EXHIBIT 99.12
SECURITIES LOAN AGREEMENT
This Securities Loan Agreement (this "AGREEMENT") dated as of December 16, 2004
between PTR Holdings Inc. ("LENDER") and Bear, Xxxxxxx International Limited
("BORROWER") sets forth the terms and conditions under which Lender may lend to
Borrower ordinary shares of UTi Worldwide Inc., a British Virgin Islands company
(the "SECURITIES"). Capitalized terms not otherwise defined herein shall have
the meanings provided in Section 24.
The parties hereto agree as follows:
1. LOANS OF SECURITIES.
1.1 Subject to the terms and conditions of this Agreement, Lender agrees
to lend and Borrower agrees to borrow 1,271,276 Securities (the
"LOAN"), which terms may be amended during the Loan in accordance
with Section 23 of this Agreement.
1.2 Notwithstanding any other provision in this Agreement regarding when
the Loan commences, the Loan shall not occur (a) until the Loaned
Securities have been transferred in accordance with Section 16, (b)
unless an effective registration statement relating to the Loaned
Securities is available to enable Borrower to sell the Loaned
Securities in an underwritten offering through the Underwriters (as
defined below) pursuant to the Underwriting Agreement (as defined
below) and (c) until the occurrence of the First Closing Date, as
defined under the Underwriting Agreement dated December 16, 2004
among UTi Worldwide Inc., United Service Technologies Limited, and
Credit Suisse First Boston LLC and Bear, Xxxxxxx & Co. Inc., as
Representatives of the Several Underwriters named therein (the
"UNDERWRITING AGREEMENT"). A registration statement on Form S-3
(Registration No. 333-120040) (the "REGISTRATION STATEMENT")
relating to 1,271,276 Securities owned by Lender, among other
Securities, was declared effective on December 3, 2004. The parties
acknowledge that the Underwriting Agreement provides that a final
prospectus supplement containing the terms of the offering of the
Securities has been prepared and will be filed with the SEC in the
form first used to confirm sales of Securities (the "FINAL
PROSPECTUS SUPPLEMENT"), that Lender is making the Loan to Borrower
for purposes of delivery of the Loaned Securities to the
Underwriters pursuant to the Underwriting Agreement and that
provided the Registration Statement continues to be effective at the
time of the Loan, the Final Prospectus Supplement is intended to and
would enable Borrower to sell the Loaned
Securities in the underwritten offering through the Underwriting
Agreement.
1.3 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, IF ANY, MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF
BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE
LOANED SECURITIES.
2. TRANSFER OF LOANED SECURITIES.
2.1 Lender shall use its commercially reasonable efforts to transfer or
cause to be transferred Loaned Securities to Borrower on or before
the close of business on December 21, 2004 and in any event on or
before 11 A.M. (New York City time) on December 22, 2004. The Loan
will commence on the later of (x) December 22, 2004 and (y) the date
on which all conditions set forth in Section 1.2 are satisfied.
3. COLLATERAL.
3.1 Unless the Loan has been terminated, Borrower shall, no later than
the Cutoff Time on the second day immediately following the day on
which a Credit Downgrade has occurred, transfer to Lender Collateral
with a market value equal to 100% (the "MARGIN PERCENTAGE") of the
market value of the Loaned Securities determined as of such day or,
if such day is not a day on which a transfer of such Collateral may
be effected under Section 16, the next day on which such a transfer
may be effected (such date, the "PLEDGE DATE"). A "CREDIT DOWNGRADE"
occurs when Borrower receives a rating for its long term, unsecured
and unsubordinated indebtedness that is below A- by Standard and
Poor's Ratings Group, or its successor ("S&P"), or below A3 by
Xxxxx'x Investors Service, Inc., or its successor ("MOODY'S"), or,
if either S&P or Moody's ceases to rate such debt, an equivalent or
lower rating by a substitute rating agency mutually agreed upon by
Lender and Borrower.
3.2. The Collateral transferred by Borrower to Lender, as adjusted
pursuant to Section 8, shall be security for Borrower's obligations
in respect of the Loan. Borrower hereby pledges with, assigns to,
and grants Lender a continuing first priority security interest in,
and a first priority lien upon, the Collateral, which shall attach
upon the transfer of the Collateral by Borrower to Lender on the
Pledge Date and which shall cease upon the earlier to occur of (x) a
Credit Upgrade and (y) the transfer of the Loaned
2
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 New York Uniform
Commercial Code. It is understood that Lender may invest the
Collateral if such Collateral consists of cash, at its own risk, but
that Lender shall, during the term of the Loan, segregate Collateral
from all securities or other assets in its possession. Lender may
not pledge, repledge, hypothecate, rehypothecate, lend, relend, sell
or otherwise transfer the Collateral, or re-register Collateral
evidenced by physical certificates in any name other than Borrower's
except in the event of a Default by Borrower. A "CREDIT UPGRADE"
occurs when Borrower receives a rating for its long term, unsecured
and unsubordinated indebtedness that is A- or better by S&P or A3 or
better by Moody's, or, if either S&P or Moody's ceases to rate such
debt, an equivalent or higher rating by a substitute rating agency
mutually agreed upon by Lender and Borrower.
3.3. Except as otherwise provided herein, upon the earlier to occur of
(x) the day immediately following the day on which Borrower notifies
Lender pursuant to Section 21 that a Credit Upgrade has occurred and
(y) transfer to Lender of the Loaned Securities on the day the Loan
is terminated pursuant to Section 5, Lender shall be obligated to
transfer the Collateral, if any, (as adjusted pursuant to Section 8)
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 16, the next day on which such a transfer may
be effected.
3.4 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 the Loan; provided,
however, that such substituted Collateral shall (a) consist only of
cash or Cash Equivalents and (b) have a market value such that the
aggregate market value of such substituted Collateral, together with
all other Collateral for the Loan, shall equal or exceed the Margin
Percentage of the market value of the Loaned Securities.
4. FEES FOR LOAN.
4.1 (a) Borrower agrees to pay Lender a loan fee of 40 basis points per
annum (a "LOAN FEE"), computed daily on the Loan, based on the
aggregate market value, determined in accordance with Section 15
hereof, 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, equal to the amount
of all earnings or returns received by Lender in respect of any
Collateral consisting of
3
cash. 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 Fee 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.
4.2 Unless otherwise agreed, any Loan Fee or Cash Collateral Fee payable
hereunder shall be payable upon the earlier of (i) the fifteenth day
of the month following the calendar month in which such Loan Fee or
Cash Collateral Fee was incurred or (ii) the termination of the
Loan; provided that if a transfer of cash in accordance with Section
16 may not be effected on such fifteenth day referred to in clause
(i) or the day of such termination referred to in clause (ii), as
the case may be, the next day on which such transfer may be
effected.
Notwithstanding the foregoing, all Loan Fees shall be payable by Borrower
immediately in the event of a Default hereunder by Borrower and all Cash
Collateral Fees shall be payable immediately by Lender in the event of a
Default hereunder by Lender.
5. TERMINATION OF THE LOAN.
(a) Borrower may terminate the 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, and (b) Lender may terminate the Loan on
a termination date established by prior notice given to Borrower pursuant
to Section 21 prior to 2 p.m. (New York City time) on a Business Day. The
termination date established by a termination notice given by Lender to
Borrower shall be a Business Day no earlier than the third Business Day
following the date of such notice. Unless otherwise agreed, Borrower
shall, on or before the Cutoff Time on the termination date of the Loan,
transfer the Loaned Securities to Lender; provided, however, that upon
such transfer by Borrower, Lender shall transfer the Collateral, if any,
(as adjusted pursuant to Section 8) to Borrower in accordance with Section
3.3.
6. RIGHTS OF BORROWER IN RESPECT OF THE LOANED SECURITIES.
Except as set forth in Sections 7.1 and 7.2 and as otherwise agreed in
writing by Borrower and Lender, until Loaned Securities are required to be
redelivered to Lender upon termination of the Loan, Borrower shall have
all of the rights and 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.
4
7. DIVIDENDS, DISTRIBUTIONS, ETC.
7.1 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, including, but not limited
to: (a) cash and all other property, (b) stock dividends, (c)
securities received as a result of split ups of the Loaned
Securities and distributions in respect thereof, (d) interest
payments, and (e) all rights to purchase additional securities.
7.2 Any cash distribution made on or in respect of the Loaned
Securities, which Lender is entitled to receive pursuant to Section
7.1, 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 (except if
such Default resulted solely from an event described in Section 11.3
hereof) at the time of such payment. Non-cash distributions received
by Borrower 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.
7.3 Borrower shall be entitled to receive all cash distributions made on
or in respect of noncash Collateral that are not otherwise received
by Borrower, to the full extent it would be so entitled if the
Collateral had not been transferred to Lender. Any distributions of
cash made on or in respect of such Collateral that Borrower is
entitled to receive hereunder 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 (except if such Default resulted solely from an event
described in Section 11.3 hereof) at the time of such payment.
7.4 (a) Unless otherwise agreed, if (i) Borrower is required to
make a payment (a "BORROWER PAYMENT") with respect to cash
distributions on Loaned Securities under Sections 7.1 and 7.2
("SECURITIES DISTRIBUTIONS"), or (ii) Lender is required to
make a payment (a "LENDER PAYMENT") with respect to cash
distributions on Collateral under Section 7.3 ("COLLATERAL
DISTRIBUTIONS"), and (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
5
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.
7.5 To the extent that, under the provisions of Sections 7.1 through
7.4, (a) a transfer of cash or other property by Borrower would give
rise to a Margin Excess (as defined in Section 8.3 below) or (b) a
transfer of cash or other property by Lender would give rise to a
Margin Deficit (as defined in Section 8.2 below), 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).
8. XXXX TO MARKET.
8.1 Starting on the Pledge Date, Borrower shall xxxx to market daily the
Loan and in the event that at the close of trading on any Business
Day the market value of the Collateral for the Loan shall be less
than 100% of the market value of all the outstanding Loaned
Securities, Borrower shall transfer additional Collateral no later
than the close of the next Business Day so that the market value of
such additional Collateral, when added to the market value of the
other Collateral for the Loan, shall equal 100% of the market value
of the Loaned Securities.
8.2 In addition to any rights of Lender under Section 8.1, in the event
that at the close of trading on any Business Day following the
Pledge Date the aggregate market value of all Collateral for the
Loan shall be less than the Margin Percentage of the market value of
all the outstanding Loaned Securities (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
6
value of all other Collateral for the Loan, shall equal or exceed
the Margin Percentage of the market value of the Loaned Securities.
Unless otherwise agreed, such transfer is to be made no later than
the close of the next Business Day following the day of Lender's
notice to Borrower.
8.3 In the event that at the close of trading on any Business Day
following the Pledge Date 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 (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 the Loan,
after deduction of such amounts, shall thereupon not exceed the
Margin Percentage of the market value of the Loaned Securities.
Unless otherwise agreed, such transfer is to be made no later than
the close of the next Business Day following the day of Borrower's
notice to Lender.
9. REPRESENTATIONS.
Each party to this Agreement hereby makes the following representations
and warranties, which shall continue during the term of any Loan
hereunder:
9.1 Each party hereto represents and warrants that (a) it has the power
to execute and deliver this Agreement, to enter into the Loans
contemplated hereby and to perform its obligations hereunder; (b) it
has taken all necessary action to authorize such execution, delivery
and performance; and (c) this Agreement constitutes a legal, valid
and binding obligation enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to
general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether
considered in a proceeding in equity or at law.
9.2 Each party hereto represents and warrants that the execution,
delivery and performance by it of this Agreement and the Loan will
at all times comply with all applicable laws and regulations
including those of applicable regulatory and self-regulatory
organizations.
9.3 Each party hereto represents and warrants that (a) it is acting for
its own account and (b) it has made its own independent decision to
enter into the Loan and this Agreement and as to whether the Loan
and the Agreement are appropriate or proper for it is based upon its
own judgment and upon advice of such advisors as each such party
deems necessary. Each party acknowledges and agrees that it is not
relying, and has not relied, upon
7
any communication (written or oral) of the other party or any
affiliate, employee or agent of such other party with respect to the
legal, accounting, tax or other implications of the Loan and the
Agreement and that each party has conducted its own analyses of the
legal, accounting, tax and other implications hereof and thereof; it
being understood that information and explanations related to the
terms and conditions of the Loan or this Agreement shall not be
considered investment advice or a recommendation to enter into the
Loan or this Agreement. Each party is entering into the Loan and
this Agreement with a full understanding of all of the terms and
risks hereof and thereof (economic and otherwise) and is capable of
evaluating and understanding (on its own behalf or through
independent professional advice), and understands and accepts, the
terms, conditions and risks. Each party is also capable of assuming
(financially and otherwise), and assumes, those risks. Each party
acknowledges that neither the other party nor any affiliate,
employee or agent of such other party is acting as a fiduciary for
or an advisor to it in respect of the Loan or this Agreement.
9.4 Borrower represents and warrants that (a) it will have at the time
of transfer of any Collateral, the right to grant to Lender a first
priority security interest therein and a first priority lien
thereupon subject to the terms and conditions hereof, and (b) it (or
the person to whom it relends the Loaned Securities) is borrowing or
will borrow the Loaned Securities (except for Loaned Securities that
qualify as "exempted securities" under Regulation T of the Board of
Governors of the Federal Reserve System) 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.
9.5 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.
9.6 Lender is the record and beneficial owner of the Securities, and
Lender will transfer all Loaned Securities to Borrower hereunder
free and clear of all liens, encumbrances, equities and claims.
9.7 Lender did not obtain, directly or indirectly, any of the Securities
transferred to Borrower hereunder for any Loan, from or using the
assets of any Plan.
9.8 Lender represents and warrants that it owns 3,084,501 Securities,
which represent 10.0% of the Securities outstanding as of December
15, 2004
8
and that each of the footnotes relating to such Lender in the
"Selling Shareholders" section of the final Prospectus Supplement
dated December 16, 2004 under the Registration Statement relating to
the sale of the Loaned Securities will be true and correct as of the
date of such final Prospectus Supplement.
10. COVENANTS.
10.1 Each party hereto agrees and acknowledges that (a) the Loan is a
"securities contract," as such term is defined in Section 741(7) of
Title 11 of the United States Code (the "BANKRUPTCY CODE"), (b) each
and every transfer of funds, securities and other property under
this Agreement and the Loan is a "settlement payment" or a "margin
payment," as such terms are used in Sections 362(b)(6) and 546(e) of
the Bankruptcy Code, and (c) the rights given to Borrower and Lender
hereunder upon a Default by the other party 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.
10.2 Borrower agrees to be liable as principal with respect to its
obligations hereunder.
10.3 Lender agrees to be liable as principal with respect to its
obligations hereunder.
10.4 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.
10.5 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.
11. EVENTS OF DEFAULT.
The Loan may be terminated immediately upon the occurrence of any one or
more of the following events (individually, a "DEFAULT") at the option of
the non-Defaulting party (the "NON-DEFAULTING PARTY") upon delivery of
notice by the Non-Defaulting Party pursuant to Section 21 to the
defaulting party (which option shall be deemed to have been exercised,
even if no notice is
9
given, immediately upon the occurrence of an event specified in subsection
11.5 below):
11.1 if any Loaned Securities shall not be transferred to Lender upon
termination of the Loan as required by Section 5;
11.2 if either party (i) shall fail to transfer to the other party
amounts in respect of distributions required to be transferred by
Section 7, (ii) shall have received notice of such failure from the
Non-Defaulting Party, and (iii) shall not have cured such Default by
the Cutoff Time on the next day after such notice on which a
transfer of cash may be effected in accordance with Section 16;
11.3 if (i) either party shall commence as debtor any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law, or seek the appointment of a receiver,
conservator, trustee, custodian or similar official for such party
or any substantial part of its property, (ii) any such case or
proceeding shall be commenced against either party, or another shall
seek such an appointment, or any application shall be filed against
either party for a protective decree under the provisions of the
Securities Investor Protection Act of 1970, which (A) is consented
to or not timely contested by such party, (B) results in the entry
of an order for relief, such an appointment, the issuance of such a
protective decree or the entry of an order having a similar effect,
or (C) is not dismissed within 30 days, (iii) either party shall
make a general assignment for the benefit of creditors, or (iv)
either party shall admit in writing its inability to pay its debts
as they become due;
11.4 if Borrower shall have been suspended or expelled from membership or
participation in any national securities exchange or registered
national securities association of which it is a member or other
self-regulatory organization to whose rules it is subject or if it
is suspended from dealing in securities by any federal or state
government agency thereof and such suspension or expulsion shall
have a material adverse effect on its ability to perform its
obligations hereunder;
11.5 if either party shall have its license, charter, or other
authorization necessary to conduct a material portion of its
business or perform its obligations hereunder withdrawn, suspended
or revoked by any applicable federal or state government or agency
thereof;
10
11.6 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;
11.7 if either party notifies the other, orally or in writing, of its
inability to or its intention not to perform its obligations
hereunder or otherwise disaffirms, rejects or repudiates any of its
obligations hereunder;
11.8 if any Collateral shall not be transferred to Lender as required by
Section 3.1 or transferred to Borrower as required by Section 3.3 or
5;
11.9 if either party shall fail to transfer Collateral as required by
Section 8; or
11.10 if either party (i) shall fail to perform any material obligation
under this Agreement not specifically set forth in subsections 11.1
through 11.9 above, including, but not limited to, the payment of
fees as required by Section 4 and the payment of transfer taxes as
required by Section 14, (ii) shall have received notice pursuant to
Section 21 of such failure from the Non-Defaulting Party and (iii)
shall not have cured such failure by the Cutoff Time on the next day
after such notice on which a transfer of cash may be effected under
Section 16;
12. LENDER'S REMEDIES.
Upon the occurrence of a Default under Section 11 entitling Lender to
terminate the Loan (other than a Default resulting from the failure by
Borrower to transfer Collateral to Lender as required by Section 3.1),
Lender shall have the right (without further notice to Borrower), in
addition to any other remedies provided herein or under applicable law,
(a) to purchase a like amount of Loaned Securities ("REPLACEMENT
SECURITIES") in the principal market for such Loaned Securities in a
commercially reasonable manner (it being understood that it would be
commercially reasonable if on each Business Day immediately following the
date on which Lender receives notice of such Default, Lender purchases a
number of Securities no less than 10% but no more than 15% of the average
daily trading volume reported for such Securities during the four calendar
weeks preceding the week in which such purchase is to be effected (or, if
the remaining number of such Securities to be purchased is less than 10%
of such average daily trading volume, such remaining number of the
securities to be purchased by Lender)), (b) to sell any Collateral, if
any, pledged to Lender at the time, 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 against the payment of the
purchase price for such Replacement Securities and any amounts due to
Lender under Sections 4, 7, 14 and 17. In the event Lender shall exercise
such
11
rights, Borrower's obligation to return a like amount of the Loaned
Securities shall terminate. Lender may similarly apply the Collateral, if
any, and any proceeds thereof to any other obligation of Borrower under
this Agreement, including Borrower's obligation with respect to
distributions paid to Borrower (and not forwarded to Lender) in respect of
the 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, if any, Borrower
shall be liable to Lender for the amount of such excess together with
interest thereon at a rate equal to the cost to Lender to borrow the
funding necessary for its payment of such purchase price from the date of
purchase of such Replacement Securities until the date of payment of such
amount by Borrower. The purchase price of Replacement Securities purchased
under this Section 12 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 12, 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, if any, 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 most recent
closing bid quotation from such a source. Upon the satisfaction of all
obligations hereunder, any remaining Collateral shall be returned to
Borrower.
13. BORROWER'S REMEDIES.
Upon the occurrence of a Default under Section 11 entitling Borrower to
terminate all Loans hereunder, Borrower shall have the right (without
further notice to Lender), in addition to any other remedies provided
herein or under applicable law, (a) to purchase a like amount of
Collateral, if any, pledged at the time to Lender ("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 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 by Lender under Sections
4, 7 and 17. 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. 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
12
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 the cost to Borrower to borrow the
funding necessary for its payment of such purchase price, from the date of
such sale until the date of payment of such deficiency by Lender. The
purchase price of any Replacement Collateral purchased under this Section
13 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, 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 most recent
closing bid quotation from such a source. Upon the satisfaction of all
Lender's obligations hereunder, any remaining Loaned Securities (or
remaining cash proceeds thereof) shall be returned to Lender. Without
limiting the foregoing, 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.
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 shall be paid by Borrower.
15. MARKET VALUE.
15.1 Unless otherwise agreed, if the principal market for the Securities
to be valued is a national securities exchange in the United States,
their market value shall be determined by their last sale price on
such exchange on the preceding Business Day or, if there was no sale
on that day, by the last sale price on the next preceding Business
Day on which there was a sale on such exchange, all as quoted on the
Consolidated Tape or, if not quoted on the Consolidated Tape, then
as quoted by such exchange.
13
15.2 Except as otherwise agreed, if the principal market for the
Securities to be valued is the over-the-counter market, their
market value shall be determined as follows: (a) if the securities
are quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), their market value shall
be the closing sale price on NASDAQ on the preceding Business Day
or, if the Securities are issues for which last sale prices are
not quoted on NASDAQ, the closing bid price on such day or (b) if
the Securities to be valued are not quoted on NASDAQ, their market
value shall be the highest bid quotation as quoted in any of The
Wall Street Journal, the National Quotation Bureau pink sheets,
the Salomon Brothers quotation sheets, quotations sheets of
registered market makers and, if necessary, dealers' telephone
quotations on the preceding Business Day. In each case referred to
in subsections (a) or (b) above, if the relevant quotation did not
exist on such day, then the relevant quotation on the next
preceding Business Day in which there was such a quotation shall
be the market value.
15.3 Unless otherwise agreed, if the Securities to be valued are
Government Securities, their market value shall be the average of
the bid and ask prices as quoted on Prophesy at 3:30 P.M. New York
time on the Business Day preceding the date on which such
determination is made. If the Securities are not so quoted on such
day, their market value shall be determined as of the next
preceding Business Day on which they were so quoted. If the
Securities to be valued are Government Securities that are not
quoted on Prophesy, their market value shall be determined as of
the close of business on the preceding Business Day in accordance
with market practice for such Securities.
15.4 All determinations of market value under Sections 15.1, 15.2 and
15.3 shall include, where applicable, accrued interest to the
extent not already included therein (other than any interest
transferred to the other party pursuant to Section 7). The
determinations of market value provided for in this Section 15
shall apply for all purposes under this Agreement, except for
purposes of Section 12 and 13.
16. TRANSFERS.
16.1 All transfers by either Borrower or Lender of Loaned Securities
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
(provided that bond transfer powers shall be provided only upon a
distribution consisting of bonds made during the term of the Loan
on or in respect of the Loaned
14
Securities), as the case may be, and to the extent Lender has a
securities account with Bear Xxxxxxx International Limited and the
Loaned Securities are not registered in the same name as the name on
such account, 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.
16.2 All transfers of cash Collateral hereunder shall be by (a) wire
transfer in immediately available, freely transferable funds, (b)
such other means as Borrower and Lender may agree. All other
transfers of cash hereunder shall be made in accordance with the
preceding sentence or by delivery of a certified or official bank
check representing next-day New York Clearing House Funds.
16.3 A transfer of securities or cash may be effected under this Section
16 on any day except (a) a day on which the transferee is closed for
business at its address set forth 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.
16.4 For the avoidance of doubt, the parties agree and acknowledge that
the term "SECURITIES," as used herein (except in this Section 16),
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.
17. CONTRACTUAL CURRENCY.
17.1 Borrower and Lender agree that: (a) any payment in respect of a
distribution under Section 7 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
the Loan under this Agreement shall be in the currency agreed upon
by
15
Borrower and Lender in connection with the 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.
17.2 If for any reason the amount in the Contractual Currency received
under Section 17.1, including amounts received after conversion of
any recovery under any judgment or order expressed in a currency
other than the Contractual Currency, is less than 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 such shortfall.
17.3 If for any reason the amount in the Contractual Currency received
under Section 17.1 exceeds the amount in the Contractual Currency
due in respect of this Agreement, then the party receiving the
payment will (unless a Default has occurred and such party is the
Non-Defaulting Party) refund promptly the amount of such excess to
the party that made such payment.
18. APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF THAT WOULD APPLY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
19. WAIVER.
The failure of a party to this Agreement to exercise any right granted or
insist upon strict adherence to any term of this Agreement on any occasion
shall not be considered a waiver or deprive that party of the right
thereafter to exercise such right, or any other right or 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.
16
20. REMEDIES.
All remedies hereunder and all obligations with respect to the Loan shall
survive the termination of the Loan, return of Loaned Securities and
termination of this Agreement.
21. NOTICES AND OTHER COMMUNICATIONS.
Unless another address is specified in writing by the respective party to
whom any notice or other communication is to be given hereunder, all such
notices or communications shall be in writing or confirmed in writing and
delivered at the respective addresses set forth in Schedule A attached
hereto. All notices shall be effective upon actual receipt, provided,
however, that if any notice shall be received by a party on a day on which
such party is not open for business at its office located at the address
set forth in Schedule A, such notice shall be deemed to have been received
by such party at the opening of business on the next day on which such
party is open for business at such address.
22. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
22.1 EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE
EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN 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.
22.2 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.
23. MISCELLANEOUS.
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
17
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 enure to the benefit of Borrower and Lender and their
respective heirs, representatives, successors and assigns. This Agreement
may be terminated by either party upon written notice to the other,
subject only to fulfillment of any obligations then outstanding. This
Agreement shall not be modified, except by an instrument in writing signed
by the party against whom enforcement is sought. 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. This Agreement
may be executed in counterparts, each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually
executed counterparty of this Agreement.
24. DEFINITIONS.
For the purposes hereof:
24.1 "BUSINESS DAY" shall mean, with respect to the Loan, a day on which
regular trading occurs in the principal market for the Loaned
Securities, provided, however, that for purposes of Section 15, such
term shall mean a day on which regular trading occurs in the
principal market for the Securities whose value is being determined.
24.2 "CLEARING ORGANIZATION" shall mean The Depository Trust Company, or,
if agreed to by Borrower and Lender, such other clearing agency at
which Borrower (or Borrower's agent) and Lender (or Lender's agent)
maintain accounts, or a book-entry system maintained by a Federal
Reserve Bank.
24.3 "CASH EQUIVALENTS" shall mean (a) securities issued or directly and
fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition,
(b) certificates of deposit with maturities of six months or less
from the date of the acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in
each case with any domestic commercial bank having capital and
surplus in excess of $500 million and Xxxxxxxx Bank Watch Rating of
"B" or better, (c) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in
clause (a) above entered into with any financial institution meeting
the qualifications specified
18
in clause (b) above, (d) commercial paper having the highest rating
obtainable from Moody's or S&P and in each case maturing within six
months after the date of acquisition and (e) money market funds at
least 95% of the assets of which constitute cash or Cash Equivalents
of the kinds described in clauses (a) through (d) of this
definition.
24.4 "COLLATERAL" shall mean, whether now owned or hereafter acquired and
to the extent permitted by applicable law, (a) cash or Cash
Equivalents transferred to Lender pursuant to Section 3 or 8, (b)
any property substituted therefor pursuant to Section 3.4, (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. For purposes of return of
Collateral by Lender or purchase or sale of securities pursuant to
Section 12 or 13, such term shall include securities of the same
issuer, class and quantity as the Collateral initially transferred
by Borrower to Lender.
24.5 "CUTOFF TIME" shall mean 11:45 a.m. (New York City time).
24.6 "DEFAULT" shall have the meaning assigned in Section 9.
24.7 "LOANED SECURITY" shall mean any Security transferred in the Loan
until such Security (or an identical Security) is transferred back
to Lender hereunder, except that, if any new or different security
shall be exchanged for any Loaned Security by recapitalization,
merger, consolidation or other corporate action, such new or
different security shall, effective upon such exchange, be deemed to
become a Loaned Security in substitution for the former Loaned
Security for which such exchange is made.
24.8 "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.
19
IN WITNESS WHEREOF, the parties hereto have caused this Securities Loan
Agreement to be duly executed as of the date first above written.
LENDER:
PTR HOLDINGS INC.
By: /s/ Ian Whitecourt
------------------------------
Name: Ian Whitecourt
Title: Director
BORROWER:
BEAR, XXXXXXX INTERNATIONAL LIMITED
By: /s/ XXXXX XXXXX
------------------------------
Name: Xxxxx Xxxxx
Title:
SCHEDULE A
NAMES AND ADDRESSES FOR COMMUNICATIONS
Borrower:
Bear, Xxxxxxx International Limited
Xxx Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Derivatives Operation - 7th Floor
Facsimile No.: (000) 000-0000
With a copy to:
Bear, Xxxxxxx International Limited
One Canada Square
Xxxxxx X00 0XX, Xxxxxxx
Attention: Derivatives Middle Office
Facsimile No.: 011-44-207-516-6805
With a copy to:
Bear, Xxxxxxx International Limited
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Equity Derivatives - 4th Floor
Facsimile No.: (000) 000-0000
Lender:
PTR Holdings Inc.
9 Columbus Centre
Pelican Drive
Road Town, Tortola
British Virgin Islands
With a copy to:
Xxxx Xxxxxxx
Telephone No.: 00 000 000 00
Facsimile No.: 35 000 000 000
A-1
