Exhibit 10.1
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Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx, Inc
Xxx Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000
_______________________________________________________________________________
Tel: 000-000-0000
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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.
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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,
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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.
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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 mark-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
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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
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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.
9. SECURITY 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
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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.
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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
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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.
14. DELIVERY 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.
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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, Xxxxxx, Xxxxxx & Xxxxx, Futures
Compliance Department, World Financial Center, North Tower, 12th Floor, New
York, NY, 10080, 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 Xxxxxxx
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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.
|_| Risk Disclosure Statement for Futures and Options
|_| Authorization to Transfer Client Funds
|_| 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,
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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.
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Account Name
-------------------------------- XXXXXXX XXXXX --------------------------------
By: __________________________________ ________________________________
Authorized Signature Date
__________________________________ ________________________________
Print Name Title
By: __________________________________ ________________________________
Authorized Signature Date
__________________________________ ________________________________
Print Name Title
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