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INTL FCSTONE MARKETS, LLC
230 S. LaSalle Street, Suite 10‐500 | Chicago, Illinois 60604 | Telephone (312) 780‐6700 | www.intlfcstone.com
© 2015 INTL FCStone Inc. All Rights Reserved.
Swaps & Over‐the‐Counter (OTC) Derivatives Account
Documentation
INTL FCStone Markets, LLC
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Swaps & Over‐the‐Counter (OTC) Derivatives Account
Welcome to INTL FCStone Markets, LLC.
Please review and fill out the following documentation that applies to you, to establish a swaps and over‐
the‐counter (OTC) derivatives account.
• Review, check the applicable boxes and sign the Eligible Contract Participant Status Form;
• Review all ISDA Swap Disclosure Documents and INTL FCStone Markets LLC, Disclosures;
• Review and choose your election and sign the Election to Receive Pre‐Trade Information in
Writing and Election Regarding Segregation of Initial Margin;
• Review and sign the Acknowledgement of Swaps Disclosures;
• Review, complete and sign the Additional Agreements consisting of the ISDA 2012 Dodd‐
Frank Supplement and ISDA 2013 Dodd‐Frank Supplement;
• Check here if you are eligible for the end‐user exception to clearing and sign the End User
Exception to the Clearing Requirement;
• Review and sign the Additional Agreements and Representations;
• Check here if you have not already obtained a Legal Entity Identifier (LEI), and review and
follow instructions to obtain a Legal Entity Identifier by contacting
If you have questions, contact Client Service center at 1‐816‐410‐7147 or
www.intlfcstone.com © 2015 INTL FCStone Inc. All Rights Reserved.
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Table of Contents
Swaps & Over‐the‐Counter (OTC) Derivatives Account
Eligible Contract Participant Status ........................................................................ 1
Applicants domiciled in Australian or EU ............................................................... 3
ISDA Copyright Notice ........................................................................................... 5
ISDA General Disclosure Statement for Transactions ............................................. 6
ISDA Disclosure Annex for Commodity Derivative Transactions ............................. 8
ISDA Disclosure Annex for Foreign Exchange Transactions ..................................... 9
ISDA Disclosure Annex for Interest Rate Transactions............................................ 9
Disclosure of Material Conflicts of Interest ........................................................... 10
Notice of Certain Rights with Respect to Clearing Swaps....................................... 12
Notice of Mark‐Up and Commission Structure ...................................................... 12
Notice of Procedures for Reporting Client Complaints .......................................... 13
Election to Receive Pre‐Trade Information in Writing ........................................... 13
Election Regarding Segregation of Initial Margin................................................... 15
Acknowledgement of Swaps Disclosures............................................................... 16
Terms of Business ................................................................................................. 17
Additional Agreements‐ ISDA 2012 Dodd‐Frank Supplement ............................... 32
Additional Agreements‐ ISDA 2013 Dodd‐Frank Supplement ............................... 36
End User Exception to the Clearing Requirement .................................................. 40
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INTL FCStone Markets, LLC
Swaps & Over‐the‐Counter (OTC) Derivatives Account
ELIGIBLE CONTRACT PARTICIPANT STATUS
In order to enter into Transactions with INTL FCStone Markets, LLC (“IFM”), applicable law requires you,
as an IFM Customer transacting “swaps” to represent that you qualify as an “eligible contract
participant,” as defined in Section 1a(18) of the Commodity Exchange Act (CEA). Please check all
categories that apply, or if none applies, please contact your IFM Account Representative.
FOR INDIVIDUALS ACTING FOR THEIR OWN ACCOUNT:
An individual who has amounts invested on a discretionary basis, the aggregate of which is in
excess of $10,000,000.
An individual who has amounts invested on a discretionary basis, the aggregate of which is in
excess of $5,000,000, and is entering into transactions with IFM in order to manage the risk associated
with an asset owned or liability incurred, or reasonably likely to be owned or incurred.
FOR INSTITUTIONS:
A “swap dealer,” as defined in CEA Section 1a(49).
A “security‐based swap dealer,” as defined in Section 3(a)(71) of the Securities Exchange Act.
A “major swap participant,” as defined in CEA Section 1a(33).
A “major security‐based swap participant,” as defined in Section 3(a)(67) of the Securities
Exchange Act.
A financial institution, as defined in CEA Section 1a.
An insurance company that is regulated by a State of the United States, or that is regulated by
a foreign government and is subject to comparable regulation as determined by the CFTC,
including a regulated subsidiary or affiliate of such an insurance company;
An investment company subject to regulation under the Investment Company Act of 1940 or a
foreign person performing a similar role or function subject as such to foreign regulation.
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A commodity pool that—
(i) has total assets exceeding $5,000,000; and
(ii) is formed and operated by a person subject to regulation under the CEA or a foreign person
performing a similar role or function subject as such to foreign regulation.
If you are a commodity pool or similar foreign person that will be entering into
transactions in foreign exchange (including foreign exchange derivative transactions), check
this box to confirm that each investor in the commodity pool or the foreign person is itself an
eligible contract participant as defined in CEA Section 1a.
A corporation, partnership, proprietorship, organization, trust, or other entity that has total
assets exceeding $10,000,000.
A corporation, partnership, proprietorship, organization, trust or other entity whose
obligations under transactions with IFM are guaranteed or otherwise supported by a letter of credit or
keepwell, support, or other agreement by an entity that meets the qualifications described in CEA
Section 1a(18)(a)(v) (please provide a copy of such letter of credit or other support document).
A corporation, partnership, proprietorship, organization, trust, or other entity that has a net
worth exceeding $1,000,000 and is entering into transactions with IFM in connection with the conduct
of its business or to manage the risk associated with an asset or liability owned or incurred or
reasonably likely to be owned or incurred in the conduct of your business.
An employee benefit plan subject to the Employee Retirement Income Security Act of 1974, a
governmental employee benefit plan, or a foreign person performing a similar role or function subject
as such to foreign regulation, and either:
has total assets exceeding $5,000,000; or
the investment decisions of which are made by‐
an investment adviser or commodity trading advisor subject to regulation
under the Investment Advisers Act of 1940 or the CEA;
a foreign person performing a similar role or function subject as such to foreign
regulation;
a financial institution as defined in CEA Section 1a; or
an insurance company described in CEA Section 18(A)(ii) or a regulated
subsidiary or affiliate of such an insurance company.
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A governmental entity (including the United States, a State, or a foreign government) or
political subdivision of a governmental entity, or an instrumentality, agency, or department thereof,
that owns and invests on a discretionary basis $50,000,000 or more in investments, or otherwise
meets the requirements described in CEA Section 1a(18)(A)(vii).
A multinational or supranational government entity.
A broker or dealer subject to regulation under the Securities Exchange Act of 1934 or a foreign
person performing a similar role or function subject as such to foreign regulation.
An investment bank holding company (as defined in section 17(i) of the Securities Exchange Act
of 1934).
A futures commission merchant subject to regulation under the CEA or a foreign person
performing a similar role or function subject as such to foreign regulation.
A floor broker or floor trader subject to regulation under the CEA in connection with any
transaction that takes place on or through the facilities of a registered entity (other than an electronic
trading facility with respect to a significant price discovery contract) or an exempt board of trade, or
any affiliate thereof, on which such person regularly trades.
FOR INDIVIDUALS OR INSTITUTIONS ACTING FOR THE ACCOUNTS OF OTHERS:
An investment adviser subject to regulation under the Investment Advisers Act of 1940.
A commodity trading advisor subject to regulation under the CEA.
A foreign person performing a role or function similar to that of a registered investment
adviser or commodity trading adviser subject as such to foreign regulation.
A person described in clause (i), (ii), (iv), (v), (viii), (ix), or (x) of CEA Section 1a(18)(A).
FOR INDIVIDUALS OR INSTITUTIONS DOMICILED OR ORGANIZED IN AUSTRALIA
Customer is a “wholesale client” defined in the Australia Corporations Act. Please describe how Customer qualifies as a “wholesale client” (attach additional pages if necessary): FOR INDIVIDUALS OR INSTITUTIONS DOMICILED OR ORGANIZED IN THE EUROPEAN UNION. Pursuant to the European Markets Infrastructure Regulations (“EMIR”):
Customer is a Financial Counterparty
Customer is a Non‐Financial Counterparty and does not exceed the threshold for purposes of EMIR reporting. Customer shall monitor its trading and shall inform INTL FCStone Markets, LLC if it ceases to be “NFC+” as defined under EMIR.
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Customer is a Non‐Financial Counterparty and does exceed the threshold for purposes of EMIR reporting, has informed the relevant competent authority of such status, shall monitor its trading and shall inform INTL FCStone Markets, LLC if it ceases to be “NFC+” as defined under EMIR. Signature: ________________________________ Name (Print):______________________________ Signatory Title (if an entity) or Agent Name (if documents are being executed by an Agent on Applicant’s behalf): ________________________________________
Date: _____________________________ month day year
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ISDA Copyright Notice
The International Swaps and Derivatives Association (“ISDA”) owns the copyrights to the following documents provided as part of this Account Application:
• ISDA General Disclosure Statement for Transactions
• ISDA Disclosure Annex for Commodity Derivatives Transactions
• ISDA Disclosure Annex for Foreign Exchange Transactions
• ISDA Disclosure Annex for Interest Rate Transactions
• ISDA August 2012 Dodd‐Frank Supplement
• ISDA March 2013 Dodd‐Frank Supplement
These disclosure documents are also available on INTL FCStone Markets LLC’s website at
https://www.intlfcstone.com/Account‐Forms/
The use or reference to any ISDA Disclosure Document should be undertaken only after you secure independent legal advice on its provisions.
ISDA makes no warranty or assurance, express or implied, concerning the suitability of any of ISDA’s Disclosure Documents for use in any particular transaction and therefore bears no responsibility or liability whatsoever, whether in tort or in contract, in respect of any use of any of the ISDA Disclosure Documents.
In general, ISDA documents are protected by federal copyright law and international copyright treaties. The unauthorized reproduction and distribution of copyrighted documents may violate U.S. copyright law and international agreements. The ISDA disclosure documents may not be revised, reproduced, displayed or distributed except by market participants documenting their own commercial transactions. In no event may any copyright or trademark notice on these disclosure documents be removed.
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International Swaps and Derivatives Association, Inc.
GENERAL DISCLOSURE STATEMENT FOR TRANSACTIONS
All Applicants: Please click on the following link on INTL FCStone Markets, LLC website to access the complete ISDA General Disclosure Statement for Transactions (“General Disclosure
Statement”): https://www.intlfcstone.com/Account‐Forms/
[__] Please check here to acknowledge that you have read and understand the General Disclosure Statement.
The General Disclosure Statement describes (1) the material characteristics of a wide variety of Transactions; (2) the material risks of such Transactions, including risks related to liquidity and counterparty credit risk; and (3) typical material incentives and conflicts of interest that we may have with respect to such Transactions.
The General Disclosure Statement also provides information regarding certain rights you may have, as follows:
• Scenario Analysis: Prior to entering into a Transaction in any swap that is not available fortrading on a designated contract market or swap execution facility, you may request, andconsult on the design of, a scenario analysis to allow you to assess your potential exposurein connection with such swap. The General Disclosure Statement provides moreinformation on the procedures for preparation of a scenario analysis. Such a scenarioanalysis is not a prediction of actual Transaction results, and there can be no assurancethat the range of assumptions employed will encompass all possible market conditions.
• Select DCO or Clearing Agency: With respect to any swap subject to the mandatoryclearing requirements under Section 2(h) of the Commodity Exchange Act, subject to theterms of any agreement between us and to applicable laws, you have the sole right toselect the derivatives clearing organization (DCO) or clearing agency at which the swapwill be cleared. With respect to any swap that is not subject to these mandatory clearingrequirements but is eligible for clearing, subject to the terms of any agreement betweenus and to applicable laws, you may in your sole discretion elect to clear such swap, and, ifyou so elect, select the DCO or clearing agency at which the swap will be cleared.
• Daily Mark: For uncleared swaps and uncleared security‐based swaps, we will provide youwith a “daily mark” as of the close of business or at such other time that we agree with youin writing. The General Disclosure Statement provides a description of these daily marks.Note that a daily mark does not reflect the actual market price at which an offer would bemade to purchase, sell, enter into, exercise, novate, unwind, terminate or settle aTransaction. Rather, it will represent a mathematical approximation of market values as ofa given date derived from proprietary models and methodologies based on certainassumptions regarding past, present and future market conditions or other factors, orfrom other sources of pricing information (e.g., third party quotes, prices on tradingvenues, or clearinghouse marks for comparable or interpolated Transactions).
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• Option to Segregate Margin: For uncleared Transactions, subject to the terms of anyagreement between us and to applicable laws, you have the right to require segregationof the funds or other property that you provide to us to margin, guarantee, or secure yourobligations, other than with respect to variation margin and provided that the property isof a type that may be held by a third party custodian. Segregated funds will bemaintained in an account with an independent third‐party custodian. You will be requiredto reimburse us for the costs of such custodial arrangements.
• ERISA and Non‐ERISA Special Entity Status: If you are an employee benefit plan defined inSection 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002)(“ERISA”) that is not subject to Title I of ERISA or otherwise defined as a “Special Entity”pursuant to CFTC Rule 23.401(c)(1), (2), (4) or (5), you may elect to be treated as a SpecialEntity pursuant to CFTC Rule 23.401(c)(6).
Please note that Transactions may give rise to significant risks and are intended primarily for
knowledgeable and sophisticated parties that are willing to accept such risks and able to absorb the losses that may arise. Therefore, it is important that you as the Customer or the
person exercising discretion on the Customer’s behalf understand these risks before entering
into any Transactions, regardless of the Customer’s level of prior experience in financial transactions or instruments.
There can be no assurance that a Transaction will provide a Customer with the desired return or achieve the desired hedging objectives.
In addition to the General Disclosure Statement, please check one or more of the following specific product disclosures that apply to you.
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International Swaps and Derivatives Association, Inc.
DISCLOSURE ANNEX FOR COMMODITY DERIVATIVE TRANSACTIONS
Please click on the following link on our website to access the complete ISDA Disclosure Annex for Commodity Derivative Transactions (“Commodity Derivative Disclosure Annex”):
https://www.intlfcstone.com/Account‐Forms/
[__] Please check here to acknowledge that you have read and understand the Commodity
Derivative Disclosure Annex.
The Commodity Derivative Disclosure Annex supplements and should be read in conjunction with the General Disclosure Statement. Nothing in the Commodity Derivative Disclosure Annex amends or supersedes the express terms of any transaction between you and us or any related governing documentation. Accordingly, descriptions in the Commodity Derivative Disclosure Annex of the operation of Commodity Transactions and the consequences of various events are in all cases subject to the actual terms of a Commodity Transaction executed between you and us and its governing documentation (whether or not such qualification is expressly stated).
The Commodity Derivative Disclosure Annex provides further description of Transactions in which the underliers are physical commodities, contracts for the future delivery of physical commodities, physical events (such as weather, transportation or emissions), rights or indexes relating to physical commodities, contracts for the future delivery of physical commodities or physical events, indices of commodities, or indices of commodity indexes (“Commodity Transactions”).
The Commodity Derivative Disclosure Annex also describes the material risks of such Transactions, including risks related to physical markets, price sources and valuation, and physical settlement, as well as special risks related to specific types of Commodity Transactions.
The terms of a Commodity Transaction may incorporate standard definitions, annexes thereto and other market standard terms, including terms, customs and usages from the physical markets for underliers. Such terms may in turn be amended or customized pursuant to the terms of the Commodity Transaction and its governing documentation. Before entering into a Commodity Transaction, you should obtain and review carefully any such materials incorporated by reference as their content could materially affect your rights and obligations under the Commodity Transaction, its value and its appropriateness for your particular objectives.
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International Swaps and Derivatives Association, Inc.
DISCLOSURE ANNEX FOR FOREIGN EXCHANGE TRANSACTIONS
Please click on the following link on our website to access the complete ISDA Disclosure Annex for Foreign Exchange Transactions (“FX Derivative Disclosures Annex”):
https://www.intlfcstone.com/Account‐Forms/
[__] Please check here to acknowledge that you have read and understand the FX Derivative
Disclosure Annex.
The FX Derivative Disclosure Annex supplements and should be read in conjunction with the General Disclosure Statement. Nothing in the FX Derivative Disclosure Annex amends or supersedes the express terms of any transaction between you and us or any related governing documentation. Accordingly, descriptions in the FX Derivative Disclosure Annex of the operation of Foreign Exchange Transactions and the consequences of various events are in all cases subject to the actual terms of a Foreign Exchange Transaction executed between you and us and its governing documentation (whether or not such qualification is expressly stated).
The FX Derivative Disclosure Annex provides further description of Transactions in which the
underliers are foreign currencies. The FX Derivative Disclosure Annex also describes the material
risks of such Transactions, including settlement risks and risks related to market disruptions, as
well as special risks related to specific types of FX Transactions.
International Swaps and Derivatives Association, Inc.
DISCLOSURE ANNEX FOR INTEREST RATE TRANSACTIONS
Please click on the following link on our website to access the complete ISDA Disclosure Annex
for Interest Rate Transactions (“Interest Rate Transactions Disclosures Annex”):
https://www.intlfcstone.com/Account‐Forms/
[__] Please check here to acknowledge that you have read and understand the Interest Rate
Transactions Disclosure Annex.
The Interest Rate Transactions Disclosure Annex supplements and should be read in conjunction with the General Disclosure Statement. Nothing in the Interest Rate Transactions Disclosure Annex amends or supersedes the express terms of any transaction between you and us or any related governing documentation. Accordingly, descriptions in the Interest Rate Transactions Disclosure Annex of the operation of Rates Transactions and the consequences of various events are in all cases subject to the actual terms of a Rates Transaction executed between you and us and its governing documentation (whether or not such qualification is expressly stated).
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The Interest Rate Transactions Disclosure Annex provides further description of Transactions in
which the underliers are interest rates. The Interest Rate Transactions Disclosure Annex also
describes the material risks of such Transactions.
DISCLOSURE OF MATERIAL CONFLICTS OF INTEREST
This document provides you with information about some of the material conflicts of interest that
may arise between you and INTL FCStone Markets, LLC (“IFM”) in connection with IFM performing
services for you with respect to swap and over‐the‐counter OTC) transactions (“Transactions”).
Conflicts of interests can arise in particular when IFM has an economic or other incentive to act, or
persuade you to act, in a way that favors IFM or its affiliates. Under applicable law, including
regulations of the Commodity Futures Trading Commission (“CFTC”), not all swaps are required to
be executed on an exchange or swap execution facility (each, a “Trading Facility”), even if a
Trading Facility lists the swap for trading. In such circumstances, it may be financially
advantageous for IFM or its affiliate to execute a swap with you bilaterally in the over‐the‐counter
market rather than on a Trading Facility and, to the extent permitted by applicable law, we may
have an incentive to persuade you to execute your swap bilaterally.
Under applicable law, you may be permitted to choose the CFTC‐registered derivatives clearing
organization (the “Clearing House”) to which you submit a swap for clearing. IFM may not be a
member of, or may not otherwise be able to submit your swap to the Clearing House of your
choice. IFM consequently has an incentive to persuade you to use a Clearing House of which IFM
or its affiliate is a member. IFM or an affiliate of IFM may own stock in, or have some other form
of ownership interest in, one or more U.S. or foreign Trading Facilities or Clearing Houses where
your Transactions may be executed and/or cleared. As a result, IFM or its affiliate may receive
financial or other benefits related to its ownership interest when Transactions are executed on a
given Trading Facility or cleared through a given Clearing House, and IFM would, in such
circumstances, have an incentive to cause Transactions to be executed on that Trading Facility or
cleared by that Clearing House. Employees and officers of IFM or its affiliate may also serve on the
board of directors or on one or more committees of a Trading Facility or Clearing House.
In addition, Trading Facilities and Clearing Houses may from time to time have in place other
arrangements that provide their members or participants with volume, market‐making or other
discounts or credits, and may call for members or participants to pre‐pay fees based on volume
thresholds, or may provide other incentive or arrangements that are intended to encourage
market participants to trade on or direct trades to that Trading Facility or Clearing House. IFM or
its affiliate may participate in and obtain financial benefits from such incentive programs. When
we provide execution services to you (either in conjunction with clearing services or in an
execution‐only capacity), we may direct orders to affiliated or unaffiliated market‐makers, other
executing firms, individual brokers or brokerage groups for execution. These parties may, where
permitted, agree to price concessions, volume discounts or refunds, rebates or similar payments
in return for receiving such business. Likewise, where permitted by law and the rules of the
applicable Trading Facility, we may solicit a counterparty to trade opposite your order or enter
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into transactions for its own account or the account of other counterparties that may, at times, be
adverse to your interests in Transactions. In such circumstances, that counterparty may make
payments or pay a commission to IFM in connection with that transaction. The results of your
transactions may differ significantly from the results achieved by us for our own account, our
affiliates, or for other customers. In addition, where permitted by applicable law and the rules of
the applicable Trading Facility, IFM and its directors, officers, employees and affiliates may act on
the other side of your order or transaction by the purchase or sale for an account, or the
execution of a transaction with a counterparty, in which IFM or a person affiliated with IFM has a
direct or indirect interest, or may effect any such order with a counterparty that provides IFM or
its affiliates with discounts related to fees for Transactions or other products. In cases where we
have offered you a discounted commission or clearing fee for Transactions executed through IFM
as agent or with IFM or its affiliate acting as counterparty, IFM or its affiliate may be doing so
because of the enhanced profit potential resulting from acting as executing broker or
counterparty.
IFM or its affiliate may act as, among other things, an investor, research provider, placement
agent, underwriter, distributor, remarketing agent, structurer, securitizer, lender, investment
manager, investment adviser, commodity trading advisor, municipal advisor, market maker,
trader, prime broker or clearing broker. In those and other capacities, IFM, its directors, officers,
employees and affiliates may take or hold positions in, or advise other customers and
counterparties concerning, or publish research or express a view with respect to, Transactions or
related financial instruments that may be the subject of advice from us to you. Any such positions
and other advice may not be consistent with, or may be contrary to, your interests or to positions
which are the subject of advice previously provided by IFM or its affiliate to you, and unless
otherwise disclosed in writing or required pursuant to regulation, we are not necessarily acting in
your best interest and are not assessing the suitability for you of any Transactions or related
financial instruments. Acting in one or more of the capacities noted above may give IFM or its
affiliate access to information relating to markets, investments and products. As a result, IFM or its
affiliate may be in possession of information which, if known to you, might cause you to seek to
dispose of, retain or increase your position in one or more Transactions or other financial
instruments. IFM and its affiliate will be under no duty to make any such information available to
you, except to the extent we have agreed in writing or as may be required under applicable law.
NOTICE OF CERTAIN RIGHTS WITH RESPECT TO CLEARING SWAPS
With respect to any swap that is subject to the mandatory clearing requirements under Section 2(h) of the Commodity Exchange Act, subject to the terms of any agreement between us and to applicable laws, you have the sole right to select the derivatives clearing organization or clearing agency at which the swap will be cleared. With respect to any swap that is not subject to these mandatory clearing requirements but is eligible for clearing, subject to the terms of any agreement between us and to applicable laws, you may in your sole discretion elect to clear such swap, and, if you so elect, select the derivatives clearing organization or clearing agency at which the swap will be cleared. IFM’s conflict of interest rules prohibit sales personnel from negotiating or agreeing to prices for the provision of clearing services.
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NOTICE OF MARK‐UP AND COMMISSION STRUCTURE
IFM will provide you with a “daily mark” for uncleared swaps each day as of the close of business or at
such other time as we agree in writing. Daily marks will not reflect the actual market price at which an
offer would be made to enter into a Transaction with you, or to novate, unwind, terminate or settle a
Transaction. In addition, our margin calls may be based on factors other than the daily mark or the
valuation of the swap on our books. IFM uses a third party vendor to prepare its daily marks, based on
valuation techniques used by our third‐party vendor described below and reserve the right to replace our
third‐party vendor at any time. We also reserve the right to alter, replace or vary valuation techniques,
methodologies and assumptions from time to time, and if materials, we will disclose such changes. IFM
relies on its third‐party vendor to supply both valuation models and the vast majority of market data used
as pricing inputs. In rare cases, pricing data is sourced from a broker or other vendor more closely
associated with trading a specialty product, and manually entered into the firm’s third party vendor
system. The pricing algorithms used by our vendor are based upon industry‐standard models to price
derivatives, such as:
• European options: Black‐Scholes
• American options: Modified Black‐Scholes (similar to Whaley)
• Asian options: Moment‐matching method (similar to Turnbull & Wakeman)
• FX options: Vanna‐Volga model with an adjustment for foreign‐domestic interest rates
• Spread options: Proprietary method, leveraging numerical integration
• Barrier options: Leverages Heynan & Kat (1994), with proprietary extensions for differing
window permutations; automatically falls back to Black‐Scholes if option is knocked‐in
• Digital options: Modified Black‐Scholes, similar to Reiner‐Rubinstein (1991)
As the volatility of an asset is a required input to option models and is not directly observable, certain
estimates must be made regarding the volatility parameter, based on observable prices, historical volatility,
and others factors. The vendor’s volatility grid is produced using the following methodology:
• Option settlement prices are collected from various exchanges and vendors
• Using standard Black‐Scholes (for European options) or Whaley (for American options), implied
volatility and deltas are backed out from out‐of‐the‐money call and put prices
• The deltas and volatilities of the traded options are used to interpolate/extrapolate a standardized
delta‐based volatility grid
If the option is a term option (i.e., expires on the standard exchange expiry day), then the volatility grid is
used without modifications. If the option is an over‐the‐counter (OTC) option that expires early, then the
vendor’s Early Expiry Vol (EEV) model will be used to determine the volatility. The EEV model is a 2‐factor
model based on Gabillon (1992). The two factors are the short vol, (volatility of the nearby, or spot,
contract) and long vol (extrapolated from the volatility of the most far‐dated contract), as well as the
correlation between the long and short vols. Using those parameters, one can calculate an early expiry
volatility. The daily marks provided will not include the compensation we receive in connection with your
transactions, and thus will vary from the actual price you receive and the value at which we carry the
transaction on our books. The daily mark is intended to be the theoretical fair value of the transaction, not
the price we have offered to deal (which includes our compensation). The prices at which we offer to deal
are our own prices, and may be more or less than what you would receive from another dealer. In this
regard, we do not purport to offer best execution on your behalf. The amount of commission to be charged
in connection with a given trade will be agreed to in writing in advance.
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NOTICE OF PROCEDURE FOR CLIENT COMPLAINTS
In the event that you wish to bring a complaint to our attention that you were unable to resolve directly with your Account Representative, you may direct your complaint to the INTL FCStone Markets, LLC (“IFM”) Compliance Department at the following address: INTL FCStone Markets, LLC c/o Chief Compliance Officer, 230 S LaSalle St, Chicago, IL 60604. Alternatively, complaints may be emailed to: [email protected] or may be made by telephone at (312) 789‐2517 or (312) 780‐6700. Please note that if you decide to register your complaint viatelephone, you must follow up with IFM via email or in writing within 10 business days. Anycomplaint must include your name, address and IFM account number. In addition, the complaintmust contain the name of the IFM employee(s) that the complaint relates to and a detaileddescription of the nature of the complaint.
ELECTION TO RECEIVE PRE‐TRADE INFORMATION IN WRITING
Pursuant to CFTC regulations, prior to entering into any swap, foreign exchange forward or foreign
exchange swap with you, IFM is required to provide you with a pre‐trade “mid‐market mark” (a
theoretical fair value of the transaction, which may or may not be the same as the price we have
offered to you and which will not include our commission), and a description of the material
economic terms of the transaction. If you agree, IFM may provide these disclosures orally to you.
Otherwise, IFM will provide these disclosures in writing (including via email). You can change your
election at any time by contacting your account representative.
Please indicate below whether you choose to receive pre‐trade mid‐market marks and transaction
descriptions orally or in writing, and sign below to confirm this election:
[__] Customer elects to receive pre‐trade mid‐market marks and descriptions of the
material economic terms of transactions orally.
OR
[__] Customer elects to receive pre‐trade mid‐market marks and descriptions of the
material economic terms of transactions in writing.
Customer Signature: ________________________________
Customer Name (Print):______________________________
Signatory Title (if Customer is an entity) or Agent Name (if documents are being executed by an
Agent on behalf of Customer): ________________________________________
Date: _____________________________ month day year
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ELECTION REGARDING SEGREGATION OF INITIAL MARGIN
If you post initial margin with IFM with respect to uncleared swaps, you have the legal right to require that
such initial margin be held in a separate bank account maintained for your benefit with a third party
custodian bank. Otherwise, we will hold all initial margin deposited by you in an account that is
commingled with margin deposited by other customers. This right is only applicable to initial margin and is
not applicable to variation margin that you may be required to post with us with respect to uncleared
swaps.
You have the right to elect to segregate your initial margin at any time, even if you have previously not
elected to do so, by notifying your IFM Account Representative. If you elect to segregate your initial
margin, you will need to work with us and a custodial bank to establish a customer relationship with that
bank. You will be responsible for the costs of such banking relationship, and we will invoice you for these
costs to the extent that the custodial bank does not do so directly. Custodian fees and charges may vary
based on a number of factors, including but not limited to the nature and extent of the relationship with a
custodian, the nature of custodial assets to be held, the nature and extent of custodial and reporting
services required, and the expected frequency of collateral transfers. In addition, segregation of initial
margin may entail fees or other transaction costs charged by us. Such charges would be determined either
at the time of trade or as otherwise agreed between you and us, and may vary by counterparty and
transaction based on a number of factors, including but not limited to our prevailing cost of funding and
the nature of the transaction concerned. These charges would be in addition to any commission or mark‐
up we charge with respect to a transaction. If you do not elect to segregate your initial margin with respect
to a transaction, we retain the right to use, or “rehypothecate,” initial margin you may deposit with us as
collateral in connection with offsetting transactions that we enter into in order to hedge our risk in
connection with that transaction with you. We also retain this right with respect to variation margin,
irrespective of whether you choose to segregate your initial margin.
Please indicate below whether you choose to have your initial margin segregated with a third‐party
custodian, and sign below to confirm this election:
[__] Customer elects to require segregation of initial margin
OR
[__] Customer elects NOT to require segregation of initial margin
Customer Signature: ________________________________
Customer Name (Print):______________________________ Date: ______________
Signatory Title (if Customer is an entity) or Agent Name (if documents are being executed by an Agent on
behalf of Customer): ________________________________________
month day year
15
ACKNOWLEDGEMENT OF SWAPS DISCLOSURES
Please sign below to acknowledge that you have received, read and understand the following
disclosure documents:
• ISDA Copyright Notice
• ISDA General Disclosure Statement for Transactions
• ISDA August 2012 Dodd‐Frank Supplement
• ISDA March 2013 Dodd‐Frank Supplement
• INTL FCStone Markets, LLC Disclosure of Material Conflicts of Interest
• INTL FCStone Markets, LLC Notice of Certain Rights with Respect to Clearing of Swaps
• INTL FCStone Markets, LLC Notice of Mark‐Up and Commission Structure
• INTL FCStone Markets, LLC Notice of Procedures for Reporting Client Complaints
• INTL FCStone Markets, LLC Notice of Right to Segregate Initial Margin
Please check the box to indicate which swaps you elect to transact and acknowledge that you have
received, read and understand the following disclosure document(s):
• ISDA Disclosure Annex for Commodity Derivative Transactions [___]
• ISDA Disclosure Annex for Foreign Exchange Transactions [___]
• ISDA Disclosure Annex for Interest Rate Transactions [___]
Customer Signature: ________________________________ Customer Name (Print):______________________________ Signatory Title (if Customer is an entity) or Agent Name (if documents are being executed by an Agent on behalf of Customer): ________________________________________ Date: _____________________________
month day year
16
INTL FCSTONE MARKETS, LLC
TERMS OF BUSINESS
This Terms of Business agreement for swaps and
over‐the‐counter (OTC) derivatives (the
“Agreement”) is dated ______between INTL
FCStone Markets, LLC, an Iowa limited liability
company (“IFM”) and
___________________________ an eligible contract
participant (“ECP”) within the meaning of Section
1a(18) of the Commodity Exchange Act, as amended
organized under the laws of
_________________________________
(“Counterparty”), each referred to individually as a
“Party” or collectively as the “Parties” and
supersedes all prior agreements between the Parties
with respect to its subject matter and constitutes,
along with the documents referred to in this
Agreement and the Account Application, a complete
and exclusive statement of the terms of the
Agreement between the Parties with respect to its
subject matter.
ARTICLE 1 Scope of Agreement, Definitions
and Contracting Procedure
1.1 Scope. This Agreement governs
each transaction defined by the CEA as a “swap,”
including any “foreign exchange swap” and “foreign
exchange forward” as defined in the CEA (each a
“Transaction”) that the Parties may enter into from
time to time after the date of this Agreement.
1.2 Definitions. Capitalized terms used
in this Agreement are defined in Exhibit A hereto, or,
if not defined in Exhibit A hereto, have the meanings
given in the 2006 ISDA Definitions published by ISDA
and, as applicable, the 2005 ISDA Commodity
Definitions published by ISDA, the 1998 FX and
Currency Option Definitions published by ISDA, the
Emerging Markets Traders Association and The
Foreign Exchange Committee, and any other
definitions specified in the relevant Confirmation for
such Transaction, as published by or in conjunction
with ISDA (collectively, the “Definitions”), except
that any references to “Swap Transactions” in the
Definitions will be deemed to be references to
“Transactions.” The Definitions are incorporated by
reference in, and made part of, this Agreement and
each relevant Confirmation as if set forth in full in
this Agreement and such Confirmation.
1.3 Single Agreement. The Parties may
agree from time to time to enter into one or more
Transactions, each of which shall be governed by this
Agreement and the Confirmation with respect to
such Transaction. In the event of any inconsistency
between the terms of a specific Transaction (as set
forth in the Confirmation for such Transaction) and
any provision of this Agreement, the terms of such
Confirmation shall control. This Agreement
(including all exhibits and annexes hereto), all
Confirmations, the Account Application, and all
documents incorporated by reference therein form a
single agreement between the Parties. Counterparty
acknowledges and agrees that it is bound by the
elections made by Counterparty in the Account
Application.
1.4 Limited Undertaking. Neither
Party commits, by entering into this Agreement, to
enter into any individual Transaction with the other
Party.
1.5 Confirmations. The Parties intend
that they are legally bound by the terms of each
Transaction from the moment they agree to those
terms (whether orally or otherwise). On or promptly
following the date on which the Parties reach
agreement on the terms of a Transaction, IFM will
send a Confirmation to Counterparty via email
outlining the commercial terms of such Transaction.
Counterparty will immediately review the terms of
each Transaction Confirmation to determine if it
accurately reflects Counterparty’s understanding of
the terms of the Transaction, and if Counterparty
believes the terms reflected in the Confirmation
accurately reflect the Transaction, Counterparty
shall confirm the same to IFM via email. If
Counterparty believes there is any discrepancy
between its understanding of the Transaction and
the terms reflected in the Confirmation,
Counterparty shall contact IFM via email (as set forth
below) within two Business Days of receiving the
Confirmation. If Counterparty has not accepted or
disputed a Confirmation in the manner set forth
above within two Business Days of receipt thereof,
Counterparty will be deemed to have accepted all
terms of such Confirmation absent manifest error.
17
ARTICLE 2 Payments, Margin and Netting.
2.1 Payments. Each Party will make
each payment or delivery specified in each
Confirmation to be made by it, subject to the other
provisions of this Agreement. Payments shall be
made on the due date, in the currency and to the
account, each as specified in the Account Application
or if not set forth in the Account Application, the
relevant Confirmation. Where settlement is by
delivery rather than by payment, delivery will be
made for receipt on the due date in the manner
customary for the relevant obligation unless
otherwise specified in the relevant Confirmation.
2.2 Early Termination. The Parties
may liquidate or terminate a Transaction prior to
maturity by written consent of both Parties, subject
to a payment based upon revised Transaction terms
adjusted to reflect prevailing rates over the
remaining term of the Transaction. Any such
payment shall be calculated by IFM.
2.3 Initial Margin. As security to
maintain the Counterparty’s position for each
Transaction, IFM may request Counterparty to pay
IFM an amount of cash calculated by IFM in its sole
discretion as “Initial Margin.” Payment of Initial
Margin for a Transaction shall be made on the day
such Transaction is initiated, as specified in the
relevant Confirmation. IFM may reject or delay any
Transaction prior to the payment of Initial Margin.
2.4 Variation Margin. As further
security to maintain the Counterparty’s position for
each Transaction, Counterparty shall pay to IFM daily
variation margin in the amount calculated by IFM in
its sole discretion (“Variation Margin”). If IFM
provides notice by 11:00 am New York time on any
Business Day to Counterparty that a payment of
Variation Margin is required, Counterparty shall pay
such Variation Margin by 5:00 pm New York time on
the same Business Day. If IFM provides any such
notice after 11:00 am New York time on a Business
Day, Counterparty shall pay the Variation Margin
specified in such notice by 12:00 pm New York Time
on the next Business Day. Upon Counterparty’s
request, IFM may return excess amounts of Variation
Margin (as determined by IFM in its sole discretion),
provided, that in no event shall the total amount of
Initial Margin and Variation Margin deposited by
Counterparty with respect to any Transaction be less
than the Initial Margin with respect to such
Transaction.
2.5 Use of Margin. Counterparty
hereby pledges to IFM, as security for its obligations
hereunder and under all Transactions, and grants to
IFM a first priority continuing security interest in,
lien on and right of set‐off against all Margin
transferred to or received by IFM hereunder. Upon
the transfer by IFM to Counterparty of any Margin,
the security interest and lien granted hereunder on
that Margin will be released immediately, without
any further action by either party. IFM shall be
entitled to hold Variation Margin and, subject to any
elections made by Counterparty in the Account
Application, Initial Margin, itself or to appoint an
agent (a “Custodian”) to hold Margin on its behalf.
Upon Counterparty’s election or notice by IFM to
Counterparty of the appointment of a Custodian, or
Counterparty’s election to appoint a Custodian,
Counterparty’s obligations to make any transfer of
Margin will be discharged by making the transfer to
that Custodian. The holding of Margin by a
Custodian will be deemed to be the holding of that
Margin by IFM. Subject to any elections made by
Counterparty in the Account Application with
respect to Initial Margin, IFM shall be entitled to
pledge, rehypothecate, invest, use, and commingle
Margin deposited by Counterparty, free from any
claim or right of any nature whatsoever. Upon the
occurrence of an Event of Default with respect to
Counterparty, IFM may exercise all rights as a
secured party under Law or in contract, including the
right to immediately apply Margin deposited by
Counterparty against any amounts owed to IFM by
Counterparty hereunder or under any other
agreement. Following the termination of a
Transaction, IFM shall return to Counterparty any
Margin deposited by Counterparty with respect to
such Transaction, net of any amounts owed by
Counterparty with respect to such Transaction.
Counterparty shall not be entitled to interest on any
Margin deposited with IFM.
2.6 Next Business Day. If a payment is
due under this Agreement on a day that is not a
Business Day, then such payment shall be made on
the next Business Day following the due date.
2.7 Netting of Payment Obligations. If
payments are due from both Parties on the same
day in the same currency, the Parties shall net the
amounts due to one Party against the amounts due
18
to the other Party, with the Party owing the greater
aggregate amount paying to the other Party the
difference between the amounts owed.
2.8 Default Interest. If a Party fails to
remit any amount payable by it when due, interest
on such unpaid portion shall accrue at the Default
Interest Rate from (and including) the due date to
(but excluding) the actual date of payment.
2.9 Condition Precedent for Payment.
Each obligation of each Party to pay any amount due
under this Agreement (other than an amount that is
due under Articles 5 or 6) is subject to the condition
precedent that no Event of Default (or event, act or
omission which, with the passing of time and/or the
giving of notice, will give rise to an Event of Default)
has occurred and is continuing with respect to the
other Party, provided, that any deferred payment
obligation shall be accounted for and settled on a
net basis on the later of (a) the date the relevant
Event of Default or potential Event of Default is
cured or waived, and (b) the scheduled termination
date of the Transaction with the latest scheduled
termination date in existence on the date the
deferral commences.
2.10 Tax Forms, Documents or
Certificates. Each Party agrees to promptly provide
to the other Party (or to such government or taxing
authority as the other Party reasonably directs), any
form, certificate or document required or reasonably
requested by the other Party in order to allow such
other Party to make a payment under the
Agreement without any deduction or withholding for
or on account of any tax, or with such deduction or
withholding at a reduced rate.
2.11 Disputed Statements. If
Counterparty, in good faith, disputes the amount (in
whole or in part) of any invoice, statement or other
payment demand, Counterparty shall pay to IFM the
undisputed portion thereof, and the Parties shall
work in good faith to resolve the dispute. If it is
ultimately determined that Counterparty owes all or
a portion of the disputed amount, Counterparty shall
immediately pay to IFM that amount upon such
determination with interest at the Default Interest
Rate from and including the original due date to but
excluding the date payment is actually made.
2.12 Verification of Information. In the
event of a good faith dispute regarding payments to
be made pursuant to any Transaction, each Party
shall have the right to verify the accuracy of any
invoice, payment demand, charge, payment or
computation made under this Agreement by
requesting copies of relevant portions of the books
and records of the other Party, which records the
other Party shall provide within a reasonable time.
Any request for verification must be made within
one (1) year after the date of the invoice or other
item with respect to which the request is made.
ARTICLE 3 Representations and Warranties
3.1 Mutual Representations and
Warranties. Each Party represents and warrants to
the other Party, as of the date of this Agreement
(which representations will be deemed to be
repeated by each Party on each date on which a
Transaction is entered into):
(a) It is either an individual, or an
entity 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, as described in the Account
Application;
(b) It is either an individual or a
corporation, limited liability company or partnership
or other entity described in the Account Application,
and as applicable, created or organized under the
laws of the jurisdiction identified on the first page of
this Agreement, and it is a taxpayer of the
jurisdiction identified in Section 7.1(a) below;
(c) It has the power to execute this
Agreement and all other documents relating hereto
to which it is a party (including the Account
Application), to deliver this Agreement and each
other document relating hereto that it is required
hereby to deliver (including the Account
Application), to perform its obligations under this
Agreement and any obligations it has under any
document relating hereto to which it is a party
(including the Account Application), and has taken all
necessary action to authorize such execution,
delivery and performance;
(d) 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
19
of its assets or any contractual restriction binding on
or affecting it or any of its assets;
(e) All governmental and other
authorizations, approvals, consents, notices and
filings that are required to have been obtained or
submitted by it with respect to this Agreement or
any document relating hereto to which it is a party
have been obtained or submitted and are in full
force and effect and all conditions of any such
authorizations, approvals, consents, notices and
filings have been complied with;
(f) Its obligations under this
Agreement and any other document relating hereto
to which it is a party 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);
(g) No Event of Default with respect to
it, or event which with notice and/or lapse of time
would constitute an Event of Default, has occurred
and is continuing and no such event or circumstance
would occur as a result of its entering into or
performing its obligations under this Agreement or
any document relating hereto to which it is a party;
(h) There is not pending or, to its
knowledge, threatened against it or any of its
Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental
body, agency or official or any arbitrator that is likely
to affect the legality, validity or enforceability
against it of this Agreement or any document
relating hereto to which it is a party or its ability to
perform its obligations under the same;
(i) It has made its own independent
decision to enter into each Transaction and as to
whether such Transaction is suitable or appropriate
for it based upon its own judgment and upon advice
from its advisors that are unaffiliated with IFM as it
has deemed necessary;
(j) It is not relying on any communication
(written or oral) of the other Party as investment
advice or as a recommendation to enter into that
Transaction;
(k) It is not deeming any communication
(written or oral) received from the other Party to be
an assurance or guarantee as to the expected results
of any Transaction;
(l) It is capable of assessing the risks and the
merits of and understanding, and understands and
accepts, the terms, conditions and risks of that
Transaction; and
(m) It is capable of assuming, and assumes,
the risks of the Transaction;
(n) The other Party has not given to it
any assurance or guarantee as to the expected
performance or result of this Agreement or any or all
Transactions and Confirmations thereof;
(o) All information furnished in writing
by or on behalf of it to the other Party was, on the
date of its preparation, true, accurate and complete
in every material aspect, such information continues
to be true, accurate and complete in every material
respect, and if there is a material change in the
furnished information, it will provide updated
information to the other Party within a reasonable
period of time; and
(p) It is not required by any applicable
Law, as modified by the practice of any relevant
governmental revenue authority, to make any
deduction or withholding for or on account of any
Tax from any payment (other than payment of
interest ) to be made by it to the other Party under
this Agreement.
3.2 Representations and Warranties of
Counterparty. Counterparty represents and
warrants to IFM, as of the date of this Agreement
(which representations will be deemed to be
repeated by Counterparty on each date on which a
Transaction is entered into):
(a) Counterparty is an “eligible
contract participant” as defined in the CEA;
(b) The information delivered by or on
behalf of Counterparty in its Account Application is
true, accurate and complete in all respects. All
elections, representations, warranties and covenants
20
made by Counterparty in such Account Application
were authorized by Counterparty and are binding on
Counterparty in accordance with their terms; and
(c) Counterparty shall notify IFM
promptly (and in any event prior to entering into any
Transaction) in the event any of the representations
made by Counterparty in this Agreement or in the
Account Application cease to be true and correct in
all material respects.
3.3 Agreement to Furnish Information.
Counterparty agrees to deliver to IFM, at or before
the execution of this Agreement, a certified copy of
a Certificate of Authority, Incumbency and Specimen
Signatures and Resolutions adopted by
Counterparty’s Board of Directors, or relevant
committee of the Board of Directors, authorizing the
execution, delivery and performance of this
Agreement and the Transactions contemplated
hereunder.
3.4 Further Protocols. The Parties
hereby agree that the Counterparty shall adopt all
applicable Protocol elected by it in the Account
Application and the Counterparty shall provide all
information required by the Protocol or IFM, in
order to make such elections. The Parties further
acknowledge that ISDA and other organizations will
publish further protocols, suggested amendments,
market conventions and other standard contractual
provisions (collectively, “Protocols”) intended to
enhance the Parties’ compliance with the CEA and
other applicable Law, or to facilitate the orderly
processing of Transactions. The Parties agree to
work in good faith to incorporate such Protocols as
are applicable to the relationship of the Parties
under this Agreement. Without limitation of the
foregoing, the Parties specifically anticipate
incorporating further DF Protocols to be published
by ISDA (each, a “Further DF Protocol”), and if IFM
notifies Counterparty in writing that the provisions
of any Further DF Protocol shall be incorporated in
this Agreement, the provisions of such Further DF
Protocol shall be deemed incorporated as of the
date of such notice. In the event Counterparty
disagrees with the incorporation of such Further DF
Protocol, IFM may elect to terminate this Agreement
and all Transactions, other than those Protocols that
require Counterparty to provide IFM information in
connection with the Protocol or Protocols that
require Counterparty’s express election.
3.5 Cleared Transactions. In the event
that a Transaction is subject to mandatory clearing
under Law, or Counterparty elects to clear a
Transaction, upon acceptance of such Transaction by
a derivatives clearing organization:
(a) The original Transaction shall be
automatically extinguished;
(b) The original Transaction shall be
replaced by equal and opposite Transactions with
the derivatives clearing organization; and
(c) All terms of the Transaction shall
conform to the product specifications of the cleared
Transaction established under the derivatives
clearing organization's rules.
ARTICLE 4 Financial & Regulatory Information
4.1 Financial Information.
Counterparty shall deliver to IFM within 120 days
following the end of each fiscal year a copy of its
annual report and the annual report of its
Guarantor, if any, containing in each case audited
consolidated financial statements for such fiscal year
certified by independent certified public
accountants. If requested by IFM, Counterparty shall
deliver within ninety (90) days after the end of each
of its (and its Guarantor’s) first three fiscal quarters
of each fiscal year, a copy of its quarterly report and
the quarterly report of its Guarantor, if any,
containing unaudited consolidated financial
statements for such fiscal quarter. In all cases the
statements shall be for the most recent accounting
period and prepared in accordance with accounting
principles that are generally accepted in
Counterparty’s country of organization; provided,
that if any such statements are not available timely
due to a delay in preparation or certification, such
delay shall not be considered a default so long as
such Party diligently pursues the preparation,
certification and delivery of the same. If such
audited financial statements are not prepared on
behalf of Counterparty or its Guarantor (if
applicable), Counterparty shall provide a
consolidated balance sheet and income statement as
of the end of each of its fiscal quarters, with the
applicable balance sheet and income statement
delivered with respect to the fourth quarter of
Counterparty’s or its Guarantor’s fiscal year
containing annual information. If Counterparty or its
Guarantor is an individual, Counterparty shall
21
provide such financial information as may be
otherwise agreed with IFM.
4.2 Additional Information. Each Party
agrees promptly to provide the other Party with any
information reasonably requested by such other
party to enable such other party to comply with the
CEA and other applicable Law in connection with any
Transaction outstanding between the Parties
hereunder. Each Party further agrees to enter into
additional reasonable documentation or modify
existing documentation between the Parties to
satisfy the requirements imposed upon one or both
of the parties by the CEA.
ARTICLE 5 Events of Default
5.1 Remedies Upon Event of Default.
Upon an Event of Default, the Performing Party may
do one or more of the following with respect to the
Defaulting Party:
(a) Withhold or suspend all payments
to the Defaulting Party required hereunder; and
(b) Upon written notice to the
Defaulting Party, which notice shall be given not less
than two Business Days and shall not exceed thirty
(30) Business Days’ prior to the Early Termination
Date, designate in such written notice an Early
Termination Date with respect to any or all
Transactions outstanding at the time immediately
preceding the Early Termination Date (the
“Terminated Transactions”); provided, however,
that with respect to a Party, where an Event of
Default described in clause (c) of the definition of an
Event of Default in Exhibit A below, is governed by a
system of law which does not permit termination to
take place after the occurrence of the relevant Event
of Default, then an Early Termination Date shall be
deemed to have occurred immediately prior to any
such Event of Default and no prior written notice
shall be required. Neither Party shall have any
obligation with respect to a Terminated Transaction
other than an obligation to pay a Net Settlement
Amount if applicable.
5.2 Enforcement of Remedies. The
Performing Party may enforce any of its remedies
under this Agreement or any Related Agreement
successively or concurrently at its option. All of the
remedies set forth in this Agreement are in addition
to all other remedies available to the Performing
Party at law or in equity.
5.3 Net Settlement Amount. Upon the
occurrence or designation of an Early Termination
Date pursuant to Section 5.1(b), the Performing
Party shall compute and shall notify the Defaulting
Party of the Net Settlement Amount. Payment of
the Net Settlement Amount shall be due within one
(1) Business Day after (i) the date of computation in
the case of any amount owing under this Section by
the Performing Party, or (ii) the Defaulting Party’s
receipt of notice of the Net Settlement Amount in
the case of any amount owing under this Section by
the Defaulting Party. A Net Settlement Amount shall
bear interest from (and including) the Early
Termination Date until the date such amount is paid
at the Default Interest Rate (for the Defaulting Party)
or the Default Interest Rate minus 1% (for the
Performing Party).
5.4 Setoff. In the event of termination
and liquidation upon the occurrence or designation
of an Early Termination Date pursuant to Section 5.1,
IFM shall have the right (but shall not be obliged)
without prior notice to Counterparty or any other
person to set off any obligation of Counterparty
owing to IFM or any Affiliate of IFM (whether or not
arising under this Agreement, whether or not
matured, whether or not contingent and regardless
of the currency, place of payment or booking office
of the obligation) against any obligation of IFM or
any Affiliate of IFM owing to Counterparty (whether
or not arising under this Agreement, whether or not
matured, and regardless of the currency, place of
payment or booking office of the obligation),
provided that any amount not then due and payable
that is included in such setoff, shall, if appropriate,
be discounted to present value in a commercially
reasonable manner by IFM. Each Party reserves to
itself all other rights to which it is or may be entitled
arising with respect to the other Party under this
Agreement or any Confirmation or under Law. For
the purpose of cross‐currency set‐off, IFM may
convert either obligation at the applicable market
exchange rate selected by IFM on the relevant date.
This Section 5.4 shall not constitute or create a
mortgage, charge, lien or other security interest
upon any of the property or assets of either party to
this Agreement.
22
5.5 Liquidated Damages. The Parties
agree that any amount recoverable under this Article
5 is a reasonable pre‐estimate of loss and not a
penalty. Such amount is payable for the loss of
bargain and the loss of protection against future
risks and, except as otherwise expressly provided in
this Agreement, neither Party will be entitled to
recover additional damages as a consequence of the
termination of the Terminated Transactions.
ARTICLE 6 Event of Change/Accelerated
Termination
6.1 Event of Change. “Event of
Change” means the enactment, promulgation,
execution or ratification of, or any change in or
amendment to, any Law (or the application or
interpretation of any Law, as determined by a court
or regulatory authority of competent jurisdiction or
as determined by the opinion of independent
counsel mutually acceptable to the Parties) that
occurs after the Trade Date of a Transaction which
would result in (a) the imposition of a new tax in a
material amount by any government or taxing
authority upon the making of payments (other than
payments of interest by either of the Parties with
respect to such Transaction); or (b) the performance
of any obligation of either of the Parties under such
Transaction being unlawful.
If an occurrence that would give rise to an Event of
Default also constitutes an Event of Change, such
occurrence will be treated as an Event of Change.
6.2 Good Faith Efforts. Upon the
occurrence of an Event of Change with respect to an
Affected Transaction, the Parties agree to use
reasonable efforts to make arrangements to avoid
the Event of Change; provided that this subsection
will not impose on either Party any obligation other
than to negotiate in good faith to make
arrangements that will not adversely affect such
Party.
6.3 Accelerated Termination Date. If
an Event of Change has occurred and is continuing
with respect to an Affected Transaction, and if within
twenty (20) Business Days of such occurrence an
arrangement is not made pursuant to Section 6.2
above, then either Party may designate an
accelerated termination date (“Accelerated
Termination Date”) with respect to such Affected
Transaction upon two (2) Business Days’ notice to
the other Party. The Party not adversely affected by
the governmental or judicial action that is an Event
of Change may elect to preserve any or all of the
Affected Transactions by agreeing in writing, prior to
the effectiveness of such notice of Accelerated
Termination Date, to hold harmless the adversely
affected Party pending reconsideration by such
regulatory agency or court, or for the remaining
term of the Transaction(s). Upon the designation of
an Accelerated Termination Date with respect to an
Affected Transaction, each Party shall deliver to the
other Party a certificate containing in reasonable
detail a computation, accompanied by such
corroborating documentation as the other Party may
reasonably request, of the Market Value of such
Affected Transaction as determined by it. The
payment to be made for such Affected Transaction
will be equal to one‐half of the difference between
the Market Value determined by the Party (“X”) with
the higher Market Value and the Market Value
determined by the Party (“Y”) with the lower Market
Value. X shall pay to Y the amount of the payment
calculated pursuant to this Section 6.3 within two (2)
Business Days after the Accelerated Termination
Date. The intent of this Article 6 is to leave neither
Party with an unfair burden as a result of an Event of
Change.
ARTICLE 7 Notices and Payments
7.1 Methods. All invoices, statements,
notices, and communications (and including, without
limitation, notices pursuant to Article 5.1 and Article
6.3, and any notices of complaints made by
Counterparty to IFM) made pursuant to this
Agreement shall be in writing and made as follows:
(a) All written communications to the
other Party shall be sent by first class, registered,
certified or express mail, return receipt requested,
postage prepaid, or by comparable delivery service,
or by hand, by facsimile (with the original sent by
first class mail) or by email addressed as follows:
23
To IFM:
INTL FCStone Markets, LLC
1251 NW Briarcliff Parkway‐Suite 800
Kansas City, Missouri 64116
Attention: Chief Financial Officer
Facsimile No.: 816‐410‐7454
Telephone No.: 816‐410‐7129
Email: [email protected]
Copies to:
INTL FCStone Markets, LLC
1251 NW Briarcliff Parkway‐Suite 800
Kansas City, Missouri 64116
Attention: Chief Risk Officer Telephone No.: 816‐410‐7145
Email: [email protected]
Tax Jurisdiction: U.S.
Tax Identification No.:42‐1481604
To COUNTERPARTY:
____________________________________
ATTN:
PHONE:
FAX:
EMAIL: ____________________________
Tax Jurisdiction: _____________________
Tax Identification No.:
(b) Either Party may modify any
information specified in this Section 7.1 by giving
written notice to the other Party.
7.2 Receipt. All written
communications made as provided in Section 7.1
shall be deemed given upon receipt by the Party to
which addressed which, in the case of facsimile or
email, shall be deemed to occur at the time
transmitted on any Business Day. All payments due
under this Agreement shall be deemed received
upon their unconditional availability as good funds in
the payment account of the receiving Party specified
in Section 7.1.
ARTICLE 8 General Provisions
8.1 Entire Agreement; Modification.
The terms of this Agreement (including the Account
Application and all documents incorporated by
reference therein) and the Confirmation for any
Transaction entered into pursuant to this Agreement
constitute the entire agreement between the Parties
with respect to the matters set forth in this
Agreement and with respect to any Transaction and
supersede any and all negotiations, agreements, and
expressions of intent, written or oral, prior hereto.
Except as set forth in Section 8.5, this Agreement
may be modified only by written agreement
executed by both Parties. This Agreement (including
the Account Application and all documents
incorporated by reference therein), any
Confirmation, and any modification of the foregoing
may be executed and delivered in counterparts,
including by a facsimile or email transmission
thereof, each of which shall be deemed an original.
8.2 No Waiver. No waiver by either
Party of any one or more defaults by the other Party
in the performance of any of the provisions of this
Agreement or the Confirmation for any Transaction
shall operate or be construed as a waiver of any
other default or defaults whether of a like kind or
different nature. Any failure or delay by either Party
to exercise any right, in whole or in part, will not be
construed as a waiver of the right to exercise the
same or any other right at any time and from time to
time hereunder.
8.3 Headings. The headings used for
the articles and sections herein are for convenience
only and shall not affect the meaning or
interpretation of the provisions of this Agreement or
any Transaction or Confirmation hereunder.
8.4 Confidentiality. All Confidential
Information shall be held and treated by the Parties
and their agents in confidence, used solely in
connection with this Agreement, and shall not,
except as hereinafter provided, be disclosed to any
third party without the other Party’s prior written
consent except (i) as may be required by Law, (ii) in
response to a request from a governmental body or
regulator, in each case having or asserting
( ) -
( ) -
24
jurisdiction over the relevant Party, or (iii) as
necessary to permit enforcement of this Agreement.
In the event that either Party (a “Disclosing Party”) is
otherwise requested or required to disclose any
Confidential Information, the Disclosing Party shall
provide the other Party with prompt written notice
of any such request or requirement, if such notice is
practicable and, based on advice of the Disclosing
Party’s counsel, permitted by Law, so that the other
Party may seek an appropriate protective order or
waive compliance with the provisions of this
Agreement. If, failing the entry of a protective order
or the receipt of a waiver hereunder, the Disclosing
Party, based on the advice of counsel, is compelled
to disclose Confidential Information, the Disclosing
Party may disclose that portion of the Confidential
Information which the Disclosing Party’s counsel
advises that the Disclosing Party is compelled to
disclose.
8.5 Severability Clause. If any Law
adopted following the date of this Agreement, or
any interpretation of any Law made following the
date of this Agreement, shall be inconsistent with
any of the provisions hereof, the affected provisions
of this Agreement shall be deemed modified or
superseded, as the case may be, by the applicable
provisions of such Law, and all other provisions of
this Agreement and provisions so modified shall in
all respects continue in full force and effect.
8.6 Governing Law, Jurisdiction and
Costs. This Agreement and any Transaction,
including any Confirmation thereof, entered into
pursuant to this Agreement shall be governed by,
construed and enforced in accordance with the law
of the State of New York without regard to principles
of conflict of laws. Any judicial action arising out of,
resulting from or in any way relating to this
Agreement, the Confirmation for any Transaction or
any Related Agreement or any alleged breach or
default under the same or the warranties and
representations contained in the same shall be
brought only in a state or federal court of competent
jurisdiction located in the State of New York, in the
Borough of Manhattan in New York City. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREUNDER.
8.7 Service of Process. Counterparty
irrevocably appoints the Process Agent specified
below to receive, for it and on its behalf, service of
process in any proceedings. If for any reason any
Party’s Process Agent is unable to act as such, such
Party will promptly notify the other Party and within
30 days appoint a substitute process agent
acceptable to the other Party. The Parties
irrevocably consent to service of process given in the
manner provided for notices in Section 7.1. Nothing
in this Agreement will affect the right of either Party
to serve process in any other manner permitted by
Law.
Counterparty appoints as Process Agent:
To the extent Counterparty fails to appoint a Process
Agent located in the State of New York above, within
ten (10) business days of written request,
Counterparty will appoint an agent for service of
process in the State of New York and provide to IFM
written notice of said appointment. If after ten (10)
business days Counterparty fails to provide written
notice to IFM of said appointment, IFM will be
authorized, for the purpose of effecting valid service
of process in the State of New York, to serve
Counterparty by certified mail directed to the
address for notices listed in Article 7 above.
8.8 Limitation on Liability.
NO PARTY SHALL BE REQUIRED TO PAY OR BE LIABLE
FOR SPECIAL, PUNITIVE, EXEMPLARY,
CONSEQUENTIAL, OR INDIRECT DAMAGES
(WHETHER OR NOT ARISING FROM ITS NEGLIGENCE)
TO ANY OTHER PARTY. IF AND TO THE EXTENT ANY
PAYMENT REQUIRED TO BE MADE PURSUANT TO
THIS AGREEMENT IS DEEMED TO CONSTITUTE
LIQUIDATED DAMAGES, THE PARTIES
ACKNOWLEDGE AND AGREE THAT SUCH DAMAGES
ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE AND
THAT SUCH PAYMENT IS INTENDED TO BE A
REASONABLE APPROXIMATION OF THE AMOUNT OS
SUCH DAMAGES AND NOT A PENALTY.
IFM shall not be liable to Counterparty as a result of
any action taken by IFM or its agents in compliance
with applicable Law or at the direction of the CFTC or
the National Futures Association. This paragraph is
25
solely for the protection and benefit of IFM, and any
failure by IFM or its agents to comply with any of
Law or order of the CFTC or the National Futures
Association shall not relieve Counterparty of any
obligations under this Agreement nor be construed
to create rights under this Agreement in favor of
Counterparty against IFM.
8.9 Bankruptcy Matters.
(a) This Agreement, including any
credit support arrangement entered into between
the parties, is a “master netting agreement” as
defined in the U.S. Bankruptcy Code (the “Code”),
and this Agreement, including any credit support
document, and each Transaction hereunder is of a
type set forth in Section 561(a)(1)‐(5) of the Code.
The remedies provided herein, and in any credit
support arrangement, are the remedies referred to
in Section 561(a), Sections 362(b)(6), (7), (17) and
(27), and Section 362(o) of the Code. All transfers of
cash, securities or other property as Margin or
otherwise under or in connection with this
Agreement, any credit support arrangement or any
Transaction hereunder are “margin payments,”
“settlement payments” and “transfers” under
Sections 546(e), (f), (g) or (j), and under Section
548(d)(2) of the Code. Each obligation under this
Agreement, any credit support arrangement or any
Transaction hereunder is an obligation to make a
“margin payment,” “settlement payment” and
“payment” within the meaning of Sections 362, 560
and 561 of the Code.
(b) In the event either Party is a
covered financial company (as defined in section
201(a)(8) of the Dodd‐Frank Wall Street Reform and
Consumer Protection Act, 12 U.S.C. 5381(a)(8)) or an
insured depository institution for which the Federal
Deposit Insurance Corporation (“FDIC”) has been
appointed as a receiver (the “covered party”),
certain limitations under Title II of the Dodd‐Frank
Act or the Federal Deposit Insurance Act may apply
to the right of the non‐covered party to terminate,
liquidate, or net any swap by reason of the
appointment of the FDIC as receiver,
notwithstanding the agreement of the Parties
hereunder. The FDIC may have certain rights to
transfer Transactions of the covered party under
section 210(c)(9)(A) of the Dodd‐Frank Wall Street
Reform and Consumer Protection Act, 12 U.S.C.
5390(c)(9)(A), or 12 U.S.C. 1821(e)(9)(A).
8.10 No Third Party Beneficiaries. This
Agreement and any Confirmation pursuant hereto
confer no rights whatsoever upon any person other
than the Parties and shall not create, or be
interpreted as creating, any standard of care, duty or
liability to any person not a Party hereto.
8.11 Binding Effect. This Agreement
shall be binding on and inure to the benefit of the
Parties and their respective successors and
permitted assigns, except as expressly provided in
this Agreement or the Confirmation for a specific
Transaction.
8.12 Assignment. This Agreement,
including any Transactions hereunder, shall not be
assigned by either Party without the written consent
of the other Party, and any such purported
assignment without consent shall be void; provided
that either Party may assign all of its rights and
obligations under this Agreement and all
Transactions pursuant to a consolidation or
amalgamation with, or merger with or into, or
transfer of all or substantially all its assets to,
another entity that is able to make all of the
representations and warranties applicable to such
Party hereunder (but without prejudice to any other
right or remedy under this Agreement), that
assumes all obligations of the assigning Party, and
whose creditworthiness is not materially weaker
(taking into consideration any credit support
provided both prior to and following the
effectiveness of such assignment) than the
creditworthiness of the assignor before such transfer
and assumption.
26
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first written above.
INTL FCStone Markets, LLC
By:
Printed Name:
Title:
By:
Printed Name:
Title:
Counterparty:
By: ____________________________________
Printed Name: _______________________________
Title: ____________________________________
27
EXHIBIT A: DEFINITONS
“Accelerated Termination Date” means the date
determined in accordance with Section 6.3.
“Account Application” means all documentation
delivered to IFM and its Affiliates in connection with
the opening of accounts, including all know‐your‐
customer information, as may be updated by
Counterparty from time to time.
“Affected Transaction” means any Transaction as to
which an Event of Change (as defined in Article 6)
shall occur.
“Affiliate” means, in relation to any person, any
entity controlled, directly or indirectly, by the
person, any entity that controls, directly or
indirectly, the person, or any entity directly or
indirectly under common control with the person.
For this purpose, “control” of any entity or person
means ownership of a majority of the voting power
of the entity or person.
“Business Day” means any calendar day, other than
a Saturday or Sunday, on which banks are open for
general commercial business in New York.
“CEA” means the United States Commodity
Exchange Act, as amended from time to time, and
the regulations thereunder.
“Confidential Information” means non‐public,
proprietary or confidential information that is
labeled as such or should reasonably be understood
by the recipient to be confidential, and includes the
terms of each specific Transaction, including but not
limited to the price, the quantity, the identity of
other sellers or intermediaries, and all other material
terms thereof. Notwithstanding the foregoing, the
following shall not constitute “Confidential
Information”:
(a) information that is generally
known to the industry or the public other than as a
result of the recipient’s breach of this Agreement;
(b) information that is made
legitimately available to a recipient by a third party
without breach of any confidentiality obligation; or
(c) information that is developed by
employees or contractors of such recipient without
knowledge of or access to Confidential Information.
“Confirmation” means a written notice confirming
the terms of a Transaction.
“Default Interest Rate” means a rate equal to the
cost to the Party to whom interest is owed (as such
cost is certified by such Party, without proof or
evidence of any actual cost) if such Party were
funding the relevant amount plus 1% per annum, but
in no event exceeding the maximum rate permitted
by applicable Law.
“Defaulting Party” means the Party with respect to
which (or whose Guarantor with respect to which)
an Event of Default has occurred.
“Disclosing Party” is defined in Section 8.4.
“Early Termination Date” means a date for
termination of the Agreement and any Related
Agreement and all the Parties’ obligations under the
same, other than the obligations set forth in Sections
5.3 [Net Settlement Amount] and 5.4 [Setoff] of the
Agreement.
“Event of Change” is defined in Section 6.1.
“Event of Default” means
(a) The failure of either Party or any
Guarantor to make payment as required or perform
any obligations (i) under this Agreement or under
any Confirmation (excluding a delay in payment that
is cured within one (1) Business Day of demand
therefor, or any other failure of performance that is
cured in a manner satisfactory to the Performing
Party in its sole discretion within five (5) Business
Days of a demand for cure); provided, that the
failure of Counterparty to make a payment of
Variation Margin within the timeframe required by
Section 2.4 shall constitute an immediate Event of
Default with or without demand by IFM; (ii) under
any Related Agreement, after giving effect to any
applicable notice or grace period thereunder; or (iii)
under any Transaction;
28
(b) The repudiation by either Party or
any Guarantor of any obligation (i) under this
Agreement, any Transaction, or the Confirmation for
a specific Transaction; or (ii) under any Related
Agreement;
(c) Either Party or any Guarantor:
(i) is dissolved (other than pursuant
to a consolidation, amalgamation
or merger);
(ii) 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;
(iii) makes a general assignment,
arrangement or composition with
or for the benefit of its creditors;
(iv) 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 or presented
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 15
days of the institution or
presentation thereof;
(v) has a resolution passed for its
winding‐up, official management
or liquidation (other than pursuant
to a consolidation, amalgamation
or merger);
(vi) 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;
(vii) 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 15 days
thereafter;
(viii) 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 (i)
to (vii) (inclusive); or
(ix) takes any action in furtherance of,
or indicating its consent to, approval of,
or acquiescence in, any of the
foregoing acts;
(d) The merger of either Counterparty
or any Guarantor of Counterparty with any other
person or the consolidation of either Counterparty
or any Guarantor of Counterparty with any other
person which (i) causes a material adverse change in
the financial condition of Counterparty or its
Guarantor or (ii) pursuant to which the entity
existing after the transfer, merger or consolidation
does not assume the obligations of Counterparty or
its Guarantor by operation of Law or otherwise;
(e) The transfer of all or substantially
all of the assets of either Counterparty or any
Guarantor;
(f) To the extent Counterparty is a natural
person, Counterparty’s death or incompetency;
(g) The failure of Counterparty or any
Guarantor of Counterparty to make payment when
due under one or more agreements or instruments
relating to Specified Indebtedness in an aggregate
amount (individually or collectively) of not less than
one million dollars ($1,000,000) which has resulted
in such Specified Indebtedness becoming due and
payable under such agreements or instruments,
before it would otherwise have been due and
payable, or defaults in making one or more
payments in an aggregate amount (individually or
29
collectively) of not less than one million dollars
($1,000,000) under such agreements or instruments
(after giving effect to any applicable notice
requirement or grace period); or
(h) The making of a materially
incorrect or misleading representation or warranty
under this Agreement or any Related Agreement.
“Guarantor” means, as to a Party, the person(s), if
any, executing a guaranty of any or all of the
obligations of such Party to the other Party relating
to a Transaction pursuant to the Agreement.
“ISDA” means the International Swaps and
Derivatives Association, Inc.
“Law” means any U.S. or foreign, federal, state,
provincial or local law, ordinance, regulation, rule,
code, order, other requirement or rule of law, stock
exchange rule or rule of any self‐regulatory
organization. The terms “lawful” and “unlawful” will
be construed accordingly.
“Margin” means both Initial Margin and Variation
Margin.
“Market Value” means, with respect to any
Terminated Transaction, the amount (as determined
by the Performing Party) of the losses (expressed as
a positive number) or gains (expressed as a negative
number) that the Performing Party calculates would
be realized in replacing that Terminated Transaction.
In determining a Market Value, the Performing Party
may consider any relevant information, including,
without limitation, one or more of the following
types of information:
(a) quotations (either firm or
indicative) for replacement transactions supplied by
one or more third parties that may take into account
the creditworthiness of the Performing Party at the
time the quotation is provided and the terms of any
relevant documentation, including credit support
documentation, between the Performing Party and
the third party providing the quotation;
(b) information consisting of relevant
market data in the relevant market supplied by one
or more third parties including, without limitation,
relevant rates , prices, yields, yield curves,
volatilities, spreads, correlations or other relevant
market data in the relevant market; or
(c) information of the types descried
in clause (a) or (b) above from internal sources
(including any of the Performing Party’s Affiliates) if
that information is of the same type used by the
Performing Party in the regular course of its business
for the valuation of similar transactions.
“Net Settlement Amount” means the single
liquidated amount payable by one Party to the
other, following the occurrence or designation of an
Early Termination Date, after netting:
(a) the amount owed by the
Defaulting Party to the Performing Party by taking
the sum of:
(i) the absolute value of all negative
Market Values with respect to the Terminated
Transactions, and
(ii) any unpaid amounts owed to the
Performing Party by the Defaulting Party
pursuant to Article 2 or a Related Agreement
immediately before the Early Termination Date,
and
(iii) all reasonable damages, losses,
and out‐of‐pocket expenses, including legal fees,
incurred by the Performing Party by reason of
terminating or liquidating the Terminated
Transactions pursuant to the Early Termination
Date, including without limitation any damages,
losses and expenses incurred in obtaining,
maintaining or liquidating hedges relating to the
Transactions that are being liquidated; and
(b) the amount owed by the
Performing Party to the Defaulting Party by taking
the sum of:
(i) all positive Market Values with
respect to the Terminated Transactions, and
(ii) any unpaid amounts owed to the
Defaulting Party by the Performing Party
pursuant to Article 2 or a Related Agreement
immediately before the Early Termination Date,
all as determined in a commercially reasonable
manner by the Performing Party.
“Performing Party” means, upon the occurrence of
an Event of Default, the non‐defaulting Party with
respect to such Event of Default.
30
“Related Agreement” means any collateral, security,
guaranty or other agreement undertaken in
connection with the Agreement.
“Specified Indebtedness” means any obligation
(whether present or future, contingent or otherwise,
as principal or surety or otherwise) in respect of
borrowed money.
“Tax” means any present or future tax, levy, impost,
duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto)
that is imposed by any government or other taxing
authority in respect of any payment under this
Agreement other than a stamp, registration,
documentation or other similar tax.
“Terminated Transaction” is defined in Section
5.1(b).
“Trade Date” has the meaning ascribed to it in the
relevant ISDA Definitions.
“Transaction” is defined in Section 1.1.
32
ADDITIONAL AGREEMENTS ‐ ISDA 2012 DODD‐FRANK SUPPLEMENT
http://
The International Swaps and Derivatives Association (“ISDA”) has developed materials referred
to as the “ISDA August 2012 DF Protocol,” intended to facilitate industry compliance with
certain CFTC rulemakings under the Dodd‐Frank Act. The ISDA August 2012 DF Protocol adds
notices, representations and covenants responsive to Dodd‐Frank requirements that must be
satisfied at or prior to the time that transactions are executed. Information regarding the ISDA
August 2012 DF Protocol is available at: http://www2.isda.org/functional-areas/protocol-managment/protocol/12
IFM is a provisionally registered swap dealer. As a condition to contracting with IFM, IFM requires that Customers agree to certain provisions set out in the Schedules to the ISDA 2012
DF Protocol (the “ISDA 2012 DF Schedules”). These important contractual provisions are
summarized below, however, you should review the full text and by signing this Agreement,
you acknowledge that you have read and understand the full text of the ISDA 2012 DF
Schedules that apply to you and that you are able to make the representations, warranties and
agreements therein. The ISDA 2012 DF Schedules are available at: http://www2.isda.org/functional-areas/protocol-managment/protocol/12
Schedule 1 of the ISDA 2012 DF Schedules contains definitions for terms that are used in the
remainder of the ISDA 2012 DF Schedules.
[___] Please check here to confirm that Customer has reviewed and agrees to the
provisions of Schedule 1 of the ISDA 2012 DF Schedules, and that the terms of Schedule 1 will
apply to all transactions between Customer and IFM.
Schedule 2 of the ISDA 2012 DF Schedules covers matters including (but not limited to) the
following:
• Representations and warranties regarding information IFM and Customer have provided
to each other, as well as requirements to update that information.
• Agreements regarding reporting of transactions and notifications regarding transactions.
• Agreements and disclosures regarding clearing of Transactions and the provision of daily
marks and scenario analyses.
[___] Please check here to confirm that Customer has reviewed and agrees to theprovisions of Schedule 2 of the ISDA 2012 DF Schedules, and that the terms of Schedule 2 will
apply to all transactions between Customer and IFM.
33
Schedules 3, 4, 5 and 6 of the ISDA 2012 DF Schedules apply only to certain types of
counterparties. Please check the boxes below as appropriate:
1. [___] Customer is a “swap dealer,” as defined in Section 1a(49) of the Commodity
Exchange Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of
the Securities Exchange Act, a “major swap participant,” as defined in Section
1a(33) of the Commodity Exchange Act, or a “major security‐based swap
participant,” as defined in Section 3(a)(67) of the Securities Exchange Act.
2. [___] Customer is an employee benefit plan subject to Title I of the United States
Employee Retirement Income Security Act, as amended from time to time
(“ERISA”).
3. [___] Customer is a Special Entity as defined in Section 4s(h)(2)(C) of the
Commodity Exchange Act and CFTC Regulation 23.401(c) thereunder, and is not
an employee benefit plan subject to Title I of ERISA.
4. [___] Customer is an employee benefit plan as defined in Section 3 of ERISA, but
is not subject to Title I of ERISA, and wishes to be treated as a “Special Entity” for
purposes of transactions between Customer and IFM.
5. [___] None of the descriptions above apply to Customer.
For Customers that checked Box 2 above:
Schedules 5 and 6 of the ISDA 2012 DF Supplement applies to Customers who have checked Box
2. Schedule 5 and 6 includes representations and warranties regarding the person or entity that
advises you regarding your transactions with IFM, and confirmation that unless otherwise
required by applicable law or agreed in connection with a particular Transaction, we have no
duty to act in your best interests and we are not assessing the suitability of the Transaction for
you.
[___] If Box 2 is checked above, please check here to confirm that Customer has
reviewed and agrees to the provisions of Schedules 5 and 6 of the ISDA 2012 DF Schedules,
and that the terms of Schedules 5 and 6 will apply to all Transactions between Customer and
IFM.
[___] If Box 2 is checked above, please check here to confirm that any Transactions
entered into between Customer and IFM will not constitute a prohibited transaction within
the meaning of Section 406 of ERISA, or Section 4975 of the United States Internal Revenue
Code.
34
If Box 2 is checked above, please provide the contact information for Customer’s Designated
Fiduciary (as defined in the ISDA 2012 DF Supplement) (if Customer has more than one
Designated Fiduciary, please attach a separate sheet of paper):
Name: ____________________ Telephone Number: _________________________________
Address: ________________________________________________________________
For Customers that checked Box 3 or Box 4 above:
Schedule 4 of the ISDA 2012 DF Supplement applies to Customers who have checked Box 3 or
Box 4. Schedule 4 includes representations and warranties regarding the person or entity that
advises you regarding your transactions with IFM, and confirmation that unless otherwise
required by applicable law or agreed in connection with a particular Transaction, we have no
duty to act in your best interests and we are not assessing the suitability of the Transaction for
you.
[___] If Box 3 or Box 4 is checked above, please check here to confirm that Customer
has reviewed and agrees to the provisions of Schedule 4 of the ISDA 2012 DF Schedules, and
that the terms of Schedule 4 will apply to all transactions between Customer and IFM.
If Box 3 or Box 4 is checked above, please provide the contact information for
Customer’s Designated QIR (as defined in the ISDA 2012 DF Supplement) (if Customer has
more than one Designated QIR, please attach a separate sheet of paper):
Name: ____________________ Telephone Number: _________________________________
Address: ________________________________________________________________
For Customers that checked Box 5 above:
Schedule 3 of the ISDA 2012 DF Supplement applies to Customers who have checked Box 5.
Schedule 3 includes representations and warranties regarding your ability to evaluate
transactions with IFM and make trading decisions, and confirmation that unless otherwise
required by applicable law or agreed in connection with a particular Transaction, we have no
duty to act in your best interests and we are not assessing the suitability of the Transaction for
you.
[___] If Box 5 is checked above, please check here to confirm that Customer has
reviewed and agrees to the provisions of Schedule 3 of the ISDA 2012 DF Schedules, and that
the terms of Schedule 3 will apply to all transactions between Customer and IFM.
If Box 5 is checked above, please provide the contact information for Customer’s
Designated Evaluation Agent (as defined in the ISDA 2012 DF Supplement), if any (if Customer
( ) -
( ) -
35
has more than one Designated Evaluation Agent, please attach a separate sheet of paper):
Name: ____________________ Telephone Number: _________________________________
Address: ________________________________________________________________
Please sign below to confirm the information provided and elections made with respect to the ISDA 2012 Dodd‐Frank Supplement:
Customer Signature: ________________________________
Customer Name (Print):______________________________
Signatory Title (if Customer is an entity) or Agent Name (if documents are being executed by an
Agent on behalf of Customer): ________________________________________
Date: _____________________________
( ) -
month day year
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ADDITIONAL AGREEMENTS ‐ ISDA 2013 DODD‐FRANK SUPPLEMENT
The International Swaps and Derivatives Association (“ISDA”) has developed materials referred
to as the “ISDA March 2013 DF Protocol,” which are intended to facilitate industry compliance
with certain CFTC rulemakings under the Dodd‐Frank Act. The ISDA March 2013 DF Protocol
adds notices, representations and covenants responsive to Dodd‐Frank requirements that must
be satisfied at or prior to the time that transactions are executed. Information regarding the
ISDA March 2013 DF Protocol is available at: http://www2.isda.org/functional-areas/protocol-managment/protocol/13
IFM is not an “insured depository institution” but may be considered a “financial company” for purposes of CFTC 23.504(b)(5). As a condition to transacting with IFM, IFM requires that its
customers agree to certain provisions set out in the Schedules to the ISDA 2013 DF Protocol (the
“ISDA 2013 DF Schedules”). These important contractual provisions are summarized below,
however, you should review the full text of the ISDA 2013 DF Schedules that apply to you and by
signing this Agreement, you acknowledge that you have read and understand the full text that
apply to you, and that you are able to make the representations, warranties and agreements
therein. The ISDA 2013 DF Schedules are available at: http://www2.isda.org/functional-areas/protocol-managment/protocol/13
Schedule 1 of the ISDA 2013 DF Schedules contains definitions for terms that are used in the
remainder of the ISDA 2013 DF Schedules.
[___] Please check here if Customer is “an insured depository institution” as defined in 12 U.S.C. 1813 or check here [___] if Customer is a “financial company” as defined in 12 U.S.C. 5381(a)(11) for purposes of CFTC 23.504(b)(5).
[___] Please check here to confirm that Customer has reviewed and agrees to the
provisions of Schedule 1 of the ISDA 2013 DF Schedules, and that the terms of Schedule 1 will
apply to all transactions between Customer and IFM.
Schedule 2 of the ISDA 2013 DF Schedules covers matters including (but not limited to) the
following:
• Representations and warranties regarding information IFM and Customer have provided
to each other, as well as requirements to update that information.
• Agreements regarding how confirmations are finalized.
• Agreements and disclosures regarding clearing of transactions.
• End‐user exemption to the clearing requirement for Transactions.
• Orderly liquidation for certain financial institutions.
[___] Please check here to confirm that Customer has reviewed and agrees to the
provisions of Schedule 2 of the ISDA 2013 DF Schedules, and that the terms of Schedule 2 will
apply to all transactions between Customer and IFM.
Schedule 3 of the ISDA 2013 DF Schedules includes procedures for valuation of swaps and for
resolution of disputes regarding those valuations. If Customer is a “swap dealer,” as defined in
Section 1a(49) of the Commodity Exchange Act, a “security‐based swap dealer,” as defined in
37
Section 3(a)(71) of the Securities Exchange Act, a “major swap participant,” as defined in
Section 1a(33) of the Commodity Exchange Act, a “major security‐based swap participant,” as
defined in Section 3(a)(67) of the Securities Exchange Act, or a “financial entity,” as defined in
Section 2(h)(7)(C)(i) of the Commodity Exchange Act, IFM requires that Customer agree to the
terms of Schedule 3 of the ISDA 2013 DF Schedules.
[___] If Customer is a “swap dealer,” as defined in Section 1a(49) of the Commodity
Exchange Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of the Securities
Exchange Act, a “major swap participant,” as defined in Section 1a(33) of the Commodity
Exchange Act, a “major security‐based swap participant,” as defined in Section 3(a)(67) of the
Securities Exchange Act, or a “financial entity,” as defined in Section 2(h)(7)(C)(i) of the
Commodity Exchange Act, please check here to confirm that Customer has reviewed and
agrees to the provisions of Schedule 3 of the ISDA 2013 DF Schedules, and that the terms of
Schedule 3 will apply to all transactions between Customer and IFM.
If Customer is not a “swap dealer,” as defined in Section 1a(49) of the Commodity Exchange
Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of the Securities Exchange
Act, a “major swap participant,” as defined in Section 1a(33) of the Commodity Exchange Act, a
“major security‐based swap participant,” as defined in Section 3(a)(67) of the Securities
Exchange Act, or a “financial entity,” as defined in Section 2(h)(7)(C)(i) of the Commodity
Exchange Act, Customer may elect to utilize the valuation methodologies and valuation dispute
resolution procedures contained in Schedule 3 of the ISDA 2013 DF Schedules.
[___] If Customer is not a “swap dealer,” as defined in Section 1a(49) of the
Commodity Exchange Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of
the Securities Exchange Act, a “major swap participant,” as defined in Section 1a(33) of the
Commodity Exchange Act, a “major security‐based swap participant,” as defined in Section
3(a)(67) of the Securities Exchange Act, or a “financial entity,” as defined in Section
2(h)(7)(C)(i) of the Commodity Exchange Act, please check here if Schedule 3 of the ISDA 2013
Dodd‐Frank Schedules will apply to transactions between Customer and IFM. Checking this
box constitutes confirmation that Customer has reviewed and agrees to the provisions of
Schedule 3 of the ISDA 2013 DF Schedules, and that the terms of Schedule 3 will apply to all
transactions between Customer and IFM.
Schedule 4 of the ISDA 2013 DF Schedules includes procedures for reconciliation of portfolios
among swap counterparties. If Customer is a “swap dealer,” as defined in Section 1a(49) of the
Commodity Exchange Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of the
Securities Exchange Act, a “major swap participant,” as defined in Section 1a(33) of the
Commodity Exchange Act, or a “major security‐based swap participant,” as defined in Section
38
3(a)(67) of the Securities Exchange Act, IFM requires that Customer agree to the terms of
Schedule 3 of the ISDA 2013 DF Schedules.
[___] If Customer is a “swap dealer,” as defined in Section 1a(49) of the Commodity
Exchange Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of the Securities
Exchange Act, a “major swap participant,” as defined in Section 1a(33) of the Commodity
Exchange Act, or a “major security‐based swap participant,” as defined in Section 3(a)(67) of
the Securities Exchange Act, please check here to confirm that Customer has reviewed and
agrees to the provisions of Schedule 4 of the ISDA 2013 DF Schedules, and that the terms of
Schedule 4 will apply to all transactions between Customer and IFM.
If Customer is not a “swap dealer,” as defined in Section 1a(49) of the Commodity Exchange
Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of the Securities Exchange
Act, a “major swap participant,” as defined in Section 1a(33) of the Commodity Exchange Act,
or a “major security‐based swap participant,” as defined in Section 3(a)(67) of the Securities
Exchange Act, Customer may elect to utilize the portfolio reconciliation procedures contained in
Schedule 4 of the ISDA 2013 DF Schedules.
[___] If Customer is not a “swap dealer,” as defined in Section 1a(49) of the
Commodity Exchange Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of
the Securities Exchange Act, a “major swap participant,” as defined in Section 1a(33) of the
Commodity Exchange Act, or a “major security‐based swap participant,” as defined in Section
3(a)(67) of the Securities Exchange Act, please check here if Schedule 4 of the ISDA 2013
Dodd‐Frank Schedules will apply to transactions between Customer and IFM. Checking this
box constitutes confirmation that Customer has reviewed and agrees to the provisions of
Schedule 4 of the ISDA 2013 DF Schedules, and that the terms of Schedule 4 will apply to all
transactions between Customer and IFM.
If Customer has elected to have Schedule 4 of the ISDA 2013 DF Schedules apply to transactions
with IFM, and is not a “swap dealer,” as defined in Section 1a(49) of the Commodity Exchange
Act, a “security‐based swap dealer,” as defined in Section 3(a)(71) of the Securities Exchange
Act, a “major swap participant,” as defined in Section 1a(33) of the Commodity Exchange Act,
or a “major security‐based swap participant,” as defined in Section 3(a)(67) of the Securities
Exchange Act, Customer may elect to only review portfolio data from IFM, or may elect to
exchange portfolio data with IFM.
[___] Please check here if (i) Customer has elected to have Schedule 4 of the ISDA
2013 DF Schedules apply to transactions between Customer and IFM, (ii) Customer elects to
only review portfolio data provided by IFM, and (iii) Customer is not a “swap dealer,” as
defined in Section 1a(49) of the Commodity Exchange Act, a “security‐based swap dealer,” as
39
defined in Section 3(a)(71) of the Securities Exchange Act, a “major swap participant,” as
defined in Section 1a(33) of the Commodity Exchange Act, or a “major security‐based swap
participant,” as defined in Section 3(a)(67) of the Securities Exchange Act.
[___] Please check here if (i) Customer has elected to have Schedule 4 of the ISDA
2013 DF Schedules apply to transactions between you and IFM, (ii) Customer elects to
exchange portfolio data with IFM, and (iii) Customer is not a “swap dealer,” as defined in
Section 1a(49) of the Commodity Exchange Act, a “security‐based swap dealer,” as defined in
Section 3(a)(71) of the Securities Exchange Act, a “major swap participant,” as defined in
Section 1a(33) of the Commodity Exchange Act, or a “major security‐based swap participant,”
as defined in Section 3(a)(67) of the Securities Exchange Act.
Customers whose transactions are subject to Schedule 4 of the ISDA 2013 DF Schedules may
elect to reconcile portfolio data with data provided to a swap data repository, rather than
exchanging data directly with IFM.
[___] Please check here if (i) Customer is required to be subject to Schedule 4 of the
ISDA 2013 DF Schedules, or has elected to be subject to Schedule 4 of the ISDA 2013 DF
Schedules, and (ii) Customer elects to reconcile portfolio data with data provided to a swap
data repository. By checking this box, Customer agrees that Part VI of Schedule 4 of the ISDA
2013 DF Schedules will apply to transactions between Customer and IFM.
Please sign below to confirm the information provided and elections made with respect to the ISDA 2013 Dodd‐Frank Supplement: Customer Signature: ________________________________ Customer Name (Print):______________________________ Signatory Title (if Customer is an entity) or Agent Name (if documents are being executed by an Agent on behalf of Customer): ________________________________________ Date: _____________________________ month day year
40
END USER EXCEPTION TO THE CLEARING REQUIREMENT
With respect to any swap that is subject to the mandatory clearing requirements under Section
2(h) of the Commodity Exchange Act, there is an exemption available from this requirement for
persons that are considered “end users.” This exemption is described in CFTC Regulation
50.501, the text of which is available here:
http://www.cftc.gov/LawRegulation/FederalRegister/FinalRules/2012-17291
The questions in this section are designed to enable us to determine whether you are eligible
for this exemption from the clearing requirement, and to enable you to elect to take advantage
of this exemption, if you desire to do so. Please check the boxes below as appropriate:
[___] Customer is NOT any of the following: (i) a “swap dealer,” as defined in Section
1a(49) of the Commodity Exchange Act, (ii) a “security‐based swap dealer,” as defined in
Section 3(a)(71) of the Securities Exchange Act, (iii) a “major swap participant,” as defined in
Section 1a(33) of the Commodity Exchange Act, (iv) a “major security‐based swap participant,”
as defined in Section 3(a)(67) of the Securities Exchange Act, or (v) a “financial entity,” as
defined in Section 2(h)(7)(C)(i) of the Commodity Exchange Act
[___] Customer is a “financial entity,” and is eligible for an exemption from the clearing
requirement because it meets the qualifications under Section 2(h)(7)(C)(iii) of the Commodity
Exchange Act (the “finance affiliate exemption”)
[___] Customer is a “financial entity,” and is eligible for an exemption from the clearing
requirement because it meets the qualifications under Section 2(h)(7)(D) of the Commodity
Exchange Act (the “hedging affiliate exemption”)
[___] Customer is a “financial entity,” and is eligible for an exemption from the clearing
requirement because it meets the qualifications under Section 2(h)(7)(C)(ii) of the Commodity
Exchange Act (the “small bank exemption”)
End User Exception Election:
[___] Please check here if any of the four Boxes above are checked, Customer is
entering into swap transactions with IFM solely for purposes of hedging or mitigating
commercial risks as described in CFTC Regulation 50.50(c), and Customer elects to NOT clear
swap transactions that would otherwise be subject to the CFTC’s mandatory clearing
requirement.
The answer to this question can be changed at any time, or with respect to any particular
swap transaction. If you have elected to use the End User Exception, you are required to
provide certain information to a registered Swap Data Repository (or to the CFTC if no Swap
Data Repository is available to receive such information). This filing can be made on an annual
1 The CFTC re-codified the end-user exception from swap clearing from Part 39 to Part 50 of the regulations, to consolidate the CFTC clearing rules in the Code of Federal Regulations.
41
basis, or on a trade‐by‐trade basis. If Customer has made the annual filing, please provide the
date on which this filing was made, and the identity of the Swap Data Repository to which it was
made:
Date: __________________
Swap Data Repository: ____________________________________________
If Customer has not made an annual filing, you are required to provide us with the
information we need to make this filing (which is set out in CFTC Regulation 50.50), at the time
of each swap transaction entered into with IFM.
Customer Signature: _______________________ Customer Name (Print):______________________________ Signatory Title (if Customer is an entity) or Agent Name (if documents are being executed by an Agent on behalf of Customer): ________________________________________ Date: _____________________________
month day year
month day year