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EXHIBIT 99.1
Public Securities Association
00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000
Telephone (000) 000-0000
MASTER SECURITIES LOAN AGREEMENT
Dated as of August 5, 1998
Between:
Xxxxx Xxxxxx, Inc
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and
Tribune Company
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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:
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
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DELIVERED TO LENDER MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF
BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE LOANED
SECURITIES.
2. Transfer of Loaned Securities.
2.1 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.
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.
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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.
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
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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.
5. Termination of the Loan. 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 fifth 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.
6. Rights of Borrower in Respect of the Loaned Securities. Except as set forth
in Sections 7.1 and 7.2 and as otherwise agreed 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
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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. 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.
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(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).
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 that 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
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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).
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.
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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) 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.
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
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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.
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 any order
for relief, such an appointment, the issuance of such a protective
decree or the entry of an order having similar effect, or (C) is not
dismissed within 15 days, (iii) either party shall make a general
assignment for the
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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 if 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.
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
Collateral 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
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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.
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
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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.
14. Transfer Taxes. All transfer taxes with respect to the transfer of the
Loaned Securities by Lender to Borrower and by Borrower to Lender upon
termination of the Loan shall be paid by Borrower.
15. Market Value.
15.1 Unless otherwise agreed, if the principal market for the securities
to be valued is a national securities exchange in the United States, their
market value shall be determined by their last sale price on such exchange on
the preceding Business Day or, if there was no sale on that day, by the last
sale price on the next preceding Business Day on which there was a sale on such
exchange, all as quoted on the Consolidated Tape or, if not quoted on the
Consolidated Tape, then as quoted by such exchange.
15.2 Except as 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
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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.
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.
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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.
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.
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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 nondefaulting party) refund promptly
the amount of such excess.
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:
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(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.
19. Single Agreement. Borrower and Lender acknowledge that, and have entered
into this Agreement in reliance of 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.
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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.
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.
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.
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.
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.
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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.
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
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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
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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.
XXXXX XXXXXX, INC.
By:
-------------------------------
Title: Managing Director
-----------------------------
Date:
------------------------------
TRIBUNE COMPANY
By:
------------------------------
Title:
-----------------------------
Date:
------------------------------
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\
Schedule B
DEFINED TERMS AND SUPPLEMENTAL PROVISIONS
1. Section 4.1 is amended by deleting clause (a) and replacing it with the
following:
(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
2. Section 4.1 is amended by adding to the end the following new sentence:
Unless otherwise agreed, such Loan Fees and Cash Collateral Fees shall be
calculated on the basis of a 360-day year for the actual number of days
the Loaned Securities are outstanding in accordance with the preceding
sentence.
3. Section 5 is amended by deleting the second sentence and replacing it
with the following new sentence:
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, (ii) in the case of Foreign Securities, the next
Business Day following the standard settlement date for trades of the
Loaned Securities entered into on the date of such notice and (iii) in the
case of all other securities, the standard settlement date for trades of
the Loaned Securities entered into on the date of such notice.
4. Section 15.3 is amended by deleting the clause "on Prophecy" in the first
sentence and substituting the clause "by a mutually acceptable source or
mutually acceptable sources," and by deleting the third sentence in its
entirety.
5. The "Cutoff Time" shall be 3 p.m. New York time.
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