Document:

Exhibit 10.4

Form of Control and Custodian
Agreement

This
Agreement dated as of ________ (the “Agreement”),
among [_____________] (the “Secured Party”),
_______________ (the “Pledgor”)
and ________________________, as custodian hereunder (the “Collateral Manager”). 

	
  

 	
  

 	
  

 
	
 1.

 	
 Intention of the Parties; Definitions 

 
	
  

 	
  

 	
  

 
	
 1.1.

 	
 Intention of the Parties 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Secured
 Party and Pledgor have entered into the Confirmation (“Confirmation”) dated
 as of [     ] bearing reference number [     ], which by its terms supplements, forms
 part of and is subject to an agreement in the form of the [year of ISDA form
 chosen] ISDA Master Agreement [(Multicurrency – Cross-Border)] (“Form Master
 Agreement”), the Schedule dated as of [     ] to the Form Master Agreement
 (“Schedule”) and the Credit Support Annex dated as of [     ] to the Form Master
 Agreement (“Credit Support Annex”) (collectively, and as amended, modified or
 otherwise supplemented from time to time, the “Master Agreement”) pursuant to
 which Pledgor has agreed to pledge to Secured Party the Collateral (as
 defined below) in order to secure the repayment of Pledgor’s “Obligations”
 (as defined in the Master Agreement) to Secured Party. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Collateral
 Manager acts as custodian for Pledgor and maintains Accounts [and the NIB
 Account] in the name of Pledgor. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Secured
 Party wishes to perfect its security interest in the Collateral by appointing
 the Collateral Manager to hold such Collateral in a separate Account (as
 defined herein) in the name of the Pledgor where the Secured Party shall have
 certain entitlement rights as specified herein. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Secured
 Party and Pledgor have requested Collateral Manager to hold the Collateral
 and to perform certain other functions as more fully described herein. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Collateral
 Manager has agreed to act on behalf of Secured Party and Pledgor as
 securities intermediary and custodian of the Collateral delivered to
 Collateral Manager by Pledgor and maintained in the Accounts for the benefit
 of Secured Party. 

 
	
  

 	
  

 	
  

 
	
 1.2.

 	
 Definitions 

 

Whenever used in this Agreement, unless the context otherwise requires,
the following words shall have the meanings hereinafter stated: 

 “Account” shall have the meaning set
forth in paragraph 2.1. 

 “Additional Collateral” shall have the meaning set forth in
paragraph 2.12(d).

 “Affiliate” means an entity
controlling, controlled by, or under common control with, Collateral Manager,
the Pledgor or the Secured Party, as the case may be. 

 “Affiliated Subcustodian” means a
Subcustodian that is an Affiliate. 

Page 1

 “Applicable Law” means any applicable
statute, treaty, rule, regulation or common law and any applicable decree,
injunction, judgment, order, formal interpretation or ruling issued by a court
or governmental entity. 

 “Authorized Person” shall be any officer who
has been designated by written notice, which contains a specimen signature of
such person, from Secured Party or Pledgor, in the form of Schedule I attached
hereto, as the case may be, and any other person whether or not any such person
is an officer or employee of Secured Party or Pledgor, duly authorized by
Secured Party or Pledgor to give Written Instructions on behalf of Secured
Party or Pledgor. Such persons will continue to be Authorized Persons until
such time as Collateral Manager receives Instructions from Secured Party or
Pledgor that any such person is no longer an Authorized Person and has had
reasonable time to comply with such Instructions. 

 “Business Day” shall mean any day on
which Collateral Manager is open for business. 

 “Cash” shall mean cash in any
currency. 

 “Cash Account” shall have the meaning set
forth in paragraph 2.1. 

 “Cash Collateral” shall mean Collateral in
the form of Cash. 

 “Cash Income Proceeds” shall
mean, in respect of Cash Collateral, any interest payment made in respect
thereof and, in respect of non-Cash Collateral, any cash distributions paid in
respect thereof in the form of income thereon (and not, for the avoidance of
doubt and without limitation, any repayment of principal or payment of
redemption proceeds in respect thereof), in each case due and paid prior to
receipt by Collateral Manager of notice from the Secured Party that (i) Pledgor
has defaulted in its obligations to Secured Party pursuant to the Master
Agreement or (ii) a termination event (as defined in the Master Agreement) has
occurred. 

 “Collateral” shall mean an amount Cash
or Securities transferred by Pledgor to and held by Collateral Manager in the
Accounts from time to time. 

 “Confidential Information” means and
includes all non-public information concerning the Secured Party or Pledgor or
the Accounts which Collateral Manager receives in the course of providing
services under this Agreement. Nevertheless, the term Confidential Information
shall not include information which is or becomes available to the general
public by means other than Collateral Manager’s breach of the terms of this
Agreement or information which Collateral Manager obtains on a non-confidential
basis from a person who is not known to be subject to any obligation of confidence
to any person with respect to that information. 

 “Eligible Collateral” shall have the meaning set forth in
paragraph 2.12(a).

“Eligible Criteria” shall have the meaning set forth
in paragraph 2.12(a). 

 “Enforcement Notice” means a
notice given by Secured Party to Collateral Manager that (i) Pledgor has
defaulted in its obligations to Secured Party pursuant to the Master Agreement
or (ii) a termination event (as defined in the Master Agreement) has occurred. 

 “FSCS” shall have the meaning set forth in
paragraph 9.6.

 “Fund Account” shall have the meaning set forth in
paragraph 5.1(b).  

 “Indemnitees” means Collateral Manager,
its Affiliates, its Subcustodians, and their respective nominees, directors,
officers, employees and agents. 

Page 2

 “Instruction” means an instruction that
has been verified in accordance with a Security Procedure or, if no Security
Procedure is applicable, which Collateral Manager believes in good faith having
been given by any Authorized Person. 

“Investments” shall have the meaning set
forth in paragraph 2.10. 

 “Liabilities” means any liabilities, losses, claims, costs,
damages, penalties, fines, obligations, taxes (other than taxes based solely on
Collateral Manager’s income), or expenses of any kind whatsoever (including,
without limitation, reasonable attorneys’, accountants’, consultants’ or
experts’ fees and disbursements). 

 “NIB Account” shall have the meaning set forth in
paragraph 2.3. 

 “Operating Guidelines” shall have
the meaning set
forth in paragraph 2.12(a). 

 “Proceeds” shall mean any principal or
interest payments or other distributions made in connection with Collateral. 

 “Process Agent” shall have the meaning set forth in
paragraph 9.8.

 “Securities” means shares, stocks,
debentures, bonds, notes or other like obligations, whether issued in
certificated or uncertificated form, and any certificates, receipts, warrants
other instruments representing rights to receive, purchase or subscribe for the
same that are commonly traded or dealt in on securities exchanges or financial
markets and other obligations of an issuer, or shares, participations and
interests in an issuer recognized in the country in which it is issued or dealt
in as a medium for investment and any other property as may be acceptable to
Collateral Manager for the Securities Account. 

 “Securities Account” shall have
the meaning set forth in paragraph 2.1. 

 “Securities Collateral” shall mean
Collateral in the form of Securities. 

 “Securities Depository” means any
securities depository, dematerialized book entry system or similar system for
the central handling of Securities. 

 “Security Procedure” means
security procedures to be followed by the Pledgor or the Secured party, as the
case may be, upon the issuance of an Instruction and/or by Collateral Manager upon
the receipt of an Instruction, so as to enable Collateral Manager to verify
that such Instruction is authorized, as set forth in service level
documentation in effect from time to time between the parties with respect to
the services set forth in this Agreement, or as otherwise established by
Collateral Manager. A Security Procedure may, without limitation, involve the
use of algorithms, codes, passwords, encryption or telephone call backs, and
may be updated by Collateral Manager from time to time upon notice to the
Pledgor and Secured Party. Each of the Pledgor and Secured Party acknowledges
that Security Procedures are designed to verify the authenticity of, and not
detect errors in, Instructions. 

 “Subcustodian” means any of the
subcustodians appointed by Collateral Manager from time to time to hold
Securities and act on its behalf in different jurisdictions. 

 “Tax” shall mean all present and
future taxes, levies, imposts or duties (including value added taxes and stamp
duties) whatsoever and wheresoever imposed (including any fines, penalties or
interest on or in respect of any of the foregoing). 

 “USA PATRIOT Act” shall have the meaning set forth in
paragraph 2.10.

Page 3

All references to time in this Agreement shall mean the time in effect
on that day in New York, New York. All items in the singular will have the same
meaning in the plural unless the context otherwise provides and vice versa. 

	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 Provision of Collateral Services by
 Collateral Manager 

 
	
  

 	
  

 
	
 2.1.

 	
 Appointment of Custodian 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Collateral
 Manager will establish and maintain the following accounts: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
           one
 or more Securities Accounts in the name of the Pledgor for Securities (the “Securities Account”), which may be held
 by Collateral Manager or a Subcustodian or a Securities Depository for
 Collateral Manager on behalf of the Pledgor; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
           one
 or more accounts in the name of the Pledgor (the “Cash Account” and, together with the Securities Account,
 the “Account”) for any and all
 cash in any currency received by or on behalf of Collateral Manager for the
 account of the Pledgor. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Notwithstanding
 paragraph 2.1(a)(ii), cash held in respect of those markets where the Pledgor
 is required to have a cash account in its own name held directly with the
 relevant Subcustodian or Securities Depository will be held in that manner
 and will not be part of the Cash Account. 

 
	
  

 	
  

 
	
  

 	
 (b)

 	
           Any
 amount standing to the credit of the Cash Account is a debt due from
 Collateral Manager as banker. Except as otherwise provided in Instructions
 acceptable to Collateral Manager, all Cash held in the Cash Account will be
 deposited during the period it is credited to the Accounts in one or more
 deposit accounts at Collateral Manager. Any non-US Cash so deposited with
 Collateral Manager will be payable exclusively by Collateral Manager’s London
 Branch in the applicable currency, subject to compliance with Applicable Law,
 including, without limitation, any restrictions on transactions in the
 applicable currency imposed by the country of the applicable currency. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           Pledgor
 and Secured Party hereby notify Collateral Manager that by separate
 agreement, Pledgor has granted Secured Party a security interest in the
 Account and all financial assets and other items therein, and Collateral
 Manager acknowledges being so notified. It is understood and agreed that
 Collateral Manager has no responsibility with respect to the validity or
 perfection of the security interest other than to act in accordance with the
 terms of this Agreement. Pledgor and Secured Party hereby appoint Collateral
 Manager as custodian of all Collateral in the Account during the term of this
 Agreement. Collateral Manager hereby accepts appointment as such custodian
 and agrees to establish and maintain the Account and appropriate records
 identifying the Collateral as pledged by Pledgor to Secured Party. Pledgor,
 Secured Party and Collateral Manager agree that the Collateral will be held
 in the Account by Collateral Manager as agent of Secured Party and the
 parties further agree that Collateral Manager will take such action with
 respect to any Collateral as Secured Party may instruct (except as otherwise
 provided for herein). 

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
           Secured
 Party hereby covenants, for the benefit of Pledgor, that Secured Party will
 not instruct Collateral Manager to deliver or cause to be 

 

Page 4

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 transferred
 any Collateral to any person other than Pledgor unless and until (i) Pledgor
 has defaulted in its obligations to Secured Party pursuant to the Master
 Agreement, or (ii) a termination event (as defined in the Master Agreement)
 has occurred. The foregoing covenant is for the benefit of Pledgor only and
 shall in no way be deemed to constitute a limitation on Secured Party’s right
 at any time to instruct Collateral Manager or on Collateral Manager’s ability
 to rely on such Instructions. If Collateral Manager receives Instructions
 from Secured Party prior to 11:00 a.m. on a Business Day directing Collateral
 Manager to transfer any Collateral, Collateral Manager shall so transfer such
 Collateral prior to the close of business on that Business Day and upon such
 transfer Collateral Manager’s duties hereunder with respect to such
 Collateral shall terminate.

 
	
  

 	
  

 
	
  

 	
 (e)

 	
           Pledgor
 and Secured Party hereby authorize Collateral Manager on a continuous and
 on-going basis to deposit all Collateral it receives in the Cash Account or
 Securities Account, as applicable. Where Collateral is transferred to an
 Account, Collateral Manager shall identify such Collateral on its books and
 records as belonging to Pledgor, and pledged to Secured Party and shall send
 Secured Party a confirmation in accordance with paragraph 2.9. 

 
	
  

 	
  

 	
  

 
	
 2.2.

 	
  

 	
 Segregation of Assets; Nominee Name

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           To
 the extent permitted by Applicable Law or market practice, Collateral Manager
 will require each Subcustodian to identify in its own books that Securities
 held at such Subcustodian by Collateral Manager on behalf of its customers
 belong to customers of Collateral Manager, such that it is readily apparent
 that the Securities do not belong to Collateral Manager or the Subcustodian. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           Collateral
 Manager is authorized, in its discretion, 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
           to
 hold in bearer form, such Securities as are customarily held in bearer form
 or are delivered to Collateral Manager or its Subcustodian in bearer form; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
           to
 hold Securities in or deposit Securities with any Securities Depository; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
           to
 hold Securities in omnibus accounts on a fungible basis and to accept
 delivery of Securities of the same class and denomination as those deposited
 with Collateral Manager or its Subcustodian; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iv)

 	
           to
 register in the name of the Pledgor, Collateral Manager, a Subcustodian, a
 Securities Depository, or their respective nominees, such Securities as are
 customarily held in registered form. 

 
	
  

 	
  

 	
  

 	
  

 
	
 2.3.

 	
  

 	
 The NIB Account

 
	
  

 	
  

 
	
  

 	
 Collateral
Manager, on behalf of Pledgor, hereby establishes, and Collateral Manager hereby
agrees to maintain a non-interest bearing Cash account No. [●] (the
“NIB Account”) in the name of Collateral Manager on behalf and for the
benefit of Pledgor. The parties agree that the NIB Account shall not be
subject to any security to be granted under the Master Agreement and
accordingly shall not be deemed to be an Account for purposes of this
Agreement. Collateral Manager will take such action with respect to any Cash
in the NIB Account as the Pledgor may instruct. The parties agree and
acknowledge that Cash Income Proceeds that comprise interest paid on Collateral 

 

Page 5 

	
  

 	
  

 	
  

 
	
  

 	
 in the
 Cash Account will be transferred directly by Collateral Manager to the NIB
 Account and will not be credited to the Cash Account. Collateral Manager has
 no obligation to credit any Cash until such Cash is actually received by Collateral
 Manager. Notwithstanding anything herein to the contrary, Pledgor agrees that
 Collateral Manager shall be entitled to reverse any Cash credit previously
 made to the NIB Account due to error or the non-receipt of any income or
 dividend distribution. The parties agree and acknowledge that Cash Income
 Proceeds that comprise coupon payments with respect to Collateral in the
 Securities Account will be paid to an account designated by Pledgor in
 writing and not to the NIB Account or the Cash Account and will not be
 credited to the Account. For the avoidance of doubt, Cash redemptions of
 Securities Collateral or Cash payment of principal with respect to Securities
 Collateral will be paid to the Cash Account. 

 
	
  

 	
  

 
	
 2.4.

 	
  

 	
 Debit Balances 

 
	
  

 	
  

 
	
  

 	
 If a debit to any currency in the Cash Account results (or will result) in a debit balance in such currency, then Collateral Manager
may, in its discretion, (i) advance an amount equal to the overdraft, (ii) refuse to settle in whole or in part the transaction whose
settlement would have caused such debit balance, or (iii) if any such transaction is posted to the Securities Account, reverse any
such posting.  If Collateral Manager elects to make such an advance, the advance will be deemed a loan to the Pledgor and the Secured
Party, payable on demand, bearing interest at the applicable rate charged by Collateral Manager from time to time, for such
overdrafts, from the date of such advance to the date of payment (both after as well as before judgment) and otherwise on the terms
on which Collateral Manager makes similar overdrafts available from time to time.  No prior action or course of dealing on Collateral
Manager’s part with respect to the settlement of transactions on behalf of the Pledgor or Secured Party will be asserted by the
Pledgor or Secured Party against Collateral Manager for Collateral Manager’s refusal to make advances to the Cash Account or to
settle any transaction for which the Pledgor does not have sufficient available funds in the applicable currency in the Cash Account
or NIB Account.

 
	
  

 	
  

 
	
 2.5.

 	
  

 	
 Updated Procedures 

 
	
  

 	
  

 	
  

 
	
  

 	
 Collateral
 Manager may provide Pledgor and Secured Party, from time to time, with
 additional or changed procedures or instructions in connection with the
 matters described herein, upon written notice to Pledgor and Secured Party. 

 
	
  

 	
  

 
	
 2.6.

 	
  

 	
 Substitution of Collateral 

 
	
  

 	
  

 	
  

 
	
  

 	
 Secured
 Party hereby grants Pledgor authority to substitute other Collateral for any
 Collateral, which is held in the Securities Account, in accordance with the
 terms of the Master Agreement. Pledgor may exercise the right of substitution
 by notifying Secured Party of its intent to transfer certain Collateral out
 of the Securities Account upon the deposit into the Securities Account of new
 Collateral that has a value as of the date of transfer which is at least
 equal to the value of that portion of the old collateral for which it is
 being substituted. Secured Party shall then provide Instructions to
 Collateral Manager directing Collateral Manager, upon the receipt of new
 Collateral, to transfer the certain specified Collateral to Pledgor. 

 
	
  

 	
  

 
	
 2.7.

 	
  

 	
 Collateral not to be Subjected to Competing Security
 Interest 

 
	
  

 
	
  

 	
 Subject
 to paragraph 5.1, Collateral Manager shall not subject any Collateral in the
 Accounts to any security interest, lien or right of setoff in favor of any third
 party 

 

Page 6

	
  

 	
  

 	
  

 
	
  

 	
 claiming
 through Collateral Manager, and Collateral Manager shall not pledge,
 encumber, hypothecate, transfer, dispose of, or otherwise grant any third
 party an interest in, any Collateral. Except as required by law or regulation,
 Collateral Manager shall not agree with any other person or entity that it
 will comply with any withdrawal, transfer, payment and redemption
 instructions, or any other entitlement or other orders, from such person or
 entity concerning the Accounts or any items therein, without the prior
 written consent of Secured Party and any such agreement entered into without
 such consent shall be null and void. 

 
	
  

 	
  

 	
  

 
	
 2.8.

 	
  

 	
 Notice of Default or Termination Event 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
           In
 the event that Collateral Manager receives an Instruction from Secured Party
 substantially in the form of Schedule V certifying that (i) Pledgor has
 defaulted in its obligations to Secured Party pursuant to the Master
 Agreement or (ii) a termination event (as defined in the Master Agreement)
 has occurred in respect of Pledgor and is confirming, Collateral Manager may,
 without further inquiry, act upon Instructions from Secured Party with
 respect to the disposition of all or any part of the Collateral and to refuse
 any Instruction from Pledgor pursuant to this Agreement and Collateral
 Manager shall suspend Secured Party and Pledgor’s access to applications or
 products of Collateral Manager’s website as described in paragraph 3.6 as
 soon as practicable. If at any time after Collateral Manager has received
 such notice, Collateral Manager receives Instructions from Secured Party
 prior to 9:00 a.m. on a Business Day directing Collateral Manager to transfer
 any Collateral, Collateral Manager shall use reasonable endeavors to so
 transfer such Collateral prior to the close of business of that Business Day.
 Collateral Manager shall have no duties hereunder with respect to any
 Collateral transferred out of the Accounts or the NIB Account pursuant to
 such instructions or instructions otherwise authorized by this Agreement.
 Unless instructed differently, Collateral Manager is hereby authorized by the
 Secured Party to use the cash and security delivery instructions set forth on
 Schedule III, attached hereto when transferring Collateral to it. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           In
 the event that Collateral Manager receives an Instruction from Pledgor
 substantially in the form of Schedule VI certifying that (i) Secured Party
 has defaulted in its obligations to Pledgor pursuant to the Master Agreement
 or (ii) a termination event (as defined in the Master Agreement) has occurred
 in respect of Secured Party and is continuing, Collateral Manager may,
 without further inquiry and in reliance on Pledgor’s Instructions, transfer
 all Collateral in the Accounts to Pledgor upon the earlier of (i) receipt by
 the Collateral Manager of Secured Party’s Instructions to Collateral Manager
 consenting to the release of the Collateral, and (ii) the fourth (4th)
 Business Day after the date of such Instruction from Pledgor. After receiving
 such notice, Collateral Manager shall suspend Secured Party and Pledgor’s
 access to applications or products of Collateral Manager’s website as
 described in paragraph 3.6 as soon as practicable. At any time prior to such
 release, Pledgor may revoke its Instruction, whereupon Collateral Manager
 shall not release any of the Collateral in the Accounts unless and until
 further Instructions are validly submitted by Pledgor, and only if such
 Instructions are in the form required under this paragraph. For the avoidance
 of doubt, Collateral Manager shall have no obligation to verify that Secured
 Party has defaulted in its obligations to Pledgor pursuant to the Master
 Agreement or 

 

Page 7 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 that a
 termination event (as defined in the Master Agreement) in respect of Secured
 Party has occurred and is continuing. The Pledgor acknowledges that the
 Secured Party (which may be under the control of a bankruptcy or insolvency
 officeholder or person with an analogous or similar status or authority)
 shall retain control of the Collateral in the Accounts and shall continue to
 be entitled to such Collateral subject to the terms of this Agreement and the
 Master Agreement until such time as the Pledgor exercises its rights under
 the Master Agreement and delivers Instructions in accordance with the terms
 of this paragraph 2.8(b). Collateral Manager acknowledges that the Secured
 Party (which may be under the control of a bankruptcy or insolvency
 officeholder or person with an analogous or similar status or authority)
 shall retain control of the Collateral in the Accounts until such time as the
 Pledgor has delivered Instructions in accordance with this paragraph 2.8(b). 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 _________
 shall not be required to deliver or transfer cash, securities or other
 property or required to act in contravention of any order, stay, judgment,
 levy, restraining notice, seizure or other similar notice or restraint
 imposed by law or issued or directed by a governmental agency or court or
 officer thereof, asserting jurisdiction over Collateral Manager, any existing
 or future part company of Collateral Manager or any director, officer,
 employee or agent of the foregoing which on its face affects such cash,
 securities or other property. Collateral Manager shall give Pledgor and
 Secured Party prompt notice of any such notice or order of which it is aware.
 Collateral Manager shall not be liable for failure to deliver or act in such
 circumstances. 

 
	
  

 	
  

 	
  

 
	
 2.9.

 	
 Account Statements 

 
	
  

 	
  

 
	
  

 	
 Collateral
 Manager will provide Pledgor and Secured Party with a statement identifying
 all Collateral in the Accounts at the frequency specified in the Operating
 Guidelines. Secured Party and Pledgor shall promptly review all such
 statements and shall promptly advise Collateral Manager of any error,
 omission or inaccuracy in each statement. Collateral Manager shall undertake
 to correct any errors, failures or omissions that are reported to Collateral
 Manager by Secured Party or Pledgor. Any such corrections shall be reflected
 on subsequent statements. 

 
	
  

 	
  

 
	
 2.10.

 	
 Investment of Cash Collateral 

 
	
  

 	
  

 	
  

 
	
  

 	
 If
instructed in writing by the Pledgor, Collateral Manager will, from time to
time, (a) invest Cash Collateral in the Cash Account in such deposits, money
market instruments and securities (the “Investments”) as may be selected from
a list provided by Collateral Manager. Collateral Manager shall have no
liability for any loss sustained as a result of any Investments or as a
result of any liquidation of any Investment prior to its maturity. Pledgor
and Secured Party agree that Collateral Manager shall not be liable for any
losses that may result from such investment in the Investments (including,
but not limited to, possible loss of the principal amount invested or any
loss sustained as a result of liquidation prior to maturity) and that Collateral
Manager has no obligation to credit any cash proceeds from the sale of any
Investment to the Accounts until such cash is actually received by Collateral
Manager. Notwithstanding anything herein to the contrary, Pledgor and Secured
Party agree that Collateral Manager shall be entitled to reverse any cash
credit previously made to the Accounts due to error or the non-receipt of any
income or dividend distribution.  

 

 Page 8

	
  

 	
  

 	
  

 
	
 2.11.

 	
 Access to Books
 and Records 

 
	
  

 	
  

 	
  

 
	
  

 	
 Upon
 reasonable request, Secured Party and Pledgor shall have access to Collateral
 Manager’s books and records maintained in connection with the Account during
 Collateral Manager’s normal business hours. Upon reasonable request, copies
 of any such books and records shall be provided to Secured Party or Pledgor
 at the requesting party’s sole expense. 

 
	
  

 	
  

 
	
 2.12.

 	
 Collateral Services 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           On
 the Business Day prior to [insert date of Effective Date], Pledgor shall
 provide Written Instructions to Collateral Manager and Secured Party
 reporting the [Obligation Amount] and Pledgor agrees, by close of business in
 New York on [insert date of Effective Date], to transfer or cause to be
 transferred to Collateral Manager, for deposit in the Accounts, [Eligible
 Collateral] whose aggregate Margin Value is an amount not less than the
 [Obligation Amount] so reported. Collateral Manager shall determine whether
 the Collateral to be transferred to the Securities Account constitutes
 [Eligible Collateral] and verify whether the aggregate Margin Value of the
 [Eligible Collateral] standing to the credit of the Accounts immediately
 after giving effect to such transfer is not less than the [[Obligation
 Amount] so reported.] “Eligible Collateral” mean Collateral meeting the
 Eligibility Criteria. “Eligibility Criteria” means such criteria as agreed
 upon by _________, Pledgor and Secured Party with respect to cash and
 securities and specified in the Operating Guidelines and shall include, among
 other things, the type and maturity of securities. “Operating Guidelines”
 mean the operating guidelines as separately agreed between _________, Pledgor
 and Secured Party, as amended from time to time by notice from _________ to
 Pledgor and Secured Party. The Operating Guidelines do not form part of this
 Agreement and are not intended to, and shall not, create any legal
 obligations of _________, Pledgor or Secured Party. _________, Pledgor and
 Secured Party, in entering into this Agreement, have not relied on any
 provision of the Operating Guidelines as a representation by another party. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 On
 each Business Day thereafter, Pledgor shall provide Written Instructions to
 Collateral Manager and Secured Party by [-] 00 a.m. (New York time) reporting
 the [Obligation Amount] on such Business Day and Pledgor agrees, by close of
 business in New York on the next Business Day, to transfer or cause to be
 transferred to Collateral Manager, for deposit in the Accounts, [Eligible
 Collateral] whose aggregate Margin Value (taking into account [Eligible
 Collateral] already credited to the Accounts) is an amount not less than the
 [Obligation Amount] so reported. On making any such transfer, Pledgor shall
 deliver a Written Instruction to Collateral Manager and Secured Party in
 respect of each type of Security concerned specifying by name and ISIN (or
 CUSIP), the type of Security being deposited and the number of such
 Securities together with the other information (if any) specified in the
 Collateral Schedule. Collateral Manager shall determine whether the
 Collateral to be transferred to the Securities Account constitutes [Eligible
 Collateral] and verify whether the aggregate Margin Value of the [Eligible
 Collateral] standing to the credit of the Account immediately after giving
 effect to such transfer is not less than the [Obligation Amount] so reported.
 

 

Page 9

	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 If
 Secured Party disputes the [Obligation Amount] determined by Pledgor it shall
 provide written notice thereof to Collateral Manager and Pledgor, and the
 [Obligation Amount] in effect as of the immediately preceding Business Day
 shall prevail for purposes of all calculations under this Agreement until the
 earlier of (i) such time as Pledgor and Secured Party independently and
 without any further action by Collateral Manager resolve such dispute and notify
 Collateral Manager jointly in writing of the new [Obligation Amount] and (ii)
 10:00 a.m., New York City time, on the Business Day following the date on
 which the notice of the dispute is given to Pledgor and Collateral Manager by
 Secured Party (whereupon, if no notice of resolution is delivered to
 Collateral Manager pursuant to the foregoing clause (i), Pledgor’s
 determination of the [Obligation Amount] on such following Business Day shall
 apply). 

 
	
  

 	
  

 	
  

 
	
  

 	
 (d) 

 	
 On each
 Business Day, Collateral Manager shall as agent of the Secured Party provide
 written notice to Pledgor and Secured Party by [—]:00 a.m. (New York time)
 indicating the aggregate [Margin Value] of the [Eligible Collateral] in the
 Accounts at the close of business in New York City on the immediately
 preceding Business Day (which notice shall include the Margin Value for each
 item of [Eligible Collateral]). If on any Business Day the aggregate [Margin
 Value] of [Eligible Collateral] in the Accounts as reported by the Collateral
 Manager pursuant to the immediately preceding sentence is less than the then
 current [Obligation Amount] as reported by the Pledgor pursuant to Section 1
 above, Pledgor agrees to transfer to Collateral Manager for deposit in the
 Accounts prior to the close of business in New York on the immediately
 succeeding Business Day additional [Eligible Collateral] (“Additional
 Collateral”) in an amount such that the aggregate [Margin Value] of [Eligible
 Collateral] in the Accounts, including such Additional Collateral,
 immediately after giving effect to such transfer equals or exceeds such
 [Obligation Amount]. Collateral Manager shall determine that all Additional
 Collateral to be transferred to the Accounts constitutes [Eligible
 Collateral]. If on any Business Day the aggregate Margin Value of [Eligible
 Collateral] in the Accounts as reported by the Collateral Manager pursuant to
 this Section 2 is greater than the then current [Obligation Amount] as
 reported by the Pledgor pursuant to Section 1 above, Collateral Manager is
 authorized to transfer from the Accounts [Eligible Collateral] with an
 aggregate Margin Value equal to but not exceeding such excess in accordance
 with Written Instructions from Pledgor which are confirmed by Secured Party
 pursuant to Written Instructions.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e) 

 	
 If
 Pledgor disputes the market value of any Security, it shall provide a written
 notice thereof to Collateral Manager and Secured Party and the market value
 of such Security as of the immediately preceding Business Day shall prevail
 for purposes of all calculations under this Agreement until the earlier of
 (i) such time as Pledgor and Secured Party independently and without any
 further action by Collateral Manager resolve such dispute and notify
 Collateral Manager jointly in writing of the market value to use and (ii)
 [--]:00 a.m., New York City time, on the Business Day following the date on
 which the notice of the dispute is given by Pledgor to Secured Party and
 Collateral Manager. Upon receipt of written notice of the specified market
 value, Collateral Manager will use such specified market value for all
 calculations performed that Business Day. If no

 

Page 10 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 notice
 of a specified market value is delivered to Collateral Manager pursuant to
 the foregoing, Collateral Manager’s calculations shall prevail.

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 Pledgor
 may not dispute the market value of any particular Security (by CUSIP or
 ISIN) in accordance with paragraph (b) more than twice, provided, however,
 that it shall be the sole responsibility of Secured Party to notify the other
 parties if Pledgor seeks to dispute the market value of a Security more than
 twice. If Pledgor seeks to dispute the market value of a Security more than
 twice, it shall have no effect and the market value determined by Collateral
 Manager shall prevail. For the avoidance of doubt, receipt by Collateral
 Manager of a notice from Pledgor of a dispute regarding the market value of
 one or more Securities shall not be construed to require that Collateral
 Manager make any changes or adjustments to its systems and it is understood
 and agreed that Collateral Manager will continue to perform its market value
 calculations hereunder using its own sources and methods. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 Securities
 or obligations which do not constitute [Eligible Collateral] shall not
 knowingly be transferred to the Accounts by Pledgor except to the extent that
 such Securities or obligations are received as distributions in respect of
 [Eligible Collateral] already held in the Accounts. Until Collateral Manager
 receives a Notice of Exclusive Control from Secured Party, Collateral Manager is
 authorized to act upon any Written Instructions from Pledgor to transfer any
 security or obligation that does not constitute [Eligible Collateral] from
 the Accounts.

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 Notwithstanding
 any other provision of this Agreement, no withdrawals shall be made from the
 Accounts without the Written Instructions of the Secured Party if,
 immediately after giving effect to such withdrawal, the aggregate Margin
 Value of the [Eligible Collateral] in the Accounts shall be less than the
 [Obligation Amount]. Subject to the foregoing, Collateral Manager shall
 transfer to Pledgor (whether by credit to another custody account of Pledgor
 at Collateral
 Manager or otherwise) all proceeds received by it with respect to
 the Collateral. After Collateral Manager’s receipt of a Notice of
 Exclusive Control, Collateral Manager shall credit to the
 Accounts all proceeds received by it with respect to the Collateral. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
           Collateral
 Manager shall furnish Pledgor and Secured Party with advices of transactions
 affecting the Account and monthly Account statements. 

 

 [NOTE: Additional Provisions and Schedules
Regarding Services to Come]  

	
  

 	
  

 	
  

 
	
 3.

 	
 Instructions
 

 
	
  

 	
  

 	
  

 
	
 3.1.

 	
 Acting on
 Instructions; Method of Instruction and Unclear Instructions 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
           The
 Pledgor and the Secured Party authorize Collateral Manager to accept, rely
 upon and/or act upon any Instructions received by it without 

 

Page 11 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 inquiry.
 The Pledgor and the Secured Party will jointly and severally indemnify the
 Indemnitees against, and hold each of them harmless from, any Liabilities
 that may be imposed on, incurred by, or asserted against the Indemnitees as a
 result of any action or omission taken in accordance with any Instruction. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           To
 the extent possible, instructions to Collateral Manager shall be sent via
 electronic instruction or trade information system acceptable to Collateral
 Manager or via facsimile transmission. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           Collateral
 Manager shall promptly notify an Authorized Person if Collateral Manager
 determines that an Instruction does not contain all information reasonably
 necessary for Collateral Manager to carry out the Instruction. Collateral
 Manager may decline to act upon an Instruction if it does not receive
 clarification or confirmation satisfactory to it. Collateral Manager is
 authorized to seek confirmation of such Instructions by telephone call-back
 to any Authorized Person designated on Schedule I attached hereto with
 respect to an instruction purportedly given by Secured Party, and Collateral
 Manager may rely upon the confirmation of anyone purporting to be a person so
 designated. Secured Party and Pledgor each acknowledges that such security
 procedure is commercially reasonable. It is understood and agreed, however,
 that Collateral Manager shall not be required to verify payment instructions
 pursuant a Security Procedure or when the circumstances otherwise warrant as
 determined by Collateral Manager in its reasonable discretion. Collateral
 Manager will not be liable for any loss arising from any reasonable delay in
 carrying out any such Instruction while it seeks information, clarification
 or confirmation or in declining to act upon any Instruction for which it does
 not receive clarification satisfactory to it. 

 
	
  

 	
  

 	
  

 
	
 3.2.

 	
  

 	
 Reliance Upon Account Numbers Provided 

 
	
  

 	
  

 	
  

 
	
  

 	
 It is
 understood and agreed that Collateral Manager and the beneficiary’s bank in
 any funds transfer may solely rely upon any account number or similar
 identifying number provided by Secured Party to identify (i) the beneficiary,
 (ii) the beneficiary’s bank, or (iii) an intermediary bank. Collateral
 Manager may debit Pledgor’s account in connection with any payment orders
 issued by Secured Party using any such identifying numbers, even where their
 use may result in a person other than the beneficiary being paid, or the
 transfer of funds to a bank other than the beneficiary’s bank or an
 intermediary bank designated by Pledgor. 

 
	
  

 	
  

 
	
 3.3.

 	
  

 	
 Security Procedures 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
           Collateral
 Manager, the Pledgor and the Secured Party shall comply with any applicable
 Security Procedures with respect to the delivery or authentication of
 Instructions and shall ensure that any codes, passwords or similar devices
 are reasonably safeguarded. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           Either
 party may record any of their telephone communications. 

 
	
  

 	
  

 	
  

 
	
 3.4.

 	
 Instructions; Contrary to Law/Market Practice

 
	
  

 	
  

 
	
  

 	
 Collateral
 Manager need not act upon Instructions which it reasonably believes to be
 contrary to law, regulation or market practice, but Collateral Manager shall
 be under no duty to investigate whether any Instructions comply with
 Applicable Law or market practice. In the event Collateral Manager does not
 act upon such Instructions, Collateral Manager will notify the Pledgor or
 Secured Party, as the case may be, where 

 

Page 12 

	
  

 	
  

 	
  

 
	
  

 	
 reasonably
 practicable. 

 
	
  

 	
  

 
	
 3.5.

 	
 Cut-Off Times

 
	
  

 	
  

 
	
  

 	
 Collateral
 Manager has established cut-off times for receipt of Instructions, which will
 be made available to the Pledgor and the Secured Party. If Collateral Manager
 receives an Instruction after its established cut-off time, Collateral
 Manager will attempt to act upon the Instruction on the day requested if
 Collateral Manager deems it practicable to do so or otherwise as soon as
 practicable after that day. 

 
	
  

 	
  

 
	
 3.6.

 	
 Electronic Access

 
	
  

 	
  

 
	
  

 	
 Access
 by the Customer and Secured Party to certain applications or products of
 Collateral Manager via Collateral Manager’s web site or otherwise shall be
 governed by this Agreement and the terms and conditions set forth in Schedule
 IV. Pledgor acknowledges that its access to such applications or products via
 Collateral Manager’s web site shall be on a “read only” basis, and Pledgor
 further acknowledges that Collateral Manager has no duty to inform it of Secured
 Party’s actions pursuant to such access to applications or products via
 Collateral Manager’s web site (other than as specified in the Operating
 Guidelines). Pledgor acknowledges that Collateral Manager has no liability
 for actions of Secured Party through the Secured Party’s access to
 applications or products via Collateral Manager’s web site. 

 
	
  

 	
  

 
	
 4.

 	
 Subcustodians and Securities Depositaries 

 
	
  

 	
  

 
	
 4.1.

 	
 Appointment of Subcustodians; Use of Securities
 Depositories 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           Collateral
 Manager is authorized under this Agreement to act through and hold Collateral
 with Subcustodians. Collateral Manager will use reasonable care in the
 selection, monitoring and continued appointment of such Subcustodians. In
 addition, Collateral Manager and each Subcustodian may deposit Securities
 with, and hold Securities in any Securities Depository on such terms as such
 Securities Depository customarily operates and Pledgor will provide
 Collateral Manager with such documentation or acknowledgements that Collateral
 Manager may require to hold the Securities in such Securities Depository. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           Any
 agreement Collateral Manager enters into with a Subcustodian for holding
 Collateral Manager’s customers’ assets will provide that such assets will not
 be subject to any right, charge, security interest, lien or claim of any kind
 in favor of such Subcustodian or its creditors except a claim for payment for
 their safe custody or administration, or, in the case of cash deposits,
 except for liens or rights in favor of creditors of the Subcustodian arising
 under bankruptcy, insolvency or similar law, and that the beneficial
 ownership thereof will be freely transferable without the payment of money or
 value other than for safe custody or administration. Collateral Manager shall
 be responsible for all claims for payment of fees for safe custody or
 administration so that no Subcustodian exercises any claim for such payment
 against the Pledgor’s assets. Where a Subcustodian deposits Securities with a
 Securities Depository, Collateral Manager will cause the Subcustodian to
 identify on its records that the Securities deposited by the Subcustodian at
 such Securities Depository belong to Collateral Manager, as agent. This
 paragraph 4.1(b) will not apply to the extent of any special agreement or
 arrangement made by the Pledgor or by the Secured Party with any particular
 Subcustodian. 

 

Page 13

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           Collateral
 Manager is not responsible for the selection or monitoring of any Securities
 Depository and will not be liable for any act or omission by (or the
 insolvency of) any Securities Depository. In the event the either the Secured
 Party or Pledgor incurs a loss due to the negligence, willful default, or
 insolvency of a Securities Depository, Collateral Manager will make
 reasonable efforts, in its discretion, to seek recovery from the Securities
 Depository, but Collateral Manager will not be obligated to institute legal
 proceedings, file proof of claim in any insolvency proceeding, or take any
 similar action. 

 
	
  

 	
  

 	
  

 
	
 4.2.

 	
 Liability for Subcustodians 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           Subject
  to paragraph 7.1(b), Collateral
 Manager will be liable for direct losses incurred by the Pledgor and Secured
 Party that result from: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
           the
 failure by a Subcustodian to use reasonable care in the provision of
 custodial services by it in accordance with the standards prevailing in the
 relevant market or from the fraud or willful misconduct of such Subcustodian
 in the provision of custodial services by it; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
           the
 insolvency of any Affiliated Subcustodian. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           Subject
 to paragraph 4.1(a) and Collateral Manager’s duty to use reasonable care in
 the monitoring of a Subcustodian’s financial condition as reflected in its
 published financial statements and other publicly available financial
 information concerning it customarily reviewed by Collateral Manager in its
 oversight process, Collateral Manager will not be responsible for any losses
 (whether direct or indirect) incurred by the either Pledgor or Secured Party
 that result from the insolvency of any Subcustodian which is not a branch or
 an Affiliated Subcustodian. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           Collateral
 Manager reserves the right to add, replace or remove Subcustodians.
 Collateral Manager will give prompt notice of any such action, which will be
 advance notice if practicable. Upon request by the Secured Party or Pledgor,
 Collateral Manager will identify the name, address and principal place of
 business of any Subcustodian and the name and address of the governmental
 agency or other regulatory authority that supervises or regulates such
 Subcustodian. 

 
	
  

 	
  

 	
  

 
	
 5.

 	
 Tax Obligations and Services 

 
	
  

 	
  

 	
  

 
	
 5.1.

 	
 Authorization to Deduct; Collateral Manager’s Right over
 the Accounts 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           Pledgor
 and Secured Party confirm that Collateral Manager is authorized to deduct
 from any cash received or credited to the Cash Account and/or the NIB Account
 any taxes or levies required by any revenue or governmental authority for
 whatever reason in respect of the Accounts or the NIB Account. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 In
 consideration of any advances or loans Collateral Manager may extend to
 Pledgor in its sole discretion in connection with this Agreement, as a
 security for the repayment of any fees, charges, expenses and other amounts
 payable to Collateral Manager hereunder, Pledgor hereby (and Secured Party
 hereby acknowledges): (i) pledges, transfers, assigns, and grants to
 Collateral Manager 

 

Page 14 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a first
 priority, continuing security interest in and right of set-off as to, all of
 Pledgor’s right title and interest in, to or under (A) the Accounts, (B) any
 and all investments in any money market or other investment fund made in
 connection with this Agreement (a “Fund Account”), (C) all securities,
 instruments and financial assets (including cash balances) maintained in or
 credited to the Accounts or any Fund Account, (D) all security entitlements
 and general intangibles related to the aforesaid and any investments of
 assets related to any of the aforesaid; and (ii) agrees that nothing
 contained herein shall be deemed to be inconsistent with, or to deny to
 Collateral Manager, all the rights and remedies of a secured party under
 applicable law. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 5.2.

 	
 Pledgor to Provide Documentation 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           Pledgor
 will provide to Collateral Manager such certifications, documentation, and
 information as it may require in connection with taxation, and warrants that,
 when given, this information is true and correct in every respect, not
 misleading in any way, and contains all material information. Pledgor
 undertakes to notify Collateral Manager immediately if any information
 requires updating or correcting. Collateral Manager provides no service of
 controlling or monitoring, and therefore has no duty in respect of, or
 liability for, any taxes, penalties, interest or additions to tax, payable or
 paid that result from: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
           the
 inaccurate completion of documents by Pledgor or any third party; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
           provision
 to Collateral Manager or a third party of inaccurate or misleading
 information by Pledgor or any third party; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
           the
 withholding of material information by Pledgor or any third party; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iv)

 	
           as
 a result of any delay by any revenue authority or any other cause beyond
 Collateral Manager’s control. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           If
 Collateral Manager does not receive appropriate certifications, documentation
 and information then, as and when appropriate and required, additional tax
 shall be deducted from all income received in respect of the collateral
 (including, but not limited to, United States non-resident alien tax and/or
 backup withholding tax). 

 
	
  

 	
  

 	
  

 	
  

 
	
 5.3.

 	
  

 	
 Responsibility for Timely Payment

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Pledgor
 and Secured Party will be responsible in all events for the timely payment of
 all taxes relating to the Accounts, and Pledgor will be responsible in all
 events for the timely payment of all taxes relating to the NIB Account,
 provided, however, that Collateral Manager will be responsible for any
 penalty or additions to tax due solely as a result of Collateral Manager’s
 negligent acts or omissions with respect to paying or withholding tax or
 reporting interest, dividend or other income paid or credited to the Accounts
 or the NIB Account, as the case may be. 

 
	
  

 	
  

 	
  

 	
  

 
	
 5.4.

 	
 Tax Relief Service

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
           Subject
 to the provisions of this Clause, Collateral Manager will apply for a
 reduction of withholding tax at source in respect of income payments on 

 

Page 15

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 collateral
 credited to the Accounts that Collateral Manager believes may be available.
 To defray expenses pertaining to nominal tax relief, Collateral Manager may
 from time to time set minimum thresholds as to a de minimus value of
 reduction of withholding which it will pursue in respect of income payments
 under this Clause. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           The
 provision of a tax relief service by Collateral Manager is conditional upon
 Collateral Manager receiving from Pledgor (i) a declaration of its identity
 and place of residence and (ii) certain other documentation (pro forma copies
 of which are available from Collateral Manager), prior to the receipt of
 collateral in the Accounts or the payment of income. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           Collateral
 Manager will perform tax relief services only with respect to taxation levied
 by the revenue authorities of the countries advised to Pledgor from time to
 time and Collateral Manager may, by notification in writing, in its absolute
 discretion, supplement or amend the countries in which the tax relief services
 are offered. Other than as expressly provided in this Clause, Collateral
 Manager will have no responsibility with regard to Pledgor or any third
 party’s tax position or status in any jurisdiction. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
           The
 provision of a tax reclaim service by Collateral Manager is conditional upon
 Collateral Manager entering into a separate agreement with Pledgor to provide
 a tax reclaim service. 

 
	
  

 	
  

 	
  

 
	
 6.

 	
 Representations and Warranties 

 
	
  

 	
  

 
	
 6.1.

 	
 Representations of Secured Party, Pledgor and Custodian 

 
	
  

 	
  

 
	
  

 	
 Secured
 Party, Pledgor and Collateral Manager each represents and warrants that: 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           It
 is duly organized and existing under the laws of the jurisdiction of its
 organization with full power and authority to execute and deliver this
 Agreement and to perform all of the duties and obligations to be performed by
 it hereunder; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           This
 Agreement is legally and validly entered into, does not, and will not,
 violate any ordinance, charter, by-law, rule or statute applicable to it, and
 is enforceable in accordance with its terms, except as may be limited by
 bankruptcy, insolvency, administration, liquidation or analogous or similar
 laws or regulations, or by equitable principles relating to or limiting
 creditors’ rights generally; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           The
 person executing this Agreement on its behalf has been duly and properly
 authorized to do so. 

 
	
  

 	
  

 	
  

 
	
 6.2.

 	
  

 	
 Representation of Pledgor 

 
	
  

 	
  

 
	
  

 	
 Pledgor
 further represents and warrants that it owns the Collateral transferred into
 the Accounts from time to time free and clear of all liens, claims, security
 interests and encumbrances (except those granted under the Master Agreement
 and to Custodian hereunder). 

 
	
  

 	
  

 
	
 6.3.

 	
  

 	
 Representations of Custodian 

 
	
  

 	
  

 
	
  

 	
 Collateral
 Manager further represents and warrants that: 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           It
 is a national banking association and it is duly authorized and empowered to
 perform its duties and obligations under this agreement. 

 

Page 16

	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           It will
 maintain the Accounts as custody accounts and shall administer the Accounts
 in the same manner it administers
 similar accounts established for the same purpose, subject always to
 the terms of this Agreement.

 

	
  

 	
  

 
	
 7.

 	
 Concerning Custodian
 

 
	
  

 	
  

 
	
 7.1.

 	
 Standard
 of Care; Liability and Indemnification

 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
           Collateral
 Manager will use reasonable care in performing its obligations under this
 Agreement. Collateral Manager will not be in violation of this Agreement with
 respect to any matter as to which it has satisfied its obligation of
 reasonable care. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           Collateral
 Manager will be liable for the Pledgor’s or the Secured Party’s direct
 damages to the extent they result from Collateral Manager’s fraud, negligence
 or willful misconduct in performing its duties as set out in this Agreement
 and to the extent provided in paragraph 4.2(a). Nevertheless, under no
 circumstances will Collateral Manager be liable for any indirect, incidental,
 consequential or special damages (including, without limitation, lost
 profits) of any form incurred by any person or entity, whether or not
 foreseeable and regardless of the type of action in which such a claim may be
 brought, with respect to the Accounts, the NIB Account, Collateral Manager’s
 performance under this Agreement, or Collateral Manager’s role as custodian. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           Pledgor
 and Secured party agree, jointly and severally, to indemnify the Indemnitees
 against, and hold them harmless from, any Liabilities that may be imposed on,
 incurred by or asserted against any of the Indemnitees in connection with or
 arising out of (i) Collateral Manager’s performance under this Agreement,
 provided the Indemnitees have not acted with negligence or engaged in fraud
 or willful misconduct in connection with the Liabilities in question or (ii)
 any Indemnitee’s status as a holder of record of the Pledgor’s or Secured
 Party’s Securities. Nevertheless, Pledgor and Secured Party will not be
 obligated to indemnify any Indemnitee under the preceding sentence with
 respect to any Liability for which Collateral Manager is liable under
 paragraph 4.2(a) of this Agreement. It is expressly understood and agreed
 that Collateral Manager’s right to indemnification hereunder shall be
 enforceable against Pledgor and Secured Party directly, without any
 obligation to first proceed against any third party for whom they may act,
 and irrespective of any rights or recourse that Secured Party or Pledgor may
 have against each other or against any such third party. This indemnity shall
 be a continuing obligation of Pledgor and Secured Party, their respective
 successors and assigns, notwithstanding the termination of this Agreement. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
           The
 Pledgor and the Secured party agree that Collateral Manager provides no
 service in relation to, and therefore has no duty or responsibility to: (i)
 question Instructions or make any suggestions to the Pledgor or the Secured
 Party or an Authorized Person regarding such Instructions other than as
 provided in paragraph 2.5; (ii) supervise or make recommendations with
 respect to investments or the retention of Securities; (iii) advise the
 Pledgor or the Secured Party or an Authorized Person regarding any default in
 the payment of principal or income of any Security; and (iv) evaluate or
 report to the Pledgor or the Secured Party or an Authorized Person regarding
 the financial condition of any broker, agent or other party to which
 Collateral 

 

Page 17

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Manager is
 instructed to deliver Securities or Cash. 

 
	
  

 	
  

 	
  

 
	
 7.2.

 	
  

 	
 Action
 upon Insolvency of Pledgor or Secured Party

 

	
  

 	
  

 	
  

 
	
  

 	
 It is understood
 and agreed by the parties that: 

 
	
  

 	
  

 
	
  

 	
 (a)

 	
           in the
 event that either or both of Pledgor and Secured Party are subject to
 bankruptcy, insolvency or any analogous or similar proceeding, Collateral
 Manager may be required to act, or may be prevented from acting, by (i) any
 applicable bankruptcy, insolvency, administration, liquidation, or analogous
 or similar laws or regulations, or by equitable principles relating to or
 limiting creditors’ rights generally; and/or (ii) the directions of a
 bankruptcy or insolvency officeholder or person with an analogous or similar
 status or authority; and/or (iii) the directions of a court or tribunal or
 other institution with analogous or similar status or authority; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           if any or
 all of the circumstances contemplated in paragraph 7.2(b) arise, Collateral
 Manager shall not have any liability for any act or omission under, by virtue
 of or directly or indirectly in relation to this Agreement or in relation to
 any related matter or claim howsoever whenever and wherever arising and
 whether such claim be formulated in contract or tort or both or by reference
 to any other remedy or right and in whatever jurisdiction or forum. 

 
	
  

 	
  

 	
  

 
	
 7.3.

 	
  

 	
 No Duty to Collect Proceeds

 
	
  

 	
  

 	
  

 
	
  

 	
 Collateral Manager shall not be under any duty or obligation to take
 action to effect collection of any Proceeds due on the Collateral in the
 Accounts.

 

	
  

 	
  

 	
  

 
	
 7.4.

 	
  

 	
 No Responsibility for Collateral until Received
 

 
	
  

 	
  

 	
  

 
	
  

 	
 Collateral Manager shall not be responsible for, or considered to be
 custodian of, any Collateral, including Cash, received by it for deposit in
 the Accounts until Collateral Manager actually receives and collects such
 Collateral either directly or by the final crediting of Collateral Manager’s
 account. Collateral Manager will be entitled to reverse any credits made on
 Pledgor’s or Secured Party’s behalf where such credits have been previously
 made and Collateral is not finally collected. 

 
	
  

 	
  

 	
  

 
	
 7.5.

 	
  

 	
 Fees 

 
	
  

 	
  

 
	
  

 	
 Collateral Manager shall be entitled to receive, and Pledgor agree[s]
 to pay, fees as may be agreed upon in writing from time to time, for its
 services under this Agreement, together with Collateral Manager’s reasonable
 out-of-pocket or incidental expenses, including, but not limited to, legal
 fees and tax or related fees incidental to processing charged directly or
 indirectly by governmental authorities, issuers, or their agents. Collateral
 Manager will invoice the Pledgor for amounts owing to it, and Collateral
 Manager may deduct amounts owing to it from the Account and the NIB Account
 if the Pledgor has not objected to the invoice within thirty (30) days of the
 date of the invoice (or such other period as the parties may agree in writing).
 Without prejudice to Collateral Manager’s other rights, Collateral Manager
 reserves the right to charge interest on overdue amounts from the due date
 until actual payment at a rate to be determined by Collateral Manager.
 Collateral Manager reserves the right to change the rate of fees and expenses
 should the assumptions underlying the Services, activity in the Accounts or
 the NIB Account, level of balances, market volatility and other factors
 change from those used to set the initial. 

 
	
  

 	
  

 	
  

 
	
 7.6.

 	
           Supply
 of Information Required by Regulation 

 

Page 18

 

	
  

 	
  

 	
  

 
	
  

 	
 It is understood and agreed that Collateral Manager is authorized to
 supply any information regarding the Accounts and the NIB Account which is
 required by any law or governmental regulation now or hereafter in effect. 

 
	
  

 	
  

 
	
 7.7.

 	
  

 	
 Force Majeure 

 
	
  

 	
  

 	
  

 
	
  

 	
 Collateral Manager shall not be responsible or liable for any failure
 or delay in the performance of its obligations under this Agreement arising
 out of or caused, directly or indirectly, by circumstances beyond its
 reasonable control, including without limitation, acts of God, earthquakes,
 fires, floods, wars, terrorism, civil or military disturbances, sabotage,
 epidemics, riots, interruptions, loss or malfunctions of utilities,
 transportation, computer (hardware or software) or communications service;
 labor disputes; acts of civil or military authority; governmental, judicial
 or regulatory actions; provided however, that Collateral Manager shall use
 commercially reasonable efforts to resume performance. 

 
	
  

 	
  

 
	
 7.8.

 	
  

 	
 Valuation 

 
	
  

 	
  

 	
  

 
	
  

 	
 The statements that Collateral Manager provides to Pledgor and
 Secured Party pursuant to paragraph 2.9 of this Agreement will include
 information with respect to the value of Collateral. Collateral Manager is
 authorized to utilize, without review or reasonableness checking, any
 generally recognized pricing information service or commercial arm’s length
 good faith valuation source (including affiliated or third party prime
 brokers or dealers in securities) in order to perform its valuation
 responsibilities hereunder. Collateral Manager shall not be liable for any
 losses incurred as a result of errors or omissions of any such pricing
 information service, broker or dealer. 

 
	
  

 	
  

 
	
 7.9.

 	
  

 	
 Exclusion of Duties Outside this Agreement 

 
	
  

 	
  

 	
  

 
	
  

 	
 Collateral Manager shall have no duties or responsibilities
 whatsoever except such duties and responsibilities as are specifically set
 forth in this Agreement, and no covenant or obligation shall be implied
 against Collateral Manager in connection with this Agreement. 

 
	
  

 	
  

 
	
 7.10.

 	
  

 	
 Collateral Manager Provides Diverse
 Financial Services and May Generate Profits as a Result 

 
	
  

 	
  

 	
  

 
	
  

 	
 The Pledgor and the Secured party hereby authorize Collateral Manager
 to act under this Agreement notwithstanding that: (a) Collateral Manager or
 any of its divisions, branches or Affiliates may have a material interest in
 transactions entered into by the Pledgor or the Secured Party with respect to
 the Accounts and the NIB Account or that circumstances are such that
 Collateral Manager may have a potential conflict of duty or interest,
 including the fact that Collateral Manager or its Affiliates may act as a
 market maker in the Securities to which Instructions relate, provide
 brokerage services to other customers, act as financial adviser to the issuer
 of such Securities, act in the same transaction as agent for more than one
 customer, have a material interest in the issue of the Securities; or earn
 profits from any of the activities listed herein and (b) Collateral Manager
 or any of its divisions, branches or Affiliates may be in possession of
 information tending to show that the Instructions received may not be in the
 best interests of the Pledgor or the Secured Party. Collateral Manager is not
 under any duty to disclose any such information. 

 
	
  

 	
  

 	
  

 
	
 8.

 	
 Termination 

 

Page 19

	
  

 	
  

 	
  

 
	
  

 	
 Any of the parties hereto may terminate this Agreement by giving to
 the other parties a notice in writing specifying the date of such
 termination, which shall be not less than ninety (90) days after the date of
 giving of such notice. Such notice shall not affect or terminate Secured
 Party’s security interest in the Collateral. Pledgor and Secured Party,
 acting jointly, may terminate this Agreement at any time that no Collateral
 is in the Accounts by giving notice in writing to Collateral Manager
 specifying the date of such termination. Upon termination hereof, Secured
 Party and Pledgor shall pay to Collateral Manager such compensation as may be
 due to Collateral Manager as of the date of such termination, and Collateral
 Manager shall follow such reasonable Instructions of Pledgor and Secured
 Party concerning the transfer of custody of the Collateral. In the event of
 discrepancy between Instructions of Pledgor and Secured Party, Collateral
 Manager shall act pursuant to Secured Party’s Instructions. Upon the date set
 forth in a termination notice, this Agreement shall terminate, and, except as
 otherwise provided herein, all obligations of the parties to each other
 hereunder shall cease. 

 
	
  

 	
  

 
	
 9.

 	
 Miscellaneous 

 
	
  

 	
  

 	
  

 
	
 9.1.

 	
 New Instructions

 
	
  

 	
  

 
	
  

 	
 Pledgor and Secured Party each agrees to furnish to Collateral
 Manager new Instructions in the event that any presently Authorized Person
 ceases to be an Authorized Person or in the event that any other Authorized
 Persons are appointed and authorized. Until such new Instructions are
 received, Collateral Manager shall be fully protected in acting upon
 Instructions of the present Authorized Persons, as set forth on Schedule I
 attached hereto. 

 
	
  

 	
  

 
	
 9.2.

 	
  

 	
 Notices

 
	
  

 	
  

 	
  

 
	
  

 	
 Notices (other than Instructions) will be served by registered mail
 or hand delivery to the address of the respective parties as set out on the
 first page of this Agreement, unless notice of a new address is given to the
 other party in writing. Notice will not be deemed to be given unless it has
 been received. 

 
	
  

 	
  

 
	
 9.3.

 	
  

 	
 Successors and Assigns 

 
	
  

 	
  

 	
  

 
	
  

 	
 This Agreement will be binding on each of the parties’ successors and
 assigns, but the parties agree that neither party can assign its rights and
 obligations under this Agreement without the prior written consent of the
 other party, which consent will not be unreasonably withheld. 

 
	
  

 	
  

 	
  

 
	
 9.4.

 	
  

 	
 Interpretation 

 
	
  

 	
  

 	
  

 
	
  

 	
 Headings are for convenience only and are not intended to affect
 interpretation. References to Clauses are to Clauses of this Agreement and
 references to sub-clauses and paragraphs are to sub-clauses of the Clauses
 and paragraphs of the sub-clauses in which they appear. 

 
	
  

 	
  

 	
  

 
	
 9.5.

 	
  

 	
 Entire Agreement 

 
	
  

 	
  

 	
  

 
	
  

 	
 This Agreement, including the Schedules, sets out the entire
 Agreement between the parties in connection with the subject matter, and this
 Agreement supersedes any other agreement, statement, or representation
 relating to custody, whether oral or written. Amendments must be in writing
 and signed by both parties. The Operating Guidelines do not form part of this
 Agreement and are not intended to, and shall not, 

 

Page 20

	
  

 	
  

 	
  

 
	
  

 	
 create any legal obligations of Custodian, Secured Party or Pledgor.
 Neither Secured Party, nor Pledgor, nor Custodian has, when entering into
 this Agreement, relied on any provision of the Operating Guidelines as a
 representation by the other party. Subject to the above, any amendments
 (whether one amendment or collectively a series of amendments) to the
 Operating Guidelines that may have a material adverse impact on the
 performance or receipt of the services under this Agreement, must be agreed
 between Custodian, Secured Party and Pledgor prior to the change being made.
 Custodian shall notify Secured Party and Pledgor of any other amendments to
 the Operating Guidelines; so far as reasonably practicable such notice will
 be in advance. 

 
	
  

 	
  

 
	
 9.6.

 	
  

 	
 Information Concerning Deposits at
 Collateral Manager’s London Branch 

 
	
  

 	
  

 	
  

 
	
  

 	
 The Financial Services Compensation Scheme (the “FSCS”) was created under the Financial
 Services and Markets Act 2000. The terms of the FSCS offer protection in
 connection with deposits and investments in the event of the persons to whom
 Collateral Manager provides services suffering a financial loss as a direct
 consequence of Collateral Manager being unable to meet any of its
 liabilities, and subject to the FSCS rules regarding eligible claimants and
 eligible claims, Pledgor may have a right to claim compensation from the
 FSCS. Subject to the terms of the FSCS, the limit on the maximum compensation
 sum payable by the FSCS in relation to investment business is £48,000 and in
 relation to deposits is £31,700. A detailed description of the FSCS
 (including information on how to make a claim, eligibility criteria and the
 procedures involved) is available from the FSCS who can be contacted at 7th
 Floor, Lloyds Chambers, Portsoken Street, London, E1 8BN. 

 
	
  

 	
  

 
	
 9.7.

 	
  

 	
 Insurance 

 
	
  

 	
  

 	
  

 
	
  

 	
 Pledgor and Secured Party acknowledge that Collateral Manager will
 not be required to maintain any insurance coverage specifically for the
 benefit of Pledgor or Secured Party. Collateral Manager will, however,
 provide details of its own general insurance coverage, to Pledgor or Secured
 Party on request. 

 
	
  

 	
  

 
	
 9.8.

 	
  

 	
 Governing Law and Jurisdiction 

 
	
  

 	
  

 	
  

 
	
  

 	
 THIS AGREEMENT WILL BE CONSTRUED, REGULATED, AND ADMINISTERED UNDER
 THE LAWS OF THE UNITED STATES OR STATE OF NEW YORK, AS APPLICABLE, WITHOUT
 REGARD TO NEW YORK’S PRINCIPLES REGARDING CONFLICT OF LAWS, EXCEPT THAT THE
 FOREGOING SHALL NOT REDUCE ANY STATUTORY RIGHT TO CHOOSE NEW YORK LAW OR
 FORUM. THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
 WILL HAVE THE SOLE AND EXCLUSIVE JURISDICTION OVER ANY LAWSUIT OR OTHER
 JUDICIAL PROCEEDING RELATING TO OR ARISING FROM THIS AGREEMENT AND EACH OF
 THE PARTIES AGREE THAT THIS COURT WILL HAVE PROPER VENUE FOR ANY SUCH LAWSUIT
 OR JUDICIAL PROCEEDING, AND THE PARTIES WAIVE ANY OBJECTION TO VENUE OR THEIR
 CONVENIENCE AS A FORUM. THE PARTIES AGREE TO SUBMIT TO THE JURISDICTION OF
 ANY OF THE COURTS SPECIFIED AND TO ACCEPT SERVICE OF PROCESS TO VEST PERSONAL
 JURISDICTION OVER THEM IN THIS COURT. THE PARTIES FURTHER HEREBY KNOWINGLY,
 VOLUNTARILY AND INTENTIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
 APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY SUCH LAWSUIT
 OR JUDICIAL PROCEEDING ARISING OR RELATING TO THIS AGREEMENT OR THE
 TRANSACTIONS CONTEMPLATED HEREBY. TO THE EXTENT THAT IN ANY JURISDICTION
 PLEDGOR OR SECURED PARTY MAY NOW OR HEREAFTER BE ENTITLED TO CLAIM, FOR
 ITSELF OR ITS ASSETS, IMMUNITY FROM SUIT, EXECUTION, ATTACHMENT (BEFORE OR
 AFTER JUDGEMENT) OR OTHER 

 

Page 21

	
  

 	
  

 	
  

 
	
  

 	
 LEGAL PROCESS, PLEDGOR AND SECURED PARTY SHALL NOT CLAIM, AND IT
HEREBY IRREVOCABLY WAIVES, SUCH IMMUNITY.

[Pledgor/Secured Party] hereby
irrevocably appoints __________________________________
(the “Process Agent”), with an office on the date hereof at
__________________________________________________, New York, NY _________,
United States, as its agent to receive on behalf of [Pledgor/Secured Party]
and its property service of copies of the summons and complaint and any other
process which may be served in any action or proceeding. This designation is
in addition to any other agent previously or hereafter designated by
[Pledgor/Secured Party] for service of process. Such service may be made by
mailing or delivering a copy of such process to [Pledgor/Secured Party] in
care of the Process Agent at the Process Agent’s above address, and
[Pledgor/Secured Party] hereby irrevocably authorizes and directs the Process
Agent to accept such service on its behalf. Nothing in this Section shall
affect the right of Secured Party, Collateral Manager or Pledgor to serve
legal process in any other manner permitted by law.]1 

 
	
  

 	
  

 
	
 9.9.

 	
  

 	
 Severability; Waiver; and Survival 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
           If one or
 more provisions of this Agreement are held invalid, illegal or unenforceable
 in any respect on the basis of any particular circumstances or in any
 jurisdiction, the validity, legality and enforceability of such provision or
 provisions under other circumstances or in other jurisdictions and of the
 remaining provisions will not in any way be affected or impaired. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           Except as
 otherwise provided herein, no failure or delay on the part of either party in
 exercising any power or right under this Agreement operates as a waiver, nor
 does any single or partial exercise of any power or right preclude any other
 or further exercise, or the exercise of any other power or right. No waiver
 by a party of any provision of this Agreement, or waiver of any breach or
 default, is effective unless it is in writing and signed by the party against
 whom the waiver is to be enforced.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           The
 parties’ rights, protections, and remedies under this Agreement shall survive
 its termination. 

 
	
  

 	
  

 	
  

 
	
 9.10.

 	
  

 	
 Confidentiality 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
           Subject
 to paragraph 9.10(b) Collateral Manager will hold all Confidential
 Information in confidence and will not disclose any Confidential Information
 except as may be required by Applicable Law, a regulator with jurisdiction
 over Collateral Manager’s business, or with the consent of the relevant
 party. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
           Pledgor
 and Secured Party authorize Collateral Manager to disclose Confidential
 Information to: 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 any Subcustodian, subcontractor, agent, Securities Depository,
 securities exchange, broker, third party agent, proxy solicitor, issuer, or
 any other person that Collateral Manager believes it is reasonably required
 in connection with Collateral Manager’s provision of relevant services under
 this Agreement; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 its professional advisors, auditors or public accountants; 

 

	
  

 	
  

 
	

 

 
	
 1

 	
 This language is required for
 non-US parties.

 

Page 22

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
 its Affiliates;
 and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iv)

 	
 any revenue
 authority or any governmental entity in relation to the processing of any tax
 relief claim. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
           Except as otherwise required by Applicable Law or as needed to
 enforce the terms of this Agreement, the parties shall hold the terms and
 conditions of this Agreement in confidence.

 
	
  

 	
  

 	
  

 

	
  

 	
  

 	
  

 
	
 9.11.

 	
  

 	
 Counterparts 

 
	
  

 	
  

 	
  

 
	
  

 	
 This Agreement may be executed in several counterparts each of which
 will be deemed to be an original and together will constitute one and the
 same agreement. 

 
	
  

 	
  

 
	
 9.12.

 	
  

 	
 Third Party Rights 

 
	
  

 	
  

 	
  

 
	
  

 	
 A person who is not a party to this Agreement shall have no right
 under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of
 this Agreement. 

 
	
  

 	
  

 	
  

 
	
 9.13.

 	
  

 	
 Headings 

 
	
  

 	
  

 	
  

 
	
  

 	
 The headings and captions in this Agreement are for reference only
 and shall not affect the construction or interpretation of any of its
 provisions. 

 
	
  

 	
  

 
	
 9.14.

 	
  

 	
 USA PATRIOT Act Disclosure 

 
	
  

 	
  

 	
  

 
	
  

 	
 Section 326 of the Uniting and Strengthening America by Providing
 Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
 (“USA PATRIOT Act”) requires Collateral Manager to implement reasonable
 procedures to verify the identity of any person that opens a new Account with
 it. Accordingly, Pledgor and Secured Party acknowledge that Section 326 of
 the USA PATRIOT Act and Collateral Manager’s identity verification procedures
 require Collateral Manager to obtain information which may be used to confirm
 Pledgor’s or Secured Party’s identity including without limitation Pledgor’s
 and Secured Party’s name, address and organizational documents (“identifying
 information”). Pledgor and Secured Party may also be asked to provide
 information about its financial status such as its current audited and
 unaudited financial statements. Pledgor and Secured Party agree to provide
 Collateral Manager with and consent to Collateral Manager obtaining from
 third parties any such identifying and financial information required as a
 condition of opening an account with or using any service provided by
 Collateral Manager. 

 
	
  

 	
  

 	
  

 
	
 9.15.

 	
  

 	
 Limitations on Liability. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a) The debts, liabilities, obligations, expenses, costs, charges,
 indemnities and reserves incurred, contracted for, attributable to or
 otherwise existing with respect to a particular Series shall be enforceable
 against the assets of such Series only, and not against the assets of the
 Trust generally or of any other Series and, unless otherwise provided by the
 Sponsor, none of the debts, liabilities, obligations, expenses, costs,
 charges, indemnities and reserves incurred, contracted for, attributable to
 or otherwise existing with respect to the Trust generally or any other Series
 shall be enforceable against the assets of such Series. Any general
 liabilities, expenses, costs, charges, indemnities or reserves of the Trust
 which are not readily identifiable as being held with respect to any
 particular Series shall be allocated and charged by the Sponsor to and among
 any one or more of the Series in such manner and on such basis 

 

Page 23 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 as the Sponsor in its sole discretion deems fair and equitable.
 Pursuant to the Delaware Statutory Trust Act and the Amended and Restated
 Trust Agreement of the Trust, any party extending credit to, contracting with
 or having any claim against any Series of the Trust may look only to the
 assets of such Series to satisfy or enforce any debt with respect to that
 Series. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b) This Agreement has been entered into by the Trust and was
 executed and delivered by an officer of its Sponsor, on behalf of the Trust,
 which officer was acting solely in his capacity as an officer of the Sponsor
 and not in his individual capacity and which Sponsor was acting solely in its
 capacity as sponsor of the Trust and not in its individual capacity. The
 obligations of this Agreement are not binding on such officer, the Sponsor or
 any shareholder of the series of the Trust individually. The obligations of
 this Agreement are binding only upon the assets and property of the Trust or
 belonging or attributable to a Series thereof.

 

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers, thereunto duly
authorized, on the day and year first above written. 

 [Secured Party] 

	
  

 	
  

 	
  

 
	
 By: 

 	
  

 	
  

 
	
  

 	

 

 	
  

 
	
 Name: 

 	
  

 	
  

 
	
 Title:

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  [Pledgor]
 

 	
  

 
	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 
	
  

 	

 

 	
  

 
	
 Name:

 	
  

 	
  

 
	
 Title:

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	

 

 	
  

 
	
  

 	
  

 	
  

 
	
 By: 

 	
  

 	
  

 
	
  

 	

 

 	
  

 
	
 Name:

 	
  

 	
  

 
	
 Title:

 	
  

 	
  

 

Page 24

SCHEDULE I

Authorized Persons

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 If
 from Secured Party:

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Name 

 	
  

 	
 Signature

 	
  

 	
 Telephone Number 

 	
  

 
	
  

 	
 

 	
  

 	
  

 	
  

 	
 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3.

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 If
 from Pledgor:

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Name  

 	
  

 	
 Signature

 	
  

 	
 Telephone Number 

 	
  

 
	
  

 	
 

 	
  

 	
  

 	
  

 	
 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3.

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 

Page 25

	
  

 
	
 SCHEDULE II 

 
	

 

 
	
 Cash and Securities Delivery Instructions

 

Securities

________________/CUST

ABA No. 

Reference: (G-Account Number, e.g., (xxxxx)

Reference: (Account Name)

Cash

_____________________ 

ABA No.: 

Account No.: (DDA Account Number)

Name: (Account
Number)

Page 26

SCHEDULE III

Secured Party 

Cash and Securities Delivery Instructions

Securities

ABA No. 

Reference: (Account Number)

Reference: (Account Name)

Cash

ABA No.: 

Account No.: (DDA Account Number)

 Name:
(Account Number)

Pledgor 

Cash and Securities Delivery Instructions 

Securities

ABA No. 

Reference: (Account Number)

Reference: (Account Name)

Cash

Bank Name

ABA No.:

Account No.: 

Account Name:

Page 27

SCHEDULE IV

Electronic Access

	
  

 	
  

 
	
 1.

 	
 Collateral Manager shall permit the Pledgor, the Secured Party and
 their Authorized Persons to access electronically the applications and
 products subject to the Agreement (the “Products”)
 in accordance with the limitations of paragraph 3.6 of the Agreement.
 Collateral Manager reserves the right to modify this Schedule IV and, subject
 to the terms and conditions of the Agreement, the products and services
 available through the Products, upon notice to the Pledgor and the Secured
 Party. Collateral Manager shall use reasonable efforts to give the Pledgor
 and the Secured Party reasonable notice of its termination or suspension of
 access hereunder to any Product, but may do so immediately upon written
 notice to the Pledgor and the Secured Party if Collateral Manager determines,
 in its sole discretion, that providing access to such Product would violate
 Applicable Law or that the security or integrity of such Product is at risk. 

 
	
  

 	
  

 
	
 2.

 	
 In consideration of the fees paid by the Pledgor or the Secured Party
 to Collateral Manager and subject to any applicable software license addendum
 in relation to Collateral Manager owned or sublicensed software provided for
 a particular application, Collateral Manager grants to the Pledgor and the
 Secured Party and, where applicable, their Authorized Persons on the terms of
 this Schedule IV a non-exclusive license to use the Products and the
 information and data made available to Pledgor or Secured Party through the
 Products (the “Data”) for the
 sole use of the Pledgor and the Secured Party. The Pledgor and the Secured
 Party may download the Data and print out hard copies for their reference,
 provided that they do not remove any copyright or other notices contained
 therein or any hyperlink or other reference to any such notice. 

 
	
  

 	
  

 
	
 3.

 	
 The rights and obligations of the parties with respect to the
 provision of certain cash products and services via the Products shall also
 be governed, to the extent not governed by this Agreement, by Collateral
 Manager’s terms and conditions relating to such products and services, as the
 same may be amended from time to time (the “Product
 Terms”). If and to the extent that there is a conflict between the
 Product Terms and this Schedule IV, the provisions of this Schedule IV shall
 prevail. 

 
	
  

 	
  

 
	
 4.

 	
 The Pledgor and the Secured Party acknowledge that there are certain
 security, corruption, transaction error and access availability risks
 associated with using open networks such as the internet, and the Pledgor and
 the Secured Party hereby expressly assume such risks. The Pledgor and the
 Secured Party shall make their own independent assessment of the adequacy of
 the internet and of the security procedures made available by Collateral
 Manager. The Pledgor and the Secured Party acknowledge and agrees that the
 selection and use by it of third party security and communications software
 and third party service providers is the sole responsibility of the Pledgor
 and the Secured Party, and Collateral Manager disclaims all risks related
 thereto, notwithstanding that Collateral Manager may recommend certain
 security and/or communication software packages. All such software must be
 interoperable with Collateral Manager’s software. Each of the Pledgor, the
 Secured Party and 

 

Page 28

 

	
  

 	
  

 
	
  

 	
 Collateral Manager shall be responsible for the proper functioning,
 maintenance and security of its own systems, services, software and other
 equipment.

 
	
  

 	
  

 
	
 5.

 	
 In cases where Collateral Manager’s web site is unexpectedly down or
 otherwise unavailable, Collateral Manager shall provide other appropriate
 means for the Pledgor and the Secured Party or their Authorized Persons to
 instruct Collateral Manager or obtain reports from Collateral Manager.
 Provided that Collateral Manager reasonably provides such other means,
 Collateral Manager shall not be liable for any Liabilities arising out of the
 inability to instruct or communicate using Collateral Manager’s web site in the
 absence of Collateral Manager’s negligence or willful misconduct. 

 
	
  

 	
  

 
	
 6.

 	
 The Pledgor and the Secured Party shall use (and cause their
 Affiliates, Authorized Persons, and other agents to use) appropriate and up
 to date products that are commercially available to protect their respective
 systems and associated files and Data from the threat of computer viruses and
 other similar destructive software elements (“Viruses”) and to minimize the risk of transmission of
 Viruses between the parties. 

 
	
  

 	
  

 
	
 7.

 	
 The Pledgor and the Secured Party shall promptly and accurately
 designate in writing to Collateral Manager the geographic location of their
 users from time to time. The Pledgor and the Secured Party further represent
 and warrant to Collateral Manager that the Pledgor and the Secured Party,
 respectively, shall not access the service from any jurisdiction which
 Collateral Manager informs the Pledgor and the Secured Party or where the
 Pledgor and the Secured Party have actual knowledge that the service is not
 authorized for use due to local regulations or laws. Prior to submitting any
 document which designates the persons authorized to act on the Pledgor’s or
 Secured Party’s behalf, the Pledgor and the Secured Party, respectively,
 shall obtain from each individual referred to in such document all necessary
 consents to enable Collateral Manager to process the Data set out therein for
 the purposes of providing the Products. 

 
	
  

 	
  

 
	
 8.

 	
 The Pledgor and the Secured Party shall be responsible for the
 compliance of their respective Authorized Persons with the terms of this
 Schedule IV. 

 

Page 29

SCHEDULE V

Notice of Pledgor Default

To:    ________________________ (“__________”)

	
  

 	
  

 
	
 CC:

 	
 [Name of Pledgor]
 (the “Pledgor”)

 
	
  

 	
 [Address of
 Pledgor]

 

[Date] 

Ladies and Gentlemen: 

Reference: Default notification pursuant to
paragraph 2.8(a) of the Control and Custody Agreement dated [●] (the “Agreement”) 

[Name of Secured Party] (“Secured
Party”) hereby notifies Collateral Manager that (i) Pledgor has
defaulted in its obligations to Secured party pursuant to the Master Agreement
(as defined in the Agreement) or (ii) a termination event (as defined in the
Master Agreement) has occurred in respect of Pledgor and is continuing.
Collateral release instructions shall follow by [format]. 

	
  

 	
  

 
	
 [Name of Secured
 Party] 

 	
  

 
	
  

 
	

 

 	
  

 
	
  

 
	
 Authorized
 Signatory

 	
  

 

Page 30

SCHEDULE VI 

Notice of Secured Party Default 

To:    ________________________ (“__________”)

	
  

 	
  

 
	
 CC:

 	
 [Name of Secured
 Party] (the “Secured Party”)

 
	
  

 	
 [Address of
 Secured Party]

 

[Date] 

Ladies and Gentlemen: 

Reference: Default notification pursuant to
paragraph 2.8(b) of the Control and Custody Agreement dated [●] (the “Agreement”) 

[Name of Pledgor] (“Pledgor”)
hereby notifies __________ that (i) Secured Party has defaulted in its
obligations to Pledgor pursuant to the Master Agreement (as defined in the
Agreement) or (ii) a termination event (as defined in the Master Agreement) has
occurred in respect of Secured Party and is continuing. Collateral release
instructions shall follow by [format]. 

	
  

 	
  

 
	
 [Name of Pledgor]

 	
  

 
	
  

 
	

 

 	
  

 
	
  

 
	
 Authorized
 Signatory

 	
  

 

Page 31Exhibit 10.5

Dated: ______

FACILITY AGREEMENT

For the entering into
and termination of

COMMODITY CONTRACTS

Between

ETFS COLLATERALIZED
COMMODITIES TRUST

ON BEHALF OF ITS
SEPARATE SERIES (FUNDS)

and

 [COUNTERPARTY]

1

THIS FACILITY AGREEMENT is made
[___________]

BETWEEN:

	
  

 	
  

 	
  

 
	
  

 	
 (1)

 	
 ETFS COLLATERALIZED COMMODITIES TRUST, a Delaware statutory trust, whose office is located at c/o ETF Securities USA LLC, Ordnance
 House, 31 Pier Road, St Helier, Jersey, Channel Islands (“Trust”),
 on behalf of each separate series (each a “Fund”) as set forth on Schedule A
 hereo; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 _________ (“Counterparty”), whose office is
 located at _________________.

 

WHEREAS:

	
  

 	
  

 	
  

 
	
  

 	
 (A)

 	
 Funds may create or redeem Long, Short, and
 Leveraged Shares at values based on the return of Commodity Contracts
 referencing the Commodity Indices; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (B)

 	
 Counterparty has agreed to provide each
 Fund with a facility for entering into and terminating Commodity Contracts on
 the terms and conditions herein stated.

 

NOW THEREFORE in consideration of the mutual covenants, conditions,
representations, and warranties set forth herein, it is hereby agreed as
follows: 

1. DEFINED TERMS AND INTERPRETATION

Defined terms

	
  

 
	
 1.1 In this
 Agreement, the following words and expressions have the following meanings:

 

“Acceptable Credit Rating” means a long term
senior debt credit rating of at least BBB+ from Standard & Poor’s Rating
Services, a division of the McGraw-Hill Companies Inc. (or any successor to the
ratings business thereof), and of at least Baa1 from Moody’s Investors Service
Inc. (or any successor to the ratings business thereof).

“Affected
Business” has the meaning given in Section 7.1.

“Affected
Party” has the meaning given in Section 7.1.

“Affiliate”
means, in relation to any person, any entity
controlled, directly or indirectly, by that person, any entity that controls,
directly or indirectly, that person, or any entity directly or indirectly under
common control with that person; and for this purpose, control of any entity or person means
ownership of a majority of the voting power of the entity or person.

“Agreement” means this agreement and includes
the Schedules hereto.

“Authorized
Individual” means, in respect of a Party or an
Authorized Participant, a natural person notified in writing by such Party or
Authorized Participant from time to time as having authority on behalf of that
Party or Authorized Participant to sign notices, give instructions and make
binding commitments on behalf of that Party or Authorized Participant in
relation to activities contemplated by this Agreement or the relevant
Authorized Participant Agreement.

“Authorized Participant” means a person who
(1) is a registered broker-dealer or other securities market participant such
as a bank or other financial institution which is not required to register as a
broker-dealer to engage in securities transactions, (2) is a participant in
DTC,

2

(3) has entered into an Authorized
Participant Agreement with the Trust and the Sponsor, and (4) has entered into
a Direct Agreement with each of the Counterparties of the relevant Fund.

Authorized Participant Agreement” means an
agreement entered into by each Authorized Participant, the Sponsor, and the
Trust, on behalf of its Funds, which sets forth the procedures for the creation
and redemption of Creation Units in a Fund.

“Business
Day” means a day (other than a Saturday or Sunday) on which
the Exchange is open for regular trading.

“Calculation Agent” means a person appointed
by the sponsor to determine the Daily Contract Price of Commodity Contracts,
_______ being the current calculation agent.

“Commodity Contract” means a prepaid forward
contract between a Fund and Counterparty, whose value is derived by reference
to the daily value of a specified Commodity Index multiplied by the Delta
Factor subject to the Daily Capital Adjustment. The terms of each Fund’s
Commodity Contracts are set forth in ISDA Agreements negotiated by the sponsor
and the counterparties. Each Fund enters into Commodity Contracts as a
substitute for investing directly in commodities, commodity futures contracts
or options on futures to gain exposure to the Fund’s specified Commodity Index.

“Commodity Contract Spread” means the spread
rate agreed by a Fund and Counterparty as compensation of the Counterparty for
providing the Fund with exposure to the Commodity Index.

“Commodity Index” means an index referencing
a specified commodity or commodities and referenced by a Fund. A Commodity
Index may be either a Composite Commodity Index or an Individual Commodity
Index.

“Component Exchange” means the commodity
futures exchange upon which index components, which are also referred to as
designated contracts, are traded, being the Intercontinental Exchange, Inc. for
Brent oil futures, the New York Mercantile Exchange, Inc. for natural gas
futures, COMEX for copper futures, The Chicago Board of Trade for wheat
futures, and COMEX for gold futures.

“Composite Commodity Index” means a Commodity
Index that tracks the futures prices of a specified basket of commodities as
calculated and published by the index providers, which may be constituted by
the index providers by aggregating multiple Individual Commodity Indices. The
Composite Commodity Indices will be referenced by the following Funds: ETFS
Composite Agriculture; ETFS Composite Industrial Metals; ETFS Composite Energy;
and ETFS All Commodities.

“Compulsory Redemption” means the mandatory
redemption of Shares of a Fund for the following reasons: _____________.

“Counterparty” means ____________. 

“Counterparty Event of Default” means:

	
  

 	
  

 
	
 (a)

 	
 the failure of Counterparty to make a
 payment it is due to make in accordance with the termination procedures,
 where such failure is not rectified within ___ Business Days following the
 day on which Counterparty receives notice of the failure or being in breach
 of any other of its obligations under this Agreement provided that

 
	
  

 	
  

 

3

	
  

 	
  

 
	
  

 	
 such
 breach (if capable of being rectified) is not rectified within ____ Business
 Days of Counterparty receiving written notice of such breach; or 

 
	
  

 	
  

 
	
 (b)

 	
 an Insolvency Event occurring with respect
 to Counterparty.

 

“Counterparty
Settlement Failure” means, in relation to any
Commodity Contracts, the failure by Counterparty to comply with its obligations
in respect of the termination of those Commodity Contracts under this Agreement
(including without limitation a failure to pay the termination amount in
respect of those Commodity Contracts on the due date therefor into the
applicable Redemption Account in accordance with this Agreement).

“Daily Capital Adjustment” means the daily
adjustment calculation of each Commodity Contract to account for a daily
accrual to a Fund of a 3-month U.S. Treasury bill rate of return less the
following ordinary expenses of the Fund: (1) Commodity Contract Spread, (2)
Sponsor’s Fee and (3) Service Allowance.

“Daily Contract Price” means the price of a
Commodity Contract is determined by the formula contained in such Commodity
Contract and calculated daily by the Calculation Agent. The formula is based on
the change in the closing settlement price level of the relevant Commodity
Index from the prior day, the Daily Capital Adjustment for such day, and the
Delta Factor for such Fund.

“Delta Factor” means the Delta Factor
applicable to a particular Fund, expressed as a number. For Long Funds, the
Delta Factor equals 100%. For Short Funds, the Delta Factor equals negative
100%. For Leveraged Funds, the Delta Factor equals 200%.

“Designated Contract” means the constituent
futures contract of a Commodity Index.

“Default Rate” means a rate per annum of
interest equal to ______ compounded daily.

“Direct
Agreement” means Direct Agreement between each
Authorized Participant and a counterparty that is a pre-condition to such
Authorized Participant’s ability to place creation and redemption orders and
that principally provides undertakings between the Authorized Participant and
counterparty regarding the settlement of monies payable for creations and
redemptions in the event of order cancellations and other settlement failures.

“DTC” means the Depository Trust Company. DTC
is a limited purpose trust company organized under New York law, a member of
the U.S. Federal Reserve System and a clearing agency registered with the SEC.
DTC will act as the securities depository for the shares of each Fund.

“Equivalent Number” means, in relation to the
entering into or termination of Commodity Contracts in conjunction with a
Creation or Redemption of Shares, the number and class of Commodity Contracts
which is the same as the number and class of Shares;

“Event of Default” means a Counterparty Event
of Default or a Fund Event of Default.

“Exchange” means ____, the exchange on which
each Fund’s shares are listed and traded.

“Fund
Event of Default” means any of:

	
  

 	
  

 
	
 (a)

 	
 the occurrence of a Fund Insolvency Event;
 or

 

4

	
  

 	
  

 
	
 (b)

 	
 Fund being in breach of this Agreement
 provided that such breach (if capable of being rectified) is not rectified
 within ___ Business Days of Counterparty sending a written notice of such
 breach, and further provided that a failure by Fund to comply with its
 obligations herein shall not be a breach of this Agreement if caused by a
 corresponding failure of an Authorized Participant to make a payment that it
 is required to make to Fund under the relevant Authorized Participant
 Agreement.

 

“Fund
Insolvency Event” means an event in which a Fund (1) is dissolved (other than pursuant to a
consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing
its inability generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the benefit of its
creditors; (4) has a declaration made against it declaring the assets of Fund insolvent; (5) institutes or has
instituted against it any other proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights,
or a petition is presented for its winding-up or liquidation, and, in the case
of any such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for its winding-up
or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (6) has a
resolution passed for its winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (7) seeks or becomes subject to
the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar
official for it or for all or substantially all its assets; (8) has a
secured party take possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration
or other legal process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains possession, or
any such process is not dismissed,
discharged, stayed or restrained, in each case within 30 days
thereafter; (9) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an analogous effect to any
of the events specified in clauses (1) to (8) (inclusive);
or (10) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; provided that no action taken by
the Sponsor in respect of a Fund shall constitute a Fund Insolvency Event save
where acts of the Sponsor fall within one or more of clauses (1) to (9) and are
taken in respect of security taken over Commodity Contracts, this Facility
Agreement, or any other Facility Agreement.

“Fund Settlement Failure” means, in relation
to any Commodity Contracts, the failure by an Authorized Participant to comply
with its obligations in respect of the Creation of Shares relating to those
Commodity Contracts under the relevant Authorized Participant Agreement
(including, without limitation, a failure to pay the creation amount in respect
of those Shares on the due date therefor in full cleared and immediately
available US Dollar funds into the specified Counterparty Account in accordance
with the relevant Authorized Participant Agreement), other than any such
failure which has occurred as a result of the failure of Counterparty to comply
with its obligations in respect of entering into the corresponding Commodity
Contracts under this Agreement;

“Funding
Rate” means a rate per annum of interest equal
to ________ compounded daily;

“Handbook” means an index provider
publication explaining the methodology for calculation of each Commodity Index.
A copy of the Handbook can be obtained from the following website
www.______________.com.

5

“Hedging Disruption Event” means an event,
circumstance, or cause that Counterparty reasonably and in good faith
determines has had or would reasonably be expected to have a materially adverse
effect on Counterparty’s ability to hedge its positions in connection with this
Agreement or Commodity Contracts of the relevant class, including, without
limitation, any limitation or prohibition associated with acquiring,
establishing, re-establishing, substituting, maintaining, unwinding or
disposing of any hedging transaction in connection with this Agreement or such
Commodity Contracts, in each case whether due to market illiquidity, position
limits in respect of any futures contract, illegality, the adoption of or
change in any law or other regulatory instrument, lack of availability of
hedging transaction market participants or the occurrence or existence of any
other circumstance or event.

“Index” means the __________ calculated and
published by ________.

“Individual Commodity Index” means a
Commodity Index that tracks the futures prices of an individual commodity as
calculated and published by the index providers. The Individual Commodity
Indices will be referenced by the following Funds: ETFS ex-U.S. Oil; ETFS
Natural Gas; ETFS Copper; ETFS Wheat; ETFS Short ex-U.S. Oil; ETFS Short
Natural Gas; ETFS Short Copper; ETFS Short Wheat; ETFS Short Gold; ETFS
Leveraged ex-U.S. Oil; ETFS Leveraged Natural Gas; ETFS Leveraged Copper; ETFS
Leveraged Wheat; and ETFS Leveraged Gold.

“Insolvency
Event” means, in relation to a person other than
Fund, such person (1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent
or is unable to pay its debts or fails or admits in writing its
inability generally to pay its debts as they become due; (3) makes a general
assignment, arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any bankruptcy
or insolvency law or other similar law affecting creditors’ rights, or a
petition is presented for its winding-up or liquidation, and, in the case of
any such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for its winding-up
or liquidation or (B) is not dismissed, discharged, stayed or restrained in
each case within 30 days of the institution or presentation thereof; (5) has a
resolution passed for its winding-up, official management or liquidation (other
than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for it or
for all or substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on or
against all or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter; (8) causes or is subject to
any event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in clauses
(1) to (7) (inclusive); or (9) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
foregoing acts;

“Investment Company Act” means the Investment
Company Act of 1940, as amended;

“ISDA” means the International Swaps and
Derivatives Association, Inc.

“ISDA Agreements” mean the ISDA Master
Agreement and all related documentation including the ISDA Master Confirmation,
Credit Support Annex, and any schedules thereto.

6

“ISDA Master Agreement” means the form of
ISDA Master Agreement (Multicurrency – Cross-border) as published by ISDA in
1992 (using 2002 Definitions), including the related Schedule negotiated by the
Sponsor on behalf of a Fund and a Counterparty, which agreement will be
accompanied by a Credit Support Annex and sets forth the general terms of
Commodity Contracts.

“ISDA Master Confirmation” means the ISDA
master confirmation entered into by the Sponsor on behalf of a Fund with a
Counterparty, which confirmation will be subject to an ISDA Master Agreement
and set forth the specific terms of Commodity Contracts.

“Leveraged Fund” means a Fund that seeks
daily investment results, before fees and expenses, which correspond to 200% of
the daily performance, whether positive or negative, of its specified Commodity
Index.

“Long Fund” means a Fund that seeks to track
the daily investment results, before fees and expenses, which correspond to
100% of the daily performance whether positive or negative, of their respective
Commodity Indices.

“Market Disruption Day” means a Trading Day on which a Market Disruption Event
occurs or is continuing in a Component Exchange.

“Market
Disruption Event” means the occurrence or
continuance of any of the following events:

          (a)
The Component Exchange fails to determine, announce, or publish the relevant
settlement price for the Designated Contract underlying a Fund’s Commodity
Index;

          (b)
The termination or suspension of, or material limitation or disruption in the
trading of, any Designated Contract used in the calculation of a Fund’s
Commodity Index; or

          (c)
The settlement price of the Designated Contract used in the calculation of a
Fund’s Commodity Index reflects the Component Exchange’s maximum permitted
price change from the previous day’s settlement price.

“Material Adverse Change” means:

	
  

 	
  

 
	
 (a)

 	
 the adoption of, or any change in, any
 applicable law, legally-binding directive, or regulation, as a consequence of
 which the performance of this Agreement by either Party becomes unlawful; or

 
	
  

 	
  

 
	
 (b)

 	
 by reason of the adoption of, or any change
 in, any applicable law, directive, regulation, accounting rule, practice or
 principle, or any change in tax law, in each case after the date of this
 Agreement, or any change in the interpretation or application by any
 competent authority of any such applicable law, directive, regulation, rule,
 practice or principle, after the date of this Agreement, a Party considers
 (acting in good faith) that the economic benefit of its participation in any
 existing or future Commodity Contracts would be materially adversely
 affected.

 

“Material Adverse Change Notice” has the
meaning given in Section 7.1.

“Party” means a party to this Agreement including that party’s successors
in title and assignees or transferees permitted in accordance with the terms of
this Agreement.

7

“Payment Date” means the third Business Day
following the Pricing Date.

“Pricing Day” means a Trading Day that is not
a Market Disruption Day. 

“Prospectus”
means the prospectus relating to the Funds that
is currently part of the effective registration statement of the Trust, as such
prospectus may be amended or supplemented;

“Redemption
Account” means a bank account to receive
payments of the redemption amount in respect of the termination of Commodity
Contracts (and matching Shares), which account shall be for an Authorized
Participant, the bank account notified in writing by the Authorized Participant
to Fund and Counterparty from time to time;

“Securities Act” means the Securities Act of
1933 of the USA.

“Service Allowance” means the sum of the tax
reporting costs of a Fund and the fixed rate amount paid that finances payment
of index licensing fees to the index providers by a Fund.

“Settlement
Failure” means either a Counterparty Settlement
Failure or a Fund Settlement Failure.

“Settlement
Failure Date” means, in relation to a Settlement
Failure, the date on which such Settlement Failure occurred.

“Settlement
Failure Party” means, with respect to the
failure to deliver cash proceeds on a transaction settlement date, the party to
a Direct Agreement that so fails to deliver cash proceeds pursuant to a creation
or redemption of Fund shares.

“Shares” means Long Shares, Short Shares, and
Leveraged Shares;

“Shareholder” means a holders of Shares; 

“Short Fund” means a Fund that seeks daily
investment results, before extraordinary fees and expenses, which correspond to
the inverse (negative 100%) of the daily performance, whether positive or
negative, of its specified Commodity Index, subject to a Daily Capital
Adjustment.

“Sponsor” means ETF Securities USA LLC, a
Delaware limited liability company that is the sponsor of the trust.

“Sponsor’s Fee” means the fixed fee rate that
accrues daily to the Sponsor in consideration for the provision of all
management and administrative services for the Fund, which fee is a component
of the Daily Capital Adjustment and may vary among the Funds.

“Termination Event” means any of the events
affecting Fund or Counterparty that results in the termination of the Facility
Agreement.

“Trading Day” means a day on which a
Component Exchange is open for trading during its regular session, which
includes a day on which a Component Exchange closes prior to its scheduled
time. 

“Trust” means ETFS Collateralized Commodities
Trust, a Delaware statutory trust formed on May 27, 2010.

8

“Trust Agreement” means the Trust Agreement
between the Sponsor and the Trustee under which the Trust is formed and which
sets forth the rights and duties of the Sponsor and the Trustee.

“Unacceptable Authorized Participant” means
an Authorized Participant in respect of which a notice has been given under
Section 6.8.

Any term capitalized therein and not defined
shall have the meaning referenced in: _________________.

Interpretation

The following rules shall apply to the
interpretation of this Agreement unless the context otherwise requires:

	
  

 	
  

 
	
 (a)

 	
 Headings to sections, paragraphs, and other
 provisions of this Agreement are inserted for ease of reference only and
 shall not affect the interpretation of this Agreement.

 
	
  

 	
  

 
	
 (b)

 	
 Any reference to a person or persons
 includes reference to any individual, corporation, partnership, joint
 venture, association, public body, governmental authority or other entity.

 
	
  

 	
  

 
	
 (c)

 	
 Words in the singular shall also include
 the plural and vice versa.

 
	
  

 	
  

 
	
 (d)

 	
 Any reference to a Section or Schedule is a
 reference to a Section or Schedule of this Agreement.

 
	
  

 	
  

 
	
 (e)

 	
 Any reference in a Schedule to a paragraph
 is (unless otherwise specified) a reference to a paragraph of that Schedule.

 
	
  

 	
  

 
	
 (f)

 	
 Any reference to this Agreement or to any
 other agreement or document includes a reference to this Agreement, or, as
 the case may be, such other agreement or document, as amended, varied,
 novated, supplemented or replaced from time to time.

 
	
  

 	
  

 
	
 (g)

 	
 References to a document or agreement being
 in the agreed form are to that document or agreement (or a draft thereof)
 being in a form initialled for identification purposes by or on behalf of
 each of the Parties on or about the date hereof.

 
	
  

 	
  

 
	
 (h)

 	
 Any reference in this Agreement to any
 statute or any provision of any statute includes a reference to any statutory
 modification or re-enactment thereof or any statutory instrument, order or
 regulation made thereunder or under any such modification or re-enactment.

 
	
  

 	
  

 
	
 (i)

 	
 Unless otherwise indicated, any reference
 in this Agreement to a time is a reference to local time (Eastern) in New
 York, NY, USA.

 

Non Waiver

1.2 No failure or delay by any Party in
exercising any right or remedy provided by law under or pursuant to this
Agreement shall impair such right or remedy or operate or be construed as a
waiver or variation of such right or remedy or preclude its exercise at any

9

subsequent time and no single or partial exercise of any such right or
remedy shall preclude any other or further exercise of it or the exercise of
any other right or remedy. 

Consequence of unenforceability 

1.3 Subject always to Section __, if at any time any provision of this
Agreement shall be found by any court or administrative body of competent
jurisdiction to be invalid, illegal or unenforceable: 

	
  

 	
  

 
	
 (a)

 	
 such invalidity, illegality or unenforceability shall not affect the
 other provisions of this Agreement which shall remain in full force and
 effect; and 

 
	
  

 	
  

 
	
 (b)

 	
 the Parties shall attempt to substitute for any invalid, illegal or
 unenforceable provision a valid, legal or enforceable provision which
 achieves to the greatest extent possible the same effect as would have been
 achieved by the invalid, illegal or unenforceable provision. 

 

2. EFFECTIVENESS AND TERM  

2.1 This Agreement shall come into effect on the Effective Date, and
continue in effect for ___ years, subject to early termination provisions
agreed to between the Parties. If the Counterparty does not agree to renew or
otherwise extend the term of this Agreement on the same or different terms
beyond the initial ___ year period or chooses to terminate this Agreement
earlier, any outstanding Commodity Contracts will expire. 

2.2 Counterparty may not terminate the Facility Agreement (i) on less
than ___ months’ notice for any reason, or (ii) on not less than ___ business
days’ notice in the event that an Event of Default or Termination Event has occurred
and is then continuing with respect to the Trust. 

2.3 Fund and Counterparty may terminate the Facility Agreement with
respect to a Fund or terminate all or some Commodity Contracts thereunder with
respect to such Fund, at any time in its discretion, (i) on not less than
___days’ notice for any reason if all shares are to be redeemed, (ii) on not
less than ___ months’ notice for any reason and regardless of whether all
shares are to be redeemed, (iii) on not less than ___ business days’ notice in the
event that an Event of Default or a Termination Event has occurred and is then
continuing with respect to the counterparty, or (iv) on not less than ___ days’
notice in the event of a Compulsory Redemption of all shares of a Fund. 

2.4 Upon termination of the Facility Agreement or all or some Commodity
Contracts thereunder, the affected Funds will Compulsorily Redeem that number
of their shares related to such Commodity Contracts. 

3. CREATION AND TERMINATION OF COMMODITY CONTRACTS  

3.1 During the term of this Agreement, Fund has the right, subject to
the term and conditions of this Agreement and ISDA Agreements, to enter into
and terminate Commodity Contracts of any of the classes provided for in this
Agreement. 

3.2 Upon a purchase order for Shares becoming accepted, an Equivalent
Number of Commodity Contracts determined in accordance with the Creation Notice
shall be automatically entered into between Counterparty and Fund. On the
Payment Date for a creation, Fund shall procure payment from Authorized Participant
to Counterparty of the 

10

Creation Amount in respect of that Creation. Upon a redemption notice
becoming accepted, Counterparty shall on the Payment Date for such redemption
pay to Fund the amount in respect of the termination of an Equivalent Number of
Commodity Contracts. On the date of acceptance of a redemption, Commodity
Contracts to which such redemption amount relates shall be automatically
terminated. 

3.3 Each of Fund and Counterparty shall comply with the provisions of
Schedule 2 and 3. It is the intention of the Parties to develop web-based
systems for the giving of pricing notices in electronic form. If such systems
are developed, the Parties may make such amendments to this Agreement
(including to the Schedules hereto) as the Parties may agree at the relevant
time to accommodate such systems. 

3.4 Counterparty will enter into a Direct Agreement with each
Authorized Participant pursuant to which it will agree with Authorized
Participant to settle between themselves any amounts due as a result of order
cancellations or other settlement failures. Fund will not be responsible for
such payments. 

3.5 Creation orders are subject to an aggregate limit and a daily limit
on the creation of new Commodity Contracts. The aggregate limit is based on all
Funds. Commodity Contracts cannot be created to the extent that the total
outstanding Daily Contract Price of all Commodity Contracts of all Funds would
exceed the aggregate limit of [$__________] unless the counterparties otherwise
agree. The daily limit is set forth in the relevant ISDA Agreements for the
Fund. 

4. [RESERVED].  

5. PRICE OF COMMODITY CONTRACTS  

5.1 In the absence of a Market Disruption Event, the Daily Contract
Price of a Commodity Contracts will be calculated to reflect the daily movement
in the relevant Commodity Index on each Pricing Day and a Daily Capital
Adjustment according to the following formula: (calculated to 7 places of
decimals with 0.00000005 rounded upwards): 

Pi,t = Pi,t-1 x (1 + DCAi,t + DFi x
(Ii,t/Ii,t-1-1))

where: 

	
  

 	
  

 
	
  

 	
 i refers to
 the relevant Fund; 

 
	
  

 	
  

 
	
  

 	
 t refers to
 the applicable Pricing Day; 

 
	
  

 	
  

 
	
  

 	
 t-1 refers
 to the Pricing Day immediately before Pricing Day t; 

 
	
  

 	
  

 
	
  

 	
 Pi,t is the
 Daily Contract Price of Fund i for day t; 

 
	
  

 	
  

 
	
  

 	
 Pi,t-1 is
 the Daily Contract Price of Fund i for day t-1; 

 
	
  

 	
  

 
	
  

 	
 Ii,t is the
 closing settlement price level of the Commodity Index referenced by Fund i
 for day t; 

 
	
  

 	
  

 
	
  

 	
 Ii,t-1 is
 the closing settlement price level of the Commodity Index referenced by Fund
 i for day t-1; 

 

11

	
  

 	
  

 
	
  

 	
 DCAi,t is the
 Daily Capital Adjustment of Fund i on day t, expressed as a decimal; and 

 
	
  

 	
  

 
	
  

 	
 DFi is the
 Delta Factor applied to Fund i, expressed as a percentage. For Long Funds,
 the Delta Factor equals 100%; for Short Funds, Delta Factor equals negative
 100%; and for Leveraged Funds, Delta Factor equals 200%. 

 

Market Disruption Days 

5.2 For the entering into or termination of a Commodity Contract, if
day t is a Market Disruption Day for the Commodity Index relating to that
Commodity Contract, no Daily Contract Price will be determined and all rights
to create or redeem Creation Units will be suspended. After a period of [5]
consecutive Market Disruption Days, the Calculation Agent will use its
reasonable efforts to calculate substitute settlement values of the affected
Commodity Index using the same methodology and processes for each individual
commodity as are used for the calculation of the Commodity Index in the index
providers’ Handbook and use those settlement values to resume the calculation
of Daily Contract Prices. When the Calculation Agent so determines substitute
Daily Contract Prices, those days will be considered Pricing Days and creation
and redemption activities will resume. 

5.3 The Calculation Agent will determine substitute Daily Contract
Prices for only [60] consecutive Pricing Days, if the Market Disruption Event
persists that long and the Sponsor and the Counterparty have not earlier agreed
upon a replacement index for the affected Commodity Index. 

5.4 Once this period in Section 5.3 expires, substitute Daily Contract
Price calculations will cease as will any further creation and redemption
activities, and the Sponsor may terminate the affected Fund and effect a
compulsory redemption of such Fund’s shares. 

6. AUTHORIZED PARTICIPANTS  

Consent for Authorized Participants 

6.1 Fund may appoint Authorized Participants in its sole discretion and
Fund shall notify Counterparty of each such appointment, identifying the
person, its Authorized Individuals and the date from which that person will be
entitled to act as an Authorized Participant; provided, however, that
Counterparty shall have a right of prior consent in accordance with this
Section 6 in respect of any creations and redemptions by any Authorized
Participant. 

6.2 Fund shall provide (or shall procure that Counterparty is provided
with) such information as Counterparty may reasonably require in order to
consider whether or not to accept creations and redemptions by any proposed
Authorized Participant. 

6.3 Counterparty shall, within ___ Business Days of receiving the
information required under Section 6.2, notify Fund whether or not Counterparty
gives its consent to creations and redemptions by an Authorized Participant. 

6.4 Counterparty shall not unreasonably withhold or delay giving its
consent in respect of any such proposal under this Section 6; provided that
Counterparty may withhold its consent in its absolute discretion where: 

12

	
  

 	
  

 
	
 (a)

 	
 such proposed person (i) does not have an Acceptable Credit Rating,
 or (ii) provide credit support acceptable to Counterparty from a credit
 support provider with an Acceptable Credit Rating, or (iii) provide cash
 collateral or other security, in either case on such terms as Counterparty
 may require in its sole discretion; or 

 
	
  

 	
  

 
	
 (b)

 	
 Counterparty otherwise deems such person to be unacceptable as an
 Authorized Participant for credit, compliance, general business policy or
 reputational reasons; or 

 
	
  

 	
  

 
	
 (c)

 	
 Counterparty reasonably determines that it would be unlawful for
 Counterparty, or Counterparty would be required to obtain any governmental or
 regulatory consent or licence in any jurisdiction, to enter into or perform
 any of the transactions between it and such Authorized Person contemplated
 under this Agreement or the relevant Direct Agreement; or 

 
	
  

 	
  

 
	
 (d)

 	
 Counterparty
 determines, in its reasonable belief, that: 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 it may be required to withhold or deduct for or on account of any tax
 under any applicable law amounts from one or more payments required to be
 made by it to Counterparty; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 it may receive a payment from such proposed person under such Direct
 Agreement from which an amount would be required to be withheld or deducted
 for or on account of any tax under any applicable law. 

 

6.5 Where Counterparty has consented (or is deemed to have consented)
to accept creations and redemptions from an Authorized Participant,
Counterparty shall negotiate in good faith to enter into a Direct Agreement
with that person.

6.6 Fund shall notify Counterparty in writing whenever an Authorized
Participant ceases to be an Authorized Participant. 

6.7 Fund shall not, when entering into an Authorized Participant
Agreement with an Authorized Participant, agree to any amendment to the agreed
form of Authorized Participant Agreement without the prior written consent of
Counterparty, such consent not to be unreasonably withheld or delayed. 

6.8 Counterparty may at any time give notice to Fund that an Authorized
Participant has ceased to be acceptable to Counterparty with effect from the
date and time (no earlier than the date and time on which such notice is sent)
specified in such notice if: 

	
  

 	
  

 
	
 (a)

 	
 the Authorized Participant or a person providing credit support to
 Counterparty for the payment obligations of that Authorized Participant does
 not have an Acceptable Credit Rating, and such Authorized Participant has not
 provided or procured the provision of credit support acceptable to
 Counterparty from a credit support provider with an Acceptable Credit Rating
 or provided cash collateral or other security, in either case on such terms
 as Counterparty may require in its sole discretion; or 

 
	
  

 	
  

 
	
 (b)

 	
 Counterparty deems such person to be unacceptable as an Authorized
 Participant for credit, compliance, general business policy or reputational
 reasons; or 

 
	
  

 	
  

 
	
 (c)

 	
 Counterparty determines, in its reasonable belief, that: 

 

13

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 it would be unlawful for Counterparty, or Counterparty would be
 required to obtain any governmental or regulatory consent or licence in any
 jurisdiction, to enter into or perform any of the transactions contemplated
 to be effected between it and such Authorized Participant, pursuant to this
 Agreement and the relevant Authorized Participant Agreement or the relevant
 Direct Agreement; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 such Authorized Participant will be incapable of performing its
 obligations under the relevant Authorized Participant Agreement or the
 relevant Direct Agreement without contravening (or causing Fund or
 Counterparty to contravene) any applicable law or regulation; or 

 
	
  

 	
  

 	
  

 	
  

 
	
 (d)

 	
 Counterparty determines, in its reasonable belief, that:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 it may be required to withhold or deduct for or on account of any Tax
 under any applicable law amounts from one or more payments required to be
 made by it:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (A)

 	
 to such proposed person under any Direct Agreement such that it would
 be required under such Direct Agreement to pay additional amounts to such
 person on account of the amount so withheld or deducted; or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (B)

 	
 to Fund under this Agreement such that it would be required to pay additional
 amounts to Fund on account of the amount so withheld or deducted; or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 it may receive a payment from such proposed person under such Direct
 Agreement from which an amount would be required to be withheld or deducted
 for or on account of any Tax under any applicable law and no amount would
 required to be paid by such person in respect of such Tax under the Direct
 Agreement; or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (e)

 	
 by reason of (i) the adoption of, or any change in, any applicable
 law, legally-binding directive or regulation after the date of the relevant
 Direct Agreement, the performance of the relevant Direct Agreement by either
 party thereto becomes unlawful; or (ii) the adoption of, or any change in,
 any applicable law, directive, regulation, accounting rule, practice or
 principle, or any change in tax law, in each case after the date of the
 relevant Direct Agreement, or any change in the interpretation or application
 by any competent authority of any such applicable law, directive, regulation,
 rule, practice or principle, after the date of the relevant Direct Agreement,
 Counterparty considers (acting in good faith) that the economic benefit of
 its being party to the relevant Direct Agreement would be materially
 adversely affected; or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (f)

 	
 such Authorized Participant has failed to pay any amount due and
 payable by it to Fund (or to its order) in respect of Shares, or to
 Counterparty in accordance with the relevant Direct Agreement, where such
 failure is not rectified within five Business Days following the day on which
 such Authorized Participant receives notice of such failure sent by Fund or
 Counterparty (as the case may be); or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (g)

 	
 the SEC or any regulatory body, governmental body, agency, other
 authority or court requests, requires, directs or orders that (or to the
 effect that) such person cease to act 

 

14

	
  

 	
  

 
	
  

 	
 as an Authorized Participant or that Counterparty cease to enter into
 Commodity Contracts in respect of Shares issued by Fund for such Authorized
 Participant or place hedges in respect of its exposures in respect of them;
 or 

 
	
  

 	
  

 
	
 (h)

 	
 the Authorized Participant has been found guilty of any breach of law
 or regulation (whether by the SEC or any other authority or body) in respect
 of its role as an Authorized Participant; or 

 

7. MATERIAL ADVERSE CHANGE  

7.1 If a Material Adverse Change occurs, the Party adversely affected
by such Change (the Affected
Party) shall give notice thereof to the other Party (a Material Adverse Change Notice),
specifying the nature of that Material Adverse Change and the business affected
thereby (the Affected
Business) and will also give such other information about that
Material Adverse Change as the other party may reasonably require. The Affected
Party will use all reasonable efforts (which will not require such Party to
incur a loss, excluding immaterial, incidental expenses) within 20 days after
it gives such Material Adverse Change Notice to restructure the Affected
Business (which may include a transfer of all its rights and obligations under
this Agreement in respect of the Affected Business to another office or
Affiliate) so that such Material Adverse Change ceases to exist. 

7.2 If the Affected Party is not able to effect such a restructure it
will give notice to the other Party to that effect within such 20 day period,
whereupon the other Party may effect such a restructure within 30 days after
such Material Adverse Change Notice. Any such restructure by a Party will be
subject to and conditional upon the prior written consent of the other Party,
which consent will not be withheld if such other Party’s policies in effect at
such time would permit it to enter into transactions with the transferee on the
terms proposed. 

7.3 If a Material Adverse Change occurs and neither Party is able to
effect such a restructure or it is reasonably determined that no such
restructure would cause the Material Adverse Change to cease, the Parties will
negotiate in good faith to reach agreement within 30 days after the first
Material Adverse Change Notice is given on action to address such Material
Adverse Change which as near as possible would leave both Parties in the same
economic position as if such Material Adverse Change had not occurred. 

8. TERMINATION  

8.1 This Agreement shall terminate following payment in full by Counterparty
of the termination amount in respect of all Commodity Contracts in respect of
all classes of Commodity Contracts, provided
that termination shall be without prejudice to all rights,
entitlements and remedies which have arisen or accrued before termination. 

9. GENERAL PAYMENT PROVISIONS  

Currency 

9.1 All monies payable under this Agreement shall be paid in US Dollars
in cleared and immediately available funds and without set-off or counterclaim
(other than any set-off expressly contemplated by this Agreement). 

15

Interest 

9.2 Following the occurrence of a Settlement Failure, interest shall
accrue on any balance of the amount (if a Fund Settlement Failure or a
Counterparty Settlement Failure) not paid or otherwise discharged by way of
set-off in accordance with this Agreement by or on behalf of Fund or
Counterparty (as the case may be) from the Settlement Failure Date. Such
interest shall: 

	
  

 	
  

 	
  

 
	
 (a)

 	
 accrue at the Funding Rate from and including the Settlement Failure
 Date to but excluding the date falling three Business Days after the
 Settlement Failure Date, and thereafter at the Default Rate; and 

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 cease to accrue: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 in relation to the balance of the amount for entering into Commodity
 Contracts, (A) on the date on which the Commodity Contracts relating to such
 balance is terminated by Counterparty in accordance with the terms of this
 Agreement, or (B) if such Commodity Contracts are not so terminated, on the
 date on which such balance is paid by or on behalf of Fund into the Counterparty
 Account; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 in relation to the balance of the termination amount, on the date on
 which such balance is paid by Counterparty into the relevant Redemption
 Account. 

 

9.3 The Parties acknowledge and agree that, other than as set out in Section
9.2, no interest or any amount in respect of or in the nature of interest is
due or payable by or on behalf of either Party. 

No double recovery 

9.4 A Party may satisfy any of its payment obligations under this
Agreement by procuring the payment of the outstanding amount on its behalf by
another person. 

Payments due on Days other than Business Days

9.5 Where a day on which a payment would otherwise be due and payable
is not a Business Day, such payment shall be due and payable by the payer on
the next following Business Day. 

Payments into a Redemption Account 

9.6 Where Counterparty is required to make a payment into a Redemption
Account, if settlement is to be effected through DTC, such payment obligation
shall be deemed satisfied upon Counterparty depositing such amount in full
cleared and immediately available US Dollar funds into the Counterparty Account
provided that the funds remain
immediately available, the account remains linked to the Graphical User
Interface access of the _______ and Counterparty does not subsequently withdraw
those funds other than as part of such settlement occurring; and 

10. REPRESENTATIONS AND WARRANTIES  

10.1 [To be provided.] 

16

11. ASSIGNMENT  

11.1 No Party shall assign, transfer, charge or otherwise deal with all
or any of its rights and/or obligations under this Agreement without the prior
written consent of the other Party. 

12. AUTHORIZED INDIVIDUALS  

12.1 Each Party shall appoint one or more Authorized Individual(s), and
shall ensure that at all times one or more Authorized Individuals are
functioning and able to perform the activities of an Authorized Individual on
its behalf. 

12.2 Fund shall use reasonable endeavours to ensure that each
Authorized Participant appoints one or more Authorized Individual(s), and that
at all times one or more Authorized Individuals are functioning and able to
perform the activities of an Authorized Individual on behalf of the Authorized
Participant. 

12.3 Each Party may record telephone calls made by or to any of its Authorized
Individuals, and each Party hereby consents to such recording by the other
Party. 

13. AMENDMENT  

This Agreement may only be amended by a written instrument signed by
the Parties or their duly Authorized representatives, and provisions of this
Agreement may only be waived by a written instrument signed by the Party giving
the waiver or its duly Authorized representative. 

14. APPLICABLE LAW  

This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (regardless of the laws that might otherwise
govern under applicable New York conflict of laws principles) as to all
matters, including matters of validity, construction, effect, performance and
remedies. 

15. JURISDICTION  

Each Party hereto irrevocably consents to the jurisdiction of the
courts of the State of New York and of any federal court located in the Borough
of Manhattan in such State in connection with any action, suit or other
proceeding arising out of or relating to this Agreement or any action taken or omitted
hereunder, and waives any claim of forum non conveniens and any objections as
to laying of venue. Each Party further waives personal service of any summons,
complaint or other process and agrees that service thereof may be made by
certified or registered mail directed to such Party at such Party’s address for
purposes of notices hereunder. Each Party hereby waives its right to a trial by
jury of any claim arising under or in connection with this Agreement. 

16. COUNTERPARTS  

This Agreement may be executed in any number of counterparts and by
different Parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when so executed
shall constitute one and the same binding agreement between the Parties. 

17

17. LIMITATIONS ON LIABILITY  

17.1 The debts, liabilities, obligations, expenses, costs, charges,
indemnities and reserves incurred, contracted for, attributable to or otherwise
existing with respect to a particular Series shall be enforceable against the
assets of such Series only, and not against the assets of the Trust generally
or of any other Series and, unless otherwise provided by the Sponsor, none of
the debts, liabilities, obligations, expenses, costs, charges, indemnities and
reserves incurred, contracted for, attributable to or otherwise existing with
respect to the Trust generally or any other Series shall be enforceable against
the assets of such Series. Any general liabilities, expenses, costs, charges,
indemnities or reserves of the Trust which are not readily identifiable as
being held with respect to any particular Series shall be allocated and charged
by the Sponsor to and among any one or more of the Series in such manner and on
such basis as the Sponsor in its sole discretion deems fair and equitable.
Pursuant to the Delaware Statutory Trust Act and the Amended and Restated Trust
Agreement of the Trust, any party extending credit to, contracting with or
having any claim against any Series of the Trust may look only to the assets of
such Series to satisfy or enforce any debt with respect to that Series. 

17.2 This Agreement has been entered into by the Trust and was executed
and delivered by an officer of its Sponsor, on behalf of the Trust, which
officer was acting solely in his capacity as an officer of the Sponsor and not
in his individual capacity and which Sponsor was acting solely in its capacity
as sponsor of the Trust and not in its individual capacity. The obligations of
this Agreement are not binding on such officer, the Sponsor or any shareholder
of the series of the Trust individually. The obligations of this Agreement are
binding only upon the assets and property of the Trust or belonging or
attributable to a Series thereof. 

	
  

 	
  

 	
  

 
	
 SIGNED by the Parties:

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 Signed by:

 	
  

 	
 )

 
	
  

 	
  

 	
 )

 
	

 

 	
  

 	
 )

 
	
  

 	
  

 	
 )

 
	

 

 	
  

 	
 )

 
	
  

 	
  

 	
  

 
	
 Signed by:

 	
  

 	
 )

 
	
  

 	
  

 	
 )

 
	

 

 	
  

 	
 )

 
	
  

 	
  

 	
 )

 
	
  

 	
  

 	
  

 
	

 

 	
  

 	
  

 

18

SCHEDULE A

LIST OF FUNDS

	
  

 	
  

 	
  

 
	
  

 	
 ETFS ex-U.S.
 Oil

 	
  

 
	
  

 	
 ETFS Natural
 Gas

 	
  

 
	
  

 	
 ETFS Copper

 	
  

 
	
  

 	
 ETFS Wheat

 	
  

 
	
  

 	
 ETFS
 Composite Agriculture

 	
  

 
	
  

 	
 ETFS
 Composite Industrial Metals

 	
  

 
	
  

 	
 ETFS Composite
 Energy

 	
  

 
	
  

 	
 ETFS All
 Commodities

 	
  

 
	
  

 	
 ETFS Short
 ex-U.S. Oil

 	
  

 
	
  

 	
 ETFS Short
 Natural Gas

 	
  

 
	
  

 	
 ETFS Short
 Copper

 	
  

 
	
  

 	
 ETFS Short
 Wheat

 	
  

 
	
  

 	
 ETFS Short
 Gold

 	
  

 
	
  

 	
 ETFS
 Leveraged ex-U.S. Oil

 	
  

 
	
  

 	
 ETFS
 Leveraged Natural Gas

 	
  

 
	
  

 	
 ETFS
 Leveraged Copper

 	
  

 
	
  

 	
 ETFS
 Leveraged Wheat

 	
  

 
	
  

 	
 ETFS
 Leveraged Gold

 	
  

 

19

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