FOREIGN CURRENCY ADDENDUM
This addendum ("Addendum) supplements the terms and conditions of
the Futures Account Client Agreement ("Agreement") entered into by and
between Willowbridge Strategic Trust ("Customer") and Prudential
Securities Incorporated ("PSI") as of ___________, 199__.
In consideration of PSI agreeing to enter into various forward and
spot foreign currency and foreign currency options transactions
(collectively "Forex Contracts") with Customer, the parties agree
as follows:
1. Relationship to Agreement. Except as otherwise provided in
this Addendum, the terms and conditions of the Agreement shall remain
in full force and effect, and shall apply to all Forex Contracts that
PSI may transact with Customer. If there are any conflicts between
the terms and conditions of the Agreement and this Addendum, the terms
and conditions of this Addendum will govern with respect to Forex
Contracts.
2. Forex Contracts. PSI and Customer will each act as principals
with respect to Forex Contracts. Forex Contracts will be transacted within
the non-regulated portion of Customer's PSI futures account. Customer
acknowledges that Forex Contracts are not traded on or guaranteed by a
regulated exchange or its clearing house and accordingly, acknowledges
that trading in Forex Contracts is not subject to the same regulatory
or financial protections as is trading in futures contracts. Customer
represents and warrants that (a) it is authorized to enter into Forex
Contracts, (b) it understands that as principal opposite PSI the parties
will each be relying on the creditworthiness of the other, (c) each
Forex Contract will be individually negotiated as to its material
economic terms, and (d) PSI will be entitled to rely on any instructions,
notices and communications that it reasonably believes to have originated
with any authorized representative of Customer, including a person with
a Power of Attorney over trading decisions, and Customer shall be
bound thereby.
3. Limits. This Addendum does not evidence a commitment of PSI
or Customer to enter into Forex Contracts generally or to enter into
any specific Forex Contract. PSI shall have the right to set limits
on the number of Forex Contracts that PSI will transact with Customer.
PSI reserves the right to increase or decrease such limits as, in PSI's
good faith judgment, market and economic conditions warrant, including
but not limited to the material change in Customer's credit rating or
Customer's country or sovereign rating by an internationally recognized
rating agency. Additionally, PSI reserves the right, exercisable at
any time when warranted by market conditions in PSI's sole discretion,
to refuse acceptance of Customer's orders.
4. Confirmations. Upon entering into a Forex Contract with
Customer, PSI shall verbally confirm the economic terms to Customer
followed by a written confirmation (via letter, telex, facsimile or
telecopier at PSI's election) (the "Confirmation) specifying the
amount of
foreign currency bought or sold by Customer against U.S.
dollars or another foreign currency, the exchange rate, and the date
on which, and the location where, the currency is to be delivered.
Confirmations shall be conclusive and binding on Customer unless
Customer promptly notifies PSI of any objection within three (3) days
of receipt by Customer of the Confirmation.
5. Collateral; Settlement. PSI reserves the right to require
customer to deposit collateral with respect to Forex Contract
transactions. All Forex Contracts will be transacted pursuant
to a line of credit or will be otherwise collateralized at PSI's
option, and will be subject to the netting provisions set forth in
Section 8 below. All payments due under a Forex Contract shall be
made by wire transfer on the delivery date specified in the Confirmation
in immediately available funds in the designated currency. In the
event that either party's performance of its payment obligations
shall be interrupted or delayed by reason of war, riot, civil
commotion, sovereign conduct or other acts of state, the time of
performance of such party's obligations shall be extended for the
period of such interruption.
6. Dispute Resolution. Any dispute between Customer and PSI
relating to Customer's Forex Contracts shall be settled and determined
by an arbitration panel of either the New York Stock Exchange, the
National Association of Securities Dealers Inc., or the National
Futures Association as Customer may elect, or if the foregoing qualified
forums decline to arbitrate such dispute, before such forum as may be
agreed upon between the parties. At such time that PSI notifies Customer
of its intent to submit a claim to arbitration Customer will have seven
business days to elect a qualified forum for conducting the proceeding.
If Customer fails to notify PSI of its selection within seven business
days, PSI shall have the absolute right to make such selection.
7. Governing Law. The interpretation and enforcement of this
Addendum (and the Forex Contracts covered hereunder) and the rights,
obligations and remedies of the parties shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to principles of choice of law.
8. Netting Provisions.
(a) Netting by Novation. Unless separately agreed and set out
in the Confirmation regarding a specific Forex Contract, each Forex
Contract made between Customer and PSI will immediately, upon its
being entered into, be netted with all then existing Forex Contracts
between Customer and PSI for the same paired currencies having the
same delivery date. Each Forex Contract containing an obligation to
deliver that has been netted pursuant to the foregoing shall immediately
be deemed cancelled and simultaneously replaced by a single transaction.
For purposes hereof, each Forex Contract shall be deemed a Forex
Contract from and after its inception for all purposes.
(b) Payment Netting. If on any delivery date more than one
delivery of a particular currency is to be made between Customer and
PSI pursuant to a Forex Contract,
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each party shall aggregate the amounts deliverable by it and only
the difference, if any, between these aggregate amounts shall be
delivered by the party owing the larger amount to the other party.
(c) Discharge and Termination of Options. Any call option or
any put option written by a party will automatically be terminated and
discharged, in whole or in part, as applicable, against a call option
or a put option, respectively, written by the other party, such
termination and discharge to occur automatically upon the payment
in full of the premium payable in respect of such options; provided
that such termination and discharge may occur only in respect of
options:
(i) each being with respect to the same put currency and
the same call currency;
(ii) each having the same expiration date and expiration time;
(iii) each being of the same style, i.e. both being
America Style options or both being European Style options;
(iv) each having the same strike price; and
(v) neither of which shall have been exercised by delivery
of a notice of exercise;
and, upon the occurrence of such termination and discharge,
neither party shall have any further obligation to the other party in
respect of the relevant options or, as the case may be, parts thereof
so terminated and discharged. In the case of a partial termination and
discharge (i.e., where the relevant options are for different amounts
of the currency), the remaining portion of the option that is partially
discharged shall continue to be a Forex Contract for all purposes of
this Addendum.
(d) The occurrence at any time with respect to a party of any of
the following events constitutes an event of default (an Event of
Default ) with respect to such party:
(i) Failure to Pay or Deliver. Failure by the party to make,
when due, any payment under this Addendum or delivery required to be
made by it if such failure is not remedied on or before the third
business day after notice of such failure is given to such party;
(ii) Breach of Agreement. Failure by the party to comply
with or perform any agreement or obligation under this Addendum if
such failure is not remedied on or before the third business day after
notice of such failure is given to the Defaulting Party:
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(iii) Failure to Provide Adequate Assurances. Failure
by Customer to provide adequate assurances of its ability to perform
any of its obligations under this Addendum within three business days
of a written request from PSI to do so when PSI has reasonable grounds
for insecurity;
(iv) Bankruptcy. The Party - (A) is dissolved (other than
pursuant to a consolidation, amalgamation or merger); (B) becomes
insolvent or is unable to pay its debts or fails or admits in writing
its inability generally to pay its debts as they become due; (C) makes
a general assignment, arrangement or composition with or for the
benefit of its creditors; (D) institutes or has instituted against
it a proceeding seeking a judgment of insolvency or bankruptcy or
any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors rights, or a petition is presented
for its winding-up or liquidation, and, in the case of any such
proceeding or petition instituted or presented against it, such
proceeding or petition (1) results in a judgment or insolvency or
bankruptcy or the entry of an order for relief or the making of an
order for its winding-up or liquidation or (2) is not dismissed,
discharged, stayed or restrained in each case within 30 days of the
institution or presentation thereof; (E) has a resolution passed for
its winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (F) seeks or becomes
subject to the appoint of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official
for it or for all or substantially all of its assets; (G) has a secured
party take possession of all or substantially all of its assets or has
a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all of its
assets and such secured party maintains possession, or any such process
is not dismissed, discharged, stayed or restrained, in each case within
30 days thereafter; (H) causes or is subject to any event with respect
to it which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (A) to
(G) (inclusive); or (i) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any
of the foregoing acts.
(e) Close-Out Netting. If an Event of Default has occurred and
is continuing in respect of a party ("Defaulting Party"), the other
party ("Non-Defaulting Party") shall be entitled in its reasonable
discretion, immediately and at any time and upon notice (unless such
notice cannot practicably be provided in the circumstances) to close-out
all Defaulting Party's Forex Contracts, and may in its reasonable
discretion at any time or from time to time upon notice (unless such
notice cannot practicably be provided in the circumstances) liquidate
all or some of Defaulting Party's collateral in Non-Defaulting Party's
possession or control on any commercially reasonable basis and apply the
proceeds of such collateral to any
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amounts owing by Defaulting Party to Non-Defaulting Party resulting
from the close-out of such Forex Contracts. Any such close-out of
Forex Contracts shall be accomplished by the Non-Defaulting Party:
(i) closing-out each such Forex Contract so that each such
Forex Contract is cancelled and calculating settlement amounts
equal to the difference between the market value (as determined by PSI
in good faith) and contract value of the Forex Contract or, in the case
of options, settlement amounts equal to the current market premium for
a comparable option (as determined by PSI in good faith); (ii) discounting
each settlement amount then due to present value at the time of close-out
(to take into account the period between the date of close-out and the
maturity date of the relevant liquidated Forex Contract using an interest
rate equal to PSI's cost of funds as determined by PSI in good faith);
(iii) calculating an aggregate settlement payment in an amount equal
to the net amount of such discounted settlement amounts as is then due
from one party to the other; and (iv) setting off the settlement payments,
if any, that Non-Defaulting Party owes Defaulting Party as a result of
such liquidation and all collateral held by or for Non-Defaulting Party
against the settlement payments, if any, that Defaulting Party owes to
Non-Defaulting Party as a result of such close-out; so that all such
amounts are netted to a single liquidated amount payable by one party
to the other party, as appropriate, on the business day following the
close-out.
Notwithstanding anything to the contrary set forth above
regarding the Non- Defaulting Party's rights to close-out and value
Forex Contracts, if an event specified in clause (iv) of this sub-section
(d) has occurred, then upon the occurrence of such event, all outstanding
Forex Contracts will be deemed to have been automatically terminated as
of the time immediately preceding the institution of the relevant
proceeding, or the presentation of the relevant petition upon the
occurrence with respect to the party to such specified event.
The rights of PSI under this sub-section (e) shall be in
addition to, and not in limitation or exclusion of any other rights
that PSI may have (whether by agreement, operation of law or otherwise).
9. Liquidated Damages. The parties agree that the amount owing
by one party to the other party hereunder is a reasonable computation
of the loss or gain it would have incurred or received on the obligations
between the parties governed by this Addendum and is not a penalty.
Such amount is payable as liquidated damages to the other party for
the loss of the benefit of its bargains and neither party shall be
entitled to recover additional damages in respect of such loss of
the bargain. The determination of such amount shall be conclusive,
absent manifest error.
10. Understanding of Risks. Each party will be deemed to represent
to the other party on the date on which it enters into a Forex Contract
that it has the capability to evaluate and understand (on its own behalf
or through independent professional advice), and does understand, the
terms, conditions and risks of that Forex Contract and is willing to
accept those terms and conditions and to assume (financially and
otherwise) those risks.
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11. Termination. Each party may terminate this Addendum at
any time on three (3) business days prior written notice. No such
termination shall affect any Forex Contracts entered into prior to
such termination and this Addendum shall continue to govern any such
Forex Contract.
__________________________ ___________________________________
Date Name of Customer
By:_______________________________
Title: ___________________________
Signature:________________________
Accepted By Prudential Securities Incorporated
By:_____________________________ Date: ____________________________
Title:__________________________
Signature: _____________________
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