cash commodity exchange

 

 

CUSTODIAL AGREEMENT

 

1.   This Custodial Agreement (the “Agreement”) is entered into by and between Grainnet Ltd., a Texas Limited Partnership, (“Grainnet”) and having its place of business at Amarillo, Texas and Bank of Commerce, a banking corporation organized and operating under the laws of the State of Texas, and having its place of business at 210 South Main, McLean, Texas (the “Custodian”).

 

The parties agree as follows:

 

2.   Appointment and Acceptance.  The Grainnet hereby appoints the Bank of Commerce to hold the Grainnet’s "monies" (the "Monies"), and authorizes the Bank of Commerce to take such action and perform such duties on behalf of the Grainnet, upon the terms and conditions set forth herein, and only to the extent that such Monies are actually delivered to the Bank of Commerce.

 

3.   Monies. Monies shall mean funds transferred between Buyers and Sellers of cattle on the Grainnet Commodity Exchange pursuant to purchase and sales contracts. (“Grainnet Monies”)

 

 

4.   Fiduciary Standard of Liability.  The Bank of Commerce hereby agrees to perform its duties upon the terms and conditions as set forth in this Agreement.  The Bank of Commerce agrees to exercise the same due care with the Monies which is expected of a fiduciary with the responsibility for the safeguarding of the Monies and for compliance with all provisions of the custodial agreement.

 

5.   Purpose. The intent of the parties is that this Agreement shall comply with existing State and Federal law. Grainnet is registered as a market agency selling grain on a fee basis. Grainnet will sell grain under the terms of sale posted on the Grainnet website and monies will be transferred for the benefit of Members according to existing smart contracts, Those funds necessary for the settlement and clearing of grain transactions will be deposited and disbursed from this Custodial account allowing only permitted adjustments for trading fees, trucking, grain discounts and other charges permitted under the smart contracts.

 

 

6.   Choice of Law, Jurisdiction and Venue. This agreement shall be governed by, and construed under, the laws of the State of Texas. Any litigation or causes of action derived from, related to, or arising out of a dispute or claim concerning the required performances, non-performances or obligations of either the Bank of Commerce or Grainnet under this Agreement shall be filed in Potter County, Texas.

 

7.   Indemnification. The Bank of Commerce shall indemnify the Grainnet for any loss of Monies occasioned by the negligence or dishonesty of the bank officers and employees, agents, subcustodians, or officers and employees of agents or subcustodians of the Bank of Commerce. The Bank of Commerce shall indemnify the Grainnet for any loss of Monies and Property occasioned by burglary, robbery, hold-up, theft or mysterious disappearance, including loss by damage or destruction to the Grainnet's Monies. In the event of such loss, the Bank of Commerce must promptly replace the Monies, and the value of any loss of rights or privileges resulting from said loss of Monies. In the event that the Bank of Commerce gains entry in a depository corporation or in the Federal Reserve book-entry system through an agent, there shall be an agreement between the Bank of Commerce and the agent under which the agent shall be subject to the same liability for loss of the Monies as the Bank of Commerce, provided however, that, if the agent shall be subject to regulation under the laws of a jurisdiction which is different from the jurisdiction the laws of which regulate the Bank of Commerce, of the state of domicile of the Grainnet may accept a standard of liability applicable to the agent which is different from the standard of liability applicable to the Bank of Commerce.

 

8.   Investment Authority.

8.1.               The Bank of Commerce will not be liable for any failure to take any action required to be taken under the agreement in the event and to the extent that the taking of such action is prevented or delayed by war (whether declared or not and including existing wars), revolution, insurrection, riot, civil commotion, act of God, accident, fire, explosion, stoppage of labor, strikes, or other differences with employees, laws, regulations, orders or other acts of any government authority.

8.2.               Monies shall be held subject to the instructions of the Grainnet and shall be withdrawable upon the demand of the Grainnet, when applicable under this Agreement.        

8.3.               All Monies and Property shall be deposited promptly by the Bank of Commerce into such accounts of the Grainnet or Members of the Grainnet Exchange as may be designated by the Grainnet from time to time. 

 

8.4.               All monies that are registered shall be registered in the name of the Grainnet, or in the name of the nominee of the Grainnet, or in the name of the Bank of Commerce or its nominee.

8.5.               The Bank of Commerce shall not use any of the Monies for the Bank of Commerce’s benefit, and none of the Grainnet’s Monies shall be loaned, pledged, or hypothecated to any person or organization.

8.6.               Nominee Authorized.  The Bank of Commerce may transfer into the Depository account all registered Monies from time to time held under this Agreement. The Bank of Commerce shall be responsible to the Grainnet for the acts of its nominee with respect to such Monies to the same extent that it is responsible for its own acts.

8.7.               To effect the transfer of registered Monies into the name of the Bank of Commerce’s nominee, to facilitate the collection of any payment thereon and to effect any other action in relation thereto or in order to meet any requirement thereof, the Grainnet authorizes the Bank of Commerce to execute in the Grainnet’s name, and to deliver, any instrument determined by the Bank to be necessary to safeguard Grainnet Monies.

9.   Records and Reporting.

9.1.               Any regulatory officials or Grainnet shall at all times be entitled to receive copies of or examine the Bank of Commerce's records relating to the Monies in the custodial account. In addition, the Bank of Commerce and Grainnet hereby agree to honor any requests made by the proper regulatory authorities for information concerning the Grainnet's Monies subject to this agreement. The Bank of Commerce and the Grainnet understand that those authorities, from time to time, may request, and the Bank of Commerce is required to furnish, a detailed listing of the Grainnet's Monies and an affidavit by the Bank of Commerce certifying the Bank of Commerce's safekeeping responsibilities relative to the Monies of the Grainnet. The Bank of Commerce's response to such requests shall be made directly to the authorities and shall encompass all of the Grainnet's Monies held by the Bank of Commerce, or agent or subcustodian of the Bank of Commerce, under this Agreement.

 

9.2.               The Bank of Commerce shall deliver promptly to the Grainnet all proxies, proxy statements, authorizations, notices and stockholder reports which the Bank of Commerce receives with respect to the Monies, and if the Monies to which such proxies or other authorization relate are registered in the name of the Bank of Commerce or its nominee, such proxies or other authorizations when so delivered to the Grainnet shall be duly executed in blank by Bank of Commerce or its nominee, as the case may be.

 

9.3.               All activities involving the Grainnet's Monies shall be subject to the Grainnet's instructions and the Monies shall be withdrawable upon demand by the Grainnet at any time.

 

9.4.               The Bank of Commerce shall furnish, upon request by Grainnet, a confirmation of all purchases, sales or transfers of Monies from grain sales to or from the account of the Grainnet, and reports of Monies and Property sufficient to verify information reported in the Grainnet's financial and accounting records, as well as supporting schedules and information required in any audit of the Grainnet's financial statement.

9.5.               The Grainnet or its designee shall at all times be entitled to examine any records maintained by the Bank of Commerce relating to the Grainnet's Monies governed under this Agreement.

 

10.Segregation of Monies. The Grainnet and the Bank of Commerce hereby agree that the Monies shall be segregated at all times from the proprietary assets of the Bank of Commerce. The Bank of Commerce's official records shall separately identify monies designated for deposit or disbursal by the Grainnet.

 

11.Amendment and Termination of Agreement.

11.1.           Amendment.  This Agreement may be amended only by a written agreement executed by both the Bank of Commerce and the Grainnet and approved in advance by the proper regulatory authorities.

 

11.2.           Termination By A Party.  This Agreement may be terminated by either party at any time upon 60 days written notice to the other party.  Upon the appointment of a replacement custodian by the Grainnet, the Bank of Commerce shall have a reasonable time to transfer the Monies, along with records pertaining to the Monies, to the new custodian, in accordance with the written instructions of the Grainnet, the Commissioner, or the person or entity legally entitled to receive such Monies and Property.

 

12. Confidentiality. Bank of Commerce recognizes the confidential nature of the parties and their data aggregated in the transactions executed on the Grainnet Exchange. Bank of Commerce will not disclose any information or data to anyone outside the bank and not a party to the transactions. Bank of Commerce may disclose Confidential Information pursuant to any order, subpoena or document discovery request, provided that prior written notice of such disclosure is furnished to Grainnet as soon as practicable in order to afford the parties to the transaction an opportunity to seek a protective order (it being agreed that if the parties are unable to obtain or does not seek a protective order and the receiver is legally compelled to disclose such information, disclosure of such information may be made without liability).

 

 

13.Entire Agreement. This Agreement constitutes the entire agreement between the parties.  All previous agreements, and instructions whether written or oral, between the Bank of Commerce and the Grainnet are hereby superseded.

 

14.Notices.

14.1.           Mailing of Notices.  All notices, requests, demands and other communications under this Agreement shall be by email and shall be deemed as having been duly given on the date of service to the email addresses listed below.

 

14.2.           Change of Address.  Any party may change the address or email address however such notice must be provided to each party to this agreement.

 

14.3.           Notice.  All notices shall be addressed as follows:

 

14.4.           If to the Bank of Commerce:               ____________________________

____________________________

____________________________

Attention: ____________________

 

14.5.           If to the Grainnet:                              _____________________________

_____________________________

_____________________________

Attention: ____________________

 

 

 

 

 

15.Effective Date.  This Agreement shall be effective upon this date the Bank of Commerce receives the first monies from Grainnet.

 

 

EXECUTED this ______ day of __________________, _________.

 

[GRAINNET]

 

 

By:__________________________________________

 

Title: ________________________________________

 

 

 

 

[BANK OF COMMERCE]

By:__________________________________________

 

Title: ________________________________________