customer to deposit collateral with respect to Forex Contract

 

                         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, 

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:

          (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 

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.

     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: _____________________

 

Basic Info X:

Name: customer to deposit collateral with respect to Forex Contract
Type: Contract
Date: May 15, 1996
Company: FUTURES STRATEGIC TRUST
State: Delaware

Other info:

Organization:

  • Willowbridge Strategic Trust
  • New York Stock Exchange
  • National Association of Securities Dealers Inc.
  • National Futures Association
  • Event of Default
  • Defaulting Party to Non-Defaulting Party

Location:

  • U.S.
  • New York
  • Novation