1
EXHIBIT 99.4
[SALOMON BROTHERS LOGO]
SALOMON BROTHERS INC
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 (212) 783-7000
MASTER SECURITIES LOAN AGREEMENT
Dated as of
Between:
SALOMON BROTHERS INC
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:
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.
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.
-1-
2
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 of 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 submitted 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.
- 2 -
3
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 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.
- 3 -
4
6. Rights of Borrower in Respect of the Loan 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 Loan Securities, including the right to transfer the Loaned
Securities to others. Lender hereby waives the right to vote, or to provide
any consent or to take any similar action with respect to the Loaned Securities
in the event that the record date or deadline for such vote, consent or other
action falls during the term of the Loan.
7. 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 withdrawing 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
- 4 -
5
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 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.
- 5 -
6
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.
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.
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 repository institution," as such term is defined in
the
- 6 -
7
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.
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 (individuality, 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
- 7 -
8
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.
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
- 8 -
9
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, brokers 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) Lenders 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 Loan 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,
- 9 -
10
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, it 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.
- 10 -
11
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.
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.
- 11 -
12
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.
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 1988, 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 falls to communicate and keep current during
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
Borrowers 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
- 12 -
13
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 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.
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,
- 13 -
14
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.
26. 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
- 14 -
15
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 affected 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.
28.7 "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).
- 15 -
16
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.
SALOMON BROTHERS INC
By: _________________________
Title: _______________________
Date: _______________________
By: _________________________
Title: _______________________
Date: _______________________
- 16 -
17
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.
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.
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.
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.
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.
18
2
(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).
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).
19
3
SALOMON BROTHERS INC
By: ________________________________________
Title: ________________________________________
Date: ________________________________________
By: ________________________________________
Title: ________________________________________
Date: ________________________________________
