Document:

Exhibit 10.14

INVESTMENT MANAGEMENT AGREEMENT

This Agreement dated as of October
1, 2004 is entered into by and between J.P. Morgan Investment Management Inc. (“Investment
Advisor”) and ACA Financial Guaranty Corporation (the “Client”) and sets forth
the terms on which Investment Advisor will act as investment manager of the
assets of Client placed with Investment Advisor for management hereunder (the “Account”).

1 Appointment of Investment
Advisor. Client hereby appoints Investment Advisor as investment manager
with respect to the Account with full investment authority, subject to the
Investment Guidelines (as defined and described in Section 3 below), and
Investment Advisor accepts such appointment and agrees to open and maintain the
Account as Client’s agent and investment manager.

2 Composition of Account;
Custody. (a) The Account shall consist of such cash and securities as shall
be agreed upon by Client and Investment Advisor that Client from time to time
places under the supervision of Investment Advisor and/or which shall become
part of the Account as a result of transactions therein or otherwise.

(b) Client has appointed Wachovia
Bank N. A.  (the “Custodian”) to be the
custodian of the cash, securities and other property in the Account and
Investment Advisor will execute all investment transactions for settlement with
the Custodian under custodial account number 7028300458. Client will provide
Investment Advisor with reasonable notice of any contributions to or
withdrawals from the Account as they may occur from time to time. Client shall
direct the Custodian to comply with all investment instructions given by
Investment Advisor with respect to the Account. Client shall provide Investment
Advisor with reasonable advance notice of any subsequent changes in the
Custodian.

(c) Client agrees that: (i) unless
Client gives written instructions to the contrary all dividend and interest
income received in respect of the Account will be retained by the Custodian for
reinvestment as part of the Account, and (ii) Client shall have full
responsibility for the payment of all taxes due on capital or income held or
collected for the Account and the filing of any returns in connection therewith
or otherwise required by law.

3 Investment Guidelines.
Client is responsible for informing Investment Advisor, in advance and in
writing, of the investment policies, guidelines, objectives, restrictions,
conditions, limitations or directions applicable to, as well as any cash needs
of, the Account (the “Investment Guidelines”), and Investment Advisor shall
invest, reinvest and manage the securities, cash and any other property in the
Account subject to such Investment Guidelines as in effect from time to time.
The initial Investment Guidelines are attached hereto as Exhibit A and made a
part hereof. Client may amend the Investment Guidelines upon written notice to
Investment Advisor; provided such amendment becomes effective only upon
Investment Advisor’s written acknowledgment of its receipt of such amendment,
and Investment Advisor shall be provided a reasonable time to comply with such
amendment.

 

4 Discretionary Authority.
(a) Client requests Investment Advisor to review the assets held in the
Account, and, subject to and in accordance with the Investment Guidelines,
Investment Advisor shall have complete discretion and authority, without
obtaining Client’s instructions, to make such sales, exchanges, investments or
reinvestments or to take any action that it deems necessary or desirable in
connection with the assets in the Account, and in connection therewith to
execute or cause to be executed any and all required documents. In exercising
its investment discretion Investment Advisor is not limited to investing in
securities and other property of the type normally deemed appropriate for trust
funds.

(b) Client authorizes Investment
Advisor, in its discretion, to aggregate purchases and sales of securities for
the Account with purchases and sales of securities of the same issuer for other
clients of Investment Advisor occurring on the same day. When transactions are
so aggregated, the actual prices applicable to the aggregated transaction will
be averaged, and the Account and the accounts of other participating clients of
Investment Advisor will be deemed to have purchased or sold their proportionate
share of the securities involved at the average price so obtained.

(c) Subject to the Investment
Guidelines, investments may be made in, but are not limited to, securities of
any kind including common or preferred stocks, warrants, rights, corporate or
government bonds or notes, repurchase agreements, securities of any open-end or
closed-end management type investment company or investment trust registered
under the Investment Company Act of 1940, limited liability legal entities and
non-registered pooled funds. The fact that any bank or non-bank subsidiary of
JPMorgan Chase & Co. is selling or providing services to and receiving
remuneration from the foregoing repurchase agreement, investment company,
investment trust or other investment product as counterparty, investment
advisor, custodian, transfer agent, registrar, or otherwise shall not preclude
Investment Advisor from investing the Account in the security.

(d) In accordance with the terms of
Exhibit E attached hereto and made a part hereof, Investment Advisor is, among
other things, authorized and empowered to purchase, sell, hold and generally
deal in and with all futures, options, short sales and derivatives contracts.

5 Brokerage and Execution
Services. In accordance with the terms of Exhibit B attached hereto and
made a part hereof, the Client acknowledges that Investment Advisor will effect
securities and other investment transactions through brokers of its choosing.

6 Proxies and Legal Notices.
Investment Advisor shall vote all proxies with respect to securities held in
the Account in accordance with Investment Advisor’s proxy voting guidelines and
procedures in effect from time to time. Client agrees to instruct Custodian to
forward all proxy materials and related shareholder communications to the
designee provided by Investment Advisor promptly upon receipt. Investment
Advisor shall not be liable with regard to voting of proxies or other corporate
actions if the proxy materials and related communications are not received in a
timely manner. Investment Advisor will not be required to take any action or
render any advice with respect to securities presently or formerly held in the
Account, or the issuers thereof, which become the subject of any legal
proceedings, including bankruptcies.

 

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7 Information and Statements.
Investment Advisor shall cause to be rendered to Client, no less frequently
than quarterly, statements setting forth the property in the Account and
transactions therein and advices of changes as they are made in the Account in
accordance with Investment Advisor’s normal procedures. Client agrees to review
promptly all statements and advices. Client acknowledges that Custodian will
furnish the official confirmations of Account transactions and periodic Account
statements detailing positions and activity.

8 Delegation to Third Parties.
Investment Advisor may employ an affiliate or a third party to perform any
accounting, administrative, reporting and ancillary services required to enable
Investment Advisor to perform its functions under this Agreement.
Notwithstanding any other provision of the Agreement, Investment Advisor may
provide information about Client and the Account to any such affiliate or other
third party for the purpose of providing the services contemplated under this
clause. Investment Advisor will act in good faith in the selection, use and
monitoring of affiliates and other third parties, and any delegation or
appointment hereunder shall not relieve Investment Advisor of any of its
obligations under this Agreement.

9 Client Lists. Client
consents to the use of Client’s name in Investment Advisor’s (or its affiliates’)
lists of representative clients solely for the purpose of identifying Client as
a Investment Advisor client.

10 Fees and Expenses. For
all services provided hereunder, Client shall pay Investment Advisor the fees
set forth in Exhibit C attached hereto. Such fees may be changed by written
agreement of the parties hereto. It is understood that, in the event such fees
are to be paid by the Custodian, Client will provide written authorization to
the Custodian to pay Investment Advisor’s fees directly from the Account. In
addition, it is agreed that all brokerage commissions, taxes, charges and other
costs incident to the purchase and sale of securities shall be charged to and
paid from the Account. Client shall also be responsible for, and shall
reimburse Investment Advisor with respect to, any reasonable out-of-pocket
expenses (including attorneys fees) incurred by any of Investment Advisor, its
employees, representatives, directors, officers, shareholders, and any
affiliate thereof (collectively, the “JPMC Entities and Persons”), with respect
to any litigation or required responses to third parties arising out of
Investment Advisor’s management of the Account, except to the extent it is
judicially determined that Investment Advisor acted with gross negligence or
willful misconduct or in violation of applicable law.

11 Service to Other Clients.
It is understood that Investment Advisor and its affiliates perform investment
advisory services for various clients. Client agrees that Investment Advisor
may give advice and take action with respect to any of its other clients, which
may differ from advice given or the timing or nature of action taken with
respect to the Account. It is Investment Advisor’s policy, to the extent
practicable, to allocate investment opportunities among clients over a period
of time on a fair and equitable basis. It is understood that Investment Advisor
shall not have any obligations to purchase or sell, or to recommend for
purchase or sale, for the Account any security which Investment Advisor, its
principals, affiliates or employees may purchase or sell for its or their own
accounts or for the account of any other client, if in the opinion of
Investment Advisor such transaction or investment appears unsuitable,
impractical or undesirable for the account. Client acknowledges that Investment
Advisor may make different investment decisions 

 

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with respect to each of its
clients, and that such fact shall not be relied upon by Client or any of its
agents or representatives as evidence of a breach of Investment Advisor’s
duties hereunder.

12 Insider Information. If,
by reason of its investment management activities, Investment Advisor obtains
material non-public information, Client acknowledges that Investment Advisor
will not make any investment decisions based upon such information.

13 Notices. All notices and
other written communications specified herein shall be deemed duly given if
delivered personally, if mailed (by registered or certified mail, return
receipt requested and postage prepaid), if sent by overnight courier service
for next business day delivery, by facsimile transmission, or by electronic
transmittal with return receipt, to the appropriate address for each party as
set forth below. Such communications shall be effective immediately (if
delivered in person or by confirmed facsimile), upon the date acknowledged to
have been received in return receipt, or upon the next business day (if sent by
overnight courier service).

Notices shall be sent to Investment Advisor at the following address:

J.P. Morgan Investment Management Inc.

Address: 522 Fifth Avenue, New York, NY 10036 

Facsimile: 212-837-1063

Attention: Jay V. Minchilli

A copy of all legal notices shall
also be delivered to Investment Advisor at the following address:

J.P. Morgan Investment Management Inc.

522 Fifth Avenue, New York, New York 10036

Facsimile: 212-837-5153

Attention: Legal Department

Notices shall be sent to Custodian
at the following address:

Address:  1300 I Street
NW, 12th Floor

Washington DC 20005

Facsimile: 202-414-3320 

Attention:  June Gray

Notices shall be sent to Client at
the following address:

Address: ACA Financial Guaranty Corporation

140 Broadway, 47th Floor

Facsimile:  212-375-2302

Attention:  General Counsel

14 Discharge of Liability.
(a) Investment Advisor does not guarantee the future performance of the Account
or any specific level of performance, the success of any investment decision or
strategy that Investment Advisor may use, or the success of Investment Advisor’s
overall management of the Account. Client understands that investment decisions
made for the Account by Investment Advisor are subject to various market,
currency, economic, political and business risks, and that those investment
decisions will not always be profitable. Investment Advisor will 

 

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manage only the securities, cash
and other investments held in the Account and in making investment decisions
for the Account, Investment Advisor will not consider any other securities,
cash or other investments owned or managed by Client.

(b) The JPMC Entities and Persons
shall have no liability for any expenses, losses, damages, liabilities, charges
and claims of any kind or nature whatsoever (“Losses”) incurred by or
threatened against Investment Advisor as the result of any actions it takes
based on instructions it receives from authorized persons (“Authorized Persons”)
of the Client and reasonably believed by the JPMC Entities and Persons to be
genuine. A list of such Authorized Persons is listed on Exhibit D. The JPMC
Entities and Persons shall not be liable to Client or its representatives for
any Losses suffered by Client arising from any depreciation in the value of the
Account or from the income derived from it (including, without limitation,
where such depreciation results from capital loss or taxation liability) or
other Losses that result from Investment Advisor’s actions hereunder, except to
the extent such Losses are judicially determined to be proximately caused by
the gross negligence or willful misconduct of or violation of applicable law by
Investment Advisor. Under no circumstances shall the JPMC Entities and Persons
be liable for any special, consequential or indirect damages.

(c) Investment Advisor may consult
with outside legal counsel concerning any question which may arise with
reference to its duties under this Agreement, and may rely on the opinion of
such counsel with respect to any action taken or suffered by Investment Advisor
hereunder in good faith and in accordance with the opinion of such counsel.

(d) Notwithstanding the foregoing,
no provision of this Agreement shall constitute a waiver or limitation of any
right of Client that may exist under Federal or state securities law.

15 Force Majeure. (a)
Neither party to this Agreement shall be liable for damages resulting from
delayed or defective performance when such delays arise out of causes beyond
the control and without the fault or negligence of the offending party. Such
causes may include, but are not restricted to, Acts of God or of the public
enemy, terrorism, acts of the State in its sovereign capacity, fires, floods,
earthquakes, power failure, disabling strikes, epidemics, quarantine
restrictions, and freight embargoes.

(b) If at any time due to major
fluctuations in market prices, abnormal market conditions or any other reason
outside the control of Investment Advisor, there shall be a deviation from the
specific instructions set out in the Investment Guidelines: (i) Investment
Advisor shall not be in breach of the Investment Guidelines provided it takes such
steps as may be necessary to ensure compliance within 14 days after such
deviation occurs; and (ii) If, in the judgment of Investment Advisor, the
actions described in (i) above are not in the best interests of Client,
Investment Advisor may, prior to the expiration of the 14 day period referred
to in (i) above, make a written recommendation to Client on the most
appropriate way to deal with the deviation which shall toll the deadline in (i)
above. Unless Client directs Investment Advisor to the contrary within 14 days
of the receipt by Client of the recommendation, Investment Advisor shall be
entitled to implement its recommendation and shall not be in breach of the
Investment Guidelines. Investment Advisor does not provide any express or
implied warranty as to the performance or 

 

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profitability of the Account or any
part thereof or that any specific investment objectives will be successfully
met.

16 Client Representations.
Client represents and warrants to Investment Advisor that: (i) Client has full
power and authority to appoint Investment Advisor to deal with the Account in
accordance with the terms of this Agreement, this Agreement is valid and has
been duly authorized, does not violate any obligation by which Client is bound,
and when so executed and delivered, will be binding upon Client in accordance
with its terms subject to applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally and general principles of
equity (and Client agrees to provide Investment Advisor with evidence of such
authority as may be reasonably requested by Investment Advisor); (ii) Client is
not an investment company as defined by the “Investment Company Act of 1940”
and registration of the Account under such Act is not required; (iii) the
Account does not contain employee benefit plan assets subject to the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), Client is not an
employee benefit plan subject to ERISA, and Client is not entering into this
Agreement in a fiduciary capacity under ERISA; (iv) Client has executed and
delivered to Investment Advisor, as applicable, a QEP Qualification (Annex A)
and a Qualified Institutional Buyer Certification (Annex B), and Client will
advise Investment Advisor in writing as soon as practicable of any change in
status affecting such documents; (v) Client acknowledges that it has received
from Investment Advisor a copy of Part II of Investment Advisor’s Form ADV more
than forty-eight (48) hours prior to entering into this Agreement; and (vi)
Client shall furnish to Investment Advisor certified copies of appointments or
designations setting forth the names, titles and authorities of the individuals
who are authorized to act on behalf of Client with respect to the Account and
this Agreement, and Investment Advisor shall be entitled to rely upon such
information until it receives written notice of a change in such appointments
or designations.

17 Investment Advisor
Representations. Investment Advisor represents and warrants to Client that:
(i) this Agreement is valid and has been duly authorized, does not violate any
obligation by which Investment Advisor is bound, and when so executed and
delivered, will be binding upon Investment Advisor in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally and general principles of equity; and
(ii) it is registered as an investment adviser under the Investment Adviser’s
Act of 1940.

18 Applicable Law. All
questions arising hereunder shall be determined according to the laws of the
State of New York (without regard to its conflict of laws provisions) and the
provisions hereof shall be binding upon the successors and assigns of the
parties. Client hereby submits to the jurisdiction of the courts of New York
and of the Federal Courts in the Southern District of New York with respect to
any litigation relating to this agreement, and consents to the service of process
by the mailing to Client of copies thereof by certified mail to Client’s
address as it appears on the books and records of Investment Advisor, such
service to be effective ten days after mailing. Client hereby waives trial by
jury in any judicial proceeding involving any dispute, controversy or claim
arising out of or relating to this Agreement. Client hereby irrevocably waives
any immunity to which it might otherwise be entitled in any arbitration, action
at law, suit in equity or any other proceedings arising out of or based on this
Agreement or any transaction in connection herewith.

 

6

 

19 Assignment. This
Agreement may not be assigned, as defined in the Investment Advisers Act of
1940, as amended, and the rules thereunder without the written consent of the
other party.

20 Term; Termination and
Survival.  The term of this Agreement
shall be for a period of one year beginning on the date first above written;
provided that it shall automatically be renewed for successive additional one
year terms without further action from the parties. This Agreement may be
terminated with respect to all or a portion of the cash, securities or other
property constituting the Account by either party as to its responsibilities
hereunder at any time by giving to the other party written notice at least
thirty (30) days prior to the date on which such termination is to become
effective. Termination of this Agreement shall be without prejudice to the
completion of any commitments to purchase or dispose of any securities or other
property made by Investment Advisor prior to giving or receipt of notice to
terminate this Agreement. The provisions relating to the following rights and
obligations of the parties shall survive the termination, cancellation,
expiration and/or rescission of this Agreement: Client Lists, Discharge of
Liability, Applicable Law, and Termination and Survival.

21 Counterparts; Severability.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. In the event that one or more provisions of this Agreement
shall be held by any court to be invalid, void or unenforceable, the remaining
provisions shall nevertheless remain and continue in full force and effect.

22 Amendment. This Agreement
may be amended by mutual consent of the parties. Except as provided herein, no
alteration or variation of the terms of this Agreement shall be valid unless
made in writing and signed by the parties hereto.

23 Customer Identification
Program. To help the government fight the funding of terrorism and money
laundering activities, Investment Advisor has adopted a Customer Identification
Program, (“CIP”) pursuant to which Investment Advisor is required to obtain,
verify and maintain records of certain information relating to its clients. In
order to facilitate Investment Advisor’s compliance with its CIP, Client hereby
represents and warrants that (i) Client’s taxpayer identification number or
other government issued identification number is 52-1474358, (ii) all documents
provided to Investment Advisor are true and accurate as of the date hereof, and
(iii) Client agrees to provide to Investment Advisor such other information and
documents that Investment Advisor reasonably requests in order to comply with
Investment Advisor’s CIP.

IN WITNESS WHEREOF, this Agreement
has been signed on behalf of the parties on the day and year first above
written.

PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING
COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS
ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE
COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS
OF PARTICIPATING IN A 

 

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TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY
TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING
COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS ACCOUNT
DOCUMENT. 

 

	
  ACA FINANCIAL GUARANTY
  CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  J.P. MORGAN INVESTMENT
  MANAGEMENT INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
   

  	
   

  
	
  Title: 

  	
  Vice President

  	
   

  
				

 

 

8

EXHIBIT
A

ACA Financial Guaranty Corporation

Investment
Guidelines

 

 

Objective:
                                       The principal
objectives in managing the investment portfolio of ACA

Financial Guaranty Corporation (“ACA” or “the Company”) are to:

 

a)              preserve the
Company’s “A” rating.

b)             Maximize total
after-tax return subject to limitations on income volatility,

c)              Maintain
adequate liquidity, and

d)             Manage
investment risk to minimize correlation with insurance risk.

 

It is the plan of the
Company to utilize the services of both third-party asset management firms and
its affiliates ACA Management, L.L.C. and ACA Securities, L.L.C. in managing
the investment portfolio.

 

Unless otherwise stated, the
percentage constraints listed herein are based upon the total aggregate market
value of the Company’s consolidated investment portfolio (“Aggregate Portfolio”)
at the end of each fiscal quarter. In the event that any of the constraints are
violated due to market fluctuations, the Finance Department will instruct the
portfolio managers to rebalance the portfolio before the end of the next
quarter.  Unless otherwise stated, rating
and other criteria for an individual security are applied as of the date of
purchase.

 

The Company may invest in
securities issued by its affiliates that constitute a portion of a transaction
in which the majority of the securities issued are sold to unaffiliated third
parties.  The risk-adjusted price of any
such securities must be not be less than their fair market value, and any such
investment must be approved by at least two of the following: The Chief
Executive Officer, Chief Operating Officer or Chief Financial Officer of the
Company (each, a “Senior Officer”) on the joint recommendation of the
Structured Finance Underwriting Committee and the Finance Department.

 

In addition to the
investment guidelines explicitly set forth, all investments will need to comply
with the investment limitations imposed on the Company by the Maryland
Insurance Administration and all other applicable law.

 

 

	
  Portfolio Composition:

  	
   

  	
  Cash and Short-Term:

  	
   

  	
  5% - 15%

  
	
   

  	
   

  	
  Fixed Income:

  	
   

  	
  80% - 95%

  
	
   

  	
   

  	
  Tactical:

  	
   

  	
  0%-5%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

 

A-1

 

	 
	
  Cash and Short-Term Securities
  (5%-15% of Aggregate Portfolio)

  	 

	 
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  Benchmark:

  	
   

  	
  i
  Money Net First Tier Institutional Money Market Fund Index.

  
	
   

  	
   

  	
   

  
	
  Portfolio
  Objective:

  	
   

  	
  The
  portfolio objective is to outperform the benchmark. Highly liquid securities
  are to be purchased.

  
	
   

  	
   

  	
   

  
	
  Constraints:

  	
   

  	
  Securities
  (Commercial Paper, Banker’s Acceptances and Time Deposits) must be rated at a
  minimum of A1 by Standard & Poor’s Corporation (“S&P”) or P1 by
  Moody’s Investors Service (“Moody’s”) and not have maturities greater than
  two years. Single issuers may not comprise more than 5% of the Aggregate
  Portfolio (other than direct obligations of the US Government or its
  agencies).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Money
  market funds are permitted, but allowable funds must seek to maintain a
  stable net asset value and may only purchase “First Tier” securities. First Tier securities are securities which are rated (or that have
  been issued by an issuer that is rated with respect to a class of short-term
  debt obligations, or any security within that class, comparable in priority
  and quality with such securities) in the highest short-term rating category
  by at least two nationally recognized statistical rating organizations
  (NRSRO’s), or if only one NRSRO has assigned a rating, by that NRSRO.
  A single fund may not comprise more than 15% of the Aggregate Portfolio.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Repurchase
  agreements are permitted but must be a) marked to market daily, b)
  collateralized at 102% by US Government or agency securities, c) have a
  maturity of 7 days or less and d) have counterparties that are rated A-1 by
  S&P or P-1 by Moody’s. Furthermore, only Primary Dealers designated by
  the Federal Reserve Bank of New York and top-tier broker-dealers (See Exhibit
  1) will be acceptable counterparties. In addition, counterparties and their
  aggregate exposure limits must have prior approval by the Management
  Investment Committee. The aggregate level of repurchase agreements cannot
  exceed 10% of the portfolio without the prior approval of at least two Senior
  Officers, which is not expected to be given except in conditions of extreme
  market illiquidity.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In
  order to properly hedge short-term foreign currency exposure, time deposits
  denominated in foreign currency 

  
									

 

A-2

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  will
  be permitted but excluded from the performance measures.

  
	
   

  	
   

  	
   

  
	
  Fixed
  Income Securities (80%-95% of Aggregate Portfolio)

  
	
   

  	
   

  	
   

  
	
  Benchmark:

  	
   

  	
  Lehman
  Aggregate Bond Index.

  
	
   

  	
   

  	
   

  
	
  Portfolio
  Objective:

  	
   

  	
  The
  portfolio objective is to outperform the benchmark while adhering to high
  fiduciary standards.

  
	
   

  	
   

  	
   

  
	
  Portfolio
  Constraints:

  	
   

  	
  Duration

  The duration of the
  portfolio should not exceed the duration of the relevant benchmark by more
  than one year or lag the benchmark by more than one year.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Portfolio
  Credit Quality

  Average portfolio credit
  quality must be rated in at least the A+ category by at least two NRSROs (as
  measured by the lowest ratings assigned by any NRSRO (the “Lowest NRSRO
  Rating”)). A minimum of 60% must be invested in securities having a Lowest
  NRSRO Rating in at least the A category by two NRSRO’s.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Security
  Credit Quality

  Except as specified below,
  investment is restricted to securities having a Lowest NRSRO Rating in at
  least the BBB category by two NRSRO’s. In the event of any downgrade below
  the BBB category, the portfolio manager must contact the Finance Department
  to discuss the course of action and may hold the position if approved by the
  Investment Committee of the Board of Directors. Securities rated in the BBB
  category cannot comprise more than 20% of the Aggregate Portfolio.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Sector
  Constraints:

  	
   

  	
  Notwithstanding
  the constraints set forth below, the portfolio will remain diversified among
  the various sectors listed below.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  US
  Treasury and US Government Agency Securities

  There is no limitation on
  the purchase of US Treasuries and US Government Agency Securities. However, securities classified as mortgage securities must follow the
  mortgage constraints listed below.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Corporate
  Bonds

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  maximum allocation to corporate securities is 30% of the Aggregate Portfolio.
  Included in the corporate sector are US corporates, preferred stock,
  (including, without limitation, trust preferred issues), Eurobonds, Yankees,
  US dollar denominated 

  
	
   

  	
   

  	
   

  

 

A-3

 

	
   

  	
   

  	
  sovereigns,
  US dollar denominated super nationals, and US dollar denominated securities
  issued by foreign entities. Exposure to any single issuer is limited to 5% of
  the Aggregate Portfolio. Investments may include issuers having a Lowest
  NRSRO Rating that is lower than the BBB category, if the rating of only one
  NRSRO is lower than the BBB category; exposure to any such single issuer is
  limited to 3% of the aggregate portfolio.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Corporate Private Placements and 144As

  The maximum allocation to
  fixed income private placements and 144As is 10% of the Aggregate Portfolio, with private placements (non-144A’s) not to exceed 5% of the Aggregate Portfolio. Exposures to any single issuers cannot exceed 2% of the Aggregate Portfolio. In addition, private placements and 144As must comply with all other constraints related to corporate bonds. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Asset
  Backed

  The maximum allocation to
  asset-backed securities is 50% of the Aggregate Portfolio with no single
  issuer, which is defined as a separate pool of collateral, to exceed 5% of
  the Aggregate Portfolio. In addition, exposure to any single servicer of
  collateral is limited to 15% of the Aggregate Portfolio. Asset backed
  securities must have a Lowest NRSRO Rating in at least the BBB category by at
  least one NRSRO.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mortgage
  Backed

  The maximum allocation to
  mortgage securities is 40% of the Aggregate Portfolio. Subject to the
  aggregate mortgage constraint, non-agency securities can constitute no more
  than 20% of the Aggregate Portfolio. Any non-agency single issuer, which is
  defined as a separate pool of collateral, may not exceed 5% of the Aggregate
  Portfolio. In addition, exposure to any non-agency single servicer of
  collateral is limited to 15% of the Aggregate Portfolio. Mortgage backed
  securities must have a Lowest NRSRO Rating in at least the BBB category by a
  least one NRSRO. More volatile types of
  CMO’s (PO’s, Inverse floaters, or any derivative thereof) are not permitted.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Municipals

  The maximum allocation to
  municipal bonds is 80% of the Aggregate Portfolio with no single issuer to
  exceed 5% of the Aggregate Portfolio. In addition, single risk concentration
  to any credit enhancement provider is limited to 35% of the Aggregate
  Portfolio. Municipal purchases in excess of 2% of the Aggregate Portfolio
  must be pre-cleared by ACA.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Non-US
  Dollar Denominated Bonds

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  maximum allocation to non-dollar bonds is 15% of the

  

 

A-4

 

	
   

  	
   

  	
  Aggregate
  Portfolio. Net foreign currency exposure may not exceed 10% of the Aggregate
  Portfolio. Debt securities of any single country are limited to 2.5% of the
  Aggregate Portfolio. Debt securities issued or Guaranteed by the governments
  of the G7 and European Union (“EU”) countries and having a Lowest NRSRO Rating
  in at least the A category by at least one NRSRO are permissible. Other debt
  securities issued by corporations, banks or other institutions denominated in
  the currency of one of the G7 or EU countries and having a Lowest NRSRO
  Rating in at least the AA category by at least one NRSRO are permissible.
  Currency forward contracts are permissible to manage benchmark exposure. The
  sum of the current market value of the non-dollar bond positions and the net
  notional amounts of all long and short forward contracts must not exceed 10%
  of the Aggregate Portfolio. The net notional amounts of all long and short
  forwards contracts denominated in any one currency and the current market
  value of all fixed income positions denominated in the same currency must not
  exceed 2.5% of the Aggregate Portfolio. Long options positions on bonds
  and/or currencies are permissible up to 5% of the Aggregate Portfolio, as
  measured by current market value of the underlying position. If a forward or
  option contract is used, the derivative counter parties must have a Lowest
  NRSRO Rating in at least the AA category (exposures with a maturity longer
  than one year) or A-1 category (exposures with a maturity of one year or
  less) by at least one NRSRO. Furthermore, only Primary Dealers designated by
  the Federal Reserve Bank of New York and top-tier broker-dealers will be acceptable
  counter-parties. In addition, counter-parties and their aggregate exposure
  limits must have prior approval by the Management Finance Committee.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest
  Rate Futures

  The maximum allocation to
  interest rate futures is 10% of the Aggregate Portfolio, which is based on
  the notional principal of the futures contract without
  any netting of positions. Futures may only be used to manage the portfolio to
  the duration of the benchmark and to manage the term structure of the
  portfolio. Both long and short positions are permissible.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Money
  Market Securities/Funds

  Securities (Commercial
  Paper, Banker’s Acceptances and Time Deposits) must be rated at a minimum of
  A1 or P1 and not have maturity greater than one year. Single issuers may not
  comprise more than 5% of the Aggregate Portfolio (other than direct
  obligations of the US Government or its agencies).

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Money
  market funds are permitted but allowable funds must seek to maintain a stable
  net asset value and may only purchase 

  

 

A-5

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “First
  Tier” securities. A single fund may not comprise more than 15% of the
  Aggregate Portfolio.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Repurchase
  agreements are allowed but must be a) marked to market daily, b)
  collateralized at 102% by US Government or agency securities, c) have a
  maturity or 30 days or less and d) have counterparties that have a Lowest
  NRSRO Rating of a least A-1 or P-1 by at least one NRSRO. Furthermore, only
  Primary Dealers designated by the Federal Reserve Bank of New York and
  top-tier brokers-dealers will be acceptable counterparties. In addition,
  counterparties and their aggregate exposure limits must have prior approval
  by the Management Finance Committee. The aggregate level of repurchase
  agreements cannot exceed 10% of the portfolio without the prior approval of
  the Management Finance Committee.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Credit
  Derivatives

  Credit derivatives are
  allowed but must follow credit quality, maturity, single risk and aggregate
  guidelines established by the Management Finance Committee on the
  recommendation of the Structured Finance Underwriting Committee, the rating
  agencies and the applicable statutory authorities.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Other
  Derivatives

  Options, swaps, futures
  (other than those previously mentioned), currencies (other than those
  previously mentioned), and structured notes are not permitted.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Gain/Loss
  Constraints:

  	
   

  	
  In
  all cases regarding losses as a result of trading activity in a portfolio
  under no circumstances should a loss exist on a “stand alone” basis — at
  least some portion of said loss should be offset by a corresponding gain in
  the portfolio. It is the role of the Portfolio Manager to minimize losses in
  the Portfolio. In the event that a prospective trade is projected to generate
  a significant loss (or 0.50% of portfolio value), it is the responsibility of
  the portfolio manger to advise the Chief Financial Officer or another member
  of the finance staff of the impact this trade would have on the portfolio
  before the said trade is settled. When in doubt about the “significance” of
  the impact of a trade on the portfolio, the Portfolio Manger should always
  advise the Chief Financial Officer or another member of the finance staff
  before settling.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Regarding
  gains in portfolio, any significant gains taken in the fiscal fourth quarter
  that are not substantially offset by losses should be communicated to the
  Chief Financial Officer or another member of the finance staff before said
  trade is settled. When in doubt about the significance of any such gain,
  Portfolio 

  

 

A-6

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Manger
  should always advise the Chief Financial Officer or another member of the
  finance staff before settling.

  
	
   

  	
   

  	
   

  
	
  Tactical
  (0%-5% of Aggregate Portfolio)

  
	
   

  	
   

  	
   

  
	
  Benchmark:

  	
   

  	
  Sustainable
  returns significantly in excess of the Fixed Income portion of the investment
  portfolio.

  
	
   

  	
   

  	
   

  
	
  Portfolio
  Objective:

  	
   

  	
  The
  portfolio objective is to achieve excess returns by pursuing investments
  outside the guideline relative to Cash and Short-Term and Fixed Income, while
  managing investment risk to minimize correlation with insurance risk.

  
	
   

  	
   

  	
   

  
	
  Overview:

  	
   

  	
  With
  the prior approval of at least two Senior Officers, an allocation to
  securities that do not adhere to the above guidelines is permissible, but may
  not exceed 5% of the Aggregate Investment Portfolio.

  
	
   

  	
   

  	
   

  
	
  Permitted:

  	
   

  	
  Securities including but
  not limited to the following:

  a) Equity interest;

  b) Subsidiary investments;

  c) Foreign investments, and

  d) Non-investment grade securities with no minimum rating.

   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

A-7

 

EXHIBIT B

Brokerage and Execution Services

(a) Investment Advisor will use the
execution services of such broker-dealers as it may select from time to time,
which will be entitled to compensation for their services, to effect
transactions for the purchase and/or sale of securities and other investments
by the Account. In connection with transactions effected for the Account,
Client authorizes Investment Advisor to establish and trade in accounts in its
or the name of the Account with members of national or regional securities
exchanges and the National Association of Securities Dealers Inc., including “omnibus”
accounts established for the purpose of combining orders for more than one
client.

(b) Client hereby authorizes
Investment Advisor to effect transactions for the Account through affiliated
broker-dealers (“Affiliated Broker-Dealers”) and the Affiliated Broker-Dealers
may retain commissions in connection with effecting such agency transactions
for the Account. Client understands that other broker-dealers may be willing to
effect transactions for Client at lower commission rates than those charged by
Affiliated Broker-Dealers. When executing trades through Affiliated
Broker-Dealers, Investment Advisor shall seek to obtain the most favorable
terms for Client transactions that are reasonably available under the
circumstances. If Client’s Account is subject to Section 11(a) of the
Securities Exchange Act of 1934 (“Exchange Act”), as amended, and Rule
11a2-2(T) thereunder, Client authorizes the Affiliated Broker-Dealers that may
be members of a U.S. securities exchange, or have the right to trade on such an
exchange, to execute transactions on such exchange for the Account.

(c) In selecting brokers through
which transactions for client accounts will be executed, Investment Advisor’s
primary consideration will be the broker’s ability to provide best execution of
trades. In making a decision about best execution (and subject to section 28(e)
of the Securities Exchange Act of 1934, as amended), Investment Advisor may
consider a number of factors including, but not limited to, trade price and
commission and quality of research services the broker may provide. The
commission rates paid to any broker for execution of transactions will be
determined through negotiations with the broker, taking into account industry
norms for the size and type of transaction, and the nature of brokerage and
research services provided. Such research services may include, but not be
limited to, analysis and reports concerning economic factors and trends,
industries, specific securities, and portfolio strategies. Research services
furnished by brokers will generally be used in connection with all Investment
Advisor’s advisory accounts, although not all such services may be used with
any particular account that paid commissions to the brokers providing such
services.

(d) Investment Advisor is also
hereby authorized to effect “agency cross transactions” (as defined in Rule
206(3)-2 promulgated by the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended) with its Affiliated Broker-Dealers whereby
they will act as agent for, and receive commissions from, the Account and the
party on the other side of the 

 

B-1

 

transaction. Client understands
that in addition to receiving commissions from both parties, the Affiliated
Broker-Dealers may have a potentially conflicting division of loyalties and
responsibilities to both parties to the transaction. Client’s consent to execute
“agency-cross transactions” may be revoked at any time by written notice from
Client to Investment Advisor.

 

B-2

EXHIBIT C

Fee Agreement

Fee Schedule

Investment Advisor’s annual fee for
acting as investment manager under this Agreement is as follows:

..125 of 1% on the balance of the Account

 

Billing Period

Such fee will be calculated as of
the last business day of each calendar quarter-end (i.e. March, June,
September, December).

Fee Calculation
Methodology

The market value used for
calculating the fee will be based on the average of three month-end market
values comprising the billing period.

Cash Flow
Prorations

The market value(s) that form(s)
the basis for each fee calculation will be adjusted to prorate any
contributions and withdrawals that occurred during the billing period when the
daily sum of such activity exceeds the greater of $1million or 2% of the
portfolio’s market value. For purposes of determining this percentage
threshold, each day’s contributions and withdrawals will be measured against
the immediately preceding month-end market value.

Special
Considerations

The above fee schedule will be
applied against the Account’s total market value, exclusive of Account assets
invested in any registered investment company or registered investment trust
advised by Investment Advisor or its affiliates. Account investments in such
registered investment company or registered investment trust advised by
Investment Advisor or its affiliates will be subject to the expense ratios in
effect for each such fund.

 

 

C-1

 

EXHIBIT D

Authorized Signature List

 

Edward Gilpin

Lisa Mumford

Adam Wilkomm

 

 

 

 

 

 

 

 

 

D-1

 

EXHIBIT E 

Futures, Options, Short Sales and Derivatives

Subject to the Investment Guidelines, in investing and reinvesting the Account,
Investment

Advisor is authorized and empowered as follows:

(a) to purchase, sell, hold and
generally deal in and with all futures contracts (and any options on such
contracts), including, without limitation, futures contracts with respect to
financial instruments and any group or index of securities (or any interest
therein based upon the value thereof), and in connection therewith to deposit
or cause to be deposited any property as collateral with any agent, all on such
terms and conditions as Investment Advisor shall determine,

(b) to grant, purchase, sell,
exercise, permit to expire, permit to be held in escrow, and otherwise to
acquire, dispose of, hold and generally deal in any manner with and in all
forms of options in any combination, all on such terms and conditions as
Investment Advisor shall determine,

(c) to engage in “short sales” and
in connection therewith to deposit any property as collateral with any agent,
to grant security interests in such collateral and to execute or cause to be
executed any and all required documents, all on such terms and conditions as
Investment Advisor shall determine, and

(d) to enter into any derivative
transaction (and in connection therewith to deposit any property as collateral
with any agent, to grant security interests in such collateral and to execute
or cause to be executed any and all required documents (including without limitation
any ISDA Master Agreements), all on such terms and conditions as Investment
Advisor shall determine), (i) which is a rate swap transaction, swap option,
basis swap, forward rate transaction, commodity swap, commodity option, equity
or equity index swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction,
collar transaction, currency swap transaction, cross-currency rate swap
transaction, currency option, credit protection transaction, credit swap,
credit default swap, credit default option, total return swap, credit spread
transaction, repurchase transaction, reverse repurchase transaction,
buy/sell-back transaction, securities lending transaction, or forward purchase
or sale of a security or other financial instrument (including any option with
respect to any of these transaction ) or (ii) which is a transaction similar to
any transaction referred to in clause (i) that is currently, or in the future
becomes, regularly entered into in the financial markets and that is a forward,
swap, future, or option on one or more rates, currencies, commodities, equity
securities or other equity instruments, debt securities or other debt
instruments, or economic indices or measures of economic risk or value; and
(iii) any combination of these transactions (including an agreement with
respect thereto and any terms and conditions incorporated in such agreement.

Investment Advisor is authorized to
disclose such provisions of this Agreement or the investment guidelines to
securities, derivatives and other transaction counterparties as may be
necessary to establish to the satisfaction of the counterparty, Investment
Advisor’s authorization to engage in transactions on behalf of Client.

 

 

E-1

 

ANNEX A QEP Certification

J.P. Morgan Investment Management
Inc. (“Investment Advisor”) is registered as a commodity trading adviser (“CTA”)
and commodity pool operator (“CPO”) with the Commodity Futures Trading
Commission (“CFTC”) and National Futures Association (“NFA”). Investment
Advisor’s registration as a CTA enables it to provide advice to clients
relating to “commodity interests,” which include but are not limited to
financial futures and options thereon.

Client’s certification below that
it constitutes a “Qualified Eligible Person” (“QEP”) under the CFTC rules
(essentially akin to being a sophisticated investor or an “accredited investor”
under the securities laws) enables Investment Advisor to avail itself of
abbreviated disclosure, reporting and record-keeping requirements.

By either circling one item in
Section I below and one item in Section II below or one item in Section III
below, Client will be certified as a QEP. Client certifies that (circle either
one item in I and one item in II or one item in Section III):

OPTION ONE

Section I (circle applicable item)

(A) Client owns securities of
issuers not affiliated with it and other investments with an aggregate market
value of at least $2 million or

(B) Client has had on deposit with
a futures commission merchant for its own account during the preceding six
months at least $200,000 in exchange-specified initial margin and option
premiums for commodity interest transactions or

(C) Client owns a portfolio
comprised of the funds or property in (A) or (B) above in which the sum of the
funds or property includable under (A), expressed as a percentage of the
minimum amount required thereunder, and the amount of futures margin and option
premiums includable in (B), expressed as a percentage of the minimum amount
required thereunder, equals at least 100% (e.g. $1 million in securities and
other property (50% of (A)) and $100,000 in exchange-specified initial margin
and option premiums (50% of (B));

Section II (circle applicable item)

(A) an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act not formed for the specific
purpose of opening an exempt account with the commodity trading advisor; or

 

 

Annex A-1

 

(B) a bank as defined in section
3(a)(2) of the Securities Act of 1933 (the “Securities Act”), or any savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the Securities Act acting for its own account or for the account of a qualified
eligible person; or

(C) an insurance company as defined
in section 2(13) of the Securities Act acting for its own account or for the
account of a qualified eligible person; or

(D) a plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of
its employees, if such plan has total assets in excess of $5 million; or

(E) an employee benefit plan within
the meaning of the Employee Retirement Income Security Act of 1974 that has
total assets in excess of $5 million; or, if the plan is self-directed, that
investment decisions for, or the decisions as to the types of investment
alternatives under, the plan are made solely by persons that are qualified
eligible persons; or

(F) a private business development
company as defined in section 202(a)(22) of the Investment Advisers Act of
1940; or

(G) an organization described in
section 501(c)(3) of the Internal Revenue Code, with total assets in excess of
$5 million; or

(H) a corporation, Massachusetts or
similar business trust, or partnership, other than a pool, which has total
assets in excess of $5 million and not formed for the specific purpose of
opening an exempt account; or

(I) a natural person whose
individual net worth, or joint net worth with that person’s spouse, at the time
that person opens an exempt account exceeds $1 million; or

(J) a natural person who had an
individual income in excess of $200,000 in each of the two most recent years or
joint income with that person’s spouse in excess of $300,000 in each of those
years and had reasonable expectation of reaching the same income level in the
current year; or

(K) a pool, trust, insurance
company separate account or bank collective trust, with total assets in excess
of $5 million not formed for the specific purpose of opening an exempt account,
and whose investment in the exempt account is directed by a qualified eligible
person; or

(L) a governmental entity
(including the United States, a state, or a foreign government) or political
subdivision thereof, or a multinational or supranational entity or an
instrumentality, agency, or department of any of the foregoing.

OPTION TWO

Section III (circle applicable
item)

Client is one of the following:

(A) a trust that was not formed for
the specific purpose of opening an exempt account and in which the trustee or
other person authorized to make investment decisions with respect to the 

 

 

Annex A-2

 

trust and each settlor or other
person who has contributed assets to the trust is a qualified eligible person;

(B) a Non-United States person
defined as (a) a natural person who is not a resident of the United States; (b)
a partnership, corporation or other entity, other than an entity organized
principally for passive investment, organized under the law of a foreign
jurisdiction and which has its principal place of business in a foreign
jurisdiction; (c) an estate or trust, the income of which is not subject to US
income tax regardless of source; (d) an entity organized principally for
passive investment such as a pool, investment company or other similar entity;
provided that (i) units held by persons who do not qualify as Non-U.S. Persons
or otherwise as qualified eligible persons represent in the aggregate less than
10% of the beneficial ownership of the entity and (ii) the entity was not
formed for the purpose of facilitating investment by persons who do not qualify
as Non-U.S. Persons in a pool with respect to which the operator is exempt from
certain requirements of Part 4 of the CFTC’s regulations by virtue of its
participants having Non-U.S. Persons; and (e) a pension plan for employees,
officers or principals of an entity organized and with its principal place of
business outside the United States;

(C) an entity in which all of the
participants are qualified eligible persons;

(D) a pool
for which a claim for exemption under CFTC Rule 4.7 has been made.

Section IV

Client will notify Investment
Advisor in writing as soon as practicable of any change in the certifications
contained herein.

Dated:

	
  Name of Client (Print or
  Type)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

 

 

 

Annex A-3

 

ANNEX B Qualified Institutional Buyer Certification

The undersigned has retained Agent
to manage the assets in the undersigned’s account (the “Account”) pursuant to
an agreement with the Agent (the “Agreement”). Pursuant to the Agreement, the
Agent is authorized to invest the Account in restricted securities under Rule
144A of the Securities Act of 1933 (“Rule 144A”) that are issued by various
issuers (the “Issuers”) and purchased from various Broker-Dealers (the “Brokers”).
In order to establish that it is a “Qualified Institutional Buyer” under Rule
144A, the undersigned hereby makes the certifications set forth below to the
Agent, the Issuers, and the Brokers. The undersigned acknowledges that the
Agent, the Issuers, and the Brokers will rely on this Certification for
purposes of Rule 144A. The Agent is hereby authorized to certify to the Issuers
and Brokers from time to time that the undersigned is a Qualified Institutional
Buyer within the meaning of Rule 144A. Such Issuers and Brokers may rely on a
certification from the Agent as to the undersigned’s status as a Qualified
Institutional Buyer as if such certification were delivered directly from the
undersigned. The undersigned agrees to notify the Agent of any change in the
certifications set forth below. This certification shall be deemed to be a
continuing certification until such time as Agent is notified in writing that
the undersigned is no longer a Qualified Institutional Buyer for purposes of
Rule 144A.

The undersigned hereby certifies
that it is familiar with the requirements of Rule 144A and further certifies,
represents and warrants that:

1. The undersigned is a “Qualified
Institutional Buyer” as described in Attachment A hereto.

2. As of 8/31/04*, the undersigned
owned and invested on a discretionary basis an aggregate of $379,034,026** , of
eligible securities as defined and calculated as set forth in Attachment A.

3. Fiscal year end: December 31

4. The undersigned is acting for
its own account or the accounts of other Qualified Institutional Buyers.

5. The person signing this
certification is the chief financial officer, a person fulfilling an equivalent
function, or other executive officer of the undersigned duly authorized to
execute this certification. If the undersigned is a “family of investment
companies” as defined in Rule 144A, the person executing this certification is
an executive officer of the investment adviser.

	
  Company:

  	
   

  
	
  By:

  	
   

  
	
  Printed Name:

  	
   

  
	
  Title:

  	
   

  
	
  Date:

  	
   

  

 

* Insert a specific date on or
since the end of the undersigned’s most recent fiscal year.

 

 

Annex B-1

 

** The amount can be an
approximation but must be a specific amount in excess of $100 million or such
lesser amount applicable to the entity as contemplated by Attachment A. The
aggregate investable amount should include all eligible securities, not just
those managed by agent.

Attachment A

Definition of “QUALIFIED
INSTITUTIONAL BUYER”

Any of the following entities,
acting for its own account or the account of other Qualified Institutional
Buyers, that in the aggregate owns and invests on a discretionary basis at
least $100 million in securities:

A company organized as an insurance
company, whose primary and predominant business activity is the writing of
insurance or the reinsuring of risk underwritten by insurance companies, and
which is subject to supervision by the insurance commissioner, or similar
official or agency, of a state or territory or the District of Columbia; or any
receiver or similar official or any liquidating agent for an insurance company,
in his capacity as such.

An investment company registered
under the Investment Company Act of 1940.

A business development company as
defined in Section 2(a)(48) of the Investment Company Act of 1940.

A small business investment company
licensed by the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958.

A plan established and maintained
by a state, its political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its employees.

An employee benefit plan within the
meaning of Title I of the Employment Retirement Income Security Act of 1974 (“ERISA”).

A trust fund whose trustee is a
bank or trust company and whose participants are exclusively (i) plans
established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, or (ii) employee benefit plans within the meaning of
Title I of the ERISA, except trust funds that include as participants
individual retirement accounts or H.R. 10 plans.

A business development company as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

An organization described in
Section 501(c)(3) of the Internal Revenue Code.

A corporation (other than a bank as
defined in Section 3(a)(2) of the Securities Act of 1933 or a savings and loan
association or other institution referenced in Section 3(a)(5)(A) of the
Securities Act of 1933 or a foreign bank or savings and loan association or
equivalent institution).

 

 

Annex B-2

 

A partnership.

A Massachusetts or similar business
trust.

An investment adviser registered
under the Investment Advisers Act of 1940.

A bank as defined in Section
3(a)(2) of the Securities Act of 1933 that has an audited net worth of at least
$25 million as demonstrated in its latest annual financial statements, as of a
date not more than 16 months preceding the date of sale under the rule.

A savings and loan association or
other institution as referenced in Section 3(a)(5)(A) of the Securities Act of
1933 that has an audited net worth of at least $25 million as demonstrated in
its latest annual financial statements, as of a date not more than 16 months
preceding the date of sale under the rule.

A foreign bank or savings and loan
association or equivalent institution that has an audited net worth of at least
$25 million as demonstrated in its latest annual financial statements, as of a
date not more than 18 months preceding such date of sale for a foreign bank or
savings and loan association or equivalent institution.

A dealer registered pursuant to
Section 15 of the Exchange Act, that in the aggregate owns and invests on a
discretionary basis at least $10 million in securities.

A dealer registered pursuant to
Section 15 of the Exchange Act, acting in a riskless principal transaction on
behalf of a Qualified Institutional Buyer.

An investment company registered
under the Investment Company Act of 1940 that is part of a family of investment
companies (as defined in Rule 144A(a)(1)(iv)) which own in the aggregate at
least $100 million in securities.

An entity, all of the equity owners
of which are Qualified Institutional Buyers.

Calculation of the Aggregate Amount
of Securities owned and invested on a discretionary basis

Exclusions. In determining the
aggregate amount of eligible “securities” owned and invested on a discretionary
basis, the following instruments and interests shall be excluded: securities
issued by affiliates of the entity, bank deposit notes and certificates of
deposits, loan participations; repurchase agreements; securities owned but
subject to a repurchase agreement; and currency, interest rate and commodity
swaps.

Valuation. The aggregate value of
securities owned and invested on a discretionary basis by an entity shall be
the cost of such securities, except that they may be valued at market if the
entity reports its securities holdings in its financial statements on the basis
of their market value, and no current information with respect to the cost of
those securities has been published.

Subsidiaries. Securities owned by
subsidiaries of the entity that are consolidated with the entity in its
financial statements prepared in accordance with generally accepted accounting
principles may be included if the investments of such subsidiaries are managed
under the direction of the entity, except that, unless the entity is a
reporting 

 

 

Annex B-3

 

company under section 13 or 15(d)
of the Exchange Act, securities owned by such subsidiaries may not be included
if the entity itself is a majority-owned subsidiary that would be included in
the consolidated financial statements of another enterprise.

 

Annex B-4Exhibit
10.15

 

FIXED INCOME INVESTMENT
MANAGEMENT AGREEMENT

 

This Agreement (“Agreement”) is made this 26 day of March, 2002 by and between
Stephens Inc., an Arkansas corporation, and ACA Financial Guaranty Corp. (the
“Client”).

 

In consideration of the premises and the mutual
covenants and conditions herein contained, the parties agree as follows:

 

1.   INVESTMENT ADVICE.   Stephens Inc.,
acting through its Stephens Capital Management Division (“SCM”), shall provide
the Client with investment advice and management services in the manner and to
the extent that SCM shall determine to be appropriate or which is reasonably
requested by the Client. Such investment advice and management services shall
be limited to only those securities and other property, which the Client
designates as being covered by SCM’s authority. Client has informed SCM that it
desires its funds to be invested primarily in bonds and other income-oriented
securities.

 

2.   DISCRETIONARY AUTHORITY.   The Client
hereby appoints SCM as the Client’s agent and attorney in fact and authorizes
SCM to invest Client’s funds, on Client’s behalf, in U.S. Treasury securities
and other investment grade bonds selected by SCM with due consideration for our
intermediate term outlook for interest rates and to make such trades of
securities or other property as SCM acting through its Capital Management
Committee in the exercise of its discretion determines to be prudent and
appropriate and to make all related transfers and deliveries of and receive and
pay for all such securities and other properties on behalf of the Client. This
authorization is being executed and delivered pursuant to Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder.

 

The Client hereby ratifies and confirms all
transactions, which are made by SCM for the Client’s account in accordance with
the terms of this Agreement.

 

3.   OTHER SERVICES.   SCM shall provide such
brokerage, clearance, settlement, custodial and other functions and services
permitted by law as may be determined by SCM to be necessary or desirable in
carrying out the terms of this Agreement. The Client may request that SCM
utilize brokers other than SCM to effect or execute transactions but agrees to
pay any charges or commissions incurred.

 

4.   COMPENSATION.   SCM shall be paid for its
services hereunder in accordance with the fee schedule attached hereto as
EXHIBIT A.

 

Stephens Inc. has discretion to invest Client funds in
investment company securities (“Mutual Funds”). Individual Mutual Funds may pay
fees to Stephens Inc. as a result of these investments. These fees received by
Stephens would be in addition to the advisory fees paid by Client. Such fees
are not credited back to Client in calculating the fees set forth in Exhibit A.
The existence of Mutual Fund fees is more fully described in the fund
prospectus mailed to each Client at the time of initial investment.

 

 

1

 

5.   CASH BASIS ACCOUNT.   Unless otherwise
agreed, each account of the Client covered by this Agreement shall be a cash
account (the “account”); and accordingly (a) full cash payment for each
security or other property purchased will be made promptly unless funds
sufficient therefore are already provided; (b) no sale is contemplated of any
security or other property before it is paid for as provided in the preceding
clause; (c) each security or other property sold will at the time be owned by
the Client and, unless already lodged in the account, will be promptly
delivered thereto; and (d) full cash payment will be made promptly of any
amount which may become due in order to meet necessary requests for additional
deposits or mark to market with respect to any unissued security purchased or
sold.

 

6.   RECORDS AND REPORTS.   SCM shall provide
the Client with written confirmations of each trade, monthly brokers’
statements and quarterly investment management reports or other periodic
reports concerning the transactions effected in the account.

 

7.   TERM.   The term of this Agreement shall
be for a period of one year beginning on the date first above written; provided
that it shall automatically be renewed for successive additional one year terms
without further action by the parties. This Agreement may be terminated by
either the Client or SCM upon fifteen (15) days notice given in writing to the
other party hereto, provided however, that the Client may terminate this
Agreement without penalty within five (5) business days after entering into
this Agreement. Upon termination of this Agreement and payment of all sums
which may be owing to it under this Agreement, SCM shall make such disposition
of the securities or other property of the Client held by it as may be directed
by the Client. The Client agrees to pay SCM the reasonable costs and expenses
of collection, including attorney’s fees, for any unpaid balance under this
Agreement.

 

8.   SUBJECT TO LAW.   All transactions under
this Agreement shall be subject to applicable laws, rules and regulations of
governmental authorities, and the applicable regulations and customs of
exchanges, markets and clearinghouses. Whenever any law, rule or regulation is
enacted by any governmental authority or exchange, market or clearing house
which shall affect in any manner or be inconsistent with any of the provisions
hereof, the provisions of this Agreement so affected shall be deemed modified
or superseded to the extent necessary in order to avoid violation of such
enactment.

 

9.   WAIVER.   Except as otherwise provided
for herein, no provision of  this
Agreement shall be waived, altered, modified or amended except in writing signed
by the party against whom such waiver, alteration, modification or amendment is
sought to be enforced.

 

10.   NO ASSIGNMENT OF AGREEMENT OR DUTIES.   Neither
party may assign  this Agreement, in
whole or in part, nor delegate, except as contemplated herein, all or part of
the performance of duties required of it by this Agreement without the prior
written consent of the other party, and any attempted assignment or delegation
without such consent shall be void.

 

 

2

11.   LIABILITY AND INDEMNIFICATION.   The
Client specifically acknowledges and agrees that (a) SCM is not warranting to
the Client that the information or advice given to the Client is correct or
accurate or that the assets managed by SCM will necessarily increase in value
or retain their value, and (b) except for gross negligence or malfeasance, or
violation of applicable law, neither SCM nor any of SCM’s officers, directors,
agents or employees shall be liable hereunder for any action performed or
omitted to be performed or for any errors of judgment in managing the account.
Nothing herein shall in any way constitute a waiver or limitation of any
rights, which the Client may have under any securities laws. To the extent
consistent with the foregoing, Client agrees to indemnify and hold harmless
SCM, its officers, shareholders, agents and employees from any and all the
liability that may be incurred by SCM as a result of its rendering advice or
management services to the Client pursuant to the terms of this Agreement and
shall reimburse SCM for any attorney fees or costs resulting from any claim or
litigation.

 

12.   NOTICE.   Any notice, request or
instruction to be given hereunder shall be in writing and delivered personally
or sent by first class mail, postage prepaid, addressed if to SCM to Stephens
Capital Management, 111 Center Street, Little Rock, Arkansas 72201 and if to
the Client to the address set out below. With respect to SCM such communication
shall be effective when actually received by SCM.

 

13.   GOVERNING LAW.   This Agreement is
entered into and shall be governed by the Laws of the State of Arkansas and
such federal statutes, rules and regulations as may be applicable hereto.

 

14.   VALUATION.   In computing the market
value of any investment of the Client each security listed on any national
securities exchange and for which recent market quotations are readily
available shall be valued at the last reported sale price on the principal
exchange on which such security is traded, or, if there has been no recent
reported sale, at the last reported bid price. Where market quotations are
readily available, unlisted securities shall be valued at the current bid
price. Any other security or asset shall be valued in a manner determined in
good faith by SCM to reflect its fair market value.

 

15.   PERIODIC REPORTS.   SCM shall furnish
continuous advice as to the investment of funds on the basis of the individual
needs of the Client and, at least quarterly, provide the Client with a
statement of the account which shall constitute a reminder to communicate any
change in the Client’s financial situation and needs to SCM.

 

16.   OWNERSHIP OF
FUNDS.   The Client shall maintain to the extent reasonably practicable
every indicia of
ownership of its funds, including (1) the right to withdraw, hypothecate, vote
or pledge securities; and (2) the receipt of a notification of each security
transaction. The Client shall have the opportunity and authority to instruct
SCM in writing to refrain from purchasing particular securities which otherwise
might be purchased.

 

 

3

17.   SERVICES TO OTHER CLIENTS; VIOLATION OF
LAWS.

 

(a)   It is understood that SCM performs
investment management services for various Clients. The Client acknowledges
that SCM may give advice and take action with respect to any of its other
Clients, which may differ from advice given with respect to any security or
other property, or the timing or nature of action taken with respect to any
security or other property.

 

(b)   Nothing in this agreement shall impose upon
SCM any obligation to purchase or sell, or to recommend for purchase or sale,
any security for the Client which SCM, or its partners, principals, affiliates
or employees, may purchase or sell for its or their own accounts or for the
account of any other Client, if in the discretion of SCM such investment would
be unsuitable for Client or if SCM determines in the best interest of Client it
would be impractical or undesirable.

 

(c)   SCM shall have no obligation hereunder to
cause Client to engage in any transaction on the basis of any information known
to SCM’s partners, principals, affiliates, employees or agents wherein the
utilization of such information might, in SCM’s judgment, constitute or involve
a violation of law or a breach of any fiduciuary or confidential relationship
by SCM and/or its partners, principals, affiliates, employees or agents.

 

18.           ARBITRATION
DISCLOSURES:

 

                ARBITRATION
IS FINAL AND BINDING ON THE PARTIES.

 

                THE
PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT
TO JURY TRIAL.

 

                PRE-ARBITRATION
DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT PROCEEDINGS.

 

                THE
ARBITRATORS’ AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDING OR LEGAL
REASONING AND ANY PARTY’S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY
THE ARBITRATORS IS STRICTLY LIMITED.

 

                THE
PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE
OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.

 

19.           ARBITRATION.   THE
CUSTOMER AGREES, AND BY CARRYING AN ACCOUNT FOR THE CUSTOMER SCM AGREES THAT
ALL CONTROVERSIES WHICH MAY ARISE BETWEEN THE PARTIES CONCERNING ANY
TRANSACTION OR THE CONSTRUCTION, PERFORMANCE OR BREACH OF THIS OR ANY OTHER
AGREEMENT BETWEEN THE PARTIES PERTAINING TO SECURITIES AND OTHER PROPERTY,
WHETHER ENTERED INTO PRIOR, ON OR SUBSEQUENT TO THE DATE HEREOF, SHALL BE
DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS AGREEMENT SHALL BE
CONDUCTED BEFORE THE NEW YORK STOCK EXCHANGE, INC. OR AN ARBITRATION FACILITY
PROVIDED BY ANY OTHER EXCHANGE OF WHICH STEPHENS INC. IS A MEMBER, OR THE
NATIONAL ASSOCIATION OF 

 

 

4

SECURITIES DEALERS, INC. OR THE MUNICIPAL SECURITIES RULEMAKING BOARD
AND IN ACCORDANCE WITH THE RULES OF THE SELECTED ORGANIZATION. THE CUSTOMER MAY
ELECT IN THE FIRST INSTANCE WHETHER ARBITRATION SHALL BE BY AN EXCHANGE OR
SELF-REGULATORY ORGANIZATION OF WHICH STEPHENS INC. IS A MEMBER, BUT IF THE
CUSTOMER FAILS TO MAKE SUCH ELECTION BY REGISTERED LETTER OR TELEGRAM ADDRESSED
TO SCM AT ITS MAIN OFFICE BEFORE THE EXPIRATION OF TEN DAYS AFTER RECEIPT OF A
WRITTEN REQUEST FROM SCM TO MAKE SUCH ELECTION, THEN SCM MAY MAKE SUCH
ELECTION. THE AWARD OF THE ARBITRATORS, OR OF THE MAJORITY OF THEM, SHALL BE
FINAL, AND JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE
OR FEDERAL, HAVING JURISDICTION.

 

20.   SUPPLEMENTAL AGREEMENTS AND DISCLOSURES.   Attached
hereto as EXHIBIT B are Supplemental Agreements and Disclosures that may
be applicable to certain transactions related to this account. Client also
acknowledges SCM has provided Client with its Part II or Schedule H of
Stephens Form ADV.

 

IN WITNESS WHEREOF, the Client has executed this
Agreement and it has been accepted by Stephens Inc. in Little Rock,
Arkansas as of the date first above written.

 

PRE-DISPUTE ARBITRATION CLAUSE. CLIENT ACKNOWLEDGES
THAT THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE, WHICH PROVIDES
THAT ALL DISPUTES RELATING TO THE CLIENT’S ACCOUNT ARE TO BE RESOLVED BY
BINDING ARBITRATION. THIS CLAUSE IS FOUND IN SECTIONS 18 AND 19 ON
PAGES 4 AND 5 OF THIS AGREEMENT.

 

 

 

	
   

  	
  Client:

  	
  American Capital Access Holdings, Inc.

  
	
   

  	
   

  	
  ACA Financial Guaranty Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  140 Broadway, 47th Floor

  
	
   

  	
   

  	
  New York, New York 10005

  
	
   

  	
   

  	
   

  
	
  3/26/2002

  	
   

  	
   

  	
   

  	
  /s/ Adam Willkomm

  
	
  (Date)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
  Adam R. Willkomm

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STEPHENS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ William L. Tedford

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  A Duly Authorized Officer

  
						

 

 

5

EXHIBIT A

 

STEPHENS
CAPITAL MANAGEMENT

A
DIVISION OF STEPHENS INC.

 

MANAGEMENT
FEE SCHEDULE

 

FOR FIXED INCOME ACCOUNTS

 

	
  ASSET VALUE OF CLIENTS ACCOUNT

  	
   

  	
  ANNUAL FEE

  
	
  On the first $1,000,000 or portion thereof

  	
   

  	
  .750%

  
	
  On the next $4,000,000 or portion thereof

  	
   

  	
  .500%

  
	
  On the next $10,000,000 or portion thereof

  	
   

  	
  .375%

  
	
  On the next $15,000,000 or portion thereof

  	
   

  	
  .250%

  
	
  On the next $20,000,000 or portion thereof

  	
   

  	
  .200%

  
	
  On account over $50,000,000

  	
  Entire amount

  	
  .200%

  

 

 

Other  15 BP

 

SCM fees apply to standard accounts and include
management, brokerage services (1), custodial services, associated accounting
reports and investment management reports. Only in special circumstances are
the fees negotiable or otherwise varied from 
the above schedule. In the event this agreement is terminated between
quarter-ends, such fees shall be prorated as of the date of termination. The
fee is deducted from the account by SCM quarterly unless otherwise agreed in
writing. SCM clients will receive a Fee Statement shortly after the deduction
of the fee.

 

The fee for the period from the effective date to the
end of the current calendar quarter shall be obtained by computing the adjusted
(2) market value of cash and securities in the portfolio as of the close of
business on the last day (subsequent to the effective date referred to above)
of the current calendar quarter and multiplying the resultant market value by
one-fourth of the applicable annual fee rate(s) indicated above, pro-rated for
the percentage of the current calendar quarter during which the portfolio is
under management.

 

The fee for any subsequent three-month period shall be
the amount obtained by computing the adjusted (2) market value of cash and
securities in the portfolio as of the close of business on the last day of the
three-month period and multiplying the resultant market value by one-fourth of
the applicable annual fee rate(s) indicated above.

 

(1)           Investment
advisory clients have the option to seek execution of transactions recommended
by SCM through broker-dealers other than Stephens Inc. However, on transactions
executed through Stephens Inc., Stephens Inc. will not charge a commission to
the client except when       shares of an
underwriting issue in which Stephens Inc. is in the syndicate are purchased for
the account, in which case the sales and underwriting fees are built into the
offering price.

 

(2)           Adjusted
for capital contributions and/or withdrawals made during that period.

 

 

 

6

EXHIBIT B

 

SUPPLEMENTAL AGREEMENTS AND
DISCLOSURES

(FOR ERISA PLANS AND OTHER
CLIENTS BOTH REFERRED TO AS “CLIENT”)

 

1.             AGENCY
CROSS TRANSACTIONS

 

From time to time, Stephens Inc.’s SCM Division may
effect a securities transaction for an SCM Client in which Stephens Inc. acts
as broker for both such SCM Client and for a non-SCM client on the other side
of the transaction. In other words, SCM may be in a position to buy or sell
securities for an SCM Client from or to the account of another client of
Stephens Inc. Such purchases or sales are known as “agency cross-transactions.”

 

In certain cases, agency cross-transactions can
increase the chances that large orders from Clients will be effected at a price
close to the most recent market price. For example, if SCM enters the market
with a large buy order from a Client in a given security, the very existence of
that large order may drive up the price of the securities transaction. Likewise,
if SCM enters the market with a large sell order from a Client in a given
security, that order can drive down the price of the security before the order
can be completed. In addition, many institutional investors trade large blocks
of securities through agency cross-transactions, so that many blocks are simply
unavailable to Clients unless they are authorized to participate in such
crosses.

 

On the other hand, agency cross-transactions involve a
potential conflict of interest. SCM may be making investment decisions for an
SCM Client, from whom it receives compensation, while Stephens Inc. receives
commissions from another non-SCM client for effecting or executing the
transaction. For this reason, SEC Rule 206(3-2) imposes various conditions on
agency cross-transactions effected for an advisory client by an investment
adviser registered with the SEC such as SCM.

 

SCM plans to comply with SEC Rule 206(3-2) by taking
the following actions: (i) SCM, after disclosing the above potential conflict
of interest, will have received the specific consent and permission of the
Client to effect agency cross-transactions for such Client; (ii) the Client
will receive from SCM a written confirmation, at or before the completion of
each agency cross-transaction, including a statement of the nature of the
transaction, the date of such transaction, an offer to furnish, upon request,
the time when such transaction took place, and certain information concerning
whether any other remuneration has been or will be received by SCM or Stephens
Inc. in connection with the transaction and, if so, that the source and amount
of such other remuneration will be furnished upon written request of the
Client; (iii) the Client will receive from SCM on an annual basis a written
disclosure statement identifying the total number of agency cross-transactions
during the period since the date of the last such statement and the total
amount of commissions or other remuneration received by SCM and Stephens Inc.
in connection with such transactions during that period; (iv) the Client is
hereby informed that it may revoke at any time by written notice the
authorization and consent for SCM to engage in agency cross-transactions; (v)
SCM will not engage in any agency cross-transaction in which SCM or Stephens
Inc. recommends the transaction to both the seller and the purchaser; (vi) SCM
will, at all times, fulfill its duty with respect to providing best price and
execution; (vii) with respect to ERISA Clients, SCM will only engage in agency
cross-transactions executed on a national securities exchange; and (viii) SCM
will comply with all other applicable disclosure requirements under federal or
state securities laws.

 

Client has read the foregoing disclosure and
specifically consents to permit SCM to engage in agency cross-transactions
pursuant to the terms and conditions set forth above. Client and SCM agree that

 

 

7

such consent may be revoked 
without  penalty at any time by
Client effective upon receipt of written notice by SCM.

 

II.            PRINCIPAL
TRANSACTIONS

 

For time to time, Stephens Inc.’s SCM Division may
wish to effect a securities transaction for an SCM Client in which Stephens
Inc. acts as principal.

 

For instance, SCM may independently determine that it
would be in the best interest of an SCM Client to purchase a new issue where
Stephens Inc. is in the underwriting syndicate or selling group because SCM
believes that the price paid during the initial offering will be more
advantageous to the Client than purchasing in the after-market. Or SCM may
determine that it would be in the best interest of a Client to purchase or sell
a security in which Stephens Inc. makes a market.

 

Such principal transactions involve potential
conflicts of interest, regarding Stephens Inc.’s interest and the interest of
SCM Clients.

 

If SCM purchases for an SCM Client a security from
Stephens Inc. which is part of an initial public offering in which Stephens
Inc. is a member of the underwriting or selling syndicate, Stephens Inc. will
receive an underwriting commission or selling concession, which is built into
the offering price; also, Stephens Inc. would have a self-interest in the
success of the offering and in disposing of its commitment. Therefore, such
principal transactions will only be effected for SCM Clients if advance
disclosure in writing is made to the Client that Stephens Inc. will be acting
as a member of the underwriting syndicate or selling group; the Client receives
a prospectus; and the Client grants SCM permission to effect the transaction.

 

If SCM purchases or sells for an SCM Client an
over-the-counter security in which Stephens Inc. makes a market, Stephens Inc.
would ordinarily receive a mark-up or mark-down if it acts as principal in the
transaction. Therefore, such principal transactions will only be effected for
SCM Clients if Stephens Inc. matches the lowest ask/highest bid prices as
reflected on NASDAQ; no mark-up or mark-down from these prices will be charged.

 

With respect to ERISA accounts, Client acknowledges
that SCM and/or Stephens Inc. will not act as principal in transactions with
the account.

 

With respect to non-ERISA accounts, Stephens Inc. is
authorized by Client to act as principal in transactions with such accounts,
and Client so consents even though such transactions may present potential
conflicts of interest. In giving this consent, Client understands that SCM will
comply with the provisions of Section 206 (3) of the Investment Advisers
Act, which requires that Stephens Inc. acting as principal for its own
accounts, will not knowingly sell any security to or purchase any security from
an SCM Client without disclosing to such Client in writing before the
completion of such transactions the capacity in which it is acting and
obtaining the Client’s advance consent contained herein to such types of
transactions. The above disclosure to the Client will be made by sending to the
Client a written confirmation, at or before the completion of such transaction,
showing, by special codes or otherwise, the capacity in which SCM or Stephens
Inc. is acting. Further, such confirmation will disclose other material
information (i.e., that Stephens Inc. makes a market in the security or that an
officer or director of Stephens Inc. serves as an officer or director of the
issuer). In addition, the special procedures described above will be utilized
for initial public offerings in which Stephens Inc. is participating.

 

 

8

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