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AMENDED AND RESTATED CUSTOMER AGREEMENT
THIS AMENDED AND RESTATED CUSTOMER AGREEMENT (this
"Agreement"), made as of the 1st day of December, 1997, 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 September 1,
1996 (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 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 ▇▇▇▇ Futures, Inc. ("CFI") 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 CFI 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 CFI. The Customer will pay
certain charges of CFI for executing and clearing trades for the
Customer pursuant to that certain Customer Agreement dated as of
December 1, 1997, among the Customer, CFI and DWR. In addition,
DWR shall pay CFI certain charges with respect to the execution
and clearance of trades for the Customer as agreed from time to
time between DWR and CFI.
(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. 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 CFI, as agreed from time to
time by DWR and CFI, on the Customer's assets deposited as margin
with CFI. 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 Trade Center, 62nd Floor
New York, New York 10048
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
President
if to DWR:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive 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/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive 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:
Risk Disclosure Statement for Project ATM Customer
Futures and Options (in the form Information Statement
prescribed by CFTC
Regulation 1.55(c))
LME Risk Warning Notice Questions & Answers on Flexible
Options Trading at the CBOT
▇▇▇▇ ▇▇▇▇▇▇ Order Presumption CME Average Pricing System
for After Hours Electronic Markets Disclosure Statement
NYMEX ACCESSSM Risk Disclosure Special Notice to Foreign
Statement Brokers and Foreign Traders
Globexr 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.
▇▇▇▇ ▇▇▇▇▇▇ PRINCIPAL PLUS FUND MANAGEMENT L.P.
CUSTOMER NAME(S)
By: DEMETER MANAGEMENT CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ December 1, 1997
AUTHORIZED SIGNATURE(S) DATE
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
(If applicable, print name and title
of signatory)