SHARE LENDING AGREEMENT
Dated as of February 19, 2002
Between:
JPMorgan Chase Bank, solely in its capacity as agent ("Agent") for GSB
Investments Corp. ("Lender")
and
JPMorgan Chase Bank, in its capacity as borrower ("Borrower").
This AGREEMENT sets forth the terms and conditions under which
Borrower may, from time to time, borrow up to all of the Pledged Items from
the Lender (each such borrowing, a "Loan", and all shares so borrowed, the
"Loaned Shares"). Agent is entering into this Agreement solely in its capacity
as Agent for Lender. All capitalized terms used but not defined herein shall
have the meanings set forth in the Stock Purchase Agreement dated as of
November 14, 2001, as amended from time to time (the "Stock Purchase
Agreement") between Lender and JPMorgan Chase Bank ("Secured Party"), acting
through ▇.▇. ▇▇▇▇▇▇ Securities Inc., and the Pledge Agreement dated as of
November 14, 2001, as amended from time to time (the "Pledge Agreement") among
Lender, as pledgor, Agent, as the collateral agent, and Secured Party.
The parties hereto agree as follows:
1. Loans of Shares.
1.1 Subject to the terms and conditions of this Agreement, Borrower
may, from time to time, orally seek to initiate a transaction in
which Lender will lend some or all of the Pledged Items to Borrower.
1.2 Borrower may borrow up to all of the Pledged Items, terminate any
Loan of such Pledged Items pursuant to Section 5(a) and re- borrow
such Pledged Items any number of times.
1.3 The Calculation Agent shall have the right to adjust (a) the
number of Loaned Shares transferred to Borrower in respect of any
Loan hereunder and (b) any Loan Fee, from time to time, on account of
any Potential Adjustment Event (as defined in the Stock Purchase
Agreement) that has diluting or concentrative effect on the shares of
Common Stock or any other adjustment pursuant to the provisions of
Article 6 of the Stock Purchase Agreement.
1.4 Notwithstanding any other provision in this Agreement regarding
when a Loan commences, a Loan hereunder shall not occur until the
Loaned Shares have been transferred to Borrower in accordance with
Section 2.
1.5 Borrower acknowledges that Lender has informed Borrower that
Lender intends that this Agreement will satisfy the requirements of
Section 1058 of the Internal Revenue Code of 1986, as amended, and
the regulations (including proposed regulations) promulgated
thereunder. Borrower hereby agrees, for United States federal income
tax purposes (including without limitation tax information reporting
purposes), to treat this Agreement in a manner consistent with such
intent of Lender.
2. Transfer of Loaned Shares.
Lender shall transfer Loaned Shares to Borrower hereunder on
or before the Cutoff Time on the date agreed to by Borrower and
Lender for the commencement of the Loan.
3. No Collateral.
Borrower will not be required and is under no
obligation to provide any collateral to Lender or to Agent for
the account of Lender for any Loan hereunder.
4. Loan Fees.
Borrower agrees to pay Lender a loan fee (a "Loan
Fee"), computed daily in an amount equal to the product of (A)
10 basis points per annum, (B) the number of Loaned Shares
outstanding on the day for which such Loan Fee is being
computed and (C) the Closing Price per share of such Pledged
Item on the Business Day immediately preceding the day for
which the Loan Fee is being computed. Loan Fees shall accrue
from and including the date on which the Loaned Shares are
transferred to Borrower to, but excluding, the date on which
such Loaned Shares are returned to Lender. Any Loan Fee
payable hereunder shall be payable on the fifteenth day of the
month following the calendar month in which such Loan Fee was
incurred.
5. Loan Termination.
5.1 (a) Borrower may terminate a Loan on any day by giving
notice to Agent and transferring the Loaned Shares to Agent on such
date;
(b) Lender may terminate any Loan on a termination date established
by notice given to Borrower prior to the close of business on a
Business Day; provided, however, that Lender may not set a Loan
termination date earlier than the earlier of (i) the number of
Business Days in the standard securities settlement cycle in the
United States as defined in Rule 15c6-1 under the Securities Exchange
Act of 1934, as amended (currently three Business Days), after
Lender's notice or (ii) five Business Days after Lender's notice..
5.2 Unless otherwise agreed, Borrower shall, on or before the Cutoff
Time on the termination date of a Loan, transfer the Loaned Shares to
Agent.
6. Borrower's Rights in the Loaned Shares.
Except as explicitly set forth herein, until the
Loaned Shares are required to be redelivered to Agent upon
termination of a Loan hereunder, Borrower shall have the right
to transfer the Loaned Shares to others. Lender further waives
the right to vote, to consent or to take any similar action in
respect of the Loaned Shares when the record date or deadline
for such vote, consent or other action falls prior to the
termination of the Loan.
7. Dividends, Distributions, etc.
Lender shall be entitled to receive all interest,
dividends and other payments with respect to any Loaned
Shares, all distributions of cash or other property with
respect to any Loaned Shares and all options, warrants,
rights, privileges and other securities issued or distributed
with respect thereto or in exchange therefor or in exchange
for any vote, consent or the taking of any similar action in
respect of such Loaned Shares, to the extent that any such
payment, distribution or issuance of a security (other than
splits of, and dividends in kind with respect to, Loaned
Shares, which will be considered Loaned Shares pursuant to
Article 1.3 hereof) shall be made and the record or other date
for determining the security holder entitled to receive such
payment, distribution or issuance of a security shall occur on
or after the date of any Loan and prior to the termination of
such Loan. Borrower will pay such dividend or deliver such
property or securities to Agent for the account of Lender on
the date of the payment, distribution or issuance thereof by
the issuer of the Loaned Shares. This obligation of Borrower
shall be binding on Borrower regardless of whether such
payment, distribution or security is actually received by
Borrower, unless and only to the extent that Lender receives
such payment, distribution or securities directly from the
issuer of the Loaned Shares or its agent, or unless Lender
would not have received such payment, distribution or
securities had the Loaned Shares not been lent. In the event
that the holder of a Loaned Share is entitled to elect the
type of distribution to be received from two or more
alternatives, such election shall be made by Lender.
8. Representations.
Each party to this Agreement hereby makes the
following representations and warranties, which shall continue
during the term of any Loan hereunder:
8.1 Each party 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 its legal, valid
and binding obligation enforceable against it in accordance with its
terms.
8.2 Lender represents and warrants that it has not relied on Agent
or Borrower, and each of Borrower and Agent represents that it has
not relied on Lender, 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.
8.3 Lender represents and warrants that it has, and will have at
the time of transfer of any Loaned Shares, the right to transfer the
Loaned Shares as required herein.
8.4 Lender represents and warrants, on the date hereof and at all
times during the term of this Agreement and any Loan, that:
(a) it is and will be acting and is and will be liable
as principal for its own account, and has made and will make
its own independent decisions to have Agent enter into this
Agreement and any Loan hereunder on its behalf;
(b) no Loaned Shares will be subject to any provisions of
the Employee Retirement Income Security Act of 1974 or of the
Department of Labor's regulations; and
(c) all Loaned Shares loaned by Lender to Borrower will
be shares of Free Stock in the hands of Borrower.
8.5 Borrower represents and warrants, on the date hereof and at all
times during the term of this Agreement and any Loan, that it is and
will be acting and is and will be liable as principal for its own
account, and has made and will make its own independent decisions to
have Agent enter into this Agreement and any Loan hereunder on its
behalf.
8.6 Borrower represents and warrants that it (or the person to whom
it relends the Loaned Shares) is borrowing or will borrow Loaned
Shares for the purpose of making delivery of Loaned Shares in the
case of short sales, failure to receive securities required to be
delivered or as otherwise permitted pursuant to Regulation T of the
Board of Governors of the Federal Reserve System, as in effect from
time to time.
9. Covenants.
9.1 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.
10. Events of Default.
All Loans hereunder may, at the option of the
non-defaulting party exercised by a written notice to the
defaulting party (which option shall be deemed exercised, even
if no notice is given, immediately on the occurrence of an
event specified in subsection (d) below), be terminated (i)
immediately on the occurrence of any of the events set forth
in subsections (a) or (d) below and (ii) two Business Days
following such notice on the occurrence of any of the events
set forth in subsections (b), (c) or (e) below, (each, a
"Default"):
(a) if Borrower fails to transfer Loaned Shares to Lender
on termination of the Loan as required by Section 5;
(b) if Borrower fails to pay when due any Loan Fee;
(c) if Borrower fails to deliver or pay when due any
cash, securities or other property as required by Section 7;
(d) if (i) Lender or Borrower shall commence as debtor
any case or proceeding under any bankruptcy or similar law,
or seek the appointment of a receiver or similar official
for Lender or Borrower, as the case may be, or any
substantial part of its property, or convene a meeting of
creditors for either such purpose, (ii) any such case or
proceeding shall be commenced against Lender or Borrower, as
the case may be, which (A) is consented to or not timely
contested by Lender or Borrower, as the case may be, (B)
results in the entry of an order for relief, such as an
appointment, the issuance of a protective decree or the
entry of an order having a similar effect or (C) is not
dismissed within 15 days, (iii) Lender or Borrower, as the
case may be, shall make a general assignment for the benefit
of creditors or (iv) Lender or Borrower, as the case may be,
shall admit in writing its inability to pay its debts as
they become due;
(e) if there shall exist any Event of Default under the
Stock Purchase Agreement;
(f) 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; or
(g) if either party notifies the other of its inability
to or its intention not to perform its obligations hereunder
or otherwise disaffirms, rejects or repudiates any of its
obligations hereunder.
11. Lender's Remedies.
Upon the occurrence of a Default under Section 10
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 Shares
("Replacement Shares") in the principal market for such
securities in a commercially reasonable manner and (b) to
apply and set off any amounts due to Borrower hereunder
against the payment of the purchase price for such Replacement
Shares and any amounts due to Lender hereunder. In the event
Lender shall exercise such right, Borrower's obligation to
return a like amount of Loaned Shares shall terminate and
Borrower shall be liable to Lender for the purchase price of
Replacement Shares (plus all other amounts, if any, due to
Lender hereunder) together with interest thereon at a rate per
annum equal to the Federal Funds Rate, as such rate fluctuates
from day to day. The purchase price of Replacement Shares
purchased under this Section 11 shall include broker's fees
and commissions and all other reasonable costs, fees and
expenses related to such purchase. In the event Lender
exercises its rights under this Section 11, Lender may elect,
in lieu of purchasing all or a portion of the Replacement
Shares, to be deemed to have made such purchase of Replacement
Shares for an amount equal to the Closing Price of such
Replacement Shares on the date of such exercise.
12. Borrower's Remedies.
Upon the occurrence of a Default under Section 10
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 sell a number of the Loaned Shares that
is necessary to obtain the amount that is then due to it in
the principal market for such securities in a commercially
reasonable manner, and (b) to apply and set off the Loaned
Shares and any proceeds thereof against any amounts due to
Borrower hereunder and to any other obligation of Lender under
this Agreement. In such event, Borrower may treat such number
of Loaned Shares as its own and Borrower's obligation to
return such number of Loaned Shares to Lender hereunder shall
terminate. The proceeds of any sale of such number of Loaned
Shares shall be determined after deduction of broker's fees
and commissions and all other reasonable costs, fees and
expenses related to such sale. In the event Borrower exercises
its rights under this Section 12, Borrower may elect, in lieu
of selling all or a portion of such number of Loaned Shares,
to be deemed to have made such sale of such number of Loaned
Shares for an amount equal to the Closing Price of such number
of Loaned Shares on the date of such exercise. Upon the
satisfaction of all Lender's obligations hereunder, any
remaining Loaned Shares (or remaining cash proceeds thereof)
shall be returned to Agent for the account of 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
Shares and the proceeds thereof.
13. Transfers.
13.1 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. or (b) transfer on the books of a Clearing
Organization. In every transfer of securities hereunder, the
transferor shall take all steps necessary (i) in the case of
transfers described in clause (a) of the preceding sentence, to
constitute the transferee as a "protected purchaser" of such
securities, within the meaning of Section 8-303 of the New York
Uniform Commercial Code (the "NYCC"), (ii) in the case of any
transfers described in clause (b) of the preceding sentence, to
constitute the transferee as a person against whom an adverse claim
with respect of such securities or any security entitlement in
respect thereof may not be asserted pursuant to Sections 8-502 or
8-510 of the NYCC or, where applicable, any U.S. federal regulation
governing transfers of securities and (iii) to provide the transferee
with comparable rights under any applicable foreign law or
regulation.
13.2 All transfers of cash hereunder shall be by wire transfer in
immediately available, freely transferable funds.
13.3 A transfer of securities or cash may be effected under this
Section 13 on any day except (a) a day on which the transferee is
closed for business at its address set forth in Section 14 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.
14. Notices.
Unless otherwise provided herein, any notices
required to be delivered hereunder shall be in writing and
personally delivered, mailed or sent by telecopy or other
similar form of rapid transmission, and shall be deemed to
have been duly given upon receipt,
14.1 in the case of Lender, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Telephone: ▇▇▇-▇▇▇-▇▇▇▇,
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇.
with a copy to Lender, at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇,
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇, Attention: Chief Financial Officer.
14.2 in the case of Borrower, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Telephone: ▇▇▇-▇▇▇-▇▇▇▇,
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇.
14.3 in the case of either of the foregoing, at such other address as
may be designated by written notice to the other party.
15. Additional Definitions.
As used herein, the following words and phrases
shall have the following meanings:
"Clearing Organization" shall mean The Depository
Trust Company, or, if agreed to by Borrower and Lender, such
other securities intermediary at which Borrower (or Borrower's
agent) and Lender maintain accounts.
"Cutoff Time" shall mean 10:00 a.m. in the
jurisdiction of the Clearing Organization, or such other time
on a Business Day by which a transfer of Loaned Shares must be
made by Borrower or Lender to the other, as shall be
determined in accordance with market practice.
"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.
"Loaned Share" means a share of Common Stock
transferred by Lender to Borrower pursuant to Section 2 and
not returned by Borrower. For purposes of the return of Loaned
Shares by Borrower, or a purchase or sale of Loaned Shares
pursuant to Section 11 or 12, Loaned Shares include any
securities of the same issuer, class and quantity as the
Loaned Shares.
16. Assignment; Successors and Assigns
None of the parties hereto may assign its rights or
delegate its obligations under this Agreement, except with the
prior written consent of the other parties hereto (which may
not be unreasonably withheld), and any purported assignment or
delegation without such prior written consent shall be void
and of no effect; provided that, notwithstanding the
foregoing, Borrower may assign its rights or delegate its
obligations under this Agreement without the prior written
consent of Lender or Agent so long as Borrower shall remain
liable with respect to its obligations under this Agreement to
the extent of any non-performance by Borrower's assignee
hereunder. All the covenants and agreements herein contained
by or on behalf of Lender, Borrower and Agent shall bind, and
inure to the benefit of, their respective successors and
assigns whether so expressed or not, and shall be enforceable
by and inure to the benefit of such parties and their
respective successors and assigns.
17. Set-off
The parties hereto acknowledge and agree that each
of Borrower and Lender may elect to set-off any or all of its
obligations to the other of Borrower and Lender under any
agreement between Borrower and Lender against any or all of
its rights to obtain performance from such other of Borrower
and Lender under any other agreement between Borrower and
Lender.
IN WITNESS WHEREOF, this Share Lending Agreement is executed by JPMorgan Chase
Bank, New York Branch, solely as Agent acting on behalf of GSB Investments
Corp., as Lender, and JPMorgan Chase Bank, as Borrower.
JPMORGAN CHASE BANK, solely JPMORGAN CHASE BANK, as
as Agent for GSB Investments Borrower
Corp., as Lender
By: /s/▇▇▇▇▇▇ ▇▇▇▇ By: /s/▇▇▇▇▇▇ ▇▇▇▇
_________________________ _________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President Title: Vice President
