Institutional Futures Client Account Agreement
Exhibit
10.1
Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx, Inc
Xxx
Xxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000
_____________________________________________________________________________________
Tel:
000-000-0000
XXXXXXX
XXXXX
Risk
Disclosure Statement For Futures and Options
This
brief statement does not disclose all of the risks and other significant
aspects
of trading in futures and options. In light of the risks, you should undertake
such transactions only if you understand the nature of the contracts (and
contractual relationships) into which you are entering and the extent of
your
exposure to risk. Trading in futures and options is not suitable for many
members of the public. You should carefully consider whether trading is
appropriate for you in light of your experience, objectives, financial resources
and other relevant circumstances.
Futures
1.
Effect of ‘Leverage’ or ‘Gearing’
Transactions
in futures carry a high degree of risk. The amount of initial margin is small
relative to the value of the futures contract so that transactions are
‘leveraged’ or ‘geared’. A relatively small market movement will have a
proportionately larger impact on the funds you have deposited or will have
to
deposit: this may work against you as well as for you. You may sustain a
total
loss of initial margin funds and any additional funds deposited with the
firm to
maintain your position. If the market moves against your position or margin
levels are increased, you may be called upon to pay substantial additional
funds
on short notice to maintain your position. If you fail to comply with a request
for additional funds within the time prescribed, your position may be liquidated
at a loss and you will be liable for any resulting deficit.
2.
Risk-reducing orders or strategies
The
placing of certain orders (e.g. ‘stop-loss’ orders, where permitted under local
law, or ‘stop-limit’ orders) which are intended to limit losses to certain
amounts may not be effective because market conditions may make it impossible
to
execute such orders. Strategies using combinations of positions, such as
‘spread’ and ‘straddle’ positions may be as risky as taking simple ‘long’ or
‘short’ positions.
Options
3.
Variable degree of risk.
Transactions
in options carry a high degree of risk. Purchasers and sellers of options
should
familiarize themselves with the type of option (i.e. put or call) which they
contemplate trading and the associated risks. You should calculate
the extent to which the value of the options must increase for your position
to
become profitable, taking into account the premium and all transaction
costs.
The
purchaser of options may offset or exercise the options or allow the options
to
expire. The exercise of an option results either in a cash settlement or
in the
purchaser acquiring or delivering the underlying interest. If the
option is on a future, the purchaser will acquire a futures position with
associated liabilities for margin (see the section on Futures above). If
the
purchased options expire worthless, you will suffer a total loss of your
investment which will consist of the option premium plus transaction costs.
If
you are contemplating purchasing deep-out-of-the-money options, you should
be
aware that the chance of such options becoming profitable ordinarily is
remote.
Selling
(‘writing’ or ‘granting’) an option generally entails considerably greater risk
than purchasing options. Although the premium received by the seller
is fixed, the seller may sustain a loss well in excess of that
amount. The seller will be liable for additional margin to maintain
the position if the market moves unfavorably. The seller will also be exposed
to
the risk of the purchaser exercising the option and the seller will be obligated
to either settle the option in cash or to acquire or deliver the underlying
interest. If the option is on a future, the seller will acquire a position
in a
future with associated liabilities for margin (see the section on Futures
above). If the option is ‘covered’ by the seller holding a corresponding
position in the underlying interest or a future or another option, the risk
may
be reduced. If the option is not covered, the risk of loss can be
unlimited.
2
XXXXXXX
XXXXX
Certain
exchanges in some jurisdictions permit deferred payment of the option premium,
exposing the purchaser to liability for margin payments not exceeding the
amount
of the premium. The purchaser is still subject to the risk of losing the
premium
and transaction costs. When the option is exercised or expires, the purchaser
is
responsible for any unpaid premium outstanding at that time.
Additional
risks common to futures and options
4.
Terms and conditions of contracts
You
should ask the firm with which you deal about the terms and conditions of
the
specific futures or options which you are trading and associated obligations
(e.g. the circumstances under which you may become obligated to make or take
delivery of the underlying interest of a futures contract and, in respect
of
options, expiration dates and restrictions on the time for exercise). Under
certain circumstances the specifications of outstanding contracts (including
the
exercise price of an option) may be modified by the exchange or clearing
house
to reflect changes in the underlying interest.
5.
Suspension or restriction of trading and pricing
relationships
Market
conditions (e.g. illiquidity) and/or the operation of the rules of certain
markets (e.g. the suspension of trading in any contract or contract month
because of price limits or ‘circuit breakers’) may increase the risk of loss by
making it difficult or impossible to effect transactions or liquidate/offset
positions. If you have sold options, this may increase the risk of
loss.
Further,
normal pricing relationships between the underlying interest and the future,
and
the underlying interest and the option may not exist. This can occur when,
for
example, the futures contract underlying the option is subject to price limits
while the option is not. The absence of an underlying reference price may
make
it difficult to judge ‘fair’ value.
6.
Deposited cash and property
You
should familiarize yourself with the protections accorded money or other
property you deposit for domestic and foreign transactions, particularly
in the
event of a firm insolvency or bankruptcy. The extent to which you may recover
your money or property may be governed by specific legislation or local
rules. In some jurisdictions, property which had been specifically
identifiable as your own will be pro-rated in the same manner as cash for
purposes of distribution in the event of a shortfall.
7.
Commission and other charges
Before
you begin to trade, you should obtain a clear explanation of all commissions,
fees and other charges for which you will be liable. These charges will affect
your net profit (if any) or increase your loss.
8.
Transactions in other jurisdictions
Transactions
on markets in other jurisdictions, including markets formally linked to a
domestic market, may expose you to additional risk. Such markets may be subject
to regulation which may offer different or diminished investor protection.
Before you trade you should inquire about any rules relevant to your particular
transactions. Your local regulatory authority will be unable to compel the
enforcement of the rules of regulatory authorities or markets in other
jurisdictions where your transactions have been effected. You should
ask the firm with which you deal for details about the types of redress
available in both your home jurisdiction and other relevant jurisdictions
before
you start to trade.
9.
Currency risks
The
profit or loss in transactions in foreign currency-denominated contracts
(whether they are traded in your own or another jurisdiction) will be affected
by fluctuations in currency rates where there is a need to convert from the
currency denomination of the contract to another currency.
10.
Trading facilities
Most
open-outcry and electronic trading facilities are supported by computer-based
component systems for the order-routing, execution, matching, registration
or
clearing of trades. As with all facilities and systems,
3
XXXXXXX
XXXXX
they
are
vulnerable to temporary disruption or failure. Your ability to
recover certain losses may be subject to limits on liability imposed by the
system provider, the market, the clearing house and/or member firms. Such
limits
may vary; you should ask the firm with which you deal for details in this
respect.
11.
Electronic trading
Trading
on an electronic trading system may differ not only from trading in an
open-outcry market but also from trading on other electronic trading systems.
If
you undertake transactions on an electronic trading system, you will be exposed
to risks associated with the system including the failure of hardware and
software. The result of any system failure may be that your order is either
not
executed according to your instructions or is not executed at all.
12.
Off-exchange transactions
In
some
jurisdictions, and only then in restricted circumstances, firms are permitted
to
effect off-exchange transactions. The firm with which you deal may be acting
as
your counterparty to the transaction. It may be difficult or impossible to
liquidate an existing position, to assess the value, to determine a fair
price
or to assess the exposure to risk. For these reasons, these transactions
may
involve increased risks. Off-exchange transactions may be less regulated
or
subject to a separate regulatory regime. Before you undertake such transactions,
you should familiarize yourself with applicable rules and attendant
risks.
4
XXXXXXX
XXXXX
Institutional
Futures Client Account Agreement
Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, with an office at 0 Xxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx, 00000, (“Xxxxxxx Xxxxx”) agrees to carry
one or more account(s) (“Account”) for the undersigned (“Client”) and provide
services to Client in connection with the purchase and sale of cash commodities
(including financial instruments), options on cash commodities, commodity
futures contracts, options on futures contracts, security futures products,
forward or leverage contracts, exchange of futures for physicals, and any
similar instruments which may be purchased or sold by or through Xxxxxxx
Xxxxx
for Client’s Account (collectively referred to as “Futures Contracts”). In
consideration thereof, Client and Xxxxxxx Xxxxx agree as follows:
1.AUTHORIZATIONS
AND ACKNOWLEDGMENTS
Xxxxxxx
Xxxxx is authorized to purchase or sell Futures Contracts for Client’s Account
in accordance with Client’s oral or written instructions. Client hereby waives
any defense that any such instructions were not in writing as may be required
by
any law, rule or regulation. In any such transaction, Xxxxxxx Xxxxx may act
as
agent or principal and may charge a xxxx-up or commission, as notified in
advance to Client, as may be limited by law, rule or regulation. All
contracts and transactions entered into after the close of any applicable
futures exchange’s normal business hours may be considered next business day
activity. Xxxxxxx Xxxxx is not acting as a fiduciary, commodity trading advisor,
investments advisor or commodity pool operator with respect to Client or
any
Futures Contracts or Account and Xxxxxxx Xxxxx shall have no responsibility
for
compliance with any law or regulation governing the conduct of any such
fiduciary or advisor selected by Client or Client’s conduct as a fiduciary, if
applicable.
2.APPLICABLE
LAW
All
transactions under this Agreement shall be subject to the Commodity Exchange
Act
and the constitution, rules, regulations, customs, usages, rulings and
interpretations of the Commodity Futures Trading Commission (“CFTC”), domestic
or foreign exchange markets, and their clearing houses, if any, where the
transactions are executed by Xxxxxxx Xxxxx or Xxxxxxx Xxxxx’x agents
(“Applicable Law”). Xxxxxxx Xxxxx is hereby authorized, in its discretion, to
employ affiliated and nonaffiliated clearing members, carrying brokers and
floor
brokers as Xxxxxxx Xxxxx’x agents or to engage in pre-execution discussions if
entering orders electronically, in connection with the execution, carrying,
clearance, delivery and settlement of any such transactions as permitted
by
Applicable Law. Client agrees to provide Xxxxxxx Xxxxx any information necessary
for Xxxxxxx Xxxxx to respond to any inquiry from any exchange or other
regulatory agency pursuant to Applicable Law.
Absent
a
separate written agreement with Client with respect to give-ups, Xxxxxxx
Xxxxx,
in its discretion, may, but shall not be obligated to, accept from other
brokers
selected by Client, Futures Contracts executed by such brokers which are
given
up to Xxxxxxx Xxxxx for clearing in Client’s Account. If Client has executed
with other brokers and Xxxxxxx Xxxxx is required to pay such executing brokers
give up fees, Client agrees that Xxxxxxx Xxxxx may withhold such fees from
Client’s Account in anticipation of such payment coming due.
3.XXXXXXX
XXXXX REPRESENTATIONS
Xxxxxxx
Xxxxx and its managing directors, officers, employees and affiliates may
take or
hold positions in or advise other clients concerning contracts which are
the
subject of advice from Xxxxxxx Xxxxx to Client, which positions and advice
may
be consistent with or contrary to positions which are the subject of advice
to
Client. In addition, Xxxxxxx Xxxxx, its directors, officers, employees, parent
companies and affiliates may act on the other side of Client’s order by the
purchase or sale for Client’s Account in which Xxxxxxx Xxxxx or any person
affiliated with Xxxxxxx Xxxxx has a direct or indirect interest, subject
to
compliance with and the limitations and conditions of Applicable
Law.
4.CLIENT
REPRESENTATIONS
Client
represents and warrants that (a) the individual(s) whose signatures are stated
below is/are duly authorized and empowered to execute and deliver this Agreement
and to effect purchases and sales of Futures Contracts through Xxxxxxx Xxxxx
in
Client’s Account until such time as Xxxxxxx Xxxxx is notified by
5
XXXXXXX
XXXXX
Client
to
the contrary; (b) regardless of any subsequent determination to the contrary,
Client is a sophisticated user of the futures markets and is aware of the
risks
and obligations of Futures Contracts and is fully prepared to assume such
risks
and obligations; (c) trading in Futures Contracts is within the power of
Client
and such activity will in no manner contravene the provisions of any corporate
resolutions, by-laws, statutes, rules, regulations, operating agreement,
partnership agreements, plan documents, trust agreements or any judgments,
orders or other agreements to which Client is bound; (d) Client is duly
organized and in good standing under the laws of the jurisdiction in which
it
was organized and in all jurisdictions where it is qualified to do business;
(e)
Client is acting as principal and not as agent in transactions under this
Agreement and no person other than Client has or will have an interest in
Client’s Account except as otherwise disclosed to Xxxxxxx Xxxxx herein; and (f)
Xxxxxxx Xxxxx is authorized to follow the instructions of the undersigned
in
every respect concerning this Account, including, but not limited to, payment
of
monies. With respect to activity in the Account, Xxxxxxx Xxxxx may rely upon
the
instructions of the above referenced individuals or any individuals subsequently
authorized by Client until Client notifies Xxxxxxx Xxxxx to the
contrary.
If
Client
engages in exchange of futures for physical (“EFP”) transactions, Client
acknowledges and agrees that, in connection with any EFP that (a) if Client
is
the seller of the cash contract(s) then Client is the buyer of the futures
contract(s) being exchanged in the EFP, and Client has an ownership interest
in
the contract(s) sufficient to allow the delivery in satisfaction of Client’s
obligations resulting from the execution of the EFP; and (b) if Client is
the
buyer of the cash contract(s) then Client is the seller of the futures
contract(s) being exchanged in the EFP. Upon request by Xxxxxxx Xxxxx, Client
agrees to provide documentation sufficient to verify its purchase or sale
of the
cash contract.
5.MODIFICATION AND
TERMINATION
Whenever
any statute shall be enacted which shall affect in any manner or be inconsistent
with any of the provisions hereof, or whenever any rule or regulation shall
be
prescribed or promulgated by the CFTC, various commodity exchanges, or other
agency or body having jurisdiction, which shall affect in any manner or be
inconsistent with any of the provisions hereof, the provisions of this Agreement
so affected shall be deemed modified or superseded, as the case may be, by
such
statute, rule or regulation, and all other provisions of this Agreement and
the
provisions as modified or superseded, shall in all respects continue to be
in
full force and effect. Xxxxxxx Xxxxx shall use its best efforts to give notice
to Client of any material change in conduct under this Agreement required
by any
such statute, rule or regulation.
Either
party may terminate this Agreement at any time by notice to the other. However,
such termination by Client shall not affect any transaction entered into
by
Client prior to receipt of such notice by Xxxxxxx Xxxxx, or any open commodity
positions or any liability held by or owed to Xxxxxxx Xxxxx by Client at
the
time of such termination. If Client has outstanding give-up bills owed to
other
brokers at the time of its termination of this Agreement, Xxxxxxx Xxxxx may
withhold the amount of such fees in order to make such payments.
Other
than as set forth in the first paragraph above, no provision of this Agreement
shall in any respects be waived, altered, modified or amended unless such
waiver, alteration, modification or amendment is in writing and signed by
one
Xxxxxxx Xxxxx’x authorized officers and by one of Client’s authorized
officers.
6.ADVICE
All
advice with respect to Futures Contracts transmitted by Xxxxxxx Xxxxx with
respect to the Account is solely incidental to the conduct of Xxxxxxx Xxxxx’x
business as a futures commission merchant and such advice will not serve
as the
primary basis for any decision by Client. Xxxxxxx Xxxxx shall have no
discretionary authority, power or control over any decision made by Client
with
respect to the Account, whether or not Xxxxxxx Xxxxx’x advice is utilized in
such decision.
7.POSITION
LIMITS
Client
acknowledges Xxxxxxx Xxxxx’x right, upon five (5) business days’ notice to
Client, to limit the number of open positions which Client may maintain or
acquire through Xxxxxxx Xxxxx at any time. For the avoidance of doubt, as
long
as Client continues to comply with its margin payment obligations under Section
12, this
6
XXXXXXX
XXXXX
provision
shall not limit the ability of Client to implement any decrease or other
adjustment in the number of open positions within the time frame(s) deemed
appropriate by Client or to enter into or maintain positions which have the
effect of reducing Xxxxxxx Xxxxx’x overall exposure to Client. In addition,
Client agrees it will not exceed contract market position limits without
appropriate prior approval from the relevant contract market. Client agrees
that
it shall not agree with any exchange or contract market to act as a market
maker
using Xxxxxxx Xxxxx’x execution or clearing capabilities without the prior
written approval of Xxxxxxx Xxxxx.
8.EXTRAORDINARY
EVENTS AND THIRD PARTY ACTIONS
Xxxxxxx
Xxxxx shall not be liable for breakdown or failure of transmission of
communication facilities, systems or software, in each case beyond its
reasonable control, or government restrictions, war or acts of terrorism,
exchange failures or market rulings or natural disasters. Xxxxxxx Xxxxx shall
not be liable to Client for any loss, cost, expense or damage to Client with
respect thereto, except as a result of Xxxxxxx Xxxxx’x negligence, willful
misconduct or bad faith.
Under
no
circumstances shall Xxxxxxx Xxxxx have any responsibility, liability or
obligation regarding any conduct, act, omission or representation of any
introducing firm, commodity trading advisor, investment adviser or third
party
vendor selected by Client to give Client research or advice, to electronically
route orders to Xxxxxxx Xxxxx or to provide like services to
Client.
0.XXXXXXXX
AND LENDING
All
monies, securities, Futures Contracts or other property which Xxxxxxx Xxxxx
may
at any time be carrying for Client or which may at any time be in Xxxxxxx
Xxxxx’x possession, including safekeeping, in each case solely in connection
with this Agreement, shall be subject to a general lien, security interest
and
right of set-off and recoupment in Xxxxxxx Xxxxx’x favor to discharge all
obligations of Client to Xxxxxxx Xxxxx in connection with this Agreement,
irrespective of whether or not Xxxxxxx Xxxxx may have made advances in
connection with such securities, Futures Contracts or other property, and
irrespective of the number of accounts Client may have with Xxxxxxx Xxxxx.
Xxxxxxx Xxxxx may apply or transfer such funds or other property of Client
between any of Client’s accounts for the purposes of margin or reduction or
satisfaction of any net debit balance. Client will not cause or allow any
of the
collateral held in the Account, whether now owned or hereafter acquired,
to be
or become subject to any liens, security interests or encumbrances of any
nature
without the prior written consent of Xxxxxxx Xxxxx, and in no event shall
the
collateral held in Client’s Account be subject to a lien or security interest
superior to that of Xxxxxxx Xxxxx.
In
accordance with the terms and limitations of the Commodity Exchange Act
regarding investment and pledging of Client assets, Client grants to Xxxxxxx
Xxxxx the right to carry in its general loans, and to pledge, re-pledge,
hypothecate, re-hypothecate, invest or loan, either separately or with the
property of other clients, to either itself as broker or to others, any
securities or other property held by Xxxxxxx Xxxxx on margin for the Account
of
Client or as collateral therefore.
10.FEES
AND COMMISSIONS
Client
shall be charged exchange and regulatory fees as determined by the relevant
exchange and/or regulator. If Client is a member of any U.S. exchange, Client
must advise Xxxxxxx Xxxxx accordingly if Client may avail itself of any reduced
fee at such exchange. In addition, Client must notify Xxxxxxx Xxxxx if it
ceases
to be a member of any such exchange. Client shall be liable for all
fees (including any fines) owed to the exchange if Client fails to give such
notice to Xxxxxxx Xxxxx. Xxxxxxx Xxxxx may pay interest to Client on any
available margin excess as agreed to from time to time between Xxxxxxx Xxxxx
and
Client. Xxxxxxx Xxxxx may charge interest upon Client’s Account in accordance
with Xxxxxxx Xxxxx’x customary charges, as determined by Xxxxxxx Xxxxx, at the
time of the acceptance of this Agreement and thereafter. Client agrees to
pay
all such commissions as agreed to from time to time between Xxxxxxx Xxxxx
and
Client.
11.LIQUIDATION
(A) If
any of the
following events shall occur, Xxxxxxx Xxxxx may proceed in accordance with
the
following paragraph: (a) Client shall be dissolved or in any other
way terminated other than a bona fide restructuring (with prior notice to
Xxxxxxx Xxxxx) that results in a successor entity with materially lesser
credit
7
XXXXXXX
XXXXX
quality
than the original entity; (b) Client shall fail to timely deposit or maintain
initial or original margin, or make timely payment of additional or variation
margin as requested in Section 12 below; (c) Client shall fail to pay the
premium on any option purchased by Client; (d) a proceeding under any
applicable bankruptcy or insolvency law, an assignment for the benefit of
creditors or an application for a receiver, custodian, conservator,
administrator, liquidator or trustee shall be filed or applied for, by or
against Client (or if Client is a trust, its trustee), or an order shall
be made
or a resolution shall be passed for the winding up, liquidation or
administration of Client (or, if Client is a trust, its trustee); (e) the
property deposited in Client’s Account shall be determined by Xxxxxxx Xxxxx, in
its commercially reasonable discretion, to be inadequate to secure the Account
or Client has suffered a material change in its financial condition and is
unable to provide Xxxxxxx Xxxxx, upon request, with such margin amounts or
collateral reasonably required by Xxxxxxx Xxxxx in accordance with Section
12 of
this Agreement; (f) Client’s Account shall incur a deficit balance which is not
satisfied in a timely basis; (g) Xxxxxxx Xxxxx shall determine that any material
representation or warranty made by Client to Xxxxxxx Xxxxx is untrue or
inaccurate and Client is unable to prove otherwise; (h) if Client is an
investment company, commodity pool or other form of collective investment
vehicle, proceedings for the revocation or suspension of any registration
of any
public offering of interests in Client or of any person or entity required
to be
registered in connection with Client’s activities have been instituted or are
pending or threatened by any governmental agency or self-regulatory
organization.
In
each
event specified above, and subject to notice from Xxxxxxx Xxxxx and one (1)
business day opportunity for Client to cure such event, Xxxxxxx Xxxxx may
liquidate Client’s open positions in whole or in part, sell or otherwise dispose
of, realize, set off or apply any or all of the property represented by an
entity on or standing to the credit of Client’s Account or held by, to the order
or under the direction or control of Xxxxxxx Xxxxx or any exchange or clearing
organization through which transactions on Client’s behalf are executed or
cleared, buy any property for Client’s Account, and/or cancel any outstanding
orders and commitments made by Xxxxxxx Xxxxx on Client’s
behalf. Without prejudice to the foregoing, Xxxxxxx Xxxxx shall have
(to the greatest extent permitted by applicable law) all of the rights of
a
secured party with respect to the property referred to above, and any rights,
powers and remedies provided herein shall operate as a variation and extension
of any statutory power of sale, application or realization available to Xxxxxxx
Xxxxx as a secured party.
Any
such
liquidation, sale, purchase and/or cancellation may be made at Xxxxxxx Xxxxx’x
discretion on any exchange or other market or through any clearing organization
where such business is transacted, at public auction or at private sale,
upon
prior notice to Client if reasonable under the circumstances, without
advertising the same and without prior tender, demand or call upon Client,
provided that any private sale must be conducted in a commercially reasonable
manner. No prior tender, demand or call from Xxxxxxx Xxxxx of the time and
place
of such liquidation, sale, purchase and/or cancellation shall be deemed to
be a
waiver of Xxxxxxx Xxxxx’x right to liquidate, sell, purchase and/or cancel as
provided herein.
In
any
transaction described above, Xxxxxxx Xxxxx may sell any property to itself
or
its affiliates or buy any property from itself or its affiliates in an
arms-length transaction. Xxxxxxx Xxxxx may, to the extent permitted by law,
purchase the whole or any part thereof free from any right of
redemption. In all cases, Client shall remain liable for, and shall
pay to Xxxxxxx Xxxxx the amount of, any deficiency in Client’s Account with
Xxxxxxx Xxxxx resulting from any transaction described herein
above.
(B) If
any of the
following events shall occur, the Client may proceed in accordance with the
following paragraph: (i) Xxxxxxx Xxxxx is subject to a “Bankruptcy” (as defined
below); (ii) Xxxxxxx Xxxxx shall fail to make timely return margin amounts,
as
required in section 12 below, after notice from the Client; (iii) any material
representation or warranty made by Xxxxxxx Xxxxx to Client herein is untrue
or
inaccurate at the time given or deemed repeated.
In
the
case of each event specified in “(b)” above, and in the case of an event
described in sub-part (ii) above subject to notice from Client and one (1)
business day opportunity to cure, Client shall have the right by notice to
Xxxxxxx Xxxxx to terminate this Agreement with immediate effect, and Xxxxxxx
Xxxxx will be liable to Client for Client’s “Economic Loss” (as defined below)
in respect of this Agreement.
8
XXXXXXX
XXXXX
As
used
in the foregoing, “Bankruptcy” shall mean that Xxxxxxx Xxxxx (l) is dissolved
(other than pursuant to a consolidation, amalgamation or merger); (2) 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; (3) makes a general
assignment, arrangement or composition with or for the benefit of its creditors;
(4) 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 against it such proceeding or petition (A) results in
a
judgment of insolvency or bankruptcy or the entry of an order for relief
or the
making of an order for its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within thirty (30) days of
the
institution or presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or substantially
all its assets; (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution, attachment,
sequestration or other legal process levied, enforced or sued on or against
all
or substantially all its assets and such secured party maintains possession,
or
any such process is not dismissed, discharged, stayed or restrained, in each
case within thirty (30) days thereafter; (8) 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
(l) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the foregoing
acts.
As
used
in the foregoing, “Economic Loss” shall mean the amount of Client’s total losses
and costs in connection with the termination of this Agreement, including
any
loss of bargain or cost of funding, calculated as of the effective
date of such termination. Economic Loss shall be determined by Client reasonably
and in good faith and may (but need not) include the use of reference quotations
from one or more leading dealers in the market in respect of the cost of
entering into replacement transactions.
12.MARGIN
Client
will at all times maintain such margins or collateral for said Account, as
are
reasonably required by Xxxxxxx Xxxxx and notified in advance to Client or
as
required by a relevant exchange, and will, not later than the Required Delivery
Time (as defined below), discharge margin obligations of Client to Xxxxxxx
Xxxxx. It is further agreed that if Xxxxxxx Xxxxx fails to receive sufficient
funds to pay for any Futures Contracts and/or initial or variation margin
by the
Required Delivery Time, Client shall be deemed in breach of this Agreement
and
Xxxxxxx Xxxxx may take the actions set forth in the Liquidation provisions
stated above. Xxxxxxx Xxxxx will cause any excess margin or collateral held
by
it to be returned to Client not later than the Required Delivery Time subject,
in all cases, to a minimum transfer amount of $250,000 (or its equivalent
in any
other currency(ies)).
As
used
in the foregoing, “Required Delivery Time” shall mean: (a) close of business on
the same local business day if demand for delivery is received from the other
party not later than 10:00 a.m. New York time, and (b) close of business
on the
next local business day if demand for delivery is received from the other
party
after 10:00 a.m. New York time.
13.CURRENCY
FLUCTUATION RISK/PAYMENT OBLIGATIONS
All
initial and subsequent deposits for margin purposes shall be made in U.S.
Dollars unless otherwise agreed by Xxxxxxx Xxxxx and Client. By placing an
order
for a Futures Contract that settles in a currency other than U.S. dollars,
Client agrees that Xxxxxxx Xxxxx may convert to the appropriate currency
funds
sufficient to meet the applicable margin requirement at the rate of exchange
at
which Xxxxxxx Xxxxx would be able, acting in a commercially reasonable manner
and in good faith, to purchase the relevant amount of such currency. Client
understands and agrees that if Client trades in such Futures Contracts, the
margin for and accruals from such trading may be held in the applicable currency
outside of the U.S., a money center country or the country of origin of such
currency and that accounts held outside of the U.S. may not be afforded the
bankruptcy protections of the U.S. bankruptcy code.
Client
shall bear all risk and cost in respect to the conversion of currencies incurred
relative to transactions
9
XXXXXXX
XXXXX
effected
on behalf of Client pursuant hereto. In no event shall Xxxxxxx Xxxxx be required
to effect or be responsible for the conversion of funds in anticipation of
changes in prevailing rates of exchange.
With
respect to all securities, Futures Contracts and other property purchased
or
sold for Client’s Account, Client agrees to pay Xxxxxxx Xxxxx promptly upon
demand, upon expiration or liquidation of any such Futures Contract or other
property purchased or sold for Client’s Account: (a) any tax imposed on such
transactions by any competent authority; (b) the amount of any trading losses
in
Client’s Account and (c) any debit balance or deficiency remaining in Client’s
Account.
00.XXXXXXXX
INSTRUCTIONS FOR PHYSICAL SETTLEMENT/OPTIONS EXERCISE
Client
understands that, if Client maintains an account for speculation, liquidating
instructions on open futures positions maturing in a current month must be
given
to Xxxxxxx Xxxxx at least three (3) business days prior to the first notice
day
or last trading day, whichever is earlier. If Client maintains an account
for
hedging, Client understands that liquidating instructions on open futures
positions maturing in a current month must be given to Xxxxxxx Xxxxx at least
one (1) business day prior to the first notice day in the case of long positions
and, in the case of short positions, at least one (1) business day prior
to the
last trading day. Alternatively, sufficient funds to take delivery or necessary
delivery documents to make delivery must be delivered to Xxxxxxx Xxxxx within
the same period(s) described above, as applicable. Client understands and
acknowledges that option positions may be subject to automatic exercise
procedures. Xxxxxxx Xxxxx will exercise all in-the-money option positions
that
are subject to automatic exercise unless Client advises Xxxxxxx Xxxxx to
the
contrary. If Client fails to comply with any of the foregoing obligations,
Xxxxxxx Xxxxx may, at its discretion and in any commercially reasonable manner,
liquidate any open positions, make or receive delivery of any securities,
commodities or instruments, or exercise or allow the expiration of any
option. Client shall remain fully liable for all costs, expenses and
liabilities incurred by Xxxxxxx Xxxxx in connection with such transactions
and
for any remaining debit balance.
In
the
event Xxxxxxx Xxxxx has requested from Client instructions, funds or documents
and none are received by Xxxxxxx Xxxxx within the applicable time frame above
and such failure continues for one (1) business day after Xxxxxxx Xxxxx provides
notice of such failure to Client, Xxxxxxx Xxxxx without any further notice
or
requests, may either liquidate the Client’s positions, or make or receive
delivery on Client’s behalf upon such terms and by such methods which Xxxxxxx
Xxxxx xxxxx to be feasible. In all cases, if any exchange or self-regulatory
organization requests delivery intention instructions from Xxxxxxx Xxxxx,
Client
shall provide such instructions promptly without regard to the above time
frames.
In
the
case of Xxxxxxx Xxxxx’x inability to deliver any security, commodity or other
property to the purchaser by reason of failure of Client to supply Xxxxxxx
Xxxxx
therewith, then and in such event, Client authorizes Xxxxxxx Xxxxx to borrow
any
security, commodity or other property necessary to make delivery thereof.
Client
agrees to be responsible for any premiums which Xxxxxxx Xxxxx may be required
to
pay thereon or any cost which Xxxxxxx Xxxxx may sustain by reason of Xxxxxxx
Xxxxx’x inability to borrow the security, commodity or other property
sold.
Notwithstanding
the foregoing, any time that Client fails to make or take delivery, Client
agrees that it shall be responsible for any debit, loss, exchange or clearing
corporation fine or other assessment or penalty levied against Xxxxxxx Xxxxx
as
a result of Client’s failed delivery.
15.VERIFICATION
OF INFORMATION
Federal
law requires all financial institutions to obtain, verify, and record
information that identifies each client who opens an account and, therefore,
in
order to open an account, Xxxxxxx Xxxxx will request Client’s name, address and,
for individuals, date of birth, as well as other information necessary to
verify
identity. Further, Client understands that an investigation may be
conducted at banks, financial institutions and credit agencies pertaining
to
Client’s identity, credit standing and its business. Client agrees to notify
Xxxxxxx Xxxxx if the financial information provided to Xxxxxxx Xxxxx by Client
changes in any material respect.
10
XXXXXXX
XXXXX
If
more
than one person or entity owns an interest in the Account, all such persons
and
entities shall execute this Agreement and each shall be deemed to be
Client.
16.CONFIRMATIONS
AND STATEMENTS
Reports
of the execution of orders, purchase and sale notices, correction notices
and
statements of Client’s Account shall be conclusive (absent manifest error) if
not objected to promptly by oral notification upon receipt of such notice
or
statement and in writing in no event later than one (1) business day after
receipt of such notice or statement by Client. Communications will be sent
to
Client via mail, electronic transmission or facsimile at Client’s request, at
the address of record on the Account application submitted by Client or at
such
other address as Client may hereafter give Xxxxxxx Xxxxx in writing. Client
must
notify Xxxxxxx Xxxxx if it is not receiving its statements in a timely
manner.
All
oral
objections should be directed to Xxxxxxx Xxxxx’x Futures Operations Division at
312.442.5555. All subsequent written notices to Xxxxxxx Xxxxx shall be delivered
to Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Futures Compliance Department,
World Financial Center, Xxxxx Xxxxx, 00xx Xxxxx,
Xxx Xxxx,
XX, 00000, facsimile number 212.738.2788.
17.GOVERNING
LAW, JURISDICTION, SUCCESSORS AND BINDING EFFECT
This
Agreement and its enforcement shall be governed by the laws of the State
of New
York without regard to conflicts of law principles. Client submits to the
non-exclusive jurisdiction of the courts of the State of New York and of
the
Federal Courts in the Southern District of New York with respect to any claim
arising out of or involving this Agreement. Client agrees that any claim,
action
or proceeding arising under or in any way relating to this Agreement must
be
brought, if at all, within one year of the date of the event(s) giving rise
thereto. Client and Xxxxxxx Xxxxx hereby waive a trial by jury in any action
arising out of or relating to this Agreement or any transaction in connection
therewith.
All
provisions shall be continuous, and shall cover the Account which Client
opens
with Xxxxxxx Xxxxx, and shall inure to the benefit of Xxxxxxx Xxxxx’x parent
firm or any successor organization, and shall be binding upon Client, its
successors and assigns.
In
accordance with CFTC Regulation 1.65, Xxxxxxx Xxxxx may assign Client’s Account
and this Agreement to another registered Futures Commission Merchant (“FCM”) by
notifying Client of the date and name of the intended assignee FCM, which
notice
shall be provided to Client at least ten (10) business days prior to the
date of
the intended assignment. Unless Client objects to the assignment prior to
the
scheduled date for the assignment, the assignment will be binding on Client.
Client may not assign this Agreement without Xxxxxxx Xxxxx’x prior consent,
which shall not be unreasonably withheld.
18.HEDGE
ACCOUNT DESIGNATION
If
this
Account is designated as a hedge Account in a relevant Xxxxxxx Xxxxx Futures
Client Account Application, all orders which Client gives for the purchase
or
sale of futures or options contracts for Client’s Account will represent bona
fide xxxxxx in accordance with accepted definitions of hedge transactions
as
that term is defined in Regulation 1.3(z) under the Commodity Exchange Act,
if
applicable, and any amendments or interpretations thereto which may be made
in
the future by the Commodity Futures Trading Commission. Client acknowledges
that
it is required to complete the Hedge Agreement in the Client Account
Application, Risk Disclosure and Statements Booklet and notify Xxxxxxx Xxxxx
if
any transactions in Futures Contracts should no longer be designated as hedged
Futures Contracts.
19.INDEMNIFICATION
Client
agrees to indemnify and hold Xxxxxxx Xxxxx, its affiliates, employees, agents,
successors and assigns, harmless from and against any and all liabilities,
losses, damages, costs and expenses, including reasonable attorney’s fees,
incurred by Xxxxxxx Xxxxx and arising out of Client’s breach or default of this
Agreement, Client’s failure to fully and timely perform Client’s duties under
this Agreement, any actions of any third party selected by Client which affect
the Account, or should any of Client’s representations and warranties fail to be
true and correct in any material respect. Client also agrees to pay promptly
to
Merrill
11
XXXXXXX
XXXXX
Xxxxx
all
reasonable attorney’s fees, incurred by Xxxxxxx Xxxxx in the enforcement of any
of the provisions of this Agreement or in any action, claim or demand filed
by
Client arising out of this Agreement and any other Agreements between Xxxxxxx
Xxxxx and Client where Xxxxxxx Xxxxx is found not to be liable or responsible.
Xxxxxxx Xxxxx shall be liable to Client for any breach of this Agreement
by
Xxxxxxx Xxxxx and the conduct of its employees and agents which constitutes
negligence or willful misconduct.
If
Client
is a trust, then specifically, without limiting the generality of the prior
paragraph, Client agrees to hold harmless and indemnify Xxxxxxx Xxxxx, its
affiliates, agents, employees, successors and assigns, from and against any
and
all claims, losses, damages, costs, and expenses, including reasonable
attorneys’ fees, incurred by Xxxxxxx Xxxxx arising out of any claim by the trust
against Xxxxxxx Xxxxx as a result of Xxxxxxx Xxxxx’x compliance with Trustee’s
instructions.
20.RECORDING
Each
party understands that the other party, in its discretion, may record on
tape or
otherwise, any telephone conversation between the operations, trading and
other
non-legal personnel of the parties, although neither party assumes
responsibility to do such or to retain such recordings. Each party
hereby agrees and consents to such recording and, subject to applicable rules
of
evidence and discovery, waives any right it may have to object to the
admissibility into evidence of such recording in any legal proceeding between
them or in any other proceeding in which the other party is involved or in
which
its records are subpoenaed.
21.ELIGIBLE
CONTRACT PARTICIPANT
Client
agrees that it qualifies as an eligible contract participant (“ECP”) as that
term is defined in Section 1(a)(12) of the Commodity Exchange Act as Client
is
one of the following types of entities: (a) bank; (b) insurance company;
(c)
corporation, partnership, trust or limited liability company with total assets
in excess of 10 million dollars or net worth of 1 million dollars; (d)
government entity which owns and invests assets in excess of 25 million dollars;
(e) broker/dealer; (f) futures commission merchant; (g) a regulated commodity
pool, hedge fund, mutual fund or other collective investment vehicle with
greater than 5 million dollars in assets, (h) employee benefit plan with
assets
greater than 5 million dollars of (i) a natural person with total assets
exceeding 10 million dollars. NOTE: ECP clients are
permitted to engage in certain activities pursuant to the Commodity Exchange
Act. If Client is not one of the above entities, please strike this paragraph
in
its entirety.
22.RECEIPT
OF CLIENT ACKNOWLEDGMENTS
By
checking the boxes below, Client hereby expressly acknowledges and agrees
that
Client has received, read and understood and has retained a copy of the “Risk
Disclosure Statement for Futures and Options” which includes the disclosures
required by CFTC Rules 1.55, 30.6, 33.7 and 190.10(c), the specific disclosure
statements below and other disclosure and risk statements applicable to Client’s
Account as set forth in this Agreement and the “Client Account Application,
Disclosure Statements and Notices”. Please check all
boxes.
r Risk
Disclosure Statement
for Futures and Options
r Authorization
to Transfer Client Funds
r Singapore
Risk Disclosure Statement
Client
hereby acknowledges that Client has read and understands all the disclosures
provided and agrees to be bound by all of the terms contained in this Agreement.
Client agrees to immediately notify Xxxxxxx Xxxxx of any material changes
to the
information contained herein. Xxxxxxx Xxxxx and Client agree that this Agreement
may be executed in counterparts.
PLEASE
NOTE: If this Agreement is executed on behalf of a corporation, a
copy of a corporate resolution authorizing the signature(s) below must be
attached. If this Agreement is executed on behalf of a partnership, then
the
signature(s) below is/are that of all of the General Partners and the
partnership agreement must be attached. If this Agreement is executed on
behalf
of a Trust,
12
XXXXXXX
XXXXX
the
Trustee signature block below must be signed and a copy of the trust agreement
provided. If this Agreement is executed on behalf of a limited liability
company
or a non-US limited company, a copy of the operating agreement or a copy
of a
resolution authorizing the signature(s) below must be
attached. Persons signing this Agreement must provide proof of
identity. Additional documentation may be requested in accordance with
applicable anti-money laundering policies.
Please
indicate your understanding and agreement of these terms by signing
below.
_____________________________________________________________________________________
Account
Name
By:_________________________________________________________
___________________
Authorized
Signature Date
___________________________________________________ _________________________
Print
Name
Title
By:_________________________________________________________ ___________________
Authorized
Signature Date
___________________________________________________ _________________________
Print
Name
Title
13
