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EXPOSURE DRAFT – DECEMBER 2000
Debt Securities Amendment to
Prime Brokerage Agreement
This amendment (the “Amendment”) amends and supplements the Prime Brokerage
Agreement dated as of _________________, _____, by and between the parties hereto (together
with any prior amendments thereto, the “Agreement”). Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Agreement.
1. Scope of Amendment; Relationship to Agreement.
(a) Except as otherwise agreed by the parties, (i) this Amendment shall apply to all
transactions in non-equity securities and any instruments described in Schedule B
hereto effected pursuant to the Agreement, and (ii) transactions in equity
securities effected pursuant to the Agreement shall be subject to the terms of the
Agreement without reference to this Amendment. Notwithstanding anything to
the contrary herein, all transactions effected pursuant to the Agreement shall be
deemed to be part of the same agreement between the parties, including for
purposes of Section 9 of the Agreement.
(b) In the event of any conflict between the terms of this Amendment and the terms
of the Agreement, the terms of this Amendment shall prevail. Except as amended
hereby, the Agreement is in all respects ratified and confirmed and the provisions
thereof shall remain in full force and effect.
2. Modifications to the Agreement. The parties hereby agree to amend and supplement
the Agreement as follows:
(a) In Section 1(a) of the Agreement, in the first sentence thereof (i) the words “or
good faith accounts” shall be inserted after the words “broker-dealer credit
accounts”, (ii) the words “each for the benefit of a specified customer of
Executing Broker that has requested prime brokerage services from the Prime
Broker” shall be deleted, and (iii) the words “for those customers by Executing
Broker” shall be deleted and replaced by “by Executing Broker for specified
Customers (as defined in Section 2(a)) that have requested prime brokerage
services from Prime Broker”.
(b) d
In Section 1(b) of the Agreement (i) the words “not disaffirmed or DK’ and is”
shall be deleted and replaced by “affirmed and is therefore”, (ii) the words “on
behalf of its customer” shall be deleted and replaced by “by it with Executing
Broker”, and (iii) the words “, good faith” shall be inserted between the words
“cash” and “or margin Account”.
[________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150 ¦ 1
EXPOSURE DRAFT – DECEMBER 2000
(c) Section 1(c) of the Agreement shall be deleted in its entirety and replaced by the
following:
“(c) This Agreement is applicable only to transactions in non-equity
securities or other instruments described in Schedule B hereto; provided,
that in the absence of any such description in Schedule B, this
Agreement is applicable to trades in (i) any non-equity security which is
eligible for clearance through the facilities of a registered clearing
agency or through the Fedwire, and (ii) any other non-equity security or
other instrument as may be agreed from time to time by the parties; and
provided further, that this Agreement shall not apply to any part of a
repurchase, reverse repurchase, forward or delayed-delivery transaction,
unless agreed by the parties in Schedule B or otherwise in writing. Any
supplemental terms or conditions set forth in Schedule B shall be
applicable to and shall govern any transactions hereunder. In the event
of any inconsistency between the terms of this Agreement and Schedule
B, those of Schedule B shall prevail.”
(d) In Section 1(d) of the Agreement, the words “Section 47 of the National
Association of Securities Dealers, Inc. (“NASD”) Rules of Fair Practice” shall be
deleted and replaced by “National Association of Securities Dealers, Inc.
(“NASD”) Rule 3230”.
(e) In Section 2(a) of the Agreement, (i) all references to “Schedule A” shall be
deleted and replaced by “Schedule C”, (ii) the words “with a trade date after the
business day on which the acceptance was received” in the fifth sentence thereof
shall be deleted and replaced by “upon such acceptance”, and (iii) all words from
and including “Deletions shall be made by” through the end of the paragraph shall
be deleted and replaced by the following:
“Deletions shall be made by either party giving notice to the other party
(whether orally or otherwise); provided, that the party deleting a Customer
shall use its best efforts to telecopy an executed copy of Form 1 to the other
party which shall indicate the deletions to be made. All deletions made
pursuant to this Section 2(a) shall be effective immediately as to all trades for
the deleted Customer(s) or, if a later date is indicated in such notice and on the
Form 1, on such later date.”
(f) Section 2(b) of the Agreement shall be deleted and replaced by “Reserved.”
(g) In Section 2(c) of the Agreement, the last two sentences shall be deleted and
replaced by the following:
“Prime Broker shall not affirm any transaction for such Customer.”
(h) Section 3 of the Agreement shall be deleted in its entirety and replaced by the
following:
2 ¦ [________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150
EXPOSURE DRAFT – DECEMBER 2000
“3. Confirmations; Trade Affirmation
(a) Representatives of a Customer may directly contact Executing Broker to
initiate transactions between Executing Broker and Prime Broker. A
transaction with Executing Broker entered into by Customer through any
s
of Customer’ representatives will be deemed affirmed by Prime Broker
as soon as Executing Broker obtains approval (whether orally or
otherwise) of the details of a particular transaction, including
corresponding settlement instructions, from any of the authorized
employees of Prime Broker listed on Schedule D hereto. Prime Broker
agrees that upon such approval of a transaction by one of Prime Broker’ s
authorized employees, Prime Broker shall be responsible for clearing
and settling such transaction with Executing Broker. Prime Broker shall
not be responsible for clearing and settling any transaction which is not
approved by one of its authorized employees. Prime Broker may amend
Schedule D from time to time by providing a revised version thereof to
Executing Broker, such amendment to be effective upon receipt of the
revised Schedule D by Executing Broker.
(b) As between Prime Broker and Executing Broker, each shall be
responsible for settling directly with the other, and not with any other
person, any transactions of Customer affirmed by Prime Broker in
accordance with Section 3(a), notwithstanding any claims either Prime
Broker or Executing Broker may have against the Customer or any
remedies Prime Broker or Executing Broker may otherwise be entitled
to pursue against the Customer pursuant to any agreement between
either of them and the Customer. In entering into any transaction with
s
Executing Broker, Customer’ representatives will not be acting as
agents of Prime Broker.
(c) Executing Broker shall confirm to Prime Broker in the normal course the
contract amount of the transaction, the security involved (including
CUSIP number), the principal amount, whether the transaction is a
purchase or sale and, if a sale, whether the transaction was a short sale or
long sale, and the settlement date.
(d) For the avoidance of doubt, Prime Broker may, at the direction of
Customer, receive or deliver funds or securities as agent and on behalf of
Customer in connection with any transaction between Customer and
Executing Broker. Notwithstanding the foregoing or any other provision
of this Agreement, however, Prime Broker shall not be responsible
under this Agreement for performance of any transaction unless such
transaction is affirmed by Prime Broker pursuant to Section 3(a) above.”
(i) Section 5 of the Agreement shall be deleted in its entirety and replaced by the
following:
[________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150 ¦ 3
EXPOSURE DRAFT – DECEMBER 2000
“5. Prospectus Delivery Requirements
If a trade involves a new issue or other transaction requiring delivery of a
prospectus, Executing Broker shall be responsible for providing such
prospectus to Customer in accordance with applicable regulatory
requirements. References in this Section 5 to the term “prospectus” shall
include Official Statements relating to municipal bond offerings and other
similar offering materials.”
(j) In Section 10 of the Agreement, paragraphs (a), (b), (d), (e), and (f) shall be
deleted and replaced by the corresponding paragraphs below:
“(a) “affirm” shall mean to approve, through an authorized representative of
Prime Broker, the details of a particular transaction and the
corresponding settlement instructions in accordance with Section 3.”
“(b) “broker-dealer credit account” shall mean an account subject to the
terms of Section 220.7 of Regulation T (12 C.F.R. § 220.7).”
“(d) Reserved.”
“(e) Reserved.”
“(f) Reserved.”
In addition, (i) paragraphs (h), (i) and (j) shall be redesignated as paragraphs (i),
(j) and (k), respectively, and (ii) a new paragraph (h) shall be inserted as follows:
“(h) “good faith account” shall mean an account subject to the terms of
Section 220.6 of Regulation T (12 C.F.R. § 220.6).”
(k) Section 11 of the Agreement shall be deleted in its entirety and replaced by
“Reserved.” Unless provided otherwise for a specific notice or communication,
and subject to Section 4(a) hereof, any notice or communication that may be or is
to be given under the Agreement or this Amendment for purposes of transactions
that are subject to this Amendment may be provided (i) in writing by facsimile,
prepaid first class mail, or courier to the facsimile numbers or addresses, as
appropriate, set forth on the signature page hereto, (ii) if the parties so agree, by
email or other electronic communication system, to the email address or other
facility specified for such purposes by the receiving party from time to time, or
(iii) if the parties so agree, through the appropriate facilities of a registered
clearing agency.
(l) New Schedules B, C (including Form 1 thereto) and D shall be added to the
Agreement in the form of Schedules B, C and D attached hereto.
(m) For purposes of transactions subject to this Amendment, the parties shall not be
required to provide the information specified in the signature page for the
4 ¦ [________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150
EXPOSURE DRAFT – DECEMBER 2000
Agreement regarding a DTC No., a DTC Agent Bank No. or address, or a PTS
Terminal address.
3. Representations and Warranties. Prime Broker and Executing Broker each represents
and warrants to the other that (i) it has all necessary corporate or other power to execute
and deliver this Amendment, to enter into the transactions and to perform its obligations
contemplated hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) the person signing this Amendment on its behalf is duly
authorized to do so on its behalf, (iii) it has given all notices to and has obtained all
authorizations required from any governmental body or self-regulatory organization of
which it is a member necessary to enter into and perform this Amendment, and (iv) the
execution, delivery and performance of this Amendment and the transactions
contemplated hereunder will not violate any law, ordinance, charter, by-law or rule
applicable to it or any agreement by which it or any of its assets are bound. Each such
representation shall be deemed remade on each date on which Executing Broker submits
a prime brokerage transaction to Prime Broker and on which Prime Broker affirms a
prime brokerage transaction.
4. Certain Notices; Termination.
(a) For the avoidance of doubt, unless otherwise agreed by the parties any notices
provided pursuant to the Agreement that relate to all transactions in any securities
or other instruments under the Agreement shall be provided in a manner that
satisfies the relevant provisions of the Agreement both (i) as provided in Section
2(k) hereof (if at that time any Customers are listed on Schedule C to the
Agreement) and (ii) without reference hereto (if at that time any Customers are
listed on Schedule A to the Agreement).
(b) Either party may terminate this Amendment for any reason and at any time upon
notice to the other party in accordance with Section 2(k) hereof. Such termination
shall apply as of the time specified in the termination notice; provided that the
Amendment shall remain effective with respect to any transaction effected
pursuant to the Amendment that is then outstanding. Notwithstanding Section 6
of the Agreement, the Agreement shall be automatically terminated upon the
termination of this Amendment except where any Customers are listed on
Schedule A to the Agreement, in which case the Agreement shall not be
terminated until a termination notice has been provided in accordance with
Section 6 of the Agreement (without reference to this Amendment).
5. Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of ______________________ without giving effect to the conflicts of law
principles thereof.
[________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150 ¦ 5
EXPOSURE DRAFT – DECEMBER 2000
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the __________
day of ______________, _______.
PRIME BROKER EXECUTING BROKER
____________________________________ ____________________________________
Name of Party Name of Party
By: By:
Print Name: Print Name:
Title: Title:
Address: Address:
Telephone No.: Telephone No.:
Fax No.: Fax No.:
6 ¦ [________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150
EXPOSURE DRAFT – DECEMBER 2000
Schedule B
[List of transactions covered.]
[Any supplemental terms or conditions agreed to by the parties.]
[________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150 ¦ 7
EXPOSURE DRAFT – DECEMBER 2000
Schedule C
(Customers for Debt Prime Brokerage Transactions)
Customer Name Prime Broker Executing Broker FBO Date Institution No. Intro.
Account No. Account No. Opened Broker*
*If applicable.
Prime Broker shall attach a listing of sub-accounts, if applicable. Such list shall include Customer name, address
and Tax ID. number.
PRIME BROKER EXECUTING BROKER
By: By:
Title: Title:
Date: Date:
8 ¦ [________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150
EXPOSURE DRAFT – DECEMBER 2000
Form 1 to Schedule C
(Additions or deletions to list of Customers for Debt Prime Brokerage Transactions)
Date: _______________________
Pursuant to the Prime Brokerage Agreement dated as of _________________ (the “Prime Brokerage Agreement”),
between ______________________________ as Prime Broker and ______________________________ as
Executing Broker, the following Customers are proposed to be added, or shall be deleted, by _________________
as indicated below.
ADDITIONS
Customer Prime Broker Executing Broker Date Institution No. Accept/ Intro.
Name Account No. FBO Account No. Opened Reject Broker*
Indicate effective date for each added Customer if other than as specified in Section 2(a) of the Prime
Brokerage Agreement:
Name Effective Date
*If applicable.
Prime Broker shall attach a listing of sub-accounts, if applicable. Such list shall include Customer name,
address and Tax ID. number.
DELETIONS
Customer Name Prime Broker Executing Broker FBO Date Institution No. Effective
Account No. Account No. Opened Date**
**If other than as specified in Section 2(a) of the Prime Brokerage Agreement.
PRIME BROKER*** EXECUTING BROKER***
By: By:
Title: Title:
***For additions, both parties must sign this Form 1; for deletions, only the party making the deletion must sign
this Form 1.
[________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150 ¦ 9
EXPOSURE DRAFT – DECEMBER 2000
Schedule D
(Authorized Persons for Debt Prime Brokerage Transactions)
Authorized Persons at Prime Broker:
Date:
Name Title Telephone Number Fax Number
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
140433
10 ¦ [________ 2000] ¦ Debt Prime Brokerage Amendment to Form 150
EXPOSURE DRAFT – DECEMBER 2000
Debt Securities Amendment to Agreement
for Prime Brokerage Clearance Services
This amendment (the “Amendment”) amends and supplements the Agreement for Prime
Brokerage Clearance Services dated as of _________________, _____ (together with any prior
amendments thereto, the “Agreement”) under which _________________ has agreed to clear
certain Prime Brokerage Transactions at your direction. Capitalized terms used but not defined
herein shall have the meanings assigned in the Agreement.
1. Scope of Amendment; Relationship to Agreement.
(a) Except as otherwise agreed by the parties, (i) this Amendment shall apply to all
Prime Brokerage Transactions in securities or instruments other than equity
securities effected pursuant to the Agreement, and (ii) all Prime Brokerage
Transactions in equity securities effected pursuant to the Agreement shall be
subject to the terms of the Agreement without reference to this Amendment.
Notwithstanding anything to the contrary herein, all Prime Brokerage
Transactions effected pursuant to the Agreement shall be deemed to be part of the
same agreement between the parties, including for purposes of Section 11 of the
Agreement.
(b) In the event of any conflict between the terms of this Amendment and the terms
of the Agreement, the terms of this Amendment shall prevail. Except as amended
hereby, the Agreement is in all respects ratified and confirmed and the provisions
thereof shall remain in full force and effect.
2. Modifications to the Agreement. You hereby agree to amend and supplement the
Agreement as follows:
(a) In Section 1 of the Agreement, (i) the words “or good faith account” shall be
inserted after the words “broker-dealer credit account,” (ii) the words “and
designated for your benefit” shall be deleted, (iii) the words “your securities”
shall be deleted and replaced by “the applicable securities,” and (iv) the words
“on your behalf” shall be deleted.
(b) In Section 2 of the Agreement (i) the words “on the DTC ID System, or any
successor system,” shall be deleted and replaced by “, through such means as may
be agreed between the Clearing Broker and your Prime Broker,” (ii) the words
“for your account” shall be deleted, (iii) the words “, the number of shares or
number of units, and” shall be deleted and replaced by “(including CUSIP
number), the principal amount,” and (iv) the words “and the settlement date” shall
be inserted after the words “long or short sale or a purchase.”
[___________ 2000] ¦ Debt Prime Brokerage Amendment to Form 151 ¦ 1
EXPOSURE DRAFT – DECEMBER 2000
(c) Section 5(b) of the Agreement shall be deleted in its entirety, and Section 5(a)
shall be redesignated as Section 5.
(d) In Section 7 of the Agreement, (i) the words “fails to affirm,” shall be inserted
before the words “indicates its intention not to settle”, and (ii) the words “or good
faith account” shall be inserted after the words “with the Clearing Broker in a
margin account”.
(e) In Section 8(b) of the Agreement, the words “for the benefit of such customer”
shall be deleted and replaced by “subject to this Agreement”.
(f) In Section 10 of the Agreement, the words “on your behalf” shall be deleted.
(g) In Section 11 of the Agreement, the words “fails to affirm,” shall be inserted
before the words “indicates its intention not to settle,”.
(h) In Section 12 of the Agreement, the words “for your account(s)” shall be deleted
and replaced by “effected”.
(i) The heading of Section 14 of the Agreement shall be replaced in its entirety with
the following: “14. Margin Account or Good Faith Account, Security Interest,
Consent to Loan or Pledge Securities”. In Section 14(a) of the Agreement, the
words “or good faith account” shall be inserted after the words “such margin in
your margin account”.
(j) In Section 25 of the Agreement the words “and designated for your benefit” shall
be deleted from the first sentence thereof.
(k) In the acknowledgment section immediately preceding the signature block, the
words “or good faith account(s)” shall be inserted after the words “1. The
securities in your margin account(s)”.
3. Representations and Warranties. You hereby agree that this Amendment and all the
terms hereof shall be binding upon you and your estate, heirs, executors, administrators,
personal representatives, successors and assigns. You represent that you are of legal age.
If you are executing this Amendment on behalf of a customer whose account is managed
by you, you hereby represent and covenant to the Clearing Broker that you have been
duly authorized by the customer to execute this Amendment. If your are not an
individual, you represent and warrant that (i) you have all necessary corporate or other
power to execute and deliver this Amendment, to enter into the transactions and to
perform your obligations contemplated hereunder and have taken all necessary action to
authorize such execution, delivery and performance, (ii) the person signing this
Amendment on your behalf is duly authorized to do so on your behalf, (iii) you have
given all notices to and have obtained all authorizations required from any governmental
body or self-regulatory organization of which you are a member necessary to enter into
and perform this Amendment, and (iv) the execution, delivery and performance of this
Amendment and the transactions contemplated hereunder will not violate any law,
ordinance, charter, by-law or rule applicable to you or any agreement by which you or
2 ¦ [___________ 2000] ¦ Debt Prime Brokerage Amendment to Form 151
EXPOSURE DRAFT – DECEMBER 2000
any of your assets are bound. Each of the foregoing representations shall be deemed
remade on each date on which you direct Clearing Broker to execute a Prime Brokerage
Transaction.
4. Termination. Either party may terminate this Amendment at any time by prior written
notice to the other party.
5. Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of ______________________ without giving effect to the conflicts of law
principles thereof.
[___________ 2000] ¦ Debt Prime Brokerage Amendment to Form 151 ¦ 3
EXPOSURE DRAFT – DECEMBER 2000
This Amendment is dated as of ____________________, 2____.
(Signature)
(Typed or Printed Name)
(Signature)
(Typed or Printed Name)
144930
4 ¦ [___________ 2000] ¦ Debt Prime Brokerage Amendment to Form 151
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