Exhibit (9)(j)
SECURITIES LENDING AUTHORIZATION AGREEMENT
Between
XXXXXXX X. XXXXXXXXX FUND, INC. ON
BEHALF OF THE INTERNATIONAL VALUE PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY
Cover Page
TABLE OF CONTENTS PAGE
1. APPOINTMENT OF STATE STREET 1
2. SECURITIES TO BE LOANED 1
3. BORROWERS 2
4. SECURITIES LENDING AGREEMENTS 3
5. LOANS OF AVAILABLE SECURITIES 4
6. DISTRIBUTIONS ON AND VOTING RIGHTS WITH
RESPECT TO LOANED SECURITIES 5
7. COLLATERAL 6
8. COMPENSATION FOR THE CLIENT AND STATE
STREET 7
9 ADMINISTRATIVE FEE DISCLOSURE 9
10. RECORDKEEPING AND REPORTS 9
11. STANDARD OF CARE 10
12. REPRESENTATIONS AND WARRANTIES 11
13. DEFINITIONS 11
14. CONTINUING AGREEMENT; TERMINATION;
REMEDIES 13
15. NOTICES 14
16. MISCELLANEOUS 15
17. SECURITIES INVESTORS PROTECTION ACT 15
18. LIMITED RECOURSE 16
19. INDEMNIFICATION 16
20. MODIFICATION 18
EXHIBIT 3.1
SCHEDULE 3.1
SCHEDULE 7.1
SCHEDULE 7.2
SCHEDULE 7.3
SCHEDULE 7.4
SCHEDULE 10.1
SCHEDULE 10.2
SECURITIES LENDING AUTHORIZATION AGREEMENT
Agreement dated the 17th day of July, 1996 between XXXXXXX X. XXXXXXXXX FUND,
INC., organized and existing under the laws of the State of Maryland, on behalf
of the International Value Portfolio (in such capacity, the "Client"), and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company ("State Street"),
setting forth the terms and conditions under which State Street is authorized to
act on behalf of the Client with respect to the lending of certain securities of
the Client held by State Street as trustee, Collateral agent or custodian.
Certain capitalized terms used in this Agreement are defined in Section 13.
The Client and State Street, as the parties hereto, hereby agree as follows:
1. Appointment of State Street. The Client hereby authorizes State Street as its
agent to lend Available Securities to Borrowers in accordance with the terms of
this Agreement. State Street shall have the responsibility and authority to do
or cause to be done all acts State Street shall determine to be desirable,
necessary, or appropriate to implement and administer this securities lending
program. Client agrees that State Street is acting as a fully disclosed agent
and not as principal in connection with the securities lending program. State
Street may take action as agent of the Client on an undisclosed or a disclosed
basis. State Street is also hereby authorized to request a third party bank to
undertake certain custodial functions in connection with holding of the
Collateral provided by a Borrower pursuant to the terms hereof. In connection
therewith, State Street may instruct said third party to establish and maintain
a Borrower's account and a State Street account wherein all Collateral,
including cash shall be maintained by said third party in accordance with the
terms of a form of custodial arrangement which shall also be consistent with the
terms hereof.
2. Securities to be Loaned. State Street acts or will act as agent, trustee or
custodian of certain securities owned by the Client. All of the Client's
securities contained in the Portfolio and held by State Street as agent, trustee
or custodian shall be subject to this securities lending program and constitute
Available Securities hereunder, except those
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securities which the Client or the Investment Manager specifically identifies in
notices to State Street as not being Available Securities, and provided that
State Street shall not effect any Loan where, immediately following effecting
such Loan, the Market Value of all Loaned Securities with respect to the
Portfolio would exceed 28% of the Market Value of the Portfolio's total assets.
Except as provided in the immediately preceding sentence, State Street shall
have no authority or responsibility for determining whether any of the Client's
securities contained in the Portfolio should be excluded from the lending
program.
3. Borrowers. The Available Securities may be loaned to any Borrower selected by
State Street, in its sole discretion, including without limitation, the Capital
Markets division of State Street; provided, however, if Available Securities are
loaned to the Capital Markets division, in addition to being consistent with the
terms hereof, said Loan shall be made in accordance with the terms of the
Securities Lending Agreement attached hereto as Schedule 3.1, as modified from
time to time in accordance with the provisions hereof (hereinafter, the "State
Street Securities Lending Agreement"). The form of the State Street Securities
Lending Agreement may be modified by State Street from time to time, without the
consent of the Client, in order to comply with the requirements of law or any
regulatory authority having jurisdiction over State Street, the Client or the
securities lending program or in any other manner that is not material and
adverse to the interests of the Client.
Client acknowledges that it is aware that State Street, acting as "Lender's
Agent" hereunder and thereunder, is or may be deemed to be the same legal entity
as State Street acting as "Borrower" under the State Street Securities Lending
Agreement, notwithstanding the different designations used herein and therein or
the dual roles assumed by State Street hereunder and thereunder. Client
represents that transactions effected pursuant to and in compliance with this
Agreement and the State Street Securities Lending Agreement will not constitute
a breach of trust or other fiduciary duty by State Street.
Client further acknowledges that it has granted State Street the power to effect
securities lending transactions with the Capital Markets division of State
Street and other powers assigned to State Street hereunder as a result of
Client's desire to increase the opportunity for it to lend securities held in
its
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account on fair and reasonable terms to qualified Borrowers without such loans
being considered a breach of State Street's fiduciary duty. In connection
therewith, each party hereby agrees that it shall furnish to the other party (i)
the most recent available audited statement of its financial condition, and (ii)
the most recent available unaudited statement of its financial condition, if
more recent than the audited statement. As long as any Loan is outstanding under
this Agreement, each party shall also promptly deliver to the other party all
such financial information that is subsequently available, and any other
financial information or statements that such other party may reasonably
request.
In the event any such Loan is made to the Capital Markets division, State Street
hereby covenants and agrees for the benefit of the Client that it has adopted
and implemented procedural safeguards to help ensure that all actions taken by
it hereunder will be effected by individuals other than, and not under the
supervision of, individuals who are acting in a capacity as Borrower thereunder,
and that all Loans effected hereunder will take place at the same fully
negotiated "arms length" prices offered to similarly situated third parties by
State Street when it acts as lending agent, notwithstanding the inherent
conflict of interest with respect to Loans to be effected by State Street to the
Capital Markets division.
In the event Client approves lending to borrowers resident in the United
Kingdom, Client shall complete Part 1 of the document known as a "MOD-2 form,"
which is attached hereto as Exhibit 3.1.
4. Securities Lending Agreements. The Client authorizes State Street to enter
into one or more Securities Lending Agreements with such Borrowers as may be
selected by State Street. Each Securities Lending Agreement shall have such
terms and conditions as State Street may negotiate with the Borrower, provided
that each Securities Lending Agreement with Borrowers shall not contain terms or
conditions materially inconsistent with the terms and conditions of this
Agreement. Certain terms of individual loans, however, including rebate fees to
be paid to the Borrower for the use of cash Collateral, shall be negotiated at
the time a loan is made.
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5. Loans of Available Securities. State Street shall have authority to make
Loans of Available Securities to Borrowers, and to deliver such securities to
Borrowers. State Street shall be responsible for determining whether any such
Loan shall be made, and for negotiating and establishing the terms of each such
Loan. State Street shall have the authority to terminate any Loan in its
discretion, at any time and without prior notice to the Client. Client may
terminate any Loan at any time upon giving notice to State Street. State Street
shall return the Loaned Securities subject to such terminated Loan(s) by the
Return Date.
The Client acknowledges that State Street administers securities lending
programs for other clients of State Street. State Street will allocate
securities lending opportunities among its clients, using reasonable and
equitable methods established by State Street from time to time. State Street
does not represent or warrant that any amount or percentage of the Client's
Available Securities will in fact be loaned to Borrowers. Client agrees that, so
long as State Street allocates securities lending opportunities among its
clients using reasonable and equitable methods, it shall have no claim against
State Street and State Street shall have no liability arising from, based on, or
relating to, loans made for other clients, or loan opportunities refused
hereunder, whether or not State Street has made fewer or more loans for any
other client, and whether or not any loan for another client, or the opportunity
refused, could have resulted in loans made under this Agreement.
The Client also acknowledges that, under the applicable Securities Lending
Agreements, Borrowers will not be required to return Loaned Securities
immediately to State Street upon receipt of notice from State Street terminating
the applicable Loan, but instead will be required to return such Loaned
Securities to State Street within such period of time following such notice as
is specified in the applicable Securities Lending Agreement; however, the
foregoing acknowledgment by the Client shall not in any way affect State
Street's obligations to the Client pursuant to Section 19 hereof. Upon receiving
a notice from the Client or the Investment Manager that Available Securities
which have been loaned to a Borrower should no longer be considered Available
Securities (whether because of the sale of such securities or otherwise), State
Street shall notify promptly thereafter the Borrower which has borrowed such
securities that the Loan of such securities is terminated and that such
securities are to be
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returned within the time specified by the applicable Securities Lending
Agreement; however, failure by the Borrower to return the securities to State
Street by the Return Date shall in no way affect State Street's obligations to
the Client pursuant to Section 19 hereof.
6. Distributions on and Voting Rights with Respect to Loaned Securities. The
Client represents and warrants that it is the beneficial owner of (or exercises
complete investment discretion over) all Available Securities free and clear of
all liens, claims, security interests and encumbrances and no such security has
been sold, and that it is entitled to receive all distributions made by the
issuer with respect to Loaned Securities. Except as provided in the next
sentence, all interest, dividends, and other distributions paid with respect to
Loaned Securities shall be credited to the Portfolio's account on the date such
amounts are delivered by the Borrower to State Street in an amount equal to (A)
such interest, dividend or other distribution less (B) the amount of any
withholding taxes payable with respect to such interest, dividend or other
distribution plus (C) any withholding or other amount that Client would be
entitled to reclaim if Client had been in possession of the Loaned Securities at
the time such interest, dividend or other distribution was paid. Any non-cash
distribution on Loaned Securities which is in the nature of a stock split or a
stock dividend shall be added to the Loan (and shall be considered to constitute
Loaned Securities) as of the date such non-cash distribution is received by the
Borrower; provided that the Client (or Investment Manager) may, by giving State
Street ten (10) Business Days' notice prior to the date of such non-cash
distribution, direct State Street to request that the Borrower deliver such
non-cash distribution to State Street, pursuant to the applicable Securities
Lending Agreement, in which case State Street shall credit such non-cash
distribution to the Portfolio's account on the date it is delivered to State
Street.
The Client acknowledges that it will not be entitled to participate in any
dividend reinvestment program or to vote with respect to securities that are on
loan on the applicable record date for such securities.
The Client also acknowledges that any payments of distributions from Borrower to
Client are in substitution for the interest or dividend accrued or paid in
respect of Loaned
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Securities and that the tax treatment of such payment may differ from the tax
treatment of such interest or dividend.
If an installment, call or rights issue becomes payable on or in respect of any
Loaned Securities, State Street shall use all reasonable endeavors to ensure
that any timely instructions from the Client are complied with, but State Street
shall not be required to make any payment unless the Client has first placed it
in funds to make such payment.
7. Collateral. The Client authorizes State Street to receive and to hold, as
Collateral agent on the Client's behalf, Collateral from Borrowers to secure the
obligations of Borrowers with respect to any loan of securities made on behalf
of the Client pursuant to the Securities Lending Agreements. All investments of
cash Collateral shall be for the account and risk of the Client. Concurrently
with the delivery of the Loaned Securities to the Borrower under any Loan, State
Street shall receive from the Borrower Collateral in any of the forms listed on
Schedule 7.1. Said Schedule may be amended from time to time by State Street
upon written notice from the Client. The Collateral received shall upon receipt,
(i) in the case of Loaned Securities denominated in United States Dollars or
whose primary trading market is located in the United States or sovereign debt
issued by foreign governments, have a value of 102% of the Market Value of the
Loaned Securities or (ii) in the case of Loaned Securities which are not
denominated in United States Dollars or whose primary trading market is not
located in the United States, have a value of 105% of the Market Value of the
Loaned Securities.
Thereafter, State Street shall take such action as is appropriate with respect
to the Collateral under the applicable Securities Lending Agreement which action
shall include marking the Collateral to market in accordance with State Street's
reasonable and customary practices as required to maintain Collateral at a
minimum of 102% or 105%, as the case may be, of the Market Value of the Loaned
Securities. State Street shall submit Earnings Statements monthly in the form
attached hereto as Schedule 7.2 or in such other form as the parties hereto may
agree from time to time, indicating the value of Collateral held by State Street
on Client's behalf. In the event that any Borrower delivers Collateral in the
form of short-term securities issued or guaranteed by the United States
government or its
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agencies as permitted by Schedule 7.1 hereto, State Street agrees that, in
addition to providing the information required to be reported on the daily
reports pursuant to Schedule 7.2 hereto with respect to such Collateral, it will
identify such short-term securities in reasonable detail on such daily reports.
State Street shall hold all Collateral, including any units representing
investment of any cash Collateral in an "E" account in the name of the Client
separate and apart from State Street's assets.
The Collateral shall be returned to Borrower at the termination of the Loan upon
the return of the Loaned Securities by Borrower to State Street in accordance
with the applicable Securities Lending Agreement. State Street shall invest cash
Collateral in accordance with the directions and limitations set forth on
Schedule 7.3 hereto and in accordance with any directions, including any
limitations established by the Client in a writing identified to this Agreement
and acknowledged in writing by State Street and shall exercise reasonable care,
skill, diligence and prudence of an agent acting in a like capacity and familiar
with such assets in the investment of Collateral. Subject to the foregoing
limits and standard of care, State Street does not assume any market or
investment risk of loss with respect to the investment of cash Collateral and
subject to State Street's obligation set forth below, if, at any time during the
term of any Loan, the value of the cash Collateral so invested is insufficient
to return the full amount of the Collateral due to such Borrower pursuant to the
Securities Lending Agreement, Client shall be solely responsible for such
shortfall and hereby agrees to pay an amount equal to such shortfall to State
Street. In the event the investment of cash Collateral is insufficient to return
the rebate fee (i.e., the return to the Borrower) (hereinafter referred to as a
"Rebate Shortfall"), Client and State Street shall each be liable for their
respective share of the Rebate Shortfall based on the fee split set forth in
Schedule 7.4. State Street shall be entitled to charge the Portfolio's account
for its share of any amounts owed under Section 8.
8. Compensation for the Client and State Street. To the extent that a Loan is
secured by cash Collateral, such Collateral, including money received with
respect to the investment of the same, or upon the maturity, sale, or
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liquidation of any such investments, shall be invested by State Street in
accordance with the terms set forth above. The Client hereby authorizes State
Street to purchase or sell investments of cash Collateral to or from other
accounts held by State Street or its affiliates.
The net income generated by any investment made pursuant to the preceding
paragraph of this Section 8 shall be allocated among the Borrower, State Street,
and the Client, as follows: (a) a portion of such income shall be paid to the
Borrower in accordance with the agreement negotiated between the Borrower and
State Street; (b) the balance, if any, shall be split between State Street, as
compensation for its services in connection with this securities lending
program, and the Client, in accordance with the fee schedule attached hereto as
Schedule 7.4.
In the event that there is a Rebate Shortfall, State Street shall debit the
account of the Portfolio by an amount equal to the Portfolio's share of the
Rebate Shortfall in accordance with Schedule 7.4 hereto and shall pay the
remaining amount of the Rebate Shortfall to the appropriate Borrower. In the
event debits to the Portfolio's account produce a deficit therein, State Street
shall sell or otherwise liquidate investments made with cash Collateral and
credit the net proceeds of such sale or liquidation to satisfy the deficit. In
the event the foregoing does not eliminate the deficit, State Street shall have
the right to charge the deficiency to any other accounts of the Portfolio
maintained by the Client at State Street.
In the event of a Loan to a Borrower resident in Canada, which is made over
record date for a dividend reinvestment program ("DRP") and is secured by cash
Collateral, the Borrower shall pay the Client a substitute payment equal to the
full amount of the cash dividend declared, and may pay a loan premium, the
amount of which shall be negotiated by State Street, above the amount of the
cash dividend. Such loan premium shall be allocated between State Street and the
Client as follows: (a) a portion of such loan premium shall be paid to State
Street as compensation for its services in connection with this securities
lending program, in accordance with Schedule 7.4 and (b) the remainder of such
loan premium shall be credited to the Client's account.
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To the extent that a Loan is secured by non-cash Collateral, the Borrower shall
be required to pay a loan premium, the amount of which shall be negotiated by
State Street. Such loan premium shall be allocated between State Street and the
Client as follows: (a) a portion of such loan premium shall be paid to State
Street as compensation for its services in connection with this securities
lending program, in accordance with Schedule 7.4 hereto; and (b) the remainder
of such loan premium shall be credited to the Client's account.
Client acknowledges that in the event that Client's participation in securities
lending generates income for the Client, State Street may be required to
withhold tax or may claim such tax from the Client as is appropriate in
accordance with applicable law.
The Client shall reimburse State Street for such reasonable fees and expenses
that State Street may incur in connection with the performance of its
obligations hereunder, including, without limitation: (i) the ordinary
telecommunication charges associated with the movement of securities in
connection with the securities lending activity contemplated by this Agreement;
and (ii) except for funds advanced by State Street to Client pursuant to Section
19 hereof, any and all funds advanced by State Street on behalf of the Client or
the Portfolio as a consequence of their obligations hereunder.
9. Administrative Fee Disclosure. The administrative fees associated with the
investment of cash Collateral in accordance with the provisions of Section 7
hereto are disclosed on Schedule 7.4 hereto.
10. Recordkeeping and Reports. State Street will establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. On a daily basis, State Street will provide the Client
and the mutual fund accounting department at State Street with a statement
describing the Loans made, including the Securities loaned and the identity of
the Borrower(s), and the income derived from Loans, during the period covered by
such statement (hereinafter, "Schedule 10.1"). State Street shall also provide
on a daily basis information regarding Loans in the form attached hereto as
Schedule 10.2. Each party to this Agreement shall comply with the reasonable
requests of the other for information necessary to the requester's performance
of its duties in connection with this securities lending program.
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11. Standard of Care. Subject to the requirements of applicable law and except
as provided in Sections 7 and 19 hereof, State Street shall not be liable for
any loss or damage, including counsel fees and court costs, whether or not
resulting from their acts or omissions to act hereunder or otherwise, unless the
loss damage arises out of State Street's own negligence. Except for any
liability, loss, or expense arising from or connected with State Street's own
negligence and except as provided in Sections 7 and 19 hereof, the Client agrees
to reimburse and hold State Street harmless from and against any liability, loss
and expense, including counsel fees and expenses and court costs, arising in
connection with this Agreement or any Loan or arising from or connected with
claims of any third parties, including any Borrower, from and against all taxes
and other governmental charges, and from and against any out-of-pocket or
incidental expenses. State Street may charge any amounts to which it is entitled
hereunder against the Portfolio's account. Without limiting the generality of
the foregoing, Client agrees: (i) that State Street shall not be responsible for
any statements, representations or warranties which any Borrower makes in
connection with any securities loans hereunder, or, except as provided in
Section 19, for the performance by any Borrower of the terms of a Loan or any
agreement related thereto, and shall not be required to ascertain or inquire as
to the performance or observance of, or a default under the terms of, a Loan or
any agreement related thereto, provided that in the case of default on the part
of a Borrower, State Street shall be responsible for making payments to Client
in accordance with Section 19 hereof; (ii) that State Street shall be fully
protected in acting in accordance with the oral or written instructions of any
person believed by State Street to be authorized to execute this Agreement on
behalf of the Client (an "Authorized Person"); and (iii) that in the event of a
default by a Borrower under a Loan, State Street shall be fully protected in
acting in its sole discretion in a manner it deems appropriate.
State Street, in determining the Market Value of Collateral, may rely upon any
recognized independent pricing service reasonably selected by State Street and
shall not be liable for any errors made by such service. State Street, in
determining the Market Value of Available Securities or Loaned Securities and
the Portfolio, may rely upon the pricing services used by State Street and
selected by the Portfolio to price the securities of the Portfolio, as such
pricing services may change
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from time to time at the request of the Portfolio. State Street shall not be
liable for any errors made by any such services.
12. Representations and Warranties. Each party hereto represents and warrants
that (a) it has the power to execute and deliver this Agreement, to enter into
the transactions contemplated hereby, and to perform its obligations hereunder;
(b) it has taken all necessary action to authorize such execution, delivery, and
performance; (c) this Agreement constitutes a legal, valid, and binding
obligation enforceable against it; and (d) the execution, delivery, and
performance by it of this Agreement will at all times comply with all applicable
laws and regulations. Client represents and warrants that it has made its own
determination as to the tax treatment of any dividends, remuneration or other
funds received hereunder. Client and State Street represent and warrant that the
financial statements delivered to the other party pursuant to Section 3 fairly
present its financial condition and there has been no material adverse change in
its financial condition or the financial condition of any parent company since
the date of the balance sheet included within such financial statements. Each
Loan shall constitute a present representation by Client and State Street that
there has been no material adverse change in its financial condition or the
financial condition of any parent company that has not been disclosed in writing
to the other party since the date of the most recent financial statements
furnished to the other party pursuant to Section 3.
The person executing this Agreement on behalf of each party hereto represents
that he or she has the authority to execute this Agreement on behalf of such
party.
The Client hereby represents to State Street that it is not subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") with
respect to this Agreement and the Securities and it qualifies as an "accredited
investor" within the meaning of Rule 501 of Regulation D under the Securities
Act of 1933, as amended.
13. Definitions. For the purposes hereof:
(a) "Available Securities" means the securities of the Client that are available
for Loans pursuant to Section 2.
(b) "Borrower" means any of the entities to which Available Securities may be
loaned under a Securities Lending Agreement and shall be limited to
broker-dealers, banks and financial institutions.
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(c) "Business Day" means (i) a day which is not a New York Stock Exchange
holiday and (ii) a day on which commercial banks in Massachusetts are not
authorized or required by law to close.
(d) "Collateral" means collateral in the forms listed on Schedule 7.1 hereto
delivered by a Borrower to secure its obligations under a Securities Lending
Agreement.
(e) "Default" means the occurrence of one or more Loan Default or Substitute
Payment Default.
(f) "Investment Manager," when used in any provision, means the person or entity
who has discretionary authority over the investment of the Available Securities
to which the provision applies.
(g) "Loan" means a loan of Available Securities to a Borrower.
(h) "Loan Default" means State Street failing to return all or a portion of the
Loaned Securities to the Client by the Return Date.
(i) "Loaned Security" shall mean any "security" which is delivered as a Loan
under a Securities Lending Agreement and any non-cash dividend that has not been
credited to the Portfolio's account in accordance with Section 6 hereof;
provided that, if any new or different security shall be exchanged for any
Loaned Security by recapitalization, merger, consolidation, or other corporate
action, such new or different security shall, effective upon such exchange, be
deemed to become a Loaned Security in substitution for the former Loaned
Security for which such exchange was made.
(j) "Market Value" of a security means the market value of such security
(including, in the case of a Loaned Security that is a debt security, the
accrued interest on such security) as determined in accordance with the last
paragraph of Section 11 hereof.
(k) "Portfolio" means the International Value Portfolio of the Xxxxxxx X.
Xxxxxxxxx Fund, Inc.
(l) "Rebate Shortfall" shall have the meaning assigned thereto in Section 7
hereof.
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(m) "Replacement Securities" means securities of the same issuer, class and
denomination as Loaned Securities that a Borrower fails to return upon
termination of a Loan.
(n) "Requisite Number" means the customary number of days necessary to settle a
purchase or sale of securities in such country.
(o) "Return Date" means the date which is the Requisite Number of days from and
including the date on which Client gives notice to State Street of termination
of any Loan or this Agreement.
(p) "Securities Lending Agreement" means the agreement between a Borrower and
State Street (on behalf of the Client) that governs Loans, as described in
Section 4.
(q) "Substitute Payment Default" means the failure by State Street to credit the
Portfolio's account within 5 days after the issuer pays any interest, dividend
or other distribution with respect to Loaned Securities in an amount equal to
(A) such interest, dividend or other distribution less (B) the amount of any
withholding taxes payable with respect to such interest, dividend or other
distribution plus (C) any withholding or other amount that Client would be
entitled to reclaim if Client had been in possession of the Loaned Securities at
the time such interest, dividend or other distribution was paid. Such credit by
State Street being in lieu of the actual interest, dividend or distribution
payment by the issuer.
14. Continuing Agreement; Termination; Remedies. It is the intention of the
parties hereto that this Agreement shall constitute a continuing agreement in
every respect and shall apply to each and every Loan, whether now existing or
hereafter made. The Client and State Street may each at any time terminate this
Agreement upon the earlier of (i) the Requisite Number of days' or (ii) five (5)
Business Days' written notice to the other to that effect. The only effects of
any such termination of this Agreement will be that (a) following such
termination, no further Loans shall be made hereunder by State Street on behalf
of the Client, (b) subject to State Street's obligations under Xxxxxxx 00, Xxxxx
Xxxxxx shall terminate any and all outstanding Loans and (c) State Street shall
return all Loaned Securities to the Client by the Return Date. The provisions
hereof shall continue in full force and effect in all other respects until all
Loans
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have been terminated and all obligations satisfied as herein provided.
15. Notices. Except as otherwise specifically provided herein, notices under
this Agreement may be made orally, in writing, or by any other means mutually
acceptable to the parties. If in writing, a notice shall be sufficient if
delivered to the party entitled to receive such notices at the following
addresses:
If to Client:
Xxxxxxx X. Xxxxxxxxx Fund, Inc.
c/o Xxxxxxx X. Xxxxxxxxx & Co., Inc.
0 Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxxx Fund, Inc.
c/o Xxxxxxx X. Xxxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone:(000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx Xxxx
If to State Street:
State Street Bank and Trust Company
Global Securities Lending Division
Two International Place, Floor 31
Xxxxxx, Xxxxxxxxxxxxx 00000
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or to such other addresses as either party may furnish the other party by
written notice under this section.
Whenever this Agreement permits or requires the Client to give notice to,
direct, or provide information to State Street, such notice, direction, or
information shall be provided to State Street on the Client's behalf by any
individual designated for such purpose by the Client in a written notice to
State Street. (This Agreement shall be considered such a designation of the
person executing the Agreement on the Client's behalf.) After its receipt of
such a notice of designation, and until its receipt of a notice revoking such
designation, State Street shall be fully protected in relying upon the notices,
directions, and information given by such designee.
16. Miscellaneous. This Agreement supersedes any other agreement between the
parties or any representations made by one party to the other, whether oral or
in writing, concerning loans of securities by State Street on behalf of the
Client. This Agreement shall not be assigned by either party without the prior
written consent of the other party. Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, representatives, successors, and assigns. This Agreement
shall be governed and construed in accordance with the laws of the Commonwealth
of Massachusetts. Client hereby submits to the jurisdiction of the State and
Federal Courts located in the Commonwealth of Massachusetts including any
appellate courts thereof. The provisions of this Agreement are severable and the
invalidity or unenforceability of any provision hereof shall not affect any
other provision of this Agreement. If in the construction of this Agreement any
court should deem any provision to be invalid because of scope or duration, then
such court shall forthwith reduce such scope or duration to that which is
appropriate and enforce this Agreement in its modified scope or duration.
17. Securities Investors Protection Act of 1970 Notice. CLIENT IS HEREBY ADVISED
AND ACKNOWLEDGES THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT
OF 1970 MAY NOT PROTECT THE CLIENT WITH RESPECT TO THE LOAN OF SECURITIES
HEREUNDER AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO THE CLIENT MAY
CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF THE BORROWER'S OBLIGATION IN THE
EVENT THE BORROWER FAILS TO RETURN THE SECURITIES.
Page 15
18. Limited Recourse. State Street may look solely to the assets of the
Portfolio for the enforcement of any claims related to this Agreement and
Xxxxxxx X. Xxxxxxxxx Fund, Inc., shall not have any personal liability under
this Agreement other than liability to satisfy any obligations to State Street
under this Agreement from the assets of the Portfolio. State Street acknowledges
that it will enter into each Loan on the foregoing basis.
19. Indemnification.
(a) Upon the occurrence of a Default, and subject to the terms of this
Agreement, State Street shall indemnify Client as follows. In the case of a Loan
Default, State Street shall purchase a number of Replacement Securities equal to
the number of such unreturned Loaned Securities to the extent that such
Replacement Securities are available (as determined in accordance with Section
19(b) below). Such Replacement Securities shall be purchased by applying the
proceeds of the Collateral with respect to such Loan to the purchase of such
Replacement Securities. If and to the extent that such proceeds are insufficient
or the Collateral is unavailable, the purchase of such Replacement Securities
shall be made at State Street's expense. In the case of a Substitute Payment
Default, State Street hereby agrees to pay to the Client a substitute payment in
an amount equal to any interest or cash dividend with respect to any Loaned
Security.
(b) If and to the extent that State Street is unable to purchase Replacement
Securities pursuant to Paragraph (a) hereof within thirty business days of the
date of the Loan Default, because the subject Securities are unavailable in the
market by reason of a cease trading order, delisting or some other legal bar,
impediment or prohibition to trading in such Securities, State Street shall
credit to the Client's account an amount equal to the Market Value of the
unreturned Loaned Securities for which Replacement Securities are not so
purchased, determined as of the close of trading on the business day on which
the Client gave notice to State Street of termination of the Loan or this
Agreement, as the case may be, which termination gave rise to the Loan Default
for which Replacement Securities were not so purchased.
Page 16
(c) In addition to making the purchases or credits required by Paragraphs (a)
and (b) hereof, State Street shall credit to the Portfolio's account the value
of all distributions on the Loaned Securities (not otherwise credited to the
Portfolio's account with State Street), the record dates for which occur before
the date that State Street purchases Replacement Securities pursuant to
Paragraph (a) or credits the Portfolio's account pursuant to Paragraph (b).
(d) Any credits required under Paragraphs (b) and (c) hereof shall be made by
application of the proceeds of the Collateral (if any) that remains after the
purchase of Replacement Securities pursuant to Paragraph (a). If and to the
extent that the Collateral is unavailable or the value of the proceeds of the
remaining Collateral is less than the value of the sum of the credits required
to be made under Paragraphs (b) and (c), such credits shall be made at State
Street's expense.
(e) If after application of Paragraphs (a) through (d) hereof, additional
Collateral remains or any previously unavailable Collateral becomes available or
any additional amounts owed by the Borrower with respect to such Loan are
received from the Borrower, State Street shall apply the proceeds of such
Collateral or such additional amounts first to reimburse itself for any amounts
expended by State Street pursuant to Paragraphs (a) through (d) above, and then
to credit to the Client's account all other amounts owed by the Borrower to
State Street, on behalf of the Client, with respect to such Loan under the
applicable Securities Lending Agreement.
(f) In the event that State Street is required to make any payment and/or incur
any loss or expense under this Section, State Street shall, to the extent of
such payment, loss, or expense, be surrogated to, and succeed to, all of the
rights of the Client against the Borrower under the applicable Securities Loan
Agreement.
(g) The provisions of this Section shall not apply to losses attributable to
war, riot, revolution, acts of government or other like causes beyond the
reasonable control or apprehension of State Street.
Page 17
20. Modification. This Agreement shall not be modified, except by an instrument
in writing signed by the party against whom enforcement is sought.
XXXXXXX X. XXXXXXXXX FUND, INC., on
behalf of the International Value Portfolio
By: Xxxx Xxxxx Xxxx
Title: Secretary
STATE STREET BANK AND TRUST COMPANY
By: Xxxxxx Xxxxxxx
Title: Senior Vice President
Page 18
SCHEDULE 3.1
The attached document is proprietary, and contains information which is
confidential and proprietary, to State Street Bank and Trust Company ("State
Street"). It is being provided for the exclusive purpose of allowing you to
assess your participation in a securities lending program operated by State
Street and in which State Street is the Borrower. Its use for any other purpose
or its distribution to anyone other than your own personnel engaged in this
assessment is prohibited without State Street's prior written permission.
SECURITIES LOAN AGREEMENT
(United States Government Securities)
Between
STATE STREET BANK AND TRUST AND COMPANY,
as Lender's Agent
And
STATE STREET BANK AND TRUST COMPANY, as Borrower
TABLE OF CONTENTS PAGE
1. TERMS OF LOAN 1
2. DELIVERIES AND TREATMENT OF
BORROWED SECURITIES 2
3. DELIVERIES AND TREATMENT OF
COLLATERAL 3
4. MARKS TO MARKET; MAINTENANCE
OF COLLATERAL 4
5. FEES 5
6. REPRESENTATIONS OF THE PARTIES 6
7. COVENANTS 7
8. TERMINATION OF LOAN WITHOUT DEFAULT 8
9. EVENTS OF DEFAULT 8
10. LENDER'S REMEDIES ON BORROWER'S
DEFAULT 9
11. BORROWER'S REMEDIES ON LENDER'S
DEFAULT 10
12. DEFINITIONS 11
13. INDEMNIFICATION 12
14. WAIVERS, GENERAL 13
15. STANDARD OF CARE 13
16. CONTINUING AGREEMENT; TERMINATION;
REMEDIES 13
17. NOTICES 13
18. TIME 14
19. SECURITIES CONTRACTS 14
20. DECLARATION OF TRUST 14
21. MISCELLANEOUS 15
22. MODIFICATION 15
SECURITIES LOAN AGREEMENT
(United States Government Securities)
Agreement dated the day of , 199 between STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, acting through its Global
Securities Lending Division, in its capacity as trustee, agent or custodian for
certain securities of its clients (in such capacity, "Lender's Agent"), and
STATE STREET BANK AND TRUST COMPANY, acting through the Money Market Division of
its Capital Markets Area, as Borrower ("Borrower"), setting forth the terms and
conditions under which one or more clients of Lender's Agent (hereinafter, each
a "Lender") from time to time, may lend to a Borrower U.S. Securities (as
defined herein), against the receipt of collateral as specified herein.
WHEREAS, each Lender has appointed Lender's Agent as its agent to act on its
behalf with respect to the lending of securities to Borrower in accordance with
the terms of a Securities Lending Authorization Agreement between such Lender
and Lender's Agent.
WHEREAS, pursuant to each Securities Lending Authorization Agreement, Lender's
Agent has been granted the responsibility and authority to do or cause to be
done all acts Lender's Agent shall determine to be desirable, necessary or
appropriate to implement or administer a securities lending program on behalf of
the Lender party thereto.
WHEREAS, upon request of Borrower, Lender's Agent may, from time to time, in its
discretion and on behalf of one or more Lenders, lend Available Securities to
Borrower against the receipt of Collateral delivered by Borrower.
NOW, THEREFORE, Lender's Agent and Borrower agree as follows:
1. Terms of Loan.
1.1 Lender's Agent and Borrower shall agree on the terms of each Loan, including
the identity and amount of the securities to be loaned (all of which shall be
U.S. Securities), the basis of compensation, and the type and amount of
Collateral to be delivered by Borrower (subject to the terms and conditions of
this Agreement), which terms may be amended during the period of the Loan only
by mutual agreement of the parties hereto.
1.2 Loans, all applicable terms and conditions thereof, and amendments and
activity, if any, with respect thereto, shall be evidenced by Lender's Agent's
records pertaining to such Loans maintained by Lender's Agent in the regular
course of its business and such records shall represent conclusive evidence
thereof except for manifest error or willful misconduct. Lender's Agent will
send Borrower monthly statements of outstanding Loans showing Loan activity
which Borrower agrees to
Page A-1
examine promptly and to advise Lender's Agent of any error or exceptions.
Borrower's failure to so advise Lender's Agent within twenty (20) days after
delivery of any such statement shall be deemed to be such party's admission of
the accuracy and correctness of the contents thereof and such party shall be
fully bound thereby.
1.3 Notwithstanding any other provisions in this Agreement with respect to when
a Loan occurs, a Loan hereunder shall not occur until the Borrowed Securities
and the Collateral therefor are delivered. If, on any Business Day, Borrower
delivers Collateral, as provided in Section 3.1 hereunder, and Lender's Agent
does not deliver the Borrowed Securities, Borrower shall have the absolute right
to the prompt return of the Collateral; and if, on any Business Day, Lender's
Agent delivers Borrowed Securities and Borrower does not deliver Collateral as
provided in Section 3.1 hereunder, Lender's Agent shall have the absolute right
to the prompt return of the Borrowed Securities.
1.4 Lender's Agent shall maintain records in accordance with its usual practice
showing the allocation among the participating Lenders of the Loans, the
compensation therefor, the collateral with respect thereto and other relevant
information. Lender's Agent shall implement appropriate procedures and policies
to restrict lending of U.S. Securities hereunder on behalf of the respective
Clients beyond the maximum credit risk and financial exposure limits which may
be set by such Lenders and Borrower.
2. Deliveries and Treatment of Borrowed Securities.
2.1 With respect to each Loan, Lender's Agent shall deliver the Borrowed
Securities to Borrower by causing the Borrowed Securities to be credited to
Borrower's Account and debited from the Relevant Lender's Account, and such
crediting and debiting shall result in receipt by Borrower and Lender's Agent of
a notice of such crediting and debiting, which notice shall constitute a
schedule of the Borrowed Securities.
2.2 Except as provided in Section 2.3, Borrower shall exercise all of the
incidents of ownership with respect to the Borrowed Securities, including the
right to transfer the Borrowed Securities to others, until the Borrowed
Securities are returned to Lender's Agent in accordance herewith.
2.3 Lender's Agent, on behalf of the Relevant Lender, shall be entitled to
receive all distributions (including payments upon maturity and other
redemption) made on or in respect of the Borrowed Securities, the payable dates
for which are during the term of the Loan and which are not otherwise received
by Lender's Agent, to the full extent the Relevant Lender would be so entitled
if the Borrowed Securities had not been loaned to Borrower, including, without
limitation, interest payments and any other distributions or other income.
Payment of each such distribution
Page A-2
shall be made by delivery of federal funds by Borrower to the Lender's Agent for
the Account of the Relevant Lender on payable, maturity, or redemption date of
such distribution.
3. Deliveries and Treatment of Collateral.
3.1 Simultaneous to the transfer of Borrowed Securities hereunder, Borrower
shall deliver to Lender's Agent Collateral in an amount not less than the Margin
Percentage of the current Market Value of the Borrowed Securities. The
Collateral shall be delivered by one or both of the following methods, as agreed
to by the parties pursuant to Section 1.2: (a) Borrower delivering U.S.
Securities to Lender's Agent and/or (b) Borrower delivering funds to the
Lender's Agent for the Account of the Relevant Lender.
3.2 With respect to each Loan, the Collateral delivered by Borrower to Lender's
Agent, as adjusted pursuant to Section 4 below, shall be security for the due
and punctual performance by Borrower of any and all of its obligations to
Lender's Agent on behalf of the Relevant Lender hereunder now or hereafter
arising, and Borrower hereby pledges with, assigns to, and grants to Lender's
Agent on behalf of the Relevant Lender a continuing first security interest in,
and a lien upon, the Collateral. Borrower shall make appropriate notations on
its books and records so as to ensure the validity of such security interest.
Such first security interest shall attach upon the delivery of the Collateral to
Lender's Agent, shall survive the termination of this Agreement, and shall cease
only upon the return of the Collateral to Borrower subsequent to the return of
the Borrowed Securities to Lender's Agent. In addition to the rights and
remedies given to Lender's Agent hereunder, Lender's Agent, on behalf of the
Relevant Lender, shall have all the rights and remedies of a secured party under
the Uniform Commercial Code of Massachusetts.
3.3 Borrower understands that Lender's Agent may use or invest the Collateral,
to the extent that such Collateral consists of cash. Such use or investment
shall be at the risk of the Relevant Lender and, subject to the payment of an
agreed rebate fee pursuant to Section 5.2, and any other fees payable hereunder,
the Relevant Lender shall be entitled to retain all income and profits therefrom
and shall bear all losses therefrom. Except as provided in Section 10, neither
Lender's Agent nor any Lender may pledge, repledge, hypothecate, rehypothecate,
lend, or relend the Collateral, to the extent such Collateral consists of other
than cash. However, Lender's Agent may commingle and hold non-cash Collateral in
bulk.
3.4 With the approval of Lender's Agent, Borrower may at any time substitute for
any securities held by Lender's Agent as Collateral for the Borrowed Securities
other Collateral with respect to the Borrowed Securities of equal current Market
Value to the Securities for which it is to be substituted. Prior to the
Page A-3
maturity of any U.S. Security that is delivered to Lender's Agent as Collateral,
Borrower shall replace such U.S. Security with other Collateral acceptable to
Lender's Agent and of equal current Market Value to the U.S. Security for which
it is to be substituted. Substituted collateral shall be considered Collateral
for all purposes hereof.
3.5 Borrower shall be entitled to receive all distributions made on or in
respect of non-cash Collateral the payable dates for which are during the term
of a Loan and which are not otherwise received by Borrower, to the full extent
it would be so entitled if the Collateral had not been delivered to Lender's
Agent. Any distributions made on or in respect of such Collateral which Borrower
is entitled to receive under this section shall be paid by Lender's Agent,
acting on behalf of the Relevant Lender, to Borrower forthwith upon receipt
thereof by Lender's Agent, so long as Borrower has not committed a Default at
the time of such receipt.
3.6 Except as provided in Sections 10 and 11 hereunder, Lender's Agent shall be
obligated to return the Collateral to Borrower upon the return to Lender's Agent
of the Borrowed Securities.
4. Marks to Market: Maintenance of Collateral.
4.1 Borrower shall daily xxxx to market any Loans hereunder and in the event
that at the close of trading on any day the Market Value of all the Collateral
delivered by Borrower to Lender's Agent with respect to any Loan hereunder shall
be less than one hundred percent (100%) of the Market Value of all Borrowed
Securities outstanding with respect to such Loan, Borrower shall deliver to
Lender's Agent for the benefit of the Relevant Lender additional Collateral by
the close of the next Business Day so that the Market Value of the additional
Collateral when added to the Market Value of the Collateral with respect to such
Loan shall equal at least the Margin Percentage of the Market Value of the
Borrowed Securities outstanding with respect to such Loan. Such additional
Collateral shall be delivered as provided in Section 3.1 above.
4.2 In the event that at the close of trading on any day the Market Value of all
the Collateral delivered by Borrower to Lender's Agent with respect to any Loan
hereunder shall be less than the Margin Percentage of the Market Value of all
the Borrowed Securities outstanding with respect to such Loan, Lender's Agent
may, by oral notice to Borrower, demand that Borrower deliver to Lender's Agent
for the benefit of the Relevant Lender additional Collateral such that the
Market Value of such additional Collateral when added to the Market Value of the
Collateral with respect to such Loan shall equal at least the Margin Percentage
of the Market Value of the Borrowed Securities outstanding with respect to such
Loan. Such delivery is to be made by the close of
Page A-4
business on the day of Lender's Agent's notice to Borrower if such notice is
given before 11:30 a.m. on a Business Day. If Lender's Agent's notice is given
after 11:30 a.m. on a Business Day or is given on a day other than a Business
Day, such delivery is to be made by the close of business of the next Business
Day, unless such notice has been superseded by a proper demand made pursuant to
Section 4.3 before 11:30 a.m. of that next Business Day. Such Collateral shall
be delivered as provided in Section 3.1 above.
4.3 In the event that at the close of trading on any day the Market Value of all
the Collateral delivered by Borrower to Lender's Agent with respect to any Loan
hereunder shall be greater than the Margin Percentage of the Market Value of all
the Borrowed Securities outstanding with respect to such Loan, Borrower may, by
oral notice to Lender's Agent, demand that Lender's Agent deliver to Borrower
such amount of Collateral as may be selected by Borrower, so long as the Market
Value of the remaining Collateral equals at least the Margin Percentage of the
Market Value of the Borrowed Securities outstanding with respect to such Loan.
Such delivery is to be made by the close of business on the day of Borrower's
notice to Lender's Agent if such notice is given before 11:30 a.m. on a Business
Day. If Borrower's notice is given after 11:30 a.m. on a Business Day or is
given on a day other than a Business Day, such delivery is to be made by the
close of business of the next Business Day, unless (a) such notice has been
superseded by a proper demand made pursuant to Section 4.2 or this Section 4.3
given before 11:30 a.m. of that next Business Day, or (b) additional Collateral
is required to be delivered on that next Business Day pursuant to Section 4.1.
Such Collateral shall be delivered as provided in Section 3.1 above.
5. Fees and Investment of Cash Collateral.
5.1 When an agreement to lend securities is made, Lender's Agent and Borrower
shall agree on the basis of compensation to be paid in respect of the Loan.
5.2 To the extent that a Loan of Borrowed Securities is collateralized by cash,
the parties hereby agree that Lender's Agent for the benefit of the Relevant
Lender shall use and invest such cash Collateral, and that, in consideration for
such right to use and invest cash Collateral, Lender's Agent, on behalf of the
Relevant Lender, will pay Borrower a loan rebate fee computed daily for each
such Loan and based on the amount of cash Collateral delivered with respect to
such Loan. The amount of such loan rebate fee shall be computed daily from the
first Business Day that cash Collateral is delivered to Lender's Agent, through
and including the earliest of: (a) the date next preceding the date that such
cash Collateral is returned to Borrower; (b) the date of a Default by Borrower;
and (c) the date Lender's Agent gives notice of termination pursuant to Section
8.2, provided that the parties may mutually agree that a loan rebate fee will be
paid for all or an agreed upon number of days
Page A-5
after such notice is given (but in no event for a period beyond the earlier of
the dates described in clauses (a) and (b) of this sentence). Provided the
Borrower is not in Default, such loan rebate fee shall be payable upon the date
the Borrowed Securities are returned to the Lender's Agent upon termination of
the Loan. If requested by any party to this agreement, Lender's Agent and
Borrower shall renegotiate the loan rebate fee from time to time.
5.3 To the extent that a Loan of Borrowed Securities is collateralized by other
than cash, Lender's Agent and Borrower may agree that Borrower shall pay to
Lender's Agent, for the account of the Relevant Lender, a loan premium based on
the par value of the borrowed securities. The amount of such loan premium shall
be computed from the first Business Day that the Borrowed Securities are
delivered to Borrower, through and including the date next preceding the date
that securities identical to the Borrowed Securities are returned to Lender's
Agent pursuant to Section 8 or the date that Lender's Agent makes a purchase of
securities or an election to treat the Borrowed Securities as sold pursuant to
Section 10.1. Any fee payable by Borrower hereunder shall be payable upon the
earliest of the following: (a) the seventh Business Day of the month following
the month in which the fee was incurred; or (b) immediately, in the event of a
Default hereunder by Borrower; or (c) the date this Agreement is terminated.
5.4 All transfer taxes and transfer fees with respect to any transfers hereunder
of Borrowed Securities shall be paid by Borrower.
6. Representations of the Parties.
The parties hereby make the following representations and warranties, which
shall continue during the term of any Loan hereunder;
6.1 Each party hereto represents and warrants that (a) it has the power to
execute and deliver this Agreement, to enter into the Loans contemplated hereby,
and to perform its obligations hereunder; (b) it has taken all necessary action
to authorize such execution, delivery, and performance; and (c) this Agreement
constitutes a legal, valid, and binding obligation enforceable against it.
6.2 Each party hereto represents and warrants that the execution, delivery and
performance by it of this Agreement and each Loan hereunder will at all times
comply with all applicable laws and regulations, including those of applicable
securities regulatory and self-regulatory agencies and organizations.
6.3 Borrower represents and warrants for the benefit of Lender's Agent and each
Lender that (a) it is a trust company duly organized and validly existing under
the laws of the Commonwealth of Massachusetts, (b) it is a bank within the
meaning of Section
Page A-6
3(a)(6)(A)-(C) of the Exchange Act, (c) it has, or will have at the time of
delivery of any Collateral, the right to grant a first security interest therein
subject to the terms and conditions hereof, and (d) the purposes for which it
borrows securities hereunder shall not violate the laws of the Commonwealth of
Massachusetts or the federal laws applicable therein.
6.4 Borrower represents that the statements provided pursuant to Section 7.1
fairly represent its financial condition, and that there has been no material
adverse change in its financial condition or the financial condition of any
parent company since that date that it has not been disclosed in writing to
Lender's Agent. Lender's Agent represents that Lender has advised it that the
statements provided pursuant to Section 7.2 fairly represent its financial
condition, and that it has not been informed of any material adverse change in
Lender's financial condition since that date that has not been disclosed in
writing to Borrower. Each Loan effected hereunder shall constitute a present
representation by: (i) Borrower that there has been no material adverse change
in its financial condition or the financial condition of any parent company that
has not been disclosed in writing to Lender's Agent since the date of the most
recent statement furnished to Lender's Agent pursuant to Section 7.1; and (ii)
Lender's Agent that it knows of no material adverse change in the financial
condition of any Lender that has not been disclosed in writing to Borrower since
the date of the most recent statement furnished by such Lender to Lender's Agent
pursuant to Section 7.2.
7. Covenants.
7.1 Borrower hereby makes the following covenants. Upon execution of this
Agreement, Borrower shall furnish to Lender's Agent (i) the most recent
available audited statement of Borrower's financial condition, and (ii) the most
recent available unaudited statement of Borrower's financial condition. As long
as any Loan is outstanding under this Agreement, Borrower will promptly deliver
to Lender's Agent all such financial information that is subsequently available,
and any other financial information or statements that Lender's Agent may
reasonably request.
7.2 Lender's Agent hereby makes the following covenants. Subject to
confidentiality restrictions, if any, Lender's Agent shall furnish to Borrower
any of the following statements received from each Lender, promptly upon much
receipt (i) the most recent available audited statement of such Lender's
financial condition, and (ii) the most recent available unaudited statement of
such Lender's financial condition. As long as any Loan is outstanding under this
Agreement, Lender's Agent will promptly deliver to Borrower all such financial
information that is subsequently delivered to Lender's Agent and any other
financial information or
Page A-7
statements pertaining to a Lender and received by Lender's Agent that Borrower
may reasonably request.
7.3 Lender's Agent and Borrower hereby covenant and agree for the benefit of the
Lenders that they each have adopted and implemented procedural safeguards to
help ensure that all actions taken by Lender's Agent hereunder will be effected
by individuals other than, and not under the supervision of, individuals who are
acting in a capacity as Borrower hereunder, and that all trades effected
hereunder will take place at the same fully negotiated "arms length" prices
offered to similarly situated third parties by Lender's Agent when it acts as
lending agent for the various participants in its securities lending program,
notwithstanding the inherent conflict of interest with respect to Loans to be
effected by Lender's Agent to Borrower.
8. Termination of Loan without Default.
8.1 Borrower may cause the termination of a Loan at any time by returning the
Borrowed Securities to Lender's Agent.
8.2 Lender's Agent may cause the termination of a Loan by giving notice of
termination of such Loan to Borrower, prior to the close of business on any
Business Day. Upon such notice, Borrower shall deliver the applicable Borrowed
Securities to Lender's Agent no later than the close of business on the next
Business Day.
8.3 Borrower's delivery of the Borrowed Securities to Lender's Agent pursuant to
Section 8.1 or 8.2 shall be made by causing Lender's Agent to credit the Account
of the Relevant Lender with the Borrowed Securities. Upon such delivery by or on
behalf of Borrower, Lender's Agent shall concurrently therewith deliver the
Collateral (as adjusted pursuant to Section 4) to Borrower; provided, however,
that if upon the return of the Borrowed Securities there is not sufficient time
for Lender's Agent to effect a return of the Collateral to Borrower's Account,
Lender's Agent may return such Collateral on the next Business Day such return
can be so effected.
9. Events of Default.
With respect to each Loan, the following shall constitute defaults hereunder
(individually, a "Default")
(a) if Lender's Agent or Borrower fails to return the relevant Borrowed
Securities or Collateral as required by Section 8 hereof;
(b) if Lender's Agent or Borrower fails to deliver or return the relevant
Collateral, as required by Section 4 hereof;
(c) if Lender's Agent or Borrower fails to make the payment of distributions
with respect to such Loan as required by Section 2.3
Page A-8
and 3.5 hereof and such default is not cured within one Business Day of notice
of such failure to Borrower or Lender's Agent, as the case may be;
(d) if any party fails to make any payment with respect to such Loan due
hereunder;
(e) if any party, or any parent company of Borrower, or the Relevant Lender
makes a general assignment for the benefit of creditors, or admits in writing
its inability to pay its debts as they become due, or files or becomes subject
to a petition in bankruptcy or is adjudicated as bankrupt or insolvent, or files
or becomes subject to a petition seeking reorganization, liquidation,
dissolution, or similar relief under any present or future law or regulation, or
seeks, consents to or acquiesces in the appointment of any trustee, receiver, or
liquidator of it or any material part of its properties;
(f) if Borrower or the Relevant Lender has its license, charter, or other
authorization necessary to conduct a material portion of its business withdrawn,
suspended or revoked by any applicable federal or state government or agency
thereof;
(g) if it is found that Borrower or the Relevant Lender has made a material
misrepresentation of its financial condition;
(h) if Borrower breaches any covenants, representations, or agreements herein;
(i) if a final judgment for the payment of money shall be rendered against
Borrower and such judgment shall not have been discharged or its execution
stayed pending appeal within sixty (60) days of entry or such judgment shall not
have been discharged within sixty (60) days of expiration of any such stay.
10. Lender's Remedies on Borrower's Default.
10.1 In the event of any Default by Borrower under Section 9 hereof with respect
to a Loan, Lender's Agent, on behalf of the Relevant Lender, shall have the
right, in addition to any other remedies provided herein or under applicable
law, to terminate all Loans of such Relevant Lender, effective immediately upon
receipt of notice to that effect by Borrower, and at the option of Lender's
Agent (without further notice to Borrower) with respect to any or each such
Loan, either (a) to purchase a like amount of the Borrowed Securities in any
market for such securities or (b) to elect to treat the Borrowed Securities as
having been purchased by Borrower at a purchase price equal to the Replacement
Value. Lender's Agent may apply the relevant Collateral to the payment of such
purchase, after deducting therefrom all amounts, if any, due the Relevant
Lender, or Lender's Agent on its behalf, from Borrower under this Agreement. In
such event, Borrower's obligation to return the applicable Borrowed Securities
shall
Page A-9
terminate. Borrower shall be liable to Lender's Agent, on behalf of the Relevant
Lender, for the cost of funds which Lender's Agent, on behalf of the Relevant
Lender, must advance to purchase such securities during any stay on the
application of the Collateral (whether such stay is automatic or imposed by a
court or any other governmental agency). In the event such purchase price or
Replacement Value exceeds the amount of the Collateral, Borrower shall be liable
to Lender's Agent, on behalf of the Relevant Lender for the amount of such
excess (plus all amounts, if any, due by Borrower to the Lender's Agent, on
behalf of the Relevant Lender hereunder) together with interest on all such
amounts at the Prime Rate, as it fluctuates from day to day, on demand from the
date of such purchase or election until the date of payment of such excess. Each
Lender shall have, as security for Borrower's obligation to such Lender to pay
such excess, a first security interest in or right of setoff against any
property of Borrower then held by such Lender and any other amount payable by
such Lender to Borrower. The purchase price of securities purchased under this
Section 10 shall include broker's fees and commissions and all other reasonable
costs, fees, and expenses related to such purchase. Lender's Agent shall
allocate among the Lenders and their respective Loans, in accordance with any
reasonable allocation method selected by Lender's Agent, the funds received,
Collateral realized upon and the costs of collection, including without
limitation, the cost of purchase of replacement securities. Upon the
satisfaction of all of Borrower's obligations to Lender's Agent, on behalf of
the Relevant Lender hereunder, any remaining Collateral held by Lender's Agent
on behalf of the Relevant Lender shall be returned to Borrower.
11. Borrower's Remedies on by Lender or Lender's Agent Default.
11.1 With respect to each Loan, in the event of any Default by the Relevant
Lender, or by Lender's Agent by reason of the Relevant Lender's failure to
perform its obligations under the terms of its Securities Lending Authorization
Agreement, Borrower shall have the right to sell an amount of the Borrowed
Securities applicable to the Loans from the Relevant Lender, in the principal
market for such securities, that will provide proceeds equal in value to the
Market Value of the Collateral on the date of Default. In such event, Borrower
may retain the proceeds of such sale and the obligation of Lender's Agent to
return the Collateral applicable to the Loans from the Relevant Lender shall
terminate. In the event the sale price received from such securities is less
than the value of the Collateral, Lender's Agent shall be liable to Borrower
(but only if and to the extent of the funds received from the Relevant Lender
under its Securities Lending Authorization Agreement) for the amount of any
deficiency (plus all amounts, if any, due to Borrower hereunder). Upon the
satisfaction of all of the obligations of Lender's Agent thereunder, any
remaining Borrowed Securities applicable to the Loans from the Relevant Lender
shall be returned to Lender's Agent.
Page A-10
12. Definitions.
For the purposes hereof:
12.1 "Account of the Relevant Lender" shall mean, with respect to each Relevant
Lender, either: (i) such Relevant Lender's sub-account reflected on the books
and records of Lender's Agent within the 3E Special Account of Lender's Agent
held in the Federal Reserve Book-Entry System; or (ii) an account designated on
the books and records of State Street Bank and Trust Company as representing
cash Collateral held by Lender's Agent as custodian on the Relevant Lender's
behalf.
12.2 "Affiliate" means (i) any person directly or indirectly, through one or
more intermediaries, controlling, controlled by, or under common control with
another person; (ii) any officer, director, or partner, or employee of such
other person; and (iii) any corporation or partnership of which such other
person is an officer, director or partner. For purposes of this definition the
term "control" means the power to exercise a controlling influence over the
management or policies of a person other than an individual.
12.3 "Available Securities" shall mean the securities available to be loaned
hereunder, as described in Section 1 hereof.
12.4 "Borrowed Security" shall mean any "security" (as defined in the Exchange
Act) which is a U.S. Security, and is delivered as a Loan hereunder, until such
security is credited to Lender's Agent for the Account of the Relevant Lender or
until the security is replaced by purchase. For purposes of the return of
Borrowed Securities by Borrower pursuant to Section 8 or the purchase of
securities pursuant to Section 10, such term shall include securities of the
same issuer, class, and quantity as the Borrowed Securities.
12.5 "Borrower's Account" shall mean the 3A Investment Account of State Street
Bank and Trust Company held through the Federal Reserve Book-Entry System.
12.6 "Business Day" shall mean any day recognized as a settlement day by the
Federal Reserve Bank of Boston and on which Lender's Agent is open for business
to the public.
12.7 "Collateral" shall mean, with respect to each Loan whether now owned or
hereafter acquired, (a) that collateral delivered to Lender's Agent pursuant to
Section 3 or 4, and (b) all accounts in which such collateral is deposited and
all securities and the like in which all cash collateral is invested or
reinvested.
Page A-11
12.8 "Default" shall have the meaning set forth in Section 9 hereof.
12.9 "Loan" shall mean a single transaction for the loan of securities hereunder
by Lender's Agent to Borrower on behalf of a designated Relevant Lender.
12.10 "Loaned Securities" shall mean securities subject to a Loan.
12.11 "Margin Percentage" shall mean one hundred and two percent (102%) or such
other percentage as is agreed to by the parties pursuant to Section 1.1.
12.12 "Market Value" of a security shall mean the fair market value of such
security (including, in the case of any Borrowed Security that is a debt
security, the accrued interest on such security) as determined by the
independent pricing service designated by Lender's Agent, or by such other
independent sources as may be selected on a reasonable basis by Lender's Agent.
"Market Value" of cash shall mean the notional amount thereof.
12.13 "Prime Rate" shall mean the prime rate as quoted in The Wall Street
Journal, New York Edition, for the business day preceding the date on which such
determination is made. If more than one rate is so quoted, the Prime Rate shall
be the average of the rates so quoted.
12.14 "Relevant Lender" shall mean, with respect to each Loan, the Lender to
whom such Loan is allocated as shown on the books of Lender's Agent maintained
pursuant to Section 1.4 hereof.
12.15 "Replacement Value" shall mean the price, including any brokerage or other
expenses and accrued interest, at which a like amount of securities identical to
the Borrowed Securities could be purchased in the principal market for such
securities at the time of the election of Lender's Agent under Section 10.1
hereof.
12.16 "State Street" shall mean State Street Bank and Trust Company.
12.17 "U.S. Security" means a security issued or guaranteed by the United States
government or any of its agencies.
13. Indemnification.
Borrower hereby agrees to indemnify and hold harmless each Lender and Lender's
Agent from any and all damages, losses, costs, and expenses (including
attorney's fees) that such Lender or Lender's Agent may incur or suffer due to
the failure of the Borrower to perform its obligations under this Agreement.
This
Page A-12
right to indemnification shall survive the termination of any Loan or of this
Agreement.
14. Waivers, General.
The failure of either party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. All waivers in respect of a Default must be in
writing.
15. Standard of Care.
Subject to the requirements of applicable law, Lender's Agent shall not be
liable with respect to any losses incurred by Borrower in connection with this
Agreement except to the extent that such losses result from the negligence of
Lender's Agent in the performance of its duties hereunder.
16. Continuing Agreement; Termination; Remedies.
It is the intention of the parties hereto that, subject to the termination
provisions set forth herein, this Agreement shall constitute a continuing
agreement in every respect and shall apply to each and every Loan, whether now
existing or hereafter made by Lender's Agent to Borrower. Lender's Agent and
Borrower may each at any time terminate this Agreement upon five (5) days'
written notice to the other parties to that effect. The sole effect of any such
termination of this Agreement will be that, following such termination, no
further Loans by Lender's Agent shall be made or considered made hereunder, but
the provisions hereof shall continue in full force and effect in all other
respects until all Loans have been terminated and all obligations satisfied as
herein provided.
17. Notices.
Except as otherwise specifically provided herein, notices under this Agreement
may be made orally, in writing, or by any other means mutually acceptable to the
parties. If in writing, a notice shall be sufficient if delivered to the party
entitled to receive such notices at the following addresses:
If to Lender's Agent:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Securities Lending Department
Page A-13
If to Borrower:
State Street Bank and Trust Company
Xxxxxxx Xxxxxxx Xxxx
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Capital Markets Area
or to such other addresses as either party may furnish the other party by
written notice under this section.
Telephone and facsimile notices shall be sufficient if communicated to the party
entitled to receive such notice at the following numbers:
If to Lender's Agent:
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
If to Borrower:
Telephone: 000-0000 Facsimile: 654-4270
18. Time.
All times specified herein shall be based on Boston time.
19. Securities Contracts.
Each party hereto agrees that this Agreement and the Loans made hereunder shall
be a "qualified financial contract" for purposes of Section 11 (e)(8) of the
Federal Deposit Insurance Act, as amended, and any receivership or
conservationship proceeding thereunder.
20. Declaration of Trust.
Lender's Agent hereby covenants and agrees that with respect to any Collateral
delivered to Lender's Agent by Borrower hereunder, Lender's Agent shall hold
such Collateral, or, in the case of cash Collateral, shall hold any securities
or units representing the investment of such cash Collateral, separate and apart
from Lender's Agent's assets and Lender's Agent hereby further declares that it
holds such Collateral or such securities or units, as the case may be, in trust
for the benefit of the Relevant Lender.
Page A-14
21. Miscellaneous.
With respect to loans of U.S. Securities to Borrower by Lender's Agent on behalf
of Lenders, this Agreement supersedes any other agreement between the parties.
This Agreement shall not be assigned by any party without the prior written
consent of the other parties. Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, representatives, successors and assigns. This Agreement shall
be governed and construed in accordance with the laws of the Commonwealth of
Massachusetts. The provisions of this Agreement are severable and the invalidity
or unenforceability of any provision hereof shall not affect any other provision
of this Agreement. If in the construction of this Agreement any court should
deem any provision to be invalid because of scope or duration, then such court
shall forthwith reduce such scope or duration to that which is appropriate and
enforce this Agreement in its modified scope or duration.
22. Modification.
This Agreement shall not be modified, except by an instrument in writing signed
by the party against whom enforcement is sought.
BORROWER: STATE STREET BANK AND TRUST COMPANY
Officer
Title
Signature
LENDER'S AGENT: STATE STREET BANK AND TRUST COMPANY
Officer:
Title:
Signature:
Page A-15
EXHIBIT 3.1
Ref No
(for insertion by Inland Revenue when photocopy)
APPLICATION FOR RELIEF FROM UK INCOME TAX ON MANUFACTURED OVERSEAS DIVIDENDS
(Double Taxation Relief (Taxes on Income) (General) (Manufactured Overseas
Dividends) Regulations S I 1993 No 1957)
Part 1 Claimant's Declaration
I declare, to the best of my knowledge and belief, that (insert name of
claimant) Claimant's address
is beneficially entitled to the manufactured overseas dividends receivable from
approved UK intermediaries or approved UK collecting agents as defined in SI
1993 Number 2004 and claim exemption under the Other Income article of the
/UK Tax Convention in respect of the
manufactured overseas dividends
(claimant's signature)
Part 2 Certificate of Tax Authority
I certify
(a) that (insert name of claimant) is resident in within
the meaning of the /United Kingdom Tax Convention and
(b)* is subject to tax on the manufactured dividends or interest to which it
is entitled.
* delete if not required by Other Income article of convention
(signature) (date)
Stamp of overseas Overseas revenue
revenue authority reference No.
Copy of Inland Revenue original
Issued on
Signature
Schedule 7.1
This Schedule is attached to and made part of the Securities Lending
Authorization Agreement, dated the day of , 1996
between XXXXXXX X. XXXXXXXXX FUND, INC. on behalf of the International Value
Portfolio ("Client") and STATE STREET BANK AND TRUST COMPANY ("State Street").
Acceptable Forms of Collateral
- Cash (U.S. Currency);
- Short-term Securities issued or guaranteed by the United States government or
its agencies;
- Such other Collateral as the parties may agree to in writing from time to
time.
Schedule 7.2
This Schedule is attached to and made part of the Securities Lending
Authorization Agreement, dated the day of , 1996 between
XXXXXXX X. XXXXXXXXX FUND, INC. on behalf of the International Value
Portfolio("Client") and STATE STREET BANK AND TRUST COMPANY ("State Street").
Form of Report
STATE STREET BANK & TRUST CO.
X.X. XXX 0000
XXXXXX, XX 00000
SECURITIES LENDING DEPARTMENT
CORP CASH
TO: SUMMARY EARNINGS STATEMENT PAGE 1
BILLING DATE:
BILLING PERIOD:
----------------------------------------------------------------------------------------------------------------------------
SETTLEMENT: AUSTRALIAN DOLLAR COLLATERAL: US DOLLARS
ACCOUNT NAME GROSS EARNINGS REBATE PAID COMMISSION NET EARNINGS BANK FEE INCOME
----------------------------------------------------------------------------------------------------------------------------
EQUITIES
EQUITY TOTALS
TOTALS
STATE STREET BANK & TRUST CO.
X.X. XXX 0000
XXXXXX, XX 00000
SECURITIES LENDING DEPARTMENT
CORP EQUITY CASH
TO: EARNINGS STATEMENT PAGE 1
BILLING DATE:
BILLING PERIOD:
------------------------------------------------------------------------------------------------------------------------------------
SETTLEMENT: AUSTRALIAN DOLLAR COLLATERAL: US DOLLARS
OPENDATE OPER-ID QUANTITY TDE PRICE FROM - THRU CLOSED BALANCE NUM RESPRN BANK AVG. MNY
BALANCE (# #) ON LOAN DAYS RATE FEE MKT RATE
------------------------------------------------------------------------------------------------------------------------------------
303 080 003 AMPULEX LTD AUSO.50
AUD USD
6/12/95 F07 383,000 CAR 2.500000 07/01 07/02 957,500.00 2 5.500 30.00 5.90000
TOTAL EARNINGS
LESS REBATE
LESS BANK FEE
TRANSACTION # 00000000 BROKER XXXXX NET EARNINGS
TOTAL CASH A/C GROSS EARNINGS
TOTAL NON-CASH A/C GROSS EARNINGS
TOTAL A/C REBATES
TOTAL CASH A/C NET EARNINGS
TOTAL NON-CASH A/C NET EARNINGS
TOTAL CASH A/C BANKFEES
TOTAL NON-CASH A/C BANKFEES
TOTAL CASH A/C INCOME
TOTAL NON-CASH A/C INCOME
STATE STREET BANK & TRUST CO.
X.X. XXX 0000
XXXXXX, XX 00000
SECURITIES LENDING DEPARTMENT
CORP EQUITY CASH
TO: SUMMARY OF TRANSACTIONS PAGE 1
BILLING DATE:
BILLING PERIOD:
------------------------------------------------------------------------------------------------------------------------------------
SETTLEMENT: COLLATERAL: CURRENCY:
ACCOUNT SHORT NAME NEW LOANS NEW BORROWER FULL RETURNS PARTIAL RETURNS ACCOUNT MARKS BROKER MARKS ADJUSTMENTS
------------------------------------------------------------------------------------------------------------------------------------
EQUITIES
EQUITY TOTALS
TOTALS
Schedule 7.3
DIRECTIONS TO STATE STREET REGARDING
THE INVESTMENT OF CASH COLLATERAL
Except as provided below, State Street shall invest cash Collateral in
repurchase agreement transactions ("Repo Transactions") so long as each of the
following conditions have been met.
(i) The counterparty of each such Repo Transaction is listed on Schedule 7.3-A
hereto or has been approved in writing by the Client or the Investment Advisor
(each an "Approved Repo Counterparty").
(ii) Each Repo Transaction shall (A) mature in one Business Day; (B) be
collateralized 102% by securities issued by the U.S. Treasury; and (C) be
entered into only in accordance with the terms of a master repurchase agreement
substantially in the form attached as Schedule 7.3-B hereto, with such changes
as State Street shall deem necessary for administrative purposes.
(iii) State Street shall not enter into a Repo Transaction with any Approved
Repo Counterparty if, as a result of entering into such Repo Transaction, there
shall be outstanding with such Approved Repo Counterparty an aggregate amount of
Repo Transactions that exceed 20% of the Market Value of the Collateral with
respect to the Loaned Securities.
(iv) State Street shall not enter into any Repo Transaction with an Approved
Repo Counterparty listed on Schedule 7.3-A hereto under the heading "Restricted
Repo Counterparties" or identified in writing to State Street by the Client or
the Investment Advisor as such (collectively, the "Restricted Repo
Counterparties") if, as a result of entering into such Repo Transaction, there
shall be outstanding with the Restricted Repo Counterparties and the Restricted
Time Deposit Counterparties (as defined below) an aggregate amount of Repo
Transactions and Time Deposits (as defined below) that exceed 20% of the Market
Value of the Collateral with respect to the Loaned Securities.
In the event that (1) after reasonable efforts, State Street is unable to enter
into Repo Transactions on the terms set forth above or (2) at the time of
investment of cash Collateral, Repo Transactions are not available in the
marketplace, State Street shall invest cash Collateral in U.S. dollar time
deposits ("Time Deposits") so long as each of the following conditions are met.
(i) The counterparty of each such Time Deposit is listed on Schedule 7.3-C
hereto or has been approved in writing by the Client or the Investment Advisor
(each an "Approved Time Deposit Counterparty").
(ii) Each Time Deposit shall mature in one Business Day.
(iii) State Street shall not invest in a Time Deposit with any Approved Time
Deposit Counterparty if, as a result of investing in such Time Deposit, there
shall be outstanding with such Approved Time Deposit Counterparty an aggregate
amount of Time Deposits that exceed 20% of the Market Value of the Collateral
with respect to the Loaned Securities.
(iv) State Street shall not invest in any Time Deposit with any Approved Time
Deposit Counterparty listed on Schedule 7.3-C hereto under the heading
"Restricted Time Deposit Counterparties" or identified in writing to State
Street by the Client or the Investment Adviser as such (collectively, the
"Restricted Time Deposit Counterparties") if, as a result of investing in such
Time Deposit, there shall be outstanding with the Restricted Repo Counterparties
(as defined above) and the Restricted Time Deposit Counterparties an
aggregate amount of Repo Transactions (as defined above) and Time Deposits that
exceed 20% of the Market Value of the Collateral with respect to the Loaned
Securities.
Schedule 7.3-A
APPROVED REPO COUNTERPARTIES
Xxxxxx X. Xxxxxxx & Co., Inc.
Bear Xxxxxxx Securities Corp.
BT Securities Corp.
Chase Securities Corp.
Chemical Securities Inc.
Citicorp Securities Inc.
Xxxx Xxxxxx Securities
DLJ Securities Corp.
First Chicago Capital Markets Inc.
Xxxxxxx, Sachs & Co. L.P.
Greenwich Capital Markets
Xxxxxx Brothers Inc.
Xxxxxxx Xxxxx Govt. Securities Inc.
Xxxxxx Xxxxxxx & Co.
NationsBanc Capital Markets Inc.
NationsBank Corporation
Xxxxx Xxxxxx Inc.
Xxxxxxx Xxxxxxxx Inc.
Xxxxx Xxxxxx Shearson Inc.
Restricted Repo Counterparties:
CS First Boston Inc.
Deutsche Xxxxxx Xxxxxxxx
Dresdner Securities USA Inc.
H.K. Shanghai Bank Securities
SBC Capital Markets Inc.
UBS Securities Inc.
Schedule 7.3-B
Form of Master Repurchase Agreement
Account Name(s) Account Number(s)
Master Repurchase Agreement
Dated as of:
Between: State Street Bank and Trust Company, not individually, but on behalf
of each entity set forth in the Annex hereto
and
1. 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
financial instruments ("Securities") 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 shall be governed
by this Agreement, including any supplemental terms or conditions contained in
Annex I hereto, unless otherwise agreed in writing.
2. Definitions
(a) "Act of Insolvency," with respect to any party; (i) the commencement by such
party as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar law, or such party seeking
the appointment of a receiver, trustee, custodian or similar official for such
party or any substantial part of its property, or (ii) the commencement of any
such case or proceeding against such party, or another seeking such an
appointment, or the filing against a party of an application for a protective
decree under the provisions of the Securities Investor Protection Act of 1970,
which (A) is consented to or not timely contested by such party, (B) results in
the entry of an order for relief, such an appointment, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by a party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by a
party of such party's inability to 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;
(c) "Buyer's Margin Amount," with respect to any Transaction as of any date, the
amount obtained by application of a percentage (which may be equal to the
percentage that is agreed to as the Seller's Margin Amount under subparagraph
(q) of this Paragraph), agreed to by Buyer and Seller prior to entering into the
Transaction, to the Repurchase Price for such Transaction as of such date;
(d) "Confirmation," the meaning specified in Paragraph 3(b) hereof;
(e) "Income," with respect to any Security at any time, any principal thereof
then payable and all interest, dividends or other distributions thereon;
(f) "Margin Deficit," the meaning specified in Paragraph 4(a) hereof;
(g) "Margin Excess," the meaning specified in Paragraph 4(b) hereof;
(h) "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 closing 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);
(i) "Price Differential," with respect to any Transaction hereunder 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 during 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);
(j) "Pricing Rate," the per annum percentage rate for determination of the Price
Differential;
(k) "Prime Rate," the prime rate of U.S. money center commercial banks as
published in The Wall Street Journal;
(l) "Purchase Date," the date on which Purchased Securities are transferred by
Seller to Buyer;
(m) "Purchase Price," (i) on the Purchase Date, the price at which Purchased
Securities are transferred by Seller to Buyer, and (ii) thereafter, such price
increased by the amount of any cash transferred by Buyer to Seller pursuant 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;
(n) "Purchased Securities," the Securities transferred by Seller to Buyer in a
Transaction hereunder, and any Securities substituted therefor in accordance
with Paragraph 9 hereof. The term "Purchased Securities" with respect to any
Transaction at any time also shall include Additional Purchased Securities
delivered pursuant to Paragraph 4(a) and shall exclude Securities returned
pursuant to Paragraph 4(b);
(o) "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 Paragraphs 3(c) or 11 hereof;
(p) "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, increased by any amount determined by the application of the
provisions of Paragraph 11 hereof;
(q) "Seller's Margin Amount," with respect to any Transaction as of any date,
the amount obtained by application of a percentage (which may be equal to the
percentage that is agreed to as the Buyer's Margin Amount under subparagraph (c)
of this Paragraph), agreed to by Buyer and Seller prior to entering into the
Transaction, to the Repurchase Price for such Transaction as of such date.
3. Initiation; Confirmation; Termination
(a) An agreement to enter into a Transaction may be made orally or in writing at
the initiation 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 (or
both), as shall be agreed, shall promptly 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 Seller with respect to
the Transaction to which the Confirmation relates, unless with respect to the
Confirmation specific objection is made promptly after receipt thereof. In the
event of any conflict between the terms of such Confirmation and this Agreement,
this Agreement shall prevail.
(c) 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 practice, by telephone or otherwise on or prior to the business day
on which such termination will be effective. On the date specified in such
demand, or on the date fixed for termination in the case of Transactions having
a fixed term, termination of the Transaction will be effected by transfer to
Seller or its agent of the Purchased 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 Repurchase Price to an account of Buyer.
4. Margin Maintenance
(a) 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
Buyer is less than the aggregate Buyer's Margin Amount for all such Transactions
(a "Margin Deficit"), 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 (decreased 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 Seller, 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 Buyer).
(c) Any cash transferred pursuant to this Paragraph shall be attributed to such
Transactions as shall be agreed upon by Buyer and Seller.
(d) 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 exceeds a specified dollar amount or 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).
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under subparagraphs
(a) and (b) of this Paragraph to require the elimination of a Margin Deficit or
a Margin Excess, as the case may be, may be exercised whenever such a Margin
Deficit or Margin Excess exists with respect to any single Transaction hereunder
(calculated without regard to any other Transaction outstanding under this
Agreement).
5. Income Payments
Where a particular Transaction's term extends over an income payment date on the
Securities subject to that Transaction, Buyer shall, as the parties may agree
with respect to such Transaction (or, in the absence of any agreement, as Buyer
shall reasonably determine in its discretion), on the date such income is
payable either (i) transfer to or credit to the account of Seller an amount
equal to such income payment or payments with respect to any Purchased
Securities subject to such Transaction or (ii) apply the income payment or
payments to reduce the amount to be transferred to Buyer by Seller upon
termination of the Transaction. Buyer shall not be obligated to take any action
pursuant to the preceding sentence to the extent that such action would result
in the creation of a Margin Deficit, unless prior thereto of simultaneously
therewith Seller transfers to Buyer cash or Additional Purchased Securities
sufficient to eliminate such Margin Deficit.
6. 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 by 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 proceeds thereof.
7. Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds hereunder shall be in
immediately available funds. All 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 (iii) shall be transferred by any other method mutually acceptable to
Seller and Buyer. As used herein with respect to Securities, "transfer" is
intended to have the same meaning as when used in Section 8-313 of the New York
Uniform Commercial Code or, where applicable, in any federal regulation
governing transfers of the Securities.
8. Segregation of Purchased Securities
To the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its possession
and shall be identified as subject to this Agreement. Segregation may be
accomplished by appropriate identification on the books and records of the
holder, including a financial intermediary or a cleaning corporation. Title to
all Purchased Securities shall pass to Buyer and, unless otherwise agreed by
Buyer and Seller, nothing in this Agreement shall preclude Buyer from engaging
in repurchase transactions with the Purchased Securities or otherwise pledging
or hypothecating the Purchased Securities, but no such transaction shall relieve
Buyer of its obligations to
transfer Purchased Securities to Seller pursuant to Paragraphs 3, 4 or 11
hereof, or of Buyer's obligation to credit or pay income to, or apply income to
the obligations of, Seller pursuant to Paragraph 5 hereof.
Required Disclosure for Transactions in Which the Seller Retains Custody of the
Purchase Securities
Seller is not permitted to substitute other securities for those subject to this
Agreement and therefore must keep Buyer's securities segregated at all times,
unless in this Agreement Buyer grants Seller the right to substitute other
securities. If Buyer grants the right to substitute, this means that Buyer's
securities will likely be commingled with Seller's own securities during the
trading day. Buyer is advised that, during any trading day that Buyer's
securities are commingled with Seller's securities, they [will]* [may]** be
subject to liens granted by Seller to [its clearing bank]* [third parties]** and
may be used by Seller for deliveries on other securities transactions. Whenever
the securities are commingled, Seller's ability to resegregate substitute
securities for Buyer will be subject to Seller's ability to satisfy [the
clearing]* [any]** lien or to obtain substitute securities.
Note: This Master Repurchase Agreement is the same as the model prepared by the
Public Securities Association.
* Language to be used under 17 CFR Section 403 4(e) if Seller is a government
securities broker or dealer other than a financial institution
** Language to be used under 17 CFR Section 403 5(d) if Seller is a financial
institution
Annex I
Supplemental Terms and Conditions
of Master Repurchase Agreement
The following terms and conditions ("the Supplement") hereby are incorporated
into the Master Repurchase Agreement ("Agreement") dated as of April 19, 1993
between State Street Bank and Trust Company ("State Street"), in the capacity on
behalf of each respective account as set forth in Paragraph 1 below (State
Street, in each such capacity, hereinafter shall be referred to as the "Buyer")
and as the ("Seller"). To the extent of any conflict between the terms of the
Agreement and this Supplement, this Supplement shall govern. Unless otherwise
indicated, the definitions contained in Paragraph 2 of the Agreement apply to
this Supplement. This Supplement shall supersede any prior Supplement to the
Agreement.
1. Legal Capacity. Buyer enters this Agreement, and each Transaction hereunder,
not individually, but solely in its capacity as either:
(a) trustee of one of the following commingled investment funds qualified under
Revenue Ruling 81-100 as a group trust (each a "Qualified Fund"), to be
specified upon entering each Transaction:
Government Securities Short Term
Investment Fund ("GSTIF") Daily Mortgage Fund
Short Term Investment Fund ("STIF") Intermediate Bond Fund
Yield Enhanced Short Term Investment Fund Short Term Bond Fund
Quality A Short Term Investment Fund International Bond Fund
Quality D Short Term Investment Fund Yield Plus Fund
Quality P Short Term Investment Fund
Super Collateral Fund
Maturity Plus Fund
(b) trustee of one of the following Common Trust Funds (each a "CTF") maintained
by State Street, to be specified upon entering each transaction:
U.S. Bond Market Common Trust Fund
German Bond Market Common Trust Fund
Japanese Bond Market Common Trust Fund
United Kingdom Bond Market Common Trust Fund
Securities Lending Quality Trust
U.S. Libor Plus Common Trust Fund
Short Term Investment Common Trust Fund
(c) agent on behalf of one of the following clients (each a "Client"), to be
specified upon entering each Transaction:
Buyer may in writing amend the list of Qualified Funds, Common Trust Funds or
Clients governed by this Agreement from time to time, subject to approval by the
Seller. Buyer represents and warrants that it is duly authorized to execute
transactions on behalf of each such account.
2. Confirmation. The Seller shall promptly issue to the Buyer a written
confirmation upon agreeing to each Transaction pursuant to Paragraph 3 of the
Agreement. In addition to the information required in said confirmation by
Paragraph 3, each confirmation also shall identify the Purchased Securities.
3. Segregation of Purchased Securities. All Purchased Securities shall be
delivered on the same day as the Transaction to the Buyer's designated custodian
or sub-custodian ("Custodian"), together with all rights relating thereto,
against the payment of the Purchase Price. Under no circumstances shall the
Seller directly or indirectly maintain possession of Purchased Securities or
Additional Purchased Securities.
4. Oral Commitment. An oral commitment between Seller and the Buyer to enter
into a Transaction shall be binding if made prior to 2:00 p.m. New York time on
the Purchase Date. If Seller fails to deliver the Purchased Securities pursuant
to such oral commitment to sell by the close of business on such Purchase Date,
the Buyer shall have no obligation to transmit funds and Seller shall pay the
difference (if any) between (i) the Repurchase Price minus the Purchase Price
and (ii) an amount equal to the interest the Buyer actually obtained on the
Purchase Price for the period during which the Seller fails to deliver such
Purchased Securities ending on but excluding the original Repurchase Date. If
Buyer fails to pay for the Purchased Securities pursuant to such oral commitment
to sell by the close of business on such Purchase Date, the Seller shall have no
obligation to transmit the Purchased Securities and Buyer shall pay to the
Seller the amount by which Seller's cost of funds exceeds the agreed upon
Pricing Rate on the Purchase Price for the period during which the Buyer fails
to deliver the Purchase Price ending on but excluding the original Repurchase
Date.
5. Limitation of Liability. Buyer's execution of this Agreement and each
Transaction hereunder relating to either a Qualified Fund or a Common Trust Fund
is made solely in its capacity as trustee of the relevant Qualified Fund or
Common Trust Fund, Buyer's execution of this Agreement and each Transaction
hereunder relating to a Client is made solely in its capacity as agent on behalf
of such Client. It is expressly acknowledged and agreed that the obligations of
State Street hereunder shall not be binding upon any of the shareholders,
directors, officers, employees or agents of State Street, personally, but shall
bind only the property of the Qualified Fund, Common Trust Fund or Client
account, as the case may be.
6. Qualified ERISA Trust. Pursuant to Paragraph 18 of the Agreement, Buyer
hereby notifies Seller that each Qualified Fund consists solely of assets of
employee benefit plans or other plans qualified under the terms of ERISA, and
State Street as a fiduciary and in its corporate capacity represents that each
Transaction made by Buyer pursuant to the Agreement does not constitute
prohibited transactions under ERISA and shall therefore be made pursuant to the
terms of ERISA. This representation shall be deemed made each day that any
transaction is outstanding hereunder.
By: By:
Title: Title:
Date: Date:
ANNEX II
Names and Addresses for Communications Between Parties
Schedule 7.3-C
APPROVED TIME DEPOSIT COUNTERPARTIES
Restricted Time Deposit Counterparties:
Bank of New York Cayman
Bank of America Cayman
Chase Bank Nassau
Chemical Bank NY Nassau
Chemical Bank NY London
CIBC NY Cayman
Credit Agricole Cayman
Credit Agricole London
Deutsche Bank Cayman
Dresdner Bank Cayman
Fifth Third Bank Cincinnati Cayman
First Union NC Nassau
Xxxxxx Trust & Savings Nassau
National Bank of Detroit Nassau
Republic National Bank Cayman
Societe Generale Cayman
Sun Trust Bank Cayman
Toronto Dominion Bank Cayman
Union Bank of Switzerland Cayman
Schedule 7.4
This Schedule is attached to and made part of the Securities Lending
Authorization Agreement, dated the day of , 1996 between
XXXXXXX X. XXXXXXXXX FUND, INC. on behalf of the International Value Portfolio
("Client") and STATE STREET BANK AND TRUST COMPANY ("State Street").
Schedule of Fees
1. Subject to Paragraph 2 below, all proceeds collected by the State Street on
investment of Cash Collateral or any fee income shall be allocated as follows:
-Sixty percent (60%) payable to the Client, and
-Forty percent (40%) payable to State Street.
2. All payments to be allocated under Paragraph 1 above shall be made after
deduction of such other amounts payable to State Street or to the Borrower under
the terms of the attached Securities Lending Authorization Agreement.
3. Any Rebate Shortfall shall also be allocated as follows:
-Sixty percent (60%) payable by Client, and
-Forty percent (40%) payable by State Street.
4. Administrative Fees:
On an annualized basis, the administrative fee for investing cash Collateral in
accordance with the provisions of Schedule 7.3 hereto is 1.75 basis points,
which shall be allocated as follows: Sixty Percent (60%) payable by the Client
and Forty Percent (40%) payable by State Street.
SCHEDULE 10.1 PAGE
ENDATE:
ALL CURRENCY AMOUNTS IN USD SECURITIES LENDING ONLOAN POSITIONS
--------------------------------------------------------------------------------------------------------------------------------
SECURITY DESCRIPTION
SETTLED CONTRACT XXXX MARKET UNSETTLED CONTRACT XXXX MARKET
UNITS ON LOAN AMOUNT AMOUNT VALUE UNITS ON LOAN AMOUNT AMOUNT VALUE
--------------------------------------------------------------------------------------------------------------------------------
SETTLEMENT CODE:
TOTALS FOR SETTLEMENT CODE:
SCHEDULE 10.1 PAGE
ENDATE:
STATE STREET BANK & TRUST CO
SECURITIES LENDING BROKER EXPOSURE
-----------------------------------------------------------------------------------------------------------------------------------
BROKER SETTLED USD CONTRACT USD XXXX USD MARKET UNSETTLED USD CONTRACT USD XXXX USD MARKET
LOANS AMOUNT AMOUNT VALUE LOANS AMOUNT AMOUNT VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TOTALS FOR FUND
Schedule 10.2
This Schedule is attached to and made part of the Securities Lending
Authorization Agreement, dated the day of , 1996 between
XXXXXXX X. XXXXXXXXX FUND, INC. on behalf of the International Value Portfolio
("Client") and STATE STREET BANK AND TRUST COMPANY ("State Street").
fund bus settle brokername loan date cusip shs cont cont amt xxxx tot amt loan mkt
act line code onloan prince amt rate rate
XX01 C AUD BT SEC 1995-06-01 615573003 48,929 $2.25 $110,090.25 $0.00 $103,375.22 5.45 5.69061
00:00:00.000
AMENDMENT TO SECURITIES LENDING AUTHORIZATION AGREEMENT BETWEEN XXXXXXX X.
XXXXXXXXX FUND, INC. ON BEHALF OF THE INTERNATIONAL VALUE PORTFOLIO
AND
STATE STREET BANK AND TRUST COMPANY
WHEREAS, Xxxxxxx X. Xxxxxxxxx Fund, Inc. on Behalf of the International Value
Portfolio (the "Client") and State Street Bank and Trust Company, a
Massachusetts trust company ("State Street"), entered into a Securities Lending
Authorization Agreement July 17, 1996 (the "Agreement");
WHEREAS, Section 20 of the Agreement allows the Agreement to be modified at any
time by a writing signed by the party against whom enforcement is sought; and
WHEREAS, the Client and State Street both desire to amend the Agreement.
NOW, THEREFORE, for the value received and in order to induce the parties to
enter into the transactions contemplated thereby, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties mutually agree to amend the Agreement in the following
respect:
1. Schedule 7.1 of the Agreement regarding Acceptable Forms of Collateral is
hereby amended by deleting the following:
"Short-term Securities issued of guaranteed by the United States government or
its agencies" and replacing it with:
"Securities issued or guaranteed by the United States government or its
agencies;"
2. Certain capitalized terms in this Amendment are defined in Section 13 of the
Agreement.
3. The Agreement shall remain the same in all other respects.
The Amendment is effective as of the 18th day of July, 1996.
IN WITNESS WHEREOF, the parties hereto agree to the execution of the above
Amendment by affixing their signature below.
XXXXXXX X. XXXXXXXXX FUND, INC. ON
BEHALF OF THE INTERNATIONAL
VALUE PORTFOLIO
By: Xxxx Xxxxx Xxxx
Title: Secretary
STATE STREET BANK AND TRUST COMPANY
By: Xxxxxx Xxxxxxx
Title: Senior Vice President
Date: September 30, 1996
