HomeMy WebLinkAboutFleet Bank Muni-Cash George H. Georges
Serior Vice Prcsiden
F~ee~ Ba~k
Ma:~So?:NY L~
300 gma~zoJov~ Road
5 ~6-547~7%0
Pa~ 5 ~ 6~547-7~56
7655
July 15, 1999
Mr. John CusFanan
Comptroller
Tow~ of Southold
Town Hall
Main Road
Southold, New York 11971
Dear Mr. Cushman:
Enclosed are your new MuniCash Agreements, replacing Swiss Bank Corp. with Merrill
Lynch. The Agreements are:
Agency Agreement - No change except name change
Custodial Undertaking - No change except name change
Master Repurchase Agreement - Two changes (see below'~
1. The name change from Swiss to Merrill Lynch.
2. Annex I (a) deleted paragraph six entitled "Security Interest" in the old
Agreement. The new Agreement includes Paragraph 6 "Security Iiaterest."
These are the only changes.
Please sign the three (3) enclosed Agency Agreements. Two copies are ro be returned ~o
us prior to September 15, 11999. A self-addressed envelope is enclosed for your
convm~ience. The third copy is for your file along with the Custodial Undertaking and
Master Repurchase Agreement.
If you have any questions, please do not hesitate to call Maureen Szigethy (516-54%
7743)~ your Relationship Manager or me. Thank you.
Best regards.
George H. Georges
GHG/ms
eric.
AGENCY AGREEMENT
AGENCY AGREEMENT (the "Agreement") dated as of this ~ day of _~/bq
1999 by and between FLEET BANK N.A., with an address of 300 Broad Hollow Road,
Melville, NY 11747 _(the "Agent") and the undersigned Customer (the "Customer").
WITNESSETR
WHEREAS, Customer desires to open and maintain one or more accounts to invest in
government securities through a three party repurchase agreement program (the "Program")
pursuant to which Customer will purchase and sell government securities to and from Merrill
Lynch Government Securities Inc./And/Or Merrill Lynch,Pierce,Fenner & Smith Inc, New York
Branch ("ML"); and
WHEREAS, the Program is effected and documented pursuant to a certain Master
Repurchase Agreement and a certain Custodial Undertaking in Connection with Master
Repurchase Agreement, both in the form delivered to Customer (and containing only such
changes from such forms as have been expressly approved in writh~g by Customer), together
with any other docmments reasonably necessary to effectuate the Program as are expressly
approved in writing by Customer (collectively the "Program Documents"); and
WHEREAS, Customer desires to appoint Agent, and Agent desires to accept such
appointment as Customer's agent, for purposes oftransrnitfing and receiving Customer's funds
pursuant to the Program and executing, delivering and performing the Program Documents;
NOW, THEREFORE. in consideration of the foregoh~g, the parties agree as follows:
1 Appointment of Agent. Subject to and upon the terms and conditions hereof,
Customer hereby appoints Agent to act as its agent for purposes of participating in the Program.
As such agent, Agent shall perform those duties set forth in Section 3 hereof; subject, however,
to those limitations set forth in Section 4 hereof. By sigmng the Notice set forth on Exhibit A
a~ached hereto and made a pm~t hereof, Customer agrees to notify the other parties to the
Program Documents that Agent is acting as Customer's agent for purposes of the Program.
2. Acceptance of Appointment. Subject m and upon the terms and conditions set
forth herekn, Agent hereby accepts the appointment set forth in Section I.
3. Duties of Agent. As Customer's agent, Agent hereby agrees to provide the
following servhces for the Customer.
(a)
Upon request by Customer. Agent shall provide Customer with yield quotes
for the various investment alternatives available under the program;
provided, however, that Agent shall not be obligated to provide quotes
unless and unffi Customer requests such quotes.
(b)
Upon request by Customer and in accordance with Customer's written
instructions and the terms of the Program, Agent shall invest Customer's
funds or liquidate Customer's investments in the Program. Agent shall not
be obligated to take, nor shall Agent take, any action with respect to
Customer's investments unless and until Customer prov/des written
instructions to Agent.
(c) Agent shall execute, deliver and perform all Program Documents on behalf
of Customer.
(d)
Agent shall have no duties or obligations other than those specifically set
forth herein.
4. Limitation of Agent's Duties. Agent's responsibilities under this Agreement are
limited as folinws:
(a)
Agent Under No Obligation to Use Own Funds. Agent shall have no
obligation to make any payment of any wpe on behalf of Customer
pursuant to the Program which requires Agent to use its own funds or to
incur ~y financial liability on Agent's part in the performance of ks duties
hereunder, unless sufficient funds have been deposited with Agent to pay in
fall all such amounts.
(b)
A~gent Not Responsible for Representations. Agent shall be regarded as
malting no representations and having no responsibilities with respect to the
accuracy or sufficiency of any representations made by Customer, or the
terms of any of the Program Documents.
(c)
Reliance Upon Instructions, Etc. In performing its duties under th/s
Agreement, Agent shall be entitled to conclusively rely on any instmctons,
written or oral, received from the Customer and to assume that the same are
accurate, duly authorized and not kn contraventinn of law; and Agent shall
Imve the right to request further instructions, or to require instructions to be
made in writing.
(d)
Limffatinn of Liability. Agent shall not be liable (i) for any actions taken in
reliance on Customer's instructions: (ii) for any action taken in good faith
reliance upon the advice of counsel; (iii) for any error of judgment unless
proven to be willful or grossly negligent; or (iv) for any incidental,
consequential or purfitive damages or for other sums [including lost profits)
in excess of~ts actual damages.
5. Indemnification. Customer hereby indemnifies and holds harmless Agent from
and against any and all clalms, damages, losses, llabilkies, costs and expenses whatsoever
(including attorneys' fees and costs, whether incurred in settlement, administrative hearing or
other proceeding, trial or on appeal of any of the foregoing) which Agent may incur (or which
may be claimed against Agent by any person or entity whatsoever, except as caused by Agent's
gross negligence or willful misconduct) by reason of or in connection with (i) this Agreement,
including, but not 1/mired to, any unauthorized instructions received from Customer and (ii) any
breach of any of the terms of the Program Documents. Notwithstanding anything herein to the
contrary, the obligation of Customer to indemnify and hold harmless Agent shall survive the
termination of this Agreement.
6. Termination. Customer may temfinate this Agreement and Agent's duties
hereunder at any time, with or without cause, in which event it agrees to notify the other parties
to the ?rogram Documents. Agent may resign upon ten (10) days written notice to Customer and
to the other parties to the Program Documents.
7. Customer's Personnel. In connection with this Agreement, Customer shall act
only through the representative(s), whose name(s) and title(s) are set forth on Exhibk B, attached
hereto and made a part hereof.
8. Miscellaneous.
(a)
This Agreement represents the entire understanding of the parties with
respect to the subject matter hereof, supersedes all prior agreements or
understandings, written or oral with respect to the subject matter hereof;
and may not be amended except in a writing signed by all parties.
(b) Neither Customer, nor Agent may assign this Agreement or its rights
hereunder without the prior written consent of the other.
(c) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Dated as of the day and year first above written.
FLEET BANK N.A.
("AGENT")
. i,~' , (D .ItsDuly
Aut~rized ~ ~
Tow~ of Southold _("Customer")
~ %-~ ~'~-~,~s~< ~ Its Duly
EXHIBIT "A"
No~ce ot Designation of Agent
The undersigned ("Customer") hereby notifies Merrill Lynch Government Securities,
Inc., and/ur Merrill Lynch. Pieme, Fenner & Smith, Inc., New York Branch and Bank of
New York (collectively_the "Other Parties") that Customer has appointed and
designated Fleet Bank ("Fleet") as its agent for the purposes set forth in the Agreement
attached hereto and that the Other Parties are authorized and empowered to follow the
instmctinns of FIeet in every respect with regard to purchases and sales effected by Fleet
for Customer's Account (as defined in the attached Agreement). Customer, by ks
execution hereof, authorizes, ratifies and confirms in all respects each and every such
rransacriun effected by Fleet for Customer.
Customer hereby inderrmgfies and holds harmless the Other Parties from and against any
and all claims, damages, losses, IiabiIkies, costs and expenses whatsoever (including
attorneys' fees and costs, whether incurred in settlement, administrative hearing or other
proceeding, trial or on appeal of any of the foregoing ("Costs")) which the Other Parties
may incur (or which may be claimed against the Other Parties by any person or entity
whatsoever, except as caused by the Other Parties' gross negligence or willful
misconduct) by reason of or in comnectinn with the purchases and sales effected by Fleet
for Customer's account, including, but not limited to, any unauthorized instructions
received from Fleet. Notwithstanding anything contained herein to the contrary, (i) the
obligation of Customer to indemnify and hold harmless the Other Parties shall survive the
termination of ti'tis Notice and (ii) the Other Parties shall have no liability for costs arising
from a failure of Fleet sogware to process properly any purchases and sales effected
pursuant to the attached Agreement.
This Notice and the authorization and indemrfity granted hereby are in addition to (and in
no way 1/mit or restrict) any and all rights that the Other Parties may have under any other
agreement or agreements between the Other Parties and Customer, or the Other Parties
and Fleet, and shall inure and continue in favor of the Other Parties, its successors by
merger, consolidation or otherwise, and assigns.
This Notice and the authorization and indemn/ty granted hereby shall continue in full
force and effect, and the Other Parties, their successors and assigns shall be entkled to
rely thereon, until the Other Parties shall have received written notice executed by
Customer, of its revocation; and such revocation or termination shall in no way affect the
validity of this Notice, or the liability of Customer under the indemnky granted to the
Other Parties, with respect to any transaction inkiated by Fleet prior to the actual receipt
by the Other Parties of the written notice of revocation as provided by this paragraph.
BY:
TITLE:
DATE:
Town of SouthoId ("Customer")
EXhiBiT "W~
Dcsign~li~n af Cusl~mer Representaiive(s)
Name(s): ~ ,~. d.~C~f~
Title(s):
Address(es) and Phone/Facsimile Number(s):
Telephone:
Fax:
CUSTODIAL UNDERTAKING IN CONNECTION
WITH MASTER REPURCHASE AGREEMENT
BY AND AMONG
FLEET BANK, NATIONAL ASSOCIATION
("Agent")
ACTING ON BEHALF OF
THE MUNICIPALFFzrES DISCLOSED ON THE ANNEX HERETO
(Each, a "Buyer")
AND
MERRILL LYNCH GOVERNMENT SECURITIES INC.
AND/OR
MERRILL LYNCH, FIERCE, FENNER & SMITH INC,
(Seller)
AND
THE BANK OF NEW YORK
(Custodian)
THIS CUSTODIAL UNDERTAKING is made and entered into as of the date set forth below by and among Buyer, Seller. and
Custodian.
RECITALS
WHEREAS, Buyer and Seller have entered into a PSA Master Repurchase A=reement dated as of ~nt.tcd:~c-p -[ _, (as it may
be amended by the parties thereto, the'Master Repurchase Agreement"), and may from time to time enter i~o Transactions with
respect to Eligible Securities (as hereinafter defined); and
WHEREAS. Custodian has agreed to act as agent for Buyer and Seller in order to effect Transactions on their behalf, all as
mom particularly set forth herein:
NOW, THEREFORE. in consideration of the mutual promises hereinafter set forth, the parties hereto agree as follows:
DEFINITIONS
Whenever used in this Custodial Undertaking, the followin~ words shall have the meanings set forth below. Capitalized terms
used but not defined herein shall have the meanings given them in the Master Repurchase Agreement.
A. "Authorized Person" shall mean any person, whether or not any such person is an officer or employee of Buyer or Seller,
as the case may be, duly authorized to give Oral Instructions and Written Instructions on behalf of Buyer or Seller, such persons and
their specimen signatures to be designated in Schedule II attached hereto: as such Schedule II may be amended from time to time.
B. "Book-Entry Securities" shall mean Book-entry Treasury securities maintained in TRADES (as defined in 31 C.F.R
357.3), other securities issued or guaranteed directly or indirectly b5 the United States government or any agency, instrumentality or
establishment of the United States government and registered in the form of an entry on the records of the Book-Entry System and
any other securities registered in the form of an entry on the records of the Book-Entry System.
C. "Brink-Entry System" shall mean the book-entry system for securkies maintained at The Federal Reserve Bank of New
York ("FRBNY").
D. "Business Day" shall mean any day on which Custodian. Seller. the Book-Entry System and appropriate Clearing
Corporation(s) are open for business.
E. "Buyer's Account(s}" shall mean each of the custodial accounts maintained by Custodian in the name of Buyer for the
deposit of Eligible Securities with respect to Transactions and any account for the deposit of cash in connection therewith.
Fo "CIearing Corpuration" shall mean the Depository Trust Company, Participants Trust Company and any other clearing
corporation within the meaning of Section 8-102 of the Uniform Commercial Code of the State of New York. as amended (the
"UCC") or otherwise authorized to act as a securities depository or clearing agency.
G. "Clearing Corporation Securities" shall mean securities which are registered in the name of Custodian or its nominee in
the form of an entry on the records of a Clearing Corporation.
H, "Cnmmunie,~tions System" shall mean a computer data base and telecommunications equivalent maintained by Custodian
with provision for access by Buyer and Seller or their duly appointed agent(s) which reflects, among other things, cash and Securities
then in the Buyer's Account and Seller's Account and Transactions then outstanding.
I. "Eligible Portfolio" shall mean each portfolio of Securities and the Securities contained therein that Buyer has selected from
the various portfolios of securities provided by Seller, as indicated on Schedule 1.
& "Margin Percentage" shall mean the percentage indicated on Schedule I with respect to Eligible Portfolios, as Schedule I
ma?.' be amended from time to time.
K. "Margin Value" shall mean the amount obtained by dividing the Market Value of Securities contained in an Eligible
"ffolio by the applicable Margin Pementage.
L. "Market Value of Securities" shall mean with respect ro any Security as of any date. the sum of (i) the marker value of
such Security based on the most recently available closing bid price for the particular Security as made available to Custodian by
pricing information services which Custodian uses generally for pricing such Securities. and (ii) accrued but unpaid Income, if any, on
the particular Security (to the extent not included themin~. In the case of cash and certificates of deposit, the face amount shall be
deemed the Market Value. In the event that Custodian is unable ro obtain the price of a particular Security [rom sucl~ pricing
~formation services on any Business Day, the Market Value shall be as deternained by Custodian in the reasonable exemise of its
discretion based on information furnished to Custodian by one or more brukem (excluding Seller) in such Security or Custodian may
price such Security using a formula utilized by Custodian for such purpose in the ordinary course of its business.
M. "Notice of Default' shall mean a written notice delivered by Buyer m Custodian and Seller, or by Seller to Custodian and
Buyer, informing Custodian and the defaulting party of an Event of Default pursuant to Paragraph [ 1 of the Master Repurchase
Agreement and setting forth the specific Event of Default thereunder.
"Oral Instructions" shall mean verbal instructions received by Custodian from an Authorized Person.
O. "Pricing Rate" shall mean the rate or percentage per annum that Seller offers_ by way of the Communications Sysmm, to be
used in computing the Repurchase Price for Transactions involving Eligible Portfolios.
P. "Purchased Portfolio" shall mean the Securities contained in an Eligible Portfolio which are transferred to Buyer's Account
tn connection with Transactions.
Q. "Revised UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York as if the
State of New York had adopted Revised Article 8 (with conforming amendments to other articles I. 1994 text. as adopted by the
American Law Institute and the National Conference of Commissioners on Uniform State Laws.
R. "Securities" shall mean Book-Entry Securities. Clearing Corporation Securities and cash.
fi. "Seller's Account" shall mean Seller's clearing account maintained on Custodian's Government Securities Clearance Sysmm
("GSCS"), any other account in which Securities are held by Custodian on behalf of Seller pursuant to the terms of this Agreement
and any account for the deposit of cash maintained in connection therewith.
T. 'Written Instructions" shall mean written communications received by Custodian from an Authorized Person by telex,
through the Communications System or any other electronic system whereby the receiver of such communications is able to verify by
codes, passwords or otherwise with a reasonable degree of certainty the identity of the sender of such communications.
All references to time in this Custodial Undertaking shall mean the time in effect on that day in New York. New York. Except
as may otherwise apply for Income payable on particular Securities or as otherwise may be agreed to in writing by the parties hereto,
all provisions in this Custodial Undertaking for the transfer, payment or receipt of funds shall mean trans:~'er of, payment in, or receipt
of. United States dollars in immediately available funds.
2. APPOINTMENT OF CUSTODIAN; ACCOUNTS
A. Buyer and Seller hereby appoint Custodian as custodian of all Securities and cash at any time delivered to Custodian in
connection with Transactions subject to this Custodial Undertaking and as their agent to effect Transactions. Custodian hereby
accepts appointment as custodian and agent.
B. Buyer and Seller each authorizes and instructs Custodian to utilize the Book-Entry System and Clearing Corporations in
connection with its performance hereunder. Book-Entry Securities and Clearing Corporation Securkies credited to Buyer's Account
and Seller's Account will be represented in accounts at the Book-Entry System and the approprime Clearing Corporation in the name
of Custodian which include only asseLs held by Custodian for its customers. Transactions with respect ro Book-Entr5 Securities and
Clearing Corporation Securities will be effected in accordance with. and subject to, the rules and regulations of the Book-Entry
System and each Clearing Corporation. respectively. Custodian shall not accept Securities in physical form in connection with
Transactions hereunder.
,3. REPRESENTATIONS AND WARRANT[ES
A. Bu~yer, Seller and Custodian. Buyer, Seller and Custodian each represents and warrants, which representations and
warranties shall be deemed tn be repeated on each Purchase Date and each Repurchase Date. that:
(il It is duly organized and existing under the laws of the jurisdiction of its organization with full power and authority to
execute and deliver this Custodial Undertaking and to perform all of the duties and obligations to be performed by it hereunder:
(ii) This Custodial Undertaking is. and each Transaction (with respect to Buyer and Seller only) will be. legally and validly
entered into. does not, and will not. violate any ordinance_ charter, by-law, rule or stature applicable to it, and is enfomeable in
accordance with its terms, except as may be limited by bankruptcy, insolvency or similar laws. or by equitable principles relating to or
limiting creditors' rights generally; and
(iii) The person executing this Custodial Undertaking on its behalf has been duly and properly authorized to do so.
B. Further Representations of Custodian. Custodian further represents and warrants, which representations and warranties
shall be deemed to be repeated on each Pumhase Date and each Repumhase Date. that:
(i) It is a New York trust company with its principal office at 48 Wall Street. New York, New York 10286:
(ii) It Mil maintain Buyer's Account as a custody account and shall administer Buyer's Account in the same manner
administers similar accounts established for the same purpose:
(iii) It is a "Member Bank" of FRBNY (within the meaning of 31 C.F.R. 306.115(g)) and maintains a book-entry securities
account with FRBNY and each Clearing Corporation in which it holds Securities hereunder; AND
(iv) It has made no determination as to the creditworthiness of Buyer or Seller.
C. Further Representation nf Buyer. Buyer acknowledges and agrees that it is primarily liable to Custodian for
satisfaction of all obligations and liabilities arising or incurred hereunder in respect of any Buyer Accounh s), without regard to the
name(s) in which any Buyer's Accounts may be maintained or any rights or recourse Buyer may have against any third party for
reimbursement of such obIigations and liabilities.
DEPOSIT OF CASH AND ELIGtBLE PORTFOLIO
A. Establishment of Pricing Rates. Seller shall input into the Communications System in accordance with the time specified
in Schedule V the Pricing Rate offered for Transactions involving Eligible Portfolios (which may vary from the pricing rate(s) offered
to other buyers). Seller shall have the right to establish and modify limitations on the size of Transactions which may be outstanding
ar any time with Buyer.
B. Entering ~nto Transactions. Buyer will notify Seller through the Communications System of its acceptance of Selter's offer
to enter Transactions no later than the time specified in Schedule V and provide the aggregate Purchase Price and Eligible Portfolio
with respect thereto. If Buyer does not notify Seller by such time and Buyer had effected an overnight Transaction with Seller un the
previous Business Day, Buyer and Seller will be deemed to have agreed to enter into an overnight Transaction at the Pricing Rate then
in effect with a Purchase Price equal to the aggregate money balance in the Account for the same or similar Eligible Portfolio that was
the subject of the Transaction effected on the previous Business Day.
C. Buyer's Instructions. On each Business Day that Seller and Buyer agree to enter into a Transaction subject m this Custodial
Undertaking, Buyer shall deliver to Custodian. by the time specified in Schedule V, Written Instructions containing the following
information:
the Purchase Date and Purchase Price:
(ii) the Repurchase Date and Repurchase Price (or rate); and
(iii) name of Buyer.
D. Seller's Tender of Securities. B~, the time specified on Schedule V on the Purchase Date. Seller shall transfer or cause to be
nsferred, to Seller's Account. the EIigible Portfolio which is the subject of Transactions on such Purchase Date. In connection
:rewith. Seller shall either deliver to Custodian Omi or Written Instructions identifying the Eligible Portfolio to be sold by SeIler to
Buyer, including a description setting forth the face amount of each Security in the Eligible Portfolio and, where applicable, the
CUSIP number for each such Security or instruct Custodian to identify the Eligible Portfolio in Seller's Account to be transferred to
Buyer's Account. Custodian agrees that all Securities in Seller's Account will be held by Custodian as agent of and custodian for
Seller.
E. Buyer's Purchase Price. By the time specified on Schedule V on the Purchase Date. Buyer shall transfer, or cause to be
transferred_ to Buyer's Account sufficient cash such that the total cash balance in Buyer's Account after such transfer equals or
exceeds the Purchase Price contained in Buyer's Written Instructions
5. EFFECTING TRANSACTIONS
A. Purchase Date. On the Purchase Date for any Transaction subject to this Custodial Undertaking, Custodian shall transfer to
Seller's Account cash from Buyer's Account m an amount equal to the Pumbase Price and transfer from Seller's Account to Buyer's
Account the Eligible Portfolio in accordance with Seller's Written Instructions with respect to such Transaction. subject m the
following provisions:
(i) Determination of Eligible Portfolio; Ne ogot~ability. Custodian shall determine that Securities to be transferred to
Buyer's Account are pan of the Eligible Portfolio, Any Securities which are not parr of the Eligible Portfolio shall not be included in
the calculations set forth below and shall not be transferred to Buyer's Account.
(ii) Determination of Margin Value. Custodian shall determine the Margin Value of Eligible Portfolio to be transferred to
Buyer's Account.
(iii) Payment of Purchase Price. Provided the Margin Value of Eligible Portfolio to be transferred to Buyer's Account
equals or exceeds the Purchase Price with respect to such Transaction_ Custodian shall transfer such Eligible Portfolio from Seller's
ACCOUnt to Buyer% Account and shall disburse from Buyer's Account [o Seller's Account cash In an amount equal to the Purchase
Prme.
(~v) M_'aintenance~r~s Account, Custodian agrees that all Securities in Buyer's Account will be held by Custodian
as agent of arid custodian for Buyer.
(u) Bunk-Entry Securities. Each Security in the Eligible Portfolio which is either (i3 a Book-Entry Security, or
(ii) a part of a fungib~-e bulk of Book-Entry Securities shall be continuously maintained by Custodian in the Book-Entry System.
During the term ufa particular Transaction. Custodian shall identify such Book-Entry Securities on its books and records as belonging
ro Buyer.
(b) Clearing Corporation Securities. Each Security in the Eligible Portfolio which is either (i) a Clearing
Corporation Security, or (ii) part ufa fungible bulk of Clearing Corporation Securities shall be continuously maintained by Custodian
m an account with the appropriate Clearing Corporation. During the term of a particular Transaction, Custodian shall continuously
[dentil3 such Clearing Corporation Securities on its books and records as belonging to Buyer.
(v) Security Denominations. Anything in this Agreement to the contrary notwithstanding, Buyer understands and agrees
that the transfer ufa Security in the Eligible Portfolio hereunder may result in the Buyer's Account being credited with a Security in a
denomination less than (i) the minimum customary unit of trading in the market for such Security, or (ii) the minimum denomination
in whinh such Security is issued, or both.
(v~) latent of B~yer and Seller. Buyer and Seller agree that it is intended that (i) with respect to transfer of Securities other
than Book-Entry Securities, Custodian~ct as a "financial intermediary" as such term ~s defined in Section 8-313 of the UCC with
respect to Transactions hereunder and that each transfer of such Securities effected by Custodian hereunder shall be a "transfer" of
securities as provided in Section 8-313 of the UCC and (ii) with respect to transfers of Book-Entry Securities. Custodian act as a
"securities intermediary" within the meaning of Section 8-t02 of the Revised UCC and each transfer of Book-Entry Securities
effected b.y,, Custodian hereunder to Buyer or Seller shall result in Buyer er Seller, as the case may be, acquiring a "securities
entitlement within the meaning of Section 8-102 of the Revised UCC. Custodian acknowledges that in performing hereunder it
intends that it shall act as a "securities intermediary" within the meaning of Section 8-102 of the Revised UCC.
B. Trust Receipts. Custodian is hereby anthorized and directed to accept trust receipts (each, a "Trust Receipt") evidencing
,ther the holding by the issuer of such Trust Receipt (a "Trust Receipt lssuer"~ of one or more Securities in the Eligible Portfolio
subject to Transactions or the crediting by the Trust Receipt Issuer m the account of Custodian of one or more Securities in the
Eligible Portfolio subject to Transactlons. Trust Receipt Issuers from whom Custodian may accept Trust Recelprs in connection with
Transactions hereunder shall be listed on Schedule I attached hereto, as such Schedule I may be amended from time to time.
Custodian shall hold each Trust Receipt at ~ secure facility at one of its offices in New York City and. during the term of a particular
~'mnsaction, shall identify the Securities described in such Trust Receipt on its books and records as belonging to Buyer.
C, Custodian's inability to Cnmplet_e a Transaction, If Custodian is unable to complete a Transaction because Seller has
failed to provide complete Written Instructions as required by Paragraph 4C or either Buyer or Seller has failed to arrange for the
transfer of sufficiem cash or Eligible Portfolio Securities to Buyer's Account or Seller's Account, respectively, Custodian shall
promptly notify Seller and Buyer and await the receipt of such Omi or Written lnstmctians, cash or the Eligible Portfolio. If
Custodian has not received Oral or Written Instructions from Seller by 4:30 p.m.. sufficient cash fi.om Buyer by the close of the
FRBNY money wire or sufficient Eligible Portfolio Securities by the close of GSCS or the appropriate Clearing Corporation, Buyer
and Seller irrevocably agree and instruct Custodian m effect the Transaction as follows: (i} if the cash balance in Buyer's Account
shall be less than the Purchase Price set forth in Seller's Instructions. the cash balance in Buyer's Account shall be deemed to be the
Purchase Price. the remaining terms of the Transaction shall be determined in accordance with Paragraph 5A, and Seller shall provide
Custodian with further Oral or Written Instructions with respect to a recalculated Repurchase Price for such Transaction; (ii) if the
cash in Buyer's Account equal to the Purchase Price exceeds the Margin Value of Eligible Portfolio in Seller's Account, Custodian
shall credit: to Seller's Account cash in an amount equal tn the Margin Value of the Eligible Portfolio Securities. and the difference
beP. veen the amount credited to Seller's Account and the Purchase Price shall be retained by Buyer and held by Custodian in Buyer's
Account. In any event. Buyer and Seller shall remain obligated to each other pursuant to the original terms of each Transaction.
D. Simultaneous Transaction. Buyer and Seller agree that in effecting Transactions transfers between Buyer's Account and
Seller's Account are intended to be. and shall be deemed to be, simultaneous.
E. Ownership of Securities; Transfers to Third Parties. (i) Upon the transfer of cash to Seller's Account and the transfer
of the Purchased Portfolio to Buyer's Account. it is agreed by Seller and Buyer that. notwithstanding the credit of Income to Seller's
Account pursuant to Paragraph 50. the Purchased Portfolio shall be for all purposes the property of Bayer. Buyer agrees, however,
that. subject to Paragraph 8 hereof and Paragraph 11 of the Master Repurchase Agreement, it will resel~ to Seller on the Repurchase
Date the Purchased Portfolio at the Repurchase Price.
(ii) Buyer, Seller and Custodian agree that the Purchased Portfolio and cash held in Buyer's Account from time to time
Mil be held by Custodian as agent of Buyer, that Custodian will take such actions with respect of Buyer's Account and any Purchased
Portfolio and cash therein as Buyer shall direct, and that in no event shall any consent of Seller be required for the taking of any such
action by Custodian. Notwithstanding anything in the Master Repurchase Agreement to the contrary, Buyer hereby covenants, for the
benefit of Seller, that Buyer will not instruct Custodian m deliver any Purchased Portfolio or cash in Buyer's Account to any person
other than Seller unless and until it has given a Notice of Default to Custodian. The foregoing covenant is for the benefit of Seller
onb and shall in no way be deemed to constitute a limitation on Buyer's right ar any time to instruct Custodian to act. or on
Custodian's obligation to act. upon Buyer's instructions. Custodian shall not be liable for any Losses (as defined in Paragraph 9A)
incurred or sustained by Buyer, Seller or any third pare/as a result of Custodian transferring any Purchased Portfolio or cash m
Buyer's Account pursuant to Buyer's instructions (whether or not subsequent to receipt of a Notice of Default) and shall have no
further obligation ur responsibility to Seller or Buyer under this Custodial Undertaking with respect to any Purchased Portfolio or
cash transferred from Buyer's Account.
(iii) Any instruction to Custodian to transfer the Purchased Portfolio or cash from Buyer's Account during the term of a
Transaction shall be set forth in a written not/ce in substantially the form attached hereto as Appendix I. Buyer shall deliver such
notice to a Vice President or more senior officer in Custodian's Broker Dealer Services Division and shall send Seller a copy of same.
Custodian shall, as promptly as practicable under the c~rcumsrances, act in accordance with such instructions; it being understood and
agreed that Custodian shall have no liability for its inability to comply with Buyer's instructions if the rules er systems of the Book,-
Entry System and/or applicable Clearing Corporation prevent Custodian from transferring the Purchased Portfolio from Buyers
Account. Buyer shall pay tn Custodian all applicable fees. costs and charges associated with such transfer from Buyer's Account
other than a transfer pursuant to Paragraph 9 hereof.
F. No Lien or Pledge by Custodian. Custodian agrees that the Purchased Portfolio shall not be subject to any security interest.
lien or right of setoff by Custodian or any third party claiming through Custodian and Custodian shall not pledge, encumber.
hypothecate, transfer, dispose of, or otherwise grant any third party an interest in. any Purchased Portfolio
G. Payment of Income. Until such time that Custodian shall receive a Notice of Default from Buyer pursuant to Paragraph 9.
Custodian shaI1 credit to Seller's Account Income received by Custodian. After receipt of such Notice of Default from Buyer,
Custodian shall credit to Buyer's Account Income received by Custodian.
-6-
H. Confirmations: Custodian shall provide Buyer and SeIIer with confirmation statements reflecting the Purchased Portfolio
and cash positions in Buyer's Account on each Business Day or as otherwise may be requested by Buyer. Buyer and Seller shal]
promptly review all such confirmation statements and shall promptly advise Custodian of any error, omission or inaccuracy in such
statements. Custodian shall undertake to correct any errors, failures or omissions that are reported to Custodian by Buyer or Seller.
Any such corrections shall be reflected on subsequent confirmatinn statements.
I. Deliveries by Custodian. Upon a Seller Default, any transfers of Securities or cash by Custodian to Buyer from Buyer's
Account shall be made to Buyer by delivery to the account(s) designated in Schedule III, as may be amended from time to time by
delivery to and receipt by Custodian nfo new Schedule III.
VALUATION OF SECURITIES
A. Valuation of Securities. At the opening of each Business Day during which a Transaction subject to this Custodial
Undertaking shall remain outstanding, Custodian shall determine the Margin Value of the Purchased Portfolio.
(i) Margin Deficit. In the event the Purchase Price of outstanding Transactions is greater than the aggregate Margin Value
of the Purchased Portfolio, Custodian shall so notify Seller by the time specified on Schedule V. On the date of any such notice,
Seller shall promptly transfer to Buyer's Account additional Securities of the types contained in the Purchased Portfolio ("Additional
Securities") such that, after transfer thereof to Buyer's Account, the aggregate Margin Value of the Purchased Portfolio (including
Additional Securities) equals or exceeds the Purchase Price of outstanding Transactions. If Seller fails to transfer an appropriate
amount of Additional Securities on the date of any such notice. Custodian shall notify Buyer and Seller and await further instructions
from Buyer. All Additional Securities transferred to Buyer's Account shall be deemed to be part of the Purchased Portfolio.
(ii) _Margin Excess. In the event the aggregate Margin Value of the Purchased Portfolio shall exceed the Purchase Price of
outstanding Transactions (such excess amount, the "Margin Excess"), Custodian shall so notify Seller and. upon Oral or Written
Instructions from Seller. Custodian shall transfer Securities in the Purchased Portfolio from Buyer's Account to Seller's Account
having a Market Value less than or equal to the Margin Excess. Subject to Custodian's compliance with the preceding sentence.
Buyer hereby irrevocably authorizes Custodian to accept the Oral or Written Instructions of Seller identifying specific Securities in
he Purchased Portfolio to be released from Buyer's Account pursuant hereto. Upon transfer from Buyer's Account, released
Securities shall cease to be part of the Purchased Portfolio for all purposes hereunder.
B. No Suhstituffons of Securities in the Purchased Portfolio. The parties agree that anything in the Custodial Undertaking to
the contrary notwithstanding, it shall be Buyer's and Seller's responsibility ro ensure that there is no substitution of Securities in any
overnight transaction in the Buyer's Account unless Buyer and Seller have agreed otherwise in writing with a copy to Custodian.
Custodian shall have no liabilky whatsoever for any loss. damage or expense arising our of the transfer of Securities in the Purchased
Portfolio to Seller against transfer to Buyer's Account of substitute Securities in accordance with paragraph 5D.
7. AUTOMATIC ROLLOVER
Buyer and Seller agree that if Custodian has not received Written Instructions by the time specified on Schedule V on the
Repurchase Date to the contrary, Buyer and Seller shall enter into a new Transaction on such date (which shall be deemed to be a new
Purchase Date).
8. REPURCHASE DATE
On the Repurchase Date for any Transaction. subject to Paragraph 9 hereof and Paragraph l 1 of the Master Repurchase
Agreement. Buyer hereby irrevocably instructs Custodian to tender to Seller the Purchased Portfolio with respect to such Transaction
and to transfer such Purchased Portfolio from Buyer's Account to Seller's Account. Seller hereby irrevocably instructs Custodian at
the time the Purchased Portfolio is transferred to Seller's Account to make payment to Buyer of the Repurchase Price by debiting cash
from Seller's Account and crediting cash to Buyer's Account. If on the Repurchase Date Seller's Account does not contain sufficient
cash available to repurchase all Securities in the Purchased Portfolio with respec[ to any Transactions_ Custodian shall notify Seller
and Buyer and Buyer shall give Custodian Oral or Written Instructions identifying which Securities in the Purchased Portfolio. if any,
are to be repurchased and the Repurchase Price
9. DEFAULT
In the event that Buyer or Seller delivers a Notice of Default to Custodian. Custodian shall notify the defaulting party of its
receipt of such Notice of Default and act in accordance with the instructions of the non-defaulting parry with respect to such non-
defaulting party's rights pursuant to Paragraph [1 of the Master Repurchase Agreement. Custodian may fully rely without further
inquiry on the statements set forth in suct~ Notice of Default. it is understood that notwithstanding anything in the Master Repurchase
Agreement to the contrary, (a) if Seller is in default thereunder, Buyer hereby irrevocably authorizes and directs Custodian to sell any
Security in the Purchased Portfolio that is in an amount less than a customary unit of trading in such Security or less than the
minimum amount in which such Security is issued, together with similar Securities held by Custodian for other counterparties of
Seller similarly situated, and (b) if Buyer is in default, to the extent any Security in the Purchased Portfolio is in an amount less than a
customary unit of trading in such Security or less than the mm/mum amount in which such Security is issued. Buyer hereby
irrevocably authorizes and directs Custodian to transfer such Security to SeIler.
In addition, Buyer and Seller acknowledge and agree that the provisions of Paragraph 12 of the Master Repurchase Agreement
shall be fully effective with respect to all Transactions entered into between them. irrespective of whether such Transactions are
entered into in connection with this Custodial Undertaking, directly between Buyer and Seller or otherwise.
~{}. CONCERN{NG CLISTOD~[AN
A. Limitation of L[abiIity; lndemnificatinn. Custodian shall not be liable for any costs, expenses, damages, liabilities or
claims, including reasonable fees of counsel (collectively, "Losses"), resulting from its acuon or inaction in connection with this
Custodial Undertaking, including Losses which are incurred by mason of any action or inaction by the Book-Entry System, any
Clearing Corporation or Trust Receipt Issuer. or their successors or nominees, except for those Losses arising out of Custodian's gross
negligence, bad faith or willful misconduct. In no event shall Custodian be liable to Buyer, Seller or any third party for special.
indirect or consequential damages, or lost profits or loss of business, arising under or in connection with this Custodial Undertaking.
Custodian may, with respect to questions of law. apply for and obtain the advice and opinion of counsel, and shall be fully protected
~'ith respect to anything done or omitted by it in good faith in conformity with such reasonable advice or opimon. Buyer and Seller
agree, jointly and severalIy, to indemnify Custodian and to hold it harmless against any and all Losses (including claims by Buyer or
Seller' which are sustained by Custodian as a result of Castodian's action or inaction ~n connection with thi~ CustodiaI Undertaking,
xcept those Losses arising out of Custodian's gross negligence, bad faith or willful misconduct. It is expressly undemtood and agreed
~at Custodian's right to indemnification hereunder shall he enfomeable against Buyer and Seller directly, without any obligation to
first proceed against any third party for whom they may act, and irrespective of any rights or recourse that Buyer or Seller may have
against any such third parry. This indemnity shall be a continuing obligation of Buyer and Seller notwithstanding the termination of
an3' Transactions or of this Custodial Undertaking.
B, No Guaranty [}z_Custodian. It is expressly agreed and acknowledged by Buyer and Seller that Custodian has made no
determination regarding Buyer's or Seller's ability to perform their respective obligations in connection with Transactions and is not
guaranteeing performance of or assuming any liability for the obligations of Buyer or Seller hereunder nor is it assuming any credit
risk associated with Transactions hereunder, which liabithies and risks are the responsibility of Buyer and Seller; further, it is
expressly agreed that Custodian is not undertaking to make credit available to SelIer or Buyer to enable it to complete Transactions
hereunder.
C. No Duty of inquiry. Without limiting the generality of the foregoing, Custodian shall be under no obligation to inquire into.
and shall not be Iiable for:
(i) The validity of the issue of any Securities purchased or sold by or for Buyer or SeIler, the legality of the pumhase or sale
or the validity or enforceability of any Trust Receipt received by Custodian hereunder:
{ii) The due authority of any Authorized Person to act on behalf of Buyer or Seller with respect to cash or Securities held in
Buyer's Account or Seller's Account: or
(iii) The due authority of Buyer. Seller or any entities for which Buyer acts to purchase, sell or hold any particular Security
hereunder.
D. Securities in Default. Custodian shall not be under any duty or obligation to take action to effect collection of any amount if
Securities upon which such amount is payable are in default, or if paymem is refused aRer due demand or presentation, unless and
until (i) it shali be directed to take such action by Written Instructions and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
E. Custodian Fee. Custodian shall be entitled to receive and Seller agrees to pay to Custodian such compensation as may be
agreed upon from time to time between Custodian and Seller and Custodian's out-of-pocket expenses,
F. Reliance on OraVWritten Instructions. Custodian shall be entitled to rely upon any Written Instruction or Oral Instruction
received by Custodian and reasonably believed by Custodian to be delivered by an Authorized Person. Buyer and Seller agree to
forward to Custodian Written Instructions confirming any and ali Oral Instructions in such manner that such Written Instructions are
received by Custodian by the close of business of the same day that such Oral Instrucnons am given to Custodian. Buyer and Seller
agree that the fact that such confirming Written Instructions are nm received or that contrary Written Instructions are received by
Custodian shall in no way affect the validity or enforceability of the transactions previously authorized and effected by Custodian.
G. Reliance nn Pricing Services. Custodian is authorized to utilize any generally recognized pricing information service
(including brokers and dealers of Securitiesl in order to perfnrm its valuation responsibilities hereunder, and Seller and Buyer agree to
hold Custodian harmless from and against any Losses incurred as a result of errors or omissions of any such pricing information
service_ broker or dealer.
H, Force Majeure. Custodian shall not be responsible or liable for any failure or delay in the performance of its obligations
under this Custodial Undertaking arising out of or caused, directly or indirectly, by cimumstances beyond its reasonable control,
includin~ without limitation, acts of God. earthquakes, fires, floods, wars. civil or military disturbances, sabotage, epidemics, riots,
loss or malfunctions of utilities, computer (hardware or sofiware.~ or communications service, labor disputes, acts of civil or military
authority, or governmental, judicial or regulatory actions; provided however, that Custodian shall use its best efforts to resume
performance as soon as possible.
I. No Additional Duties. Custodian shall have no duties or responsibilities except such duties and responsibilities as are
specifically set forth in this Custodial Undertaking, and no covenant or obligation shall be implied in this Custodial Undertaking
against Custodian.
J, No Duty Regarding Derivatives. If Buyer and Seller have selected Eligible Securities which derive ail or a portion of their
'alue from changes in the value of underlying securities, mortgages or other obligations, or one or more currencies, commodities.
adices or other factors (hereinafter referred to as "Derivative Securities% the parties understand that Custodian shall have no
obligation to monitor whether any such Eligible Securities are also Derivative Securities. Accordingly, the part/es agree that anything
in the Custodial Undertaking m the contrary notwithstanding, it shall be Buyer's and Seller's responsibility to ensure that Eligible
Securities do not include Derivative Securities unless they have otherwise agreed. Custodian shall have no liability whatsoever for
an?.' loss, damage or expense arising out of the ineligibility of Derivative Securities which are the subject of Transactions pursuant to
the Custodial Undertaking.
l 1. TERMINATION
Any of the parties hereto may terminate this Custodial Undertaking by giving to the other parties a notice in writing specifying
the date of such termination, which shall be not less than thirty (30) days after the date of giving of such notice. Upon termination
hereof. Seller shall pay to Custodian such compensation as may be due to Custodian as of the date of such termination, and shall
likewise reimburse Custodian for any disbursements and expenses made or incurred by Custodian and payable or reimbursable
hereunder, if Buyer and Seller do not provide Written Instructions designating a successor custodian prior to the termination date.
Custodian shall, at Buyer's expense, continue to hold Purchased Securities and cash in Buyer's Account until the Repurchase Date
with respect to each outstanding Transaction. or until it has received a Notice of Default in connection therewith, and Written
Instructions with respect to delive~ of such Purchased Securities. If Custodian has not received delivery instructions with respect to
Purchased Securities and/ur cash in Buyer's Account. Custodian may, in its sole discretion, hold Book-Entry Securities and Clearing
Corporation Securities in escrow for the benefit of and at the expense of Buyer and deliver cash to Buyer at the address provided
below.
[2. MISCELLANEOUS
A. Authorized Persons. Buyer and Seller each agrees to furnish to Custodian a new Schedule II in the event that any
uthorized Person ceases to be an Authorized Person or in the event that other or additional Authorized Persons are appointed and
~thorized. Until such new Schedule II is received. Custodian shall be fully protected in acting under the provisions of this Custodial
Undertaking upon Oral Instructions or Wri~en Instructions from a person reasonably believed to be an Authorized Person as set forth
in the last delivered Schedule II.
B. Access to Books and Records Upon reasonable request, Buyer and Seller shall have access to Custodian's books and
records maintained in connection with this Custodial Undertaking during Custodian's normal business hours. Upon reasonable
request, copies of any such books and records shall be provided to Buyer or Seller at its expense.
C. _Invalidity of any Provision. In case any provision in or obligation under this Custodial Undertaking shall be invalid, illegal
or unenfomeable in anyjurisdiction, the validity, legality and enforceability of the remaining provisions or obligations shall not in any
way' be affected or impaired thereby, and if any prowsion is inapplicable to any person or circumstances, it shall nevertheless remain
applicable to all other persons and circumstances.
D. Parties, Entire Agreement, Amendments.
(i) The Custudial Undertaking. Buyer, Seller, and Custodian agree that this Custodial Undertaking constitutes
the entire agreement among the parties hereto with respect to Transactions subject to this Custodial Undertakthg and may not be
amended or modified in any manner except by a written agreement executed by the parties hereto.
(ii) The Custodiut Undertaking and the Master Repurchase Agreement. Buyer and Seller acknowledge and
agree that the Master Repurchase Agreemanr in conjunction with this Custodial Undertaking represents the entire agreement between
Buyer and Seller with respect to Transactions. Buyer and Seller acknowledge and agree that Custodian is not pray to the Master
Repurchase Agreement.
E. Binding Agr~eement. This Custodial Undertaking shall extend to and shall be binding upon the parties hereto, and their
respective successom and assigns; provided, however, that this Custodial Undertaking shall not be assignable by any party without the
written consent of the other parties.
F. Applicah[e Law/Jurisdiction. This Custodial Undertaking shall be construed in accordance with the laws of the State of
New York without regard to conflict of laws principles thereof. Tbe parties hereby consent m the jurisdiction of a state or federal
court situated in New York City, New York in connemmn with any dispute arising hereunder. Each party hereto hereby waives trial
by jury in any proceeding involving, directly or indirectly, any matter in any way arising out of, related to~ or connected with, this
Custodial Undertaking.
G. Waiver of l[mman~ty. To the extent that in any jurisdiction any party may now or hereafter be entitled to claim, for itself or
its assets, immunity from suit, execution, attachment tbefom or after judgment} or other legal process, each party irrevocably agrees
not to claim, and it hereby waives, such immunity in connection with this Custodial Undertaking.
H. Headings and References. The headings and captions in this Custodial Undertaking are for reference only and shall not
affect the construction or interpretation of any of its provisions.
1. Counterpar? This Custodial Undertaking may be executed in any number of counterparts, each of which shall be deemed
to be an original, but such counterparts shall, together, constitute only one instrument.
& inconsistency with Muster Repurchase Agreement. In the event of any inconsmmncy between the terms and conditions of
the Master Repumhase Agreement and this Custodial Undertaking with respect to the rights, duties or obligations of Custodian and
Transactions subject to this Custodial Undertaking, the terms and conditions of this Custodial Undertaking shall govern.
K. Notices. Any notice author/zed or required by this Custodial Undertaking shall be sufficiently given if addressed to the
rece~mng party and hand delivered or sent by mail, telex or facsimile to the individuals at the addresses specified in Schedule IIV or to
such other pemon or pemons as the receiving party may from time to time designate in writing. Such notice shall be effective upon
receipt.
L. Conlidentiality. The parties hereto agree not to disclose to any other party and to keep confidential the terms and conditions
of this Agreement (including fee arrangements) and any amendment, supplement or Schedule hereto. In the event that any parry
hereto breaches any provision nfthis section, any other party shall be entitled to temporary and permanent injunctive relief against the
breaching party without the necessity of proving actual damages. Nutwithstanding the foregoing, Custodian may disclose Buyer or
Seller's name. address, securities position and other information to such persons and to such extent as required by law, the rules of any
zk exchange or regulatory or self-regulatory organization or any order or decree of any court or administrative body that is binding
on Custodian or any Clearing Corporation or the terms of the organizationa~ documents of the issuer o£any Security or the terms of
an>' Security itself.
/~L No Third Par~v Beneficiaries. Notwithstanding the facts that (i) Buyer or Sailer may act on behalf of parties not signatory
to this con.act, and (ii) Custodian may from time to time maintain Accounts in the name of third parties, the parties signatory hereto
agree that in performing hereunder Custodian is acting solely on behalf of the Buyer and Seller which are signatories hereto and each
signatory hereto acknowledges and agrees that no contractual or service relationship shall be deemed to be astabIished hereby
between Custodian and any such third party or any other person,
N. Parties Deemed Principals. Unless the parties hereto execute and deliver a Custodial Agency Annex pursuant to which the
identity of all principals for whom an3' parry may act in connection this Cnstodial Undertaking is disclosed, each party shall be
responsible for the performance of its obligations hereunder as a principal. However, the execution and delivery of a Custodial
Agency Annex shall not relieve any parry of its obligations hereunder except as provided by applicable law.
[Iq WITNESS W'flEREOF, the parties hereto have caused this Custodial Undertak{ng to be executed by their respective
corporate nfficers, thereunto duly authorized, as of the 7'_~ day of July , 1999.
FLEET BANK~ NATIONAL ASSOCIATION
ACTENG ON BEHALF OF THE MUNICIPALITIES
DISCLOSED ON THE ANNEX ATTACHED HERETO
Title: Vice President
MERRILL LYNCH GOVERNMENT SECURITIES, INC.
AND/OR MERRILL L~NCH PIERCE FENNER & $1~T~
INC. ("Merr~II Lynch' ) ~' ~' ~' J' ~- j. ~ ~
Title: CLA[RE ~MESKOV[C Vice President
SCHEDULE I
SCHEDULE OF ELIGIBLE PORTFOLIO
A. Each of the following portfolios of Securities shall be an Eligible Portfolio for Transa/:tio~s described in the
Custodial Undertaking In Connection With Master Repurchase Agreement dated as of "1/~./¢~
among
Merrill Lynch. Fleet Bank. NA and The Bank of New York. and shall have the Margin Percentage wi~h r'est~ect thereto set
forth below:
~ligible Portfolio Margin Percentage
GOVERNMENT SECURITIES [02 %
Frequency of Priqin_~ Rate Ad. iustment-
DAILY MARK TO MARKET
Dated:
Pursuant to Paragraph 5B of the Custodial Undertaking In Connection With Master Repurchase Agreement Custodian is
authorized and directed to accept Trust Receipts from the following Trust Receipt Issuers:
N/A
ACCEPTED:
T E ANKOFNEW O
B.:v
Title:
CLAIRE A. MESKOVIC
Vice President
V £E PRESII E
SCHEDULEII
The following/ndividuals have been designated as Authorized Persons of Buyer and Seller, respectively, in connection with the
Custodial Undertaking In Connection With Master Repurchase Agreement dated as of July 7~ I999
BUYER
Nattle
Edward T. Novaknff
Lois McGrath
Signature /
SELLER
Name
Signature
SCHEDULE III
Account Infommtion for Delivery of Buyer's Securities and Cash Upon Notice of Seller Default
ABA: 011500010
Bank Name: Fleet National Bank
City: Boston, MA 02211
Account Name: Money Market Suspense
Account Number: 2014361
SCHEDULE IV
ADDRESS FOR NOTICES
TO SELLER:
Stephanie S. Wolf, Esq.
World Financial Center
North Tower, i2~ Floor
New York, NY 10281-1312
(2121 449-3562
TO BUYER:
Fleet Bank, National Association
ACTING ON BEHALF OF THE MUNICIPALITIES DISLCOSED ON THE ANNEX AJTACHED HERIrro
(Each. a "Buyer")
c/o Fleet National Bank
75 State Street - MABOF03E
Boston, MA 02211
Arm: Brian Snell, Vice President
(617) 346-t I69 - phone
(617) 346-I 180 - FAX
TO CUSTODIAN:
The Bank of New York
One Wall Street. 4th Floor
New York, New York 10286
Agn: Tri-Party Services
Government Securities Clearance Division
SCHEDULE v
SCHEDULE OF DALLY OPERATIONAL EVENTS & TIMES
A. The following are the daily operational events and time deadlines applicable for Transactions subject to the Custodial
Undertaking In Connection With Master Repurchase Agreement dated as of July 7~ 1999 ~ among Merrill Lynch.
Fleet Bank, National Association and The Bank of New York,
Deadline for Seller to Establish Pricing Rates: 10:00 AM
Deadline for Buyer to Accept Pricing Rate: 1:00 PM
Deadline for Seller's Delivery of Written Instructions to Custodian: 1:00 PM
Deadline for Seller to Tender Eliaible Portfolio: 3:00 PM
Deadline for Buyer to Deliver Purchase Price to Custodian: [:0C PM
Custodian's Inability to Complete a Transaction:
If Custodian has not received Written lnstX'uctions from Seller by 3:00 PM, sufficient cash from Buyer by the close of the FRBNY
money wire or sufficient Eligible Portfolio by the close of GSCS or the appropriate Clearing Corporation. Custodian shall perform in
accordance with Paragraph 5C.
:adline for Custodian to Notify Seller of Margin Deficit: 3:00 PM
Deadline to Notify Custodian of No Automatic Rollover: 1:00 PM
Deadline for Buyer to Notify Custodian of Intention to Terminate Prior to the Repurchase Date: i:00 PM
Dated:
ACCEPTED:
BANK.¢ yORK
Title: CLAIRE A. MErSKOVIC Vice President
FLEET BANI,¢ NATIONAL *kSSOCIATION
ACTING ON BEHALF OF THE 1V/UNICII~ALITIES
DISCLOSED ON THE ANNEX ATTACHED
HERETO
By:"~ ~' ~//./"-~ ~
T~tle:
BRIAN SNELL
ViCE PRESIDENT
SCHEDULE VI
TERMINATION PRIOR TO REPURCHASE DATE
Buyer may terminate any Transaction prior to the Repurchase Date by givxng Custodian Omi or Written
Instructions to that effect no later than 12:30 p.m. on the date Buyer wishes to terminate such Transaction
(the "Revised Repurchase Date"). The Repurchase Price with respect to such Transaction shall be the
Purchase Price plus the Price Differential for the per[od from the Purchase Date to, but not including, the
Revised Repurchase Date. The Purchase Price shall be payable to Buyer on the Revised Repumhase Date,
but the Pr[ce Differential shall be payable to Buyer on the regularly scheduled Repumhase Date. Buyer
and Seller hereby authorize and insh'uct Custodian on any Revised Repurchase Date to transfer to Seller the
Purchased Portfolio, Additional Securities and/or cash and Income thereon, if any, held in the Buyer's
Account underlying the Transactinn against the transfer by Seller of cash equal to the Pumhase Price.
A?PENDIX [
To.*
The Bank of New York
Broker Dealer Services
One Wall Street, 4~ Floor
New York, New York 10286
Attention: Vice President
This notice ~s given pursuant to Paragraph 5E of the Custodial Undertaking In
Connection With Master Repurchase Agreement by and among
("Buyer"), ("Seller") and The Bank of New
York ("Custodian") dated as of (the "Custodial Undertaking").
Buyer hereby instructs Custodian to transfer the following Purchased Portfolio and cash
in Buyer's Account (as defined in the Custodial Undertaking) to:
ABA:
Bank or DepositmT:.
City:
Account Name:
Account Number:
Date:
[Buyer]
By:
Title:
CUSTODIAL AGENCY ANNEX
This Annex forms a parr of the Custodial Undertaking In Connection With Master Repurchase
Agreement dated as of ,lnly 7, 1999 (the "Custodial Undertaldng") by and among
Fleet Bank, National Association ("Agent"), as agent for the principal(s) identified on Appendix A
attached hereto (each, a "Buyer"), Merrill Lynch, ("Seller") and The Bank of New York ("Custodian").
Capitalized terms used but not defined shall have the meanings ascribed to them in the Custodial
Undertaking.
1. Representations and W:~rranfies of Agent
In ~ddition to the representations set forth in Section 3.A of the Custodial Undertaking, Agent
hereby represents and warrants, which representations and warranties shall be deemed to be continuing
during the term of any Transaction, that:
(a) Each Buyer has duly author/zed Agent to execute and deliver the Custodial Undertaking
on its behalf, has the power to so authorize Agent and to enter into the Transactions contemplated by the
Master Repurchase Agreement and otherwise perform its obligations pursuant to the Master Repurclmse
Agreement and the Custodial Undertaking, and has taken ali necessary action to authorize such
execution and delivery by Agent and such performance by it; and
(b) No Transaction effected hereunder shall be for the account of any third party not listed on
Appendix A hereto.
2. Multiple Buyers
(a) No Cholee of Account(s). In the event that Agent proposes to act for more than one
Buyer hereunder, Agent and Seller shall treat Transactions under the Custodial Undertaldng as
transactions entered into on behalf of separate Buyer.
(b) _S_e..p~rate Accounts for Buyers. In t~he event that Agent and Seller (with Custodian's
prior consent) elect to treat Transactions under the Custodial Undertaking as transactions on behalf of
separate Buyers, the parties agree that 0) Custodian shall establish a separate Buyer's Account in the
name of each Buyer, (iD Agent will provide Seller and CnstodSan with Written Instructions speeiffng
the portion of each Transaction allocable to the account of each of the Buyers for win/ch it is acting (to
the extent that any such Transaction is allocable to the account of more than one Buyer); (iii) Custodian
shall perform its obligations pursuant to Section 6 of the Custodial Undertaldng on a Transaction-by-
Transaction basis; and (iv) the parties' respective remedies under the Custodial Undertaking shall be
determined as if Agent had entered into a separate Custodial Undertaking with the other party on behalf
of each of its Buyers.
3. .Custodian Not Responsible for Buyer Confirmations. Notwithstanding any provision in the
Custodial Undertaking to the contrary, all confirmation statements prepared by Custodian pursuant to
the Custodial Undertaking shall be delivered to Agem as agent for Buyer and Custodian shall have no
responsibility for providing any Buyer with confirmation statements reflecting Purchased Securities or
cash positions in a Buyer's Account.
4. Rescinded Authori~. Agent shall provide Seller and Custodian promptly with a revSsed
Appendix A whenever a Buyer rescinds Agent's authority to perform its obligations pursuant to the
Custodial Undertaking.
5. Inconsistency with Agency Annex to Master Repurchase Agreement. In the event of any
inconsistency between the terms and conditions of any agency annex to the Master Repurchase
Agreement and this Custodial Agency Annex, the terms and conditions of this Custodial Agency Annex
shall govern.
1N WITNESS WHEREOF, the parties have caused this Annex to be executed by their respective
officers, thereunto duly authorized, as of the date first above written,
AGENT: SELLER:
FLEET BANK, NATIONAL ASSOCIATION
By:
Title: Vice President
MERRILL LYNCH GOVERNMENT
SECURITIES INC. AND/OR .2.2.2 ..-.i .~.?-
MERRILL LYNCH, PIERCE, ~.-~
FENNER & SMITH INC. ~!
THE BANK OF NEW YORK
CLAIRE An MESKOV[C
Title: Vice President
APPENDIX A
Master Repurchase
Agreement
September 1996 Version
Merrill Lynch Governmenc Securities Inco and/or
Between: Merrill ?~rg~_h,.Pie~r_c~e F_e_n. ner_&_~_mi__th' _In.c~o~ora_t~d .................
and
FLEET BANK. NATIONAL ASSOCIATION
AS AGENT FOR THE MUNICIPALITIES AS
PROVIDED SEPARATELY
Applicability
From time to time the parties hereto may enter into transactions in which one party ("Seller')
agrees to transfer to the other (~Buyer') securities or other assets ('Seeurities') against the transfer
of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a
date certain or on demand, against the transfer of funds by Seller. Each such transaction shall be
referred to herein as a 'Transaction" and. unless otherwise agreed in writing, shall be governed by
this Agreement. including any supplemental terms or conditions contained in Annex I hereto and
in any other annexes identified herein or therein as applicable hereunder.
Definitions
(a) 'Act of Insolvency; with respec: to any party, (i) the commencement by such party es debtor of
any case or proceeding under any bankruptcy, insolvency, reorgan/zation, liquidation, moratori-
um, dissolution, delinquency or similar law, or such party seeking the appointment or election
of a receiver, conservator, trustee, custodian or similar official for such parr/or any substantial
part of it~ proper[y, or the convening of any meeting of creditors for purposes of commencing
any such case or proceeding or seeking such an appointment or election. (ii) the commence-
ment of any such case or proceeding against such party, or another seeking such an appoint-
ment or election, or the filing against a party of an application for a protective decree under the
provisions of the Securities Investor Protection Act of i970, which (A) is consented to or not
timely contested by such party, (B) results in the entry of an order for relie£ such an appoint-
merit or election, the issuance of such a protective decree or the entry of an order having a s~m-
ilar effect or {C) is not dismissed within I5 days, (iii) the making by such party of a general
assignment for the benetlt of creditors, or (iv) the admission in writing by such parry of such
party's inability ro pay such party's debts as they become due;
(b) 'Additional Purchased Securities'. Securities provided by Seller to Buyer pursuant to Paragraph
4(a) hereof:
'Buyer's Margin Amount", with respect ro any Transaction as of any date. the amount
obtained by appliration of the Buyer's Margin Percentage to the Repurchase Price for
such Transaction as of such date:
{d)
'Buyer's Margin Pementage", with respect to any Transaction as of any date. a percentage
(which may be equal m the Seller's Margin Percentage) agreed to by Buyer and Seller or.
in the absence of any such agreement, the percentage obtained by dividing the Market
Value of the Purchased Securities on the Purchase Date by the Purchase Price on the
Purchase Date for such Transaction:
(e) 'Confirmation". the meaning specified in Paragraph 3 (b) hereo?:
(f) 'Income", with respect to any Security at an.v time. any principal thereof and alt interest.
dividends or other distributions thereon:
(g) 'Margin Deficit: the meaning specified in Paragraph 4 (a) hereof:
(h) "Margin Excess'. the meaning specified in Paragraph 4 (b) hereof:
(i)
'Margin Notice Deadline". the time agreed to by the parties in the relevant Confirmation.
Annex I hereto or otherwise as the deadline for giving notice requiring same-day satisfac-
tion of margin maintenance obligations as provided in Paragraph 4 hereof (or. in the
absence of any such agreement, [he deadline for such purposes established in accordance
with market practice);
"Market Value: with respect to any Securities as of any date, the price for such Securities
on such date obtained from a generally recognized source agreed to by the parties or the
most recent dosing bid quotation from such a source, plus accrued Income to the extent
not included therein (other than any Income credited or transferred to. or applied to the
obligations of, Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to
market practice for such Securities);
(k)
'Price Differential; with respect to any Transaction as of any date. the aggregate amount
obtained by daily application of the Pricing Rate for such Transaction to the Purchase
Price for such Transaction on a 360 day per year basis for the actual number of days dur-
ing the period commencing on (and including) the Purchase Date for such Transaction
and ending on (but excluding) the date of determination (reduced by any amount of
such Price Differential previously paid by Seller to Buyer with respect to such
Transaction);
(I) "Pricing Rate". the per annum percentage rate for determination of the Price Differential:
(m) "Prime Rate", the prime rate of U.S. commercial banks as published in Tl~e Wall Street
Journal (or. if more than one such rate is published, the average of such rates);
in) 'Purchase Dam': the date on which Purchased Securities are to be transferred by Seller to
Buyer;
2 a September 1996 m Master Repurchase Agreement
(o)
(p)
(q)
(r)
'Purchase Price~, (i) on the Purchase Date. the price at which Purchased Securities are
transferred by Seller to Buyer, and (ii) thereafter except where Buyer and Seller agree oth-
erwise, such price increased by the amount of any cash transferred by Buyer to Seller pur-
suant to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by
Seller to Buyer pursuant to Paragraph 4 (a) hereof or applied to reduce Seller's obligations
under clause (ii) of Paragraph 5 hereof:
"Purchased Securities~. the Securities transferred by Seller to Buyer in a Transaction here-
under, and any Securities subsatuted therefor in accordance with Paragraph 9 hereof. The
term 'Purehased Securities" with respect m any Transaction at any time also shall include
Additional Purchased Securitie~ delivemd pursuant to Paragraph 4 (a) hereof and shall
exclude Securities returned pursuant m Paragraph 4(b) hereof:
'Repurchase Date~, the date on which Seller is to repurchase the Purchased Securities
from Buyer, including any date determined by application of the provisions of Paragraptz
3(c) or i1 hereof:
'Repurchase Price: the price at which Purchased Securities are to be transferred from
Buyer to Seller upon termination of a Transaction. which will be determined in each case
(including Transactions terminable upon demand) as the sum of the Purchase Price and
the Price Differential as of the date of such determination:
"Seller's Margin Amount: with respect to any Transaction as of any date. the amount
obtained by application of the Seller's Margin Percentage to the Repurchase Price for
such Transaction as of such date:
'Seller's Margin Percentage'; with respect to any Transaction as of any date, a percentage
(which may be equal to the Buyer's Margin Percentage) agreed to by Buyer and Seller or.
in the absence of any such agreement, the percentage obtained by dividing tine Market
Value of the Purchased Securities on the Purchase Date by the Purchase Price on the
Purchase Date for such Transaction.
3. Initiation; Canfirraation: Termination
(a) An agreement to enter into a Transaction may be made orally or in writing at the initia-
tion of either Buyer or Seller. On the Purchase Date for the Transaction. the Purchased
Securities shall be transferred to Buyer or its agent against the transfer of the Purchase
Price to an account of Seller
(b)
Upon agreeing to enter into a Transaction hereunder Buyer or Seller Ior both), as shall
be agreed, shal~ prompdy deliver to the other party a written confirmation of each
Transaction (a "Confirmation"). The Confirmation shall describe the Purchased
Securities (including CUSIP number, if any), identify Buyer and Seller and set forth (i)
the Purchase Date. (ii) the Purchase Price. (iii) the Repurchase Date, unless the
Transaction is to be terminable on demand. (iv) the Pricing Rate or Repurchase Price
applicable to the Transaction. and (v) any additional terms or conditions of the
Transaction not inconsistent with this Agreement. The Confirmation. together with this
Agreement. shall constitute conclusive evidence of the terms agreed between Buyer and
SelRer with respect to the Transaction to which the Confirmation relates, unless with
September 1996 ~ Master Repurchase Agreement ~ 3
(c)
respect to the Confirmation specific objection is made promptly after receipt thereofi In
the event of any conflict between the terms of such Confirmation and this Agreement.
this Agreement shall prevail.
In the case of Transactions terminable upon demand- such demand shall be made by
Buyer or Seller. no later than such time as is customary in accordance with market prac-
tice, by telephone or otherwise on or prior to the bus/ness day on which such termination
will be effective. On the date specified in such demand, or on the date fuxed for termina-
tion in the case of Transactions having a luted term. termination of the Transaction will
· be effected by transfer to Seller or its agent of the Pumhased Securities and any Income in
respect thereof received by Buyer (and not previously credited or transferred to. or
applied to the obligations of. Seller pursuant to Paragraph 5 hereof) against the transfer
of the Repumhase Price to an account of Buyer
Margin Maintenance
(a) tf at any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Buyer is tess than the aggre-
gate Buyer's Margin Amount for all such Transactions (a "Margin Deficit"l, then Buyer
may by notice to Seller require Seller in such Transactions. at Seller's option, to transfer to
Buyer cash or additional Securities reasonably acceptable to Buyer ('Additional
Purchased Securities"), so that the cash and aggregate Market Value of the Purchased
Securities. including any such Additional Purchased Securities, will thereupon equal or
exceed such aggregate Buyer's Margin Amount Idecreased by the amount of any Margin
Deficit as of such date arising from any Transactions in which such Buyer is acting as
Seller).
(b)
If at any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Seller exceeds the aggregate
Seller's Margin Amount for all such Transactions at such time (a ~Margin Excess"), then
Seller may by notice to Buyer require Buyer in such Transactions. at Buyer's option, to
transfer cash or Purchased Securities to Seilen so that the aggregate Market Value of the
Purchased Securities. after deduction of any such cash or any Purchased Securities so
transferred, will thereupon not exceed such aggregate Seller's Margin Amount (increased
by the amount of any Margin Excess as of such date arising from any Transactions in
which such Seller is acting as BuyerJ.
(c)
If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph
at or before the Margin Notice Deadline on any business day, the parry receiving such
notice shall transfer cash or Additional Purchased Securities as provided in such subpara-
graph no later than the close of business in the relevant market on such day. If any such
notice is given after the Margin Notice Deadline. the party receiving such notice shall
transfer such cash or Securities no later than the close of business in the relevant market
on the next business day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions
as shall be agreed upon by Buyer and Seller.
4 ~ September 1 gffi = Master Repurchase Agreement
(e)
Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the
respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this
Paragraph may be exercised only where a Margin Deficit or Margin Excess, as the case
may be. exceeds a specified dollar amount or a specified percentage of the Repurchase
Prices for such Transactions (which amount or percentage shall be agreed to by Buyer
and Seller prior to entering into any such Transactions).
SeIIar and Buyer may agree, with respect to any or all Transactions hereunder, that t~e
respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph
to require the elimination of a Margin Deficit or a Morgan Excess. as the case may be,
may be exercised whenever such a Margin Deficit or Margin Excess ex/sm with respect to
any single Transaction hereunder (calculated without regard to any other Transaction
outstanding under this Agreement).
o
Income Payments
Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in
respect of the Securities that is not otherwise received by Seller. to the full extent it would be
so entitled if the Securities had not been sold to Buyer. Buyer shall as the parties may agree
with respect to any Transaction (or. in the absence of any such agreement, as Buyer shall rea-
sonably determine in its discretion~, on the date such Income is paid or distributed either (0
transfer to or credit to the account of Selter such Income with respect to any Purchased
Securities subject to such Transaction or (ii) with respect to Income paid in cash. apply the
Income payment or payments to reduce the amount, if any, to be transferred to Buyer by
Seller upon termination of such Transaction. Buyer shall not be obligated to take any actinn
pursuant to the preceding sentence (A) to the extent that such action would result in the cre-
ation of a Margin Deficit. unless prior thereto or simultaneously therewith Seller transfers to
Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin DeficiL or
(B) if an Event of Default with respect to Seller has occurred and Ls then continuing at the
time such Income is paid or distributed.
Security Interest
Although the parties intend that all Transactions hereunder be sales and purchases and not
loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to
have pledged to Buyer as security for the performance by Seller of its obligations under each
such Transaction. and shall be deemed to have granted to Buyer a security interest in, all of
the Purchased Securities with respect to all Transactions hereunder and all Income thereon
and other proceeds thereoI~
Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately
available funds. Ali Securities transferred by one party hereto to the other party (i) shall be in
suitable form for transfer or shall be accompanied by duly executed instruments of transfer
or assignment in blank and such other documentation as the party receiving possession may
reasonably request. (ii) shall be transferred on the book-entry system of a Federal Reserve
Bank, or Oil) shall be transferred by any other method mutually acceptable to Se[lev and
Buyer.
September 1996 a Master Repurchase Agreement = 5
Segregation of Purchased Securities
lb the extent required by applicable law. all Purchased Securities in the possession of Seller
shall be segregated from other securities in its possession and shalI be identified as subject to
this Agreement. Segregation may be accomplished by appropriate identification nn the books
and records of the holder, including a financial or securities ~ntermediary or a ciear~ng corpo-
ration. All of Seller's interest in the Purchased Securities shall pass to Buyer on the Purchase
Date and. unless otherwise agreed by Buyer and Seller. nothing in this Agreement shall pre-
ciude Buyer from engaging in repurchase transactions with the Purchased Securkies or other-
wise sailing, transferring, pledging or hypothecating the Purchased Secuflties, but no such
transaction shall ralieve Buyer of its obligations to' transfer Purchased Securities to Seller pur-
suant to Paragraph 3.4 or 11 hereof, or of Buyer's obligation to credit or pay'Income to. or
apply Income to the obligations of. SellYr pursuant,to Paragraph 5 hereof.
Required Disclosure for Transactions in Which the Seller
Retains Custody of the Purchased Securities
Seller is nor permitted to substitute other securities for those subject to this
Agreement and therefore must keep Buyer's securities segregated at ali times, unless
in th~s Agreement Buyer grants Seller the right to substitute other securities. It
Buyer grants the right to substitute, th~s means that Buyer's securities wilt likely be
commingled with Seller's own securkies during the trading day. Buyer is advised
that. during any trading day that Buyers securities are commingled with Seller's
securities, they [will]* [may] ~ be subject to liens granted by Selter to [its clearing
bank]* [third part~esl ~* and may be used by Seller fur deliveries on other securities
transactions. Whenever the securities are commingled, Seller's ability to resegregam
substitute securities for Buyer will be subject to Seller's ability to satisfy [the clear-
ing] * [any]** lien nr to obtain substitute securities.
' Language to be used under 17 C.ER. 1~403.4 (e) if Seller is a government securities broker
or dealer other than a financial institutiom
'~ Language to be used under 17 C.ER. B403.5(d) if Seller is a financial institution.
Substitution
Seller may, subject to agreement with and acceptance by Buyer. substitute other Securities
for any Purehased Securities. Such substitution shall be made by transfer to Buyer of such
other Seeurities and transfer to Seller of such Purchased Securities. After substitution, the
substituted Securities shall be deemed to be Purchased Securities.
(b)
In Transactions in which Seller retains custody of Purchased Securities. the parties
expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this
Paragraph. to have agreed to and accepted in this Agreement substitution by Seller of
other Securities for Purchased Securities: provided, however, that such other Securities
shall have a Market Value at least equal to the Market Value of the Purchased Securities
for which they are substituted.
September I996 ~ Master Repurchase Agreement
10. Representations
Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to
execute and deliver this Agreement. to enter into Transactions contemplated hereunder and
to perform its obligations hereunder and has taken all necessary action to authorize such exe-
cution, delivery and performance, (ii) it wiIl engage in such Transactions as principal (or, if
agreed in writing, in the form of an annex hereto or otherwise, in advance of any Transaction
by the other party hereto, as agent for a disclosed principal), (iii) the person signing this
Agreement on.its behalf is duly authorized to do so on its behalf (or on behalf of any such
disclosed principal), (iv) it has obtained ali authorizations of any governmental body
required in connectic~n with this Agreement and the Transactions hereunder and such autho-
rizations are in full force and effect and (V) the execution, delivery and performance of this
Agreement and the Transactions hereunder wiIl not violate any law, ordinance, charter, by-
law or rule applicable to it or any agreement by which it is bound or by which any of its
asse~ are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be
deemed to repeat all the foregoing representations made by it.
11. Events of Default
In the event that (i) Seller falls to transfer or Buyer fails to purchase Purchased Securities
upon the applicable Purchase Date. (ii) Seller fails to repurchase or Buyer fails to transfer
Purchased Securities upon the applicable Repumhase Date. Ifil) Seller or Buyer fails to com-
ply with Paragraph 4 hereof, (iv) Buyer fails, after one business day's notice, to comply with
Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or untrue in any material
respect when made or repeated or deemed to have been made or repeated, or (vii) Seller or
Buyer shall admit to t~he other its inability to, or its intention not to. perform any of its oblig-
ations hereunder (each an "Event of Default"):
(a)
The nondefaulfing party may, at its option (which option shall be deemed to have been
exercised ~nmediately upon the occurrence of an Act of Insolvency), declare an Event of
Default to have occurred hereunder and. upon the exercise or deemed exercise of such
option, the Repurchase Date for each Transaction hereunder shall, if it has not already
occurred, be deemed immediately to occur (except that. in the event that the Purchase
Date for any Transaction has not yet occurred as of the date of such exercise or deemed
exercise, such Transaction shall be deemed immediately canceled). The nondefaulting
parLy shall (except upon the occurrence of an Act of Insolvency) give notice to the
defaulting party of the exercise of such opt2on as promptly as practicable.
(b)
In ail Transactions in which the defaulting party is acting as Seller. if the nondefaulting
party exercises or is deemed to have exercised the option referred to in subparagraph (a)
of this Paragraph, (i) the defaulting party's obligations in such Transactions to repurchase
all Purchased SecuNties. at the Repurchase Price therefor on the Repurchase Date deter-
mined in accordance with subparagraph (a) of this Paragraph. shall thereupon become
immediately due and payable. (ii) all Income paid after such exercise or deemed exercise
shall be retained by the nondefaulting party and applied to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party hereunder, and
(iiij the defaulting party shall immediately deliver to the nondefaulting party any
Purchased Securities subject to such Transactions then in the defaulting party's posses-
sion or control.
September 1996 ~ Master Repurchase Agreement ~ 7
(c)
(d)
(e)
(0
in ali Transactions in which the defaulting party is acting as Buyer. upon tender by the
nondefaulting party of payment of the aggregate Repurchase Prices for all such
Transactions, all right, tire and interest in and entitlement to ail Pumhased Securities
subject to such Transactions shall be deemed transferred to the nondefaulting parry, and
the defaulting party shall deliver all such Purchased Securities to the nondefaulting party.
tf the nondefaulting party exercises or is deemed to have exercised the option referred to
in subparagraph (a) of. this Paragraph, the nondefaulting parry, without prior notice ro
the defaulting parry, may:
(i)
as to Transactions in which the defaulting party is acting as Seller. (A) immediately
sell_ in a recugn~zed market (or otherwise in a commercially reasonable manner) ar
such prme or prices as the nondefaulting parry may reasonably deem satisfactory, any
or all Purchased Securities subject to such Transactions and apply the proceeds
thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by
the defaulting party hereunder or (B) in its sole discretion elect, in lieu of selling all
or a portion of such Purchased Securities. ro give the defaulting party credit for such
Purchased Securities in an amount equal to the price therefor on such date. obtained
from a generally recognized source or the most recent closing bid quotation from
such a source, against the aggregate unpaic~ Repurchase Prices and any other
amounts owing by the defaulting parry hereunder: and
(ii) as to Transactions in which the defaulting party is acting as Buyer, (A) immediately
purchase, in a recognized market (or otherwise in a commercially reasonable man-
ner) at such price or prices as the nondefaulting parry may reasonably deem satisfac-
tory, securities ["Replacement Securities") of the same class and amount as any
Purchased Securities that are not delivered by the defaulting parry to the nondefault-
lng party as required hereunder or (B) in its sole discretion elect, in lieu of purchas-
ing Replacement Securities. to be deemed to have purchased Replacement Securities
at the price therefor on such date. obtained from a generally recognized source or the
most recent closing offer quotation from such a source.
Unless otherwise provided in Annex L the parties acknowledge and agree that (i] the
Securities subject to any Transaction hereunder are instrumanrs traded in a recognized
market. (2) in the absence of a generally recognized source for prices or bid or offer quo-
rations for any Security, the nondefaulting party may establish the source therefor in its
sole discretion and (3) all prices, bids and offers shall be determined together with
accrued Income (except to the extent contrary to market practice with respect to the rel-
evant Securities).
As to Transactions in which the defaulting party is acting as Buyer, the defaulting party
shall be liable ro the nondefaulting party for any excess of the price paid (or deemed
paid) by the nondefaultin§ party for Replacement Securities over the Repurchase Price
for the Purchased Securities replaced thereby and for any amounts payable by the
defaulting party under Paragraph 5 hereof or otherwise hereunden
For purposes of this Paragraph 1 i. the Repurchase Price for each Transaction hereunder
in respect of which the defaulting party is acting as Buyer shall not increase above the
8 ~ September 1996 ~ Master Repurchase Agreement
amount of such Repurchase Price for such Transaction determined as of the date of the
exercise or deemed exercise by the nondefautting party of the option referred to in sub-
paragraph (a) of this Paragraph.
The defaulting parry shall be liable to the nondefaulting parry for (i) the amount of all
reasonable legal or other expenses incurred by the nondefaulting parry in connection
with or as a result of an Event of Default. (ii) damages in an amount equal to the cost
(including all fees. expenses and commissions) of entering into replacement transactions
and entering into or terminating hedge transactions in connection with or as a result of
an Event of Default, and (iii) any other loss. damage, cost or expense directly arising or
resulting [rom the occurrence of an Event of Default in respect of a Transaction.
To the extent permitted by applicable law~ the defaulting parry shall be liable to the' non-
defaulting parry for interest on any amounts owing by the defaulting parry hereunder,
from the date the defaulting parry becomes liable for such amounts hereunder until such
amounts are (i) paid in full by the defaulting par .fy or (ii) satisfied in full by the exercise
of the nondefaulting party's rights hereunder. Interest on any sum payable by the default-
mg party to the nondefaulting parry under this Paragraph t 1 {h) shall be at a rate equal to
the greater of the Pricing Rate for the relevant Transaction or the Prime Rate.
The nondefaulting party shall have. in addition to its rights hereunder, any rights other-
wise available to it under any other agreement or applicable law.
12. Single Agreement
Buyer and Seller acknowledge that. and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions
hereunder constitute a single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform att of
its obligations in respect of each Transaction hereunder, and that a default in the perfor-
mance of any such obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by
them in respect of any Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other transfers made by either
of them in respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions hereunder, and
the obligations to make any such payments, deliveries and other transfers may be applied
against each other and netted.
13. Notices and Other Communications
Any and all notices, statements, demands or other communications hereunder may be given
by a party to the other by mail. Facsimile. telegraph, messenger or otherwise to the address
specified in Annex II hereto, or so sent to such party at any other place specified in a notice of
change of address hereafter received by the other. All notices, demands and requests hereun-
der may be made orally, ro be confirmed promptly in writing, or by other communication as
specified in the preceding sentence.
September 1996 a MasTer Repurchase Agreement ~ 9
14. Ear,re Agreement; Severability
This Agreement shall supersede any existing agreemen~ between the parties containing gem
era[ terms and conditions for repurchase transactions. Each provision and agreement herein
shall be treated as separate and independent from any other provision or agreement herein
and shall be enforceable notwithstanding the unenforceability of any such other provision or
agreement.
15. Non-assignability; Termination
(a) 'The rights and obligations of the parties under this Agreement and under any
Transaction shall not be assigned by either party without the prior written consent of the
other party, and any such assignment without the prior written consent of the other
party shall be null and void. Subject m the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns. This Agreement may be terminated by either party
upon giving written notice to the other, except that this Agreement shall, notwithstanding
such notice, remain applicable to any Transactions then outstanding.
(b)
Subparagraph (a) of this Paragraph 15 shall nor preclude a party from assigning, charg-
ing or otherwise dealing with all or any part of its interest in any sum payable to it under
Paragraph I 1 hereof.
16. Governing Law
This Agreement shall be governed by the laws of the State of New York without giving effect
to the conflict of law principles thereof.
17. No Waivers, Etc.
No express or implied waiver of any Event of Default by either party shall constitute a waiver
of any other Event of Default and no exercise of any remedy hereunder by any parry shall
constitute a waiver of its right to exercise any other remedy hereunder. No modification or
waiver of any provision of this Agreement and no consent By any party to a departure here-
from shall be effective unless and until such shall be in writing and duly executed by both of
the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pur-
suant to Paragraph 4 (a) or 4 (b) hereof wilt not constitute a waiver of any right to do so ar a
later date.
18. Use of Employee Plan Assets
(a) if assets of an employee benefit plan subject to any provision of the Employee Retirement
Income Security Act of 1974 ('ERISA") are intended to be used by either party hereto
(the 'Plan Party") in a Transaction. the Plan Party shall so notify the other party prior to
the Transaction. The Plan Party shall represent in writing to the other party that the
Transaction does not constitute a prohibited transaction under ERISA or is otherwise
exempt therefrom, and the other parry may proceed in reliance thereon but shall not be
required so to proceed.
10 = September !996 = Master Repurchase Agreement
(b)
(c)
Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction
shall proceed only if Seller furnishes or has furnished to Buyer its most recent available
audited statement of its financial condition and its most recent subsequent unaudited
statement of its financial condition.
By entering into a Transaction pursuant to this Paragraph. Seller shall be deemed (0 to'
represent to Buyer that since the date of Seller's latest such financial statements, there has
been no material adverse change in Seller's financial condition which Seller has not dis-
closed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited
statements .of its financial condition as they are issued, so lor}g as it is a Seller in any our-
standing Transaction involving a Plan Party.
Intent
(a} The parties recognize that each Transaction is a ~repurchase agreement" as that term is
defined in Section i01 of Title 11 of the United States Code as amended (except insofar
as the type of Securities subject to such Transaction or the term of such Transaction
would render such definition inapplicable), and a 'securities contract" as that term is
defined in Section 741 of Title 11 of the United States Code. as amended (except insofar
as the type of assets subject to such Transaction would render such definition inapplica-
ble).
(b)
It is understood that either party's right to liquidate Securities delivered to it in connec-
tion with Transactions hereunder or to exercise any other remedies pursuant to
Paragraph I 1 hereof is a contractual right to liquidate such Transaction as described in
Sections 555 and 559 of Title 11 of the United States Code. as amended.
The parties agree and acknowledge that if a parry hereto is an "insured depository insti-
tution.' as such term is defined in the Federal Deposit Insurance Act. as amended
("FDIA'), then each Transaction hereunder is a "qualified financial contract." as that term
is defined in FDIA and any rules, orders or policy statements thereunder (except insofar
as the type of assets subject to such Transaction would render such definition inapplica-
ble).
It is understood that this Agreement constitutes a "netting contract" as defined in and
subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of
199i ("FDICIA") and each payment entitlement and payment obligation under any
Transaction hereunder shall constitute a 'covered contractual payment entitlement" or
"covered contractual payment obligation: respectively, as defined in and subject ro FDI-
CIA (except insofar as one or both of the parties is not a "financial institution" as that
term is defined in FDICIA).
20. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a broker or dealer registered
with the Securities and Exchange Commission ("SEC") under Section 15 of the Securities
Exchange Act of 1934 ("1934 Act"), the Securities Investor Protection Corporation has
September 1996 = Master Repurchase Agreement ~ 11
taken the position that the provisions of the Securities Investor Protection Act of 1970
("SiPA') do not protect the other party with respect to any Transaction hereunder:
in the case of Transactions in which one of the parties is a government securities broker
or a government securities dealer registered with the SEC under Section 15C of the 1934
Act. SIPA will not provide protection to the other party with respect to any Transaction
hereunder: and
in the case of Transactions in which one of the parties is a financial institution, funds
held by the financial institution pursuant to a Transaction hereunder are not a depom:
and therefore are not insured by the Federal Deposit Insurance Corporation or the
National Credit Union Share Insurance Fund. as applicable.
Merrill Lynch Government Securities Inc. and/or
Merrill lynch, Pierce, Fenner, & Smith Incorporated
Date: Date:
FLEET BANK. NATIONAL ASSOCIATION
AS AGENT FOR THE MUNICIPALITIES AS
VI£F PFaFf! DFNT
i 2 ~ September I996 ~ Master Repurchase Agreement
-~x FLEET BANK. NATIONAL ASSOCIATION
Supplemental Terms and Conditions AS AGENT FOR THE MUNICIPALITIES AS
PROVIDED SEPARATELY
This Annex I forms a part of the Mawr Repureb~-¢ Agrccmeot dasd as of ~-A.CC~ -~. 19._~_~
(the "Agreement"} between Merrill Lynch C~.~rnrn~ Securities Inc. and/or Merrill Lynch,
Pierce, F~aner & Smith Incorporated and
Capitalism terms used but not defined in this Annex i shall Nave the meanings ascribed to them in
Modi/icarion ofSeaiun 9 of/he Agreement.
Eff'ccrive la/mary I. 1998. Section 9 oftbe Agrecmcm is hereby mnended by ,ddi,g thc following
paragraphs:
(c) In ~ rose of any Trunsa~on for which tbe Repureh=~e Dat~ is other*h.n the business day
immediately following the Purchase Dare amt with respect to which Seller does not have any
exkqfing right to sub~m substantially the mine Sceur~es for ~ Purchased Sem~r~es. SeEer
shall have ~he right, subject to the proviso to th/s sentence, upon norice to Buyer, which notice sImall
be given az or prior m i0 am (New York time) on such business day, to substkute substantially the
same Securities for any Purchased Senurkies; provid~d~ hot. ever, that Buyer may elect, by the
close of business on the business day notice is re~qved, or by the close of thc ~ business day ff
notice ~s giv~ after 10 am (New York trine) on such day, not to mx=IX such substiunion. In the
event such substitution is accepted by Buyer, such subsrimrion sh~ be made by Seller's trm~f~ to
Buyer of such other Secur?des and Buyer's w~rt~r to Seller of such Purchased $ceurk/~, and
after subs~Jtafion~ ~e subsrituted Securi~es shall be deemed to be Purchased Sccurk/es. In the
evil Buyer elects not m accept such substitution, Buyer shall offer Seller the right to ;er~te- the
Trmm~un.
(d) In the event Seller exercises irs fight to substitute or terminate under sub-pamgr-oh (c), Seller
shulI be obllg~_t~d_ to pay to Buyer, by the close of the business day of such substitution or
termin~on, ~s the case may be. an amount equsl m (A) Buyer's aenm~ ensz (including all fees,
expenses and commissions) of (i) entering into repNcement wansa~ons; (ii) enmrmg into or
terminating hedge wansac~ious: and/or (iii) terminating mmsatmous or substituting securities in like
tmmactious with third parties m counccdon with or ns a resuk of such substitution or termination,
and OB) to the extent Buyer determines not to enter mm replacement transactions, thc loss recurred
by Buyer directly arksSng or resulting from such substitution or termm~mon. The foregoing
amounts stroll be solely determined and calculated by Buyer in good f~ith.
Other Applle_.~ble Anne. xes.
Irt addition to this Annex i and Annex H, the following Annexes (ifapphcable) and any Schedules
thereto shall form a part of the Agreement and shall be applicable thereunder:.
[ntern=rionat Tran~-acduns) and Schedule
International Transactions Relating to Relevant Country.)]
Yes No
[ 1 /
Yes N___~o
[Annex IV (Par~ Act~g as Agent) and Annex IV.A
([dentific2tion of Pvincipals)]
[Annex V OVhrgin for Forward Transactions)]
[] [Cc
[Annex V1 (Buy/Sell Back Transactions)]
[Annex VI/(Transactions Involving Registered
investment Companies) and Schedule V~ak
(Supplemental Terms and Conditions of Transactions
~volving Registered Investment Companies)]
Cuunterpm't~
The Agreement may be executed in any number of counterparts, each of which co unterparts sh ~1!
be deemed to be an original, and such counterparts shall constitute but one and the same
instrument
Merrill Lynch Government SecuriTies Inc.
and/or Merrill Lynch. Pierce. Fenner & Smith
Incorpor'ared
Date:
FLEET BANK, NATIONAL ASSOCIATION
AS AGENT FOR THE MUNICIPALITIES AS
PROVIDED SEPARATELY
Title: ER [A'[~ g. ~ ~{ELt
Da~:
) 4 = Semember 1996 = Ma~ter Repurclmse Agreement
ANNEX LA
TO
MASTER REPURCHASE AGREEMENT
MERRILL LYNCH GOVERN1M[ENT SECURITIES ][NC.
ANll)/OR
MERRILL LYNCH, PIERCE, FENNER & SMITH ][NC.
and
FLEET BANK, NA AS AGENT FOR TI::[E MUNICIPAL][TIES AS PROVIDED'
SEPERATELY
The following terms and conditions are hereby ~ncorporated into the Master Repurchase
Agreement ("Agreement") dated as of ~ddg~7~etween Merrill Lynch and Fleet Bank, NA
as agent for the Municipalities as provided~' ''~separately. To the extent of any conflict between the
terms of the Agreement and this Annex. this Annex shall govern. Capital/zed terms used but not
defined herein shall have the meaning given to them in the Agreement.
1. The Agreement is amended as follows:
(a) In light of the fact that the transactions that are the subject of this Agreement are
effected on a tri-party basis, paragraph 8 entitled "Segregation of Purchased
Securities" and sub-paragraph 8 of the Agreement entitled "Required Disclosure for
Transactions in Which the Seller Retains Custody of the Purchased Securities" shall
not apply.
(b) Paragraph 9 of the Agreement entitled "Substitution" shall not apply to transactions
that are the subject of this Agreement that are effected on an overnight basis
Waiver of Immunity. To the extent applicable, each party hereto waives, tc the fullest
extent permitted by applicable law, ali immunity (whether on the basis of sovereignty or
otherwise) from jurisdiction, attachment (both before and after judgement) and execution to
which it might otherwise be entitled m any action or proceeding in the courts of the United
States or any other country or jurisdiction, relating in any way to this Agreement and agrees
that it will not raise, claim or cause to be pleaded any such immunity at or in respect of any
such action er Proceeding.
[Signature page follows]
MERRILL LYNCH GOVERNMENT SECURITIES
INCORPORATED AND/OR MERRILL LYNCH.
PIERCE. FENNER & SMITH INCORPORATED
FLEET BANK, NA
AS AGENT FOR THE MUNICIPALITIES
AS PROVIDED SEPARATELY
By:
Name:
Title:
BR I.Att
C SNELL .........
~Va:. Joim, Cusi'anan
Comptroller
Town of Southoid
Town Hail
Main Road
Southold. New York ! ! 97t
As you are ¢~'are. V/eet B~ se~es as your agent to facilitate inves~enB in Fleet MuniCashTM . our
2~g~ly suanessfifi M-pa~~ ~purchase agreement program. Until now, ~e co~te¢~' on ~e repurcn*se
a~eemenr i~ been Union B~ of Swkzerl~d. fu~erly Swiss B~. Union Bm~ of Swi~eri~d h~
~nfo~ied us ~hat they ~e exi~ng this l~e of business.
Wz are pleased to announce that Fleet has selected Merrill Lynch to replace Union Bank of Switzeriand
the counte~a~, cn me repurchase agreemem. Bank of New York will continue as the third parry
c2stodian.
Our goal ~s to ensure a seamless transfer of your funds to Merrill Lynch on July I, 1999. however, your
authorization is required to make the transfer, In that regard and as evidence of your authorization, we
ask that you s~gn where indicated and return a copy of this letter in the envelope provided for that
purpose.
Since Umon Bank of Switzerland will be exiting the business as of June 30. 1999, we must receive ,. nur
autkorizatioi~ prior !o that date. Ot~ep, vise we must 2ransfer your funds to your Fleer Demand Depnsk
r~r Mone~' ?:'larke'. Account. Over the next ~'ew months you will receive a complete set ,fMuniCa~sl~r~
pro,'am documents for your execution from yeur Fleet relationship manager.
We appreciate yoar confidence in Fleet and we look forward to a continuation of our succeasfu!
L 3 ou requL, aaaitionai kn~brmation on Merrill Lynch, please contact me at 516/547-7743 or your Fleer
Relationship Manager if you have any questions.
Geotge II. ~forges
AUTHORIZED AND APPROVED:
Date
]~L1TZABETI~Y Ao N]~V1LLE
T OV~Z~T CLE~
REGIST~ OF ~T~ STATISTICS
~R~GE OFFICER
RECORDS ~AGE~ENT OFFICER
F~EDOM OF INFO~TION OFFICER
Town Hall, 53095 Main Road
P.O. ]Box 1179
Southold. New York 11971
Fax 516' 765-6145
Telephone t515) 765-1800
OFF[CE @F TI-~E TOWN CLE~
TOWN OF SOUTHOLD
THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION WAS
ADOPTED AT A REGULAR MEETING OF THE $OUTHOLD TOWN BOARD
RESOLVED that the Town Board of the Town of Southo~d hereby authorizes
Supervisor Jean W. Cochran to execute agreements changing the
counterparty in F~eet Municash from Union Bank of Switzerland to Merrill
Lynch.
Neville
Southo~d Town C~erk
June :22. 1999