Exhibit 10.5
COMMODITY TRADING ADVISOR AGREEMENT
This Commodity Trading Advisor Agreement ("AGREEMENT") is made this
1st day of November, 2006 between FutureFuel Chemical Company, a Delaware
corporation formerly known as Xxxxxxx XX, Inc. ("CLIENT"), and Apex Oil
Company, Inc., a Missouri corporation ("ADVISER").
RECITALS
A. Client is in the business of producing biofuels (biodiesel,
bioethanol and lignin/biomass solid fuels) and biobased specialty products
(biobased lubricants, solvents and intermediates) (the "BUSINESS").
B. In connection with its Business, Client needs to acquire
substantial quantities of feedstocks and diesel products and needs to hedge
its feedstocks and finished products and requires advice with respect to
such activities.
C. Adviser has expertise in the acquisition of feedstocks and the
hedging of various commodities and is willing to provide advice to Client
with respect to such matters on the terms set forth herein.
AGREEMENT
In consideration of the foregoing, the mutual covenants
herein contained and other good and valuable consideration (the receipt,
adequacy and sufficiency of which are hereby acknowledged by the parties by
their execution hereof), the parties agree as follows.
1. COMMODITY TRADING ADVISER. Client hereby employs Adviser, and Adviser
agrees to serve, as a commodity trading adviser for Client on the following
terms and subject to the following conditions.2. COMMODITY TRADING ADVICE.
Adviser hereby agrees to advise Client with respect to the purchase, sale,
exchange, conversion or hedging of commodities as Client may request from
time to time. For purposes of this Agreement, the term "commodity" includes:
(i) any and all feedstocks that Client uses in the operation of the
Business, including fats and oils (including lard, tallow, cottonseed oil,
peanut oil, soybean oil, palm oil and all other fats and oils), cottonseed
meal, cottonseed, soybeans, soybean meal, livestock and livestock products
and methanol; (ii) diesel fuel, heating oil, gasoline and ethanol; (iii)
biofuels, including biodiesel and bioethanol, and co-products from biofuels,
including glycerin; and (iv) pour-point depressants, color stabilizers and
other petroleum products. Such advice will also include advice as to
contracts of sale for commodities and as to options for commodities. For
purposes of this Agreement, the term "contract of sale" includes sales,
agreements of sale and agreements to sell, and the term "option" means an
agreement, contract or transaction that is of the character of, or is
commonly known to the trade as, an "option", "privilege", "indemnity",
"bid", "offer", "put", "call", "advance guaranty", or "decline guaranty".
3. POWER OF ATTORNEY. Client hereby grants to Adviser a power of attorney,
and hereby appoints Adviser as Client's agent with full power and authority,
to enter into contracts of sale for the purchase or sale of commodities and
options on commodities and the leasing of rail cars. Adviser will exercise
this power of attorney and authority only in accordance with objectives set
forth by Client from time to time. Adviser's authority will include the
authority:
(i) to give instructions for commodity transactions, including the
buying and selling of commodities and options with respect to
commodities; and
(ii) to make, execute, and deliver any and all contracts of sale and
written instruments of assignment and transfer and to take any and
all actions necessary or proper to effectuate the authority hereby
conferred.
Adviser is expressly not authorized hereby to exercise the following powers:
(a) to withdraw, acquire possession of or direct the disbursement of
assets held in any account maintained on behalf of Client;
(b) to trade securities as such term is defined in the Securities Act of
1933, as amended (the "SECURITIES ACT"); or
(c) to make filings and disclosures under federal and state securities
and other laws and regulations.
Whenever this Agreement or Exhibit B is attached to any instrument of
assignment and transfer, all persons are entitled, without further inquiry
or investigation and regardless of the date of such authorization, to act in
reliance upon the assumption that the commodities or options named in such
instrument were theretofore duly and properly transferred, endorsed, sold,
assigned, set over and delivered, and that with respect to such instrument
the authority conferred herein is still in full force and effect. This
authorization and power of attorney will remain effective until Client has
revoked it by written notice delivered personally or sent by registered or
certified mail to Adviser. Such revocation will not affect Client's
obligations resulting from transactions initiated prior to receipt of such
written notice.
4. FEES. As compensation for Adviser's adviser services provided to Client
hereunder and for Adviser exercising the authority granted to Adviser under
Section 3, Client will pay Adviser a fee equal to $10,000 per month. Such
fee is payable within ten days of receipt of invoice.
5. REPORTS. Adviser will prepare such reports, including daily position
reports, with respect to any activities conducted by it on Client's behalf
under this Agreement. Such reports are to be in such forms, and be prepared
with such frequency, as Client may reasonably request from time to time.
6. TERMINATION. This Agreement may be terminated by either party at any time
upon written notice. In the event of such termination, Client will owe
Adviser a pro rata portion of the fees specified in Section 4, calculated to
the date of termination
7. STANDARD OF CARE. The parties agree that the sole standard of care
imposed on Adviser by this Agreement is to act with the care, prudence and
diligence under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in the conduct
of an enterprise of like character and with like aims; provided, however,
that nothing in this Agreement will be deemed to limit any responsibility or
liability that Adviser may have to Client to the extent such limitation
would be inconsistent with applicable laws, including the Securities Act,
the Securities Exchange Act of 1934, as amended, the Investment Adviser Act
or the Commodity Exchange Act.
8. RESTRICTIONS ON ADVISER'S AUTHORITY. Except pursuant to an exemption
under the Commodity Exchange Act or any rule or regulation promulgated
thereunder, Adviser will not pursuant to Section 3 offer on behalf of Client
to enter into, enter into, execute or confirm the execution of a contract
for the purchase or sale of a commodity for future delivery (other than a
contract which is made on or subject to the rules of a board of trade,
exchange, or market located outside the United States, its territories or
possessions) unless: (i) such transaction is conducted on or subject to the
rules of a board of trade which has been designated or registered by the
Commodity Futures Trading Commission (the "COMMISSION") as a contract market
or derivatives transaction execution facility for such commodity; (ii) such
contract is
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executed or consummated by or through a contract market; and (iii) such
contract is evidenced by a record in writing which shows the date, the
parties to such contract and their addresses, the property covered and its
price, and the terms of delivery. The foregoing restriction does not apply
to transactions or positions which are bona fide hedging transactions or
positions as such terms are defined by the Commission.
9. NO REGISTRATION. Adviser hereby advises Client, and Client hereby
acknowledges, that neither Adviser nor any of Adviser's employees are
registered under the Commodity Exchange Act as a commodity trading adviser
(as such term is defined in the Commodity Exchange Act) in that, during the
course of the twelve months preceding the date of this Agreement, Adviser
has not furnished commodity trading advice to more than fifteen persons and
does not hold itself out generally to the public as a commodity trading
advisor.
10. NO APPROVAL BY THE UNITED STATES. Client acknowledges that Adviser has
not been sponsored, recommended or approved, and that Adviser's abilities or
qualifications have not in any respect been passed upon, by the United
States or any agency or officer thereof.
11. DISCLOSURE DOCUMENT. Client hereby acknowledges receipt of the
Disclosure Document attached hereto as Exhibit A.
12. AMENDMENT AND MODIFICATION. No amendment, modification, supplement,
termination, consent or waiver of any provision of this Agreement, nor
consent to any departure therefrom, will in any event be effective unless
the same is in writing and is signed by the party against whom enforcement
of the same is sought. Any waiver of any provision of this Agreement and any
consent to any departure from the terms of any provision of this Agreement
is to be effective only in the specific instance and for the specific
purpose for which given.
13. ASSIGNMENTS. No party may assign or transfer (voluntarily or
involuntarily, by operation of law (including by merger or consolidation),
judicial decree or otherwise) any of its rights or obligations under this
Agreement to any other person without the prior written consent of the other
parties.
14. CAPTIONS. Captions contained in this Agreement have been inserted herein
only as a matter of convenience and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provision hereof.
15. CONFIDENTIALITY. Each party agrees to maintain any confidential
information that it may receive from the other parties confidential and may
not disclose such information to any person without the prior written
consent of the party originally furnishing such confidential information.
However, a party may disclose such confidential information (the "DISCLOSING
PARTY"): (i) to legal counsel of the Disclosing Party; (ii) to other
professional advisors of the Disclosing Party (but only if they have been
informed of the confidential nature of such confidential information and
agree in writing to be bound by the terms of this Section); (iii) to
regulatory officials having jurisdiction over the Disclosing Party; and (iv)
as required by law or legal process or in connection with any legal
proceeding to which the Disclosing Party is a party or is otherwise subject.
In each such event (other than clause (i)), the Disclosing Party, prior to
such disclosure, is to inform the party originally furnishing such
confidential information.
16. CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise: (i) references to the plural include the singular and vice versa;
(ii) references to any person include such person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by
this Agreement; (iii) references to one gender include all genders; (iv)
"including" is not limiting; (v) "or" has the inclusive meaning represented
by the phrase "and/or"; (vi) the words "hereof", "herein", "hereby",
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any
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particular provision of this Agreement; (vii) section and Exhibit references
are to this Agreement unless otherwise specified; (viii) reference to any
agreement (including this Agreement), document or instrument means such
agreement, document or instrument as amended or modified and in effect from
time to time in accordance with the terms thereof and, if applicable, the
terms hereof; and (ix) general or specific references to any law mean such
law as amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time.
17. COUNTERPART FACSIMILE EXECUTION. For purposes of this Agreement, a
document (or signature page thereto) signed and transmitted by facsimile
machine or telecopier is to be treated as an original document. The
signature of any party thereon, for purposes hereof, is to be considered as
an original signature, and the document transmitted is to be considered to
have the same binding effect as an original signature on an original
document. At the request of any party, any facsimile or telecopy document is
to be re-executed in original form by the parties who executed the facsimile
or telecopy document. No party may raise the use of a facsimile machine or
telecopier or the fact that any signature was transmitted through the use of
a facsimile or telecopier machine as a defense to the enforcement of this
Agreement or any amendment or other document executed in compliance with
this Section.
18. COUNTERPARTS. This Agreement may be executed by the parties on any
number of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the parties notwithstanding that all
the parties are not signatories to the same counterpart.
19. EXHIBITS. All of the Exhibits attached to this Agreement are deemed
incorporated herein by reference.
20. FAILURE OR DELAY. No failure on the part of any party to exercise, and
no delay in exercising, any right, power or privilege hereunder operates as
a waiver thereof; nor does any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof,
or the exercise of any other right, power or privilege. No notice to or
demand on any party in any case entitles such party to any other or further
notice or demand in similar or other circumstances.
21. FURTHER ASSURANCES. The parties will execute and deliver such further
instruments and do such further acts and things as may be required to carry
out the intent and purpose of this Agreement.
22. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder are to be governed by and construed and interpreted in
accordance with the laws of the State of Missouri applicable to contracts
made and to be performed wholly within Missouri, without regard to choice or
conflict of laws rules.
23. LEGAL FEES. Except as otherwise provided herein, all legal and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby are to be paid by the party incurring such
costs and expenses. In the event any party brings suit to construe or
enforce the terms hereof, or raises this Agreement as a defense in a suit
brought by another party, the prevailing party is entitled to recover its
attorneys' fees and expenses.
24. NO JOINT VENTURE OR PARTNERSHIP. The parties agree that nothing
contained herein is to be construed as making the parties joint venturers or
partners.
25. SEVERABILITY. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction is, as to such
jurisdiction, ineffective to the extent of any such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof, or affecting the validity, enforceability or legality of
such provision in any other jurisdiction, unless the
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ineffectiveness of such provision would result in such a material change as
to cause completion of the transactions contemplated hereby to be
unreasonable.
26. SUCCESSORS AND ASSIGNS. All provisions of this Agreement are binding
upon, inure to the benefit of and are enforceable by or against the parties
and their respective heirs, executors, administrators or other legal
representatives and permitted successors and assigns.
27. THIRD-PARTY BENEFICIARY. This Agreement is solely for the benefit of the
parties and their respective successors and permitted assigns, and no other
person has any right, benefit, priority or interest under or because of the
existence of this Agreement.
APEX OIL COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxx, Executive Vice
President
FUTUREFUEL CHEMICAL COMPANY
By: /s/ Xxxxxxx X. Xxxxxx 10/30/06
-------------------------------------------
Xxxxxxx X. Xxxxxx, President
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EXHIBIT A
DISCLOSURE STATEMENT
Although the giving of commodity trading advice is not the
principal business activity of Apex Oil Company, Inc. ("APEX"), Apex is
giving to FutureFuel Chemical Company ("FUTUREFUEL", "YOU" or "YOUR") this
Disclosure Statement.
THE COMMODITY FUTURES TRADING COMMISSION ("COMMISSION") HAS NOT PASSED UPON
THE MERITS OF PARTICIPATING IN THIS TRADING PROGRAM NOR HAS THE COMMISSION
PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE STATEMENT.
THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL. YOU SHOULD
THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN
LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO
AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE
FOLLOWING.
(1) IF YOU PURCHASE A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF
THE PREMIUM AND OF ALL TRANSACTION COSTS.
(2) IF YOU PURCHASE OR SELL A COMMODITY FUTURE OR SELL A COMMODITY
OPTION, YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS
AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO
ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST
YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO DEPOSIT A
SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN
ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUIRED
FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED
AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR
ACCOUNT.
(3) UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR
IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE,
WHEN THE MARKET MAKES A "LIMIT MOVE."
(4) THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR,
SUCH AS A "STOP-LOSS" OR "STOP-LIMIT" ORDER, WILL NOT NECESSARILY
LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS
MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS.
(5) A "SPREAD" POSITION MAY NOT BE LESS RISKY THAN A SIMPLE "LONG" OR
"SHORT" POSITION.
(6) THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY
TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF
LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS.
IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES
FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS
THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING
PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THE COMMODITY
TRADING ADVISER AGREEMENT TO WHICH THIS DISCLOSURE DOCUMENT IS ATTACHED
CONTAINS A COMPLETE DESCRIPTION OF EACH FEE TO BE CHARGED TO YOU BY APEX.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT
ASPECTS OF THE COMMODITY MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY THIS
DISCLOSURE DOCUMENT AND COMMODITY TRADING BEFORE YOU TRADE.
FOREIGN FUTURES AND FOREIGN OPTIONS
-----------------------------------
THE RISK OF LOSS IN TRADING FOREIGN FUTURES AND FOREIGN OPTIONS CAN BE
SUBSTANTIAL. THEREFORE, YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING
IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING
WHETHER TO TRADE FOREIGN FUTURES OR FOREIGN OPTIONS, YOU SHOULD BE AWARE OF
THE FOLLOWING.
(1) PARTICIPATION IN FOREIGN FUTURES AND FOREIGN OPTIONS TRANSACTIONS
INVOLVES THE EXECUTION AND CLEARING OF TRADES ON OR SUBJECT TO THE
RULES OF A FOREIGN BOARD OF TRADE.
(2) NEITHER THE COMMISSION, THE NATIONAL FUTURES ASSOCIATION NOR ANY
DOMESTIC EXCHANGE REGULATES ACTIVITIES OF ANY FOREIGN BOARDS OF
TRADE, INCLUDING THE EXECUTION, DELIVERY AND CLEARING OF
TRANSACTIONS, OR HAS THE POWER TO COMPEL ENFORCEMENT OF THE RULES
OF A FOREIGN BOARD OF TRADE OR ANY APPLICABLE FOREIGN LAWS.
GENERALLY, THE FOREIGN TRANSACTION WILL BE GOVERNED BY APPLICABLE
FOREIGN LAW. THIS IS TRUE EVEN IF THE EXCHANGE IS FORMALLY LINKED
TO A DOMESTIC MARKET SO THAT A POSITION TAKEN ON THE MARKET MAY BE
LIQUIDATED BY A TRANSACTION ON ANOTHER MARKET. MOREOVER, SUCH LAWS
OR REGULATIONS WILL VARY DEPENDING ON THE FOREIGN COUNTRY IN WHICH
THE FOREIGN FUTURES OR FOREIGN OPTIONS TRANSACTION OCCURS.
(3) FOR THESE REASONS, YOU MAY NOT BE AFFORDED CERTAIN OF THE
PROTECTIVE MEASURES PROVIDED BY THE COMMODITY EXCHANGE ACT, THE
COMMISSION'S REGULATIONS OR THE RULES OF THE NATIONAL FUTURES
ASSOCIATION AND ANY DOMESTIC EXCHANGE, INCLUDING THE RIGHT TO USE
REPARATIONS PROCEEDINGS BEFORE THE COMMISSION AND ARBITRATION
PROCEEDINGS PROVIDED BY THE NATIONAL FUTURES ASSOCIATION OR ANY
DOMESTIC FUTURES EXCHANGE. IN PARTICULAR, FUNDS RECEIVED FROM
CUSTOMERS FOR FOREIGN FUTURES OR FOREIGN OPTIONS TRANSACTIONS MAY
NOT BE PROVIDED THE SAME PROTECTIONS AS FUNDS RECEIVED IN RESPECT
OF TRANSACTIONS ON UNITED STATES FUTURES EXCHANGES. THEREFORE, YOU
SHOULD OBTAIN AS MUCH INFORMATION AS POSSIBLE FROM APEX CONCERNING
THE FOREIGN RULES WHICH WILL APPLY TO YOUR PARTICULAR TRANSACTION.
(4) YOU SHOULD ALSO BE AWARE THAT THE PRICE OF ANY FOREIGN FUTURES OR
FOREIGN OPTIONS CONTRACT AND, THEREFORE, THE POTENTIAL PROFIT AND
LOSS THEREON, MAY BE AFFECTED BY ANY VARIANCE IN THE FOREIGN
EXCHANGE RATE BETWEEN THE TIME YOUR ORDER IS PLACED AND THE TIME IT
IS LIQUIDATED, OFFSET OR EXERCISED.
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You should be aware of the following disclosures and considerations, which
relate specifically to Apex.
(1) Apex is a Missouri corporation that is not registered with the
Commission as a commodity trading advisor. The address and
telephone number of Apex's business office are:
Apex Oil Company, Inc.
0000 Xxxxxxx Xxxx., 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000
Xxxx Xxxx and Xxx Xxxxxxx are the primary employees of Apex who
will be performing the services for you under the Agreement.
Xxxx Xxxx has spent the last 28 years with Apex and/or its
affiliates buying, selling and scheduling petroleum products via
truck, pipeline, rail, barge and tankers, and has engaged in risk
management with respect to petroleum products via swaps, futures
and options.
Xxx Xxxxxxx has spent the last 26 years with Apex and/or its
affiliates buying, selling and scheduling petroleum products via
truck, pipeline, rail, barge and tankers, and has engaged in risk
management with respect to petroleum products via swaps, futures
and options.
(2) The Commission requires a commodity trading advisor to disclose to
prospective clients the actual performance record of all accounts
for which the trading advisor and its principals have had the
authority to cause transactions to be effected without clients'
specific authorization. You should note that this trading advisor
and its principals previously have not had such authority.
(3) You should be aware of the following actual or potential conflicts
of interest.
Apex will devote so much of its time to your activities as Apex
deems necessary. Apex is not restricted from entering into
additional advisory relationships or from engaging in other
business activities, even though such activities may be in
competition with your affairs or may involve substantial time and
resources of Apex. Apex is currently engaged buying, selling,
trading, storage and distribution of petroleum and petroleum
products, among other things.
Apex may purchase commodities or options from or sell commodities
or options to you or your affiliates. Such commodities and options
are intended to be priced at published or listed rates plus
applicable location differentials.
Apex will trade in commodity interests for its own account.
(4) There have been no material administrative, civil or criminal
actions against Apex or any of the principals of Apex within the
five-year period preceding the date of the Agreement.
(5) Additional Risk Factors.
Volatility and Leverage. Commodity futures prices can be highly
-----------------------
volatile. Because of the low margin deposits normally required in
futures trading, an extremely high degree of leverage is typical of
a futures trading account. As a result, a relatively small price
movement in a futures contract may result in substantial losses to
the investor. Like other leveraged investments, a futures
transaction may result in losses in excess of the amount invested.
Daily Price Fluctuation Limits. Commodity exchanges limit
------------------------------
fluctuation in commodity futures contract prices during a single
day. During a single trading day, no trades may be executed at
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prices beyond the "daily limit." Once the price of a future
contract for a particular commodity has increased or decreased by
an amount equal to the daily limit, positions in the commodity can
neither be taken nor liquidated unless traders are willing to
effect trades at or within the limit. Futures prices have
occasionally moved the daily limit for several consecutive days
with little or no trading. Similar occurrences could prevent
clients from promptly liquidating unfavorable positions and subject
clients to substantial losses.
Speculative Nature of Commodity Futures Trading. Commodity futures
-----------------------------------------------
trading is speculative. Price movements of commodity futures
contracts are influenced by, among other things, changing supply
and demand relationships, governmental, agricultural and trade
programs and policies and national and international political and
economic events. Changing crop prospects occasioned by unexpected
weather or damage by insects and plant diseases make it difficult
to forecast supplies of agricultural commodities. Similarly, demand
is also difficult to forecast due to such factors as variable world
production patterns, unexpected purchases by foreign countries and
continued changes in domestic needs.
Commodity Trading Strategies. The two principal strategies used in
----------------------------
commodity trading are "trend-following" systems and "fundamental"
trading strategies. Trend-following technical strategies seek to
take into account certain "technical" factors in identifying price
trends. The buy and sell signals generated by a technical trading
system are not based on analysis of fundamental supply and demand
factors, general economic factors or anticipated world events, but
generally upon actual daily, weekly and monthly price fluctuations,
volume variations and changes in open interest. The profitability
of any technical trading strategy depends upon occurrence of major
price moves or trends in some commodities. In the past, there have
been periods without discernible trends, and presumably similar
periods will occur in the future. Any factor that may lessen the
prospect of major trends in the future (such as increased
governmental control of the markets) may reduce the prospect that
any technical trading strategy will be profitable in the future.
Commodity trading strategies employing trend-following timing
signals, based exclusively on technical analysis, are used by many
traders. If too many traders follow very similar strategies, a
bunching of buy and sell orders could occur. Fundamental analysis
attempts to examine factors that affect the supply and demand for a
particular commodity in order to predict future prices. Such
analysis may not result in profitable trading because the analyst
may not have knowledge of all of the pertinent factors affecting
supply and demand. Prices may often be affected by unrelated
factors and purely fundamental analysis may not enable the trader
to determine quickly that his previous decisions were incorrect.
THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE
EXPLANATION OF THE RISKS INVOLVED IN COMMODITY TRADING.
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EXHIBIT B
CONFIRMATION OF DELEGATION OF AUTHORITY
THIS CONFIRMATION OF DELEGATION OF AUTHORITY is made the 1st day of
November, 2006, between APEX OIL COMPANY, INC., a Missouri corporation
("Advisor") and FUTUREFUEL CHEMICAL COMPANY, a Delaware corporation
("FFCC"). Advisor and FFCC are referred to herein individually, as a "Party"
and collectively, as the "Parties".
RECITALS
A. Pursuant to a Commodity Trading Advisor Agreement between
Advisor and FFCC entered as of the date hereof ("Advisor Agreement"),
Advisor has agreed to advise FFCC in connection with commodity trading
transactions and railcar leasing and FFCC has granted Advisor a power of
attorney to enter into commodity contracts and railcar leases on behalf of
FFCC.
B. The Parties desire to memorialize in writing the delegation of
authority and power of attorney granted by FFCC under the Advisor Agreement.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein
contained and other good and valuable consideration (the receipt, adequacy
and sufficiency of which are hereby acknowledged by the parties by their
execution hereof), the Parties agree as follows.
1. APPOINTMENT. FFCC confirms its appointment of Advisor via power of
attorney, as FFCC's agent and advisor with respect to contracts for the
purchase or sale of commodities and options on commodities and the leasing
of rail cars; provided, however, that FFCC shall at all times and in all
events retain the right to act on its own behalf on any matter.
2. EXTENT OF AUTHORITY. Advisor's authority includes authority to (i) give
instructions for commodity transactions and the leasing of rail cars,
including the buying and selling of commodities and options with respect to
commodities, and (ii) to make, execute, and deliver any and all contracts of
sale, leases and written instruments of assignment and transfer and to take
any and all actions necessary or proper to effectuate such transactions.
3. AUTHORITY TO CONTRACT. Advisor shall have and is authorized to represent
itself as having, full authority and power to make contracts and legal
commitments in the name of and binding on FFCC which are for the purchase or
sale of commodities, options on commodities or the leasing of rail cars.
4. TERM. This delegation of authority shall be effective as of the date
hereof, and continue in effect until terminated by FFCC or Advisor in
accordance with the terms of the Advisor Agreement.
5. COMPLIANCE WITH LAWS. Advisor shall conduct all of its activities on
behalf of FFCC in accordance with all applicable laws and all terms of the
Advisor Agreement.
APEX OIL COMPANY, INC. FUTUREFUEL CHEMICAL COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx 10/30/06
----------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxx,
Executive V. P. President
