assign, transfer or charge its rights or 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
11.2 shall be void.
11.3 Telephonic Recording. The Parties agree that each 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.
11.4 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 11.4 shall be effective upon receipt.
11.5 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 11.4, 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 or Options, 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.
11.6 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.
11.7 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.
11.8 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).
11.9 Time of Essence, Etc. Time shall be of the essence in the
Agreement. Unless otherwise agreed, the times referred to in the Agreement with
respect to Options shall in each case refer to the local time of the relevant
Designated Office of the Seller of the relevant Option.
11.10 Headings. Headings in the Agreement are for ease of reference
only.
17
11.11 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 11.4.
11.12 Amendments. No amendment, modification or waiver of the Agreement
will be effective unless in writing executed by each of the Parties; provided
that the Parties may agree in a Confirmation that complies with Section 2.3 to
amend the Agreement solely with respect to the Option that is the subject of the
Confirmation.
11.13 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.
11.14 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.
11.15 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 an 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 12. LAW AND JURISDICTION
12.1 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.
12.2 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.
18
(b) 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.
12.3 Waiver of Jury Trial. Each Party irrevocably waives any and all
right to trial by jury in any Proceedings.
12.4 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 court, (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.
XXXXXX XXXXXXX & CO. INCORPORATED
By:
------------------------------
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX
SPECTRUM __________________ L.P.
By: Demeter Management Corporation
------------------------------
Name:
Title:
19
Schedule-1
SCHEDULE
Schedule to the International Foreign Exchange and
Options Master Agreement dated as of June
___, 2000 (the "Agreement")
between Xxxxxx Xxxxxxx & Co. Incorporated ("Party A")
and
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum ________________ L.P.
("Party B").
Part I. Scope of the Agreement
The Agreement shall apply to all FX Transactions outstanding between
any two Designated Offices of the Parties on the Effective Date.
The Agreement shall apply to all Currency Options outstanding between
any two Designated Offices of the Parties on the Effective Date.
Part II. Designated Offices
Each of the following shall be a Designated Office:
Party A: New York
Party A is not a multibranch party.
Party B: New York
Party B is not a multibranch party.
Each Party (the "first Party") that enters into an FX Transaction or
Option through an agency, branch, or office other than its head or home office
represents to the other Party (the "second Party") that, notwithstanding the
place of booking office or jurisdiction of incorporation or organization of the
first Party, the obligations of the first Party are the same as if it had
entered into the FX Transaction or Option through its head or home office. This
representation will be deemed to be repeated by the first Party on each date on
which it enters into an FX Transaction or Option.
Part III. Notices
If sent to Party A:
Address: Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Telex Number: 6801048 (Answerback: FXMS)
Facsimile Number: (000) 000-0000
SWIFT Number: XXXXXX00
Name of Individual or Department to whom Notices are to be sent:
Foreign Exchange Trading Department
Schedule-1
If sent to Party B:
Address: Party B c/o
Morgan Xxxxxxx Xxxx Xxxxxx & Co.
0 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone Number: 000-000-0000
Telex Number:
Facsimile Number: 000-000-0000
SWIFT Number:
Name of Individual or Department to whom Notices are to be sent:
Managed Futures
Part IV. Payment Instructions
[X] Name of Bank and Office, Account Number and Reference with
respect to relevant Currencies:
In the case of Party A, U.S. dollar payments shall be made to the
following account:
Bank of New York, New York
ABA#: 000000000
For: Xxxxxx Xxxxxxx & Co., New York
Acct. #: 8900010932
Ref: Chips UID 23-65-84
In the case of Party B, U.S. dollar payments shall be made to the
following account:
Citibank N.A.
ABA#: 021-000089
For: Xxxx Xxxxxx Xxxxxxxx Inc.
Acct.#: 40611164
For Further Credit to Managed Futures Fund Margin Transfer 000-000000-0
[X] With respect to each Party, as may be set forth in such Standard
Settlement Instructions as may be specified by such Party in a notice given in
accordance with Section 11.4.
Part V. Netting
A. Discharge of Options
Section 4.1 shall apply to Options other than Barrier Options.
B. Netting of Premiums
Section 4.2 shall apply to Premium payments for Options other than
Barrier Options.
C. Settlement Netting Offices
Each of the following shall be a Settlement Netting Office:
Schedule-2
Party A: Same as Part II.
Party B: Same as Part II
Party A and Party B agree that, notwithstanding Section 6.2 of the
Agreement, obligations to make payments pursuant to FX Transactions shall only
be netted, satisfied and discharged against obligations to make payments arising
out of the same or other FX Transactions between a pair of Settlement Netting
Offices and obligations to make payments pursuant to Options (including
exercised Options) shall only be netted, satisfied and discharged against
obligations to make payments arising out of the same or other Options (including
exercised Options) between a pair of Settlement Netting Offices.
D. Novation Netting Offices
Each of the following shall be a Novation Netting Office:
Party A: Same as Part II
Party B: Same as Part II
E. Matched Pair Novation Netting Offices
Each of the following shall be a Matched Pair Novation Netting
Office:
Not applicable.
Part VI. Automatic Exercise of Options; Cash Settlement of FX Transactions
A. Automatic Exercise of Options
Automatic Exercise of certain In-the-money Options pursuant to
Section 5.3 shall apply to Party A as Buyer.
Automatic Exercise of certain In-the-money Options pursuant to
Section 5.3 shall apply to Party B as Buyer.
B. Cash Settlement of FX Transactions
Schedule-3
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 6.1 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 8.1(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 reasonably determined by
Party A in accordance with market practice.
Part VII. Base Currency
Party A's Base Currency is U.S. Dollars.
Party B's Base Currency is U.S. Dollars.
Part VIII. Threshold Amount
For purposes of clause (x) of the definition of Event of Default:
Party A's Threshold Amount is U.S.D. $10,000,000.
Party B's Threshold Amount is U.S.D. $10,000,000.
Part IX. Additional Events of Default
Clause (x) of the definition of Event of Default shall be modified
by deleting the words ", or becomes capable at any time of being declared,"
after the words "and remains unpaid after any applicable grace period has
elapsed, or (B) becomes".
The following provisions which are checked shall constitute Events
of Default:
[X] (a) occurrence of garnishment or provisional garnishment
against a claim against the Defaulting Party acquired by the Non-Defaulting
Party. The automatic termination provision of Section 8.1 shall not apply to
either Party that is a Defaulting Party in respect of this Event of Default.
[X] (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 8.1
shall not apply to either Party that is a Defaulting Party in respect of this
Event of Default.
[X] (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 8.1 shall not apply to either Party
that is a Defaulting Party in respect of this Event of Default.
Schedule-4
Part X. Automatic Termination
The Automatic Termination provision of Section 8.1 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 8.1 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 11.14 shall not apply to the
Agreement.
Part XII. Governing Law
In accordance with Section 12.1 of the Agreement, the Agreement
shall be governed by the laws of:
[X] the State of New York.
[ ] England and Wales.
[ ] Japan.
Part XIII. Consent to Jurisdiction
In accordance with Section 12.2 of the Agreement, each Party
irrevocably submits to the non-exclusive jurisdiction of:
[X] the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City.
[ ] the courts of England.
[ ] the Tokyo District Court.
Part XIV. Agent for Service of Process
Party A appoints the following as its agent for service of process
in any Proceedings in the State of New York: Not applicable.
Party B appoints the following as its agent for service of process
in any Proceedings in the State of New York: Not applicable.
Part XV. Certain Regulatory Representations
A. The following FDICIA representation shall 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:
[X] broker or dealer within the meaning of FDICIA;
Schedule-5
[ ] depository institution within the meaning of FDICIA;
[X] 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 counterparties) 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 not (i) a plan
subject to the fiduciary responsibility part of the Employee Retirement Income
Security Act of 1974, as amended, or subject to Section 4975 of the Internal
Revenue Code of 1986, as amended; (ii) a person acting on behalf of any such
plan; or (iii) a person the assets of whom constitute assets of any such plan.
C. The following CFTC trade option representation shall not apply:
Schedule-6
Each Party represents and warrants that it is a commercial user of
or a merchant handling the Currencies subject to each Option and was offered or
entered into each Option solely for purposes related to its business as such.
D. 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. Representations and Warranties
In addition to the representations and warranties set forth in
Section 7.1 and Part XV of this Schedule, each Party hereby represents and
warrants to the other Party on the date hereof and on the date of each FX
Transaction or Option, as the case may be, that: (a) it is a sophisticated
investor able to evaluate and assume the risks associated with transactions in
currencies as contemplated by the Agreement; (b) it is not relying upon any
representations (whether written or oral) of the other Party other than the
representations expressly set forth in the Agreement, this Schedule, any Credit
Support Document or in any Confirmation; (c) its execution and delivery of the
Agreement, and its performance of its obligations hereunder, do not and will not
conflict with any law or regulation of the jurisdiction of its organization or
other law or regulation applicable to it, and do not and will not violate,
constitute a default under, or result in the creation or imposition of any lien
or encumbrance on any of its property or assets under any agreement or
instrument to which it is a party or by which its assets are bound; (d) no
consent, authorization or approval (including exchange control approval) or
other action by, and no notice to or filing with, any person or entity,
including any governmental authority or regulatory body, other than any already
obtained, made or filed and remaining in full force and effect, and the
conditions of which have been duly complied with, is required in connection with
the performance of its obligations under the Agreement; and (e) there are no
actions, proceedings or claims pending or, to the best of its knowledge,
threatened, the adverse determination of which might have a materially adverse
effect on its ability to perform its obligations under, or affect the validity
or enforceability of, the Agreement.
Part XVII. Agreement Superseding
A new Section 11.16 shall be added to the Agreement which shall
read as follows: "The Agreement shall supersede any other agreement between the
Parties with respect to the subject matter hereof."
Part XVIII. Barrier Options
In connection with any Barrier Options between the Parties, Party
B acknowledges that:
a) As part of its business, Party A regularly trades in the
foreign exchange spot, forward, futures and options markets for its own account
and for the accounts of other customers. Such trading may affect spot prices in
the Currency Pair.
b) Party A generally xxxxxx its Barrier Option positions by buying
or selling a quantity of the relevant currency, and may adjust (increase or
decrease) its hedge as market conditions change during the life of the Options
and it believes that it is more or less likely that a Barrier will be breached.
Such hedging and de-hedging activity may affect spot prices and may thus affect
the probability of a Barrier being breached.
Schedule-7
Part XIX. 1998 FX and Currency Option Definitions.
The 1998 FX and Currency Option Definitions as published by
ISDA, EMTA and the Foreign Exchange Committee (the "Definitions") shall be
applicable to each FX Transaction and Option under the Agreement, including any
FX Transaction or Option outstanding on the date hereof, subject to the
following:
A. Definitions:
1. The term "Agreement" in Section 2.2 of the Agreement shall
include the Agreement as modified and supplemented by this
Part.
2. The term "FX Transaction" and "Currency Option Transaction" in
the Definitions or in a Confirmation shall in all cases by
considered references to an "FX Transaction" and "Option"
under the Agreement.
3. All terms in this Part shall have the meanings given them
above or in the Definitions, unless not defined above or in
the Definitions, in which case the term shall have the meaning
given in the Agreement.
B. Scope.
1. Notwithstanding the absence of any reference to the
Definitions in a Confirmation, this Part and the Definitions
shall be applicable to any FX Transaction or Currency Option
Transaction covered by the Agreement; provided that the
Parties may agree otherwise for any Transaction as evidenced
by a Confirmation that complies with Section 2.3 of the
Agreement.
2. In the event of any inconsistency between the Definitions and
a Confirmation, the terms of the Confirmation shall govern for
the purpose of the relevant Transaction. In the event of any
inconsistency between the Definitions and the Agreement, the
Definitions shall prevail.
C. Confirmations.
Notwithstanding Sections 2.4 and 11.12 of the Agreement, in the event
of any inconsistency between the terms of a Confirmation for an FX Transaction
or Currency Option Transaction and the Agreement, the terms of the Confirmation
shall prevail.
D. Disruption Events.
With respect to any Disruption Event that is applicable to an FX
Transaction or Currency Option Transaction pursuant to the Definitions or as
otherwise agreed by the Parties as evidenced by a Confirmation, Section 9 of the
Agreement shall not be applicable in respect of such FX Transaction or Currency
Option Transaction, and the Parties shall be subject to the Disruption Fallbacks
(including but not limited to No Fault Termination) specified as applicable
pursuant to the Definitions or such Confirmation.
Schedule-8
E. Miscellaneous.
The provisions of Part VI.B of this Schedule relating to cash
settlement of FX Transactions shall apply to Non-Deliverable FX Transactions.
Part XX. Margin and Security
(a) Party B shall at all times maintain with Xxxx Xxxxxx Xxxxxxxx
Inc. (the "Custodian") for and on behalf of Party A cash and securities
acceptable to Party A (together, the "Margin") in order to secure the
obligations of Party B under all open FX Transactions and Options entered into
under the Agreement. The amount of Margin which Party B shall maintain with
Party A shall be determined by Party A in its reasonable judgment (which
determination shall be conclusive in the absence of manifest error), on a risk
adjusted basis, taking into account historical volatility, imputed volatility
and/or such other factors as Party A reasonably deems relevant to this
determination (the "Aggregate Margin Requirement"). On or prior to the date of
the Agreement, Party B shall have established a special pledge account with the
Custodian (the "Account") for the purpose of holding custody of the Margin for
and on behalf of Party A in accordance with the provisions of the Custodian
Account Addendum, dated the date hereof, and the Agreement. Party B's failure to
deposit Margin or to establish the Account as required herein shall be an Event
of Default for all purposes under the Agreement (it being understood that there
shall be no grace period with respect to obligations of Party B pursuant to this
Part XX).
(b) Whenever such Aggregate Margin Requirement shall exceed the
market value of Margin on deposit with the Custodian in the Account as
determined by Party A at such time in its reasonable judgment and which
determination shall be conclusive in the absence of manifest error (the "Margin
Balance", and the difference between such Aggregate Margin Requirement and the
Margin Balance being the "Shortfall"), then Party B shall deposit immediately
upon Party A's request, additional Margin in an amount at least equal to such
Shortfall.
(c) In furtherance of the foregoing, as security for the prompt
and complete payment when due and the performance by Party B of all of its
obligations to Party A under the Agreement, Party B hereby grants to Party A a
continuing first priority security interest in and to all of Party B's right,
title and interest in and to the Margin, the Account, all financial assets,
investment property and other property and assets which are deposited from time
to time in, or credited from time to time to, the Account, all security
entitlements in respect thereof, all income and profits thereon, all interest,
dividends and other payments and distributions with respect thereto, and all
proceeds of any of the foregoing (the "Margin Collateral"). As additional
security for the prompt and complete payment when due and the performance by
Party B of all of its obligations to Party A under the Agreement, Party B hereby
grants to Party A and its affiliates a first priority security interest in and
to any property of Party B at any time held by or for the benefit of Party A or
any affiliate of Party A for any purpose, including, without limitation, any
property of Party B held in any account with Party A, any affiliate of Party A
or with the Custodian, any financial assets, investment property and other
property and assets which are deposited from time to time in, or credited from
time to time to, any such account, all security entitlements in respect thereof,
all income and profits thereon, all interest, dividends and other payments and
distributions with respect thereto, and all proceeds of any of the foregoing
(the "Collateral"), to secure all obligations of Party B to Party A. If
Schedule-9
Collateral was delivered in connection with a particular agreement between Party
B and Party A or any of its affiliates, then such Collateral shall secure first
the obligations of Party B with respect to such agreement and second all other
obligations of Party B to Party A or any of its affiliates (in such order as
Party A shall determine in its sole discretion). Party A, its affiliates and the
Custodian and Party B hereby each acknowledge and agree that (a) each of Party A
and its affiliates which holds Collateral holds such Collateral for itself and
also as agent and bailee for all other of Party A and its affiliates which are
secured parties hereunder or under any agreement between Party B and Party A or
any of its affiliates and (b) the Custodian which holds Collateral for and on
behalf of Party A holds such Collateral as agent and bailee for Party A and its
affiliates which are secured parties hereunder and under any agreement between
Party B and Party A or any of its affiliates. If an Event of Default hereunder
shall occur, then each of Party A and its affiliates shall be entitled to retain
or sell all Collateral as security for Party B's obligations, even if otherwise
required pursuant to the terms of an agreement or otherwise to deliver any
Collateral to Party B or Party B's order. The parties agree that Party A and its
affiliates shall have the rights and remedies of a secured creditor under the
New York Uniform Commercial Code (the "UCC") and under any other applicable law
or agreement to exercise any right with respect to the Margin Collateral and the
Collateral subject to the security interest granted under the Agreement.
Notwithstanding Section 9-207 of the UCC, each of Party A or any of its
affiliates shall have free and unrestricted use of any Margin Collateral and/or
Collateral which it holds hereunder or with the Custodian, including, without
limitation, the right, from time to time and without notice to Party B, to sell,
pledge, repledge, hypothecate, rehypothecate, assign, invest, use, commingle or
otherwise dispose of, or otherwise use in its business any Margin Collateral
and/or Collateral separately or in common with other securities, commodities or
other property, for the sum due to any of Party A or any of its affiliates or
for a greater sum on terms which may otherwise impair the right of Party B to
redeem such Margin Collateral and/or Collateral, and free from any other right
of claim of any nature whatsoever of Party B, and without retaining possession
and control for delivery a like amount of similar securities, commodities, or
other property.
(d) Party B represents and warrants that it owns the Margin
Collateral and the Collateral to be pledged and assigned to each of Party A and
its affiliates hereunder and under any other agreement between Party B and Party
A or any of its affiliates, free and clear of any liens, equities, claims
(including, without limitation, participation interests) and transfer
restrictions. Party B covenants and agrees that it will not sell, assign,
transfer, exchange or otherwise dispose of, or grant any option with respect to,
any of the Margin Collateral or the Collateral, nor will it create, incur or
permit to exist any lien on or with respect to any of the Margin Collateral or
the Collateral, any interest therein, or any proceeds thereof, except for the
security interests created under this Agreement or otherwise under any agreement
between Party B and Party A or any of its affiliates. Any purported sale,
assignment, transfer, exchange, disposition, grant or lien of the Margin
Collateral or the Collateral by Party B that is not permitted under the
foregoing sentence shall be null and void and shall constitute an Event of
Default hereunder and under any agreement between Party B and Party A or any of
its affiliates immediately prior to the taking of any such action, if Party A so
deems (it being understood that there shall be no grace period with respect to
obligations of Party B pursuant to this Part XX).
(e) Party B shall, at its sole expense and as Party A in its sole
discretion may deem necessary or advisable from time to time, undertake all such
action as is necessary, (i) to create, preserve, protect and perfect the
security interests granted under the Agreement, (ii) to enable Party A to
exercise and enforce its rights with respect to such security interests, and
(iii) execute and deliver all documents and instruments in such manner and form
as Party A may require, including without limitation UCC financing statements
and continuation statements. Party B hereby appoints Party A as its true and
lawful attorney-in-fact, including without limitation, to sign and file such
documents and instruments on Party B's behalf and without Party B's signature;
such appointment, being coupled with an interest, shall be irrevocable. Without
limitation on the foregoing, Party B agrees to take such action as Party A in
its sole discretion may deem necessary or advisable in the event of any change
in applicable law, including, without limitation, Article 8 of the UCC and the
Regulations of the Department of the Treasury governing transfers of interests
in U.S. marketable treasury securities in book-entry form.
Schedule-10
(f) The parties hereto agree that each of the Account and any
account in which any Collateral is held or to which any Collateral is credited
(a "Collateral Account") is a "securities account" within the meaning of Article
8 of the UCC and that all property and assets (including, without limitation,
cash) held in or credited to (i) the Account or (ii) any Collateral Account
shall be treated as a "financial asset" for purposes of Article 8 of the UCC.
XXXXXX XXXXXXX & CO. INCORPORATED
By
-------------------------------
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX SPECTRUM ________________ L.P.
By: Demeter Management Corporation
Name:
Title:
Schedule-11
Addendum-1
CUSTODIAN ACCOUNT ADDENDUM
This Addendum supplements, forms part of, and is subject in all
respects to, the Foreign Exchange and Options Master Agreement (FEOMA) including
the Schedule thereto (the "Schedule") dated as of June ___, 2000 by and between
Xxxxxx Xxxxxxx & Co. Incorporated and Demeter Management Corporation on behalf
of ____________________________________ (collectively, the "Agreement"), and is
a part of the Schedule with respect to each party; provided, however, as used
herein, "Pledgor" means Party B and "Secured Party" means Party A (as defined in
the Agreement). Other capitalized terms used herein, unless otherwise defined,
have the meanings specified in the Agreement. With respect to the rights or
obligations of the Secured Party or the Pledgor, in the event of any
inconsistencies between this Addendum and the Agreement, the Agreement will
prevail.
Having appointed Xxxx Xxxxxx Xxxxxxxx Inc. (the "Custodian") to hold
Margin for and on behalf of the Secured Party, the Secured Party, the Pledgor
and the Custodian (solely to the extent of the duties it has agreed to undertake
and perform hereunder) agree as follows:
1. In all respects, the rights of the Secured Party under the Schedule
with respect to Margin shall not be affected by the appointment of a Custodian
hereunder. The provisions of this Addendum in no way diminish or otherwise
affect the rights of the Secured Party under the Agreement.
2. The Secured Party, by written notice to the Custodian, may exercise
all powers, and exercise any and all rights and remedies permitted under the
Schedule as though the Secured Party was taking such action directly, and the
Custodian will comply with, and be entitled to rely on, all such instructions
(including, without limitation, entitlement orders) as if such instructions were
provided by the parties jointly.
3. As used herein, the following terms have the following meaning:
"Advice from the Secured Party" or "Advice" means a written notice sent
to the Pledgor and/or the Custodian or transmitted by a facsimile sending device
by any of those individuals designated by the Secured Party, except that for any
of the following purposes it shall mean notice by telephone to a person
designated by the Pledgor in writing as authorized to receive such advice or, in
the event that no such person is available, to any officer of the Pledgor and
confirmed promptly in writing thereafter: (i) for initial or additional Margin;
(ii) that the Secured Party has issued a Notice of Exercise with respect to an
Option ; or (iii) that the Pledgor has failed to give notice of intent to make
payment of amounts or deliveries as required under Paragraph 5 of this Addendum.
With respect to any covering purchase transaction, the Advice from the Secured
Party shall mean a Confirmation in use by the Secured Party and sent or
transmitted to the Pledgor and/or the Custodian. When used herein the term
"Advise" means the act of sending an Advice from the Secured Party.
4. The Custodian shall open an account on its books entitled "Special
Custody Account for Xxxxxx Xxxxxxx & Co. Incorporated as Pledgee of Xxxxxx
Xxxxxxx Xxxx Xxxxxx Strategic Alternatives, L.L.C (referred to herein as the
"Special Custody Account").
The parties hereto agree that all property and assets held in
or credited to the Special Custody Account will be treated as financial assets
under Article 8 of the Uniform Commercial Code as in effect in the State of New
York (the "UCC"). The parties hereto further agree that the securities
intermediary's jurisdiction, within the meaning of Section 8-110(e) of the UCC,
in respect of the Special Custody Account and the Margin is the State of New
York and agree that none of them has or will enter into any agreement to the
contrary.
Addendum-1
Anything in this Addendum notwithstanding, the Custodian
hereby agrees to comply with entitlement orders and other instructions of the
Secured Party with respect to the Special Custody Account and any Margin without
further consent of the Pledgor. The Pledgor hereby consents to such agreement.
The Custodian represents and warrants that it has not, and
agrees that it will not, agree to comply with entitlement orders concerning the
Special Custody Account or any Margin that are originated by any person other
than the Secured Party.
The Pledgor agrees to inform the Custodian in writing that
cash and securities specified by the Pledgor as qualifying as Margin and equal
in value to the Aggregate Margin Requirement are to be identified on the
Custodian's books and records as pledged to the Secured Party. The Custodian
will hold the Margin in, and credit the Margin to, the Special Custody Account,
separate and apart from any other property of the Pledgor that may be held by
the Custodian, subject to the interest therein of the Secured Party as the
Pledgee thereof in accordance with the terms of the Agreement. The Custodian
continuously represents that Margin will not be subject to any other lien,
charge, security interest or other right or claim of the Custodian or any person
claiming through the Custodian. The Custodian will confirm in writing to the
Secured Party and the Pledgor all pledges, releases, substitutions or
distributions of Margin permitted under the Agreement, and will inform the
Secured Party upon request of the kind and amount of Margin pledged to the
Secured Party.
5. In the event that (i) the Secured Party advises the Pledgor in an
Advice from the Secured Party that the Secured Party has exercised an Option
sold by the Pledgor and the Pledgor does not promptly notify the Secured Party
by telephone of the Pledgor's intention to comply with the Notice of Exercise by
making payment or delivery, as the case may be, as required under the terms of
such Option plus payment of applicable commissions or other charges; or (ii) the
Pledgor, having received such Notice of Exercise, fails to make such payment or
delivery, or cause such payment or delivery to be made, then the Secured Party
will immediately notify the Pledgor in an Advice from the Secured Party of such
failure to give telephone notice or failure to make payment or delivery, as
applicable, and may, after transmittal of an Advice from the Secured Party of
its intention to do so and only if the Pledgor does not promptly make payment or
delivery to the Secured Party, direct the Custodian to take any action necessary
to fully satisfy Pledgor's obligations to the Secured Party, including any of
the Secured Party's rights and remedies under Part XX of the Schedule.
6. With respect to any losses or liabilities, the Custodian shall be
protected in acting pursuant to any instructions from the Pledgor or Advices
from the Secured Party believed by the Custodian in good faith to be genuine and
authorized. The Pledgor agrees to indemnify the Custodian for, and hold it
harmless against, any loss, liability or expense incurred by the Custodian,
without negligence or bad faith on the part of the Custodian, arising out of
this Addendum.
7. The Secured Party shall not be liable for any losses, costs,
damages, liabilities or expenses suffered or incurred by the Pledgor as a result
of any actions taken under this Addendum, or any other action taken or not taken
by the Secured Party hereunder for the Pledgor's account at the Pledgor's
direction or otherwise, except to the extent that such loss, cost, damage,
liability or expense is the result of the Secured Party's own recklessness,
willful misconduct or bad faith.
Addendum-2
8. The Pledgor continuously represents and warrants to the Secured
Party that securities included at any time in the Margin shall be in good
deliverable form (or Custodian shall have the unrestricted power to put such
securities into good deliverable form) in accordance with the requirements of
such exchanges as may be the primary market or markets for such securities. Each
of the Pledgor, the Secured Party and the Custodian continuously represents and
warrants that:
a) it has duly executed and delivered this Addendum, and has all requisite
power, authority and approvals to enter into and perform its
obligations hereunder; and
b) this Addendum is its valid and legally binding obligation, enforceable
against it in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and to
general equitable principles.
The Secured Party and the Pledgor hereby acknowledge that the Custodian
holds securities and cash as custodian for its customers through sub-custodians,
depositaries and deposit-taking banks which maintain omnibus accounts on behalf
of customers of the Custodian. Securities held in the Special Custody Account
may be held at the Depository Trust Company or other book-entry depository
systems in the account of the Custodian, save that Margin denominated in
currencies other than US Dollars may be held by a sub-custodian for the
Custodian other than in book-entry form. U.S. Treasury securities shall be held
in a Treasury/Reserve Automated Debt Entry System ("TRADES") Participant's
securities account of the Custodian or of the Custodian's sub-custodian for the
account of the Custodian at the Federal Reserve Bank.
9. A monthly statement will be provided by the Custodian to the Secured
Party and the Pledgor listing all Margin held in the Special Custody Account.
The Custodian will also advise the Secured Party upon request, at any time, of
the kind and amount of Margin pledged to the Secured Party. It is agreed that,
notwithstanding any language to the contrary in Custodian's form of
confirmation, the Custodian holds the Margin as agent of the Secured Party as
pledgee hereunder, not as escrow agent. The Custodian makes no representations
as to the existence, perfection or enforceability of any security interest,
charge, lien or other rights of the Pledgor in or to the Margin.
10. The Pledgor shall pay the Custodian as compensation for its
services pursuant to this Addendum such compensation as may from time to time be
agreed upon in writing between the Pledgor and the Custodian.
11. No amendment to this Addendum shall be effective unless in writing
and signed by an authorized officer of each of the Secured Party, the Pledgor,
and the Custodian.
12. This Addendum may be executed in one or more counterparts, all of
which together shall constitute but one and the same instrument.
13. Any of the parties hereto may terminate the custodial relationship
by notice, given at least 10 business days prior to the date of such intended
termination, in writing to the other parties hereto; provided, however, that
should the Custodian or the Pledgor seek to terminate, then the Pledgor must
designate a replacement Custodian, which the Secured Party has, in the exercise
of its sole discretion, approved. Custodian agrees to remain as the Custodian
until such time as a replacement Custodian has been approved and such
replacement Custodian has agreed to the terms of its service hereunder and under
the Agreement.
Addendum-3
Written communications hereunder shall be sent in the manner specified in the
Agreement addressed:
(a) If to Custodian, to:
Xxxx Xxxxxx Xxxxxxxx Inc.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx - Managed Futures Department
Phone: 000-000-0000
Fax: 000-000-0000
(b) If to the Pledgor, to:
Demeter Management Corporation
Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co.
2 World Trade Center
62nd Floor
New York, New York 10048
Attention: Managed Futures Department
Phone: 000-000-0000
Fax: 000-000-0000
(c) If to the Secured Party, to:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Foreign Exchange Trading Desk
Phone: (000) 000-0000
Fax: (000) 000-0000
14. This Addendum will be governed by the laws of the State of New York
applicable to transactions entered into and to be performed wholly within the
State of New York.
DEMETER MANAGEMENT CORPORATION
on behalf of ______________________
By:
--------------------
Name:
--------------------
Title:
--------------------
XXXXXX XXXXXXX & CO. INCORPORATED
By:
--------------------
Name:
--------------------
Title:
--------------------
Addendum-4
XXXX XXXXXX XXXXXXXX INC.
(for purposes of this Addendum)
By:
--------------------
Name:
--------------------
Title:
--------------------
Addendum-5
