Fully paid and excess margin securities held in your enrolled account are eligible for lending through the FPL Program. A fully paid security is a security that has been completely paid for. An excess margin security is a security that has not been completely paid for, but that has a market value exceeding 140% of your margin debit balance to HilltopSecurities.

The FPL Program is available for traditional brokerage cash accounts and certain Individual Retirement Arrangement (IRA) accounts with a minimum account value of $250,000 at the time of enrollment that meet other applicable eligibility requirements. Certain accounts including, but not limited to, advisory/managed accounts and Employee Retirement Income Security Act of 1974 (ERISA) accounts, may not be eligible for participation. Please contact your Financial Professional for more information.

You maintain economic ownership of any securities on loan and are subject to market risk with price fluctuations. Furthermore, you retain the ability to sell your shares at any time and receive the proceeds of such sale. It is important to note that selling a position on loan will result in the termination of the loan. Additionally, should you write a covered call on an underlying position while it is on loan, the loan will also be terminated.

No. You will not have proxy voting rights on loaned securities. During the term of the loan, you waive the right to vote, provide any consent, or to take any similar action with respect to the loaned securities if the applicable record date or deadline falls during the term of the loan.

If a dividend is paid while securities are on loan, you will receive a substitute payment, or payment-in-lieu of the dividend, instead of receiving the actual dividend payment from the issuer. Payments-in-lieu may receive different tax treatment than a dividend payment from the issuer. However, HilltopSecurities will gross up such payments-in-lieu for tax withholding.3 Please consult your tax professional for more information about how this may impact your specific situation.

While your securities are on loan, they are not protected by Securities Investor Protection Corporation (SIPC) insurance. On the loan origination date, HilltopSecurities will deposit collateral in the form of cash equal to 102% of the market value of any shares that HilltopSecurities has borrowed. This collateral will be held at an independent custodian bank as outlined in the MSLA. The amount of the collateral posted will be adjusted daily (or “marked-to-market”) to reflect any changes in the loaned securities’ market value or a change in the number of shares borrowed by HilltopSecurities. The collateral pledged by HilltopSecurities to you for its loans under the FPL Program does not contribute to the market value of your account.

In general, positions that are considered “hard-to-borrow” are more likely to be selected for borrowing under the FPL Program. However, not all hard-to-borrow positions will carry the same demand.

No. Once you are enrolled, HilltopSecurities may borrow shares of any securities from your account at its discretion. Participation in the FPL Program does not guarantee that your shares will be borrowed by HilltopSecurities or that you will earn income.

3. Gross-ups of payments-in-lieu will made in accordance with HilltopSecurities’ policies.

You will receive compensation in the form of a loan fee while the securities are on loan. Loan income will accrue daily and will be credited to your account on a monthly basis. The lending interest rate for a loan is market-driven and can fluctuate daily based on several factors, including but not limited to, borrowing demand, market supply and short selling. Participation in the FPL Program does not guarantee that any portion of your shares will be borrowed by HilltopSecurities or that you will earn income.

On the day a new loan is originated, HilltopSecurities will send you, via email, a Loan Origination Notification prompting you to view the loan confirmation on HilltopSecurities’ client website or mobile application, MOmentum Client or MOmentum Mobile.

By accessing your account via HilltopSecurities’ client website or mobile application, MOmentum Client or MOmentum Mobile, you will be able to see which securities are currently on loan. When all shares of your position are currently on loan, a Location of “FPL” will display on the account’s Positions Page:

Positions with a partial share amount on loan will display a Location of “Multiple”. Hover over the hyperlink to see more details

The market value of any loaned securities will continue to be reflected in your Total Account Value.

Number of shares, loan rate and income may change daily. The details regarding the number of shares on loan, the current loan rate and the amount of income earned will be reflected on your account’s Activity Page for the duration of the loan.

HilltopSecurities may borrow the securities in your enrolled account to satisfy delivery requirements resulting from short sales, to cover a short sale or fail to deliver, to satisfy customer possession and control requirements, to further on-lend the loaned securities to other broker-dealers, and/or for any other permitted purpose.

HilltopSecurities may receive compensation in connection with the use of your loaned securities, including in association with lending your securities to other parties or facilitating the settlement of short sales. The income earned by HilltopSecurities will vary depending on the demand for the security.

The lending interest rates paid to you by HilltopSecurities for loans of securities are based on several factors including, but not limited to, borrowing demand, the overall lendable supply of the security, short-selling and hedging interests, and general market conditions.

Changing market conditions may necessitate a change in the lending rate. You may see the updated rate reflected daily by accessing your account via HilltopSecurities’ client website or mobile application, MOmentum Client or MOmentum Mobile.

Both you and HilltopSecurities may terminate loans at any time. Additionally, a loan will be terminated upon your sale of shares currently on loan, your writing of a covered call against shares that are on loan, or your notification to HilltopSecurities that you are choosing to unenroll from the FPL Program. You may remove specific securities from the FPL Program by transferring the shares to another account that is not enrolled in the FPL Program or by choosing to unenroll from the FPL Program.