EXHIBIT 10.5
(ISDA LOGO)
CREDIT SUPPORT ANNEX
to the Schedule to the
Master Agreement
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dated as of November 1, 2001
between
CITIBANK N.A. AMERITRADE HOLDING
CORPORATION
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("Party A") ("Party B")
This Annex supplements, forms part of, and is subject to, the above-referenced
Agreement, is part of its Schedule and is a Credit Support Document under this
Agreement with respect to each party.
Accordingly, the parties agree as follows: --
PARAGRAPH 1. INTERPRETATION
(a) DEFINITIONS AND INCONSISTENCY. Capitalized terms not otherwise defined
herein or elsewhere in this Agreement have the meanings specified pursuant to
Paragraph 12, and all references in this Annex to Paragraphs are to Paragraphs
of this Annex. In the event of any inconsistency between this Annex and the
other provisions of this Schedule, this Annex will prevail, and in the event of
any inconsistency between Paragraph 13 and the other provisions of this Annex,
Paragraph 13 will prevail.
(b) SECURED PARTY AND PLEDGOR. All references in this Annex to the "Secured
Party" will be to either party when acting in that capacity and all
corresponding references to the "Pledgor" will be to the other party when acting
in that capacity; provided, however, that if Other Posted Support is held by a
party to this Annex, all references herein to that party as the Secured Party
with respect to that Other Posted Support will be to that party as the
beneficiary thereof and will not subject that support or that party as the
beneficiary thereof to provisions of law generally relating to security
interests and secured parties.
PARAGRAPH 2. SECURITY INTEREST
Each party, as the Pledgor, hereby pledges to the other party, as the Secured
Party, as security for its Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against
all Posted Collateral Transferred to or received by the Secured Party
hereunder. Upon the Transfer by the Secured Party to the Pledgor of Posted
Collateral, the security interest and lien granted hereunder on that Posted
Collateral will be released immediately and, to the extent possible, without
any further action by either party.
EXECUTION COPY
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▇▇▇▇▇▇▇▇▇ 13. ELECTIONS AND VARIABLES
(a) SECURITY INTEREST FOR "OBLIGATIONS". The term "OBLIGATIONS" as used in
this Annex includes no additional obligations with respect to Party A and
Party B.
(b) CREDIT SUPPORT OBLIGATIONS.
(i) Delivery Amount, Return Amount and Credit Support Amount.
(A) "DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a).
(B) "RETURN AMOUNT" has the meaning specified in Paragraph 3(b).
(C) "CREDIT SUPPORT AMOUNT" has the meaning specified in Paragraph 3.
(ii) ELIGIBLE COLLATERAL. The following items will qualify as "ELIGIBLE
COLLATERAL" for the party specified:
PARTY PARTY VALUATION
A B PERCENTAGE
(A) Cash X X 100%
(B) negotiable debt obligations issued by the U.S. X X 100%
Treasury Department having a remaining maturity
at issuance of less than one year
(C) negotiable debt obligations issued by the U.S. X X 98%
Treasury Department having a remaining maturity
at issuance of at least one year but less than
10 years
(D) negotiable debt obligations issued by the U.S. X X 95%
Treasury Department having a remaining maturity
at issuance of more than 10 years
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Certificated securities shall not constitute "Eligible Collateral".
(iii) OTHER ELIGIBLE SUPPORT. As set forth in the Confirmation.
(iv) THRESHOLDS.
(A) "INDEPENDENT AMOUNT" means with respect to Party A:$0.
"INDEPENDENT AMOUNT" means with respect to Party B:$0.
(B) "THRESHOLD" means, with respect to this
Credit Support Annex and
with respect to Party A and Party B: $0.
(C) "MINIMUM TRANSFER AMOUNT" means with respect to Party A and Party
B U.S. $100,000; provided, however, that if a Secured Party is
holding Posted Credit Support and the Credit Support Amount for
that Secured Party is, or is deemed to be, zero at that time and,
but for its Minimum Transfer Amount, the Secured Party would be
required to make a Transfer to the Pledgor under Paragraph 3(b),
the Minimum Transfer Amount will be zero; and, provided further,
that if an Event of Default or a Potential Event of Default
occurs and is continuing with respect to such party or an Early
Termination Date has occurred or been designated as a result of
an Event of Default with respect to such party, the Minimum
Transfer Amount will be zero.
(D) ROUNDING. The Delivery Amount and the Return Amount will be
rounded up and down to the nearest integral multiple of $50,000,
respectively, with $500 being rounded up.
(c) VALUATION AND TIMING.
(i) "VALUATION AGENT" means Citibank, N.A.
(ii) "VALUATION DATE" means each Local Business Day.
(iii) "VALUATION TIME" means the close of business in the city of the
Valuation Agent on the Local Business Day before the Valuation Date
or date of calculation, as applicable; provided that the calculations
of Value and Exposure will be made as of approximately the same time
on the same date.
(iv) "NOTIFICATION TIME" means 1:00 p.m., New York time, on a Local
Business Day.
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(d) CONDITIONS PRECEDENT AND SECURED PARTY'S RIGHTS AND REMEDIES. There shall
be no "SPECIFIED CONDITIONS" for either party.
(e) SUBSTITUTION.
(i) "SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
(ii) CONSENT. If specified here as applicable, then the Pledgor must
obtain the Secured Party's consent for any substitution pursuant to
Paragraph 4(d): Inapplicable.
(f) DISPUTE RESOLUTION.
(i) "RESOLUTION TIME" means 1:00 p.m., New York time, on the Local
Business Day following the date on which the notice of a dispute is
given under Paragraph 5.
(ii) VALUE. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support will be calculated as follows: Disputes over
Value will be resolved by the Valuation Agent seeking three bid
quotes as of the relevant Valuation Date or date of Transfer from
parties that regularly act as dealers in the securities or other
property in question. The Value will be the arithmetic mean of the
quotes received by the Valuation Agent multiplied by the applicable
Valuation Percentage.
(iii) ALTERNATIVE. The provisions of Paragraph 5 will apply.
(g) HOLDING AND USING POSTED COLLATERAL.
(i) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS. Party A will be
entitled to hold Posted Collateral pursuant to Paragraph 6(b);
provided that the following conditions applicable to it are
satisfied:
(1) Party A is not a Defaulting Party.
(2) Posted Collateral may be held only in the following
jurisdictions: United States.
(3) Party A's Custodian shall (A) be a U.S. financial institution
or the U.S. branch of a non-U.S. financial institution and (B)
have a rating of A1 or higher by ▇▇▇▇▇'▇ Investors Services,
Inc. ("Moody's") and A+ or higher by Standard & Poor's
Corporation ("S&P"), respectively, and have a capitalization in
excess of $5 Billion. The Custodian shall be a party acceptable
to Party B.
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(4) Party A has a Long Term Issuer Rating applicable to the
Head Office of Citibank, N.A. of at least Baa3 and BBB-,
as determined by Moody's or S&P, respectively.
Initially, the CUSTODIAN for Party A is: None.
Party B and its Custodian will be entitled to hold Posted Collateral
pursuant to Paragraph 6(b); provided that the following conditions
applicable to it are satisfied:
(1) Party B is not a Defaulting Party.
(2) Posted Collateral may be held only in the following jurisdictions:
United States.
(3) Party B's Custodian shall (A) be a U.S. financial institution or
the U.S. branch of a non-U.S. financial institution and and (B)
have a rating of A1 or higher by ▇▇▇▇▇'▇ Investors Services, Inc.
("Moody's") and A+ or higher by Standard & Poor's Corporation
("S&P"), respectively, and have a capitalization in excess of $5
Billion. The Custodian shall be a party acceptable to Party A.
(4) Party B has a senior long-term unsecured debt rating of at least
Baa3 and BBB-, as determined by Moody's or S&P, respectively.
Initially, the CUSTODIAN for Party B is: None.
(ii) USE OF POSTED COLLATERAL. The provisions of Paragraph 6(c)(i) will
apply to Party A and Party B; provided that in the case of Party A
it has a Long Term Issuer Rating applicable to the Head Office of
Citibank, N.A. of at least Baa3 and BBB-, as determined by Moody's
or S&P, and in the case of Party B, it has a senior long-term
unsecured debt rating of at lease Baa3 and BBB-, as determined by
Moody's or S&P.
(h) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) INTEREST RATE. The "INTEREST RATE" will be the Federal Funds Rate.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in
H.15(519) for that day opposite the caption "Federal Funds
(Effective)". If on any day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in
Composite 3:30 p.m. Quotations for U.S. Government Securities for
that day under the caption "Federal Funds/Effective Rate". If on
any day the appropriate rate for such day is not yet published in
either H.15(519) or Composite 3:30 P.M. Quotations for U.S.
Government Securities, the rate for such day will be the
arithmetic means of the rates for the last transaction in
overnight U.S. Dollar Federal funds arranged by three leading
brokers of U.S.
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Dollar Federal funds transactions in New York City selected by
Citibank in good faith prior to 9:00 a.m., New York City time, on
such day. "H.15(519)" means the weekly statistical release designated
as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. "COMPOSITE 3:30 P.M.
QUOTATIONS FOR U.S. GOVERNMENT SECURITIES" means the daily
statistical release designated as such, or any successor publication,
published by the Federal Reserve Bank of New York.
(ii) TRANSFER OF INTEREST AMOUNT. The Transfer of the Interest Amount
will be made on the last Local Business Day of each calendar month
and on any Local Business Day that all Posted Collateral in the form
of Cash is transferred to the pledgor pursuant to paragraph 3(b).
(iii) ALTERNATIVE TO INTEREST AMOUNT. The provisions of Paragraph 6(d)(ii)
will apply.
(i) ADDITIONAL REPRESENTATION(S). None.
(j) OTHER ELIGIBLE SUPPORT AND OTHER POSTED SUPPORT. None.
(k) DEMANDS AND NOTICES.
All demands, specification and notices under this Annex will be made
pursuant to the Notices Section of this Agreement, unless otherwise
specified here:
Party A: Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Margin Operations
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telefax No.: ▇▇▇-▇▇▇-▇▇▇▇
Party B: As set forth in the Schedule.
(l) ADDRESSES FOR TRANSFERS.
Party A: As set forth in demands and notices from one party to the other
party from time to time.
Party B: As set forth in demands and notices from one party to the other
party from time to time.
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(m) OTHER PROVISIONS.
(i) The definition of Posted Collateral shall also include any and
all accounts in which the Cash which constitutes Posted
Collateral is held.
(ii) Paragraph 6(a) is hereby amended by adding the following sentence
to the end thereof:
The Secured Party shall identify on its books and records the
Posted Collateral (including for the sake of clarity, any cash
proceeds of or distribution on such Posted Collateral) held by it
from all other assets it may hold.
(iii) The following new paragraph is added to the end of Paragraph
8(a):
To the extent notice is required under applicable law, the
parties hereto agree that notice on the day of sale is reasonable
notice for purposes of the Uniform Commercial Code 9-504(3) (as
in effect in New York).
(iv) Events of Default. Paragraph 7(i) shall be amended and restated
in its entirety as follows:
(i) that party fails (or fails to cause its Custodian) to make,
when due any Transfer of Eligible Collateral, Posted Collateral
or the Interest Amount as applicable, required to be made by it
and that failure continues for one Local Business Day after
notice of that failure is given to that party.
(v) For purposes of this
Credit Support Annex, Local Business Day
shall have the meaning specified in Paragraph 12; provided,
however, that if the New York Stock Exchange is not scheduled to
be open to transact business on such day, such day shall not be a
Local Business Day.
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CITIBANK, N.A.
AMERITRADE HOLDING
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇ Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President Title: Managing Director of Finance
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Date: Date: 08/29/02
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