SECURITIES LOAN AGREEMENT
(BORROWER)
SECURITIES LOAN AGREEMENT dated as of __________ ___, 200_, by and between
UBS SECURITIES LLC, as agent for the Accounts (in such capacity and not in its
individual capacity, UBS SECURITIES LLC is hereinafter referred to as "Lender"),
and______________, ("Borrower"), setting forth the terms and conditions under
which Lender, on behalf of one or more Accounts identified in accordance with
Section 1.3 may, from time to time, arrange for loans to Borrower of certain
securities held in the Accounts against a pledge of collateral. References to
Lender in this Agreement refer only to Lender in its representative capacity as
agent for the Accounts and in no case shall be construed so as to render Lender
liable as principal. Capitalized terms not otherwise defined herein shall have
the meanings provided in Section 29.
Lender and Borrower, intending to be legally bound, agree as follows:
1. Loans of Securities.
1.1 Subject to the terms and conditions of this Agreement, either party
hereto may, from time to time, orally seek to initiate a transaction whereby
Lender will lend securities to Borrower (each, a "Loan"). The parties shall
agree orally on the terms of each Loan, which shall be subject to the terms and
conditions of this Agreement and which shall include: (a) the date of
commencement of the Loan ("Loan Commencement Date"); (b) a description
(including the identity of the issuer) and the amount of the Loaned Securities;
(c) the account to which the Loaned Securities are to be transferred; (d) the
terms of compensation (including any applicable rebate); (e) the types of
Collateral acceptable for the Loan; and (f) the account or accounts to which the
cash and non-cash Collateral for the Loan are to be transferred. These terms may
be amended during the term of the Loan upon mutual agreement of the parties,
provided that any amendment is consistent with the terms of this Agreement.
1.2 Each Loan shall be evidenced by Lender's books and records pertaining
to such loans, as maintained by Lender in the regular course of its business,
which shall represent presumptive evidence thereof except for manifest error or
willful misconduct. Lender shall send Borrower monthly statements of outstanding
Loans showing Loan activity. Borrower agrees to examine such statements promptly
and to advise Lender of any errors or exceptions. Borrower's failure to so
advise Lender within ten (10) days after delivery of any such statement shall be
deemed to be Borrower's admission of the accuracy and correctness of the
contents thereof, and Borrower shall be fully bound thereby. The foregoing shall
not be construed to prevent the parties hereto from mutually agreeing to amend
or correct such statements if there has been manifest error in the preparation
of the statements.
1.3 Lender shall, periodically or when a material change in Lender's
Accounts takes place, furnish to the Borrower a list of Accounts on whose behalf
Lender is authorized to effect Loans as agent. With respect to any Loan, the
identity of the Account shall be promptly furnished to Borrower upon its request
or upon the occurrence of a Default involving such Account, provided, however,
that Lender shall furnish such identity automatically with respect to any Loan
of the assets of any ERISA Plan.
1.4 Notwithstanding anything to the contrary contained in this Agreement
with respect to when a Loan commences, a Loan hereunder shall not occur until
the Loaned Securities and the Collateral therefor have been transferred in
accordance with Section 16.
1.5 WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER, IT IS UNDERSTOOD
AND AGREED THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970
MAY NOT PROTECT LENDER WITH RESPECT TO LOANED SECURITIES HEREUNDER AND THAT,
THEREFORE, THE COLLATERAL DELIVERED TO LENDER MAY CONSTITUTE THE ONLY SOURCE OF
SATISFACTION OF BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE
LOANED SECURITIES.
2. Transfer of Loaned Securities.
2.1 On the Loan Commencement Date (but in no event prior to the transfer
to the account or accounts designated by Lender of Collateral in the amount
required pursuant to Section 3), Lender shall arrange for the transfer of the
Loaned Securities to Borrower.
2.2 Borrower agrees that the completion of a transfer of Loaned Securities
to it pursuant to a Loan shall constitute its acceptance and receipt thereof,
and each such acceptance and receipt shall be deemed to constitute a
representation by Borrower that, as of the date of such transfer, (a) all
representations and warranties by Borrower herein are true and correct, as if
made on and as of such date, (b) no Default hereunder has occurred and is
continuing, and (c) except as otherwise theretofore disclosed to Lender in
writing, there has been no material adverse change in the financial condition or
business of Borrower or any direct or indirect parent of Borrower since the date
of the most recent financial statements of Borrower provided to Lender hereunder
and that, where Borrower is a registered broker-dealer under the Exchange Act,
it is in compliance with Rule 15c3-1 thereunder.
3. Transfer of Collateral.
3.1 Prior to, or concurrently with, the transfer of the Loaned Securities
to Borrower, Borrower shall transfer to the account or accounts designated by
Lender, Collateral having a Market Value in an amount equal to the Required
Value.
3.2 The Collateral transferred by Borrower to the account or accounts
designated by Lender in respect of any Loan, as adjusted pursuant to Section 8,
shall be security for Borrower's obligations in respect of such Loan and for any
other obligations of Borrower hereunder, and
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Borrower hereby pledges, assigns and grants to Lender, as agent for the Account,
a continuing first priority security interest in, and a lien upon, the
Collateral, which shall attach upon the transfer of the Loaned Securities to
Borrower and which shall cease with respect to any item of Collateral upon its
being re-transferred to Borrower. In addition to all the rights and remedies
given to Lender as agent hereunder, Lender, as agent for the Account, shall have
all the rights and remedies of a secured party under the UCC.
3.3 Lender may transfer or arrange for the transfer of the Collateral for
any Loan to the related Account and the Account may use or invest the
Collateral, if such Collateral consists of cash, at the risk, and for the
benefit, of the Account, which shall bear all losses with respect thereto. If
the Collateral consists of securities, an Account that is a securities broker or
dealer may pledge, repledge, hypothecate, rehypothecate, lend, relend, sell or
otherwise transfer the Collateral and commingle the Collateral with other
collateral or with its own assets. Borrower irrevocably appoints Lender as its
attorney-in-fact for the purpose of doing or performing any act or thing
(including, without limitation, executing any document) and taking all other
steps as may be required to enable Lender or the Account to transfer any
Collateral to a third party or to otherwise realize upon any Collateral.
3.4 Provided that Borrower is not in Default hereunder, upon the transfer
to the account or accounts designated by Lender of all Loaned Securities in
respect of a Loan and the payment of all Loan Fees due upon termination of such
Loan, Lender shall transfer (or cause the related Account to transfer) to
Borrower the Collateral relating to such Loan. Lender's sole obligation to
Borrower in respect of the Collateral is to return or arrange for the return of
such to Borrower pursuant to this Section 3.4 and Section 5.4.
3.5 If Borrower transfers Collateral in respect of a Loan to the account
or accounts designated by Lender and Lender does not transfer or arrange for the
transfer of the Loaned Securities to Borrower, Borrower shall have the absolute
right to the immediate return of the Collateral; and if Lender transfers or
arranges for the transfer of Loaned Securities to Borrower and Borrower does not
transfer Collateral to the account or accounts designated by Lender as required
under Section 3.1, Lender shall have the absolute right to the immediate return
of the Loaned Securities.
3.6 Borrower may, upon reasonable notice to Lender and with Lender's
consent (which shall not be unreasonably withheld), substitute Collateral for
Collateral securing any Loan; provided, however, that such substituted
Collateral shall: (a) consist only of cash, securities or other property that
would be acceptable Collateral in accordance with this Agreement; and (b) have a
Market Value that, when added to the Market Value of the remaining Collateral
for such Loan, is equal to or in excess of the Required Value. Substituted
Collateral shall constitute Collateral for all purposes hereunder.
3.7 Collateral shall be allocated to Loans as follows:
3.7.1 Except as provided in the following sentence, Collateral transferred
by Borrower in connection with a specific Loan shall be allocated to such Loan;
provided, that if Collateral is
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received on the same day for more than one Loan, the Lender shall arrange for
the allocation of such Collateral to each Loan then being made so that each such
Loan is secured by not less than the Required Value of Collateral acceptable for
such Loan. Any Collateral received with respect to a Loan in excess of the
Required Value for such Loan may be held as collateral security for all Loans
made to Borrower at any time without being allocated to any one Loan or, in the
sole discretion of Lender, may be allocated at any time to any Loan or Loans
then outstanding hereunder. All allocations of Collateral shall be marked in
Lender's books and records, which shall be presumptive evidence of such
allocations.
3.7.2 Lender shall have the right, at its sole election, at any time and
from time to time, to allocate or reallocate any Collateral delivered pursuant
to the terms hereof to or among any outstanding Loan or Loans.
3.7.3 It is expressly understood and agreed by the parties hereto that no
allocation of Collateral to any Loan or liabilities due to any Account pursuant
to the terms hereof shall in any way affect the ability of Lender to apply such
Collateral to the satisfaction of any obligation of Borrower hereunder upon any
Default hereunder, regardless of the Loan or Account to which such obligation
relates, and that all Collateral at any time given hereunder shall constitute
collateral security for all the Borrower's obligations to Lender or the Accounts
hereunder without distinction of any kind and upon any Default hereunder may be
applied to any such obligation or obligations as Lender in its sole discretion
may elect.
3.8 No later than seven days prior to the scheduled expiration date of any
Letter of Credit supporting Borrower's obligations hereunder, Borrower shall
deliver an extension of the expiration of such Letter of Credit or replace such
Letter of Credit by providing Lender with a substitute Letter of Credit or other
acceptable Collateral in an amount at least equal to the amount of the Letter of
Credit for which it is substituted.
4. Loan and Cash Collateral Fees.
4.1 With respect to any Loan for which the Collateral consists of
Government Securities or Letters of Credit and with respect to such other Loans
as may be agreed upon by the parties, Borrower shall pay Lender a Loan Fee
("Loan Fee") based on the par value of those Loaned Securities which are debt
instruments and on the Market Value at the time of the Loan of those Loaned
Securities which are equity securities, as adjusted by any subsequent marks to
market pursuant to Section 8, from the Loan Commencement Date to, but not
including, the earlier of the date that securities identical to the Loaned
Securities are returned to Lender upon a termination of the Loan or the date
that securities identical to the Loaned Securities are purchased for the account
of Lender pursuant to Section 12. The rate of the Loan Fee applicable to all
Loaned Securities for any particular day shall be the rate agreed upon by the
parties prior to and from time to time during each Loan. All such accrued Loan
Fees shall be paid by the Borrower to Lender, as agent for the Account, by the
earlier of (a) the tenth Business Day of the calendar month next following the
calendar month during which such Loan Fees accrued and (b) the date as of which
this Agreement is terminated.
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4.2 Unless otherwise agreed, with respect to any Loan as to which the
Collateral consists of cash, the Lender's compensation shall consist of the
right to use and invest the cash Collateral in accordance with Section 3.3. In
consideration of the right to use and invest any such cash Collateral, the
Lender agrees to pay the Borrower a cash collateral fee (the "Cash Collateral
Fee") computed daily for each Loan and based on the amount of cash Collateral
delivered with respect to such Loan. The amount of the Cash Collateral Fee shall
be computed from the Loan Commencement Date to, but not including, the earlier
of the date that securities identical to the Loaned Securities are returned to
the account or accounts designated by Lender upon a termination of the Loan and
the date that securities identical to the Loaned Securities are purchased for
the account of Lender pursuant to Section 12. The amount of the Cash Collateral
Fee for any particular day shall be computed by multiplying (a) the amount of
cash Collateral by (b) the annual Cash Collateral Fee rate agreed upon by the
parties prior to and from time to time during each Loan and (c) by the fraction
1/360. All accrued Cash Collateral Fees shall be paid by the Lender to the
Borrower or its agent by the earlier of (a) the tenth Business Day following the
receipt by the Lending Agent from the Borrower of an invoice in the calendar
month next following the calendar month during which such Cash Collateral Fees
accrued and (b) the date as of which this Agreement is terminated.
4.3 Notwithstanding the foregoing, all Loan Fees shall be payable by
Borrower immediately in the event of a Default hereunder by Borrower, and all
Cash Collateral Fees shall be payable immediately by Lender in the Event of a
Default hereunder by Lender. Cash Collateral Fees shall cease to accrue upon the
occurrence of a Default hereunder by Borrower, and Loan Fees shall cease to
accrue upon the occurrence of a Default hereunder by Lender.
5. Termination of the Loan.
5.1 Each Loan shall be terminable by either party by demand made in
accordance with this Section 5.
5.2 Except with respect to Loans of Foreign Securities, Borrower may
terminate a Loan on any Business Day by giving notice to Lender prior to the
Termination Notice Time and transferring the Loaned Securities to Lender by the
close of business on the corresponding date specified in such notice. With
respect to Loans of Foreign Securities, such termination notice must be received
by Lender before 11:00 a.m., Eastern time, on the second Business Day preceding
the termination date.
5.3 Lender may terminate a Loan on any termination date established by
notice given to Borrower prior to the close of business on any Business Day. The
termination date so established shall be a date no earlier than the standard
settlement date for trades of the Loaned Securities entered into on the date of
such notice, which date shall, unless Borrower and Lender agree to the contrary,
be (a) in the case of Government Securities, at Lender's discretion the same day
or the next Business Day following such notice; (b) in the case of Foreign
Securities, the standard settlement date in the principal market for such
securities; or (c) in all other cases, the third Business Day following such
notice.
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5.4 On or prior to the termination date of any Loan, Borrower shall
transfer the Loaned Securities to or at the direction of Lender, whereupon
Lender shall transfer, or cause the Account to transfer, the Collateral (as
adjusted pursuant to Section 8) to Borrower pursuant to Section 3.4.
6. Rights of Borrower in Respect of the Loaned Securities. Until a Loan is
terminated in accordance herewith and except as set forth in Sections 7.1 and
7.2 hereof, Borrower shall have all of the incidents of ownership of the Loaned
Securities, including the right to exercise any voting rights and transfer the
Loaned Securities to others. Notwithstanding the above, the Borrower shall remit
to the account or accounts as designated by Lender any payment made to the
Borrower in respect of any consent solicitation with respect to the Loaned
Securities.
7. Dividends, Distributions, Etc.
7.1 Lender as agent for the Account shall be entitled to receive all
distributions made on or in respect of the Loaned Securities which are not
otherwise received by Lender, to the full extent it would be so entitled if the
Loaned Securities had not been lent to Borrower, including, but not limited to:
(a) all property (including cash dividends and all other distributions of cash
or property), (b) stock dividends and bonus issues, (c) securities received as a
result of split-ups of the Loaned Securities and distributions in respect
thereof, (d) interest payments, (e) all rights to purchase additional
securities, and (f) payments upon maturity or other redemption.
7.2 Any cash distributions made on, or in respect of, the Loaned
Securities, that Lender as agent for the Account is entitled to receive pursuant
to Section 7.1, shall be paid by the transfer by Borrower of cash (denominated
in the currency of issue for the Loaned Securities, unless otherwise agreed) to
the account or accounts designated on the date such cash distribution is made by
the issuer, in an amount equal to such cash distributions (subject to the
provisions of Section 7.4), so long as Lender is not then in Default. Non-cash
distributions received by Borrower in respect of the Loaned Securities shall be
added to the Loaned Securities (unless otherwise directed by Lender) and shall
be considered such for all purposes, except that if the Loan has terminated,
Borrower shall forthwith deliver the same to Lender.
7.3 (a) Borrower shall be entitled to receive all cash distributions made
on, or in respect of, non-cash Collateral which are not otherwise received by
Borrower, to the full extent it would be so entitled if the Collateral had not
been transferred by Borrower. Any distributions of cash made on or in respect of
such Collateral which Borrower is entitled to receive hereunder shall be paid by
the transfer of cash (denominated in the currency of issue of the non-cash
Collateral, unless otherwise agreed) by Lender to Borrower upon the date of
receipt by Lender or the Account thereof, in an amount equal to such cash
distribution (subject to the provisions of Section 7.4), so long as Borrower is
not then in Default.
(b) Borrower shall be entitled to receive all non-cash distributions made
on or in respect of non-cash Collateral the payment dates for which are during
the term of the Loan and which are not otherwise received by Borrower, to the
full extent it would be so entitled if the
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Collateral had not been transferred by Borrower. Any distributions made on or in
respect of such Collateral which Borrower is entitled to receive hereunder shall
be paid by or at the direction of Lender to Borrower promptly, so long as
Borrower is not in Default at the time of such receipt.
7.4 (a) If (i) Borrower is required to make a payment (a "Borrower
Payment") with respect to cash distributions on Loaned Securities under Sections
7.1 and 7.2 ("Securities Distributions") or (ii) Lender is required to make a
payment (a "Lender Payment") with respect to cash distributions on Collateral
under Section 7.3 ("Collateral Distributions"), and (ii) Borrower, Lender or
their respective custodians, as the case may be ("Payor"), shall be required by
law to collect any withholding or other tax, duty, fee, levy or charge required
to be deducted or withheld from such Borrower Payment or Lender Payment ("Tax"),
then Payor shall pay such additional amounts as may be necessary in order that
the net amount of the Borrower Payment or Lender Payment received by Lender or
Borrower, as the case may be ("Payee"), after payment of such Tax equals the net
amount of the Securities Distribution or Collateral Distribution that would have
been received by the Payee if such Securities Distribution or Collateral
Distribution had been paid directly to the Payee; provided, however, that any
Borrower Payment shall also take into account (and Borrower shall pay such
additional amounts as reflect) the value (as specified in a notice by Lender to
Borrower) to the Account of any tax refund or reclaim to which such Account
would otherwise have been entitled had the Loaned Securities not been loaned.
(b) Each party shall supply to the other notice of such tax information as
may be requested by the other to enable it to effect the Borrower Payment or
Lender Payment in the required amount, computed as per the immediately preceding
paragraphs of this Section 7. Borrower represents that, as of the Loan
Commencement Date, no Tax would be imposed on any cash distribution paid to it
with respect to Collateral for any Loan, unless Borrower has given notice to the
contrary to Lender (specifying the rate at which such Tax would be imposed), and
that Borrower will notify Lender of any change that occurs during the term of a
Loan in the rate of any Tax that would be imposed on any such cash distribution.
7.5 To the extent that, under the provisions of Sections 7.1 through 7.4,
a transfer of cash or other property by Borrower would give rise to a Margin
Excess or a transfer of cash or other property by Lender would give rise to a
Margin Deficit, Borrower or Lender, as the case may be, shall not be obligated
to make such transfer but, in lieu thereof, shall immediately credit the amounts
that would have been transferable under such Sections to the account of Lender
or Borrower, as the case may be.
7.6 Borrower and Lender agree that, on the Business Day following the
record date for the cash distribution relating to any Borrower or Lender
Payment, Lender will notify Borrower that Lender will charge or credit (as
appropriate) Borrower's account for such Borrower or Lender Payment on the date
the payment is payable by Borrower or Lender pursuant to Section 7.2 or 7.3
hereof, and Lender will effect such charge or credit on such date; provided,
however, that no failure on the part of Lender to provide such notice or to
effect such charge or credit shall affect the parties' respective rights and
obligations under Section 7.1, 7.2 or 7.3.
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8. ▇▇▇▇ to Market Margin.
8.1 In the event that at the close of trading on any Business Day the
Market Value of the Collateral for any Loan shall be, in the case of Loaned
Securities that are Foreign Securities, 104% or less of the Market Value of such
Loaned Securities, or in the case of other Loaned Securities, 101% or less of
the Market Value of the Loaned Securities, Borrower shall immediately, and
without notice or demand from Lender, transfer additional Collateral to the
account or accounts designated by Lender so that the Market Value of such
additional Collateral, when added to the Market Value of the other Collateral
for such Loan, shall equal or exceed the Required Value.
8.2 In addition to the rights of Lender under Section 8.1, in the event
that at the close of trading on any Business Day the Market Value of Collateral
for a Loan shall be less than the Required Value (a "Margin Deficit"), Lender
may, by notice (which may be oral) to Borrower, demand that Borrower transfer to
Lender additional Collateral so that the Market Value of such additional
Collateral, when added to the Market Value of all other Collateral for such
Loan, shall equal or exceed the Required Value. Unless otherwise agreed, such
transfer shall be made in accordance with Lender's instructions by no later than
the close of business on the day of demand if such demand is made prior to 11:00
a.m. New York time on a Business Day; otherwise such transfer shall be made on
the next Business Day; provided, however, that any such transfer of additional
Collateral comprised of Foreign Securities may be made on the next Business Day.
If the additional Collateral to be posted is intended to be through adjustment
of a Letter of Credit previously delivered to Lender as Collateral, Borrower
agrees to cause the issuing bank to amend the original Letter of Credit by
delivery of an amended Letter of Credit to Lender within the applicable time
period described in the preceding sentence.
8.3 In the event that at the close of trading on any Business Day the
Market Value of all Collateral for a Loan shall be greater than the Required
Value (a "Margin Excess"), Borrower may, by notice (which may be oral) to
Lender, demand that Lender transfer to Borrower such amount of the Collateral
selected by Borrower so that the Market Value of the Collateral for such Loan,
after deduction of such amount, shall not exceed the Required Value. Unless
otherwise agreed, such transfer shall be made in accordance with Borrower's
instructions by no later than 3:00 p.m. New York time on the day of demand if
such demand is made prior to 11:00 a.m. New York time on a Business Day;
otherwise such transfer shall be made on the next Business Day; provided,
however, that any such transfer of Collateral comprised of Foreign Securities
may be made on the next Business Day. If Lender is requested to return to
Borrower a portion of any security constituting Collateral, Borrower shall, at
the oral request of Lender, take all such action as is necessary to cause such
security to be reissued in such denominations as are required to permit such a
partial return, and in such case Lender shall not be obligated to return
Collateral hereunder unless and until such action has been taken and may make
required returns of Collateral hereunder by returning such securities in such
amounts as are, as nearly as practicable, equal to but not greater than the
required return. The return to Borrower of securities the Market Value of which
on the date on which the requirement to return the same was established was then
sufficient to comply with such requirement of return shall be in full compliance
with this Agreement and a full discharge of Lender's obligation to make such
return, notwithstanding the
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fact that, at the date of such return the Market Value of any such securities
may have declined. Where Collateral is in the form of a Letter of Credit, Lender
agrees to promptly consent to a reduction in the undrawn balance of the Letter
of Credit sufficient to eliminate the Margin Excess, provided that Borrower
delivers to Lender an amended Letter of Credit within the time period described
in the second sentence of this Section 8.3.
8.4 Borrower and Lender may agree, with respect to one or more Loans
hereunder, to ▇▇▇▇ the values to market pursuant to Sections 8.1 and 8.2 by
valuing the Loaned Securities lent and the Collateral given in respect thereof
on an Account-by-Account basis.
9. Representations of the Parties Hereto. The parties hereby make the
following representations and warranties:
9.1 Each party hereto represents and warrants that (a) it has the power to
execute and deliver this Agreement, to enter into the Loans contemplated hereby
and to perform its obligations hereunder; (b) it has taken all necessary action
to authorize such execution, delivery and performance; and (c) this Agreement
constitutes a legal, valid and binding obligation enforceable against it in
accordance with its terms (in the case of Lender, solely in its capacity as
agent for the Account or Accounts whose securities are the subject of a Loan or
Loans).
9.2 Each party hereto represents and warrants that the execution, delivery
and performance by it of this Agreement and each Loan hereunder will at all
times comply with all applicable laws and regulations including those of
applicable securities regulatory and self-regulatory organizations (in the case
of Lender, solely in its capacity as agent for the Account or Accounts whose
securities are the subject of a Loan or Loans).
9.3 Each party hereto represents and warrants that it has not relied on
the other for any tax or accounting advice concerning this Agreement (except as
expressly provided herein) and has made its own determination as to the tax and
accounting treatment of any Loan and any dividends, remuneration or other funds
received hereunder.
9.4 Borrower represents and warrants that all Loans will comply with the
applicable regulations of the Board of Governors of the Federal Reserve System
governing margin lending ("Margin Regulations") and, without limiting the
generality of the foregoing, that it (or any party to whom it relends the Loaned
Securities) is borrowing or will borrow the Loaned Securities for the purpose of
making delivery of such securities in the case of short sales, failure to
receive securities required to be delivered or other similar situations or as
otherwise permitted pursuant to the applicable Margin Regulations.
9.5 Borrower represents and warrants that it has, or will have at the time
of transfer to the account or accounts designated by Lender of any Collateral
hereunder (other than Letters of Credit), the right to grant to Lender a first
priority security interest therein subject to the terms and conditions hereof.
As to Collateral consisting of Letters of Credit transferred to the account or
accounts designated by Lender hereunder, Borrower represents and warrants that
Lender shall have full unencumbered title thereto.
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9.6 Lender represents and warrants that the Account for which it is acting
in any Loan shall have represented and warranted to it that the Loaned
Securities transferred to Borrower shall be free and clear of any lien or
encumbrance at the time of transfer, and Borrower represents and warrants to
Lender that all Loaned Securities returned hereunder shall be free and clear of
any lien or encumbrance at the time of such return.
9.7 Lender represents and warrants that as to each Account, the Account
has represented and warranted to it that the Account has duly authorized Lender,
as agent, to execute and deliver this Agreement on its behalf, and to enter into
Loans on its behalf.
9.8 Notwithstanding any other provision of this Agreement, each of the
representations and warranties set out in Section 2.2 and in this Section 9
shall be deemed made and repeated for all purposes at the time that any Loan is
made and to be in effect as of all times when Borrower's obligations with
respect to any Loan remain outstanding.
10. Covenants.
10.1 Financial information shall be delivered as follows:
10.1.1 If Borrower is not a broker-dealer registered under the Exchange
Act, it covenants as follows: Upon execution of this Agreement, Borrower shall
deliver to the Lender Borrower's and any parent company's most recent available
financial information, including (without limitation) the most recent available
audited and unaudited statements of Borrower's and any parent company's
financial condition that Borrower or such parent company is required to provide
to any governmental agency or self regulatory body. As long as any Loan is
outstanding under this Agreement, Borrower will promptly deliver to Lender all
such financial information that is subsequently available, and any other
financial information or statements that Lender may reasonably request.
10.1.2 If Borrower is a broker-dealer registered under the Exchange Act,
it covenants as follows: Upon execution of this Agreement, Borrower shall
deliver to Lender the most recent statements of Borrower required to be
furnished to Borrower's customers by Rule 17a-5(c) and (d) under the Exchange
Act. As long as any Loan is outstanding under this Agreement, Borrower shall
promptly deliver to Lender all such statements subsequently required to be
furnished to Borrower's customers by such Rule (or any successor thereto). Upon
execution of this Agreement, Borrower shall also deliver to Lender Borrower's
and any parent company's most recent financial information otherwise available
to its shareholders, the SEC, or the public, as the case may be, including
(without limitation) the most recent available audited and unaudited statements
of Borrower's or any parent company's financial condition and any report or
notice required by Rules 17a-5(a) (2) (i) and (ii) and 17a-11 under the Exchange
Act. As long as any Loan is outstanding under this Agreement, Borrower will
promptly deliver to the Lender all such financial information that is
subsequently available.
10.2 Borrower shall be liable as principal with respect to its obligations
hereunder.
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10.3 Borrower shall at all times in respect of each Loan effected pursuant
hereto maintain Collateral having a Market Value at least equal to the Required
Value.
10.4 Borrower agrees to cause every Letter of Credit delivered by it and
constituting Collateral hereunder to be renewed or replaced by Collateral
(including, without limitation, a renewal or replacement Letter of Credit)
satisfactory to Lender at least seven days prior to the scheduled expiration
date of such Letter of Credit.
10.5 Borrower shall give Lender prompt notice of the occurrence of any
development in the business affairs of Borrower that has resulted in, or which
in Borrower's reasonable judgment could result in, a material adverse effect on
the ability of Borrower to perform its obligations under this Agreement. Any
such notice shall set forth, in reasonable detail, a description of the event
which has occurred and of the action, if any, that Borrower proposes to take
with respect thereto. Borrower will forward to Lender a copy of any order,
decree, determination, instruction or other written evidence received by it of
or with respect to any matter referred to in the first sentence of this
subparagraph 10.5.
10.6 Borrower and Lender hereby agree and acknowledge that (a) each Loan
hereunder is a "securities contract," as such term is defined in Section 741(7)
of Title 11 of the United States Code (the "Bankruptcy Code"), (b) each and
every transfer of funds, securities and other property under this Agreement and
each Loan hereunder is a "settlement payment" or a "margin payment," as such
terms are used in Sections 362(b)(6) and 546(e) of the Bankruptcy Code, and (c)
the rights given to Borrower and Lender hereunder upon a Default by the other
constitute the right to cause the liquidation of a securities contract and the
right to set off mutual debts and claims in connection with a securities
contract, as such terms are used in Sections 555 and 362(b) (6) of the
Bankruptcy Code. Each party hereto further agrees and acknowledges that if
Borrower or an Account is an "insured depository institution," as such term is
defined in the Federal Deposit Insurance Act, as amended ("FDIA"), then each
Loan hereunder is a "securities contract" and "qualified financial contract," as
such terms are defined in the FDIA and any rules, orders or policy statements
thereunder.
10.7 Borrower will, from time to time, do and perform any and all acts and
execute any and all further instruments reasonably requested by Lender more
fully to effect the purposes of this Agreement and the pledge of the Collateral
hereunder, including, without limitation, the execution and filing of financing
statements and continuation statements relating to the Collateral under the
provisions of the UCC.
10.8 Borrower will notify Lender promptly upon the occurrence of any
change of control with respect to Borrower or if Borrower enters into an
agreement providing for such a change of control. For purposes of this
paragraph, a "change of control" shall occur if Borrower consolidates or
amalgamates with or merges with or into, or transfers all or substantially all
of its assets to another entity, or if any person or entity acquires directly or
indirectly the beneficial ownership of equity securities having the power to
elect a majority of the board of directors of
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Borrower or otherwise acquires directly or indirectly the power to control the
policy making decisions of Borrower.
11. Events of Default. All Loans between Borrower and Lender may, at the
option of the non-defaulting party exercised by notice to the defaulting party
(which option shall be deemed to have been exercised, even if no notice is
given, immediately upon the occurrence of an event specified in Section 11.6
below), be terminated immediately upon the occurrence of any one or more of the
following events (individually, a "Default"):
11.1 Any Loaned Securities shall not be transferred to Lender on the
termination date of the Loan as required by Section 5;
11.2 Any Collateral shall not be transferred to Borrower as required by
Section 3.5 and Section 5;
11.3 Borrower shall fail to comply with the obligation to replace an
expiring Letter of Credit under Section 10.4 and such default is not cured
within one Business Day after notice of such failure to Borrower;
11.4 Borrower or Lender shall fail to transfer Collateral as required by
Section 8;
11.5 Borrower or Lender shall fail to make the payment of distributions as
required by Section 7 and such default is not cured within one Business Day
after notice of such failure to Borrower or Lender, as the case may be;
11.6 (a) Lender or Borrower shall commence as debtor any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law, or seek the appointment of a receiver, conservator,
trustee, custodian or similar official for such person or any substantial part
of its property, or (b) any such case or proceeding shall be commenced against
Lender or Borrower, or another shall seek such an appointment, or any
application shall be filed against such person for a protective decree under the
provisions of the Securities Investor Protection Act ("SIPA"), which (i) is
consented to or not timely contested by such party, (ii) results in the entry of
an order for relief, such an appointment, the issuance of such a protective
decree or the entry of an order having a similar effect, or (iii) is not
dismissed within 15 days, or (c) Lender or Borrower shall make a general
assignment for the benefit of creditors, or (d) Lender or Borrower shall admit
in writing its inability to pay its debts as they become due;
11.7 Lender or Borrower shall have been suspended or expelled from
membership or participation in any securities exchange or association or other
self-regulatory organization to whose rules it is subject or if it is suspended
from dealing in securities by any governmental agency or regulatory body;
11.8 Lender or Borrower shall have its license, charter, or other
authorization necessary to conduct a material portion of its business withdrawn,
suspended or revoked by any applicable government or agency or regulatory body
thereof;
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11.9 Any representation made or deemed to be made by a party in respect of
this Agreement or any Loan or Loans made hereunder shall be incorrect or untrue
in any material respect during the term of any Loan hereunder;
11.10 Borrower or Lender (a) fails to provide to the other party
reasonable assurances of its ability to perform its obligations hereunder or
under any Loan within 24 hours after request therefor is made in good faith by
the requesting party; (b) notifies the other, orally or in writing, of its
inability to or its intention not to perform its obligations hereunder; or (c)
otherwise disaffirms, rejects or repudiates any of its obligations hereunder;
11.11 Borrower or Lender (a) shall fail to perform any material obligation
under this Agreement not specifically set forth in this Section 11, including
but not limited to the payment of fees as required by Section 4, and the payment
of transfer taxes as required by Section 14, (b) shall have received notice of
such failure from the non-defaulting party, and (c) shall not have cured such
failure by the next day after such notice on which a transfer of funds, Loaned
Securities or Collateral, as the case may be, could be effected pursuant to
Section 16.4 hereof; or
11.12 A party to this Agreement ("X") consolidates or amalgamates with, or
merges into, or transfers all or substantially all of its assets to, another
entity and (a) the resulting, surviving or transferee entity has not assumed all
the obligations of X under this Agreement pursuant to an agreement reasonably
satisfactory to the other party or (b) the financial condition of the resulting,
surviving or transferee entity is, in the judgment of the other party,
materially weaker than that of X prior to such transaction.
12. Lender's Remedies.
12.1 If:
(a) any Default shall occur in respect of which Borrower is the defaulting
party; or
(b) Lender becomes obligated to return, or is otherwise deprived of its
rights to, any Loaned Securities after their return to Lender, or Lender
is in any way required to pay their value or any related sum over, as a
result of any bankruptcy, insolvency, liquidation, reorganization, or
other similar proceeding relating to Borrower or pursuant to any legal
requirement, including without limitation any laws relating to so-called
"preferences" or preferential payments,
Lender shall have the right, in addition to any other remedies provided herein
or under applicable law or in equity and without further notice to Borrower:
(a) to purchase, in a commercially reasonable time and manner (taking into
consideration the nature of the market for the Loaned Securities), a like
amount of the Loaned Securities ("Replacement Securities") in the
principal market for such securities; or
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(b) to sell any Collateral in the principal market for such Collateral in
a commercially reasonable time and manner (taking into consideration the
nature of the market for the Collateral) or to treat the Loaned Securities
as having been purchased by Borrower at a purchase price equal to the
Market Value thereof on the day of the Default (or on the date of the
event referred to in (b) above, as the case may be); and
(c) to apply and set off the Collateral (including any amounts drawn under
a Letter of Credit supporting any Loan) and any proceeds thereof against
the payment of the purchase price for any Replacement Securities and any
amounts due Lender under Sections 4, 7, 14 and 17 hereof. Lender may also
apply the Collateral and any proceeds thereof to any other obligation of
Borrower under this Agreement, including Borrower's obligations with
respect to distributions paid to Borrower (and not forwarded to Lender) in
respect of Loaned Securities.
In the event that Lender exercises such rights, Borrower's obligation to return
a like amount of Loaned Securities shall terminate.
12.2 In the event that the purchase price of Replacement Securities, plus
any and all amounts due to Lender hereunder, exceeds the Market Value of the
Collateral on the date the Replacement Securities are purchased, Borrower shall
be liable to Lender for the amount of such excess, together with interest on
such excess at a per annum rate that, in the case of purchases of Foreign
Securities, is equal to LIBOR plus two (2%) percent, and in the case of
purchases of any other securities and all other amounts due to Lender hereunder,
that is equal to the Fed Funds Rate plus two (2%) percent, in each case as such
rates fluctuate from day to day, from the date of such purchase until the date
of payment of such excess. Lender shall have, and Borrower hereby grants to
Lender, as security for Borrower's obligation to pay such excess, a security
interest in any property of Borrower (including, without limitation, the
Collateral) then held by Lender or the Account and a right of setoff against
such property and against any other amount payable by Lender to Borrower. The
purchase price of securities purchased under this Section 12 shall include, and
the proceeds of any sale of Collateral shall be determined after the deduction
of, broker's fees, taxes and commissions and all other reasonable costs, fees
and expenses related to such purchase or sale or to the exercise of Lender's
remedies including, without limitation, reasonable legal fees and expenses. Upon
the satisfaction of all obligations hereunder, any remaining Collateral shall be
returned to Borrower.
13. Borrower's Remedies.
13.1 In the event of any Default involving Lender or an Account under
Section 11 hereof, Borrower shall have the right, in addition to any other
remedies provided herein or under applicable law or in equity and without
further notice to Lender:
(a) to purchase, in a commercially reasonable time and manner (taking into
consideration the nature of the market for the Collateral), a like amount
of Collateral ("Replacement Collateral") in the principal market for such
Collateral; or
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(b) to sell a like amount of Loaned Securities in the principal market for
such Loaned Securities in a commercially reasonable time and manner
(taking into consideration the nature of the market for the Loaned
Securities) or to treat the Collateral as having been purchased by Lender
at a purchase price equal to the Market Value thereof on the day of the
Default; and
(c) to apply and set off the Loaned Securities and any proceeds thereof
against the payment of the purchase price for any Replacement Collateral,
Lender's obligation to return any cash or other Collateral and any amounts
due Lender under Sections 4, 7 and 17 hereof. Borrower may also apply the
Loaned Securities and any proceeds thereof to any other obligation of
Lender or the Account under this Agreement, including Lender's obligations
with respect to distributions paid to Lender (and not forwarded to
Borrower) in respect of Collateral.
In the event that Borrower exercises such rights, Lender's obligation to return
a like amount of Collateral shall terminate; provided, however, that, where
Collateral consists of a Letter of Credit, upon the exercise or deemed exercise
by Borrower of its termination rights under Section 11, Lender shall immediately
return the Letter of Credit to Borrower, and Borrower shall return to Lender the
Loaned Securities or an amount equal to the net proceeds from the sale (or
deemed sale) of the Loaned Securities in the manner described above, reduced by
any other amounts owed by the Account to Borrower.
13.2 In the event that the sales price received from such Loaned
Securities is less than the purchase price of Replacement Collateral (plus the
amount of any cash and the Market Value of any other Collateral not replaced by
Borrower on the date that the Loaned Securities are sold, and all amounts due to
Borrower hereunder), the Account shall be liable to Borrower for the amount of
such deficiency, together with interest on such deficiency at a per annum rate
that, in the case of Collateral consisting of Foreign Securities, is equal to
LIBOR plus two (2%) percent, and in the case of Collateral consisting of any
other securities and all other amounts due to Borrower hereunder, that is equal
to the Fed Funds Rate plus two (2%) percent, in each case as such rates
fluctuate from day to day, from the date of such sale until the date of payment
of such deficiency. Borrower shall have, and Lender as agent for the Account
hereby grants to Borrower, as security for the Account's obligation to pay such
excess, a security interest in any property of the Account (including, without
limitation, the Loaned Securities) then held by Borrower and a right of setoff
against such property and against any other amount payable by Borrower to Lender
in respect of such Account arising hereunder. The purchase price of any
Replacement Collateral purchased under this Section 13 shall include, and the
proceeds of any sale of any Loaned Securities shall be determined after the
deduction of, broker's fees, taxes and commissions and all other reasonable
costs, fees and expenses related to such purchase or sale or to the exercise of
Borrower's remedies including, without limitation, reasonable legal fees and
expenses. Upon the satisfaction of all the Account's obligations hereunder, any
remaining Loaned Securities (or remaining net cash proceeds from sale or deemed
sale thereof) shall be returned to Lender.
15
14. Transfer Taxes and Costs. All transfer taxes, stamp duties and fees
and similar charges with respect to any transfers hereunder of Loaned Securities
or Collateral shall be paid by Borrower. Borrower covenants and agrees that it
shall ensure that this Agreement and all instruments of transfer in respect of
any Loaned Securities or Collateral shall have been stamped in accordance with
all applicable laws.
15. Market Value.
15.1 If the principal market for the securities to be valued is a national
securities exchange in the United States, their Market Value shall be determined
by their last sale price on such exchange on the preceding Business Day or, if
there was no sale on that day, by the last sale price on the next preceding
Business Day on which there was a sale on such exchange, all as quoted on the
consolidated tape or if not quoted on the consolidated tape, then as quoted by
such exchange.
15.2 If the principal market for the securities to be valued is the
over-the-counter market, their Market Value shall be determined as follows. If
the securities are quoted on the Nasdaq stock market (Nasdaq), their Market
Value shall be the closing sale price on Nasdaq on the preceding Business Day
or, if the securities are issues for which last sale prices are not quoted on
Nasdaq, the closing bid price on such day. If the securities to be valued are
not quoted on Nasdaq, their Market Value shall be the highest bid quotation as
quoted in or by any of The Wall Street Journal, the National Quotation Bureau
pink sheets, or a recognized, independent pricing source chosen by the Lender.
If the securities to be valued are Government Securities, their Market Value
shall be the closing bid as quoted by any recognized, independent pricing
service chosen by the Lender or, if not available from such a service, as quoted
in The Wall Street Journal. In each case, if the relevant quotation did not
exist on such day, then the relevant quotation on the next preceding Business
Day on which there was such a quotation shall be the Market Value.
15.3 Unless otherwise agreed, if the securities to be valued are Foreign
Securities, their Market Value shall be determined as of the close of business
on the preceding Business Day in accordance with market practice in the
principal market for such securities.
15.4 Market Value shall include, where applicable, accrued interest to the
extent not already included therein (other than any interest transferred to the
other party pursuant to Section 7).
15.5 With respect to Collateral consisting of cash, Market Value as of any
date shall be the face amount thereof held by Lender at the time of
determination and, with respect to Collateral consisting of Letters of Credit,
Market Value as of any date shall be the undrawn balance thereof which Lender
may at such time draw thereunder except that if, in the judgment of Lender, the
creditworthiness of the issuer of any Letter of Credit has been or may be
impaired, then, upon notice to Borrower, the Market Value of such Letter of
Credit shall be zero.
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15.6 Unless otherwise agreed, where the Loaned Securities in respect of a
Loan are denominated in a currency other than the currency in which the related
Collateral is denominated, the currency which shall be applicable for purposes
of determining Market Value shall be the currency in which the Collateral is
denominated (the "Contractual Currency"), and any Loaned Security not
denominated in the Contractual Currency shall be converted into a Contractual
Currency equivalent based on the most current spot rate of exchange quoted by
the independent source of exchange rates as notified to Borrower by Lender upon
Borrower's request. Such notification may be oral.
16. Transfers.
16.1 All transfers of securities hereunder shall be by (a) physical
delivery of certificates representing such securities together with duly
executed stock and bond transfer powers, as the case may be, with signatures
guaranteed by a bank or a member firm of the New York Stock Exchange, Inc., (b)
transfer on the books of a Clearing Organization, (c) transfer on the books of a
financial or securities intermediary in accordance with the UCC or (d) such
other means as Borrower and Lender may agree. In every transfer of securities
hereunder, the transferor shall take all steps necessary (i) to effect a
"transfer" under Section 8-313 of the UCC or any amended version of Article 8 of
the UCC that may hereafter be in effect, with respect to transfers governed by
Revised Article 8, to give the transferee control of the transferred securities
within the meaning of Revised Article 8 Section 8-106; and (ii) to provide the
transferee with comparable rights under any applicable foreign law or
regulation.
16.2 All transfers of cash Collateral hereunder shall be by (a) wire
transfer in immediately available, freely transferable funds or (b) such other
means as Borrower and Lender may agree. All other transfers of cash hereunder
shall be made in accordance with the preceding sentence or by delivery of same
day funds.
16.3 All transfers of a Letter of Credit from Borrower to Lender shall be
made by physical delivery of the Letter of Credit to Lender. Transfer of a
Letter of Credit from Lender to Borrower shall be made by causing such Letter of
Credit to be returned or by causing the amount of such Letter of Credit to be
reduced to the amount required after such transfer.
16.4 A transfer of securities, cash or Letters of Credit may be effected
under this Section 16 on any day except (a) a day on which the transferee is
closed for business at its address set forth on the signature page hereof or (b)
a day on which a Clearing Organization or wire transfer system is closed, if the
facilities of such Clearing Organization or wire transfer system are required to
effect such transfer. Each transfer of securities or cash shall be made to the
account specified by the party to whom such transfer is to be made.
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17. Contractual Currency.
17.1 Unless otherwise agreed, each payment of cash under this Agreement
(except as provided in Section 7.2) shall be made in the Contractual Currency.
Notwithstanding the foregoing, the payee of any such payment may, at its option,
accept tender thereof in any other currency; provided, however, that, to the
extent permitted by applicable law, the obligation of the payor to make such
payment will be discharged only to the extent of the amount of Contractual
Currency that such payee may, consistent with normal banking procedures,
purchase with such other currency (after deduction of any premium and costs of
exchange) on the banking day next succeeding its receipt of such currency.
17.2 If for any reason the amount of the Contractual Currency received
under Section 17.1, including amounts received after conversion of any recovery
under any judgment or order expressed in a currency other than the Contractual
Currency, falls short of the amount in the Contractual Currency due in respect
of this Agreement, the party required to make the payment will (unless a Default
has occurred and such party is the non defaulting party), as a separate and
independent obligation and to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall.
17.3 If for any reason the amount in the Contractual Currency received
under Section 17.1 exceeds the amount in the Contractual Currency due in respect
of this Agreement, then the party receiving the payment will (unless a Default
has occurred and such party is the non-defaulting party) refund promptly the
amount of such excess.
18. Obligations to be Separate. Each and every obligation, liability or
undertaking of an Account with respect to any Loan shall be solely an
obligation, liability or undertaking of, and binding upon, the Account for which
such Loan is made and shall be payable solely from the available assets of such
Account. No such obligation, liability or undertaking shall be binding upon or
affect any other Account or, in the case of an Account that is a portfolio or
series of an investment company registered as such under the Investment Company
Act of 1940, be binding upon or affect any assets of any other portfolio or
series of such investment company. Neither UBS Securities LLC (in its individual
capacity) nor any Affiliate thereof shall have any liability to Borrower
whatsoever in respect of any Loan, it being understood and agreed that Borrower
shall have recourse solely to the Account in the event of the occurrence of a
Default involving the Account.
19. ERISA. If any of the securities transferred to Borrower hereunder for
any Loan have been or shall be obtained, directly or indirectly, from or using
the assets of any Plan, Lender shall so notify Borrower in writing upon the
execution of this Agreement or upon initiation of the Loan under Section 1.1. If
Lender so notifies Borrower, then Borrower and Lender shall conduct the Loan in
accordance with the terms and conditions of Department of Labor Prohibited
Transaction Exemption 81-6 (46 Fed. Reg. 7527, January 23, 1981; as amended, 52
Fed. Reg. 18754, May 19, 1987), or any successor thereto, unless Borrower
certifies that neither it nor any of its Affiliates is a party-in-interest to
the Plan for purposes of ERISA. If a Loan is to be conducted in accordance with
18
Prohibited Transaction Exemption 81-6, then Borrower represents and warrants to
Lender that it is either (a) a bank subject to federal or state supervision, (b)
a broker-dealer registered under the Exchange Act or (c) exempt from
registration under Section 15(a)(1) of the Exchange Act as a dealer in exempted
government securities (as defined in Section 3(a)(12) of the Exchange Act) and
(d) neither it nor any affiliate (as defined in Prohibited Transaction Exemption
81-6) of Borrower has any discretionary authority or control with respect to the
investment of the assets of the Plan involved in the Loan or renders investment
advice (within the meaning of 29 C.F.R. Section 2510.3-21(c)) with respect to
the assets of the Plan involved in the Loan. For purposes hereof, "Plan" shall
mean (a) any "employee benefit plan" as defined in Section 3(3) of ERISA which
is subject to Part 4 of Subtitle B of Title I of such Act; (b) any "plan" as
defined in Section 4975(e)(1) of the Internal Revenue Code of 1986; or (c) any
entity the assets of which are deemed to be assets of any such "employee benefit
plan" or "plan" by reason of the Department of Labor's plan asset regulation, 29
C.F.R. Section 2510.3-101.
20. Indemnification. Borrower agrees to indemnify and hold harmless Lender
and the Account (including the directors and officers of any Account which is a
corporation or business trust, and the sponsor and fiduciaries of any Account
which is a Plan) from any and all damages, losses, liabilities, claims, costs
and expenses (including attorneys' fees) which Lender or the Account may incur
or suffer arising in any way out of the use by Borrower of Loaned Securities or
any failure of Borrower to deliver Loaned Securities in accordance herewith or
to otherwise comply with the terms of this Agreement, provided, however, that
this indemnification shall extend to consequential losses or damages only to the
extent that the same are caused by Borrower's gross negligence or willful
misconduct.
21. Calculations. Except as provided in Section 8.1, all determinations of
the Market Value of securities, Collateral, or other property or amounts for any
purpose under this Agreement shall be made in good faith by Lender.
22. Limitation of Liability. With respect to each Account that has
represented to the Lender that it is a business trust, notice is hereby given
that this instrument is executed by Lender as agent on behalf of the Trustees of
each such Account as Trustees and not individually and that the obligations of
such Account under this instrument are not binding upon any of the Trustees or
shareholders of such Account individually but are binding only upon the assets
and property of each such Account.
23. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to the
conflict of laws principles thereof. Borrower hereby irrevocably consents to the
exclusive jurisdiction of any state or Federal court located in New York, New
York, and consents that all service of process shall be sent by (a) same-day
messenger service, or (b) nationally recognized overnight courier service
directed to Borrower at Borrower's address set forth below for notices, and
service so made will be deemed to be completed (a) at the time of deposit with
the messenger service or (b) on the Business Day after deposit with such
courier; provided, that nothing contained in this Agreement will prevent Lender
from bringing any action, enforcing any award or judgment or exercising any
rights against Borrower individually, against any security or against any
property of Borrower
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within any other county, state or nation. Lender and Borrower agree that the
venue provided above is the most convenient forum for both Lender and Borrower,
and Borrower waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement.
24. WAIVER OF JURY TRIAL; ARBITRATION. EACH OF THE BORROWER AND LENDER
IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY
DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS. BORROWER AND LENDER ACKNOWLEDGE THAT THE
FOREGOING WAIVER IS KNOWING AND VOLUNTARY. Any dispute or controversy between
the parties relating to or arising out of this Agreement or any Loan shall be
referred to and settled by arbitration pursuant to the Constitution and Rules of
The New York Stock Exchange, Inc., in New York City, New York, except that any
dispute or controversy arising out of an event under Section 11.6 above shall
not be referred to arbitration. Borrower acknowledges that it has read and
understood all the provisions of this Agreement, including the waiver of jury
trial, and has been advised by counsel as necessary or appropriate.
25. Waiver. The failure of either party to exercise any remedy or to
insist upon strict adherence to any term of this Agreement on any occasion shall
not be considered a waiver or deprive that party of the right thereafter to
exercise any of its remedies or to insist upon strict adherence to that term or
any other term of this Agreement. All waivers in respect of a Default must be in
writing.
26. Remedies. All remedies hereunder and all obligations with respect to
any Loan shall survive the termination of the relevant Loan, return of Loaned
Securities or Collateral and termination of this Agreement. The parties agree
that, in the event that Lender fails to enforce any of its rights or remedies
hereunder, such rights and remedies may be enforced against Borrower by the
Account.
27. Notices and Other Communications. Except as otherwise provided in this
Agreement, all notices, demands, and other communications hereunder shall be
sufficient if made in writing and delivered or transmitted (as the case may be)
by registered mail, facsimile, telex, or courier, or by telephone promptly
confirmed in writing and delivered or transmitted as aforesaid, to the intended
recipient at the addresses (or to the numbers) set forth on the signature page
hereof. Notices shall be effective upon receipt.
28. Miscellaneous. This Agreement constitutes the entire agreement between
the parties hereto, other than any agreement between the parties that specifies
that it relates specifically to loans of securities of a particular Account or
group of Accounts. This Agreement shall not be assigned by either party (either
directly or indirectly as a result of a merger, consolidation or other
reorganization) without the prior written consent of the other party. Subject to
the foregoing, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns. This
20
Agreement may be terminated by either party upon giving written notice to the
other, subject only to fulfillment of any obligations then outstanding. This
Agreement shall not be modified, except by an instrument in writing specifically
referring hereto, signed by the party against whom enforcement is sought.
29. Definitions. For the purposes hereof:
29.1 "Account" means, with respect to any Loan, the account for which
Lender is acting as agent in making the Loan.
29.2 "Affiliate" shall mean any entity which controls, is controlled by,
or is under common control with another entity.
29.3 "Bankruptcy Code" shall have the meaning set forth in Section 10.6.
29.4 "Borrower" shall have the meaning set forth in the introduction.
29.5 "Borrower Payment" shall have the meaning set forth in Section 7.4.
29.6 "Business Day" shall mean, with respect to any Loan hereunder, any
day (other than a Saturday or Sunday) recognized as a settlement day in the
principal market in which the Loaned Securities are traded, provided, however,
that for the purposes of computing Market Value in Section 15, "Business Day"
shall mean a day on which regular trading occurs in the principal market for the
securities whose value is being determined. Notwithstanding the foregoing, for
purposes of marking to market in Section 8, "Business Day" shall mean any day
(other than a Saturday or Sunday) (a) on which regular trading occurs in the
principal market for any Loaned Securities or for any Collateral consisting of
securities under any outstanding Loan or (b) on which transfers of cash
Collateral may be effected by Lender and Borrower (or any nominee or agent
thereof).
29.7 "Cash Collateral Fee" shall have the meaning set forth in Section
4.2.
29.8 "Clearing Organization" shall mean The Depository Trust Company,
Participants Trust Company or if agreed to by Borrower and Lender, such other
clearing agency at which Borrower (or Borrower's agent) and Lender (or Lender's
agent) maintain accounts, or a book-entry system maintained by a Federal Reserve
Bank.
29.9 "Collateral" shall mean: (a) all cash, Government Securities and all
other marketable securities or Letters of Credit that Borrower and Lender agree
shall be acceptable as collateral, whether now owned or hereafter acquired,
which are transferred to Lender pursuant to Sections 3 or 8; (b) all accounts in
which such property is deposited and all securities, instruments or other
investment property in which any cash collateral is invested or reinvested; and
(c) any payments, distributions and proceeds of the foregoing. For purposes of
the return of Collateral by Lender or purchase or sale of securities in
connection with the exercise of Lender's
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or Borrower's remedies, such term shall include securities of the same issuer,
class and quantity as the Collateral initially transferred by Borrower to
Lender.
29.10 "Collateral Distributions" shall have the meaning set forth in
Section 7.4.
29.11 "Contractual Currency" shall mean: (a) with respect to any payment
in respect of a distribution under Section 7, the currency in which the
underlying distribution was made; (b) with respect to any return of cash, the
currency in which the underlying transfer of cash was made; (c) with respect to
any other payment of cash in connection with a Loan, United States dollars or
such other currency as may be agreed upon by Borrower and Lender; and (d) for
purposes of determining Market Value of Loaned Securities and Collateral in
respect of a Loan in which the Loaned Securities and the Collateral are
denominated in different currencies, the currency in which the Collateral is
denominated.
29.12 "Default" shall have the meaning set forth in Section 11.
29.13 "Fed Funds Rate" shall mean the rate of interest (expressed as an
annual rate), as published in Federal Reserve Statistical Release H.15(519) or
any publication substituted therefor, charged for federal funds (dollars in
immediately available funds borrowed by banks on an overnight unsecured basis)
on that day or, if that day is not a banking day in New York City, on the next
preceding banking day.
29.14 "ERISA" shall mean the Employee Retirement Income Security Act of
1974.
29.15 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
29.16 "Foreign Securities" shall mean securities that are denominated in a
currency other than United States Dollars and that are principally cleared and
settled outside of the United States.
29.17 "Government Securities" shall mean government securities as defined
in Section 3(a)(42)(A)-(C) of the Exchange Act.
29.18 "Lender" shall have the meaning set forth in the introduction.
29.19 "Lender Payment" shall have the meaning set forth in Section 7.4.
29.20 "Letter of Credit" shall mean an irrevocable, unconditional,
stand-by letter of credit, in form and substance satisfactory to Lender, issued
by a bank (not affiliated with Borrower) which is acceptable to Lender and is
insured by the Federal Deposit Insurance Corporation or is a foreign bank that
has filed an agreement with the Board of Governors of the Federal Reserve System
on Form FR T-2 (or any successor).
29.21 "LIBOR" shall mean for any date, the offered rate for deposits in
U.S. dollars for a period of three months which appears on the Reuters Screen
LIBOR page as of 11:00 A.M.,
22
London time, on such date (or, if at least two such rates appear, the arithmetic
mean of such rates).
29.22 "Loan" shall have the meaning set forth in Section 1.1.
29.23 "Loan Fee" shall have the meaning set forth in Section 4.1.
29.24 "Loaned Securities" shall mean any security (as defined in the
Exchange Act) that is transferred in a Loan until such security (or an identical
security) is transferred back to Lender hereunder, except that if any new or
different security shall be exchanged for any Loaned Security by
recapitalization, merger, consolidation or other corporate action, such new or
different security shall, effective upon such exchange, be deemed to become a
Loaned Security in substitution for the former Loaned Security for which such
exchange is made. For purposes of the return of Loaned Securities by Borrower or
purchase or sale of securities in connection with the exercise of Lender's or
Borrower's remedies hereunder, such term shall include securities of the same
issuer, class and quantity as the Loaned Securities, as adjusted pursuant to the
preceding sentence.
29.25 "Margin Deficit" and "Margin Excess" shall have the meanings set
forth in Sections 8.2 and 8.3, respectively.
29.26 "Margin Regulations" shall have the meaning set forth in Section
9.4.
29.27 "Market Value" shall mean market value determined in accordance with
Section 15.
29.28 "Plan" shall have the meaning set forth in Section 19.
29.29 "Required Value" shall mean, as of any date of determination, the
following percentage of the Market Value of the Loaned Securities: (a) in the
case of Foreign Securities, 105%; and (b) in the case of all other Loaned
Securities, 102%.
29.30 "Revised Article 8" shall mean the Uniform Commercial Code, Revised
Article 8, Investment Securities (with Conforming and Miscellaneous Amendments
to Articles 1, 3, 4, 5, 9 and 10), 1994 Official Text, as incorporated by
reference in 31 C.F.R. Part 357.
29.31 "Securities Distributions" shall have the meaning set forth in
Section 7.4.
29.32 "SIPA" shall have the meaning set forth in Section 11.6.
29.33 "Tax" shall have the meaning set forth in Section 7.4.
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29.34 "Termination Notice Time" shall mean, with respect to a notice to
Lender to terminate a Loan: (a) with respect to a Loan of Government Securities,
9:45 a.m., Eastern time, on a Business Day; (b) with respect to a Loan of
Foreign Securities, 11:00 a.m., Eastern time, on the second Business Day
preceding the termination date; and (c) with respect to any other Loan, 11:00
a.m., Eastern time, on a Business Day.
29.35 "Transfer" or "transfer" of cash, securities or Letters of Credit by
Lender to Borrower or by Borrower to Lender shall mean a transfer effected in
accordance with Section 16.
29.36 "UCC" shall mean the Uniform Commercial Code in effect in the State
of New York, as the same may be amended from time to time.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written:
Address for Notices: UBS SECURITIES LLC, in
its capacity as agent for Account(s) and
One International Place not in its individual capacity
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By:
Attn: Global Portfolio Lending ________________________________________
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Name:
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Title:
Address for Notices: ____________________________,
as Borrower
By:
________________________________________
Attn: ______________________
Name:
Facsimile No.: Title:
Telephone No.:
25