Common use of Rebalancing Clause in Contracts

Rebalancing. Monthly, and at times intra-month, as Third Point may deem necessary in its sole discretion, Third Point will execute rebalancing trades (based on monthly performance and cash inflows and outflows) to maintain to the extent practicable parity in the portfolio composition of the Joint Venture and the Managed Accounts, taking into account various factors including account leverage, investment restrictions and tax considerations. If withdrawals or contributions result in a disparity between the portfolio composition of the Joint Venture and one or more Managed Accounts which Third Point, in its sole discretion, believes should be rectified, and/or if Third Point determines that a change in the leverage of Third Point Ultra Ltd. (“Ultra”) is appropriate (such change may result in changes to the Joint Venture's portfolio composition, since Ultra is generally managed on a parallel, pro rata basis with the Joint Venture and the other Third Point Funds, with the difference that Ultra is typically more levered than the other Third Point Funds), then Third Point may, in its sole discretion, seek to achieve such parity through rebalancing or through the purchase or sale of securities on the open market. In order to effect a rebalancing, Third Point will purchase or sell securities or other investments for the Joint Venture while at the same time Third Point is selling or purchasing the same investments for one or more of the Managed Accounts. Transactions between the Joint Venture and the Managed Accounts shall be for cash consideration at (i) the current market price of the particular securities if effected on the open market or (ii) the close of business market price for the particular securities on the day of the transaction if not effected on the open market. Principal trades will be effected by Third Point in compliance with the Investment Advisers Act of 1940, as amended. Every principal trade shall require the prior written consent of the Disinterested Board Members. Prior to obtaining such consent, Third Point shall provide the Disinterested Board Members with information providing: (i) the rationale for the principal trade and why it believes it is in the best interest of the Joint Venture; (ii) its determination that the trade is consistent with Third Point’s duty to seek best execution; and (iii) that the valuation procedures described in this Agreement are followed in determining the appropriate price at which to effect the transaction. Special Arrangements. There may be circumstances in which it may be advantageous to establish nominee arrangements under which particular investments such as bank debt, trade claims, private investments and investments held for tax purposes (and a limited number of other difficult to transfer securities) are held by the Joint Venture or a Managed Account, while the economic benefits and risks of those investments are shared by the Joint Venture and one or more Managed Accounts. Such nominee arrangements may entail the creation of special purpose vehicles, derivative contracts and other mechanisms for sharing risk and reward and generally reduce the expense and administrative burden of any rebalancing with respect to those securities. Third Point will establish such nominee arrangements only where there is no reasonable alternative, and in any event will seek to ensure that all such arrangements result in a fair and equitable sharing of risk and reward, (taking into consideration any financing or other incremental costs) and will obtain Investment Committee approval for such arrangements on behalf of the Joint Venture. To the extent Third Point (or its Affiliates) have significant investments in any of the Managed Accounts involved in such arrangements, such Managed Accounts may be regarded as proprietary accounts of Third Point. The fairness of arrangements involving proprietary accounts will be reviewed by an independent party. The Joint Venture or each Managed Account that bears economic risk and reward from these arrangements will bear any associated tax or regulatory risk, and may be required to indemnify the Joint Venture or Managed Accounts with respect to those risks. Service Providers. Third Point will select certain of the Joint Venture’s service providers. In addition, service providers may provide services to both the Joint Venture and one or more members of the Third Point Group. While such arrangements have the potential to give rise to conflicts of interest, Third Point will attempt to ensure that service provider selection for the Joint Venture is not impacted from any provision of services to members of the Third Point Group and that the Joint Venture does not effectively subsidize the costs of such services. Furthermore, members of the Third Point Group may be related to (by blood, marriage or otherwise), or may be personal friends with, the Joint Venture’s service providers or their respective owners, members, principals, officers or employees. Third Point addresses these conflicts of interest by, in consultation with Third Point’s compliance committee, taking reasonable measures to ascertain whether each service provider is qualified and appropriate to provide its services in a manner that serves the best interests of the Joint Venture, taking into account factors such as expertise, availability and quality of service and the competitiveness of compensation rates in comparison with other service providers satisfying Third Point’s service provider selection criteria.

Rebalancing. MonthlyThe underlying assets have a tendency to perform differently over time resulting in “portfolio drift”, which could mean that a Cautious portfolio becomes Balanced or a Balanced portfolio becomes Adventurous, for example. The initial Asset Allocation can only be maintained throughout the investment programme if the portfolio is rebalanced on a regular basis. We rebalance all our portfolios twice yearly to address the issue of “portfolio drift”. Rebalancing back to the original asset allocation is fundamental to successful investing, supporting the principle of discipline; in addition, and at times intra-monthespecially with low correlating asset classes, the effect of correcting portfolio drift tends to support positive investor behaviour by selling high and buying low. We offer our clients:  A unique Investment Philosophy  The benefits of an organisation that understands the real meanings of “risk”  Objective driven and tailored portfolios Our clients recognise and benefit from the recurring mantras we apply, which include:  Simplicity – we do not invest in anything that cannot be clearly explained.  Transparency – we do not invest in anything where the potential returns are not easily identified.  Liquidity – we do not invest in anything that may have liquidity issues. These mantras mean that our portfolios have a unique look and feel to them as Third Point may deem necessary in its sole discretionthere are certain assets that we actively wish to hold and there are certain assets that we do not. What we wish to hold:  Cash  Bonds  Property  Equities  Commodities What we do not wish to hold:  Complex Derivatives  Hedge Funds  Structured Products  “Bricks and Mortar” Property funds Downward pressure on underlying portfolio costs and offering value to clients are chief concerns. In the interests of keeping costs as keen as possible but not compromising the future performance of the portfolios, Third Point will execute rebalancing trades our growth portfolios consist either entirely of index tracking funds (based on monthly performance passive portfolios) or a combination of index tracking and cash inflows and outflows) actively managed funds (core satellite portfolios). We are also very mindful that there needs to maintain be a compelling reason to the extent practicable parity include an actively managed fund with a higher fund charge compared to an index tracker in the portfolio composition same sector with a much lower fund charge. IronBright offers a comprehensive suite of the Joint Venture investment portfolios for capital growth and the Managed Accounts, taking into account various factors including account leverage, investment restrictions income production that are risk rated and tax considerationsobjective driven. If withdrawals or contributions result They are steeped in a disparity between the portfolio composition our underlying philosophy of the Joint Venture and one or more Managed Accounts which Third Point, in its sole discretion, believes should be rectified, and/or if Third Point determines that a change “Belief in the leverage Future”, “Patience” and “Discipline” and supported through our Portfolio Practices of Third Point Ultra Ltd. (“Ultra”) is appropriate (such change may result in changes ensuring the Asset Allocation and Diversification are right from outset and then maintaining these year on year through a disciplined approach to the Joint Venture's portfolio composition, since Ultra is generally managed on a parallel, pro rata basis with the Joint Venture and the other Third Point Funds, with the difference that Ultra is typically more levered than the other Third Point Funds), then Third Point may, in its sole discretion, seek to achieve such parity through rebalancing or through the purchase or sale of securities on the open market. In order to effect a twice yearly rebalancing, Third Point will purchase or sell securities or other investments for the Joint Venture while at the same time Third Point is selling or purchasing the same investments for one or more of the Managed Accounts. Transactions between the Joint Venture and the Managed Accounts shall be for cash consideration at (i) the current market price of the particular securities if effected on the open market or (ii) the close of business market price for the particular securities on the day of the transaction if not effected on the open market. Principal trades will be effected by Third Point in compliance with the Investment Advisers Act of 1940, as amended. Every principal trade shall require the prior written consent of the Disinterested Board Members. Prior to obtaining such consent, Third Point shall provide the Disinterested Board Members with information providing: (i) the rationale for the principal trade and why it believes it is in the best interest of the Joint Venture; (ii) its determination that the trade is consistent with Third Point’s duty to seek best execution; and (iii) that the valuation procedures described in this Agreement are followed in determining the appropriate price at which to effect the transaction. Special Arrangements. There may be circumstances in which it may be advantageous to establish nominee arrangements under which particular investments such as bank debt, trade claims, private investments and investments held for tax purposes (and a limited number of other difficult to transfer securities) are held by the Joint Venture or a Managed Account, while the economic benefits and risks of those investments are shared by the Joint Venture and one or more Managed Accounts. Such nominee arrangements may entail the creation of special purpose vehicles, derivative contracts and other mechanisms for sharing risk and reward and generally reduce the expense and administrative burden of any rebalancing with respect to those securities. Third Point will establish such nominee arrangements only where there is no reasonable alternative, and in any event will seek to ensure that all such arrangements result in a fair and equitable sharing of risk and reward, (taking into consideration any financing or other incremental costs) and will obtain Investment Committee approval for such arrangements on behalf of the Joint Venture. To the extent Third Point (or its Affiliates) have significant investments in any of the Managed Accounts involved in such arrangements, such Managed Accounts may be regarded as proprietary accounts of Third Point. The fairness of arrangements involving proprietary accounts will be reviewed by an independent party. The Joint Venture or each Managed Account that bears economic risk and reward from these arrangements will bear any associated tax or regulatory risk, and may be required to indemnify the Joint Venture or Managed Accounts with respect to those risks. Service Providers. Third Point will select certain of the Joint Venture’s service providers. In addition, service providers may provide services to both the Joint Venture and one or more members of the Third Point Group. While such arrangements have the potential to give rise to conflicts of interest, Third Point will attempt to ensure that service provider selection for the Joint Venture is not impacted from any provision of services to members of the Third Point Group and that the Joint Venture does not effectively subsidize the costs of such services. Furthermore, members of the Third Point Group may be related to (by blood, marriage or otherwise), or may be personal friends with, the Joint Venture’s service providers or their respective owners, members, principals, officers or employees. Third Point addresses these conflicts of interest by, in consultation with Third Point’s compliance committee, taking reasonable measures to ascertain whether each service provider is qualified and appropriate to provide its services in a manner that serves the best interests of the Joint Venture, taking into account factors such as expertise, availability and quality of service and the competitiveness of compensation rates in comparison with other service providers satisfying Third Point’s service provider selection criteria.