FS Investment Corporation IV 8-K [fsiciv-8k_021017.htm]

 

Exhibit 10.2

 

 

(BNP PARIBAS LOGO) [exhibit10-2_001.jpg]  Execution copy    

 

U.S. PB Agreement

This U.S. PB Agreement (including all terms, schedules, supplements and exhibits
attached hereto, this “Agreement”) is entered into between the customer
specified below (“Customer”) and BNP Paribas Prime Brokerage International, Ltd.
(“BNPP PB”) on behalf of itself and as agent for the BNPP Entities (as defined
in the Account Agreement attached as Exhibit A hereto). The Agreement sets forth
the terms and conditions on which BNPP PB will transact business with Customer.
Customer and BNPP PB, on behalf of itself and as agent for the BNPP Entities,
have also entered into the Account Agreement.

All terms, provisions and agreements set forth in each agreement listed below
are hereby incorporated herein by reference with the same force and effect as
though fully set forth herein, all of which taken together shall constitute a
single, integrated agreement. All capitalized terms not defined herein shall
have the respective meanings assigned to them in the Account Agreement.

(a)Account Agreement, attached as Exhibit A hereto;

(b)Rehypothecation Exhibit, attached as Exhibit B hereto;

IN WITNESS WHEREOF, the parties have caused this U.S. PB Agreement to be duly
executed and delivered as of March 1, 2017.

 

BNP PARIBAS PRIME BROKERAGE INTERNATIONAL, LTD.,
for itself and as agent for the BNPP Entities  

By:

/s/ Jeffrey Lowe   Name: Jeffrey Lowe   Title: Managing Director    

By:

/s/ JP Muir   Name: JP Muir   Title: Managing Director

 

 

 

 

(BNP PARIBAS LOGO) [exhibit10-2_001.jpg]

 

Broomall funding llc   Name of Customer      

By:

/s/ Gerald F. Stahlecker      Name: Gerald F. Stahlecker     Title: Executive
Vice President         Delaware   Jurisdiction of organization   Limited
Liability Company   Type of organization   Philadelphia, Pennsylvania   Place of
business / chief executive office   6134466   Organizational identification
number  

Addresses for Notices to Customer

Address: c/o FS Investment Corporation IV, 201 Rouse Boulevard, Philadelphia, PA
19112

Attention: Edward T. Gallivan, Jr., Chief Financial Officer

 

Telephone: (215) 495-1150 Fax: (215) 222-4649 Email:
ted.gallivan@franklinsquare.com

 

 

 

 

Exhibit A to U.S. PB Agreement – Account Agreement

 

 

This account agreement (including all schedules attached hereto, this “Account
Agreement”) is entered into between Customer and BNP PARIBAS PRIME BROKERAGE
INTERNATIONAL, LTD. (“BNPP PB”), on behalf of itself and as agent for the BNPP
Entities. This Account Agreement is incorporated as an exhibit to the U.S. PB
Agreement (the “Agreement”) and sets forth the terms and conditions on which
BNPP PB will open and maintain accounts (the “Accounts”) for cash loans and
other products or services and otherwise transact business with Customer.
Certain capitalized terms used in this Agreement are defined in Section 18.

 

1. Collateral Maintenance, Repayment of Financing - The provisions of this
Subsection shall apply except to the extent any such provisions contravene the
Committed Facility Agreement (as defined herein) and such Committed Facility
Agreement has not been terminated or the commitment therein has not expired.
Customer will at all times maintain in, and upon written (including, without
limitation, via electronic mail) demand furnish to, the Accounts, or otherwise
provide to the BNPP Entities in a manner satisfactory to the BNPP Entities,
assets of the types and in the amounts required by the BNPP Entities in
accordance with the terms of the outstanding Contracts (“Deliverable
Collateral”) as follows: if the relevant demand is made on or before 11:00 a.m.
New York time on any Business Day, Customer shall meet such demand by the close
of business on that Business Day; if the relevant demand is made after 11:00
a.m. New York time on any Business Day, Customer shall meet such demand by the
close of business on the following Business Day. Immediately upon written or
oral demand by BNPP PB, Customer shall pay to BNPP PB in immediately available
U.S. funds any principal balance of, accrued unpaid interest on, and any other
Obligation owing in respect of, any Account.    

2.Security Interest -    

(a)Grant of Security Interest. Customer hereby assigns and pledges to the BNPP
Entities all Collateral, and Customer hereby grants a continuing first-priority
security interest therein, a lien thereon and a right of set off against any
Collateral, and all such Collateral shall be subject to a general lien and a
continuing first-security interest and fixed charge, in each case securing the
discharge of all Obligations and the termination of all Contracts, whether now
existing or hereafter arising and irrespective of whether or not any of the BNPP
Entities have made advances in connection with such Collateral, and irrespective
of the number of accounts Customer may have with any of the BNPP Entities, and
of which BNPP Entity holds such Collateral.    

(b)No other Liens. All Collateral delivered to a BNPP Entity shall be free and
clear of all prior liens, claims and encumbrances (other than liens solely in
favor of the BNPP Entities), and Customer will not cause or allow any of the
Collateral, whether now owned or hereafter acquired, to be or become subject to
any liens, security interests, mortgages or encumbrances of any nature other
than security interests solely in the BNPP Entities’ favor. Furthermore,
Collateral consisting of securities shall be delivered in good deliverable form
(or the BNPP Entities shall have the power to place such securities in good
deliverable form) in accordance with the requirements of the primary market or
markets for such securities.

(c)Perfection. Customer shall execute such documents and take such other actions
as the BNPP Entities shall reasonably request in order to perfect the BNPP
Entities’ rights with respect to any such Collateral. Without limiting the
generality of the foregoing, Customer agrees to record the security interests
granted hereunder in any internal or external register of mortgages and charges
maintained by or with respect to Customer under Applicable Law. Customer shall
pay the fees for any filing, registration, recording or perfection of any
security interest contemplated by this Agreement and pay, or cause to be paid,
from the Accounts any and all Taxes imposed on the Collateral by any authority.
In addition, Customer appoints the BNPP Entities as Customer’s attorney-in-fact
to act on Customer’s behalf to sign, seal, execute and deliver all documents,
and do all acts, solely as may be required, or as any BNPP Entity shall
determine in good faith to be advisable, to perfect the security interests
created hereunder in, provide for any BNPP Entity to have control of, or realize
upon any rights of any BNPP Entity in, any or all of the Collateral. The BNPP
Entities and Customer each acknowledge and agree that each account maintained by
any of the BNPP Entities to which any Collateral is credited is a “securities
account” within the meaning of Article 8 of the Uniform Commercial Code, as in
effect in the State of New York (the “NYUCC”), and all property and assets held
in or credited from time to time to such an account shall be treated as a
“financial asset” for purposes of Article 8 of the NYUCC, provided that any such
account may also be a “deposit account” (within the meaning of Section
9-102(a)(29) of the NYUCC) or a “commodity account” (within the meaning of
Section 9-102(a)(14) of the NYUCC). Each BNPP Entity represents and warrants
that it is a “securities intermediary” within the meaning of Article 8 of the
NYUCC and is acting in such capacity with respect to each such account
maintained by it.    

(d)Effect of Security Interest. The BNPP Entities’ security interest in the
Collateral shall (i) remain in full force and effect until the payment and
performance in full of Customer’s Obligations, (ii) be binding upon Customer,
its successors and permitted assigns, and (iii) inure to the benefit of, and be
enforceable by, the BNPP Entities and their respective successors, transferees
and assigns.    

(e)Contract Status. The parties acknowledge that this Agreement and each
Contract entered into pursuant to this Agreement are each a “securities
contract”, “swap agreement,” “forward contract,” or “commodity contract” within
the meaning of the United States Bankruptcy Code (Title 11 of the United States
Code) (the “Bankruptcy Code”) and that each delivery, transfer, payment and
grant of a security interest made or required to be made hereunder or thereunder
or contemplated hereby or thereby or made, required to be made or contemplated
in connection herewith or therewith is a “transfer” and a “margin payment” or a
“settlement payment” within the meaning of Sections 362(b)(6),(7),(17) and/or
(27) and Sections 546(e), (f), (g) and/or (j) of the Bankruptcy Code. The
parties further acknowledge that this Agreement is a “master netting agreement”
within the meaning of the Bankruptcy Code and a “netting contract” within the
meaning of the Federal Deposit Insurance Corporation Improvement Act of 1991.

 

 

 

 

3.Maintenance of Collateral -    

(a)General. Each BNPP Entity that holds Collateral holds such Collateral for
itself and also as agent and bailee for all other BNPP Entities that are secured
parties under any Contract or as to which Customer has any Obligation. Except
where otherwise required by Applicable Law or where adverse regulatory capital,
reserve or other similar costs (“Adverse Costs”) would thereby arise, the
security interests of the BNPP Entities in any Collateral shall rank in such
order of priority as the BNPP Entities may agree from time to time; provided,
however, that BNPP PB shall have first-priority interest in the assets that it
holds other than assets held in a cash account. In the event that any BNPP
Entity is obliged by Applicable Law to maintain a first-priority lien, or where
such BNPP Entity would suffer Adverse Costs if it did not maintain a
first-priority lien, such BNPP Entity’s interest in the applicable Collateral
shall have priority over that of the other BNPP Entities to the extent required
to satisfy the requirements of Applicable Law or avoid such Adverse Costs. In
the event that two or more BNPP Entities are so obliged to maintain a
first-priority lien, or would suffer Adverse Costs if they did not maintain a
first-priority lien, such BNPP Entities shall determine among themselves the
priority of their respective interests in the relevant Collateral.
Notwithstanding anything herein to the contrary, except as otherwise agreed
among the BNPP Entities, the security interest of the BNPP Entities in any
Collateral consisting of the Customer’s right, title or interest in, to or under
any Contract shall be subject to any enforceable right of setoff or netting
(including, without limitation, any such right granted pursuant to Section 8
hereof) that any BNPP Entity that is party to such Contract may have with
respect to the obligations of the Customer to such BNPP Entity (whether arising
under such Contract or any other Contract).    

(b)Transfers of Collateral between Accounts. Customer agrees that the BNPP
Entities, at any time, at any BNPP Entity’s discretion and subject to using good
faith efforts to provide prior notice to Customer, may use, apply, or transfer
any and all Collateral interchangeably between the BNPP Entities in any accounts
in which Customer has an interest. With respect to Collateral pledged
principally to secure Obligations under any Contract, the BNPP Entities shall
have the right, but in no event the obligation, to apply all or any portion of
such Collateral to Customer’s Obligations to any of the BNPP Entities under any
other Contract, to transfer all or any portion of such Collateral to secure
Customer’s Obligations to any of the BNPP Entities under any other Contract or
to release any such Collateral. Under no circumstances shall any Collateral
pledged

  principally to secure Obligations to any of the BNPP Entities under any
Contract be required to be applied or transferred to secure Obligations to any
of the other BNPP Entities or to be released if (i) any BNPP Entity determines
that such transfer would render it undersecured with respect to any Obligations,
(ii) an event of default has occurred and is continuing with respect to Customer
under any Contract or Obligation or (iii) any such application, transfer or
release would be contrary to Applicable Law.    

(c)Control by BNPP Entities. Each BNPP Entity that (i) is the securities
intermediary in respect of any securities account constituting Collateral, or to
which any Collateral is credited or in which any Collateral is held or carried,
agrees that it will comply with entitlement orders originated by any other BNPP
Entity with respect to any such securities account or Collateral without any
further consent by Customer, (ii) is the bank in respect of any deposit account
constituting Collateral, or to which any Collateral is credited or in which any
Collateral is held or carried, agrees with Customer and each other BNPP Entity
(each of whom so agrees with it) that it will comply with instructions
originated by any other BNPP Entity directing disposition of the funds in such
deposit account without further consent by Customer and (iii) is the commodity
intermediary in respect of any commodity contract or commodity account
constituting Collateral, or any commodity account to which any Collateral is
credited or in which any Collateral is held or carried, agrees with Customer and
each other BNPP Entity (each of whom so agrees with it) that it will apply any
value on account of any such Collateral as directed by any other BNPP Entity
without further consent by Customer. Customer hereby consents to the foregoing
agreements of the BNPP Entities. Each of the BNPP Entities that is the
securities intermediary, commodity intermediary or bank with respect to any such
securities, commodity or deposit account or any such commodity contract
represents and warrants that it has not, and agrees that it will not, agree to
comply with entitlement orders, directions or instructions concerning any such
account or any security entitlements, financial assets, commodity contracts or
funds credited thereto or held or carried thereon that are originated by any
person other than (i) a BNPP Entity or (ii) (until a BNPP Entity shall have
given a “notice of sole control”) Customer. Each BNPP Entity hereby notifies
each other BNPP Entity of its security interest in, and the assignment by way of
security to it of, the Collateral. Each BNPP Entity acknowledges such notice
from each other BNPP Entity and each BNPP Entity and Customer consent to the
security interest granted by this Section. For the avoidance of doubt, each BNPP
Entity when not acting in its capacity as a securities intermediary agrees that
it shall not issue an entitlement order unless and until an amount is owing by
Customer pursuant to the terms of the Agreement or an Event of Default with
respect to Customer has occurred and is continuing.    

4.Rehypothecation - See Exhibit B.   

5.Representations and Warranties - Customer (and, if a person or entity is
signing this Agreement on behalf of Customer, such person or entity, on behalf
of Customer and not in any individual capacity) hereby represents and warrants
as of the date hereof, which representations and warranties will be deemed
repeated on each date on which this Agreement is in effect, that:

 

2 

 

 

(a)Due Organization; Organizational Information. Customer is duly organized and
validly existing under the laws of the jurisdiction of its organization;
Customer’s jurisdiction of organization, type of organization, place of business
(if it has only one place of business) or chief executive office (if it has more
than one place of business) and organizational identification number are, in
each case as set forth on the cover page hereof or as shall have been notified
to BNPP PB not less than 30 days prior to any change of such information; and
unless Customer otherwise informs BNPP PB in writing, Customer does not have any
place of business in the United Kingdom.    

(b)Non-Contravention; Compliance with Applicable Laws. Customer is and will at
all times be, in compliance with (i) Applicable Law that relates to (a)
felonies, (b) fraud, (c) activities related to the conduct of Customer’s
business or (d) activities related to the securities industry (except in the
case of (c) or (d), where the failure to do so would not have a material adverse
effect on Customer or its ability to perform under the Contracts, as determined
by the BNPP Entities), (ii) all orders and awards binding on Customer or its
property, (iii) Customer’s internal documents and policies (including
organizational documents) (except where such failure would not have a material
adverse effect on Customer or its ability to perform under the Contracts, as
determined by the BNPP Entities), and (iv) all material contracts (including
this Agreement) or other instruments binding on or affecting Customer or any of
its property. Further, Customer maintains adequate controls to be reasonably
assured of such compliance. To the best of the Customer’s knowledge, there are
and have been no legal or governmental proceedings or investigations pending or
threatened to which Customer or any Related Person is a party or to which any of
the properties of Customer or any Related Person is subject. Further, to
Customer’s knowledge, the education, employment and other qualifications for the
officers for the Customer in the prospectus provided to any investors or
otherwise made available by the Customer are correct in all material respects.
   

(c)Full Power. Customer has full power and is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder. Customer has
full power to enter into and engage in any and all transactions (i) in any
Account with any BNPP Entity or (ii) that is subject to this Agreement. Further,
this Agreement has been duly executed and delivered by Customer, and constitutes
a valid, binding and enforceable agreement of Customer, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and general principles of
equity.    

(d)No Consent. No consent of any person and no authorization or other action by,
and no notice to, or filing with, any governmental authority or any other person
is required that has not already been obtained (i) for the due execution,
delivery and performance by Customer of this Agreement; or (ii) for the exercise
by any of the BNPP Entities of

  the rights or remedies provided for in this Agreement, including rights and
remedies in respect of the Collateral.    

(e)No Prior Lien. Customer is the lawful owner of all Collateral, free and clear
of all liens, claims, encumbrances and transfer restrictions, except such as are
created under this Agreement, other liens in favor of one or more BNPP Entities,
and Customer will not cause or allow any of the Collateral, whether now owned or
hereafter acquired, to be or become subject to any liens, security interests,
mortgages or encumbrances of any nature other than those in favor of the BNPP
Entities. No person (other than any BNPP Entity) has an interest in any Account
or any other accounts of Customer with any of the BNPP Entities, any Collateral
or other assets or property held therein or credited thereto or any other
Collateral. Unless Customer has notified BNPP PB to the contrary, none of the
Collateral are “restricted securities” as defined in Rule 144 under the
Securities Act of 1933, as amended.    

(f)ERISA. (i) The assets used to consummate the transactions provided hereunder
shall not constitute the assets of (A) an “employee benefit plan” that is
subject to Part 4, Subtitle B, Title I of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), (B) a “plan” within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), that
is subject to Section 4975 of the Code, or (C) a person or entity the underlying
assets of which are deemed to include plan assets as determined under Section
3(42) of ERISA and the regulations thereunder, and (ii) either (A) the assets
used to consummate the transactions provided hereunder shall not constitute the
assets of a governmental plan that is subject to any federal, state or local law
that is substantially similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code (a “Similar Law”) or (B) the transactions hereunder do
not violate any applicable Similar Law. Customer will notify BNPP PB (1) if
Customer is aware in advance that it will breach the foregoing representation
and warranty (the “Representation”), reasonably in advance of it breaching the
Representation, or (2) promptly upon becoming aware that it is in breach of the
Representation. If Customer provides such notice or if BNPP PB is aware that
Customer is in breach or will be in breach of the Representation, upon a BNPP
Entity’s written request, Customer will terminate any or all transactions under
this Agreement (x) if Customer gave advance notice that it would breach the
Representation, prior to breaching the Representation, (y) if Customer gave no
notice but BNPP PB is aware that Customer will be in breach of the
Representation, prior to breaching the Representation (unless Customer avoids
the occurrence of such breach) or, (z) if Customer is in breach of the
Representation, immediately.

 

3 

 

 

(g)Market Timing. Customer does not presently engage in and will not engage in
any Market-Timing Trading Activity, and Customer will not use the proceeds of
any financing in furtherance of any Market-Timing Trading Activity. Customer
does not presently engage in and will not engage in any transactions and does
not and will not cause any person to engage in any transactions, that would
constitute, for any party to such transactions, a violation of (i) Rule 22c-1 of
the Investment Company Act or (ii) analogous Applicable Law relating to the
timing of purchases, sales and exchanges of non-U.S. mutual funds, non-U.S. unit
trusts or analogous non-U.S. investment vehicles. Customer will not use the
proceeds of any financing to invest, whether directly or indirectly, in
Market-Timing Investment Entities and Customer is, and at all times will be, in
compliance with (i) Investment Company Act Rule 22c-1 in connection with the
purchase, sale and exchange of all U.S. mutual funds and (ii) all analogous
Applicable Law relating to the timing of purchases, sales and exchanges of
non-U.S. mutual funds, non-U.S. unit trusts or analogous non-U.S. investment
vehicles. To the extent that Customer learns that Customer has invested in a
Market-Timing Investment Entity, Customer shall promptly notify BNPP PB of such
investment, including the name of each such Market-Timing Investment Entity and
the amount of the investment, as well as Customer’s plan to divest Customer’s
investment in such entity in a timely manner, and Customer shall promptly
commence such divestment and complete the same in a timely manner.    

(h)Information Provided by Customer; Financial Statements. Any information
provided by Customer to any BNPP Entity in connection with this Agreement is
correct in all material respects and Customer agrees promptly to notify the
relevant BNPP Entity if there is any material change with respect to any such
information. Customer’s financial statements or similar documents previously or
hereafter provided to the BNPP Entities (i) do or will fairly present the
financial condition of Customer as of the date of such financial statements and
the results of its operations for the period for which such financial statements
are applicable, (ii) have been prepared in accordance with generally accepted
accounting principles in the United States consistently applied and, (iii) if
audited, have been certified without reservation by a firm of independent public
accountants. Customer will promptly furnish to the relevant BNPP Entity any
information (including financial information) about Customer upon such BNPP
Entity’s reasonable request.    

(i)Anti-Money Laundering. To the best of Customer’s knowledge, none of Customer,
any person controlling or controlled by Customer, any person having a beneficial
interest in Customer, or any person for whom Customer acts as agent or nominee
in connection herewith is: (i) an individual or entity, country or territory,
that is named on a list issued by the U.S. Department of the Treasury’s Office
of Foreign Assets Control (“OFAC”), or an individual or entity that resides, is
organized or chartered, or has a place of business, in a country or territory
subject to OFAC’s various sanctions/embargo programs; (ii) a resident in, or
organized or chartered under the laws of (A) a jurisdiction that has been
designated by the Secretary of the Treasury under the USA PATRIOT Act as
warranting special measures and/or as being of primary money laundering concern,
or (B) a jurisdiction that has been designated as non-cooperative with
international anti-money laundering principles by a multinational or
inter-governmental group such as the Financial Action Task Force on Money
Laundering (“FATF”) of which the United States is

  a member; (iii) a financial institution that has been designated by the
Secretary of the Treasury as warranting special measures and/or as being of
primary money laundering concern; (iv) a “senior foreign political figure,” or
any “immediate family” member or “close associate” of a senior foreign political
figure, in each case within the meaning of Section 5318(i) of Title 31 of the
United States Code or regulations issued thereunder; or (v) a prohibited
“foreign shell bank” as defined in Section 5318(j) of Title 31 of the United
States Code or regulations issued thereunder, or a U.S. financial institution
that has established, maintains, administers or manages an account in the U.S.
for, or on behalf of, a prohibited “foreign shell bank”.    

BNPP PB hereby represents and warrants as of the date hereof, which
representations and warranties will be deemed repeated on each date on which
this Agreement is in effect, that:

    (x)BNPP PB is duly organized and validly existing under the laws of the
jurisdiction of its organization;    

(y)BNPP PB has full power and is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder. BNPP PB has full power to
enter into and engage in any and all transactions (i) in any Account or (ii)
that is subject to this Agreement. Further, this Agreement has been duly
executed and delivered by BNPP PB, and constitutes a valid, binding and
enforceable agreement of BNPP PB, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and general principles of equity; and    

(z)To the best of its knowledge, no consent of any person and no authorization
or other action by, and no notice to, or filing with, any governmental authority
or any other person is required that has not already been obtained for the due
execution, delivery and performance by BNPP PB of this Agreement.    

6.Short Sales - Customer agrees to comply with Applicable Law relating to short
sales, including, but not limited to, any requirement that Customer designate a
sale as “long” or “short”.    

7.No Obligation - Customer agrees that BNPP PB shall be under no obligation to
effect or settle any trade on behalf of Customer and that BNPP PB reserves the
right at any time to place a limit on the type or size of transactions which are
to be settled and cleared by BNPP PB For the avoidance of doubt, no BNPP Entity
is required to extend, renew or “roll-over” any Contract or transaction
including, but not limited to, any Contract executed on an “open” basis or
demand basis with Customer, notwithstanding past practice or market custom.

 

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8.Events of Default; Setoff -    

(a)Events of Default. The following Events of Default shall apply only to the
extent the Committed Facility Agreement has been terminated or the commitment
therein has expired. (i) In the event of default by Customer on any Obligation
under any transaction or contract or a default, event of default, declaration of
default, termination event, exercise of default remedies, or other similar
condition or event under any transaction or contract (howsoever characterized,
which, for the avoidance of doubt, includes the occurrence of an Additional
Termination Event or Specified Condition under an ISDA Master Agreement between
Customer and any BNPP Entity, affiliate of a BNPP Entity or a third party
entity, if applicable) in respect of Customer, (ii) if Customer shall become
bankrupt, insolvent, or subject to any bankruptcy, reorganization, insolvency or
similar proceeding or all or substantially all its assets become subject to a
suit, levy, enforcement, or other legal process where a secured party maintains
possession of such assets, has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a consolidation, amalgamation
or merger), seeks or becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets, has a
secured party take possession of all or substantially all its assets, or takes
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts, or (iii) if any representation or
warranty made or deemed made by Customer under the Agreement proves false or
misleading when made or deemed made (each of the foregoing, an “Event of
Default”), BNPP PB and any and all the BNPP Entities are hereby authorized, in
their discretion, upon the occurrence of such Event of Default, if such Event of
Default is then continuing, to take Default Action upon prior written notice to
Customer. If BNPP PB or any other BNPP Entity elects to sell any Collateral, buy
in any property, or cancel any orders upon an Event of Default, such sale,
purchase or cancellation may be made on the exchange or other market where such
business is then usually transacted, or at public auction or at private sale,
without advertising the same and without any notice of the time or place of sale
to Customer or to the personal representatives of Customer, and without prior
tender, demand or call of any kind upon Customer or upon the personal
representatives of Customer, all of which are expressly waived. The BNPP
Entities will comply with NYUCC Section 9-610(b), to the extent applicable, when
exercising any such sale, purchase or cancellation. The BNPP Entities may
purchase or sell the property to or from any BNPP Entity or third parties in
whole or in any part thereof free from any right of redemption, and Customer
shall remain liable for any deficiency. A prior tender, demand or call of any
kind from the BNPP Entities, or prior notice from the BNPP Entities, of the time
and place of such sale or purchase shall not be considered a waiver of the BNPP
Entities’ right to sell or buy any Collateral at any time as provided herein.
   

(b)Close-out. Upon the Close-out of any Contract, the Close-out Amount for such
Contract shall be due. If, however, Applicable Law would stay or otherwise
impair the enforcement of the provisions of this Agreement or any Contract upon
the occurrence of an insolvency related Close-out or Event of Default, then
Close-out shall automatically occur immediately prior to the occurrence of such
insolvency related Close-out or Event of Default.    

(c)Setoff. Upon the occurrence of an Event of Default, BNPP PB and any and all
BNPP Entities are hereby authorized, in their discretion, to set off

  and otherwise apply any and all of the obligations of any and all BNPP
Entities then due to Customer against any and all Obligations of Customer then
due to such BNPP Entities (whether at maturity, upon acceleration or termination
or otherwise). Without limiting the generality of the foregoing, upon the
occurrence of the Close-out of any Contract, each BNPP Entity shall have the
right to net the Close-out Amounts due from it to Customer and from Customer to
it, so that a single settlement payment (the “Net Payment”) shall be payable by
one party to the other, which Net Payment shall be immediately due and payable
(subject to the other provisions hereof and of any Contract); provided that if
any Close-out Amounts may not be netted against all other Close-out Amounts,
such excluded Close-out Amounts shall be netted among themselves to the fullest
extent permitted under Applicable Law. Upon the occurrence of a Close-out, each
BNPP Entity may also (i) liquidate, apply and set off any or all Collateral
against any Net Payment, payment, or Obligation owed to it or any other BNPP
Entity under any Contract and (ii) set off and net any Net Payment, payment or
obligation owed by it or any other BNPP Entity under any Contract against (x)
any or all collateral or margin (or the Cash value thereof) posted by it or any
other BNPP Entity to Customer under any Contract and (y) any Net Payment,
payment or Obligation owed by Customer to any BNPP Entity (whether mature or
unmatured, fixed or contingent, liquidated or unliquidated).    

(d)Reinstatement of Obligations. If the exercise of any right to reduce and
set-off pursuant to this Agreement shall be avoided or set aside by a court or
shall be restrained, stayed or enjoined under Applicable Law, the obligations in
respect thereof shall be reinstated or, in the event of restraint, stay or
injunction, preserved in at least the amounts as of the date of restraint, stay
or injunction between the applicable BNPP Entities, on the one hand, and
Customer on the other, until such time as such restraint, stay or injunction
shall no longer prohibit exercise of such right.    

(e)BNPP Entity Consent. No BNPP Entity shall make any payment to Customer in
respect of a Close-Out Amount without the consent of each other BNPP Entity that
has a security interest in such Close-Out Amount.    

(f)BNPP Insolvency. If the Securities Investor Protection Corporation files an
application for a protective decree against BNPP PB, Customer shall, subject to
Applicable Law and any general principles of equity, regardless of whether
considered in a proceeding in equity or law, have the contractual right to
set-off or net any Obligations owed by Customer to BNPP PB against any
obligations owed by BNPP PB to Customer under this Agreement.    

9.Indemnity -    

(a)General. Customer agrees to indemnify and hold the BNPP Entities harmless
from and fully reimburse the BNPP Entities for any Indemnified Losses. The
indemnities under this Section 9 shall be separate from and in addition to any
other indemnity under any Contract.    

(b)Delivery Failures. In case of the sale of any security, commodity, or other
property by the BNPP Entities at the direction of Customer and the BNPP
Entities’ inability to deliver the same to the purchaser by reason of failure of
Customer to supply the BNPP Entities therewith, Customer authorizes the BNPP
Entities to borrow or purchase any such security, commodity, or other property
reasonably necessary to make delivery thereof. Customer hereby agrees to be
responsible for any cost, expense or loss which the BNPP Entities may sustain
thereby, except any such loss caused by a BNPP Entity’s gross negligence,
willful misconduct or fraud.

 

5 

 

 

10.Limitation of Liability -    

(a)General. None of the BNPP Entities, nor any of their respective officers,
directors, employees, agents or counsel, shall be liable for any action taken or
omitted to be taken by any of them hereunder or in connection herewith except
for the gross negligence, willful misconduct or fraud of the applicable BNPP
Entity as specified in Section 10(b).    

(b)Third Parties. The BNPP Entities may execute any of their duties and exercise
their rights hereunder by or through agents (which may include affiliates) or
employees. None of the BNPP Entities shall be liable for the acts or omissions
of any subcustodian or other agent selected by it with reasonable care, unless
such subcustodian is an affiliate of any BNPP Entity, except to the extent
caused by the relevant BNPP Entity’s failure to monitor or reasonably appoint
such sub-custodian or agent, as set forth below. Upon Customer’s request, BNPP
PB will provide Customer with a list of sub-custodians or other third parties
employed by it to custody Customer’s Collateral and will use best efforts to
give prior notice to Customer of any changes in the identity of sub-custodians
or third parties employed by BNPP PB to custody Customer’s Collateral, but only
to the extent that such change affects the custody of Customer’s Collateral.
BNPP PB will be responsible to Customer for satisfying itself as to the ongoing
suitability of such sub-custodians to provide custodial services to customers of
BNPP PB as a general matter. BNPP PB will maintain what it considers to be an
appropriate level of supervision over such sub-custodians and will make
appropriate inquiries, as determined by BNPP PB, periodically to confirm that
the obligations of such sub-custodians continue to be competently discharged.
All transactions effected with a third party for Customer shall be for the
account of Customer and the BNPP Entities shall have no responsibility to
Customer or such third party with respect thereto. Nothing in this Agreement
shall create, or be deemed to create, any third party beneficiary rights in any
person or entity (including any investor or adviser of Customer), other than the
BNPP Entities.    

(c)No Liability for Indirect, Consequential, Exemplary or Punitive Damages;
Force Majeure. In no event shall the BNPP Entities or Customer be held liable
for indirect, consequential, exemplary or punitive damages. In no event shall
the BNPP Entities be held liable for any loss of any kind caused, directly or
indirectly, by any Force Majeure Event.    

11.Taxes -   

(a)Withholding Tax. Except as required by Applicable Law, each payment by
Customer and

  all deliveries of Deliverable Collateral or Collateral under this Agreement
shall be made, and the value of any Deliverable Collateral or Collateral shall
be calculated, without withholding or deducting any Taxes. If any Taxes are
required to be withheld or deducted, Customer shall pay such additional amounts
as necessary to ensure that the actual net amount received by the BNPP Entities
is equal to the amount that the BNPP Entities would have received had no such
withholding or deduction been required. Customer will provide the BNPP Entities
with any forms or documentation reasonably requested by the BNPP Entities in
order to reduce or eliminate withholding tax on payments made to Customer with
respect to this Agreement. The BNPP Entities are hereby authorized to withhold
Taxes from any payment in delivery made hereunder and remit such Taxes to the
relevant taxing authorities to the extent required by Applicable Law.    

(b)Qualified Dividends. Customer acknowledges that, with respect to the reduced
U.S. federal income tax rate that applies to dividends received from U.S.
corporations and certain foreign corporations by individuals who are citizens or
residents of the United States, (i) the individual must satisfy applicable
holding period requirements in order to be eligible for the reduced tax rate;
(ii) the reduced tax rate does not apply to substitute or “in lieu” dividend
payments paid to shareholders by broker-dealers under cash lending or securities
lending arrangements which permit the broker-dealers to borrow securities from
investors; and (iii) the reduced tax rate may not apply to dividends received
from certain corporations, including money market funds, bond mutual funds, and
Real Estate Investment Trusts. Customer further acknowledges that although
Customer may receive from BNPP PB a Form 1099-DIV indicating which dividends may
qualify for the reduced tax rate, as required by applicable rules, Customer is
responsible for determining which dividends qualify for the reduced tax rate
based on Customer’s own tax situation.    

(c)Income and Other Taxes. Except as otherwise expressly stated herein: (i) the
BNPP Entities have no obligation or responsibility to Customer with respect to
the accounting or reporting of income or other taxes with respect to the
execution, delivery and performance of this Agreement, each related agreement
and each transaction hereunder or thereunder (for the sake of clarity,
including, without limitation, with respect to any related margin lending
agreement and each related transaction) (each a “Transaction”), including,
without limitation, unrelated business taxable income under section 514 of the
Code; and (ii) Customer shall alone be responsible for the payment of any and
all taxes and related penalties, interests and costs arising from or relating to
the Transactions. Customer represents and warrants, on and as of the date hereof
and each date any Transaction remains outstanding, that Customer has in place
policies and procedures necessary to ensure proper accounting and reporting of
any and all taxation of the Customer and/or Accounts in connection with the
Transactions.

 

6 

 

 

12.Notices; Instructions -    

 (a)Notices. All notices and other communications provided hereunder shall be
(i) in writing (including, for avoidance of doubt, electronic mail) and
delivered to the address of the intended recipient specified on the cover page
hereof or to such other address as such intended recipient may provide or (ii)
posted onto the website maintained by BNPP PB for Customer (except for default
and margin notices) or (iii) in such other form agreed to by the parties. All
communications sent to Customer or a BNPP Entity shall be deemed delivered to
Customer or such BNPP Entity, as applicable, as of (x) the date sent, if sent
via facsimile, email or posted onto the Internet, (y) the date the messenger
arrives at Customer’s address as set forth on the signature page hereof or such
BNPP Entity’s address, if sent via messenger; or (z) the next Business Day if
sent via mail, in each case, whether actually received or not. Failure by
Customer to object in writing to any communication within ten (10) Business Days
of delivery shall be deemed evidence, in the absence of manifest error, that
such communication is complete and correct.    

 (b)Instructions. Notwithstanding anything to the contrary, Customer agrees that
the BNPP Entities may rely upon any authorized instructions or any notice,
request, waiver, consent, receipt or other document which the BNPP Entities
reasonably believe to be genuine and transmitted by an authorized person listed
on Appendix I attached hereto.    

13.BNPP Entities Are Not Advisors or Fiduciaries - Customer represents that it
is capable of assessing the merits (on its own behalf or through independent
professional advice), and understands and accepts, the terms and conditions set
forth in this Agreement and any transaction it may undertake with the BNPP
Entities. Customer acknowledges that (a) none of the BNPP Entities is (i) acting
as a fiduciary for or an advisor to Customer in respect of this Agreement or any
transaction it may undertake with the BNPP Entities; (ii) advising it,
performing any analysis, or making any judgment on any matters pertaining to the
suitability of any transaction, or (iii) offering any opinion, judgment or other
type of information pertaining to the nature, value, potential or suitability of
any particular investment or transaction, (b) the BNPP Entities do not guarantee
or warrant the accuracy, reliability or timeliness of any information that the
BNPP Entities may from time to time provide or make available to Customer and
(c) the BNPP Entities may take positions in financial instruments discussed in
the information provided Customer (which positions may be inconsistent with the
information provided) and may execute transactions for themselves or others in
those instruments and may provide investment banking and other services to the
issuers of those instruments or with respect to those instruments. Customer
agrees that (x) it is solely responsible for monitoring compliance with its own
internal restrictions and procedures governing investments, trading limits and
manner of authorizing investments, and with the Applicable Law affecting its
authority and ability to trade and invest and (y) in no event shall a BNPP
Entity undertake to assess whether a Contract or transaction is appropriate or
legal for Customer.    

14.Litigation in Court, Sovereign Immunity, Service -    

 (a)ANY LITIGATION BETWEEN CUSTOMER AND THE BNPP ENTITIES 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 BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.    

(b)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.    

(c)EACH PARTY HERETO, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
IRREVOCABLY WAIVES WITH RESPECT TO ITSELF AND ITS REVENUES AND ASSETS
(IRRESPECTIVE OF THEIR USE OR INTENDED USE) ALL IMMUNITY ON THE GROUNDS OF
SOVEREIGNTY OR SIMILAR GROUNDS FROM (I) SUIT, (II) JURISDICTION OF ANY U.S.
COURT, (III) RELIEF BY WAY OF INJUNCTION, ORDER FOR SPECIFIC PERFORMANCE, OR
RECOVERY OF PROPERTY, (IV) ATTACHMENT OF ITS ASSETS (WHETHER BEFORE OR AFTER
JUDGMENT) AND (V) EXECUTION OR ENFORCEMENT OF ANY JUDGMENT TO WHICH IT OR ITS
REVENUES OR ASSETS MIGHT OTHERWISE BE ENTITLED IN ANY ACTIONS OR PROCEEDINGS IN
SUCH COURTS, AND IRREVOCABLY AGREES THAT IT WILL NOT CLAIM SUCH IMMUNITY IN ANY
SUCH ACTIONS OR PROCEEDINGS.    

(d)CUSTOMER HEREBY CONSENTS TO PROCESS BEING SERVED BY ANY BNPP ENTITY ON
CUSTOMER IN ANY SUIT, ACTION OR PROCEEDING OF THE NATURE SPECIFIED IN CLAUSE (a)
ABOVE BY THE MAILING OF A COPY THEREOF BY REGISTERED OR CERTIFIED AIRMAIL,
POSTAGE PRE-PAID, TO CUSTOMER AT THE ADDRESS SET FORTH AFTER CUSTOMER’S
SIGNATURE ABOVE; SUCH SERVICE SHALL BE DEEMED COMPLETED AND EFFECTIVE AS FROM 30
DAYS AFTER SUCH MAILING. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

7 

 

 

15.Applicable Law, Enforceability - THIS AGREEMENT, ITS ENFORCEMENT, ANY
CONTRACT (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY THEREIN), AND ANY DISPUTE
BETWEEN THE BNPP ENTITIES AND CUSTOMER, WHETHER ARISING OUT OF OR RELATING TO
CUSTOMER’S ACCOUNTS OR OTHERWISE INCIDENTAL TO SUCH ACCOUNTS OR THIS AGREEMENT,
SHALL BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK. The parties
hereto further agree that (i) the securities intermediary’s jurisdiction, within
the meaning of Section 8-110(e) of the NYUCC, in respect of any securities
account constituting Collateral or to which any Collateral is credited or in
which any Collateral is held or carried and in respect of any Collateral
consisting of security entitlements; (ii) the bank’s jurisdiction, within the
meaning of Section 9-304(b) of the NYUCC, in respect of any deposit account
constituting Collateral, or to which any Collateral is credited or in which any
Collateral is held or carried; and (iii) the commodity intermediary’s
jurisdiction, within the meaning of Section 9-305(b) of the NYUCC, in respect of
any commodity account constituting Collateral, or to which any Collateral is
credited or in which any Collateral is held or carried and in respect of any
Collateral consisting of commodity contracts, is the State of New York and agree
that none of them has or will enter into any agreement to the contrary. Customer
and BNPP PB agree that, in respect of any Account maintained by BNPP PB, the law
applicable to all the issues specified in Article 2(1) of the “Hague Convention
on the Law Applicable to Certain Rights in Respect of Securities Held with an
Intermediary (Hague Securities Convention)” is the law in force in the State of
New York and agree that none of them has or will enter into any agreement to the
contrary.    

16.Modification; Termination; Assignment -    

 (a)Modification. Any modification of the terms of this Agreement must be made
in writing and executed by the parties to this Agreement.    

 (b)Termination. If the Committed Facility Agreement has been terminated, either
BNPP PB or Customer may terminate this Agreement upon delivery of written notice
to the other party, provided that Customer’s termination notice is only
effective if it is accompanied by instructions as to the transfer of all
property held in the Accounts. Sections 2, 3, 8, 9, 10, 14 and 15 and each
representation made hereunder shall survive any termination.    

 (c)Assignment. BNPP PB may assign its rights hereunder or any interest herein
or under any other Contract: (A) to BNP Paribas Prime Brokerage International,
Ltd. or to any entity guaranteed by BNP Paribas, provided that such assignment
shall not have any effect on the then current requirements imposed on Customer
or the BNPP Entities in relation to the withholding or deduction of Taxes and
Customer shall have received evidence thereto in the form of any relevant
Internal Revenue Service Form W-9, W-8ECI or W-8BEN or otherwise, or (B) to an
unaffiliated entity (i) solely in connection with a sale of the prime brokerage
business, upon thirty calendar days’ prior written notice, (ii) other than in
connection with a sale of the prime brokerage business, upon Customer’s consent,
which consent shall not be unreasonably withheld or delayed. Customer may not
assign its rights under or any interest in (i) any Contract without the prior
written consent of BNPP PB and each BNPP Entity that is a party thereto or (ii)
this Agreement, including, without limitation, its right to any Close-Out
Amount, without the prior written consent of each BNPP Entity. Any attempted
assignment by Customer in violation of this Agreement shall be null, void and
without effect.     17.Miscellaneous -    

 (a)Fees. The provisions of this Subsection shall apply except to the extent any
such provisions contravene the Committed Facility Agreement and

 

  such Committed Facility Agreement has not been terminated or the commitment
therein has not expired. Customer agrees to pay all brokerage commissions,
markups or markdowns in connection with the execution of transactions and other
fees for custody and other services rendered to Customer as determined by BNPP
PB. Customer authorizes the BNPP Entities to pay themselves or others for fees,
commissions, markups and other charges, expenses and Obligations from any
Account.    

(b)Contingency. The fulfillment of the obligations of any BNPP Entity to
Customer under any Contract is contingent upon there being no breach,
repudiation, misrepresentation or default (however characterized) by Customer
which has occurred and is continuing under any Contract.    

(c)Conversion of Currencies. The BNPP Entities shall have the right to convert
currencies in connection with the effecting of transactions and the exercise of
any of their rights hereunder in a commercially reasonable manner.    

(d)Truth-in-Lending Statement. Customer hereby acknowledges receipt of a
Truth-in-Lending disclosure statement. Subject to the Committed Facility
Agreement (unless such agreement has been terminated or the commitment therein
has expired), interest will be charged on any debit balances in the Accounts in
accordance with the methods described in such statement or in any amendment or
revision thereto which may be provided to Customer. Any debit balance which is
not paid at the close of an interest period will be added to the opening balance
for the next interest period.    

(e)Federal Deposit Insurance Corporation. Unless explicitly stated otherwise,
transactions hereunder and funds held in the Accounts (i) are not insured by the
Federal Deposit Insurance Corporation or any government agency, (ii) are not
deposits or obligations of, or guaranteed by, BNP Paribas or any other bank; and
(iii) involve market and investment risks, including possible loss of the
principal amount invested.    

(f)USA Patriot Act Disclosure. BNPP PB, like all financial institutions, is
required by Federal law to obtain, verify and record information that identifies
each customer who opens an account with BNPP PB. When Customer opens an account
with BNPP PB, BNPP PB will ask for Customer’s name, address, date of birth,
government-issued identification number and/or other information reasonably
required by BNPP PB to form a reasonable belief as to Customer’s identity, such
as documents that establish legal status.    

(g)Anti-Money Laundering. Customer understands and acknowledges that the BNPP
Entities are, or may in the future become, subject to money laundering statutes,
regulations and conventions of the United States or other international
jurisdictions, and Customer agrees to execute instruments, provide information,
or perform any other acts as may reasonably be requested by any BNPP Entity for
the purpose of carrying out due diligence as may be required by Applicable Law.
Customer agrees that it will provide the BNPP Entities with such information as
any BNPP Entity may reasonably require to comply with applicable anti-money
laundering laws or regulations. Customer understands, acknowledges and agrees
that to the extent permitted by Applicable Law, any BNPP Entity may provide
information, including confidential information, to the Financial Crimes
Enforcement Network, a bureau of the U.S. Department of the Treasury, or any
other agency or instrumentality of the U.S. Government, or as otherwise required
by Applicable Law, in connection with a request for information on behalf of a
U.S. federal law enforcement agency investigating terrorist activity or money
laundering.

 

8 

 

 

 (h)Money Market Funds. Customer agrees that with respect to transactions
effected in shares of any money market fund and any other transactions listed in
Rule 10b-10(b)(1) of the Exchange Act, BNPP PB may provide Customer with a
monthly or quarterly written statement pursuant to Rule 10b-10(b) of the
Exchange Act in lieu of an immediate confirmation.    

 (i)No Waivers. No failure or delay in exercising any right, or any partial
exercise of a right will operate as a waiver of the full exercise of that right.
The rights provided in the Contracts are cumulative and not exclusive of any
rights provided by law.    

 (j)Counterparts. 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.    

 (k)Integration; Severability. This Agreement supersedes all prior agreements as
to matters within its scope. To the extent this Agreement contains any provision
which is inconsistent with provisions in any other Contract or agreement between
Customer and any of the BNPP Entities, or of which Customer is a beneficiary,
the provisions of this Agreement shall control except if such other Contract
explicitly states that it is intended to supersede this Agreement by name, in
which case such other Contract shall prevail. If any provision of this Agreement
is or becomes inconsistent with Applicable Law, that provision will be deemed
modified or, if necessary, rescinded in order to comply. All other provisions of
this Agreement shall remain in full force and effect. To the extent that this
Agreement is not enforceable as to any Contract, this Agreement shall remain in
full force and effect and be enforceable in accordance with its terms as to all
other Contracts.    

 (l)Master Agreement. This Agreement, together with each Contract and any
supplements, modifications or amendments hereto or thereto, shall constitute a
single business and contractual relationship among the parties with respect to
the subject matter hereof.    

 (m)Captions. Section designations and captions are provided for convenience of
reference, do not constitute a part of this Agreement, and are not to be
considered in its interpretation.    

 (n)Recording of Conversations. Each of the BNPP Entities and Customer is aware
that each party may record conversations between any of the parties or parties’
representatives relating to the matters referred to in this Agreement and no
party

 

  has any objection and hereby agrees to such recording.    

(o)Proxy Disclosures. Any attempt to vote securities will be void to the extent
that such securities are not in the possession or control of either BNPP PB or a
BNPP Entity, including (i) securities not yet delivered to BNPP PB or a BNPP
Entity, (ii) securities purchased and not paid for by settlement date, and (iii)
securities that either BNPP PB or a BNPP Entity has hypothecated,
re-hypothecated, pledged, re-pledged, sold, lent or otherwise transferred.
Please be advised that for the purposes of proxy voting, Customer will not be
notified that the securities are not in either BNPP PB or a BNPP Entity’s
possession or control. Furthermore, neither BNPP PB nor any other BNPP Entity
will notify Customer that a vote was void.    

18.Certain Definitions -     (a)“Applicable Law” means all applicable laws,
rules and regulations by which a party hereto is bound, including, without
limitation, those of all U.S. and non-U.S., federal, state and local
governmental authorities, self-regulatory organizations, markets, exchanges and
clearing facilities, in all cases where applicable.    

(b)“BNPP Entities” means BNP Paribas, BNP Paribas Prime Brokerage International,
Ltd. and BNP Paribas Prime Brokerage, Inc.    

(c)“Business Day” means any day other than a Saturday, Sunday or other day on
which the New York Stock Exchange is closed.    

(d)“Close-out” means the termination, cancellation, liquidation, acceleration,
or other similar action with respect to all transactions under one or more
Contracts.    

(e)“Close-out Amount” means with respect to each Contract, the amount (expressed
in U.S. Dollars or the U.S. Dollar Equivalent) calculated as payable by one
party to the other upon Close-out of such Contract determined in accordance with
the provisions of such Contract, or if no such provisions are specified, by
following such procedures as the BNPP Entities determine in good faith are
commercially reasonable and in accordance with industry practice.    

(f)“Collateral” means all right, title and interest of Customer in and to (i)
each deposit, custody, securities, commodity or other account maintained by
Customer with any of the BNPP Entities (including, but not limited to, any or
all Accounts); (ii) any cash, securities, commodity contracts, general
intangibles and other property which may from time to time be deposited,
credited, held or carried in any such account, that is due to Customer from any
of the BNPP Entities, or that is delivered to or in the possession or control of
any of the BNPP Entities or any of the BNPP Entities’ agents and all security
entitlements with respect to any of the foregoing; (iii) all of Customer’s
right, title or interest in, to or under any Contract, including obligations
owed by any of the BNPP Entities (after any netting or set off, in each case to
the extent enforceable, of amounts owed under such Contract); (iv) all of
Customer’s security interests (or similar interests) in any property of any BNPP
Entity securing any BNPP Entity’s obligations to Customer under any Contract;
(v) any property of Customer in which any of the BNPP Entities is granted a
security interest under any Contract or otherwise (howsoever held); (vi) all
income and profits on any of the foregoing, all dividends, interest and other
payments and distributions with respect to any of the foregoing, all other
rights and privileges appurtenant to any of the foregoing, including any voting
rights and any redemption rights, and any substitutions for any of the
foregoing; and (vii) all proceeds of any of the foregoing, in each case whether
now existing or owned by Customer or hereafter arising or acquired.

 

9 

 

 

(g)“Contract” means this Agreement, the Committed Facility Agreement between the
Customer and BNPP PB (as amended from time to time, the “Committed Facility
Agreement”) dated as of the date hereof, and the Special Custody and Pledge
Agreement between Customer, BNPP PB and State Street Bank and Trust Company (the
“Custodian”) (as amended from time to time, the “Special Custody and Pledge
Agreement”) dated on or about the date hereof, including in each case, the
schedules, exhibits, and appendices thereto.    

(h)“Default Action” means (i) to terminate, liquidate and accelerate any and all
Contracts, (ii) to exercise any right under any security relating to any
Contract, (iii) to net or set off payments which may arise under any Contract or
other agreement or under Applicable Law, (iv) to cancel any outstanding orders
for the purchase or sale or borrowing or lending of any securities or other
property, (v) to sell, apply or collect on any or all of the Collateral (either
individually or jointly with others), (vi) to buy in any securities, commodities
or other property of which any Account of Customer may be short, and (vii) to
exercise any rights and remedies available to a secured creditor under any
Applicable Law or under the NYUCC (whether or not the NYUCC is otherwise
applicable in the relevant jurisdiction).    

(i)“Force Majeure Event” means government restrictions, exchange or market
actions or rulings, suspension of trading, war (whether declared or undeclared),
terrorist acts, insurrection, riots, fires, floods, strikes, failure of utility
or similar services, accidents, adverse weather or other events of nature
(including but not limited to earthquakes, hurricanes and tornadoes) and any
other conditions beyond the BNPP Entities’ control and any event where any
communications network, data processing system or computer system used by any of
the BNPP Entities or Customer or by market participants is rendered wholly or
partially inoperable.    

(j)“Indemnified Losses” means any actual loss, claim, damage, liability,
penalty, fine or excise tax (including any reasonable and documented legal fees
and expenses relating to any action, proceeding, investigation and preparation
therefor) when and as incurred by the BNPP Entities (i) pursuant to authorized
instructions received by the BNPP Entities’ from Customer or its agents, (ii) as
a consequence of a breach by Customer of any covenant, representation or
warranty hereunder, (iii) in settlement of any claim or litigation relating to
BNPP Entities’ acting as agent for Customer or (iv) in connection with or
related to any Account, this Agreement, any Contract, any transactions hereunder
or thereunder, any activities or services of the BNPP Entities in connection
with this Agreement or otherwise

 

  (including, without limitation, (A) any technology services, reporting,
trading, research or capital introduction services or (B) any DK or
disaffirmance of any transaction hereunder). “Indemnified Losses” shall (x)
include without limitation any damage, actual loss, actual cost and expense that
is incurred to put the BNPP Entities in the same economic position as they would
have been in had a default (howsoever defined) under any Contract not occurred,
or that arises out of any other commitment any BNPP Entity has entered into in
connection with or as a hedge in connection with any transaction or in an effort
to mitigate any resulting loss to which any BNPP Entity is exposed because of a
default (howsoever defined) under any Contract and (y) not include any losses of
a BNPP Entity resulting directly from such BNPP Entity’s gross negligence,
willful misconduct, fraud, breach of this Agreement or violation of Applicable
Law.    

(k)“Market-Timing Investment Entities” means hedge funds, private investment
funds or other companies or partnerships that engage in Market Timing Trading
Activity.    

(l)“Market-Timing Trading Activity” means (i) purchasing and selling, or
exchanging, mutual fund or similar investment units to exploit short-term
differentials in the prices of such funds or similar units and their underlying
assets, and similar trading strategies or (ii) purchasing and selling, or
exchanging mutual fund or similar investment units more than twice within a
thirty-day period. Notwithstanding the above, the following shall not constitute
“Market-Timing Trading Activity”: (x) trading of money market funds, short-term
bond funds or exchange-traded funds or (y) trading of mutual funds in the manner
consistent with such fund’s prospectus or other offering documents.    

(m)“Obligations” means any and all obligations of Customer to any BNPP Entity
arising at any time and from time to time under or in connection with any and
all Contracts (including but not limited to obligations to deliver or return
Deliverable Collateral or other assets or property (howsoever described) under
or in connection with any such Contract), in each case whether now existing or
hereafter arising, whether or not mature or contingent.    

(n)“Related Person” means principals, directors and senior employees (in such
official capacity as principal, director or senior employee, as the case may be)
of (i) Customer, (ii) Customer’s affiliates, (iii) Customer’s investment manager
or (iv) any person or entity for which Customer’s investment manager acts as
investment manager.    

(o)“Taxes” means any taxes, levies, imposts, duties, charges, assessments or
fees of any nature, including interest, penalties and additions thereto that are
imposed by any taxing authority.    

(p)“U.S. Dollar Equivalent” of an amount, as of any date, means: in respect of
any amount denominated in a currency, including a composite currency, other than
U.S. Dollars (an “Other Currency”), the amount expressed in U.S. Dollars, as
determined by the BNPP Entities, that would be required to purchase such amount
(where the BNPP Entities would require Customer to deliver such Other Currency
in connection with a Contract) or would be received for the sale of such amount
of such Other Currency (where the BNPP Entities would deliver such Other
Currency to Customer in connection with a Contract), as of such date at the rate
equal to the spot exchange rate of a foreign exchange agent (selected in good
faith by the BNPP Entities) at or about 11:00 a.m. (in the city in which such
foreign exchange agent is located) or such later time as the BNPP Entities in
their reasonable discretion shall determine.

 

10 

 

 

19.Software -     (a)License; Use. Upon any BNPP Entity’s delivering to
Customer, or making available for use by Customer, any computer software or
application, as such may be delivered, made available, and modified by any BNPP
Entity from time to time in its sole discretion (the “Software”), the BNPP
Entities grant to Customer a personal, non-transferable and non-exclusive
license to use the Software solely for Customer’s own internal and proper
business purposes and not in the operation of a service bureau or other business
outside of or in addition to Customer’s ordinary course of business. The
Software includes all associated “Information” as that term is used in this
Section. The Software may include trade blotter functions, capital accounting
functions, interfaces with other systems and accounting functions, a Customer
website, and other software or communication or encryption systems that may be
developed from time to time. Except as set forth herein, no license or right of
any kind is granted to Customer with respect to the Software.    

(b)Ownership. Customer acknowledges that the BNPP Entities and their suppliers
retain and have title and exclusive proprietary rights to the Software,
including any trade secrets or other ideas, concepts, know-how, methodologies,
or information incorporated therein and the exclusive rights to any copyrights,
trademarks and patents (including registrations and applications for
registration of either), or other statutory or legal protections available in
respect thereof. Customer further acknowledges that all or a part of the
Software may be copyrighted or trademarked (or a registration or claim made
therefore) by a BNPP Entity or its suppliers. Customer may not remove any
statutory copyright notice or other notice included in the Software or on any
media containing the Software. Customer shall not take any action with respect
to the Software inconsistent with the foregoing acknowledgments.    

(c)Limitation on Reverse Engineering, Decompilation and Disassembly. Customer
shall not, nor shall it attempt to decompile, disassemble, reverse engineer,
modify, or create derivative works from the Software.    

(d)Transfer. Customer may not, directly or indirectly, sell, rent, lease or lend
the Software or provide any of the Software or any portion thereof to any other
person or entity without the BNPP Entities’ prior written consent. Customer may
not copy or reproduce except to create a backup copy or to move the Software to
a different computer.    

 

(e)Upgrades. The Software includes all updates or supplements to the Software
and this Section 19 applies to all such updates or supplements, unless the BNPP
Entities provide other terms along with the update or supplement.    

(f)Equipment. Customer shall obtain and shall maintain all equipment, software
and services, including but not limited to computer equipment and
telecommunications services, necessary for it to use the Software, and the BNPP
Entities shall not be responsible for the reliability or availability of any
such equipment, software or services.    

(g)Proprietary Information. The Software, any database and any proprietary data,
processes, information and documentation made available to Customer (other than
those that are or become part of the public domain or are legally required to be
made available to the public) (collectively, the “Information”), are the
exclusive and confidential property of the BNPP Entities or their suppliers.
Customer shall keep the Information confidential by using the same care and
discretion that Customer uses with respect to its own confidential property and
trade secrets, but not less than reasonable care. Upon termination of the
Account Agreement, the PB Terms or the Software license granted herein for any
reason, Customer shall return to the BNPP Entities or destroy any and all copies
of the Information that are in its possession or under its control.    

(h)Support Services. Other than the assistance provided in the Information, the
BNPP Entities do not offer any support services in connection with the Software.
   

(i)DISCLAIMER OF WARRANTIES. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
THE BNPP ENTITIES AND THEIR SUPPLIERS PROVIDE THE SOFTWARE TO CUSTOMER, AND ANY
(IF ANY) SUPPORT SERVICES RELATED TO THE SOFTWARE AS IS AND WITH ALL FAULTS; AND
THE BNPP ENTITIES AND THEIR SUPPLIERS HEREBY DISCLAIM WITH RESPECT TO THE
SOFTWARE AND SUPPORT SERVICES ALL WARRANTIES AND CONDITIONS, WHETHER EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO, ANY (IF ANY) WARRANTIES,
DUTIES OR CONDITIONS OF OR RELATED TO: MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, LACK OF VIRUSES, ACCURACY OR COMPLETENESS OF RESPONSES, RESULTS,
WORKMANLIKE EFFORT AND LACK OF NEGLIGENCE. ALSO THERE IS NO WARRANTY, DUTY OR
CONDITION OF TITLE, QUIET ENJOYMENT, QUIET POSSESSION, CORRESPONDENCE TO
DESCRIPTION OR NON-INFRINGEMENT. THE ENTIRE RISK ARISING OUT OF USE OR
PERFORMANCE OF THE SOFTWARE AND ANY SUPPORT SERVICES REMAINS WITH CUSTOMER.

 

11 

 

 

(j)EXCLUSION OF INCIDENTAL, CONSEQUENTIAL AND CERTAIN OTHER DAMAGES. TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL THE BNPP ENTITIES
OR THEIR SUPPLIERS BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR
LOSS OF PROFITS OR CONFIDENTIAL OR OTHER INFORMATION, FOR BUSINESS INTERRUPTION,
FOR PERSONAL INJURY, FOR LOSS OF PRIVACY, FOR FAILURE TO MEET ANY DUTY INCLUDING
OF GOOD FAITH OR OF REASONABLE CARE, FOR NEGLIGENCE, AND FOR ANY OTHER PECUNIARY
OR OTHER LOSS WHATSOEVER) ARISING OUT OF OR IN ANY WAY RELATED TO THE USE OF OR
INABILITY TO USE THE SOFTWARE, THE PROVISION OF OR FAILURE TO PROVIDE SUPPORT
SERVICES, OR OTHERWISE UNDER OR IN CONNECTION WITH ANY PROVISION OF THIS SECTION
19, EVEN IN THE EVENT OF THE FAULT, TORT (INCLUDING NEGLIGENCE), STRICT
LIABILITY, BREACH OF CONTRACT OR BREACH OF WARRANTY OF THE BNPP ENTITIES OR ANY
SUPPLIER, AND EVEN IF THE BNPP ENTITIES OR ANY SUPPLIER HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL ANY BNPP ENTITY OR ANY SUPPLIER
BE LIABLE FOR ACTS OF GOD, ACTS OF WAR OR TERRORISM, MACHINE OR COMPUTER
BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF COMMUNICATION
FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR CAUSE BEYOND
THEIR REASONABLE CONTROL.    

(k)Security; Reliance; Unauthorized Use. Customer will cause all persons using
the Software to treat all applicable user and authorization codes, passwords and
authentication keys with extreme care, and Customer will establish internal
control and safekeeping procedures to restrict the availability of the same to
duly authorized persons

 

  only. No BNPP Entity shall be liable or responsible to Customer or any third
party for any unauthorized use of the Software or of the user and authorization
codes, passwords and authentications keys that may be used in connection with
the Software.    

(l)Encryption. Customer acknowledges and agrees that encryption may not be
available for any or all data or communications between Customer and a BNPP
Entity. Customer agrees that a BNPP Entity may, at any time, deactivate any
encryption features such BNPP Entity may in its sole discretion provide, without
notice or liability to Customer.    

(m)Termination. Customer acknowledges and agrees that any BNPP Entity may, in
its sole discretion, at any time, and without any notice or liability to
Customer, suspend or terminate this license of the Software to Customer and deny
Customer’s access to and use of the Software; provided that in the event the
Software is terminated, BNPP PB will deliver the information to Customer through
a format agreed to by the parties.    

(n)Other Terms and Conditions. Customer shall comply with all other terms and
conditions that may be posted by a BNPP Entity on any website or web page
through which Customer accesses or uses the Software or that may otherwise be
delivered in any form to Customer in connection with its use of the Software.
The use by Customer of the Software constitutes Customer’s acceptance of and
agreement to be bound by all such other terms and conditions.    

(o)Compliance with Law. Customer shall comply with all Applicable Law applicable
to Customer’s use of the Software.

 

12 

 

 

Exhibit B to U.S. PB Agreement – Rehypothecation Exhibit

 

 

This Exhibit B (the “Rehypothecation Agreement”) is entered into between
Customer and BNP PARIBAS PRIME BROKERAGE INTERNATIONAL, LTD. (“BNPP PB”), on
behalf of itself and as agent for the BNPP Entities. This Rehypothecation
Agreement is incorporated as an exhibit to the U.S. PB Agreement (the
“Agreement”). Certain capitalized terms used in this Agreement are defined in
Section 18 of the Agreement.

 

1.Rehypothecation -

 

(a)Customer expressly grants BNPP PB the right, to the fullest extent that it
may effectively do so under Applicable Law and subject to the terms and
conditions of this Rehypothecation Agreement, to re-register the Collateral in
its own name or in another name other than Customer’s, to use or invest the
proceeds of any securities lending transaction at its own risk, and to pledge,
repledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer or use
the Collateral (the “Hypothecated Securities”), with all attendant rights of
ownership except as provided below. For the purposes of the return of any
Hypothecated Securities to Customer, BNPP PB’s return obligations shall be
satisfied by delivering the Hypothecated Securities or securities identical to
such Hypothecated Securities (such securities having the same cusip number as
the subject Hypothecated Securities, or in the case of a reorganization or
recapitalization of the issuer, the equivalent of the subject Hypothecated
Securities) (“Equivalent Securities”). For the avoidance of doubt, Customer
hereby grants BNPP PB its consent to hypothecate its securities for the purposes
of Rule 15c2-1(a)(1) of the Exchange Act, subject to the limits of this
Agreement.    

(b)Collateral held by Custodian (including any successor thereto) pursuant to
the Special Custody and Pledge Agreement (the “Margin Collateral”) shall be
transferred to BNPP PB for purposes of rehypothecation only against a request to
Custodian for release of Margin Collateral (“Hypothecation Request”) that meets
the following requirements: (i) the Hypothecation Request is issued by a duly
authorized representative of BNPP PB in accordance with the requirements for
instructions set forth for in the Special Custody and Pledge Agreement, (ii)
subject to Section 2(c)(B), the fair market value of the securities which are
subject to the Hypothecation Request, together with the value of any outstanding
Hypothecated Securities, shall not exceed the value of the loan against which
the Margin Collateral was pledged (“Hypothecation Limit”), provided that if the
Maximum Commitment Financing (as defined in the Committed Facility Agreement) is
increased pursuant to the mutual agreement of the parties, then the fair market
value of the securities which are subject to the Hypothecation Request, together
with the value of any outstanding Hypothecated Securities, shall not exceed the
lesser of (A) the Hypothecation Limit or (B) thirty-three and one-third percent
(33⅓%) of the total assets of the Customer based on the most recent financial
information provided by the Customer, (iii) the securities which are subject to
the Hypothecation Request shall not represent the

 

  entire position of such security held by Customer, and (iv) the securities
which are subject to the Hypothecation Request are not Ineligible Securities (as
defined below) and have not been recalled by the Customer or if the securities
which are subject to the Hypothecation Request were recalled by the Customer
other than for the purpose of selling the securities, the record date that was
the reason for the recall or event has passed.     2.Eligibility; Recall Rights
-   

(a)Customer shall have the right, in its sole discretion and without condition,
to designate any Margin Collateral as ineligible for rehypothecation for any
valid business reason, in the sole discretion of Customer, including, without
limitation, an imminent sale, dividend declaration or other corporate action
(“Ineligible Securities”), provided that the market value of the Margin
Collateral that has not been designated as Ineligible Securities would,
following such designation, be at least equal to the Outstanding Debit Financing
(as defined in the Committed Facility Agreement). Except as limited herein,
Customer shall have the right, upon demand and without condition, to recall any
Hypothecated Securities and BNPP PB shall, to the extent commercially reasonable
under the circumstances, return such security or an Equivalent Security to the
Special Custody Account (as defined in the Special Custody and Pledge Agreement,
the “Special Custody Account”) within a commercially reasonable period (in any
event, no sooner than the standard settlement cycle for such securities).    

(b)Customer shall provide, or cause the Custodian to provide, a daily report to
BNPP PB of portfolio transactions relating to securities in the Special Custody
Account. With respect to any Hypothecated Security that is the subject of a sell
order, on the date such report is delivered to BNPP PB, BNPP PB shall, without
any further action by Customer and to the extent commercially reasonable under
the circumstances, return such security or an Equivalent Security to the Special
Custody Account within a commercially reasonable period (in any event, no sooner
than the standard settlement cycle for such securities).    

(c)If as of the close of business on any Business Day the value of all
outstanding Hypothecated Securities exceeds the Hypothecation Limit (such excess
amount, the “Rehypothecation Excess”), BNPP PB shall, at its option, either (A)
reduce the amount of outstanding Hypothecated Securities so that the total value
of such securities does not exceed the Hypothecation Limit or (B) deliver to,
and maintain within, the Special Custody Account an amount of cash at least
equal to any Rehypothecation Excess (for the avoidance of doubt, if there is no
Rehypothecation Excess, BNPP PB can recall any cash delivered hereunder).

 

 

 

 

3.Corporate Actions -     (a)Income Payments. Customer shall be entitled to
receive with respect to any Hypothecated Security, an amount equal to any
principal thereof and all interest, dividends or other distributions paid or
distributed on or in respect of the Hypothecated Securities (“Income”) that is
not otherwise received by Customer. BNPP PB shall, on the date such Income is
paid or distributed either transfer to or credit to the Special Custody Account
such Income with respect to any Hypothecated Securities, provided that BNPP PB
shall make commercially reasonable efforts to return Hypothecated Securities
receiving Income prior to the record date for a distribution.    

(b)Income in the Form of Securities. Where Income, in the form of securities, is
paid in relation to any Hypothecated Securities, such securities shall be
delivered to the Special Custody Account.    

(c)Other Corporate Actions. Where, in respect of any Hypothecated Securities,
any rights relating to conversion, sub-division, consolidation, pre-emption,
rights arising under a takeover offer, rights to receive securities or a
certificate which may at a future date be exchanged for securities or other
rights, including those requiring election by the record holder of such
securities at the time of the relevant election, become exercisable prior to the
redelivery of Equivalent Securities, then Customer may, within a reasonable time
before the latest time for the exercise of the right or option give written
notice to BNPP PB that on redelivery of Equivalent Securities, it wishes to
receive Equivalent Securities in such form as will arise if the right is
exercised or, in the case of a right which may be exercised in more than one
manner, is exercised as is specified in such written notice, and BNPP PB shall,
to the extent commercially reasonable under the circumstances, return such
Hypothecated Security or an Equivalent Security to the Special Custody Account
within a commercially reasonable period (in any event, no sooner than the
standard settlement cycle for such securities).    

4.Segregation of Hypothecated Securities - Unless otherwise agreed by the
parties, any transfer of Hypothecated Securities to the Customer or any transfer
of cash pursuant to Sections 2 or 3 shall be effected by delivery or other
transfer to or for credit to the Special Custody Account. BNPP PB expressly
acknowledges that all securities that it is obligated to transfer hereunder
shall be transferred to the Special Custody Account and shall not be held by
BNPP PB    

5.Re-hypothecation Failure - Hypothecated Securities shall be marked-to-market
daily and valued in

 

  accordance with the Special Custody and Pledge Agreement and this Agreement
(together such agreements, the “Account Documents”). Upon the failure of BNPP PB
to return Hypothecated Securities or the equivalent thereof (e.g., securities of
the quantity, class or tranche, and issuer that are identical in every respect
to such Hypothecated Securities) (such Hypothecated Securities, “Failed
Securities”) pursuant to this Agreement or Applicable Law, Customer shall be
entitled to reduce the value of the loan against which the Margin Collateral was
pledged by an amount equal to one hundred percent (100%) of the then-current
fair market value of such Failed Securities as reasonably agreed to between the
parties without any fee or penalty; provided, however that the terms of the
Committed Facility Agreement shall not be altered or amended by such reduction.
   

6.Failure to Process Instructions - If (i) Customer provides BNPP PB with
instructions in respect of corporate actions on the Hypothecated Securities
(excluding any exercise of voting rights) which do not require Customer to be a
record holder at the time of exercise, (ii) Customer provides at least five
Business Days notice prior to the relevant exercise deadline, and (iii) BNPP PB
fails to process Customer’s instructions in a commercially reasonable manner,
BNPP PB shall provide Customer the cash equivalent of payments or distributions
actually made but which Customer did not receive due to BNPP PB’s failure.    

7.Fees - BNPP PB agrees to pay Customer a rehypothecation fee (the
“Rehypothecation Fee”), computed daily at a rate as set forth herein, as
modified from time to time by mutual agreement of the parties. Except as BNPP PB
and Customer may otherwise agree, the Rehypothecation Fee shall accrue from and
including the date on which BNPP PB rehypothecates Margin Collateral to, but
excluding, the date on which securities or other financial assets of the same
issuer and class as the Margin Collateral initially rehypothecated are returned
to Customer’s Special Custody Account. Unless otherwise agreed, any
Rehypothecation Fee payable hereunder shall be payable upon the earlier of (i)
the day that is two (2) Business Days prior to the calendar month end in the
month in which such fee was incurred (the “Scheduled Payment Date”) or (ii) the
termination of the U.S. PB Agreement (the “Termination Payment Date”) (or, if
such Scheduled Payment Date or Termination Payment Date, as the case may be, is
not a Business Day, the next Business Day.       For the avoidance of doubt,
each payment of the Rehypothecation Fee on a Scheduled Payment Date shall be
payment for the monthly period from three (3) Business Days prior to a calendar
month end to three (3) Business Days prior to the next succeeding calendar month
end.      8.Fee Amount – 70% of the difference between the fair market rate (as
determined by BNPP PB) and Fed Funds Open (or any successor benchmark rate).