EXHIBIT (h.3)
[LOGO OF THE BOND MARKET ASSOCIATION] [LOGO]
Master Securities
Loan Agreement
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2000 Version
Dated as of:
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Between:
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and
(each individually and not collectively)
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1. APPLICABILITY.
From time to time the parties hereto may enter into transactions in which
one party ("Lender") will lend to the other party ("Borrower") certain
Securities (as defined herein) against a transfer of Collateral (as defined
herein). Each such transaction shall be referred to herein as a "Loan" and,
unless otherwise agreed in writing, shall be governed by this Agreement,
including any supplemental terms or conditions contained in an Annex or
Schedule hereto and in any other annexes identified herein or therein as
applicable hereunder. Capitalized terms not otherwise defined herein shall
have the meanings provided in Section 25.
2. LOANS OF SECURITIES.
2.1 Subject to the terms and conditions of this Agreement, Borrower or
Lender may, from time to time, seek to initiate a transaction in which
Lender will lend Securities to Borrower. Borrower and ▇▇▇▇▇▇ shall
agree on the terms of each Loan (which terms may be amended during the
Loan), including the issuer of the Securities, the amount of
Securities to be lent, the basis of compensation, the amount of
Collateral to be transferred by Borrower, and any additional terms.
Such agreement shall be confirmed (a) by a schedule and receipt
listing the Loaned Securities provided by Borrower to Lender in
accordance with Section 3.2, (b) through any system that compares
Loans and in which Borrower and Lender are participants, or (c) in
such other manner as may be agreed by ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ in writing.
Such confirmation (the "Confirmation"), together with the Agreement,
shall constitute conclusive evidence of the terms agreed between
Borrower and Lender with respect to the Loan to which the Confirmation
relates, unless with respect to the Confirmation specific objection is
made promptly after receipt thereof. In the event of any inconsistency
between the terms of such Confirmation and Agreement, this Agreement
shall prevail unless each party has executed such Confirmation.
2.2 Notwithstanding any other provision in this Agreement regarding when a
Loan commences, unless otherwise agreed, a Loan hereunder shall not
occur until the Loaned Securities and the Collateral therefor have
been transferred in accordance with Section 15.
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3. TRANSFER OF LOANED SECURITIES.
3.1 Unless otherwise agreed, ▇▇▇▇▇▇ shall transfer Loaned Securities to
Borrower hereunder on or before the Cutoff Time on the date agreed to
by ▇▇▇▇▇▇▇▇ and Lender for the commencement of the Loan.
3.2 Unless otherwise agreed, Borrower shall provide Lender, for each Loan
in which Lender is a Customer, with a schedule and receipt listing the
Loaned Securities. Such schedule and receipt may consist of (a) a
schedule provided to Borrower by ▇▇▇▇▇▇ and executed and returned by
Borrower when the Loaned Securities are received, (b) in the case of
Securities transferred through a Clearing Organization which provides
transferors with a notice evidencing such transfer, such notice, or
(c) a confirmation or other document provided to Lender by Borrower.
3.3 Notwithstanding any other provision in this Agreement, the parties
hereto agree that they intend the Loans hereunder to be loans of
Securities. If, however, any Loan is deemed to be a loan of money by
Borrower to Lender, then Borrower shall have, and Lender shall be
deemed to have granted, a security interest in the Loaned Securities
and the proceeds thereof.
4. COLLATERAL.
4.1 Unless otherwise agreed, Borrower shall, prior to or concurrently with
the transfer of the Loaned Securities to Borrower, but in no case
later than the Close of Business on the day of such transfer, transfer
to Lender Collateral with a Market Value at least equal to the Margin
Percentage of the Market Value of the Loaned Securities.
4.2 The Collateral transferred by Borrower to Lender, as adjusted pursuant
to Section 9, shall be security for Borrower's obligations in respect
of such Loan and for any other obligations of Borrower to Lender
hereunder. Borrower hereby pledges with, assigns to, and grants Lender
a continuing first priority security interest in, and a lien upon, the
Collateral, which shall attach upon the transfer of the Loaned
Securities by Lender to Borrower and which shall cease upon the
transfer of the Loaned Securities by Borrower to Lender. In addition
to the rights and remedies given to Lender hereunder, ▇▇▇▇▇▇ shall
have all the rights and remedies of a secured party under the UCC. It
is understood that Lender may use or invest the Collateral, if such
consists of cash, at its own risk, but that (unless Lender is a
Broker-Dealer) Lender shall, during the term of any Loan hereunder,
segregate Collateral from all securities or other assets in its
possession. Lender may Retransfer Collateral only (a) if Lender is a
Broker-Dealer or (b) in the event of a Default by Borrower.
Segregation of Collateral may be accomplished by appropriate
identification on the books and records of Lender if it is a
"securities intermediary" within the meaning of the UCC.
4.3 Except as otherwise provided herein, upon transfer to Lender of the
Loaned Securities on the day a Loan is terminated pursuant to Section
6, Lender shall be obligated to transfer the Collateral (as adjusted
pursuant to Section 9) to Borrower no later than the Cutoff Time on
such day or, if such day is not a day on which a transfer of such
Collateral may be effected under Section 15, the next day on which
such a transfer may be effected.
4.4 If Borrower transfers Collateral to Lender, as provided in Section
4.1, and ▇▇▇▇▇▇ does not transfer the Loaned Securities to Borrower,
Borrower shall have the absolute right to the return of the
Collateral; and if Lender transfers Loaned Securities to Borrower and
Borrower does not transfer Collateral to Lender as provided in Section
4.1, Lender shall have the absolute right to the return of the Loaned
Securities.
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4.5 Borrower may, upon reasonable notice to Lender (taking into account
all relevant factors, including industry practice, the type of
Collateral to be substituted, and the applicable method of transfer),
substitute Collateral for Collateral securing any Loan or Loans;
provided, however, that such substituted Collateral shall (a) consist
only of cash, securities or other property that Borrower and Lender
agreed would be acceptable Collateral prior to the Loan or Loans and
(b) have a Market Value such that the aggregate Market Value of such
substituted Collateral, together with all other Collateral for Loans
in which the party substituting such Collateral is acting as Borrower,
shall equal or exceed the agreed upon Margin Percentage of the Market
Value of the Loaned Securities.
4.6 Prior to the expiration of any letter of credit supporting ▇▇▇▇▇▇▇▇'s
obligation hereunder, ▇▇▇▇▇▇▇▇ shall, no later than the Extension
Deadline, (a) obtain an extension of the expiration of such letter of
credit, (b) replace such letter of credit by providing Lender with a
substitute letter of credit in an amount at least equal to the amount
of the letter of credit for which it is substituted, or (c) transfer
such other Collateral to Lender as may be acceptable to Lender.
5. FEES FOR LOAN.
5.1 Unless otherwise agreed, (a) Borrower agrees to pay Lender a loan fee
(a "Loan Fee"), computed daily on each Loan to the extent such Loan is
secured by Collateral other than cash, based on the aggregate Market
Value of the Loaned Securities on the day for which such Loan Fee is
being computed, and (b) Lender agrees to pay Borrower a fee or rebate
(a "Cash Collateral Fee") on Collateral consisting of cash, computed
daily based on the amount of cash held by Lender as Collateral, in the
case of each of the Loan Fee and the Cash Collateral Fee at such rates
as Borrower and Lender may agree. Except as Borrower and Lender may
otherwise agree (in the event that cash Collateral is transferred by
clearing house funds or otherwise), Loan Fees shall accrue from and
including the date on which the Loaned Securities are transferred to
Borrower to, but excluding, the date on which such Loaned Securities
are returned to Lender, and Cash Collateral Fees shall accrue from and
including the date on which the cash Collateral is transferred to
Lender to, but excluding, the date on which such cash Collateral is
returned to Borrower.
5.2 Unless otherwise agreed, any Loan Fee or Cash Collateral Fee payable
hereunder shall be payable:
(a) in the case of any Loan of Securities other than Government
Securities, upon the earlier of (i) the fifteenth day of the
month following the calendar month in which such fee was incurred
and (ii) the termination of all Loans hereunder (or, if a
transfer of cash in accordance with Section 15 may not be
effected on such fifteenth day or the day of such termination, as
the case may be, the next day on which such a transfer may be
effected); and
(b) in the case of any Loan of Government Securities, upon the
termination of such Loan and at such other times, if any, as may
be customary in accordance with market practice.
Notwithstanding the foregoing, all Loan Fees shall be payable by
Borrower immediately in the event of a Default hereunder by ▇▇▇▇▇▇▇▇
and all Cash Collateral Fees shall be payable immediately by Lender in
the event of a Default by ▇▇▇▇▇▇.
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6. TERMINATION OF THE LOAN.
6.1 a) Unless otherwise agreed, either party may terminate a Loan on a
termination date established by notice given to the other party
prior to the Close of Business on a Business Day. The termination
date established by a termination notice shall be a date no earlier
than the standard settlement date that would apply to a purchase or
sale of the Loaned Securities (in the case of a notice given by
Lender) or the non-cash Collateral securing the Loan (in the case
of a notice given by ▇▇▇▇▇▇▇▇) entered into at the time of such
notice, which date shall, unless Borrower and Lender agree to the
contrary, be (i) in the case of Government Securities, the next
Business Day following such notice and (ii) in the case of all
other Securities, the third Business Day following such notice.
(b) Notwithstanding paragraph (a) and unless otherwise agreed, Borrower
may terminate a Loan on any Business Day by giving notice to Lender
and transferring the Loaned Securities to Lender before the Cutoff
Time on such Business Day if (i) the Collateral for such Loan
consists of cash or Government Securities or (ii) Lender is not
permitted, pursuant to Section 4.2, to Retransfer Collateral.
6.2 Unless otherwise agreed, Borrower shall, on or before the Cutoff Time
on the termination date of a Loan, transfer the Loaned Securities to
Lender; provided, however, that upon such transfer by ▇▇▇▇▇▇▇▇, Lender
shall transfer the Collateral (as adjusted pursuant to Section 9) to
Borrower in accordance with Section 4.3.
7. RIGHTS IN RESPECT OF LOANED SECURITIES AND COLLATERAL.
7.1 Except as set forth in Sections 8.1 and 8.2 and as otherwise agreed by
▇▇▇▇▇▇▇▇ and Lender, until Loaned Securities are required to be
redelivered to Lender upon termination of a Loan hereunder, Borrower
shall have all of the incidents of ownership of the Loaned Securities,
including the right to transfer the Loaned Securities to others.
Lender hereby waives the right to vote, or to provide any consent or
to take any similar action with respect to, the Loaned Securities in
the event that the record date or deadline for such vote, consent or
other action falls during the term of the Loan.
7.2 Except as set forth in Sections 8.3 and 8.4 and as otherwise agreed by
Borrower and Lender, if Lender may, pursuant to Section 4.2,
Retransfer Collateral, Borrower hereby waives the right to vote, or to
provide any consent or take any similar action with respect to, any
such Collateral in the event that the record date or deadline for such
vote, consent or other action falls during the term of a Loan and such
Collateral is not required to be returned to Borrower pursuant to
Section 4.5 or Section 9.
8. DISTRIBUTIONS.
8.1 Lender 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.
8.2 Any cash Distributions made on or in respect of the Loaned Securities,
which Lender is entitled to receive pursuant to Section 8.1, shall be
paid by the transfer of cash to Lender by Borrower, on the date any
such Distribution is paid, in an amount equal to such cash
Distribution, so long as Lender is not in Default at the time of such
payment. Non-cash Distributions that Lender is
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entitled to receive pursuant to Section 8.1 shall be added to the
Loaned Securities on the date of distribution and shall be considered
such for all purposes, except that if the Loan has terminated,
Borrower shall forthwith transfer the same to Lender.
8.3 Borrower shall be entitled to receive all 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 to Lender.
8.4 Any cash Distributions made on or in respect of such Collateral, which
Borrower is entitled to receive pursuant to Section 8.3, shall be paid
by the transfer of cash to Borrower by ▇▇▇▇▇▇, on the date any such
Distribution is paid, in an amount equal to such cash Distribution, so
long as Borrower is not in Default at the time of such payment.
Non-cash Distributions that Borrower is entitled to receive pursuant
to Section 8.3 shall be added to the Collateral on the date of
distribution and shall be considered such for all purposes, except
that if each Loan secured by such Collateral has terminated, Lender
shall forthwith transfer the same to Borrower.
8.5 Unless otherwise agreed by the parties:
(a) If (i) Borrower is required to make a payment (a "Borrower
Payment") with respect to cash Distributions on Loaned Securities
under Sections 8.1 and 8.2 ("Securities Distributions"), or (ii)
Lender is required to make a payment (a "Lender Payment") with
respect to cash Distributions on Collateral under Sections 8.3
and 8.4 ("Collateral Distributions"), and (iii) Borrower or
Lender, 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 (subject to subsections
(b) and (c) below), pay such additional amounts as may be
necessary in order that the net amount of the Borrower Payment or
Lender Payment received by the 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 if such Securities Distribution or
Collateral Distribution had been paid directly to the Payee.
(b) No additional amounts shall be payable to a Payee under
subsection (a) above to the extent that Tax would have been
imposed on a Securities Distribution or Collateral Distribution
paid directly to the Payee.
(c) No additional amounts shall be payable to a Payee under
subsection (a) above to the extent that such Payee is entitled to
an exemption from, or reduction in the rate of, Tax on a Borrower
Payment or Lender Payment subject to the provision of a
certificate or other documentation, but has failed timely to
provide such certificate or other documentation.
(d) Each party hereto shall be deemed to represent that, as of the
commencement of any Loan hereunder, no Tax would be imposed on
any cash Distribution paid to it with respect to (i) Loaned
Securities subject to a Loan in which it is acting as Lender or
(ii) Collateral for any Loan in which it is acting as Borrower,
unless such party has given notice to the contrary to the other
party hereto (which notice shall specify the rate at which such
Tax would be imposed). Each party agrees to notify the other 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 Distributions
payable to it.
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8.6 To the extent that, under the provisions of Sections 8.1 through 8.5,
(a) a transfer of cash or other property by Borrower would give rise
to a Margin Excess or (b) a transfer of cash or other property by
▇▇▇▇▇▇ would give rise to a Margin Deficit, Borrower or Lender (as the
case may be) shall not be obligated to make such transfer of cash or
other property in accordance with such Sections, but shall in lieu of
such transfer immediately credit the amounts that would have been
transferable under such Sections to the account of Lender or Borrower
(as the case may be).
9. MARK TO MARKET.
9.1 If Lender is a Customer, Borrower shall daily mark to market any Loan
hereunder and in the event that at the Close of Trading on any
Business Day the Market Value of the Collateral for any Loan to
Borrower shall be less than 100% of the Market Value of all the
outstanding Loaned Securities subject to such Loan, Borrower shall
transfer additional Collateral no later than the Close of Business on
the next Business Day so that the Market Value of such additional
Collateral, when added to the Market Value of the other Collateral for
such Loan, shall equal 100% of the Market Value of the Loaned
Securities.
9.2 In addition to any rights of Lender under Section 9.1, if at any time
the aggregate Market Value of all Collateral for Loans by Lender shall
be less than the Margin Percentage of the Market Value of all the
outstanding Loaned Securities subject to such Loans (a "Margin
Deficit"), Lender may, by notice 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 Loans, shall equal or exceed the Margin
Percentage of the Market Value of the Loaned Securities.
9.3 Subject to Borrower's obligations under Section 9.1, if at any time
the Market Value of all Collateral for Loans to Borrower shall be
greater than the Margin Percentage of the Market Value of all the
outstanding Loaned Securities subject to such Loans (a "Margin
Excess"), Borrower may, by notice 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 Loans,
after deduction of such amounts, shall thereupon not exceed the Margin
Percentage of the Market Value of the Loaned Securities.
9.4 Borrower and ▇▇▇▇▇▇ may agree, with respect to one or more Loans
hereunder, to mark the values to market pursuant to Sections 9.2 and
9.3 by separately valuing the Loaned Securities lent and the
Collateral given in respect thereof on a Loan-by-Loan basis.
9.5 Borrower and Lender may agree, with respect to any or all Loans
hereunder, that the respective rights of ▇▇▇▇▇▇ and Borrower under
Sections 9.2 and 9.3 may be exercised only where a Margin Excess or
Margin Deficit exceeds a specified dollar amount or a specified
percentage of the Market Value of the Loaned Securities under such
Loans (which amount or percentage shall be agreed to by Borrower and
Lender prior to entering into any such Loans).
9.6 If any notice is given by Borrower or Lender under Sections 9.2 or 9.3
at or before the Margin Notice Deadline on any day on which a transfer
of Collateral may be effected in accordance with Section 15, the party
receiving such notice shall transfer Collateral as provided in such
Section no later than the Close of Business on such day. If any such
notice is given after the Margin Notice Deadline, the party receiving
such notice shall transfer such Collateral no later than the Close of
Business on the next Business Day following the day of such notice.
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10. REPRESENTATIONS.
The parties to this Agreement hereby make the following representations and
warranties, which shall continue during the term of any Loan hereunder:
10.1 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.
10.2 Each party hereto represents and warrants that it has not relied on
the other for any tax or accounting advice concerning this Agreement
and that it has made its own determination as to the tax and
accounting treatment of any Loan and any dividends, remuneration or
other funds received hereunder.
10.3 Each party hereto represents and warrants that it is acting for its
own account unless it expressly specifies otherwise in writing and
complies with Section 11.1(b).
10.4 Borrower represents and warrants that it has, or will have at the time
of transfer of any Collateral, the right to grant a first priority
security interest therein subject to the terms and conditions hereof.
10.5 a) Borrower represents and warrants that it (or the person to whom it
relends the Loaned Securities) is borrowing or will borrow Loaned
Securities that are Equity Securities for the purpose of making
delivery of such Loaned Securities in the case of short sales,
failure to receive securities required to be delivered, or as
otherwise permitted pursuant to Regulation T as in effect from time
to time.
(b) Borrower and Lender may agree, as provided in Section 24.2, that
Borrower shall not be deemed to have made the representation or
warranty in subsection (a) with respect to any Loan. By entering
into any such agreement, Lender shall be deemed to have represented
and warranted to Borrower (which representation and warranty shall
be deemed to be repeated on each day during the term of the Loan)
that Lender is either (i) an "exempted borrower" within the meaning
of Regulation T or (ii) a member of a national securities exchange
or a broker or dealer registered with the U.S. Securities and
Exchange Commission that is entering into such Loan to finance its
activities as a market maker or an underwriter.
10.6 Lender represents and warrants that it has, or will have at the time
of transfer of any Loaned Securities, the right to transfer the Loaned
Securities subject to the terms and conditions hereof.
11. COVENANTS.
11.1 Each party agrees either (a) to be liable as principal with respect to
its obligations hereunder or (b) to execute and comply fully with the
provisions of ▇▇▇▇▇ ▇ (the terms and conditions of which ▇▇▇▇▇ are
incorporated herein and made a part hereof).
11.2 Promptly upon (and in any event within seven (7) Business Days after)
demand by ▇▇▇▇▇▇, Borrower shall furnish Lender with ▇▇▇▇▇▇▇▇'s most
recent publicly-available financial statements and any other financial
statements mutually agreed upon by ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇.
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Unless otherwise agreed, if Borrower is subject to the requirements of
Rule 17a-5(c) under the Exchange Act, it may satisfy the requirements
of this Section by furnishing Lender with its most recent statement
12. EVENTS OF DEFAULT.
All Loans hereunder may, at the option of the non-defaulting party (which
option shall be deemed to have been exercised immediately upon the
occurrence of an Act of Insolvency), be terminated immediately upon the
occurrence of any one or more of the following events (individually, a
"Default"):
12.1 if any Loaned Securities shall not be transferred to Lender upon
termination of the Loan as required by Section 6;
12.2 if any Collateral shall not be transferred to Borrower upon
termination of the Loan as required by Sections 4.3 and 6;
12.3 if either party shall fail to transfer Collateral as required by
Section 9;
12.4 if either party (a) shall fail to transfer to the other party amounts
in respect of Distributions required to be transferred by Section 8,
(b) shall have been notified of such failure by the other party prior
to the Close of Business on any day, and (c) shall not have cured such
failure by the Cutoff Time on the next day after such Close of
Business on which a transfer of cash may be effected in accordance
with Section 15;
12.5 if an Act of Insolvency occurs with respect to either party;
12.6 if any representation made by either party in respect of this
Agreement or any Loan or Loans hereunder shall be incorrect or untrue
in any material respect during the term of any Loan hereunder;
12.7 if either party notifies the other of its inability to or its
intention not to perform its obligations hereunder or otherwise
disaffirms, rejects or repudiates any of its obligations hereunder; or
12.8 if either party (a) shall fail to perform any material obligation
under this Agreement not specifically set forth in clauses 12.1
through 12.7, above, including but not limited to the payment of fees
as required by Section 5, and the payment of transfer taxes as
required by Section 14, (b) shall have been notified of such failure
by the other party prior to the Close of Business on any day, and (c)
shall not have cured such failure by the Cutoff Time on the next day
after such Close of Business on which a transfer of cash may be
effected in accordance with Section 15.
The non-defaulting party shall (except upon the occurrence of an Act of
Insolvency) give notice as promptly as practicable to the defaulting party
of the exercise of its option to terminate all Loans hereunder pursuant to
this Section 12.
13. REMEDIES.
13.1 Upon the occurrence of a Default under Section 12 entitling Lender to
terminate all Loans hereunder, ▇▇▇▇▇▇ shall have the right, in
addition to any other remedies provided herein, (a) to purchase a like
amount of Loaned Securities ("Replacement Securities") in the
principal
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market for such Loaned Securities in a commercially reasonable manner,
(b) to sell any Collateral in the principal market for such Collateral
in a commercially reasonable manner and (c) to apply and set off the
Collateral and any proceeds thereof (including any amounts drawn under
a letter of credit supporting any Loan) against the payment of the
purchase price for such Replacement Securities and any amounts due to
Lender under Sections 5, 8, 14 and 16. In the event that Lender shall
exercise such rights, ▇▇▇▇▇▇▇▇'s obligation to return a like amount of
the Loaned Securities shall terminate. Lender may similarly 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 (i) the
purchase price of Replacement Securities (plus all other amounts, if
any, due to Lender hereunder) exceeds (ii) the amount of the
Collateral, Borrower shall be liable to Lender for the amount of such
excess together with interest thereon at a rate equal to (A) in the
case of purchases of Foreign Securities, LIBOR, (B) in the case of
purchases of any other Securities (or other amounts, if any, due to
Lender hereunder), the Federal Funds Rate or (C) such other rate as
may be specified in Schedule B, in each case as such rate fluctuates
from day to day, from the date of such purchase until the date of
payment of such excess. As security for Borrower's obligation to pay
such excess, Lender shall have, and Borrower hereby grants, a security
interest in any property of Borrower then held by or for Lender and a
right of setoff with respect to such property and any other amount
payable by Lender to Borrower. The purchase price of Replacement
Securities purchased under this Section 13.1 shall include, and the
proceeds of any sale of Collateral shall be determined after deduction
of, broker's fees and commissions and all other reasonable costs, fees
and expenses related to such purchase or sale (as the case may be). In
the event Lender exercises its rights under this Section 13.1, Lender
may elect in its sole discretion, in lieu of purchasing all or a
portion of the Replacement Securities or selling all or a portion of
the Collateral, to be deemed to have made, respectively, such purchase
of Replacement Securities or sale of Collateral for an amount equal to
the price therefor on the date of such exercise obtained from a
generally recognized source or the last bid quotation from such a
source at the most recent Close of Trading. Subject to Section 18,
upon the satisfaction of all obligations hereunder, any remaining
Collateral shall be returned to Borrower.
13.2 Upon the occurrence of a Default under Section 12 entitling Borrower
to terminate all Loans hereunder, Borrower shall have the right, in
addition to any other remedies provided herein, (a) to purchase a like
amount of Collateral ("Replacement Collateral") in the principal
market for such Collateral in a commercially reasonable manner, (b) to
sell a like amount of the Loaned Securities in the principal market
for such Loaned Securities in a commercially reasonable manner and (c)
to apply and set off the Loaned Securities and any proceeds thereof
against (i) the payment of the purchase price for such Replacement
Collateral, (ii) Lender's obligation to return any cash or other
Collateral, and (iii) any amounts due to Borrower under Sections 5, 8
and 16. In such event, Borrower may treat the Loaned Securities as its
own and Lender's obligation to return a like amount of the Collateral
shall terminate; provided, however, that Lender shall immediately
return any letters of credit supporting any Loan upon the exercise or
deemed exercise by Borrower of its termination rights under Section
12. Borrower may similarly apply the Loaned Securities and any
proceeds thereof to any other obligation of Lender 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 (i) the sales price received
from such Loaned Securities is less than (ii) the purchase price of
Replacement Collateral (plus the amount of any cash or other
Collateral not replaced by Borrower and all other amounts, if any, due
to Borrower hereunder), Lender shall be liable to Borrower for the
amount of any such deficiency, together with interest on such amounts
at a rate equal to (A) in the case of Collateral consisting of Foreign
Securities, LIBOR, (B) in the
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case of Collateral consisting of any other Securities (or other
amounts due, if any, to Borrower hereunder), the Federal Funds Rate or
(C) such other rate as may be specified in Schedule B, in each case as
such rate fluctuates from day to day, from the date of such sale until
the date of payment of such deficiency. As security for Lender's
obligation to pay such deficiency, Borrower shall have, and Lender
hereby grants, a security interest in any property of Lender then held
by or for Borrower and a right of setoff with respect to such property
and any other amount payable by Borrower to Lender. The purchase price
of any Replacement Collateral purchased under this Section13.2 shall
include, and the proceeds of any sale of Loaned Securities shall be
determined after deduction of, broker's fees and commissions and all
other reasonable costs, fees and expenses related to such purchase or
sale (as the case may be). In the event Borrower exercises its rights
under this Section 13.2, Borrower may elect in its sole discretion, in
lieu of purchasing all or a portion of the Replacement Collateral or
selling all or a portion of the Loaned Securities, to be deemed to
have made, respectively, such purchase of Replacement Collateral or
sale of Loaned Securities for an amount equal to the price therefor on
the date of such exercise obtained from a generally recognized source
or the last bid quotation from such a source at the most recent Close
of Trading. Subject to Section 18, upon the satisfaction of all
Lender's obligations hereunder, any remaining Loaned Securities (or
remaining cash proceeds thereof) shall be returned to Lender.
13.3 Unless otherwise agreed, the parties acknowledge and agree that (a)
the Loaned Securities and any Collateral consisting of Securities are
of a type traded in a recognized market, (b) in the absence of a
generally recognized source for prices or bid or offer quotations for
any security, the non-defaulting party may establish the source
therefor in its sole discretion, and (c) all prices and bid and offer
quotations shall be increased to include accrued interest to the
extent not already included therein (except to the extent contrary to
market practice with respect to the relevant Securities).
13.4 In addition to its rights hereunder, the non-defaulting party shall
have any rights otherwise available to it under any other agreement or
applicable law.
14. TRANSFER TAXES.
All transfer taxes with respect to the transfer of the Loaned Securities by
▇▇▇▇▇▇ to Borrower and by Borrower to Lender upon termination of the Loan
and with respect to the transfer of Collateral by Borrower to Lender and by
Lender to Borrower upon termination of the Loan or pursuant to Section 4.5
or Section 9 shall be paid by Borrower.
15. TRANSFERS.
15.1 All transfers by either Borrower or Lender of Loaned Securities or
Collateral consisting of "financial assets" (within the meaning of the
UCC) hereunder shall be by (a) in the case of certificated securities,
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) registration of an
uncertificated security in the transferee's name by the issuer of such
uncertificated security, (c) the crediting by a Clearing Organization
of such financial assets to the transferee's "securities account"
(within the meaning of the UCC) maintained with such Clearing
Organization, or (d) such other means as Borrower and ▇▇▇▇▇▇ may
agree.
15.2 All transfers of cash hereunder shall be by (a) wire transfer in
immediately available, freely transferable funds or (b) such other
means as Borrower and Lender may agree.
10
15.3 All transfers of letters of credit from Borrower to Lender shall be
made by physical delivery to Lender of an irrevocable letter of credit
issued by a "bank" as defined in Section 3(a)(6)(A)-(C) of the
Exchange Act. Transfers of letters of credit from Lender to Borrower
shall be made by causing such letters of credit to be returned or by
causing the amount of such letters of credit to be reduced to the
amount required after such transfer.
15.4 A transfer of Securities, cash or letters of credit may be effected
under this Section 15 on any day except (a) a day on which the
transferee is closed for business at its address set forth in Schedule
A hereto 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.
15.5 For the avoidance of doubt, the parties agree and acknowledge that the
term "securities," as used herein (except in this Section 15), shall
include any "security entitlements" with respect to such securities
(within the meaning of the UCC). In every transfer of "financial
assets" (within the meaning of the UCC) hereunder, the transferor
shall take all steps necessary (a) to effect a delivery to the
transferee under Section 8-301 of the UCC, or to cause the creation of
a security entitlement in favor of the transferee under Section 8-501
of the UCC, (b) to enable the transferee to obtain "control" (within
the meaning of Section 8-106 of the UCC), and (c) to provide the
transferee with comparable rights under any applicable foreign law or
regulation.
16. CONTRACTUAL CURRENCY.
16.1 Borrower and Lender agree that (a) any payment in respect of a
Distribution under Section 8 shall be made in the currency in which
the underlying Distribution of cash was made, (b) any return of cash
shall be made in the currency in which the underlying transfer of cash
was made, and (c) any other payment of cash in connection with a Loan
under this Agreement shall be in the currency agreed upon by Borrower
and Lender in connection with such Loan (the currency established
under clause (a), (b) or (c) hereinafter referred to as 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.
16.2 If for any reason the amount in the Contractual Currency received
under Section 16.1, 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.
16.3 If for any reason the amount in the Contractual Currency received
under Section 16.1 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.
11
17. ERISA.
Lender shall, if any of the Securities transferred to the Borrower
hereunder for any Loan have been or shall be obtained, directly or
indirectly, from or using the assets of any Plan, so notify Borrower in
writing upon the execution of this Agreement or upon initiation of such
Loan under Section 2.1. If Lender so notifies ▇▇▇▇▇▇▇▇, 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, Jan. 23, 1981; as amended, 52 Fed. Reg. 18754, May 19, 1987), or any
successor thereto (unless ▇▇▇▇▇▇▇▇ and Lender have agreed prior to entering
into a Loan that such Loan will be conducted in reliance on another
exemption, or without relying on any exemption, from the prohibited
transaction provisions of Section 406 of the Employee Retirement Income
Security Act of 1974, as amended, and Section 4975 of the Internal Revenue
Code of 1986, as amended). Without limiting the foregoing and
notwithstanding any other provision of this Agreement, if the Loan will be
conducted in accordance with Prohibited Transaction Exemption 81-6, then:
17.1 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 Government
Securities.
17.2 Borrower represents and warrants that, during the term of any Loan
hereunder, neither Borrower nor any affiliate 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. ▇▇▇▇▇▇ agrees
that, prior to or at the commencement of any Loan hereunder, it will
communicate to Borrower information regarding the Plan sufficient to
identify to Borrower any person or persons that have discretionary
authority or control with respect to the investment of the assets of
the Plan involved in the Loan or that render investment advice (as
defined in the preceding sentence) with respect to the assets of the
Plan involved in the Loan. In the event Lender fails to communicate
and keep current during the term of any Loan such information, Lender
rather than Borrower shall be deemed to have made the representation
and warranty in the first sentence of this Section 17.2.
17.3 Borrower shall mark to market daily each Loan hereunder pursuant to
Section 9.1 as is required if Lender is a Customer.
17.4 ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ agree that:
(a) the term "Collateral" shall mean cash, securities issued or
guaranteed by the United States government or its agencies or
instrumentalities, or irrevocable bank letters of credit issued
by a person other than Borrower or an affiliate thereof;
(b) prior to the making of any Loans hereunder, Borrower shall
provide Lender with (i) the most recent available audited
statement of Borrower's financial condition and (ii) the most
recent available unaudited statement of ▇▇▇▇▇▇▇▇'s financial
condition (if more recent than the most recent audited
statement), and each Loan made hereunder shall be deemed a
representation by Borrower that there has been no material
adverse change in Borrower's financial condition subsequent to
the date of the latest financial statements or information
furnished in accordance herewith;
(c) the Loan may be terminated by Lender at any time, whereupon
Borrower shall deliver the Loaned Securities to Lender within the
lesser of (i) the customary delivery period for such
12
Loaned Securities, (ii) five Business Days, and (iii) the time
negotiated for such delivery between ▇▇▇▇▇▇▇▇ and Lender;
provided, however, that Borrower and ▇▇▇▇▇▇ may agree to a longer
period only if permitted by Prohibited Transaction Exemption
81-6; and
(d) the Collateral transferred shall be security only for obligations
of Borrower to the Plan with respect to Loans, and shall not be
security for any obligation of Borrower to any agent or affiliate
of the Plan.
18. SINGLE AGREEMENT.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ acknowledge that, and have entered into this Agreement
in reliance on the fact that, all Loans hereunder constitute a single
business and contractual relationship and have been entered into in
consideration of each other. Accordingly, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ hereby agree
that payments, deliveries and other transfers made by either of them in
respect of any Loan shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Loan
hereunder, and the obligations to make any such payments, deliveries and
other transfers may be applied against each other and netted. In addition,
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ acknowledge that, and have entered into this Agreement
in reliance on the fact that, all Loans hereunder have been entered into in
consideration of each other. Accordingly, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ hereby agree
that (a) each shall perform all of its obligations in respect of each Loan
hereunder, and that a default in the performance of any such obligation by
Borrower or by ▇▇▇▇▇▇ (the "Defaulting Party") in any Loan hereunder shall
constitute a default by the Defaulting Party under all such Loans
hereunder, and (b) the non-defaulting party shall be entitled to set off
claims and apply property held by it in respect of any Loan hereunder
against obligations owing to it in respect of any other Loan with the
Defaulting Party.
19. APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
20. WAIVER.
The failure of a party to this Agreement 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 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.
21. SURVIVAL OF 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.
22. NOTICES AND OTHER COMMUNICATIONS.
Any and all notices, statements, demands or other communications hereunder
may be given by a party to the other by telephone, mail, facsimile, e-mail,
electronic message, telegraph, messenger or otherwise to the individuals
and at the facsimile numbers and addresses specified with respect to it in
Schedule A hereto, or sent to such party at any other place specified in a
notice of change of number or address hereafter received by the other
party. Any notice, statement, demand or other
13
communication hereunder will be deemed effective on the day and at the time
on which it is received or, if not received, on the day and at the time on
which its delivery was in good faith attempted; provided, however, that any
notice by a party to the other party by telephone shall be deemed effective
only if (a) such notice is followed by written confirmation thereof and (b)
at least one of the other means of providing notice that are specifically
listed above has previously been attempted in good faith by the notifying
party.
23. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
23.1 EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK
STATE COURT SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY
SUCH COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING
BROUGHT TO ENFORCE ITS OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO
THIS AGREEMENT OR ANY LOAN HEREUNDER AND (B) WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND
ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR
DOMICILE.
23.2 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
24. MISCELLANEOUS.
24.1 Except as otherwise agreed by the parties, this Agreement supersedes
any other agreement between the parties hereto concerning loans of
Securities between Borrower and Lender. This Agreement shall not be
assigned by either party without the prior written consent of the
other party and any attempted assignment without such consent shall be
null and void. Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and
their respective heirs, representatives, successors and assigns. This
Agreement may be terminated by either party upon 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
signed by the party against whom enforcement is sought. The parties
hereto acknowledge and agree that, in connection with this Agreement
and each Loan hereunder, time is of the essence. Each provision and
agreement herein shall be treated as separate and independent from any
other provision herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.
24.2 Any agreement between Borrower and Lender pursuant to Section 10.5(b)
or Section 25.37 shall be made (a) in writing, (b) orally, if
confirmed promptly in writing or through any system that compares
Loans and in which Borrower and Lender are participants, or (c) in
such other manner as may be agreed by ▇▇▇▇▇▇▇▇ and Lender in writing.
14
25. DEFINITIONS.
For the purposes hereof:
25.1 "Act of Insolvency" shall mean, with respect to any party, (a) the
commencement by such party as debtor of any case or proceeding under
any bankruptcy, insolvency, reorganization, liquidation, moratorium,
dissolution, delinquency or similar law, or such party's seeking the
appointment or election of a receiver, conservator, trustee, custodian
or similar official for such party or any substantial part of its
property, or the convening of any meeting of creditors for purposes of
commencing any such case or proceeding or seeking such an appointment
or election, (b) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or
election, or the filing against a party of an application for a
protective decree under the provisions of the Securities Investor
Protection Act of 1970, 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 or election, 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, (c) the making by such party of
a general assignment for the benefit of creditors, or (d) the
admission in writing by such party of such party's inability to pay
such party's debts as they become due.
25.2 "Bankruptcy Code" shall have the meaning assigned in Section 26.1.
25.3 "Borrower" shall have the meaning assigned in Section 1.
25.4 "Borrower Payment" shall have the meaning assigned in Section 8.5(a).
25.5 "Broker-Dealer" shall mean any person that is a broker (including a
municipal securities broker), dealer, municipal securities dealer,
government securities broker or government securities dealer as
defined in the Exchange Act, regardless of whether the activities of
such person are conducted in the United States or otherwise require
such person to register with the U.S. Securities and Exchange
Commission or other regulatory body.
25.6 "Business Day" shall mean, with respect to any Loan hereunder, a day
on which regular trading occurs in the principal market for the Loaned
Securities subject to such Loan, provided, however, that for purposes
of determining the Market Value of any Securities hereunder, such term
shall mean a day on which regular trading occurs in the principal
market for the Securities whose value is being determined.
Notwithstanding the foregoing, (a) for purposes of Section 9,
"Business Day" shall mean any day on which regular trading occurs in
the principal market for any Loaned Securities or for any Collateral
consisting of Securities under any outstanding Loan hereunder and
"next Business Day" shall mean the next day on which a transfer of
Collateral may be effected in accordance with Section 15, and (b) in
no event shall a Saturday or Sunday be considered a Business Day.
25.7 "Cash Collateral Fee" shall have the meaning assigned in Section 5.1.
25.8 "Clearing Organization" shall mean (a) The Depository Trust Company,
or, if agreed to by ▇▇▇▇▇▇▇▇ and Lender, such other "securities
intermediary" (within the meaning of the UCC) at which Borrower (or
Borrower's agent) and Lender (or Lender's agent) maintain accounts, or
(b) a Federal Reserve Bank, to the extent that it maintains a
book-entry system.
15
25.9 "Close of Business" shall mean the time established by the parties in
Schedule B or otherwise orally or in writing or, in the absence of
any such agreement, as shall be determined in accordance with market
practice.
25.10 "Close of Trading" shall mean, with respect to any Security, the end
of the primary trading session established by the principal market
for such Security on a Business Day, unless otherwise agreed by the
parties.
25.11 "Collateral" shall mean, whether now owned or hereafter acquired and
to the extent permitted by applicable law, (a) any property which
Borrower and Lender agree prior to the Loan shall be acceptable
collateral and which is transferred to Lender pursuant to Sections 4
or 9 (including as collateral, for definitional purposes, any letters
of credit mutually acceptable to Lender and Borrower), (b) any
property substituted therefor pursuant to Section 4.5, (c) all
accounts in which such property is deposited and all securities and
the like in which any cash collateral is invested or reinvested, and
(d) any proceeds of any of the foregoing; provided, however, that if
Lender is a Customer, "Collateral" shall (subject to Section 17.4(a),
if applicable) be limited to cash, U.S. Treasury bills and notes, an
irrevocable letter of credit issued by a "bank" (as defined in
Section 3(a)(6)(A)-(C) of the Exchange Act), and any other property
permitted to serve as collateral securing a loan of securities under
Rule 15c3-3 under the Exchange Act or any comparable regulation of
the Secretary of the Treasury under Section 15C of the Exchange Act
(to the extent that Borrower is subject to such Rule or comparable
regulation) pursuant to exemptive, interpretive or no-action relief
or otherwise. If any new or different Security shall be exchanged for
any Collateral by recapitalization, merger, consolidation or other
corporate action, such new or different Security shall, effective
upon such exchange, be deemed to become Collateral in substitution
for the former Collateral for which such exchange is made. For
purposes of return of Collateral by Lender or purchase or sale of
Securities pursuant to Section 13, such term shall include Securities
of the same issuer, class and quantity as the Collateral initially
transferred by Borrower to Lender, as adjusted pursuant to the
preceding sentence.
25.12 "Collateral Distributions" shall have the meaning assigned in Section
8.5(a).
25.13 "Confirmation" shall have the meaning assigned in Section 2.1.
25.14 "Contractual Currency" shall have the meaning assigned in Section
16.1.
25.15 "Customer" shall mean any person that is a customer of Borrower under
Rule 15c3-3 under the Exchange Act or any comparable regulation of
the Secretary of the Treasury under Section 15C of the Exchange Act
(to the extent that Borrower is subject to such Rule or comparable
regulation).
25.16 "Cutoff Time" shall mean a time on a Business Day by which a transfer
of cash, securities or other property must be made by Borrower or
Lender to the other, as shall be agreed by Borrower and Lender in
Schedule B or otherwise orally or in writing or, in the absence of
any such agreement, as shall be determined in accordance with market
practice.
25.17 "Default" shall have the meaning assigned in Section 12.
25.18 "Defaulting Party" shall have the meaning assigned in Section 18.
16
25.19 "Distribution" shall mean, with respect to any Security at any time,
any distribution made on or in respect of such Security, including,
but not limited to: (a) cash and all other property, (b) stock
dividends, (c) Securities received as a result of split ups of such
Security and distributions in respect thereof, (d) interest payments,
(e) all rights to purchase additional Securities, and (f) any cash or
other consideration paid or provided by the issuer of such Security
in exchange for any vote, consent or the taking of any similar action
in respect of such Security (regardless of whether the record date
for such vote, consent or other action falls during the term of the
Loan). In the event that the holder of a Security is entitled to
elect the type of distribution to be received from two or more
alternatives, such election shall be made by ▇▇▇▇▇▇, in the case of a
Distribution in respect of the Loaned Securities, and by ▇▇▇▇▇▇▇▇, in
the case of a Distribution in respect of Collateral.
25.20 "Equity Security" shall mean any security (as defined in the Exchange
Act) other than a "nonequity security," as defined in Regulation T.
25.21 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
25.22 "Extension Deadline" shall mean, with respect to a letter of credit,
the Cutoff Time on the Business Day preceding the day on which the
letter of credit expires.
25.23 "FDIA" shall have the meaning assigned in Section 26.4.
25.24 "FDICIA" shall have the meaning assigned in Section 26.5.
25.25 "Federal 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 herefor, 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.
25.26 "Foreign Securities" shall mean, unless otherwise agreed, Securities
that are principally cleared and settled outside the United States.
25.27 "Government Securities" shall mean government securities as defined
in Section 3(a)(42)(A)-(C) of the Exchange Act.
25.28 "Lender" shall have the meaning assigned in Section 1.
25.29 "Lender Payment" shall have the meaning assigned in Section 8.5(a).
25.30 "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., London time, on such date
(or, if at least two such rates appear, the arithmetic mean of such
rates).
25.31 "Loan" shall have the meaning assigned in Section 1.
25.32 "Loan Fee" shall have the meaning assigned in Section 5.1.
25.33 "Loaned Security" shall mean any Security transferred in a Loan
hereunder 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,
17
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 return of Loaned
Securities by Borrower or purchase or sale of Securities pursuant to
Section 13, such term shall include Securities of the same issuer,
class and quantity as the Loaned Securities, as adjusted pursuant to
the preceding sentence.
25.34 "Margin Deficit" shall have the meaning assigned in Section 9.2.
25.35 "Margin Excess" shall have the meaning assigned in Section 9.3.
25.36 "Margin Notice Deadline" shall mean the time agreed to by the parties
in the relevant Confirmation, Schedule B hereto or otherwise as the
deadline for giving notice requiring same-day satisfaction of
mark-to-market obligations as provided in Section 9 hereof (or, in
the absence of any such agreement, the deadline for such purposes
established in accordance with market practice).
25.37 "Margin Percentage" shall mean, with respect to any Loan as of any
date, a percentage agreed by Borrower and Lender, which shall be not
less than 100%, unless (a) Borrower and Lender agree otherwise, as
provided in Section 24.2, and (b) Lender is not a Customer.
Notwithstanding the previous sentence, in the event that the writing
or other confirmation evidencing the agreement described in clause
(a) does not set out such percentage with respect to any such Loan,
the Margin Percentage shall not be a percentage less than the
percentage obtained by dividing (i) the Market Value of the
Collateral required to be transferred by Borrower to Lender with
respect to such Loan at the commencement of the Loan by (ii) the
Market Value of the Loaned Securities required to be transferred by
Lender to Borrower at the commencement of the Loan.
25.38 "Market Value" shall have the meaning set forth in Annex II or
otherwise agreed to by ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ in writing.
Notwithstanding the previous sentence, in the event that the meaning
of Market Value has not been set forth in Annex II or in any other
writing, as described in the previous sentence, Market Value shall be
determined in accordance with market practice for the Securities,
based on the price for such Securities as of the most recent Close of
Trading obtained from a generally recognized source agreed to by the
parties or the closing bid quotation at the most recent Close of
Trading obtained from such source, plus accrued interest to the
extent not included therein (other than any interest credited or
transferred to, or applied to the obligations of, the other party
pursuant to Section 8, unless market practice with respect to the
valuation of such Securities in connection with securities loans is
to the contrary). If the relevant quotation did not exist at such
Close of Trading, then the Market Value shall be the relevant
quotation on the next preceding Close of Trading at which there was
such a quotation. The determinations of Market Value provided for in
Annex II or in any other writing described in the first sentences of
this Section 25.38 or, if applicable, in the preceding sentence shall
apply for all purposes under this Agreement, except for purposes of
Section 13.
25.39 "Payee" shall have the meaning assigned in Section 8.5(a).
25.40 "Payor" shall have the meaning assigned in Section 8.5(a).
25.41 "Plan" shall mean: (a) any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974
which is subject to Part 4 of Subtitle B of Title I of
18
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.
25.42 "Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
25.43 "Retransfer" shall mean, with respect to any Collateral, to pledge,
repledge, hypothecate, rehypothecate, lend, relend, sell or otherwise
transfer such Collateral, or to re-register any such Collateral
evidenced by physical certificates in any name other than Borrower's.
25.44 "Securities" shall mean securities or, if agreed by the parties in
writing, other assets.
25.45 "Securities Distributions" shall have the meaning assigned in Section
8.5(a).
25.46 "Tax" shall have the meaning assigned in Section 8.5(a).
25.47 "UCC" shall mean the New York Uniform Commercial Code.
26. INTENT.
26.1 The parties recognize that each Loan hereunder is a "securities
contract," as such term is defined in Section 741 of Title 11 of the
United States Code (the "Bankruptcy Code"), as amended (except insofar
as the type of assets subject to the Loan would render such definition
inapplicable).
26.2 It is understood that 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.
26.3 It is understood that the rights given to ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
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.
26.4 The parties agree and acknowledge that if a party hereto 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 (except insofar as the type of assets
subject to the Loan would render such definitions inapplicable).
26.5 It is understood that this Agreement constitutes a "netting contract"
as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment
obligation under any Loan hereunder shall constitute a "covered
contractual payment entitlement" or "covered contractual payment
obligation," respectively, as defined in and subject to FDICIA (except
insofar as one or both of the parties is not a "financial institution"
as that term is defined in FDICIA).
26.6 Except to the extent required by applicable law or regulation or as
otherwise agreed, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ agree that Loans hereunder shall
in no event be "exchange contracts" for purposes
19
of the rules of any securities exchange and that Loans hereunder shall
not be governed by the buy-in or similar rules of any such exchange,
registered national securities association or other self-regulatory
organization.
27. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS.
27.1 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.
27.2 LENDER ACKNOWLEDGES THAT, IN CONNECTION WITH LOANS OF GOVERNMENT
SECURITIES AND AS OTHERWISE PERMITTED BY APPLICABLE LAW, SOME
SECURITIES PROVIDED BY BORROWER AS COLLATERAL UNDER THIS AGREEMENT MAY
NOT BE GUARANTEED BY THE UNITED STATES.
BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A.
By:
---------------------------------
Title:
By:
---------------------------------
Title:
[BORROWER]
By:
---------------------------------
Title:
20
ANNEX I-A
PARTY ACTING AS AGENT
This Annex sets forth the terms and conditions governing all transactions in
which a party lending or borrowing Securities, as the case may be ("Agent"), in
a Loan is acting as agent for one or more third parties (each, a "Principal").
Unless otherwise defined, capitalized terms used but not defined in this Annex
shall have the meanings assigned in the Securities Loan Agreement of which it
forms a part (such agreement, together with this Annex and any other annexes,
schedules or exhibits, referred to as the "Agreement") and, unless otherwise
specified, all section references herein are intended to refer to sections of
such Securities Loan Agreement.
1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. In addition to the
representations and warranties set forth in the Agreement, Agent hereby
makes the following representations and warranties, which shall continue
during the term of any Loan: Principal has duly authorized Agent to execute
and deliver the Agreement on its behalf, has the power to so authorize
Agent and to enter into the Loans contemplated by the Agreement and to
perform the obligations of Lender or Borrower, as the case may be, under
such Loans, and has taken all necessary action to authorize such execution
and delivery by Agent and such performance by it.
2. IDENTIFICATION OF PRINCIPALS. Agent agrees (a) to provide the other party,
prior to any Loan under the Agreement, with a written list of Principals
for which it intends to act as Agent (which list may be amended in writing
from time to time with the consent of the other party), and (b) to provide
the other party, before the Close of Business on the next Business Day
after agreeing to enter into a Loan, with notice of the specific Principal
or Principals for whom it is acting in connection with such Loan. If (i)
Agent fails to identify such Principal or Principals prior to the Close of
Business on such next Business Day or (ii) the other party shall determine
in its sole discretion that any Principal or Principals identified by Agent
are not acceptable to it, the other party may reject and rescind any Loan
with such Principal or Principals, return to Agent any Collateral or Loaned
Securities, as the case may be, previously transferred to the other party
and refuse any further performance under such Loan, and Agent shall
immediately return to the other party any portion of the Loaned Securities
or Collateral, as the case may be, previously transferred to Agent in
connection with such Loan; provided, however, that (A) the other party
shall promptly (and in any event within one Business Day of notice of the
specific Principal or Principals) notify Agent of its determination to
reject and rescind such Loan and (B) to the extent that any performance was
rendered by any party under any Loan rejected by the other party, such
party shall remain entitled to any fees or other amounts that would have
been payable to it with respect to such performance if such Loan had not
been rejected. The other party acknowledges that Agent shall not have any
obligation to provide it with confidential information regarding the
financial status of its Principals; Agent agrees, however, that it will
assist the other party in obtaining from Agent's Principals such
information regarding the financial status of such Principals as the other
party may reasonably request.
3. LIMITATION OF AGENT'S LIABILITY. The parties expressly acknowledge that if
the representations and warranties of Agent under the Agreement, including
this Annex, are true and correct in all material respects during the term
of any Loan and Agent otherwise complies with the provisions of this Annex,
then (a) Agent's obligations under the Agreement shall not include a
guarantee of performance by its Principal or Principals and (b) the other
party's remedies shall not include a right of setoff against obligations,
if any, of Agent arising in other transactions in which Agent is acting as
principal.
4. MULTIPLE PRINCIPALS.
(a) In the event that Agent proposes to act for more than one Principal
hereunder, Agent and the other party shall elect whether (i) to treat
Loans under the Agreement as transactions entered into on behalf of
separate Principals or (ii) to aggregate such Loans as if they were
transactions by a single Principal. Failure to make such an election
in writing shall be deemed an election to treat Loans under the
Agreement as transactions on behalf of separate Principals.
(b) In the event that Agent and the other party elect (or are deemed to
elect) to treat Loans under the Agreement as transactions on behalf of
separate Principals, the parties agree that (i) Agent will provide the
other party, together with the notice described in Section 2(b) of
this Annex, notice specifying the portion of each Loan allocable to
the account of each of the Principals for which it is acting (to the
extent that any such Loan is allocable to the account of more than one
Principal), (ii) the portion of any individual Loan allocable to each
Principal shall be deemed a separate Loan under the Agreement, (iii)
the mark to market obligations of Borrower and Lender under the
Agreement shall be determined on a Loan-by-Loan basis (unless the
parties agree to determine such obligations on a
Principal-by-Principal basis), and (iv) Borrower's and ▇▇▇▇▇▇'s
remedies under the Agreement upon the occurrence of a Default shall be
determined as if Agent had entered into a separate Agreement with the
other party on behalf of each of its Principals.
(c) In the event that Agent and the other party elect to treat Loans under
the Agreement as if they were transactions by a single Principal, the
parties agree that (i) Agent's notice under Section 2(b) of this Annex
need only identify the names of its Principals but not the portion of
each Loan allocable to each Principal's account, (ii) the mark to
market obligations of Borrower and Lender under the Agreement shall,
subject to any greater requirement imposed by applicable law, be
determined on an aggregate basis for all Loans entered into by Agent
on behalf of any Principal, and (iii) ▇▇▇▇▇▇▇▇'s and ▇▇▇▇▇▇'s remedies
upon the occurrence of a Default shall be determined as if all
Principals were a single Lender or Borrower, as the case may be.
(d) Notwithstanding any other provision of the Agreement (including,
without limitation, this Annex), the parties agree that any
transactions by Agent on behalf of a Plan shall be treated as
transactions on behalf of separate Principals in accordance with
Section 4(b) of this Annex (and all mark to market obligations of the
parties shall be determined on a Loan-by-Loan basis).
5. INTERPRETATION OF TERMS. All references to "Lender" or "Borrower," as the
case may be, in the Agreement shall, subject to the provisions of this
Annex (including, among other provisions, the limitations on Agent's
liability in Section 3 of this Annex), be construed to reflect that (i)
each Principal shall have, in connection with any Loan or Loans entered
into by Agent on its behalf, the rights, responsibilities, privileges and
obligations of a "Lender" or "Borrower," as the case may be, directly
entering into such Loan or Loans with the other party under the Agreement,
and (ii) Agent's Principal or Principals have designated Agent as their
sole agent for performance of ▇▇▇▇▇▇'s obligations to Borrower or
Borrower's obligations to Lender, as the case may be, and for receipt of
performance by Borrower of its obligations to Lender or Lender of its
obligations to Borrower, as the case may be, in connection with any Loan or
Loans under the Agreement (including, among other things, as Agent for each
Principal in connection with transfers of securities, cash or other
property and as agent for giving and receiving all notices under the
Agreement). Both Agent and its Principal or Principals shall be deemed
"parties" to the Agreement and all references to a "party" or "either
party" in the
2
Agreement shall be deemed revised accordingly (and any Default by Agent
under the Agreement shall be deemed a Default by Lender or Borrower, as the
case may be).
BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A.
IN ITS INDIVIDUAL CAPACITY
By:
---------------------------------
Title:
By:
---------------------------------
Title:
[BORROWER]
By:
---------------------------------
Title:
Title:
3
ANNEX II
MARKET VALUE
Unless otherwise agreed by ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇:
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 at the most recent
Close of Trading or, if there was no sale on the Business Day of the most
recent Close of Trading, by the last sale price at the Close of Trading 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.
2. If the principal market for the Securities to be valued is the
over-the-counter market, and the Securities are quoted on The Nasdaq Stock
Market ("Nasdaq"), their Market Value shall be the last sale price on
Nasdaq at the most recent Close of Trading or, if the Securities are issues
for which last sale prices are not quoted on Nasdaq, the last bid price at
such Close of Trading. If the relevant quotation did not exist at such
Close of Trading, then the Market Value shall be the relevant quotation on
the next preceding Close of Trading at which there was such a quotation.
3. Except as provided in Section 4 of this Annex, if the principal market for
the Securities to be valued is the over-the-counter market, and the
Securities are not quoted on Nasdaq, their Market Value shall be determined
in accordance with market practice for such Securities, based on the price
for such Securities as of the most recent Close of Trading obtained from a
generally recognized source agreed to by the parties or the closing bid
quotation at the most recent Close of Trading obtained from such a source.
If the relevant quotation did not exist at such Close of Trading, then the
Market Value shall be the relevant quotation on the next preceding Close of
Trading at which there was such a quotation.
4. If the Securities to be valued are Foreign Securities, their Market Value
shall be determined as of the most recent Close of Trading in accordance
with market practice in the principal market for such Securities.
5. The Market Value of a letter of credit shall be the undrawn amount thereof.
6. All determinations of Market Value under Sections 1 through 4 of this Annex
shall include, where applicable, accrued interest to the extent not already
included therein (other than any interest credited or transferred to, or
applied to the obligations of, the other party pursuant to Section 8 of the
Agreement), unless market practice with respect to the valuation of such
Securities in connection with securities loans is to the contrary.
7. The determinations of Market Value provided for in this Annex shall apply
for all purposes under the Agreement, except for purposes of Section 13 of
the Agreement.
[BORROWER] BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A.
By: By:
------------------------------ --------------------------------------
Title: Title:
By: --------------------------------------
Title:
SCHEDULE A
NAMES AND ADDRESSES FOR COMMUNICATIONS
For the purpose of Section 22 of this Agreement
COUNTERPARTY:
SCHEDULE B
SUPPLEMENTAL TERMS AND CONDITIONS
TO 2000 BMA