EXHIBIT 99.7b
SECURITIES LENDING AGENCY AGREEMENT
This SECURITIES LENDING AGENCY AGREEMENT, dated as of _____________, 20___
(this "Agency Agreement"), is entered into by and between (i) CITIBANK, N.A., a
national banking organization (the "Agent") and (ii) JEFFERSON PILOT VARIABLE
FUND, INC., a corporation organized under the laws of Maryland (the "Lender").
Capitalized terms used herein without definition shall have the meaning assigned
thereto in the Lending Agreements (as defined below).
W I T N E S S E T H :
THAT WHEREAS, the Lender wishes to appoint the Agent, and the Agent is
willing to accept such appointment, to lend certain of the Lender's securities
upon the terms and conditions set forth in this Agency Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Agent and the Lender agree as
follows:
1. APPOINTMENT AND ACCEPTANCE; AGENT'S AUTHORIZATION.
a. The Lender hereby appoints the Agent, and the Agent hereby accepts
its appointment, as the Lender's securities lending agent solely with the
duties and obligations set forth in this Agency Agreement. No covenants or
obligations shall be implied as a result of this Agency Agreement.
b. The Lender hereby authorizes and directs the Agent to arrange and
administer loans (the "Loans") of securities maintained in the accounts
identified on Schedule I hereto (such accounts, the "Designated Accounts")
(i) to the borrowers identified on Exhibit A hereto or as otherwise
identified by the Lender in writing from time to time (the "Approved
Borrowers"), (ii) pursuant to the Master Securities Lending Agreements
signed by the Agent for, on behalf and as agent of, the Lender,
substantially in the form of Exhibit C hereto (the "Lending Agreements"),
and (iii) within the parameters for collateralization set forth on Schedule
II hereto or as otherwise designated in writing by the Lender. The Lender
agrees to be bound by all of the terms and conditions of the Lending
Agreements, including without limitation, the representations, warranties
and agreements contained in such Lending Agreements.
2. AGENT'S SERVICES. The Lender hereby directs the Agent and the Agent agrees
to perform the following functions:
a. To negotiate the rebates and/or lending fees with the Approved
Borrowers.
b. To sign such documents and instruments, including but not limited to
repurchase agreements, tri-party agreements or other relevant agreements
for the investment of acceptable collateral, as designated on Schedule II
hereto (the "Collateral").
c. To safekeep on Lender's behalf any and all securities delivered as
Collateral by the Approved Borrowers in respect of Loans, in accordance
with the service standards furnished to the Lender by the Agent from time
to time. Subject to the terms hereof, such securities delivered as
Collateral shall be segregated on the Agent's books and records as being
maintained solely for the benefit of the Lender.
d. To use its best efforts to invest on Lender's behalf all cash
Collateral delivered by Approved Borrowers in respect of Loans in the
investments designated by the Lender in Exhibit B hereto.
e. To perform daily the "▇▇▇▇-to-market" function described in the
Lending Agreements as Lender's agent and to request and return Collateral
as contemplated in the Lending Agreements.
f. To claim from the Approved Borrowers, distributions in respect of
securities lent to the Approved Borrower on Lender's behalf on a timely
basis.
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g. To provide the Lender a statement with respect of the Loans, as
agreed upon separately by the parties hereto.
3. REPRESENTATIONS AND WARRANTIES. The Lender and the Agent each hereby
represents and warrants, which representations and warranties shall be
continuing and shall be deemed reaffirmed on every day a Loan is
outstanding:
a. The execution and delivery of this Agency Agreement and the Lending
Agreements and the entering into the transactions contemplated in this
Agency Agreement and the Lending Agreements and the performance of its
obligations hereunder and thereunder, including solely with respect to the
Lender, any direction by the Lender for the investment of cash collateral,
(i) have been duly and validly authorized by all necessary action, (ii) do
not and will not conflict with, contravene or violate any provision of such
party's organizational documents (including, without limitation, its
certificate of incorporation and bylaws), (iii) do not and will not result
in a violation of any law, rule or regulation, or any judgment, order,
decree, determination or award of any court or governmental authority,
which is now in effect and applicable to such party, or (iv) do not require
the consent or approval of any government agency or instrumentality, except
any such consents and approvals which such party has obtained.
b. This Agency Agreement is, and the Lending Agreements and the
transactions contemplated therein will be, legal, and valid and binding
upon it and enforceable against it in accordance with their terms.
c. The person executing this Agency Agreement on its behalf has been,
and all Authorized Persons acting on behalf of such party will have been,
duly and properly authorized to do so.
d. Solely with respect to the Lender, the Securities in the Designated
Accounts are, and shall be at the time Loans are made, free and clear of
all liens and encumbrances, and the Lender has, full right, title and
interest in and to such Securities and has not transferred, assigned or
encumbered any interest or rights with respect to this Agency Agreement,
the Lending Agreements or transactions contemplated hereby or thereby.
4. INDEMNIFICATION.
a. The Agent agrees to indemnify the Lender from any liability that is
incurred by the Lender resulting from the Agent's negligence or willful
misconduct in performing its duties hereunder, PROVIDED THAT, the liability
of the Agent shall be limited to the Market Value of the Loaned Securities
to which such loss or damage relates, at the time of such negligence or
willful misconduct, and PROVIDED FURTHER THAT, the Agent shall not be
liable for (i) special, consequential or indirect damages, lost profits or
loss of business, (ii) any liability incurred as a result of the actions or
inactions of any depositories or any third party agents of Agent
(including, without limitation, any depositories such as The Depository
Trust Company and The Participants Trust Company and pricing agencies),
(iii) any loss arising out of any suspension of the Agent's duties and
obligations hereunder as a result of any law, regulation, decree, order or
governmental act which prevents or limits the performance of such duties
and obligations and (iv) any loss arising out of any reason, cause or
contingency beyond the Agent's reasonable control, including (without
limitation) natural disasters, nationalization, currency restrictions, act
of war, act of terrorism, act of God, postal or other strikes affecting the
market infrastructure, or the failure, suspension or disruption of any
relevant stock exchange, clearance system or market.
b. The Lender agrees to indemnify the Agent from any liability incurred
by the Agent resulting from any action taken or omitted to be taken by the
Agent pursuant to the terms of this Agency Agreement, or the Lending
Agreements or as a consequence of carrying out any instructions of the
Lender, including, without limitation, instructions transmitted orally, by
telephone, telex, facsimile transmission or any other means agreed to
between the Lender and the Agent; provided that, the Lender shall not be
liable for loss resulting from the Agent's negligence or willful
misconduct.
(c) (i) If there occurs a default by the Approved Borrower under
Section 16(b)(iv) of a Lending Agreement which results in the termination
of a Loan and the Approved Borrower is unable to redeliver
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the Loaned Securities, then, the Agent shall as soon as practicable and
without any further authorization by or direction from the Lender, upon
receipt of reasonable evidence of such event of default, pay into the
Lender's account (Y) an amount equal to the difference between (1) the
value of the Loaned Securities at the time of default, or, if at such time
a value is not determinable, the latest prior time at which a value is
determinable (the "Indemnification Payment Time") and (2) the value of the
Collateral as determined on the "relevant date" (as defined below) or at
the Indemnification Payment Time, whichever is greater; PROVIDED THAT, to
the extent that the value of the Collateral at the Indemnification Payment
Time is less than the value of the Collateral on the relevant date as a
result of the negligence or willful default of the Agent, then the
difference between (1) and (2) shall be increased by an amount equal to the
change in the value of the Collateral, or (Z) 100% of the value of the
Loaned Securities on the relevant date, whichever is less;
As used in this Section, the "relevant date" means the date which is
the later of (A) the Settlement Date (as defined in the Lending Agreements)
of the relevant Loan or (B) the last date (prior to the default by the
Approved Borrower) on which the Agent completed a successful ▇▇▇▇ to market
process (namely a ▇▇▇▇ to market process which either did not result in a
demand for additional collateral, or if a demand was made, resulted in the
delivery of such additional Collateral), PROVIDED THAT if there was any
later date (prior to the default of the Approved Borrower) on which the
Approved Borrower was still able and willing to deliver sufficient
additional Collateral but the Agent failed to complete a successful ▇▇▇▇ to
market process due to its negligence or willful default, then such date (or
the last such dates, if more than one) shall be the relevant date.
References to the "value" of Securities or other things shall mean the
value determined in accordance with the Agent's usual procedures under the
Lending Agreements.
(ii) The Lender acknowledges and agrees that the investment of cash
Collateral is for the Lender's account and the Lender agrees that to the
extent any investment losses reduce the amount of cash below the amount
required by the Loan and/or ▇▇▇▇ to market process, the Lender will, on the
Agent's demand, pay to the Agent such amount (together with any applicable
fees or charges) in cash which the Agent will receive and use as, or
reimburse for, Collateral. If the Lender fails to make any payment due the
Agent, the Lender will be liable to the Agent for the amount of any such
payment, together with interest on such amount, from the date of the
Agent's demand referred to above until payment of such liability.
(iii) The Lender and Agent each consent to the other's reservation of the
right, without imposing any obligation not otherwise specifically set forth
herein, (A) to terminate or modify any Loan at any time, and (B) the right
to review and delete any Approved Borrowers and/or investment
counterparties at any time.
5. SECURITY INTEREST. As security for any liability arising under this
Agreement of the Lender to the Agent, the Lender hereby (a) pledges and
assigns to, and grants to the Agent a continuing security interest in and a
lien on, the Collateral and the proceeds thereof and the Agent shall have,
with respect thereto, all of the rights and remedies of a secured party
under applicable law and (b) grants to the Agent a right of set-off against
any assets in any custody account listed in Schedule I of this Agreement.
6. SUBROGATION. If the Agent makes any transfer or payment as a result of a
failure by an Approved Borrower to return any Loaned Securities, the Lender
agrees that the Agent is and will be subrogated to all the Lender's rights
with respect to such failure in and to the Lending Agreements and the
Collateral under such Lending Agreements and the Lender hereby assigns to
the Agent all such rights.
7. ADVICE OF COUNSEL. The Agent may (but shall not be obligated) obtain advice
of Lender's counsel in respect of its rights and obligations under this
Agency Agreement and the Lending Agreements and shall be fully protected
for any actions taken or not taken pursuant to such advice of counsel.
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8. SECURITIES LENDING FEES.
a. In consideration of the services provided hereunder the Lender agrees
to pay to the Agent an amount equal to 30% of the investment income (net of
rebates) on cash Collateral delivered to the Agent on Lender's behalf in
respect of any Loans by the Approved Borrowers, as well as reasonable fees
paid in connection with transactions for which non-cash Collateral is
provided by Approved Borrowers.
b. The fees payable to Agent hereunder shall be substantiated in the
statements provided to the Lender by the Agent under the terms of this
Agency Agreement and such fees shall be payable on a monthly basis. The
Agent is hereby authorized and directed to withhold such fees from the
amounts payable to Lender in respect of such investment and fee income or
as otherwise agreed in writing.
9. ADVANCES. The Lender agrees to repay the Agent promptly for any advances of
funds that the Agent may from time to time, in its sole discretion, make to
the Lender in connection with and to facilitate the transactions
contemplated in this Agency Agreement and the Lending Agreements. In such
event, the Lender shall be liable to the Agent for the amount of such
advance or payment, together with interest on such amounts, at a rate per
annum equal to the Agent's internal pool fund rate, from the date of the
Agent's advance or the due date of such payment, as appropriate, until
payment by the Lender of such liability. The Agent may withhold all such
amounts from the amounts payable to the Lender hereunder.
10. DISCLOSURE/CONFIDENTIALITY; NON-PUBLIC INFORMATION.
a. The Lender and Agent each agree and understand that each party may
disclose the other's identity or information regarding the terms of this
Agency Agreement, the Lending Agreements and the transactions contemplated
in such agreements if required to do so by any court order or similar
process or by order of an authority having power and jurisdiction over the
respective party, and Lender agrees that the Agent may disclose the
Lender's identity, as deemed necessary in connection with the consummation
of any Loans.
b. The Lender agrees that no printed materials or other matter in any
language which mention Citigroup Inc., Citibank, N.A. or the rights, powers
or duties of the Agent shall be issued by the Lender or on the Lender's
behalf unless Citibank, N.A. shall first have given its specific written
consent.
c. Lender agrees that, notwithstanding anything else contained in this
Agency Agreement and any other agreement between the Lender and Citibank,
N.A. and its affiliates (collectively, "Citigroup"), neither Citibank, N.A.
nor any of its affiliates shall incur any liability for failure to make
use, in its role as Agent within the terms of this Agency Agreement, of
non-public information, the use of which may be prohibited by the legal and
regulatory environment and by internal Citigroup policies, whether or not
the use of such information in a specific instance might not constitute a
breach of any such applicable laws, regulations or polices.
11. NOTICE OF SALE. The Lender agrees to give prompt notice, and to cause all
of the investment managers and/or advisors with access to the Designated
Accounts to give prompt notice, to the Agent of any securities in the
Designated Accounts it or they, as applicable, shall or have sold. The
Lender understands that the Agent shall have no liability as a result of
the failure of the Lender and/or its investment managers/advisors to give
sufficient notice of sale of securities in the Designated Accounts to
provide for the recall of such securities in accordance with the terms of
the Lending Agreements.
12. NOTICES. Except as otherwise specifically provided herein, all notices
and other communications shall be in writing in the English language and
shall be made either by facsimile or by prepaid first class mail (except
that notice of termination, if mailed, shall be sent by prepaid registered
or certified mail) at the
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address listed below or at such other address as a party may advise the
other parties hereto in writing from time to time. Notices provided to the
parties hereto shall be effective upon receipt.
If to Agent: CITIBANK, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: SECURITIES LENDING DESK - COMPLIANCE OFFICER
If to Lender: JEFFERSON PILOT VARIABLE FUND, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇ - Treasurer
13. TERMINATION.
a. Each party may terminate this Agency Agreement and the Agent's
authorization as securities lending agent for Lender at any time upon
giving not less than 45 days prior written notice to the other. The parties
hereby acknowledge and agree that the Agent shall continue (unless
specifically instructed to terminate the Loans) to act (with all power,
authority and protection set forth herein) with respect to any Loans
outstanding at the time notice of termination is given until such Loans
terminate.
b. Notwithstanding anything else contained herein, the right of any
party to be indemnified under this Agency Agreement and the representations
and warranties included herein shall survive the termination of this Agency
Agreement.
14. MISCELLANEOUS.
a. AMENDMENTS. This Agency Agreement shall not be amended except by a
written agreement between the parties and any purported amendment made in
contravention of this section shall be null and void and of no effect
whatsoever.
b. ASSIGNMENT. This Agency Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and permitted
assigns. Except in the case of a delegation by the Agent of its duties
hereunder to an affiliate, neither party shall assign, transfer or charge
all or any rights, benefits or obligations hereunder without the consent of
the other party. Any purported assignment, transfer or charge made in
contravention of this section shall be null and void and of no effect
whatsoever.
c. ENTIRE AGREEMENT. This Agency Agreement shall constitute the entire
agreement between the parties and, unless otherwise expressly agreed in
writing, shall supersede all prior agreements and understandings, written
or oral relating thereto, between the parties.
d. NO IMPLIED WAIVER. The parties hereto agree that (i) the rights,
powers, privileges and remedies stated in this Agency Agreement are
cumulative and not exclusive of any rights, powers, privileges and remedies
provided by law, unless specifically waived, and (ii) any failure or delay
in exercising any right, power, privilege or remedy will not be deemed to
constitute a waiver thereof and a single or partial exercise of any right,
power, privilege or remedy will not preclude any subsequent or further
exercise of that or any other right, power, privilege or remedy.
e. FURTHER ASSURANCES. The Lender agrees to provide such additional
information and execute and deliver such further documentation as Agent may
reasonably request in connection with and in furtherance of the
transactions authorized herein.
f. PARTIAL INVALIDITY. In the event that any provision of this Agency
Agreement, or the application thereof to any person or circumstances, shall
be determined by a court of proper jurisdiction to be invalid or
unenforceable to any extent, the remaining provisions of this Agency
Agreement, and the application of such provisions to persons or
circumstances other than those as to which it is held invalid or
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unenforceable, shall be unaffected thereby and such provisions shall be
valid and enforced to the fullest extent permitted by law in such
jurisdiction.
g. GOVERNING LAW AND JURISDICTION. (i) This Agency Agreement shall be
governed by and construed in accordance with the laws of the State of New
York and the parties agree that the courts of the State of New York shall
have jurisdiction to hear and determine any suit, action and proceeding and
settle any dispute which may arise out of or in connection with this Agency
Agreement and for such purposes, each irrevocably submits to the
non-exclusive jurisdiction of such courts.
(ii) Each party hereto irrevocably waives (A) any right to a trial by jury;
(B) any objection it may have at any time to the laying of venue of any
actions or proceedings brought in any court designated hereby, any claim
that such actions or proceedings have been brought in an inconvenient forum
and the right to object that any court designated hereby does not have
jurisdiction over such party; and (C) to the fullest extent permitted by
applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or similar grounds from actions or proceedings by or in any
court, and irrevocably agrees, to the fullest extent permitted by
applicable law, that it will not claim such immunity in any such actions or
proceedings.
h. COUNTERPARTIES. This Agency Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Securities Lending
Agency Agreement to be executed as of the date set forth above.
CITIBANK, N.A., AGENT JEFFERSON PILOT VARIABLE FUND, INC., LENDER
By: By:
------------------------ -------------------------------
Name: Name:
Title: Title:
6
SCHEDULE I
to the Securities Lending Agency Agreement,
Between CITIBANK, N.A., As Agent
and JEFFERSON PILOT VARIABLE FUND, INC. ("Lender")
IDENTIFY ACCOUNTS FROM WHICH LOANS SHALL BE MADE (THE "DESIGNATED ACCOUNTS") BY
INITIALING EITHER (A) OR (B) AND COMPLETING THE NECESSARY INFORMATION.
/ / A. ALL CITIBANK, N.A. CUSTODY ACCOUNTS
/ / B. CUSTODY ACCOUNTS LISTED BELOW:
ACCOUNT NAME ACCOUNT NUMBER
------------------------- ------------------
------------------------------- ------------------
------------------------------- ------------------
------------------------------- ------------------
------------------------------- ------------------
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CITIBANK, N.A., AGENT JEFFERSON PILOT VARIABLE FUND, INC., LENDER
By: By:
-------------------------- -------------------------------
Name: Name:
Title: Title:
Dated as of: ___________________
I
SCHEDULE II
to the Securities Lending Agency Agreement,
Between CITIBANK, N.A., As Agent
and Jefferson Pilot Variable Fund, Inc. ("Lender")
COLLATERALIZATION PARAMETERS
The Agent shall accept only the following types of Collateral in an amount equal
to or greater than the designated maintenance requirement (for the specific type
of Loan) for any Loans entered into pursuant to authority in the Agency
Agreement:
A. COLLATERAL
(i) Cash;
(ii) Government Securities or OECD government and agency securities;
B. MAINTENANCE REQUIREMENTS
(i) Loans of Government Securities: l00% plus accrued interest.
(ii) Loans of Corporate Debt Securities: 102% plus accrued interest.
(iii) Loans of Equity Securities: 102%.
(iv) Loans of Foreign Securities: 105%.
(v) All other Securities: 102%.
CITIBANK, N.A., AGENT JEFFERSON PILOT VARIABLE FUND, INC.,
LENDER
By: By:
-------------------------- -------------------------------
Name: Name:
Title: Title:
Dated as of: _____________________
II
Exhibit A
to the Securities Lending
Agency Agreement
Exhibit A
SECURITIES LENDING BORROWERS
LENDER:________________________________________
ABBEY NATIONAL SECURITIES INC. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
ABN AMRO Inc. ▇▇▇▇▇▇ Brothers, Inc.
( Merged with ABN AMRO Securities LLC)
Alpine Associates, L.P. (Former: Alpine Associates) MAPLE SECURITIES U.S.A. INC.
(FORMER: MAPLE PARTNERS USA INC.)
Banc of America Securities L.L.C. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Government Securities, Inc.
(Former: NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, L.L.C.)
Bear, ▇▇▇▇▇▇▇ & Co., Inc. ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ and ▇▇▇▇▇, Inc.
Bear ▇▇▇▇▇▇▇ International Ltd. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.
Bear ▇▇▇▇▇▇▇ Securities Corporation MS Securities Services, Inc.
BNP PARIBAS SECURITIES CORP. National Financial Services LLC
(Former: National Financial Services Corp.)
BNY BROKERAGE INC. (Former: BNY ESI & Co.) BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp. (Former: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Inc.)
Barclays Capital Inc. NATIONAL INVESTOR SERVICES CORP.
JPMorgan Chase Bank ( Former: The Chase Manhattan Bank) ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLC
CIBC World Markets Corp. (Former: CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.) Nomura Securities International, Inc.
Citadel Trading Group L.L.C. UBS PaineWebber Inc.
(Former: PaineWebber, Incorporated - subsidiary of UBS
AG)
Credit Lyonnais Sec. (U.S.A.) Inc. Paloma Securities LLC
Credit Suisse First Boston Corporation PNC CAPITAL MARKETS, INC.
Daiwa Securities America, Inc. Prudential Securities, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ Inc. (Former: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.) ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
(Part of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co. )
Deutsche Bank Securities Inc. (Former: Deutsche Banc Alex. RBC Dominion Securities Corp.
▇▇▇▇▇ Inc.)
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ LLC ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
(Former: Dresdner Kleinwort ▇▇▇▇▇▇ North America LLC) (Affiliate of Citigroup, Inc.)
Wachovia Bank, National Association Salomon Brothers International Ltd.
(Former: First Union National Bank) (Affiliate of Citigroup, Inc.)
Wachovia Securities Incorporated ▇▇ ▇▇▇▇▇ Securities Corp.
(Former: First Union Securities Incorporated)
FIMAT USA, INC. SOCIETE GENERALE, NEW YORK BRANCH
Fortis Investment Services L.L.C. SWS Securities Inc. (Former: Southwest Securities Inc.)
Mizuho Securities USA Inc. (Former: Fuji Securities, Inc.) ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇. ▇▇▇▇▇ American Securities Inc.
1
Greenwich Capital Markets, Inc. TD Securities (USA) Inc.
(Former: Toronto Dominion Securities (USA) Inc.)
HSBC Securities (USA) Inc. Fleet Securities, Inc.
ING Financial Markets LLC UBS Warburg LLC (Former: Warburg Dillon Read LLC)
(Former: ING Barings Corp. )
INVESTEC ERNST & COMPANY VAN DER MOOLEN SPECIALISTS USA, LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇, L.L.C.
Jefferies & Co., Inc. WESTLB AG
NEW YORK
▇. ▇. ▇▇▇▇▇▇ Securities, Inc. (Merged with Chase Securities Zions First National Bank
Inc.)
IN CONNECTION WITH LOANS OF SECURITIES AND REVERSE REPURCHASE TRANSACTIONS (IF
PREVIOUSLY APPROVED AS INVESTMENT VEHICLE FOR SECURITIES LENDING CASH
COLLATERAL) WITHIN THE TERMS OF THE SECURITIES LENDING PROGRAM, WE AUTHORIZE THE
USE OF THE FOLLOWING ENTITIES AS THIRD PARTY CUSTODIANS OF (a) COLLATERAL FOR
SECURITIES LENT UNDER THE SECURITIES LENDING PROGRAM, AND (b) SECURITIES
PURCHASED UNDER REPURCHASE TRANSACTIONS (IF PREVIOUSLY APPROVED) AND CASH
COLLATERAL REMITTED FOR SUCH PURCHASES: THE BANK OF
NEW YORK AND THE CHASE
MANHATTAN BANK. WE FURTHER AUTHORIZE CITIBANK, N.A. AS OUR AGENT TO ENTER INTO
THE NECESSARY AGREEMENTS TO EFFECTUATE THE FOREGOING.
UPDATE ___________
TOTAL ___ BORROWERS
VERSION CUSTODY/MASTER
BY:
--------------------------------
Name:
Title:
DATE:_____________________________
2
Exhibit B
to the
Securities Lending
Agency Agreement
EXHIBIT B
INVESTMENT GUIDELINES FOR SECURITIES LENDING CASH COLLATERAL
PORTFOLIO GUIDELINES:
- Minimum of 60% of investments in the overnight market, best efforts
basis.
- Weighted-average portfolio maturity (weighted-average maturity is
defined as the period between coupon reset dates) cannot exceed 30
days.
- Maximum reset on floating rate coupon investments cannot exceed 90
days. Final maturities on floating rate investments cannot exceed 3
years.
- Final maturity of fixed coupon investments cannot exceed 90 days.
- Long-term senior unsecured debt ratings of all issuers must be mid-A
or higher by S&P and Moody's.
- Derivative securities are prohibited.
- All U.S. dollar investments.
INDIVIDUAL INVESTMENT GUIDELINES:
The following securities will be permitted for the reinvestment of the cash
collateral proceeds with restrictions as reflected.
COMMERCIAL PAPER AND SHORT-TERM CORPORATE BONDS
- Floating rate - Maximum 90 day coupon reset. The base rate can be
either LIBOR, Fed Funds or Prime. Final maturity of no greater than 3
years.
- Fixed rate-final maturity no greater than 90 days.
Only Al/P1 rated issues. Domestic and taxable issues only. No
municipalities. Short-term corporate bonds cannot be more than 10% of the
total portfolio. Maintain exposure limit of $20 million per issuer.
REPURCHASE AGREEMENTS
- The following collateral is approved;
U.S. Government and Government Agency Obligations. CMO's/MBS' that
are rated AAA by Moody's and S&P. Minimum 2% haircut on
1
collateral for overnight repos and a minimum 4% haircut on repos
longer than overnight Al/P1 Commercial Paper. Minimum 2% haircut.
- Maximum final maturity of 90 days.
Collateral must be marked to market daily, with margin calls when
necessary. Approved counterparties are attached as Exhibit B.
2
TIME DEPOSITS
- Maximum maturity of one week.
- Deposits will be permitted in domestic banks with operating company
senior unsecured debt ratings of mid-A or higher by S&P or Moody's.
Deposits in branches of foreign banks will be allowed from a list of
approved names (Exhibit A). No more than $5 million per issuer.
CERTIFICATES OF DEPOSIT
- Floating rate - Maximum 90 day coupon reset. The base rate can be
either L1BOR, Fed Funds or Prime. Final maturity of no greater than
3 years.
- Fixed rate - final maturity no greater than 90 days.
Domestic banks rated mid-A or higher by Moody's or S&P. Yankee CD purchases
will be permitted from a list of approved bank names. This list is attached
for reference (Exhibit A). Maintain exposure limit of $10 million per
issuer.
MONEY MARKET FUNDS
- Authorized to purchase shares in the following funds:
Dreyfus Cash Management Plus
Dreyfus Cash Management
Dreyfus Government Cash Management
Dreyfus Treasury Prime Cash Management
Merrimac Funds
Janus Money Market Fund
Janus Government Money Market Fund
Landmark Institutional Liquid Reserves
Landmark Institutional U.S. Treasury Reserves
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
- Floating rate - Maximum 90 day coupon reset. The base rate can be
either LIBOR, Fed Funds or Prime. Final maturity of no greater than
3 years.
- Fixed rate - final maturity no greater than 90 days.
3
EXHIBIT A
BANKS APPROVED FOR YANKEE C.D.'S AND TIME DEPOSITS
AUSTRALIA
Australia & New Zealand Group Ltd.
National Australia Bank Ltd.
Westpac Banking Corp.
CANADA
Bank of Montreal
Bank of Nova Scotia
Canadian Imperial Bank of Commerce
Royal Bank of Canada
Toronto-Dominion Bank
GERMANY
Commerzbank AG West Germany
Deutsche Bank ▇▇
▇▇▇▇▇▇▇▇ Bank AG
NETHERLANDS
ABN Amro Bank NV
ING Bank NV
SWITZERLAND
Credit Suisse
Swiss Bank Corp.
Union Bank of ▇▇▇▇▇▇▇▇▇▇▇
▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Abbey National PLC
Bank of Scotland
Barclays Bank PLC
Lloyds Bank PLC
Midland Bank PLC
National Westminster Bank PLC
Royal Bank of Scotland
5
EXHIBIT B
APPROVED COUNTERPARTIES FOR REPURCHASE AGREEMENTS
Bear ▇▇▇▇▇▇▇ & Co., Inc.
Chase Securities, Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
Deutsche ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
First Chicago Capital Markets, Inc.
▇▇▇▇▇▇▇ Sachs & Co.
▇▇▇▇▇▇ Brothers, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Government Securities, Inc.
▇.▇. ▇▇▇▇▇▇ Securities, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.
Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities Inc.
Prudential Securities, Inc.
Salomon Brothers, Inc.
UBS Securities, LLC
6
Exhibit C
to the
Securities Lending
Agency Agreement
MASTER SECURITIES LENDING AGREEMENT (REV. 1/13/84)
DATED: __________________, 199___
Gentlemen:
This letter sets forth the terms of an agreement between Citibank, N.A., as
Agent for one or more holders of securities (the "Agent" ), and
_______________________________ (the "Borrower").
1. POSITION OF AGENT
The Agent has been appointed the agent for one or more holders of
securities (collectively, the "Lenders"), to arrange and administer, on
behalf of such holders, pursuant to this Agreement, loans of securities. A
list of such Lenders is available upon request to the Agent.
2. LOANS OF SECURITIES
If the Borrower desires to borrow securities it may telephone the Agent,
specifying the securities the Borrower wishes to borrow, the nature of the
Collateral (such term and certain other defined terms employed herein being
defined in Annex I) the Borrower proposes to deliver to the Agent as
security for such loan, the Maintenance Percentage to be applicable in
connection with such loan, the fees and rebates the Borrower proposes to
pay and collect in connection with such loan and the principal terms of the
Loan referred to in Section 4 hereof. The Agent, on behalf of a Lender
willing to consummate a loan ( a "Loan") of such securities (the "Loaned
Securities") upon such terms shall so notify the Borrower by telephone
(such day of notification being herein referred to as the "Trade Date").
Unless otherwise agreed by the Agent and the Borrower and provided in the
Confirmation (as defined in Section 4 hereof), the settlement date (the
"Settlement Date") for such Loan shall be the Trade Date. In the case of
Foreign Securities, the Settlement Date shall be the Foreign Business Day
for the principal market for the Loaned Securities agreed by both the
parties on the Trade Date.
3. DELIVERIES ON THE SETTLEMENT DATE
(a) On the Settlement Date for any Loan and during the Agent's
business hours, the Lender making such Loan shall (i) cause the Loaned
Securities which are to be the subject of such Loan to be credited to the
account of the Borrower in accordance with subsection (c) (ii) (B) of
Section 20 hereof or (ii) deliver to the Agent for delivery to the Borrower
certificates representing such Loaned Securities in accordance with
subsection (c) (ii) (A) of Section 20 hereof, in which event the Agent
shall list such Loaned Securities on a receipt which the Borrower shall
execute and return to the Agent at the time such Loaned Securities are
received by the Borrower.
(b) Against receipt of such Loaned Securities, the Borrower shall
deliver to the Agent, as Initial Collateral, (i) cash, (ii) Marketable
Securities or (iii) a Letter of Credit, or any combination thereof as
agreed to on the Trade Date with respect to such Loan. The Market Value of
the Initial Collateral for such Loan shall be at least equal to the
Maintenance Percentage of the Market Value of the Loaned Securities subject
thereto at the time the Agent has been notified by the Borrower of its
intent to borrow securities.
(c) Upon the delivery of the Loaned Securities by the Agent to the
Borrower as contemplated by subsection (a) of this Section a Loan of the
Loaned Securities, upon the terms and conditions agreed to on the Trade
Date, and subject to the terms and conditions of this Agreement, shall be
deemed to have been made.
1
4. THE CONFIRMATION
The terms and conditions of each Loan shall be memorialized in a written
confirmation (the "Confirmation") in the form attached as Exhibit A. By the
close of business on the Business Day following Trade Date for each Loan,
the Agent shall send to the Borrower a Confirmation that reflects the
principal terms of such Loan, including (i) the identity of the Lender
making such Loan, (ii) a description of the Loaned Securities subject
thereto, (iii) the basis of compensation for such Loan, (iv) the type and
amount of Collateral to be provided for such Loan, (v) the termination date
of such Loan, if any, and (vi) any special terms and conditions for such
Loan agreed between the parties on the Trade Date. The Borrower shall
review such Confirmation in accordance with the procedures set forth
therein. This Agreement shall be deemed to be incorporated into each such
Confirmation as though set forth therein. The description of the Collateral
on the Confirmation shall include the foreign currency market value of the
Foreign Securities, the exchange rate used in the calculation of the dollar
equivalent of the Foreign Securities, and the dollar value of the
Collateral.
5. SECURITY INTEREST
The Borrower shall be deemed to have granted to each Lender with respect to
any and all Loans extended by such Lender a security interest in all cash
and Marketable Securities held by the Agent as Collateral for such Loans
and any proceeds thereof to secure all present and future obligations of
the Borrower to such Lender under this Agreement with respect to such
Loans. Any such security interest shall survive the termination of any
Loans arising from a Borrower's Default under Section 16 hereof or a
failure of the Borrower to make a delivery required by Section 15 hereof
and shall continue until all obligations of the Borrower to the Lender
hereunder have been satisfied.
6. REPRESENTATIONS AND WARRANTIES OF AND COVENANTS BY THE BORROWER
The Borrower represents and warrants to the Agent on the Settlement Date
and for any Loan shall be deemed to have represented and warranted to the
Agent and the Lender making such Loan, and covenants with the Agent and
such Lender that:
(a) this Agreement has been duly authorized and validly executed and
delivered by the Borrower and constitutes the legal, valid and binding
obligation of the Borrower;
(b) any securities borrowed by the Borrower hereunder will be
borrowed and used only for purposes permitted by, and in full conformity
with, all applicable laws and regulations;
(c) any Marketable Securities delivered by the Borrower as Collateral
hereunder shall be owned by the Borrower and delivered free and clear of
any lien, claim or encumbrance whatsoever (other than the security interest
of any Lender under Section 5 hereof);
(d) if such Borrower is not a registered broker-dealer under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") it has
delivered to the Agent audited financial statements of the Borrower for its
last fiscal year and the most recent available unaudited balance sheet of
the Borrower and the related statements of income and retained earnings (if
more recent than such audited statements) and such other financial
information, if any, relating to it as has been made available to the
public by the Borrower since the date of such audited financial statements;
the financial statements and information furnished hereunder fairly
present, in accordance with generally accepted accounting principles
consistently applied, its financial condition and results of operations as
of the respective dates thereof; there has been no material adverse change
in its financial condition or results of operations subsequent to the date
of the latest such statement delivered to the Agent; and no Borrower's
Default has occurred or is expected to occur; and
(e) if such Borrower is not a registered broker-dealer under the
Exchange Act, the Borrower will promptly deliver to the Agent all revised
and future audited financial statements and such other financial
2
information as long as this Agreement is in force and Loans are outstanding
hereunder all of which will fairly present, in accordance with generally
accepted accounting principles consistently applied, the Borrower's
financial condition or results of operations as of the dates of such
revised and future statements or information; the Borrower will provide the
Agent with audited financial statements of the Borrower as of the end of
each fiscal year of the Borrower within ninety days thereof; and the
Borrower will promptly notify the Agent in writing of any material, adverse
change in the financial condition or results of operations of the Borrower
from the date of the most recent audited financial statements for its last
fiscal year furnished under this Section.
(f) if such Borrower is a registered broker-dealer under the Exchange
Act, (i) it has delivered to the Agent the audited financial statements of
the Borrower for its last fiscal year required to be furnished to customers
under Rule 17a-5(c) under the Exchange Act and the most recently available
financial statements required of the Borrower to be furnished to its
customers by such Rule, (ii) such statements are substantially in the form
required under said Rule and (iii) the Borrower's net capital ratio as set
forth in such reports has been and will continue to be computed
substantially in accordance with such Rule; the Borrower has also delivered
to the Agent such other recent financial statements and other information,
if any, relating to it as are available to the public; the Borrower
represents that each such statement and calculation fairly presents its
financial condition and net capital ratio in accordance with the
requirements of the Securities and Exchange Commission (the "SEC") as of
the date thereof; and the Borrower also represents that there has been no
material adverse change in its financial condition or results of operations
subsequent to the date of the latest financial statement or calculation
delivered to the Agent and that no Borrower's Default has occurred or is
expected to occur; and
(g) if such Borrower is a registered broker-dealer under the Exchange
Act, the Borrower shall promptly deliver to the Agent all such revised and
future statements, calculations and information as long as this Agreement
is in force and Loans are outstanding hereunder, all of which will be in
conformity with the applicable rules of the SEC and will fairly present the
information purported to be shown thereby; the Borrower shall provide the
Agent with the audited financial statements of the Borrower required to be
furnished to customers of the Borrower under said Rule as of the end of
each fiscal year of the Borrower within ninety days thereof; and the
Borrower shall promptly notify the Agent in writing of any material adverse
change in financial condition or results of operations of the Borrower from
the date of the most recent statement or calculation furnished under
subsection (f) of this Section.
7. REPRESENTATIVES AND WARRANTIES OF AND COVENANTS BY THE LENDER; LIMITATIONS
ON LIABILITY OF LENDER
(a) Each Lender by the Agent on the Settlement Date for any Loan
hereunder shall be deemed to have represented and warranted to and
covenanted with the Borrower that:
(i) any securities furnished as Collateral to such Lender hereunder
will be used only for purposes permitted by, and in full conformity with,
all applicable laws and regulations;
(ii) any Loaned Securities delivered by such Lender hereunder shall be
owned by the Lender and delivered free and clear of any lien, claim or
encumbrance whatsoever;
(iii) the obligations of the Lender hereunder have been duly and
validly authorized by all necessary action of the Lender;
(iv) it will not direct the Agent to draw against any Letter of Credit
furnished as Collateral unless a Borrower's Default has occurred or is
continuing; and
(v) no Lender's Default by, or attributable to, such Lender has
occurred or is expected to occur.
(b) The Borrower agrees that no Lender will have any Liability to the
Borrower with respect to any Loan hereunder arising from any breach by the
Agent of the representations and warranties set forth in
3
Section 8 hereof or any negligence or willful misconduct of the Agent in
the performance of its duties hereunder.
8. REPRESENTATIONS AND WARRANTIES OF AGENT; LIMITATION ON LIABILITY OF AGENT
(a) The Agent represents and warrants to the Borrower that:
(i) this Agreement has been duly authorized and validly executed and
delivered by the Agent and constitutes the legal, valid and binding
obligation of the Agent;
(ii) the Agent will hold all Collateral for any Loan pursuant to the
terms of each Lender's authorization which will provide that the Agent will
hold any Collateral for such Lender and that such authorization will not be
revocable on less than 5 Business Days notice. The Agent will give the
Borrower prompt notice of any notice of revocation thereof received by the
Agent from any Lender which has made an outstanding Loan; and
(iii) the Agent has been duly authorized by the respective Lenders to
enter into this Agreement and the transactions contemplated hereby.
(b) The Borrower agrees that the Agent will have no liability to the
Borrower with respect to any Loan hereunder except for breach of the
foregoing warranties and representations and any negligence or willful
misconduct by the Agent in the performance of its duties hereunder.
9. RIGHTS OF BORROWER IN RESPECT OF LOANED SECURITIES
Until such time as a Loan is terminated pursuant hereto, the Borrower shall
have all of the incidents of ownership of the Loaned Securities which are
the subject of such Loan.
10. RIGHTS OF LENDER IN RESPECT OF CASH AND MARKETABLE SECURITIES DELIVERED AS
COLLATERAL
(a) The Agent, on behalf of each Lender having a Loan outstanding
hereunder, shall be entitled to exercise all rights of ownership of any
cash held by the Agent as Collateral for such Loan, including the right to
invest it, and may deal with such cash at the risk and for the account of
such Lender. The sole obligation of such Lender in respect of any such cash
shall be to direct the Agent to transmit to the Borrower upon termination
of any Loan in respect of which such cash was delivered an amount of cash
equal to the amount of cash theretofore delivered to the Agent as
Collateral for such Loan (net of redeliveries, if any).
(b) Until such time as a Loan is terminated pursuant hereto, a Lender
shall have all of the incidents of ownership of any Marketable Securities
delivered as Collateral for any Loan made by such Lender.
(c) The Agent shall not have any obligation to segregate any
Collateral but the Agent will record on its books and records all
deliveries of Collateral made by the Borrower hereunder.
11. DISTRIBUTIONS ON LOANED SECURITIES AND ON MARKETABLE SECURITIES DELIVERED
AS COLLATERAL
(a) With respect to each Loan hereunder, the Borrower will, provided
no Lender's Default by or attributable to the Lender making such Loan has
occurred and is continuing, and except as provided in subsection (b) of
this Section:
(i) Deliver to the Agent an amount equal to any cash distributions or
dividends payable on the Loaned Securities subject to such Loan within one
Business Day after the payable date for any such payment or distribution.
In the case of Foreign Securities, all cash distributions, dividends, and
interest shall be delivered by the Borrower to the Agent. In the event that
such Loaned Securities have been re-registered while on loan in the name of
an entity which incurs a higher withholding tax on distributions than the
Lender would have incurred, the Borrower will deliver to the Agent the full
amount that would have been due the Lender if the Loaned Securities had not
been on loan.
4
(ii) Deliver to the Agent securities or rights corresponding to any
securities or rights distributed on such Loaned Securities within one
Business Day after receipt by the Borrower of any such distribution or
within one Business Day after distribution date, whichever date is earlier.
In the event a distribution or dividend on such Loaned Securities is
payable in one of several forms at the option of the owner of record of
such Loaned Securities and one of such options is a cash option, the
Borrower shall deliver to the Agent within one Business Day after the
payable date for such cash option, free and clear of any claims of the
Borrower hereunder, a payment in cash equal to the amount that would have
been received if the cash option had been chosen with respect to such
distribution or dividend.
(b) In the case of distributions or dividends in securities made on
Loaned Securities subject to any Loan, such securities will be added to the
Loaned Securities, and be considered as Loaned Securities subject to such
Loan for all purposes, unless the Borrower and Agent agree otherwise. Where
such securities are to be added to the Loaned Securities, the Borrower
shall deliver to the Agent on such distribution date additional Collateral
with a Market Value at least equal to the Maintenance Percentage of the
Market Value of such securities on distribution date.
(c) With respect to each Loan hereunder the Lender making such Loan
will, provided no Borrower's Default has occurred and is continuing:
(i) direct the Agent to deliver to the Borrower an amount equal to
any cash distributions or dividends payable on any Marketable Securities
included in the Collateral for such Loan within one (1) Business Day after
the payable date for any such payment or distribution; and
(ii) direct the Agent to deliver to the Borrower securities or rights
corresponding to any securities or rights distributed on such Marketable
Securities within one (1) Business Day after receipt by the Lender of any
such distribution. In the event a distribution or dividend on such
Marketable Securities is payable in one of several forms at the option of
the owner of record of such Marketable Securities and one of such options
is a cash option, the Lender shall direct the Agent to deliver to the
Borrower within one (1) Business Day after the payable date for such cash
option free and clear of any claims hereunder a payment in cash equal to
the amount that would have been received if the cash options had been
chosen with respect to such distribution or dividend.
12. MARKS TO MARKET
(a) If, as of the close of business on any Business Day, the
aggregate Market Value of the Collateral in respect of all Loans between a
single Lender and the Borrower (the "Aggregate Collateral Value") shall
exceed the Maintenance Percentage of the aggregate Market Value of the
Loaned Securities subject to such Loans (the "Aggregate Loaned Securities
Value"), the Agent shall, if so directed by the Borrower and provided that
the Agent shall not know that any Borrower's Default has occurred and is
continuing, as promptly as possible on the next Business Day, return to the
Borrower (and the Lender making such Loan shall be deemed to have directed
the Agent to do so ) Collateral specified by the Borrower provided that as
of the close of business on the day prior to the date of such return, after
giving effect to any such return, the Aggregate Collateral Value shall be
at least equal to the Maintenance Percentage of the Aggregate Loaned
Securities Value.
(b) If, as of the close of business on any Business Day, the
Aggregate Collateral Value shall be less than the Maintenance Percentage of
the Aggregate Loaned Securities Value, the Agent shall, prior to 12:00 noon
on the next Business Day, give telephonic notice of such fact to the
Borrower which shall, provided that no Lender's Default, by or attributable
to the Lender which made such Loan, has occurred and is continuing, deliver
to the Agent Collateral with a Market Value such that as of the close of
business on the day prior to the date of such delivery the Aggregate
Collateral Value, after giving effect to such delivery, shall be at least
equal to the Maintenance Percentage of the Aggregate Loaned Securities
Value.
5
(c) For purposes of this Agreement, if a Lender has more than one
Loan outstanding hereunder, Collateral delivered by the Borrower with
respect to all Loans outstanding from such Lender hereunder shall be
aggregated and deemed allocated pro rata to each such Loan according to the
respective Market Value of the Loaned Securities which are the subject of
each such Loan.
(d) If any notice of the type described in subsection (b) of this
Section is given by the Agent by 10:00 A.M.,
New York City time, on any
Business Day, deliveries of Collateral called for as a result thereof shall
be made no later than the close of business on such Business Day.
Otherwise, deliveries shall be made no later than 12:00 noon,
New York City
time, on the following Business Day.
(e) Solely with respect to Borrowers which are registered
broker-dealers under the Exchange Act, the Borrower shall furnish to the
Agent prior to 12:00 noon,
New York City time, daily on each Business Day
during the term of any Loan under this Agreement a report, either by
telephone or otherwise, of the Market Value at the close of trading on the
last preceding Business Day of all Collateral and Loaned Securities on such
day. In the event the Aggregate Loaned Securities Value at the close of
trading on such last preceding Business Day exceeds 100% of the Aggregate
Collateral Value, the Borrower shall deliver to the Agent additional
Collateral by the close of the day such report is furnished as necessary to
equal, when added to the Aggregate Collateral Value as of the close of
business on the date of such delivery, not less than the Maintenance
Percentage of the Aggregate Loaned Securities Value. The Borrower may elect
in such report to leave any excess Collateral with the Agent. In the event
the Agent disagrees with a report furnished by the Borrower, or in the
event that the Borrower fails to furnish such report by 12:00 noon,
New
York City time, on the Business Day following the day for which the report
is made, the Agent may demand that the Borrower deliver an amount of
additional Collateral computed pursuant to this Section 12, and the
Borrower shall make delivery of such additional Collateral and a statement
of its Market Value to the Agent by the close of business on the same
Business Day. The obligations of the Borrower under this subsection (e) are
in addition to, and not in lieu of, the obligations of the Borrower under
subsection (b) of this Section.
13. TRANSFER TAXES AND FEES
All transfer taxes and fees, if any, with respect to any transfers of
Loaned Securities and any Collateral shall be paid by the Borrower.
14. INDEMNIFICATION
(a) The Borrower will indemnify, defend, hold and save harmless the
Agent and each Lender from any claims, actions, demands or liabilities of
any kind whatsoever arising in any way out of any use that the Borrower
makes of any Loaned Securities and will reimburse each Lender, upon demand,
for any losses, other than consequential damages, incurred by such Lender
(including all reasonable counsel fees and expenses) as a result of any
failure or inability of the Borrower to return Equivalent Securities
corresponding to the Loaned Securities subject to any Loan by such Lender
in the manner and under the circumstances contemplated by this Agreement.
(b) Each Lender will indemnify, defend, hold and save harmless the
Agent and the Borrower from any claims, actions, demands or liabilities of
any kind whatsoever arising in any way out of the use that such Lender
makes of any Marketable Securities included in the Collateral for any Loan
by such Lender and will reimburse the Borrower, upon demand, for any
losses, other than consequential damages, incurred by the Borrower
(including all reasonable counsel fees and expenses) as a result of any
failure or inability of such Lender to return any cash or Equivalent
Securities corresponding to any Marketable Securities included in the
Collateral for any Loan by such Lender in the manner and under the
circumstances contemplated by this Agreement.
15. TERMINATION WITHOUT DEFAULT
(a) Provided that no Borrower's Default has occurred and is
continuing, the Borrower may terminate a Loan on any Business Day by giving
notice to the Agent of its intention to terminate such Loan on such
6
day (a "Borrower's Termination Date"); provided, however, that if such
notice is given after 12:00 noon,
New York City time, on such day, the
Borrower's Termination Date for such Loan, shall be the next following
Business Day. On any Borrower's Termination Date for any Loan, the Borrower
shall deliver Equivalent Securities corresponding to the Loaned Securities
which are the subject of such Loan to the Agent and the Agent shall deliver
to the Borrower:
(i) cash in an amount equal to the amount of cash Collateral for such
Loan (net of redeliveries) theretofore delivered to the Agent by the
Borrower; and
(ii) Equivalent Securities corresponding to any Marketable Securities
theretofore delivered to the Agent as Collateral for such Loan, provided
that no such delivery under (i) above or this Subsection (ii) shall be made
to the extent such delivery would cause the Aggregate Collateral Value to
be less than the Maintenance Percentage of the Aggregate Loaned Securities
Value.
(b) Provided that no Lender's Default by or attributable to such
Lender has occurred and is continuing, a Lender may on any Business Day
notify the Agent by telephone of the Lender's election to terminate a Loan
made by such Lender on such day (a "Lender's Termination Date"); provided,
however, that if such notice is given after 12:00 noon, New York City time
on such day, the Lender's Termination Date for such Loan shall be the next
Business Day. The Agent shall, as promptly as practicable, after receipt of
such notice from such Lender, give notice of such Lender's Termination Date
to the Borrower. Within five (5) Business Days after any Lender's
Termination Date or, if the then customary delivery period in New York City
in the principal market for Equivalent Securities corresponding to the
Marketable Securities which are the subject of such Loan would expire on an
earlier date, on such earlier date, the Borrower shall deliver to the Agent
Equivalent Securities corresponding to the Loaned Securities which are the
subject of the terminated Loan and the Agent shall deliver to the Borrower:
(i) cash in an amount equal to the amount of cash Collateral for such
Loan (net of redeliveries) theretofore delivered to the Agent by the
Borrower; and
(ii) Equivalent Securities corresponding to any Marketable Securities
theretofore delivered to the Agent as Collateral for such Loan, provided
that no such delivery under (i) or (ii) above shall be made to the extent
such delivery would cause the Aggregate Collateral Value to be less than
the Maintenance Percentage of the Aggregate Loaned Securities Value.
With respect to Foreign Securities:
(i) For termination of a loan by the Borrower, the Borrower shall
notify the Agent of the termination of a loan on the Business Day which
immediately precedes the Foreign Business Day in the principal market in
which the Securities will be returned;
(ii) For termination of a loan by the Lender, the Borrower shall
return Foreign Securities within a period of time equal to the customary
settlement period in the principal trading market for such Foreign
Securities commencing on the Foreign Business Day immediately following the
Business Day on which the Lender or the Agent notifies the Borrower of
termination; and
(iii) The collateral will be returned to the Borrower on the Business
Day immediately following the Foreign Business Day on which the Foreign
Securities are returned to the Agent. If the collateral is in the form of
cash, transfer will be effected in immediately available funds.
(c) Notwithstanding the provisions of this Section, any Lender,
provided that no Lender's Default by or attributable to such Lender has
occurred and is continuing, or the Borrower, provided that no Borrower's
Default has occurred and is continuing, may terminate a Loan with respect
to (i) any U.S. Government Securities, on any Business Day on which the
Federal Reserve Clearance System is open for business and (ii) any Agency
Securities, on any Business Day on which the Federal Reserve Clearance
System is open for business, by giving telephonic notice of its intent to
terminate such Loan on said day (a "Government
7
Termination Date"); provided however, that if such notice is given after
10:00 A.M., New York City time, on such day, the Government Termination
Date for such Loan shall be the next following Business Day. On the
Government Termination Date for any Loan, the Borrower shall deliver
Equivalent Securities corresponding to the Loaned Securities which are the
subject of such Loan to the Agent and the Lender shall direct the Agent to
return the Collateral for such Loan to the Borrower.
16. TERMINATION OF LOAN UPON DEFAULT
(a) All Loans made under this Agreement shall terminate immediately
upon the happening of any Borrower's Default (as defined in subsection (b)
of this Section) and all Loans made hereunder by a particular Lender shall
terminate immediately upon the happening of a Lender's Default (as defined
in subsection (b) of this section) by or attributable to such Lender and
without any notice by the non-defaulting party or the Agent.
(b) Any event of the nature described below occurring to, or arising
out of the action or inaction of, the Borrower shall be referred to herein
as a "Borrower's Default," and any event of the nature described below
occurring to, or arising out of the action or inaction of, the Lender shall
be referred to herein as a "Lender's Default":
(i) the Borrower shall fail to deliver the Initial Collateral
pursuant to Section 3 hereof or a Lender shall fail to deliver the Loaned
Securities, or either the Borrower or a Lender shall fail to deliver
Collateral as required by Section 12 hereof;
(ii) either the Borrower or a Lender shall fail to make any delivery
to the Agent as required by Section 11 hereof or any delivery requested by
Section 15 hereof;
(iii) either the Borrower or a Lender shall fail to comply with any
other provision hereof and such failure shall continue for more than one
day after notice;
(iv) either the Borrower or a Lender shall make a general assignment
for the benefit of creditors, or shall admit in writing its inability to
pay its debts as they become due, or shall file a petition in bankruptcy or
shall be adjudicated a bankrupt or insolvent, or shall file a petition
seeking reorganization, liquidation, dissolution or similar relief under
any present or future statute, law or regulation, or shall seek consent to
or acquiesce in the appointment of any trustee, receiver or liquidator or
similar official for all or any material portion of its properties; or if
any petition is filed against it in any court or before any agency alleging
it is bankrupt or insolvent or seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under
any present or future statute, law or regulation, or the appointment of a
trustee, receiver or liquidator or similar official of all or a material
portion of its property and such petition shall not be dismissed within 30
days; or
(v) any representation or warranty made or deemed made by the
Borrower or a Lender hereunder or in connection herewith shall prove to
have been incorrect in any material respect when made or deemed made or the
Borrower shall fail to promptly notify the Agent of a material adverse
change in the Borrower's financial condition or results of operations.
(vi) if the Borrower is a registered broker-dealer under the Exchange
Act and, if the Borrower shall have been suspended or expelled from
membership or participation in any national securities exchange or
association or other self-regulatory organization or if it is suspended
from dealing in securities by any governmental agency; or
(vii) if the Borrower is a registered broker-dealer under the Exchange
Act and, if under the net capital requirements under the Exchange Act or
any national securities exchange of which the Borrower is a member, (i) the
Borrower's aggregate indebtedness shall exceed 1,000 percent of its net
capital if the Borrower is not operating pursuant to the alternative net
capital requirements provided in Rule 15c3-1 under
8
the Exchange Act or (ii) the Borrower's net capital shall be less than 5%
of its aggregate debit items if the Borrower is operating pursuant to such
alternative net capital requirements.
(c) Except as provided in Section 20(d) hereof, the Agent shall,
promptly after learning of any Lender's Default or Borrower's Default, give
notice by telephone (confirmed as promptly as practicable in writing) to
the non-defaulting party, identifying the party in default and describing
the Lender's or the Borrower's Default in question. No failure or omission
by the Agent to give any such notice shall excuse any Lender's Default or
Borrower's Default or limit the rights of any Borrower or Lender in respect
thereof.
17. REMEDIES OF LENDER
Upon the happening of any Borrower's Default each Lender shall have all the
rights in respect of the Collateral of a secured party under Articles 8 and
9 of the New York Uniform Commercial Code and as otherwise provided by law,
including the right of set-off and, in addition to any and all other rights
and remedies it may have, may at its sole option, elect, without any
further notice to or demand on the Borrower by the Agent, to purchase
Equivalent Securities corresponding to the Loaned Securities which are the
subject of any outstanding Loan or Loans and apply the Collateral for such
Loan or Loans to or toward the payment of the cost thereof (the purchase
price thereof, including accrued interest, if applicable, plus any
brokerage commissions, fees, transfer taxes, and other charges incurred by
the Lender in connection with such purchase) and any other amounts then
owing to the Lender hereunder, in which event the obligation of the
Borrower to return Equivalent Securities corresponding to such Loaned
Securities shall terminate and such Lender shall be entitled to collect and
retain all payments of principal of, interest on or any other amount
payable on or with respect to such Collateral. The Borrower shall be liable
for, and shall pay to the Agent upon demand, the excess, if any, of the
cost to such Lender (as defined above and as specified in such demand) of
the Equivalent Securities corresponding to the Loaned Securities purchased
by such Lender pursuant to this Section, plus any amounts then owing to the
Lender hereunder with respect to the Loan or Loans in question, over the
sum of (i) the amount of cash Collateral then held by the Agent with
respect to such Loan or Loans (ii) the cash proceeds received by the Agent
under any Letters of Credit included in the Collateral then held by the
Agent with respect to such Loan or Loans and (iii) the Market Value, as of
the close of business on the Business Day preceding the date of purchase of
such Equivalent Securities of the Marketable Securities included in the
Collateral then held by the Agent with respect to such Loan or Loans,
together with interest on such excess at an annual rate equal to the
broker's loan rate in effect at Citibank N.A., from time to time, or the
maximum rate permitted by law, if less, from the date of such purchase or
notice until the date of payment of such excess. In the event the sum of
(i), (ii) and (iii) set forth in the immediately preceding sentence exceeds
the cost of the Equivalent Securities purchased pursuant to this Section
plus any amounts then owing to such Lender hereunder, such Lender shall
return such excess amount to the Borrower, provided that no such amount
shall be returned to the extent such delivery would cause the Aggregate
Collateral Value to be less then the maintenance Percentage of the
Aggregate Loaned Securities Value. The Borrower shall be liable for, and
shall pay to the Agent on demand, all reasonable costs and expenses
incurred by any Lender as a result of any Borrower's Default.
18. REMEDIES OF BORROWER
Upon the happening of any Lender's Default, the Borrower, in addition to
any and all other rights and remedies it may have, may at its sole option,
and without any further notice to or demand on the Lender in question by
the Agent, elect to purchase the Loaned Securities which are the subject of
any Loan or Loans by such Lender at a purchase price equal to the Market
Value of such loaned Securities (including accrued interest, if applicable,
if such interest is not included in the Market Value of such Loaned
Securities) at the close of business on the day preceding the date of such
event less any other amounts then owing to the Borrower by such Lender
hereunder, and apply any cash or Marketable Securities then held by the
Agent as Collateral for such Loan or Loans by such Lender to the payment of
such purchase price (any Marketable Securities included in such Collateral
being valued for purposes of such payment at their Market Value at
9
the close of business on the day preceding the date of such event). Such
Lender shall remain liable, in the event of any such purchase of such
Loaned Securities, to the Borrower for an amount equal to the excess of the
Market Value of the Collateral for such Loan or Loans over the purchase
price of the Loaned Securities as defined above, together with interest on
such excess at an annual rate equal to the broker's loan rate in effect at
Citibank, N.A., from time to time, or the maximum rate permitted by law, if
less, from the date of such purchase until the date of payment of such
excess. In the event the Market Value of the Loaned Securities which are
the subject of such Loan or Loans exceeds the Market Value of the
Collateral for such Loan or Loans on such date plus any amounts then owing
to the Borrower by such Lender hereunder, the Borrower shall remit to such
Lender such excess amount. If the Borrower purchases Loaned Securities
pursuant to this Section the Borrower shall be entitled to collect and
retain all payments of principal of, interest on or any other amounts
payable on or with respect to such Loaned Securities. Each Lender shall be
liable for, and shall pay to the Agent on demand, all reasonable costs and
expenses incurred by the Borrower as a result of a Lender's Default by or
attributable to such Lender.
19. SUBSTITUTION
The Borrower shall have the right to substitute Marketable Securities, cash
and/or a Letter of Credit for the Collateral delivered to the Agent for any
Loan provided that the Collateral so substituted is acceptable to the Agent
in its sole discretion and has a Market Value at least equal to the Market
Value of the replaced Collateral.
20. NOTICES, DELIVERIES AND PAYMENTS
(a) Except as otherwise provided herein, all notices under this
Agreement shall be deemed to be delivered and received when transmitted or
sent to the party entitled to receive such notices at the addresses
indicated at the end of this Agreement, or to such other addresses and
telephone numbers and to the attention of such other persons as either
party may furnish the other party by written notice under this Section.
(b) Except as otherwise expressly herein provided, all payments of
money under this Agreement, whether by or to the Agent, any Lender or the
Borrower, shall be made by (i) delivering a certified or official bank
check payable to the order of the Borrower, the Agent or such Lender, as
the case may be, drawn in New York Clearing House Funds or (ii) by
crediting the account of the Borrower, the Agent or such Lender, as the
case may be, at the Federal Reserve Bank of New York, a recognized
securities depository or a clearing corporation acceptable to the parties.
Notwithstanding the provisions of this Section, all payments made with
respect to Government Securities shall be made in same day funds.
(c) Except as otherwise expressly herein provided, all deliveries of
securities under this Agreement, whether by or to the Agent, any Lender or
the Borrower must be:
(i) of the specified issue, and
(ii) (A) placed in the possession of the transferee in bearer form or
registered in the name of the transferee or endorsed to said transferee in
blank, or
(B) effected by the making of appropriate entries on the books of
the Federal Reserve Bank of New York, or a recognized securities depository
or clearing corporation acceptable to the parties, reducing the account of
the transferor and increasing the account of the transferee. As used in
this Section, "transferee" shall include transferee's designated agent,
custodian or nominee.
(d) Each Lender and the Borrower each acknowledges that failures to
make deliveries at the times called for herein may be expected to occur in
the ordinary course of business. Each Lender and the Borrower each hereby
agrees that the Agent need not notify it of any such failure unless such
failure shall have continued for one (1) full Business Day after the time
such delivery was required, and agrees (without prejudice to any rights the
Borrower may have against any Lender or any Lender may have against the
10
Borrower) not to assert any claim against the Agent for any damages
suffered by it as a result of compliance by the Agent with this subsection.
21. MISCELLANEOUS
This Agreement supersedes any other agreement between the parties
concerning securities loans, shall not be assignable by either party
without prior written consent of the other party, shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns, shall not be changed except by an instrument in writing signed by
each of the parties, and shall be governed by the laws of the State of New
York.
The Borrower hereby consents to the disclosure of its identity by the Agent
to any Lender from whom the Borrower borrows Loaned Securities.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute one instrument.
22. MATTERS CONCERNING THE SECURITIES INVESTOR PROTECTION ACT OF 1970
A LENDER MAY NOT BE PROTECTED BY THE PROVISIONS OF THE SECURITIES INVESTOR
PROTECTION ACT OF 1970 WITH RESPECT TO SECURITIES LOAN TRANSACTIONS AND,
THEREFORE, COLLATERAL DELIVERED TO A LENDER MAY CONSTITUTE THE ONLY SOURCE
OF SATISFACTION OF THE BORROWER'S OBLIGATION IN THE EVENT THE BORROWER
FAILS TO RETURN THE SECURITIES.
CITIBANK, N.A., AS AGENT -------------------------------------
(Borrower)
By: By:
----------------------- ----------------------------------
Vice President Authorized Signature
Date: Date:
----------------------- -----------------------
Address: Address:
----------------------- -----------------------
----------------------- -----------------------
----------------------- -----------------------
Attention: Attention:
----------------------- -----------------------
Telephone No.: Telephone No.:
----------------------- -----------------------
Telex No.: Telex No.:
----------------------- -----------------------
11
ANNEX I
CERTAIN DEFINED TERMS
"AGENCY SECURITIES" shall mean any securities issued by a federal agency or
transactions which are settled by the physical delivery of such securities
against payment through the Federal Reserve Clearance System or otherwise in
same day funds.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, a day on
which banking institutions in the City of New York are authorized or obligated
by law or executive order to close, or a day on which the New York Stock
Exchange, Inc. is closed.
"COLLATERAL" shall mean cash, Marketable Securities or Letters of Credit
delivered by the Borrower to the Agent to be held by the Agent on behalf of a
Lender (net of redeliveries, if any, pursuant to Section 12 (a) of the
Agreement) as collateral to secure the performance by the Borrower of its
obligations in respect of any Loan upon the terms and conditions set forth in
the Agreement and in any Confirmation with respect to such Loan.
"EQUIVALENT SECURITIES" shall mean securities of the same class, issue (maturity
and interest rate, in the case of debt securities) and quantity as the Loaned
Securities or any Marketable Securities delivered as Collateral, as the case may
be, or, if such class shall have ceased to exist or the quantity thereof shall
have been adjusted as a result of a merger or a recapitalization or similar
event, securities of the same class and quantity as the securities into which
Loaned Securities or Marketable Securities shall have been converted or changed.
"FOREIGN BUSINESS DAY" shall mean, with respect to Foreign Securities, any day
other than a Saturday, a Sunday, a day on which local banking institutions are
authorized or obligated by law or executive order to close, or a day on which
the principal local exchange on which securities are traded in closed.
"FOREIGN SECURITIES" shall mean, Loaned Securities issued outside the
continental United States, as well as al Loaned Securities denominated in
currencies other than in United States dollars, whose principal trading market
is located outside of the continental United States.
"GOVERNMENT SECURITIES" shall mean U.S. Government Securities and Agency
Securities.
"INITIAL COLLATERAL" shall mean the Collateral delivered by the Borrower on a
Settlement Date.
"LETTER OF CREDIT" shall mean an irrevocable letter of credit issued by a bank
which is acceptable to the Agent in its sole discretion and which shall provide
that payments thereunder shall be made to the Agent upon certification by the
Agent that a Borrower's Default has occurred and is continuing.
"MAINTENANCE PERCENTAGE" shall mean, with respect to Loaned Securities which are
Government Securities, 100%; with respect to Loaned Securities which are Foreign
Securities, 105%; and, with respect to Loaned Securities which are Other
Securities, 102%.
"MARKET VALUE" shall mean:
(a) in the case of cash, 100% of the amount thereof;
(b) in the case of a Letter of Credit, 100% of the amount payable thereunder;
(c) in the case of Other Securities:
(i) if traded on a national securities exchange the last publicly available
sale price (regular way) on the principal national securities exchange on
which such securities are traded or, if there has not been any such sale on
a particular day, the last publicly available bid quotation on such
exchange on such day, or
(ii) if such securities are not traded on a national securities
exchange, the last publicly available bid quotation as reported by NASDAQ;
12
(d) in the case of Government Securities, the sum of
(i) the last publicly available bid quotation of such securities, or such
other valuation to which the Agent and the Borrower agree, and
(ii) the interest accrued but not yet due and owing on such securities
as of such date, if any.
(e) in the case of Foreign Securities
the value as determined as of the close of business on the preceding
business day by a third party pricing agent in accordance with market
practice in the principal market for such securities, considering, among
other factors, applicable foreign exchange rates and accrued interest
obligations.
Notwithstanding the provisions of clause (c) of this definition, if the Agent
and Borrower so agree on the Trade Date and it is so indicated in the
Confirmation, the Market Value of debt securities that are Other Securities
shall also include interest accrued but not yet due and owing on such securities
as of such date, if any.
"MARKETABLE SECURITIES" shall mean: (a) with respect to Loans to Borrowers which
are not registered broker-dealers under the Exchange Act, any Government
Securities and any Other Securities and (b) with respect to Loans to Borrowers
which are registered broker-dealers under the Exchange Act, United States
Treasury Bills and United States Treasury Notes.
"OTHER SECURITIES" shall mean any debt or equity securities other than
Government Securities.
"U.S. GOVERNMENT SECURITIES" shall mean any debt securities issued by the United
States or by federal agencies or transactions which are settled through the
Federal Reserve Clearance System.
MASTER
10/93
13
EXHIBIT A TO MASTER SECURITIES LENDING AGREEMENT
SECURITIES LOAN PROGRAM
TRANS. TYPE NEW SECURITIES LOAN TRANS NO. 200645
TRADE DATE 01/23/90
SETTLEMENT DELIVERY VIA FEDERAL FUNDS SETTLE DATE 01/23/90
ACCOUNT
TERM DATE OPEN
UNITS 18,000,000 PRICE 105.000000
CUSIP ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ TREASURY NOTES
DTD 12.3.04
DELIVER TO SECURITYNY INT RATE 11.0 MAT DATE0 2/15/90
PRU-BACHE
AMOUNT $18,900,000.00
UNITS CURRENTLY HELD FED
SPECIAL INSTRUCTIONS
RATE 7.950
FINDER
ORIGINATOR LMS ** AGENT ** SEE REVERSE SIDE FOR ADDITIONAL INFORMATION
THE TRANSACTION(S) REFLECTED HEREIN WERE MADE BY
CITIBANK, N.A. AS AGENT FOR LENDERS UNDER OUR WRITTEN
MASTER SECURITIES LENDING AGREEMENT WITH YOU.
IF THE INFORMATION PROVIDED HEREIN IN NOT CORRECT IN
EVERY RESPECT, PLEASE IMMEDIATELY PROVIDE WRITTEN
NOTICE OF ANY INACCURACIES TO:
CITIBANK, N.A., AS AGENT
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTN: SECURITIES LENDING DEPARTMENT
14
