Document:

Exhibit 10.3

 

ARCH CAPITAL GROUP LTD.

 

Restricted Share Unit Agreement

 

THIS
AGREEMENT, dated as of May 9, 2008, between Arch Capital Group Ltd. (the “Company”),
a Bermuda company, and Mark Lyons (the “Employee”).

 

WHEREAS, the
Employee has been granted the following award under the Company’s 2007 Long
Term Incentive and Share Award Plan (the “Plan”);

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto agree as follows.

 

1.             Award
of Share Units.  Pursuant to the provisions of the Plan, the
terms of which are incorporated herein by reference, the Employee is hereby
awarded 8,350 Restricted Share Units (the “Award”), subject to the terms and
conditions herein set forth.  Capitalized
terms used herein and not defined shall have the meanings set forth in the
Plan.  In the event of any conflict
between this Agreement and the Plan, the Plan shall control.

 

2.             Terms
and Conditions.  It is understood and agreed that the Award of
Restricted Share Units evidenced hereby is subject to the following terms and
conditions:

 

(a)           Vesting
of Award.  Subject to Section 2(b) below
and the other terms and conditions of this Agreement, this Award shall become
vested in three equal annual installments on the first, second and third
anniversaries of the date hereof.  Unless
otherwise provided by the Company, all amounts receivable in connection with
any adjustments to the Shares under Section 4(c) of the Plan or Section 2(e) below
shall be subject to the vesting schedule in this Section 2(a).

 

(b)           Termination
of Service; Forfeiture of Unvested Share Units.

 

(i)           In the event the
Employee ceases to be an employee of the Company prior to the date the
Restricted Share Units otherwise become vested due to his or her death or
Permanent Disability (as defined in the Company’s Incentive Compensation Plan
on the date hereof), the Restricted Share Units shall become immediately vested
in full upon such termination of employment.

 

(ii)          In the event of
termination of employment (other than by the Company for Cause, as such term is
defined in the Company’s Incentive Compensation Plan on the date hereof) after
the attainment of Retirement Age (as defined in the Company’s Incentive
Compensation Plan on the date hereof), the Restricted Share Units shall
continue to vest on the schedule set forth in Section 2(a) above so
long as the Employee does not engage in any activity in competition with any
activity of the Company or any of its Subsidiaries other than serving on

 

 

the board of directors (or similar
governing body) of another company or as a consultant for no more than 26 weeks
per calendar year (“Competitive Activity”). 
In the event the Employee engages in a Competitive Activity, any unvested
Restricted Share Units shall be forfeited by the Employee and become the
property of the Company.

 

(iii)         In the event the
Employee ceases to be an employee of the Company after a Change in Control (as
defined below) due to termination (A) by the Company not for Cause or (B) by
the Employee for Good Reason (as defined in the Employment Agreement, dated as
of August 1, 2006, between the Employee and Arch Insurance Group Inc.), in
either case, on or before the second anniversary of the occurrence of the
Change in Control, the Restricted Share Units, to the extent not already
vested, shall become immediately vested in full upon such termination of employment.

 

(iv)        If the Employee ceases
to be an Employee of the Company for any other reason prior to the date the
Restricted Share Units become vested, the unvested Restricted Share Units shall
be forfeited by the Employee and become the property of the Company; provided
that, in the event of a Redundancy (as defined below), the Committee, in its
sole discretion, may, in accordance with its authority under the Plan, determine
that the Restricted Share Units, to the extent not vested, shall become vested
upon such termination of employment.

 

(v)         For purposes of this
Agreement, service with any of the Company’s Subsidiaries (as defined in the
Plan) shall be considered to be service with the Company.

 

(vi)        “Change in Control”
shall mean:

 

(A)                                 any person (within the
meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
other than a Permitted Person, is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting
Securities representing 50% or more of the total voting power or value of all
the then outstanding Voting Securities; or

 

(B)                                   the individuals who,
as of the date hereof, constitute the Board of Directors of the Company (the “Board”)
together with those who become directors subsequent to such date and whose
recommendation, election or nomination for election to the Board was approved
by a vote of at least a majority of the directors then still in office who
either were directors as of such date or whose recommendation, election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the members of the Board; or

 

2

 

(C)                                   the consummation of
a merger, consolidation, recapitalization, liquidation, sale or disposition by
the Company of all or substantially all of the Company’s assets, or
reorganization of the Company, other than any such transaction which would (x) result
in more than 50% of the total voting power and value represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being beneficially owned by the former shareholders of the Company
and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or
(B) of this paragraph.

 

“Permitted Persons” means (A) the Company; (B) any Related
Party; (C) Hellman & Friedman or any of its subsidiaries or
investment funds managed or controlled by Hellman & Friedman; (D) Warburg
Pincus or any of its subsidiaries or any investment funds managed or controlled
by Warburg Pincus or any of its subsidiaries; or (E) any group (as defined
in Rule 13b-3 under the Exchange Act) comprised of any or all of the foregoing.

 

“Related Party” means (A) a majority-owned subsidiary of the
Company; (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any majority-owned subsidiary of the
Company; or (C) any entity, 50% or more of the voting power of which is
owned directly or indirectly by the shareholders of the Company in
substantially the same proportion as their ownership of Voting Securities immediately
prior to the transaction.

 

“Voting Security” means any security of the
Company which carries the right to vote generally in the election of directors.

 

(vii)         “Redundancy”
shall mean termination of employment by the Company due to its need to reduce
the size of its workforce, including due to closure of a business or a
particular workplace or change in business process.  Whether a termination
of employment is due to a “redundancy” shall be determined by the Committee in
its sole and absolute discretion, such determination being final and binding on
all parties hereto and all persons claiming through, in the name of or on
behalf of such parties.

 

(c)           Distribution of Shares.  At the time the Employee ceases to be an employee
of the Company for any reason prior to attaining Retirement Age, the Company
shall

 

3

 

distribute to the Employee (or his or her heirs in the event of the
Employee’s death) a number of Shares equal to the number of vested Restricted
Share Units then held by the Employee. 
In the event the Employee ceases to be an employee of the Company after
attaining Retirement Age, a number of Shares equal to the number of vested
Restricted Share Units held by the Employee will be distributed by the Company
to the Employee (or his or her heirs in the event of the Employee’s death) at
the later of (i) the time the Employee ceases to be an employee of the Company,
and (ii) the date the Restricted Share Units are scheduled to vest
pursuant to the schedule set forth in Section 2(a) above (without
regard to any acceleration of such vesting), so long as the Restricted Share
Units are not forfeited before such time as provided in Section 2(b).

 

(d)           Rights
and Restrictions.  The Restricted Share Units shall not be
transferable, other than pursuant to will or the laws of descent and
distribution.  Prior to vesting of the
Restricted Share Units and delivery of the Shares to the Employee following his
termination of employment, the Employee shall not have any rights or privileges
of a shareholder as to the Shares subject to the Award.  Specifically, the Employee shall not have the
right to receive dividends or the right to vote such Shares prior to vesting of
the Award and delivery of the Shares.

 

(e)           Adjustments
for Recapitalization and Dividends. 
In the event that, prior to the distribution of Shares pursuant to Section 2(c) above,
any dividend in Shares, recapitalization, Share split, reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other such change affects the Shares such that they are
increased or decreased or changed into or exchanged for a different number or
kind of shares, other securities of the Company or of another corporation or
other consideration, then in order to maintain the proportionate interest of the
Employee and preserve the value of the Award, there shall automatically be
substituted for each Share subject to the Award the number and kind of shares,
other securities or other consideration (including cash) into which each
outstanding Share shall be changed or for which each such Share shall be
exchanged.

 

(f)            Dividend
Equivalents.  As of each date on
which a cash dividend is paid on Shares, there shall be granted to the Employee
that number of additional Restricted Share Units (including fractional units)
determined by (i) multiplying the amount of such dividend per Share by the
number of Restricted Share Units held by the Employee, and (ii) dividing
the total so determined by the Fair Market Value of a Share on the date of
payment of such cash dividend.  The
Restricted Share Units granted pursuant to this Section 2(f) will
have the same terms and conditions (including vesting dates) as the Restricted
Share Units with respect to which they are granted.

 

(g)           No
Right to Continued Employment.  This
Award shall not confer upon the Employee any right with respect to continuance
of employment by the Company nor shall this Award interfere with the right of
the Company to terminate the Employee’s employment at any time.

 

3.             Transfer
of Shares.  The Shares delivered
hereunder, or any interest therein, may be sold, assigned, pledged,
hypothecated, encumbered, or transferred or disposed of in any other manner, in
whole or in part, only in compliance with the terms, conditions and

 

4

 

restrictions as set forth in the governing instruments of the Company,
applicable United States federal and state securities laws or any other
applicable laws or regulations and the terms and conditions hereof.

 

4.             Expenses
of Issuance of Shares.  The issuance
of stock certificates hereunder shall be without charge to the Employee.  The Company shall pay any issuance, stamp or
documentary taxes (other than transfer taxes) or charges imposed by any
governmental body, agency or official (other than income taxes) or by reason of
the issuance of Shares.

 

5.             Withholding.  The Employee shall pay to the Company or make
arrangements satisfactory to the Committee regarding payment of any federal,
state or local taxes of any kind required by law to be withheld with respect to
the Award and the Company shall, to the extent permitted or required by law,
have the right to deduct from any payment of any kind otherwise due to the Employee,
federal, state and local taxes of any kind required by law to be withheld.

 

6.             References.  References
herein to rights and obligations of the Employee shall apply, where
appropriate, to the Employee’s legal representative or estate without regard to
whether specific reference to such legal representative or estate is contained
in a particular provision of this Agreement.

 

7.             Notices.  Any
notice required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or by
courier, or sent by certified or registered mail, postage prepaid, return
receipt requested, duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently by
similar process give notice of:

 

If to the Company:

 

Arch Capital Group Ltd.

Wessex House, 4th Floor

45 Reid Street

Hamilton HM 12 Bermuda 

Attn.: Secretary

 

If to the Employee:

 

To the last address delivered to the Company by the
Employee in the manner set forth herein.

 

8.             Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of New York, without giving effect to principles of
conflict of laws.

 

9.             Entire
Agreement.  This Agreement and the
Plan constitute the entire agreement among the parties relating to the subject
matter hereof, and any previous agreement or

 

5

 

understanding among the parties with respect thereto is superseded by
this Agreement and the Plan.

 

10.           Counterparts.  This
Agreement may be executed in two counterparts, each of which shall constitute
one and the same instrument.

 

11.           Section 409A.  It is intended that this Agreement and the
Award will comply with Section 409A of the Code (and any regulations and
guidelines issued thereunder), to the extent the Agreement and Award are
subject thereto, and the Agreement shall be interpreted on a basis consistent
with such intent.  If an amendment of the
Agreement is necessary in order for it to comply with Section 409A, the
parties hereto will negotiate in good faith to amend the Agreement in a manner
that preserves the original intent of the parties to the extent reasonably
possible.  Notwithstanding any provision
of this Agreement to the contrary, for purposes of this Agreement, the Employee’s
employment will be deemed to have terminated on the date of the Employee’s “separation
from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with
the Company.  Notwithstanding any
provision to the contrary in this Agreement, if the Employee is deemed on the
date of his or her “separation from service” (within the meaning of Treas. Reg.
Section 1.409A-1(h)) to be a “specified employee” (within the meaning of
Treas. Reg. Section 1.409A-1(i)), then with regard to any payment that is
required to be delayed pursuant to Section 409A(a)(2)(B) of the Code
(after taking into account any applicable exceptions to such requirement), such
payment shall not be made prior to the earlier of (i) the expiration of
the six (6)-month period measured from the date of the Employee’s “separation
from service,” or (ii) the date of the Employee’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all
payments delayed pursuant hereto (whether they would have otherwise been
payable in a single sum or in installments in the absence of such delay) shall
be paid to the Employee in a lump sum and any remaining payments due under this
Agreement shall be paid in accordance with the normal payment dates specified
for them herein.  No action or failure to
act, pursuant to this Section 11 shall subject the Company to any claim,
liability, or expense, and the Company shall not have any obligation to
indemnify or otherwise protect the Employee from the obligation to pay any
taxes, interest or penalties pursuant to Section 409A of the Code.

 

6

 

IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first above written.

 

	
   

  	
  ARCH CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dawna Ferguson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /a/ Mark D. Lyons

  
	
   

  	
  Mark D. Lyons

  

 

7Exhibit 10.2

 

	
  

  
  

  	
   

   

  UBS
  Bank USA

  
	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
  Credit Line Account
  Application and 

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Agreement for
  Organizations and Businesses

  	
  HB

  	
   

  	
  Internal Use Only

  

 

	
  For
  Internal Use Only

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Variable
  Credit Line Account at UBS Bank USA

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARQULE
  INC

  	
   

  	
  5V

  	
   

  	
  04442

  	
   

  	
  CP

  
	
   

  Fixed
  Credit Line Account at UBS Bank USA

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5F

  	
   

  	
   

  	
   

  	
   

  

 

Collateral Account(s) at UBS Financial Services Inc.

 

Insert
the information below for each UBS Financial Services Inc. account to be
pledged to secure the Borrower’s credit line.

 

	
  Full Collateral (Securities)
  Account Title

  	
   

  	
  Branch

  	
   

  	
  Account
  Number

  	
   

  	
  FA#

  	
   

  
	
  1)   ARQULE
  INC

  	
   

  	
  CP

  	
   

  	
  29354

  	
   

  	
  CP16

  	
   

  
	
  2)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Credit Line Account

 

Select
the type of credit line account:

x  Variable
Credit Line Account

o  Fixed Credit Line Account

o  Both

 

If you do not indicate your preference you will be deemed to
have selected the “Both” option.

 

Account Ownership

 

Is
this entity / organization a business that provides commercial goods or
services (i.e., an operating entity)?

x Yes     No
o

 

Any changes or corrections to the information on this application
must be initialed by you.

 

Select
the Organization/Business Structure:

 

x Corporation

o Corp- Subchapter ‘S’

o Limited Liability Company
(LLC)

o Limited Liability
Partnership (LLP)

o Limited Liability-Limited Partnership
(LLLP)

o Sole Proprietorship

o Partnership-General

o Partnership-Limited

o Association

o Partnership-Invest Club

o Invest Club Membership

o Fed Charter-Credit Union

o Foundation-not for profit

o Endowment-not for profit

o State Charter-S&L Bank

o State Charter-Savings Bank

o State Charter-Comm Bank

o State Charter-Trust Co.

o State Charter-Credit Union

o State Charter-Indus Loan

o Fed Charter-Savings Assoc

o Fed Charter-Nat’l Bank

o Fed Charter-Trust Co.

o Govt Agency-Federal

o Govt Agency-Local Ent

o Govt Agency-State

 

Borrower Information

 

This
section should be completed by the Organization/Business.

 

Borrower

 

Organization
/ Business Name ARQULE INC

Organization/Business
is (please complete each item that applies):

 

	
  1)  x 
  Incorporated 

  	
  o  Unincorporated

  
	
  2)  x  For Profit

  	
  o  Not For Profit

  
	
   

  	
   

  
	
  Industry
  Group (e.g., Construction, Service, etc.):  

  	
   

  
	
  Other     Biotech

  	
   

  
	
   

  	
   

  
	
  Is
  the Organization/Business publicly listed?

  	
  o  No     x  Yes;     specify:

  

 

	
  NASDAQ

  	
   

  	
  ARQL

  	
   

  
	
  Exchange
  (NYSE, AMEX, or NASDAQ)

  	
   

  	
  Ticker
  Symbol

  

 

	
  Place
  of Formation / Incorporation

  	
   

  
	
   

  	
   

  
	
  x  USA
  (if incorporated, specify State): 

  	
  Delaware

  	
   

  
	
  o  Other
  (specify)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TIN:
  04-3221586

  	
  Date
  of Incorporation / Establishment:

  	
   

  
	
   

  	
  12/31/93

  	
   

  
	
   

  	
   

  
	
  Location
  of Address

  	
   

  
	
   

  	
   

  
	
  x  Business - Primary

  	
  o  Other ( please specify )

  
	
   

  	
   

  
	
  Street
  Address (If a P.O. Box, complete the
  Additional Address Information on page 3.):

  
	
   

  	
   

  
	
  19
  PRESIDENTIAL WAY

  	
   

  
	
   

  	
   

  
	
  City:

  	
  State:

  	
  ZIP:

  	
   

  
	
  Woburn

  	
  MA

  	
  01801-1040

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  USA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Business
  Telephone Number: 

  	
   

  
	
   

  	
  781
  994 0375

  	
   

  	
   

  
								

 

	
  HB Rev 04/07 HB LOAD SPEDOC UX E HB V102

   

  	
   

  	
   

  ©2007 UBS Bank USA. All
  rights reserved.

  
	
   

  	
   

  	
  Sign and date the
  application on page 4

  

 

 

	
  

  
  

  	
   

   

  UBS
  Bank USA

  
	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Internal Use Only

  

 

Borrower Financial and
Ownership Information At 3/31/08

 

	
  Annual
  Income:

  	
   

  	
  Liquid
  Assets: 

  	
  $56.5
  mill cash

  
	
  $53.4
  mill loss 2007

  	
   

  	
   

  	
  63.0
  mill ARS

  
	
  Net
  Worth

  	
   

  	
  Fiscal
  Year End (indicate month)

  
	
  $73.4
  mill 3/31/08

  	
   

  	
  December

  
	
   

  	
   

  
	
  Do you receive a substantial amount of your
  revenue/wealth (over 50%) (trade/export) from a country outside of the United
  States?

  
	
  o  Yes   x  No     If
  yes specify:

  	
   

  
	
   

  	
   

  	
   

  
	
  Country(ies):

   

  	
   

  
	
  Does the Borrower own 10% or more of the shares of
  any publicly traded company?

  
	
  o  Yes   x  No     If
  yes, please specify company and %:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  %

  
	
   

  Are any of the Borrowers, business owners or directors/principal
  officers a control person of UBS AG or its subsidiaries or affiliates?*

  
	
  o  Yes   x  No     If
  yes, please specify company and %:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Is the Borrower an officer or member of the board
  of directors of UBS AG, its subsidiaries or affiliates?*

  
	
  o  Yes   x  No     If
  yes, please specify:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Subsidiary or Affiliate

  	
   

  	
  Employee Name and SS#

  
	
   

  	
   

  
	
  Is the Borrower an immediate family member of an executive officer or
  member of the board of directors of UBS AG? Immediate
  family member means a spouse or any other relative residing in the Borrower’s
  household to whom the Borrower lends financial support.

  
	
  o  Yes   x  No     If
  yes, please specify:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Subsidiary or Affiliate

  	
   

  	
  Employee
  Name and SS#

  
	
   

  	
   

  	
   

  
	
  Will any of the loan proceeds be used to repay any debt or obligation
  owed to, or purchase an asset from, UBS AG or its subsidiaries or affiliates?

  
	
  o  Yes   x  No     If
  yes, please specify:

  	
   

  
	
   

  	
   

  	
   

  
	
  Subsidiary or Affiliate

  	
   

  	
   

  
													

 

*For purposes these questions, “control” means a person or
entity that either (a) owns, controls or has the power to vote 25% or more
of any class of voting securities, (b) has the ability to control the
election of the majority of the directors of a company, or (c) has the
power to exercise a controlling influence over management policies. A person or
entity is presumed to have control of a company if the person or entity owns,
controls or has the power to vote 10% or more of any class of voting securities
of the company and (i) the person is an executive officer or director of
the company or (ii) no other person has a greater percentage of that class
of voting securities.

 

Principal Officer/Beneficial Owner

 

Complete
this section for the Principal Officer(s) of the borrower, or beneficial
owner for an LLC. To include additional principal officers please photocopy
this page and submit it with the application.

 

	
  Principal Officer Name

  	
   

  	
  SS#

  
	
  Rob Weiskopf

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Country of Citizenship:

  	
   

  	
  Date of Birth

  
	
  x   USA                       

  	
  o

  	
  Other
  (specify)

  
	
   

  	
   

  

Passport/CEDULA
and Green Card#: (If non-U.S. and no SS# specified)

                                                              /                                                             

 

Passport/CEDULA
Country of Issuance:

USA

 

Street
Address:

19
PRESIDENTIAL WAY

 

	
  City: 

  Woburn

  	
   

  	
  State: 

  MA

  	
   

  	
  ZIP

  01801-1040

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  USA

  	
   

  
	
  Telephone Number:

  	
   

  	
  781 994 0375

  	
   

  	
   

  	
   

  
								

 

	
  HB Rev 04/07 HB LOAD SPEDOC UX E HB V102

   

  	
   

  	
   

  ©2007 UBS Bank USA. All
  rights reserved.

  
	
   

  	
   

  	
  Sign and date the
  application on page 4

  

 

2

 

	
  

  
  

  	
   

   

  UBS
  Bank USA

  
	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Internal Use Only

  

 

	
  Credit Line Account Features

  
	
  Check Writing

  
	
   

  
	
  If
  you would like to receive Credit Line checks for your credit line account,
  please enroll below:

  
	
  o  Check
  here if you would like Credit Line checks.

  
	
  Checks
  will be in the name of the Borrower.

  
	
  Please
  print the address that you would like to appear on your checks.

  
	
   

   

  
	
   

  
	
   

  
	
   

  Alternate Mailing Address for Checks

  
	
  Print
  the mailing address for the delivery of checks if different from the address
  on the checks:

  
	
   

   

  
	
   

  
	
   

  
	
  Wire Instructions for Loan Payment: (In US Dollars) 

  
	
  Bank Name: UBS AG

  
	
  Wire System Address: ABA 026007993

   

  
	
  For Further Credit to the Account of: UBS Bank USA

  Account Number: 101-WA-792479-000

  
	
   

  
	
  For the Benefit of: Full Name

  Account Number: 5[F or V] 00000

  

 

Senior Political Affiliation

 

Are
you, any authorized signatories, beneficial owners, trustees, powers of
attorney or other individuals with authority to effect transactions, or any of
their immediate family members or close associates a:

 

	
  I)

  	
  Current U.S. political
  official (as defined in section B below)?

  	
  x No   o Yes;   complete:

  
	
   

  	
   

  
	
   

  	
  A) 

  	
  Political
  Official’s Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B) 

  	
  Current
  Position:

  	
  o  President

  	
  o  Vice
  President

  	
  o  US
  Cabinet Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  o  Speaker
  of the House of Representatives

  	
  o  Supreme
  Court Justice

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  o  Chairman
  of the Joint Chiefs of Staff

  	
  o  Ambassador

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C) 

  	
  Relationship
  to Client(s):

  	
  o  Self

  	
  o  Immediate
  family member

  	
  o  Close
  associate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  o  Associated
  with business or trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II)

  	
  Current
  or former Senior non-U.S. political official, non-U.S. Religious
  Group/Organization, or Senior/Influential representative of a non-U.S.
  Religious Group/Organization?

  	
  x  No    Yes;     complete:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Political Official’s Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Current or Former Position:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Relationship to Client(s):

  	
  o  Self

  	
  o  Immediate
  family member

  	
  o  Close
  associate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  o  Associated
  with business or trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Duplicate Party Addendum

  Complete
  this section for each Duplicate Party to receive a duplicate credit line
  account statement.

  
	
   

  	
   

  
	
   

  	
  Internal
  Location Code (UBS Financial Services Inc. Use Only)

  
	
   

  	
   

  
	
  Name:

  	
   

  	
  Country
  of Citizenship:

  
	
   

  	
   

  	
  o   USA   o    Other
  (specify):

  	
   

  
	
  Street
  Address:

  	
   

  	
  City:

  	
  State:         ZIP:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Additional Address Information

   

  	
   

  
	
  If
  the Borrower’s mailing address is a P.O. Box please provide a legal
  residence address below.

  
	
   

  	
   

  
	
  First
  Name:

  	
  Last
  Name:

  	
  Street
  Address:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Location
  of Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  o   Business
  - Primary

  	
   

  	
   

  
	
  o   Business
  - Secondary

  	
   

  	
  City:

  	
  State:         ZIP:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o   Other
  (Specify):

  	
   

  	
   

  	
   

  	
   

  
																					

 

	
  HB Rev 04/07 HB LOAD SPEDOC UX E HB V102

  	
   

  	
   

  
	
   

  	
   

  	
  ©2007 UBS Bank USA. All
  rights reserved.

  
	
   

  	
   

  	
  Sign and date the
  application on page 4

  

 

3

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

Borrower Agreement

 

BY SIGNING BELOW, THE BORROWER UNDERSTANDS, ACKNOWLEDGES AND
AGREES THAT:

 

A     The Borrower has received and read a copy of this Borrower Agreement,
the attached Credit Line Account Application and Agreement (including the
Credit Line Agreement following this Borrower Agreement) and the Loan
Disclosure Statement explaining the risk factors that the Borrower should
consider before obtaining a loan secured by the Borrower’s securities account.
The Borrower agrees to be bound by the terms and conditions contained in the
Credit Line Account Application and Agreement (which terms and conditions are
incorporated by reference). Capitalized terms used in this Borrower Agreement
have the meanings set forth in the Credit Line Agreement.

 

B     THE BORROWER UNDERSTANDS AND
AGREES THAT UBS BANK USA MAY DEMAND FULL OR PARTIAL PAYMENT OF THE CREDIT
LINE OBLIGATIONS, AT ITS SOLE OPTION AND WITHOUT CAUSE, AT ANY TIME, AND THAT
NEITHER FIXED RATE ADVANCES NOR VARIABLE RATE ADVANCES ARE EXTENDED FOR ANY
SPECIFIC TERM OR DURATION. THE BORROWER UNDERSTANDS AND AGREES THAT ALL
ADVANCES ARE SUBJECT TO COLLATERAL MAINTENANCE REQUIREMENTS. THE BORROWER
UNDERSTANDS THAT UBS BANK USA MAY, AT ANY TIME, IN ITS DISCRETION, TERMINATE
AND CANCEL THE CREDIT LINE REGARDLESS OF WHETHER OR NOT AN EVENT HAS OCCURRED.

 

C     UNLESS DISCLOSED IN WRITING
TO UBS BANK USA AT THE TIME OF THIS AGREEMENT, AND APPROVED BY UBS BANK USA,
THE BORROWER AGREES NOT TO USE THE PROCEEDS OF ANY ADVANCE EITHER TO PURCHASE,
CARRY OR TRADE IN SECURITIES OR TO REPAY ANY DEBT (I) USED TO PURCHASE,
CARRY OR TRADE IN SECURITIES OR (II) TO ANY AFFILIATE OF UBS BANK USA. THE
BORROWER WILL BE DEEMED TO REPEAT THIS AGREEMENT EACH TIME THE BORROWER
REQUESTS AN ADVANCE.

 

D     THE BORROWER UNDERSTANDS THAT
BORROWING USING SECURITIES AS COLLATERAL ENTAILS RISKS. SHOULD THE VALUE OF THE
SECURITIES IN THE COLLATERAL ACCOUNT DECLINE BELOW THE REQUIRED COLLATERAL
MAINTENANCE REQUIREMENTS, UBS BANK USA MAY REQUIRE THAT THE BORROWER POST
ADDITIONAL COLLATERAL, REPAY PART OR ALL OF THE BORROWER’S LOAN AND/OR SELL
THE BORROWER’S SECURITIES. ANY REQUIRED LIQUIDATIONS MAY INTERRUPT THE
BORROWER’S LONG-TERM INVESTMENT STRATEGIES AND MAY RESULT IN ADVERSE TAX
CONSEQUENCES.

 

E     Neither UBS Bank USA nor UBS
Financial Services Inc. provides legal or tax advice.

 

F     Upon execution of this Credit Line Account
Application and Agreement, the Borrower will have supplied all of the
information requested in the Application and the Borrower declares it as true
and accurate and further agrees to promptly notify UBS Bank USA in writing of
any material changes to any or all of the information contained in the
Application including information relating to the Borrower’s financial
situation.

 

G     Subject to any applicable financial privacy
laws and regulations, data regarding the Borrower and the Borrower’s securities
accounts may be shared with UBS Bank USA affiliates. Subject to any applicable
financial privacy laws and regulations, the Borrower requests that UBS Bank USA
share such personal financial data with non-affiliates of UBS Bank USA as is
necessary or advisable to effect, administer or enforce, or to service, process
or maintain, all transactions and accounts contemplated by this Agreement.

 

H     The Borrower authorizes UBS Bank USA and UBS
Financial Services Inc. to obtain a credit report or other credit references
concerning the Borrower (including making verbal or written inquiries
concerning credit history) or to otherwise verify or update credit information
given to UBS Bank USA at any time. The Borrower authorizes the release of this
credit report or other credit information to UBS Bank USA affiliates as it
deems necessary or advisable to effect, administer or enforce, or to service,
process or maintain all transactions and accounts contemplated by this
Agreement, and for the purpose of offering additional products, from time to
time, to the Borrower. The Borrower authorizes UBS Bank USA to exchange
Borrower information with any party it reasonably believes is conducting a
legitimate credit inquiry in accordance with the Fair Credit Reporting Act. UBS
Bank USA may also share credit or other transactional experience with the
Borrower’s designated UBS Financial Services Inc. Financial Advisor or other
parties designated by the Borrower.

 

I      UBS Bank USA is subject to examination by various
federal, state and self-regulatory organizations and that books and records
maintained by UBS Bank USA are subject to inspection and subpoena by these
regulators and by federal, state, and local law enforcement officials. The
Borrower also acknowledges that such regulators and officials may, pursuant to
treaty or other arrangements, in turn disclose such information to the
officials or regulators of other countries, and that U.S. courts may be
required to compel UBS Bank USA to disclose such information to the officials
or regulators of other countries. The Borrower agrees that UBS Bank USA may
disclose to such regulators and officials information about the Borrower and
transactions in the credit line account or other accounts at UBS Bank USA
without notice to the Borrower. In addition, UBS Bank USA may in the context of
a private dispute be required by subpoena or other judicial process to disclose
information or produce documentation related to the Borrower, the credit line
account or other accounts at UBS Bank USA. The Borrower acknowledges and agrees
that UBS Bank USA reserves the right, in its sole discretion, to respond to
subpoenas and judicial process as it deems appropriate.

 

J     To help the government fight the funding of
terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that identifies each
person who opens an account. When the Borrower opens an account with UBS Bank
USA, UBS Bank USA will ask for the Borrower’s name, address, and other
information that will allow UBS Bank USA to identify the Borrower. UBS Bank USA
may also ask to see other identifying documents. UBS Financial Services Inc.
and UBS Bank USA are firmly committed to compliance with all applicable laws, rules and
regulations, including those related to combating money laundering. The
Borrower understands and agrees that the Borrower must take all necessary steps
to comply with the anti-money laundering laws, rules and regulations of
the Borrower’s country of origin, country of residence and the sites of the
Borrower’s transaction.

 

K     UBS Bank USA and its affiliates will act as
creditors and, accordingly, their interests may be inconsistent with, and
potentially adverse to, the Borrower’s interests. As a lender and consistent
with normal lending practice, UBS Bank USA may take any steps necessary to
perfect its interest in the Credit Line, issue a call for additional collateral
or force the sale of the Borrower’s securities if the Borrower’s actions or inactions
call the Borrower’s creditworthiness into question. Neither UBS Bank USA nor
UBS Financial Services Inc. will act as Client’s investment advisor with
respect to any liquidation. In fact UBS Bank USA will act as a creditor and UBS
Financial Services Inc. will act as a securities intermediary.

 

L     The Borrower understands that, if the
Collateral Account is a managed account with UBS Financial Services Inc., (i) in
addition to any fees payable to UBS Financial Services Inc. in connection with
the Borrower’s managed account, interest will be payable to the Bank on an
amount advanced to the Borrower in connection with the Credit Line Account, and
(ii) the performance of the managed account might not exceed the managed
account fees and the interest expense payable to the Bank in which case the
Borrower’s overall rate of return will be less than the costs associated with
the managed account.

 

M.   UBS Bank USA may provide copies of all credit
line account statements to UBS Financial Services Inc. and to any Guarantor.
The Borrower acknowledges and agrees that UBS Bank USA may share any and all
information regarding the Borrower and the Borrower’s accounts at UBS Bank USA
with UBS Financial Services Inc. UBS Financial Services Inc. may provide copies
of all statements and confirmations concerning each Collateral Account to UBS
Bank USA at such times and in such manner as UBS Bank USA may request and may
share with UBS Bank USA any and all information regarding the Borrower and the
Borrower’s accounts with UBS Financial Services Inc.

 

	
  IN
  WITNESS WHEREOF, the undersigned (“Borrower”) has signed this Agreement, or
  has caused this Agreement to be signed in its 

  
	
  name
  by its duly authorized representatives, as of the date indicated below.

  	
  DATE:

  	
  6/30/08

  

 

Name of Borrower: ARQULE INC

 

	
  By:

  	
  /s/
  Rob Weiskopf

  	
   

  	
  Title:  VP Finance, Corporate Controller &
  Treasurer

  
	
   

  	
  (Signature of Authorized
  Signatory of Borrower)* Rob Weiskopf

  	
   

  	
  (Title of Authorized
  Signatory of Borrower)

  

 

The authorized signatory of the Borrower must be one of the
Authorized Persons designated on the applicable UBS Bank USA supplemental form
excecuted by the Borrower (e.g., the Supplemental Corporate Resolution Form (HP
Form)).

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

4

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

Credit Line Agreement - Demand Facility

 

THIS
CREDIT LINE AGREEMENT (as it may be amended, supplemented or otherwise modified
from time to time, this “Agreement”) is made by and between the party or
parties signing as the Borrower on the Application to which this Agreement is
attached (together and individually, the “Borrower”) and UBS Bank USA (the “Bank”)
and, together with the Application, establishes the terms and conditions that
will govern the uncommitted demand loan facility made available to the Borrower
by the Bank. This Agreement becomes effective upon the earlier of (i) notice
from the Bank (which notice may be oral or written) to the Borrower that the
Credit Line has been approved and (ii) the Bank making an Advance to the
Borrower.

 

1)    Definitions

 

·      “Advance” means any Fixed Rate Advance or Variable Rate Advance made by
the Bank pursuant to this Agreement.

 

·      “Advance Advice” means a written or electronic notice by the Bank, sent
to the Borrower, the Borrower’s financial advisor at UBS Financial Services
Inc. or any other party designated by the Borrower to receive the notice,
confirming that a requested Advance will be a Fixed Rate Advance and specifying
the amount, fixed rate of interest and Interest Period for the Fixed Rate
Advance.

 

·      “Application” means the Credit Line Account Application and Agreement
that the Borrower has completed and submitted to the Bank.

 

·      “Approved Amount” means the maximum principal amount of Advances that is
permitted to be outstanding under the Credit Line at any time, as specified in
writing by the Bank.

 

·      “Breakage Costs” and “Breakage Fee” have the meanings specified in Section 6(b).

 

·      “Business Day” means a day on which both of the Bank and UBS Financial
Services Inc. are open for business. For notices and determinations of LIBOR,
Business Day must also be a day for trading by and between banks in U.S. dollar
deposits in the London interbank market.

 

·      “Collateral” has the meaning specified in Section 8(a).

 

·      “Collateral Account” means, individually and collectively, each account
of the Borrower or Pledgor at UBS Financial Services Inc. or UBS International
Inc., as applicable, that is either identified as a Collateral Account on the
Application to which this Agreement is attached or subsequently identified as a
Collateral Account by the Borrower or Pledgor in writing, together with all
successors to those identified accounts, irrespective of whether the successor
account bears a different name or account number.

 

·      “Credit Line” has the meaning specified in Section 2(a).

 

·      “Credit Line Account” means each Fixed Rate Account and each Variable
Rate Account of the Borrower that is established by the Bank in connection with
this Agreement and either identified on the Application or subsequently
identified as a Credit Line Account by the Bank by notice to the Borrower,
together with all successors to those identified accounts, irrespective of
whether any successor account bears a different name or account number.

 

·      “Credit Line Obligations” means, at any time of determination, the aggregate
of the outstanding principal amounts of all Advances, together with all accrued
but unpaid interest on the outstanding principal amounts, any and all fees or
other charges payable in connection with the Advances and any costs of
collection (including reasonable attorneys’ fees) and other amounts payable by
the Borrower under this Agreement, and any and all other present or future
obligations of the Borrower and the other respective Loan Parties under this
Agreement and the related agreements, whether absolute or contingent, whether
or not due or mature.

 

·     ”Event”
means any of the events listed in Section 10.

 

·      “Fixed Rate Advance” means any advance made under the Credit Line that
accrues interest at a fixed rate.

 

·      “Guarantor” means any party who guaranties the payment and performance
of the Credit Line Obligations.

 

·      “Guaranty Agreement” means an agreement pursuant to which a Guarantor
agrees to guaranty payment of the Credit Line Obligations.

 

·      “Interest Period” means, for a Fixed Rate Advance, the number of days,
weeks or months requested by the Borrower and confirmed in the Advance Advice
relating to the Fixed Rate Advance, commencing on the date of (i) the
extension of the Fixed Rate Advance or (ii) any renewal of the Fixed Rate
Advance and, in each case, ending on the last day of the period. If the last
day is not a Business Day, then the Interest Period will end on the immediately
succeeding Business Day. If the last

Business Day would fall in the next calendar month, the Interest Period
will end on the immediately preceding Business Day. Each monthly or longer
Interest Period that commences on the last Business Day of a calendar month (or
on any day for

which there is no numerically corresponding day in the appropriate
subsequent calendar month) will end on the last Business Day of the appropriate
calendar month.

 

·      “Joint Borrower” has the meaning specified in Section 7(a).

 

·      “LIBOR” means, as of any date of determination:

 

(i)      for Variable Rate Advances, the prevailing London Interbank Offered Rate
for deposits in U.S. dollars having a maturity of 30 days as published in The
Wall Street Journal “Money Rates” Table on the date of the Advance; and

 

(ii)     for Fixed Rate Advances, the prevailing London Interbank Offered Rate
for deposits in U.S. dollars having a maturity corresponding to the length of
the Interest Period applicable to the Advance as quoted by the Bloomberg
service at 4:00 a.m. Eastern Standard Time on the date of the Advance.

 

If the rate ceases to be regularly published by The Wall Street Journal
or stated by the Bloomberg service, as applicable, LIBOR will be determined by
the Bank in its sole and absolute discretion. For any day that is not a Business
Day, LIBOR will be the applicable LIBOR in effect immediately prior to that
day.

 

·      “Loan Party” means each Borrower, Guarantor and Pledgor, each in their
respective capacities under this Agreement or any related agreement.

 

·      “Person” means any natural person, company, corporation, firm, partnership,
joint venture, limited liability company or limited liability partnership,
association, organization or any other legal entity.

 

·      “Pledgor” means each Person who pledges to the Bank any Collateral to
secure the Credit Line Obligations (or to secure the obligations of any
Guarantor with respect to the guaranty of the Credit Line Obligations).
Pledgors will include (i) each Borrower who pledges Collateral to secure
the Credit Line Obligations, (ii) each Guarantor who has pledged
collateral to secure the Credit

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

5

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

Line
Obligations or its obligations under a Guaranty Agreement, (iii) any
spouse of a Borrower who executes a spouse’s pledge and consent agreement with
respect to a jointly held collateral account, (iv) any other joint account
holder who executes a joint account holder pledge and consent agreement with
respect to a jointly held collateral account, and (v) any other Person who
executes a pledge agreement with respect to the Credit Line.

 

·      “Premier Credit Line” means any Credit Line with an Approved Amount
equal to or greater than $250,000.

 

·      “Prime Credit Line” means any Credit Line with an Approved Amount less
than $250,000.

 

·      “Prime Rate” means the floating “Prime Rate” as published in The Wall
Street Journal “Money Rates” Table from time to time. The Prime Rate will
change as and when the Prime Rate as published in The Wall Street Journal
changes. In the event that The Wall Street Journal does not publish a Prime
Rate, the Prime Rate will be the rate as determined by the Bank in its sole and
absolute discretion.

 

·      “Securities Intermediary” has the meaning specified in Section 9.

 

·      “UBS Financial Services Inc.” means UBS Financial Services Inc. and its
successors.

 

·      “UBS-I” means UBS International Inc. and its successors.

 

·      “Variable Rate Advance” means any advance made under the Credit Line
that accrues interest at a variable rate.

 

2)    Establishment of Credit Line;
Termination

 

a)    Upon the
effectiveness of this Agreement, the Bank establishes an UNCOMMITTED, demand revolving line of
credit (the “Credit Line”) in an amount equal to the Approved Amount. The Bank
may, from time to time upon request of the Borrower, without obligation and in
its sole and absolute discretion, authorize and make one or more Advances to
the Borrower. The Borrower acknowledges that the Bank has no obligation to make
any Advances to the Borrower. The Bank may carry each Variable Rate Advance in
a Variable Rate Account and may carry each Fixed Rate Advance in a Fixed Rate
Account, but all Advances will constitute extensions of credit pursuant to a
single Credit Line. The Approved Amount will be determined, and may be adjusted
from time to time, by the Bank in its sole and absolute discretion.

 

b)    THE BORROWER AND EACH OTHER
LOAN PARTY UNDERSTAND AND AGREE THAT THE BANK MAY DEMAND FULL OR PARTIAL
PAYMENT OF THE CREDIT LINE OBLIGATIONS, AT ITS SOLE AND ABSOLUTE DISCRETION AND
WITHOUT CAUSE, AT ANY TIME, AND THAT NEITHER FIXED RATE ADVANCES NOR VARIABLE
RATE ADVANCES ARE EXTENDED FOR ANY SPECIFIC TERM OR DURATION.

 

c)    UNLESS DISCLOSED IN WRITING
TO THE BANK AT THE TIME OF THE APPLICATION, AND APPROVED BY THE BANK, THE
BORROWER AGREES NOT TO USE THE PROCEEDS OF ANY ADVANCE EITHER TO PURCHASE,
CARRY OR TRADE IN SECURITIES OR TO REPAY ANY DEBT (I) USED TO PURCHASE,
CARRY OR TRADE IN SECURITIES OR (II) TO ANY AFFILIATE OF THE BANK. THE
BORROWER WILL BE DEEMED TO REPEAT THE AGREEMENT IN THIS SECTION 2(C) EACH
TIME IT REQUESTS AN ADVANCE.

 

d)    Prior to the
first Advance under the Credit Line, the Borrower must sign and deliver to the
Bank a Federal Reserve Form U-1 and all other documentation as the Bank
may require. The Borrower acknowledges that neither the Bank nor any of its
affiliates has advised the Borrower in any manner regarding the purposes for
which the Credit Line will be used.

 

e)    The Borrower
consents and agrees that, in connection with establishing the Credit Line
Account, approving any Advances to the Borrower or for any other purpose
associated with the Credit Line, the Bank may obtain a consumer or other credit
report from a credit reporting agency relating to the Borrower’s credit history.
Upon request by the Borrower, the Bank will inform the Borrower: (i) whether
or not a consumer or other credit report was requested; and (ii) if so,
the name and address of the consumer or other credit reporting agency that
furnished the report.

 

f)     The
Borrower understands that the Bank will, directly or indirectly, pay a portion
of the interest that it receives to the Borrower’s financial advisor at UBS
Financial Services Inc. or one of its affiliates. To the extent permitted by
applicable law, the Bank may also charge the Borrower fees for establishing and
servicing the Credit Line Account.

 

g)    Following
each month in which there is activity in the Borrower’s Credit Line Account in
amounts greater than $1, the Borrower will receive an account statement showing
the new balance, the amount of any new Advances, year to date interest charges,
payments and other charges and credits that have been registered or posted to
the Credit Line Account.

 

h)    Each of the
Loan Parties understands and agrees that the Bank may, at any time, in its
discretion, terminate and cancel the Credit Line regardless of whether or not
an Event has occurred. In the event the Bank terminates and cancels the Credit
Line the Credit Line Obligations shall be immediately due and payable in full.
If the Credit Line Obligations are not paid in full,

the Bank shall have the right, at its option, to exercise any or all of
its remedies described in Section 10 of this Agreement.

 

3)    Terms of Advances

 

a)    Advances
made under this Agreement will be available to the Borrower in the form, and
pursuant to procedures, as are established from time to time by the Bank in its
sole and absolute discretion. The Borrower and each Loan Party agree to
promptly provide all documents, financial or other information in connection
with any Advance as the Bank may request. Advances will be made by wire
transfer of funds to an account as specified in writing by the Borrower or by
any other method agreed upon by the Bank and the Borrower. The Borrower
acknowledges and agrees that the Bank will not make any Advance to the Borrower
unless the collateral maintenance requirements that are established by the Bank
in its sole and absolute discretion have been satisfied.

 

b)    Each Advance
made under a Premier Credit Line will be a Variable Rate Advance unless
otherwise designated as a Fixed Rate Advance in an Advance Advice sent by the
Bank to the Borrower. The Bank will not designate any Advance as a Fixed Rate
Advance unless it has been requested to do so by the Borrower (acting directly
or indirectly through the Borrower’s UBS Financial Services Inc. financial
advisor or other agent designated by the Borrower and acceptable to the Bank).
Each Advance Advice will be conclusive and binding upon the Borrower, absent
manifest error, unless the Borrower otherwise notifies the Bank in writing no
later than the close of business, New York time, on the third Business Day
after the Advance Advice is received by the Borrower.

 

c)    Each Advance
made under a Prime Credit Line will be a Variable Advance.

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

6

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

d)            Unless
otherwise agreed by the Bank: (i) all Fixed Rate Advances must be in an
amount of at least $100,000; and (ii) all Variable Rate Advances must be
in an amount of at least $2,500. If the Borrower is a natural person, the
initial Variable Rate Advance under the Credit Line must be in an amount equal
to at least $25,001 (the “Initial Advance Requirement”). If the initial Advance
requested by the Borrower is made in the form of a check drawn on the Credit
Line that does not satisfy the Initial Advance Requirement, then, in addition to
and not in limitation of the Bank’s rights, remedies, powers or privileges
under this Agreement or applicable law, the Bank may, in its sole and absolute
discretion:

 

(i)                 pay the check drawn by the Borrower if, prior
to paying that check, the Bank makes another Advance to the Borrower, which
Advance shall be in an amount not less than $25,001; or

 

(ii)              pay the check drawn by the Borrower; or

 

(iii)           decline to pay (bounce) the check.

 

If
the Bank elects option (ii), no interest shall accrue on the amount of the
Advance made by paying the check, and the amount of that Advance shall be due
and payable to the Bank immediately (with or without demand by the Bank).

 

4)            Interest

 

a)             Each
Fixed Rate Advance will bear interest at a fixed rate for the Interest Period
specified in the related Advance Advice. The rate of interest payable on each
Fixed Rate Advance will be determined by adding a percentage rate to LIBOR as
of the date that the fixed rate is determined.

 

b)            Each
Variable Rate Advance under a Premier Credit Line will bear interest at a
variable rate equal to LIBOR, adjusted daily, plus the percentage rate that
(unless otherwise specified by the Bank in writing) is shown on Schedule I
below for the Approved Amount of the Credit Line. For Premier Credit Lines, the
rate of interest payable on Variable Rate Advances is subject to change without
notice in accordance with fluctuations in LIBOR and in the Approved Amount. On
each day that LIBOR changes or the Approved Amount crosses one of the
thresholds that is indicated on Schedule I (or that is otherwise specified by
the Bank in writing), the interest rate on all Variable Rate Advances will
change accordingly.

 

c)             Each
Variable Rate Advance under a Prime Credit Line will bear interest at a
variable rate equal to the Prime Rate, adjusted daily, plus the percentage rate
that (unless otherwise specified by the Bank in writing) is shown on the
attached Schedule II and that corresponds to the aggregate principal amount
outstanding under the Prime Credit Line on that day. For Prime Credit Lines,
the rate of interest payable on Variable Rate Advances is subject to change
without notice in accordance with fluctuations in the Prime Rate and in the
aggregate amount outstanding under the Prime Credit Line. On each date that the
Prime Rate changes or the aggregate principal amount outstanding under the
Prime Credit Line crosses one of the thresholds that is indicated on Schedule
II (or that is otherwise specified by the Bank in writing), the interest rate
on all Variable Rate Advances will change accordingly.

 

5)            Payments

 

a)             Each Fixed Rate Advance will be due and payable in full ON
DEMAND or, if not earlier demanded by the Bank, on the last day of the
applicable Interest Period.
Any Fixed Rate Advance as to which the Bank has not made a demand for payment
and that is not paid in full or renewed, which renewal is in the sole and
absolute discretion of the Bank, (pursuant to procedures as may be established
by the Bank) as another Fixed Rate Advance on or before the last day of its
Interest Period, will be automatically renewed on that date as a U.S. dollar
denominated, Variable Rate Advance in an amount (based, in the case of any
conversion of a non-U.S. dollar denominated Fixed Rate Advance, upon the
applicable, spot currency exchange rate as of the maturity date, as determined
by the Bank) equal to the unpaid principal balance of the Fixed Rate Advance
plus any accrued but unpaid interest on the Fixed Rate Advance, which Variable
Rate Advance will then accrue additional interest at a variable rate as
provided in this Agreement.

 

b)            Each Variable Rate Advance
will be due and payable ON DEMAND.

 

c)             The
Borrower promises to pay the outstanding principal amount of each Advance,
together with all accrued but unpaid interest on each Advance, any and all fees
or other charges payable in connection with each Advance, on the date the
principal amount becomes due (whether by reason of demand, the occurrence of a
stated maturity date, by reason of acceleration or otherwise). The Borrower further
promises to pay interest in respect of the unpaid principal balance of each
Advance from the date the Advance is made until it is paid in full. All
interest will be computed on the basis of the number of days elapsed and a
360-day year. Interest on each Advance will be payable in arrears as follows:

 

(i)                 for Fixed Rate Advances - on the last day of
the Interest Period (or if the Interest Period is longer than three months, on
the last day of each three month period following the date of the Advance) and
on each date that all or any portion of the principal amount of the Fixed Rate
Advance becomes due or is paid; and

 

(ii)              for Variable Rate Advances - on the
twenty-second day of each month other than December, and on the thirty-first
day of December, and on each date that all or any portion of the principal
amount of the Variable Rate Advance becomes due or is paid.

 

To
the extent permitted by law, interest charges on any Advance that are not paid
when due will be treated as principal and will accrue interest at a variable
rate from the date the payment of interest was due until it is repaid in full.

 

d)            All
payments of principal, interest or other amounts payable under this Agreement
will be made in immediately available funds and in the same currency in which
the Advance was made, which unless otherwise agreed by the Bank, will be U.S.
dollars. UBS Financial Services Inc. or UBS International Inc., as applicable,
may act as collecting and servicing agent for the Bank for the Advances. All
payments will be made by wire transfer of funds to an account specified by the
Bank or by another method agreed upon by the Bank and the Borrower. Upon
receipt of all payments, the Bank will credit the same to the Credit Line
Account. The Bank shall apply the proceeds of any payments in the following
order; first to any Breakage Costs, Breakage Fee, other fees, costs of
collection and expenses, second to accrued interest and third to the
outstanding principal amount of the related Advance.

 

e)             All
payments must be made to the Bank free and clear of any and all present and
future taxes (including withholding taxes), levies, imposts, duties,
deductions, fees, liabilities and similar charges other than those imposed on
the overall net income of the Bank. If so requested by the Bank, the Borrower
will deliver to the Bank the original or a certified copy of each receipt
evidencing payment of any taxes or, if no taxes are payable in respect of any
payment under this Agreement, a certificate from each appropriate taxing
authority, or an opinion of counsel in form and substance and from counsel
acceptable to the Bank in its sole and absolute discretion, in either case
stating that the payment is exempt from or not subject

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

7

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

to
taxes. If any taxes or other charges are required to be withheld or deducted
from any amount payable by the Borrower under this Agreement, the amount
payable will be increased to the amount which, after deduction from the
increased amount of all taxes and other charges required to be withheld or
deducted from the amount payable, will yield to the Bank the amount stated to
be payable under this Agreement. If any of the taxes or charges are paid by the
Bank, the Borrower will reimburse the Bank on demand for the payments, together
with all interest and penalties that may be imposed by any governmental agency.
None of the Bank, UBS Financial Services Inc., UBS-I or their respective
employees has provided or will provide legal advice to the Borrower or any Loan
Party regarding compliance with (or the implications of the Credit Line and the
related guaranties and pledges under) the laws (including tax laws) of the
jurisdiction of the Borrower or any Loan Party or any other jurisdiction. The
Borrower and each Loan Party are and shall be solely responsible for, and the
Bank shall have no responsibility for, the compliance by the Loan Parties with
any and all reporting and other requirements arising under any applicable laws.

 

f)                In
no event will the total interest and fees, if any, charged under this Agreement
exceed the maximum interest rate or total fees permitted by law. In the event
any excess interest or fees are collected, the same will be refunded or
credited to the Borrower. If the amount of interest payable by the Borrower for
any period is reduced pursuant to this Section 5(f), the amount of
interest payable for each succeeding period will be increased to the maximum rate
permitted by law until the amount of the reduction has been received by the
Bank.

 

6)            Prepayments; Breakage Charges

 

a)             The
Borrower may repay any Variable Rate Advance at any time, in whole or in part,
without penalty.

 

b)            The
Borrower may repay any Fixed Rate Advance, in whole or in part. The Borrower
agrees to reimburse the Bank, immediately upon demand, for any loss or cost (“Breakage
Costs”) that the Bank notifies the Borrower has been incurred by the Bank as a
result of (i) any payment of the principal of a Fixed Rate Advance before
the expiration of the Interest Period for the Fixed Rate Advance (whether
voluntarily, as a result of acceleration, demand or otherwise), or (ii) the
Customer’s failure to take any Fixed Rate Advance on the date agreed upon,
including any loss or cost (including loss of profit or margin) connected with
the Bank’s re-employment of the amount so prepaid or of those funds acquired by
the Bank to fund the Advance not taken on the agreed upon date.

 

Breakage
Costs will be calculated by determining the differential between the stated
rate of interest (as determined in accordance with Section 4(a) of
the Agreement) for the Fixed Rate Advance and prevailing LIBOR and multiplying
the differential by the sum of the outstanding principal amount of the Fixed
Rate Advance (or the principal amount of Fixed Rate Advance not taken by the
Borrower) multiplied by the actual number of days remaining in the Interest
Period for the Fixed Rate Advance (based upon a 360-day year). The Borrower also
agrees to promptly pay to the Bank an administrative fee (“Breakage Fee”) in
connection with any permitted or required prepayment. The Breakage Fee will be
calculated by multiplying the outstanding principal amount of the Fixed Rate
Advance (or the principal amount of Fixed Rate Advance not taken by the
Borrower) by two basis points (0.02%) (with a minimum Breakage Fee of $100.00).
Any written notice from the Bank as to the amount of the loss or cost will be
conclusive absent manifest error.

 

7)            Joint Credit Line Account
Agreement; Suspension and Cancellation

 

a)             If
more than one Person is signing this Agreement as the “Borrower”, each party (a
“Joint Borrower”) will be jointly and severally liable for the Credit Line
Obligations, regardless of any change in business relations, divorce, legal
separation, or other legal proceedings or in any agreement that may affect
liabilities between the parties. Except as provided below for the reinstatement
of a suspended or cancelled Credit Line, and unless otherwise agreed by the
Bank in writing, the Bank may rely on, and each Joint Borrower will be
responsible for, requests for Advances, directions, instructions and other
information provided to the Bank by any Joint Borrower.

 

b)            Any
Joint Borrower may request the Bank to suspend or cancel the Credit Line by
sending the Bank a written notice of the request addressed to the Bank at the
address shown on the Borrower’s periodic Credit Line Account statements. Any
notice will become effective three Business Days after the date that the Bank
receives it, and each Joint Borrower will continue to be responsible for
paying: (i) the Credit Line Obligations as of the effective date of the
notice, and (ii) all Advances that any Joint Borrower has requested but
that have not yet become part of the Credit Line Obligations as of the
effective date of the notice. No notice will release or in any other way affect
the Bank’s interest in the Collateral. All subsequent requests to reinstate
credit privileges must be signed by all Joint Borrowers comprising the
Borrower, including the Joint Borrower requesting the suspension of credit
privileges. Any reinstatement will be granted or denied in the sole and
absolute discretion of the Bank.

 

c)             All
Credit Line Obligations will become immediately due and payable in full as of
the effective date of any suspension or cancellation of the Credit Line. The
borrower will be responsible for the payment of all charges incurred on the
Advances after the effective date. The Bank will not release any Loan Party
from any of the obligations under this Agreement or any related agreement until
the Credit Line Obligations have been paid in full and this Agreement has been
terminated.

 

8)            Collateral; Grant of Security
Interest; Set-off

 

a)             To
secure payment or performance of the Credit Line Obligations, the Borrower
assigns, transfers and pledges to the Bank,

and grants to the Bank a first priority lien and security interest in
the following assets and rights of the Borrower, wherever located and whether
owned now or acquired or arising in the future: (i) each Collateral
Account; (ii) any and all money, credit balances, certificated and
uncertificated securities, security entitlements, commodity contracts,
certificates of deposit, instruments, documents, partnership interests, general
intangibles, financial assets and other investment property now or in the
future credited to or carried, held or maintained in any Collateral Account; (iii) any
and all over-the-counter options, futures, foreign exchange, swap or similar
contracts between the Borrower and either UBS Financial Services Inc. or any of
its affiliates; (iv) any and all accounts of the Borrower at the Bank or
any of its affiliates; (v) any and all supporting obligations and other
rights ancillary or attributable to, or arising in any way in connection with,
any of the foregoing; and (vi) any and all interest, dividends,
distributions and other proceeds of any of the foregoing (collectively, the “Collateral”).

 

b)            The
Borrower and if applicable, any Pledgor on the Collateral Account, will take
all actions reasonably requested by the Bank to evidence, maintain and perfect
the Bank’s first priority security interest in, and to enable the Bank to
obtain control over, the Collateral and any additional collateral pledged by
the Pledgors, including but not limited to making, executing, recording and
delivering to the Bank financing statements and amendments thereto, control
agreements, notices, assignments, listings, powers, consents and other
documents regarding the Collateral and the Bank’s security interest in the
Collateral in a form as the Bank

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

8

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

reasonably
may require. Each Loan Party irrevocably authorizes and appoints each of the
Bank and UBS Financial Services Inc., as collateral agent, to act as their
agent and attorney-in-fact to file any documents or to execute any documents in
their name, with or without designation of authority. Each Loan Party
acknowledges that it will be obligated in respect of the documentation as if it
had executed the documentation itself.

 

c)             The
Borrower (and, if applicable, any other Pledgor on the Collateral Account)
agrees to maintain in a Collateral Account, at all times, Collateral having an
aggregate lending value as specified by the Bank from time to time.

 

d)            The
Bank’s sole duty for the custody, safe keeping and physical preservation of any
Collateral in its possession will be to deal with the Collateral in the same
manner as the Bank deals with similar property for its own account. The
Borrower (and, if applicable, any other Pledgor on the Collateral Account)
agrees that the Bank will have no responsibility to act on any notice of corporate
actions or events provided to holders of securities or other investment
property included in the Collateral. The Borrower (and, if applicable, any
other Pledgor on the Collateral Account) agrees to (i) notify the Bank
promptly upon receipt of any communication to holders of the investment
property disclosing or proposing any stock split, stock dividend, extraordinary
cash dividend, spin-off or other corporate action or event as a result of which
the Borrower or Pledgor would receive securities, cash (other than ordinary
cash dividends) or other assets in respect of the investment property, and (ii) immediately
upon receipt by the Borrower or Pledgor of any of these assets, cause them to
be credited to a Collateral Account or deliver them to or as directed by the
Bank as additional Collateral.

 

e)             The
Borrower (and, if applicable, any other Pledgor on the Collateral Account)
agrees that all principal, interest, dividends, distributions, premiums or
other income and other payments received by the Bank or credited to the
Collateral Account in respect of any Collateral may be held by the Bank as
additional Collateral or applied by the Bank to the Credit Line Obligations.
The Bank may create a security interest in any of the Collateral and may, at
any time and at its option, transfer any securities or other investment
property constituting Collateral to a securities account maintained in its name
or cause any Collateral Account to be redesignated or renamed in the name of
the Bank.

 

f)               If
a Collateral Account has margin features, the margin features will be removed
by UBS Financial Services Inc. or UBS-I, as applicable, so long as there is no
outstanding margin debit in the Collateral Account. If there is a margin debit
in the Collateral Account, such debit must be paid and satisfied in full prior
to the acceptance of this Agreement by the Bank.

 

g)            If
the Collateral Account permits cash withdrawals in the form of check writing,
access card charges, bill payment and/or electronic funds transfer services
(for example, Resource Management Account®, Business Services Account BSA®,
certain Basic Investment Accounts and certain accounts enrolled in UBS
Financial Services Inc. Investment Solutions programs), the “Withdrawal Limit”
for the Collateral Account, as described in the documentation governing the
account will be reduced on an ongoing basis so that the aggregate lending value
of the Collateral remaining in the Collateral Account following the withdrawal
may not be less than the amount required pursuant to Section 8(c).

 

h)            In
addition to the Bank’s security interest, the Bank will at all times have a
right to set off any or all of the Credit Line Obligations at or after the time
at which they become due, whether upon demand, at a stated maturity date, by
acceleration or otherwise, against all securities, cash, deposits or other
property in the possession of or at any time in any account maintained with the
Bank or any of its affiliates by or for the benefit of the Borrower, whether
carried individually or jointly with others. This right is in addition to, and
not in limitation of, any right the Bank may have at law or otherwise.

 

i)                The
Bank reserves the right to disapprove any Collateral and to require the
Borrower at any time to deposit into the Borrower’s Collateral Account
additional Collateral in the amount as the Bank requests or to substitute new
or additional Collateral for any Collateral that has previously been deposited
in the Collateral Account.

 

9)            Control

 

For
the purpose of giving the Bank control over each Collateral Account and in
order to perfect the Bank’s security interests in the Collateral, the Borrower
and each Pledgor on the applicable Collateral Account consents to compliance by
UBS Financial Services Inc., UBS-I or any other securities intermediary (in any
case, the “Securities Intermediary”) maintaining a Collateral Account with
entitlement orders and instructions from the Bank (or from any assignee or
successor of the Bank) regarding the Collateral Account and any financial
assets or other property held therein without the further consent of the
Borrower or any other Pledgor on the applicable Collateral Account. Without
limiting the foregoing, the Borrower and each Pledgor on the Collateral Account
acknowledges, consents and agrees that, pursuant to a control agreement entered
into between the Bank and the Securities Intermediary:

 

	
   

  	
  a)

  	
  The
  Securities Intermediary will comply with entitlement orders originated by the
  Bank regarding any Collateral Account without further consent from the Borrower
  or any Pledgor. The Securities Intermediary will treat all assets credited to
  a Collateral Account, including money and credit balances, as financial
  assets for purposes of Article 8 of the Uniform Commercial Code.

  
	
   

  	
   

  	
   

  
	
   

  	
  b)

  	
  In
  order to enable the Borrower and any Pledgor on the applicable Collateral
  Account to trade financial assets that are from time to time credited to a
  Collateral Account, the Securities Intermediary may comply with entitlement
  orders originated by the Borrower or any Pledgor on the applicable Collateral
  Account (or if so agreed by the Bank, by an investment adviser designated by
  the Borrower or any Pledgor on the applicable Collateral Account and
  acceptable to the Bank and the Securities Intermediary) regarding the
  Collateral Account, but only until the time that the Bank notifies the
  Securities Intermediary, that the Bank is asserting exclusive control over
  the Collateral Account. After the Securities Intermediary has received a
  notice of exclusive control and has had a reasonable opportunity to comply,
  it will no longer comply with entitlement orders originated by the Borrower
  or any Pledgor (or by any investment adviser designated by the Borrower or
  any Pledgor) concerning the Collateral Account. Notwithstanding the
  foregoing, however, and irrespective of whether it has received any notice of
  exclusive control, the Securities Intermediary will not comply with any
  entitlement order originated by the Borrower or any Pledgor (or by any
  investment adviser designated by the Borrower or any Pledgor) to withdraw any
  financial assets from a Collateral Account or to pay any money, free credit
  balance or other amount owing on a Collateral Account (other than cash
  withdrawals and payments not exceeding the “Withdrawal Limit” as contemplated
  in Section 8 (g)) without the prior consent of the Bank.

  

 

10)     Remedies

 

a)             If
any of the following events (each, an “Event”) occurs:

 

(i)                 the Borrower fails to pay any amount due under
this Agreement;

 

(ii)              the Borrower and/or any other relevant Loan
Party fails to maintain sufficient Collateral in a Collateral Account or any

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

9

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

Guarantor
fails to maintain collateral as required under its Guaranty Agreement;

 

(iii)       the Borrower or any other Loan Party breaches or fails to perform any
other covenant, agreement, term or condition that is applicable to it under
this Agreement or any related agreement, or any representation or other
statement of the Borrower (or any Loan Party) in this Agreement or in any
related agreement is incorrect in any material respect when made or deemed
made;

 

(iv)          the Borrower or any other Loan Party dies or is declared (by appropriate
authority) incompetent or of unsound mind or is indicted or convicted of any
crime or, if not an individual, ceases to exist;

 

(v)             any voluntary or involuntary proceeding for
bankruptcy, reorganization, dissolution or liquidation or similar action is
commenced by or against the Borrower or any other Loan Party, or a trustee in
bankruptcy, receiver, conservator or rehabilitator is appointed, or an
assignment for the benefit of creditors is made, with respect to the Borrower
or any other Loan Party or its property;

 

(vi)          the Borrower or any Loan Party is insolvent, unable to pay its debts as
they fall due, stops, suspends or threatens to stop or suspend payment of all
or a material part of its debts, begins negotiations or takes any proceeding or
other step with a view to readjustment, rescheduling or deferral of all or any
part of its indebtedness, which it would or might otherwise be unable to pay
when due, or proposes or makes a general assignment or an arrangement or
composition with or for the benefit of its creditors;

 

(vii)       a Collateral Account (or any account in which collateral provided by a
Loan Party is maintained) or any portion thereof is terminated, attached or
subjected to a levy;

 

(viii) the Borrower or any
Loan Party fails to provide promptly all financial and other information as the
Bank may request from time to time;

 

(ix)            any indebtedness of the Borrower or any other
Loan Party in respect of borrowed money (including indebtedness guarantied by
the Borrower or any other Loan Party) or in respect of any swap, forward, cap,
floor, collar, option or other derivative transaction, repurchase or similar
transaction or any combination of these transactions is not paid when due, or
any event or condition causes the indebtedness to become, or permits the holder
to declare the indebtedness to be, due and payable prior to its stated
maturity;

 

(x)               final judgment for the payment of money is
rendered against Borrower (or any Loan Party) and, within thirty days from the
entry of judgment, has not been discharged or stayed pending appeal or has not
been discharged within thirty days from the entry of a final order of
affirmance on appeal;

 

(xi)            any legal proceeding is instituted or any
other event occurs or condition exists that in the Bank’s judgment calls into
question (A) the validity or binding effect of this Agreement or any
related agreement or any of the Borrower’s (or any other Loan Party’s)
obligations under this Agreement or under any related agreement or (B) the
ability of the Borrower (or any Loan Party) to perform its obligations under
this Agreement, or under any related agreement; or

 

(xii)         the Bank otherwise deems itself or its security interest in the
Collateral insecure or the Bank believes in good faith that the prospect of
payment or other performance by any Loan Party is impaired.

 

then,
the Credit Line Obligations will become immediately due and payable (without
demand) and the Bank may, in its sole and absolute discretion, liquidate,
withdraw or sell all or any part of the Collateral and apply the same, as well
as the proceeds of any liquidation or sale, to any amounts owed to the Bank,
including any applicable Breakage Costs and Breakage Fee. The Bank will not be
liable to any Loan Party in any way for any adverse consequences (for tax
effect or otherwise) resulting from the liquidation of appreciated Collateral.
Without limiting the generality of the foregoing, the sale may be made in the
Bank’s sole and absolute discretion by public sale on any exchange or market
where business is then usually transacted or by private sale, and the Bank may
be the purchaser at any public or private sale. Any Collateral that may decline
speedily in value or that customarily is sold on a recognized exchange or
market may be sold without providing any Loan Party with prior notice of the
sale. Each Loan Party agrees that, for all other Collateral, two calendar days
notice to the Loan Party, sent to its last address shown in the Bank’s account
records, will be deemed reasonable notice of the time and place of any public
sale or time after which any private sale or other disposition of the
Collateral may occur. Any amounts due and not paid on any Advance following an
Event will bear interest from the day following the Event until fully paid at a
rate per annum equal to the interest rate applicable to the Advance immediately
prior to the Event plus 2.00%. In addition to the Bank’s rights under this
Agreement, the Bank will have the right to exercise any one or more of the
rights and remedies of a secured creditor under the Utah Uniform Commercial
Code, as then in effect.

 

b)             Nothing
contained in this Section 10 will limit the right of the Bank to demand
full or partial payment of the Credit Line Obligations, in its sole and
absolute discretion and without cause, at any time, whether or not an Event has
occurred and is continuing.

 

c)              All
rights and remedies of the Bank under this Agreement are cumulative and are in
addition to all other rights and remedies that the Bank may have at law or
equity or under any other contract or other writing for the enforcement of the
security 

interest herein or the collection of any amount due under this
Agreement.

 

d)             Any
non-exercise of rights, remedies and powers by the Bank under this Agreement
and the other documents delivered in connection with this Agreement shall not
be construed as a waiver of any rights, remedies and powers. The Bank fully
reserves its rights to invoke any of its rights, remedies and powers at any
time it may deem appropriate.

 

11)     Representations, Warranties
and Covenants by the Loan Parties

 

Each
Borrower and each other Loan Party (if applicable) makes the following
representations, warranties and covenants (and each Borrower will be deemed to
have repeated each representation and warranty each time a Borrower requests an
Advance) to the Bank:

 

a)              Except
for the Bank’s rights under this Agreement and the rights of the Securities
Intermediary under any account agreement, the Borrower and each relevant
Pledgor owns the Collateral, free of any interest or lien in favor of any third
party and free of any impediment to transfer;

 

b)             Each
Loan Party: (i) if a natural Person, is of the age of majority; (ii) is
authorized to execute and deliver this Agreement and to perform its obligations
under this Agreement and any related agreement; (iii) is not an employee
benefit plan, as that term is defined by the Employee Retirement Income
Security Act of 1974, or an Individual

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

10

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

Retirement
Credit Line Account (and none of the Collateral is an asset of a plan or
account); and (iv) unless the Loan Party advises the Bank to the contrary,
in writing, and provides the Bank with a letter of approval, where required,
from its employer, is not an employee or member of any exchange or of any
corporation or firm engaged in the business of dealing, either as a broker or
as principal, in securities, bills of exchange, acceptances or other forms of
commercial paper;

 

c)              Neither
the Borrower nor any Pledgor on the Collateral Account has pledged or will
pledge the Collateral or grant a security interest in the Collateral to any
party other than the Bank or the Securities Intermediary, or has permitted or
will permit the Collateral to become subject to any liens or encumbrances
(other than those of the Bank and the Securities Intermediary), during the term
of this Agreement;

 

d)             No
Loan Party is in default under any material contract, judgment, decree or order
to which it is a party or by which it or its properties may be bound;

 

e)              Each
Loan Party has duly filed all tax and information returns required to be filed
and has paid all taxes, fees, assessments and other governmental charges or
levies that have become due and payable, except to the extent such taxes or
other charges are being contested in good faith and are adequately reserved
against in accordance with GAAP; and

 

f)                The
Borrower and each relevant Pledgor (i) is and at all times will continue
to be the legal and beneficial owner of all assets held in or credited to any
Collateral Account or otherwise included in the Collateral, (ii) does not
hold any assets held in or credited to any Collateral Account or otherwise
included in the Collateral in trust or subject to any contractual or other
restrictions on use that would prevent the use of such assets to (a) repay
the Bank or (b) be pledged as Collateral in favor of the Bank.

 

12)     Indemnification; Limitation
on Liability of the Bank and the Securities Intermediary

 

Borrower
agrees to indemnify and hold harmless the Bank and the Securities Intermediary,
their affiliates and their respective directors, officers, agents and employees
against any and all claims, causes of action, liabilities, lawsuits, demands
and damages, for example, any and all court costs and reasonable attorneys
fees, in any way relating to or arising out of or in connection with this
Agreement, except to the extent caused by the Bank’s or Securities Intermediary’s
breach of its obligations under this Agreement. Neither the Bank nor the
Securities Intermediary will be liable to any party for any consequential
damages arising out of any act or omission by either of them with respect to
this Agreement or any Advance or Collateral Account.

 

13)     Acceptance of Application and
Agreement; Applicable Law

 

THIS APPLICATION AND AGREEMENT WILL BE RECEIVED AND
ACCEPTED BY BANK IN THE STATE OF UTAH, OR IF THIS APPLICATION AND AGREEMENT IS
DELIVERED TO BANK’S AGENT, UBS FINANCIAL SERVICES INC., IT WILL BE RECEIVED AND
ACCEPTED WHEN RECEIVED BY UBS FINANCIAL SERVICES INC.’S UNDERWRITING
DEPARTMENT. DELIVERY OF THE APPLICATION AND AGREEMENT TO THE BORROWER’S
FINANCIAL ADVISOR AT UBS FINANCIAL SERVICES INC. WILL NOT BE CONSIDERED RECEIPT
OR ACCEPTANCE BY BANK. ALL DECISIONS MADE BY BANK REGARDING THE CREDIT LINE
WILL BE MADE IN UTAH.

 

THIS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY IN THE STATE OF UTAH AND, IN CONNECTION WITH THE CHOICE
OF LAW GOVERNING INTEREST, THE FEDERAL LAWS OF THE UNITED STATES.

 

14)     Assignment

 

This
Agreement may not be assigned by the Borrower without the prior written consent
of the Bank. This Agreement will be binding upon and inure to the benefit of
the heirs, successors and permitted assigns of the Borrower. The Bank may
assign this Agreement, and this Agreement will inure to the benefit of the Bank’s
successors and assigns.

 

15)     Amendment

 

This
Agreement may be amended only by the Bank at any time by sending written
notice, signed by an authorized officer of the Bank, of an amendment to the
Borrower. The amendment shall be effective as of the date established by the
Bank. This Agreement may not be amended orally. The Borrower or the Bank may
waive compliance with any provision of this Agreement, but any waiver must be
in writing and will not be deemed to be a waiver of any other provision of this
Agreement.

 

16)     Severability

 

If
any provision of this Agreement is held to be invalid, illegal, void or
unenforceable, by reason of any law, rule, administrative order or judicial or
arbitral decision, the determination will not affect the validity of the
remaining provisions of this Agreement.

 

17)     Choice of Forum; Waiver of
Jury Trial

 

a)              ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY JUDGMENT ENTERED BY ANY COURT REGARDING
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT WILL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE THIRD JUDICIAL DISTRICT COURT FOR THE
STATE OF UTAH OR IN THE UNITED STATES DISTRICT COURT FOR THE STATE OF UTAH.
EACH OF THE LOAN PARTIES IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS
OF THE THIRD JUDICIAL DISTRICT COURT FOR THE STATE OF UTAH AND OF THE UNITED
STATES DISTRICT COURT FOR THE STATE OF UTAH FOR THE PURPOSE OF ANY SUCH ACTION
OR PROCEEDING AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH ACTION OR PROCEEDING. EACH OF
THE LOAN PARTIES IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY HAVE NOW OR IN THE FUTURE TO THE LAYING OF
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

 

b)              EACH OF THE LOAN PARTIES (FOR
ITSELF, ANYONE CLAIMING THROUGH IT OR IN ITS NAME, AND ON BEHALF OF ITS EQUITY
HOLDERS) IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
REGARDING ANY CLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

c)              Any arbitration proceeding
between the Borrower (or any other Loan Party) and the Securities Intermediary,
regardless of whether or not based on circumstances related to any court
proceedings between the Bank and the Borrower (or the other Loan Party), will
not provide a basis for any stay of the court proceedings.

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

11

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

d)              Nothing in this Section 17
will be deemed to alter any agreement to arbitrate any controversies which may
arise between the Borrower (or any other Loan Party) and UBS Financial Services
Inc. or its predecessors, and any claims between the Borrower or the Loan
Party, as applicable, and UBS Financial Services Inc. or its employees (whether
or not they have acted as agents of the Bank) will be arbitrated as provided in
any agreement between the Borrower or the Loan Party, as applicable, and UBS
Financial Services Inc.

 

18)     State Specific Provisions and
Disclosures

 

a)              For residents of Ohio:

 

The Ohio laws against discrimination require that all
creditors make credit equally available to all creditworthy customers, and that
credit reporting agencies maintain separate credit histories on each individual
upon request. The Ohio civil rights commission administers compliance with this
law.

 

b)              For residents of Oregon:

 

NOTICE TO BORROWER: DO NOT SIGN THIS AGREEMENT BEFORE YOU
READ IT. THIS AGREEMENT PROVIDES FOR THE PAYMENT OF A PENALTY IF YOU WISH TO
REPAY A FIXED RATE ADVANCE PRIOR TO THE DATE PROVIDED FOR REPAYMENT IN THE
AGREEMENT.

 

c)              For residents of Vermont:

 

NOTICE TO BORROWER: THE ADVANCES MADE UNDER THIS AGREEMENT
ARE DEMAND LOANS AND SO MAY BE COLLECTED BY THE LENDER AT ANY TIME. A NEW
LOAN MUTUALLY AGREED UPON AND SUBSEQUENTLY ISSUED MAY CARRY A HIGHER OR
LOWER RATE OF INTEREST.

 

NOTICE TO JOINT BORROWER: YOUR SIGNATURE ON THE AGREEMENT
MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF THE BORROWER
DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.

 

d)              For residents of California:

 

(i)                Any person, whether married,
unmarried, or separated, may apply for separate credit.

 

(ii)            As required by law, you are
notified that a negative credit report reflecting on your credit record may be
submitted to a credit reporting agency if you fail to fulfill the terms of your
credit obligations.

 

(iii)        The Borrower will notify the
Bank, within a reasonable time, of any change in the Borrower’s name, address,
or employment.

 

(iv)           The Borrower will not attempt
to obtain any Advance if the Borrower knows that the Borrower’s credit
privileges under the Credit Line have been terminated or suspended.

 

(v)               The Borrower will notify the
Bank by telephone, telegraph, letter, or any other reasonable means that an
unauthorized use of the Credit Line has occurred or may occur as the result of
the loss or theft of a credit card or other instrument identifying the Credit
Line, within a reasonable time after the Borrower’s discovery of the loss or
theft, and will reasonably assist the Bank in determining the facts and
circumstances relating to any unauthorized use of the Credit Line.

 

19)     Account Agreement

 

Each Loan Party acknowledges and agrees that this Agreement
supplements their account agreement(s) with the Securities Intermediary
relating to the Collateral Account and, if applicable, any related account
management agreement(s) between the Loan Party and the Securities
Intermediary. In the event of a conflict between the terms of this Agreement
and any other agreement between the Loan Party and the Securities Intermediary,
the terms of this Agreement will prevail.

 

20)     Notices

 

Unless otherwise required by law, all notices to a Loan Party
may be oral or in writing, in the Bank’s discretion, and if in writing,
delivered or mailed by the United States mail, or by overnight carrier or by
telecopy to the address of the Loan Party shown on the records of the Bank.
Each Loan Party agrees to send notices to the Bank, in writing, at such address
as provided by the Bank from time to time.

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

12

 

	
  

  	
   

  	
   

  

 

	
   

  	
  UBS Bank USA

  
	
   

  	
  Variable
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5V

  	
  04442

  	
  CP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed
  Credit Line Account Number: (if
  applicable)

  
	
   

  	
  5F

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SS#
  / TIN

  	
   

  	
   

  	
   

  
	
  Credit
  Line Agreement

  	
   

  	
   

  	
  Internal Use Only

  
							

 

Schedule I to UBS Bank USA Credit Line Agreement

 

Schedule
of Percentage Spreads Over LIBOR

 

	
  Aggregate Approved Amount

  	
   

  	
  Spread Over LIBOR

  	
   

  
	
  $250,000 to $499,999

  	
   

  	
  2.750

  	
  %

  
	
  $500,000 to $999,999

  	
   

  	
  1 .750

  	
  %

  
	
  $1,000,000 to $4,999,999

  	
   

  	
  1.500

  	
  %

  
	
  $5,000,000 and over

  	
   

  	
  1 .250

  	
  %

  

 

Schedule II to UBS Bank USA Credit Line Agreement

 

Schedule
of Percentage Spreads Over Prime

 

	
  Outstanding Amount under Credit Line

  	
   

  	
  Spread Over Prime

  	
   

  
	
  $0 to $24,999

  	
   

  	
  3.125

  	
  %

  
	
  $25,000 to $49,999

  	
   

  	
  2.625

  	
  %

  
	
  $50,000 to $74,999

  	
   

  	
  2.125

  	
  %

  
	
  $75,000 to $99,999

  	
   

  	
  1.625

  	
  %

  
	
  $100,000 to $249,999

  	
   

  	
  1.375

  	
  %

  

 

NOTICE TO CO-SIGNER (Traduccion en Ingles Se Requiere Por La
Ley)

 

You
are being asked to guarantee this debt. Think carefully before you do. If the
borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay
if you have to, and that you want to accept this responsibility.

 

You
may have to pay to the full amount of the debt if the borrower does not pay.
You may also have to pay late fees or collection costs, which increase this
amount.

 

The
creditor can collect this debt from you without first trying to collect from
the borrower. The creditor can use the same collection methods against you that
can be used against the borrower, such as suing you, garnishing your wages,
etc. If this debt is ever in default, that fact may become a part of your
credit record.

 

This
notice is not the contract that makes you liable for the debt. 

 

AVISO PARA EL FIADOR (Spanish Translation Required By Law)

 

Se
le esta pidiendo que garantice esta deuda. Pienselo con cuidado antes de
ponerse de acuerdo. Si la persona que ha pedido este prestamo no paga la deuda,
usted tendra que pagarla. Este seguro de que usted podra pagar si sea obligado
a pagarla y de que usted desea aceptar la responsabilidad.

 

Si
la persona que ha pedido el prestamo no paga la deuda, es posible que usted
tenga que pagar la suma total de la deuda, mas los cargos por tardarse en el
pago o el costo de cobranza, lo cual aumenta el total de esta suma.

 

El
acreedor (financiero) puede cobrarle a usted sin, primeramente, tratar de cobrarle
al deudor. Los mismos metodos de cobranza que pueden usarse contra el deudor,
podran usarse contra usted, tales como presentar una demanda en corte, quitar
parte de su sueldo, etc. Si alguna vez no se cumpla con la obligacion de pagar
esta deuda, se puede incluir esa informacion en la historia de credito de
usted.

 

Este
aviso no es el contrato mismo en que se le echa a usted la responsabilidad de
la deuda.

 

	
   

  	
  ©2007 UBS Bank USA. All rights reserved.

  
	
  HB Rev 04/07
  HB LOAD SPEDOC UX E HB V102

  	
  Sign and date the application on page 4

  

 

13

 

Credit Line Account: 

 

  Collateral Account:

 

ADDENDUM TO CREDIT LINE ACCOUNT APPLICATION AND
AGREEMENT

 

This Addendum (this “Addendum”)
is attached to, incorporated by reference into and is fully a part of the
Credit Line Account Application and Agreement between UBS Bank USA (the “Bank”)
and the borrower named in the signature area below (the “Borrower”), dated as
of the date hereof (as amended or otherwise modified from time to time, the
“Agreement”). This Addendum and the Agreement shall not become effective and
binding upon the Bank until this Addendum has been executed by the Borrower and
accepted by the Bank at its home office. Any conflict between the terms of the
Agreement and this Addendum shall be resolved in accordance with the terms of
this Addendum. Defined terms used herein to have the respective meanings set
forth in the Agreement unless otherwise defined in this Addendum.

 

A.             Bank and the Borrower
acknowledge and agree that:

 

1. The Agreement is
amended by adding the following as Section 3 e):

 

“The Borrower acknowledges that the Bank will not make an
Advance against the Collateral in amounts equal to the fair market or par value
of the Collateral unless the Borrower arranges for another person or entity to
provide additional collateral or assurances on terms and conditions
satisfactory to the Bank. In requesting an Approved Amount equal to the par
value of the Collateral, the Borrower has arranged for UBS Financial Services
Inc. to provide, directly or through a third party, the pledge of additional
collateral and/or assurances to the Bank so that the Bank will consider making
Advances from time to time in accordance with the terms of this Agreement and in
amounts equal to, in the aggregate, the par value of the Collateral at the date
of an Advance. In addition, the Borrower, the Bank and UBS Financial Services
Inc. acknowledge and agree that if (a) the Bank is repaid all of the
Credit Line Obligations due to the Bank under the Agreement and this Addendum
and (b) as part of such repayment, the Bank realizes on the additional
collateral and/or assurances pledged or otherwise provided by UBS Financial
Services and/or any such third party to the Bank, then the Agreement shall not
terminate and the Bank shall automatically assign to UBS Financial Services
Inc. and any such third party, and UBS Financial Services Inc. and any such
third party shall automatically assume and be subrogated to, all of the Bank’s
rights, claims and interest in and under the Agreement and this Addendum,
including without limitation, the security interest in the Collateral granted
the Bank under the Agreement and this Addendum (further including, without
limitation, interest, dividends, distributions, premiums, other income and
payments received in respect of any Collateral) to the extent of the amount
that the Bank has realized on all or any part of the additional collateral
and/or assurances pledged or otherwise provided by UBS Financial Services
and/or any such third party to the Bank in order to effect the repayment of the
Credit Line Obligations due to the Bank under the Agreement. Upon such
automatic assignment and subrogation, UBS Financial Services Inc. and any such
third party shall be entitled to directly exercise any and all rights and
remedies afforded the Bank under the Agreement, this Addendum and any and all
other documents and agreements entered into in connection with the Agreement
and/or this Addendum.”

 

2. Section 4 c)
of the Agreement is deleted in its entirety and replaced with the following:

 

“Each Variable Rate Advance under a Prime Credit Line will
bear interest at a variable rate equal to LIBOR, adjusted daily, plus the
percentage rate that (unless otherwise specified by the Bank in writing) is
shown on Schedule I below for the Approved Amount of the Credit Line. For Prime
Credit Lines, the rate of interest payable on Variable Rate Advances is subject
to change without notice in accordance with fluctuations in

 

 

LIBOR.
On each day that LIBOR changes (or that is otherwise specified by the Bank in
writing), the interest rate on all Variable Rated Advances will change
accordingly.”

 

3. The Agreement is amended by adding the following as Section 5
g):

 

“Borrower
will make additional payments (“Additional Payments”) as follows:

 

·                 The
proceeds of any liquidation, redemption, sale or other disposition of all or
part of the auction rate securities in the Collateral Account (the “Pledged
ARS”) will be automatically transferred to Bank as payments. The amount of
these payments will be determined by the proceeds received in the Collateral
Account, and may be as much as the total Credit Line Obligations.

 

·                 All
other interest, dividends, distributions, premiums, other income and payments
that are received in the Collateral Account in respect of any Collateral will
be automatically transferred to Bank as payments. These are referred to as “ARS
Payments.” The amount of each ARS Payment will vary, based on the proceeds
received in the Collateral Account. Bank estimates that the ARS Payments will
range from zero to fifteen ($15.00) dollars per month per $1,000 in par value
of Pledged ARS. Bank will notify Borrower at least ten (10) days in
advance of any ARS Payment that falls outside of this range. If Borrower would
prefer to have advance notice of each payment to be made to Advances, Borrower
may cancel ARS Payments as described below.

 

·                 Borrower
agrees that any cash, check or other deposit (other than a deposit of
securities) made to the Collateral Account is an individual authorization to
have such amount transferred to Bank as a payment. The amount of each payment
is the amount of the deposit.

 

Each
Additional Payment will be applied, as of the date received by Bank, in the
manner set forth in the last sentence of Section 5 d). Borrower
acknowledges that neither Bank nor UBS Financial Services Inc. sets or arranges
for any schedule of Additional Payments. Instead, Additional Payments will be
transferred automatically from the Collateral Account whenever amounts are
received in the Collateral Account, generally on the second Business Day after
receipt.

 

Borrower
may elect to stop ARS Payments at any time, and this election will cancel all
ARS Payments that would occur three (3) Business Days or more after Bank
receives such notice. If Borrower stops ARS Payments, Borrower will continue to
be obligated to pay principal, interest, and other amounts pursuant to the
Agreement. If Borrower elects to cancel ARS Payments, all other Additional Payments
will be cancelled. Cancelling ARS Payments and Additional Payments may result
in higher interest charges by Bank because amounts received in the Collateral
Account will not be automatically transferred and credited. Any amounts
received in the Collateral Account will remain in the Collateral Account unless
Bank permits you to withdraw all or part of such amounts. Your notice to cancel
must be sent to: Attention: Head of Credit Risk Monitoring, UBS Bank USA, 299
South Main Street, Suite 2275, Salt Lake City, Utah 84111, or call (801)
741-033 1.

 

Important Disclosure About Required Payments. If Additional Payments are sufficient to pay
all accrued interest on Advances on or before a due date, then Borrower need
not make an additional interest payment. Excess Additional Payments will be
applied against principal. However, if Additional Payments are not sufficient
to pay all accrued interest on Advances on or before a due date, then Bank may,
in its sole discretion (1) capitalize unpaid interest as an additional
Advance, although Bank generally will capitalize interest only if the total of
all Advances will be under the Credit Line, or (2) require Borrower to
make payment of all accrued and unpaid interest.”

 

4. The Agreement is amended by adding the following as Section 10
e):

 

“The
Borrower agrees that in the event the Bank determines to liquidate or sell any
Collateral, the Bank shall, to the fullest extent permitted by applicable law,
have the right to do so in any manner, including, without limitation, the sale
of Collateral individually or in a block, for cash or for credit, in a public
or private sale, with or without public notice, through the use of sealed bids
or otherwise, with the aid of any advisor or agent who may be an affiliate of
the Bank or in any other manner as the Bank in its sole discretion shall
choose. The Borrower acknowledges that the price the Bank obtains for
Collateral in the Bank’s chosen method of

 

2

 

sale
may be lower than might be otherwise obtained in another method of sale, and
the Borrower hereby agrees that any such sale shall not be considered to be not
commercially reasonable solely because of such lower price. The Borrower
understands that there may not be a liquid market for the Collateral and that,
as a result, the price received for the Collateral upon liquidation or sale by
the Bank may be substantially less than the Borrower paid for such Collateral
or than the last market value available for it, if any. The Borrower further
agrees that any sale by the Bank shall not be considered to be not commercially
reasonable solely because there are few (including only one) or no third
parties who submit bids or otherwise offer to buy the Collateral. The Borrower
understands that the Bank’s sale of any of the Collateral may be subject to
various state and federal property and/or securities laws and regulations, and
that compliance with such laws and regulations may result in delays and/or a
lower price being obtained for the Collateral. The Borrower agrees that the
Bank shall have the right to restrict any prospective purchasers to those who,
in the Bank’s sole discretion, the Bank deems to be qualified. The Borrower
acknowledges that the Bank shall have sole authority to determine, without
limitation, the time, place, method of advertisement and manner of sale and
that the Bank may delay or adjourn any such sale in its sole discretion. The
Borrower expressly authorizes the Bank to take any action with respect to the
Collateral as the Bank deems necessary or advisable to facilitate any
liquidation or sale, and the Borrower agrees that the Bank shall not be held
liable for taking or failing to take any such action, regardless if a greater
price may have been obtained for the Collateral if such action was or was not
taken, as applicable. The Borrower hereby waives, to the fullest extent
permitted by law, any legal right of appraisal, notice, valuation, stay,
extension, moratorium or redemption that the Borrower would otherwise have with
respect to a sale of the Collateral.”

 

5. The
Agreement is amended by adding the following as Section 11 f):

 

“In
connection with any Collateral consisting of securities commonly referred to as
“Auction Rate Securities” (which for greater certainly, include, without
limitation, debt securities on which the interest rate payable is periodically
re-set by an auction process and/or equity securities on which any dividend
payable is periodically re-set by an auction process), if at any time any such
Auction Rate Securities may be sold, exchanged, redeemed, transferred or
otherwise conveyed by the Borrower for gross proceeds that are, in the
aggregate, not less than the par value of such securities (a “Par Value
Liquidation”), the Borrower agrees (i) to immediately effect such Par
Value Liquidation and (ii) that the proceeds of any such Par Value
Liquidation so effected shall be immediately and automatically used to pay down
any and all outstanding Credit Line Obligations to the extent of such proceeds.
The Borrower hereby acknowledges and agrees with the Bank and directs UBS
Financial Services Inc. that to the extent permitted by applicable law, this
section shall constitute an irrevocable instruction, direction and standing
sell order to UBS Financial Services Inc. to effect a Par Value Liquidation to
the extent it is possible to do so at any time during the term of this
Agreement. The Borrower further agrees with the Bank and UBS Financial Services
Inc. to execute and deliver to the Bank and/or UBS Financial Services Inc. such
further documents and agreements as may be necessary in the sole and absolute
discretion of the Bank and/or UBS Financial Services Inc. to effect the
foregoing irrevocable instruction, direction and standing sell order.”

 

6. The
Agreement is amended by adding the following as Section 21:

 

“The Borrower hereby (i) acknowledges and admits
its indebtedness and obligations to the Bank under the Agreement; and (ii) acknowledges,
admits and agrees that it has no and shall assert no defenses, offsets,
counterclaims or claims in respect of its obligations under the Agreement, in
each case notwithstanding any claim or asserted claim that it may have, or
purport to have, against any affiliate of the Bank.”

 

3

 

7. Schedules I and II to the Agreement are deleted in their entirety and
replaced with the following Schedule I:

 

Schedule I
to UBS Bank USA Credit Line Agreement

 

Schedule of Percentage
Spreads Over LIBOR

 

	
  Aggregate Approved Amount

  	
   

  	
  Spread Over LIBOR

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $25,001 and
  over

  	
   

  	
  1 .00

  	
  %

  

 

The
Bank reserves the right to change the Spread over LIBOR, in its sole and
absolute discretion and without notice to Borrower, if at any time the
Collateral which consists of securities commonly referred to as “Auction Rate
Securities” may be sold, exchanged, redeemed, transferred or otherwise conveyed
by Borrower for gross proceeds that are, in the aggregate, not less than the
par value of such securities.”

 

8. The
Bank and the Borrower acknowledge and agree that notwithstanding anything to
the contrary in the Agreement, Borrower shall not request and the Bank shall
not make a Fixed Rate Advance.

 

9.     Section 8 f) of the Agreement is
deleted in its entirety and replaced with the following:

 

“If
a Collateral Account has margin features, the margin features will be removed
by UBS Financial Services Inc. or UBS International Inc., as applicable, so
long as there is no outstanding margin debit in the Collateral Account. If a
Collateral Account has Resource Management Account® or Business Services
Account BSA® features, such as check writing, cards, bill payment, or
electronic funds transfer services, all such features shall be removed by UBS
Financial Services Inc. or UBS International Inc., as applicable.”

 

10.   The Bank and the Borrower
acknowledge and agree that notwithstanding anything to the contrary in the
Agreement, the Credit Line shall not have Credit Line checks.

 

11. The
Agreement is amended by adding the following as Section 23:

 

“The Borrower understands, acknowledges and agrees
that the Bank shall have no obligation to extend any further credit to the
Borrower.”

 

4

 

B.            This Addendum may be signed in multiple
original counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, each of the parties has signed
this Addendum pursuant to due and proper authority as of the date set forth
below.

 

	
   

  	
  Borrower
  Name:

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Rob Weiskopf

  
	
   

  	
  Name:

  	
   Rob Weiskopf

  
	
   

  	
  Title:

  	
  VP Finance Corporate Controller and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UBS BANK USA

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 6/30/08

  	
   

  
					

 

5

 

Re:  Account
Number CP 29354 (the “Account”)

 

ADDENDUM TO CREDIT LINE AGREEMENT

 

The attached “Credit Line
Agreement” sets forth certain terms related to the extension of credit by UBS
Bank USA (the “Bank”) with respect to certain assest held through the
above-referenced non-discretionary corporate cash management Account with UBS
Financial Services Inc. (the “Firm”). The party signing this Addendum as Client
where indicated below (the “Client”) understands and agrees that, notwithstanding
anything to the contrary contained in either the Credit Line Agreement
(including, without limitation, Section 19 of the Credit Line Agreement) or the
existing. Corporate Cash Management Account Agreement applicable to the Account
(the “Account Agreement the terms of the Credit Line Agreement supplement, but
do not replace, the existing Account Agreement as follows: (1) the terms of the
Credit Line Agreement (as amended from time to time, in accordance with its
terms) shall govern with respect to any matters, issues or disputes related
directly to, or arising directly from, the extension of credit and/or the
status of Client as borrower and the Bank as lender pursuant to the Credit-Line
Agreement (e.g., matters relating to the loan account(s) established at the
Bank pursuant to the Credit Line Agreement; the terms of any borrowing or
extension of credit under the Credit Line Agreement and/or the indemnification
of the Bank as a lender); and.(ii) the terms of the Account Agreement (as
amended from time to time, in accordance with its terms) shall govern with
respect to all other matters (e.g., matters relating to the Account established
at the Firm pursuant to the Account Agreement, the Firm’s trading authority and
activities and/or the indemnification of the Firm for the services it provides
under the Account Agreement).

 

Without limiting the generality of the foregoing,
Client further understands and agrees that:

 

(A)  If applicable, Client may continue to receive
Financial Advisor Reports with respect to the Account, as described in
Section 8 of the Account Agreement, and Client’s receipt of such reports
remains subject to the previsions of Section 8 of the Account Agreement.

 

(B)       Solely with respect
to disputes arising out of the extension of credit and/or the status of Client
as borrower and the Bank as lender pursuant to the Credit Line Agreement, the choice of law provisions of
Section 13 of the Credit Line Agreement and the dispute resolution provisions
of Section 17 of the Credit Line Agreement shall govern. With respect to
any other disputes relating to the Account, the choice of law. provisions of
Section 14 of the Account Agreement and the dispute resolution provisions of
Section 15 of the Account Agreement shall continue to govern.

 

(C)       If Client elected or
in the future
elects to adopt Exhibit B to the Account Agreement, the Firm may continue to
exercise the limited discretion descried therein with respect to the Account.

 

(D)      If Client elected or in the future elects to adopt Exhibit C to the Account Agreement, the
terms set forth in Exhibit C shall continue to govern with respect to the
Account and any investment policy statement associated with the Account.

 

 

	
  Acknowledged and agreed this 30th day
  of June 2008,

  
	
   

  	
   

  
	
   

  	
   

  
	
  Client’s Name:

  	
  ArQule, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Rob Weiskopf

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Rob
  Weiskopf

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  VP Finance Corporate Controller and Treasurer

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