HomeMy WebLinkAboutContract 31143-A4 Execution Copy
AMENDMENT ^ITY SECRETAr,
dated as of January 1,2009 "ONTRACT NO. l 1-+3 A�-
to the
TERMS AND RENEWAL AGREEMENT among MORGAN STANLEY&CO.
INCORPORATED ("Morgan Stanley"),CITY OF FORT WORTH(the"Customer"),and
THE BANK OF NEW YORK(the"Custodian")
and to the
MASTER REPURCHASE AGREEMENT between Morgan Stanley and the Customer
Morgan Stanley, the Customer, and the Custodian have previously entered into that certain Terms and Renewal
Agreement dated as of November 12, 1993 (the"Renewal Agreement")(as amended from time to time).
Morgan Stanley and the Customer have previously entered into that certain Master Repurchase Agreement dated as
of October 30, 1989, as amended on November 9, 1989 (the "Amendment Agreement") (as amended from time to
time).
The parties have agreed to amend the Renewal Agreement and the Amendment Agreement in accordance with the
terms of this Amendment(the"Amendment").
Morgan Stanley, the Customer, and the Custodian agree that the obligations of each party under the Current Paired
Transaction shall continue to be governed by the provisions of the Renewal Agreement.
NOW THEREFORE, in consideration of the mutual agreements contained herein, and intending to be legally bound
hereby,the parties hereto agree as follows:
1. Amendment of the Renewal Agreement
As used in the Renewal Agreement (including any Confirmation relating thereto), as amended by this Amendment,
the terms "Terms and Renewal Agreement", "Agreement", "this Agreement", "herein", "hereinafter", "hereof',
"hereto" and other words of similar import, shall mean the Renewal Agreement as amended hereby, unless the
context otherwise specifically requires.
Any term used in this Paragraph 1 and not defined shall have the meaning set forth in the Renewal Agreement.
Upon execution of this Amendment by both parties, the Renewal Agreement shall be and hereby is amended as
follows:
(a) Paragraph 2 under"Amendments to Amendment"of the Renewal Agreement shall be deleted in its entirety
and the following provision shall be added in its place:
"2. Paragraph 7 (g)of the Amendment Agreement,Miscellaneous, shall be replaced in its entirety with
the following:
g. This Amendment Agreement shall terminate on January 1, 2010, provided, however, the
Customer and Morgan Stanley may, upon at least 30 days prior notice to the other party,
request a renegotiation of the Price Differential for each Repurchase Transaction to be
OFFIC4&MCORD applicable as of January 1,2009."
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(b) Paragraph 1 under"Amendments to Custody Agreement" of the Renewal Agreement shall be deleted in its
entirety and the following provision shall be added in its place:
11
1. The first sentence of Paragraph 1 of Article VI of the Custody Agreement, Termination, shall be
replaced in its entirety with the following:
`This agreement shall terminate on January 1, 2010,provided, however, the Customer and Morgan
Stanley may, upon at least 30 days prior notice to the other party, request a renegotiation of the
Price Differential for each Repurchase Transaction to be applicable as of January 1,2009."'
2. Amendment of the Amendment Agreement
As used in the Amendment Agreement (including any Confirmation relating thereto), as amended by this
Amendment, the terms "Master Repurchase Agreement", "Agreement", "this Agreement", "herein", "hereinafter",
"hereof', "hereto" and other words of similar import, shall mean the Amendment Agreement as amended hereby,
unless the context otherwise specifically requires.
Any term used in this Paragraph 2 and not defined shall have the meaning set forth in the Amendment Agreement.
Upon execution of this Amendment by both parties, the Amendment Agreement shall be and hereby is amended as
follows:
(a) Paragraph 6 of the Amendment Agreement, Price Differentials and Renewals, as amended in the Terms and
Renewal Agreement dated as of November 2, 1993,shall be replaced in its entirety with the following:
"a. During the term hereof, for all Paired Transactions:
(1) The Price Differential applicable to each repurchase transaction in which Customer is
acting a Seller of United States Treasury Securities shall, in all cases,be fifteen(15) basis
points less than the Price Differential applicable to the corresponding repurchase
transaction in which Morgan Stanley is acting as Seller.
(2) The Price Differential applicable to each repurchase transaction involving Eligible
Securities which represent the most current U.S. Treasury Securities issue with an original
maturity of two, three, five, and ten years in which Customer is acting as Seller shall in all
cases by thirty five (35) basis points less than the Price Differential applicable to the
corresponding repurchase in which Morgan Stanley is acting as Seller.
(3) The Price Differential applicable to each repurchase transaction involving Eligible
Securities which represent Federal National Mortgage Association Bullet Benchmark
Bills, Notes, and Bonds and Federal Home Loan Mortgage Corporation Reference Bills,
Notes, and Bonds in which Customer is acting as Seller shall in all cases by four(4) basis
points less than the Price Differential applicable to the corresponding repurchase
transaction in which Morgan Stanley is acting as Seller.
(4) Such Price Differentials shall be effective from January 1, 2009 until January 1, 2010.
All payments of net Price Differential from Morgan Stanley to Customer shall be paid on
the last Business Day of each month during the term hereof or in the event such day is not
a Business Day,on the next succeeding Business Day."
3. Representations
Each party represents to the other party that all representations contained in the Agreement, as amended, are true and
accurate as of the date of this Amendment and that such representations are deemed to be given or repeated by each
party,as the case may be,on the date of this Amendment.
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4. Miscellaneous
(a) Definitions. Capitalized terms used in this Amendment and not otherwise defined herein shall have the
meanings specified for such terms in the Agreement.
(b) Entire Agreement This Amendment constitutes the entire agreement and understanding of the parties with
respect to its subject matter and supersedes all oral communication and prior writings (except as otherwise provided
herein) with respect thereto.
(c) Counterparts. This Amendment may be executed and delivered in counterparts (including by facsimile
transmission)each of which will be deemed an original.
(d) Headings. The headings used in this Amendment are for convenience of reference only and are not to
affect the construction of or to be taken into consideration in interpreting this Amendment.
(e) Governing Law. This Amendment will be governed by and construed in accordance with the laws of the
State of New York(without reference to choice of law doctrine).
IN WITNESS WHEREOF, the parties have executed this Amendment on the respective dates specified below with
effect from the date speci ed in this Amendment.
MORGAN ST CO. INCORPORATED CITY OF FORT WORTH
By: By: �7Sc" L
Na Steven T Naftzger Name: Karen L. Mon�tgom y
Tit 1 : Authorized Signator Title: Assistant City Manager
Date: JAN - 8 2009 Date: D /a ?/0 7
APPROVED AS FORM AND LEGALITY:
Assistant ' ty Attorney
flttesW by:
Many Hri , City Secretary
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Contract AuthorizatioA
OFFICIAL RECORD 11 1 O `Q 4-i
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Official site of the City of Fort Worth,Texas
CITY COUNCIL AGENDA FORT WORTH
COUNCIL ACTION: Approved on 11/9/2004
DATE: 11/9/2004 REFERENCE NO.: **C-20390 LOG NAME: 13SECURELEND
CODE: C TYPE: CONSENT PUBLIC HEARING: NO
SUBJECT: Amendment to Securities Lending Program between the City of Fort Worth, Morgan
Stanley and Bank of New York
RECOMMENDATION:
It is recommended that the City Council authorize the City Manager to negotiate and execute the
necessary documents to amend the City's securities lending program with Morgan Stanley and Bank
of New York for one year with four optional one-year renewals.
DISCUSSION:
Securities lending is a cash management strategy involving the lending of the City's securities to a
primary dealer with the substitution of securities of greater market value being safe-kept by a third
party custodial bank in an account in the City's name. The program is designed so that the City
earns supplemental income on the portfolio without losing ownership or interest payments on the
loaned securities. The safety of the City's securities is guaranteed. All revenues are deposited in th,
General Fund.
The primary dealer will use the borrowed securities in several ways. With these high quality
securities, the dealer can borrow money at a lower interest rate. The dealer can use the funds to
finance its own investment positions or to invest in short-term, higher yielding investments. The
borrowed bond can also be used to correct "fails." When any investor buys a bond from a primary
dealer, the primary dealer often is buying it from another institution, which is also buying it from
someone, etc. Any breakdown in this chain causes "fails" down the line. If a primary dealer has
access to bonds through security lending, it can avoid "fails" and any associated costs.
The City Council first approved the contract for a securities lending program with Morgan Stanley an,
with the Bank of New York as custodian on October 17, 1989. Those agreements were last amende
on January 29, 2002, (M&C C-18940). During the past two years, Morgan Stanley has used the City'
portfolio of U.S. Treasury securities and benchmark securities of the Federal National Mortgage
Association and of the Federal Home Loan Mortgage Corporation. The City has been compensated
at a rate of 9 basis points (0.09%) times the market value and accrued interest earnings of the
portfolio for Treasuries and 7 basis points (0.07%) for the agency securities. The City receives this
fee monthly regardless of lending activity. Recently issued Treasuries, referred to as "on-the-run,"
are compensated at a rate of 35 basis points. There are no costs to the City. Morgan Stanley pays
all custodial fees related to the program.
The current amendment expires on November 30, 2004. The new amendment will run for one year
http://apps.cfwnet.org/council_packet/mc_review.asp?ID=3062&councildate=11/9/2004 2/16/2009
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with four annual options to renew and re-negotiate the fee structure to reflect prevailing market
conditions. No other investment firm expressed interest in the program. Assuming an average
portfolio of$157 million in Treasuries and $190 million in agency securities, Morgan Stanley's
proposal will generate $275,000 in fees for this fiscal year.
Morgan Stanley paid $306,000 in fees to the City in the previous fiscal year. Since its inception, the
program has generated $2,600,000 for the General Fund.
FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that the Finance Department, Revenue Office, will be responsible for
the collection of fees due the City under the program. All fees will be deposited in the General Fund.
TO Fund/Account/Centers FROM Fund/Account/Centers
GG01 441123 0134010 $275,000.00
Submitted for City Manager's Office by: Richard Zavala (Acting) (8511)
Originating Department Head: Jim Keyes (8517)
Additional Information Contact: Robert Shook (8519)
ATTACHMENTS
http://apps.cfwnet.org/council_packet/mc_review.asp?ID=3062&councildate=11/9/2004 2/16/2009