Exhibit 99.3
SECURITIES LOAN AGREEMENT
This Securities Loan Agreement (this "AGREEMENT") dated as of December 16, 2004
between Wagontrails Investments N.V. ("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 349,911 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 728,214 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
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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
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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.
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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
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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 value of all other Collateral
for the Loan, shall equal or exceed the Margin
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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) each party hereto represents and warrants
that 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 any communication (written or
oral) of the other party or any affiliate,
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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 728,214 Securities,
which represent 2.35% of the Securities outstanding as of December
15, 2004 and that each of the footnotes relating to such Lender in
the "Selling Shareholders" section of the final Prospectus
Supplement dated December
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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 given, immediately upon the occurrence of an event
specified in subsection 11.5 below):
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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;
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;
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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 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
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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 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
12
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.
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
13
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 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
14
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 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
15
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.
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
16
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 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
17
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 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
18
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:
WAGONTRAILS INVESTMENTS N.V.
By: /s/ Ian Whitecourt
----------------------------------
Name: Ian Whitecourt
Title: Director
BORROWER:
BEAR, XXXXXXX INTERNATIONAL LIMITED
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Senior Managing Director
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:
------
Wagontrails Investments N.V.
P.O. Box 1915
Kempton Park 0000
Xxxxxxxxxxxx, Xxxxx Xxxxxx
Attn: Xxxxxxx X. Xxxxxxx
With a copy to:
Xxxx Xxxxxxx
Telephone No.: 00 000 000 00
Facsimile No.: 35 000 000 000
A-1
