CUSTOMER AGREEMENT
XXXXXXX XXXXX XXXXXX XXXXXXXXX FUTURES FUND L.P.
This Customer Agreement made and entered into as of the 15th day of April
2002, by and among XXXXXXX XXXXX XXXXXX XXXXXXXXX FUTURES FUND L.P., a New York
limited partnership (the "Partnership"), XXXXX XXXXXX FUTURES MANAGEMENT LLC, a
Delaware limited liability company ("SBFM" or the "General Partner"), and
XXXXXXX XXXXX XXXXXX INC., a Delaware corporation ("SSB").
W I T N E S S E T H :
WHEREAS, the Partnership, formed on March 25, 2002, has been organized to
engage in the speculative trading of commodity interests, including, but not
limited to, futures contracts, options, spot, and forward contracts; and
WHEREAS, SBFM is the general partner of the Partnership and is registered
as a commodity pool operator with the Commodity Futures Trading Commission
("CFTC") and is a member of the National Futures Association ("NFA"); and
WHEREAS, the Partnership and SSB wish to enter into this Customer Agreement
setting forth the terms and conditions upon which SSB will perform brokerage and
other services for the Partnership;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, it is agreed as follows:
1. Appointment of Broker/Dealer and Opening of Account. The Partnership hereby
appoints SSB as its commodity broker/dealer through whom the Partnership will
execute trades in commodity interests including futures contracts, options,
spot, and forward contracts. As soon as practicable following the conclusion of
the Initial Offering Period (as defined in the Private Placement Offering
Memorandum and Disclosure Document of the Partnership) of the units of limited
partnership interest in the Partnership (the "Units"), provided at least 5,000
Units are sold, the Partnership shall deposit or cause to be deposited the
partners' capital contributions in a commodity brokerage account with SSB, and
will maintain all of its assets, as they from time to time exist, in such
account except for such amounts as may be necessary or desirable to be
maintained in a bank account or with a broker to facilitate trading in interbank
forward foreign currency transactions and the payment of Partnership expenses,
redemptions or distributions. The Partnership shall execute such other documents
as shall be necessary or appropriate to permit SSB to perform its services
hereunder.
2. Services of SSB. SSB agrees to use its best efforts to effect transactions
for the Partnership's account. SSB agrees to assist the Partnership in
performing various functions. These include, but are not limited to: (a)
calculating the Partnership's Net Assets and Net Asset Value (as such terms are
defined in the Partnership's Limited Partnership Agreement) at such times as may
be required, (b) calculating any fees due the Partnership's trading advisor (the
"Advisor"), (c) preparing and confirming financial information for annual or
interim audits and reports and (d) establishing procedures for effecting
redemptions, cash distributions and the liquidation of the Partnership upon
termination. SSB further agrees to furnish clerical and bookkeeping support for
the administration of the Partnership.
3. Brokerage and Other Fees. (a) The Partnership shall pay to SSB, in lieu of
brokerage commissions on a per trade basis, a monthly flat rate brokerage fee
equal to 4.5% per year of the Partnership's month-end Net Assets (computed
monthly by multiplying the Partnership's Net Assets as of the last business day
of each month by 4.5% and multiplying the result thereof by the ratio which the
total number of calendar days in that month bears to 365 days), which is
inclusive of floor brokerage. The Partnership shall also pay all National
Futures Association, exchange, clearing, user and give-up fees, or shall
reimburse SSB for all such fees previously paid by SSB on behalf of the
Partnership. SSB's fee may be increased or decreased at any time at SSB's
discretion upon notice to the Partnership.
(b) Reimbursement of Offering Expenses. The Partnership shall reimburse SSB
for the total amount of the offering and organizational expenses of the Initial
Offering Period, plus interest at the prime rate quoted by JPMorgan Chase Bank
over the first 24 months after trading commences.
4. Payment of Interest. All of the assets of the Partnership which are deposited
in the Partnership's accounts at SSB will be deposited and maintained in cash
and/or in U.S. government securities. During the term of this Agreement, SSB
will, within ten (10) days following the end of each calendar month, credit the
Partnership's brokerage accounts with a sum representing interest on eighty
percent (80%) of the average daily equity maintained in cash in U.S. dollars,
and interest on one hundred percent (100%) of the average daily equity
maintained in cash in non-U.S. dollars, in such accounts during each month
(i.e., the sum of the daily cash balances in such accounts divided by the total
number of calendar days in that month) at a 30-day Treasury xxxx rate determined
weekly by SSB based on the average non-competitive yield on 3-month U.S.
Treasury bills maturing in 30 days (or on the closest maturity date thereto)
from the date on which such weekly rate is determined. The equity maintained in
cash in the account on Saturdays, Sundays and holidays shall be the equity
maintained in cash in the account as of the close of business on the immediately
preceding business day. Xxxxxxx Xxxxx Barney may place up to 100% of the Fund's
assets into 90-day U.S. Treasury bills, in which case the Partnership will
receive eighty percent (80%) of the interest (original issue discount) and
Xxxxxxx Xxxxx Xxxxxx will retain twenty percent (20%) of the interest earned on
the Treasury bills.
5. Trading Authorization. The General Partner has entered into a Management
Agreement with Xxxxxx Capital Management, L.P. as the Partnership's Advisor.
Pursuant to the Management Agreement, the Partnership's Advisor shall have
discretion to order purchases and sales of commodity interests including futures
contracts, options, spot, and forward contracts. SBFM as the Partnership's
General Partner may allocate or reallocate all or a portion of the Partnership's
assets among trading programs operated by the Partnership's Advisor or select or
appoint additional or replacement trading advisors. SSB is hereby authorized to
execute all orders placed by the Partnership's Advisor for the account of the
Partnership until notified by SBFM to the contrary, and shall have no obligation
to inquire into the reason for or method of determining such orders, nor any
obligation to monitor such orders in relation to the Partnership's trading
policies. The provisions of this Paragraph 5 shall apply with equal force and
effect to any other commodity trading advisor designated in the future by SBFM.
6. Terms of the Account. The following terms and conditions shall be
applicable to the Partnership's account:
(a) The word "property" is used herein to mean securities of all kinds,
monies, options, commodities and contracts for the future delivery of,
or otherwise relating to, commodities or securities and all property
usually and customarily dealt in by brokerage firms.
(b) All transactions for the Partnership's account shall be subject to the
regulations of all applicable federal, state and self-regulatory
agencies including, but not limited to, the various commodity
exchanges and the constitutions, rules and customs, as the same may be
constituted from time to time, of the exchange or market (and its
clearing house, if any) where executed. Actual deliveries are intended
on all transactions. The Partnership also agrees not to exceed the
speculative position limits for its own account, acting alone or in
concert with others, and promptly to advise SSB if it is required to
file reports of its commodity positions with the Commodity Futures
Trading Commission.
(c) Any and all property belonging to the Partnership, or in which it may
have an interest, held by SSB or carried in the Partnership's account
(either individually or jointly with others) shall be subject to a
general lien for the discharge of the Partnership's obligations to
SSB, wherever or however arising and without regard to whether or not
SSB has made advances with respect to such property, and SSB is hereby
authorized to sell and/or purchase any and all property in the
Partnership's account without notice to satisfy such general lien.
(d) The Partnership agrees to maintain such collateral and/or margin as
SSB may, in its discretion, require from time to time and will pay on
demand any amount owing with respect to its account. Against a "short"
position in any commodity contract, prior to the maturity thereof, the
Partnership will give SSB instructions to cover, or furnish SSB with
all necessary delivery documents, and in default thereof, SSB may,
without demand or notice, cover the contracts, or if an order to buy
in such contracts cannot be executed under prevailing conditions, SSB
may procure the actual commodity and make delivery thereof upon any
terms and by any method which may be feasible. It is further agreed
that if the Partnership fails to receive sufficient funds to pay for
any commodities and commodity futures contracts and/or to satisfy any
demands for original and/or variation margin, SSB may, without prior
demand and notice, sell any property held by it in the Partnership's
account and any loss resulting therefrom will be charged to the
Partnership's account.
(e) SSB may, whenever in its discretion it considers it necessary for its
protection, sell any or all property held in the Partnership's
account, cancel any open orders for the purchase or sale of any
property with or without notice to the Partnership, and SSB may borrow
or buy in any property required to make delivery against any sales,
including a short sale, effected for the Partnership. Such sale or
purchase may be public or private and may be made without advertising
or notice to the Partnership and in such manner as SSB may, in its
discretion, determine, and no demands, calls, tenders or notices which
SSB may make or give in any one or more instances shall invalidate the
aforesaid waiver on the Partnership's part. At any such sale SSB may
purchase the property free of any right of redemption and the
Partnership shall be liable for any deficiency in its account.
(f) SSB and the Partnership agree that the parties shall have the right to
offset any unrealized gains and losses on the Partnership's open
positions and to net any open orders for the purchase or sale of any
property of the Partnership.
(g) The Partnership agrees to pay service fees and/or interest charges
upon its account monthly at the prevailing and/or allowable rates
according to the laws of the State of New York, as determined by SSB
at the time of the acceptance of this Agreement in its New York office
and thereafter.
(h) If any provisions herein are or should become inconsistent with any
present or future law, rule or regulation of any sovereign government
or a regulatory body having jurisdiction over the subject matter of
this Agreement, such provision shall be deemed to be rescinded or
modified in accordance with any such law, rule or regulation. In all
other respects, this Agreement shall continue and remain in full force
and effect.
(b) Indemnification. (a) In any action, suit, or proceeding to which SSB was or
is a party or is threatened to be made a party by reason of the fact that it is
or was the commodity broker for the Partnership (other than an action by or in
the right of the Partnership), the Partnership shall indemnify and hold harmless
SSB, subject to subparagraph (c), against any loss, liability, damage, cost,
expense (including attorneys' fees and accountants' fees), judgments and amounts
paid in settlement actually and reasonably incurred by it in connection with
such action, suit or proceeding if SSB acted in good faith and in a manner it
reasonably believed to be in the best interests of the Partnership, except that
no indemnification shall be made in respect of any claim, issue or matter which
as to SSB constituted negligence, misconduct or breach of its fiduciary
obligations to the Partnership, unless, and only to the extent that, the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, SSB is fairly and reasonably entitled to indemnification for such expenses
which such court shall deem proper; and further provided that no indemnification
shall be available from the Partnership if such indemnification is prohibited by
Section 16 of the Partnership's Limited Partnership Agreement. The termination
of any action, suit or proceeding by judgment, order or settlement shall not, of
itself, create a presumption that SSB did not act in good faith, and in a manner
which it reasonably believed to be in or not opposed to the best interests of
the Partnership. To the extent that SSB has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subparagraph (a) above, or in defense of any claim, issue or matter therein, the
Partnership shall indemnify it against the expenses, including attorneys' fees,
actually and reasonably incurred by it in connection therewith.
(c) Any indemnification under subparagraph (a) above, unless ordered by a
court, shall be made by the Partnership only as authorized in the specific case
and only upon a determination by independent legal counsel in a written opinion
that indemnification is proper in the circumstances because SSB has met the
applicable standard of conduct set forth in subparagraph (a) above.
(d) The term SSB as used in this Paragraph 7 shall include SSB, its
officers, directors, stockholders, employees and affiliates.
7. Termination. This Agreement may be terminated at any time by either party
hereto upon notice to the other, in which event the brokerage accounts shall be
closed and all positions open at such time shall be liquidated or shall be
transferred to another broker as directed by the Partnership.
8. Miscellaneous. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. This
Agreement shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above written.
XXXXXXX XXXXX XXXXXX XXXXXXXXX FUTURES FUND L.P.
By: Xxxxx Xxxxxx Futures Management LLC
(General Partner)
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
President
XXXXXXX XXXXX XXXXXX INC.
(Commodity Broker/Dealer)
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title:President
