Exhibit 10.06
COMMODITY FUTURES CUSTOMER AGREEMENT
BETWEEN
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARTER ▇▇▇▇▇▇▇▇ ▇.▇.
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
This Commodity Futures Customer Agreement ("Agreement"), dated as of
August 31, 2002, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Charter ▇▇▇▇▇▇▇▇ ▇.▇. ("Customer"), and acknowledged and agreed
to by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ Inc., the non-clearing commodity broker for the Customer
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇"), shall govern the purchase and sale by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of
commodity futures contracts and options thereon (collectively, "Contracts") for
the account and risk of Customer through one or more accounts carried by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; (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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of any change in such information.
3. PAYMENT AND INTEREST OBLIGATIONS.
(A) COMPENSATION PAYMENTS TO ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Customer shall pay ▇▇▇▇▇▇
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ with respect to the Account or any transactions
therein. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ shall pay ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ such charges with respect to
the execution and clearing of trades for Customer as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall agree from time to time.
(B) PAYMENT OF INTEREST. The Customer's assets deposited with ▇▇▇▇▇▇
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ customary practice for
investment of its futures customer funds. All of Customer's funds will be
available for margin for the Customer's trading. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall pay to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ at each month-end interest on Customer's funds in its
possession as agreed between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ from time to
time. The Customer understands that it will not receive any interest income on
its assets held by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ other than that paid by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
pursuant to the Customer's ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ Customer Agreement. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ shall pay ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ interest on any debit balances in the Account at
such rates as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ shall agree from time to
time.
(C) NETTING. The parties agree that all payment obligations of Customer
to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under this Agreement and all payment obligations of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ to Customer under this Agreement will be netted against each other to
result in one net payment amount.
4. CUSTOMER'S EVENTS OF DEFAULT; ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in its sole and absolute discretion, considers it
necessary for its protection, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have the right, in addition
to any other remedy available to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at law or in equity, and in
addition to any other action ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ may ▇▇▇▇ 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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and to apply the proceeds thereof to any amounts owed by Customer
to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇
▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in any
commercially reasonable manner. In the event ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ position would not
be jeopardized thereby, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or prior notice from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ shall not be considered a waiver of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ right to take any
action without notice or demand. In the event ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ exercises any
remedies available to it under this Agreement, Customer shall reimburse,
compensate and indemnify ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for any and all costs, losses,
penalties, fines, taxes and damages that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its affiliates (as
defined below) shall not be liable to Customer, the general partner or the
limited partners of the Customer ("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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ determines, in good faith, to be in the best interest of the
Customer, unless such act, omission, conduct, or activity by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
its affiliates constituted misconduct or negligence. Without limiting the
foregoing, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 firm or other third party (including
floor brokers not selected by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and banks) to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of its
2
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ whether or not made or given at the request of
Customer; (iii) as a result of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ obligations hereunder
directly or indirectly caused by the occurrence of any contingency beyond the
control of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its floor brokers to comply with Applicable Law; or
(vi) for any acts or omissions of those neither employed nor supervised by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇. In no event ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ be liable to Customer for
consequential, incidental or special damages hereunder.
(B) INDEMNIFICATION BY CUSTOMER. Customer shall indemnify, defend and
hold harmless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of Customer, including, without
limitation, any demands, claims or lawsuits initiated by a Limited Partner (or
assignee thereof); provided that (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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.
(C) INDEMNIFICATION BY ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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
3
with the defense or settlement of claims; provided ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has approved
such settlement) incurred as a direct result of the activities of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its affiliates.
(D) LIMITATION ON INDEMNITIES. The indemnities provided in this Section
5 by Customer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ contained in
this Agreement to the extent caused by such event. Likewise, the indemnities
provided in this Section 5 by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; (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 ▇▇▇▇▇▇
▇▇▇▇▇▇▇; (iii) any natural person, partnership, corporation, association, or
other legal entity directly or indirectly controlling, controlled by, or under
common control with, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; or (iv) any officer or director of ▇▇▇▇▇▇
▇▇▇▇▇▇▇. Notwithstanding the foregoing, "affiliates" for purposes of this
Section 5 shall include only those persons acting on behalf of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and performing services for Customer within the scope of the authority of ▇▇▇▇▇▇
▇▇▇▇▇▇▇, as set forth in this Agreement.
6. GENERAL AGREEMENTS. The parties agree that:
(A) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ RESPONSIBILITY. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ agrees to
notify the applicable trading advisor for the Customer (each a "Trading
Advisor") immediately upon discovery of any error committed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
any of its agents with respect to a trade for the Customer's account which
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
▇▇▇▇▇▇▇ shall constitute errors made by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. However, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
shall not be responsible for errors committed by the Trading Advisors.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ agrees to report to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ its own errors and
the errors of any Trading Advisor for the Account which ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ becomes
aware of, provided that such reporting may be via telephone. Notwithstanding the
foregoing, the failure to comply with such reporting obligation does not
4
increase ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ liability for its own errors beyond that otherwise
expressly set forth in this Agreement, nor does it make ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in any
way responsible for errors committed by the Trading Advisors.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ with respect to
any Account opened by Customer hereunder is incidental to the conduct of ▇▇▇▇▇▇
▇▇▇▇▇▇▇'▇ 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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in making any such decision. Customer acknowledges that ▇▇▇▇▇▇
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to Customer. The positions and advice
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its managing directors, officers, employees and affiliates
may be inconsistent with or contrary to positions of, and the advice given by,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to Customer.
(C) RECORDING. Each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the Customer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the Customer or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ with respect to the
Account and transactions therein and each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the Customer and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ hereby agrees and consents thereto.
(D) ACCEPTANCE OF ORDERS; POSITION LIMITS.
(i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall immediately notify Customer of
its rejection of any order. Unless specified by Customer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ with a copy of
such applications or reports and such other information as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Requests for margin deposits and/or premium
payments may, at ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ election, be communicated to Customer orally,
telephonically or in writing. Customer margin deposits and/or premium payments
shall be made by wire transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ customer segregated account
and shall be in U.S. dollars unless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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.
(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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its affiliates, or carried
by others for the Account, hereby are pledged to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and shall be
subject to a general lien and security interest in ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ favor to
secure any indebtedness or other amounts, obligations and/or liabilities at any
5
time owing from Customer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (collectively, the "Customer's
Liabilities"). Customer hereby grants ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ the right to borrow,
pledge, repledge, hypothecate, rehypothecate, loan or invest any of the
Collateral held by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, 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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ set forth above shall be qualified by any applicable requirements
for segregation of customers' property under Applicable Law. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
commits to Customer that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ will not issue a Notice of Exclusive
Control under the Control Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
unless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have no responsibility to take any action on behalf of
Customer or positions in the Account unless and until ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
receives oral or written instructions reasonably acceptable to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ indicating the action ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
at such time as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ may require in connection with any delivery.
(ii) Short option Contracts may be subject to exercise at any time.
Exercise notices received by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has previously received
instructions from Customer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ sole responsibility shall be to
use its best efforts to notify Customer of such allocation.
(iii) If Customer fails to comply with any of the foregoing
obligations, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in its sole and absolute
discretion, deems necessary or appropriate, and Customer shall indemnify and
hold ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ harmless as a result of any action taken or not taken by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in connection therewith or pursuant to Customer's
instructions.
6
(I) FINANCIAL AND OTHER INFORMATION. Customer shall provide to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ such financial information regarding Customer as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ may from
time to time reasonably request. Customer shall notify ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ upon thirty 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, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
▇▇▇▇▇▇▇ is required by a regulatory authority to transfer the account to another
futures commission merchant or in the event that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ abandons the
Futures Commission Merchant ("FCM") business, then ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have the
right to terminate this Agreement by written notice effective the date contained
therein, provided that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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.
(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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, 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
7
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to exercise,
and no delay in exercising, any contractual right will operate as a waiver
thereof, nor will any single or partial exercise by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, 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):
|x| 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇
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.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARTER ▇▇▇▇▇▇▇▇ ▇.▇.
("Customer")
By: DEMETER MANAGEMENT CORPORATION, GENERAL PARTNER
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------------------------
(Signature) (Date)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chairman
-----------------------------------------------------------------------
(Name & Title - Please Print)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
/s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------------------------------
(Signature) (Date)
W. ▇▇▇▇▇▇ ▇▇▇▇▇, Managing Director
-----------------------------------------------------------------------
(Name & Title - Please Print)
ACKNOWLEDGED AND AGREED (AS TO SECTION 3(A) AND (B))
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------------------------
(Signature) (Date)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Director
-----------------------------------------------------------------------
(Name & Title - Please Print)
9