Document:

Exhibit 10.6

 

OPTIMER PHARMACEUTICALS, INC.

 

AMENDED AND RESTATED SEVERANCE BENEFIT PLAN

 

Section 1.                                          INTRODUCTION.

 

The Optimer Pharmaceuticals, Inc. Amended and Restated Severance Benefit Plan (the “Plan”) was originally established effective May 5, 2010 amended and restated effective February 7, 2012 and is hereby further amended and restated in its entirety effective February 26, 2013 (the “Effective Date”).  The purpose of the Plan is to provide for the payment of severance benefits to certain eligible employees of Optimer Pharmaceuticals, Inc. (the “Company”) whose employment with the Company is terminated in a covered termination and who meet the eligibility criteria set forth in Section 2(a) below.  This document constitutes the written instrument under which the Plan is maintained and supersedes any prior plan or practice of the Company or any written agreement between the Company and any employee that provides for payments or benefits in the event of termination of employment or a change in control of the Company, including but not limited to the Optimer Pharmaceuticals, Inc. Severance Benefit Plan established effective October 2, 2008, except to the extent such written agreement expressly contemplates that such persons are eligible to receive benefits additional to or in lieu of those provided under the Plan.  This Plan document also is the Summary Plan Description for the Plan.

 

Section 2.                                          ELIGIBILITY FOR BENEFITS.

 

(a)                                 General Rules.  Subject to the requirements set forth in this Section, the Company will grant severance benefits under the Plan to Eligible Employees.

 

(1)                                 Definition of “Eligible Employee.”  For purposes of this Plan, an Eligible Employee is a full-time or a part-time regular hire employee of the Company who is notified by the Company in writing that he or she is eligible for participation in the Plan and (i) whose employment is terminated in a Covered Termination (as defined further in Section 2(c) below); or (ii) who is selected by the Plan Administrator in its sole discretion to receive the benefits set forth herein.  The determination of whether an employee is an Eligible Employee shall be made by the Company, in its sole discretion, and such determination shall be binding and conclusive on all persons.  For purposes of this Plan, part-time employees are those regular hire employees who are regularly scheduled to work more than twenty (20) hours per week but less than a full-time work schedule.  Regular hire employees working twenty (20) hours per week or less and temporary employees are not eligible for severance benefits under the Plan.

 

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(2)                                 In order to be eligible to receive any benefits under the Plan, an Eligible Employee who is terminated in a Covered Termination must remain on the job until his or her date of termination as scheduled by the Company, which may not exceed thirty (30) days from the date of any notification of termination.

 

(3)                                 In order to be eligible to receive any benefits under the Plan, an Eligible Employee also must execute a general waiver and release in substantially the form attached hereto as Exhibit A, Exhibit B or Exhibit C, as appropriate, and such release must become effective in accordance with its terms.  The Company, in its discretion, shall determine and may modify the form of the required release, which may be incorporated into a termination agreement or other agreement with the Eligible Employee.

 

(b)                                 Exceptions to Benefit Entitlement.  An employee, including an employee who otherwise is an Eligible Employee, will not receive benefits under the Plan (or will receive reduced benefits under the Plan) in the following circumstances, as determined by the Company in its sole discretion:

 

(1)                                 The employee has executed an individually negotiated employment contract or agreement with the Company relating to severance benefits that is in effect on his or her termination date, in which case such employee’s severance benefit, if any, shall be governed by the terms of such individually negotiated employment contract or agreement and shall be governed by this Plan only to the extent that the reduction pursuant to Section 3(c) below does not entirely eliminate benefits under this Plan.

 

(2)                                 The employee voluntarily terminates employment with the Company for any reason not constituting a Constructive Termination.  Voluntary terminations include, but are not limited to, resignation, retirement or failure to return from a leave of absence on the scheduled date.

 

(3)                                 The employee is offered an identical or substantially equivalent or comparable position with the Company or an affiliate of the Company.  For purposes of the foregoing, a “substantially equivalent or comparable position” is one that offers the employee substantially the same level of responsibility and compensation and, for employees who are not field-based employees, does not require a relocation of the employee’s place of employment that would materially adversely affect the employee’s commute (including, without limitation, a one-way increase in the distance of the employee’s commute of 15 miles or a one-way increase in the time of the employee’s commute of more than 30 minutes).

 

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(4)                                 The employee is offered immediate reemployment by a successor to the Company or an affiliate of the Company or by a purchaser of its assets, as the case may be, following a change in ownership of the Company or a sale of substantially all of the assets of a division or business unit of the Company.  For purposes of the foregoing, “immediate reemployment” means that the employee’s employment with the successor to the Company or an affiliate of the Company or the purchaser of its assets, as the case may be, results in uninterrupted employment such that the employee does not incur a lapse in pay as a result of the change in ownership of the Company or the sale of its assets.

 

(5)                                 The employee is rehired by the Company or an affiliate of the Company prior to the date benefits under the Plan are scheduled to commence.

 

(6)                                 The employee does not confirm in writing that he or she is and shall remain subject to the Company’s Employee Proprietary Information Agreement, including the failure to sign a termination statement under such Agreement;

 

(7)                                 Following notification of involuntary termination by the Company, the employee does not satisfactorily perform his or her assigned job duties until the date set by the Company for the termination of employment;

 

(8)                                 The employee terminates employment due to the employee’s death or Disability.

 

(c)                                  Definitions:  For purposes of this Plan, the following terms shall have the meanings set forth below:

 

(1)                                 “Base Salary”“ means the Eligible Employee’s base pay (excluding incentive pay, premium pay, commissions, overtime, bonuses and other forms of variable compensation), at the rate in effect during the last regularly scheduled payroll period immediately preceding the Eligible Employee’s termination date.  For any Eligible Employees that are regular part-time employees, “Base Salary” shall mean the pro-rata equivalent of the Eligible Employee’s base pay which reflects the part-time status of the Eligible Employee.

 

(2)                                 “Board” means the Company’s Board of Directors.

 

(3)                                 “Bonus” means with respect to an Eligible Employee:

 

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(i)                                    if, on or prior to the date of the Covered Termination, the Company shall have approved under the Company’s Incentive Compensation Plan or any succeeding incentive plan adopted by the Company a target bonus amount applicable to such Eligible Employee and related Company and/or individual performance goals (collectively,  the “Cash Bonus Plan”) applicable for the year in which such Covered Termination occurs, the full year cash bonus payable to such Eligible Employee under such Cash Bonus Plan as if 100% of all such performance goals were attained for such year;

 

(ii)                                if, on or prior to the date of the Covered Termination, the Company shall not have approved a Cash Bonus Plan applicable to such Eligible Employee for the year in which such Covered Termination occurs, but a Cash Bonus Plan applicable to such Eligible Employee existed for the year immediately preceding the year in which such Covered Termination occurs, the full year cash bonus payable to such Eligible Employee under the Cash Bonus Plan in effect for such immediately preceding year as if 100% of all applicable performance goals were attained; or

 

(iii)                            if, on or prior to the date of the Covered Termination, the Company shall not have approved a Cash Bonus Plan applicable to such Eligible Employee for either the year in which such Covered Termination occurs or the immediately preceding year, the largest maximum full year cash bonus payable to any other Company officer with an employment title equivalent to or below the employment title of such Eligible Employee as of the date of the Covered Termination, under either a Cash Bonus Plan in effect for the year of such Covered Termination or the immediately preceding the year as if 100% of all applicable performance goals were attained.

 

(4)                                 “Cause” for termination of employment means a termination resulting from the occurrence of any of the following events that has a material negative impact on the business or reputation of the Company:

 

(i)                                    the employee’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company;

 

(ii)                                the employee’s intentional, material violation of any contract or agreement between the employee and the Company or of any statutory duty owed to the Company;

 

(iii)                            the employee’s unauthorized use or disclosure of the Company’s confidential information or trade secrets;

 

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(iv)                             an employee’s intentional refusal or intentional failure to act in accordance with any lawful and proper direction or order of his or her superiors;

 

(v)                                 an employee’s habitual neglect of the duties of employment;

 

(vi)                             an employee’s indictment, charge, or conviction of a felony or any crime involving moral turpitude, or participation in any act of theft or dishonesty; or

 

(vii)                         the employee’s gross misconduct.

 

(5)                                 “Change of Control” means any of the following events:

 

(i)                                    a sale, lease or disposition of all or substantially all of the assets of the Company; or;

 

(ii)                                a merger or consolidation (in a single transaction or a series of related transactions) of the Company with or into any other corporation or corporations or other entity, or any other corporate reorganization, where the stockholders of the Corporation immediately prior to such event do not retain more than fifty percent (50%) of the voting power of and interest in the successor entity (excluding any transactions if the primary purpose of the transaction is to obtain financing from new or existing investors).

 

The Board shall have the right to determine whether a Change of Control has occurred in accordance with the foregoing definition, and its determination shall be final, binding and conclusive on all persons.

 

(6)                                 “Constructive Termination” means the occurrence of one or more of the following events, provided that the Eligible Employee has first provided written notice to the Company within 90 days of the first such occurrence of such condition specifying the event(s) constituting Constructive Termination and specifying that the Eligible Employee intends to terminate employment not earlier than 30 days after providing such notice, and the Company (or surviving corporation) has not cured such event(s) within 30 days (or such longer period as may be specified by the Eligible Employee in such notice) after such written notice is received by the Company (the “Cure Period”), and the Eligible Employee resigns within 30 days following the end of the Cure Period:

 

(i)                                    a material diminution in the Eligible Employee’s authority, duties or responsibilities; or

 

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(ii)                                any relocation by the Company of the principle place for the rendering of the Eligible Employee’s services that materially adversely affects the Eligible Employee’s commute (including, without limitation, a one-way increase in the distance of the Eligible Employee’s commute of 15 miles or a one-way increase in the time of the Eligible Employee’s commute of more than 30 minutes); or

 

(iii)                            a material reduction by the Company of annual base compensation, which reduction is not applicable to all of the Company’s senior executive employees.

 

However, none of the foregoing will constitute a Constructive Termination to the extent mutually agreed upon in advance of the occurrence thereof by the Eligible Employee.

 

(7)                                 “Covered Termination” means (i) an involuntary termination of an employee’s employment by the Company other than for Cause or (ii) a Constructive Termination by an Eligible Employee who is the Chief Executive Officer or another Company officer.  A Covered Termination does not include a termination of employment resulting from such Eligible Employee’s resignation for any reason not constituting a Constructive Termination, or due to the Eligible Employee’s death or Disability.

 

(8)                                 “Disability” means the employee is prevented from performing his duties hereunder by reason of any physical or mental incapacity that results in the employee’s satisfaction of all requirements necessary to receive benefits under the Company’s long-term disability plan due to a total disability.  If the Company has no long-term disability plan in place, “Disability” shall mean a physical or mental disability or infirmity of the employee, as determined by a physician of recognized standing selected by the Company, that prevents (or, in the opinion of such physician, is reasonably expected to prevent) the normal performance of his duties as an employee of the Company for any continuous period of 180 days, or for 180 days during any one 12-month period.

 

(9)                                 “Equity Award” means any stock option, restricted stock, restricted stock unit, or other equity award to acquire shares of the Company’s stock.  Notwithstanding the foregoing, for all purposes of the Plan “Equity Award” does not include any equity award issued under or held in any plan that is intended to be qualified under Section 401(a) of the Internal Revenue Code.

 

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(10)                          “Non-Performance Vesting Equity Award” means at any given time an Equity Award that is not a Performance Vesting Equity Award.

 

(11)                          “Performance Vesting Equity Award” means at any given time an Equity Award (a) listed on Appendix B hereto (as may be amended from time to time by the Company) for which the vesting commencement is subject to the attainment of performance goals that have not been attained at such time so that the vesting commencement date for such Equity Award has not yet occurred or (b) which vests solely based upon the attainment of performance goals that have not been attained and which has no time-based vesting component.

 

(12)                          “Year of Service” means each complete year of employment in which an Eligible Employee has been employed by the Company.  For purposes of this definition, a year of employment shall be a 365 day period (or 366 day period in case of a leap year) that, for the first year of employment, commences on the Eligible Employee’s date of hire and that, for any subsequent year, commences on an anniversary of that hire date.  A Year of Service shall include any leave of absence period that was approved by the Company.

 

Section 3.                                          AMOUNT OF BENEFIT.

 

(a)                                 Severance Benefits.  Subject to the exceptions set forth in Section 2(b), severance benefits under the Plan, if any, shall be provided to Eligible Employees described in Section 2(a) as described on Appendix A attached hereto.

 

(b)                                 Additional Benefits.  Notwithstanding the foregoing, the Company may, in its sole discretion, provide benefits in addition to those benefits set forth in Section 3(a) to Eligible Employees and the provision of any such benefits to an Eligible Employee shall in no way obligate the Company to provide such benefits to any other Eligible Employee or to any other employee, even if similarly situated.

 

(c)                                  Certain Reductions.

 

(1)                                 An Eligible Employee’s severance benefits that may be provided under the Plan shall be automatically reduced by any severance benefits provided under such Eligible Employee’s written employment or severance agreement with the Company, unless otherwise specifically provided under the terms of such agreement.

 

(2)                                 The Company, in its sole discretion, shall have the authority to reduce an Eligible Employee’s severance benefits, in whole or in part, by any other severance 

 

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benefits, pay in lieu of notice, or other similar benefits payable to the Eligible Employee by the Company or an affiliate of the Company that become payable in connection with the Eligible Employee’s termination of employment pursuant to (i) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act, the California Plant Closing Act, or any other similar state law, or (ii) any Company policy or practice providing for the Eligible Employee to remain on the payroll for a limited period of time after being given notice of the termination of the Eligible Employee’s employment, and the Plan Administrator shall so construe and implement the terms of the Plan; provided, however, that notwithstanding the foregoing and any other provision in the Plan to the contrary, such reductions shall in no event reduce the cash severance benefits provided under this Plan to less than two (2) weeks of Base Salary.  The Company’s decision to apply such reductions to the severance benefits of one Eligible Employee and the amount of such reductions shall in no way obligate the Company to apply the same reductions in the same amounts to the severance benefits of any other Eligible Employee, even if similarly situated.  In the Company’s sole discretion, such reductions may be applied on a retroactive basis, with severance benefits previously paid being re-characterized as payments pursuant to the Company’s statutory obligation.

 

(d)                                 Non-Duplication of Benefits.  No Eligible Employee is eligible to receive benefits under this Plan more than one time.

 

(e)                                  Termination of Benefits.  With respect to each Eligible Employee, benefits under this Plan shall terminate immediately if such Eligible Employee, at any time, violates any material proprietary information, non-disparagement, confidentiality or non-solicitation obligation to the Company.

 

(f)                                   Vesting Acceleration of Equity Awards.                  In order to give effect to any acceleration of vesting of Equity Awards to which an Eligible Employee may be entitled under this Plan, notwithstanding anything to the contrary set forth in the Eligible Employee’s Equity Award agreements or the Company’s equity plans regarding immediate forfeiture of unvested shares upon termination or service, following an Eligible Employee’s Covered Termination, the shares subject to any unvested portion of such Eligible Employee’s Equity Awards shall not be forfeited or returned to the applicable equity plan before any vesting acceleration of such Equity Awards provided by this Plan is finally determined and given effect, if applicable; provided, however, that nothing in this Section 3(f) prohibits the Company or a successor organization (or its parent) from causing such Equity Awards to earlier terminate pursuant to the terms of the applicable equity plan or award agreements in connection with a Change of Control, merger, acquisition or other similar corporate transaction where such Equity Awards will terminate and not be assumed by the successor or acquiring entity.

 

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Section 4.                                          SECTION 409A COMPLIANCE.

 

(a)                                 Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under the Plan (the “Severance Benefits”) that constitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”) shall not commence in connection with an Eligible Employee’s termination of employment unless and until the Eligible Employee has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably determines that such amounts may be provided to the Eligible Employee without causing the Eligible Employee to incur the additional 20% tax under Section 409A.

 

(b)                                 It is intended that each installment of the Severance Benefits payments provided for in this Plan is a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).  For the avoidance of doubt, it is intended that payments of the Severance Benefits set forth in this Plan satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).  However, if the Company (or, if applicable, the successor entity thereto) determines that the Severance Benefits constitute “deferred compensation” under Section 409A and the Eligible Employee is, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the Severance Benefit payments shall be delayed until the earlier to occur of: (i) the date that is six months and one day after the Eligible Employee’s Separation From Service, or (ii) the date of the Eligible Employee’s death (such applicable date, the “Specified Employee Initial Payment Date”), the Company (or the successor entity thereto, as applicable) shall (A) pay to the Eligible Employee, or his estate, a lump sum amount equal to the sum of the Severance Benefit payments that the Eligible Employee would otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of the Severance Benefits had not been so delayed pursuant to this Section and (B) commence paying the balance of the Severance Benefits in accordance with the applicable payment schedules set forth in this Plan.

 

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(c)                                  The severance benefits provided under the Plan are intended to qualify for an exemption from application of Section 409A or comply with its requirements to the extent necessary to avoid adverse personal tax consequences under Section 409A, and any ambiguities herein shall be interpreted accordingly.

 

(d)                                 Notwithstanding anything to the contrary set forth herein, the Eligible Employee shall receive the Severance Benefits described above, if and only if the Eligible Employee duly executes and returns to the Company within the applicable time period set forth therein, but in no event more than forty-five days following Separation From Service, a separation agreement containing the Company’s standard form of release of claims in favor of the Company (attached to this Agreement as Exhibits A, B and C) and other standard provisions, including without limitation, those relating to non-disparagement and confidentiality (the “Separation Agreement”), and permits the release of claims contained therein to become effective in accordance with its terms.  Notwithstanding any other payment schedule set forth in this Plan, none of the Severance Benefits will be paid or otherwise delivered prior to the effective date of the Separation Agreement.  Except to the extent that payments may be delayed until the Specified Employee Initial Payment Date pursuant to the preceding paragraph, on the first regular payroll pay day following the effective date of the Separation Agreement, the Company will pay the Eligible Employee the Severance Benefits the Eligible Employee would otherwise have received under the Plan on or prior to such date but for the delay in payment related to the effectiveness of the Separation Agreement, with the balance of the Severance Benefits being paid as originally scheduled.

 

Section 5.                                          PARACHUTE PAYMENTS

 

(a)                                 In the event that the payments provided herein and benefits otherwise payable to an Eligible Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Code, or any comparable successor provisions, and (ii) but for this Section 5 would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the “Excise Tax”), then such Eligible Employee’s benefits hereunder shall be either:

 

(i)                                     provided to such Eligible Employee in full, or

 

(ii)                                  provided to such Eligible Employee as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax,

 

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whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by such Eligible Employee, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax (the “Reduced Amount”).  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order:  reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits.  If acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Eligible Employee’s stock awards.

 

(b)                                 Unless the Company and such Eligible Employee otherwise agree in writing, any determination required under this Section 5 shall be made in writing in good faith by the Company’s independent certified public accountants (the “Accountants”).  For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority.  The Company and such Eligible Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 5.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.

 

(c)                                  If, notwithstanding any reduction described in this Section 5, the IRS determines that such Eligible Employee is liable for the Excise Tax as a result of the receipt of the payment of benefits as described above, then such Eligible Employee shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that such Eligible Employee challenges the final IRS determination, a final judicial determination, a portion of the payment equal to the “Repayment Amount.”  The Repayment Amount with respect to the payment of benefits shall be the smallest such amount, if any, as shall be required to be paid to the Company so that such Eligible Employee’s net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized.  The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in such Eligible Employee’s net after-tax proceeds with respect to the payment of such benefits being maximized.  If the Excise Tax is not eliminated pursuant to this paragraph, such Eligible Employee shall pay the Excise Tax.

 

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(d)                                 Notwithstanding any other provision of this Section 5, if (i) there is a reduction in the payment of benefits as described in this Section 5, (ii) the IRS later determines that such Eligible Employee is liable for the Excise Tax, the payment of which would result in the maximization of such Eligible Employee’s net after-tax proceeds (calculated as if such Eligible Employee’s benefits had not previously been reduced), and (iii) such Eligible Employee pays the Excise Tax, then the Company shall pay to such Eligible Employee those benefits which were reduced pursuant to this Section 5 contemporaneously or as soon as administratively possible after such Eligible Employee pays the Excise Tax so that such Eligible Employee’s net after-tax proceeds with respect to the payment of benefits is maximized.

 

(e)                                  If an Eligible Employee either (i) brings any action to enforce such Eligible Employee’s rights pursuant to this Section 5, or (ii) defends any legal challenge to such Eligible Employee’s rights hereunder, such Eligible Employee shall be entitled to recover attorneys’ fees and costs incurred in connection with such action, regardless of the outcome of such action; provided, however, that in the event such action is commenced by such Eligible Employee, the court finds the claim was brought in good faith.

 

Section 6.                                          IMPACT ON OTHER EMPLOYEE BENEFITS

 

(a)                                 Continued Group Health Plan Benefits.  If the Eligible Employee was enrolled in a group health plan (e.g., medical, dental, or vision plan) sponsored by the Company or an affiliate immediately prior to termination, the Eligible Employee may be eligible to continue coverage under such group health plan (or to convert to an individual policy), at the time of the Eligible Employee’s termination of employment, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).  The Company will notify the Eligible Employee of any such right to continue such coverage at the time of termination pursuant to COBRA.  No provision of this Plan will affect the continuation coverage rules under COBRA.

 

(b)                                 Other Employee Benefits.  All other benefits (such as life insurance, disability coverage, and 401(k) plan coverage) terminate as of the Eligible Employee’s termination date (except to the extent that a conversion privilege may be available thereunder).

 

Section 7.                                          COMPANY PROPERTY.

 

(a)                                 Return of Company Property.  Except as provided in Section 7(b) below, an Eligible Employee will not be entitled to any severance benefit under the Plan unless and until the Eligible Employee returns all Company Property.  For this purpose, “Company Property” means all Company documents (and all copies thereof) and other Company property 

 

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which the Eligible Employee had in his or her possession at any time, including, but not limited to, Company files, notes, drawings records, plans, forecasts, reports, studies, analyses, proposals, agreements, financial information, research and development information, sales and marketing information, operational and personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, but not limited to, leased vehicles, computers, facsimile machines, mobile telephones, servers), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part).  As a condition to receiving benefits under the Plan, Eligible Employees must not make or retain copies, reproductions or summaries of any such Company property.

 

(b)                                 Retention of Certain Company Equipment.  Notwithstanding the provisions of Section 7(a), the Company and an Eligible Employee may agree to allow the Eligible Employee to retain certain Company equipment (e.g., laptops, printers, facsimile machines, copiers, etc.) (“Company Equipment”) for his or her personal use following the Eligible Employee’s termination of employment.  As a condition to retaining any Company Equipment, the Eligible Employee must execute a general waiver and release in substantially the form attached hereto as Exhibit A, Exhibit B or Exhibit C, as appropriate, and such release must become effective in accordance with its terms. The Eligible Employee acknowledges that the Eligible Employee will have imputed income related to the retention of any Company Equipment.  The Eligible Employee will follow all Company instructions as to the return and/or deletion of any Company information contained on the Company Equipment.

 

Section 8.                                          WITHHOLDING TAXES AND OFFSETS FOR INDEBTEDNESS.

 

All payments under the Plan will be subject to applicable withholding for federal, state and local taxes.  If an Eligible Employee is indebted to the Company at his or her termination date, the Company reserves the right to offset any severance payments under the Plan by the amount of such indebtedness to the extent permitted by applicable laws.  Additionally, if an Eligible Employee is subject to withholding for taxes related to any non-Plan benefits, the Company may offset any severance payments under the Plan by the amount of such withholding taxes.

 

Section 9.                                          REEMPLOYMENT.

 

In the event of an Eligible Employee’s reemployment by the Company or an affiliate of the Company during the period of time in respect of which severance benefits pursuant to Sections 3(a) and 3(b) have been paid, the Company, in its sole and absolute discretion, may require such Eligible Employee to repay to the Company all or a portion of such severance benefits as a condition of reemployment.

 

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Section 10.                                   RIGHT TO INTERPRET PLAN; AMENDMENT AND TERMINATION.

 

(a)                                 Exclusive Discretion.  The Plan Administrator (as defined in Section 13(a) herein) shall have the exclusive discretion and authority to establish rules, forms, and procedures for the administration of the Plan and to construe and interpret the Plan and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan.  The rules, interpretations, computations and other actions of the Plan Administrator shall be binding and conclusive on all persons.

 

(b)                                 Amendment or Termination.  The Company reserves the right to amend or terminate this Plan (including Appendix A) or the benefits provided hereunder at any time; provided, however, that no such amendment or termination shall adversely affect the right to any unpaid benefit of any Eligible Employee whose termination date has occurred prior to amendment or termination of the Plan.  In addition, following a Change of Control, no such amendment or termination may adversely affect the benefits to which an employee would become entitled under the Plan as an Eligible Employee upon a Covered Termination if the Plan had not been so amended or terminated, without the consent of the affected employee.  Furthermore, no such amendment or termination may adversely affect the benefits to which a Company officer would become entitled under the Plan as an Eligible Employee upon a Covered Termination if the Plan had not been so amended or terminated, without the consent of such affected officer.  Any action amending or terminating the Plan must be approved by the Board or a duly authorized committee thereof and evidenced by a writing executed by the Chief Executive Officer or Chief Financial Officer of the Company.

 

Section 11.                                   NO IMPLIED EMPLOYMENT CONTRACT.

 

The Plan shall not be deemed (i) to give any employee or other person any right to be retained in the employ of the Company or (ii) to interfere with the right of the Company to discharge any employee or other person at any time, with or without cause, which right is hereby reserved.

 

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Section 12.                                   LEGAL CONSTRUCTION.

 

This Plan is intended to be governed by and shall be construed in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”) and, to the extent not preempted by ERISA, the laws of the State of California (without regard to principles of conflict of laws).

 

Section 13.                                   CLAIMS, INQUIRIES AND APPEALS.

 

(a)                                 Applications for Benefits and Inquiries.  Any application for benefits, inquiries about the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan Administrator in writing by an applicant (or his or her authorized representative).  Communications to the Plan Administrator should be addressed to:

 

Optimer Pharmaceuticals, Inc.

 

Attn:  Human Resources

 

101 Hudson Street , Suite 3501
 Jersey City, NJ 07302

 

(b)                                 Denial of Claims.  In the event that any application for benefits is denied in whole or in part, the Plan Administrator must provide the applicant with written or electronic notice of the denial of the application, and of the applicant’s right to review the denial.  Any electronic notice will comply with the regulations of the U.S. Department of Labor.  The notice  of denial will be set forth in a manner designed to be understood by the applicant and will include the following:

 

(1)                                 the specific reason or reasons for the denial;

 

(2)                                 references to the specific Plan provisions upon which the denial is based;

 

(3)                                 a description of any additional information or material that the Plan Administrator needs to complete the review and an explanation of why such information or material is necessary; and

 

(4)                                 an explanation of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA following a denial on review of the claim, as described in Section 11(d) below.

 

15

 

This notice of denial will be given to the applicant within ninety (90) days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional ninety (90) days for processing the application.  If an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial ninety (90) day period.

 

This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application.

 

(c)                                  Request for a Review.  Any person (or that person’s authorized representative) for whom an application for benefits is denied, in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within sixty (60) days after the application is denied.  A request for a review shall be in writing and shall be addressed to:

 

Optimer Pharmaceuticals, Inc.

 

Attn:  Human Resources

 

101 Hudson Street , Suite 3501
 Jersey City, NJ 07302

 

A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant feels are pertinent.  The applicant (or his or her representative) shall have the opportunity to submit (or the Plan Administrator may require the applicant to submit) written comments, documents, records, and other information relating to his or her claim.  The applicant (or his or her representative) shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim.  The review shall take into account all comments, documents, records and other information submitted by the applicant (or his or her representative) relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

(d)                                 Decision on Review.  The Plan Administrator will act on each request for review within sixty (60) days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional sixty (60) days), for processing the request for a review.  If an extension for review is required, written notice of the extension will be furnished to the applicant within the initial sixty (60) day period.  This notice of extension will describe the 

 

16

 

special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the review.  The Plan Administrator will give prompt, written or electronic notice of its decision to the applicant. Any electronic notice will comply with the regulations of the U.S. Department of Labor.  In the event that the Plan Administrator confirms the denial of the application for benefits in whole or in part, the notice will set forth, in a manner calculated to be understood by the applicant, the following:

 

(1)                                 the specific reason or reasons for the denial;

 

(2)                                 references to the specific Plan provisions upon which the denial is based;

 

(3)                                 a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim; and

 

(4)                                 a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA.

 

(e)                                  Rules and Procedures.  The Plan Administrator will establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing benefit claims.  The Plan Administrator may require an applicant who wishes to submit additional information in connection with an appeal from the denial of benefits to do so at the applicant’s own expense.

 

(f)                                   Exhaustion of Remedies.  No legal action for benefits under the Plan may be brought until the applicant (i) has submitted a written application for benefits in accordance with the procedures described by Section 13(a) above, (ii) has been notified by the Plan Administrator that the application is denied, (iii) has filed a written request for a review of the application in accordance with the appeal procedure described in Section 13(c) above, and (iv) has been notified that the Plan Administrator has denied the appeal.  Notwithstanding the foregoing, if the Plan Administrator does not respond to a applicant’s claim or appeal within the relevant time limits specified in this Section 13, the applicant may bring legal action for benefits under the Plan pursuant to Section 502(a) of ERISA.

 

17

 

Section 14.                                   BASIS OF PAYMENTS TO AND FROM PLAN.

 

The Plan shall be unfunded, and all cash payments under the Plan shall be paid only from the general assets of the Company.  An Eligible Employee’s right to receive payments under the Plan is no greater than that of the Company’s unsecured general creditors.  Therefore, if the Company were to become insolvent, the Eligible Employee might not receive benefits under the Plan.

 

Section 15.                                   OTHER PLAN INFORMATION.

 

(a)                                 Employer and Plan Identification Numbers. The Employer Identification Number assigned to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue Service is 33-0830300.  The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is 511.

 

(b)                                 Ending Date for Plan’s Fiscal Year and Type of Plan.  The date of the end of the fiscal year for the purpose of maintaining the Plan’s records is December 31.  The Plan is a welfare benefit plan.

 

(c)                                  Agent for the Service of Legal Process.  The agent for the service of legal process with respect to the Plan is:

 

Optimer Pharmaceuticals, Inc.

 

Attn:  Human Resources

 

101 Hudson Street , Suite 3501
 Jersey City, NJ 07302

 

(d)                                 Plan Sponsor and Administrator.  The Plan Sponsor and the “Plan Administrator” of the Plan is:

 

Optimer Pharmaceuticals, Inc.

 

Attn:  Human Resources

 

101 Hudson Street , Suite 3501
 Jersey City, NJ 07302

 

18

 

The Plan Sponsor’s and Plan Administrator’s telephone number is (201) 492-9208.  The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan.

 

Section 16.                                   STATEMENT OF ERISA RIGHTS.

 

Participants in this Plan are entitled to certain rights and protections under ERISA.  If you are an Eligible Employee, you are considered a participant in the Plan and, under ERISA, you are entitled to:

 

(a)                                 Receive Information About Your Plan and Benefits

 

(1)                                 Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the Plan and a copy of the latest annual report (Form 5500 Series), if applicable, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration;

 

(2)                                 Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan and copies of the latest annual report (Form 5500 Series), if applicable, and an updated (as necessary) Summary Plan Description.  The Administrator may make a reasonable charge for the copies; and

 

(3)                                 Receive a summary of the Plan’s annual financial report, if applicable.  The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report.

 

(b)                                 Prudent Actions by Plan Fiduciaries.  In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan.  The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.  No one, including your employer, your union or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.

 

(c)                                  Enforce Your Rights.  If your claim for a Plan benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules as set forth in detail in Section 13 herein.

 

19

 

Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request a copy of Plan documents or the latest annual report from the Plan, if applicable, and do not receive them within 30 days, you may file suit in a Federal court and you are not required to follow the claims procedure set forth in Section 13 herein.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.

 

If you have completed the claims and appeals procedure described in Section 11 and have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court.

 

If you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

 

(d)                                 Assistance with Your Questions.  If you have any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration or accessing its website at http://www.dol.gov/ebsa/.

 

Section 17.                                   GENERAL PROVISIONS.

 

(a)                                 Notices.  Any notice, demand or request required or permitted to be given by either the Company or an Eligible Employee pursuant to the terms of this Plan shall be in writing and shall be deemed given when delivered personally or deposited in the U.S. mail, First Class with postage prepaid, and addressed to the parties, in the case of the Company, at the

 

20

 

address set forth in Section 15(d) and, in the case of an Eligible Employee, at the address as set forth in the Company’s employment file maintained for the Eligible Employee as previously furnished by the Eligible Employee or such other address as a party may request by notifying the other in writing.

 

(b)                                 Transfer and Assignment.  The rights and obligations of an Eligible Employee under this Plan may not be transferred, assigned or alienated.  This Plan shall be binding upon any surviving entity resulting from a Change of Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company without regard to whether or not such person or entity actively assumes the obligations hereunder.

 

(c)                                  Waiver.  Any party’s failure to enforce any provision or provisions of this Plan shall not in any way be construed as a waiver of any such provision or provisions, nor prevent any party from thereafter enforcing each and every other provision of this Plan.  The rights granted the parties herein are cumulative and shall not constitute a waiver of any party’s right to assert all other legal remedies available to it under the circumstances.

 

(d)                                 Severability.  Should any provision of this Plan be declared or determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

 

(e)                                  Section Headings.  Section headings in this Plan are included for convenience of reference only and shall not be considered part of this Plan for any other purpose.

 

Section 18.                                   EXECUTION.

 

To record the amendment and restatement of the Plan as set forth herein, and approved by the Board effective as of February 26, 2013, Optimer Pharmaceuticals, Inc. has caused its duly authorized officer to execute the same this 19th day of March, 2013.

 

	
 
    	
OPTIMER   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Henry A. McKinnell
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
Chief   Executive Officer
    

 

21

 

APPENDIX A

 

OPTIMER PHARMACEUTICALS, INC. SEVERANCE BENEFIT PLAN

 

BENEFITS FOR ELIGIBLE EMPLOYEES

 

Certain capitalized terms not specifically defined in this Appendix A are defined in the Plan.

 

Severance benefits to be provided to Eligible Employees under the Optimer Pharmaceuticals, Inc. Amended and Restated Severance Benefit Plan (the “Plan”) who are terminated pursuant to a Covered Termination.

 

1.                                      Conditions to Receipt of Benefits:  Subject to the exceptions set forth in Section 2(b) of the Plan, the Eligible Employee must meet all the requirements set forth in Sections 2(a) and 7(a) of the Plan, including, without limitation, executing a general waiver and release in substantially the form attached to the Plan as Exhibit A, Exhibit B or Exhibit C, as appropriate (the “Release”), within the applicable time period set forth therein and permit such release to become effective in accordance with its terms.  The Company, in its sole discretion, may modify the form of the required general waiver and release to comply with applicable law, and may incorporate such waiver and release into a termination agreement or other agreement with the Eligible Employee.

 

2.                                      Regular Covered Termination Severance Benefits.  Eligible Employees that are terminated in a Covered Termination that occurs either prior to, or more than 12 months following, a Change of Control, shall receive the benefits set forth in this Section 2.

 

(a)                                 Base Salary Continuation Benefit.  Eligible Employees shall be entitled to receive continued Base Salary payments for the time period following a Covered Termination as set forth below next to the respective Eligible Employees’ position in effect at the time of the Covered Termination.

 

22

 

	
Position
    	
 
    	
Base Salary Continuation Period
    
	
 
    	
 
    	
 
    
	
Chief Executive Officer
    	
 
    	
24 months
    
	
 
    	
 
    	
 
    
	
Company Officers
    	
 
    	
15 months
    
	
 
    	
 
    	
 
    
	
Senior Vice Presidents and Vice   Presidents
    	
 
    	
12 months
    
	
 
    	
 
    	
 
    
	
All Director levels, Managers,   and Non-Managerial Staff with annual Base Salary in excess of $100,000
    	
 
    	
2 weeks, plus 2 weeks for each   Year of Service, up to a maximum of 36 weeks
    
	
 
    	
 
    	
 
    
	
Non-Managerial Staff with annual   Base Salary of $100,000 or less
    	
 
    	
2 weeks, plus 1 week for each   Year of Service, up to a maximum of 26 weeks
    

 

(b)                                 Continued Group Health Plan Benefits.  If the Eligible Employee was enrolled in a group health plan (e.g., medical, dental, or vision plan) sponsored by the Company or an affiliate of the Company immediately prior to termination, the Eligible Employee may be eligible to continue coverage under such group health plan (or to convert to an individual policy), at the time of the Eligible Employee’s termination of employment, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).  The Company will notify the Eligible Employee of any such right to continue such coverage at the time of termination pursuant to COBRA.  No provision of this Plan will affect the continuation coverage rules under COBRA, except that the Company’s payment, if any, of applicable insurance premiums, or waiver of any cost of coverage under any self-funded group health plan, will be credited as payment by the Eligible Employee for purposes of the Eligible Employee’s payment required under COBRA.  Therefore, the period during which an Eligible Employee may elect to continue the Company’s or its affiliate’s group health plan coverage at his or her own expense under COBRA, the length of time during which COBRA coverage will be made 

 

23

 

                                                available to the Eligible Employee, and all other rights and obligations of the Eligible Employee under COBRA (except the obligation to pay insurance premiums that the Company pays, if any, or, with respect to a self-funded plan, any obligation to pay the cost of coverage to the Company that the Company waives, if any) will be applied in the same manner that such rules would apply in the absence of this Plan.

 

If an Eligible Employee timely elects continued coverage under COBRA, the Company shall pay the full amount of the Eligible Employee’s COBRA premiums, or shall provide coverage under any self-funded plan, on behalf of the Eligible Employee for the Eligible Employee’s continued coverage under the Company’s group health plans, including coverage for the Eligible Employee’s eligible dependents, for a number of months following the Eligible Employee’s termination of employment as set forth below next to the respective Eligible Employee’s position in effect at the time of the Covered Termination (such applicable period of months, the “COBRA Payment Period”); provided, however, that no such premium payments shall be made, and no coverage shall be provided under any self-funded group health plan, following the effective date of the Eligible Employee’s coverage by a group health plan of a subsequent employer.  Each Eligible Employee shall be required to notify the Company immediately if the Eligible Employee becomes covered by a group health plan of a subsequent employer.  Upon the conclusion of such period of insurance premium payments made by the Company, or the provision of coverage under a self-funded group health plan, the Eligible Employee will be responsible for the entire payment of premiums (or payment for the cost of coverage) required under COBRA for the duration of the COBRA period.

 

For purposes of this Section 2(b), (i) references to COBRA shall be deemed to refer also to analogous provisions of state law and (ii) any applicable insurance premiums that are paid by the Company shall not include any amounts payable by the Eligible Employee under an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of the Eligible Employee.

 

24

 

	
Position
    	
 
    	
Months of Continued Group Health Benefits
    
	
 
    	
 
    	
 
    
	
Chief Executive Officer
    	
 
    	
24 Months
    
	
 
    	
 
    	
 
    
	
Company Officers
    	
 
    	
15 Months
    
	
 
    	
 
    	
 
    
	
Senior Vice Presidents and Vice   Presidents
    	
 
    	
12 Months
    
	
 
    	
 
    	
 
    
	
All Director levels, Managers,   and Non-Managerial Staff with annual Base Salary in excess of $100,000
    	
 
    	
None
    
	
 
    	
 
    	
 
    
	
Non-Managerial Staff with annual   Base Salary of $100,000 or less
    	
 
    	
None
    

 

Notwithstanding the foregoing, if the Company determines, in its sole discretion, that the Company cannot provide the COBRA premium benefits without potentially incurring additional financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof pay the Eligible Employee a taxable cash amount, which payment shall be made regardless of whether the Eligible Employee or the Eligible Employee’s eligible family members elect health care continuation coverage (the “Health Care Benefit Payment”).  The Health Care Benefit Payment shall be paid in monthly installments on the same schedule that the COBRA Premiums would otherwise have been paid to the insurer.  The Health Care Benefit Payment shall be equal to  the amount that the Company would have otherwise paid for COBRA insurance premiums (which amount shall be calculated based on the premium for the first month of coverage), and shall be paid until the earlier of (i) expiration of the COBRA Payment Period, or (ii) the date the Eligible Employee voluntarily enrolls in a health insurance plan offered by another employer or entity.

 

25

 

(c)                                  Vesting Acceleration for Non-Performance Vesting Equity Awards.  All Non-Performance Vesting Equity Awards granted by the Company to the Eligible Employee (determined as of the date of the Eligible Employee’s Covered Termination) shall be subject to accelerated vesting, if any, for the time period or to the extent set forth below next to the Eligible Employee’s respective position.  If such accelerated vesting is with respect to less than 100% of the Equity Award such acceleration shall be determined in accordance with the vesting schedule applicable to such Equity Award as if the Eligible Employee had been employed for the additional period of time indicated next to the Eligible Employee’s position as of the date of his or her Covered Termination.

 

	
Position
    	
 
    	
Time Period or Extent of Vesting
   Acceleration for Non-Performance
   Vesting Equity Awards
    
	
 
    	
 
    	
 
    
	
Chief Executive Officer
    	
 
    	
24 months
    
	
 
    	
 
    	
 
    
	
Company Officers
    	
 
    	
15 months
    
	
 
    	
 
    	
 
    
	
Senior Vice Presidents and Vice   Presidents
    	
 
    	
12 months
    
	
 
    	
 
    	
 
    
	
All Director levels, Managers,   and Non-Managerial Staff with annual Base Salary in excess of $100,000
    	
 
    	
None
    
	
 
    	
 
    	
 
    
	
Non-Managerial Staff with annual   Base Salary of $100,000 or less
    	
 
    	
None
    

 

3.                                      Change of Control Covered Termination Severance Benefits.  Eligible Employees that are terminated in a Covered Termination that occurs upon or within twelve (12) months following a Change of Control, shall receive the benefits set forth in this Section 3.

 

26

 

(a)                                 Base Salary Continuation Benefit.  Eligible Employees shall be entitled to receive continued Base Salary payments for the time period following a Covered Termination as set forth below next to the respective Eligible Employees’ position in effect at the time of the Covered Termination.

 

	
Position
    	
 
    	
Base Salary Continuation Period
    
	
 
    	
 
    	
 
    
	
Chief Executive Officer
    	
 
    	
24 months
    
	
 
    	
 
    	
 
    
	
Company Officers
    	
 
    	
18 months
    
	
 
    	
 
    	
 
    
	
Senior Vice Presidents and Vice   Presidents
    	
 
    	
12 months
    
	
 
    	
 
    	
 
    
	
All Director levels, Managers,   and Non-Managerial Staff with annual Base Salary in excess of $100,000
    	
 
    	
3 months, plus 2 weeks for each   Year of Service, up to a maximum of 36 weeks
    
	
 
    	
 
    	
 
    
	
Non-Managerial Staff with annual   Base Salary of $100,000 or less
    	
 
    	
3 months, plus 1 week for each   Year of Service, up to a maximum of 26 weeks
    

 

(b)                                 Bonus Payments.  Any bonus payment pursuant to this Section  shall be in a single lump sum to be paid within ten (10) days following the later of: (i) the effective date of the Release, or (ii) the Change of Control.  The Company shall pay to each Eligible Employee the indicated percentage of such Eligible Employee’s Bonus as set forth below next to the respective Eligible Employee’s position in effect at the time of the Covered Termination:

 

	
Position
    	
 
    	
Bonus Percentage
    
	
 
    	
 
    	
 
    
	
Chief Executive Officer
    	
 
    	
200%
    
	
 
    	
 
    	
 
    
	
Company Officers
    	
 
    	
150%
    
	
 
    	
 
    	
 
    
	
Senior Vice Presidents and Vice   Presidents
    	
 
    	
100%
    
	
 
    	
 
    	
 
    
	
All Director levels, Managers,   and Non-Managerial Staff with annual Base Salary in excess of $100,000
    	
 
    	
0%
    
	
 
    	
 
    	
 
    
	
Non-Managerial Staff with annual   Base Salary of $100,000 or less
    	
 
    	
0%
    

 

27

 

(c)                                  Continued Group Health Plan Benefits.  If the Eligible Employee was enrolled in a group health plan (e.g., medical, dental, or vision plan) sponsored by the Company or an affiliate of the Company immediately prior to termination, the Eligible Employee may be eligible to continue coverage under such group health plan (or to convert to an individual policy), at the time of the Eligible Employee’s termination of employment, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).  The Company will notify the Eligible Employee of any such right to continue such coverage at the time of termination pursuant to COBRA.  No provision of this Plan will affect the continuation coverage rules under COBRA, except that the Company’s payment, if any, of applicable insurance premiums, or waiver of any cost of coverage under any self-funded group health plan, will be credited as payment by the Eligible Employee for purposes of the Eligible Employee’s payment required under COBRA.  Therefore, the period during which an Eligible Employee may elect to continue the Company’s or its affiliate’s group health plan coverage at his or her own expense under COBRA, the length of time during which COBRA coverage will be made available to the Eligible Employee, and all other rights and obligations of the Eligible Employee under COBRA (except the obligation to pay insurance premiums that the Company pays, if any, or, with respect to a self-funded plan, any obligation to pay the cost of coverage to the Company that the 

 

28

 

                                                Company waives, if any) will be applied in the same manner that such rules would apply in the absence of this Plan.

 

If an Eligible Employee timely elects continued coverage under COBRA, the Company shall pay the full amount of the Eligible Employee’s COBRA premiums, or shall provide coverage under any self-funded plan, on behalf of the Eligible Employee for the Eligible Employee’s continued coverage under the Company’s group health plans, including coverage for the Eligible Employee’s eligible dependents, for a number of months following the Eligible Employee’s termination of employment as set forth below next to the respective Eligible Employees’ position in effect at the time of the Covered Termination (such applicable monthly period, the “COBRA Payment Period”); provided, however, that no such premium payments shall be made, and no coverage shall be provided under any self-funded group health plan, following the effective date of the Eligible Employee’s coverage by a group health plan of a subsequent employer.  Each Eligible Employee shall be required to notify the Company immediately if the Eligible Employee becomes covered by a group health plan of a subsequent employer.  Upon the conclusion of such period of insurance premium payments made by the Company, or the provision of coverage under a self-funded group health plan, the Eligible Employee will be responsible for the entire payment of premiums (or payment for the cost of coverage) required under COBRA for the duration of the COBRA period.

 

For purposes of this Section 3(c), (i) references to COBRA shall be deemed to refer also to analogous provisions of state law and (ii) any applicable insurance premiums that are paid by the Company shall not include any amounts payable by the Eligible Employee under an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of the Eligible Employee.

 

	
Position
    	
 
    	
Months of Continued Group Health Benefits
    
	
 
    	
 
    	
 
    
	
Chief Executive Officer
    	
 
    	
24 Months
    
	
 
    	
 
    	
 
    
	
Company Officers
    	
 
    	
18 Months
    
	
 
    	
 
    	
 
    
	
Senior Vice Presidents and Vice   Presidents
    	
 
    	
12 Months
    
	
 
    	
 
    	
 
    
	
All Director levels, Managers,   and Non-Managerial Staff with annual Base Salary in excess of $100,000
    	
 
    	
Continued during severance
    
	
 
    	
 
    	
 
    
	
Non-Managerial Staff with annual   Base Salary of $100,000 or less
    	
 
    	
Continued during severance
    

 

29

 

Notwithstanding the foregoing, if the Company determines, in its sole discretion, that the Company cannot provide the COBRA premium benefits without potentially incurring additional financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof pay the Eligible Employee a taxable cash amount, which payment shall be made regardless of whether the Eligible Employee or the Eligible Employee’s eligible family members elect health care continuation coverage (the “Health Care Benefit Payment”).  The Health Care Benefit Payment shall be paid in monthly installments on the same schedule that the COBRA Premiums would otherwise have been paid to the insurer.  The Health Care Benefit Payment shall be equal to  the amount that the Company would have otherwise paid for COBRA insurance premiums (which amount shall be calculated based on the premium for the first month of coverage), and shall be paid until the earlier of (i) expiration of the COBRA Payment Period, or (ii) the date the Eligible Employee voluntarily enrolls in a health insurance plan offered by another employer or entity.

 

(d)                                 Equity Vesting Acceleration.

 

(1)                                 Vesting Acceleration for Non-Performance Vesting Equity Awards.  All Non-Performance Vesting Equity Awards granted by the Company to the Eligible Employee (determined as of the date of the Eligible Employee’s Covered Termination) shall be subject to 100% immediate accelerated vesting.

 

(2)                                 Any Performance Vesting Equity Awards (determined as of the date of the Eligible Employee’s Covered Termination) shall be subject to 100% immediate accelerated vesting as if each of the target goals had been achieved to the maximum extent possible.

 

30

 

4.                                      Time and Form of Base Salary Continuation Payments.  Subject to the provisions of Section 4 of the Plan, all Base Salary continuation payments shall be paid in accordance with the Company’s standard payroll practices, and shall commence with the first payroll period following the effective date of the Release.  The Company will pay the Eligible Employee the Base Salary continuation severance benefits the Eligible Employee would otherwise have received under the Plan on or prior to such date but for the delay in payment related to the effectiveness of the Release, with the balance of the Base Salary continuation severance benefits being paid as originally scheduled.

 

5.                                      Reductions Pursuant to Section 3(c) of the Plan.  The severance benefits set forth in this Appendix A are subject to certain reductions under Section 3(c) of the Plan.

 

6.                                      Amendment of Appendix A.  The foregoing severance benefits are subject to such change as the Company, pursuant to Section 10(b) of the Plan, may determine in its sole and absolute discretion.  Any such change in severance benefits shall be set forth in a revised version of this Appendix A.

 

31

 

For Employees Age 40 or Older

 

Individual Termination

 

EXHIBIT A

 

RELEASE AGREEMENT

 

I understand and agree completely to the terms set forth in the Optimer Pharmaceuticals, Inc. Severance Benefit Plan (the “Plan”).

 

I understand that this Release, together with the Plan, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company that is not expressly stated therein.  Certain capitalized terms used in this Release are defined in the Plan.

 

I hereby confirm my obligations under my proprietary information agreement with the Company.

 

Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its parents, subsidiaries, successors, predecessors and affiliates, and their partners, members, directors, officers, employees, stockholders, shareholders, agents, attorneys, predecessors, insurers, affiliates and assigns, from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to and including the date I sign this Release.  This general release includes, but is not limited to: (a) all claims arising out of or in any way related to my employment with the Company, or its affiliates, or the termination of that employment; (b) all claims related to my compensation or benefits, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company, or its affiliates; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act (as amended) (“ADEA”), the federal Employee Retirement Income Security Act of 1974 (as amended), and the California Fair Employment and Housing Act (as amended); provided, however, that nothing in this paragraph shall be construed in 

 

A-1

 

any way to release the Company or its affiliates from its obligation to indemnify me pursuant to agreement or applicable law.

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA, and that the consideration given under the Plan for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (a) my waiver and release do not apply to any rights or claims that may arise after the date I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not do so); (c) I have twenty-one (21) days to consider this Release (although I may choose voluntarily to sign this Release earlier); (d) I have seven (7) days following the date I sign this Release to revoke the Release by providing written notice to an officer of the Company; and (e) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after I sign this Release.

 

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims hereunder.

 

I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than twenty-one (21) days following the date it is provided to me.

 

	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

A-2

 

For Employees Age 40 or Older

 

Group Termination

 

EXHIBIT B

 

RELEASE AGREEMENT

 

I understand and agree completely to the terms set forth in the Optimer Pharmaceuticals, Inc. Severance Benefit Plan (the “Plan”).

 

I understand that this Release, together with the Plan, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company that is not expressly stated therein.  Certain capitalized terms used in this Release are defined in the Plan.

 

I hereby confirm my obligations under my proprietary information agreement with the Company.

 

Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its parents, subsidiaries, successors, predecessors and affiliates, and their partners, members, directors, officers, employees, stockholders, shareholders, agents, attorneys, predecessors, insurers, affiliates and assigns, from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to and including the date I sign this Release.  This general release includes, but is not limited to: (a) all claims arising out of or in any way related to my employment with the Company, or its affiliates, or the termination of that employment; (b) all claims related to my compensation or benefits, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company, or its affiliates; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act (as amended) (“ADEA”), the federal Employee Retirement Income Security Act of 1974 (as amended), and the California Fair Employment and Housing Act (as amended); provided, however, that nothing in this paragraph shall be construed in any way to release the Company or its affiliates from its obligation to indemnify me pursuant to agreement or applicable law.

 

B-1

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA, and that the consideration given under the Plan for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (a) my waiver and release do not apply to any rights or claims that may arise after the date I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have forty-five (45) days to consider this Release (although I may choose voluntarily to sign this Release earlier); (d) I have seven (7) days following the date I sign this Release to revoke the Release by providing written notice to an office of the Company; (e) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after I sign this Release; and (f) I have received with this Release a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of the Company in the same job classification or organizational unit who were not terminated.

 

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims hereunder.

 

I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than forty-five (45) days following the date it is provided to me.

 

	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

B-2

 

For Employees Under Age 40

 

Individual and Group Termination

 

EXHIBIT C

 

RELEASE AGREEMENT

 

I understand and agree completely to the terms set forth in the Optimer Pharmaceuticals, Inc. Severance Benefit Plan (the “Plan”).

 

I understand that this Release, together with the Plan, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof.  I am not relying on any promise or representation by the Company that is not expressly stated therein.  Certain capitalized terms used in this Release are defined in the Plan.

 

I hereby confirm my obligations under my proprietary information agreement with the Company.

 

Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its parents, subsidiaries, successors, predecessors and affiliates, and their partners, members, directors, officers, employees, stockholders, shareholders, agents, attorneys, predecessors, insurers, affiliates and assigns, from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to and including the date I sign this Release.  This general release includes, but is not limited to: (a) all claims arising out of or in any way related to my employment with the Company, or its affiliates, or the termination of that employment; (b) all claims related to my compensation or benefits, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company, or its affiliates; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act (as amended) (“ADEA”), the federal Employee Retirement Income Security Act of 1974 (as amended), and the California Fair Employment and Housing Act (as amended); provided, however, that nothing in this paragraph shall be construed in any way to release the Company or its affiliates from its obligation to indemnify me pursuant to agreement or applicable law.

 

C-1

 

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims hereunder.

 

I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than fourteen (14) days following the date it is provided to me.

 

	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

C-2Exhibit 10.01

 

AMENDED AND RESTATED ADVISORY AGREEMENT

 

among

 

CAMBRIDGE GLOBAL HORIZONS, LLC,

 

BLACKROCK INVESTMENT MANAGEMENT, LLC,

 

and

 

CANTAB CAPITAL PARTNERS LLP

 

Dated as of March 31, 2013

 

 

ADVISORY AGREEMENT

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Undertakings in Connection with Offering of Global Horizons   Units
    	
2
    
	
2.
    	
Duties of the Trading Advisor
    	
3
    
	
3.
    	
Trading Advisor Independent
    	
5
    
	
4.
    	
Commodity Broker; Floor Brokers
    	
5
    
	
5.
    	
Allocation of Company Assets to Trading Advisor
    	
6
    
	
6.
    	
Incentive Fee
    	
7
    
	
7.
    	
Term and Termination
    	
8
    
	
8.
    	
Right to Advise Others; Uniformity of Acts and Practices
    	
9
    
	
9.
    	
Speculative Position Limits
    	
10
    
	
10.
    	
Additional Undertakings by the Trading Advisor
    	
10
    
	
11.
    	
Representations and Warranties
    	
10
    
	
12.
    	
Entire Agreement
    	
13
    
	
13.
    	
Indemnification
    	
13
    
	
14.
    	
Assignment
    	
15
    
	
15.
    	
Amendment; Waiver
    	
15
    
	
16.
    	
Severability
    	
15
    
	
17.
    	
Notices
    	
15
    
	
18.
    	
Governing Law
    	
16
    
	
19.
    	
Consent to Jurisdiction
    	
16
    
	
20.
    	
Remedies
    	
16
    
	
21.
    	
Promotional Material
    	
16
    
	
22.
    	
Confidentiality
    	
17
    
	
23.
    	
Survival
    	
17
    
	
24.
    	
Counterparts
    	
17
    
	
25.
    	
Headings
    	
17
    

 

	
Appendix A - Commodity Trading Authority
    	
A-1
    
	
 
    	
 
    
	
Appendix   B — Certain Disclosures
    	
B-1
    

 

 

AMENDED AND RESTATED ADVISORY AGREEMENT

 

THIS AMENDED AND RESTATED ADVISORY AGREEMENT (the “Agreement”), made as of this        day of March 2013, among CAMBRIDGE GLOBAL HORIZONS, LLC, a Delaware limited liability company (the “Company”), BLACKROCK INVESTMENT MANAGEMENT LLC, a Delaware limited liability company and the manager of the Company (the “Manager”), and CANTAB CAPITAL PARTNERS LLP (the “Trading Advisor”);

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, the Company trades, buys, sells or otherwise acquires, holds or disposes of forward contracts, futures contracts for commodities, financial instruments and currencies on United States and foreign exchanges, any rights pertaining thereto and any options thereon or on physical commodities and engages in all activities incident thereto (the foregoing forms of investment being collectively referred to herein as “commodity interests”);

 

WHEREAS, a holder of interests in the Company, BlackRock Global Horizons I, LP (the “Global Horizons Fund”), currently offers units of limited partnership interests in the Global Horizons Fund (the “Global Horizons Units”) for sale to investors in an offering exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”), pursuant to Section 4(2) thereof and Rule 506 under Regulation D promulgated thereunder, as described in the Global Horizons Fund’s confidential private placement memorandum (the “Global Horizons Memorandum”) that has been filed with the Commodity Futures Trading Commission (the “CFTC”) and the National Futures Association (the “NFA”) pursuant to the Commodity Exchange Act, as amended (the “CEA”), the commodity pool operator and commodity trading advisor regulations promulgated under the CEA by the CFTC (the “Commodity Regulations”), and NFA rules promulgated under the CEA (the “NFA Rules”);

 

WHEREAS, previously the sole holder of interests in the Company was the Global Horizons Fund, but interests in the Company may now be held by additional entities sponsored or managed by the Manager or an affiliate (each such entity, including the Global Horizons Fund, a “BlackRock Vehicle”);

 

WHEREAS, the Global Horizons Fund had previously sold Global Horizons Units publicly pursuant to an effective registration under the 1933 Act.  Such public offering was discontinued in 1998, and the Global Horizons Units now being offered are the same class of equity securities as the outstanding Global Horizons Units;

 

WHEREAS, the Trading Advisor is engaged in the business of, among other things, making trading decisions on behalf of investors in the purchase and sale of certain commodity interests;

 

WHEREAS, pursuant to the original advisory agreement entered into between the parties on March 25, 2010 and amended from time to time (collectively, the “Original Agreement”), the Company desired the Trading Advisor, upon the terms and conditions set forth therein, to act as a trading advisor for the Company and to make commodity interests investment

 

1

 

decisions for the Company with respect to the Company’s assets from time to time, and the Trading Advisor desired to so act;

 

WHEREAS, for purposes of the FSA Rules, the Trading Advisor has classified each of the Company and the Manager (together, “BlackRock”) as a “Professional Client” (as defined in the FSA Rules); and

 

WHEREAS, the parties wish to amend and restate the Original Agreement and enter into this Agreement to set forth and memorialize the terms pursuant to which each of them will perform its responsibilities in the roles described above.

 

NOW, THEREFORE, the parties hereto do hereby agree as follows:

 

1.                                      Undertakings in Connection with Offering of Global Horizons Units.

 

(a)                                 Undertakings by the Trading Advisor.  The Trading Advisor agrees to use its best efforts to cooperate with the Global Horizons Fund and the Manager in amending the Global Horizons Memorandum, including without limitation by providing, as promptly as may be reasonably practicable, all information (if any) regarding the Trading Advisor and its principals which the Manager reasonably believes to be necessary or advisable to include in the Global Horizons Memorandum, as the same may be amended from time to time; provided, that nothing herein shall require the Trading Advisor to disclose any proprietary or confidential information related to its trading programs, systems or strategies or to its clients.

 

(b)                                 Certain Defined Terms.  As used in this Agreement, the term “principal” shall have the same meaning given to such term in Section 4.10(e) of the Commodity Regulations, and the term “affiliate” shall mean an individual or entity (including a stockholder, director, officer, employee, agent, or principal) that directly or indirectly controls, is controlled by, or is under common control with any other individual or entity.

 

(c)                                  Use of Global Horizons Memorandum and Other Solicitation Material.  Neither the Trading Advisor, its principals nor any of its employees, affiliates or agents, the employees, affiliates or agents of such affiliates, or their respective successors or assigns shall use, publish, circulate or distribute the Global Horizons Memorandum (including any amendment or supplement thereto) or any related solicitation material nor shall any of the foregoing engage in any marketing, sales or promotional activities in connection with the offering of Global Horizons Units, except as may be requested by the Manager and agreed to by the Trading Advisor.

 

(d)                                 Updated Performance Information.  At any time while Global Horizons Units continue to be offered and sold, at the written request of the Global Horizons Fund or the Manager, the Trading Advisor, at its own expense, shall promptly provide the Global Horizons Fund and the Manager with complete and accurate performance information (in form and substance consistent with Section 4.35 of the Commodity Regulations and the NFA Rules) reflecting the actual performance of the accounts directed by the Trading Advisor up to the latest practicable date (consistent with Section 4.35 of the Commodity Regulations) prior to the date of the Global Horizons Memorandum as amended or supplemented, together with any reports or letters relating to such performance data received from accountants and in the possession of the

 

2

 

Trading Advisor; provided that the Manager reasonably believes such information to be necessary or advisable in connection with its preparation of the Global Horizons Memorandum or other required disclosures, reports or regulatory filings.

 

(e)                                  Access to Personnel.  Upon reasonable notice to the Trading Advisor, the Company or the Manager shall have the right to have access to appropriate senior personnel of the Trading Advisor in order to discuss matters related to the accuracy and completeness of data provided by the Trading Advisor and/or compliance with the terms of this Agreement (subject to such restrictions as the Trading Advisor may reasonably deem necessary or advisable so as to preserve the confidentiality of proprietary information concerning such trading systems, methods, models, strategies and formulas and of the identity of the Trading Advisor’s clients).

 

2.                                      Duties of the Trading Advisor.

 

(a)                                 Speculative Trading.  As of the date of this Agreement, the Trading Advisor acts as a trading advisor for the Company, acting independently from any other advisors or managers selected to direct accounts on behalf of the Global Horizons Fund.  The Trading Advisor and the Company agree that in managing the assets of the Company, the Trading Advisor shall utilize the investment policy and strategy (the “Program”) as described in the Confidential Private Placement Memorandum for CCP Core Macro Fund dated January 1, 2013 (as amended or modified from time to time, the “Disclosure Document”).  The Trading Advisor shall provide the Company with 30 days’ prior notice of any material change to the trading strategy set forth in the Disclosure Document as of the date hereof.  The Trading Advisor may trade a substantively different portfolio in managing the Company only with the consent of the Manager.  Except as provided otherwise in this Section 2, the Trading Advisor shall have sole and exclusive authority and responsibility for directing the investment and reinvestment of the Company’s assets utilizing the Programs pursuant to and in accordance with the Trading Advisor’s best judgment and its approach as described in the Disclosure Document, and as refined and modified from time to time in the future in accordance herewith, for the period and on the terms and conditions set forth herein.  Only those individuals employed by the Trading Advisor and authorized by the Trading Advisor to do so are permitted to implement trades for the Company.  The most recent list of these individuals will be found on the Financial Services Authority (and/or its successor’s) website.    Notwithstanding the foregoing, the Company or the Manager may override the trading instructions of the Trading Advisor to the extent necessary to comply with applicable law, including speculative position limits. The Trading Advisor will have no liability for the results of the Company’s or the Manager’s decision to override the Trading Advisor’s trading instructions.

 

For any trade where the Trading Advisor has received no specific instructions from the Company or the Manager, the Trading Advisor shall arrange for the execution of such trade in accordance with the terms of this Agreement and the Trading Advisor’s best execution policy, a summary of which is included in Appendix B.  The Company and the Manager each acknowledge that they have read the Trading Advisor’s best execution policy as set forth in Appendix B.  The Company and the Manager acknowledge that the aggregation of transactions may on occasion operate to the Company’s disadvantage.

 

3

 

The Company and the Manager both specifically acknowledge that in agreeing to manage the Company, the Trading Advisor is not making any guarantee of profits or of protections against loss.

 

The Trading Advisor shall give the Company and the Manager prompt written notice of any proposed material change in the Program or the manner in which trading decisions are to be made or implemented and shall not make any such proposed material change with respect to trading for the Company without having given the Company and the Manager at least 30 days’ prior written notice of such change.  The addition and/or deletion of commodity interests from the Company’s portfolio managed by the Trading Advisor shall not be deemed a change in the Trading Advisor’s trading approach and prior written notice to the Company or the Manager shall not be required therefor, provided that, with respect to the Company, the Trading Advisor may trade a different trading program in managing the Company only with the consent of the Manager.

 

(b)                                 List of Commodity Interests Traded by the Trading Advisor.  The Trading Advisor shall provide two weeks’ advance notification via email of any additions to the list of commodity interests which it intends to trade on the Company’s behalf, provided that the Trading Advisor shall only add commodity interests to the list that are (i) eligible for offer and sale in the United States or to U.S. persons and (ii) able to be cleared by the Company’s Clearing Broker (as defined below).

 

(c)                                  Investment of Assets Held in Securities and Cash.  Notwithstanding any provision of this Agreement to the contrary, the Company and the Manager, and not the Trading Advisor, shall have the sole and exclusive authority and responsibility with regard to the investment, maintenance and management of the Company’s assets other than in respect of the Trading Advisor’s trading of the Company’s assets in commodity interests.

 

(d)                                 Trading Authorization.  Prior to the Company’s acceptance of trading advice from the Trading Advisor in accordance with this Agreement, the Company shall deliver to the Trading Advisor a trading authorization in the form of Appendix A hereto appointing the Trading Advisor as an agent of the Company and attorney-in-fact for such purpose.

 

(e)                                  Delivery of Disclosure Documents.  The Trading Advisor shall, during the term of this Agreement, deliver to the Company copies of all updated confidential private placement memoranda, or supplements thereto, for CCP Core Macro Fund, promptly following preparation of such documents.

 

(f)                                   Trade Reconciliations.  The Trading Advisor acknowledges its obligation to review its commodity interest positions on a daily basis and to notify the Company and the Manager promptly of any errors committed by the Trading Advisor or any trade which the Trading Advisor believes was not executed in accordance with its instructions and which cannot be promptly resolved; provided that such error involves an amount that is at least two basis points of the Company’s net assets at the time such error occurred.  The Trading Advisor will use its own systems and that of NAV consulting to evaluate trade and portfolio information until it receives the necessary information from the Company, upon which time the Trading Advisor will use the information from the Company to evaluate the trade and portfolio information.

 

4

 

(g)                                  Trade Information.   The Trading Advisor shall use reasonable efforts to provide trade information to OMR Systems by electronic file by 4:30 p.m. on the date of any trade made on behalf of the Company.

 

3.                                      Trading Advisor Independent.  For all purposes of this Agreement, the Trading Advisor shall be deemed to be an independent contractor and shall have no authority to act for or represent the Company in any way and shall not otherwise be deemed to be an agent of the Company.  Nothing contained herein shall create or constitute the Trading Advisor and any other trading advisor for the Company, the Global Horizons Fund or the Manager as a member of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, nor shall this Agreement be deemed to confer on any of them any express, implied, or apparent authority to incur any obligation or liability on behalf of any other.  The parties acknowledge that the Trading Advisor has not been an organizer or promoter of the Global Horizons Fund.

 

4.                                      Commodity Broker; Floor Brokers.

 

(a)                                 Clearing of All Trades.  The Trading Advisor shall clear orders for all commodity interest transactions for the Company through such commodity broker or brokers as the Company shall designate from time to time in its sole discretion (the “Clearing Broker”).  The Trading Advisor will also trade on a “give up” basis through floor brokers.  All such trades will be “given-up” to be carried by the Clearing Broker.  The Trading Advisor shall receive copies of all daily and monthly brokerage statements for the Company directly from the Clearing Broker.

 

The parties acknowledge that the Trading Advisor has no authority or responsibility for selecting the Clearing Broker or for the negotiation of Clearing Broker commission rates.  If necessary for the Trading Advisor to trade pursuant to the Program, the Company shall provide adequate dealing lines of credit for the Trading Advisor to place orders for spot and forward currency contracts on behalf of the Company.

 

(b)                                 Forward Trading.  All forward trades for the Company shall be executed through the forward dealer(s) (which may be affiliates of the Manager) selected by the Trading Advisor, provided said trades are “given-up” to the Clearing Broker.

 

(c)                                  Floor Brokerage.  Notwithstanding Section 4(a) of this Agreement, the Trading Advisor may place orders for commodity interest transactions for the Company through floor brokers selected by the Trading Advisor.  Such floor brokers shall “give up” all trades on behalf the Company to the Clearing Broker for clearance.

 

The brokerage and floor commissions, “give-up” fees and other transaction costs charged by any floor broker to effect Company transactions shall be competitive with the Clearing Broker’s standard rates.

 

5

 

5.                                      Allocation of Company Assets to Trading Advisor; Allocation of Receipts and Charges.

 

(a)                                 The Manager has allocated a portion of the assets of the BlackRock Vehicles to the Company to be managed in accordance with the terms of this Agreement.  The Manager may, in its sole discretion, reallocate BlackRock Vehicles’ assets by contributing to or withdrawing amounts from the Company as of any month-end. The Company may withdraw amounts from the Clearing Broker Accounts as of any month-end, including to fund any distributions or redemptions of interests to be made by the Company and/or to pay the Company’s expenses; provided that the Company and the Manager shall provide the Trading Advisor three days’ notice so that the Trading Advisor may liquidate positions as may be necessary to satisfy such withdrawals. The Trading Advisor will have no liability for following the instructions of the Company and/or the Manager in connection with such withdrawals.

 

(b)                                 A separate memorandum account (each such account, an “Account”) shall be maintained on the books of the Company with respect to each BlackRock Vehicle’s interest in the Company (or in respect of different portions of a BlackRock Vehicle’s interest in the Company) managed by the Trading Advisor and shall be increased or decreased for allocations, reallocations, and the allocation of gains and receipts, losses and charges (including the Incentive Fee and the Management Fee (as defined below)) with respect to such Account.

 

(c)                                  Gains and receipts (e.g., trading profits and, in some instances, interest income), losses and charges (e.g., trading losses, Trading Advisor management fees, incentive fees and brokerage commissions) specific to the Company shall be allocated to the BlackRock Vehicles’ Accounts on a pro rata basis based on the value of each BlackRock Vehicle Account at the beginning of the applicable fiscal period, before reduction for any Incentive Fee (as defined herein).

 

(d)                                 With respect to the Global Horizons Fund, gains and receipts, losses and charges not specific to (i) the Company or (ii) any other company or account held by the Global Horizons Fund and managed by a specific trading advisor (e.g., certain interest income and distributions attributable to the Global Horizons Fund) (“Non-Specific Items”), shall be allocated among all of the companies and accounts held by the Global Horizons Fund that are managed by the different trading advisors, including the Global Horizon Fund’s Account with the Company, pro rata based on the beginning of the month value of each such company and account after reduction for account specific charges.

 

(e)                                  The value of each BlackRock Vehicle’s Account after taking into account all realized and unrealized gains and losses, and with respect to Global Horizons Fund’s Account, the Non-Specific Items referenced in clause (d) above, and after taking into account the Management Fee, is the “Mark-to-Market Value” of each BlackRock Vehicle’s Account.

 

(f)                                   The value of a BlackRock Vehicle’s Account determined by deducting from the Mark-to-Market Value of such BlackRock Vehicle’s Account, all charges and reserves (including but not limited to, in the case of Global Horizons Fund, (i) the charges specific to Global Horizons Fund’s Account provided for in Section 5(d), and (ii) a pro rata share (based upon the value of Global Horizons Fund’s Account and each other company and account of the Global Horizons Fund) of distribution fees, transfer agent fees, administrator’s fees, brokerage

 

6

 

commissions and sponsor fees) except any charges or accruals for the fees provided for in Section 6 is a BlackRock Vehicle’s Account’s “Net Asset Value Before Fees.” For the avoidance of doubt, for the purpose of calculating the Incentive Fee in Section 6(b), [ ]*.

 

6.                                      Fees.

 

(a)                                 Management Fee.  Within approximately ten business days of each calendar month-end, the Company will pay the Trading Advisor a Management Fee in respect of each BlackRock Vehicle’s Account equal to a [ ]* management fee and a [ ]* NAV consulting fee of the month-end Net Asset Value Before Fees of each such BlackRock Vehicle’s Account (collectively, the “Management Fee”).

 

(b)                                 Incentive Fee.

 

(i)                                             The Company will pay an incentive fee (the “Incentive Fee”) to the Trading Advisor, in respect of each BlackRock Vehicle’s Account, on a calendar quarter basis (“Incentive Fee Calculation Date”), equal to [ ]* of the New Trading Profit (as defined herein) of such BlackRock Vehicle’s Account as of such Incentive Fee Calculation Date.  The Incentive Fee will be waived in respect of any New Trading Profit for the period beginning April 1, 2013 and ending  December 31, 2013 for any investments made on or prior to April 1, 2013 (the “Initial Investment”) (the “Initial Investment Incentive Fee Waiver Period”).  For the avoidance of doubt any investments made after April 1, 2013 will be subject to Incentive Fees from the date of investment. The first Incentive Fee Calculation Date for monies invested after April 1, 2013 (but prior to June 30, 2013) will be June 30, 2013 and will be calculated for the period beginning April 2, 2013 (or the date of investment, if after April 1, 2013) and ending June 30, 2013. The first Incentive Fee Calculation Date for the Initial Investment will be March 31, 2014, for the period January 1, 2014 to March 31, 2014. The opening High Water Mark for the Initial Investment will be the value of the relevant investment on January 1, 2014, and will be adjusted subsequent to that point in the manner set out below.

 

(ii)                                          Subject to the adjustments contemplated below, “New Trading Profit” shall mean any increase in the Mark-to-Market Value of a BlackRock Vehicle’s Account as of the current Incentive Fee Calculation Date over the High Water Mark (as defined herein) attributable to such BlackRock Vehicle’s Account.  New Trading Profit will be calculated prior to reduction [ ]*.

 

(iii)                                       The High Water Mark attributable to a BlackRock Vehicle’s Account shall be equal to the highest value of such BlackRock Vehicle’s Account (for the avoidance of doubt, after reduction for the Incentive Fee then paid), as of any preceding Incentive Fee Calculation Date.  For investments made after April 1, 2013 and the Initial Investment once the Initial Investment Fee Waiver Period has terminated, the High Water Mark attributable to a BlackRock Vehicle’s Account shall be increased dollar-for-dollar by any capital allocated to the Company by such BlackRock Vehicle and decreased proportionately when capital is reallocated away from the Company (other than to pay expenses) by such BlackRock Vehicle.  The amount of the High Water Mark after giving effect to the proportionate reduction

 

7

 

made as a result of a reallocation shall be calculated by multiplying the High Water Mark of such BlackRock Vehicle’s Account in effect immediately prior to such reallocation by a fraction the numerator of which is the value of such BlackRock Vehicle’s Account immediately following such reallocation and the denominator of which is the value of such BlackRock Vehicle’s Account immediately before such reallocation.  Notwithstanding the foregoing, if a BlackRock Vehicle reinvests assets from another vehicle or account (the “Other Account”) managed by the Trading Advisor or its affiliates in the Company, then the initial High Water Mark attributable to such BlackRock Vehicle’s Account shall be the high water mark applicable to such BlackRock Vehicle’s assets in the Other Account determined as of the date of reinvestment in the Company.

 

(iv)                                      If an Incentive Fee is paid as of an Incentive Fee Calculation Date in respect of a BlackRock Vehicle’s Account, the High Water Mark of such BlackRock Vehicle’s Account is reset to the value of the BlackRock Vehicle’s Account immediately following such payment.

 

(v)                                         When there is an accrued Incentive Fee in respect of a BlackRock Vehicle’s Account at any time any reallocation from the Company by a BlackRock Vehicle is made, the Incentive Fee attributable to such reallocation will be paid.  Such Incentive Fee shall be determined by multiplying the Incentive Fee that would have been paid in respect of such BlackRock Vehicle’s Account had the date of the reallocation been an Incentive Fee Calculation Date by a fraction the numerator of which is the amount of the reallocation by such BlackRock Vehicle and the denominator of which is the value of the BlackRock Vehicle’s Account immediately prior to the reallocation, in each case prior to reduction for the accrued Incentive Fee.  Such Incentive Fee will be paid from and reduce the amount of the reallocation by such BlackRock Vehicle.

 

(vi)                                      Interest shall not be included in any of the foregoing calculations.  For the avoidance of doubt, no Incentive Fee shall be payable on any interest income earned by a BlackRock Vehicle.

 

(vii)                                   Termination of this Agreement shall be treated as an Incentive Fee Calculation Date.

 

7.                                      Term and Termination.

 

(a)                                 Term and Renewal.  This Agreement shall continue in effect until December 31, 2013.  Thereafter, this Agreement shall be automatically renewed for successive one-year periods, on the same terms, unless terminated by either the Trading Advisor or the Company upon 90 days’ notice to the other party.

 

(b)                                 Termination.  Notwithstanding Section 7(a) hereof, this Agreement shall terminate:

 

(i)                                             immediately if the Company shall terminate and be dissolved in accordance with the Limited Liability Company Agreement or otherwise;

 

(ii)                                          at the discretion of the Manager as of the end of any month;

 

8

 

(iii)             at the discretion of the Trading Advisor, as of the following month-end, should any of the following occur:  (1) the assets managed by the Trading Advisor decrease to less than [ ]* at the close of business on any day; or (2) the Trading Advisor has determined to cease managing any customer accounts pursuant to the Program; or

 

(iv)             at the discretion of the Trading Advisor as of the end of any month upon 90 days’ prior written notice to the Manager.

 

8.             Right to Advise Others; Uniformity of Acts and Practices.

 

(a)           During the term of this Agreement, the Trading Advisor and its affiliates shall be free to advise other investors as to the purchase and sale of commodity interests, to manage and trade other investors’ commodity interests accounts and to trade for and on behalf of their own proprietary commodity interests accounts.  However, under no circumstances shall the Trading Advisor or any of its affiliates favor any commodity interests account directed by any of them (regardless of the date on which they began or shall begin to direct such account) over the Company’s account, giving due consideration to the trading program which the Manager has requested the Trading Advisor to trade on behalf of the Company.  For purposes of this Agreement, the Trading Advisor and its affiliates shall not be deemed to be favoring another commodity interests account over the Company’s account (i) if the Trading Advisor or its affiliates, in accordance with specific instructions of the owner of such account, trade such account at a degree of leverage or in accordance with trading policies which shall be different from that which shall normally be applied to substantially all of the Trading Advisor’s other accounts, (ii) if the Trading Advisor or its affiliates, in accordance with the Trading Advisor’s money management principles, shall not trade certain commodity interests contracts for an account based on the amount of equity in such account or (iii) if the Trading Advisor allocates and executes trades in accordance with its best execution and allocation policies and procedures and such trades result in certain accounts receiving favorable treatment over others (including the Company) with respect to certain trades; provided further that such trading activity does not result in a consistent pattern over time demonstrating that any other account or accounts are being favored over the Company under such policies and procedures.

 

(b)           The Trading Advisor understands and agrees that it and its affiliates shall have a fiduciary responsibility to the Company under this Agreement.

 

(c)           At the request of the Company, the Trading Advisor and its affiliates shall promptly make available to the Company (if available to it without unreasonable efforts) copies of such written reports delivered by the Trading Advisor or its affiliates as are required to be delivered to fund investors pursuant to the CEA and similar previously-prepared written information (subject to the need to preserve the confidentiality of proprietary information concerning the Trading Advisor’s trading systems, methods, models, strategies and formulas and the identity of the Trading Advisor’s clients).

 

(d)           The Company and the Manager acknowledge that different accounts, even though traded according to the same investment program, can have varying investment results. The reasons for this include numerous material differences among accounts, but not limited to: (a) the periods during which accounts are active; (b) the investment program used (although all accounts may be traded in accordance with the same approach, such approach may be modified

 

9

 

periodically as a result of ongoing research and development by the Trading Advisor); (c) leverage employed; (d) the size of the account, which can influence the size of positions taken and restrict the account from participating in all markets available to an investment program; (e) the amount of interest income earned by an account, which will depend on the rates paid by a broker on equity deposits and/or on the portion of an account invested in interest-bearing obligations such as U.S. Treasury Bills; (f) the amount of management fees and performance fees and the brokerage commissions paid; (g) the timing of orders to open or close positions; (h) the market conditions, which in part determine the quality of trade executions; (i) trading instructions/restrictions of the client; (j) procedures governing the timing for the commencement of trading and the method of moving toward full portfolio commitment for new accounts; (k) variation in fill prices; and (l) the timing of additions and withdrawals.  The Company and the Manager acknowledge that the aggregation of transactions may on occasions operate to the Company’s disadvantage.

 

9.             Speculative Position Limits.  If the Trading Advisor (either alone or aggregated with the positions of any other person if such aggregation shall be required by the CEA, the CFTC or any other regulatory authority having jurisdiction) shall exceed or be about to exceed applicable limits in any commodity interest traded for the Company, the Trading Advisor shall immediately take such action as the Trading Advisor may deem fair and equitable to comply with the limits, and shall immediately deliver to the Company a written explanation of the action taken to comply with such limits.  If such limits are exceeded by the Company, the Manager may require the Trading Advisor to liquidate positions as required.

 

10.          Additional Undertakings by the Trading Advisor.  Neither the Trading Advisor nor its employees, affiliates or agents, the stockholders, directors, officers, employees, principals, affiliates or agents of such affiliates, or their respective successors or assigns shall:  (a) use or distribute for any purpose whatsoever any list containing the names and/or residential addresses of and/or other information about the investors of the BlackRock Vehicles, nor (b) directly solicit any investor in a BlackRock Vehicle for any business purpose whatsoever (unless such investor in a BlackRock Vehicle is already a client of the Trading Advisor).

 

11.          Representations and Warranties.

 

(a)           The Trading Advisor hereby represents and warrants to the other parties as follows:

 

(i)               The Trading Advisor is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization and in good standing in each other jurisdiction in which the nature or conduct of its business requires such qualification and the failure to be duly qualified would materially affect the Trading Advisor’s ability to perform its obligations under this Agreement. The Trading Advisor has full corporate, partnership or limited liability company (as the case may be) power and authority to perform its obligations under this Agreement.

 

(ii)              This Agreement has been duly and validly authorized, executed and delivered on behalf of the Trading Advisor and constitutes a valid, binding and enforceable agreement of the Trading Advisor in accordance with its terms.

 

10

 

(iii)             The Trading Advisor has all governmental, regulatory and commodity exchange licenses and approvals and has effected all filings and registrations with governmental and regulatory agencies required to conduct its business and to act as described herein or required to perform its obligations hereunder (including, without limitation, registration of the Trading Advisor as a commodity trading advisor under the CEA, and membership of the Trading Advisor as a commodity trading advisor in NFA), and the performance of such obligation will not violate or result in a breach of any provision of the Trading Advisor’s certificate of incorporation, by-laws or any agreement, instrument, order, law or regulation binding on the Trading Advisor.  The principals of the Trading Advisor are duly listed as such in the official records of the NFA.

 

(iv)             Assuming the accuracy of the Manager’s representation in subsection 11(b)(vii) below, management by the Trading Advisor of an account for the Company in accordance with the terms hereof will not require any registration under, or violate any of the provisions of, the Investment Advisers Act of 1940 (assuming that the Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Company Act”)).

 

(v)              The Trading Advisor’s implementation of its trading program on behalf of the Company will not infringe any other person’s copyrights, trademark or other property rights.

 

(vi)             The execution and delivery of this Agreement, the incurrence of the obligations herein set forth and the consummation of the transactions contemplated herein will not constitute a breach of, or default under, any instrument by which the Trading Advisor is bound or any order, rule or regulation application to the Trading Advisor of any court or any governmental body or administrative agency having jurisdiction over the Trading Advisor.

 

(vii)            Other than as may have been disclosed in writing to the Manager by the Trading Advisor, there is not pending, or to the best of the Trading Advisor’s knowledge threatened, any action, suit or proceeding before or by any court or other governmental body to which the Trading Advisor is a party, or to which any of the assets of the Trading Advisor is subject, which might reasonably be expected to result in any material adverse change in the condition, financial or otherwise, business or prospects of the Trading Advisor.  The Trading Advisor has not received any notice of an investigation or warning letter from NFA or CFTC regarding non-compliance by the Trading Advisor with the CEA or the regulations thereunder.

 

(b)           The Manager hereby represents and warrants to the other parties as follows:

 

(i)               The Manager is duly organized and validly existing and in good standing under the laws of its jurisdiction of formation and in good standing under the laws of each other jurisdiction in which the nature or conduct of its business requires such qualification and the failure to so qualify would materially adversely affect the Manager’s ability to perform its obligations hereunder.

 

(ii)              The Manager has the power and authority under applicable law to perform its obligations hereunder.

 

11

 

(iii)             This Agreement has been duly and validly authorized, executed and delivered by the Manager and constitutes a legal, valid and binding agreement of the Manager enforceable in accordance with its terms.

 

(iv)             The execution and delivery of this Agreement, the incurrence of the obligations set forth herein and the consummation of the transactions contemplated herein will not constitute a breach of, or default under, any instrument by which the Manager is bound or any order, rule or regulation applicable to the Manager of any court or any governmental body or administrative agency having jurisdiction over the Manager.

 

(v)              There is not pending, or, to the best of the Manager’s knowledge threatened, any action, suit or proceeding before or by any court or other governmental body to which the Manager is a party, or to which any of the assets of the Manager is subject, which might reasonably be expected to result in any material adverse change in the condition (financial or otherwise), business or prospects of the Manager or is required to be disclosed pursuant to applicable CFTC regulations.

 

(vi)             The Manager has all governmental, regulatory and commodity exchange approvals and licenses, and has effected all filings and registrations with governmental agencies required to conduct its business and to act as described herein or required to perform its obligations hereunder (including, without limitation, registration as a commodity pool operator under the CEA and membership in NFA as a commodity pool operator), and the performance of such obligations will not contravene or result in a breach of any provision of its certificate of incorporation, by-laws or any agreement, order, law or regulation binding upon it.  The principals of the Manager are duly registered as such on the Manager’s commodity pool operator Form 7-R registration.       The Global Horizons Fund is a “Qualified Eligible Person” as that term is defined in Rule 4.7 of the CEA.

 

(vii)            The Company is not an “investment company” within the meaning of the Company Act.

 

(viii)           The Company and the Manager acknowledge receipt of the Disclosure Document and acknowledge and agree that they have read and understand the information provided in the Disclosure Document regarding the investment strategy, disclosures and risks contained therein.

 

(c)           The Company represents and warrants to the other parties as follows:

 

(i)               The Company is duly organized and validly existing and in good standing as a limited liability company under the laws of the State of Delaware and in good standing under the laws of each other jurisdiction in which the nature or conduct of its business requires such qualification and the failure to so qualify would materially adversely affect the Company’s ability to perform its obligations hereunder.

 

(ii)              The Company has the limited liability company power and authority under applicable law to perform its obligations hereunder.

 

12

 

(iii)             This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a legal, valid and binding agreement of the Company enforceable in accordance with its terms.

 

(iv)             The execution and delivery of this Agreement, the incurrence of the obligations set forth herein and the consummation of the transactions contemplated herein will not constitute a breach of, or default under, any instrument by which the Company is bound or any order, rule or regulation applicable to the Company of any court or any governmental body or administrative agency having jurisdiction over the Company.

 

(v)              There is not pending, or, to the best of the Company’s knowledge, threatened, any action, suit or proceeding before or by any court or other governmental body to which the Company is a party, or to which any of the assets of the Company is subject, which might reasonably be expected to result in any material adverse change in the condition (financial or otherwise), business or prospects of the Company or which is required to be disclosed pursuant to applicable CFTC regulations.

 

(vi)             The Company has all governmental, regulatory and commodity exchange approvals and licenses, and has effected all filings and registrations with governmental agencies required to conduct its business and to act as described herein or required to perform its obligations hereunder and the performance of such obligations will not contravene or result in a breach of any provision of its certificate of formation, limited liability company agreement or any other agreement, order, law or regulation binding upon it.

 

(d)           The foregoing representations and warranties shall be continuing during the entire term of this Agreement and, if at any time, any event shall occur which would make any of the foregoing representations and warranties of any party no longer true and accurate, such party shall promptly notify the other parties.

 

12.          Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and no other agreement, verbal or otherwise, shall be binding as between the parties unless it shall be in writing and signed by the party against whom enforcement is sought.

 

13.          Indemnification.

 

(a)           The Company shall indemnify, defend and hold harmless the Trading Advisor and its affiliates and their respective directors, officers, shareholders, employees and controlling persons from and against any and all losses, claims, damages, liabilities (joint and several), costs and expenses (including any investigatory, legal and other expenses incurred in connection with, and any amounts paid in, any settlement; provided that the Company shall have approved such settlement) resulting from a demand, claim, lawsuit, action or proceeding relating to any of such person’s actions or capacities relating to the business or activities of the Company pursuant to this Agreement; provided that the conduct of such person which was the subject of the demand, claim, lawsuit, action or proceeding did not constitute negligence, misconduct or a breach of this Agreement or of any fiduciary obligation to the Company.  The termination of any demand, claim, lawsuit, action or proceeding by settlement shall not, in itself, create a

 

13

 

presumption that the conduct in question was not undertaken in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the Company.

 

(b)           The Trading Advisor shall indemnify, defend and hold harmless the Company, the Manager, their respective affiliates and their respective directors, officers, shareholders, employees and controlling persons from and against any and all losses, claims, damages, liabilities (joint and several), costs and expenses (including any reasonable investigatory, legal and other expenses incurred in connection with, and any amounts paid in, any settlement; provided that the Trading Advisor shall have approved such settlement) resulting from a demand, claim, lawsuit, action or proceeding relating to any action or omission of the Trading Advisor or any of its respective officers, directors or employees relating to the business or activities of such person under this Agreement or relating to the management of an account of the Company provided:  the action or omission of such person which was the subject of the demand, claim, lawsuit, action or proceeding constituted negligence or misconduct or a breach of this Agreement or was an action or omission taken otherwise than in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the Company.

 

(c)           The Trading Advisor, its officers, directors, employees and shareholders shall not be liable to the Company and its officers, directors or members or to any of their successors or assigns except by reason of acts or omissions in contravention of the express terms of this Agreement, or due to their intentional misconduct or negligence.

 

(d)           The foregoing agreements of indemnity shall be in addition to, and shall in no respect limit or restrict, any other remedies which may be available to an indemnified party.

 

(e)           Any indemnification required by this Section 13 unless ordered or expressly permitted by a court, shall be made by the indemnifying party only upon a determination by independent legal counsel mutually agreeable to the parties hereto in a written opinion that the conduct which is the subject of the claim, demand, lawsuit, action or proceeding with respect to which indemnification is sought meets the applicable standard set forth in this Section 13.

 

(f)            In the event that a person entitled to indemnification under this Section 13 is made a party to an action, suit or proceeding alleging both matters for which indemnification may be due hereunder and matters for which indemnification may not be due hereunder, such person shall be indemnified only in respect of the former matters.

 

(g)           Promptly after receipt by any of the indemnified parties under this Agreement of notice of any demand, claim, lawsuit, action or proceeding, the indemnified party shall notify the indemnifying party in writing of the commencement thereof if a claim for indemnification in respect thereof is to be made under this Agreement.  Except to the extent that the indemnifying party is not materially prejudiced thereby, the omission so to notify shall relieve the indemnifying party from any obligation or liability which it may have to any such indemnified party under this section.  In the event that such demand, claim, lawsuit, action or proceeding is brought against a person entitled to be indemnified under this Agreement, and the indemnifying party is notified of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that the indemnifying party may wish, to assume the defense thereof, with counsel selected by the indemnifying party and approved by the

 

14

 

indemnified person (provided that approval may not be unreasonably withheld), and after notice from the indemnifying party to such indemnified person of the indemnifying party’s election so as to assume the defense thereof, the indemnifying party shall not be liable to such person under this section for any legal or other expenses subsequently incurred by such person in connection with the defense thereof, unless the indemnifying party approves the employment of separate counsel by such person (it being understood, however, that the indemnifying party shall not be liable for legal or other expenses of more than one separate firm of attorneys for all such persons indemnified hereunder, which firm shall be designated in writing by the Trading Advisor or the Company, as the case may be).

 

14.          Assignment.  This Agreement shall not be assigned by any of the parties hereto without the prior express written consent of the other parties hereto; provided, that either party may assign this agreement to an affiliate upon prior notice to the other party.

 

15.          Amendment; Waiver.  This Agreement shall not be amended except by a writing signed by the parties hereto.  No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its rights hereunder on any occasion or series of occasions.

 

16.          Severability.  If any provision of this Agreement, or the application of any provision to any person or circumstance, shall be held to be inconsistent with any present or future law, ruling, rule or regulation of any court or governmental or regulatory authority having jurisdiction over the subject matter hereof, such provision shall be deemed to be rescinded or modified in accordance with such law, ruling, rule or regulation, and the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it shall be held inconsistent, shall not be affected thereby.

 

17.          Notices.  Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered by courier service, facsimile, postage prepaid mail or other similar means and shall be effective upon actual receipt by the party to which such notice shall be directed, addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof):

 

if to the Company or the Manager:

 

CAMBRIDGE GLOBAL HORIZONS, LLC

c/o BlackRock Investment Management LLC

40 East 52nd Street

25th Floor

New York, NY 10022

Attn:  Edward A. Rzeszowski

Facsimile:  212-810-8745

 

with a copy to:

 

BlackRock Investment Management, LLC

Princeton Corporate Campus

800 Scudders Mill Road — Section 1B

 

15

 

Plainsboro, New Jersey  08536

Attn:  Michael Pungello

Facsimile:  609-282-2664

 

with a further copy to:

BlackRock Alternative Advisors

601 Union Street, 56th Floor

Seattle, Washington  98101

Attn:  Larry Gail

Facsimile:  206-225-2684

 

if to the Trading Advisor:

 

Cantab Capital Partners LLP

City House, Hills Road

Cambridge, CB2 1RE

United Kingdom

Attn:  Dr. Ewan Kirk

Facsimile:  44-122-375-5775

 

18.          Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law.

 

19.          Consent to Jurisdiction.  The parties hereto agree that any action or proceeding arising directly, indirectly or otherwise in connection with, out of, related to or from this Agreement, any breach hereof or any transaction covered hereby, shall be resolved, whether by arbitration or otherwise, within the County of New York, City of New York, and State of New York.  Accordingly, the parties consent and submit to the jurisdiction of the federal and state courts and any applicable arbitral body located within the County of New York, City of New York, and State of New York.  The parties further agree that any such action or proceeding brought by any party to enforce any right, assert any claim, or obtain any relief whatsoever in connection with this Agreement shall be brought by such party exclusively in federal or state courts, or if appropriate before any applicable arbitral body, located within the County of New York, City of New York, and State of New York.

 

20.          Remedies.  In any action or proceeding arising out of any of the provisions of this Agreement, the Trading Advisor, the Manager and the Company agree that they shall not seek any prejudgment equitable or ancillary relief.  Such parties also agree that their sole remedy in any such action or proceeding shall be to seek actual monetary damages for any breach of this Agreement; provided, however, that the Company agrees that the Trading  Advisor and the Manager may seek declaratory judgment with respect to the indemnification provisions of this Agreement.

 

21.          Promotional Material.  None of the parties hereto will make reference to any other such party in officially filed or publicly or privately distributed material without first

 

16

 

submitting such material to the party so named for approval a reasonable period of time in advance of the proposed use of such material.

 

22.          Confidentiality.  The Company and the Manager acknowledge that the Trading Advisor’s strategies and trades constitute proprietary data belonging to the Trading Advisor and agree that they will not disseminate any confidential information regarding any of the foregoing, except as required by law, and any such information as may be acquired by the Manager or the Company is to be used solely to monitor the Trading Advisor’s performance on behalf of the Company.

 

23.          Survival.  The provisions of this Agreement shall survive the termination hereof with respect to any matter arising while this Agreement shall be in effect.

 

24.          Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

25.          Headings.  Headings to sections and subsections in this Agreement are for the convenience of the parties only and are not intended to be a part of or to affect the meaning or interpretation hereof.

 

PURSUANT TO AN EXEMPTION FROM THE U.S. COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH COMMODITY TRADING ADVISORS WHOSE CLIENTS ARE LIMITED TO QUALIFIED ELIGIBLE PERSONS, THIS DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE CFTC.  THE CFTC DOES NOT PASS UPON THE MERITS OF INVESTING WITH THE ADVISOR OR THE ACCURACY OF THE INFORMATION HEREIN.  THEREFORE, THE CFTC HAS NOT REVIEWED OR APPROVED THIS AGREEMENT.

 

*              *              *              *              *

 

17

 

IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of the undersigned on the day and year first written above.

 

	
 
    	
CAMBRIDGE   GLOBAL HORIZONS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
BLACKROCK   INVESTMENT MANAGEMENT, LLC,
    
	
 
    	
 
    	
its   Manager
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:   
    	
Robert   S. Ellsworth
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Larry   Gail
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BLACKROCK   INVESTMENT MANAGEMENT, LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Robert   S. Ellsworth
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Larry   Gail
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CANTAB   CAPITAL PARTNERS LLP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

18

 

APPENDIX A

 

COMMODITY TRADING AUTHORITY

 

Cantab Capital Partners LLP

Attn:  Dr. Ewan Kirk

Facsimile:  44-122-375-5775

 

Dear Cantab Capital Partners LLP:

 

Cambridge Global Horizons, LLC (the “Company”) does hereby make, constitute and appoint you as its attorney-in-fact to buy and sell commodity futures and forward contracts (including foreign futures and options contracts) in accordance with the Advisory Agreement between us and certain others.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
CAMBRIDGE   GLOBAL HORIZONS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
BLACKROCK   INVESTMENT MANAGEMENT, LLC,
    
	
 
    	
 
    	
its   Manager
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
Dated   as of March     , 2013
    	
 
    	
 
    
				

 

A-1

 

APPENDIX B

 

CERTAIN DISCLOSURES

 

FSA Disclosures

 

1.1                                        The Trading Advisor shall not be liable in respect of the negligence, wilful default or fraud or any other act or omission of any third party through whom transactions are effected pursuant to this Agreement or of any other third party having custody or possession of the Company’s assets from time to time, or of any stock exchange, data vendor, price feed provider, or clearance or settlement system or any other third party with whom the Trading Advisor deals in the course of business.

 

1.2                                        The Trading Advisor will not be liable for any loss arising directly or indirectly from trading errors or errors of fact or judgement or any action taken (or omitted to be taken) by it howsoever arising except to the extent that any such error or action (or the omission thereof) is due directly and exclusively to the Trading Advisor’s negligence, wilful default or fraud or that of it or any of its employees, directors, officers or other agents.

 

1.3                                        The Trading Advisor will not be liable to the Company for or in respect of any communication links, software or data produced or provided by any third party.

 

1.4                                        Except as expressly provided in this Agreement all warranties, representations, terms, conditions and guarantees, whether implied by law or otherwise, are expressly excluded by the Trading Advisor to the fullest extent permitted by law.

 

1.5                                        Nothing in this Agreement shall exclude or restrict any duty or liability to the that the Trading Advisor may have under the rules of the FSA, the CFTC, the NFA or any other regulatory or self-regulatory body with jurisdiction over the Trading Advisor, and neither party excludes liability for death or personal injury caused by the negligence of it, its employees or agents, or for fraud.

 

B-1

 

Best Execution Policy

 

Background

 

Firms generally seek to achieve best execution for their clients but must now document these execution arrangements to enable them to demonstrate how they comply with MiFID’s best execution requirements both when they place/transmit orders to a broker for execution or when they execute an order through Direct Market Access (“DMA”).  To meet these new obligations firms must develop a disclosure statement in order to meet the requirement to provide appropriate information to their clients on its execution policy.

 

Developing and maintaining a Disclosure Statement

 

On a day by day basis firms work hard with their brokers or through DMA to achieve the best possible execution result for their clients and so the starting point for the documentation of the best execution policy is a thorough understanding of how these arrangements work.  It is then a case of documenting how the factors set out below (to the extent relevant) have been taken into account in developing the current arrangements.  Where factors have not previously been fully taken into account there may be an opportunity to improve the execution arrangements.  Execution arrangements are dynamic and will change as brokers’ skills develop, venues open or close, new technology is developed etc.  It is in the best interests of firms to actively evaluate these changes and of course keep the execution policy up to date.  Firms must notify clients of any material changes to its execution policy or arrangements.  However, client consent to these changes is not required.

 

To develop/ maintain the disclosure statement the following steps will be relevant:

 

List the class of instruments in which the firm places/ transmits or executes client orders.

 

For each instrument list the execution venues or brokers to which client orders are directed for execution.

 

Execution criteria

 

For each execution venue (defined as a regulated market, MTF, systematic internaliser, market maker or other liquidity provider) or broker list the factors/reasons (with reference to the Execution Criteria) for the relevant venue or broker.

 

MiFID requires firms to obtain the best possible result (rather than merely the best price) and to take into account the following criteria for determining the relative importance of the execution factors for the client (or types of client) that the firm has:

 

(1) the characteristics of the client including the categorisation of the client as retail or professional;

 

(2) the characteristics of the client order (if there is a client order);

 

(3) the characteristics of financial instruments that are the subject of that client order;

 

B-2

 

(4) the characteristics of the execution venues/brokers to which that order can be directed.

 

Execution factors

 

A number of other factors can be into account when providing best execution to clients such as:

 

·                  Price

·                  Costs

·                  Speed

·                  Liquidity

·                  Settlement

·                  Client Objectives

·                  Order size / nature

·                  Venue

·                  Propensity to reject STP orders

·                  Accuracy of fill information / propensity of errors

·                  Availability of credit lines, creditworthiness

·                  Others as relevant

 

Monitoring

 

The firm shall monitor the effectiveness of the execution arrangements for each instrument traded with each broker or venue through an evaluation of the controls and related exceptions or through sample checks.  Such monitoring should be undertaken on the basis of the risk and impact on the client of the firm not meeting the relevant execution criteria.

 

When considered as a result of the above monitoring, the firm shall correct any deficiencies noted in execution arrangements.

 

Annual Review

 

Annually (or when material change occurs to the ability to obtain the best possible results for clients) firms should formerly review their execution arrangements considering whether the brokers / execution venues selected are providing the best possible result for its clients.  The review should consider whether information on which the order execution policy is based is manifestly accurate, complete and up to date.

 

Disclosure

 

These arrangements have been summarised in a “Best Execution Disclosure Statement” and a “Best Execution, Acknowledgement of Disclosure”.

 

The quality of execution

 

When buying and selling financial instruments on your behalf, we will take all reasonable steps to achieve the best overall result for you or “Best Execution”.  This involves considering the nature of your orders, and the market in question.

 

B-3

 

We will use our knowledge, experience and judgement to execute trades on your behalf taking into consideration a range of different factors that include not just price, but also the costs incurred in the transaction, the need for timely execution, the liquidity of the market, the size of the order and the nature of the financial transaction, including whether it is executed on a regulated market or over-the-counter.

 

We will use our knowledge of your circumstances and requirements to determine the factors that we need to take into account for the purpose of providing you with “Best Execution”.

 

Our commitment to provide you with Best Execution does not mean that we owe you any fiduciary responsibilities over and above the specific regulatory obligations placed upon us or as may be otherwise contracted between us.

 

Order Execution Policy

 

We have set out the criteria that determine how we select the different venues /brokers through which your order may be executed. We have identified those venues/brokers on which we will most regularly seek to execute/direct orders and which we believe offer the best prospects for affording you Best Execution. We will also assess, on a regular basis, the quality of execution afforded by those venues/brokers across our client base and whether we need to change our execution arrangements.

 

In selecting the most appropriate venues/brokers for the purpose of executing your orders, we will take into full account the factors relevant to the order, including those set out above:

 

(a) what we reasonably assess to be your best interests in terms of executing your orders; and

 

(b) such other factors as may be appropriate, including the ability of the venue/broker to manage complex orders, the speed of execution, the creditworthiness of the venue and the quality of any related clearing and settlement facilities.

 

Our policy, in providing you with Best Execution, is, so far as possible and subject to the processes set out below, to exercise the same standards and operate the same processes across all the different markets and financial instruments on which your orders are executed.  However, the diversity in those markets and instruments and the kind of orders that you may place with us mean that different factors will have to be taken into account when we assess the nature of our execution policy in the context of different instruments and different markets. For example, there is no formalised market or settlement infrastructure for over-the-counter transactions. In some markets, price volatility may mean that the timeliness of execution is a priority, whereas, in other markets that have low liquidity, the fact of execution may itself constitute best execution. In other cases, our choice of broker or venue may be limited (even to the fact that there may only be one platform/market upon which we can execute your orders) because of the nature of your order or of your requirements.

 

Set out below is a summary of the principal types of instruments on which we provide best execution, the brokers/ execution venues that we employ as well as the execution criteria we believe are important to you.

 

B-4

 

	
Instruments
    	
 
    	
Brokers/Execution   venues
    	
 
    	
Relevant   Execution Criteria (nb this may replicate what is in the policy or provide a   briefer summary)
    
	
Futures
    	
 
    	
DMA,   On exchange. Executed via GS, EDF Man, Newedge, ICAP Securities Ltd,   Deutsche Bank AG, Quantitative Brokers
    	
 
    	
Ability   to execute electronically / STP
   Propensity to reject STP orders
   Speed
   Execution cost (commissions)
   Accuracy of fill information / propensity of errors.
    
	
FX
    	
 
    	
OTC.   Executed via Barclays, Deutsche Bank, Goldman Sachs, Morgan Stanley, J P   Morgan, Newedge, Bank of America Merrill Lynch, HSBC, Nomura, Tullet Prebon,   UBS, The Royal Bank of Scotland plc, Credit Suisse AG London Branch, BNP   Paribas
    	
 
    	
Ability   to execute electronically / STP
   Propensity to reject STP orders
   Price
   Liquidity
   Speed
   Accuracy of fill information / propensity of errors.
   Availability of credit lines, creditworthiness.
    

 

We regularly evaluate these arrangements to ensure that they continue to be appropriate.

 

B-5

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