EFTA01355747.pdf

time and place of such sale or purchase shall not be considered a waiver of the right to sell or buy without demand or notice as provided herein. Client further understands and agrees that if DBSI or Pershing permits Client a period of time in which to satisfy a call, the granting of that period of time shall not in any way wane or diminish the riaht of DBSI or Pershing to shorten the time period in which Client must satisfy the call, including an outstanding call, or to demand that a cell be • satisfied immediately. Client further understands that liquidations may involve sales of positions in Client's Account(s) that ale as great as the loll indebtedness owed by Client. 8. Reg T Extensions. Client authorizes 0951, at its discretion, to request and obtain extension(s) of Client's time to make payment for securities Client purchases, as provided for by Federal Reserve Bank Regulation T. 9. Short Sales of Securities. Client understands that before executing a Sion Sale, 011S1 or Pershing is generally required to make an affirmative determination as to whethor DBSI or Pershing will receive delivery of the securities from the Client or that the securities can be borrowed by the settlement date. This process is commonly referred to as 'obtaining a locate.' If a sufficient qoantity of securities is not available from inventory, DBSI or Pershing may, among ether things, cnntoct third-party lenders to ascertain whether they have securities available for lending. If a sufficient quantity of securities appears borrowable, DBSI or Pershing may proceed to execute the short sale on Client's behalf. A locate is simply an indication that, as of the time the locate is obtained, it appears that securities will be available for borrowing on the settlement date. A locate is note guarantee that securities will actually be available for lending and delivery on the settlement date or that the lender wil not thereafter require the return otthe bonoweo secorthesi If the securities are not available for borrowing for any reason by the settlement date. Client (as the seller) will "fail to deliver to the purchaser. In that circumstance, a buy-in of the securities that were not timely delivered will occur on the morning of the third business day after normal settlement date and Client will be responsible for all losses pnd eons of the buyrn. See "Mandatory Close-Out of Short Sales" below. Client is ultimately responsible for the delivery of securities on the settlement date and for the consequences of a failure to deliver and the timely return of securities borrowed on Client's behalf including any losses incurred by DBSI or Pershing relating to such short sales. Short positions will tte 'marked to the marker weekly. If the agoregate Value of all securities seid by Client appreciates, an amount equal to such appreciation will be transferred from Client's Margin Account to Client's short Account resulting in a debit entry in the Margin Account. if the aggregate value of all the securities sold short depreciates, an amount equal to such decline will be traitaterred from the casts account to the Margin Aoceunt resulting in a credit entry in the Margin Account. The dosing price from the previous business day is used to determine any appreciation or depreciation in the market value of any security sold short. Please note, fromtime to time. DBSI or Pershing may be prohibited from effecting a short sale in accordance wah Abelicable Law whether or oat a "locate" Is obtained. 10. Mandatory Close-Out of Short Sales. Applicable Law generally requires that short sates of equity securities be dosed by no later than the beginning of regular trading hours on the first business day following the settlement date if delivery of the securities has not occurred. The-close-out is effected by D851 or Pershing purchasing the securities for cash or guaranteed delivery of like kind and quantity. The requirement generally applies to undelivered equity securities that on the date of short sale. appeared on the 'restricted list' of FINRA or a national securities exchange of which DBSI or Pershing is a member (i.e., those securities that have a clearing short position of 711,000 shares or more and that ate equal to at least 1/2 of 1% of the issue's total shores outstarding) ("Threshold Securities'). D851 or Pershing will be required to effect a close-out mandated by Applicable Law whether or not a 'locate" was obtained and whether or not a buy-in notice was issued by a purchaser or securities lender. 11. Tax Treatment of Earnings oo Pledged Municipal Securities. Client will consult with a tax adviser prier to depositing municipal securities to satisfy margin requirements as there may be tax consequences of doing so. 12. Rehypothacation and Tax Treatment of Payments in Lieu of Dividends. The Internal Revenue Code generally provides that, subject to certain requirements, dividends paid to a U.S. individual shareholder f tom domestic omporations and certain foreign corporations am subject tc tax at the rsdnced rates applicable to long-term capital gains. Pay:nuns in lieu el dividends are not eligible for the reduced rate of tax for dividends and are taxed at ordinary income tax rates. DBSI and Pershing have the right to rchypathecate margined shares in Client's Margin Account Accordingly. Client hereby agrees that Client's Account may receive payments in lieu of dividends, which unlike actual dividends are taxed at ordinary income tax rates. Client further agrees that neither DEIS, nor Pershing shall be responsible to Client for any additional taxes or other costs Client incurs for receipt of such payments in lieu of dividends. Chem also agrees to consult with Client's tax adviser it Client has any questions relating to payments in lieu of dividends. 13. Additional Risks. The use of margin may enable Client to increase the size of the trades and/or volume of trading in the account which rosy result in an increase in the amount of commisenns being paid TO 0PSI or Pershing by fent 14. Restricted Spcutides. Client will rant post Restricted Secnritles es collateral for margin transactions with:let the oder optimal of DBSI. 15. Collection Remedies. DBSI reserves the right to assert any other remedies available under Applicable Law to collect any and all amount(s) due to DBSI or Pershing. 16. Receipt of Margin Disclosure. Client hereby acknowledges receipt'of the Merlyn 0iscloeuie end Clieht acknowledges Client's understanding of and agreement to the contents thereof. 12W/10-0573 12 012105011113 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0041009 CONFIDENTIAL SDNY_GM_00187193 EFTA01355747