Document:

Unassociated Document

     

    
      

      

    

     

    OWNERSHIP
      INTERESTS PLEDGE

    AND
      SECURITY AGREEMENT

    

    between

    

    ANTHRACITE
      CAPITAL, INC.,

    as
      pledgor

    

    and

    

    BLACKROCK
      HOLDCO 2, INC.,

    as
      lender

    

    Dated
      as
      of March 7, 2008

     

    
      

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Table
      of Contents

    

    
      	
              1.

            	
              GRANT
                OF SECURITY INTEREST

            	 	
              1

            
	
              2.

            	
              COLLATERAL

            	 	
              1

            
	
              3.

            	
              OBLIGATIONS

            	 	
              1

            
	
              4.

            	
              WARRANTIES
                AND REPRESENTATIONS

            	 	
              2

            
	
              5.

            	
              PLEDGOR’S
                AGREEMENTS

            	 	
              2

            
	
              6.

            	
              EVENTS
                OF DEFAULT

            	 	
              5

            
	
              7.

            	
              REMEDIES
                AFTER EVENT OF DEFAULT

            	 	
              6

            
	
              8.

            	
              ACTIONS
                BY LENDER IN RESPECT OF THE COLLATERAL

            	 	
              6

            
	
              9.

            	
              NATURE
                OF LENDER’S RIGHTS AND REMEDIES

            	 	
              7

            
	
              10.

            	
              PLEDGOR’S
                CONSENT AND WAIVER

            	 	
              7

            
	
              11.

            	
              LENDER
                MAY ASSIGN

            	 	
              8

            
	
              12.

            	
              LIMITS
                ON LENDER’S DUTIES

            	 	
              8

            
	
              13.

            	
              RELEASE;
                TERMINATION

            	 	
              8

            
	
              14.

            	
              
                MISCELLANEOUS

              

            	 	
              9

            
	
              15.

            	
              WAIVER
                OF JURY TRIAL

            	 	
              10

            

    

    

      Index
        of Defined Terms

    

    

      
        	
                Agreement

              	 	 	
                1

              	 
	
                Anti-Money
                  Laundering Laws

              	 	 	
                5

              	 
	
                Collateral

              	 	 	
                1

              	 
	
                Credit
                  Agreement

              	 	 	
                1

              	 
	
                Event
                  of Default

              	 	 	
                5

              	 
	
                Legal
                  Requirements

              	 	 	
                4

              	 
	
                Lender

              	 	 	
                1

              	 
	
                Obligations

              	 	 	
                1

              	 
	
                Pledge
                  and Security Agreement

              	 	 	
                1

              	 
	
                Pledged
                  Interests

              	 	 	
                1

              	 
	
                Pledgor

              	 	 	
                1

              	 
	
                Rights
                  and Remedies

              	 	 	
                7

              	 

      

    

     

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    OWNERSHIP
      INTERESTS PLEDGE AND SECURITY AGREEMENT

     

    This
      agreement (the “Pledge
      and Security Agreement”
or
      “Agreement”)
      is
      delivered as of March 7th,
      2008 by
      ANTHRACITE CAPITAL, INC., a Maryland corporation, having an address c/o
      BlackRock Financial Management, Inc., 40 East 52nd
      Street,
      New York, New York 10022 (“Pledgor”),
      in
      favor of BLACKROCK HOLDCO2, INC., a Delaware corporation, having an address
      c/o
      BlackRock, Inc., 40 East 52nd
      Street,
      New York, NY 10022 (the “Lender”),
      pursuant to the terms of that certain Credit Agreement (the “Credit
      Agreement”),
      dated
      of even date hereof, from Pledgor, as borrower, to Lender. Capitalized terms
      used herein that are not otherwise specifically defined herein shall have the
      same meanings herein as in the Credit Agreement.

     

    1. GRANT
      OF SECURITY INTEREST. 

     

    Pledgor
      does hereby pledge, assign, transfer, grant and deliver to Lender, a continuing
      first priority security interest in the Collateral (as hereinafter defined)
      to
      secure the payment and performance in full of the Obligations. 

     

    2. COLLATERAL. 

     

    The
      term
“Collateral”
shall
      mean and include the following property, wherever located:

     

    2.1 all
      of
      Pledgor’s right, title and interest (including, without limitation, Pledgor’s
      voting rights) in the investments described on Exhibit
      A
      as
“Pledged Interests” (all interests in the Collateral pursuant to this
Section
      2.1
      or
Section
      2.2
      are
      referred to herein as “Pledged
      Interests”),
      as
      updated by the parties hereto from time to time;

     

    2.2 all
      certificates or other instruments, if any, representing a Pledged
      Interest;

     

    2.3 all
      Pledgor’s income, cash flow, rights of distribution (whether in cash, property
      or equity interests), dividends, interest, proceeds, accounts, fees, profits,
      rights of redemption or other rights to payment which in any way relate to
      or
      arise out of the Pledged Interests; and

     

    2.4 all
      rights of access arising from the Pledged Interests to books, records,
      information and electronically stored data relating to any of the foregoing.
      

     

    3. OBLIGATIONS. 

     

    The
      term
“Obligations”
shall
      mean all now existing or hereafter arising obligations of Pledgor to Lender,
      whether primary or secondary, direct or indirect, absolute or contingent, joint
      or several, secured or unsecured, due or not, liquidated or unliquidated,
      arising by operation of law or otherwise under any Credit Document whether
      for
      principal, interest, fees, expenses or otherwise, together with all costs of
      collection or enforcement, including, without limitation, reasonable attorneys’
fees incurred in any collection efforts or in any action or
      proceeding.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    4. WARRANTIES
      AND REPRESENTATIONS. 

     

    Pledgor
      warrants and represents to, and agrees with, Lender that:

     

    4.1 Pledgor
      is the owner of the Collateral free and clear of all pledges, liens, security
      interests and other encumbrances of every nature whatsoever, except for any
      such
      liens or encumbrances in favor of Lender;

     

    4.2 Pledgor
      has the full right, power and authority to pledge the Collateral and to grant
      the security interest in the Collateral as herein provided;

     

    4.3 There
      are
      no restrictions on, or consents required with respect to, the transfer of the
      Collateral to Lender hereunder, or with respect to any subsequent transfer
      thereof or realization thereupon by Lender;

     

    4.4 Each
      Pledged Interest listed on Exhibit
      A
      is as
      described and set forth on Exhibit
      A
      attached
      hereto and made a part hereof; 

     

    4.5 Pledgor
      has delivered to Lender true and complete copies of the organizational documents
      of each of the entities listed on Exhibit
      A
      and, as
      of the date hereof, the same have not been further amended or modified in any
      respect whatsoever;

     

    4.6 All
      of
      the warranties and representations made by or in respect of Pledgor under the
      Credit Agreement are true and accurate;

     

    4.7 The
      execution, delivery and performance of this Agreement by Pledgor does not and
      shall not result in the violation of any mortgage, indenture, material contract,
      instrument, agreement, judgment, decree, order, statute, rule or regulation
      to
      which Pledgor is subject, or by which it or any of its property is bound;
      and

     

    4.8 This
      Agreement has been duly authorized, executed and delivered by Pledgor and
      constitutes a legal, valid and binding obligation of Pledgor, enforceable in
      accordance with the terms hereof, subject to bankruptcy, insolvency and similar
      laws of general application affecting the rights and remedies of
      creditors.

     

    4.9 The
      grant
      of the security interest in the Collateral, combined with the filing of
      financing statements, the execution of assignments and/or possession of the
      Collateral, each as appropriate, is effective to vest in Lender a valid and
      perfected first priority security interest in and to the Collateral as set
      forth
      herein.

     

    5. PLEDGOR’S
      AGREEMENTS. 

     

    Pledgor
      agrees so long as any of the Obligations remain outstanding that:

     

    5.1 Pledgor
      shall execute all such instruments, documents and papers, and will do all such
      acts as Lender may reasonably request from time to time to carry into effect
      the
      provisions and intent of this Agreement including, without limitation, the
      execution of stop-transfer orders, stock powers, notifications to obligors
      on
      the Collateral, the providing of notification in connection with book-entry
      securities or general intangibles, and the providing of instructions to the
      issuers of uncertificated securities, and will do all such other acts as Lender
      may reasonably request with respect to the perfection and protection of the
      pledge and security interests granted herein and the assignments effected hereby
      including, without limitation, the execution and delivery of any amendments
      to
      this Agreement to evidence the investments or portions thereof included in
      the
      Collateral, and authorizes Lender at any time and from time to time to file
      UCC
      financing statements, continuation statements, and amendments thereto describing
      the Collateral without the signature of Pledgor;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    5.2 Except
      for any liens or encumbrances in favor of the Lender, Pledgor shall keep the
      Collateral free and clear of all liens, encumbrances, attachments, security
      interest pledges and charges;

     

    5.3 Pledgor
      shall not transfer the Collateral or any direct or indirect interest therein
      to
      any other person, except as specifically permitted by the Credit
      Agreement;

     

    5.4 Pledgor
      shall deliver to Lender, if and when received by Pledgor, any item representing
      or constituting any of the Collateral. If under any circumstance whatsoever
      any
      proceeds should be paid to or come into the hands of Pledgor, Pledgor shall
      hold
      the same in trust for immediate delivery to Lender to be held as additional
      Collateral; 

     

    5.5 Except
      as
      permitted by this Agreement, Pledgor shall not exercise any right with respect
      to the Collateral which would materially dilute or materially adversely affect
      Lender’s security interest in the Collateral;

     

    5.6 Pledgor
      shall not, without the prior written consent of Lender in each instance, which
      consent shall not be unreasonably withheld, conditioned or delayed, vote the
      Collateral in favor of or consent to any resolution or action which does or
      might:

     

    5.6.1 impose
      any additional restrictions upon the sale, transfer or disposition of the
      Collateral other than restrictions, if any, the application of which is waived
      to the full satisfaction of Lender as to the Collateral; or

     

    5.6.2 result
      in
      the issuance of any additional interest in any of the investment entities listed
      on Exhibit
      A,
      or of
      any class of security, which issuance could reasonably be expected to materially
      adversely affect the value of the Collateral; 

     

    5.6.3 vest
      additional powers, privileges, preferences or priorities in any other class
      of
      interest in any of the investment entities listed on Exhibit
      A
      to the
      material detriment of the value of or rights accruing to the Collateral; or
      

     

    5.6.4 cause
      the
      Collateral to become certificated, or opt in to the regime of security interest
      perfection governed by Article 8 of the uniform commercial code.

     

    5.7 Pledgor
      shall not enter into or consent to any amendment or modification of or with
      respect to the governing documents of any of the investment entities listed
      on
Exhibit
      A
      which
      could reasonably be expected to materially adversely affect the value of the
      Collateral without the prior written consent of Lender in each instance, which
      consent shall not be unreasonably withheld, conditioned or delayed;

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    5.8 Insofar
      as the same may be material or significant to Lender’s interests, Pledgor shall
      perform in all material respects all of its obligations as a partner, member
      or
      shareholder of each of the investment entities listed on Exhibit
      A
      and
      shall enforce, to the extent provided for it in the governing documents of
      such
      entities all of the obligations of the other shareholders, partners or members
      of such entity; 

     

    5.9 Pledgor
      shall not itself or on behalf of any investment entities listed on Exhibit
      A
      take any
      action which would cause or result in a violation of any provisions of the
      Credit Documents; 

     

    5.10 Pledgor
      shall take all such actions as may be necessary or desirable in order to insure
      that all of the Obligations of Pledgor under the Credit Documents are punctually
      and faithfully paid and performed in the manner provided for
      therein;

     

    5.11 Pledgor
      shall, with reasonable promptness, but in all events within 3 Business Days
      after it has actual knowledge thereof, notify Lender in writing of the
      occurrence of any act, event or condition which Pledgor, in its good faith
      determination, believes constitutes a default or Event of Default under any
      of
      the Credit Documents, specifying the nature and existence thereof. Such
      notification shall include a written statement of any remedial or curative
      actions which Pledgor proposes to undertake to cure or remedy such default
      or
      Event of Default;

     

    5.12 Restrictions
      on Liens.
      Pledgor
      shall not, without the prior written consent of Lender (which consent may be
      withheld in Lender’s sole discretion) (a) further encumber the Pledged
      Interests; (b) alter in a material way the character or conduct of its business
      from that conducted as of the date hereof; (c) dissolve, terminate or liquidate,
      nor merge or consolidate with any other person; 

     

    5.13 Place
      for Records, Inspection.
      Pledgor
      shall maintain all of its business records at the address specified at the
      beginning of this Agreement. Upon reasonable prior notice and at reasonable
      times during normal business hours, Lender shall have the right (through such
      agents or consultants as Lender may designate) to make copies of and abstracts
      from Pledgor’s books of account, correspondence and other records and to discuss
      its financial and other affairs with any of its investors and any accountants
      hired by Pledgor; 

     

    5.14 Expenses.
      Pledgor
      shall pay all costs and expenses reasonably incurred by Lender in connection
      with the enforcement of Lender’s rights under the Credit Documents, including,
      without limitation, reasonable third party costs and expenses, including
      reasonable legal fees and disbursements, appraisal fees, inspection fees, plan
      review fees, travel costs, fees and out-of-pocket costs of consultants.
      Pledgor’s obligations to pay such costs and expenses shall include, without
      limitation, all reasonable attorneys’ fees and other costs and expenses
      reasonably incurred for preparing and conducting litigation or dispute
      resolution arising from any breach by Pledgor of any covenant, warranty,
      representation or agreement under any Loan Document;

     

    5.15 Compliance
      with Legal Requirements.
      Pledgor
      shall comply, in all material respects with all laws, rules, regulations, orders
      and decrees (including without limitation environmental laws) applicable to
      it,
      or to its properties (“Legal
      Requirements”).
      In
      furtherance of the foregoing and not in limitation thereof, Pledgor hereby
      agrees to provide Lender with any additional information that Lender reasonably
      requests from time to time in order to ensure compliance by Pledgor with all
      applicable Anti-Money Laundering Laws. The term “Anti-Money
      Laundering Laws”
shall
      mean the USA Patriot Act of 2001, the Bank Secrecy Act, and Executive Order
      13224 - Blocking Property and Prohibiting Transactions With Persons Who Commit,
      Threaten to Commit, or Support Terrorism, and any similar Legal
      Requirements;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    5.16 Insurance.
      Pledgor
      will maintain with financially sound and reputable insurers, insurance with
      respect to such properties and its business against such casualties and
      contingencies as shall be in accordance with the general practices of businesses
      engaged in similar activities in similar geographic areas and in amounts,
      containing such terms, in such forms and for such periods as may be reasonable
      and prudent;

     

    5.17 Taxes.
      Pledgor
      will pay or cause to be paid taxes, assessments and other governmental charges
      payable by it and file all returns and reports relating thereto before the
      same
      become delinquent including, without limitation, upon its income or profits.
      Promptly upon request by Lender, Pledgor will provide evidence of the payment
      of
      such taxes, assessments and other governmental charges in the form of receipted
      tax bills or other form reasonably acceptable to Lender, or evidence of the
      existence of applicable contests as permitted herein; and

     

    5.18 Existence
      of Pledgor, Maintenance of REIT Status.
      Pledgor
      will do or cause to be done all things necessary to preserve and keep in full
      force and effect its existence as a Maryland corporation. Pledgor will do all
      things commercially reasonable, to maintain its status as a real estate
      investment trust and not take any action which could lead to its
      disqualification as a real estate investment trust.

     

    6. EVENTS
      OF DEFAULT. 

     

    6.1 The
      occurrence of any one or more Events of Default under the Credit Agreement
      shall
      constitute an event of default (“Event
      of Default”)
      under
      this Agreement and upon the occurrence and during the continuance of any Event
      of Default, Lender may exercise any one or more of the rights and remedies
      as
      hereinafter set forth or as set forth and provided for in each of the other
      Credit Documents.

     

    6.2 Prior
      to
      the occurrence of an Event of Default, and after the cure of such Event of
      Default (if cured prior to an acceleration of the Final Maturity Date by Lender)
      and the reimbursement by Pledgor of all expenses incurred by Lender resulting
      from such Event of Default, Pledgor shall be entitled to exercise any and all
      rights to receive cash dividends and distributions, consent, vote, approve,
      elect, determine, consult, propose, agree, and all other rights or prerogatives,
      if any, pertaining to the Collateral or any part thereof, to the extent
      permitted under the terms of the Credit Agreement and other Credit Documents,
      in
      a way not adverse to Lender’s interest in the Collateral. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    7. REMEDIES
      AFTER EVENT OF DEFAULT. 

     

    7.1 Upon
      the
      occurrence and during the continuance of any Event of Default, and at any time
      Lender shall have all of the rights and remedies of a secured party upon default
      under the Uniform Commercial Code as adopted in the State of New York, in
      addition to which Lender may sell or otherwise dispose of the Collateral or
      any
      portion thereof and/or enforce and collect the Collateral or any portion thereof
      (including, without limitation, the liquidation of debt instruments or
      securities and the exercise of conversion rights with respect to convertible
      securities, whether or not such instruments or securities have matured, and
      whether or not any penalties or other charges are imposed on account of such
      action) for application towards (but not necessarily in complete satisfaction
      of) the Obligations. The proceeds of any such collection or of any such sale
      or
      other disposition of the Collateral, or any portion thereof shall be applied
      as
      Lender shall determine. Pledgor shall remain liable to Lender for any deficiency
      remaining following such application. Any surplus remaining after payment in
      full of all Obligations shall be paid over to Pledgor or to whomsoever may
      be
      lawfully entitled to receive such surplus. 

     

    7.2 Unless
      the Collateral is perishable, threatens to decline speedily in value, or is
      of a
      type customarily sold on a recognized market (in which event Lender shall give
      Pledgor such notice as may be practicable under the circumstances), Lender
      shall
      give Pledgor at least the minimum notice required by law of the date, time
      and
      place of any public sale thereof, or of the time after which any private sale
      or
      any other intended disposition is to be made. 

     

    7.3 Pledgor
      acknowledges that any exercise by Lender of Lender’s rights upon an Event of
      Default will be subject to compliance by Lender with the applicable statutes,
      regulations, ordinances, directives and orders of any federal, state, municipal
      or other governmental authority including, without limitation, any of the
      foregoing which may restrict the sale or disposition of securities. Lender
      in
      its sole discretion, but in good faith, at any such sale or in connection with
      any such disposition may restrict the prospective bidders or purchasers as
      to
      the nature of business, investment intention, or otherwise, including, without
      limitation, a requirement that the persons making such purchases represent
      and
      agree to the satisfaction of Lender that they are purchasing the Collateral,
      or
      some portion thereof, for their own account, for investment and not with a
      view
      towards the distribution or a sale thereof, or that they otherwise fall within
      some lawful exemption from registration under applicable laws. 

     

    8. ACTIONS
      BY LENDER IN RESPECT OF THE COLLATERAL. 

     

    Pledgor
      hereby appoints Lender, or any agent designated by Lender, as the
      attorney-in-fact of Pledgor after an Event of Default has occurred and is
      continuing to: (a) endorse in favor of Lender any of the Collateral; (b) cause
      the transfer of any of the Collateral in such name as Lender may from time
      to
      time determine; (c) renew, extend or roll over any Collateral; (d) make, demand
      and initiate actions to enforce any of the Collateral or rights therein; and
      (e)
      file financing statements, continuation statements, and amendments thereto
      describing the Collateral without the signature of Pledgor. 

     

    Lender
      may take such action with respect to the Collateral as Lender may reasonably
      determine to be necessary to protect and preserve its interest in the
      Collateral. Lender shall also have and may exercise at any time after an Event
      of Default has occurred and is continuing all rights, remedies, powers,
      privileges and discretions of Pledgor with respect to and under the Collateral.
      The within designation and grant of power of attorney is coupled with an
      interest and is irrevocable until this Pledge and Security Agreement is
      terminated by a written instrument executed by a duly authorized officer of
      Lender or until all Obligations have been paid or fulfilled and the obligation
      of Lender to make Loans under the Credit Agreement has terminated. The power
      of
      attorney under this Section
      8
      shall
      not be affected by subsequent disability or incapacity of Pledgor. Lender shall
      not be liable for any act or omission to act pursuant to this Section
      8,
      except
      for any act or omission to act which constitutes gross negligence or willful
      misconduct. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    9. NATURE
      OF LENDER’S RIGHTS AND REMEDIES. 

     

    The
      rights, remedies, powers, privileges and discretions of Lender hereunder
      (collectively, the “Rights
      and Remedies”)
      shall
      be cumulative and not exclusive of any rights, remedies, powers, privileges
      or
      discretions which it may otherwise have. No delay or omission by Lender in
      exercising or enforcing any of the Rights and Remedies shall operate as, or
      constitute, a waiver thereof. No waiver by Lender of any default or any Event
      of
      Default or of any default under any other Loan Document shall operate as a
      waiver of any other default or Event of Default or of any other default under
      any Loan Document. No exercise of any Rights and Remedies shall preclude any
      other exercise of the Rights and Remedies. No waiver by Lender of any of the
      Rights and Remedies on any one occasion shall be deemed a waiver on any
      subsequent occasion nor shall it be deemed a continuing waiver. All Rights
      and
      Remedies and all of Lender’s rights, remedies, powers, privileges and
      discretions under any other agreement or transaction in respect of the
      Collateral are cumulative and not alternative or exclusive and may be exercised
      by Lender at such time or times in such order of preference as Lender in its
      sole and absolute discretion may determine.

     

    10. PLEDGOR’S
      CONSENT AND WAIVER. 

     

    Pledgor
      hereby agrees that Lender may enforce its rights as against Pledgor or the
      Collateral, or as against any other party liable for the Obligations, or as
      against any other collateral given for any of the Obligations, in any order
      or
      in such combination as Lender may in its sole discretion determine, and Pledgor
      hereby expressly waives all suretyship defenses and defenses in the nature
      thereof, agrees to the release or substitution of any Collateral hereunder
      or
      otherwise, and consents to each and all of the terms, provisions and conditions
      of the other Credit Documents. Pledgor further: (a) waives presentment, demand,
      notice and protest with respect to the Obligations and the Collateral; (b)
      waives any delay on the part of Lender; (c) assents to any indulgence or waiver
      which Lender may grant or give any other person liable or obliged to Lender
      for
      or on account of the Obligations; (d) authorizes Lender to alter, amend, cancel,
      waive or modify any term or condition of the obligations of any other person
      liable or obligated to Lender for or on account of the Obligations without
      notice to or further consent from Pledgor; (e) agrees that no release of any
      property securing the Obligations shall affect the rights of Lender with respect
      to the Collateral hereunder which is not so released; and (f) to the fullest
      extent that is permitted by applicable law, waives the right to notice and/or
      hearing, it might otherwise be entitled thereto, prior to Lender’s exercising
      the Rights and Remedies upon an Event of Default.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    11. LENDER
      MAY ASSIGN. 

     

    Pledgor
      agrees that upon any sale or transfer by Lender of the Credit Documents and
      the
      indebtedness evidenced thereby that is permitted under the Credit Agreement,
      Lender may deliver the Collateral disposed of as part of such a sale or transfer
      to the purchaser or transferee, who shall thereupon become vested with all
      powers and rights given to Lender in respect thereto, and Lender shall be
      thereafter forever relieved and fully discharged from any liability or
      responsibility in connection therewith.

     

    12. LIMITS
      ON
      LENDER’S DUTIES. 

     

    Lender
      shall not have any duty as to the collection or protection of the Collateral,
      or
      any portion thereof, or any income or distribution thereon, beyond the safe
      custody of such Collateral as may come into the actual possession of Lender
      and
      the accounting for monies actually received by Lender hereunder, and Lender
      shall not have any duty as to the preservation of rights against prior parties
      or any other rights pertaining thereto. Lender shall be deemed to have exercised
      reasonable care in the custody and preservation of any Collateral in its
      possession of such Collateral is accorded treatment equal to that which it
      accords its own property. Nothing
      in this Agreement shall be construed as an undertaking by Lender of any of
      the
      liabilities or obligations of Pledgor as
      pledgor or any other shareholder, member or partner of any of the investment
      entities listed on Exhibit
      A,
      including but not limited to, the obligation to make contributions to capital
      or
      the obligation to make any other payment to, for or on behalf of Pledgor.
      Lender’s rights and obligations in respect of the Pledged Interests are those
      only of a secured party under New York law.

     

    13. RELEASE;
      TERMINATION. 

     

    Upon
      the
      indefeasible payment in full of all Obligations and the termination or
      expiration of any obligation of Lender to make Loans under the Credit Agreement,
      the security interest granted hereby shall terminate and all rights to the
      Collateral shall revert to Pledgor. Upon any such payment and termination or
      expiration, Lender will, at Pledgor’s sole expense, deliver to Pledgor all
      certificates and instruments, if any, evidencing the Collateral held by Lender
      hereunder, and execute and deliver to Pledgor such documents as Pledgor shall
      reasonably request to evidence such termination. In the event that for any
      reason the payment in full of all Obligations under the Credit Agreement shall
      be held invalid or shall be voided for any reason, then the foregoing release
      shall be automatically revoked without further action of the parties hereto
      and
      the security interest granted hereby shall be automatically reinstated and
      remain in force, nunc pro tunc.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    14. MISCELLANEOUS.

     

    14.1 Independent
      Remedies.
      Lender’s Rights and Remedies may be exercised without resort to or regard to any
      other source of satisfaction of the Obligations.

     

    14.2 Successors
      and Assigns.
      All of
      the agreements, obligations, undertakings, representations and warranties herein
      made by Pledgor shall inure to the benefit of Lender and its respective
      successors and assigns and shall bind Pledgor and its successors and
      assigns.

     

    14.3 Entire
      Agreement.
      This
      Agreement and all other instruments executed in connection herewith constitute
      the entire agreement between Pledgor and Lender pertaining to the subject matter
      hereof, and supersede all prior agreements, understandings, negotiations and
      discussions, whether oral or written, of such parties pertaining to the subject
      matter hereof.

     

    14.4 Modifications.
      No
      modification, amendment or waiver of any provisions of this Agreement shall
      be
      effective unless executed in writing by the party to be charged with such
      modification, amendment and waiver and, if such party be Lender, then by a
      duly
      authorized officer thereof.

     

    14.5 Captions.
      Captions in this Agreement are intended solely for convenience and shall not
      be
      deemed to affect the meaning or construction of any provision
      hereof.

     

    14.6 Severability.
      Each
      provision hereof shall be enforceable to the fullest extent permitted by
      applicable law. The invalidity and unenforceability of any provision(s) hereof
      shall not impair or affect any other provision(s) hereof which are valid and
      enforceable.

     

    14.7 Counterparts.
      This
      Agreement may be executed in several counterparts, each of which when executed
      and delivered is an original, but all of which together shall constitute one
      instrument. In making proof of this Agreement, it shall not be necessary to
      produce or account for more than one such counterpart which is executed by
      the
      party against whom enforcement of such agreement is sought.

     

    14.8 Notices.
      Any
      demand, notice or request by either party to the other shall be given in the
      manner provided therefor in the Credit Agreement.

     

    14.9 Conflicts.
      In the
      event of any conflict between the provisions of this Agreement and the Credit
      Agreement, the Credit Agreement shall govern.

     

    14.10 Governing
      Law.
      This
      Agreement shall in all respects be governed, construed, applied and enforced
      in
      accordance with the laws of the State of New York without regard to principles
      of conflicts of law.

     

    14.11 No
      Partnership.
      The
      relationship between Pledgor and Lender shall be only of creditor-debtor and
      no
      relationship of agency, partner or joint- or co-venturer shall be created by
      or
      inferred from this Agreement or the other Credit Documents. Grantor shall
      indemnify, defend, and save Lender harmless from any and all claims asserted
      against Lender as being the agent, partner, or joint-venturer of
      Pledgor.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    14.12 Other
      Security.
      To the
      extent that the Obligations are now or hereafter secured by property other
      than
      the Collateral or by the guarantee, endorsement or property of any other Person,
      then Lender shall have the right in its sole discretion to pursue, relinquish,
      subordinate, modify or take any other action with respect thereto, without
      in
      any way modifying or affecting any of Lender’s rights and remedies
      hereunder.

     

    15. WAIVER
      OF JURY TRIAL. 

     

    EXCEPT
      AS
      PROHIBITED BY LAW, PLEDGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
      JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
      OR IN CONNECTION WITH THIS AGREEMENT.

    

    [Signature
      pages attached]

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    This
      Pledge and Security Agreement has been executed and delivered as an instrument
      under seal as of the 7th day of March, 2008.

     

    
      	 	 	 
	 	PLEDGOR:
	 	 
	 	ANTHRACITE CAPITAL, INC., a Maryland
              corporation
	 
 	 
 	 
 
	
            	By:  	 /s/
              Richard
              Shea 
	 	
              

              Name: Richard
                Shea 

              Title: Chief
                Operating Officer & President

            

    

     

    
      	 	 	 
	 	LENDER:
	 	 
	 	BLACKROCK HOLDCO 2, INC., a Delaware
              corporation
	 
 	 
 	 
 
	
            	By:  	/s/
              Ann
              Marie Petach 
	 	
              

              Name: Ann
                Marie Petach 

              Title: Managing
                Director

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    Pledged
      InterestsHARRIS
      & HARRIS GROUP, INC.

     

    AMENDED
      AND RESTATED

    EMPLOYEE
      PROFIT SHARING PLAN

     

    Adopted
      as of July 23, 2002,

    effective
      as of the Effective Date (as defined herein)

    

    Purpose
      of Plan

     

    The
      purpose of this Plan is to provide a special incentive for designated key
      employees of Harris & Harris Group, Inc., a New York corporation (the
      "Company") to increase the future profits of the Company, by allowing such
      employees to share in the historical after-tax profits of the Company as set
      forth herein. The purpose of this restatement is to provide for the
      participation of additional Participants in the Grandfathered Investments (as
      defined herein) and to continue to compensate the Grandfathered Participants
      with respect to the Grandfathered Investments following termination of such
      individuals' employment with the Company for reasons other than Cause (as
      defined herein), in each case as set forth herein.

     

    SECTION
      1.

     

    Definitions

     

    As
      used
      herein, unless otherwise required by the context, the following terms shall
      have
      these meanings:

     

    "Award"
      shall mean an award made or due to a Participant pursuant to the provisions
      of
      the Plan.

     

    "Award
      Percentage" shall mean, with respect to any Participant for any Plan Year,
      the
      percentages established by the Committee for such Participant for such Plan
      Year
      (or, in the case of a Terminating Participant, for the Plan Year in which the
      Participant became a Terminating Participant) with respect to the various
      subsets of Qualifying Income contemplated by the Plan; provided,
      however,
      that
      the aggregate Award Percentages for all Participants for any Plan Year may
      not
      exceed 20% of Qualifying Income; and provided,
      further,
      that
      the Grandfathered Participants' Grandfathered Award Percentages with respect
      to
      the Grandfathered Investments shall be as set forth in Section 3. Except for
      the
      Plan Year in which the Effective Date occurs, the Award Percentages with respect
      to the various subsets of Qualifying Income contemplated by the Plan shall
      be
      established no later than January 1 of each Plan Year. In the event that such
      Award Percentages are not established by that date, the Award Percentages from
      the prior Plan Year shall continue to apply.

     

    "Board"
      shall mean the board of directors of the Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    "Cause"
      shall mean: (1) that an employee has materially failed to perform the duties
      and
      responsibilities of his or her position with the Company for reasons other
      than
      disability or has been insubordinate; (2) that an employee has violated any
      securities law or regulation, lost appropriate required licensing, been
      convicted of a felony or a crime involving moral turpitude (regardless of
      whether involving the Company), or has not complied to a significant degree
      with
      any policy of the Company; or (3) that an employee has committed any act of
      fraud, embezzlement, or similar conduct against the Company or any of its
      shareholders constituting dishonesty, intentional breach of fiduciary
      obligation, or intentional and material wrongdoing or gross misfeasance or
      that
      results in a material economic detriment to the assets, business, or prospects
      of the Company or any of its shareholders. Whether there is Cause for the
      termination of any person's employment shall be determined by the chief
      executive officer of the Company and, with respect to the chief executive
      officer or president of the Company, the Board.

     

    "Committee"
      shall mean the Compensation Committee of the Board.

     

    "Effective
      Date" with respect to the Plan shall be the date on which the Plan is approved
      by the shareholders of the Company or, if the Committee so determines, any
      date
      after such shareholder approval and not later than January 1, 2003.

     

    "Fair
      Market Value" shall mean, with respect to any asset of the Company, the value
      thereof most recently determined by the Committee, using the valuation
      methodologies set forth in the Company's 10-K or other filings under the 1940
      Act with respect to the determination of the "net asset value" of the Company's
      assets, provided,
      however,
      that in
      no event shall this Plan be interpreted as giving the Committee the power to
      determine the "net asset value" of the Company's assets for purposes of the
      1940
      Act.

     

    "Grandfathered
      Investments" shall mean, collectively, the Tiny Technology Investments and
      the
      Non-Tiny Technology Investments.

     

    "Grandfathered
      Non-Tiny Technology Award Percentage" shall mean (a) with respect to each
      Grandfathered Participant, the reduced percentage set forth in Section 3 for
      such Participant with respect to the Non-Tiny Technology Investments plus,
      on a
      Plan-Year by Plan-Year basis, any Incremental Percentage (as defined in Section
      3) awarded to such Participant for such Plan Year, and (b) with respect to
      each
      New Participant, the Award Percentage, if any, determined by the Committee
      for
      such Participant for a particular Plan Year with respect to Grandfathered
      Non-Tiny Technology Qualifying Income for such Plan Year.

     

    "Grandfathered
      Non-Tiny Technology Qualifying Income" for a Plan Year shall mean the Qualifying
      Income of the Company for such Plan Year attributable to the Non-Tiny Technology
      Investments, less any Terminating Qualifying Income for such Plan Year
      attributable thereto.

     

    "Grandfathered
      Participants" shall mean the following persons who are Participants on the
      date
      of adoption of the Plan: Charles E. Harris, Mel P. Melsheimer, Helene Shavin
      and
      Jacqueline M. Matthews.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    "Grandfathered
      Participations" shall have the meaning set forth in Section 3.

     

    "Grandfathered
      Tiny Technology Award Percentage" shall mean (a) with respect to each
      Grandfathered Participant, the reduced percentage set forth in Section 3 for
      such Participant with respect to the Tiny Technology Investments plus, on a
      Plan- Year by Plan-Year basis, any Incremental Percentage (as defined in Section
      3) awarded to such Participant for such Plan Year, and (b) with respect to
      each
      New Participant, the Award Percentage, if any, determined by the Committee
      for
      such Participant for a particular Plan Year with respect to Grandfathered Tiny
      Technology Qualifying Income for such Plan Year.

     

    "Grandfathered
      Tiny Technology Qualifying Income" for a Plan Year shall mean the Qualifying
      Income of the Company for such Plan Year attributable to the Tiny Technology
      Investments, less any Terminating Qualifying Income for such Plan Year
      attributable thereto.

     

    "Incremental
      Percentage" shall have the meaning set forth in Section 3.

     

    "Net
      Realized Income" for a Plan Year shall mean the net realized income of the
      Company as reflected in the consolidated statement of operations of the Company
      for such Plan Year. For greater clarity, such amount shall include investment
      income, fee, service, and other income, realized gains and losses, and operating
      expenses (including taxes paid or payable by the Company for such Plan Year),
      but shall be calculated without regard to dividends paid or distributions made
      to shareholders, payments under this Plan, unrealized gains or losses, and
      loss
      carryovers from other years.

     

    "New
      Investment" shall mean any investment that is made by the Company after the
      first New Participant Measuring Date that occurs after the date of adoption
      of
      the Plan, including any additional investment made after such date in a
      Grandfathered Investment.

     

    "New
      Investment Award Percentage" shall mean the Award Percentage, if any, determined
      by the Committee for any Participant for a particular Plan Year with respect
      to
      New Investment Qualifying Income for such Plan Year.

     

    "New
      Investment Qualifying Income" for a Plan Year shall mean the Qualifying Income
      of the Company for such Plan Year attributable to the New
      Investments.

     

    "New
      Participant" shall mean each Participant who begins participation in the Plan
      on
      or after the Effective Date. The Committee shall determine the date as of which
      an individual shall become a New Participant or such other date not earlier
      than
      the later of the Effective Date or the last day of the year prior to the year
      in
      which such person became an employee of the Company.

     

    "New
      Participant Measuring Date" shall mean, with respect to a New Participant,
      such
      date as the Committee shall determine in writing on or before the first award
      of
      an Award Percentage for any subset of Qualifying Income to such New
      Participant.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    "1940
      Act" shall mean the Investment Company Act of 1940, as amended. 

     

    "Non-Tiny
      Technology Investments" shall mean the Company's investments on the first New
      Participant Measuring Date that occurs after the date of adoption of the Plan
      in
      the following entities: PHZ Capital Partners, L.P.; AlphaSimplex Group, LLC;
      Experion Systems, Inc.; Exponential Business Development Company; Kriton
      Medical, Inc.; NeuroMetrix, Inc.; Questech Corporation and investments in other
      companies that are not involved in nanotechnology, microelectromechanical
      systems or microsystems, in any case, which have been made on or prior to the
      first New Participant Measuring Date that occurs under the Plan.

     

    "Participant"
      shall mean each person who is or was designated by the Committee as a
      participant in the Plan, including each Grandfathered Participant, Terminating
      Participant, and New Participant.

     

    "Plan"
      shall mean the Harris & Harris Group, Inc. Amended and Restated Employee
      Profit Sharing Plan, adopted as of July 23, 2002, as amended from time to
      time.

     

    "Plan
      Year" shall mean the calendar year.

     

    "Post-Participation
      Qualifying Income" for any New Participant for a Plan Year shall mean the New
      Investment Qualifying Income of the Company for such Plan Year, less the
      pre-participation nonqualifying gain, if any, with respect to such New
      Participant. With respect to a New Participant, pre-participation nonqualifying
      gain is intended to reduce New Investment Qualifying Income for such person
      by
      the portion of net after-tax realized gains attributable to asset values as
      of
      such person's New Participant Measuring Date, and shall be so interpreted.
      For
      each New Participant, the pre-participation nonqualifying gain shall be the
      aggregate of, with respect to each portfolio investment position or portion
      thereof constituting a New Investment sold or otherwise disposed of by the
      Company during the Plan Year (determined on a first-in, first-out basis): (1)
      the Fair Market Value as of such New Participant's New Participant Measuring
      Date of any such position or portion, minus (2) the sum of (a) the tax basis
      of
      such position or portion as of such date, plus (b) a portion of the costs of
      such sale or other disposition equal to the ratio (which shall not be greater
      than 1.0) of the excess of (1) above over (2)(a) above, divided by the gain
      realized by the Company on the sale or other disposition of such position or
      portion (ignoring sale or disposition costs), plus (c) the amount of taxes
      payable by the Company for the Plan Year attributable to the excess of (1)
      above
      over the sum of (2)(a) and (b) above, plus (d) an amount equal to the expenses
      of the Company for such Plan Year (other than the amount of taxes attributable
      to sales or other dispositions of portfolio investment positions or portions
      thereof and expenses of such sales or dispositions) multiplied by a fraction
      the
      numerator of which is the excess of (1) above over (2)(a) above and the
      denominator of which is the aggregate gross income of the Company for such
      Plan
      Year before expenses and taxes of any sort.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    For
      purposes of this entire definition, any calculation that would otherwise yield
      a
      negative number as the solution to the calculation shall be deemed to yield
      an
      answer of zero.

     

    Solely
      for purposes of determining the amount of the pre-participation nonqualifying
      gain with respect to any New Participant, if the proceeds received from any
      sale
      or other disposition of a New Investment position or portion thereof are less
      than the Fair Market Value of such position or portion as of the relevant New
      Participant Measuring Date, then the Fair Market Value of such position or
      portion as of the New Participant Measuring Date shall be deemed to equal the
      amount of such proceeds.

     

    In
      the
      event that multiple portfolio investment positions (or portions thereof) are
      sold or otherwise disposed of during a Plan Year, some of which are sold or
      disposed of at a gain and some of which are sold or disposed of at a loss,
      for
      purposes of calculating the pre-participation nonqualifying gain the aggregate
      net realized gain, if any, attributable to such sales or dispositions shall
      be
      allocated between or among the gain positions based on the relative amounts
      of
      the gains realized on the gain positions, consistent with the purpose of this
      Plan.

     

    "Qualifying
      Income" for a Plan Year shall mean the Net Realized Income of the Company for
      such Plan Year, less the nonqualifying gain, if any. Nonqualifying gain is
      intended to reduce Net Realized Income by the portion of net after-tax realized
      gains attributable to asset values as of September 30, 1997, and shall be so
      interpreted. The nonqualifying gain shall be the aggregate of, with respect to
      each portfolio investment position or portion thereof sold or otherwise disposed
      of by the Company during the Plan Year (determined on a first-in, first-out
      basis) and held by the Company on September 30, 1997: (1) the Fair Market Value
      as of September 30, 1997 of such position or portion, minus (2) the sum of
      (a)
      the tax basis of such position or portion as of September 30, 1997, plus (b)
      a
      portion of the costs of such sale or disposition equal to the ratio (which
      shall
      not be greater than 1.0) of the excess of (1) over (2)(a) above, divided by
      the
      gain realized by the Company on the sale or other disposition of such position
      or portion (ignoring sale or disposition costs), plus (c) the amount of taxes
      payable by the Company for the Plan Year attributable to the excess of (1)
      above
      over the sum of (2)(a) and (b) above, plus (d) an amount equal to the expenses
      of the Company for such Plan Year (other than the amount of taxes attributable
      to sales or other dispositions of portfolio investment positions or portions
      thereof and expenses of such sales or dispositions) multiplied by a fraction
      the
      numerator of which is the excess of (1) above over (2)(a) above and the
      denominator of which is the aggregate gross income of the Company for such
      Plan
      Year before expenses and taxes of any sort.

     

    For
      purposes of this entire definition, any calculation (or part thereof) that
      would
      otherwise yield a negative number as the solution to the calculation (or part)
      shall be deemed to yield an answer of zero.

     

    For
      purposes of determining the amount of the nonqualifying gain, if the proceeds
      received from any sale or other disposition of a portfolio investment position
      or portion thereof are less than the Fair Market Value of such position or
      portion as of September 30, 1997, then the Fair Market Value of such
      position or portion as of September 30, 1997 shall be deemed to equal such
      proceeds.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    In
      the
      event that multiple portfolio investment positions (or portions thereof) are
      sold or otherwise disposed of during a Plan Year, some of which are sold or
      disposed of at a gain and some of which are sold or disposed of at a loss,
      for
      purposes of calculating the nonqualifying gain the aggregate net realized gain,
      if any, attributable to such sales or dispositions shall be allocated between
      or
      among the gain positions based on the relative amounts of the gains realized
      on
      the gain positions, consistent with the pur-pose of this Plan.

     

    "Terminating
      Participant" shall mean a person whose full participation in Qualifying Income
      has been terminated other than for Cause pursuant to this Plan. Following the
      action or event in a Plan Year that results in a Participant becoming a
      Terminating Participant, the person shall remain a Participant for that Plan
      Year and for succeeding Plan Years for purposes of such Participant's rights
      to
      Terminating Qualifying Income. A Terminating Participant shall cease to be
      a
      Participant when all portfolio investments held by the Company at the time
      such
      person became a Terminating Participant are sold or otherwise disposed of by
      the
      Company (determined on a first-in, first-out basis). As of the Effective Date,
      one Participant, Rachel Pernia, is the sole Terminating
      Participant.

     

    "Terminating
      Qualifying Income" for any Terminating Participant for a Plan Year shall mean
      the Net Realized Income of the Company for such Plan Year, less the terminating
      nonqualifying gain, if any. With respect to any Terminating Participant,
      terminating nonqualifying gain is intended to reduce Net Realized Income by
      the
      portion of net after-tax realized gains attributable to increases in asset
      values after the time such person becomes a Terminating Participant, as well
      as
      by the amount of nonqualifying gain (as defined in "Qualifying Income"), and
      shall be so interpreted. For each Terminating Participant, the terminating
      nonqualifying gain shall be the aggregate of:

     

    (1) with
      respect to all or any portion of any portfolio investment position
      sold or otherwise disposed of by the Company during the Plan Year (determined
      on
      a first-in, first-out basis) and held by the Company on September 30, 1997,
      (a)(i) the gain realized on such sale or other disposition (ignoring sale or
      disposition costs), plus (ii) the excess of the Fair Market Value of such
      position or portion as of September 30, 1997 over the tax basis of such position
      or portion as of September 30, 1997, minus (iii) the excess of the Fair Market
      Value of such position or portion as of the last day of the quarter ending
      on or
      immediately prior to the date such person became a Terminating Participant
      over
      the tax basis of such position or portion thereof as of such date, minus (b)
      the
      sum of (i) a portion of the costs of sale or other disposition equal to the
      ratio (which shall not be greater than 1.0) of (a) above divided by the gain
      realized by the Company on the sale or other disposition of such position or
      portion (ignoring sale or disposition costs), plus (ii) the amount of taxes
      payable by the Company for the Plan Year attributable to the excess of (a)
      over
      (b)(i) above, plus

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (2) with
      respect to all or any portion of any portfolio investment position sold or
      otherwise disposed of by the Company during the Plan Year (determined on a
      first-in, first-out basis), acquired by the Company after September 30, 1997,
      and held by the Company on the date such person became a Terminating
      Participant, (a) the gain realized on such sale or other disposition (ignoring
      sale or disposition costs), minus the excess of the Fair Market Value of such
      position or portion as of the last day of the quarter ending on or immediately
      prior to the date such person became a Terminating Participant over the tax
      basis of such position or portion as of such date, minus (b) the sum of (i)
      a
      portion of the costs of sale or other disposition equal to the ratio (which
      shall not be greater than 1.0) of (a) above divided by the gain realized by
      the
      Company on the sale or other disposition of such position or portion thereof
      (ignoring sale or disposition costs), plus (ii) the amount of taxes payable
      by
      the Company for the Plan Year attributable to the excess of(a) over (b)(i)
      above, plus

     

    (3) with
      respect to all or any portion of any portfolio investment position sold or
      otherwise disposed of by the Company during the Plan Year (determined on a
      first-in, first-out basis) and acquired by the Company after the date such
      person became a Terminating Participant, (a) the gain realized on such sale
      or
      other disposition (ignoring sale or disposition costs), minus (b) the sum of(i)
      the costs of sale or other disposition, plus (ii) the amount of taxes payable
      by
      the Company for the Plan Year attributable to such sale or other disposition,
      minus

     

    (4) an
      amount
      equal to the expenses of the Company for such Plan Year (other than the amount
      of taxes attributable to sales or other dispositions of portfolio investment
      positions or portions thereof and expenses of such sales or dispositions)
      multiplied by a fraction the numerator of which is the excess of (a) the
      aggregate net realized gain from the sale or other disposition of portfolio
      investment positions or portions thereof (ignoring sale or disposition costs)
      over (b) the sum of (1)(a) above, (2)(a) above, and (3)(a) above and the
      denominator of which is the aggregate gross income of the Company for such
      Plan
      Year before expenses and taxes of any sort.

     

    For
      purposes of this entire definition, any calculation that would otherwise yield
      a
      negative number as the solution to the calculation shall be deemed to yield
      an
      answer of zero.

     

    Solely
      for purposes of determining the amount of the terminating nonqualifying gain
      with respect to any Terminating Participant, (i) if the proceeds received from
      any sale or other disposition of a portfolio investment position or portion
      thereof are less than the Fair Market Value of such position or portion as
      of
      September 30, 1997, then the Fair Market Value of such position or portion
      as of
      September 30, 1997 shall be deemed to equal the amount of such proceeds, and
      (ii) if the proceeds received from any sale or other disposition of a portfolio
      investment position or portion thereof are less than the Fair Market Value
      of
      such position or portion as of the last day of the quarter ending on or
      immediately prior to the date such person became a Terminating Participant,
      then
      the Fair Market Value of such position or portion as of the last day of the
      quarter ending on or immediately prior to the date such person became a
      Terminating Participant shall be deemed to equal the amount of such
      proceeds.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    For
      purposes of (2) above, in the event the relevant portfolio investment position
      or portion thereof was acquired after the last day of the quarter ending on
      or
      immediately prior to the date a person became a Terminating Participant, the
      Fair Market Value of such position as of the end of such quarter shall be the
      acquisition cost.

     

    In
      the
      event that multiple portfolio investment positions (or portions thereof) are
      sold or otherwise disposed of during a Plan Year, some of which are sold or
      disposed of at a gain and some of which are sold or disposed of at a loss,
      for
      purposes of calculating the terminating nonqualifying gain, the aggregate net
      realized gain, if any, attributable to such sales or dispositions shall be
      allocated between or among the gain positions based on the relative amounts
      of
      the gains realized on the gain positions, consistent with the purpose of this
      Plan.

     

    "Tiny
      Technology Investments" shall mean the Company's investment as of the first
      New
      Participant Measuring Date that occurs after the date of adoption of the Plan
      in
      NanoOpto Corporation; Nanopharma Corp.; Nantero, Inc.; NeoPhotonics Corporation;
      Continuum Photonics, Inc., Nanotechnologies, Inc.; Optiva, Inc. and other
      investments in other companies involved in nanotechnology,
      microelectromechanical systems or microsystems which have been made on or prior
      to the Effective Date.

     

    SECTION
      2.

     

    Amount
      of Award: Payment of Award

     

    As
      soon
      as practicable following the end of each Plan Year, the Committee shall
      determine whether, and if so, how much, Qualifying Income exists with respect
      to
      such Plan Year and whether, and if so, how much, Terminating Qualifying Income,
      Grandfathered Non-Tiny Technology Qualifying Income, Grandfathered Tiny
      Technology Qualifying Income, New Investment Qualifying Income and
      Post-Participation Qualifying Income for each New Participant exists. The
      Committee shall make a provisional determination, based on accruals provided
      by
      management, within 45 days after the end of each Plan Year.

     

    Not
      later
      than 60 days after the end of each Plan Year the Company shall make the
      following cash payments: 

     

    (1)
      to
      each Terminating Participant an Award in an amount equal to the product of
      (a)
      90% of the estimated Terminating Qualifying Income for such Terminating
      Participant for such Plan Year, multiplied by (b) such Terminating Participant's
      Award Percentage; 

     

    (2)
      to
      each Grandfathered Participant whose employment has not been terminated for
      Cause, and to each New Participant who was employed by the Company on December
      31 of such Plan Year and whose employment has not been terminated for Cause,
      an
      Award in an amount equal to the sum of (a) the product of (x) 90% of the
      estimated Grandfathered Non-Tiny Technology Qualifying Income for such Plan
      Year, multiplied by (y) such Participant's Grandfathered Non-Tiny Technology
      Award Percentage, plus (b) the product of (x) 90% of the estimated Grandfathered
      Tiny Technology Qualifying Income for such Plan Year, multiplied by (y) such
      Participant's Grandfathered Tiny Technology Award Percentage;

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (3)
      to
      each Grandfathered Participant who was employed by the Company on December
      31 of
      such Plan Year and whose employment has not been terminated for Cause, an Award
      in an amount equal to the sum of (a) the product of (x) 90% of the estimated
      New
      Investment Qualifying Income for such Plan Year, multiplied by (y) such
      Grandfathered Participant's New Investment Award Percentage, plus (b) the
      product of (x) 90% of the estimated excess of (I) the product of New Investment
      Qualifying Income for such Plan Year, multiplied by the aggregate New Investment
      Award Percentages for such Plan Year of all New Participants over (II) the
      amount, calculated separately for each New Participant and then aggregated,
      of
      the product of the Post-Participation Qualifying Income for each such New
      Participant for such Plan Year, multiplied by such New Participant's New
      Investment Award Percentage for such Plan Year, multiplied by (y) the product
      of
      1.0 multiplied by a fraction, the numerator of which is such Grandfathered
      Participant's New Investment Award Percentage for such Plan Year and the
      denominator of which is the aggregate of the New Investment Award Percentages
      for such Plan Year of all Grandfathered Participants; and

     

    (4)
      to
      each New Participant who was employed by the Company on December 31 of such
      Plan
      Year and whose employment has not been terminated for Cause, an Award in an
      amount equal to the product of (a) 90% of the estimated Post-Participation
      Qualifying Income for such New Participant for such Plan Year, multiplied by
      (b)
      such New Participant's New Investment Award Percentage.

     

    Not
      later
      than 45 days after the filing of the Company's federal income tax return for
      such Plan Year, the Committee shall finalize the foregoing determinations and
      pay to the Participants any remaining Award amounts owed to the Participants,
      determined under principles consistent with the preceding sentence. In the
      event
      that any portion of the maximum amount payable under this Plan with respect
      to
      any category of Qualifying Income for a Plan Year is not required to be paid
      pursuant to the foregoing provisions because (subject to Section 3) a
      Participant's employment terminated on or prior to December 31 of such Plan
      Year
      or for Cause, the remaining portion of such maximum amount shall be paid to
      the
      Participants eligible to participate in that category of Qualifying Income
      based
      on their relative Award Percentages for that category of Qualifying Income,
      provided,
      however,
      that
      the aggregate amount payable to all Participants for a Plan Year shall not
      exceed 20% of the Qualifying Income for the Plan Year. In the event that the
      aggregate amount of all Awards payable for any Plan Year shall be greater than
      20% of the Qualifying Income for such Plan Year (a "Plan prohibited payment"),
      each Participant's Award for such Plan Year shall be reduced, pro-rata within
      each category of Qualifying Income, by the minimum amount necessary to allow
      the
      aggregate Awards for such Plan Year not to constitute a Plan prohibited payment.
      If such a reduction is necessary, each Participant shall unconditionally forfeit
      the amount of any reduction made pursuant to this paragraph.

     

    In
      order
      to be eligible to receive an Award under this Section 2, a Participant must
      be
      employed by the Company on the final day of the Plan Year to which such Award
      relates; provided, however, that the foregoing shall not apply to Grandfathered
      Participants with respect to their Grandfathered Participations; and provided,
      further, however, if the employment of any Participant was terminated for Cause,
      such former employee shall cease to be a Participant and any Awards not yet
      paid
      to or earned by such person shall automatically be forfeited.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Notwithstanding
      any other provision of the Plan, in no event shall the aggregate amount of
      all
      Awards payable for any Plan Year during which the Company remains a "business
      development company" within the meaning of the 1940 Act be greater than the
      maximum percentage of the Company's "net income after taxes" (within the meaning
      of Section 57(n)(l)(B) of the 1940 Act or any successor provision thereto)
      permitted to be paid as profit sharing under the 1940 Act or other applicable
      law. In the event that any portion of any Award may not be paid pursuant to
      the
      limitation set forth in the preceding sentence (a "1940 Act prohibited
      payment"), each Participant's Award for such Plan Year shall be reduced,
      pro-rata within each category of Qualifying Income, by the minimum amount
      necessary to allow the aggregate Awards for such Plan Year not to constitute
      a
      1940 Act prohibited payment. If such a reduction is necessary, each Participant
      shall unconditionally forfeit the amount of any reduction made pursuant to
      this
      paragraph.

     

    Further,
      notwithstanding any provision of this Plan to the contrary, in the case of
      any
      Participant for any Plan Year, no Award of more than the excess of $1,000,000
      over the amount of other compensation paid by the Company to such Participant
      for such Plan Year (after any Award reduction described in this Section 2)
      shall
      be paid unless and until the shareholders of the Company have approved the
      making of such Awards pursuant to the requirements of Section 162(m) of the
      Internal Revenue Code of 1986, as amended.

     

    SECTION
      3.

     

    Grandfathered
      Participations

     

    As
      of the
      Effective Date, the Grandfathered Participants' Award Percentages with respect
      to the Non-Tiny Technology Investments shall be reduced by ten percent (10%),
      as
      follows: Charles E. Harris, from 13.790% to 12.411%; Mel P. Melsheimer, from
      4.233% to 3.8097%; Helene Shavin, from 1.524% to 1.3716%; and Jacqueline M.
      Matthews, from 0.453% to 0.4077%. As of the Effective Date, the Grandfathered
      Participants' Award Percentages shall be reduced with respect to the Tiny
      Technology Investments by twenty-five percent (25%), as follows: Charles E.
      Harris, from 13.790% to 10.3425%; Mel P. Melsheimer, from 4.233% to 3.17475%;
      Helene Shavin, from 1.524% to 1.143%; and Jacqueline M. Matthews, from 0.453%
      to
      0.33975%. The reduced Award Percentages set forth in this paragraph of Section
      3
      are herein referred to as the "Grandfathered Participations." The aggregate
      of
      the 10% reduction in the Award Percentages with respect to the Non-Tiny
      Technology Investments and the 25% reduction in the Award Percentages with
      respect to the Tiny Technology Investments is herein referred to as the
      "Incremental Percentage".

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    The
      termination of a Grandfathered Participant's employment with the Company shall
      have no adverse effect upon such Participant's Grandfathered Participations,
      unless such Grandfathered Participant is terminated by the Company for Cause,
      in
      which case such Grandfathered Participant's Grandfathered Participations (as
      well as all other Awards) shall be immediately cancelled and forfeited. The
      death of a Grandfathered Participant shall have no adverse effect upon such
      Participant's Grandfathered Participations.

     

    A
      Grandfathered Participant's rights under the Plan with respect to such
      participant's Award Percentage, if any, with respect to a New Investment or
      any
      other investment made by the Company other than the Grandfathered Investments
      shall be as determined by the Committee in its sole discretion and otherwise
      subject to the terms of the Plan. 

     

    The
      Incremental Percentages shall be allocated as Grandfathered Non-Tiny Technology
      Award Percentages and Grandfathered Tiny Technology Award Percentages each
      Plan
      Year among one or more Participants as the Committee shall determine in its
      sole
      discretion (which allocation may include the Grandfathered Participants).

     

    SECTION
      4.

     

    Administration

     

    The
      Plan
      shall be administered by the Committee with decisions taken in accordance with
      its normal procedures. Members of the Committee shall not be liable for any
      acts
      or omissions to act in the administration of the Plan.

     

    A
      secretary selected by the Committee shall keep full and accurate minutes of
      all
      meetings and records of the actions of the Committee, and these minutes and
      records shall be at all times open to inspection by the members of the Board.
      The secretary shall periodically transmit to the Board certified copies of
      any
      statements or schedules prepared in connection with the administration of the
      Plan.

     

    SECTION
      5.

     

    Amendment,
      Termination or Modification of the Plan

     

    The
      Plan
      at any time and for any reason may be modified, amended, or terminated by the
      Committee; provided,
      however,
      that
      the Grandfathered Participations may not be modified or amended. Nothing in
      this
      Plan shall preclude the Committee from, for any Plan Year, naming additional
      Participants in the Plan or changing the Award Percentage for any category
      of
      Qualifying Income (other than the reduced Grandfathered Non-Tiny Technology
      Award Percentages and Grandfathered Tiny Technology Award Percentages set forth
      in Section 3) of any Participant or New Participant (subject to the overall
      percentage limitations contained herein).

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    SECTION
      6.

     

    Effective
      Date

     

    The
      Plan
      shall be effective on the Effective Date.

     

    SECTION
      7.

     

    General
      Provisions

     

    Compliance
      with Legal Requirements.
      The
      Plan and the granting and payment of Awards, and the other obligations of the
      Company under the Plan shall be subject to all applicable federal and state
      laws, rules, and regulations, and to such approvals by any regulatory or
      governmental agency as may be required.

     

    Nontransferability.
      Awards
      not yet earned shall not be transferable or subject to assignment or alienation
      under any circumstances. Awards earned but not yet paid shall not be
      transferable by a Participant except by will or the laws of descent and
      distribution.

     

    No
      Right to Continued Employment.
      Nothing
      in the Plan or in any Award granted or other agreement entered into pursuant
      hereto shall confer upon any Participant the right to continue in the employ
      of
      the Company or to be entitled to any remuneration or benefits not set forth
      in
      the Plan or other agreement or to interfere with or limit in any way the right
      of the Company to terminate such Participant's employment.

     

    Withholding
      Taxes.
      Where a
      Participant or other person is entitled to receive a cash payment pursuant
      to an
      Award hereunder, the Company shall have the right to withhold any taxes or
      to
      require the Participant or such other person to pay to the Company the amount
      of
      any taxes that the Company may be required to withhold before delivery to such
      Participant or other person of such payment.

     

    Unfunded
      Status of Awards.
      The
      Plan is intended to constitute an "unfunded" plan for incentive and deferred
      compensation. With respect to any payments not yet made to a Participant
      pursuant to an Award, nothing contained in the Plan or any Award shall give
      any
      such Participant any rights that are greater than those of a general creditor
      of
      the Company.

     

    Governing
      Law.
      The
      Plan and all determinations made and actions taken pursuant hereto to the extent
      not governed by federal law shall be governed by the laws of the State of New
      York without giving effect to the conflict of laws principles
      thereof.

     

    Beneficiary.
      A
      Participant may file with the Committee a written designation of a beneficiary
      on such form as may be prescribed by the Committee and may, from time to time,
      amend or revoke such designation. If no designated beneficiary survives the
      Participant, the executor or administrator of the Participant's estate shall
      be
      deemed to be the Participant's beneficiary.

    
      
         

      

      
        12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]