**Exhibit 10.12**

 

**PSA**

THE BOND MARKET

TRADE ASSOCIATION

 

**MASTER**

**REPURCHASE AGREEMENT**

SEPTEMBER 1996 VERSION

 

Dated as of **October18, 2004**

 

Between:

 

**Aether Systems, Inc. by FBR Investment Management, Inc., asAgent**

 

and

 

**Daiwa Securities America Inc. (“Counterparty”)**

 

# **1.**                                      Applicability

From time to time the parties hereto may enter intotransactions in which one party (“Seller”) agrees to transfer to the other (“Buyer”)securities or other assets (“Securities”) against the transfer of funds byBuyer, with a simultaneous agreement by Buyer to transfer to Seller suchSecurities at a date certain or on demand, against the transfer of funds bySeller. Each such transaction shall be referred to herein as a “Transaction”and, unless otherwise agreed in writing, shall be governed by this Agreement,including any supplemental terms or conditions contained in Annex I hereto andin any other annexes identified herein or therein as applicable hereunder.

 

# **2.**                                      Definitions

## (a)                                  “Actof Insolvency”, with respect to any party, (i) the commencement by such partyas debtor of any case or proceeding under any bankruptcy, insolvency,reorganization, liquidation, moratorium, dissolution, delinquency or similarlaw, or such party seeking the appointment or election of a receiver, conservator,trustee, custodian or similar official for such party or any substantial partof its property, or the convening of any meeting of creditors for purposes ofcommencing any such case or proceeding or seeking such an appointment orelection, (ii) the commencement of any such case or proceeding against suchparty, or another seeking such an appointment or election, or the filingagainst a party of an application for a protective decree under the provisionsof the Securities Investor Protection Act of 1970, which (A) is consented to ornot timely contested by such party, (B) results in the entry of an order forrelief, such an appointment or election, the issuance of such a protectivedecree or the entry of an order having a similar effect, or (C) is not dismissedwithin 15 days, (iii) the making by such party of a general assignment for thebenefit of creditors, or (iv) the admission in writing by such party of suchparty’s inability to pay such party’s debts as they become due;

 

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## (b)                                 “AdditionalPurchased Securities”, Securities provided by Seller to Buyer pursuant toParagraph 4(a) hereof;

 

## (c)                                  “Buyer’sMargin Amount”, with respect to any Transaction as of any date, the amountobtained by application of the Buyer’s Margin Percentage to the Repurchase Pricefor such Transaction as of such date;

##  

## (d)                                 “Buyer’sMargin Percentage”, with respect to any Transaction as of any date, apercentage (which may be equal to the Seller’s Margin Percentage) agreed to byBuyer and Seller or, in the absence of any such agreement, the percentageobtained by dividing the Market Value of the Purchased Securities on thePurchase Date by the Purchase Price on the Purchase Date for such Transaction;

##  

## (e)                                  “Confirmation”,the meaning specified in Paragraph 3(b) hereof;

##  

## (f)                                    “Income”,with respect to any Security at any time, any principal thereof and allinterest, dividends or other distributions thereon;

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## (g)                                 “MarginDeficit”, the meaning specified in Paragraph 4(a) hereof;

##  

## (h)                                 “MarginExcess”, the meaning specified in Paragraph 4(b) hereof;

##  

## (i)                                     “MarginNotice Deadline”, the time agreed to by the parties in the relevantConfirmation, Annex I hereto or otherwise as the deadline for giving noticerequiring same-day satisfaction of margin maintenance obligations as providedin Paragraph 4 hereof (or, in the absence of any such agreement, the deadlinefor such purposes established in accordance with market practice);

##  

## (j)                                     “MarketValue”, with respect to any Securities as of any date, the price for suchSecurities on such date obtained from a generally recognized source agreed toby the parties or the most recent closing bid quotation from such a source,plus accrued Income to the extent not included therein (other than any Incomecredited or transferred to, or applied to the obligations of, Seller pursuantto Paragraph 5 hereof) as of such date (unless contrary to market practice forsuch Securities);

##  

## (k)                                  “PriceDifferential”, with respect to any Transaction as of any date, the aggregateamount obtained by daily application of the Pricing Rate for such Transactionto the Purchase Price for such Transaction on a 360-day-per-year basis for theactual number of days during the period commencing on (and including) thePurchase Date for such Transaction and ending on (but excluding) the date ofdetermination (reduced by any amount of such Price Differential previously paidby Seller to Buyer with respect to such Transaction);

##  

## (l)                                     “PricingRate”, the per annum percentage rate for determination of the PriceDifferential;

 

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## (m)                               “PrimeRate”, the prime rate of U.S. commercial banks as published in *The Wall Street Journal* (or, if more thanone such rate is published, the average of such rates);

##  

## (n)                                 “PurchaseDate”, the date on which Purchased Securities are to be transferred by Sellerto Buyer;

##  

## (o)                                 “PurchasePrice”, (i) on the Purchase Date, the price at which Purchased Securities aretransferred by Seller to Buyer, and (ii) thereafter, except where Buyer andSeller agree otherwise, such price increased by the amount of any cashtransferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and decreasedby the amount of any cash transferred by Seller to Buyer pursuant to Paragraph4(a) hereof or applied to reduce Seller’s obligations under clause (ii) ofParagraph 5 hereof;

##  

## (p)                                 “PurchasedSecurities”, the Securities transferred by Seller to Buyer in a Transactionhereunder, and any Securities substituted therefor in accordance with Paragraph9 hereof.  The term “Purchased Securities”with respect to any Transaction at any time also shall include AdditionalPurchased Securities delivered pursuant to Paragraph 4(a) hereof and shallexclude Securities returned pursuant to Paragraph 4(b) hereof;

##  

## (q)                                 “RepurchaseDate”, the date on which Seller is to repurchase the Purchased Securities fromBuyer, including any date determined by application of the provisions ofParagraph 3(c) or 11 hereof;

##  

## (r)                                    “RepurchasePrice”, the price at which Purchased Securities are to be transferred fromBuyer to Seller upon termination of a Transaction, which will be determined ineach case (including Transactions terminable upon demand) as the sum of thePurchase Price and the Price Differential as of the date of such determination;

 

## (s)                                  “Seller’sMargin Amount”, with respect to any Transaction as of any date, the amountobtained by application of the Seller’s Margin Percentage to the RepurchasePrice for such Transaction as of such date;

##  

## (t)                                    “Seller’sMargin Percentage”, with respect to any Transaction as of any date, a percentage(which may be equal to the Buyer’s Margin Percentage) agreed to by Buyer andSeller or, in the absence of any such agreement, the percentage obtained bydividing the Market Value of the Purchased Securities on the Purchase Date bythe Purchase Price on the Purchase Date for such Transaction.

##  

# **3.**                                      Initiation;Confirmation; Termination

## (a)                                  Anagreement to enter into a Transaction may be made orally or in writing at theinitiation of either Buyer or Seller.  Onthe Purchase Date for the Transaction, the Purchased Securities shall betransferred to Buyer or its agent against the transfer of the Purchase Price toan account of Seller.

 

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## (b)                                 Uponagreeing to enter into a Transaction hereunder, Buyer or Seller (or both), asshall be agreed, shall promptly deliver to the other party a writtenconfirmation of each Transaction (a “Confirmation”).  The Confirmation shall describe the PurchasedSecurities (including CUSIP number, if any), identify Buyer and Seller and setforth (i) the Purchase Date, (ii) the Purchase Price, (iii) the RepurchaseDate, unless the Transaction is to be terminable on demand, (iv) the PricingRate or Repurchase Price applicable to the Transaction, and (v) any additionalterms or conditions of the Transaction not inconsistent with thisAgreement.  The Confirmation, togetherwith this Agreement, shall constitute conclusive evidence of the terms agreedbetween Buyer and Seller with respect to the Transaction to which theConfirmation relates, unless with respect to the Confirmation specificobjection is made promptly after receipt thereof.  In the event of any conflict between theterms of such Confirmation and this Agreement, this Agreement shall prevail.

 

## (c)                                  Inthe case of Transactions terminable upon demand, such demand shall be made byBuyer or Seller, no later than such time as is customary in accordance withmarket practice, by telephone or otherwise on or prior to the business day onwhich such termination will be effective. On the date specified in such demand, or on the date fixed fortermination in the case of Transactions having a fixed term, termination of theTransaction will be effected by transfer to Seller or its agent of thePurchased Securities and any Income in respect thereof received by Buyer (andnot previously credited or transferred to, or applied to the obligations of,Seller pursuant to Paragraph 5 hereof) against the transfer of the RepurchasePrice to an account of Buyer.

 

# **4.**                                      MarginMaintenance

## (a)                                  Ifat any time the aggregate Market Value of all Purchased Securities subject toall Transactions in which a particular party hereto is acting as Buyer is lessthan the aggregate Buyer’s Margin Amount for all such Transactions (a “MarginDeficit”), then Buyer may by notice to Seller require Seller in suchTransactions, at Seller’s option, to transfer to Buyer cash or additionalSecurities reasonably acceptable to Buyer (“Additional Purchased Securities”),so that the cash and aggregate Market Value of the Purchased Securities,including any such Additional Purchased Securities, will thereupon equal orexceed such aggregate Buyer’s Margin Amount (decreased by the amount of anyMargin Deficit as of such date arising from any Transactions in which suchBuyer is acting as Seller).

 

## (b)                                 Ifat any time the aggregate Market Value of all Purchased Securities subject toall Transactions in which a particular party hereto is acting as Seller exceedsthe aggregate Seller’s Margin Amount for all such Transactions at such time (a “MarginExcess”), then Seller may by notice to Buyer require Buyer in suchTransactions, at Buyer’s option, to transfer cash or Purchased Securities toSeller, so that the aggregate Market Value of the Purchased Securities, afterdeduction of any such cash or any Purchased Securities so transferred, willthereupon not exceed such aggregate Seller’s Margin Amount (increased by theamount of any

 

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## Margin Excess as of such date arising from anyTransactions in which such Seller is acting as Buyer).

##  

## (c)                                  Ifany notice is given by Buyer or Seller under subparagraph (a) or (b) of thisParagraph at or before the Margin Notice Deadline on any business day, theparty receiving such notice shall transfer cash or Additional PurchasedSecurities as provided in such subparagraph no later than the close of businessin the relevant market on such day.  Ifany such notice is given after the Margin Notice Deadline, the party receivingsuch notice shall transfer such cash or Securities no later than the close ofbusiness in the relevant market on the next business day following such notice.

##  

## (d)                                 Anycash transferred pursuant to this Paragraph shall be attributed to suchTransactions as shall be agreed upon by Buyer and Seller.

##  

## (e)                                  Sellerand Buyer may agree, with respect to any or all Transactions hereunder, thatthe respective rights of Buyer or Seller (or both) under subparagraphs (a) and(b) of this Paragraph may be exercised only where a Margin Deficit or a MarginExcess, as the case may be, exceeds a specified dollar amount or a specifiedpercentage of the Repurchase Prices for such Transactions (which amount orpercentage shall be agreed to by Buyer and Seller prior to entering into anysuch Transactions).

##  

## (f)                                    Sellerand Buyer may agree, with respect to any or all Transactions hereunder, thatthe respective rights of Buyer and Seller under subparagraphs (a) and (b) ofthis Paragraph to require the elimination of a Margin Deficit or a MarginExcess, as the case may be, may be exercised whenever such a Margin Deficit ora Margin Excess exists with respect to any single Transaction hereunder(calculated without regard to any other Transaction outstanding under thisAgreement).

 

# **5.**                                      IncomePayments

Seller shall be entitled to receive an amount equal toall Income paid or distributed on or in respect of the Securities that is nototherwise received by Seller, to the full extent it would be so entitled if theSecurities had not been sold to Buyer.  Buyershall, as the parties may agree with respect to any Transaction (or, in theabsence of any such agreement, as Buyer shall reasonably determine in itsdiscretion), on the date such Income is paid or distributed either (i) transferto or credit to the account of Seller such Income with respect to any PurchasedSecurities subject to such Transaction or (ii) with respect to Income paid incash, apply the Income payment or payments to reduce the amount, if any, to betransferred to Buyer by Seller upon termination of such Transaction.  Buyer shall not be obligated to take anyaction pursuant to the preceding sentence (A) to the extent that such actionwould result in the creation of a Margin Deficit, unless prior thereto orsimultaneously therewith Seller transfers to Buyer cash or Additional PurchasedSecurities sufficient to eliminate such Margin Deficit, or (B) if an Event ofDefault with respect to Seller has occurred and is then continuing at the timesuch Income is paid or distributed.

 

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# **6.**                                      SecurityInterest

Although the parties intend that all Transactionshereunder be sales and purchases and not loans, in the event any suchTransactions are deemed to be loans, Seller shall be deemed to have pledged toBuyer as security for the performance by Seller of its obligations under eachsuch Transaction, and shall be deemed to have granted to Buyer a securityinterest in, all of the Purchased Securities with respect to all Transactionshereunder and all Income thereon and other proceeds thereof.

 

# **7.**                                      Paymentand Transfer

Unless otherwise mutually agreed, all transfers offunds hereunder shall be in immediately available funds. All Securitiestransferred by one party hereto to the other party (i) shall be in suitableform for transfer or shall be accompanied by duly executed instruments oftransfer or assignment in blank and such other documentation as the partyreceiving possession may reasonably request, (ii) shall be transferred on thebook-entry system of a Federal Reserve Bank, or (iii) shall be transferred byany other method mutually acceptable to Seller and Buyer.

 

# **8.**                                      Segregationof Purchased Securities

To the extent required by applicable law, allPurchased Securities in the possession of Seller shall be segregated from othersecurities in its possession and shall be identified as subject to thisAgreement. Segregation may be accomplished by appropriate identification on thebooks and records of the holder, including a financial or securitiesintermediary or a clearing corporation. All of Seller’s interest in thePurchased Securities shall pass to Buyer on the Purchase Date and, unlessotherwise agreed by Buyer and Seller, nothing in this Agreement shall precludeBuyer from engaging in repurchase transactions with the Purchased Securities orotherwise selling, transferring, pledging or hypothecating the PurchasedSecurities, but no such transaction shall relieve Buyer of its obligations totransfer Purchased Securities to Seller pursuant to Paragraph 3, 4 or 11hereof, or of Buyer’s obligation to credit or pay Income to, or apply Income tothe obligations of, Seller pursuant to Paragraph 5 hereof.

 

**Required Disclosure for Transactions in Which the SellerRetains Custody of the Purchased Securities**

 

Seller is not permitted to substitute other securitiesfor those subject to this Agreement and therefore must keep Buyer’s securitiessegregated at all times, unless in this Agreement Buyer grants Seller the rightto substitute other securities. If Buyer grants the right to substitute, thismeans that Buyer’s securities will likely be commingled with Seller’s ownsecurities during the trading day. Buyer is advised that, during any tradingday that Buyer’s securities are commingled with Seller’s securities, they[will]* [may)** be subject to liens granted by Seller to [its clearing bank]*[third parties]** and may be used by Seller for deliveries on other securitiestransactions. Whenever the securities are commingled, Seller’s ability toresegregate substitute securities for Buyer will be subject to Seller’s abilityto satisfy [the clearing]* [any]** lien or to obtain substitute securities.

 

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*                 Languageto be used under 17 C.F.R. §403.4(e) if Seller is a government securitiesbroker or dealer other than a financial institution.

 

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**          Languageto be used under 17 C.F.R. §403.5(d) if Seller is a financial institution.

 

# **9.**                                      Substitution

## (a)                                  Sellermay, subject to agreement with and acceptance by Buyer, substitute otherSecurities for any Purchased Securities. Such substitution shall be made bytransfer to Buyer of such other Securities and transfer to Seller of suchPurchased Securities. After substitution, the substituted Securities shall bedeemed to be Purchased Securities.

##  

## (b)                                 InTransactions in which Seller retains custody of Purchased Securities, theparties expressly agree that Buyer shall be deemed, for purposes ofsubparagraph (a) of this Paragraph, to have agreed to and accepted in thisAgreement substitution by Seller of other Securities for Purchased Securities;provided, however, that such other Securities shall have a Market Value atleast equal to the Market Value of the Purchased Securities for which they aresubstituted.

##  

# **10.**                               Representations

Each of Buyer and Seller represents and warrants tothe other that (i) it is duly authorized to execute and deliver this Agreement,to enter into Transactions contemplated hereunder and to perform itsobligations hereunder and has taken all necessary action to authorize suchexecution, delivery and performance, (ii) it will engage in such Transactionsas principal (or, if agreed in writing, in the form of an annex hereto orotherwise, in advance of any Transaction by the other party hereto, as agentfor a disclosed principal), (iii) the person signing this Agreement on itsbehalf is duly authorized to do so on its behalf (or on behalf of any suchdisclosed principal), (iv) it has obtained all authorizations of anygovernmental body required in connection with this Agreement and theTransactions hereunder and such authorizations are in full force and effect and(v) the execution, delivery and performance of this Agreement and theTransactions hereunder will not violate any law, ordinance, charter, by-law orrule applicable to it or any agreement by which it is bound or by which any ofits assets are affected. On the Purchase Date for any Transaction Buyer andSeller shall each be deemed to repeat all the foregoing representations made byit.

 

# **11.**                               Eventsof Default

In the event that (i) Seller fails to transfer orBuyer fails to purchase Purchased Securities upon the applicable Purchase Date,(ii) Seller fails to repurchase or Buyer fails to transfer Purchased Securitiesupon the applicable Repurchase Date, (iii) Seller or Buyer fails to comply withParagraph 4 hereof, (iv) Buyer fails, after one business day’s notice, tocomply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect toSeller or Buyer, (vi) any representation made by Seller or Buyer shall havebeen incorrect or untrue in any material respect when made or repeated ordeemed to have been made or repeated, or (vii) Seller or Buyer shall admit tothe other its inability to, or its intention not to, perform any of itsobligations hereunder (each an “Event of Default”):

 

## (a)                                  Thenondefaulting party may, at its option (which option shall be deemed to havebeen exercised immediately upon the occurrence of an Act of Insolvency),declare an Event of Default to have occurred hereunder and, upon the exerciseor deemed

 

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## exercise of such option, the Repurchase Date for eachTransaction hereunder shall, if it has not already occurred, be deemedimmediately to occur (except that, in the event that the Purchase Date for anyTransaction has not yet occurred as of the date of such exercise or deemedexercise, such Transaction shall be deemed immediately canceled). Thenondefaulting party shall (except upon the occurrence of an Act of Insolvency)give notice to the defaulting party of the exercise of such option as promptlyas practicable.

##  

## (b)                                 Inall Transactions in which the defaulting party is acting as Seller, if thenondefaulting party exercises or is deemed to have exercised the optionreferred to in subparagraph (a) of this Paragraph, (i) the defaulting party’sobligations in such Transactions to repurchase all Purchased Securities, at theRepurchase Price therefor on the Repurchase Date determined in accordance withsubparagraph (a) of this Paragraph, shall thereupon become immediately due andpayable, (ii) all Income paid after such exercise or deemed exercise shall beretained by the nondefaulting party and applied to the aggregate unpaidRepurchase Prices and any other amounts owing by the defaulting partyhereunder, and (iii) the defaulting party shall immediately deliver to thenondefaulting party any Purchased Securities subject to such Transactions thenin the defaulting party’s possession or control.

##  

## (c)                                  Inall Transactions in which the defaulting party is acting as Buyer, upon tenderby the nondefaulting party of payment of the aggregate Repurchase Prices forall such Transactions, all right, title and interest in and entitlement to allPurchased Securities subject to such Transactions shall be deemed transferredto the nondefaulting party, and the defaulting party shall deliver all suchPurchased Securities to the nondefaulting party.

##  

## (d)                                 Ifthe nondefaulting party exercises or is deemed to have exercised the optionreferred to in subparagraph (a) of this Paragraph, the nondefaulting party,without prior notice to the defaulting party, may:

 

### (i)                                     asto Transactions in which the defaulting party is acting as Seller, (A)immediately sell, in a recognized market (or otherwise in a commerciallyreasonable manner) at such price or prices as the nondefaulting party mayreasonably deem satisfactory, any or all Purchased Securities subject to suchTransactions and apply the proceeds thereof to the aggregate unpaid RepurchasePrices and any other amounts owing by the defaulting party hereunder or (B) inits sole discretion elect, in lieu of selling all or a portion of suchPurchased Securities, to give the defaulting party credit for such PurchasedSecurities in an amount equal to the price therefor on such date, obtained froma generally recognized source or the most recent closing bid quotation fromsuch a source, against the aggregate unpaid Repurchase Prices and any otheramounts owing by the defaulting party hereunder; and

 

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### (ii)                                  asto Transactions in which the defaulting party is acting as Buyer, (A)immediately purchase, in a recognized market (or otherwise in a commerciallyreasonable manner) at such price or prices as the nondefaulting party mayreasonably deem satisfactory, securities (“Replacement Securities”) of the sameclass and amount as any Purchased Securities that are not delivered by thedefaulting party to the nondefaulting party as required hereunder or (B) in itssole discretion elect, in lieu of purchasing Replacement Securities, to bedeemed to have purchased Replacement Securities at the price therefor on suchdate, obtained from a generally recognized source or the most recent closingoffer quotation from such a source.

 

Unless otherwise provided in Annex I, the partiesacknowledge and agree that (1) the Securities subject to any Transactionhereunder are instruments traded in a recognized market, (2) in the absence ofa generally recognized source for prices or bid or offer quotations for anySecurity, the nondefaulting party may establish the source therefor in its solediscretion and (3) all prices, bids and offers shall be determined togetherwith accrued Income (except to the extent contrary to market practice withrespect to the relevant Securities).

 

## (e)                                  Asto Transactions in which the defaulting party is acting as Buyer, thedefaulting party shall be liable to the nondefaulting party for any excess ofthe price paid (or deemed paid) by the nondefaulting party for ReplacementSecurities over the Repurchase Price for the Purchased Securities replacedthereby and for any amounts payable by the defaulting party under Paragraph 5hereof or otherwise hereunder.

##  

## (f)                                    Forpurposes of this Paragraph 11, the Repurchase Price for each Transactionhereunder in respect of which the defaulting party is acting as Buyer shall notincrease above the amount of such Repurchase Price for such Transactiondetermined as of the date of the exercise or deemed exercise by thenondefaulting party of the option referred to in subparagraph (a) of thisParagraph.

##  

## (g)                                 Thedefaulting party shall be liable to the nondefaulting party for (i) the amountof all reasonable legal or other expenses incurred by the nondefaulting partyin connection with or as a result of an Event of Default, (ii) damages in anamount equal to the cost (including all fees, expenses and commissions) ofentering into replacement transactions and entering into or terminating hedgetransactions in connection with or as a result of an Event of Default, and(iii) any other loss, damage, cost or expense directly arising or resultingfrom the occurrence of an Event of Default in respect of a Transaction.

 

## (h)                                 Tothe extent permitted by applicable law, the defaulting party shall be liable tothe nondefaulting party for interest on any amounts owing by the defaultingparty hereunder, from the date the defaulting party becomes liable for suchamounts hereunder until such amounts are (i) paid in full by the defaultingparty or (ii) satisfied in full by the exercise of the nondefaulting party’srights hereunder.

 

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## Interest on any sum payable by the defaulting party tothe nondefaulting party under this Paragraph 11(h) shall be at a rate equal tothe greater of the Pricing Rate for the relevant Transaction or the Prime Rate.

 

## (i)                                     Thenondefaulting party shall have, in addition to its rights hereunder, any rightsotherwise available to it under any other agreement or applicable law.

 

# **12.**                               SingleAgreement

Buyer and Seller acknowledge that, and have enteredhereinto and will enter into each Transaction hereunder in consideration of andin reliance upon the fact that, all Transactions hereunder constitute a singlebusiness and contractual relationship and have been made in consideration ofeach other. Accordingly, each of Buyer and Seller agrees (i) to perform all ofits obligations in respect of each Transaction hereunder, and that a default inthe performance of any such obligations shall constitute a default by it inrespect of all Transactions hereunder, (ii) that each of them shall be entitledto set off claims and apply property held by them in respect of any Transactionagainst obligations owing to them in respect of any other Transactionshereunder and (iii) that payments, deliveries and other transfers made by eitherof them in respect of any Transaction shall be deemed to have been made inconsideration of payments, deliveries and other transfers in respect of anyother Transactions hereunder, and the obligations to make any such payments,deliveries and other transfers may be applied against each other and netted.

 

# **13.**                               Noticesand Other Communications

Any and all notices, statements, demands or othercommunications hereunder may be given by a party to the other by mail,facsimile, telegraph, messenger or otherwise to the address specified in AnnexII hereto, or so sent to such party at any other place specified in a notice ofchange of address hereafter received by the other.  All notices, demands and requests hereundermay be made orally, to be confirmed promptly in writing, or by othercommunication as specified in the preceding sentence.

 

# **14.**                               EntireAgreement; Severability

This Agreement shall supersede any existing agreementsbetween the parties containing general terms and conditions for repurchasetransactions. Each provision end agreement herein shall be treated as separateand independent from any other provision or agreement herein and shall beenforceable notwithstanding the unenforceability of any such other provision oragreement.

 

# **15.**                               Non-assignability;Termination

## (a)                                  Therights and obligations of the parties under this Agreement and under anyTransaction shall not be assigned by either party without the prior writtenconsent of the other party, and any such assignment without the prior writtenconsent of the other party shall be null and void. Subject to the foregoing,this Agreement and any Transactions shall be binding upon and shall inure tothe benefit of the parties and their respective successors and assigns. ThisAgreement may be terminated by either party upon giving written notice to theother, except that this

 

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## Agreement shall, notwithstanding such notice, remainapplicable to any Transactions then outstanding.

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## (b)                                 Subparagraph(a) of this Paragraph 15 shall not preclude a party from assigning, charging orotherwise dealing with all or any part of its interest in any sum payable to itunder Paragraph 11 hereof.

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# **16.**                               GoverningLaw

This Agreement shall be governed by the laws of theState of New York without giving effect to the conflict of law principlesthereof.

 

# **17.**                               NoWaivers, Etc.

No express or implied waiver of any Event of Defaultby either party shall constitute a waiver of any other Event of Default and noexercise of any remedy hereunder by any party shall constitute a waiver of itsright to exercise any other remedy hereunder. No modification or waiver of anyprovision of this Agreement and no consent by any party to a departure herefromshall be effective unless and until such shall be in writing and duly executedby both of the parties hereto. Without limitation on any of the foregoing, thefailure to give a notice pursuant to Paragraph 4(a) or 4(b) hereof will notconstitute a waiver of any right to do so at a later date.

 

# **18.**                               Useof Employee Plan Assets

## (a)                                  Ifassets of an employee benefit plan subject to any provision of the EmployeeRetirement Income Security Act of 1974 (“ERISA”) are intended to be used byeither party hereto (the “Plan Party”) in a Transaction, the Plan Party shall sonotify the other party prior to the Transaction. The Plan Party shall representin writing to the other party that the Transaction does not constitute aprohibited transaction under ERISA or is otherwise exempt therefrom, and theother party may proceed in reliance thereon but shall not be required so toproceed.

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## (b)                                 Subjectto the last sentence of subparagraph (a) of this Paragraph, any suchTransaction shall proceed only if Seller furnishes or has furnished to Buyerits most recent available audited statement of its financial condition and itsmost recent subsequent unaudited statement of its financial condition.

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## (c)                                  Byentering into a Transaction pursuant to this Paragraph, Seller shall be deemed(i) to represent to Buyer that since the date of Seller’s latest such financialstatements, there has been no material adverse change in Seller’s financialcondition which Seller has not disclosed to Buyer, and (ii) to agree to provideBuyer with future audited and unaudited statements of its financial conditionas they are issued, so long as it is a Seller in any outstanding Transactioninvolving a Plan Party.

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# **19.**                               Intent

## (a)                                  Theparties recognize that each Transaction is a “repurchase agreement” as thatterm is defined in Section 101 of Title 11 of the United States Code, asamended (except insofar as the type of Securities subject to such Transactionor the term of

 

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## such Transaction would render such definitioninapplicable), and a “securities contract” as that term is defined in Section741 of Title 11 of the United States Code, as amended (except insofar as thetype of assets subject to such Transaction would render such definitioninapplicable).

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## (b)                                 Itis understood that either party’s right to liquidate Securities delivered to itin connection with Transactions hereunder or to exercise any other remediespursuant to Paragraph 11 hereof is a contractual right to liquidate suchTransaction as described in Sections 555 and 559 of Title 11 of the United StatesCode, as amended.

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## (c)                                  Theparties agree and acknowledge that if a party hereto is an “insured depositoryinstitution,” as such term is defined in the Federal Deposit Insurance Act, asamended (“FDIA”), then each Transaction hereunder is a “qualified financialcontract,” as that term is defined in FDIA and any rules, orders or policystatements thereunder (except insofar as the type of assets subject to suchTransaction would render such definition inapplicable).

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## (d)                                 Itis understood that this Agreement constitutes a “netting contract” as definedin and subject to Title IV of the Federal Deposit Insurance CorporationImprovement Act of 1991 (“FDICIA”) and each payment entitlement and paymentobligation under any Transaction hereunder shall constitute a “coveredcontractual payment entitlement” or “covered contractual payment obligation”,respectively, as defined in and subject to FDICIA (except insofar as one orboth of the parties is not a “financial institution” as that term is defined inFDICIA).

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# **20.**                               DisclosureRelating to Certain Federal Protections

The parties acknowledge that they have been advisedthat:

 

## (a)                                  inthe case of Transactions in which one of the parties is a broker or dealerregistered with the Securities and Exchange Commission (“SEC”) under Section 15of the Securities Exchange Act of 1934 (“1934 Act”), the Securities InvestorProtection Corporation has taken the position that the provisions of theSecurities Investor Protection Act of 1970 (“SIPA”) do not protect the otherparty with respect to any Transaction hereunder;

##  

## (b)                                 inthe case of Transactions in which one of the parties is a government securitiesbroker or a government securities dealer registered with the SEC under Section15C of the 1934 Act, SIPA will not provide protection to the other party withrespect to any Transaction hereunder; and

##  

## (c)                                  inthe case of Transactions in which one of the parties is a financialinstitution, funds held by the financial institution pursuant to a Transactionhereunder are not a deposit and therefore are not insured by the FederalDeposit Insurance Corporation or the National Credit Union Share InsuranceFund, as applicable.

 

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| **Aether Systems, Inc. by FBR  Investment  Management, Inc., as agent** | ** ** | **Daiwa Securities America Inc.**  |
|-------------------------------------------------------------------------|------------|-----------------------------------------|
| ** **                                                              | ** ** | ** **                              |
| By:                                                                     | ** ** | ** **                              | ** ** | By: | ** ** | ** ** |
| ** **                                                              | ** ** | ** **                              |
| Title:                                                                  | ** ** | ** **                              | ** ** | Title: | ** ** | ** ** |
| ** **                                                              | ** ** | ** **                              |
| Date:                                                                   | ** ** | ** **                              | ** ** | Date: | ** ** | ** ** |

 

Asfurther specified in Annex IV hereto, FBR Investment Management, Inc. is actingsolely as agent for Aether Systems, Inc. (“Aether”) and not as principal in anytransactions.  Subject to Agent’srepresentations set forth in the Letter of Trading Authorization issued toDaiwa Securities America Inc. (“Daiwa”) and dated June 15, 2004, Agent, in suchcapacity as ‘Agent’, shall have no liability to Daiwa whatsoever for any ofAether’s obligations hereunder or otherwise, including without limitations forany Transaction entered into by the Agent on Aether’s behalf hereunder, or formargin calls, maintenance calls or settlement of Transactions.

 

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**ANNEX I**

 

**Supplemental Termsand Conditions**

 

ThisAnnex I forms a part of the Master Repurchase Agreement dated as of **October 18, 2004** (the “Agreement”)between **Aether Systems, Inc. by FBRInvestment Management, Inc., as Agent**(“Party A”), and **Daiwa Securities America Inc.** (“Party B”).Capitalized terms used but not defined in this Annex I shall have the meaningsascribed to them in the Agreement.

 

1.                                       OtherApplicable Annexes. In addition to this Annex I and Annex II, the followingAnnexes and any Schedules thereto shall form a part of this Agreement and shallbe applicable thereunder:

 

(*Please check asappropriate*)

oAnnex III (International Transactions)

ýAnnex IV (Party Acting as Agent)

oAnnex V (Margin for Forward Transactions)

oAnnex VI (Buy/Sell Transactions)

oAnnex VII (Transactions Involving Registered Investment Companies)

 

o*No additional annexes apply.*

 

2.                                       Theparties agree that each may electronically record all telephone conversationsbetween them.

 

3.                                       Thefollowing 2 paragraphs shall be added to Paragraph 9 of the Agreement:

 

(c)                                  Inthe case of any Transaction for which the Repurchase Date is other than thebusiness day immediately following the Purchase Date and with respect to whichSeller does not have any existing right to substitute substantially the sameSecurities for the Purchased Securities, Seller shall have the right, subjectto the proviso to this sentence, upon notice to Buyer, which notice shall begiven at or prior to 10 am (New York time) on such business day to substitutesubstantially the same Securities for any Purchased Securities, provided,however, that Buyer may elect, by the close of business on the business daynotice is received, or by the close of the next business day if notice is givenafter 10 am (New York time) on such day, not to accept such substitution. Inthe event such substitution is accepted by Buyer, such substitution shall bemade by Seller’s transfer to Buyer of such other Securities and Buyer’stransfer to Seller of such Purchased Securities, and after substitution, thesubstituted Securities shall be deemed to be Purchased Securities. In the eventBuyer elects not to accept such substitution, Buyer shall offer Seller theright to terminate the Transaction.

 

(d)                                 Inthe event Seller exercises its right to substitute or terminate undersub-paragraph (c),                 Seller shall beobligated to pay to Buyer, by the close of the business day of suchsubstitution or termination, as the case may be, an amount equal to (A) Buyer’sactual cost (including all fees, expenses and commissions) of (i) entering intoreplacement transactions; (ii) entering into or terminating hedge

 

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transactions; and/or (iii) terminating transactions orsubstituting securities in like transactions with third parties in connectionwith or as a result of such substitution or termination, and (B) to the extentBuyer determines not to enter into replacement transactions, the loss incurredby Buyer directly arising or resulting from such substitution or termination.The foregoing amounts shall be solely determined and calculated by Buyer ingood faith.

 

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**ANNEX II**

 

**NAMES ANDADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES**

 

1)**                                      Allcommunications with Daiwa Securities America Inc. will be directed to:**

 

**Daiwa Securities America Inc.**

Financial Square, 32 Old Slip

New York, NY 10005

Attn: Repo Desk

Tel: 212-612-6540

Fax: 212-612-7129

 

2)                                      **All communications with Aether Systems, Inc. by FBRInvestment Management, Inc., as Agent will be directed to:**

 

**Aether Systems, Inc.**

11500 Cronridge Dr.

Owings Mills, MD 21117

Attn: Steven Bass

Tel: 443-394-5250

Fax: 443-356-8699

 

**FBR Investment Management, Inc.**

1001 Nineteenth Street North

Arlington, VA 22209

Attn: Brian Bowers

Tel: 703-469-1148

Fax: 703-312-9721

 

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**ANNEX III**

 

**InternationalTransactions**

 

ThisAnnex III (including any Schedules hereto) forms a part of the MasterRepurchase Agreement dated as of                  (the “Agreement”) between                  and Daiwa Securities America Inc. Capitalized terms used but not defined in this Annex III shall have themeanings ascribed to them in the Agreement.

 

**1.****                                      Definitions.**  For purposes of the Agreement and this AnnexIII:

 

(a)          Thefollowing terms shall have the following meanings:

 

“BaseCurrency”, United States dollars or such other currency as Buyer and Seller mayagree in the Confirmation with respect to any International Transaction orotherwise in writing;

 

“BusinessDay” or “business day”:

 

(i)                                     inrelation to any International Transaction which (A) involves an InternationalSecurity and (B) is to be settled through CEDEL or Euroclear, a day on whichCEDEL or, as the case may be, Euroclear is open to settle business in thecurrency in which the Purchase Price and the Repurchase Price are denominated;

 

(ii)                                  inrelation to any International Transaction which (A) involves an InternationalSecurity and (B) is to be settled through a settlement system other than CEDELor Euroclear, a day on which that settlement system is open to settle suchInternational Transaction;

 

(iii)                               inrelation to any International Transaction which involves a delivery ofSecurities not falling within (i) or (ii) above, a day on which banks are openfor business in the place where delivery of the relevant Securities is to beeffected; and

 

(iv)                              inrelation to any International Transaction which involves an obligation to makea payment not falling within (1) or (ii) above, a day other than a Saturday orSunday on which banks are open for business in the principal financial centerof the country of which the currency in which the payment is denominated is theofficial currency and, if different, in the place where any account designatedby the parties for the making or receipt of the payment is situated (or, in thecase of ECU, a day on which ECU clearing operates);

 

“CEDEL”, CEDEL Bank,société anonyme;

 

“Contractual Currency”,the currency in which the International Securities subject to any InternationalTransaction are denominated or such other

 

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currency as may bespecified in the Confirmation with respect to any International Transaction;

 

“Euroclear”, MorganGuaranty Trust Company of New York, Brussels Branch, as operator of theEuroclear System;

 

“International. Security”,any Security that (i) is denominated in a currency other than United Statesdollars or (ii) is capable of being cleared through a clearing facility outsidethe United States or (iii) is issued by an issuer organized under the laws of ajurisdiction other than the United Stales (or any political subdivision thereof);

 

“InternationalTransaction”, any Transaction involving (i) an International Security or (ii) aparty organized under the laws of a jurisdiction other than the United States(or any political subdivision thereof) or having its principal place ofbusiness outside the United States or (iii) a branch or office outside theUnited States designated in Annex I by a party organized under the laws of theUnited Status (or any political subdivision thereof) as an office through whichthat party may act;

 

“LIBOR”, in relation toany sum in any currency, the offered rate for deposits for such sum in suchcurrency for a period of three months which appears on the Reuters Screen LIBOpage as of 11:00 A.M., London time, on the date on which it is to be determined(or, if more than one such rate appears, the arithmetic mean of such rates);

 

“Spot Rate”, where anamount in one currency is to be converted into a second currency on any date,the spot rate of exchange of a comparable amount quoted by a major money-centerbank in the New York interbank market, as agreed by Buyer and Seller, for thesale by such bank of such second currency against a purchase by it of suchfirst currency.

 

(b)                                 NotwithstandingParagraph 2 of the Agreement, the term “Prime Rate” shall mean, with respect toany International Transaction, LIBOR plus a spread, as may be specified in theConfirmation with respect to any International Transaction or otherwise inwriting.

 

**2.****                                      Mannerof Transfer.**  All transfers ofInternational Securities (i) shall be in suitable form for transfer andaccompanied by duly executed instruments of transfer or assignment in blank(where required for transfer) and such other documentation as the transfereemay reasonably request, or (ii) shall be transferred through the book-entrysystem of Euroclear or CEDEL, or (iii) shall be transferred through any otheragreed securities clearing system or (iv) shall be transferred by any othermethod mutually acceptable to Seller and Buyer.

 

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**3.****                                      ContractualCurrency.**

 

(a)                                  Unlessotherwise mutually agreed, all funds transferred in respect of the PurchasePrice or the Repurchase Price in any International Transaction shall be in theContractual Currency.

 

(b)                                 Notwithstandingsubparagraph (a) of this Paragraph 3, the payee of any payment may, at itsoption, accept tender thereof in any other currency; provided, however, that,to the extent permitted by applicable law, the obligation of the payor to makesuch payment will be discharged only to the extent of the amount of theContractual Currency that such payee may, consistent with normal bankingprocedures, purchase with such other currency (after deduction of any premiumand costs of exchange) for delivery within the customary delivery period for spottransactions in respect of the relevant currency.

 

(c)                                  Iffor any reason the amount in the Contractual Currency so received, includingamounts received after conversion of any recovery under any judgment or orderexpressed in a currency other than the Contractual Currency, falls short of theamount in the Contractual Currency due in respect of the Agreement, the partyrequired to make the payment shall (unless an Event of Default has occurred andsuch party is the nondefaulting party) as a separate and independent obligation(which shall not merge with any judgment or any payment or any partial paymentor enforcement of payment) and to the extent permitted by applicable law,immediately pay such additional amount in the Contractual Currency as may be necessaryto compensate for the shortfall.

 

(d)                                 Iffor any reason the amount of the Contractual Currency received by one partyhereto exceeds the amount in the Contractual Currency due such party in respectof the Agreement, then (unless an Event of Default has occurred and such partyis the nondefaulting party) the party receiving the payment shall refundpromptly the amount of such excess.

 

**4.****                                      Notices.**  Any and all notices, statements, demands orother communications with respect to International Transactions shall be givenin accordance with Paragraph 13 of the Agreement and shall be in the Englishlanguage.

 

**5.****                                      Taxes.**

 

(a)                                  Transfertaxes, stamp taxes and all similar costs with respect to the transfer ofSecurities shall be paid by Seller.

 

(b)                                 (i)                                     Unlessotherwise agreed, all money payable by one party (the “Payor”) to the other(the “Payee”) in respect of any International Transaction shall be paid freeand clear of, and without withholding or deduction for, any taxes or duties ofwhatsoever nature imposed, levied, collected, withheld or assessed by anyauthority having power to tax (a “Tax”), unless the withholding or deduction ofsuch Tax is required by law. In that event, unless otherwise agreed, Payorshall pay such additional amounts as will

 

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result in the net amounts receivable by Payee (aftertaking account of such withholding or deduction) being equal to such amounts aswould have been received by Payee had no such Tax been required to be withheldor deducted; provided that for purposes of Paragraphs 5 and 6 the term “Tax”shall not include any Tax that would not have been imposed but for theexistence of any present or former connection between Payee and thejurisdiction imposing such Tax other than the mere receipt of payment fromPayor or the performance of Payee’s obligations under an InternationalTransaction. The parties acknowledge and agree, for the avoidance of doubt,that the amount of Income required to be transferred, credited or applied byBuyer for the benefit of Seller under Paragraph 5 of the Agreement shall bedetermined without taking into account any Tax required to be withheld ordeducted from such Income, unless otherwise agreed.

 

(ii)                                  Inthe case of any Tax required to be withheld or deducted from any money payableto a party hereto acting as Payee by the other party hereto acting as Payor,Payee agrees to deliver to Payor (or, if applicable, to the authority imposingthe Tax) any certificate or document reasonably requested by Payor that wouldentitle Payee to an exemption from, or reduction in the rate of, withholding ordeduction of Tax from money payable by Payor to Payee.

 

(iii)                               Eachparty hereto agrees to notify the other party of any circumstance known orreasonably known to it (other than a Change of Tax Law, as defined in Paragraph6 hereof) that causes a certificate or document provided by it pursuant tosubparagraph (b)(ii) of this Paragraph to fail to be true.

 

(iv)                              Notwithstandingsubparagraph (b)(i) of this Paragraph, no additional amounts shall be payableby Payor to Payee in respect of an International Transaction to the extent thatsuch additional amounts are payable as a result of a failure by Payee to complywith its obligations under subparagraph (b)(ii) or (b)(iii) of this Paragraphwith respect to such International Transaction.

 

**6.****                                      TaxEvent.**

 

(a)                                  ThisParagraph 6 shall apply if either party notifies the other, with respect to aTax required to be collected by withholding or deduction, that —

 

(i)                                     anyaction taken by a taxing authority or brought in a court of competentjurisdiction after the date an International Transaction is entered into,regardless of whether such action is taken or brought with respect to a partyto the Agreement; or

 

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(ii)                                  achange in the fiscal or regulatory regime after the date an InternationalTransaction is entered into,

 

(each,a “Change of Tax Law”) has or will, in the notifying party’s reasonableopinion, have a material adverse effect on such party in the context of anInternational Transaction.

 

(b)                                 Ifso requested by the other party, the notifying party will furnish the otherparty with an opinion of a suitably qualified adviser that an event referred toin subparagraph (a)(i) or (a)(ii) of this Paragraph 6 has occurred and affectsthe notifying party.

 

(c)                                  Wherethis Paragraph 6 applies, the party giving the notice referred to insubparagraph (a) above may, subject to subparagraph (d) below, terminate theInternational Transaction effective from a date specified in the notice, notbeing earlier (unless so agreed by the other party) than 30 days after the dateof such notice, by nominating such date as the Repurchase Date.

 

(d)                                 Ifthe party receiving the notice referred to in subparagraph (a) of thisParagraph 6 so elects, it may override such notice by giving a counter-noticeto the other party. If a counter-notice is given, the party which gives suchcounter-notice will be deemed to have agreed to indemnify the other party againstthe adverse effect referred to in subparagraph (a) of this Paragraph 6 so faras it relates to the relevant International Transaction and the originalRepurchase Date will continue to apply.

 

(e)                                  Wherean International Transaction is terminated as described in this Paragraph 6,the party which has given the notice to terminate shall indemnify the otherparty against any reasonable legal and other professional expenses incurred bythe other party by reason of the termination, but the other party may not claimany sum constituting consequential loss or damage in respect of a terminationin accordance with this Paragraph 6.

 

(f)                                    ThisParagraph 6 is without prejudice to Paragraph 5 of this Annex III; but anobligation to pay additional amounts pursuant to Paragraph 5 of this Annex IIImay, where appropriate, be a circumstance which causes this Paragraph 6 toapply.

 

**7.****                                      Margin.**  In the calculation of “Margin Deficit” and “MarginExcess” pursuant to Paragraph 4 of the Agreement, all sums not denominated inthe Base Currency shall be deemed to be converted into the Base Currency at theSpot Rate on the date of such calculation.

 

**8.****                                      Eventsof Default.**

 

(a)                                  Inaddition to the Events of Default set forth in Paragraph 11 of the Agreement,it shall be an additional “Event of Default” if either party fails, after onebusiness day’s notice, to perform any covenant or obligation required to beperformed by it

 

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under this Annex III,including, without limitation, the payment of taxes or additional amounts asrequired by Paragraph 5 of this Annex III.

 

(b)                                 Inaddition to the other rights of a nondefaulting party under Paragraph 11 of theAgreement, following an Event of Default, the nondefaulting party may, at anytime at its option, effect the conversion of any currency into a differentcurrency of its choice at the Spot Rate on the date of the exercise of suchoption and offset obligations of the defaulting party denominated in differentcurrencies against each other.

 

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**Schedule III.A**

 

**InternationalTransactions Relating to [Relevant Country]**

 

ThisSchedule III.A forms a part of Annex III to the Master Repurchase Agreementdated as of (the “Agreement”) between                   and Daiwa Securities America Inc. Capitalized terms used but not defined in this Schedule III.A shall havethe meanings ascribed to them in Annex III.

 

[Insert provisions applicable to relevant country.]

 

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**ANNEX IV**

 

**Party Acting asAgent**

 

ThisAnnex IV forms a part of the Master Repurchase Agreement dated as of **October 18, 2004** (the “Agreement”) between **Aether Systems, Inc. by FBR Investment Management,Inc., as Agent** and **DaiwaSecurities America Inc.**  ThisAnnex IV sets forth the terms and conditions governing all transactions inwhich a party selling securities or buying securities, as the case may be (“Agent”),in a Transaction is acting as agent for one or more third parties (each, a “Principal”).  Capitalized terms used but not defined inthis Annex IV shall have the meanings ascribed to them in the Agreement.

 

**1.****                                      AdditionalRepresentations.**  In addition to therepresentations set forth in Paragraph 10 of the Agreement, Agent hereby makesthe following representations, which shall continue during the term of anyTransaction: Principal has duly authorized Agent to execute and deliver theAgreement on its behalf, has the power to so authorize Agent and to enter intothe Transactions contemplated by the Agreement and to perform the obligationsof Seller or Buyer, as the case may be, under such Transactions, and has takenall necessary action to authorize such execution and delivery by Agent and suchperformance by it.

 

**2.****                                      Identificationof Principals**.  Agent agrees (a) toprovide the other party, prior to the date on which the parties agree to enterinto any Transaction under the Agreement, With a written list of Principals forwhich it intends to act as Agent (which list may be amended in writing fromtime to time with the consent of the other party), and (b) to provide the otherparty, before the close of business on the next business day after orallyagreeing to enter into a Transaction, with notice of the specific Principal orPrincipals for whom it is acting in connection with such Transaction.  If (i) Agent fails to identify such Principalor Principals prior to the close of business on such next business day or (ii)the other party shall determine in its sole discretion that any Principal orPrincipals identified by Agent are not acceptable to it, the other party mayreject and rescind any Transaction with such Principal or Principals, return toAgent any Purchased Securities or portion of the Purchase Price, as the casemay be, previously transferred to the other party and refuse any further performanceunder such Transaction, and Agent shall immediately return to the other partyany portion of the Purchase Price or Purchased Securities, as the case may be,previously transferred to Agent in connection with such Transaction; provided,however, that (A) the other party shall promptly (and in any event within onebusiness day) notify Agent of its determination to reject and rescind suchTransaction and (B) to the extent that any performance was rendered by anyparty under any Transaction rejected by the other party, such party shallremain entitled to any Price Differential or other amounts that would have beenpayable to it with respect to such performance if such Transaction had not beenrejected. The other party acknowledges that Agent shall not have any obligationto provide it with confidential information regarding the financial status ofits Principals; Agent agrees, however, that it will assist the other party inobtaining from Agent’s Principals such information regarding the financialstatus of such Principals as the other party may reasonably request.

 

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3.                                       **Limitation of Agent’s Liability**.  The parties expressly acknowledge that if therepresentations of Agent under the Agreement, including this Annex IV, are trueand correct in all material respects during the term of any Transaction andAgent otherwise complies with the provisions of this Annex IV, then (a) Agent’sobligations under the Agreement shall not include a guarantee of performance byits Principal or Principals and (b) the other party’s remedies shall notinclude a right of setoff in respect of rights or obligations, if any, of Agentarising in other transactions in which Agent is acting as principal.

 

**4.****                                      MultiplePrincipals.**

 

(a)                                  Inthe event that Agent proposes to act for more than one Principal hereunder,Agent and the other party shall elect whether (i) to treat Transactions underthe Agreement as transactions entered into on behalf of separate Principals or(ii) to aggregate such Transactions as if they were transactions by a singlePrincipal. Failure to make such an election in writing shall be deemed anelection to treat Transactions under the Agreement as transactions on behalf ofseparate Principals.

 

(b)                                 Inthe event that Agent and the other party elect (or are deemed to elect) totreat Transactions under the Agreement as transactions on behalf of separatePrincipals, the parties agree that (i) Agent will provide the other party,together with the notice described in Paragraph 2(b) of this Annex IV, noticespecifying the portion of each Transaction allocable to the account of each ofthe Principals for which it is acting (to the extent that any such Transactionis allocable to the account of more than one Principal); (ii) the portion ofany individual Transaction allocable to each Principal shall be deemed aseparate Transaction under the Agreement; (iii) the margin maintenanceobligations of Buyer and Seller under Paragraph 4 of the Agreement shall bedetermined on a Transaction-by-Transaction basis (unless the parties agree todetermine such obligations on a Principal-by-Principal basis); and (iv) Buyer’sand Seller’s remedies under the Agreement upon the occurrence of an Event ofDefault shall be determined as if Agent had entered into a separate Agreementwith the other party on behalf of each of its Principals.

 

(c)                                  Inthe event that Agent and the other party elect to treat Transactions under theAgreement as if they were transactions by a single Principal, the parties agreethat (i) Agent’s notice under Paragraph 2(b) of this Annex IV need onlyidentify the names of its Principals but not the portion of each Transactionallocable to each Principal’s account; (ii) the margin maintenance obligationsof Buyer and Seller under Paragraph 4 of the Agreement shall, subject to any greaterrequirement imposed by applicable law, be determined on an aggregate basis forall Transactions entered into by Agent on behalf of any Principal; and (iii)Buyer’s and Seller’s remedies upon the occurrence of an Event of Default shallbe determined as if all Principals were a single Seller or Buyer, as the casemay be.

 

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(d)                                 Notwithstandingany other provision of the Agreement (including, without limitation, this AnnexIV), the parties agree that any Transactions by Agent on behalf of an employeebenefit plan under ERISA shall be treated as Transactions on behalf of separatePrincipals in accordance with Paragraph 4(b) of this Annex IV (and all marginmaintenance obligations of the parties shall be determined on aTransaction-by-Transaction basis).

 

**5.****                                      Interpretationof Terms**.  All references to “Seller”or “Buyer”, as the case may be, in the Agreement shall, subject to theprovisions of this Annex IV (including, among other provisions, the limitationson Agent’s liability in Paragraph 3 of this Annex IV), be construed to reflectthat (i) each Principal shall have, in connection with any Transaction orTransactions entered into by Agent on its behalf, the rights, responsibilities,privileges and obligations of a “Seller” or “Buyer”, as the case may be,directly entering into such Transaction or Transactions with the other partyunder the Agreement, and (ii) Agent’s Principal or Principals have designatedAgent as their sole agent for performance of Seller’s obligations to Buyer orBuyer’s obligations to Seller, as the case may be, and for receipt ofperformance by Buyer of its obligations to Seller or Seller of its obligationsto Buyer, as the case may be, in connection with any Transaction or Transactionsunder the Agreement (including, among other things, as Agent for each Principalin connection with transfers of Securities, cash or other property and as agentfor giving and receiving all notices under the Agreement). Both Agent and itsPrincipal or Principals shall be deemed “parties” to the Agreement and allreferences to a “party” or “either party” in the Agreement shall be deemedrevised accordingly (and any Act of Insolvency with respect to Agent or anyother Event of Default by Agent under Paragraph 11 of the Agreement shall bedeemed an Event of Default by Seller or Buyer, as the case may be).

 

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**ANNEX V**

 

**Margin for ForwardTransactions**

 

ThisAnnex V forms a part of the Master Repurchase Agreement dated as of                     (the “Agreement”) between                    and Daiwa Securities America Inc. Capitalized terms used but not defined in this Annex V shall have themeanings ascribed to them in the Agreement.

 

1.                                       Definitions.  For purposes of the Agreement and this AnnexV, the following terms shall have the following meanings:

 

“Forward Exposure”, the amount of loss a party wouldincur upon canceling a Forward Transaction and entering into a replacementtransaction, determined in accordance with market practice or as otherwiseagreed by the parties;

 

“Forward Transaction”, any Transaction agreed to bythe parties as to which the Purchase Date has not yet occurred;

 

“Net Forward Exposure”, the aggregate amount of aparty’s Forward Exposure to the other party under all Forward Transactionshereunder reduced by the aggregate amount of any Forward Exposure of the otherparty to such party under all Forward Transactions hereunder;

 

“Net Unsecured Forward Exposure”, a party’s NetForward Exposure reduced by the Market Value of any Forward Collateraltransferred to such party (and not returned) pursuant to Paragraph 2 of thisAnnex V.

 

2.                                       MarginMaintenance.

 

(a)                                  Ifat any time a party (the “In-the-Money Party”) shall have a Net Unsecured ForwardExposure to the other party (the “Out-of-the-Money Party”) under one or moreForward Transactions, the In-the-Money Party may by notice to theOut-of-the-Money Party require the Out-of-the-Money Party to transfer to theIn-the-Money Party Securities or cash reasonably acceptable to theIn-the-Money-Party (together with any Income thereon and proceeds thereof, “ForwardCollateral”) having a Market Value sufficient to eliminate such Net UnsecuredForward Exposure. The Out-of-the-Money Party may by notice to the In-the-MoneyParty require the In-the-Money Party to transfer to the Out-of-the-Money PartyForward Collateral having a Market Value that exceeds the In-the-Money Party’sNet Forward Exposure (“Excess Forward Collateral Amount”). The rights of the partiesunder this subparagraph shall be in addition to their rights undersubparagraphs (a) and (b) of Paragraph 4 and any other provisions of theAgreement.

 

(b)                                 Theparties may agree, with respect to any or all Forward Transactions hereunder,that the respective rights of the parties under subparagraph (a) of thisParagraph

 

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may be exercised onlywhere a Net Unsecured Forward Exposure or Excess Forward Collateral Amount, asthe case may be, exceeds a specified dollar amount or other specified thresholdfor such Forward Transactions (which amount or threshold shall be agreed to bythe parties prior to entering into any such Forward Transactions).

 

(c)                                  Theparties may agree, with respect to any or all Forward Transactions hereunder,that the respective rights of the parties under subparagraph (a) of thisParagraph to require the elimination of a Net Unsecured Forward Exposure orExcess Forward Collateral Amount, as the case may be, may be exercised wheneversuch a Net Unsecured Forward Exposure or Excess Forward Collateral Amountexists with respect to any single Forward Transaction hereunder (calculatedwithout regard to any other Forward Transaction outstanding hereunder).

 

## (d)                                 Theparties may agree, with respect to any or all Forward Transactions hereunder,that (i) one party shall transfer to the other party Forward Collateral havinga Market Value equal to a specified dollar amount or other specified thresholdno later than the Margin Notice Deadline on the day such Forward Transaction isentered into by the parties or (ii) one party shall not be required to make anytransfer otherwise required to be made under this Paragraph if, after givingeffect to such transfer, the Market Value of the Forward Collateral held bysuch party would be less than a specified dollar amount or other specifiedthreshold (which amount or threshold shall be agreed to by the parties prior toentering into any such Forward Transactions).

##  

## (e)                                  Ifany notice is given by a party to the other under subparagraph (a) of thisParagraph at or before the Margin Notice Deadline on any business day, theparty receiving such notice shall transfer Forward Collateral as provided insuch subparagraph no later than the close of business in the relevant market onsuch business day. If any such notice is given after the Margin NoticeDeadline, the party receiving such notice shall transfer such ForwardCollateral no later than the close of business in the relevant market on thenext business day.

##  

## (f)                                    Uponthe occurrence of the Purchase Date for any Forward Transaction and theperformance by the parties of their respective obligations to transfer cash andSecurities on such date, any Forward Collateral in respect of such ForwardTransaction, together with any Income thereon and proceeds thereof, shall betransferred by the party holding such Forward Collateral to the other party;provided, however, that neither party shall be required to transfer suchForward Collateral to the other if such transfer would result in the creationof a Net Unsecured Forward Exposure of the transferor.

##  

## (g)                                 ThePledgor (as defined below) of Forward Collateral may, subject to agreement withand acceptance by the Pledgee (as defined below) thereof, substitute otherSecurities reasonably acceptable to the Pledgee for any Securities ForwardCollateral.  Such substitution shall bemade by transfer to the Pledgee of such

 

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## other Securities and transfer to the Pledgor of suchSecurities Forward Collateral. After substitution, the substituted Securitiesshall constitute Forward Collateral.

##  

3.                                       SecurityInterest.

 

(a)                                  Inaddition to the rights granted to the parties under Paragraph 6 of theAgreement, each party (“Pledgor”) hereby pledges to the other party (“Pledgee”)as security for the performance of its obligations hereunder, and grantsPledgee a security interest in and right of setoff against, any ForwardCollateral and any other cash, Securities or property, and all proceeds of anyof the fore-going, transferred by or on behalf of Pledger to Pledgee or duefrom Pledgee to Pledgor in connection with the Agreement and the ForwardTransactions hereunder.

 

(b)                                 Unlessotherwise agreed by the parties, a party to whom Forward Collateral has beentransferred shall have the right to engage in repurchase transactions withForward Collateral or otherwise sell, transfer, pledge or hypothecate ForwardCollateral, including in respect of loans or other extensions of credit to suchparty that may be in amounts greater than the Forward Collateral such party isentitled to as security for obligations hereunder, and that may extend forperiods of time longer than the periods during which such party is entitled toForward Collateral as security for obligations hereunder; provided, however,that no such transaction shall relieve such party of its obligations totransfer Forward Collateral pursuant to Paragraph 2 or 4 of this Annex V orParagraph 11 of the Agreement.

 

4.                                       Eventsof Default.

 

(a)                                  Inaddition to the Events of Default set forth in Paragraph 11 of the Agreement,it shall be an additional “Event of Default” if either party fails, after onebusiness day’s notice, to perform any covenant or obligation required to beperformed by it under Paragraph 2 or any other provision of this Annex.

 

(b)                                 Inaddition to the other rights of a nondefaulting party under Paragraphs 11 and12 of the Agreement, if the nondefaulting party exercised or is deemed to haveexercised the option referred to in Paragraph 11(a) of the Agreement:

 

(i)                                     Thenondefaulting party, without prior notice to the defaulting party, may (A)immediately sell, in a recognized market (or otherwise in a commerciallyreasonable manner) at such price or prices as the nondefaulting party mayreasonably deem satisfactory, any or all Forward Collateral subject to any orall Forward Transactions hereunder and apply the proceeds thereof to anyamounts owing by the defaulting party hereunder or (B) in its sole discretionelect, in lieu of selling all or a portion of such Forward Collateral, to givethe defaulting party credit for such Forward Collateral in an amount equal tothe price therefor on such date, obtained from a generally recognized source orthe most recent closing bid quotation from such a source, against any amountsowing by the defaulting party hereunder.

 

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(ii)                                  AnyForward Collateral held by the defaulting party, together with any Incomethereon and proceeds thereof, shall be immediately transferred by thedefaulting party to the nondefaulting party. The nondefaulting party may, atits option (which option shall be deemed to have been exercised immediatelyupon the occurrence of an Act of Insolvency), and without prior notice to thedefaulting party, (i) immediately purchase, in a recognized market (orother-wise in a commercially reasonable manner) at such price or prices as thenondefaulting party may reasonably deem satisfactory, securities (“ReplacementSecurities”) of the same class and amount as any Securities Forward Collateralthat is not delivered by the defaulting party to the nondefaulting party asrequired hereunder or (ii) in its sole discretion elect, in lieu of purchasingReplacement Securities, to be deemed to have purchased Replacement Securitiesat the price therefor on such date, obtained from a generally recognized sourceor the most recent closing offer quotation from such a source, whereupon thedefaulting party shall be liable for the price of such Replacement Securitiestogether with the amount of any cash Forward Collateral not delivered by thedefaulting party to the nondefaulting party as required hereunder.

 

Unlessotherwise provided in Annex I, the parties acknowledge and agree that (1) theForward Collateral subject to any Forward Transaction hereunder are instrumentstraded in a recognized market, (2) in the absence of a generally recognizedsource for prices or bid quotations for any Forward Collateral, thenondefaulting party may establish the source therefor in its sole discretionand (3) all prices and bids shall be determined together with accrued Income(except to the extent contrary to market practice with respect to the relevantForward Collateral).

 

5.                                       NoWaivers, Etc.  Without limitation ofthe provisions of Paragraph 17 of the Agreement, the failure to give a noticepursuant to subparagraph (a), (b), (c) or (d) of Paragraph 2 of this Annex Vwill not constitute a waiver of any right to do so at a later date.

 

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**ANNEX VI**

 

**Buy/Sell BackTransactions**

 

ThisAnnex VI forms a part of the Master Repurchase Agreement dated as of                       (the “Agreement”) between                         and Daiwa Securities America Inc. Capitalized terms used but not defined in this Annex VI shall have themeanings ascribed to them in the Agreement.

 

**1.****                                     **Inthe event of any conflict between the terms of this Annex VI and any other termof the Agreement, the terms of this Annex VI shall prevail.

 

**2.****                                     **Each‘Transaction shall be identified at the time it is entered into and in therelevant Confirmation as either a Repurchase Transaction or a Buy/Sell BackTransaction.

 

**3.****                                     **Inthe case of A Buy/Sell Back Transaction, the Confirmation delivered inaccordance with Paragraph 3 of the Agreement may consist of a single documentin respect of both of the transfers of funds against Securities which togetherform the Buy/Sell Back Transaction or separate Confirmations may be deliveredin respect of each such transfer.

 

**4.****                                      Definitions**.The following definitions shall apply to Buy/Sell Back Transactions:

 

(a)                                  “AccruedInterest”, with respect to any Purchased Securities subject to a Buy/Sell BackTransaction, unpaid Income that has accrued during the period from (andincluding) the issue date or the last Income payment date (whichever is later)in respect of such Purchased Securities to (but excluding) the date ofcalculation.  For these purposes unpaidIncome shall be deemed to accrue on a daily basis from (and including) theissue date or the last Income payment date (as the case may be) to (butexcluding) the next Income payment date or the maturity date (whichever isearlier);

 

(b)                                 “SellBack Differential”, with respect to any Buy/Sell Back Transaction as of anydate, The aggregate amount obtained by daily application of the Pricing Ratefor such Buy/Sell Back Transaction to the Purchase Price for such Buy/Sell BackTransaction on a 360 day per year basis (unless otherwise agreed by the partiesfor the Transaction) for the actual number of days during the period commencingon (and including) the Purchase Date for such Buy/Sell Back Transaction andending on (but excluding) the date of determination;

 

(c)                                  “SellBack Price”, with respect to any Buy/Sell Back Transaction:

 

(i)                                     inrelation to the date originally specified by the parties as the Repurchase Datepursuant to Paragraph 2(q) of the Agreement, the price agreed by the Parties inrelation to such Buy/Sell Back Transaction, and

 

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(ii)                                  inany other case (including for the purposes of the application of Paragraph 4 orParagraph 11 of the Agreement), the product of the formula (P + D) - (IR + C),where —

 

P                                         =the Purchase Price

 

D                                       =the Sell Back Differential

 

IR                                    =the amount of any Income in respect of the Purchased Securities paid by theissuer on any date falling between the Purchase Date and the Repurchase Date

 

C                                        =the aggregate amount obtained by daily application of the Pricing Rate for suchBuy/Sell Back Transaction to any such Income from (and including) the date ofpayment by the issuer to (but excluding) the date of calculation.

 

**5.****                                     **Whenentering into a Buy/Sell Back Transaction the parties shall also agree on theSell Back Price and the Pricing Rate to apply in relation to such Buy/Sell BackTransaction on the scheduled Repurchase Date. The parties shall record the Pricing Rate in at least one Confirmationapplicable to such Buy/Sell Back Transaction.

 

**6.****                                     **Terminationof a Buy/Sell Back Transaction shall be effected on the Repurchase Date bytransfer to Seller or its agent of Purchased Securities against the payment bySeller of (i) in a case where the Repurchase Date is the date originally agreedto by the parties pursuant to Paragraph 2(q) of the Agreement, the Sell BackPrice referred to in Paragraph 4(c)(i) of this Annex; and (ii) in any othercase, the Sell Back Price referred to in Paragraph 4(c)(ii) of this Annex.

 

**7.****                                     **Forthe avoidance of doubt, the parties acknowledge and agree that the PurchasePrice and the Sell Back Price in Buy/Sell Back Transactions shall includeAccrued Interest (except to the extent contrary to market practice with respectto the Securities subject to such Buy/Sell Back Transaction, in which event (i)an amount equal to the Purchase Price plus Accrued Interest to the PurchaseDate shall be paid to Seller on the Purchase Date and shall be used, in lieu ofthe Purchase Price, for calculating the Sell Back Differential, (ii) an amountequal to the Sell Back Price plus the amount of Accrued Interest to theRepurchase Date shall be paid to Buyer on the Repurchase Date, and (iii) theformula in Paragraph 4(c)(ii) of this Annex VI shall be replaced by the formula“(P + AI + D) - (IR + C)”, where “AI” equals Accrued Interest to the PurchaseDate).

 

**8.****                                     **Unlessthe parties agree in Annex I to the Agreement that a Buy/Sell Back Transactionis not to be repriced, they shall at the time of repricing agree on thePurchase Price, the Sell Back Price and the Pricing Rate applicable to suchTransaction.

 

**9.****                                     **Paragraph5 of the Agreement shall not apply to Buy/Sell Back Transactions. Selleragrees, on the date such Income is received, to pay to Buyer any Incomereceived by Seller in respect of Purchased Securities that is paid by theissuer on any date falling between the Purchase Date and the Repurchase Date.

 

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**10.****                              **Referencesto “Repurchase Price” throughout the Agreement shall be construed as referencesto “Repurchase Price or the Sell Back Price, as the case may be.”

 

**11.****                              **In11 of the Agreement, references to the “Repurchase Prices” shall be construedas references to “Repurchase Prices and Sell Back Prices.”

 

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**ANNEX VII**

 

**TransactionsInvolving Registered Investment Companies**

 

ThisAnnex VII (including any Schedules hereto) forms a part of the MasterRepurchase Agreement dated as of                  (the “Agreement”) between                      (“Counterparty”) and each investment company identified on Schedule VII.Ahereto (as such schedule may be amended from time to time) acting on behalf ofits respective series or portfolios identified on such Schedule VII.A, or inthe case of those investment companies for which no separate series orportfolios are identified on such Schedule VII.A, acting for and on behalf ofitself (each such series, portfolio or investment company, as the case may be,hereinafter referred to as a “Fund”).  Inthe event of any conflict between the terms of this Annex VII and any otherterm of the Agreement, the terms of this Annex VII shall prevail. Capitalizedterms used but not defined in this Annex VII shall have the meanings ascribedto them in the Agreement.

 

**1.****                                      MultipleFunds**. For any Transaction in which a Fund is acting as Buyer (or Seller,as the case may be), each reference in the Agreement and this Annex VII toBuyer (or Seller, as the case may be) shall be deemed a reference solely to theparticular Fund to which such Transaction relates, as identified to Seller (orBuyer, as the case may be) by the Fund and as may be specified in theConfirmation therefor. In no circumstances shall the rights, obligations orremedies of either party with respect to a particular Fund constitute a right,obligation or remedy applicable to any other Fund.  Specifically, and without otherwise limitingthe scope of this Paragraph:(a) the margin maintenance obligations of Buyer andSeller specified in Paragraph 4 or any other provisions of the Agreement andthe single agreement provisions of Paragraph 12 of the Agreement shall beapplied based solely upon Transactions entered into by a particular Fund, (b)Buyer’s and Seller’s remedies under the Agreement upon the occurrence of anEvent of Default shall be determined as if each Fund had entered into aseparate Agreement with Counterparty, and (c) Seller and Buyer shall have noright to set off claims related to Transactions entered into by a particularFund against claims related to Transactions entered into by any other Fund.

 

**2.****                                      MarginPercentage**. For any Transaction in which a Fund is acting as Buyer, theBuyer’s Margin Percentage shall always be equal to at least        %,or such other percentage as the parties hereto may from time to time mutuallydetermine; provided, that in no event shall such percentage be less than100%.  For any Transaction in which aFund is acting as Seller, the Buyer’s Margin Percentage shall be suchpercentage as the parties hereto may from time to time mutually determine;provided, that in no event shall such percentage be less than 100%.

 

**3.****                                      Confirmations**.Unless otherwise agreed, Counterparty shall promptly issue a Confirmation tothe Fund pursuant to Paragraph 3 of the Agreement. Upon the transfer ofsubstituted or Additional Purchased Securities by either party, Counterpartyshall promptly provide notice to the Fund confirming such transfer.

 

**4.****                                      FinancialCondition**. Each party represents that it has delivered the followingfinancial information to the other party to the Agreement: in the case of aparty that is a registered

 

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broker-dealer, its mostrecent statements required to be furnished to customers by Rule 17a-5 (c) underthe 1934 Act; in the case of a party that is a Fund, its most recent audited orunaudited financial statements required to be furnished to its shareholders byRule 30d-1 under the Investment Company Act of 1940; in the case of any otherparty, its most recent audited or unaudited statements of financial conditionor other comparable information concerning its financial condition.

 

Each party represents that the financial statements orinformation so delivered fairly reflect its financial condition and, ifapplicable, its net capital ratio, on the date as of which such financialstatements or information were prepared. Each party agrees that it will makeavailable and deliver to the other party, promptly upon request, all suchfinancial statements that subsequently are required to be delivered to itscustomers or shareholders pursuant to Rule 17a-5(c) or Rule 30d-1, as the casemay be, or, in the case of a party that is neither a registered broker-dealernor a Fund, all such financial information that subsequently becomes availableto the public.

 

Each Fund acknowledges and agrees that it has made anindependent evaluation of the creditworthiness of the other party that isrequired pursuant to the Investment Company Act of 1940 or the regulationsthereunder.  Each Fund agrees that itsagreement to enter into each Transaction hereunder shall constitute anacknowledgment and agreement that it has made such an evaluation.

 

**5.****                                      Segregationof Purchased Securities**. Unless otherwise agreed by the parties, any transferof Purchased Securities to a Fund shall be effected by delivery or othertransfer (in the manner agreed upon pursuant to Paragraph 7 of the Agreement)to the custodian or subcustodian designated for such Fund in Schedule VILAhereto (“Custodian”) for credit to the Fund’s custodial account with suchCustodian.  If the party effecting suchtransfer is the Fund’s Custodian, such party shall, unless otherwise directedby the Fund, (a) transfer and maintain such Purchased Securities to and in theFund’s custodial account with such party and (b) so indicate in a notice to theFund.

 

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**Schedule VII.A**

 

**SupplementalTennis and Conditions of TransactionsInvolving Registered Investment Companies**

 

ThisSchedule VII.A forms a part of Annex VII to the Master Repurchase Agreementdated as of (the “Agreement”) between                       and Daiwa Securities America Inc. Capitalized terms used but not defined inthis Schedule VII.A shall have the meanings ascribed to them in Annex VII.

 

**1.****                                     **ThisAgreement is entered into by or on behalf of the following Funds, and unlessotherwise indicated by the appropriate Fund in connection with a Transaction,the following Custodians are designated to receive transfers of PurchasedSecurities on behalf of such Funds for credit to the appropriate Fund’scustodial account:

 
| **Name of Fund** | ** ** | **Custodian** |
|------------------|------------|---------------|
|             |       |          |
|             |       |          |
|             |       |          |

 

o.  Limitation of Liability. If the Fund isorganized as a business trust (or a series thereof), the parties agree asfollows: [insert appropriate language limiting liability of trustees, officersand others].

 

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