Contract
Exhibit
10.8
-11-
This FX
PRIME BROKERAGE AGREEMENT (“Agreement”), dated as of March
1, 2007, by and between UBS
AG (“UBS”) and
UBS Managed Futures (Aspect)
LLC (“Customer”)
sets forth certain terms and conditions relating to the establishnnent of a
facility (the “Facility”) through which
Customer may trade foreign exchange transactions with various
Dealers.
Scope of
Agreement. The parties explicitly acknowledge and agree that
whilst this Agreement contains provisions governing a wide range of foreign
exchange transactions. Transactions and Authorized Transactions
(subject to any further limitations specified in any Dealer
notice/authorization) shall be limited to the following types of transactions
only:
(i) | FX Transactions; | |
(ii) | Currency Option Transactions | |
(iii) | Exotic Options. |
UBS may,
at its absolute discretion, give notice to the Customer of any change, deletion
or addition to this provision.
1.
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Definitions
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Capitalized
terms used herein but not defined herein shall have the meanings ascribed
to them in the CP ISDA Master
Agreement.
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“Authorized
Transactions” means foreign exchange transactions of a type that UBS has
authorized the Customer to enter into with each Dealer.
“CP ISDA
Master Agreement” means the ISDA Master Agreement
dated
by and between Customer and UBS, including any Credit Support Annex to the
schedule to that agreement.
“Currency
Option Transaction” shall have the meaning ascribed in the 1998 FX and
Currency Option Definitions, as amended from time to time (as published by the
International Swaps and Derivatives Association, Inc., the Emerging Markets
Traders Association (“EMTA”“) and The Foreign Exchange Committee) (“FX Definitions”) and for the
avoidance of doubt, shall not include an option that would otherwise be deemed
to be an Exotic Option.
“Dealer”
means those banks and dealers authorized by UBS, pursuant to a Master FX Give-Up
Agreement, with whom Customer can enter into Authorized
Transactions. Customer shall be notified of such Dealers by UBS in
writing from time to time, specifying the type of Authorized Transactions and
limits therefor.
“Deliverable
Currency Option Transaction” shall have the meaning ascribed in the FX
Definitions.
“Deliverable
FX Transaction” shall have the meaning ascribed in the FX
Definitions.
“Delta”
means, in respect of each Currency Option Transaction, the amount calculated by
UBS to be the change in option price for a change in the underlying price (as
determined by UBS) for such Currency Option Transaction.
“Delta
Equivalent Position” means, for each Currency Option Transaction, the
Delta multiplied by the U.S. dollar equivalent (as calculated by UBS in a
commercially reasonable manner) of each currency to be received by UBS if such
Currency Option Transaction were exercised, as calculated by UBS.
“Exotics
Net Open Position” shall be calculated in the manner specified in
Attachment 1.
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“Exotic
Notional Limit” means the maximum notional quantity (calculated in the
manner specified in Attachment 1) of Exotic Options that Customer can trade with
each Dealer on a trade date, such limit to be advised to Customer by UBS from
time to time.
“Exotic
Options” means barrier options (and such other non-vanilla options as
approved by UBS from time to time).
“FX
Transaction” shall have the meaning ascribed in the FX
Definitions.
“Master FX
Give-Up Agreement” means an agreement by and between UBS and each of the
various Dealers, relating to the trading of FX Transactions and Currency Option
Transactions by UBS customers on behalf of UBS.
“Net
Currency Position” means, for any value date, with respect to each
currency of a FX Transaction, the net U.S. dollar equivalent (as calculated by
UBS in a commercially reasonable manner) of the amount of such currency owed to
UBS by the Customer as calculated by UBS in good faith and in a commercially
reasonable manner.
“Net Open
Position” means for the aggregate amount owed to UBS by Customer, as
calculated by UBS in the manner specified in Attachment 1 hereto (which may be
modified from time to time by UBS in its reasonable discretion).
“Net Open
Position Limit” means, the maximum Net Open Position and Exotic Net Open
Position, as an aggregate across all Tiers, that a Customer is authorized to
have outstanding at any time with UBS, as determined by UBS and advised to the
Customer (such amount may be amended from time to time by UBS upon reasonable
notice to the Customer).
“Netted
Option” means, a Currency Option Transaction sold by Prime Broker and
owned by the Customer which may be discharged and terminated together with a
Currency Option Transaction sold by the Customer and owned by Prime Broker upon
satisfying the following criteria:
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(i)
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each
Currency Option Transaction being with respect to the same Put Currency
and Call Currency;
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(ii)
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each
having the same Expiration Date and Expiration
Time;
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(iii)
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each
being of the same style, i.e. either both being American Style Options or
both being European Style Options;
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(iv)
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each
having the same Strike Price; and
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(v)
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neither
of which shall have been exercised by delivery of a Notice of Exercise (as
defined below); and
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(vi)
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the
case of a partial discharge and termination (i.e., where the relevant
Currency Option Transactions are for different amounts of the Currency
Pair), only the portion discharged and terminated shall be considered a
Netted Option.
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“Non-Deliverable
Currency Option Transaction”‘ shall have the meaning ascribed in the FX
Definitions.
“Non-Deliverable
FX Transaction” shall have the meaning ascribed in the FX
Definitions.
“Notice of
Exercise” means telex, telephonic or other electronic notification
(excluding facsimile transmission), given by the owner of an Option prior to or
at the Expiration Time on the Expiration Date as agreed to at the time the
Option is entered into, as evidenced by the Confirmation.
“Notice of
Barrier Event” means telex, telephonic or other electronic notification
(excluding facsimile transmission) given by the relevant Dealer as the
determination agent of an Exotic Option immediately following a barrier event as
agreed to at the time the Exotic Option is entered into, as evidenced in a
Confirmation.
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“Options”
includes Currency Option Transactions (Deliverable and Non-Deliverable) and
Exotic Options,
“Risk
Add-On” means, for Exotic Options, such amount as determined by UBS in a
commercially reasonable manner taking each Currency Pair and determining the
close-out risk on such trade, in accordance with UBS’s internal model (based on
the underlying volatility of Currency Pairs as determined by UBS, having
aggregated offsetting transactions on a value date basis and across value dates
where possible, in UBS’s sole and absolute discretion).
“Transactions”
means Deliverable and Non-Deliverable FX Transactions, Deliverable and
Non-Deliverable Currency Options Transactions and Exotic Options.
2.
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The
Facility
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(a)
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UBS
may (in its sole discretion) establish and maintain dealing lines for use
by Customer in trading Transactions in the name of UBS with one or more
Dealers. UBS will provide each Dealer with such authorization
and other agreements and instruments as it deems appropriate in order to
permit Customer to execute Authorized Transactions with Dealers in the
name of UBS in accordance with the terms
hereof.
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(b)
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Customer
acknowledges and agrees that the establishment and maintenance of dealing
lines by UBS under the Facility is subject to UBS’s sole discretion,
including but not limited to, discretion regarding credit, documentation,
available currencies, size or tenor of lines (which may vary according to
currency) and UBS’s line usage for business outside of the
Facility. Customer further acknowledges and agrees that such
dealing lines may be changed by UBS in its sole discretion at any time
without prior notice. UBS is not and shall not be responsible
for and does not warrant the sufficiency or availability of the dealing
lines for any purpose. In the event that UBS does not establish
or maintain adequate dealing lines for the Facility, Customer’s only
remedy shall be to terminate this Agreement. In this
respect. Customer waives all other claims and remedies against
UBS.
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(c)
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UBS
will establish trading limits for each Dealer, and advise Customer of
those limits. Customer agrees to limit the Authorized
Transactions with each Dealer in such a manner as UBS may from time to
time specify. Customer acknowledges and agrees that
Transactions exceeding such limits shall not be binding on UBS unless and
until UBS accepts such Transactions. UBS maintains the right to
reject any Transactions which exceed the Net Open Position Limit, Notional
Exotic Limit or for which Customer has not satisfied all of the collateral
delivery requirements of the Credit Support Annex of the CP ISDA Master
Agreement (including any obligation to deliver the Independent Amount
relating to any Transaction) and Customer will indemnify UBS for any
claims by Dealer as a result of UBS’s assertion of such non-bindingness or
refusal in the circumstances described above, except to the extent that
such claim results from the bad faith, negligence, willful misconduct or
fraud of UBS. In the event that UBS accepts a Transaction
exceeding the Net Open Position Limit or the Exotic Notional Limit,
Customer agrees that UBS may, in its sole and absolute discretion and
without notice, liquidate all or part of the corresponding Customer
Contract (as defined below) for the account of the Customer, in order to
reduce Customer’s Net Open Position to below the agreed Net Open Position
Limit or reduce Customer’s utilization of Exotic Notional
Limit.
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(d)
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Customer
agrees to promptly pay UBS such commissions and other fees set forth in
the attached Fee Schedule (as the terms of such Schedule may be revised
from time to time by agreement between UBS and
Customer).
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(e)
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Notwithstanding
any provision contained in the CP ISDA Master Agreement and any
confirmation thereunder, UBS may amend any Independent Amount with respect
to any Transaction or group of Transactions upon notice to
Customer.
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3.
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Transaction
Confirmations
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(a)
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When
Customer enters into an Authorized Transaction with a Dealer in the name
of UBS under the Master FX Give-up Agreement, Customer and UBS will be
deemed to have automatically entered into a Transaction (the “Customer Contract”) on
identical terms, except that UBS’s position as buyer or seller of the
Transaction will be the reverse of its position with
Dealer. The foregoing is subject to UBS’s right to reject a
trade under the terms of this Agreement and any Master FX Give-Up
Agreement. The Customer Contracts shall be governed by the CP
ISDA Master Agreement.
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(b)
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The
Authorized Transactions made between Dealer(s) and UBS shall be subject to
and be governed by the (i) ISDA Master Agreements entered into between the
respective Dealers and UBS or (ii) if any Dealers have not entered into an
ISDA Master Agreement with UBS, such other master agreements as such
Dealers and UBS may agree from time to time ((i) and (ii), “Dealer Master
Agreements”).
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(c)
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Customer
agrees to promptly respond to trade notices provided by Dealer via UBS’s
online automated system. In the event that such system is not
available for any reason. Customer will notify UBS by Reuters
Direct Dealing or telephone, immediately after entering into a Transaction
in UBS’s name with a Dealer. Such notice shall be made in
accordance with the procedures to be set forth in Schedule
2. By 5pm (New York time) each New York business day, each
London business day, and each other business day (elsewhere) (each such
day a “Business Day”) on which Customer enters into Authorized
Transactions (or purports to do so). Customer will confirm,
through the UBS Webpage referred to Schedule 2 (or by other means
acceptable to UBS), that all trades reported through such Webpage
represent all Authorized Transactions which Customer has entered (or
purported to enter) on such day. For the purposes of the
preceeding sentence a transaction will be deemed entered on a Business Day
if, and only if, it was entered after 5pm New York time on the immediately
preceeding Business Day and not after 5pm New York time on such Business
Day.
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(d)
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Except
as otherwise provided in clause 3(f), once an Authorized Transaction with
a Dealer is entered into in the name of UBS and accepted by UBS, Customer
shall have no right to amend, cancel or otherwise affect or interfere with
any such transactions, which shall be the sole responsibility of
UBS.
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(e)
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Customer
acknowledges and agrees that the relevant Dealer will be the calculation
agent/determination agent for Exotic Options which are Authorized
Transactions or Customer Contracts. Where Customer has entered
into an Authorized Transaction which is an Exotic Option, any Notice of
Barrier Event delivered by such Dealer to Customer shall constitute notice
of the relevant barrier event under the Authorized Transaction and the
corresponding Customer Contract. Any dispute that Customer may
have as to the occurrence or not of a barrier event (e.g. knock-out,
kick-in, binary, however described,) shall be solely between Customer and
such Dealer and Customer acknowledges and agrees that Prime Broker shall
have no role therein and shall be entitled to act under the Customer
Contract (and for the avoidance of doubt, the corresponding Authorized
Transaction), and Customer shall not prevent in any way Prime Broker from
taking any action, upon the Notice of Barrier Event as if no dispute
existed.
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(f)
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Notwithstanding
any terms of a Confirmation or CP ISDA Master Agreement to the contrary,
if Customer has entered into an Authorized Transaction with a Dealer in
the name of UBS in which UBS is the buyer of an Option, as between
Customer and UBS, the corresponding Customer Contract may only be
exercised by delivery of a Notice of Exercise by Customer to such Dealer,
copied to UBS, which shall also constitute exercise of such Option by UBS
under such Authorized Transaction.
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(g)
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Notwithstanding
any terms of a Confirmation or the CP ISDA Master Agreement to the
contrary, if Customer has entered into an Authorized Transaction with a
Dealer in the name of UBS in which UBS is the seller of an Option, such
Option will only be exercised by the simultaneous delivery of a Notice of
Exercise by such Dealer to both Customer and, UBS, which shall constitute
exercise of such Option by such Dealer and exercise by UBS of its Option
under the corresponding Customer
Contract.
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(h)
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For
the purposes of Non-Deliverable FX Transactions and Non-Deliverable
Currency Options Transactions, the calculation agent for the transaction
between UBS and Customer shall be as detailed on the relevant
Confirmation.
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(i)
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For
each Customer Contract entered into hereunder, UBS shall promptly send to
Customer a Confirmation, via electronic transmission, web-based
communication, telex or facsimile. Customer agrees to respond
to such Confirmation by close of business on the next Local Business Day
after receipt of such Confirmation, either confirming agreement thereto or
requesting a correction of any error(s) contained
therein. Failure by Customer to respond within such period
shall not affect the validity or enforceability of such Customer Contract
and shall be deemed to be an affirmation of the terms contained in such
Confirmation, absent manifest error (“Deemed Acceptance”). The
parties agree that any such exchange or Deemed Acceptance of an electronic
transmission, web-based communication, telex or facsimile transmission
shall constitute a Confirmation of such Customer Contract for the purposes
of the CP ISDA Master Agreement.
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4.
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Representations
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Each
party represents to the other party (which representations will be deemed to be
repeated by each party on each date on which a transaction is entered into)
that:
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(a)
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It
is duly organized and validly existing under the laws of the jurisdiction
of its organization or incorporation and, if relevant under such laws, in
good standing;
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(b)
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It
has the power to execute this Agreement and any other documentation
referred to this Agreement, to deliver this Agreement and any other
documentation referred to this Agreement and to perform its obligations
under this Agreement and has taken all necessary action to authorize such
execution, delivery and
performance;
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(c)
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Such
execution, delivery and performance do not violate or conflict with any
law applicable to it, any provision of its constitutional documents, any
order or judgment of any court or other agency of government applicable to
it or any of its assets or any contractual restriction binding on or
affecting it or any of its assets;
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(d)
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All
governmental and other consents that are required to have been obtained by
it with respect to this Agreement have been obtained and are in full force
and effect and all conditions of any such consents have been complied
with; and
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(e)
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Its
obligations under this Agreement constitute its legal, valid and binding
obligations, enforceable in accordance with their respective terms
(subject to applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors’ rights generally and subject, as to
enforceability, to equitable principles of general application (regardless
of whether enforcement is sought in a proceeding in equity or at
law)).
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5.
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Indemnification
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Customer
agrees to indemnify, hold harmless and defend UBS, its affiliates and their
respective officers, directors, employees, agents, successors and assigns (each,
an “Indemnified Person”),, from and against any and all claims, damages, costs,
losses and liabilities (including reasonable attorneys’ fees), which may at any
time be asserted against or incurred by UBS based upon, arising from or in
connection with this Agreement, the Facility and any action or inaction on the
part of Customer under this Agreement, including but not limited to, (i) any
material breach of any representation, warranty, covenant or agreement of
Customer contained in this Agreement; (ii) any failure of Customer to comply
with applicable law; (iii) Customer’s negligence or willful misconduct; (iv) any
claim by a Dealer in respect of an Authorized Transaction; and (v) any
indemnification which UBS has given to a Dealer; except to the extent that the
claim, damages, costs, losses and liabilities are due to the , bad faith,
negligence, wilful misconduct or fraud of Indemnified Persons.
6.
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General
Provisions
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(a)
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This
Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment or performance of any liabilities is
rescinded or must otherwise be returned or unwound by UBS upon insolvency,
bankruptcy, or reorganization of Customer, or otherwise, all as though
such payment had not been made.
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(b)
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This
Agreement may be terminated by either party without cause, upon prior
written notice. Termination will not affect any outstanding
rights and obligations under this Agreement, any Authorized Transactions
accepted by UBS, and their corresponding Customer Contracts, and such
rights and obligations shall continue to be governed by this Agreement and
the particular terms agreed between UBS and Customer in relation to such
Authorized Transactions and Customer Contracts until all obligations have
been fully performed.
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(c)
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No
indulgence or concession granted by either party and no omission or delay
on the part of a party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.
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(d)
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The
provisions of the FX Definitions are hereby incorporated in their entirety
and shall apply to all Transactions entered into or deemed to be entered
into between (i) UBS and each Dealer and (ii) UBS and Customer, whether or
not so stated in a confirmation of any such
Transaction. Authorized Transactions and Customer Contracts are
Transactions under the relevant ISDA Master Agreements and any trade
confirmation is a Confirmation under such ISDA Master
Agreements.
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(e)
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Customer
hereby consents to UBS effecting such disclosure as UBS may deem
appropriate, to enable UBS to transfer Customer’s records and information,
to process and execute Customer’s
instructions.
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(f)
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In
the event Customer is trading Non-Deliverable FX Transactions,
Non-Deliverable Currency Option Transactions and/or Exotic Options,
Customer consents to the use of confirms substantially in the form of the
confirmation template for each such transaction as published by The
Foreign Exchange Committee (“FXC”), the Financial
Markets Lawyers Group or EMTA, as appropriate. Customer also
agrees, hereby, to abide by such best practices as may be published by the
FXC from time to time, and such recommended market practice as may be
published by EMTA from time to
time.
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(g)
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In
the event any one or more of the provisions contained in this Agreement is
held invalid, illegal, or unenforceable in any respect under the law of
any jurisdiction, the validity, legality, and enforceability of the
remaining provisions under the law of such jurisdiction, and the validity,
legality, and enforceability
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of
such and any other provisions under the law of any other jurisdiction,
shall not in any way be affected or impaired
thereby.
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(f)
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No
amendment, modification, or waiver of this Agreement will be effective
unless in writing executed by each of the
parties.
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(g)
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The
parties agree that each party may electronically record all telephonic
conversations between them relating to the subject matter of this
Agreement and that any such tape recordings may be submitted in evidence
in any suit, action, or other proceeding relating to this Agreement
(“Proceedings”).
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7.
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Notices
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Except as
otherwise provided in this Agreement, all notices, requests and other
communications hereunder shall be delivered in accordance with the notice
provisions in in Section 12 of the CP ISDA Master Agreement although UBS may
additionally give notices to Customer hereunder by by posting the same on the
UBS Webpage referred to in Schedule 2.
8.
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Governing
Law and Jurisdiction
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(a)
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This
Agreement and the rights and obligations of UBS and of Customer hereunder
shall be governed by, and construed in accordance with the laws of England
and Wales.
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(b)
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With
respect to any suit, action or proceedings relating to this Agreement,
each party irrevocably (i) submits to the non-exclusive jurisdiction of
courts of England (ii) waives any objection which it may have at any time
to the laying of venue of any Proceedings brought in any such court,
waives any claim that such Proceedings have been brought in an
inconvenient forum and further waives the right to object, with respect to
such Proceedings, that such court does not have jurisdiction over such
party. Nothing in this Agreement precludes either party from
bringing Proceedings in any other jurisdiction nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other
jurisdiction.
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IN
WITNESS WHEREOF, the UBS and Customer have caused this Agreement to be duly
executed by their respective authorized officers as of the date first written
above.
UBS AG | UBS Managed Futures (Aspect) LLC | |||
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By: /s/ Xxxxxxx Xxxxx | By: /s/ Xxxxx X. XxXxxxxx | |||
Name:
Xxxxxxx Xxxxx
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Name:
Xxxxx X. XxXxxxxx
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Title:
Director Exchange Traded Derivatives Compliance
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Title:
Executive Director
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Date: | Date: |
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By: /s/ Xxxx X. Xxxxxx | By: /s/ Xxxxxxx Xxxxx | |||
Title: Director | ||||
Name:
Xxxx X. Xxxxxx
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Title:
Associate Dirctor - Legal Department
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Date: |
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SCHEDULE
1
FEE
SCHEDULE
As agreed
separately between the parties.
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SCHEDULE
2
PROCEDURES
FOR NOTIFYING TRADES
1.
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Upon
receipt of trade details from Dealer, Customer will accept or reject trade
on UBS’s Webpage. URL and password to be advised in separate
mailing.
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2.
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If
procedure 1 is unavailable, trade details to be communicated via
Reuters;
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UBPB -
New York time-zone, 7:30am-7pm
UBPB -
Singapore time-zone, 7am-6pm
UBPB -
Zurich time-zone, 8am-6pm
3.
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If
Both 1 and 2 are unavailable, trade details to be communicated via
telephone;
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+ 000 000
0000 - New York time-zone, 7:30am-7pm
+ 01 65
6836 5216 - Singapore time-zone, 7am-6pm
+ 41 1
239 5040 - Zurich time-zone, 8am-6pm
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Attachment
1
1) The
Net Open Position shall be calculated by UBS in a commercially reasonable manner
by determining the sum of the following:
(i) For
Transactions involving only currencies considered by UBS, in its sole
discretion, to be of low to normal volatility, the aggregate of the Net Currency
Position for each currency, after making the following adjustments, to the
extent applicable and to the extent feasible at any time for UBS:
(I) for
each currency, UBS shall net (or aggregate, as the case may be) the Net Currency
Position for FX Transactions and the Delta Equivalent Position for Currency
Option Transactions (after giving effect to the netting provisions of the
definition of “Netted Option”) across all value dates for all such
Transactions;
(II) for
each currency, UBS shall determine the U.S. dollar equivalent (calculated by UBS
in a commercially reasonable manner) of the amount calculated in clause (i)(l);
and
(III) UBS
shall calculate the sum of the amounts determined for each currency pursuant to
clause (i)(ll).
(ii) For
Transactions involving at least a currency considered by UBS, in its sole
discretion, to be of medium to high volatility, the aggregate of the Net
Currency Position for each currency, after making the following adjustments, to
the extent applicable and to the extent feasible at any time for
UBS:
(I) for
each currency, UBS shall net (or aggregate, as the case may be) the Net Currency
Position for FX Transactions and the Delta Equivalent Position for Currency
Option Transactions (after giving effect to he netting provisions of the
definition of “Netted Option”) for each value date,
(II) for
each currency, UBS shall determine the U.S. dollar equivalent (calculated by UBS
in a commercially reasonable manner) of the amount calculated in clause
(ii)(l);
(III) UBS
shall calculate the sum of the amounts determined for each currency pursuant to
clause (ii)(ll); and
(IV) UBS
shall calculate the sum of the amounts determined pursuant to clause (ii)(lll)
for all value dates.
2) Exotics
Net Open Position shall be calculated by summing (i) and (ii)
below:
(i) On
the trade date of an Exotic Option, the Exotics Net Open Position shall be
calculated by UBS in a commercially reasonable manner as follows; UBS shall
determine the U.S. dollar equivalent (determined by UBS in a commercially
reasonable manner) of the Delta Equivalent Position (after giving effect to the
netting provisions of the definition of “Netted Option”) of each Exotic Option
and summing together all such amounts.
(ii) On
all subsequent days, the Exotics Net Open Position shall be calculated by UBS
acting in a commercially reasonable manner, by dividing the Risk Add-On by a
percentage amount as determined by UBS in its sole discretion.
For the
avoidance of doubt, 2(i) shall only apply on the trade date of an Exotic Option,
after trade date only 2(ii) will apply.
3) Maximum
notional quantity for Exotic Notional Limit purposes shall be calculated as
below, for each trade date:
(i) net
the notional quantities in respect of those Exotic Options which are identical
(requires same currency, expiration date, strike and barrier strike
price);
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(ii) convert
any cross-currency Exotic Option to a US dollar equivalent (determined by UBS in
a commercially reasonable manner) notional quantity based upon the then
open-market value of one of such currencies; and
(iii) aggregate
such notional quantities.
Customer
acknowledges and agrees that the volatility classification for any currency may
be changed by UBS in its sole discretion at any time without prior
notice.
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