THE
BOND
MARKET
ASSOCIATION SLA
MASTER SECURITIES
LOAN AGREEMENT
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2000 Version
Dated as of:
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Between:
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and
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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 this 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.
2000 Master Securities Loan Agreement 1
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
2 2000 Master Securities Loan Agreement
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.
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 obligations 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.
2000 Master Securities Loan Agreement 3
Notwithstanding the foregoing, all Loan Fees shall be
payable by Borrower immediately in the event of a Default
hereunder by Borrower and all Cash Collateral Fees shall be
payable immediately by Lender in the event of a Default by
Lender.
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.
4 2000 Master Securities Loan Agreement
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 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
2000 Master Securities Loan Agreement 5
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.
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).
6 2000 Master Securities Loan Agreement
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.
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.
2000 Master Securities Loan Agreement 7
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. 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.
8 2000 Master Securities Loan Agreement
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 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
2000 Master Securities Loan Agreement 9
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 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 Section 13.2 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.
10 2000 Master Securities Loan Agreement
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.
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
2000 Master Securities Loan Agreement 11
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.
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.
12 2000 Master Securities Loan Agreement
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 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.
2000 Master Securities Loan Agreement 13
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 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
14 2000 Master Securities Loan Agreement
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.
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
2000 Master Securities Loan Agreement 15
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.
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.
16 2000 Master Securities Loan Agreement
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.
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 therefor, charged for federal funds (dollars in
immediately available funds borrowed by banks on an overnight
unsecured basis) on that day or, if that day is not a banking
day in New York City, on the next preceding banking day.
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.
2000 Master Securities Loan Agreement 17
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 LIBO 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, 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
18 2000 Master Securities Loan Agreement
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 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
2000 Master Securities Loan Agreement 19
contract," as such terms are definedin the FDIA and any
other 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 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.
BEAR, ▇▇▇▇▇▇▇ SECURITIES CORP. CORNERSTONE PROGRESSIVE
RETURN FUND
BY: BY:
--------------------------- --------------------------------
NAME: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ NAME:
TITLE : CO-PRESIDENT TITLE:
DATE: MAY 23, 2007 DATE: MAY 23, 2007
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 Section 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.
BEAR, ▇▇▇▇▇▇▇ SECURITIES CORP. CORNERSTONE PROGRESSIVE
RETURN FUND
BY: BY:
--------------------------- --------------------------------
NAME: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ NAME:
TITLE : CO-PRESIDENT TITLE:
DATE: MAY , 2007 DATE: MAY , 2007
SCHEDULE A
NAMES AND ADDRESSES FOR COMMUNICATIONS
CORNERSTONE PROGRESSIVE RETURN
FUND, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: [▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇]
Telephone: (212) 272 - 2093
Facsimile: (212) 272 - 5885
BEAR, ▇▇▇▇▇▇▇ SECURITIES CORP.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Treasury
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
DEFINED TERMS AND SUPPLEMENTAL PROVISIONS
l. The first sentence of Section 1 of this Agreement is deleted in its
entirety and is hereby replaced with the following:
"This Agreement sets forth the terms and conditions under
which CORNERSTONE PROGRESSIVE RETURN FUND, a statutory trust created
under the Delaware Statutory Trust Act ("Lender"), may from time to
time lend to BEAR, ▇▇▇▇▇▇▇ SECURITIES CORP. ("Borrower"), a corporation
organized and existing under the laws of the State of Delaware, certain
Securities (as defined herein) against a transfer of Collateral (as
defined herein), which Securities are held in custody for Lender by
CUSTODIAL TRUST COMPANY ("CTC "), a bank and trust company organized
and existing under the laws of the State of New Jersey and an affiliate
of Borrower".
2. Section 2.1 of this Agreement is deleted in its entirety and is
hereby replaced with the following:
"2.1 Subject to the terms and conditions of this Agreement and
provided that such securities are available for lending, Lender shall,
from time to time, lend to Borrower securities held by CTC as custodian
for Lender. The issuer and amount of such securities to be lent in each
Loan shall be determined by Borrower, and Lender shall lend such
securities to Borrower upon demand by Borrower or the National
Securities Clearing Corporation ("NSCC"), made in writing, orally or
electronically to CTC (all such securities lent to Borrower upon such
demand by NSCC being referred to herein as "NSCC Loaned Securities").
All other terms of each Loan, including the basis of compensation and
the type and amount of Collateral to be delivered by Borrower, shall be
as set forth elsewhere in this Agreement. Each Loan shall be confirmed
(a) by a schedule and receipt listing each Loaned Security provided by
Borrower to Lender in accordance with Section 3.2, (b) through any
system that compares Loans and in
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which Borrower and Lender are participants, or (c) in such other manner
as may be agreed by Borrower and Lender in writing. "
3. Section 3.1 of this Agreement is deleted in its entirety and is
hereby replaced with the following:
"Unless otherwise agreed, Lender shall transfer Loaned
Securities to Borrower on or before the Cutoff Time on the Business Day
that demand therefor is made if such demand is made on or before such
Cutoff Time, otherwise by the Cutoff Time on the next Business Day."
4. Section 4.1 of this Agreement is deleted in its entirety and is
hereby replaced with the following:
"Unless otherwise agreed, Borrower shall transfer to Lender,
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, Collateral with a market value at least equal to a
percentage (the "Margin Percentage ") that in the case of Loans of NSCC
Loaned Securities shall be no less than 100% of the market value of
such NSCC ▇▇▇▇▇ d Securities and in the case of all other Loans shall
be 102% of the market value of such Loaned Securities."
5. Section 5.1 of this Agreement is supplemented by adding at the end
thereof the following:
"The Loan Fee and Cash Collateral Fee for any Loan shall be
computed on the basis of a 360-day year and for the actual number of
days such Loan is outstanding. Any Cash Collateral Fee payable by
Lender may be paid by offset against amounts due from Borrower to
Lender under this Agreement or such other agreement between them as
Lender and Borrower may determine."
6. Section 5.1 of this Agreement is further supplemented by adding
thereto, immediately after Section 5.1, a new Section 5.1.1, a new Section 5.1.2
and a new Section 5.1.3, in each case as follows:
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"5.1.1 Except as otherwise set forth in Section 5.1.2 in the
case of Loans of NSCC Loaned Securities, if a Loan is secured by
Collateral consisting of cash, then, in addition to the Cash Collateral
Fee (rebate) on such Collateral, Lender shall pay to Borrower a fee
(referred to herein as the "Spread Fee") on such Collateral, computed
daily, equal to 30% of the difference between (a) the return payable on
such Collateral at the Reinvestment Rate therefor and (b) such Cash
Collateral Fee (rebate).
5.1.2 If cash Collateral securing any Loan of NSCC Loaned
Securities is invested in a repurchase transaction pursuant to the
Master Repurchase Agreement of even date herewith between Lender and
Bear, ▇▇▇▇▇▇▇ & Co. Inc., an affiliate of Borrower, then no Cash
Collateral Fee or other fee shall be payable on such cash Collateral by
Lender."
5.1.3 Spread Fees shall be payable at the same times as are
provided in Section 5.2 for the payment of Cash Collateral Fees."
7. Notwithstanding Section 6.1(a)(ii), Borrower and Lender agree that
the standard settlement date that would apply to a purchase or sale of Foreign
Securities for purposes of the termination provisions of Section 6 shall be the
standard settlement date that would apply to a purchase or sale of such Foreign
Securities entered into at the time of a termination notice in the principal
market for such Foreign Securities.
8. Section 25.16 of this Agreement is deleted in its entirety and is
hereby replaced with the following: ""Cutoff Time " shall mean 12:30 p.m. (New
York City time) on any Business Day by which time a transfer of cash, securities
or other property must or may be made by Borrower or Lender to the other. "
9. Section 25.25 of this Agreement is deleted in its entirety and is
hereby replaced with the following:
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""Federal Funds Rate" means the rate for U.S. dollar funds
settled through the Federal Reserve System or other immediately
available U.S. dollar funds, as quoted by an independent broker of such
funds, selected by Borrower, for the last transaction completed prior
to 9:30 a.m. (New York City time) on the Business Day for which such
rate is determined, rounded up or down on a daily alternating basis to
the nearest whole multiple of one-eighth of one percent ".
10. Section 25 of this Agreement is hereby supplemented by adding a new
Section 25.48 as follows:
"25.48 "Reinvestment Rate" means, for any day, as to
Collateral consisting of cash, the rate of return for such day on the
investment agreed to by Lender and Borrower for such cash. If such
investment is a money market mutual fund, or a pooled cash account or
other short-term collective investment vehicle maintained by a bank or
other financial institution, then such rate of return shall be the
simple, daily yield (on a 360-day year basis) on such fund, account or
other vehicle for such day. "
11. Section 25.37 of this Agreement is hereby deleted in its entirety
and is hereby replaced with the following: "[RESERVED]".
12. This Agreement is hereby supplemented by adding a new Section 28 at
the end of this Agreement as follows:
"28. PATRIOT ACT. Borrower and its agents are required either
by law, regulation or order, or as a matter of good practice, to
establish policies and follow procedures for the purpose of guarding
against money- laundering activities. Among other things, those
policies and procedures include the identification of customers and the
source of moneys provided by customers, the identification of
"suspicious transactions" and the adoption of anti- money-laundering
programs. Lender hereby agrees that it will fully comply with all
applicable anti- money laundering laws, regulations and orders, as now
or hereafter in effect."
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