Exhibit (h.9)
[GRAPHIC] THE [LOGO]
BOND
MARKET
ASSOCIATION
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 Lender 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
Borrower and Lender 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, Lender shall transfer Loaned
Securities to Borrower hereunder on or before the Cutoff Time
on the date agreed to by Borrower 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
Lender 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, Lender 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 Lender 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
Borrower's obligation hereunder, Borrower 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
Borrower and all Cash Collateral Fees shall be payable
immediately by Lender in the event of a Default by Lender.
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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 Borrower) 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 Borrower, 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 Borrower 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 Lender, 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 Lender 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. ▇▇▇▇ to Market.
9.1 If Lender is a Customer, Borrower shall daily ▇▇▇▇ 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 Lender may agree, with respect to one or more
Loans hereunder, to ▇▇▇▇ 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 Lender 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 Annex I (the terms and
conditions of which Annex are incorporated herein and made a
part hereof).
11.2 Promptly upon (and in any event within seven (7) Business Days
after) demand by Lender, Borrower shall furnish Lender with
Borrower's most recent publicly-available financial statements
and any other financial statements mutually agreed upon by
Borrower and Lender.
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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 required to be furnished to
customers pursuant to such Rule.
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, Lender 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, Borrower'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 Lender 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 Lender 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.
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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 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, Jan. 23, 1981; as amended, 52 Fed. Reg. 18754, May
19, 1987), or any successor thereto (unless Borrower 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. Lender 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 ▇▇▇▇ to market daily each Loan hereunder
pursuant to Section 9.1 as is required if Lender is a
Customer.
17.4 Borrower and Lender 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 Borrower'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
Borrower and Lender; provided, however, that Borrower
and Lender 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.
Borrower and Lender 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, Borrower and Lender
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, Borrower and Lender 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, Borrower and Lender 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 Lender (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 Borrower and Lender 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
Borrower 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 Borrower 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 Lender, in the case of a Distribution in respect of
the Loaned Securities, and by Borrower, 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 ▇▇▇▇-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 Borrower and Lender 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 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.
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, Borrower and Lender 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 ▇▇▇▇ 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 Lender'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 ▇▇▇▇ 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) Borrower's and
Lender'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 ▇▇▇▇ 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 Lender'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:
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Title:
By:
----------------------------
Title:
[Borrower]
By:
----------------------------
Title:
Title:
3
Annex II
Market Value
Unless otherwise agreed by Borrower and Lender:
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:
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Title: Title:
By:
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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