Exhibit 10.2

 

LOGO [g470427pmtexex10_21.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, Inc. (“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)     Prime Brokerage Terms, attached as Exhibit B hereto;

 

(c)     Rehypothecation Agreement, attached as Exhibit C hereto;

IN WITNESS WHEREOF, the parties have caused this U.S. PB Agreement to be duly
executed and delivered as of Oct. 19, 2017.

 

BNP PARIBAS PRIME BROKERAGE, INC., 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

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LOGO [g470427pmtexex10_21.jpg]

 

NEXPOINT CAPITAL, INC.

Name of Customer By:   /s/ Frank Waterhouse  

Name: Frank Waterhouse

 

Title: Treasurer

Jurisdiction of organization

Type of organization

Place of business / chief executive office

Organizational identification number

Addresses for Notices to Customer

NEXPOINT CAPITAL, INC.

300 Crescent Court Suite 700

Dallas Texas 75201

Attention: Brian Mitts

Phone: 972-419-2556

Email: bmitts@highlandfunds.com

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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,
INC. (“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 margin loans, execution, settlement
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 or oral 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 light of outstanding Contracts (“Deliverable
Collateral”); by (i) 5:00 p.m. New York time on the same Business Day, if the
notice of a margin requirement is sent to Customer on or before 11:00 a.m. New
York time on a Business Day, or (ii) 5:00 p.m. New York time on the immediately
succeeding Business Day, if such notice is sent to Customer after 11:00 a.m. New
York time on a Business Day. Immediately upon written or oral demand by BNPP PB,
subject to the provisions of the Committed Facility Agreement, 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 priority security interest and fixed charge, in each
case securing the discharge of all Obligations, Contracts with BNPP Entities and
liabilities of Customer to the BNPP Entities hereunder and thereunder, 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, as may be required, or as any BNPP Entity shall reasonably
determine 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

 

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       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 following the occurrence of an Event of Default, at any
BNPP Entity’s discretion and without 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 which Obligation has not been satisfied in accordance
with the requirements of

  such Contract. 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 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. Without limiting the generality or authority of
the preceding, as between Customer and each BNPP Entity, each BNPP Entity
covenants to Customer that it will not issue any orders or instructions as
described in this Section 3(c) unless an Event of Default has occurred. 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.

 

4. Rehypothecation - See Exhibit C.

 

5. Representations and Warranties of Customer - Customer 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:

 

 

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  (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;
Customer must promptly inform BNPP PB in writing as to a change in the place of
business of Customer.

 

  (b) Non-Contravention; Compliance with Applicable Laws. Customer has at all
times been, 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 except 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 in good faith and a commercially
reasonable manner or (d) activities related to the securities industry except
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 in good faith and a commercially reasonable manner, (ii) all judicial
orders (except 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 in good faith and a commercially reasonable manner), (iii)
Customer’s organizational documents and the prospectus provided to any investors
or otherwise made available by Customer in all material respects, and (iv) all
material contracts (including this Agreement) with BNPP PB or other material
instruments with BNPP PB binding on or affecting Customer or any of its property
in all material respects subject to any relevant notice and cure periods.
Further, Customer maintains adequate controls to be reasonably assured of such
compliance. Further, there is and has not been (a) the public commencement of
formal criminal charges or proceedings by a court against Customer or any
Related Person, or a formal arrest of any Related Person, or (b) the public
filing or public announcement by any governmental or regulatory body of
enforcement proceedings against Customer or any Related Person, in all cases
specified in (a) and (b) above, alleging fraud (including any unlawful scheme to
defraud investors), embezzlement, money laundering, insider trading, market
manipulation, material violations of securities laws or security regulations, or
a felony related to any of the foregoing.

 

  (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 and 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” or securities of an issuer of which
Customer is an “affiliate” as defined in Rule 144 under the Securities Act of
1933.

 

  (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.

 

 

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  (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 immediately 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
immediately 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 and complete in all material respects, as of the date of its provision.
Customer’s financial statements or similar documents previously or hereafter
provided to the BNPP Entities (i) do or will fairly present, in all material
respects, 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 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, 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”.

 

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.

 

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) If Customer fails to perform any payment or posting
Obligation under this Agreement when due, provided that, it shall not be an
Event of Default if such failure is caused by an error or omission of an
administrative or operational nature of which Customer has notified BNPP PB on
the day such posting was due and (A) funds were available for Customer to post
when due and (B) such posting is made by the close of business on the
immediately following Business Day after such posting was originally due;
(ii) if Customer fails to comply with or perform any other Obligation under this
Agreement and such failure is not cured within one (1) Business Day of written
(including, for the avoidance of doubt, electronic mail) notice of such failure;
(iii) in the event of default, declaration of default, termination event,
exercise of default remedies, or other similar condition or event under any
transaction or contract with a BNPP Entity or affiliate of a BNPP Entity
(howsoever characterized, which, for the avoidance of doubt, includes the
occurrence of an Additional Termination Event under an ISDA Master Agreement
between Customer and a BNPP Entity or affiliate of a BNPP Entity) in respect of
Customer or any guarantor or credit support provider of Customer, which has
resulted in the acceleration, termination or close-out of all transactions under
such contract (howsoever characterized); (iv) the occurrence

 

 

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of a default, event of default or other similar condition or event (however
described) by Customer under one or more agreements or instruments relating to
Specified Indebtedness in an aggregate amount of not less than the Threshold
which has resulted in such Specified Indebtedness becoming due and payable under
such agreements or instruments, before it would otherwise have been due and
payable. For purposes of this clause, “Threshold” shall mean the lesser of (A)
3% of Customer’s Net Asset Value and (B) $10,000,000 USD, and “Specified
Indebtedness” shall mean any obligation (whether present or future, contingent
or otherwise, as principal or surety or otherwise) in respect of borrowed money
between Customer and third parties; (v) if Customer shall become bankrupt,
insolvent, or subject to any bankruptcy, reorganization, insolvency or similar
proceeding (provided, however, that in the case of a proceeding instituted
against Customer, the existence of such proceeding shall not constitute an Event
of Default unless such proceeding is not dismissed within 15 days of its
commencement) 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 (vi) if any representation or
warranty made or deemed made by Customer under the Agreement proves materially
false or misleading when made or deemed made (each of the foregoing, an “Event
of Default”), BNPP PB and any and all BNPP Entities are hereby authorized, in
their discretion, to take Default Action. 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 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. At any time following 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.

 

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.

 

 

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  (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
necessary to make delivery thereof. Customer hereby agrees to be responsible for
any reasonable and documented cost, expense or loss which the BNPP Entities may
sustain thereby.

 

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 or willful misconduct of the applicable BNPP Entity. No
BNPP Entity shall be liable for any error of judgment made by it in good faith.
The BNPP Entities may consult with legal counsel and any action taken or
suffered in good faith in accordance with the advice of such counsel shall be
full justification and protection to them.

 

  (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. 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. 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 any party hereto 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.

 

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 or (iii) in such
other form agreed to by the parties, provided that a BNPP Entity may deliver
notice with respect to an Event of Default or a Margin notice using any method
set forth above (including via email to Customer) other than posting onto the
website maintained by the BNPP Entities for Customer. All communications sent to
Customer, shall be deemed delivered to

 

 

6

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Customer as of (w) if sent during Business Hours, the date sent or if sent after
Business Hours, the next Business Day, if sent via facsimile, email or posted
onto the Internet; (x) the date the messenger arrives at Customer’s address as
set forth on the signature page hereof, if sent via messenger or if such date is
not a Business Day, the next Business Day; (y) the next Business Day if sent via
overnight mail or (z) the third Business Day if otherwise sent via mail, in each
case, whether actually received or not. Failure by Customer to object in writing
to any communication within five 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 authorized persons of
Customer.

 

13. BNPP Entities Are Not Advisers 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 adviser 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 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.

 

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

 

 

7

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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: (A) to BNP Paribas Prime Brokerage International, Ltd. or to any entity
guaranteed by BNP Paribas 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, so long as, in each case, such assignment does
not violate any provisions of the Investment Company Act of 1940. 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 good faith and 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) BNPP PB not a Bank. 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 of
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 that will allow
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

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  (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 (i) if such
other contract or agreement explicitly states that it is intended to supersede
this Agreement by name, in which case such other contract or agreement shall
prevail and (ii) to the extent of all transactions effected under such other
contract or agreement. 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.    

 

  (p) SIPC. BNPP PB is a member of the Securities Investor Protection
Corporation (“SIPC”) through which customer accounts are protected in the event
of a broker-dealer’s insolvency up to $500,000, including a maximum of $100,000
for free cash balances. Neither SIPC nor the additional coverage is the same as
or a substitute for FDIC deposit insurance, and they do not protect against
declines in the market value of your securities. If you would like to contact
the SIPC to obtain a SIPC brochure or to obtain other information about SIPC,
you may call SIPC directly at (202) 371-8300 or visit the SIPC website at
www.sipc.org.

 

18. Certain Definitions -

 

  (a) “Applicable Law” means all applicable laws, rules, regulations and
customs, 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) “Business Hour” means any hour between 8:00 a.m. New York time and 6:00
p.m. New York time on a Business Day.

 

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

 

  (f) “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.

 

  (g) “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,

 

 

9

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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.    

 

  (h) “Contract” means this Agreement, the Committed Facility Agreement between
the Customer and BNP Paribas Prime Brokerage International, Ltd. (as amended
from time to time, the “Committed Facility Agreement”) dated as of the date
hereof, the PBI Agreement, between the Customer, BNP Paribas Prime Brokerage
International, Ltd., and BNP Paribas, acting through its New York branch (as
amended from time to time, the “Arranged Financing Agreement”) dated as of the
date hereof, the Special Custody and Pledge Agreement between Customer, BNPP PB
and State Street Bank and Trust Company (including any successor custodian
thereto, the “Custodian”) (as amended from time to time, the “Special Custody
Agreement”) dated as of the date hereof, and the Special Custody and Pledge
Agreement between Customer, BNP Paribas Prime Brokerage International, Ltd. and
Custodian dated as of the date hereof, including in each case, the schedules,
exhibits, and appendices thereto, and any agreements in connection with any of
the foregoing.

 

  (i) “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).

 

  (j) “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.

 

  (k) “Indemnified Losses” means any loss, claim, damage, liability, penalty,
fine or excise tax (including any reasonable 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, loss, 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 to the extent that such losses result directly from such BNPP
Entity’s gross negligence or willful misconduct.

 

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

 

  (m) “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.

 

  (n) “Net Asset Value” means, with respect to Customer, the aggregate net asset
value of the common stock issued by Customer calculated in accordance with U.S.
generally accepted accounting principles.

 

  (o) “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.

 

 

10

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

 

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

  (r) “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 in good faith and in a commercially
reasonable manner, 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.

 

 

11

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Exhibit B – Prime Brokerage Terms

The Prime Brokerage Terms (the “PB Terms”) are entered into between Customer and
BNP Paribas Prime Brokerage, Inc. (“BNPP PB”), on behalf of itself and as agent
for the BNPP Entities. The PB Terms set forth certain additional terms and
conditions on which BNPP PB will open and maintain Accounts for prime brokerage
pursuant to the Account Agreement between BNPP PB and Customer (the “Account
Agreement”). In the event of any inconsistency between any term of the PB Terms
and the Account Agreement, the PB Terms shall control. All capitalized terms
used but not defined herein shall have the meaning set forth in the Account
Agreement. For the avoidance of doubt, “Applicable Law” shall include the SEC
Letter. 

 

1. Prime Brokerage—Customer may maintain brokerage accounts with brokers other
than BNPP PB (“Executing Brokers”) and may from time to time place orders with
an Executing Broker, but designate BNPP PB as its “Prime Broker.”

 

  (a) Prime Brokerage Agreements with Executing Brokers. In connection
therewith, Customer hereby requests that BNPP PB act as its Prime Broker and
authorizes BNPP PB (x) to execute an agreement with each Executing Broker with
whom Customer engages in prime brokerage transactions (a “Prime Brokerage
Agreement”), (y) to provide and obtain any relevant information relating to
Customer in order for BNPP PB to establish a prime brokerage relationship on
Customer’s behalf with the Executing Brokers, and (z) to perform any necessary
or useful act as Prime Broker in accordance with the Account Agreement, the PB
Terms or Applicable Law. Customer understands that no order may be legally
accepted by BNPP PB as Prime Broker from an Executing Broker with whom BNPP PB
has not entered into a Prime Brokerage Agreement.

 

  (b) Settlement. Customer or its authorized representative will advise BNPP PB
prior to the close of business (New York time) on trade date of the details of
all transactions (the “Trade Data”) effected for it by an Executing Broker. BNPP
PB is authorized to acknowledge, affirm, settle and clear all such transactions.
BNPP PB is further authorized to undertake to resolve any unmatched trade report
received by it from an Executing Broker; however, Customer shall remain
responsible for the ultimate resolution and BNPP PB shall have no responsibility
with respect to Trade Data not correctly transmitted to it on a timely basis by
any person or entity. If Customer has instructed Executing Brokers to send trade
confirmations to Customer in care of BNPP PB, Customer understands that such
confirmations are available to Customer without charge upon request. BNPP PB may
provide the Executing Brokers with any relevant information necessary in order
for the Executing Brokers to settle such trades.

 

  (c) Minimum Net Equity. If Customer fails to maintain in its Accounts cash and
securities with a ready market in an amount equal to or exceeding the minimum
net equity required for prime brokerage customers under the SEC Letter for
Customer (the “Minimum Net Equity”), and Customer does not bring its Accounts
into compliance after notice from BNPP PB in accordance with Applicable Law,

  BNPP PB shall notify all Executing Brokers of this event and may be required
by the SEC Letter to DK any transaction effected for Customer by an Executing
Broker without notice to Customer, in which case all transactions of Customer
for that day will be DK’d. BNPP PB will send a cancellation notification to
Customer to offset the prior notification sent pursuant to Section 1(b) and
Customer must settle outstanding trades directly with the Executing Brokers.
“SEC Letter” means the Securities and Exchange Commission No-Action letter,
dated January 25, 1994, relating to prime brokerage, as amended, supplemented,
modified or replaced from time to time.

 

  (d) Settlement in Bulk. BNPP PB may commingle its prime brokerage transactions
with those of other accounts managed by the investment manager of Customer
(“sub-accounts”) for settlement in bulk in accordance with the investment
manager’s instructions. If the net equity of any sub-account is below the
Minimum Net Equity, BNPP PB may be required to DK the entire transaction, in
which case, prior to the DK deadline established by the SEC Letter, the
investment manager may (i) resubmit the bulk trade so as to exclude those
securities which were originally allocated to the sub-account failing to meet
the Minimum Net Equity requirement or (ii) if permissible, re-allocate the
entire prime brokerage transaction to those sub-accounts meeting the Minimum Net
Equity requirement.

 

2. 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 Section 2(g) hereof. 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,

 

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  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 2 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. Excluding any information relating to Customer
and its trading strategies and accounts, 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 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.

 

  (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
2, 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.

 

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(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.

(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.

 

3. Termination of PB Terms - BNPP PB may terminate the PB Terms at any time for
any reason by giving notice of termination to Customer in accordance with the
Account Agreement. In the event of such termination, BNPP PB continues to have
its rights under the SEC Letter to cease the clearance and settlement of any
transactions for Customer executed but not settled prior to such notice of
termination. The PB Terms shall terminate immediately upon the termination of
the Account Agreement.

 

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Exhibit C – Rehypothecation Agreement

 

 

This Exhibit C (the “Rehypothecation Agreement”) is entered into between
Customer and BNP PARIBAS PRIME BROKERAGE, INC. (“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 the Account Agreement.

 

1. Rehypothecation -

 

  (a) Customer expressly grants each BNPP Entity the right, to the fullest
extent that it may effectively do so under Applicable Law, 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,
(a) the BNPP Entities shall comply with Rule 15c3-3 of the Securities Exchange
Act of 1934, as such rule may be amended, restated or otherwise modified from
time to time including in relation to the treatment of “fully paid securities”
and (b) 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 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 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 sum of (i) the value of the loan
against which the Margin Collateral was pledged and (ii) an amount equal to the
market value of securities sold short minus the cash in the Account
(“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 (33 1⁄3%) 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 including an imminent sale, dividend declaration
or other corporate action (“Ineligible Securities”), provided that the amount of
Ineligible Securities designated by Customer cannot cause the amount of
securities remaining to be below the Hypothecation Limit. 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
Agreement, the “Special Custody Account”) within a commercially reasonable
period (in any event, no sooner than the standard settlement cycle for such
securities after such request).

 

  (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 after such
request).

(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).

 

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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, preemption,
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 after such request).

 

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 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 the Margin Collateral is rehypothecated 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.