Document:

Exhibit 10.1

 

As amended January 18, 2012

 

OSHKOSH CORPORATION

 

2009 INCENTIVE STOCK AND AWARDS PLAN 
 As Amended and Restated

 

1.             Purposes, History and Effective Date.

 

(a)           Purpose. The Oshkosh Corporation 2009 Incentive Stock and Awards Plan has two complementary purposes: (i) to attract and retain outstanding individuals to serve as officers, directors, employees and consultants and (ii) to increase shareholder value. This Plan will provide participants incentives to increase shareholder value by offering the opportunity to acquire shares of the Company’s common stock, receive monetary payments based on the value of such common stock, or receive other incentive compensation, on the potentially favorable terms that this Plan provides.

 

(b)           History. Prior to the effective date of this Plan, the Company had in effect the 1990 Plan, which was originally effective April 9, 1990, and the 2004 Plan, which was originally effective February 3, 2004. The 1990 Plan terminated upon shareholder approval of the 2004 Plan on February 3, 2004, and no new awards have been granted under the 1990 Plan since such date. Upon shareholder approval of this Plan on February 3, 2009, the 2004 Plan terminated, and after such date no new awards have been granted under the 2004 Plan, although awards granted under the 2004 Plan or the 1990 Plan and still outstanding continue to be subject to all terms and conditions of the 2004 Plan or the 1990 Plan, as applicable, subject to Section 14(c) of this Plan.  The Board amended and restated this Plan effective November 15, 2011, contingent on subsequent shareholder approval of this Plan as amended and restated.

 

(c)           Effective Date. This Plan became effective on, and Awards may be granted under this Plan on and after, the Effective Date. This Plan will terminate as provided in Section 14.

 

2.             Definitions. Capitalized terms used in this Plan have the following meanings:

 

(a)           “1990 Plan” means the Oshkosh Corporation 1990 Incentive Stock Plan, as amended.

 

(b)           “2004 Plan” means the Oshkosh Corporation 2004 Incentive Stock and Awards Plan, as amended.

 

(c)           “Affiliate” has the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act or any successor rule or regulation thereto.

 

(d)           “Amendment Approval Date” means the date on which the Company’s shareholders approve this Plan as amended and restated.

 

(e)           “Award” means a grant of Options, Stock Appreciation Rights, Performance Shares, Performance Units, Shares, Restricted Stock, Restricted Stock Units or an Incentive Award. Any Award granted under this Plan shall be provided or made in such manner and at such time as complies with the applicable requirements of Code Section 409A to avoid a plan failure described in Code Section 409A(a)(1), including, without limitation, deferring payment to a specified employee or until a specified distribution event, as provided in Code Section 409A(a)(2).

 

(f)            “Board” means the Board of Directors of the Company.

 

(g)           “Cause” means, except as otherwise determined by the Committee upon the grant of an Award, (i) conviction of a felony or a plea of no contest to a felony, (ii) willful misconduct that is materially and demonstrably detrimental to the Company or an Affiliate, (iii) willful refusal to perform requested

 

 

duties consistent with a Participant’s office, position or status with the Company or an Affiliate (other than as a result of physical or mental disability) or (iv) other conduct or inaction that the Committee determines in its discretion constitutes Cause, except that, with respect to clauses (ii), (iii) and (iv), Cause shall be determined by a majority of the Committee at a meeting held after reasonable notice to the Participant and including an opportunity for the Participant and his or her counsel to be heard, and the Committee shall not have the right to determine that Cause exists pursuant to clause (iv) following the occurrence of a Change in Control. All determinations of the Committee as to Cause shall be final.

 

(h)           “Change in Control” means the occurrence of any one of the following events:

 

(i) any Person (other than (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or any of its subsidiaries, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock in the Company (individually, an “Excluded Person” and collectively, “Excluded Persons”)) is or becomes the “Beneficial Owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after the Effective Date, pursuant to express authorization by the Board that refers to this exception) representing 25% or more of (1) the combined voting power of the Company’s then outstanding voting securities or (2) the then outstanding shares of common stock of the Company; or

 

(ii) the following individuals cease for any reason to constitute a majority of the number of Directors then serving:  individuals who, on the Effective Date, constituted the Board and any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors on the Effective Date or whose appointment, election or nomination for election was previously so approved; or

 

(iii) consummation of a merger, consolidation or share exchange of the Company with any other corporation or issuance of voting securities of the Company in connection with a merger, consolidation or share exchange of the Company (or any direct or indirect subsidiary of the Company), other than (A) a merger, consolidation or share exchange that would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or share exchange continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or share exchange, or (B) a merger, consolidation or share exchange effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Excluded Person) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after the Effective Date, pursuant to express authorization by the Board that refers to this exception) representing 25% or more of (1) the combined voting power of the Company’s then outstanding voting securities or (2) the then outstanding shares of common stock of the Company; or

 

(iv) (A) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or (B) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets (in one transaction or a series of related transactions within any period of twenty-four (24) consecutive months), other than a sale or

 

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disposition by the Company of all or substantially all of the Company’s assets to an entity at least 75% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.

 

Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

 

(i)            “Change in Control Price” means the highest of the following: (i) the Fair Market Value of a Share, as determined on the date of the Change in Control; (ii) the highest price per Share paid in the Change in Control transaction; or (iii) the Fair Market Value of a Share, calculated on the date of surrender of the relevant Award in accordance with Section 16(c), but this clause (iii) shall not apply if in the Change in Control transaction, or pursuant to an agreement to which the Company is a party governing the Change in Control transaction, all of the Shares are purchased for and/or converted into the right to receive a current payment of cash and no other securities or other property.

 

(j)            “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes any successor provision and the regulations promulgated under such provision.

 

(k)           “Committee” means the Human Resources Committee of the Board (or a successor committee with the same or similar authority).

 

(l)            “Company” means Oshkosh Corporation, a Wisconsin corporation, or any successor thereto.

 

(m)          “Director” means a member of the Board, and “Non-Employee Director” means a Director who is not also an employee of the Company or its Subsidiaries.

 

(n)           “Disability” has the meaning ascribed to the terms “total disability” or “totally disabled” in the Oshkosh Corporation Long Term Disability Program for Salaried Employees (or any successor plan thereto).

 

(o)           “Effective Date” means February 3, 2009.

 

(p)           “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a specific provision of the Exchange Act includes any successor provision and the regulations and rules promulgated under such provision.

 

(q)           “Fair Market Value” means, per Share on a particular date, the last sales price on such date on the national securities exchange on which the Stock is then traded, as reported in The Wall Street Journal, or if no sales of Stock occur on the date in question, on the last preceding date on which there was a sale on such exchange. If the Shares are not listed on a national securities exchange, but are traded in an over-the-counter market, the last sales price (or, if there is no last sales price reported, the average of the closing bid and asked prices) for the Shares on the particular date, or on the last preceding date on which there was a sale of Shares on that market, will be used. If the Shares are neither listed on a national securities exchange nor traded in an over-the-counter market, the price determined by the Committee, in its discretion, will be used.

 

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(r)            “Incentive Award” means the right to receive a payment to the extent Performance Goals are achieved or other conditions are satisfied, and shall include “Annual Incentive Awards” as described in Section 10 and “Long-Term Incentive Awards” as described in Section 11.

 

(s)            “Option” means the right to purchase Shares at a stated price for a specified period of time.

 

(t)            “Participant” means an individual selected by the Committee to receive an Award.

 

(u)           “Performance Goals” means any goals the Committee establishes that relate to one or more of the following with respect to the Company or any one or more Subsidiaries, Affiliates or other business units:  sales or other revenues; cost of sales; expenses; cost reductions; income or earnings, including net income, operating income, earnings per share or margins; cash flow; debt; ratio of debt to equity or other financial measure that appears on the Company’s financial statements or is derived from one or more amounts that appear on the Company’s financial statements; return on shareholders equity, capital, assets or other financial measure that appears on the Company’s financial statements or is derived from one or more amounts that appear on the Company’s financial statements; working capital or any of its components, including accounts receivable, inventories or accounts payable; assets; stock price; dividend payments; economic value added; market share; new product releases; and product quality. As to each Performance Goal, the relevant measurement of performance shall be computed in accordance with generally accepted accounting principles to the extent applicable, but, unless otherwise determined by the Committee and to the extent consistent with Code Section 162(m), will exclude the effects of (i) charges for reorganizing and restructuring, (ii) discontinued operations, (iii) asset write-downs, (iv) gains or losses on the disposition of a business or business segment, (v) changes in tax or accounting principles, regulations or laws, (vi) extraordinary, unusual and/or non-recurring items of gain or loss, and (vii) mergers, acquisitions or dispositions, that in each case the Company identifies in its audited financial statements, including footnotes, or the Management’s Discussion and Analysis section of the Company’s annual report.  Also, for Awards intended to be considered “performance-based compensation” under Code Section 162(m), the Committee may, to the extent consistent with Code Section 162(m), appropriately adjust any evaluation of performance under a Performance Goal to exclude any of the following events that occurs during a performance period: (i) litigation, claims, judgments or settlements; (ii) the effects of changes in other laws or regulations affecting reported results; and (iii) accruals of any amounts for payment under this Plan or any other compensation arrangements maintained by the Company.  In addition, in the case of Awards that the Committee determines will not be considered “performance-based compensation” under Code Section 162(m), the Committee may establish other Performance Goals not listed in this Plan or adjust any evaluation of performance under a Performance Goal to the extent the Committee deems appropriate and consistent with the terms of this Plan.

 

(v)           “Performance Shares” means the right to receive Shares to the extent Performance Goals are achieved.

 

(w)          “Performance Units” means the right to receive cash and/or Shares valued in relation to a unit that has a designated dollar value or the value of which is equal to the Fair Market Value of one or more Shares, to the extent Performance Goals are achieved.

 

(x)           “Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, or any group of Persons acting in concert that would be considered “persons acting as a group” within the meaning of Treas. Reg. § 1.409A-3(i)(5).

 

(y)           “Plan” means this Oshkosh Corporation 2009 Incentive Stock and Awards Plan, as may be amended from time to time.

 

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(z)           “Restricted Stock” means Shares that are subject to a risk of forfeiture and/or restrictions on transfer, which may lapse upon the achievement or partial achievement of Performance Goals and/or upon the completion of a period of service.

 

(aa)         “Restricted Stock Unit” means the right to receive cash and/or Shares the value of which is equal to the Fair Market Value of one Share.

 

(bb)         “Retirement” means a Participant’s termination of employment or service as a Director at a time that the Participant is at least age 55 and has completed at least five (5) years of continuous service with the Company.

 

(cc)         “Rule 16b-3” means Rule 16b-3 as promulgated by the United States Securities and Exchange Commission under the Exchange Act.

 

(dd)         “Section 16 Participants” means Participants who are subject to the provisions of Section 16 of the Exchange Act.

 

(ee)         “Share” means a share of Stock.

 

(ff)          “Stock” means the Common Stock of the Company, par value of one cent ($.01) per share.

 

(gg)         “Stock Appreciation Right” or “SAR” means the right of a Participant to receive cash equal to the appreciation of the Fair Market Value of a Share during a specified period of time.

 

(hh)         “Subsidiary” means any corporation, limited liability company or other limited liability entity in an unbroken chain of entities beginning with the Company if each of the entities (other than the last entities in the chain) owns the stock or equity interest possessing more than fifty percent (50%) of the total combined voting power of all classes of stock or other equity interests in one of the other entities in the chain.

 

3.             Administration.

 

(a)           Committee Administration. In addition to the authority specifically granted to the Committee in this Plan, the Committee has full discretionary authority to administer this Plan, including but not limited to the authority to (i) interpret the provisions of this Plan, (ii) prescribe, amend and rescind rules and regulations relating to this Plan, (iii) correct any defect, supply any omission, or reconcile any inconsistency in any Award or agreement covering an Award in the manner and to the extent it deems desirable to carry this Plan into effect and (iv) make all other determinations necessary or advisable for the administration of this Plan. A majority of the members of the Committee will constitute a quorum, and a majority of the Committee’s members must make all determinations of the Committee. The Committee may make any determination under this Plan without notice or meeting of the Committee by a writing that a majority of the Committee members have signed. All Committee determinations are final and binding.

 

(b)           Delegation to Other Committees or Officers. To the extent applicable law permits, the Board may delegate to another committee of the Board or to one or more officers of the Company any or all of the authority and responsibility of the Committee. However, no such delegation is permitted with respect to Awards made to Section 16 Participants at the time any such delegated authority or responsibility is exercised. The Board also may delegate to another committee of the Board consisting entirely of Non-Employee Directors any or all of the authority and responsibility of the Committee with respect to individuals who are Section 16 Participants. If the Board has made such a delegation, then all references to the Committee in this Plan include such other committee or one or more officers to the extent of such delegation.

 

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(c)           Indemnification. The Company will indemnify and hold harmless each member of the Board and the Committee, and each officer or member of any other committee to whom a delegation under Section 3(b) has been made, as to any act or omission, or determination made, with respect to this Plan or any Award to the maximum extent that the law and the Company’s by-laws permit.

 

4.             Eligibility. The Committee may designate any of the following as a Participant from time to time: any officer or other employee of the Company or its Affiliates, an individual that the Company or an Affiliate has engaged to become an officer or employee, a consultant who provides services to the Company or its Affiliates, or a Director, including a Non-Employee Director. The Committee’s designation of a Participant in any year will not require the Committee to designate such person to receive an Award in any other year.  The Committee’s granting of a particular type of Award to a Participant will not require the Committee to grant the same or any other type of Award to such individual.

 

5.             Types of Awards. Subject to the terms of this Plan, the Committee may grant any type of Award to any Participant it selects, but only employees of the Company or a Subsidiary (that qualifies under Section 422 of the Code) may receive grants of incentive stock options within the meaning of Section 422 of the Code. Awards may be granted alone or in addition to, in tandem with, or (subject to the prohibition on repricing contained in Section 14(e)) in substitution for any other Award (or any other award granted under another plan of the Company or any Affiliate).

 

6.             Shares Reserved under this Plan.

 

(a)           Plan Reserve. Subject to adjustment as provided in Section 16, as of the Amendment Approval Date, an aggregate of 6,000,000 Shares, plus the number of Shares issuable under Awards outstanding under this Plan as of the Amendment Approval Date, plus the number of Shares available for issuance under this Plan that have not been made subject to an outstanding Award as of the Amendment Approval Date, plus the number of Shares described in Section 6(c), are reserved for issuance under this Plan. The aggregate number of Shares reserved under this Section 6(a) shall be depleted by the maximum number of Shares, if any, that may be payable under an Award as determined at the time of grant; provided that the aggregate number of Shares reserved under this Section 6(a) shall be depleted by 1.75 Shares for each Share delivered in payment or settlement of a full-value Award. For this purpose, a full-value award includes Shares, Restricted Stock, Restricted Stock Units payable in Shares, Performance Shares, Performance Units payable in Shares and any other similar Award payable in Shares under which the value of the Award is measured as the full value of a Share, rather than the increase in the value of a Share. Notwithstanding the foregoing, the Company may issue only such number of Shares as is described in the first sentence of this Section 6(a) upon the exercise of incentive stock options. For purposes of determining the aggregate number of Shares reserved for issuance under this Plan, any fractional Share shall be rounded to the next highest full Share.

 

(b)           Replenishment of Shares Under this Plan. If (i) an Award lapses, expires, terminates or is cancelled without the issuance of Shares under the Award (whether due currently or on a deferred basis), (ii) the Committee determines during or at the conclusion of the term of an Award that all or some portion of the Shares with respect to which the Award was granted will not be issued on the basis that the conditions for such issuance will not be satisfied, (iii) Shares are forfeited under an Award or (iv) Shares are issued under any Award and the Company subsequently reacquires them pursuant to rights reserved upon the issuance of the Shares, then such Shares shall be recredited to this Plan’s reserve (in the same number as they depleted the reserve) and may again be used for new Awards under this Plan, but such Shares may not be issued pursuant to incentive stock options. Notwithstanding the foregoing, in no event shall the following Shares be recredited to this Plan’s reserve: Shares tendered or withheld in payment of the exercise price of an outstanding Option; Shares tendered or withheld to satisfy federal, state or local tax withholding obligations; and Shares purchased by the Company using proceeds from Option exercises.

 

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(c)           Addition of Shares from Predecessor Plans. After the Amendment Approval Date, if any Shares subject to awards granted under the 1990 Plan or the 2004 Plan would again become available for new grants under the terms of such plan if such plan were still in effect, then those Shares will be available for the purpose of granting Awards under this Plan, thereby increasing the number of Shares available for issuance under this Plan as determined under the first sentence of Section 6(a). Any such Shares will not be available for future awards under the terms of the 1990 Plan or the 2004 Plan.

 

(d)           Participant Limitations. Subject to adjustment as provided in Section 16, no Participant may be granted Awards that could result in such Participant:

 

(i) receiving Options for, and/or Stock Appreciation Rights with respect to, more than 5,000,000 Shares during any period of five consecutive fiscal years of the Company;

 

(ii) receiving Awards of Restricted Stock or Restricted Stock Units relating to more than 1,500,000 Shares during any period of five consecutive fiscal years of the Company;

 

(iii) receiving, with respect to an Award of Performance Shares and/or an Award of Performance Units the value of which is based on the Fair Market Value of a Share, payment of more than 600,000 Shares in respect of any period of two consecutive fiscal years of the Company, or of more than 900,000 Shares in respect of any period of three consecutive fiscal years of the Company;

 

(iv) receiving, with respect to an Annual Incentive Award in respect of any single fiscal year of the Company, a cash payment of more than $6,000,000; or

 

(v) receiving, with respect to a Long-Term Incentive Award and/or an Award of Performance Units the value of which is not based on the Fair Market Value of a Share, a cash payment of more than $12,000,000 in respect of any period of two consecutive fiscal years of the Company, or of more than $18,000,000 in respect of any period of three consecutive fiscal years of the Company.

 

In all cases, determinations under this Section 6(d) should be made in a manner that is consistent with the exemption for performance-based compensation that Code Section 162(m) provides.

 

7.             Options. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each Option, including but not limited to: (a) whether the Option is an “incentive stock option” which meets the requirements of Code Section 422, or a “nonqualified stock option” which does not meet the requirements of Code Section 422; (b) the grant date, which may not be any day prior to the date that the Committee approves the grant; (c) the number of Shares subject to the Option; (d) the exercise price, which may never be less than the Fair Market Value of the Shares subject to the Option as determined on the date of grant; (e) the terms and conditions of exercise; and (f) the term, except that an Option must terminate no later than seven (7) years after the date of grant. In all other respects, the terms of any incentive stock option should comply with the provisions of Code Section 422 except to the extent the Committee determines otherwise. If an Option that is intended to be an incentive stock option fails to meet the requirements of Code Section 422, the Option shall automatically be treated as a nonqualified stock option to the extent of such failure.  Except to the extent the Committee determines otherwise, a Participant may exercise an Option in whole or part after the right to exercise the Option has accrued, provided that any partial exercise must be for one hundred (100) Shares or multiples thereof. Except as the Committee may otherwise provide, an Option shall expire at the earliest of seven (7) years from the date of grant, three (3) months after termination of the Participant’s employment or service for reasons other than death, Disability, Retirement or Cause, one (1) year after termination of the Participant’s employment or service as a result of death or Disability, three (3) years after termination of the Participant’s employment or service as a result of Retirement, or immediately upon termination of the Participant’s employment or service for Cause.

 

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8.             Stock Appreciation Rights. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each SAR, including but not limited to: (a) whether the SAR is granted independently of an Option or relates to an Option; (b) the grant date, which may not be any day prior to the date that the Committee approves the grant; (c) the number of Shares to which the SAR relates; (d) the grant price, which may never be less than the Fair Market Value of the Shares subject to the SAR as determined on the date of grant; (e) the terms and conditions of exercise or maturity; and (f) the term, provided that an SAR must terminate no later than seven (7) years after the date of grant. If an SAR is granted in relation to an Option, then unless otherwise determined by the Committee, the SAR shall be exercisable or shall mature at the same time or times, on the same conditions and to the extent and in the proportion, that the related Option is exercisable and may be exercised or mature for all or part of the Shares subject to the related Option. Upon exercise of any number of SAR, the number of Shares subject to the related Option shall be reduced accordingly and such Option may not be exercised with respect to that number of Shares. The exercise of any number of Options that relate to an SAR shall likewise result in an equivalent reduction in the number of Shares covered by the related SAR.

 

9.             Performance and Stock Awards. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each award of Shares, Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, including, but not limited to: (a) the number of Shares and/or units to which such Award relates; (b) whether, as a condition for the Participant to realize all or a portion of the benefit provided under the Award, one or more Performance Goals must be achieved during such period as the Committee specifies; (c) the length of the vesting and/or performance period and, if different, the date on which payment of the benefit provided under the Award will be made; (d) with respect to Performance Units, whether to measure the value of each unit in relation to a designated dollar value or the Fair Market Value of one or more Shares; and (e) with respect to Performance Units and Restricted Stock Units, whether to settle such Awards in cash, in Shares, or in a combination of cash and Shares. Notwithstanding the foregoing, subject to the provisions of Sections 14 and 16, on or after the Amendment Approval Date, (x) no condition or vesting provision applicable to an Award of Shares, Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units that is based on performance criteria shall be based on performance over a period of less than one (1) year, and no condition or vesting provision applicable to such an Award that is based upon continued service or the passage of time shall provide for vesting in less than pro rata installments over three (3) years from the date the Award is made, other than with respect to such Awards that are issued upon exercise or settlement of Options or SARs; and (y) no more than 300,000 Shares not subject to conditions or vesting provisions, or subject to conditions or vesting provisions that do not meet the minimum requirements of the preceding clause (x), may be awarded.

 

10.          Annual Incentive Awards. Subject to the terms of this Plan, the Committee will determine all terms and conditions of an Annual Incentive Award, including but not limited to the Performance Goals, performance period, the potential amount payable, the type of payment, and the timing of payment, subject to the following: (a) the Committee must require that payment of all or any portion of the amount subject to the Annual Incentive Award is contingent on the achievement or partial achievement of one or more Performance Goals during the period the Committee specifies, although the Committee may specify that all or a portion of the Performance Goals subject to an Award are deemed achieved upon a Participant’s death, Disability or Retirement; (b) the performance period must relate to a period of at least one fiscal year of the Company except that, if the Award is made at the time of commencement of employment with the Company or on the occasion of a promotion, then the Award may relate to a period shorter than one fiscal year; and (c) payment will be in cash except to the extent that the Committee determines that payment will be in Shares or Restricted Stock, either on a mandatory basis or at the election of the Participant, having a Fair Market Value at the time of the payment equal to the amount payable with respect to the Annual Incentive Award.

 

11.          Long-Term Incentive Awards. Subject to the terms of this Plan, the Committee will determine all terms and conditions of a Long-Term Incentive Award, including but not limited to the Performance Goals, performance period, the potential amount payable, the type of payment, and the timing of payment, subject to the following: (a) the Committee must require that payment of all or any

 

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portion of the amount subject to the Long-Term Incentive Award is contingent on the achievement or partial achievement of one or more Performance Goals during the period the Committee specifies, although the Committee may specify that all or a portion of the Performance Goals subject to an Award are deemed achieved upon a Participant’s death, Disability or Retirement; (b) the performance period must relate to a period of more than one fiscal year of the Company except that, if the Award is made at the time of commencement of employment with the Company or on the occasion of a promotion, then the Award may relate to a shorter period; and (c) payment will be in cash except to the extent that the Committee determines that payment will be in Shares or Restricted Stock, either on a mandatory basis or at the election of the Participant, having a Fair Market Value at the time of the payment equal to the amount payable with respect to the Long-Term Incentive Award.

 

12.          Amendment of Minimum Vesting and Performance Periods.  Notwithstanding any provision of this Plan that requires a minimum vesting and/or performance period for an Award, the Committee, at the time an Award is granted or any later date, may subject an Award to a shorter vesting and/or performance period to take into account a Participant’s hire or promotion, or may accelerate the vesting or deem an Award to be earned, in whole or in part, in the event of a Participant’s death, Disability or Retirement.

 

13.          Transferability. Awards are not transferable other than by will or the laws of descent and distribution, unless and to the extent the Committee allows a Participant to: (a) designate in writing a beneficiary to exercise the Award after the Participant’s death; or (b) transfer an Award.

 

14.          Termination and Amendment of Plan; Amendment, Modification or Cancellation of Awards.

 

(a)           Term of Plan. Unless the Board earlier terminates this Plan pursuant to Section 14(b), this Plan will terminate on the earlier of (i) the date that is 10 years from the Effective Date and (ii) the date when all Shares reserved for issuance have been issued.

 

(b)           Termination and Amendment. The Board or the Committee may amend, alter, suspend, discontinue or terminate this Plan at any time, subject to the following limitations:

 

(i) the Board must approve any amendment of this Plan to the extent the Company determines such approval is required by: (A) action of the Board, (B) applicable corporate law or (C) any other applicable law;

 

(ii) shareholders must approve any amendment of this Plan to the extent the Company determines such approval is required by: (A) Section 16 of the Exchange Act, (B) the Code, (C) the listing requirements of any principal securities exchange or market on which the Shares are then traded or (D) any other applicable law; and

 

(iii) shareholders must approve any of the following Plan amendments: (A) an amendment to materially increase any number of Shares specified in Section 6(a) or 6(d) (except as permitted by Section 16); or (B) an amendment to the provisions of Section 14(e).

 

(c)           Amendment, Modification, Cancellation or Recoupment of Awards.

 

(i) Except as provided in Section 14(e) and subject to the requirements of this Plan, the Committee may modify or amend any Award or waive any restrictions or conditions applicable to any Award or the exercise of the Award, and the terms and conditions applicable to any Awards may at any time be amended, modified or canceled by mutual agreement between the Committee and the Participant or any other person(s) as may then have an interest in the Award, so long as any amendment or modification does not increase the number of Shares issuable under this Plan (except as permitted by Section 16), but the Committee need not obtain Participant (or other

 

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interested party) consent for the cancellation of an Award pursuant to the provisions of Section 16(a) or for the modification or amendment of an Award: (A) to the extent the modification or amendment is deemed necessary by the Committee to comply with any applicable law or the listing requirements of any principal securities exchange or market on which the Shares are then traded; (B) to the extent the modification or amendment is deemed necessary by the Committee to preserve favorable accounting or tax treatment of any Award for the Company; or (C) to the extent the Committee determines that such modification or amendment does not materially and adversely affect the value of an Award or that such modification or amendment is in the best interest of the affected Participant or any other person(s) as may then have an interest in the Award. In addition, except as provided in Section 14(e) and subject to the requirements of this Plan, the Committee may modify or amend any Award granted to a Participant under the 1990 Plan or the 2004 Plan, or waive any restrictions or conditions applicable to any such Award, to include Award terms consistent with the permitted terms of Awards granted under this Plan.

 

(ii) Any Awards granted pursuant to this Plan on or after September 30, 2011, and any Stock issued or cash paid pursuant to such an Award, shall be subject to any recoupment or clawback policy that may be adopted by the Company from time to time and to any requirement of applicable law, regulation or listing standard that requires the Company to recoup or clawback compensation paid pursuant to such an Award.

 

(d)           Survival of Authority and Awards. Notwithstanding the foregoing, the authority of the Board and the Committee under this Section 14 and to otherwise administer this Plan will extend beyond the date of this Plan’s termination. In addition, termination of this Plan will not affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards will continue in force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions.

 

(e)           Repricing Prohibited. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, Shares, other securities or other property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities, or similar transaction(s)), the Company may not, without obtaining shareholder approval: (i) amend the terms of outstanding Options or SARs to reduce the exercise price of such outstanding Options or SARs; (b) cancel outstanding Options or SARs in exchange for Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs; or (c) cancel outstanding Options or SARs with an exercise price above the current Stock price in exchange for cash or other securities.

 

(f)            Foreign Participation. To assure the viability of Awards granted to Participants employed or residing in foreign countries, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it determines is necessary or appropriate for such purposes. Any such amendment, restatement or alternative versions that the Committee approves for purposes of using this Plan in a foreign country will not affect the terms of this Plan for any other country. In addition, all such supplements, amendments, restatements or alternative versions must comply with the provisions of Section 14(b)(ii).

 

15.          Taxes.

 

(a)           Withholding.  The Company is entitled to withhold the amount of any tax attributable to any amount payable or Shares deliverable under this Plan, and the Company may defer making payment or delivery if any such tax may be pending unless and until indemnified to its satisfaction and may deduct (or require an Affiliate to deduct) from any payments of any kind otherwise due the Participant cash or,

 

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with the consent of the Committee, Shares otherwise deliverable or vesting under an Award to satisfy such tax. If Shares are deliverable upon exercise or payment of an Award, the Committee may permit a Participant to satisfy all or a portion of the federal, state and local withholding tax obligations arising in connection with such Award by electing to (a) have the Company withhold Shares otherwise issuable under the Award, (b) tender back Shares received in connection with such Award or (c) deliver other previously owned Shares, in each case having a Fair Market Value equal to the amount to be withheld. However, the amount to be withheld may not exceed the total minimum federal, state and local tax withholding obligations associated with the transaction to the extent needed for the Company to avoid adverse accounting consequences. The election must be made on or before the date as of which the amount of tax to be withheld is determined and otherwise as the Committee requires.

 

(b)           No Guarantee of Tax Treatment.  Notwithstanding any provision of this Plan to the contrary, the Company does not guarantee to any Participant or any other person(s) with an interest in an Award that (i) any Award intended to be exempt from Code Section 409A shall be so exempt, (ii) any Award intended to comply with Code Section 409A or Code Section 422 shall so comply, or (iii) any Award shall otherwise receive a specific tax treatment under any other applicable tax law, nor in any such case will the Company or any Affiliate be required to indemnify, defend or hold harmless any individual with respect to the tax consequences of any Award.

 

16.          Adjustment Provisions; Change in Control.

 

(a)           Adjustment of Shares.  If (i) the Company shall at any time be involved in a merger or other transaction in which the Shares are changed or exchanged; or (ii) the Company shall subdivide or combine the Shares or the Company shall declare a dividend payable in Shares, other securities (other than any associated preferred stock purchase rights issued pursuant to that certain Rights Agreement, dated February 1, 1999, between the Company and ComputerShare Investor Services, LLC, as successor rights agent, or similar stock purchase rights that the Company might authorize and issue in the future) or other property; or (iii) the Company shall effect a cash dividend the amount of which exceeds 10% of the trading price of the Shares at the time the dividend is declared, or the Company shall effect any other dividend or other distribution on the Shares in the form of cash, or a repurchase of Shares, that the Board determines by resolution is special or extraordinary in nature or that is in connection with a transaction that the Company characterizes publicly as a recapitalization or reorganization involving the Shares; or (iv) any other event shall occur which, in the case of this clause (iv), in the judgment of the Committee necessitates an adjustment to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, then, subject to Participants’ rights under Section 16(c), the Committee shall, in such manner as it may deem equitable, adjust any or all of (A) the number and type of Shares subject to this Plan (including the number and type of Shares described in Sections 6(a) and 6(d)) and which may after the event be made the subject of Awards under this Plan, (B) the number and type of Shares subject to outstanding Awards, (C) the grant, purchase, or exercise price with respect to any Award; and (D) to the extent such discretion does not cause an Award that is intended to qualify as performance-based compensation under Section 162(m) of the Code to lose its status as such, the Performance Goals of an Award.  If any of the transactions or events described in clauses (i) — (iv) constitutes a Change in Control or occurs subsequent to any Change in Control occurring after the Effective Date, then, subject to Participants’ rights under Section 16(c) and the cash payment provisions of the following sentence, and unless the Committee otherwise determines prior to the first Change in Control occurring after the Effective Date, proportionate adjustments of the type described in clauses (A) — (D) shall be made automatically such that the full economic value of the Awards to Participants that are outstanding at the time of the transaction or event shall be preserved and not diminished as a result of the transaction or event.  If any of the events described in clauses (i) — (iv) occurs, the Committee may also (or in lieu of the adjustments described in clauses (A) — (D)) make provision for a cash payment to the holder of an outstanding Award in exchange for the cancellation of all or a portion of the Award (without the consent of the holder of an Award) in an amount determined by the Committee effective at such time as the Committee specifies (which may be the time such transaction or event is effective), but if such transaction or event constitutes a Change in Control, then (1) such payment shall be at least as favorable to the holder as the greatest amount the

 

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holder could have received in respect of such Award under Section 16(c), and (2) from and after the Change in Control, the Committee may make such a provision only if the Committee determines that doing so is necessary to substitute, for each Share then subject to an Award, the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect of each Share pursuant to the transaction or event in accordance with the last sentence of this Section 16(a). However, in each case, with respect to Awards of incentive stock options, no such adjustment may be authorized to the extent that such authority would cause this Plan to violate Code Section 422(b). Further, the number of Shares subject to any Award payable or denominated in Shares must always be a whole number. In any event, Options previously granted to Non-Employee Directors at the time of any event described in this Section 16(a) are subject to only such adjustments as are necessary to maintain the relative proportionate interest the Options represented immediately prior to any such event and to preserve, without exceeding, the value of such Options. Without limitation, subject to Participants’ rights under Section 16(c), in the event of any such merger or similar transaction, subdivision or combination of Shares, dividend or other event described above, whether or not constituting a Change in Control (other than any such transaction in which the Company is the continuing corporation and in which the outstanding Stock is not being converted into or exchanged for different securities, cash or other property, or any combination thereof), the Committee shall substitute, on an equitable basis as the Committee determines, for each Share then subject to an Award, the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect of each Share pursuant to the transaction. Notwithstanding the foregoing, if the Company shall subdivide the Shares or the Company shall declare a dividend payable in Shares, and if no action is taken by the Board or the Committee, then the adjustments contemplated by this Section 16(a) that are proportionate shall nevertheless automatically be made as of the date of such subdivision of the Shares or dividend in Shares.

 

(b)           Issuance or Assumption. Notwithstanding any other provision of this Plan, and without affecting the number of Shares otherwise reserved or available under this Plan, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, the Committee may authorize the issuance or assumption of awards under this Plan upon such terms and conditions as it may deem appropriate.

 

(c)           Change in Control. Except to the extent the Committee provides a result more favorable to holders of Awards (either in an award agreement or at the time of a Change in Control), in the event of a Change in Control:

 

(i) each holder of an Option or SAR (A) shall have the right at any time thereafter to exercise the Option or SAR in full whether or not the Option or SAR was theretofore exercisable; and (B) shall have the right, exercisable by written notice to the Company within 60 days after the Change in Control, to receive, in exchange for the surrender of the Option or SAR, an amount of cash equal to the excess of the Fair Market Value of the Shares covered by the Option or SAR that is so surrendered on the date of surrender of the Option or SAR over the purchase or grant price of such Shares under the Award;

 

(ii) Restricted Stock and Restricted Stock Units that are not then vested shall vest upon the date of the Change in Control and each holder of such Restricted Stock or such Restricted Stock Units shall have the right, exercisable by written notice to the Company within 60 days after the Change in Control, to receive, in exchange for the surrender of such Restricted Stock or the cancellation of such Restricted Stock Units, as applicable, an amount of cash equal to the Change in Control Price of such Restricted Stock or the number of Shares to which such Restricted Stock Units relate;

 

(iii) each holder of a Performance Share and/or Performance Unit for which the performance period has not expired shall have the right, exercisable by written notice to the Company within 60 days after the Change in Control, to receive, in exchange for the surrender of

 

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the Performance Share and/or Performance Unit, an amount of cash equal to the product of the value of the Performance Share and/or Performance Unit and a fraction the numerator of which is the number of whole months that have elapsed from the beginning of the performance period to which the Award is subject to the date of the Change in Control and the denominator of which is the number of whole months in the performance period;

 

(iv) each holder of a Performance Share and/or Performance Unit that has been earned but not yet paid shall receive an amount of cash equal to the value of the Performance Share and/or Performance Unit; and

 

(v) all Annual and Long-Term Incentive Awards that are earned but not yet paid shall be paid, and all Annual and Long-Term Incentive Awards that are not yet earned shall be deemed to have been earned pro rata, as if the Performance Goals are attained as of the effective date of the Change in Control, by taking the product of (A) the Participant’s target award opportunity for the period to which the Award is subject, and (B) a fraction, the numerator of which is the number of whole months that have elapsed from the beginning of the performance period to which the Award is subject to the date of the Change in Control and the denominator of which is the number of whole months in the performance period.

 

For purposes of this Section 16, the “value” of a Performance Share shall be equal to, and the “value” of a Performance Unit the value of which is equal to the Fair Market Value of one or more Shares shall be based on, the Change in Control Price.

 

Except as otherwise expressly provided in any agreement between a Participant and the Company (including where any such agreement makes reference to corresponding provisions of the 1990 Plan rather than this Plan), if the receipt of any payment by a Participant under the circumstances described above would result in the payment by the Participant of any excise tax provided for in Section 280G and Section 4999 of the Code, then the amount of such payment shall be reduced to the extent required to prevent the imposition of such excise tax.

 

17.          Miscellaneous.

 

(a)           Other Terms and Conditions. The grant of any Award may also be subject to other provisions (whether or not applicable to the Award granted to any other Participant) as the Committee determines appropriate, including, without limitation, provisions for:

 

(i) one or more means to enable Participants to defer the delivery of Shares or recognition of taxable income relating to Awards or cash payments derived from the Awards on such terms and conditions as the Committee determines, including, by way of example, the form and manner of the deferral election, the treatment of dividends paid on the Shares during the deferral period or a means for providing a return to a Participant on amounts deferred, and the permitted distribution dates or events (provided that no such deferral means may result in an increase in the number of Shares issuable under this Plan);

 

(ii) the payment of the purchase price of Options (A) by delivery of cash or other Shares or other securities of the Company (including by attestation) having a then Fair Market Value equal to the purchase price of such Shares, (B) by delivery (including by fax) to the Company or its designated agent of an executed irrevocable option exercise form together with irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of the Shares and deliver the sale or margin loan proceeds directly to the Company to pay for the exercise price, (C) by surrendering the right to receive Shares otherwise deliverable to the Participant upon exercise of the Award having a Fair Market Value at the time of exercise equal to the total exercise price, or (D) by any combination of (A), (B) and/or (C);

 

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(iii) except in connection with the grant of Awards providing Options or SARs, for which Awards this subsection is not applicable, provisions giving the Participant the right to receive dividend payments or dividend equivalent payments with respect to the Shares subject to the Award (but only after the Shares subject to the Award are earned, vested or acquired), which payments may be either made currently or credited to a nonqualified deferred compensation account for the Participant that complies with the applicable requirements of Code Section 409A, provides for the deferral of payment of such amounts to a specified employee or until a specified event described in Code Section 409A(a)(2), and may be settled in cash or Shares, as the Committee determines;

 

(iv) restrictions on resale or other disposition of Shares; and

 

(v) compliance with federal or state securities laws and stock exchange requirements.

 

(b)           Employment and Service. The issuance of an Award shall not confer upon a Participant any right with respect to continued employment or service with the Company or any Affiliate, or the right to continue as a Director. Unless determined otherwise by the Committee, for purposes of this Plan and all Awards, the following rules shall apply:

 

(i) a Participant who transfers employment between the Corporation and its Subsidiaries, or between Subsidiaries, will not be considered to have terminated employment;

 

(ii) a Participant who ceases to be a Non-Employee Director because he or she becomes an employee of the Company or a Subsidiary shall not be considered to have ceased service as a Director with respect to any Award until such Participant’s termination of employment with the Company and its Subsidiaries;

 

(iii) a Participant who ceases to be employed by the Company or a Subsidiary and immediately thereafter becomes a Non-Employee Director, a non-employee director of a Subsidiary, or a consultant to the Company or any Subsidiary shall not be considered to have terminated employment with the Company or any of its Subsidiaries until such Participant’s service as a director of, or consultant to, the Company and its Subsidiaries has ceased; and

 

(iv) a Participant employed by a Subsidiary will be considered to have terminated employment when such entity ceases to be a Subsidiary.

 

Notwithstanding the foregoing, for purposes of an Award that is subject to Code Section 409A, if a Participant’s termination of employment with the Company or any of its Subsidiaries or service triggers the payment of compensation under such Award, then the Participant will be deemed to have terminated employment or service upon his or her “separation from service” within the meaning of  Code Section 409A.  Notwithstanding any other provision in this Plan or an Award to the contrary, if any Participant is a “specified employee” within the meaning of Code Section 409A as of the date of his or her “separation from service” within the meaning of Code Section 409A, then, to the extent required to avoid the income inclusion, interest and additional tax imposed by Code Section 409A, any payment made to the Participant on account of such separation from service shall not be made before a date that is six months after the date of the separation from service.

 

(c)           No Fractional Shares. No fractional Shares or other securities may be issued or delivered pursuant to this Plan, and the Committee may determine whether cash, other securities or other property will be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights to fractional Shares or other securities will be canceled, terminated or otherwise eliminated.

 

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(d)           Unfunded Plan. This Plan is unfunded and does not create, and should not be construed to create, a trust or separate fund with respect to this Plan’s benefits. This Plan does not establish any fiduciary relationship between the Company and any Participant or other person. To the extent any person holds any rights by virtue of an Award granted under this Plan, such rights are no greater than the rights of the Company’s general unsecured creditors.

 

(e)           Requirements of Law and Securities Exchange. The granting of Awards and the issuance of Shares in connection with an Award are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any other provision of this Plan or any award agreement, the Company has no liability to deliver any Shares under this Plan or make any payment unless such delivery or payment would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity, and unless and until the Participant has taken all actions required by the Company in connection therewith. The Company may impose such restrictions on any Shares issued under this Plan as the Company determines necessary or desirable to comply with all applicable laws, rules and regulations or the requirements of any national securities exchanges. Notwithstanding any provision of this Plan or any document pertaining to Awards granted hereunder to the contrary, this Plan shall be so construed, interpreted and administered to meet the applicable requirements of Code Section 409A to avoid a plan failure described in Code Section 409A(a)(1).

 

(f)            Governing Law. This Plan, and all agreements under this Plan, will be construed in accordance with and governed by the laws of the State of Wisconsin, without reference to any conflict of law principles. Any legal action or proceeding with respect to this Plan, any Award or any award agreement, or for recognition and enforcement of any judgment in respect of this Plan, any Award or any award agreement, may be heard only in a “bench” trial, and any party to such action or proceeding shall agree to waive its right to a jury trial.

 

(g)           Limitations on Actions. Any legal action or proceeding with respect to this Plan, any Award or any award agreement must be brought within one year (365 days) after the day the complaining party first knew or should have known of the events giving rise to the complaint.

 

(h)           Construction. Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used in the singular or plural, they shall be construed as though they were used in the plural or singular, as the case may be, in all cases where they would so apply. Title of sections are for general information only, and this Plan is not to be construed with reference to such titles.

 

(i)            Severability. If any provision of this Plan or any award agreement or any Award (i) is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or Award, or (ii) would disqualify this Plan, any award agreement or any Award under any law the Committee deems applicable, then such provision should be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of this Plan, award agreement or Award, then such provision should be stricken as to such jurisdiction, person or Award, and the remainder of this Plan, such award agreement and such Award will remain in full force and effect.

 

A-15Exhibit 10.1

 

CUSTOMER AGREEMENT

 

It is understood and agreed that this document shall constitute a separate agreement with each party listed on Exhibit A attached hereto, as if each such party had executed a separate document naming only itself as Customer, and that no party listed on Exhibit A shall have any liability under this document for the obligations of any other party engaging in Transactions with UBS-S LLC, including any other party so listed. With respect to any one such party, references in this Agreement to Customer shall be deemed to refer only to such party, and (iii) the term “this Agreement” shall be construed according to the foregoing provisions.

 

This Customer Agreement (“Agreement”) between UBS Securities LLC (“UBS-S LLC”) and each fund listed in Exhibit A (jointly not severally) (“Customer”) shall govern the purchase and sale by UBS-S LLC of certain futures contracts, options thereon and options contracts for the account and risk of Customer through one or more accounts carried by UBS-S LLC on behalf and in the name of Customer (collectively, the “Account”), as more fully described below. “Business Day” as used in this Agreement means any day other than a Saturday, Sunday and/or other day on which the New York Stock Exchange is closed.

 

1.                                      UBS-S LLC’S AUTHORIZATION TO ACT AS BROKER

 

Customer authorizes UBS-S LLC, acting through employees and agents selected by it in its sole discretion, to purchase and sell for the Account contracts for certain futures contracts, options thereon and options contracts for which UBS-S LLC has notified Customer that UBS-S LLC is prepared to execute transactions (collectively, “Contracts”) within or outside the United States of America in accordance with Customer’s instructions.

 

2.                                      CUSTOMER’S REPRESENTATIONS AND WARRANTIES

 

(a)                                  Representations and Warranties. Customer hereby represents and warrants (which representations and warranties are deemed to be continuing for the term of this Agreement) as follows:

 

(i)                                    Authority. Customer has full right, power and authority to enter into this Agreement and the Contracts, and the person executing this Agreement on behalf of Customer is authorized to do so. This Agreement is binding on Customer and enforceable against Customer in accordance with its terms;

 

(ii)                                Lawful Agreement. Customer may lawfully establish and open the Account for the purpose of effecting purchases and sales of Contracts through UBS-S LLC. Transactions entered into pursuant to this Agreement will not violate any “Applicable Law” (as defined below) to which Customer is subject or any agreement to which Customer is subject or a party and the execution, delivery and performance of this Agreement by Customer require no action by or in respect of or tiling with any governmental body, agency or official:

 

 

(iii)                            Customers Information. Any financial or other information provided to UBS-S LLC by Customer in connection with this Agreement will be accurate and complete in every material respect.

 

(iv)                               Interest or Control of Account. If any person or entity has, or during the term of this Agreement will have, any interest in the Account other than Customer, Customer hereby agrees to so notify UBS-S LLC immediately (and no later than within one Business Day); and

 

(v)                                   Designation. If Customer is not a citizen or resident of the United States, Customer has been informed by UBS-S LLC of Commodity Futures Trading Commission (“CFTC”) Regulations concerning the designation of a futures commission merchant as the agent of foreign brokers, customers of a foreign broker and foreign traders for certain purposes as set forth in CFTC’ Regulation §15.05 and concerning special calls for information from futures commission merchants, foreign brokers and members of contract markets as set forth in CFTC Regulation §21.03

 

(b)                                  Notice of Change. Customer shall immediately (and no later than within one Business Day) notify UBS-S LLC in writing if any of the representations contained herein materially change or cease to be true and correct.

 

3.                                      APPLICABLE LAW

 

The Account and all transactions and agreements in respect of the Account shall be subject to the regulations of all applicable Federal, state and self-regulatory agencies or authorities, including but not limited to: (a) the provisions of the Commodity Exchange Act, as amended, and any rules, regulations, orders and interpretations promulgated thereunder by the CFTC; (b) the constitution, by-laws, rules, regulations, orders and interpretations of the relevant board of trade, trading facility, market, or exchange and its clearing house, if any (each, an “exchange”) on or subject to the rules of which such transactions are executed and/or cleared, and any relevant registered futures association, including, without limitation, the National Futures Association (“NFA”); and (c) custom and usage of the trade. All such provisions, rules, regulations, orders, interpretations, constitution, by-laws, custom and usage, as in effect from time to time, are hereinafter collectively referred to as “Applicable Law.”

 

4.                                      RELIANCE ON INSTRUCTIONS

 

UBS-S LLC shall be entitled to rely on any instructions, notices and communications, whether oral or in writing, that it believes to be that of an individual authorized to act on behalf of Customer, including, but not limited to, any individual identified in writing by Customer as authorized to act on its behalf, and Customer shall be bound thereby. Customer hereby waives any defense that any such instruction was not in writing as may be required by the Statute of Frauds or any other similar law, rule or regulation.

 

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5.                                      ACCEPTANCE OF ORDERS; POSITION LIMITS

 

(a)                                  Acceptance of Orders. UBS-S LLC shall have the right to limit the size of open positions (net or gross) of Customer with respect to the Account at any time and to refuse acceptance of any orders (whether such refusal or limitation is required by, and whether such refusal is based on position limits imposed under, Applicable Law). UBS-S LLC shall immediately notify Customer of its rejection of any order. Unless specified by Customer, UBS-S LLC may designate the exchange or trading system on which it will attempt to execute orders.

 

(b)                                  Position Limits. Customer ,hall not, either alone or in combination with others, violate any position or exercise limit established by or under Applicable Law. If Customer intends at any time to exceed such position limits, Customer shall cause to cause to be filed an application with the CFTC or the relevant exchange requesting authorization for Customer to exceed such position limits and shall provide UBS-S LLC with a copy of such application and such other information as UBS-S LLC may reasonably request with respect to such application. Customer shall indemnify and hold UBS-S LLC harmless from and against all claims, damages, fines or assessments of any kind whatsoever, including reasonable attorneys’ fees in connection with the defense thereof, made and incurred in connection with any violation by Customer of its obligations under this Section 5(h).

 

6.                                      ORIGINAL AND VARIATION MARGIN; PREMIUMS; OTHER CONTRACT OBLIGATIONS

 

With respect to every Contract purchased, sold or cleared for the Account, Customer shall make, or cause to be made, all applicable original margin, variation margin, intra-day margin and premium payments, and perform all other obligations attendant to transactions or positions in such Contracts, as may be required by Applicable Law or by UBS-S LLC in its sole and absolute discretion. Requests for margin deposits and/or premium payments may, at UBS-S LLC’s election, be communicated to Customer orally, telephonically or in writing. Margin requirements established by UBS-S LLC may exceed the margin requirements set by any exchange on which transactions are executed or cleared or caused to be executed or cleared by UBS-S LLC or any agent thereof for Customer and may be changed by UBS-S LLC without prior notice to Customer. Except as otherwise provided herein, all such margin and premium payments shall be in the form, as UBS-S LLC permits, of cash in U.S. dollars, securities of the U.S. Government, or a combination thereof. If at any time Customer fails timely to deposit or maintain required margin, or Customer fails timely to make any premium payments, UBS-S LLC may at any time, without further notice to Customer, close out Customer’s open position in whole or in part and take any action it deems appropriate.

 

7.                                      SECURITY INTEREST AND RIGHTS RESPECTING COLLATERAL

 

All Contracts, cash, securities, and/or other property of Customer, including all proceeds of all such property such as profits from Account transactions (collectively, the

 

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“Collateral”) now or at any future time in the Account or otherwise held by UBS-S LLC or its affiliates, any exchange through which trades of the Account are executed and/or positions are held, or any other entity authorized to act as an agent of UBS-S LLC or Customer, hereby are pledged to UBS-S LLC and shall be subject to a general lien and continuing first priority security interest in UBS-S LLC’s favor to secure any indebtedness or other amounts at any time owing from Customer to UBS-S LLC, and to secure any and all other obligations and liabilities of Customer to UBS-S LLC (collectively, the “Customer’s Liabilities”). Customer will not cause or allow any of the Collateral held in Customer’s Accounts whether now owned or hereafter acquired, to be or become subject to any liens, security interests or encumbrances of any nature without the prior written consent of UBS-S LLC and in no event shall the Collateral held in Customer’s Account be subject to a lien or security interest superior to that of UBS-S LLC. Customer hereby grants UBS-S LLC the right to borrow, pledge, repledge, hypothecate, rehypothecate, loan or invest any of the Collateral without notice to Customer, and without any obligation to pay or to account to Customer for any interest, income or benefit that may be derived therefrom. UBS-S LLC shall be under no obligation to deliver to Customer the identical Collateral in the Account, but shall only be under an obligation to deliver to Customer Collateral of like or equivalent kind and amount. The rights of UBS-S LLC set forth above shall be qualified by any applicable requirements for segregation of customer’s property under Applicable Law.

 

8.                                      PAYMENT OBLIGATIONS OF CUSTOMER

 

(a)                                  Charges to the Account. With respect to every Contract purchased, sold or cleared tor the Account, Customer shall pay UBS-S LLC upon demand and UBS-S LLC hereby is authorized to charge Customer’s Account for: (i) all brokerage charges. give-up fees, commissions and service fees as UBS-S LLC may from time to time charge as agreed in writing between Customer and UBS-S LLC (ii) all exchange clearing member, NFA or CFTA fees or charges, fines or penalties; (iii) any tax imposed on such transactions by any competent taxing authority; (iv) the amount of any trading losses in the Account; (v) any debit balance or deficiency in the Account; (vi) interest and service charges on any debit balances or deficiencies in the Account, any advances or any loan (including interest on the amount of variation margin calls, until satisfaction of such calls, when the Customer posts U.S. Treasury Bills for original margin purposes), at the rate customarily charged by UBS-S LLC and agreed in writing between Customer and UBS-S LLC (which may be at the prevailing and/or allowable rates according to the laws of the State of Illinois) from the day any such deficit was incurred to (but not including) the day of payment (calculated on the basis of a 360 day year and for the actual number of days elapsed for all deficits, except for those denominated in foreign currencies for which generally accepted accounting principles require that the interest rate shall be calculated otherwise), together with costs and reasonable attorneys’ fees incurred in collecting any such deficit; (vii) all storage and delivery service fees; and (viii) any other amounts owed by Customer to UBS-S LLC with respect to the Account or any transactions therein.

 

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(b)                                  Payment in U.S. Dollars. Any and all payment obligations of Customer, if not deducted from Customer’s Account as permitted hereunder, shall be made upon demand in immediately available U.S. dollars to UBS-S LLC or at such other place and at such time and in such manner as UBS-S LLC notifies Customer. The obligation of Customer to make all payments due hereunder shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any other currency other than U.S. dollars, except to the extent that such tender or recovery shall result in the actual receipt by UBS-S LLC of the full amount of such U.S. dollars expressed to be payable in respect of such amounts. Customer agrees that its obligations to make payment in U.S. dollars as aforesaid shall be enforceable as an alternative or additional cause of action for the purpose of recovery of the amount (if any) by which such actual receipt shall fall short of the full amount of U.S. dollars expressed to be payable in respect of such amount due hereunder, and shall not be affected by judgment being obtained for other sums due hereunder.

 

(c)                                  Setoff. Any Collateral may at any time or from time to time without notice or compliance with any condition precedent (which notice hereby is expressly waived) be setoff, appropriated and applied by UBS-S LLC against any and all payment obligations of Customer hereunder including, but not limited to, any deficit balance or margin deficiency in the Account (or any sub-account within the Account), in such manner as UBS-S LLC in its discretion may determine.

 

(d)                                  Netting. UBS-S LLC may at any time or from time to time without notice or compliance with any condition precedent (which notice hereby is expressly waived) net (i) any Collateral held in or on behalf of the Account (or any sub-account within the Account) or liabilities or payment obligations of UBS-S LLC to Customer or the Account (or any sub-account within the Account) against (ii) any liabilities or payment obligations of Customer thereunder, including, but not limited to any deficit balance or margin deficiency in the Account (or any sub-account within the Account), paying to Customer only the amount by which the aggregate amount of (i) above exceeds the aggregate amount of (ii) above.

 

(e)                                  Gross-Up. All payment made by Customer to hereunder will be made without setoff or counterclaim tree and clear and without deduction or withholding for, any present or future taxes, levies, assessments or other charges of whatever nature, now or hereinafter imposed by any jurisdiction or by any agency, state or other political subdivision or taxing authority thereof or therein, and all interest, penalties, or similar liabilities with respect thereto (collectively. “Taxes”). If any Taxes are so levied or imposed, Customer agrees to pay the tall amount of such Taxes, and such additional amounts as may be necessary so that every net payment of all amounts due hereunder, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein. Customer will furnish to UBS-S LLC, within thirty days after the date the payment of any Taxes is due pursuant to Applicable Law, certified copies of tax receipts evidencing such payment by Customer.

 

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9.                                      DELIVERY PROCEDURES; OPTIONS ALLOCATION PROCEDURE

 

(a)                                  Instructions. Customer will provide UBS-S LLC with instructions either to liquidate Contracts previously established by Customer, make or take delivery under any such Contracts, or exercise options entered into by Customer, within such time limits as may be specified by UBS-S LLC; provided that if no such time limit is specified, (i) if Customer maintains an Account for speculation, liquidating instructions on open futures positions maturing in a current delivery month must be given to UBS-S LLC at least five (5) Business Days prior to the first notice day or last trading day, whichever is earlier; and (ii) if Customer maintains an Account for hedging, Customer understands that liquidating instructions on open futures positions maturing in a current delivery month must be given to UBS-S LLC at least one (1) Business Day prior to the first notice day in the case of long positions, and in the case of short positions, at least one (1) Business Day prior to the last trading day. UBS-S LLC shall have no responsibility to take any action on behalf of Customer, including, without limitation, exercising option Contracts, unless and until UBS-S LLC receives oral or written instructions reasonably acceptable to UBS-S LLC indicating the action UBS-S LLC is to take. Any instructions, if given orally to UBS-S LLC, shall immediately be confirmed in writing by Customer. Funds sufficient to take delivery pursuant to such Contract or deliverable grade commodities to make delivery pursuant to such Contract must be delivered to UBS-S LLC at such time and location as UBS-S LLC may require in connection with any delivery.

 

(b)                                  Allocation Procedures. Short option Contracts may be subject to exercise at any time. Exercise notices received by UBS-S LLC with respect to option Contracts sold by Customer may be allocated to Customer pursuant to a random allocation procedure, and Customer shall be bound by any such allocation of exercise notices. Such notices may be allocated to Customer after the close of trading on the day on which such notices have been allocated to UBS-S LLC by the applicable exchange. In the event of any allocation to Customer, unless UBS-S LLC has previously received instructions from Customer, UBS-S LLC’s sole responsibility shall be to use commercially reasonable efforts to notify Customer by telephone of such allocation at any time before trading commences on the first day on which such option Contracts are traded on the applicable exchange following the day on which the applicable contract market has allocated such notices to UBS-S LLC.

 

(c)                                  Failure to Provide Instructions. If Customer fails to comply with any of the foregoing obligations, UBS-S LLC may, in its sole and absolute discretion, liquidate any open positions, make or receive delivery of any commodities or instruments, or exercise or allow the expiration of any options, in such manner and on such terms as UBS-S LLC, in its sole and absolute discretion, deems necessary or appropriate. Any such action taken shall be in the sole and absolute discretion of UBS-S LLC and Customer shall remain fully liable for all costs, losses, expenses, liabilities and damages (including special. indirect and consequential damages. penalties and tines) which UBS-S LLC may be required

 

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to pay or which it has sustained in connection with such transactions and for any remaining debit balance in the Account

 

10.                               EVENTS OF DEFAULT; UBS-S LLC’S REMEDIES

 

(a)                                  Events of Default. As used herein, each of the following shall be deemed an “Event of Default”: (i) the commencement of a case under any bankruptcy, insolvency or reorganization law or similar law effecting creditors’ rights of any jurisdiction, or the filing of a petition for the appointment of a receiver by or against Customer, for the benefit of its creditors, an admission in writing by Customer that it is insolvent or is unable to pay its debts v. hen they mature, or the suspension by the Customer of its usual business or any material portion thereof; (ii) the issuance of any warrant or order of attachment against the Account or the levy of a judgment against the Account; (iii) if Customer is an employee benefit plan, the termination of’ Customer or the filing by Customer of a notice of intent to terminate with the Pension Benefit Guaranty Corporation (or other similar governmental agency or body of any jurisdiction), or the receipt of a notice of the Pension Benefit Guaranty Corporation’s (or other similar governmental agency’s or body’s) intent to terminate Customer, or the inability of Customer to pay benefits under the relevant employee benefit plan when due; (iv) the failure by Customer to deposit or maintain margins, to pay required premiums, or to make payments required by Section 8 hereof; (v) the Account shall incur a deficit balance; (vi) the failure by Customer to perform, in any material respect, its obligations respecting delivery, exercise or a notice of allocation of exercise, payment for delivery, or settlement under Contracts held in the Account (it being understood that any failure to comply with any Applicable Law shall be deemed material); (vii) the failure by Customer, in any material respect, to perform any of its other obligations hereunder (it being understood that any failure to comply with any Applicable Law shall be deemed material); (viii) if UBS-S LLC for any reason whatsoever deems it necessary or desirable for its protection; or (ix) there occurs or exists (1) an event as described in sub-paragraphs (i)- (viii) above under one or more agreements or instruments entered into by the Customer with UBS-S LLC or its affiliates (“Other Agreement”), or (2) there occurs or exists an event which constitutes an event of default (howsoever defined or described) under any Other Agreement.

 

(b)                                  Remedies. Upon the occurrence of an Event of Default that is continuing UBS-S LLC shall have the right, in addition to any other remedy available to UBS-S LLC at law or in equity, and in addition to any other action UBS-S LLC may deem appropriate under the circumstances, to liquidate, spread or roll-forward any or all open Contracts held in or for the Account, sell any or all of the securities or other property of Customer held by UBS-S LLC and its affiliates and to apply the proceeds thereof to any amounts owed by Customer to UBS-S LLC, borrow or buy any options, securities, Contracts or other property for the Account and cancel any unfilled orders for the purchase or sale of Contracts for the Account, or take such other or further actions as UBS-S LLC, in its reasonable discretion, deems necessary or appropriate for its protection, all without demand for margin

 

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and without notice or advertisement. In the event UBS-S LLC’s position would not be jeopardized thereby, UBS-S LLC will make reasonable efforts under the circumstances to notify Customer prior to taking any such action. Any such liquidation, sale, purchase, borrowing or cancellation shall be made at the discretion of UBS-S LLC on, through or subject to the rules of an exchange, on other markets, at public auction or by private transaction, including, without limitation, by an exchange for physical transaction or similar transaction wherein UBS-S LLC may act as agent and/or as principal in such transaction. Customer acknowledges and agrees that a prior demand or margin call of any kind from UBS-S LLC or prior notice from UBS-S LLC shall not be considered a waiver of UBS-S LLC’s right to take any action without notice or demand. In any transaction described above, UBS-S LLC may sell any Collateral to itself or its affiliates or buy any Collateral from itself or its affiliates. UBS-S LLC may, to the extent permitted by law, purchase the whole or any part thereof free from any right of redemption. In all cases. Customer shall remain liable for and shall pay to UBS-S LLC on demand the amount of any deficiency in its Account resulting from any such transaction, and Customer shall reimburse, compensate and indemnify UBS-S LLC for any and all costs, losses, penalties, tines, taxes and damages which UBS-S LLC may incur. including reasonable attorneys fees incurred in connection with the exercise of its remedies and the recovery of any such costs, losses, penalties, fines, taxes and damages.

 

11.                               EXCULPATION AND INDEMNIFICATION

 

(a)                                  Exculpation. Neither UBS-S LLC nor any of its managing directors, officers, employees or affiliates shall be liable for any costs, losses, penalties, fines, Taxes and damages sustained or incurred by Customer other than as a result of UBS-S LLC’s gross negligence or willful misconduct. In no event will UBS-S LLC be liable to Customer for consequential, incidental or special damages. Without limiting the generality of the foregoing, neither 1113S-S LLC nor any of its managing directors, officers, employees or affiliates shall have any responsibility or liability to Customer hereunder for any costs, losses, penalties, fines, Taxes and damages, including consequential, incidental or special damages, sustained or incurred by Customer, (i) in connection with the performance or non-performance by any exchange, clearing firm or other third party (including other exchange members, banks and floor brokers) to UBS-S LLC of its obligations in respect of any Contract or other property of Customer; (ii) as a result of any prediction, recommendation or advice made or given by a representative of UBS-S LLC whether or not made or given at the request of Customer; (iii) as a result of any delay in the performance or non-performance of any of UBS-S LLC’s obligations hereunder to the extent that losses arising therefrom are, directly or indirectly, caused by the occurrence of any contingency beyond the control of UBS-S LLC including, but not limited to, the unscheduled closure of an exchange or contract market or delays in the transmission of orders due to breakdowns or failures of transmission or communication facilities, execution, and/or trading facilities or other systems; (iv) as a result of any action taken by UBS-S LLC, its managing directors, officers, employees, agents (including other clearing firms through

 

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which transactions are effected on behalf of Customer) or floor brokers, to comply with Applicable Law; or (v) for any acts or omissions of those neither employed nor supervised by UBS-S LLC. Moreover, UBS-S LLC shall have no responsibility for compliance by Customer with any law or regulation governing Customer’s conduct as a fiduciary, if applicable.

 

(b)                                  Force Majeure and Acts of State. In the event that UBS-S LLC’s performance of any of its obligations and undertakings hereunder shall be interrupted or delayed by any occurrence not occasioned by the conduct of either party hereto, whether such occurrence shall be an act of God or the common enemy or the result of war, riot, fire, flood, civil commotion, acts of terrorism, sovereign conduct or other acts of State, or the act or conduct of any person or persons not party or privy hereto, then UBS-S LLC shall be excused from performance for such period of time as is reasonably necessary after such occurrence to remedy the effects thereof and neither UBS-S LLC nor any of its managing directors, officers, employees or affiliates shall be directly or indirectly responsible for losses occasioned thereby.

 

(c)                                  Electronic Trading Systems Waiver. In consideration of UBS-S LLC making electronic trading systems or services available, in whole or in part, directly or indirectly, Customer agrees that neither UBS-S LLC, the electronic trading systems or services provided, exchanges whose products may be traded on or through such electronic trading systems or services, nor any other entities controlling, controlled by or under common control with such entities, nor their respective directors, officers, or employees, shall be liable for any losses, damages, costs or expenses (including, but not limited to, loss of profits, loss of use, incidental or consequential damages), regardless of the cause, arising from any fault, delay, omission, inaccuracy or termination of the electronic trading systems or services, or the inability to enter or cancel orders, or any other cause in connection with the furnishing, performance, maintenance, or use of or inability to use all or any part of the electronic trading systems or services, The foregoing shall apply regardless of whether a claim arises in contract, tort, negligence, strict liability or otherwise.

 

(d)                                  Indemnification of UBS-S LLC. Customer agrees to indemnify and hold UBS-S LLC and its managing directors, officers, employees and affiliates harmless from and against any and all costs (including reasonable attorneys’ fees), losses, penalties, fines, taxes and damages incurred by UBS-S LLC as a result of any action taken or not taken by UBS-S LLC in reliance upon any instructions, notices and communications which UBS-S LLC believes to be that of an individual authorized to act on behalf of Customer, or in connection with UBS-S LLC’s recovery of any such costs, losses, penalties, fines, taxes and damages.

 

12.                               TERMINATION

 

This Agreement may be terminated at any time by Customer or UBS-S LLC by written notice to the other; provided, however, that any such termination shall not relieve either

 

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party of any obligations in connection with any debit or credit balance in the Account or other liability or obligation arising or accruing prior to such termination. In the event of such notice, Customer shall promptly either close out open positions in the Account or arrange for such open positions to be transferred to another futures commission merchant. Upon satisfaction by Customer of all of Customer’s Liabilities, UBS-S LLC shall transfer to another futures commission merchant all Contracts, if any, then held for the Account, and shall transfer to Customer or to another futures commission merchant, as Customer may instruct, all cash, securities and other property held in the Account, whereupon this Agreement shall terminate.

 

13.                               CLOSE-OUT OF OFFSETTING POSITIONS

 

UBS-S LLC shall close-out any Contract for which an offsetting order is entered by Customer, unless Customer instructs UBS-S LLC not to close-out such Contract and to maintain the offsetting Contracts as open positions; provided, that UBS-S LLC shall not be obligated to comply with any such instructions given by Customer if Customer fails to provide UBS-S LLC with any representations, documentation or information reasonably requested by UBS-S LLC or if, in UBS-S LLC’s reasonable judgment, any failure to close-out such offsetting Contracts against each other would result in a violation of Applicable Law. If offsetting Contracts are not closed out, Customer acknowledges that any such offsetting long and short positions may result in the charging of additional fees and commissions and the payment of additional margin, even though such offsetting Contracts may not result in any additional market gain or loss.

 

14.                               REPORTS AND OBJECTIONS

 

All confirmations, purchase and sale notices, correction notices and account statements (collectively, “Reports”) shall be submitted to Customer and shall be conclusive and binding on Customer unless Customer notifies UBS-S LLC of any objection thereto prior to the opening of trading on the contract market on which such transaction occurred on the Business Day following the day on which Customer receives such Report; provided, that with respect to monthly statements, Customer may notify UBS-S LLC of any objection thereto within five (5) Business Days after receipt of such monthly statement, provided the objection could not have been raised at the time any prior Report was received by Customer as provided for above. Any such notice of objection, if given orally to LI3S-S LLC, shall promptly (and in no event later than within one (1) Business Day) be confirmed in writing by Customer

 

Customer consents to the electronic delivery of Reports via facsimile, electronic mail, computer networks (e.g., local area networks, commercial on-line services and SwisKey, Abacus or any similar online statement delivery system) or other electronic means agreed upon by Customer and LIBS-S LLC. Customer may revoke its consent at any time upon reasonable notice to UBS-S LLC.

 

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15.                               FOREIGN CURRENCY TRANSACTIONS

 

In the event that the Customer directs U13S-S LLC to enter into any Contract on an exchange on which such transactions are effected in a currency other than the U.S. dollar, any profit or loss arising as a result of a fluctuation in the exchange rate affecting such currency will be entirely for the account and risk of the Customer. All initial and subsequent deposits for margin purposes, and the return to the Customer of any funds, are expected to be made in the currency of contract settlement. Should the Customer elect to deposit funds other than the currency of settlement or instruct UBS-S LLC to convert funds which are already on deposit in another currency, UBS-S LLC shall debit or credit the Account of Customer at a rate of exchange determined by UBS-S LLC in its sole discretion on the basis of the then prevailing market rate of exchange for such foreign currency. Customer authorizes UBS-S LLC to deposit Customer funds in depositories located outside of the United States consistent with the requirements of Applicable Law.

 

16.                               UBS-S LLC’S RESPONSIBILITY

 

UBS-S LLC is not acting as a fiduciary, foundation manager, commodity pool operator, commodity trading advisor or investment adviser in respect of any Account opened by Customer and UBS-S LLC shall have no responsibility hereunder for compliance with any law or regulation governing the conduct of fiduciaries, foundation managers, commodity pool operators, commodity trading advisors or investment advisers.

 

17.                               ADVICE

 

All advice communicated by UBS-S LLC with respect to any Account opened by Customer hereunder is incidental to the conduct of UBS-S LLC’s business as a futures commission merchant, does not constitute an offer to sell or the solicitation of an offer to buy any Contract, and such advice will not serve as the primary basis for any decision by or on behalf of Customer. UBS-S LLC shall have no discretionary authority, power or control over any decisions made by or on behalf of Customer in respect of the Account, regardless of whether Customer relies on the advice of UBS-S LLC in making any such decision. Any such advice, although based upon information from sources UBS-S LLC believes to be reliable, may be incomplete or inaccurate, may not be verified and may be changed without notice to Customer. UBS-S LLC makes no representation as to the accuracy, completeness, reliability or prudence of any such advice or information or as to the tax consequences of Customer’s futures or options trading. UBS-S LLC is a separate and independent corporate entity, distinct from its affiliates and it shall be free to purchase and sell Contracts for any affiliates without limitation or restriction. The relationship between UBS-S LLC and Customer as described herein shall not affect any provisions of credit to Customer by UBS AG or any other subsidiary of UBS AG. Moreover, Customer acknowledges that UBS-S LLC and its managing directors, officers, employees and affiliates may take or hold positions in, or advise other customers concerning, contracts which are the subject of advice from UBS-S LLC to Customer. The positions and advice of I’LIS-S LLC and its managing directors, officers, employees and affiliates may be inconsistent with or contrary to positions of, and the advice given by, UBS-S LLC to Customer.

 

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18.                               FINANCIAL AND OILIER INFORMATION

 

Customer agrees to furnish appropriate financial statements to UBS-S LLC and to inform UBS-S LLC of any material changes in the financial position of Customer and to furnish promptly such other information concerning Customer as UBS-S LLC reasonably requests. UBS-S LLC is authorized from time to time to contact banks, financial institutions and credit agencies for verification of the financial condition of Customer. Customer agrees that UBS-S LLC may, from time to time, share with its branches, agencies and affiliates, certain non-public information concerning Customer as required to open and maintain Customer’s Account in accordance with this Agreement.

 

19.                               RECORDING

 

UBS-S LLC, in its sole and absolute discretion, may record, on tape or otherwise, any telephone conversation between UBS-S LLC and Customer involving their respective officers, agents and employees. Customer hereby agrees and consents to such recording, with or without the use of an automatic tone warning device. Customer acknowledges that UBS-S LLC may erase such recordings after a reasonable period of time.

 

20.                               ACCOUNTS INTRODUCED BY OTHER BROKERS

 

If UBS-S LLC is carrying the Account of Customer as executing or clearing broker by arrangement with another broker through whose courtesy the Account has been introduced to UBS-S LLC, then, until receipt from Customer of written notice to the contrary, UBS-S LLC may accept from such other broker, without inquiry or investigation by UBS-S LLC, (i) orders for the purchase or sale in the Account of Contracts, and (ii) any other instructions concerning the Account. UBS-S LLC shall not be responsible or liable for any acts or omissions of such other broker or its employees.

 

21.                               SEVERABILITY

 

If any provision of this Agreement is, or at any time becomes, inconsistent with any present or future Applicable Law, and if any of these authorities have jurisdiction over the subject matter of this Agreement, the inconsistent provision shall be deemed superseded or modified to conform with such law, rule or regulation but in all other respects, this Agreement shall continue and remain in full force and effect.

 

22.                               BINDING EFFECT

 

This Agreement shall be binding on and inure to the benefit of the parties and their successors. In accordance with CFTC regulations, UBS-S LLC may assign Customer’s Account(s) and this Agreement to another registered Futures Commission Merchant (“FCM”) by notifying Customer of the date and name of the intended assignee FCM. Unless Customer objects to the assignment prior to the scheduled date for the assignment, the assignment will be binding on Customer. Customer may not assign this Agreement without UBS-S LLC’s prior consent.

 

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23.                               ENTIRE AGREEMENT

 

This Agreement contains the entire agreement between the parties and supersedes any prior agreements between the parties as to the subject matter hereof, No provision of this Agreement shall in any respect be waived, altered. modified, or amended unless such waiver, alteration, modification or amendment is signed by the party against whom such waiver, alteration, modification or amendment is to be enforced.

 

24.                               INSTRUCTIONS, NOTICES OR COMMUNICATIONS

 

(a)                                 Except as specifically otherwise provided in this Agreement, all instructions, notices or other communications may be oral or written. All oral instructions, unless custom and usage of trade dictate otherwise, shall be promptly confirmed in writing. All written instructions, notices or other communications shall be addressed as follows:

 

(i)                                    if to UBS-S LLC:

 

UBS Securities LLC
 One North Wacker Drive
 Chicago, IL 60606
 Attn: ETD Legal Department, 31st Floor

 

(ii)                                if to Customer at the address as indicated on the New Account Information Form:

 

(b)                                 All instructions, notices or other communications sent, shall be deemed given to Customer and effective as follows: if posted on the internet, on the date it is posted; if in writing and delivered in person or by courier, on the date it is delivered or delivery is attempted; if sent by facsimile transmission, on the date sent; if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery attempted; or; if sent by electronic messaging system, on the date sent. All instructions, notices or other communications to UBS-S LLC shall be directed to UBS-S LLC’s office at the address listed above or such other addresses as UBS-S LLC may hereafter direct to Customer in writing.

 

25.                               RIGHTS AND REMEDIES CUMULATIVE

 

All rights and remedies arising under this Agreement as amended and modified from time to time are cumulative and not exclusive of any rights or remedies which may be available at law or otherwise.

 

26.                               NO WAIVER

 

No failure on the part of UBS-S LLC to exercise, and no delay in exercising, any contractual right will operate as a waiver thereof, nor will any single or partial exercise

 

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by UBS-S LLC of any right preclude any other or future exercise thereof or the exercise of any other partial right.

 

27.                               GOVERNING LAW

 

THE INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CHOICE OF LAW.

 

28.                               CONSENT TO JURISDICTION

 

Any litigation between UBS-S LLC and Customer relating to this Agreement or transactions hereunder shall take place in the Courts of the State of Illinois located in Cook County or in the United States District Court for the Northern District of Illinois, and the parties agree to submit to such exclusive jurisdiction. Customer consents to the service of process by the mailing to Customer of copies of such court tiling by certified mail to the address of Customer as it appears on the books and records of UBS-S LLC, such service to be effective ten days after mailing. Customer hereby waives irrevocably any immunity to which it might otherwise be entitled in any arbitration, action at law, suit in equity or any other proceeding arising out of or based on this Agreement or any transaction in connection herewith.

 

29.                               WAIVER OF JURY TRIAL

 

Customer hereby waives trial by jury in any action or proceeding arising out of or relating to this Agreement or any transaction in connection herewith.

 

30.                               ACCEPTANCE OF AGREEMENT

 

This Agreement shall not be deemed to be accepted by UBS-S LLC or become a binding contract between Customer and UBS-S LLC until approved by a duly authorized officer of UBS-S LLC in writing. This Agreement may be executed by the parties hereto in any number of counterparts, each of which when so executed and delivered will be an original, but all of which counterparts will together constitute one and the same instrument.

 

31.                               CUSTOMER ACKNOWLEDGEMENTS (please check box below with an “x”):

 

x           (a)           FUTURES AND OPTIONS DISCLOSURE DOCUMENTS

 

CUSTOMER HEREBY ACKNOWLEDGES THAT IT HAS RECEIVED, UNDERSTANDS AND CONSENTS TO THE FUTURES AND OPTIONS DISCLOSURE DOCUMENTS FURNISHED TO CUSTOMER INCLUDING DISCLOSURES REGARDING:

 

Risk Disclosure Statement for Futures and Options

 

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Notice Regarding Average Pricing

 

Questions and Answers to Address Key Features of CME Rule 553 — Average Pricing System

 

Electronic Trading and Order Routing Systems Disclosure Statement

 

UBS-S LLC Special Disclosure Statement

 

Cross Trade Consent

 

Non-US Futures and Options Direct Order Transmittal Customer Disclosure Statement

 

LME Guidelines (applicable to customers trading LME contracts)

 

Hong Kong Position Limit Notice (applicable to customers trading on Hong Kong Exchanges)

 

Non US Trader Disclosure Statement

 

Uniform Notification regarding access to Market Data

 

CME Disclosure on Payment for Order Flow

 

Third Party Vendor Disclosure Statement

 

Disclosure Statement on Futures Exchange Ownership Interests and incentive Programs

 

x           (b)           CONSENT TO TRANSFER FUNDS

 

The undersigned acknowledges that UBS-S LLC may, until it receives a written notice of revocation with respect thereto, in its sole and absolute discretion and without prior notice to the undersigned, transfer any funds, securities, commodities, Contracts or other property from any account (segregated. secured or non¬regulated) maintained by the undersigned to any other account (segregated, secured or non-regulated) of the undersigned maintained by UBS-S LLC or any of its affiliates. UBS-S LLC will promptly confirm in writing each transfer of funds, securities, commodities, Contracts or other property pursuant hereto. UBS-S LLC shall not be liable for making or failing to make any transfer authorized hereby.

 

32.                               HEDGING REPRESENTATION  (The following must be completed by Customers who will engage in all or a portion of their transactions for bona fide hedging purposes.) Customer has indicated on the New Account Information Form that the Account is either solely or partially for hedging purposes and therefore at least a portion of the transactions effected for the Account will be bona fide hedging transactions as

 

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described in Section 4a of the Commodity Exchange Act, as amended, and Rule 1.3(z) promulgated thereunder (a copy of which is attached hereto as Annex A), unless Customer specifically notifies UBS-S LLC to the contrary in writing with respect to any transaction or group of transactions. Customer represents that it is familiar with CFTC and exchange rules, regulations, and advisories concerning hedging and agrees to provide UBS-S LLC with such notification should the Account no longer be solely or partially for hedging purposes. . As such, in accordance with CFTC Rule 190.06, Customer may specify whether, in the unlikely event of UBS-S LLC’s bankruptcy, Customer prefers that the trustee liquidate open commodity contracts in the Account without seeking Customer’s instructions. Accordingly, in the event of UBS-S LLC’s bankruptcy, the trustee should (check one of the following):

 

o            Attempt to contact Customer for instructions regarding the disposition of open contracts in the Account.

 

o            Liquidate open commodity contracts without seeking Customer’s instructions.

 

This instruction may be changed at any time by written notice sent to UBS-S LLC.

 

If you indicated on the New Account Information Form that the Account is partially for hedging purposes please specify the Commodities to be Hedged:

 

* * * * *

 

 

 

(signature page on next page)

 

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IN WITNESS WHEREOF, Customer has executed this Agreement on the date indicated below.

 

	
Sydling AAA Master Fund LLC
    	
 
    
	
(“Customer”)
    	
 
    

 

 

	
By:
    	
Jerry Pascucci, President Sydling Futures   Management 
    	
 
    	
/s/ Jerry Pascucci 
    	
 
    	
9/1/11 
    
	
 
    	
Print Name and Title
    	
 
    	
Signature
    	
 
    	
Date
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Print Name and Title
    	
 
    	
Signature
    	
 
    	
Date
    

 

 

	
ACCEPTED   BY UBS SECURITIES LLC
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
Stephen Chivers, Exec Dir
    	
 
    	
/s/ Stephen Chivers 
    	
 
    	
11/4/11 
    
	
 
    	
Print Name and Title
    	
 
    	
Signature
    	
 
    	
Date
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
Tami A. Jenser, Director
    	
 
    	
/s/ Tami A. Jenser 
    	
 
    	
11/4/11 
    
	
 
    	
Print Name and Title
    	
 
    	
Signature
    	
 
    	
Date
    

 

17

 

ANNEX A

 

1.3(z) Bona fide hedging transactions and positions —

 

(1) General definition. Bona fide hedging transactions and positions shall mean transactions or positions in a contract for future delivery on any contract market, or in a commodity option, where such transactions or positions normally represent a substitute for transactions to be made or positions to be taken at a later time in a physical marketing channel, and where they are economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise, and where they arise from:

 

(i) The potential change in the value of assets which a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising,

 

(ii) The potential change in the value of liabilities which a person owns or anticipates incurring, or

 

(iii) The potential change in the value of services which a person provides, purchases, or anticipates providing or purchasing.

 

Notwithstanding the foregoing, no transactions or positions shall be classified as bona fide hedging unless their purpose is to offset price risks incidental to commercial cash or spot operations and such positions are established and liquidated in an orderly manner in accordance with sound commercial practices and, for transactions or positions on contract markets subject to trading and position limits in effect pursuant to section 4a of the Act, unless the provisions of paragraphs (z) (2) and (3) of this section and §§1.47 and 1.48 of the regulations have been satisfied.

 

(2) Enumerated hedging transactions. The definitions of bona fide hedging transactions and positions in paragraph (z)(1) of this section includes, but is not limited to, the following specific transactions and positions:

 

(i) Sales of any commodity for future delivery on a contract market which do not exceed in quantity:

 

(A) Ownership or fixed-price purchase of the same cash commodity by the same person; and

 

(B) Twelve months’ unsold anticipated production of the same commodity by the same person provided that no such position is maintained in any future during the five last trading days of that future.

 

(ii) Purchases of any commodity for future delivery on a contract market which do not exceed in quantity.

 

(A) The fixed-price sale of the same cash commodity by the same person.

 

 

(B) The quantity equivalent of fixed-price sales of the cash products and by products of such commodity by the same person; and

 

(C) Twelve months unfilled anticipated requirements of the same cash commodity for processing, manufacturing, or feeding by the same person, provided that such transactions and positions in the five last trading days of any one future do not exceed the person’s unfilled anticipated requirements of the same cash commodity for that month and for the next succeeding month.

 

(iii) Offsetting sales and purchases for future delivery on a contract market which do not exceed in quantity that amount of the same cash commodity which has been bought and sold by the same person at unfixed prices basis different delivery months of the contract market, provided that no such position is maintained in any future during the five last trading days of that future.

 

(iv) Sales and purchases for future delivery described in paragraphs (z)(2)(i), (ii), and (iii) of this section may also be offset other than by the same quantity of the same cash commodity, provided that the fluctuations in value of the position for future delivery are substantially related to the fluctuations in value of the actual or anticipated cash position, and provided that the positions in any one future shall not be maintained during the five last trading days of that future.

 

(3) Non-enumerated cases. Upon specific request made in accordance with §1.47 of the regulations, the Commission may recognize transactions and positions other than those enumerated in paragraph (z)(2) of this section as bona fide hedging in such amount and under such terms and conditions as it may specify in accordance with the provisions of §1.47. Such transactions and positions may include, but are not limited to, purchases or sales for future delivery on any contract market by an agent who does not own or who has not contracted to sell or purchase the offsetting cash commodity at a fixed price, provided That the person is responsible for the merchandising of the cash position which is being offset.

 

2

 

EXHIBIT A

 

Customer

 

Sydling AAA Master Fund LLC

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