Exhibit 99.1
Master Securities Loan Agreement
Public Securities Association
00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000
Telephone (000) 000-0000
MASTER SECURITIES LOAN AGREEMENT
Dated as of __________ __, 2003
Between:
Xxxx Xxxxxxx
and
________________________________
This Agreement sets forth the terms and conditions under which one party
("Lender") may, from time to time, lend to the other party ("Borrower") certain
securities against a pledge of collateral. Capitalized terms not otherwise
defined herein shall have the meanings provided in Section 26.
The parties hereto agree as follows:
Section 1. Loans of Securities.
1.1 Subject to the terms and conditions of this Agreement, Borrower or Lender
may, from time to time, orally seek to initiate a transaction in which
Lender will lend securities to Borrower. Borrower and Lender shall agree
orally on the terms of each Loan, including the issuer of the securities,
the amount of securities to be lent, the basis of compensation, and the
amount of Collateral to be transferred by Borrower, which terms may be
amended during the Loan.
1.2 Notwithstanding any other provision in this Agreement regarding when a
Loan commences, a Loan hereunder shall not occur until the Loaned
Securities and the Collateral therefor have been transferred in accordance
with Section 16.
1.3 WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER, IT IS UNDERSTOOD AND
AGREED THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF
1970 MAY NOT PROTECT LENDER WITH RESPECT TO LOANED SECURITIES HEREUNDER
AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO LENDER MAY CONSTITUTE THE
ONLY SOURCE OF SATISFACTION
OF BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE LOANED
SECURITIES.
Section 2. Transfer of Loaned Securities.
2.1 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.
2.2 Unless otherwise agreed, Borrower shall provide Lender, in 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.
Section 3. Collateral.
3.1 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 a percentage of the
market value of the Loaned Securities agreed to by Borrower and Lender
(which shall be not less than 100% of the market value of the Loaned
Securities) (the "Margin Percentage").
3.2 The Collateral transferred by Borrower to Lender, as adjusted pursuant to
Section 8, shall be security for Borrower's obligations in respect of such
Loan and for any other obligations of Borrower to Lender. Borrower hereby
pledges with, assigns to, and grants Lender a continuing first 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 New
York Uniform Commercial Code. 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 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, only (a) if Lender is 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 "financial intermediary" or a "clearing corporation"
within the meaning of the New York Uniform Commercial Code.
3.3 Except as otherwise provided herein, upon transfer to Lender of the Loaned
Securities on the day a Loan is terminated pursuant to Section 5, Lender
shall be obligated to transfer the Collateral (as adjusted pursuant to
Section 8) to Borrower no later than the Cutoff Time on such day or, if
such day is not a day on which a transfer of such Collateral may be
effected under Section 16, the next day on which such a transfer may be
effected.
3.4 If Borrower transfers Collateral to Lender, as provided in Section 3.1,
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 3.1, Lender shall
have the absolute right to the return of the Loaned Securities.
3.5 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. Prior to the expiration of any letter of credit supporting
Borrower's obligations hereunder, Borrower shall, no later than the Cutoff
Time on the date such letter of credit expires, obtain an extension of the
expiration of such letter of credit or 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.
3.6 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.
Section 4. Fees for Loan.
4.1 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 par value
(in the case of Loans of Government Securities) or the aggregate market
value (in the case of all other Loans) 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.
4.2 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 or (ii) the termination of all
Loans hereunder (or, if a transfer of cash in accordance with Section 16 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.
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.
Section 5. Termination of the Loan.
5.1 Unless otherwise agreed, (a) 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, and (b) Lender may terminate a Loan on a termination
date established by notice given to Borrower prior to the close of
business on a Business Day. The termination date established by a
termination notice given by Lender to Borrower shall be a date no earlier
than the standard settlement date for trades of the Loaned Securities
entered into on the date 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. 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 8) to
Borrower in accordance with Section 3.3.
Section 6. Rights of Borrower in Respect of the Loaned Securities.
6.1 Except as set forth in Sections 7.1 and 7.2 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.
Section 7. Dividends, Distributions, Etc.
7.1 Lender shall be entitled to receive all distributions made on or in
respect of the Loaned Securities which are not otherwise received by
Lender, to the full extent it would be so entitled if the Loaned
Securities had not been lent to Borrower, including, but not limited to:
(a) cash and all other property, (b) stock dividends, (c) securities
received as a result of split ups of the Loaned Securities and
distributions in respect thereof, (d) interest payments, and (e) all
rights to purchase additional securities.
7.2 Any cash distributions made on or in respect of the Loaned Securities,
which Lender is entitled to receive pursuant to Section 7.1, shall be paid
by the transfer of cash to Lender by Borrower, on the date any such
distribution is paid, in an amount equal to such cash distribution, so
long as Lender is not in Default at the time of such payment. Non-cash
distributions received by Borrower shall be added to the Loaned Securities
on the date of
distribution and shall be considered such for all purposes, except that if
the Loan has terminated, Borrower shall forthwith transfer the same to
Lender.
7.3 Borrower shall be entitled to receive all cash distributions made on or in
respect of 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. Any distributions of cash made on or in
respect of such Collateral which Borrower is entitled to receive hereunder
shall be paid by the transfer of cash to Borrower by Lender, on the date
any such distribution is paid, in an amount equal to such cash
distribution, so long as Borrower is not in Default at the time of such
payment.
7.4 (a) Unless otherwise agreed, if (i) Borrower is required to make a payment
(a "Borrower Payment") with respect to cash distributions on Loaned
Securities under Sections 7.1 and 7.2 ("Securities Distributions"), or
(ii) Lender is required to make a payment (a "Lender Payment") with
respect to cash distributions on Collateral under Section 7.3 ("Collateral
Distributions"), and (iii) Borrower or Lender, as the case may be
("Payor"), shall be required by law to collect any withholding or other
tax, duty, fee, levy or charge required to be deducted or withheld from
such Borrower Payment or Lender Payment ("Tax"), then Payor shall (subject
to subsections (b) and (c) below), pay such additional amounts as may be
necessary in order that the net amount of the Borrower Payment or Lender
Payment received by the Lender or Borrower, as the case may be ("Payee"),
after 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.
7.5 To the extent that, under the provisions of Sections 7.1 through 7.4 (a) a
transfer of cash or other property by Borrower would give rise to a Margin
Excess (as defined in Section 8.3 below) or (b) a transfer of cash or
other property by Lender would give rise to a Margin Deficit (as defined
in Section 8.2 below), Borrower or Lender (as the case may be) shall not
be obligated to make such transfer of cash or other property in accordance
with such Sections, but shall in lieu of such transfer immediately credit
the amounts that would have been transferable under such Sections to the
account of Lender or Borrower (as the case may be).
Section 8. Xxxx to Market.
8.1 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
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.
8.2 In addition to any rights of Lender under Section 8.1, in the event that
at the close of trading on any Business Day 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 agreed upon Margin Percentage of the market value of the Loaned
Securities. Unless otherwise agreed, such transfer is to be made no later
than the close of the next Business Day following the day of Lender's
notice to Borrower.
8.3 In the event that at the close of trading on any Business Day 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. Unless otherwise agreed, such transfer is to be made no
later than the close of the next Business Day following the day of
Borrower's notice to Lender.
8.4 Borrower and Lender may agree, with respect to one or more Loans
hereunder, to xxxx the values to market pursuant to Sections 8.2 and 8.3
by separately valuing the Loaned Securities lent and the Collateral given
in respect thereof on a Loan-by-Loan basis.
8.5 Borrower and Lender may agree, with respect to any or all Loans hereunder,
that the respective rights of Lender and Borrower under Sections 8.2 and
8.3 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).
Section 9. Representations. Each party to this Agreement hereby makes the
following representations and warranties, which shall continue during the term
of any Loan hereunder:
9.1 Each party hereto represents and warrants that (a) it has the power to
execute and deliver this Agreement, to enter into the Loans contemplated
hereby and to perform its obligations hereunder; (b) it has taken all
necessary action to authorize such execution, delivery and performance;
and (c) this Agreement constitutes a legal, valid and binding obligation
enforceable against it in accordance with its terms.
9.2 Each party hereto represents and warrants that the execution, delivery and
performance by it of this Agreement and each Loan hereunder will at all
times comply with all applicable laws and regulations including those of
applicable regulatory and self-regulatory organizations.
9.3 Each party hereto represents and warrants that 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.
9.4 Borrower represents and warrants that it is acting for its own account.
Lender represents and warrants that it is acting for its own account
unless it expressly specifies otherwise in writing and complies with
Section 10.3(b).
9.5 Borrower represents and warrants that (a) it has, or will have at the time
of transfer of any Collateral, the right to grant a first security
interest therein subject to the terms and conditions hereof, and (b) it
(or the person to whom it relends the Loaned Securities) is borrowing or
will borrow the Loaned Securities (except for Loaned Securities that
qualify as "exempted securities" under Regulation T of the Board of
Governors of the Federal Reserve System) for the purpose of making
delivery of such securities in the case of short sales, failure to receive
securities required to be delivered, or as otherwise permitted pursuant to
Regulation T as in effect from time to time.
9.6 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.
Section 10. Covenants.
10.1 Each party hereto agrees and acknowledges that (a) each Loan hereunder is
a "securities contract," as such term is defined in Section 741(7) of
Title 11 of the United States Code (the "Bankruptcy Code"), (b) each and
every transfer of funds, securities and other property under this
Agreement and 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, and (c) 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. Each party
hereto further agrees and acknowledges 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.
10.2 Borrower agrees to be liable as principal with respect to its obligations
hereunder.
10.3 Lender 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).
10.4 Promptly upon (and in any event within seven (7) Business Days after)
demand by Lender, Borrower shall furnish Lender with Borrower's most
recent publicly-available financial statements and any other financial
statements mutually agreed upon by Borrower and Lender. 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.
10.5 Except to the extent required by applicable law or regulation or as
otherwise agreed, Borrower and Lender agree that Loans hereunder shall in
no event be "exchange contracts" for purposes of the rules of any
securities exchange and that Loans hereunder shall not be governed by the
buy-in or similar rules of any such exchange, registered national
securities or other self-regulatory organization.
Section 11. Events of Default. All Loans hereunder may, at the option of the
non-defaulting party exercised by notice to the defaulting party (which option
shall be deemed to have been exercised, even if no notice is given, immediately
upon the occurrence of an event specified in subsection (e) below), be
terminated immediately upon the occurrence of any one or more of the following
events (individually, a "Default"):
(a) if any Loaned Securities shall not be transferred to Lender upon
termination of the Loan as required by Section 5;
(b) if any Collateral shall not be transferred to Borrower upon
termination of the Loan as required by Sections 3.3 and 5;
(c) if either party shall fail to transfer Collateral as required by
Section 8;
(d) if either party (i) shall fail to transfer to the other party
amounts in respect of distributions required to be transferred by
Section 7, (ii) shall have received notice of such failure from the
non-defaulting party, and (iii) shall not have cured such default by
the Cutoff Time on the next day after such notice on which a
transfer of cash may be effected in accordance with Section 16;
(e) if (i) either party shall commence as debtor any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law, or seek the appointment of a receiver,
conservator, trustee, custodian or similar official for such party
or any substantial part of its property, (ii) any such case or
proceeding shall be commenced against either party, or another shall
seek such an appointment, or any application shall be filed against
either party for a protective decree under the provisions of the
Securities Investor Protection Act of 1970, which (A) is consented
to or not timely contested by such party, (B) results in the entry
of an order for relief, such an appointment, the issuance of such a
protective decree or the entry of an order having a similar effect,
or (C) is not dismissed within 15 days, (iii) either party shall
make a general assignment for the benefit of creditors, or (iv)
either party shall admit in writing its inability to pay its debts
as they become due;
(f) if either party shall have been suspended or expelled from
membership or participation in any national securities exchange or
registered national securities association of which it is a member
or other self-regulatory organization to whose rules it is subject
or if it is suspended from dealing in securities by any federal or
state government agency thereof.
(g) if either party shall have its license, charter, or other
authorization necessary to conduct a material portion of its
business withdrawn, suspended or revoked by any applicable federal
or state government or agency thereof;
(h) 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;
(i) if either party notifies the other, orally or in writing, of its
inability to or its intention not to perform its obligations
hereunder or otherwise disaffirms, rejects or repudiates any of its
obligations hereunder; or
(j) if either party (i) shall fail to perform any material obligation
under this Agreement not specifically set forth in clauses (a)
through (i) above, including but not limited to the payment of fees
as required by Section 4, and the payment of transfer taxes as
required by Section 14, (ii) shall have received notice of such
failure from the non-defaulting party and (iii) shall not have cured
such failure by the Cutoff Time on the next day after such notice on
which a transfer of cash may be effected under Section 16.
Section 12. Lender's Remedies.
Upon the occurrence of a Default under Section 11 entitling Lender to
terminate all Loans hereunder, Lender shall have the right (without
further notice to Borrower), in addition to any other remedies provided
herein or under applicable law, (a) to purchase a like amount of Loaned
Securities ("Replacement Securities") in the principal market for such
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 4, 7,
14 and 17. In the event Lender shall exercise such rights, Borrower's
obligation to return a like amount of the Loaned Securities shall
terminate. Lender may similarly apply the Collateral 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 12
shall include, and the proceeds of any sale of Collateral shall be
determined after deduction of, broker's fees and commissions and all other
reasonable costs, fees and expenses related to such purchase or sale (as
the case may be). In the event Lender exercises its rights under this
Section 12, Lender may elect in its sole discretion, in lieu of purchasing
all or a portion of the Replacement Securities or selling all or a portion
of the Collateral, to be deemed to have made, respectively, such purchase
of Replacement Securities or sale of Collateral for an amount equal to the
price therefor on the date of such exercise obtained from a generally
recognized source or the most recent closing bid quotation from such a
source. Subject to Section 19, upon the satisfaction of all obligations
hereunder, any remaining Collateral shall be returned to Borrower.
Section 13. Borrower's Remedies.
Upon the occurrence of a Default under Section 11 entitling Borrower to
terminate all Loans hereunder, Borrower shall have the right (without
further notice to Lender), in addition to any other remedies provided
herein or under applicable law, (a) to purchase a like amount of
Collateral ("Replacement Collateral") in the principal market for such
Collateral in a commercially reasonable manner, (b) to sell a like amount
of the Loaned Securities in the principal market for such securities in a
commercially reasonable manner and (c) to apply
and set off the Loaned Securities and any proceeds thereof against (i) the
payment of the purchase price for such Replacement Collateral (ii)
Lender's obligation to return any cash or other Collateral and (iii) any
amounts due to Borrower under Sections 4, 7 and 17. In such event,
Borrower may treat the Loaned Securities as its own and Lender's
obligation to return a like amount of the Collateral shall terminate;
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 11. 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 shall
include, and the proceeds of any sale of Loaned Securities shall be
determined after deduction of, broker's fees and commissions and all other
reasonable costs, fees and expenses related to such purchase or sale (as
the case may be). In the event Borrower exercises its rights under this
Section 13, Borrower may elect in its sole discretion, in lieu of
purchasing all or a portion of the Replacement Collateral or selling all
or a portion of the Loaned Securities, to be deemed to have made,
respectively, such purchase of Replacement Collateral or sale of Loaned
Securities for an amount equal to the price therefor on the date of such
exercise obtained from a generally recognized source or the most recent
closing bid quotation from such a source. Subject to Section 19, upon the
satisfaction of all Lender's obligations hereunder, any remaining Loaned
Securities (or remaining cash proceeds thereof) shall be returned to
Lender. Without limiting the foregoing, the parties hereto agree that they
intend the Loans hereunder to be loans of securities. If, however, any
Loan is deemed to be a loan of money by Borrower to Lender, then Borrower
shall have, and Lender shall be deemed to have granted, a security
interest in the Loaned Securities and the proceeds thereof.
Section 14. Transfer Taxes.
All transfer taxes with respect to the transfer of the Loaned Securities by
Lender to Borrower and by Borrower to Lender upon termination of the Loan
shall be paid by Borrower.
Section 15. Market Value.
15.1 Unless otherwise agreed, if the principal market for the securities to be
valued is a national securities exchange in the United States, their
market value shall be determined by their last sale price on such exchange
on the preceding Business Day or, if there was no sale on that day, by the
last sale price on the next preceding Business Day on which there was a
sale on such exchange, all as quoted on the Consolidated Tape or, if not
quoted on the Consolidated Tape, then as quoted by such exchange.
15.2 Except as provided in Section 15.3 or 15.4 or as otherwise agreed, if the
principal market for the securities to be valued is the over-the-counter
market, their market value shall be determined as follows. If the
securities are quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), their market value shall be the
closing sale price on NASDAQ on the preceding Business Day or, if the
securities are issues for which last sale prices are not quoted on NASDAQ,
the closing bid price on such day. If the securities to be valued are not
quoted on NASDAQ, their market value shall be the highest bid quotation as
quoted in any of The Wall Street Journal, the National Quotation Bureau
pink sheets, the Salomon Brothers quotation sheets, quotations sheets of
registered market makers and, if necessary, dealers' telephone quotations
on the preceding Business Day. In each case, if the relevant quotation did
not exist on such day, then the relevant quotation on the next preceding
Business Day in which there was such a quotation shall be the market
value.
15.3 Unless otherwise agreed, if the securities to be valued are Government
Securities, their market value shall be the average of the bid and ask
prices as quoted on Prophesy at 3:30 P.M. New York time on the Business
Day preceding the date on which such determination is made. If the
securities are not so quoted on such day, their market value shall be
determined as of the next preceding Business Day on which they were so
quoted. If the securities to be valued are Government Securities that are
not quoted on Prophesy, their market value shall be determined as of the
close of business on the preceding Business Day in accordance with market
practice for such securities.
15.4 Unless otherwise agreed, if the securities to be valued are Foreign
Securities, their market value shall be determined as of the close of
business on the preceding Business Day in accordance with market practice
in the principal market for such securities.
15.5 Unless otherwise agreed, the market value of a letter of credit shall be
the undrawn amount thereof.
15.6 All determinations of market value under Sections 15.1, 15.2, 15.3 and
15.4 shall include, where applicable, accrued interest to the extent not
already included therein (other than any interest transferred to the other
party pursuant to Section 7), unless market practice with respect to the
valuation of such securities in connection with securities loans is to the
contrary. All determinations of market value that are required to be made
at the close of trading on any Business Day pursuant to Section 8 or
otherwise hereunder shall be made as if being determined at the
commencement of trading on the next Business Day. The determinations of
market value provided for in this Section 15 shall apply for all purposes
under this Agreement, except for purposes of Sections 12 and 13.
Section 16. Transfers.
16.1 All transfers of securities hereunder shall be by (a) 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) transfer on the books of a Clearing Organization, or (c) such
other means as Borrower and Lender may agree. In every transfer of
securities hereunder, the transferor shall take all steps necessary (i) to
effect a "transfer" under Section 8-313 of the New York Uniform Commercial
Code or, where applicable, under any U.S. federal regulation governing
transfers of securities and (ii) to provide the transferee with comparable
rights under any applicable foreign law or regulation.
16.2 All transfers of cash Collateral hereunder shall be by (a) wire transfer
in immediately available, freely transferable funds or (b) such other
means as Borrower and Lender may agree. All other transfers of cash
hereunder shall be made in accordance with the preceding sentence or by
delivery of a certified or official bank check representing next-day New
York Clearing House Funds.
16.3 All transfers of a letter 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. Transfer of a letter of credit from
Lender to Borrower shall be made by causing such letter of credit to be
returned or by causing the amount of such letter of credit to be reduced
to the amount required after such transfer.
16.4 A transfer of securities, cash or letters of credit may be effected under
this Section 16 on any day except (a) a day on which the transferee is
closed for business at its address set forth in Schedule A hereto or (b) a
day on which a Clearing Organization or wire transfer system is closed, if
the facilities of such Clearing Organization or wire transfer system are
required to effect such transfer.
Section 17. Contractual Currency.
17.1 Borrower and Lender agree that: (a) any payment in respect of a
distribution under Section 7 shall be made in the currency in which the
underlying distribution of cash was made; (b) any return of cash shall be
made in the currency in which the underlying transfer of cash was made and
(c) any other payment of cash in connection with 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 procedures, purchase with such other currency (after deduction of
any premium and costs of exchange) on the banking day next succeeding its
receipt of such currency.
17.2 If for any reason the amount in the Contractual Currency received under
Section 17.1, including amounts received after conversion of any recovery
under any judgment or order expressed in a currency other than the
Contractual Currency, 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.
17.3 If for any reason the amount in the Contractual Currency received under
Section 17.1 exceeds the amount in the Contractual Currency due in respect
of this Agreement, then the
party receiving the payment will (unless a Default has occurred and such
party is the non-defaulting party) refund promptly the amount of such
excess.
Section 18. 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 the
Agreement or upon initiation of such Loan under Section 1.1. 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:
(a) Borrower represents and warrants to Lender that it is either (i) a bank
subject to federal or state supervision, (ii) a broker-dealer registered under
the Exchange Act or (iii) exempt from registration under Section 15(a)(1) of the
Exchange Act as a dealer in Government Securities.
(b) 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 clause (b).
(c) Borrower and Lender agree that:
(i) 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;
(ii) prior to the making of any Loans hereunder, Borrower shall provide Lender
with (A) the most recent available audited statement of Borrower's financial
condition and (B) 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;
(iii) the Loan may be terminated by Lender at any time, whereupon Borrower shall
deliver the Loaned Securities to Lender within the lesser of (A) the customary
delivery period for such securities; (B) five Business Days and (C) 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
(iv) 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.
Section 19. 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.
Section 20. 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.
Section 21. 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.
Section 22. 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.
Section 23. Notices and Other Communications.
Unless another address is specified in writing by the respective party to whom
any notice or other communication is to be given hereunder, all such notices or
communications shall be in writing or confirmed in writing and delivered at the
respective addresses set forth in Schedule A attached hereto. All notices shall
be effective upon actual receipt, provided, however, that if any notice shall be
received by a party on a day on which such party is not open for business at its
office located at the address set forth in Schedule A, such notice shall be
deemed to have been received by such party at the opening of business on the
next day on which such party is open for business at such address.
Section 24. Submission To Jurisdiction; Waiver Of Jury Trial.
24.1 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.
24.2 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.
Section 25. Miscellaneous.
This Agreement supersedes any other agreement between the parties hereto
concerning loans of securities between Borrower and Lender. This Agreement shall
not be assigned by either party without the prior written consent of the other
party and any attempted assignment without such consent shall be null and void.
Subject to the foregoing, this Agreement shall be binding upon and shall ensure
to the benefit of Borrower and Lender and their respective heirs,
representatives, successors and assigns. This Agreement may be terminated by
either party upon written notice to the other, subject only to fulfillment of
any obligations then outstanding. This Agreement shall not be modified, except
by an instrument in writing signed by the party against whom enforcement is
sought. 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.
Section 26. Definitions. For the purposes hereof:
26.1 "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 Securities and Exchange Commission or other regulatory
body.
26.2 "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
Section 15, such term shall mean a day on which regular trading occurs in
the principal market for the securities whose value is being determined.
Notwithstanding the foregoing, (i) for purposes of Section 8, "Business
Day" shall mean any day on which regular trading occurs in the principal
market for any Loaned Securities or for any securities Collateral 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 16; and (ii) in no event shall a Saturday or Sunday be considered
a Business Day.
26.3 "Clearing Organization" shall mean The Depository Trust Company, or, if
agreed to by Borrower and Lender, such other clearing agency at which
Borrower (or Borrower's agent) and Lender (or Lender's agent) maintain
accounts, or a book-entry system maintained by a Federal Reserve Bank.
26.4 "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 shall be acceptable collateral prior to the Loan and
which is transferred to Lender pursuant to Section 3 or 8 (including as
collateral, for definitional purposes, any letters of credit mutually
acceptable to Lender and Borrower), (b) any property substituted therefor
pursuant to Section 3.5, (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. For
purposes of return of Collateral by Lender or purchase or sale of
securities pursuant to Section 12 or 13, such term shall include
securities of the same issuer, class and quantity as the Collateral
initially transferred by Borrower to Lender.
26.5 "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).
26.6 "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.
26.7 "Default" shall have the meaning assigned in Section 11.
26.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
26.9 "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.
26.10 "Foreign Securities" shall mean, unless otherwise agreed, securities that
are principally cleared and settled outside the United States.
26.11 "Government Securities" shall mean government securities as defined in
Section 3(a)(42)(A)-(C) of the Exchange Act.
26.12 "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).
26.13 "Loan" shall mean a loan of securities hereunder.
26.14 "Loaned Security" shall mean any security which is a security as defined
in the Exchange Act, 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 12 or 13, such term shall include securities of the
same issuer, class and quantity as the Loaned Securities, as adjusted
pursuant to the preceding sentence.
26.15 "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.
BORROWER:
[Name of Bank]
By:
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Title:
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Date:
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LENDER:
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Xxxx Xxxxxxx
Date: _______, 2003
ANNEX I
Lender Acting as Agent
This Annex sets forth the terms and conditions governing all
transactions in which a party lending securities ("Agent") in a Loan is acting
as agent for one or more third parties (each, a "Principal"). Unless otherwise
defined, capitalized terms used 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 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.
Section 1. Additional Representations and Warranties. In addition to the
representations and warranties set forth in Section 9 of 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 under such Loans, and has taken all necessary action to
authorize such execution and delivery by Agent and such performance by it.
Section 2. Identification of Principals. Agent agrees (a) to provide Borrower
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 Borrower), and (b) to provide Borrower, before the
close of business on the next Business Day after orally 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) Borrower shall
determine in its sole discretion that any Principal or Principals identified by
Agent are not acceptable to it, Borrower may reject and rescind any Loan with
such Principal or Principals, return to Agent any Loaned Securities previously
transferred to Borrower and refuse any further performance under such Loan, and
Agent shall immediately return to Borrower any Collateral previously transferred
to Agent in connection with such Loan; provided, however, that (A) Borrower
shall promptly (and in any event within one Business Day) 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 Borrower, 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. Borrower 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 Borrower in obtaining
from Agent's Principals such information regarding the financial status of such
Principals as Borrower may reasonably request.
Section 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) Borrower'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.
Section 4. Multiple Principals.
(a) In the event that Agent proposes to act for more than one Principal
hereunder, Borrower and Agent shall elect whether (i) to treat Loans under this
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 this Agreement as transactions on behalf of separate Principals.
(b) In the event that Borrower and Agent 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 Borrower, 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 Section 8 of 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 Borrower on
behalf of each of its Principals.
(c) In the event that Borrower and Agent elect to treat Loans under
this 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 Section 8 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.
(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).
Section 5. Interpretation of Terms. All references to "Lender" 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" directly entering into such Loan or
Loans with Borrower 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 and for receipt of performance by Borrower of its
obligations to Lender 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 paragraph (e) or any other applicable provision
of Section 11 shall be deemed a Default by Lender).
[Name of Bank]
By:
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Title:
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Date:
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By:
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Title:
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Date:
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Schedule A
NAMES AND ADDRESSES FOR COMMUNICATIONS
(fill in as needed)
Schedule B
DEFINED TERMS AND SUPPLEMENTAL PROVISIONS
Cutoff Time[s]
(fill in as needed)
