EXHIBIT 10.01
AMENDED AND RESTATED CUSTOMER AGREEMENT
THIS AMENDED AND RESTATED CUSTOMER AGREEMENT (this "Agreement"),
made as of the 22nd day of June, 2000, by and between ▇▇▇▇ ▇▇▇▇▇▇ PRINCIPAL PLUS
FUND MANAGEMENT L.P., a Delaware limited partnership (the "Customer"), and ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 August 24, 1989, (with ▇▇▇▇ ▇▇▇▇▇▇ Principal Plus Fund L.P. as
the limited partner; referred to herein as the "Limited Partner"), and a Limited
Partnership Agreement dated as of August 24, 1989, as amended and restated as of
August 29, 1995, with Demeter Management Corporation, a Delaware corporation
("Demeter"), acting as general partner (in such capacity, the "General
Partner"), to trade, buy, sell, spread or otherwise acquire, hold, or dispose of
commodities (including foreign currencies, mortgage-backed securities, money
market instruments, and any other securities or items which are now or may
hereafter be, the subject of futures contract trading), commodity futures
contracts, commodity forward contracts, foreign exchange commitments, and any
options on physical commodities and on futures contracts, spot (cash)
commodities, and any rights pertaining thereto, and to engage in all activities
incident thereto (hereinafter referred to collectively as "futures interests");
WHEREAS, the Customer (which is a commodity pool) and the General
Partner (which is a registered commodity pool operator) have entered into a
management agreement (the "Management Agreement") with a trading advisor (the
"Trading Advisor"), which provides that the Trading Advisor has 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 Agreement;
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 non-clearing 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 Limited Partner'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 Limited Partner
(the "Units") and in any amendment or supplement to the Prospectus.
2. Duties of DWR. DWR agrees to act as a non-clearing commodity
broker for the Customer and introduce the Customer's account to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated ("MS & Co.") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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 Advisor,
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 Partner
pursuant to the Customer's Amended and Restated 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. (a) Except as otherwise set forth
herein, the Customer, and not DWR, shall be responsible for all taxes,
management and incentive fees to the Trading Advisor, brokerage commissions to
DWR, and all extraordinary expenses incurred by it. In addition, the Customer,
and not DWR, shall pay the charges of MS & Co. and MSIL for executing and
clearing the Customer's futures interests trades (as described in paragraph 5(b)
below).
(b) The Customer will pay its and the Limited Partner's ordinary
administrative expenses during the period that the Customer is actively trading.
If the Company should cease trading or terminate, such administrative expenses
will be paid out of the remaining assets of the Customer, or, if no such assets
remain, such administrative expenses shall be paid by the Limited Partner out of
assets other than those held in the Yield Pool. If the only remaining assets are
those held in the Yield Pool, DWR and/or the Trading Advisor will pay and will
not be reimbursed for the Limited Partner's ordinary administrative expenses
until the end of the Guarantee Period. Such expenses shall include legal,
accounting, auditing, recordkeeping, administration, and clerical expenses
(including expenses incurred in preparing reports and tax information to limited
partners of the Limited Partner and regulatory authorities and expenses for
specialized administrative services), printing and duplication expenses, mailing
expenses, and filing fees.
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. (a) Compensation of DWR. The Customer will pay brokerage
commissions to DWR at a monthly flat-rate.
The Customer will pay to DWR a monthly flat-rate fee of 1/3 of 1% (a
4% annual rate) of the Limited Partner's Adjusted Net Assets (as defined below)
as of the last day of each month. DWR will receive such brokerage fees
irrespective of the number of trades executed on the Customer's behalf. For the
purpose of calculating this brokerage fee, the term "Net Assets" shall have the
same meaning as in Section 7(d) of the Limited Partner's limited partnership
agreement (except that assets held in the Yield Pool will be valued at cost plus
accrued interest). "Adjusted Net Assets" shall equal Net Assets, increased by
the current monthly brokerage fee, the current monthly management fee, any
accrued incentive fee due the Trading Advisor, and any redemptions or
distributions as of the end of the month for which brokerage fees are being
calculated.
(b) Compensation of MS & Co. and MSIL. The Customer will pay certain
charges of MS & Co. and MSIL for executing and clearing trades for the Customer
pursuant to those certain Customer Agreements dated as of May 1, 2000, among the
Customer, MS & Co. and DWR, and between the Customer and MSIL. In addition, DWR
shall pay MS & Co. certain charges with respect to the execution and clearance
of trades for the Customer as agreed from time to time between DWR and MS & Co.
For purposes of clarity, the ▇▇▇▇-up, spread, or other profit of MS & Co.
included as a part of the transaction price on each foreign currency forward
contract trade executed with MS & Co. pursuant to the Foreign Exchange and
Options Master Agreement between MS & Co. and the Customer is separate from the
fees paid to DWR or MS & Co. pursuant to either this Agreement or the Customer
Agreement among the Customer, MS & Co. and DWR.
(c) During the Guarantee period, the brokerage fees and the
aggregate cap on brokerage fees, transaction fees and costs, ordinary
administrative expenses and net excess interest and compensating balance
benefits to DWR as set forth herein and in the Prospectus, may not be increased.
Thereafter, no increase may take effect until the first business day following a
Redemption Date, provided that: (i) notice of such increase is mailed to each
limited partner of the Limited Partner at least five business days prior to the
last date on which a "Request for Redemption" must be received by Demeter, as
general partner of the Limited Partner, with respect to the applicable
Redemption Date; and (ii) such notice shall describe the redemption and voting
rights of the limited partners of the Limited Partner.
(d) Notwithstanding the foregoing, the Customer's expenses are
subject to the following limits: (a) if the Customer or the Limited Partner 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 or the Limited Partner, and
(iii) net excess interest and compensation balance benefits to DWR (after
crediting the Customer or the Limited Partner with interest as described in the
Prospectus) shall not exceed 14% annually of the Limited Partner'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
Advisor, 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 ▇▇▇▇ investments with customer
segregated funds as if an amount equal to 90% of the Customer's average daily
Net Assets for the month were invested in U.S. Treasury bills at that rate. 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, 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, the Limited Partner, or any of its or their respective
successors or assigns, for any act, omission, conduct, or activity undertaken by
or on behalf of the Customer pursuant to this Agreement which DWR determines, in
good faith, to be in the best interests of the Customer, unless such act,
omission, conduct, or activity by DWR or its affiliates constituted misconduct
or negligence.
The Customer shall indemnify, defend and hold harmless DWR and its
affiliates from and against any loss, liability, damage, cost or expense
(including attorneys' and accountants' fees and expenses incurred in the defense
of any demands, claims, or lawsuits) actually and reasonably incurred arising
from any act, omission, conduct or activity undertaken by DWR on behalf of the
Customer pursuant to this Agreement, including, without limitation, any demands,
claims or lawsuits initiated by the Limited Partner (or a limited partner of the
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 the Limited Partner (or a limited partner of the 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 the Delaware Revised Uniform Limited Partnership
Act, as amended, and 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 or Limited Partner; (ii) such demand, claim, lawsuit, or legal action
is not initiated by the Limited Partner (or a limited partner of the Limited
Partner); and (iii) such advances are repaid, with interest at the legal rate
under Delaware law, if the person receiving such advance is ultimately found not
to be entitled to indemnification hereunder.
DWR shall indemnify, defend and hold harmless the Customer and its
successors or assigns from and against any losses, liabilities, damages, costs,
or expenses (including in connection with the defense or settlement of claims;
provided DWR has approved such settlement) incurred as a result of the
activities of DWR or its affiliates, provided, further, that the act, omission,
conduct, or activity giving rise to the claim for indemnification was the result
of bad faith, misconduct or negligence.
The indemnities provided in this Section 8 by the Customer to DWR
and its affiliates shall be inapplicable in the event of any losses,
liabilities, damages, costs, or expenses arising out of, or based upon, any
material breach of any warranty, covenant, or agreement of DWR contained in this
Agreement to the extent caused by such breach. Likewise, the indemnities
provided in this Section 8 by DWR to the Customer and any of its successors and
assigns shall be inapplicable in the event of any losses, liabilities, damages,
costs, or expenses arising out of, or based upon, any material breach of any
warranty, covenant, or agreement of the Customer contained in this Agreement to
the extent caused by such breach.
As used in this Section 8, the term "affiliate" of DWR shall mean:
(i) any natural person, partnership, corporation, association, or other legal
entity directly or indirectly owning, controlling, or holding with power to vote
10% or more of the outstanding voting securities of DWR; (ii) any partnership,
corporation, association, or other legal entity 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or held with
power to vote by DWR; (iii) any natural person, partnership, corporation,
association, or other legal entity directly or indirectly controlling,
controlled by, or under common control with, DWR; or (iv) any officer or
director of DWR. Notwithstanding the foregoing, "affiliates" for purposes of
this Section 8 shall include only those persons acting on behalf of DWR within
the scope of the authority of DWR, as set forth in this Agreement.
9. Term. This Agreement shall continue in effect until terminated by
either party giving not less than 60 days' prior written notice of termination
to the other party. Any such termination by either party shall be without
penalty.
10. Complete Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the matters referred to herein,
and no other agreement, verbal or otherwise, shall be binding as between the
parties unless in writing and signed by the party against whom enforcement is
sought.
11. Assignment. This Agreement may not be assigned by either party
without the express written consent of the other party.
12. Amendment. This Agreement may not be amended except by the
written consent of the parties and provided such amendment is consistent with
the Limited Partnership Agreement.
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:
▇▇▇▇ ▇▇▇▇▇▇ PRINCIPAL PLUS FUND MANAGEMENT L.P.
c/o Demeter Management Corporation
Two World ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
if to DWR:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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.
IN WITNESS WHEREOF, this Agreement has been executed for and on
behalf of the undersigned as of the day and year first above written.
▇▇▇▇ ▇▇▇▇▇▇ PRINCIPAL PLUS FUND
MANAGEMENT L.P.
By: Demeter Management Corporation,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
FUTURES CUSTOMER AGREEMENT
In consideration of the acceptance by ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. ("DWR") of one
or more accounts of the undersigned ("Customer") (if more than one account is
carried by DWR, all are covered by this Agreement and are referred to
collectively as the "Account") and DWR's agreement to act as Customer's broker
for the execution, clearance and/or carrying of transactions for the purchase
and sale of commodity interests, including commodities, commodity futures
contracts and commodity options, Customer agrees as follows:
1. APPLICABLE RULES AND REGULATIONS - The Account and each transaction
therein shall be subject to the terms of this Agreement and to (a) all
applicable laws and the regulations, rules and orders (collectively
"regulations") of all regulatory and self-regulatory organizations having
jurisdiction and (b) the constitution, by-laws, rules, regulations,
orders, resolutions, interpretations and customs and usages (collectively
"rules") of the market and any associated clearing organization (each an
"exchange") on or subject to the rules of which such transaction is
executed and/or cleared. The reference in the preceding sentence to
exchange rules is solely for DWR's protection and DWR's failure to comply
therewith shall not constitute a breach of this Agreement or relieve
Customer of any obligation or responsibility under this Agreement. DWR
shall not be liable to Customer as a result of any action by DWR, its
officers, directors, employees or agents to comply with any rule or
regulation.
2. PAYMENTS TO DWR - Customer agrees to pay to DWR immediately on request (a)
commissions, fees and service charges as are in effect from time to time
together with all applicable regulatory and self-regulatory organization
and exchange fees, charges and taxes; (b) the amount of any debit balance
or any other liability that may result from transactions executed for the
account; and (c) interest on such debit balance or liability at the
prevailing rate charged by DWR at the time such debit balance or liability
arises and service charges on any such debit balance or liability together
with any reasonable costs and attorney's fees incurred in collecting any
such debit balance or liability. Customer acknowledges that DWR may charge
commissions at other rates to other customers.
3. CUSTOMER'S DUTY TO MAINTAIN ADEQUATE MARGIN - Customer shall at all times
and without prior notice or demand from DWR maintain adequate margins in
the account so as continually to meet the original and maintenance margin
requirements established by DWR for Customer. DWR may change such
requirements from time to time at DWR's discretion. Such margin
requirements may exceed the margin requirements set by any exchange or
other regulatory authority and may vary from DWR's requirements for other
customers. Customer agrees, when so requested, immediately to wire
transfer margin funds and to furnish DWR with names of bank officers for
immediate verification of such transfers. Customer acknowledges and agrees
that DWR may receive and retain as its own any interest, increment,
profit, gain or benefit directly or indirectly, accruing from any of the
funds DWR receives from Customer.
4. DELIVERY; OPTION EXERCISE
(a) Customer acknowledges that the making or accepting of delivery
pursuant to a futures contract may involve a much higher degree of
risk than liquidating a position by offset. DWR has no control over
and makes no warranty with respect to grade, quality or tolerances
of any commodity delivered in fulfillment of a contract.
(b) Customer agrees to give DWR timely notice and immediately on request
to inform DWR if Customer intends to make or take delivery under a
futures contract or to exercise an option contract. If so requested,
Customer shall provide DWR with satisfactory assurances that
Customer can fulfill Customer's obligation to make or take delivery
under any contract. Customer shall furnish DWR with property
deliverable by it under any contract in accordance with DWR's
instructions.
(c) DWR shall not have any obligation to exercise any long option
contract unless Customer has furnished DWR with timely exercise
instructions and sufficient initial margin with respect to each
underlying futures contract.
5. FOREIGN CURRENCY - If DWR enters into any transaction for Customer
effected in a currency other than U.S. dollars: (a) any profit or loss
caused by changes in the rate of exchange for such currency shall be for
Customer's account and risk and (b) unless another currency is designated
in DWR's confirmation of such transaction, all margin for such transaction
and the profit or loss on the liquidation of such transaction shall be in
U.S. dollars at a rate of exchange determined by DWR in its discretion on
the basis of then prevailing market rates of exchange for such foreign
currency.
6. DWR MAY LIMIT POSITIONS HELD - Customer agrees that DWR, at its
discretion, may limit the number of open positions (net or gross) which
Customer may execute, clear and/or carry with or acquire through it.
Customer agrees (a) not to make any trade which would have the effect of
exceeding such limits, (b) that DWR may require Customer to reduce open
positions carried with DWR and (c) that DWR may refuse to accept orders to
establish new positions. DWR may impose and enforce such limits, reduction
or refusal whether or not they are required by applicable law, regulations
or rules. Customer shall comply with all position limits established by
any regulatory or self-regulatory organization or any exchange. In
addition, Customer agrees to notify DWR promptly if customer is required
to file position reports with any regulatory or self-regulatory
organization or with any exchange.
7. NO WARRANTY AS TO INFORMATION OR RECOMMENDATION - Customer acknowledges
that:
(a) Any market recommendations and information DWR may communicate to
Customer, although based upon information obtained from sources
believed by DWR to be reliable, may be incomplete and not subject to
verification;
(b) DWR makes no representation, warranty or guarantee as to, and shall
not be responsible for, the accuracy or completeness of any
information or trading recommendation furnished to Customer;
(c) recommendations to Customer as to any particular transaction at any
given time may differ among DWR's personnel due to diversity in
analysis of fundamental and technical factors and may vary from any
standard recommendation made by DWR in its market letters or
otherwise; and
(d) DWR has no obligation or responsibility to update any market
recommendations or information it communicates to Customer.
Customer understands that DWR and its officers, directors,
affiliates, stockholders, representatives or associated persons may have
positions in and may intend to buy or sell commodity interests which are the
subject of market recommendations furnished to Customer, and that the market
positions of DWR or any such officer, director, affiliate, stockholder,
representative or associated person may or may not be consistent with the
recommendations furnished to Customer by DWR.
8. LIMITS ON DWR DUTIES; LIABILITY - Customer agrees:
(a) that DWR has no duty to apprise Customer of news or of the value of
any commodity interests or collateral pledged or in any way to
advise Customer with respect to the market;
(b) that the commissions which DWR receives are consideration solely for
the execution, reporting and carrying of Customer's trades;
(c) that if Customer has authorized any third party or parties to place
orders or effect transactions on behalf of Customer in any Account,
each such party has been selected by Customer based on its own
evaluation and assessment of such party and that such party is
solely the agent of Customer, and if any such party allocates
commodity interests among its customers, Customer has reviewed each
such party's commodity interest allocation system, has satisfied
itself that such allocation system is fair and will seek recovery
solely from such party to recover any damages sustained by Customer
as the result of any allocation made by such party; and
(d) to waive any and all claims, rights or causes of action which
Customer has or may have against DWR or its officers, employees and
agents (i) arising in whole or in part, directly or indirectly, out
of any act or omission of any person, whether or not legally deemed
an agent of DWR, who refers or introduces Customer to DWR or places
orders for Customer and (ii) for any punitive damages and to limit
any claims arising out of this Agreement or the Account to
Customer's direct out-of-pocket damages.
9. EXTRAORDINARY EVENTS - Customer shall have no claim against DWR for any
loss, damage, liability, cost, charge, expense, penalty, fine or tax
caused directly or indirectly by (a) governmental, court, exchange,
regulatory or self-regulatory organization restrictions, regulations,
rules, decisions or orders, (b) suspension or termination of trading, (c)
war or civil or labor disturbance, (d) delay or inaccuracy in the
transmission or reporting of orders due to a breakdown or failure of
computer services, transmission or communication facilities, (e) the
failure or delay by any exchange to enforce its rules or to pay to DWR any
margin due in respect of Customer's Account, (f) the failure or delay by
any bank, trust company, clearing organization or other person which,
pursuant to applicable exchange rules, is holding Customer funds,
securities or other property to pay or deliver the same to DWR or (g) any
other cause or causes beyond DWR's control.
10. INDEMNIFICATION OF DWR - Customer agrees to indemnify, defend and hold
harmless DWR and its officers, employees and agents from and against any
loss, cost, claim, damage (including any consequential cost, loss or
damage), liability or expense (including reasonable attorneys' fees) and
any fine, sanction or penalty made or imposed by any regulatory or
self-regulatory authority or any exchange as the result, directly or
indirectly, of:
(a) Customer's failure or refusal to comply with any provision of this
Agreement or perform any obligation on its part to be performed
pursuant to this Agreement; and
(b) Customer's failure to timely deliver any security, commodity or
other property previously sold by DWR on Customer's behalf.
11 NOTICES; TRANSMITTALS - DWR shall transmit all communications to Customer
at Customer's address, telefax or telephone number set forth in the
accompanying Futures Account Application or to such other address as
Customer may hereafter direct in writing. Customer shall transmit all
communications to DWR (except routine inquiries concerning the Account) to
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Futures Compliance
Officer. All payments and deliveries to DWR shall be made as instructed by
DWR from time to time and shall be deemed received only when actually
received by DWR.
12. CONFIRMATION CONCLUSIVE - Confirmation of trades and any other notices
sent to Customer shall be conclusive and binding on Customer unless
Customer or Customer's agent notifies DWR to the contrary (a) in the case
of an oral report, orally at the time received by Customer or its agent or
(b) in the case of a written report or notice, in writing prior to opening
of trading on the business day next following receipt of the report. In
addition, if Customer has not received a written confirmation that a
commodity interest transaction has been executed within three business
days after Customer has placed an order with DWR to effect such
transaction, and has been informed or believes that such order has been or
should have been executed, then Customer immediately shall notify DWR
thereof. Absent such notice, Customer conclusively shall be deemed
estopped to object and to have waived any such objection to the failure to
execute or cause to be executed such transaction. Anything in this Section
12 withstanding, neither Customer nor DWR shall be bound by any
transaction or price reported in error.
13. SECURITY INTEREST - All money and property ("collateral") now or at any
future time held in Customer's Account, or otherwise held by DWR for
Customer, is subject to a security interest in DWR's favor to secure any
indebtedness at any time owing to it by Customer. DWR, in its discretion,
may liquidate any collateral to satisfy any margin or Account deficiencies
or to transfer the collateral to the general ledger account of DWR.
14. TRANSFER OF FUNDS - At any time and from time to time and without prior
notice to Customer, DWR may transfer from one account to another account
in which Customer has any interest, such excess funds, equities,
securities or other property as in DWR's judgment may be required for
margin, or to reduce any debit balance or to reduce or satisfy any
deficits in such other accounts except that no such transfer may be made
from a segregated account subject to the Commodity Exchange Act to another
account maintained by Customer unless either Customer has authorized such
transfer in writing or DWR is effecting such transfer to enforce DWR's
security interest pursuant to Section 13. DWR promptly shall confirm all
transfers of funds made pursuant hereto to Customer in writing.
15. DWR'S RIGHT TO LIQUIDATE CUSTOMER POSITIONS - In addition to all other
rights of DWR set forth in this Agreement:
(a) when directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over DWR or the
Account;
(b) whenever, in its discretion, DWR considers it necessary for its
protection because of margin requirements or otherwise;
(c) if Customer or any affiliate of Customer repudiates, violates,
breaches or fails to perform on a timely basis any term, covenant or
condition on its part to be performed under this Agreement or
another agreement with DWR;
(d) if a case in bankruptcy is commenced or if a proceeding under any
insolvency or other law for the protection of creditors or for the
appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer is filed by or against Customer or any
affiliate of Customer, or if Customer or any affiliate of Customer
makes or proposes to make any arrangement or composition for the
benefit of its creditors, or if Customer (or any such affiliate) or
any or all of its property is subject to any agreement, order,
judgment or decree providing for Customer's dissolution, winding-up,
liquidation, merger, consolidation, reorganization or for the
appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer of Customer, such affiliate or such
property;
(e) DWR is informed of Customer's death or mental incapacity; or
(f) if an attachment or similar order is levied against the Account or
any other account maintained by Customer or any affiliate of
Customer with DWR;
DWR shall have the right to (i) satisfy any obligations due DWR out of any
Customer's property in DWR's custody or control, (ii) liquidate any or all
of Customer's commodity interest positions, (iii) cancel any or all of
Customer's outstanding orders, (iv) treat any or all of Customer's
obligations due DWR as immediately due and payable, (v) sell any or all of
Customer's property in DWR's custody or control in such manner as DWR
determines to be commercially reasonable, and/or (vi) terminate any or all
of DWR's obligations for future performance to Customer, all without any
notice to or demand on Customer. Any sale hereunder may be made in any
commercially reasonable manner. Customer agrees that a prior demand, call
or notice shall not be considered a waiver of DWR's right to act without
demand or notice as herein provided, that Customer shall at all times be
liable for the payment of any debit balance owing in each account upon
demand whether occurring upon a liquidation as provided under this Section
15 or otherwise under this Agreement, and that in all cases Customer shall
be liable for any deficiency remaining in each Account in the event of
liquidation thereof in whole or in part together with interest thereon and
all costs relating to liquidation and collection (including reasonable
attorneys' fees).
16. CUSTOMER REPRESENTATIONS, WARRANTIES AND AGREEMENTS - Customer represents
and warrants to and agrees with DWR that:
(a) Customer has full power and authority to enter into this Agreement
and to engage in the transactions and perform its obligations
hereunder and contemplated hereby and (i) if a corporation or a
limited liability company, is duly organized under the laws of the
jurisdiction set forth in the accompanying Futures Account
Application, or (ii) if a partnership, is duly organized pursuant to
a written partnership agreement and the general partner executing
this Agreement is duly authorized to do so under the partnership
agreement;
(b) Neither Customer nor any partner, director, officer, member, manager
or employee of Customer nor any affiliate of Customer is a partner,
director, officer, member, manager or employee of a futures
commission merchant introducing broker, exchange or self-regulatory
organization or an employee or commissioner of the Commodity Futures
Trading Commission (the "CFTC"), except as previously disclosed in
writing to DWR;
(c) The accompanying Futures Account Application and Personal Financial
Statements, if applicable, (including any financial statements
furnished in connection therewith) are true, correct and complete.
Except as disclosed on the accompanying Futures Account Application
or otherwise provided in writing, (i) Customer is not a commodity
pool or is exempt from registration under the rules of the
Commission, and (ii) Customer is acting solely as principal and no
one other than Customer has any interest in any Account of Customer.
Customer hereby authorizes DWR to contact such banks, financial
institutions and credit agencies as DWR shall deem appropriate for
verification of the information contained herein.
(d) Customer has determined that trading in commodity interests is
appropriate for Customer, is prudent in all respects and does not
and will not violate Customer's charter or by-laws (or other
comparable governing document) or any law, rule, regulation,
judgment, decree, order or agreement to which Customer or its
property is subject or bound;
(e) As required by CFTC regulations, Customer shall create, retain and
produce upon request of the applicable contract market, the CFTC or
the United States Department of Justice documents (such as
contracts, confirmations, telex printouts, invoices and documents of
title) with respect to cash transactions underlying exchanges of
futures for cash commodities or exchange of futures in connection
with cash commodity transactions;
(f) Customer consents to the electronic recording, at DWR's discretion,
of any or all telephone conversations with DWR (without automatic
tone warning device), the use of same as evidence by either party in
any action or proceeding arising out of the Agreement and in DWR's
erasure, at its discretion, of any recording as part of its regular
procedure for handling of recordings;
(g) Absent a separate written agreement between Customer and DWR with
respect to give-ups, DWR, in its discretion, may, but shall have no
obligation to, accept from other brokers commodity interest
transactions executed by such brokers on an exchange for Customer
and proposed to be "given-up" to DWR for clearance and/or carrying
in the Account;
(h) DWR, for and on behalf of Customer, is authorized and empowered to
place orders for commodity interest transactions through one or more
electronic or automated trading systems maintained or operated by or
under the auspices of an exchange, that DWR shall not be liable or
obligated to Customer for any loss, damage, liability, cost or
expense (including but not limited to loss of profits, loss of use,
incidental or consequential damages) incurred or sustained by
Customer and arising in whole or in part, directly or indirectly,
from any fault, delay, omission, inaccuracy or termination of a
system or DWR's inability to enter, cancel or modify an order on
behalf of Customer on or through a system. The provisions of this
Section 16(h) shall apply regardless of whether any customer claim
arises in contract, negligence, tort, strict liability, breach of
fiduciary obligations or otherwise; and
(i) If Customer is subject to the Financial Institution Reform, Recovery
and Enforcement Act of 1989, the certified resolutions set forth
following this Agreement have been caused to be reflected in the
minutes of Customer's Board of Directors (or other comparable
governing body) and this Agreement is and shall be, continuously
from the date hereof, an official record of Customer.
Customer agrees to promptly notify DWR in writing if any of the warranties
and representations contained in this Section 16 becomes inaccurate or in
any way ceases to be true, complete and correct.
17. SUCCESSORS AND ASSIGNS - This Agreement shall inure to the benefit of DWR,
its successors and assigns, and shall be binding upon Customer and
Customer's executors, trustees, administrators, successors and assigns,
provided, however, that this Agreement is not assignable by Customer
without the prior written consent of DWR.
18. MODIFICATION OF AGREEMENT BY DWR; NON-WAIVER PROVISION - This Agreement
may only be altered, modified or amended by mutual written consent of the
parties, except that if DWR notifies Customer of a change in this
Agreement and Customer thereafter effects a commodity interest transaction
in an account, Customer agrees that such action by Customer will
constitute consent by Customer to such change. No employee of DWR other
than DWR's General Counsel or his or her designee, has any authority to
alter, modify, amend or waive in any respect any of the terms of this
Agreement. The rights and remedies conferred upon DWR shall be cumulative,
and its forbearance to take any remedial action available to it under this
Agreement shall not waive its right at any time or from time to time
thereafter to take such action.
19. SEVERABILITY - If any term or provision hereof or the application thereof
to any persons or circumstances shall to any extent be contrary to any
exchange, government or self-regulatory regulation or contrary to any
federal, state or local law or otherwise be invalid or unenforceable, the
remainder of this Agreement or the application of such term or provision
to persons or circumstances other than those as to which it is contrary,
invalid or unenforceable, shall not be affected thereby.
20. CAPTIONS - All captions used herein are for convenience only, are not a
part of this Agreement, and are not to be used in construing or
interpreting any aspect of this Agreement.
21. TERMINATION - This Agreement shall continue in force until written notice
of termination is given by Customer or DWR. Termination shall not relieve
either party of any liability or obligation incurred prior to such notice.
Upon giving or receiving notice of termination, Customer will promptly
take all action necessary to transfer all open positions in each account
to another futures commission merchant.
22. ENTIRE AGREEMENT - This Agreement constitutes the entire agreement between
Customer and DWR with respect to the subject matter hereof and supersedes
any prior agreements between the parties with respect to such subject
matter.
23. GOVERNING LAW; CONSENT TO JURISDICTION -
(a) In case of a dispute between Customer and DWR arising out of or
relating to the making or performance of this Agreement or any
transaction pursuant to this Agreement (i) this Agreement and its
enforcement shall be governed by the laws of the State of New York
without regard to principles of conflicts of laws, and (ii) Customer
will bring any legal proceeding against DWR in, and Customer hereby
consents in any legal proceeding by DWR to the jurisdiction of, any
state or federal court located within the State and City of New York
in connection with all legal proceedings arising directly,
indirectly or otherwise in connection with, out of, related to or
from Customer's Account, transactions contemplated by this Agreement
or the breach thereof. Customer hereby waives all objections
Customer, at any time, may have as to the propriety of the court in
which any such legal proceedings may be commenced. Customer also
agrees that any service of process mailed to Customer at any address
specified to DWR shall be deemed a proper service of process on the
undersigned.
(b) Notwithstanding the provisions of Section 23 (a)(ii), Customer may
elect at this time to have all disputes described in this Section
resolved by arbitration. To make such election, Customer must sign
the Arbitration Agreement set forth in Section 24. Notwithstanding
such election, any question relating to whether Customer or DWR has
commenced an arbitration proceeding in a timely manner, whether a
dispute is within the scope of the Arbitration Agreement or whether
a party (other than Customer or DWR) has consented to arbitration
and all proceedings to compel arbitration shall be determined by a
court as specified in Section 23 (a)(ii).
24. ARBITRATION AGREEMENT (OPTIONAL) - Every dispute between Customer and DWR
arising out of or relating to the making or performance of this Agreement
or any transaction pursuant to this Agreement, shall be settled by
arbitration in accordance with the rules, then in effect, of the National
Futures Association, the contract market upon which the transaction giving
rise to the claim was executed, or the National Association of Securities
Dealers as Customer may elect. If Customer does not make such election by
registered mail addressed to DWR at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇; 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 ▇▇▇ IN A
COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY CLAIMS
OR COUNTERCLAIMS WHICH YOU OR DWR MAY SUBMIT TO ARBITRATION UNDER THIS
AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO
PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER SECTION 14 OF
THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE WHICH MAY BE
ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU
WILL BE NOTIFIED IF DWR INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF
YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF
YOU PREFER TO REQUEST A SECTION 14 "REPARATIONS" PROCEEDINGS BEFORE THE
CFTC, YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE
THAT ELECTION.
YOU NEED NOT AGREE TO THIS ARBITRATION AGREEMENT TO OPEN AN ACCOUNT WITH
DWR. See 17 CFR 180.1-180.5. ACCEPTANCE OF THIS ARBITRATION AGREEMENT
REQUIRES A SEPARATE SIGNATURE ON PAGE 8.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL) - Without its prior
notice, Customer agrees that when DWR executes sell or buy orders on
Customer's behalf, DWR, its directors, officers, employees, agents,
affiliates, and any floor broker may take the other side of Customer's
transaction through any account of such person subject to its being
executed at prevailing prices in accordance with and subject to the
limitations and conditions, if any, contained in applicable rules and
regulations.
26. AUTHORIZATION TO TRANSFER FUNDS (OPTIONAL) - Without limiting other
provisions herein, DWR is authorized to transfer from any segregated
account subject to the Commodity Exchange Act carried by DWR for the
Customer to any other account carried by DWR for the Customer such amount
of excess funds as in DWR's judgment may be necessary at any time to avoid
a margin call or to reduce a debit balance in said account. It is
understood that DWR will confirm in writing each such transfer of funds
made pursuant to this authorization within a reasonable time after such
transfer.
27. SUBORDINATION AGREEMENT (APPLIES ONLY TO ACCOUNTS WITH FUNDS HELD IN
FOREIGN COUNTRIES) - Funds of customers trading on United States contract
markets may be held in accounts denominated in a foreign currency with
depositories located outside the United States or its territories if the
customer is domiciled in a foreign country or if the funds are held in
connection with contracts priced and settled in a foreign currency. Such
accounts are subject to the risk that events could occur which hinder or
prevent the availability of these funds for distribution to customers.
Such accounts also may be subject to foreign currency exchange rate risks.
If authorized below, Customer authorizes the deposit of funds into such
foreign depositories. For customers domiciled in the United States, this
authorization permits the holding of funds in regulated accounts offshore
only if such funds are used to margin, guarantee, or secure positions in
such contracts or accrue as a result of such positions. In order to avoid
the possible dilution of other customer funds, a customer who has funds
held outside the United States agrees by accepting this subordination
agreement that his claims based on such funds will be subordinated as
described below in the unlikely event both of the following conditions are
met: (1) DWR is placed in receivership or bankruptcy, and (2) there are
insufficient funds available for distribution denominated in the foreign
currency as to which the customer has a claim to satisfy all claims
against those funds.
By initialing the Subordination Agreement below, Customer agrees that if
both of the conditions listed above occur, its claim against DWR's assets
attributable to funds held overseas in a particular foreign currency may
be satisfied out of segregated customer funds held in accounts denominated
in dollars or other foreign currencies only after each customer whose
funds are held in dollars or in such other foreign currencies receives its
pro-rata portion of such funds. It is further agreed that in no event may
a customer whose funds are held overseas receive more than its pro-rata
share of the aggregate pool consisting of funds held in dollars, funds
held in the particular foreign currency, and non-segregated assets of DWR.
OPTIONAL ELECTIONS
The following provisions, which are set forth in this agreement, need not be
entered into to open the Account. Customer agrees that its optional elections
are as follows:
SIGNATURE REQUIRED FOR EACH ELECTION
ARBITRATION AGREEMENT:
(Agreement Paragraph 24)
-----------------------------------------
CONSENT TO TAKE THE OTHER SIDE OF ORDERS:
(Agreement Paragraph 25) X /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
AUTHORIZATION TO TRANSFER FUNDS:
(Agreement Paragraph 26) X /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
ACKNOWLEDGEMENT TO SUBORDINATION AGREEMENT
(Agreement Paragraph 27) X /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
(Required for accounts holding non-U.S.
currency)
=============================================================================================
HEDGE ELECTION
Customer confirms that all transactions in the Account will [ ] represent
bona fide hedging transactions, as defined by the Commodity Futures
Trading Commission, unless DWR is notified otherwise not later than the
time an order is placed for the Account [check box if applicable]:
Pursuant to CFTC Regulation 190.06(d), Customer specifies and agrees, with
respect to hedging transactions in the Account, that in the unlikely event of
DWR's bankruptcy, it prefers that the bankruptcy trustee [check appropriate
box]:
A. Liquidate all open contracts without first seeking instructions [ ]
either from or on behalf of Customer.
B. Attempt to obtain instructions with respect to the disposition of [ ]
all open contracts.
(IF NEITHER BOX IS CHECKED, CUSTOMER SHALL BE DEEMED TO ELECT A)
=============================================================================================
ACKNOWLEDGEMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned each hereby acknowledges its separate receipt from DWR, and its
understanding of each of the following documents prior to the opening of the
account:
o Risk Disclosure Statement for Futures o Project ATM Customer Information
and Options (in the form prescribed by Statement
CFTC Regulation 1.55(c))
o LME Risk Warning Notice o Questions & Answers on Flexible
Options Trading at the CBOT
o ▇▇▇▇ ▇▇▇▇▇▇ Order Presumption for After
Hours Electronic Markets o CME Average Pricing System Disclosure
Statement
o NYMEX ACCESSSM Risk Disclosure Statement o Special Notice to Foreign Brokers and
Foreign Traders
o Globex(R) Customer Information and Risk
Disclosure Statement
=============================================================================================
REQUIRED SIGNATURES
The undersigned has received, read, understands and agrees to all the provisions
of this Agreement and the separate risk disclosure statements enumerated above
and agrees to promptly notify DWR in writing if any of the warranties and
representations contained herein become inaccurate or in any way cease to be
true, complete and correct.
▇▇▇▇ ▇▇▇▇▇▇ CORNERSTONE FUND II L.P.
---------------------------------------------------------------------------------------------
CUSTOMER NAME(S)
By: DEMETER MANAGEMENT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ June 22, 2000
----------------------------------------------- ------------------------------------------
AUTHORIZED SIGNATURE(S) DATE
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chairman
---------------------------------------------------------------------------------------------
(If applicable, print name and title of signatory)