Exhibit 10.3

 

EXECUTION VERSION

 

SPECIAL CUSTODY AND PLEDGE AGREEMENT

 

AGREEMENT (hereinafter “Agreement”), dated as of December 11, 2013, among State
Street Bank and Trust Company, a Massachusetts trust company, in its capacity as
custodian hereunder (“Custodian”), Berwyn Funding LLC (the “Fund”), and BNP
Paribas Prime Brokerage, Inc. (the “Counterparty”).

 

WHEREAS, the Fund provides Collateral (as defined herein) to Counterparty to
secure obligations owing by the Fund to the Counterparty under the Committed
Facility Agreement, dated as of date hereof (the “Committed Facility
Agreement”), and the account agreement included in the U.S. PB Agreement, dated
as of the date hereof, with the Counterparty (the “Account Agreement” and,
together with the Committed Facility Agreement, the “40 Act Financing
Agreements”); and

 

WHEREAS, Counterparty is required to comply with applicable laws and regulations
pertaining to extensions of credit and borrowing of securities, including the
margin regulations of the Board of Governors of the Federal Reserve System and
of any relevant securities exchanges and other self-regulatory organizations
(collectively, the “Margin Rules”) and Counterparty’s internal policies; and

 

WHEREAS, to facilitate extensions of credit and the borrowing of securities from
the Counterparty, the Fund and Counterparty desire to establish and evidence
procedures for compliance with the Margin Rules; and

 

WHEREAS, Custodian acts as custodian of certain assets of the Fund pursuant to a
custodian agreement, dated as of December 10, 2013, by and among the Custodian,
the Fund and certain other wholly-owned subsidiaries of FS Energy and Power Fund
(the “Custody Agreement”).

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
for other good and valuable consideration, it is agreed as follows:

 

(1)        As used herein, capitalized terms have the following meanings unless
otherwise defined herein:

 

“Adequate Performance Assurance” shall mean such Collateral placed in the
Special Custody Account (as such term is hereinafter defined) as is adequate
under the terms of the Committed Facility Agreement and, to the extent such
Committed Facility Agreement (i) has been terminated or the commitment therein
has expired or (ii) is otherwise inapplicable to any portion of the Collateral,
the Account Agreement.

 

“Advice from Counterparty” means a notice or entitlement order (as defined in
Section 8-102 of the UCC (as defined herein)) delivered by an Authorized
Representative of Counterparty to the Fund or Custodian, as applicable,
hereunder, communicated: (i) in writing; (ii) by a facsimile-sending device; or
(iii) in cases of calls for additional Collateral (as such term is hereinafter
defined) or notices referred to in paragraph 8 hereof, by telephone to a person
designated by the Fund or Custodian in writing as authorized to receive such
advice or, in the event that no such person is available, to any officer of the
Fund or Custodian and confirmed in writing promptly thereafter.  A
duly-authorized officer of Counterparty will certify to Custodian, on Appendix A
attached, the names and signatures of those employees of Counterparty who are

 

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authorized to sign Advices from Counterparty (each, an “Authorized
Representative of Counterparty”), which certification may be amended from time
to time.

 

“Business Day” means a day on which Custodian, the Fund and the Counterparty are
open for business.

 

“Collateral” means U.S. cash, U.S. Government securities, or other U.S.
margin-eligible securities acceptable to the Counterparty and Custodian which
are pledged to the Counterparty as provided herein.

 

“Foreign Securities” means any investments (including foreign currencies) for
which the primary market is outside the United States, and any cash and cash
equivalents that are reasonably necessary to effect the Fund’s transactions in
those investments.

 

“Insolvency” means that:  (i) an order, judgment or decree has been entered
under the bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law (herein called
the “Bankruptcy Law”) of any jurisdiction adjudicating the Fund insolvent;
(ii) the Fund has petitioned or applied to any tribunal for, or consented to the
appointment of, or taking possession by, a trustee, receiver, liquidator or
similar official, of the Fund, or commenced a voluntary case under the
Bankruptcy Law of the United States or any proceedings relating to the Fund
under the Bankruptcy Law of any other jurisdiction, whether now or hereinafter
in effect; or (iii) any such petition or application has been filed, or any such
proceedings commenced, against the Fund and the Fund by any act has indicated
its approval thereof, consent thereto or acquiescence therein, or an order for
relief has been entered in an involuntary case under the Bankruptcy Law of the
United States or any other jurisdiction, as now or hereinafter constituted, or
an order, judgment or decree has been entered appointing any such trustee,
receiver, liquidator or similar official, or approving the petition in any such
proceedings.

 

“Instructions from Fund” means a request, direction or certification in writing
signed in the name of the Fund by a person authorized by the Fund, on Appendix B
attached (as may be amended from time to time), and delivered to Custodian or
transmitted to it by a facsimile-sending device, except that instructions to
pledge initial or additional Collateral may be given by telephone and thereafter
confirmed in writing signed in the name of the Fund by a person authorized in
writing by the Fund.

 

(2)        (a)        Upon instructions from the Fund, Custodian, in its
capacity as a Securities Intermediary as defined in Revised Article 8 of the
Uniform Commercial Code as in effect from time to time in the State of New York
(the “UCC”), to the extent the same may be applicable, or in applicable federal
law or regulations, shall segregate Collateral on its books and records as an
account for Counterparty entitled “BNP Paribas Prime Brokerage, Inc., Pledgee of
Berwyn Funding LLC” (the “Special Custody Account”) and shall hold therein for
the Counterparty as pledgee upon the terms of this Agreement all Collateral. 
The Custodian hereby agrees that any Collateral except U.S. cash held in the
Special Custody Account shall be treated as a financial asset for purposes of
the UCC to the extent the same may be applicable, and Custodian shall elect to
hold such Collateral that is U.S. cash as a deposit in its capacity as a “bank”
as such term is defined in Section 9-102(a)(8) of the UCC, which deposit account
shall constitute part of, and be maintained in the same manner as, the Special
Custody Account.  The Fund agrees to instruct Custodian through Instructions
from Fund as to the cash and specific securities which Custodian is to identify
on its books and records as pledged to the Counterparty as Collateral in the
Special Custody Account.  The Custodian may in its discretion decline to follow
such

 

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Instructions if following the Instructions would in Custodian’s sole judgment
result in any remaining assets in the custody account being inadequate to cover
any obligations of the Fund to the Custodian. The Fund agrees that, if as a
result of Custodian’s declining to follow such Instructions, the Collateral in
the Special Custody Account is not equal to or greater than Adequate Performance
Assurance and as a result a Fund Default has occurred, Counterparty may exercise
its right and remedies provided hereunder (including, without limitation, the
rights and remedies specified in Section 8 hereof).

 

(b)        Provided that the Letter Agreement regarding Lending Operational
Procedures has been agreed to by the Custodian, the Fund and Counterparty, upon
receipt of an Advice from Counterparty, Custodian shall release Collateral
identified by Counterparty from the Special Custody Account to the Fund’s
custody account established pursuant to the terms of the Custody Agreement (the
“Released Collateral”) for purposes of delivering such Released Collateral to
Counterparty pursuant to the Letter Agreement regarding Lending Operational
Procedures by and among the Custodian, the Fund and Counterparty.  The Fund
hereby directs and authorizes Custodian to make such release, and any such
Advice from Counterparty shall be “Proper Instructions” in accordance with the
Custody Agreement.  In the event that there is inadequate Collateral in the
Special Custody Account to satisfy such Advice from Counterparty, Custodian
shall notify Counterparty and Fund of the shortfall amount, and other than
issuing such notice, Custodian shall have no responsibility hereunder with
respect to such Advice from Counterparty.

 

(c)        The Fund agrees to provide and at all times maintain Adequate
Performance Assurance in the Special Custody Account pursuant to the terms and
conditions of this Agreement.  Such Collateral (i) may be released only in
accordance with the terms of this Agreement; and (ii) except as required to be
released hereunder to the Counterparty, shall not be made available to the
Counterparty or to any other person claiming through the Counterparty, including
creditors of the Counterparty.  Custodian will maintain accounts and records for
the Collateral in the Special Custody Account separate from the accounts and
records of any other property of the Fund which may be held by Custodian,
subject to the interest therein of the Counterparty as the pledgee thereof in
accordance with the terms of this Agreement.  Such security interest in any item
of Collateral will terminate at such time as such item of Collateral is released
to the Fund as provided in paragraph 4 hereof.

 

Unless otherwise instructed in writing by the Fund, all distributions on
Collateral received by the Custodian and any proceeds of transfer or other
payments with respect to Collateral in the Special Custody Account, including,
but not limited to, interest and dividends, shall not constitute Collateral and
shall be delivered to the Fund’s custody account.  As between the Fund and the
Counterparty, the Fund agrees to instruct the Custodian to credit any
distribution on Collateral from a corporate action, redemption or issuer call
received by the Custodian to the Special Custody Account as additional
Collateral and shall be held in the Special Custody Account as Collateral until
released therefrom or withdrawn in accordance with this Agreement.

 

(d)        The Fund, the Counterparty and Custodian agree that Collateral will
be held for the Counterparty in the Special Custody Account by Custodian under
the terms and conditions of this Agreement and that the Custodian will take such
actions with respect to any Collateral in the Special Custody Account
(including, without limitation, the delivery thereof in accordance with
paragraph 8) as the Counterparty shall direct in an Advice from Counterparty,
without further consent of the Fund.

 

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(e)        The Fund hereby grants a continuing security interest to the
Counterparty in the Special Custody Account and all Collateral and other
financial assets credited thereto, from time to time to secure the Fund’s
obligations to the Counterparty under the Account Agreement.  Custodian shall
have no responsibility for the validity or enforceability of such security
interest.  For the avoidance of doubt, assets of the Fund held by Custodian that
are not Collateral or are not credited to the Special Custody Account shall not
be subject to the foregoing security interest.

 

(f)        The Fund hereby represents and warrants that it will not instruct
Custodian to sell or deliver out a Foreign Security which has been segregated as
Collateral under this Agreement unless it has first done the following:
(i) obtained written consent for the security’s release from the Counterparty,
(ii) forwarded such consent to Custodian, (iii) instructed Custodian in writing
to desegregate (or unpledge) such security, and (iv) instructed Custodian in
writing to segregate substitute Collateral.  As between the Fund and Custodian,
the Fund agrees that any buy-ins, fees, or penalties assessed in a non-U.S.
market in connection with the sale, segregation, or substitution of Foreign
Securities covered by this Agreement shall be solely the responsibility of the
Fund, which agrees to indemnify and hold harmless Custodian from liability or
responsibility for such buy-ins, fees, or penalties.  The Fund hereby
acknowledges that its instruction to Custodian to segregate any Foreign Security
as Collateral signifies the Fund’s acceptance of Country Risk (as defined in the
Custody Agreement) with regard to holding or transacting in such Foreign
Security or in segregating such Foreign Security.

 

The Counterparty hereby acknowledges that with respect to any Foreign Securities
that may be held by (i) Custodian (or its nominee), (ii) a sub-custodian (or its
nominee) within Custodian’s network of sub-custodians (each a “Sub-Custodian”),
or (iii) a depository or book-entry system for the central handling of
securities in which Custodian or the Sub-Custodian are participants, there is a
risk that local law, rule, regulation or market practice or the rules of any
such Sub-Custodian or depository/book-entry system may be inconsistent with the
application of New York law and the performance of Custodian’s obligations under
the UCC.  To the extent any such inconsistency inhibits Custodian’s performance
of such obligations, the Counterparty hereby waives such performance.  The
parties hereby further acknowledge that Custodian gives no assurance that a
security entitlement is created under the UCC at the Euroclear or Cedelbank
level with respect to the Fund’s assets held in Euroclear or Clearstream or
their successors.

 

(3)        Custodian will confirm in writing to the Counterparty and the Fund,
within one Business Day, all pledges, releases or substitutions of Collateral
and will supply the Counterparty and the Fund with a monthly statement of
Collateral in the Special Custody Account and transactions in the Special
Custody Account during the preceding month.  Custodian will also advise the
Counterparty and the Fund upon reasonable request, of the kind and amount of
Collateral pledged to each of the Counterparty and the Fund.

 

(4)        Custodian agrees to release Collateral from the Special Custody
Account only upon receipt of an Advice from Counterparty (including for whatever
uses are permissible under the Committed Facility Agreement and Account
Agreement, though Custodian shall at no time have responsibility for determining
whether Counterparty is in compliance with those permissible uses). Counterparty
agrees, upon request of the Fund, to provide such an Advice from Counterparty to
Custodian with respect to Collateral selected by the Fund directing the release
of such Collateral to the Fund:  (i) if said Collateral represents an excess in
value of the Collateral necessary to constitute Adequate Performance Assurance
at that time; (ii) against

 

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receipt in the Special Custody Account of substitute Collateral having a value
at least equal (with any remaining Collateral) to Adequate Performance
Assurance; or (iii) upon termination of the Fund’s accounts with Counterparty
and settlement in full of all transactions therein and any amounts owed to the
Counterparty with respect thereto.  It is understood that the Counterparty will
be responsible for valuing Collateral; Custodian at no time has any
responsibility for determining whether the value of Collateral is equal in value
to Adequate Performance Assurance.

 

(5)        The Fund represents and warrants to the Counterparty that securities
pledged to the Counterparty shall be in good deliverable form (or Custodian
shall have the unrestricted power to put such securities into good deliverable
form), and that Collateral in the Special Custody Account will not be subject to
any liens or encumbrances (including, to the best of its knowledge, those
permitted by Rule 17f-5 promulgated under the Investment Company Act of 1940, as
amended) other than the lien in favor of the Counterparty contemplated hereby. 
The Fund shall promptly notify the Counterparty in the event that Collateral in
the Special Custody Account is subject to any levy, lien, charge, claim, court
order or other process purporting to affect the Collateral other than in favor
of the Counterparty as contemplated hereby.

 

(6)        Collateral in the Special Custody Account shall at all times remain
the property of the Fund subject only to the extent of the interest and rights
therein of the Counterparty as the pledgee and secured party thereof.  Other
than liens for safe custody or administration of Foreign Securities granted to
(x) any entity that is incorporated or organized under the laws of a country
other than the United States, (y) a majority-owned direct or indirect subsidiary
of a regulated and permitted U.S. bank or bank-holding company (other than
Custodian or its affiliates) or (z) any creditors of any entity referenced in
(x) or (y) above (other than Custodian or its affiliates), (a) Custodian
represents that Collateral in the Special Custody Account is not subject to any
other lien, charge, security interest or other right or claim of the Custodian
or any person claiming through Custodian, and (b) Custodian hereby waives any
right, charge, security interest, lien or right of set off of any kind which it
may have or acquire with respect to the Collateral in the Special Custody
Account.  Except for the claims and interests of the Counterparty and the Fund,
the Custodian has not, to the best of its knowledge, received written notice of
any claim to, or interest in, the Special Custody Account, any financial asset
credited thereto or any security entitlement in respect thereof.  Custodian
shall use reasonable efforts to notify the Counterparty and the Fund as soon as
practicable under the circumstances if the office of the general counsel of
Custodian, or any senior vice president or more senior management member of the
U.S. Investor Services division of Custodian receives any written notice of
levy, lien, court order or other legal process purporting to affect the
Collateral; provided, however, that the Custodian’s failure to do so shall not
give rise to any liability hereunder.

 

(7)        The Counterparty shall, on each Business Day, compute the aggregate
net credit or debit balance under the Account Agreement, and advise the Fund by
11:00 A.M. New York time of the amount of the net debit or credit, as the case
may be. If a net debit balance exists on such day, the Fund will cause, by the
close of business on such day, an amount of Collateral to be deposited in the
Special Custody Account to provide Adequate Performance Assurance related to
such net debit balance; provided that, in the event that Counterparty advises
the Fund of such net debit balance after 11:00 A.M., then such amount of
Collateral shall be deposited in the Special Custody Account by the close of
business on the following Business Day.  Counterparty will charge interest on
debit balances in accordance with Counterparty’s policies as set forth in the
Committed Facility Agreement (and to the extent such Committed Facility
Agreement has been terminated or the commitment therein has expired, the Account

 

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Agreement) and Counterparty will not pay interest on credit balances.  Balances
will be appropriately adjusted when extensions of credit are closed out.

 

(8)        The occurrence of any of the following constitutes a default by the
Fund hereunder (a “Fund Default”):  (a) a Default (as defined in the Committed
Facility Agreement), (b) an Event of Default (as defined in the Account
Agreement), or (c) Fund’s Insolvency.  Upon Counterparty’s determination that a
Fund Default has occurred, if Counterparty wishes to declare such default,
Counterparty shall notify the Fund in an Advice from Counterparty of such Fund
Default.  After transmittal by Counterparty of such Advice from Counterparty, if
such Fund Default is then continuing, Counterparty may thereupon take Default
Action or any other action permitted pursuant to the 40 Act Financing
Agreements, including without limitation, the conversion of any convertible
securities or exercise of Fund’s rights in warrants (if any) held in the Account
and the Special Custody Account, the buy-in of any securities of which the
Account may be short, and the sale of any or all property or securities in the
Account and the Special Custody Account to the extent necessary to satisfy
Fund’s obligations to Counterparty (in which event such Collateral shall be
delivered to Counterparty as directed in an Advice from Counterparty). Any sale
of Collateral made hereunder shall be made in accordance with the provisions of
the New York Uniform Commercial Code (including, without limitation section
9-610(b) of the New York Uniform Commercial Code). Fund shall be liable to
Counterparty for any deficiency which may exist after the exercise by
Counterparty of its rights and remedies as aforesaid. Any surplus resulting from
the sale of Collateral shall be transmitted to Custodian.  Counterparty shall
notify Fund of any deficiency remaining thereafter in an Advice from
Counterparty.  Any such sale of Collateral held in the Special Custody Account
shall be made only after such Collateral has been withdrawn from the Special
Custody Account by Counterparty.

 

(9)        The Counterparty hereby covenants, for the benefit of the Fund, that
the Counterparty will not instruct Custodian pursuant to an Advice from
Counterparty to deliver Collateral free of payment with respect to any sale of
Collateral pursuant to paragraph 8 until after the occurrence of the events set
forth in paragraph 8.  The foregoing covenant is for the benefit of the Fund
only and shall in no way be deemed to constitute a limitation on Custodian’s
obligation to act upon instructions pursuant to an Advice from Counterparty and
Custodian’s obligation to act upon such instructions, which instructions, for
the avoidance of doubt, may include directions to deliver Collateral to
Counterparty other than pursuant to paragraph 8 (including for other permissible
uses under the Committed Facility Agreement and Account Agreement). Custodian
shall not be required to make any determination as to whether such delivery is
made in accordance with any provisions of this Agreement or any other agreement
between the Counterparty and the Fund.

 

(10)      Reserved.

 

(11)      Custodian’s duties and responsibilities are set forth in this
Agreement.  Custodian shall act only upon receipt of an Advice from Counterparty
regarding release of Collateral, except as required by applicable law. 
Custodian shall not be liable or responsible for anything done, or omitted to be
done by it in good faith and in the absence of negligence and may rely and shall
be protected in acting upon any Advice from Counterparty which it reasonably
believes to be genuine and authorized.  As between the Fund and Custodian, the
terms of the Custody Agreement shall apply with respect to any losses or
liabilities of such parties arising out of matters covered by this Agreement;
for the avoidance of doubt, each Advice from Counterparty shall be considered a
“Proper Instruction” under the Custody Agreement and as such is subject to the
terms of the Custody Agreement and, in particular, the Fund’s indemnity

 

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of the Custodian thereunder.  As between Custodian and Counterparty,
Counterparty shall indemnify and hold Custodian harmless from and against any
losses or liabilities (including reasonable legal fees) imposed on or incurred
by Custodian subsequent to the taking of any action, or arising out of any
omission, of Custodian in compliance with any Advice from Counterparty, except
to the extent that any such loss or liability (i) results from Custodian’s
negligence, fraud, recklessness, willful misconduct or bad faith; or
(ii) represents special, consequential, punitive, exemplary or incidental
damages. In matters concerning or relating to this Agreement, Custodian shall
not be liable for the acts or omissions of any of the other parties to this
Agreement.  In matters concerning or relating to this Agreement, Custodian shall
not be responsible for compliance with any statute or regulation regarding the
establishment or maintenance of margin credit, including but not limited to
Regulations T or X of the Board of Governors of the Federal Reserve System, the
Office of the Comptroller of the Currency or the U.S. Securities and Exchange
Commission. Custodian shall have no duty to require any cash or securities to be
delivered to it or to determine that the amount and form of assets deposited in
the Special Custody Account comply with any applicable requirements.  Custodian
may hold the securities in the Special Custody Account in bearer, nominee,
book-entry, or other form and in any depository or clearing corporation
(including omnibus accounts), with or without indicating that the securities are
held hereunder; provided, however, that all securities held in the Special
Custody Account shall be identified on Custodian’s records as subject to this
Agreement and shall be in a form that permits transfer at the direction of
Counterparty without additional authorization or consent of the Fund.

 

Neither Counterparty nor Custodian shall be responsible or liable for any losses
resulting from nationalization, expropriation, devaluation, seizure, or similar
action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, levies or other charges affecting the
property in the Special Custody Account; acts of war, terrorism, insurrection or
revolution; or acts of God; or any other similar event beyond the control of
such party or its agents (any such event, a “Force Majeure Event”); provided,
that, as between the Fund and Counterparty, should any Force Majeure Event occur
with respect to Custodian and such event (a) prevents or would prevent Custodian
from releasing the Collateral to Counterparty upon an Advice from Counterparty
directing such release or (b) would inhibit Counterparty’s ability to monitor
the amount of Collateral in the Special Custody Account (each of (a) and (b), a
“Custodian Failure Event”), then during the period from the day on which the
Force Majeure Event begins (the “Force Majeure Event Day”) up to the day on
which the relevant Custodian Failure Event is no longer occurring, for purposes
of determining whether Fund has met its obligation to provide and maintain
Adequate Performance Assurance under this Agreement or to meet the Collateral
Requirements (as defined in the Committed Facility Agreement), Counterparty
shall take account only of the Collateral that was in the Special Custody
Account on the Business Day immediately prior to the Force Majeure Event Day. 
In no event shall any party to this Agreement be liable for indirect, special,
or consequential damages even if advised of the possibility or likelihood
thereof. This paragraph shall survive the termination of this Agreement.

 

(12)      The Fund hereby agrees to pay and reimburse Custodian for any
advances, costs, expenses (including, without limitation, reasonable attorney’s
fees and costs) and disbursements that may be paid or incurred by Custodian in
connection with performing its duties or responsibilities under this Agreement
or arrangements contemplated hereby, but only to the extent that the Fund has
not paid and will not pay the Custodian for such advances, costs, expenses
(including, without limitation, reasonable attorney’s fees and costs) and
disbursements pursuant to the Custody Agreement.

 

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(13)      The Counterparty shall not be liable for any losses, costs, damages,
liabilities or expenses suffered or incurred by the Fund as a result of any
transaction executed hereunder, or any other action taken or not taken by the
Counterparty hereunder for the Fund’s account at Fund’s direction or otherwise,
except to the extent that such loss, cost, damage, liability or expense is the
result of the Counterparty’s gross negligence, willful misconduct or fraud.

 

(14)      No amendment of this Agreement shall be effective unless in writing
and signed by an authorized officer of each of the Counterparty, the Fund and
Custodian.

 

(15)      Written communications hereunder, other than an Advice from
Counterparty, shall be sent by facsimile-sending device or telegraphed when
required herein, hand delivered or mailed first class postage prepaid, except
that written notice of termination shall be sent by certified mail, in any such
case addressed:

 

(a)

if to Custodian, to:

State Street Bank and Trust Company

 

 

2 Avenue de Lafayette

 

 

Boston, MA 02111

 

 

Attention: Dennis Fritchman, Senior Vice President

 

 

Facsimile No.:  617-662-9873

 

 

Telephone No.: 617-662-9817

 

 

 

 

 

 

(b)

if to the Fund, to:

Berwyn Funding LLC

 

 

c/o FS Energy and Power Fund

 

 

Cira Centre

 

 

2929 Arch Street, Suite 675

 

 

Philadelphia, PA 19104

 

 

Attn: Chief Financial Officer

 

 

Facsimile No.:

(215) 222-4649

 

 

Telephone No.:

(215) 495-1150

 

 

 

 

 

 

(c)

if to the Counterparty, to:

BNP Paribas Prime Brokerage, Inc.

 

 

787 Seventh Avenue

 

 

New York, NY 10019

 

 

Attention:

Tomer Seifan

 

 

Fax No.:

201-850-4602

 

 

Phone No.:

212-471-6565

 

 

Attention:

Alex Bergelson

 

 

Fax No.:

201-850-4601

 

 

Phone No.:

212-471-6533

 

 

 

 

 

BNP Paribas Prime Brokerage, Inc.

 

 

525 Washington Boulevard

 

 

Jersey City, NJ  07310

 

 

Attn: David Koppel

 

 

Tel:  201-850-5391

 

 

Fax: 201-850-4618

 

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Copies of Custodian’s confirmations, statements and advices issued pursuant to
paragraph 3 should be sent to:

 

State Street Bank and Trust Company

801 Pennsylvania Avenue

Kansas City, MO 64105

Attn:    Vice President, Mutual Funds

Facsimile No.:  816-871-9451

Telephone No.:   816-871-4000

 

(16)      Any of the parties hereto may terminate this Agreement by thirty (30)
days’ prior written notice to the other parties hereto; provided, however, that
the status of any Collateral pledged to the Counterparty at the time of such
notice shall not be affected by such termination until the release of such
pledge pursuant to the terms of the Account Agreement and any applicable Margin
Rules.  Upon termination of this Agreement or the Custody Agreement, (a) all
assets of the Fund held in the Special Custody Account shall be transferred to a
successor custodian specified by the Fund and reasonably acceptable to
Counterparty in its good faith discretion.

 

(17)      Nothing in this Agreement prohibits the Counterparty, the Fund or
Custodian from entering into similar agreements with others in order to
facilitate options or other derivatives transactions and as contemplated by the
Committed Facility Agreement and Account Agreement.

 

(18)      Custodian has not entered into, and until the termination of this
Agreement will not enter into, any agreement with any person (other than the
Counterparty) relating to the Special Custody Account and/or any financial asset
credited thereto pursuant to which it has agreed, or will agree, to comply with
entitlement orders of such person.

 

(19)      If any provision or condition of this Agreement shall be held to be
invalid or unenforceable by any court, or regulatory or self-regulatory agency
or body, such invalidity or unenforceability shall attach only to such provision
or condition.  The validity of the remaining provisions and conditions shall not
be affected thereby and this Agreement shall be carried out as if any such
invalid or unenforceable provision or condition were not contained herein.

 

(20)      All references herein to times of day shall mean the time in New York,
New York, U.S.A.

 

(21)      This Agreement and its enforcement (including, without limitation, the
establishment and maintenance of the Special Custody Account and all interests,
duties and obligations related thereto) shall be governed by the laws of the
State of New York without regard to its conflicts of law rules other than Title
14 of Article 5 of the New York General Obligations Law.  This Agreement shall
be binding on the parties and any successor organizations thereof irrespective
of any change or changes in personnel thereof.  Any litigation between any of
the parties to this Agreement or involving their respective property must be
instituted in the United States District Court for the Southern District of New
York or the Supreme Court of the State of New York for the County of New York.
Each party hereby irrevocably waives, to the fullest extent permitted by
applicable law, any objection, including any objection to the laying of venue or
based on the grounds of forum non conveniens, which it may now or hereafter have
to the bringing of any such action or proceeding in such courts.  Each party
hereby agrees that a judgment in any such dispute may be enforced in other
jurisdictions

 

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by suit on the judgment or in any other manner provided by law.  Any right to
trial by jury with respect to any claim, action, proceeding or counterclaim or
other legal action is hereby waived by all parties to this agreement.

 

(22)      This Agreement may be signed in counterparts, all of which shall
constitute but one and the same instrument.

 

(23)      For the avoidance of doubt, the Fund and Custodian agree that, except
for the rights of control in favor of Counterparty agreed to herein, nothing
herein shall amend the terms of the Custody Agreement.

 

(24)      Counterparty may, upon notice to the Fund and Custodian, assign its
rights or any interest under this agreement to any affiliate of Counterparty
(including, without limitation, BNP Paribas Prime Brokerage International,
Ltd.).

 

 

 

[Remainder of Page Intentionally Left Blank]

 

-10-

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BERWYN FUNDING LLC

 

By:

/s/ Gerald F. Stahlecker

 

 

 

Name:

Gerald F. Stahlecker

 

 

Title:

Executive Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BNP PARIBAS PRIME BROKERAGE, INC.

 

 

 

 

 

By:

/s/ Jeffrey Lowe

 

 

 

Name:

Jeffrey Lowe

 

 

Title:

Managing Director

 

 

 

 

 

 

 

 

 

 

By:

/s/ Chris Innes

 

 

 

Name:

Chris Innes

 

 

Title:

Managing Director

 

 

 

 

 

 

 

 

 

 

 

STATE STREET BANK AND TRUST COMPANY

 

 

 

 

 

By:

/s/ George Sullivan

 

 

 

Name:

George Sullivan

 

 

Title:

Executive Vice President

 

 

 

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