Please read the Investment Management Agreement carefully. You will only be able to accept it once you have scrolled down to the end.
INVESTMENT MANAGEMENT AGREEMENT
EFFECTIVE AUGUST 1, 2017
This Investment Management Agreement (“Agreement”) is entered into as of the date set forth below by and between Passed Pawn Advisors, LLC, a Delaware limited liability company with offices at 300 E. 74th Street #5F, New York, New York 10021 (“Adviser”), and the undersigned (“Client”). In consideration of the mutual agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, Client and Passed Pawn Advisors, LLC agree as follows:
1. Establishment of Accounts. Client has or shall open one or more accounts over which Client has authority with one or more brokerage firms or other financial institutions (each a “Custodian” and, collectively, “Custodians”) listed on Exhibit A, to be managed by Adviser (each an “Account” and, collectively, the “Accounts”), according the investment approach and restrictions specified on Exhibit B with respect to the trading of financial instruments, including but not limited to equities, fixed income securities, futures, commodities, forex, options, mutual funds, and other pooled investment vehicles, or other rights pertaining thereto, as applicable. Adviser is authorized, without further approval by or notice to Client, to make all investment decisions concerning the Account and to make purchases, sales, and otherwise effect transactions in the Account on behalf of Client in accordance with all terms, conditions, objectives, guidelines and restrictions of this Agreement. This authorization shall remain in full force and effect until revoked by Client in writing. Client shall provide all information and assistance reasonably requested by Adviser pertaining to the Account or the financial affairs of Client as may be necessary to enable Adviser to perform under the terms of this Agreement. Client recognizes that the Account, as may be increased through additional contributions, is subject to certain risks. If Client participates in additional services provided by Adviser that require Client to agree to specific terms and conditions electronically (through clicks or other actions) or otherwise, such terms and conditions will be deemed an amendment and will be incorporated into and made part of this Advisory Agreement.
Client should consult the account statements received from Custodians in order to determine the actual activity in its account, including profits, losses, and current cash equity balance.
CLIENT WILL CAREFULLY READ, UNDERSTAND AND ACCEPT THE TERMS AND CONDITIONS OF THIS ADVISORY AGREEMENT BEFORE CLICKING "REGISTER" OR OTHER SIMILARLY WORDED BUTTON OR ENTERING ELECTRONIC SIGNATURE. IF CLIENT HAS ANY QUESTIONS ABOUT ANY OF THE PROVISIONS IN THIS ADIVOSRY AGREEMENT CLIENT WILL ADDRESS THEM WITH ADVISER BEFORE AGREEING TO IT. CLIENT UNDERSTANDS THAT CLICKING OR CHECKING "REGISTER" OR TYPING CLIENT’S NAME IN THE ELECTRONIC SIGNATURE FIELD IS THE LEGAL EQUIVALENT OF MANUALLY SIGNING THIS ADVISORY AGREEMENT AND CLIENT WILL BE LEGALLY BOUND BY ITS TERMS AND CONDITIONS. CLIENT UNDERSTANDS THAT THIS ADVISORY AGREEMENT MAY BE AMENDED FROM TIME TO TIME BY ADVISER, WITH REVISED TERMS POSTED ON THE WEBSITE. CLIENT AGREES TO CHECK THE WEBSITE FOR UPDATES TO THIS ADIVOSRY AGREEMENT.
2. Limited Power of Attorney. From the date hereof until such time as this Agreement is terminated by either party in accordance with Section 15 hereof, Client hereby irrevocably constitutes and appoints Adviser as Client’s agent and true and lawful attorney-in-fact, in its name, place and stead, to (i) buy and sell (including short sales) equities, fixed income securities, futures, commodities, forex, options, mutual funds, and other pooled investment vehicles, and any similar investments, on margin or otherwise for the account and risk of Client through the Account; (ii) order withdrawal of funds from the Account to pay the compensation owed to Adviser pursuant to Section 8 of this Agreement; and (iii) execute for and on behalf of Client and in the name of the respective Account holder standard customer agreements with such brokerage firms as Adviser may designate. The foregoing power of attorney and trading authority shall be deemed to be continuing and shall remain in full force and effect until such time as this Agreement shall have been terminated pursuant to Section 15. Such power of attorney may not be modified or limited orally or by any course of dealing between Adviser and Client; any such modification or limitation being required to be in writing to be of any force or effect.
3. Information and Services to be provided by Client. Client agrees to provide any and all information needed by Adviser to deliver the service described in Sections 1 & 2, including information concerning Client's investment objectives and any restrictions Client seeks to impose on the Account. Client further agrees to inform Adviser promptly in writing concerning any changes to Client's investment objectives with respect to the Account. Client will make available such other assistance and information pertaining to the Account or the financial affairs of Client as may be necessary to enable Adviser to perform under the terms of this Agreement.
Client certifies that, to the best of its knowledge, such information as it shall provide will be true, accurate and complete. Client acknowledges that all services will be based upon the information that Client has supplied to Adviser. Client will inform Adviser of any material changes in said information and further agrees to indemnify and hold Adviser harmless from any liability that may arise in any manner on account of the provision of inaccurate or incomplete information by Client or its agents to Adviser.
4. Brokerage Services. Unless Client directs Adviser to use a particular broker-dealer to execute transactions for its account, Adviser shall place orders for the execution of Client’s security transactions with or through such brokers, dealers, or issuers as Adviser may, in Adviser’s discretion, select, using reasonable efforts to obtain the best available execution under the circumstances. Where Adviser selects the broker, dealer, or issuer, Adviser will use its best efforts to negotiate the most favorable commission rate available under the circumstances based on the size and anticipated trading activity and such other factors as may be relevant to obtaining execution of specific trades and to the management of Client’s account(s). Client agrees that Adviser may, but shall not be required to, aggregate orders for the Account with orders of other clients. In such cases, the transactions will be allocated among Client accounts according to Adviser’s policy. Client authorizes Adviser to assign to the Account the average price and pro rata share of expenses resulting from such "bunched" orders.
Client agrees that any proprietary information that Adviser furnishes to Client, including any written documentation, is for Client’s internal use only and should remain confidential to Client and Client’s agents.
6. Qualifications. Adviser has all material governmental, regulatory, self-regulatory, and exchange licenses, registrations, memberships, and approvals required to perform its obligations under this Agreement. Adviser is registered as an investment adviser with U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended. Adviser will obtain and maintain any licenses, registrations, memberships and approvals required during the term of this Agreement.
7. No Guarantee of Performance. Adviser does not make any guarantees regarding investment performance or that any of Adviser’s investment recommendations will result in a benefit to Client. Client acknowledges that the future performance of investments made by Adviser on Client’s behalf may prove to be better or worse than past results.
THE INVESTMENTS ADVISER WILL MAKE DECISIONS THAT INVOLVE RISK. THE ACCOUNT MAY DECREASE IN VALUE.
8. Compensation. In consideration for the services to be provided hereunder, Client will pay Adviser a management fee beginning as of the date of this Agreement in accordance with the Schedule of Fees set forth in Exhibit C. The compensation paid to Adviser will be in addition to any compensation due to any manager or general partner of a pooled investment vehicle in which the Account may be invested.
9. Custody. Custody of Client’s assets will be maintained with the Custodians. All transactions will be made in Client's name. Adviser will not have custody over Client’s assets and will at all times comply with applicable regulations with respect to Client’s assets. Adviser shall not be responsible for providing or maintaining insurance coverage with respect to Client’s assets.
10. Expenses. Adviser shall be responsible for its own out-of-pocket expenses, including its own administrative, legal, tax, accounting, and operational expenses. Client or the respective Account shall be responsible for any and all other expenses related to investments made for an Account according to Adviser recommendations, including investment, custodial, brokerage, administrative, legal, tax, accounting, and operational expenses. Client acknowledges that any manager or general partner of a pooled investment vehicle in which the Account may be invested themselves may charge fees on Client’s investments and such fees will be separate and in addition to the fees charged by Adviser.
11. Representations and Warranties of Client. Client represents and warrants that: it is the sole beneficial owner or has all authority required to retain Adviser and enter into this Agreement on behalf of the owners of all Account assets represented on Exhibit A; it has disclosed accurate information about the financial circumstances and all other material information to Adviser with respect to the Accounts; Client has full power and authority to enter into and to perform its obligations under this Agreement; the entry into and performance of its obligations under this Agreement do not and will not conflict with any other agreement to which Client or any Account owner is a party or any law or regulation applicable to Client or any Account owner.
Investments for an Account in pooled investment vehicles made by Adviser under this Agreement will be held in the name of the Account owner only and Client’s authorization will be required to affect any partial or complete withdrawal. The terms of any additional contributions and withdrawals from pooled investment vehicles will be governed by the terms set by such pooled investment vehicles in which an Account is invested.
12. Contributions and Withdrawals. Client and the respective Account owners have or will contribute the amounts set forth on Exhibit A to the respective Accounts. Additional amounts may be contributed or withdrawn at Client's direction to respective Custodians at any time. Notwithstanding the foregoing, however, Client agrees to make its best efforts to notify Adviser at least ten (10) days in advance of all contributions or withdrawals to or from an Account. After receiving notice from Client regarding a withdrawal of cash, Adviser will make commercially reasonable efforts to liquidate assets of the Account, including illiquid assets, in a timely manner. Client acknowledges that withdrawals without notice to Adviser may cause Adviser or a Custodian to liquidate assets and unwind positions at unfavorable prices that may materially affect the value of the Account. Client acknowledges that its contribution of additional assets and changes in Client’s investment policy may affect the investment performance of the Account. Adviser is not responsible for the investment performance of assets pending investment.
13. Limitation of Liability.
(a) Adviser will give Client the benefit of its best judgment and efforts in rendering services under this Agreement to Client, and Client agrees as an inducement to Adviser’s undertaking these services that Adviser, its affiliates and their respective principals, officers, directors, members, partners, shareholders, agents and employees (collectively, the “Indemnitees”) shall not be liable hereunder for any expenses, losses, damages, liabilities, demands, charges and claims of any kind or nature whatsoever (including without limitation any legal expenses and costs and expenses relating to investigating or defending any demands, charges and claims) (collectively “Losses”); provided, however, that nothing herein shall be deemed to protect or purport to protect an Indemnitee against any liability to Client to which any such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance by such Indemnitee of its obligations and duties hereunder; provided, however, further that nothing herein shall be deemed to constitute a waiver or limitation of any rights that Client may have against Adviser under any federal or state securities laws or Employee Retirement Income Securities Act of 1974, as amended (“ERISA”), even in circumstances where Adviser’s actions were taken in good faith.
(b) Client shall reimburse, indemnify and hold harmless the Indemnitees for, from and against any and all Losses: (i) relating to this Agreement or investments made by Client according to Adviser recommendations arising out of any inaccuracy in or breach of any representation, warranty, covenant or agreement set forth in this Agreement or any act or omission or alleged act or omission, in each of the foregoing cases on the part of Client or any of Client’s agents; or (ii) arising or relating to any demand, charge or claim in respect of an Indemnitee's acts, omissions, transactions, duties, obligations or responsibilities arising pursuant to this Agreement; provided, however, that an Indemnitee shall not be indemnified for Losses resulting by reason of willful misfeasance, bad faith or gross negligence in the performance by such Indemnitee of its obligations and duties hereunder. Client shall advance amounts and/or pay expenses as incurred in connection with the indemnification obligation herein. In the event that this indemnification obligation shall be deemed to be unenforceable, whether in whole or in part, such unenforceable portion shall be stricken or modified so as to give effect to this section to the fullest extent permitted by law.
14. Assumption of Financial Risks. Client understands and accepts that financial risks are involved with any investment recommendations that Adviser may make with respect to the investment management program, and understands that there can be no assurance that any goals of the Account, including any financial objectives, will be achieved. All transactions carried out pursuant to the Account shall be made at the risk of Client.
15. Term and Termination. This Agreement shall be valid for a term of one year and will be renewed automatically for additional one year terms unless otherwise terminated in accordance with this Section. Either party may terminate this Agreement for any reason, at any time, and without penalty, by providing ten (10) days’ prior written notice to the other party delivered pursuant to Section 21 below. As applicable, upon notice of termination, the fee due from Client to Adviser shall be prorated to the date of termination as set forth in Exhibit C. Termination of this Agreement shall not affect any liability resulting from sales or exchanges initiated prior to written notice of such termination.
16. Assignment. Neither party may assign or transfer this Agreement without the consent of the other party.
17. Other Accounts and Activities. Client understands that Adviser may perform investment advisory services for various other clients. Client agrees that Adviser may give advice and take action in the performance of its duties with respect to any of its other clients that may differ from the timing or nature of advice or action taken with respect to Client. Adviser agrees to act in a manner consistent with its fiduciary obligations, including under ERISA for a Client subject to ERISA. Adviser shall not be under any obligation to purchase, sell or recommend for purchase or sale to Client any security or financial product that Adviser may purchase, sell or recommend for purchase or sale to the account of another client if, in the sole discretion of Adviser, such action is not practical or desirable for Client.
Client understands that Adviser, its officers, members, employees and any member of their families may or may not be invested in the same securities or financial products that Adviser may from time to time purchase or sell under this Agreement. Adviser will not execute principal transactions without Client consent.
Nothing in this Agreement shall be deemed to limit or restrict the right of Adviser, or the right of its officers, members, or employees, to engage in any other business or to devote time and attention to the management of other aspects of any business, whether of a similar or dissimilar nature, or to render investment advisory services or services of any kind to any other corporation, firm, association, or individual.
18. Anti-Money Laundering.
(a) Client understands and agrees that Adviser prohibits the investment of funds by any persons or entities that are acting, directly or indirectly: (i) in contravention of any applicable laws and regulations, including anti-money laundering regulations or conventions; (ii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Treasury Department's Office of Foreign Assets Control1 (“OFAC”), as such list may be amended from time to time; (iii) for a senior foreign political figure, any member of a senior foreign political figure’s immediate family or any close associate of a senior foreign political figure2, unless Adviser, after being specifically notified by Client in writing that it is such a person, conducts further due diligence, and determines that such investment shall be permitted; or (iv) for a foreign shell bank3 (such persons or entities in (i) – (iv) are collectively referred to as “Prohibited Persons”);
(b) Client represents, warrants and covenants that: (i) it is not, nor is any person or entity controlling, controlled by or under common control with Client, a Prohibited Person; and (ii) to the extent Client has any beneficial owners,4 (A) it has carried out thorough due diligence to establish the identities of such beneficial owners, (B) based on such due diligence, Client reasonably believes that no such beneficial owners are Prohibited Persons, (C) it holds the evidence of such identities and status and will maintain all such evidence for at least five years from the date of termination of this Agreement, and (D) it will make available such information and any additional information that Adviser may require upon request;
(c) If any of the foregoing representations, warranties or covenants ceases to be true or if Adviser no longer reasonably believes that it has satisfactory evidence as to their truth, notwithstanding any other agreement to the contrary, Adviser may be obligated to freeze the Account, either by prohibiting additional investments, declining or suspending any withdrawals and/or segregating the assets constituting the investment in accordance with applicable regulations, or Client’s investment may immediately be withdrawn by Adviser, and Adviser may also be required to report such action and to disclose Client’s identity to OFAC or other authority. In the event that Adviser is required to take any of the foregoing actions, Client understands and agrees that it shall have no claim against Adviser or its affiliates, directors, members, partners, shareholders, officers, employees and agents for any form of damages as a result of any of the aforementioned actions; and
(d) Client understands and agrees that any withdrawal proceeds paid to it will be paid to the same account from which Client's investment with Adviser was originally remitted, unless Adviser, in its sole discretion, agrees otherwise.
19. Applicable Law. This Agreement shall be governed by the laws of the State of New York except to the extent pre-empted by United States Federal law.
20. Additional Services. If requested by Client, Adviser may provide other services that are not included in this Agreement, subject to additional fees or other compensation under the terms of a separate agreement.
21. Notices. All notices and other communications shall be deemed effective when received, in writing, at the addresses specified herein below, or at such other address as either party may specify by notice given in accordance with this Section 21. Receipt of written notice shall be presumed if sent by Federal Express or other overnight courier, mailed by registered or certified mail, return receipt requested, or sent by confirmed email or confirmed facsimile followed by a hard copy sent by first class, postage prepaid mail.
If to Client:
If to Adviser:
Passed Pawn Advisors, LLC
Attn: Igor Tsukerman
300 E. 74th Street #5F
New York, New York 10021
Email: [email protected]
Fax: (888) 511-9365
22. Status of Adviser. The parties understand and agree that Adviser shall be deemed to be an independent contractor of Client and shall not be deemed to be an agent of Client beyond the scope of services provided under this Agreement. Nothing contained herein shall create or constitute Adviser and Client as members of any partnership, joint venture, association, syndicate, unincorporated business, or other separate entity, nor shall be deemed to confer on either of them any express, implied, or apparent authority to incur any obligation or liability on behalf of any other such entity.
23. Reports. Generally, a Custodian will provide real time performance data and account balances through an online interface available on the Custodian’s website. Additionally, Client will receive written statements no less than quarterly from Adviser.
24. ERISA Disclosure. This section applies to qualified retirement plans governed by ERISA. If an Account is for a plan subject to ERISA, Client appoints Adviser, and Adviser accepts its appointment, as an "investment manager" as define under ERISA with respect to such Account. Adviser acknowledges that it is a "fiduciary" within the meaning of Section 3(21) of ERISA and understands that as a fiduciary, it must:
- Act solely in the interests of the participant and their beneficiaries;
- Defray the expenses of administration of the plan;
- Act with the care, skill, prudence, and diligence that a prudent man would use in the same situation;
- Diversify plan investments to reduce the risks of large losses unless it is clearly prudent not to do so; and,
- Act according to the terms of the plan documents, to the extent the documents are consistent with ERISA.
Client represents that Adviser has been furnished true and complete copies of all documents establishing and governing the plan and evidencing Client's authority to retain Adviser. Client will furnish promptly to Adviser any amendments to the plan, and Client agrees that, if any amendment affects the rights or obligations of Adviser, such amendment will be binding on Adviser only when agreed to by Adviser in writing. If the Account contains only a part of the assets of the plan, Client understands that Adviser will have no responsibility for the diversification of all of the plan's investments, and that Adviser will have no duty, responsibility or liability for Client assets that are not in the Account. If ERISA or other applicable law requires bonding with respect to the assets in the Account, Client will obtain and maintain at its expense bonding that satisfies this requirement and covers Adviser and its Affiliated Persons.
25. Valuation. All valuations will be performed by Custodians and relied upon by Adviser. Any valuation shall not be deemed a guarantee of any kind whatsoever with respect to the value of the assets of the Account. Client will receive statements from Custodians concerning the value of investment positions held in the Account
26. Proxies and Class Action Lawsuits. Client understands and agrees that Client retains the right to vote all proxies which are solicited for securities held in the Account. Adviser will not be required to take any action or render any advice with respect to the voting of proxies solicited by or with respect to the issuers of securities in which assets of the Account may be invested from time to time. In addition, Adviser will not take any action or render any advice with respect to any securities held in any Accounts that are named in or subject to class action lawsuits. Adviser will, however, forward to Client any information received by Adviser regarding class action legal matters involving any security held in the Account.
Captions. The captions in this Agreement are included for the convenience of reference only and in no way delimit any of the provisions hereof or otherwise affect their construction or effect.
Severability. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule, or otherwise, the remainder of this Agreement shall not be affected thereby.
Binding Nature. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
Practice of Law and Accounting. Client understands and acknowledges that Adviser does not and will not practice law or accounting in providing services to Client pursuant to this Agreement.
Joint and Several Obligations. In the event that more than one person executes this Agreement as Client, each person signing as Client agrees to be jointly and severally bound by each obligation assumed by Client hereunder.
Counterparts. This Agreement may be executed in any number of counterparts, all of which shall together constitute one and the same Agreement.
Pronouns. In this Agreement, singular pronouns include the plural, and masculine pronouns include the feminine and neuter gender wherever the context shall require.
Interpretation of Agreement. Any rule of law or legal decision that would require interpretation of any ambiguities in this Agreement against the party that has drafted it is not applicable and is waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the purpose of the parties and this Agreement.
29. Death or Disability. The death, disability or incompetency of Client will not terminate or change the terms of the Agreement. However, Client’s executor, guardian, attorney-in-fact or other authorized representative may terminate this Agreement in accordance with the terms of Section 15.
30. Entire Agreement; Amendment. This Agreement constitutes the entire agreement between Client and Adviser and may not be amended or modified without the consent of both Client and Adviser.
31. Force Majeure Events. Adviser shall take reasonable actions to permit the continued performance of its obligations hereunder in the event of the occurrence of a force majeure event. Notwithstanding the foregoing, Adviser shall not be liable for its failure to perform any of its obligations hereunder during any period in which such performance is delayed by a force majeure event, which shall be defined as an earthquake, fire, flood, or other act of God, or war, terrorist act, or criminal act (including without limitation viruses, worms, malware or computer hacking that circumvent reasonable computer security measures).
EXHIBIT A – MANAGED ACCOUNTS
|Account Holder Name
||Approximate $ Value
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EXHIBIT B – INVESTMENT APPROACH AND RESTRICTIONS
A. Methods of Analysis
Adviser employs fundamental analysis as our primary method for analyzing securities to achieve the investment objectives and goals of the Fund. Fundamental analysis consists of analyzing financial statements of companies, calculating financial ratios, and reviewing cyclical trends of industries in conjunction with other monetary policy indictors to assess the overall performance and profitability of companies. We may at times also employ technical analysis and charting to analyze securities.
Fundamental analysis involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. Fundamental analysis is performed on historical and present data but with the goal of making financial forecasts. There are several possible objectives: to conduct a company stock valuation and predict its probable price evolution; to make a projection on its business performance; to evaluate its management and make internal business decisions; and to calculate its credit risk. Fundamental analysis does not attempt to anticipate market movements. This presents a potential risk as the price of a security can move up or down along with the overall market regardless of the economic and financial factors considered in evaluating stock.
Technical analysis is a method of evaluating securities by relying on the assumption that market data, such as charts of price, volume and open interest can help predict future (usually short-term) market trends. Technical analysis assumes that market psychology influences trading in a way that enables predicting when a stock will rise or fall. The technical indicators that the fund may consider include, but are not limited to, price, volume, momentum, relative strength, sector/group strength and moving averages. Technical analysis does not consider the underlying financial condition of a company. This presents a risk that a poorly-managed or financially unsound company may underperform regardless of market movement.
Charting analysis involves the gathering and processing of price and volume information for a particular security. This price and volume information is analyzed using mathematical equations. The resulting data is then applied to graphing charts, which is used to predict future price movements based on price patterns and trends.
B. Investment Strategies
Adviser utilizes issuer-generated financials, official statements, research reports issued by third party analysts, Bloomberg, and other sources to help determine the suitability of the asset or security.
Adviser fully understands that each client has a distinct risk/return profile that may change over time. Adviser goal is to match the profile with the availability of the assets in the marketplace. A key to Adviser’s strategy is to execute or transact at the best possible prices for its clients.
Adviser’s asset allocation process includes both our analysis of market and economic conditions with future expectations on one hand, and an extensive client profile on the other. These allocations are then translated into actual investment choices, based on our proprietary research that take into account suitability, risk/reward characteristics, liquidity, overall costs, and tax considerations. This step creates core holdings designed to be the bulk of the portfolio for the long term. A smaller portion is then allocated to satellite holdings designed to take tactical advantage for shorter investment periods, to provide access to a narrow market niche, or to reflect each investor’s specific values or requests. The research is ongoing, to ensure that these investment choices still meet the adviser’s and client’s criteria, as well as to uncover new, potentially superior opportunities.
The initial portfolio construction is only a start. Active portfolio management is a critical part of risk management, and periodic rebalancing is necessary to achieve superior results and to make sure that the portfolio remains within the designed allocation and risk parameters. We are not bound by any benchmark or predetermined allocation by asset class, sector or geography, which gives us the flexibility to pursue what we believe are the best opportunities within the client’s risk tolerance. Tax efficiency and optimization is an additional consideration in our portfolio construction and rebalancing process.
C. Material Risks of Methods of Analysis and Investment Strategies
Notwithstanding the method of analysis or investment strategy employed by our Firm, the assets within your portfolio are subject to risk of devaluation or loss. Adviser wants you to be aware that there are many different events that can affect the value of your assets or portfolio including, but not limited to, changes in financial status of companies, market fluctuations, changes in exchange rates, trading suspensions and delays, economic reports, and natural disasters.
All investment programs have certain risks that are borne by the investor. Our investment approach constantly keeps the risk of loss in mind. Investors face the following investment risks:
- Interest-rate Risk: Fluctuations in interest rates may cause investment prices to fluctuate. For example, when interest rates rise, yields on existing bonds become less attractive, causing their market values to decline.
- Market Risk: The price of a security, bond, or mutual fund may drop in reaction to tangible and intangible events and conditions. This type of risk is caused by external factors independent of a security’s particular underlying circumstances. For example, political, economic, and social conditions may trigger market events.
- Credit Risk: Debt obligations may experience adverse effects from credit ratings downgrades, default or bankruptcy. Political, economic and other factors may also adversely affect governmental issues.
- Inflation Risk: When any type of inflation is present, a dollar will be worth more today than a dollar next year, because purchasing power is eroding at the rate of inflation.
- Currency Risk: Overseas investments are subject to fluctuations in the value of the dollar against the currency of the investment’s originating country. This is also referred to as exchange rate risk.
- Foreign and Emerging Markets Risk: Foreign investing involves risks not typically associated with US investments. In addition to currency risk described above, adverse political, social and economic developments affecting foreign countries, foreign tax, securities, and accounting laws may all affect prices of foreign investments. These risks may be further increased in emerging markets.
- Reinvestment Risk: This is the risk that future proceeds from investments may have to be reinvested at a potentially lower rate of return (i.e. interest rate). This primarily relates to fixed income securities.
- Business Risk: These risks are associated with a particular industry or a particular company within an industry. For example, oil-drilling companies depend on finding oil and then refining it, a lengthy process, before they can generate a profit. They carry a higher risk of profitability than an electric company, which generates its income from a steady stream of customers who buy electricity no matter what the economic environment is like.
- Liquidity Risk: Liquidity is the ability to readily convert an investment into cash. Generally, assets are more liquid if many traders are interested in a standardized product. For example, Treasury Bills are highly liquid, while real estate properties are not.
- Financial Risk: Excessive borrowing to finance a business’ operations increases the risk of profitability, because the company must meet the terms of its obligations in good times and bad. During periods of financial stress, the inability to meet loan obligations may result in bankruptcy and/or a declining market value.
- Volatility and Correlation Risk: Adviser makes investing recommendations in part using diversification techniques designed to reduce correlation of assets within a Client’s portfolio. However, it is possible that unrelated asset classes may exhibit high correlations in times of high market volatility, increasing portfolio risk
While this information provides a synopsis of the events that may affect your investments, this listing is not exhaustive. We want you to understand that there are inherent risks associated with investing and depending on the risk occurrence; you may suffer LOSS OF ALL OR PART OF YOUR PRINCIPAL INVESTMENT.
D. Recommendation of Specific Types of Securities
While the advice of Adviser focuses primarily on equity and option securities, our services may also include other securities and investment vehicles.
EXHIBIT C – FEE SCHEDULE
Management Fees - Client will pay Adviser an asset management fee of 0.35% to 1.10% of the assets under management (of Client’s Account), according to the table below. The Management Fee will be calculated and charged on a quarterly basis, in advance, based upon the market value of a client’s assets on the last day of the previous quarter, depending on the amount of assets under management, related accounts, or any other reason in Adviser’s sole discretion. The management fee will be appropriately prorated to reflect any capital contributions that occur during a quarter. The minimum annual fee is $35.96 for the Starter plan and $300 for Impact and Power.
|AUM / Plan
|$10,000 – $24,999
|$25,000 – $99,999
|$100,000 – $249,999
|$250,000 – $999,999
Deduction From Account - Client authorizes Adviser to make deductions or withdrawals from the Account for any fees due to Adviser under this Agreement.
Passed Pawn Advisors, LLC (“Adviser”) recognizes the importance of protecting our client’s non-public information, and we are committed to maintaining the confidentiality, integrity and security of our current and former clients’ non-public information.
Adviser collects information about our clients (such as name, address, social security number, assets and income) from discussions with such clients, documents provided by clients and in the course of providing service to our clients.
Adviser will not disclose non-public information about our clients except as necessary to carry out transactions Client has requested or authorized in connection with our services, as required by law, or to non-affiliated third parties who assist us in administering client accounts. Any party that receives this information will use it only for the services required and as allowed by applicable law or regulation, and is not permitted to share or use this information for marketing or any other purpose. Because the disclosures made are only those necessary to manage and service accounts, clients cannot limit the scope of the disclosures that we make.
Adviser restricts access to our clients’ non-public information to those employees and third party service providers who need to know such information in order to provide products or services to our clients. Adviser maintains physical, electronic, and procedural safeguards that comply with federal standards to guard each client’s non-public information.