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

 

Exhibit 10.3

 

 

SPECIAL CUSTODY AND PLEDGE AGREEMENT

  

AGREEMENT (hereinafter “Agreement”), dated as of March 1, 2017, among State
Street Bank and Trust Company, a Massachusetts trust company, in its capacity as
custodian hereunder (“Custodian”), Broomall Funding LLC (the “Fund”), and BNP
Paribas Prime Brokerage International, Ltd. (the “Counterparty”).

 

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

 

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

 

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

 

WHEREAS, Custodian acts as custodian of certain assets of the Fund pursuant to a
custodian agreement by and among the Custodian, the Fund and certain other
wholly-owned subsidiaries of FS Investment Corporation IV (the “Custody
Agreement”).

 

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

 

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

 

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

 

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

 

 

 

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

 

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

 

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

 

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

 

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

 

(2)           (a)          Upon Instructions from Fund, Custodian, in its
capacity as a Securities Intermediary as defined in Revised Article 8 of the
Uniform Commercial Code as in effect from time to time in the State of New York
(the “UCC”), to the extent the same may be applicable, or in applicable federal
law or regulations, shall segregate Collateral on its books and records as an
account for Counterparty entitled “BNP Paribas Prime Brokerage International,
Ltd., Pledgee of Broomall Funding LLC” (the “Special Custody Account”) and shall
hold therein for the Counterparty as pledgee upon the terms of this Agreement
all Collateral. The Custodian hereby agrees that any Collateral except U.S. cash
held in the Special Custody Account shall be treated as a financial asset for
purposes of the UCC to the extent the same may be applicable, and Custodian
shall elect to hold such Collateral that is U.S. cash as a deposit in its
capacity as a “bank” as such term is defined in Section 9-102(a)(8) of the UCC,
which deposit account shall constitute part of, and be maintained in the same
manner as, the Special Custody Account. The Fund agrees to instruct Custodian
through Instructions from Fund as to the cash and specific securities which
Custodian is to identify on its books and records as pledged to the Counterparty
as Collateral in the Special Custody Account. The Custodian may in its
discretion decline to follow such Instructions if following the Instructions
would in Custodian’s sole judgment result in any remaining assets in the custody
account being inadequate to cover any obligations of the Fund to the Custodian.
Fund agrees that, if as a result of Custodian’s declining to follow such
Instructions, the Collateral in the Special Custody Account is not equal to or
greater than Adequate Performance Assurance and as a result a Fund Default has
occurred, Counterparty may exercise its right and remedies provided hereunder
(including, without limitation, the rights and remedies specified in Section 8
hereof).

 

 

 

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

 

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

 

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

 

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

 

 

 

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

 

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

 

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

 

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

 

(4)          Custodian agrees to release Collateral from the Special Custody
Account only upon receipt of an Advice from Counterparty (including for whatever
uses are permissible under the Committed Facility Agreement and Account
Agreement, though Custodian shall at no time have responsibility for determining
whether Counterparty is in compliance with those permissible uses). Counterparty
agrees, upon request of the Fund, to provide such an Advice from Counterparty to
Custodian with respect to Collateral selected by the Fund directing the release
of such Collateral to the Fund: (i) if said Collateral represents an excess in
value of the Collateral necessary to constitute Adequate Performance Assurance
at that time; (ii) against receipt in the Special Custody Account of substitute
Collateral having a value at least equal (with any remaining Collateral) to
Adequate Performance Assurance; or (iii) upon termination of the Fund’s accounts
with Counterparty and settlement in full of all transactions therein and any
amounts owed to the Counterparty with respect thereto. It is understood that the
Counterparty will be responsible for valuing Collateral; Custodian at no time
has any responsibility for determining whether the value of Collateral is equal
in value to Adequate Performance Assurance.

 

 

 

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

 

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

 

(7)          The Counterparty shall, on each Business Day, compute the aggregate
net credit or debit balance under the Account Agreement, and advise the Fund by
11:00 A.M. New York time of the amount of the net debit or credit, as the case
may be. If a net debit balance exists on such day, the Fund will cause, by the
close of business on such day, an amount of Collateral to be deposited in the
Special Custody Account to provide Adequate Performance Assurance related to
such net debit balance; provided that, in the event that Counterparty advises
the Fund of such net debit balance after 11:00 A.M., then such amount of
Collateral shall be deposited in the Special Custody Account by the close of
business on the following Business Day. Counterparty will charge interest on
debit balances in accordance with Counterparty’s policies as set forth in the
Committed Facility Agreement (and to the extent such Committed Facility
Agreement has been terminated or the commitment therein has expired, the Account
Agreement) and Counterparty will not pay interest on credit balances. Balances
will be appropriately adjusted when extensions of credit are closed out.

 

 

 

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

 

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

  

(10)        Reserved.

 

 

 

(11)        Custodian’s duties and responsibilities are set forth in this
Agreement. Custodian shall act only upon receipt of an Advice from Counterparty
regarding release of Collateral, except as required by applicable law. Custodian
shall not be liable or responsible for anything done, or omitted to be done by
it in good faith and in the absence of negligence and may rely and shall be
protected in acting upon any Advice from Counterparty which it reasonably
believes to be genuine and authorized. As between the Fund and Custodian, the
terms of the Custody Agreement shall apply with respect to any losses or
liabilities of such parties arising out of matters covered by this Agreement;
for the avoidance of doubt, each Advice from Counterparty shall be considered a
“Proper Instruction” under the Custody Agreement and as such is subject to the
terms of the Custody Agreement and, in particular, the Fund’s indemnity of the
Custodian thereunder. As between Custodian and Counterparty, Counterparty shall
indemnify and hold Custodian harmless from and against any losses or liabilities
(including reasonable legal fees) imposed on or incurred by Custodian subsequent
to the taking of any action, or arising out of any omission, of Custodian in
compliance with any Advice from Counterparty, except to the extent that any such
loss or liability (i) results from Custodian’s negligence, fraud, recklessness,
willful misconduct or bad faith; or (ii) represents special, consequential,
punitive, exemplary or incidental damages. In matters concerning or relating to
this Agreement, Custodian shall not be liable for the acts or omissions of any
of the other parties to this Agreement. In matters concerning or relating to
this Agreement, Custodian shall not be responsible for compliance with any
statute or regulation regarding the establishment or maintenance of margin
credit, including but not limited to Regulations T or X of the Board of
Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency or the U.S. Securities and Exchange Commission. Custodian shall have no
duty to require any cash or securities to be delivered to it or to determine
that the amount and form of assets deposited in the Special Custody Account
comply with any applicable requirements. Custodian may hold the securities in
the Special Custody Account in bearer, nominee, book-entry, or other form and in
any depository or clearing corporation (including omnibus accounts), with or
without indicating that the securities are held hereunder; provided, however,
that all securities held in the Special Custody Account shall be identified on
Custodian’s records as subject to this Agreement and shall be in a form that
permits transfer at the direction of Counterparty without additional
authorization or consent of the Fund.

 

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

 

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

 

 

 

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

 

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

 

(15)         Written communications hereunder, other than an Advice from
Counterparty,

 

shall be sent by facsimile-sending device or telegraphed when required herein,
hand delivered or mailed first class postage prepaid, except that written notice
of termination shall be sent by certified mail, in any such case addressed:

 

  (a) if to Custodian, to: State Street Bank and Trust Company
100 Summer Street, Floor 5
Boston, MA 02206
Attention: James Meagher, Managing Director
Facsimile No.: 212-651-2393
Telephone No.: 617-662-7310           (b) if to the Fund, to: Broomall Funding
LLC
c/o FS Investment Corporation IV
201 Rouse Boulevard
Philadelphia, PA 19112
Attn: Chief Financial Officer
Facsimile No.: (215) 222-4649
Telephone No.: (215) 495-1150           (c) if to the Counterparty, to: BNP
Paribas Prime Brokerage International, Ltd.
787 Seventh Avenue
New York, NY 10019
Attention:       Alex Bergelson
Fax No.:           201-850-4601 
Phone No.:      212-471-6533               BNP Paribas
525 Washington Boulevard
Jersey City, NJ  07310
Attn: David Koppel
Tel:  201-850-5391
Fax: 201-850-4618             Copies of Custodian’s confirmations, statements
and advices issued pursuant to paragraph 3 should be sent to:              
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, MO 64105
Attn: Vice President, Mutual Funds
Facsimile No.: 816-871-9451
Telephone No.: 816-871-4000

  

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

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

 

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

 

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

 

[Remainder of Page Intentionally Left Blank]

 

 

 

IN WITNESS WHEREOF, the duly authorized representatives of the parties have
executed this Agreement as of the date and year first written above.

 

Broomall funding llc

 

By:  /s/ Gerald F. Stahlecker   Name:  Gerald F. Stahlecker   Title:
   Executive Vice President  

  

BNP Paribas Prime Brokerage INTERNATIONAL, LTD.

 

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

 

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

   

State Street Bank and Trust Company

 

By:  /s/ James F. Smith   Name:  James F. Smith   Title:    Managing Director