Tanya: We finally agreed on the guaranty form (the cap is $25 million) and are about ready to execute the actual agreement. I have one question: in the ISDA world, we use "cost of funds plus 1%" as the default interest rate. The Bear document provides: "...interest thereon at a rate equal to (A) in the case of purchases of Foreign Securities, LIBOR, (B) in the case of purchases of any other securities (or other amounts, if any, due to Lender hereunder), the Federal Funds Rate or (C) such other rate as may be specified in Schedule B, in each case as such rate fluctuates from day to day, from the date of such purchase until the date of payment of such excess." What is your preference: Bear's standard language or do you want to specify another rate?
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Bear Stearns "Securities Loan Agreement"