EXHIBIT 10.2
Master Securities
Loan Agreement
2000 Version
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Dated as of: April 4, 2002
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Between: ABN AMRO Inc.
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and Thermo Electron Corporation
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1. Applicability.
From time to time the parties hereto may enter into transactions in which
one party ("Lender") will lend to the other party ("Borrower") certain
Securities (as defined herein) against a transfer of Collateral (as defined
herein). Each such transaction shall be referred to herein as a "Loan" and,
unless otherwise agreed in writing, shall be governed by this Agreement,
including any supplemental terms or conditions contained in an Annex or
Schedule hereto and in any other annexes identified herein or therein as
applicable hereunder. Capitalized terms not otherwise defined herein shall
have the meanings provided in Section 25.
2. Loans of Securities.
2.1 Subject to the terms and conditions of this Agreement, Borrower or
Lender may, from time to time, seek to initiate a transaction in which
Lender will lend Securities to Borrower. Borrower and Lender shall
agree on the terms of each Loan (which terms may be amended during the
Loan), including the issuer of the Securities, the amount of
Securities to be lent, the basis of compensation, the amount of
Collateral to be transferred by Borrower, and any additional terms.
Such agreement shall be confirmed (a) by a schedule and receipt
listing the Loaned Securities provided by Borrower to Lender in
accordance with Section 3.2, (b) through any system that compares
Loans and in which Borrower and Lender are participants, or (c) in
such other manner as may be agreed by Borrower and Lender in writing.
Such confirmation (the "Confirmation"), together with the Agreement,
shall constitute conclusive evidence of the terms agreed between
Borrower and Lender with respect to the Loan to which the Confirmation
relates, unless with respect to the Confirmation specific objection is
made promptly after receipt thereof. In the event of any inconsistency
between the terms of such Confirmation and this Agreement, this
Agreement shall prevail unless each party has executed such
Confirmation.
2.2 Notwithstanding any other provision in this Agreement regarding when a
Loan commences, unless otherwise agreed, a Loan hereunder shall not
occur until the Loaned Securities and the Collateral therefor have
been transferred in accordance with Section 15.
3. Transfer of Loaned Securities.
3.1 Unless otherwise agreed, Lender shall transfer Loaned Securities to
Borrower hereunder on or before the Cutoff Time on the date agreed to
by Borrower and Lender for the commencement of the Loan.
3.2 Unless otherwise agreed, Borrower shall provide Lender, for each Loan
in which Lender is a Customer, with a schedule and receipt listing the
Loaned Securities. Such schedule and receipt may consist of (a) a
schedule provided to Borrower by Lender and executed and returned by
Borrower when the Loaned Securities are received, (b) in the case of
Securities transferred through a Clearing Organization which provides
transferors with a notice evidencing such transfer, such notice, or
(c) a confirmation or other document provided to Lender by Borrower.
3.3 Notwithstanding any other provision in this Agreement, the parties
hereto agree that they intend the Loans hereunder to be loans of
Securities. If, however, any Loan is deemed to be a loan of money by
Borrower to Lender, then Borrower shall have, and Lender shall be
deemed to have granted, a security interest in the Loaned Securities
and the proceeds thereof.
4. Collateral.
4.1 Unless otherwise agreed, Borrower shall, prior to or concurrently with the
transfer of the Loaned Securities to Borrower, but in no case later than
the Close of Business on the day of such transfer, transfer to Lender
Collateral with a Market Value at least equal to the Margin Percentage of
the Market Value of the Loaned Securities.
4.2 The Collateral transferred by Borrower to Lender, as adjusted pursuant to
Section 9, shall be security for Borrower's obligations in respect of such
Loan and for any other obligations of Borrower to Lender hereunder.
Borrower hereby pledges with, assigns to, and grants Lender a continuing
first priority security interest in, and a lien upon, the Collateral, which
shall attach upon the transfer of the Loaned Securities by Lender to
Borrower and which shall cease upon the transfer of the Loaned Securities
by Borrower to Lender. In addition to the rights and remedies given to
Lender hereunder, Lender shall have all the rights and remedies of a
secured party under the UCC. It is understood that Lender may use or invest
the Collateral, if such consists of cash, at its own risk, but that (unless
Lender is a Broker-Dealer) Lender shall, during the term of any Loan
hereunder, segregate Collateral from all securities or other assets in its
possession. Lender may Retransfer Collateral only (a) if Lender is a
Broker-Dealer or (b) in the event of a Default by Borrower. Segregation of
Collateral may be accomplished by appropriate identification on the books
and records of Lender if it is a "securities intermediary" within the
meaning of the UCC.
4.3 Except as otherwise provided herein, upon transfer to Lender of the Loaned
Securities on the day a Loan is terminated pursuant to Section 6, Lender
shall be obligated to transfer the Collateral (as adjusted pursuant to
Section 9) to Borrower no later than the Cutoff Time on such day or, if
such day is not a day on which a transfer of such Collateral may be
effected under Section 15, the next day on which such a transfer may be
effected.
4.4 If Borrower transfers Collateral to Lender, as provided in Section 4.1, and
Lender does not transfer the Loaned Securities to Borrower, Borrower shall
have the absolute right to the return of the Collateral; and if Lender
transfers Loaned Securities to Borrower and Borrower does not transfer
Collateral to Lender as provided in Section 4.1, Lender shall have the
absolute right to the return of the Loaned Securities.
4.5 Borrower may, upon reasonable notice to Lender (taking into account all
relevant factors, including industry practice, the type of Collateral to be
substituted, and the applicable method of transfer), substitute Collateral
for Collateral securing any Loan or Loans; provided, however, that such
substituted Collateral shall (a) consist only of cash, securities or other
property that Borrower and Lender agreed would be acceptable Collateral
prior to the Loan or Loans and (b) have a Market Value such that the
aggregate Market Value of such substituted Collateral, together with all
other Collateral for Loans in which the party substituting such Collateral
is acting as Borrower, shall equal or exceed the agreed upon Margin
Percentage of the Market Value of the Loaned Securities.
4.6 Prior to the expiration of any letter of credit supporting Borrower's
obligations hereunder, Borrower shall, no later than the Extension
Deadline, (a) obtain an extension of the expiration of such letter of
credit, (b) replace such letter of credit by providing Lender with a
substitute letter of credit in an amount at least equal to the amount of
the letter of credit for which it is substituted, or (c) transfer such
other Collateral to Lender as may be acceptable to Lender.
5. Fees for Loan.
5.1 Unless otherwise agreed, (a) Borrower agrees to pay Lender a loan fee (a
"Loan Fee"), computed daily on each Loan to the extent such Loan is secured
by Collateral other than cash, based on the aggregate Market Value of the
Loaned Securities on the day for which such Loan Fee is being computed, and
(b) Lender agrees to pay Borrower a fee or rebate (a "Cash Collateral Fee")
on Collateral consisting of cash, computed daily based on the amount of
cash held by Lender as Collateral, in the case of each of the Loan Fee and
the Cash Collateral Fee at such rates as Borrower and Lender may agree.
Except as Borrower and Lender may otherwise agree (in the event that cash
Collateral is transferred by clearing house funds or otherwise), Loan Fees
shall accrue from and including the date on which the Loaned Securities are
transferred to Borrower to, but excluding, the date on which such Loaned
Securities are returned to Lender, and Cash Collateral Fees shall accrue
from and including the date on which the cash Collateral is transferred to
Lender to, but excluding, the date on which such cash Collateral is
returned to Borrower.
5.2 Unless otherwise agreed, any Loan Fee or Cash Collateral Fee payable
hereunder shall be payable:
(a) in the case of any Loan of Securities other than Government
Securities, upon the earlier of (i) the fifteenth day of the month
following the calendar month in which such fee was incurred and (ii)
the termination of all Loans hereunder (or, if a transfer of cash in
accordance with Section 15 may not be effected on such fifteenth day
or the day of such termination, as the case may be, the next day on
which such a transfer may be effected); and
(b) in the case of any Loan of Government Securities, upon the termination
of such Loan and at such other times, if any, as may be customary in
accordance with market practice.
Notwithstanding the foregoing, all Loan Fees shall be payable by
Borrower immediately in the event of a Default hereunder by Borrower
and all Cash Collateral Fees shall be payable immediately by Lender in
the event of a Default by Lender.
6. Termination of the Loan.
6.1 a) Unless otherwise agreed, either party may terminate a Loan on a
termination date established by notice given to the other party prior
to the Close of Business on a Business Day. The termination date
established by a termination notice shall be a date no earlier than
the standard settlement date that would apply to a purchase or sale of
the Loaned Securities (in the case of a notice given by Lender) or the
noncash Collateral securing the Loan (in the case of a notice given by
Borrower) entered into at the time of such notice, which date shall,
unless Borrower and Lender agree to the contrary, be (i) in the case
of Government Securities, the next Business Day following such notice
and (ii) in the case of all other Securities, the third Business Day
following such notice.
(b) Notwithstanding paragraph (a) and unless otherwise agreed, Borrower
may terminate a Loan on any Business Day by giving notice to Lender
and transferring the Loaned Securities to Lender before the Cutoff
Time on such Business Day if (i) the Collateral for such Loan consists
of cash or Government Securities or (ii) Lender is not permitted,
pursuant to Section 4.2, to Retransfer Collateral.
6.2 Unless otherwise agreed, Borrower shall, on or before the Cutoff Time
on the termination date of a Loan, transfer the Loaned Securities to
Lender; provided, however, that upon such transfer by Borrower, Lender
shall transfer the Collateral (as adjusted pursuant to Section 9) to
Borrower in accordance with Section 4.3.
7. Rights in Respect of Loaned Securities and Collateral.
7.1 Except as set forth in Sections 8.1 and 8.2 and as otherwise agreed by
Borrower and Lender, until Loaned Securities are required to be
redelivered to Lender upon termination of a Loan hereunder, Borrower
shall have all of the incidents of ownership of the Loaned Securities,
including the right to transfer the Loaned Securities to others.
Lender hereby waives the right to vote, or to provide any consent or
to take any similar action with respect to, the Loaned Securities in
the event that the record date or deadline for such vote, consent or
other action falls during the term of the Loan.
7.2 Except as set forth in Sections 8.3 and 8.4 and as otherwise agreed by
Borrower and Lender, if Lender may, pursuant to Section 4.2,
Retransfer Collateral, Borrower hereby waives the right to vote, or to
provide any consent or take any similar action with respect to, any
such Collateral in the event that the record date or deadline for such
vote, consent or other action falls during the term of a Loan and such
Collateral is not required to be returned to Borrower pursuant to
Section 4.5 or Section 9.
8. Distributions.
8.1 Lender shall be entitled to receive all Distributions made on or in respect
of the Loaned Securities which are not otherwise received by Lender, to the
full extent it would be so entitled if the Loaned Securities had not been
lent to Borrower.
8.2 Any cash Distributions made on or in respect of the Loaned Securities,
which Lender is entitled to receive pursuant to Section 8.1, shall be paid
by the transfer of cash to Lender by Borrower, on the date any such
Distribution is paid, in an amount equal to such cash Distribution, so long
as Lender is not in Default at the time of such payment. Non-cash
Distributions that Lender is entitled to receive pursuant to Section 8.1
shall be added to the Loaned Securities on the date of distribution and
shall be considered such for all purposes, except that if the Loan has
terminated, Borrower shall forthwith transfer the same to Lender.
8.3 Borrower shall be entitled to receive all Distributions made on or in
respect of non-cash Collateral which are not otherwise received by
Borrower, to the full extent it would be so entitled if the Collateral had
not been transferred to Lender.
8.4 Any cash Distributions made on or in respect of such Collateral, which
Borrower is entitled to receive pursuant to Section 8.3, shall be paid by
the transfer of cash to Borrower by Lender, on the date any such
Distribution is paid, in an amount equal to such cash Distribution, so long
as Borrower is not in Default at the time of such payment. Non-cash
Distributions that Borrower is entitled to receive pursuant to Section 8.3
shall be added to the Collateral on the date of distribution and shall be
considered such for all purposes, except that if each Loan secured by such
Collateral has terminated, Lender shall forthwith transfer the same to
Borrower.
8.5 Unless otherwise agreed by the parties:
(a) If (i) Borrower is required to make a payment (a "Borrower Payment") with
respect to cash Distributions on Loaned Securities under Sections 8.1 and
8.2 ("Securities Distributions"), or (ii) Lender is required to make a
payment (a "Lender Payment") with respect to cash Distributions on
Collateral under Sections 8.3 and 8.4 ("Collateral Distributions"), and
(iii) Borrower or Lender, as the case may be ("Payor"), shall be required
by law to collect any withholding or other tax, duty, fee, levy or charge
required to be deducted or withheld from such Borrower Payment or Lender
Payment ("Tax"), then Payor shall (subject to subsections (b) and (c)
below), pay such additional amounts as may be necessary in order that the
net amount of the Borrower Payment or Lender Payment received by the Lender
or Borrower, as the case may be ("Payee"), after payment of such Tax equals
the net amount of the Securities Distribution or Collateral Distribution
that would have been received if such Securities Distribution or Collateral
Distribution had been paid directly to the Payee.
(b) No additional amounts shall be payable to a Payee under subsection (a)
above to the extent that Tax would have been imposed on a Securities
Distribution or Collateral Distribution paid directly to the Payee.
(c) No additional amounts shall be payable to a Payee under subsection (a)
above to the extent that such Payee is entitled to an exemption from, or
reduction in the rate of, Tax on a Borrower Payment or Lender Payment
subject to the provision of a certificate or other documentation, but has
failed timely to provide such certificate or other documentation.
(d) Each party hereto shall be deemed to represent that, as of the commencement
of any Loan hereunder, no Tax would be imposed on any cash Distribution
paid to it with respect to (i) Loaned Securities subject to a Loan in which
it is acting as Lender or (ii) Collateral for any Loan in which it is
acting as Borrower, unless such party has given notice to the contrary to
the other party hereto (which notice shall specify the rate at which such
Tax would be imposed). Each party agrees to notify the other of any change
that occurs during the term of a Loan in the rate of any Tax that would be
imposed on any such cash Distributions payable to it.
8.6 To the extent that, under the provisions of Sections 8.1 through 8.5, (a) a
transfer of cash or other property by Borrower would give rise to a Margin
Excess or (b) a transfer of cash or other property by Lender would give
rise to a Margin Deficit, Borrower or Lender (as the case may be) shall not
be obligated to make such transfer of cash or other property in accordance
with such Sections, but shall in lieu of such transfer immediately credit
the amounts that would have been transferable under such Sections to the
account of Lender or Borrower (as the case may be).
9. Xxxx to Market.
9.1 If Lender is a Customer, Borrower shall daily xxxx to market any Loan
hereunder and in the event that at the Close of Trading on any Business Day
the Market Value of the Collateral for any Loan to Borrower shall be less
than 100% of the Market Value of all the outstanding Loaned Securities
subject to such Loan, Borrower shall transfer additional Collateral no
later than the Close of Business on the next Business Day so that the
Market Value of such additional Collateral, when added to the Market Value
of the other Collateral for such Loan, shall equal 100% of the Market Value
of the Loaned Securities.
9.2 In addition to any rights of Lender under Section 9.1, if at any time the
aggregate Market Value of all Collateral for Loans by Lender shall be less
than the Margin Percentage of the Market Value of all the outstanding
Loaned Securities subject to such Loans (a "Margin Deficit"), Lender may,
by notice to Borrower, demand that Borrower transfer to Lender additional
Collateral so that the Market Value of such additional Collateral, when
added to the Market Value of all other Collateral for such Loans, shall
equal or exceed the Margin Percentage of the Market Value of the Loaned
Securities.
9.3 Subject to Borrower's obligations under Section 9.1, if at any time the
Market Value of all Collateral for Loans to Borrower shall be greater than
the Margin Percentage of the Market Value of all the outstanding Loaned
Securities subject to such Loans (a "Margin Excess"), Borrower may, by
notice to Lender, demand that Lender transfer to Borrower such amount of
the Collateral selected by Borrower so that the Market Value of the
Collateral for such Loans, after deduction of such amounts, shall thereupon
not exceed the Margin Percentage of the Market Value of the Loaned
Securities.
9.4 Borrower and Lender may agree, with respect to one or more Loans hereunder,
to xxxx the values to market pursuant to Sections 9.2 and 9.3 by separately
valuing the Loaned Securities lent and the Collateral given in respect
thereof on a Loan-by-Loan basis.
9.5 Borrower and Lender may agree, with respect to any or all Loans hereunder,
that the respective rights of Lender and Borrower under Sections 9.2 and
9.3 may be exercised only where a Margin Excess or Margin Deficit exceeds a
specified dollar amount or a specified percentage of the Market Value of
the Loaned Securities under such Loans (which amount or percentage shall be
agreed to by Borrower and Lender prior to entering into any such Loans).
9.6 If any notice is given by Borrower or Lender under Sections 9.2 or 9.3 at
or before the Margin Notice Deadline on any day on which a transfer of
Collateral may be effected in accordance with Section 15, the party
receiving such notice shall transfer Collateral as provided in such Section
no later than the Close of Business on such day. If any such notice is
given after the Margin Notice Deadline, the party receiving such notice
shall transfer such Collateral no later than the Close of Business on the
next Business Day following the day of such notice.
10. Representations.
The parties to this Agreement hereby make the following representations and
warranties, which shall continue during the term of any Loan hereunder:
10.1 Each party hereto represents and warrants that (a) it has the power to
execute and deliver this Agreement, to enter into the Loans contemplated
hereby and to perform its obligations hereunder, (b) it has taken all
necessary action to authorize such execution, delivery and performance, and
(c) this Agreement constitutes a legal, valid and binding obligation
enforceable against it in accordance with its terms.
10.2 Each party hereto represents and warrants that it has not relied on the
other for any tax or accounting advice concerning this Agreement and that
it has made its own determination as to the tax and accounting treatment of
any Loan and any dividends, remuneration or other funds received hereunder.
10.3 Each party hereto represents and warrants that it is acting for its own
account unless it expressly specifies otherwise in writing and complies
with Section 11.1(b).
10.4 Borrower represents and warrants that it has, or will have at the time of
transfer of any Collateral, the right to grant a first priority security
interest therein subject to the terms and conditions hereof.
10.5 (a) Borrower represents and warrants that it (or the person to whom it
relends the Loaned Securities) is borrowing or will borrow Loaned
Securities that are Equity Securities for the purpose of making
delivery of such Loaned Securities in the case of short sales, failure
to receive securities required to be delivered, or as otherwise
permitted pursuant to Regulation T as in effect from time to time.
(b) Borrower and Lender may agree, as provided in Section 24.2, that
Borrower shall not be deemed to have made the representation or
warranty in subsection (a) with respect to any Loan. By entering into
any such agreement, Lender shall be deemed to have represented and
warranted to Borrower (which representation and warranty shall be
deemed to be repeated on each day during the term of the Loan) that
Lender is either (i) an "exempted borrower" within the meaning of
Regulation T or (ii) a member of a national securities exchange or a
broker or dealer registered with the U.S. Securities and Exchange
Commission that is entering into such Loan to finance its activities
as a market maker or an underwriter.
10.6 Lender represents and
warrants that it has, or will have at the time of transfer of any
Loaned Securities, the right to transfer the Loaned Securities subject
to the terms and conditions hereof.
11. Covenants.
11.1 Each party agrees either (a) to be liable as principal with respect to
its obligations hereunder or (b) to execute and comply fully with the
provisions of Annex I (the terms and conditions of which Annex are
incorporated herein and made a part hereof).
11.2 Promptly upon (and in any event within seven (7) Business Days after)
demand by Lender, Borrower shall furnish Lender with Borrower's most
recent publicly-available financial statements and any other financial
statements mutually agreed upon by Borrower and Lender. Unless
otherwise agreed, if Borrower is subject to the requirements of Rule
17a-5(c) under the Exchange Act, it may satisfy the requirements of
this Section by furnishing Lender with its most recent statement
required to be furnished to customers pursuant to such Rule.
12. Events of Default.
All Loans hereunder may, at the option of the non-defaulting party (which
option shall be deemed to have been exercised immediately upon the
occurrence of an Act of Insolvency), be terminated immediately upon the
occurrence of any one or more of the following events (individually, a
"Default"):
12.1 if any Loaned Securities shall not be transferred to Lender upon
termination of the Loan as required by Section 6;
12.2 if any Collateral shall not be transferred to Borrower upon termination of
the Loan as required by Sections 4.3 and 6;
12.3 if either party shall fail to transfer Collateral as required by Section 9;
12.4 if either party (a) shall fail to transfer to the other party amounts in
respect of Distributions required to be transferred by Section 8, (b) shall
have been notified of such failure by the other party prior to the Close of
Business on any day, and (c) shall not have cured such failure by the
Cutoff Time on the next day after such Close of Business on which a
transfer of cash may be effected in accordance with Section 15;
12.5 if an Act of Insolvency occurs with respect to either party;
12.6 if any representation made by either party in respect of this Agreement or
any Loan or Loans hereunder shall be incorrect or untrue in any material
respect during the term of any Loan hereunder;
12.7 if either party notifies the other of its inability to or its intention not
to perform its obligations hereunder or otherwise disaffirms, rejects or
repudiates any of its obligations hereunder; or
12.8 if either party (a) shall fail to perform any material obligation under
this Agreement not specifically set forth in clauses 12.1 through 12.7,
above, including but not limited to the payment of fees as required by
Section 5, and the payment of transfer taxes as required by Section 14, (b)
shall have been notified of such failure by the other party prior to the
Close of Business on any day, and (c) shall not have cured such failure by
the Cutoff Time on the next day after such Close of Business on which a
transfer of cash may be effected in accordance with Section 15.
The non-defaulting party shall (except upon the occurrence of an Act of
Insolvency) give notice as promptly as practicable to the defaulting party
of the exercise of its option to terminate all Loans hereunder pursuant to
this Section 12.
13. Remedies.
13.1 Upon the occurrence of a Default under Section 12 entitling Lender to
terminate all Loans hereunder, Lender shall have the right, in addition to
any other remedies provided herein, (a) to purchase a like amount of Loaned
Securities ("Replacement Securities") in the principal market for such
Loaned Securities in a commercially reasonable manner, (b) to sell any
Collateral in the principal market for such Collateral in a commercially
reasonable manner and (c) to apply and set off the Collateral and any
proceeds thereof (including any amounts drawn under a letter of credit
supporting any Loan) against the payment of the purchase price for such
Replacement Securities and any amounts due to Lender under Sections 5, 8,
14 and 16. In the event that Lender shall exercise such rights, Borrower's
obligation to return a like amount of the Loaned Securities shall
terminate. Lender may similarly apply the Collateral and any proceeds
thereof to any other obligation of Borrower under this Agreement, including
Borrower's obligations with respect to Distributions paid to Borrower (and
not forwarded to Lender) in respect of Loaned Securities. In the event that
(i) the purchase price of Replacement Securities (plus all other amounts,
if any, due to Lender hereunder) exceeds (ii) the amount of the Collateral,
Borrower shall be liable to Lender for the amount of such excess together
with interest thereon at a rate equal to (A) in the case of purchases of
Foreign Securities, LIBOR, (B) in the case of purchases of any other
Securities (or other amounts, if any, due to Lender hereunder), the Federal
Funds Rate or (C) such other rate as may be specified in Schedule B, in
each case as such rate fluctuates from day to day, from the date of such
purchase until the date of payment of such excess. As security for
Borrower's obligation to pay such excess, Lender shall have, and Borrower
hereby grants, a security interest in any property of Borrower then held by
or for Lender and a right of setoff with respect to such property and any
other amount payable by Lender to Borrower. The purchase price of
Replacement Securities purchased under this Section 13.1 shall include, and
the proceeds of any sale of Collateral shall be determined after deduction
of, broker's fees and commissions and all other reasonable costs, fees and
expenses related to such purchase or sale (as the case may be). In the
event Lender exercises its rights under this Section 13.1, Lender may elect
in its sole discretion, in lieu of purchasing all or a portion of the
Replacement Securities or selling all or a portion of the Collateral, to be
deemed to have made, respectively, such purchase of Replacement Securities
or sale of Collateral for an amount equal to the price therefor on the date
of such exercise obtained from a generally recognized source or the last
bid quotation from such a source at the most recent Close of Trading.
Subject to Section 18, upon the satisfaction of all obligations hereunder,
any remaining Collateral shall be returned to Borrower.
13.2 Upon the occurrence of a Default under Section 12 entitling Borrower to
terminate all Loans hereunder, Borrower shall have the right, in addition
to any other remedies provided herein, (a) to purchase a like amount of
Collateral ("Replacement Collateral") in the principal market for such
Collateral in a commercially reasonable manner, (b) to sell a like amount
of the Loaned Securities in the principal market for such Loaned Securities
in a commercially reasonable manner and (c) to apply and set off the Loaned
Securities and any proceeds thereof against (i) the payment of the purchase
price for such Replacement Collateral, (ii) Lender's obligation to return
any cash or other Collateral, and (iii) any amounts due to Borrower under
Sections 5, 8 and 16. In such event, Borrower may treat the Loaned
Securities as its own and Lender's obligation to return a like amount of
the Collateral shall terminate; provided, however, that Lender shall
immediately return any letters of credit supporting any Loan upon the
exercise or deemed exercise by Borrower of its termination rights under
Section 12. Borrower may similarly apply the Loaned Securities and any
proceeds thereof to any other obligation of Lender under this Agreement,
including Lender's obligations with respect to Distributions paid to Lender
(and not forwarded to Borrower) in respect of Collateral. In the event that
(i) the sales price received from such Loaned Securities is less than (ii)
the purchase price of Replacement Collateral (plus the amount of any cash
or other Collateral not replaced by Borrower and all other amounts, if any,
due to Borrower hereunder), Lender shall be liable to Borrower for the
amount of any such deficiency, together with interest on such amounts at a
rate equal to (A) in the case of Collateral consisting of Foreign
Securities, LIBOR, (B) in the case of Collateral consisting of any other
Securities (or other amounts due, if any, to Borrower hereunder), the
Federal Funds Rate or (C) such other rate as may be specified in Schedule
B, in each case as such rate fluctuates from day to day, from the date of
such sale until the date of payment of such deficiency. As security for
Lender's obligation to pay such deficiency, Borrower shall have, and Lender
hereby grants, a security interest in any property of Lender then held by
or for Borrower and a right of setoff with respect to such property and any
other amount payable by Borrower to Lender. The purchase price of any
Replacement Collateral purchased under this Section 13.2 shall include, and
the proceeds of any sale of Loaned Securities shall be determined after
deduction of, broker's fees and commissions and all other reasonable costs,
fees and expenses related to such purchase or sale (as the case may be). In
the event Borrower exercises its rights under this Section 13.2, Borrower
may elect in its sole discretion, in lieu of purchasing all or a portion of
the Replacement Collateral or selling all or a portion of the Loaned
Securities, to be deemed to have made, respectively, such purchase of
Replacement Collateral or sale of Loaned Securities for an amount equal to
the price therefor on the date of such exercise obtained from a generally
recognized source or the last bid quotation from such a source at the most
recent Close of Trading. Subject to Section 18, upon the satisfaction of
all Lender's obligations hereunder, any remaining Loaned Securities (or
remaining cash proceeds thereof) shall be returned to Lender.
13.3 Unless otherwise agreed, the parties acknowledge and agree that (a) the
Loaned Securities and any Collateral consisting of Securities are of a type
traded in a recognized market, (b) in the absence of a generally recognized
source for prices or bid or offer quotations for any security, the
non-defaulting party may establish the source therefor in its sole
discretion, and (c) all prices and bid and offer quotations shall be
increased to include accrued interest to the extent not already included
therein (except to the extent contrary to market practice with respect to
the relevant Securities).
13.4 In addition to its rights hereunder, the non-defaulting party shall have
any rights otherwise available to it under any other agreement or
applicable law.
14. Transfer Taxes.
All transfer taxes with respect to the transfer of the Loaned Securities by
Lender to Borrower and by Borrower to Lender upon termination of the Loan
and with respect to the transfer of Collateral by Borrower to Lender and by
Lender to Borrower upon termination of the Loan or pursuant to Section 4.5
or Section 9 shall be paid by Borrower.
15. Transfers.
15.1 All transfers by either Borrower or Lender of Loaned Securities or
Collateral consisting of "financial assets" (within the meaning of the UCC)
hereunder shall be by (a) in the case of certificated securities, physical
delivery of certificates representing such securities together with duly
executed stock and bond transfer powers, as the case may be, with
signatures guaranteed by a bank or a member firm of the New York Stock
Exchange, Inc., (b) registration of an uncertificated security in the
transferee's name by the issuer of such uncertificated security, (c) the
crediting by a Clearing Organization of such financial assets to the
transferee's "securities account" (within the meaning of the UCC)
maintained with such Clearing Organization, or (d) such other means as
Borrower and Lender may agree.
15.2 All transfers of cash hereunder shall be by (a) wire transfer in
immediately available, freely transferable funds or (b) such other means as
Borrower and Lender may agree.
15.3 All transfers of letters of credit from Borrower to Lender shall be made by
physical delivery to Lender of an irrevocable letter of credit issued by a
"bank" as defined in Section 3(a)(6)(A)-(C) of the Exchange Act. Transfers
of letters of credit from Lender to Borrower shall be made by causing such
letters of credit to be returned or by causing the amount of such letters
of credit to be reduced to the amount required after such transfer.
15.4 A transfer of Securities, cash or letters of credit may be effected under
this Section 15 on any day except (a) a day on which the transferee is
closed for business at its address set forth in Schedule A hereto or (b) a
day on which a Clearing Organization or wire transfer system is closed, if
the facilities of such Clearing Organization or wire transfer system are
required to effect such transfer.
15.5 For the avoidance of doubt, the parties agree and acknowledge that the term
"securities," as used herein (except in this Section 15), shall include any
"security entitlements" with respect to such securities (within the meaning
of the UCC). In every transfer of "financial assets" (within the meaning of
the UCC) hereunder, the transferor shall take all steps necessary (a) to
effect a delivery to the transferee under Section 8-301 of the UCC, or to
cause the creation of a security entitlement in favor of the transferee
under Section 8-501 of the UCC, (b) to enable the transferee to obtain
"control" (within the meaning of Section 8-106 of the UCC), and (c) to
provide the transferee with comparable rights under any applicable foreign
law or regulation.
16. Contractual Currency.
16.1 Borrower and Lender agree that (a) any payment in respect of a Distribution
under Section 8 shall be made in the currency in which the underlying
Distribution of cash was made, (b) any return of cash shall be made in the
currency in which the underlying transfer of cash was made, and (c) any
other payment of cash in connection with a Loan under this Agreement shall
be in the currency agreed upon by Borrower and Lender in connection with
such Loan (the currency established under clause (a), (b) or (c)
hereinafter referred to as the "Contractual Currency"). Notwithstanding the
foregoing, the payee of any such payment may, at its option, accept tender
thereof in any other currency; provided, however, that, to the extent
permitted by applicable law, the obligation of the payor to make such
payment will be discharged only to the extent of the amount of Contractual
Currency that such payee may, consistent with normal banking 12 procedures,
purchase with such other currency (after deduction of any premium and costs
of exchange) on the banking day next succeeding its receipt of such
currency.
16.2 If for any reason the amount in the Contractual Currency received under
Section 16.1, including amounts received after conversion of any recovery
under any judgment or order expressed in a currency other than the
Contractual Currency, falls short of the amount in the Contractual Currency
due in respect of this Agreement, the party required to make the payment
will (unless a Default has occurred and such party is the non-defaulting
party) as a separate and independent obligation and to the extent permitted
by applicable law, immediately pay such additional amount in the
Contractual Currency as may be necessary to compensate for the shortfall.
16.3 If for any reason the amount in the Contractual Currency received under
Section 16.1 exceeds the amount in the Contractual Currency due in respect
of this Agreement, then the party receiving the payment will (unless a
Default has occurred and such party is the non-defaulting party) refund
promptly the amount of such excess.
17. ERISA. Lender shall, if any
of the Securities transferred to the Borrower hereunder for any Loan have
been or shall be obtained, directly or indirectly, from or using the assets
of any Plan, so notify Borrower in writing upon the execution of this
Agreement or upon initiation of such Loan under Section 2.1. If Lender so
notifies Borrower, then Borrower and Lender shall conduct the Loan in
accordance with the terms and conditions of Department of Labor Prohibited
Transaction Exemption 81-6 (46 Fed. Reg. 7527, Jan. 23, 1981; as amended,
52 Fed. Reg. 18754, May 19, 1987), or any successor thereto (unless
Borrower and Lender have agreed prior to entering into a Loan that such
Loan will be conducted in reliance on another exemption, or without relying
on any exemption, from the prohibited transaction provisions of Section 406
of the Employee Retirement Income Security Act of 1974, as amended, and
Section 4975 of the Internal Revenue Code of 1986, as amended). Without
limiting the foregoing and notwithstanding any other provision of this
Agreement, if the Loan will be conducted in accordance with Prohibited
Transaction Exemption 81-6, then:
17.1 Borrower represents and warrants to Lender that it is either (a) a bank
subject to federal or state supervision, (b) a broker-dealer registered
under the Exchange Act or (c) exempt from registration under Section
15(a)(1) of the Exchange Act as a dealer in Government Securities.
17.2 Borrower represents and warrants that, during the term of any Loan
hereunder, neither Borrower nor any affiliate of Borrower has any
discretionary authority or control with respect to the investment of the
assets of the Plan involved in the Loan or renders investment advice
(within the meaning of 29 C.F.R. Section 2510.3-21(c)) with respect to the
assets of the Plan involved in the Loan. Lender agrees that, prior to or at
the commencement of any Loan hereunder, it will communicate to Borrower
information regarding the Plan sufficient to identify to Borrower any
person or persons that have discretionary authority or control with respect
to the investment of the assets of the Plan involved in the Loan or that
render investment advice (as defined in the preceding sentence) with
respect to the assets of the Plan involved in the Loan. In the event Lender
fails to communicate and keep current during the term of any Loan such
information, Lender rather than Borrower shall be deemed to have made the
representation and warranty in the first sentence of this Section 17.2.
17.3 Borrower shall xxxx to market daily each Loan hereunder pursuant to Section
9.1 as is required if Lender is a Customer.
17.4 Borrower and Lender agree that:
(a) the term "Collateral" shall mean cash, securities issued or guaranteed
by the United States government or its agencies or instrumentalities,
or irrevocable bank letters of credit issued by a person other than
Borrower or an affiliate thereof;
(b) prior to the making of any Loans hereunder, Borrower shall provide
Lender with (i) the most recent available audited statement of
Borrower's financial condition and (ii) the most recent available
unaudited statement of Borrower's financial condition (if more recent
than the most recent audited statement), and each Loan made hereunder
shall be deemed a representation by Borrower that there has been no
material adverse change in Borrower's financial condition subsequent
to the date of the latest financial statements or information
furnished in accordance herewith;
(c) the Loan may be terminated by Lender at any time, whereupon Borrower
shall deliver the Loaned Securities to Lender within the lesser of (i)
the customary delivery period for such Loaned Securities, (ii) five
Business Days, and (iii) the time negotiated for such delivery between
Borrower and Lender; provided, however, that Borrower and Lender may
agree to a longer period only if permitted by Prohibited Transaction
Exemption 81-6; and
(d) the Collateral transferred shall be security only for obligations of
Borrower to the Plan with respect to Loans, and shall not be security
for any obligation of Borrower to any agent or affiliate of the Plan.
18. Single Agreement.
Borrower and Lender acknowledge that, and have entered into this Agreement
in reliance on the fact that, all Loans hereunder constitute a single
business and contractual relationship and have been entered into in
consideration of each other. Accordingly, Borrower and Lender hereby agree
that payments, deliveries and other transfers made by either of them in
respect of any Loan shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Loan
hereunder, and the obligations to make any such payments, deliveries and
other transfers may be applied against each other and netted. In addition,
Borrower and Lender acknowledge that, and have entered into this Agreement
in reliance on the fact that, all Loans hereunder have been entered into in
consideration of each other. Accordingly, Borrower and Lender hereby agree
that (a) each shall perform all of its obligations in respect of each Loan
hereunder, and that a default in the performance of any such obligation by
Borrower or by Lender (the "Defaulting Party") in any Loan hereunder shall
constitute a default by the Defaulting Party under all such Loans
hereunder, and (b) the non-defaulting party shall be entitled to set off
claims and apply property held by it in respect of any Loan hereunder
against obligations owing to it in respect of any other Loan with the
Defaulting Party.
19. APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
20. Waiver.
The failure of a party to this Agreement to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. All waivers in
respect of a Default must be in writing.
21. Survival of Remedies. All remedies hereunder and all obligations with
respect to any Loan shall survive the termination of the relevant Loan,
return of Loaned Securities or Collateral and termination of this
Agreement.
22. Notices and Other Communications. Any and all notices, statements, demands
or other communications hereunder may be given by a party to the other by
telephone, mail, facsimile, e-mail, electronic message, telegraph,
messenger or otherwise to the individuals and at the facsimile numbers and
addresses specified with respect to it in Schedule A hereto, or sent to
such party at any other place specified in a notice of change of number or
address hereafter received by the other party. Any notice, statement,
demand or other communication hereunder will be deemed effective on the day
and at the time on which it is received or, if not received, on the day and
at the time on which its delivery was in good faith attempted; provided,
however, that any notice by a party to the other party by telephone shall
be deemed effective only if (a) such notice is followed by written
confirmation thereof and (b) at least one of the other means of providing
notice that are specifically listed above has previously been attempted in
good faith by the notifying party.
23. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
23.1 EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY SUCH
COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT TO
ENFORCE ITS OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT
OR ANY LOAN HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF
JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE.
23.2 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
24. Miscellaneous.
24.1 Except as otherwise agreed by the parties, this Agreement supersedes
any other agreement between the parties hereto concerning loans of
Securities between Borrower and Lender. This Agreement shall not be
assigned by either party without the prior written consent of the
other party and any attempted assignment without such consent shall be
null and void. Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of Borrower and Lender and
their respective heirs, representatives, successors and assigns. This
Agreement may be terminated by either party upon notice to the other,
subject only to fulfillment of any obligations then outstanding. This
Agreement shall not be modified, except by an instrument in writing
signed by the party against whom enforcement is sought. The parties
hereto acknowledge and agree that, in connection with this Agreement
and each Loan hereunder, time is of the essence. Each provision and
agreement herein shall be treated as separate and independent from any
other provision herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.
24.2 Any agreement between Borrower and Lender pursuant to Section 10.5(b)
or Section 25.37 shall be made (a) in writing, (b) orally, if
confirmed promptly in writing or through any system that compares
Loans and in which Borrower and Lender are participants, or (c) in
such other manner as may be agreed by Borrower and Lender in writing.
25. Definitions.
For the purposes hereof:
25.1 "Act of Insolvency" shall mean, with respect to any party, (a) the
commencement by such party as debtor of any case or proceeding under
any bankruptcy, insolvency, reorganization, liquidation, moratorium,
dissolution, delinquency or similar law, or such party's seeking the
appointment or election of a receiver, conservator, trustee, custodian
or similar official for such party or any substantial part of its
property, or the convening of any meeting of creditors for purposes of
commencing any such case or proceeding or seeking such an appointment
or election, (b) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or
election, or the filing against a party of an application for a
protective decree under the provisions of the Securities Investor
Protection Act of 1970, which (i) is consented to or not timely
contested by such party, (ii) results in the entry of an order for
relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or
(iii) is not dismissed within 15 days, (c) the making by such party of
a general assignment for the benefit of creditors, or (d) the
admission in writing by such party of such party's inability to pay
such party's debts as they become due.
25.2 "Bankruptcy Code" shall have the meaning assigned in Section 26.1
25.3 "Borrower" shall have the meaning assigned in Section 1.
25.4 "Borrower Payment" shall have the meaning assigned in Section 8.5(a).
25.5 "Broker-Dealer" shall mean any person that is a broker (including a
municipal securities broker), dealer, municipal securities dealer,
government securities broker or government securities dealer as
defined in the Exchange Act, regardless of whether the activities of
such person are conducted in the United States or otherwise require
such person to register with the U.S. Securities and Exchange
Commission or other regulatory body.
25.6 "Business Day" shall mean, with respect to any Loan hereunder, a day
on which regular trading occurs in the principal market for the Loaned
Securities subject to such Loan, provided, however, that for purposes
of determining the Market Value of any Securities hereunder, such term
shall mean a day on which regular trading occurs in the principal
market for the Securities whose value is being determined.
Notwithstanding the foregoing, (a) for purposes of Section 9,
"Business Day" shall mean any day on which regular trading occurs in
the principal market for any Loaned Securities or for any Collateral
consisting of Securities under any outstanding Loan hereunder and
"next Business Day" shall mean the next day on which a transfer of
Collateral may be effected in accordance with Section 15, and (b) in
no event shall a Saturday or Sunday be considered a Business Day.
25.7 "Cash Collateral Fee" shall have the meaning assigned in Section 5.1.
25.8 "Clearing Organization" shall mean (a) The Depository Trust Company,
or, if agreed to by Borrower and Lender, such other "securities
intermediary" (within the meaning of the UCC) at which Borrower (or
Borrower's agent) and Lender (or Lender's agent) maintain accounts, or
(b) a Federal Reserve Bank, to the extent that it maintains a
book-entry system.
25.9 "Close of Business" shall mean the time established by the parties in
Schedule B or otherwise orally or in writing or, in the absence of any
such agreement, as shall be determined in accordance with market
practice.
25.10"Close of Trading" shall mean, with respect to any Security, the end
of the primary trading session established by the principal market for
such Security on a Business Day, unless otherwise agreed by the
parties.
25.11"Collateral" shall mean, whether now owned or hereafter acquired and
to the extent permitted by applicable law, (a) any property which
Borrower and Lender agree prior to the Loan shall be acceptable
collateral and which is transferred to Lender pursuant to Sections 4
or 9 (including as collateral, for definitional purposes, any letters
of credit mutually acceptable to Lender and Borrower), (b) any
property substituted therefor pursuant to Section 4.5, (c) all
accounts in which such property is deposited and all securities and
the like in which any cash collateral is invested or reinvested, and
(d) any proceeds of any of the foregoing; provided, however, that if
Lender is a Customer, "Collateral" shall (subject to Section 17.4(a),
if applicable) be limited to cash, U.S. Treasury bills and notes, an
irrevocable letter of credit issued by a "bank" (as defined in Section
3(a)(6)(A)-(C) of the Exchange Act), and any other property permitted
to serve as collateral securing a loan of securities under Rule 15c3-3
under the Exchange Act or any comparable regulation of the Secretary
of the Treasury under Section 15C of the Exchange Act (to the extent
that Borrower is subject to such Rule or comparable regulation)
pursuant to exemptive, interpretive or no-action relief or otherwise.
If any new or different Security shall be exchanged for any Collateral
by recapitalization, merger, consolidation or other corporate action,
such new or different Security shall, effective upon such exchange, be
deemed to become Collateral in substitution for the former Collateral
for which such exchange is made. For purposes of return of Collateral
by Lender or purchase or sale of Securities pursuant to Section 13,
such term shall include Securities of the same issuer, class and
quantity as the Collateral initially transferred by Borrower to
Lender, as adjusted pursuant to the preceding sentence.
25.12"Collateral Distributions" shall have the meaning assigned in Section
8.5(a). 25.13 "Confirmation" shall have the meaning assigned in
Section 2.1. 25.14 "Contractual Currency" shall have the meaning
assigned in Section 16.1.
25.15"Customer" shall mean any person that is a customer of Borrower under
Rule 15c3-3 under the Exchange Act or any comparable regulation of the
Secretary of the Treasury under Section 15C of the Exchange Act (to
the extent that Borrower is subject to such Rule or comparable
regulation).
25.16"Cutoff Time" shall mean a time on a Business Day by which a transfer
of cash, securities or other property must be made by Borrower or
Lender to the other, as shall be agreed by Borrower and Lender in
Schedule B or otherwise orally or in writing or, in the absence of any
such agreement, as shall be determined in accordance with market
practice.
25.17 "Default" shall have the meaning assigned in Section 12.
25.18 "Defaulting Party" shall have the meaning assigned in Section 18.
25.19"Distribution" shall mean, with respect to any Security at any time,
any distribution made on or in respect of such Security, including,
but not limited to: (a) cash and all other property, (b) stock
dividends, (c) Securities received as a result of split ups of such
Security and distributions in respect thereof, (d) interest payments,
(e) all rights to purchase additional Securities, and (f) any cash or
other consideration paid or provided by the issuer of such Security in
exchange for any vote, consent or the taking of any similar action in
respect of such Security (regardless of whether the record date for
such vote, consent or other action falls during the term of the Loan).
In the event that the holder of a Security is entitled to elect the
type of distribution to be received from two or more alternatives,
such election shall be made by Lender, in the case of a Distribution
in respect of the Loaned Securities, and by Borrower, in the case of a
Distribution in respect of Collateral.
25.20"Equity Security" shall mean any security (as defined in the Exchange
Act) other than a "nonequity security," as defined in Regulation T.
25.21"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
25.22"Extension Deadline" shall mean, with respect to a letter of credit,
the Cutoff Time on the Business Day preceding the day on which the
letter of credit expires.
25.23 "FDIA" shall have the meaning assigned in Section 26.4.
25.24 "FDICIA" shall have the meaning assigned in Section 26.5.
25.25"Federal Funds Rate" shall mean the rate of interest (expressed as an
annual rate), as published in Federal Reserve Statistical Release
H.15(519) or any publication substituted therefor, charged for federal
funds (dollars in immediately available funds borrowed by banks on an
overnight unsecured basis) on that day or, if that day is not a
banking day in New York City, on the next preceding banking day.
25.26"Foreign Securities" shall mean, unless otherwise agreed, Securities
that are principally cleared and settled outside the United States.
25.27"Government Securities" shall mean government securities as defined in
Section 3(a)(42)(A)-(C) of the Exchange Act.
25.28"Lender" shall have the meaning assigned in Section 1.
25.29 "Lender Payment" shall have the meaning assigned in Section 8.5(a).
25.30"LIBOR" shall mean for any date, the offered rate for deposits in U.S.
dollars for a period of three months which appears on the Reuters
Screen LIBO page as of 11:00 a.m., London time, on such date (or, if
at least two such rates appear, the arithmetic mean of such rates).
25.31 "Loan" shall have the meaning assigned in Section 1.
25.32 "Loan Fee" shall have the meaning assigned in Section 5.1.
25.33"Loaned Security" shall mean any Security transferred in a Loan
hereunder until such Security (or an identical Security) is
transferred back to Lender hereunder, except that, if any new or
different Security shall be exchanged for any Loaned Security by
recapitalization, merger, consolidation or other corporate action,
such new or different Security shall, effective upon such exchange, be
deemed to become a Loaned Security in substitution for the former
Loaned Security for which such exchange is made. For purposes of
return of Loaned Securities by Borrower or purchase or sale of
Securities pursuant to Section 13, such term shall include Securities
of the same issuer, class and quantity as the Loaned Securities, as
adjusted pursuant to the preceding sentence.
25.34 "Margin Deficit" shall have the meaning assigned in Section 9.2.
25.35 "Margin Excess" shall have the meaning assigned in Section 9.3.
25.36"Margin Notice Deadline" shall mean the time agreed to by the parties
in the relevant Confirmation, Schedule B hereto or otherwise as the
deadline for giving notice requiring same-day satisfaction of
xxxx-to-market obligations as provided in Section 9 hereof (or, in the
absence of any such agreement, the deadline for such purposes
established in accordance with market practice).
25.37"Margin Percentage" shall mean, with respect to any Loan as of any
date, a percentage agreed by Borrower and Lender, which shall be not
less than 100%, unless (a) Borrower and Lender agree otherwise, as
provided in Section 24.2, and (b) Lender is not a Customer.
Notwithstanding the previous sentence, in the event that the writing
or other confirmation evidencing the agreement described in clause (a)
does not set out such percentage with respect to any such Loan, the
Margin Percentage shall not be a percentage less than the percentage
obtained by dividing (i) the Market Value of the Collateral required
to be transferred by Borrower to Lender with respect to such Loan at
the commencement of the Loan by (ii) the Market Value of the Loaned
Securities required to be transferred by Lender to Borrower at the
commencement of the Loan.
25.38"Market Value" shall have the meaning set forth in Annex II or
otherwise agreed to by Borrower and Lender in writing. Notwithstanding
the previous sentence, in the event that the meaning of Market Value
has not been set forth in Annex II or in any other writing, as
described in the previous sentence, Market Value shall be determined
in accordance with market practice for the Securities, based on the
price for such Securities as of the most recent Close of Trading
obtained from a generally recognized source agreed to by the parties
or the closing bid quotation at the most recent Close of Trading
obtained from such source, plus accrued interest to the extent not
included therein (other than any interest credited or transferred to,
or applied to the obligations of, the other party pursuant to Section
8, unless market practice with respect to the valuation of such
Securities in connection with securities loans is to the contrary). If
the relevant quotation did not exist at such Close of Trading, then
the Market Value shall be the relevant quotation on the next preceding
Close of Trading at which there was such a quotation. The
determinations of Market Value provided for in Annex II or in any
other writing described in the first sentences of this Section 25.38
or, if applicable, in the preceding sentence shall apply for all
purposes under this Agreement, except for purposes of Section 13.
25.39 "Payee" shall have the meaning assigned in Section 8.5(a).
25.40 "Payor" shall have the meaning assigned in Section 8.5(a).
25.41"Plan" shall mean: (a) any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974
which is subject to Part 4 of Subtitle B of Title I of such Act; (b)
any "plan" as defined in Section 4975(e)(1) of the Internal Revenue
Code of 1986; or (c) any entity the assets of which are deemed to be
assets of any such "employee benefit plan" or "plan" by reason of the
Department of Labor's plan asset regulation, 29 C.F.R. Section
2510.3-101.
25.42"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
25.43"Retransfer" shall mean, with respect to any Collateral, to pledge,
repledge, hypothecate, rehypothecate, lend, relend, sell or otherwise
transfer such Collateral, or to re-register any such Collateral
evidenced by physical certificates in any name other than Borrower's.
25.44"Securities" shall mean securities or, if agreed by the parties in
writing, other assets.
25.45"Securities Distributions" shall have the meaning assigned in Section
8.5(a).
25.46 "Tax" shall have the meaning assigned in Section 8.5(a).
25.47 "UCC" shall mean the New York Uniform Commercial Code.
26. Intent.
26.1 The parties recognize that each Loan hereunder is a "securities contract,"
as such term is defined in Section 741 of Title 11 of the United States
Code (the "Bankruptcy Code"), as amended (except insofar as the type of
assets subject to the Loan would render such definition inapplicable).
26.2 It is understood that each and every transfer of funds, securities and
other property under this Agreement and each Loan hereunder is a
"settlement payment" or a "margin payment," as such terms are used in
Sections 362(b)(6) and 546(e) of the Bankruptcy Code.
26.3 It is understood that the rights given to Borrower and Lender hereunder
upon a Default by the other constitute the right to cause the liquidation
of a securities contract and the right to set off mutual debts and claims
in connection with a securities contract, as such terms are used in
Sections 555 and 362(b)(6) of the Bankruptcy Code.
26.4 The parties agree and acknowledge that if a party hereto is an "insured
depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Loan hereunder is a
"securities contract" and "qualified financial contract," as such terms are
defined in the FDIA and any rules, orders or policy statements thereunder
(except insofar as the type of assets subject to the Loan would render such
definitions inapplicable).
26.5 It is understood that this Agreement constitutes a "netting contract" as
defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment obligation
under any Loan hereunder shall constitute a "covered contractual payment
entitlement" or "covered contractual payment obligation," respectively, as
defined in and subject to FDICIA (except insofar as one or both of the
parties is not a "financial institution" as that term is defined in
FDICIA).
26.6 Except to the extent required by applicable law or regulation or as
otherwise agreed, Borrower and Lender agree that Loans hereunder shall in
no event be "exchange contracts" for purposes of the rules of any
securities exchange and that Loans hereunder shall not be governed by the
buy-in or similar rules of any such exchange, registered national
securities association or other self-regulatory organization.
27. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS.
27.1 WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER, IT IS UNDERSTOOD
AND AGREED THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION
ACT OF 1970 MAY NOT PROTECT LENDER WITH RESPECT TO LOANED SECURITIES
HEREUNDER AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO LENDER MAY
CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF BORROWER'S OBLIGATIONS
IN THE EVENT BORROWER FAILS TO RETURN THE LOANED SECURITIES.
27.2 LENDER ACKNOWLEDGES THAT, IN CONNECTION WITH LOANS OF GOVERNMENT
SECURITIES AND AS OTHERWISE PERMITTED BY APPLICABLE LAW, SOME
SECURITIES PROVIDED BY BORROWER AS COLLATERAL UNDER THIS AGREEMENT MAY
NOT BE GUARANTEED BY THE UNITED STATES.
By: /s/ Xxxxx X. Xxxxxxx
Title: Assistant Vice President
Date: April 4, 2002
By: /s/ Xxxxxxx X. Xxxxxxxx
Titlle: Treasurer
Date: April 4, 2002
Annex I
Party Acting as Agent
This Annex sets forth the terms and conditions governing all transactions in
which a party lending or borrowing Securities, as the case may be ("Agent"), in
a Loan is acting as agent for one or more third parties (each, a "Principal").
Unless otherwise defined, capitalized terms used but not defined in this Annex
shall have the meanings assigned in the Securities Loan Agreement of which it
forms a part (such agreement, together with this Annex and any other annexes,
schedules or exhibits, referred to as the "Agreement") and, unless otherwise
specified, all section references herein are intended to refer to sections of
such Securities Loan Agreement.
1. Additional Representations and Warranties. In addition to the
representations and warranties set forth in the Agreement, Agent hereby
makes the following representations and warranties, which shall continue
during the term of any Loan: Principal has duly authorized Agent to execute
and deliver the Agreement on its behalf, has the power to so authorize
Agent and to enter into the Loans contemplated by the Agreement and to
perform the obligations of Lender or Borrower, as the case may be, under
such Loans, and has taken all necessary action to authorize such execution
and delivery by Agent and such performance by it.
2. Identification of Principals. Agent agrees (a) to provide the other party,
prior to any Loan under the Agreement, with a written list of Principals
for which it intends to act as Agent (which list may be amended in writing
from time to time with the consent of the other party), and (b) to provide
the other party, before the Close of Business on the next Business Day
after agreeing to enter into a Loan, with notice of the specific Principal
or Principals for whom it is acting in connection with such Loan. If (i)
Agent fails to identify such Principal or Principals prior to the Close of
Business on such next Business Day or (ii) the other party shall determine
in its sole discretion that any Principal or Principals identified by Agent
are not acceptable to it, the other party may reject and rescind any Loan
with such Principal or Principals, return to Agent any Collateral or Loaned
Securities, as the case may be, previously transferred to the other party
and refuse any further performance under such Loan, and Agent shall
immediately return to the other party any portion of the Loaned Securities
or Collateral, as the case may be, previously transferred to Agent in
connection with such Loan; provided, however, that (A) the other party
shall promptly (and in any event within one Business Day of notice of the
specific Principal or Principals) notify Agent of its determination to
reject and rescind such Loan and (B) to the extent that any performance was
rendered by any party under any Loan rejected by the other party, such
party shall remain entitled to any fees or other amounts that would have
been payable to it with respect to such performance if such Loan had not
been rejected. The other party acknowledges that Agent shall not have any
obligation to provide it with confidential information regarding the
financial status of its Principals; Agent agrees, however, that it will
assist the other party in obtaining from Agent's Principals such
information regarding the financial status of such Principals as the other
party may reasonably request.
3. Limitation of Agent's Liability. The parties expressly acknowledge that if
the representations and warranties of Agent under the Agreement, including
this Annex, are true and correct in all material respects during the term
of any Loan and Agent otherwise complies with the provisions of this Annex,
then (a) Agent's obligations under the Agreement shall not include a
guarantee of performance by its Principal or Principals and (b) the other
party's remedies shall not include a right of setoff against obligations,
if any, of Agent arising in other transactions in which Agent is acting as
principal.
4. Multiple Principals.
(a) In the event that Agent proposes to act for more than one Principal
hereunder, Agent and the other party shall elect whether (i) to treat Loans
under the Agreement as transactions entered into on behalf of separate
Principals or (ii) to aggregate such Loans as if they were transactions by
a single Principal. Failure to make such an election in writing shall be
deemed an election to treat Loans under the Agreement as transactions on
behalf of separate Principals.
(b) In the event that Agent and the other party elect (or are deemed to elect)
to treat Loans under the Agreement as transactions on behalf of separate
Principals, the parties agree that (i) Agent will provide the other party,
together with the notice described in Section 2(b) of this Annex, notice
specifying the portion of each Loan allocable to the account of each of the
Principals for which it is acting (to the extent that any such Loan is
allocable to the account of more than one Principal), (ii) the portion of
any individual Loan allocable to each Principal shall be deemed a separate
Loan under the Agreement, (iii) the xxxx to market obligations of Borrower
and Lender under the Agreement shall be determined on a Loan-by-Loan basis
(unless the parties agree to determine such obligations on a
Principal-by-Principal basis), and (iv) Borrower's and Lender's remedies
under the Agreement upon the occurrence of a Default shall be determined as
if Agent had entered into a separate Agreement with the other party on
behalf of each of its Principals.
(c) In the event that Agent and the other party elect to treat Loans under the
Agreement as if they were transactions by a single Principal, the parties
agree that (i) Agent's notice under Section 2(b) of this Annex need only
identify the names of its Principals but not the portion of each Loan
allocable to each Principal's account, (ii) the xxxx to market obligations
of Borrower and Lender under the Agreement shall, subject to any greater
requirement imposed by applicable law, be determined on an aggregate basis
for all Loans entered into by Agent on behalf of any Principal, and (iii)
Borrower's and Lender's remedies upon the occurrence of a Default shall be
determined as if all Principals were a single Lender or Borrower, as the
case may be.
(d) Notwithstanding any other provision of the Agreement (including, without
limitation, this Annex), the parties agree that any transactions by Agent
on behalf of a Plan shall be treated as transactions on behalf of separate
Principals in accordance with Section 4(b) of this Annex (and all xxxx to
market obligations of the parties shall be determined on a Loan-by-Loan
basis).
5. Interpretation of Terms. All references to "Lender" or "Borrower," as the
case may be, in the Agreement shall, subject to the provisions of this
Annex (including, among other provisions, the limitations on Agent's
liability in Section 3 of this Annex), be construed to reflect that (i)
each Principal shall have, in connection with any Loan or Loans entered
into by Agent on its behalf, the rights, responsibilities, privileges and
obligations of a "Lender" or "Borrower," as the case may be, directly
entering into such Loan or Loans with the other party under the Agreement,
and (ii) Agent's Principal or Principals have designated Agent as their
sole agent for performance of Lender's obligations to Borrower or
Borrower's obligations to Lender, as the case may be, and for receipt of
performance by Borrower of its obligations to Lender or Lender of its
obligations to Borrower, as the case may be, in connection with any Loan or
Loans under the Agreement (including, among other things, as Agent for each
Principal in connection with transfers of securities, cash or other
property and as agent for giving and receiving all notices under the
Agreement). Both Agent and its Principal or Principals shall be deemed
"parties" to the Agreement and all references to a "party" or "either
party" in the Agreement shall be deemed revised accordingly (and any
Default by Agent under the Agreement shall be deemed a Default by Lender or
Borrower, as the case may be).
Annex II
Market Value
Unless otherwise agreed by Borrower and Lender:
1. If the principal market for the Securities to be valued is a national
securities exchange in the United States, their Market Value shall be
determined by their last sale price on such exchange at the most recent
Close of Trading or, if there was no sale on the Business Day of the most
recent Close of Trading, by the last sale price at the Close of Trading on
the next preceding Business Day on which there was a sale on such exchange,
all as quoted on the Consolidated Tape or, if not quoted on the
Consolidated Tape, then as quoted by such exchange.
2. If the principal market for the Securities to be valued is the
over-the-counter market, and the Securities are quoted on The Nasdaq Stock
Market ("Nasdaq"), their Market Value shall be the last sale price on
Nasdaq at the most recent Close of Trading or, if the Securities are issues
for which last sale prices are not quoted on Nasdaq, the last bid price at
such Close of Trading. If the relevant quotation did not exist at such
Close of Trading, then the Market Value shall be the relevant quotation on
the next preceding Close of Trading at which there was such a quotation.
3. Except as provided in Section 4 of this Annex, if the principal market for
the Securities to be valued is the over-the-counter market, and the
Securities are not quoted on Nasdaq, their Market Value shall be determined
in accordance with market practice for such Securities, based on the price
for such Securities as of the most recent Close of Trading obtained from a
generally recognized source agreed to by the parties or the closing bid
quotation at the most recent Close of Trading obtained from such a source.
If the relevant quotation did not exist at such Close of Trading, then the
Market Value shall be the relevant quotation on the next preceding Close of
Trading at which there was such a quotation.
4. If the Securities to be valued are Foreign Securities, their Market Value
shall be determined as of the most recent Close of Trading in accordance
with market practice in the principal market for such Securities.
5. The Market Value of a letter of credit shall be the undrawn amount thereof.
6. All determinations of Market Value under Sections 1 through 4 of this Annex
shall include, where applicable, accrued interest to the extent not already
included therein (other than any interest credited or transferred to, or
applied to the obligations of, the other party pursuant to Section 8 of the
Agreement), unless market practice with respect to the valuation of such
Securities in connection with securities loans is to the contrary.
7. The determinations of Market Value provided for in this Annex shall apply
for all purposes under the Agreement, except for purposes of Section 13 of
the Agreement.
By: /s/ Xxxxx X. Xxxxxxx
Title: Assistant Vice President
Date: April 4, 2002
By: /s/ Xxxxxxx X. Xxxxxxxx
Titlle: Treasurer
Date: April 4, 2002
Annex III
Term Loans
This Annex sets forth additional terms and conditions governing Loans designated
as "Term Loans" in which Lender lends to Borrower a specific amount of Loaned
Securities ("Term Loan Amount") against a pledge of cash Collateral by Borrower
for an agreed upon Cash Collateral Fee until a scheduled termination date
("Termination Date"). Unless otherwise defined, capitalized terms used but not
defined in this Annex shall have the meanings assigned in the Securities Loan
Agreement of which it forms a part (such agreement, together with this Annex and
any other annexes, schedules or exhibits, referred to as the "Agreement").
1. The terms of this Annex shall apply to Loans of Equity Securities only if
they are designated as Term Loans in a Confirmation therefor provided
pursuant to the Agreement and executed by each party, in a schedule to the
Agreement or in this Annex. All Loans of Securities other than Equity
Securities shall be "Term Loans" subject to this Annex, unless otherwise
agreed in a Confirmation or other writing.
2. The Confirmation for a Term Loan shall set forth, in addition to any terms
required to be set forth therein under the Agreement, the Term Loan Amount,
the Cash Collateral Fee and the Termination Date. Lender and Borrower agree
that, except as specifically provided in this Annex, each Term Loan shall
be subject to all terms and conditions of the Agreement, including, without
limitation, any provisions regarding the parties' respective rights to
terminate a Loan.
3. In the event that either party exercises its right under the Agreement to
terminate a Term Loan on a date (the "Early Termination Date") prior to the
Termination Date, Lender and Borrower shall, unless otherwise agreed, use
their best efforts to negotiate in good faith a new Term Loan (the
"Replacement Loan") of comparable or other Securities, which shall be
mutually agreed upon by the parties, with a Market Value equal to the
Market Value of the Term Loan Amount under the terminated Term Loan (the
"Terminated Loan") as of the Early Termination Date. Such agreement shall,
in accordance with Section 2 of this Annex, be confirmed in a new
Confirmation at the commencement of the Replacement Loan and be executed by
each party. Each Replacement Loan shall be subject to the same terms as the
corresponding Terminated Loan, other than with respect to the commencement
date and the identity of the Loaned Securities. The Replacement Loan shall
commence on the date on which the parties agree which Securities shall be
the subject of the Replacement Loan and shall be scheduled to terminate on
the scheduled Termination Date of the Terminated Loan.
4. Borrower and Lender agree that, except as provided in Section 5 of this
Annex, if the parties enter into a Replacement Loan, the Collateral for the
related Terminated Loan need not be returned to Borrower and shall instead
serve as Collateral for such Replacement Loan.
5. If the parties are unable to negotiate and enter into a Replacement Loan
for some or all of the Term Loan Amount on or before the Early Termination
Date, (a) the party requesting termination of the Terminated Loan shall pay
to the other party a Breakage Fee computed in accordance with Section 6 of
this Annex with respect to that portion of the Term Loan Amount for which a
Replacement Loan is not entered into and (b) upon the transfer by Borrower
to Lender of the Loaned Securities subject to the Terminated Loan, Lender
shall transfer to Borrower Collateral for the Terminated Loan in accordance
with and to the extent required under the Agreement, provided that no
Default has occurred with respect to Borrower.
6. For purposes of this Annex, the term "Breakage Fee" shall mean a fee agreed
by Borrower and Lender in the Confirmation or otherwise orally or in
writing. In the absence of any such agreement, the term "Breakage Fee"
shall mean, with respect to Loans of Government Securities, a fee equal to
the sum of (a) the cost to the non-terminating party (including all fees,
expenses and commissions) of entering into replacement transactions and
entering into or terminating hedge transactions in connection with or as a
result of the termination of the Terminated Loan, and (b) any other loss,
damage, cost or expense directly arising or resulting from the termination
of the Terminated Loan that is incurred by the non-terminating party (other
than consequential losses or costs for lost profits or lost opportunities),
as determined by the non-terminating party in a commercially reasonable
manner, and (c) any other amounts due and payable by the terminating party
to the non-terminating party under the Agreement on the Early Termination
Date.
By: /s/ Xxxxx X. Xxxxxxx
Title: Assistant Vice President
Date: April 4, 2002
By: /s/ Xxxxxxx X. Xxxxxxxx
Titlle: Treasurer
Date: April 4, 2002
Schedule A
Names and Addresses for Communications
Thermo Electron Corporation:
Confirmations:
Thermo Electron Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Primary Contact: Xxxx Xxxxx
(000) 000-0000
Fax: (000) 000-0000
Email: xxxxxx@xxxxxx.xxx
Secondary Contact: Xxxxxxx X. Xxxxxxxx
(000) 000-0000
Fax: (000) 000-0000
Eamil: xxxxxxxxx@xxxxxx.xxx
SCHEDULE B
SUPPLEMENTAL TERMS AND CONDITIONS
This Annex I forms a part of the Master Securities Loan Agreement, dated as
of March 18, 2002, between ABN AMRO Incorporated ("Party A") and Thermo Electron
Corporation ("Party B"). Capitalized terms used but not defined in this Schedule
B shall have the meanings ascribed to them in this Agreement.
1. Consent to Recording. Each party consents to the recording of the telephone
conversations of relevant personnel of the parties and their respective
affiliates in connection with this Agreement or any Loan or potential Loan
and agrees to such recordings being used as evidence in court proceedings
or arbitration.
2. Obligations Regarding Collateral. The last three sentences of Section 4.2
of the Agreement are hereby deleted in their entirety and the following
substituted in their place:
"It is understood that Lender may use or invest the Collateral at its own
risk. In this regard, Lender may 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. These rights shall not affect Lender's obligation to
return Collateral to Borrower under Section 4.3."
3. Waiver of Jury Trial. Each party irrevocably waives any and all right to
trial by jury in any legal proceeding instituted in connection with this
Agreement or any Loan to the fullest extent permitted by law. As to any
matter for which a jury trial cannot be waived, each party agrees not to
assert any such matter as a cross claim or counterclaim in, nor move to
consolidate the same with, any legal proceeding in which a jury trial is
waived.
4. Information Sharing. Party B understands and agrees that Party A may, from
time to time, obtain from or provide to one or more affiliates credit or
other non-public information concerning Party B.
5. Parties to Rely on Their Own Expertise. Each party shall enter into each
Loan governed by this Agreement in reliance only upon its own judgment.
Neither party holds itself out as advising, nor as any of its employees or
agents having the authority to advise, the other party as to whether or not
it should enter into any such Loan or as to any subsequent actions relating
thereto or on any other commercial matters concerned with any Loan governed
by this Agreement, and neither party shall have any responsibility or
liability whatsoever in respect of any advice of this nature given, or view
expressed, by it or any such persons to the other party, whether or not
such advice is given or such views are expressed at the request of the
other party.
6. Miscellaneous. For purposes of the Agreement, the parties agree that the
terms set forth below shall have the following meanings:
A. Cutoff Time 3:15 p.m. (New York time)
B. Close of Business 3:00 p.m. (New York time)
C. Margin Notice Deadline 10:00 a.m.(New York time)
7. Representations. Subsection (c) of Section 10.1 is hereby revised to read
as follows:
(c) this Agreement constitutes a legal, valid and binding obligation
enforceable against it in accordance with its terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity
or at law)).
8. Margin Percentage. Notwithstanding the definition of "Margin Percentage"
contained in section 25.37, the Margin Percentage shall be 95% or as
otherwise agreed to between Lender and Borrower at the commencement of the
a loan.
ABN AMRO INCORPORATED THERMO ELECTRON CORPORATION
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------- -----------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Assistant Vice President Title: Treasurer
