EX-99.(H.4) 7 dex99h4.htm AMENDED AND RESTATED SECURITIES LENDING AGENCY AGREEMENT Exhibit (h.4) AMENDED AND RESTATED SECURITIES LENDING AGENCY AGREEMENT
Exhibit (h.4)
AMENDED AND RESTATED
SECURITIES LENDING AGENCY AGREEMENT
AGREEMENT, dated as of October 15, 2010, between iShares, Inc., a Maryland corporation, iShares MSCI Russia Capped Index Fund, Inc., a Maryland corporation, iShares MSCI Emerging Markets Small Cap Index Fund, Inc. a Maryland corporation, and iShares Trust, a Delaware statutory trust (each singly and together, the “Company”), acting on behalf of the funds listed on Schedule A hereto and any future series or portfolio of the Company (each, a “Fund”), and BlackRock Institutional Trust Company, N.A., a national banking association (“BTC”) and its successors.
WHEREAS, BTC acts as the agent for iShares, Inc. and iShares Trust for the purpose of lending Securities in the Account (as defined below) pursuant to a securities lending agency agreement, dated as of November 2, 2009, as amended; and
Whenever used in this Agreement, unless the context otherwise requires, the following words shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meaning assigned to them in the applicable Securities Lending Agreement.
1.1 “Account” shall mean the custodial account or accounts established and maintained by the Custodian on behalf of each Fund for the safekeeping of Securities and monies of the Fund from time to time.
1.2 “Approved Investment” shall mean any type of investment permitted for Cash Collateral under the Securities Lending Guidelines.
1.3 “Authorized Person” shall be any officer of the Company and any other person, whether or not any such person is an officer or employee of the Company, duly authorized by resolutions of the Company to give Oral Instructions and/or Written Instructions on behalf of the Company, such persons to be designated in a Certificate which contains a specimen signature of such person.
1.4 “Book-Entry System” shall mean the Federal Reserve/Treasury book-entry system for receiving and delivering Government Securities (as defined herein), its successors or equivalent and nominees.
1.5 “Borrower” shall mean any entity which is permitted to borrow Securities from the Company pursuant to then applicable law, regulation, and/or interpretation and pursuant to the Securities Lending Guidelines, and which has a valid Securities Lending Agreement in place with BTC.
1.6 “Business Day” shall mean, with respect to a Fund for which Securities loans are outstanding pursuant to this Agreement, a day on which both such Fund and BTC are open for business.
1.7 “Cash Collateral” shall mean either Fed funds or New York Clearing House funds or their equivalent if denominated in U.S. dollars, or the equivalent if the Cash Collateral is denominated in a currency other than U.S. dollars, as applicable for a particular loan of Securities.
1.8 “Cash Management Costs” shall mean the expenses incurred in connection with the management and investment of a Fund’s Cash Collateral, including fees and expenses payable to BTC, BlackRock Fund Advisors (“BFA”) or any other affiliate of BTC (or its successors) as a result of the investment of Cash Collateral in any joint account, fund or similar vehicle.
1.9 “Certificate” shall mean any notice, instruction, schedule or other instrument in writing, authorized or required by this Agreement to be given to BTC, which is actually received by BTC and signed on behalf of the Company by an Authorized Person or a person reasonably believed by BTC to be an Authorized Person.
1.10 “Collateral” shall mean Cash Collateral, Government Securities and Letters of Credit, plus such other collateral as may be then permitted by applicable law, regulation and/or interpretation, and the Securities Lending Guidelines.
1.11 “Collateral Account” shall mean a segregated account or accounts established and maintained by the Custodian for the purpose of holding Collateral and Approved Investments, and interest, dividends and other payments and distributions received with respect to Collateral and Approved Investments (“Distributions”). A Collateral Account may include a joint account as permitted by the Securities Lending Guidelines.
1.12 “Custodian” shall mean State Street Bank and Trust Company, a trust company organized and existing under the laws of the Commonwealth of Massachusetts, or such other company that may from time to time be retained as custodian by the Company with respect to one or more Funds.
1.13 “Depository” shall mean the Depository Trust Company, Euroclear, and any other securities depository, sub-depository or clearing agency (and their respective successors and nominees) authorized under applicable law or regulation to act as a securities depository, sub-depository or clearing agency, including any foreign securities depository or sub-depository for the Company.
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1.14 “Earnings Account” shall mean a segregated account established and maintained by the Custodian for the purpose of receiving any Securities Loan Fee paid by Borrowers in connection with Securities loans hereunder.
1.15 “Government Security” shall mean book-entry Treasury securities (as defined in Subpart 0 of Treasury Department Circular No. 300, 31 C.F.R. 306) and any other securities issued or guaranteed by the United States government or any agency or instrumentality of the United States government.
1.16 “Letter of Credit” shall mean an unconditional and irrevocable letter of credit in favor of BTC as agent for the Fund issued by a bank other than the Borrower, the creditworthiness of which has been deemed to be acceptable by BTC and which meets any applicable requirements in the Securities Lending Guidelines.
1.17 “Oral Instructions” shall mean verbal instructions actually received by BTC from an Authorized Person or from a person reasonably believed by BTC to be an Authorized Person.
1.18 “Rebate” shall mean the amount payable by the Fund to a Borrower in connection with Securities loans at any time collateralized by Cash Collateral.
1.19 “Securities Lending Agreement” shall mean with respect to any Borrower, the agreement pursuant to which BTC lends securities on behalf of its customers (including the Fund) to such Borrower, as amended from time to time, which agreement shall meet any applicable requirements in the Securities Lending Guidelines. The Securities Lending Agreement may be in the form of a master agreement covering a series of Securities lending transactions from multiple lenders, including the Company.
1.20 “Securities Lending Guidelines” shall mean guidelines governing the Company’s Securities lending program adopted by the Company and provided to BTC from time to time. The Securities Lending Guidelines may address any aspect of the Company’s Securities lending program, including without limitation the kinds of Securities that may be lent, permissible forms of Collateral, permissible Approved Investments, the selection of Borrowers, and regular reporting to the Company.
1.21 “Securities Loan Fee” shall mean the amount payable by a Borrower to BTC, as agent for the Fund, pursuant to the applicable Securities Lending Agreement in connection with Securities loans, if any, collateralized by Collateral other than Cash Collateral.
1.22 “Security” shall mean any Government Securities, non-U.S. securities, U.S. common stock and other equity securities, bonds, debentures, corporate debt securities, notes, mortgages or other obligations, and any certificates, warrants or other instruments representing rights to receive, purchase, or subscribe for the same, or evidencing or representing any other rights or interests therein, which are available for lending pursuant to Section 2.2 of this Agreement.
1.23 “Written Instructions” shall mean written communications actually received by BTC from an Authorized Person or from a person reasonably believed by BTC to be an Authorized Person by letter, memorandum, telegram, cable, telex, telecopy facsimile, computer, video (CRT) terminal or other on-line system, or any other method whereby BTC is able to verify with a reasonable degree of certainty the identity of the sender.
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2. Appointment; Scope of Agency Authority.
2.3 Securities Lending Agreement.
(a) Attached hereto as Exhibit A are the standard forms of Securities Lending Agreements in effect between BTC and the Borrowers as of the date hereof. BTC shall provide the Company with any proposed material amendments or changes, and notify the Company of any such amendments or changes, to any form of Securities Lending Agreement to be used prior to their effectiveness. The Company may elect, without penalty, to terminate any Borrower if it opposes the change.
(b) BTC is hereby authorized to lend Securities in the Account to Borrowers pursuant to the Securities Lending Agreements, this Agreement and the Securities Lending Guidelines.
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3. Representations and Warranties.
(a) This Agreement and the Securities Lending Guidelines have been approved by the Board of Trustees or Board of Directors of the Company (as applicable); this Agreement is, and, if properly entered into under the terms of this Agreement and the Securities Lending Guidelines, each Securities loan and Approved Investment will be, legally and validly entered into by the Company on behalf of each Fund, does not, and will not, violate any statute, regulation, rule, order or judgment binding on the Fund, or any provision of the Company’s charter or by-laws, or any agreement binding on the Company or affecting its property, and is enforceable against the Company and each Fund in accordance with its terms, except as may be limited by bankruptcy, insolvency or similar laws, or by equitable principles relating to or limiting creditors’ rights generally;
(b) The person executing this Agreement and all Authorized Persons acting on behalf of the Company or any Fund has and have been duly and properly authorized to do so;
(c) Each Fund is lending Securities as principal for its own account and it will not transfer, assign or encumber its interest in, or rights with respect to, any Securities loans; and
(d) All Securities available for lending pursuant to Section 2.2 of this Agreement are free and clear of all liens, claims, security interests and encumbrances that would preclude their being lent as contemplated by this Agreement. The Company shall promptly notify BTC in the manner agreed between the parties from time to time when any Securities are no longer subject to the representations contained in this sub-paragraph (d).
(a) This Agreement is legally and validly entered into by BTC, does not and will not, violate any statute, regulation, rule, order or, judgment binding on BTC, or any provision of BTC’s charter or by-laws, or any agreement binding on BTC or affecting its property, and is enforceable against BTC in accordance with its terms, except as may be limited by bankruptcy, insolvency or similar laws, or by equitable principles relating to or limiting creditors’ rights generally;
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(b) Both the person executing this Agreement on behalf of BTC and all persons acting on BTC’s behalf pursuant to this Agreement have been duly and properly authorized to do so; and
(c) It will comply with all laws, rules and regulations, including without limitation the conditions of any exemptive orders granted to the Company by the Securities and Exchange Commission with respect to securities lending transactions, if required, applicable to the Securities lending transactions contemplated by this Agreement.
4. Securities Lending Transactions.
4.3 Receipt of Collateral; Approved Investments.
(a) With respect to any Securities loan entered into on behalf of a Fund, BTC shall require that the Borrower deliver and maintain collateral that is equal at all times during the term of the loan to at least the market value of the Securities loaned and any accrued interest thereon. If Cash Collateral is received, BTC is hereby authorized and directed, without obtaining any further approval from the Fund, to invest and reinvest all or substantially all of the Cash Collateral received in any Approved Investments, including in the name of and on behalf of the Fund to redeem, withdraw or sell the same, and to receive distributions in the name of and on behalf of the Fund in accordance with the Securities Lending Guidelines. The Company hereby agrees to execute all necessary documents and take all necessary actions reasonably requested by BTC in order to permit BTC to so act with regard to Approved Investments. BTC shall instruct the Custodian to credit all Collateral, Approved Investments and Distributions received with respect to Collateral and Approved Investments to the Collateral Account and xxxx its books and records to identify the Fund’s ownership thereof as appropriate.
(b) All Approved Investments shall be for the account and risk of the Fund. To the extent any loss arising out of Approved Investments results in a deficiency in the amount of Collateral available for return to a Borrower pursuant to the Securities Lending Agreement, the Fund agrees to pay BTC on demand cash in an amount equal to such deficiency.
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(c) Except as otherwise provided herein, all Collateral, Approved Investments and Distributions credited to the Collateral Account shall be controlled by, and subject only to the instructions of, BTC, and BTC shall not be required to comply with any instructions of the Company with respect to the same.
(a) upon receipt by BTC of Oral Instructions or Written Instructions instructing it to terminate a Securities loan; provided that the Company may require that each Security must be returned to the Fund by no later than the date which is the standard settlement date for trades of such Security entered into on the date such Oral Instruction or Written Instruction is received by BTC;
(b) upon receipt by BTC of Oral Instructions or Written Instructions pursuant to the Securities Lending Guidelines to no longer lend to a particular Borrower;
(c) upon receipt of written notice from the Company terminating this Agreement with respect to one or more Funds in accordance with Section 6; or
(d) as contemplated by the Securities Lending Guidelines.
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4.8 Securities Loan Fee. BTC shall receive any applicable Securities Loan Fee paid by any Borrower pursuant to a Securities Lending Agreement and credit all such amounts received to the Earnings Account.
5.1 Standard of Care: Indemnification.
(a) It is expressly understood and agreed that in exercising its rights and performing its obligations hereunder, BTC owes no fiduciary duty to the Fund. BTC shall not be liable for any costs, expenses, damages, liabilities or claims (including reasonable attorneys and accountants fees) incurred by the Fund, except to the extent those costs, expenses, damages, liabilities or claims result from BTC’s material breach of this Agreement or BTC’s negligence, willful misconduct, bad faith, or reckless disregard of its obligations and duties hereunder.
Neither the Company nor BTC shall have any obligation hereunder for costs, expenses, damages, liabilities or claims (including reasonable attorneys and accountants fees), which are sustained or incurred by reason of any action or inaction by the Book-Entry System or any Depository or their respective successors or nominees. In no event shall either party be liable to the other for special, punitive or consequential damages, arising under or in connection with this Agreement, even if previously informed of the possibility of such damages.
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(b) The Company on behalf of each Fund agrees to indemnify BTC and to hold it harmless from and against any and all costs, expenses, damages, liabilities or claims (including reasonable fees and expenses of counsel) which BTC may sustain or incur or which may be asserted against BTC by reason of or as a result of any action taken or omitted by BTC in connection with or arising out of BTC’s operating under and in compliance with this Agreement, except those costs, expenses, damages, liabilities or claims arising out of BTC’s negligence, bad faith, willful misconduct, or reckless disregard of its obligations and duties hereunder. Actions taken or omitted in reasonable reliance upon Oral Instructions or Written Instructions, any Certificate, or upon any information, order, indenture, stock certificate, power of attorney, assignment, affidavit or other instrument reasonably believed by BTC to be genuine or bearing the signature of a person or persons reasonably believed by BTC to be genuine or bearing the signature of a person or persons reasonably believed to be authorized to sign, countersign or execute the same, shall be presumed to have been taken or omitted in good faith.
(c) BTC shall indemnify and hold harmless the Company and each Fund, its Board of Trustees or Board of Directors (as applicable) and its agents, BFA and any investment adviser for the Funds from any and all loss, liability, costs, damages, actions, and claims (“Loss”) to the extent that any such Loss arises out of the material breach of this Agreement by or negligent acts or omissions, bad faith or willful misconduct of BTC, its officers, directors or employees or any of its agents or subcustodians in connection with the Securities lending activities undertaken pursuant to this Agreement, provided that BTC’s indemnification obligation with respect to the acts or omissions of its subcustodians shall not exceed the indemnification provided by the applicable subcustodian to BTC.
(d) prior to lending on behalf of any Fund or Funds, BTC shall have obtained a Guaranty and Indemnity from Barclays Bank PLC or another entity, the creditworthiness of which is reasonably satisfactory to the Board of Trustees or Board of Directors (as applicable) of the Company, in favor of such Fund or Funds. Upon the termination of that guaranty, BTC shall obtain, and bear the costs of obtaining, a guaranty from Barclays Bank PLC or another entity, the creditworthiness of which is reasonably satisfactory to the Board of Trustees or Board of Directors (as applicable) of the Company, pursuant to which the guarantor will indemnify the Funds for losses due to a Borrower default on terms that are consistent in all material respects with the existing Guarantee and Indemnity by Barclays Bank PLC. The Funds and/or Company, at their expense, may obtain further indemnification against losses due to a Borrower default from a third party to which BTC is not a party.
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5.6 BTC’s Fee as Securities Lending Agent, etc.
(a) In connection with each Securities loan hereunder, the Fund shall, subject to Section 5.6(c), pay to BTC a percentage (the “BTC Fee Percentage”) of the net amount earned from Securities lending activities, consisting of income earned on the investment and reinvestment of Cash Collateral plus any Securities Loan Fees otherwise paid by the Borrowers. The net amount to be paid to BTC shall be computed after deducting any rebate due to the Borrowers under the applicable Securities Lending Agreement with the Borrowers. The BTC Fee Percentage shall be such percentage as may from time to time be agreed upon by the Board of the Company and BTC and shall be set forth in writing. Effective as of October 15, 2010, the BTC Fee Percentage is thirty five percent (35%).
(b) BTC is authorized on a monthly basis to charge the fee owed to it by a Fund under this Section 5.6 against the applicable Collateral Account or Earnings Account. Such fee shall be charged and paid at the end of each month. Subject to Section 5.6(c), BTC shall simultaneously therewith direct the Custodian to pay to the applicable Fund the net amount earned from Securities lending activities, as described in Section 5.6(a), that is not paid to BTC as its fee.
(c) BTC shall be responsible for all transaction fees and all other operational costs relating to Securities lending activities, other than extraordinary expenses (e.g., litigation and indemnification expenses). In the event that a Fund directly or indirectly bears all or a portion of any fees and expenses payable to BTC, BFA or any other affiliate of BTC as a result of the investment of Cash Collateral in any joint account, fund or similar vehicle, such fees and expenses (other than extraordinary expenses), as computed at least monthly by BTC or its designee, then such excess shall, without limitation, be deemed a transaction fee or other operational cost for which BTC shall be responsible.
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Instructions in such manner so that such Written Instructions are received by BTC by the close of business of the same day that such Oral Instructions are given to BTC. The Company agrees that the fact that such confirming Written Instructions are not received on a timely basis or that contrary instructions are received by BTC shall in no way affect the validity or enforceability of the transactions authorized by the Company. BTC shall use reasonable efforts to report any subsequently received contrary instructions. In this regard, the records of BTC shall be presumed to reflect accurately any Oral Instructions given by an Authorized Person or a person reasonably believed by BTC to be an Authorized Person.
(a) BTC shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and in the applicable Securities Lending Agreement, and no covenant or obligation shall be implied against BTC in connection with this Agreement.
(b) Neither the Company nor any Fund shall have any duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied against the Company or any Fund in connection with this Agreement.
(c) Nothing in this Agreement shall be understood to imply that in performing the functions described herein, BTC is acting in the capacity of an investment adviser or is providing advice as to the value of securities or as to the advisability of investing in, purchasing, or selling securities.
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(a) Any notice or other instrument in writing, authorized or required by this Agreement to be given to BTC, shall be sufficiently given if addressed to BTC and received by it at its offices at 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, Attention: Securities Lending Department, with a copy to the General Counsel or at such other place as BTC may from time to time designate in writing.
(b) Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Company shall be sufficiently given if addressed to the Fund and/or Company and received by - Mutual Fund Administration, c/o BlackRock Fund Advisors, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, with a copy to: Legal Department, or at such other place as the Company may from time to time designate in writing.
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7.7 Governing Law. This Agreement shall be construed in accordance with the laws of the State of California without regard to conflict of laws principles thereof.
7.10 SIPA Notice. THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970 MAY NOT PROTECT THE FUND WITH RESPECT TO LOANS HEREUNDER AND, THEREFORE, THE COLLATERAL DELIVERED TO BTC AS AGENT FOR THE FUND MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF A BORROWER’S OBLIGATION IN THE EVENT SUCH BORROWER FAILS TO RETURN THE LOANED SECURITIES.
[End of Text]
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iSHARES, INC. | ||
By: | /s/ Xxxx Xxx | |
Name: Xxxx Xxx | ||
Title: Treasurer and Chief Financial Officer | ||
iSHARES TRUST | ||
By: | /s/ Xxxx Xxx | |
Name: Xxxx Xxx | ||
Title: Treasurer and Chief Financial Officer | ||
iSHARES MSCI RUSSIA CAPPED INDEX FUND, INC. | ||
By: | /s/ Xxxx Xxx | |
Name: Xxxx Xxx | ||
Title: Treasurer and Chief Financial Officer | ||
iSHARES MSCI EMERGING MARKETS SMALL CAP INDEX FUND, INC. | ||
By: | /s/ Xxxx Xxx | |
Name: Xxxx Xxx | ||
Title: Treasurer and Chief Financial Officer |
BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A. | ||
By: | /s/ Xxxxx Xxxxxxxxxx | |
Name: Xxxxx Xxxxxxxxxx | ||
Title: Managing Director | ||
By: | /s/ Xxxxx Xxxxxxxx | |
Name: Xxxxx Xxxxxxxx | ||
Title: Managing Director |
Approved by the Board of Trustees of iShares Trust, the Board of Directors of iShares, Inc., the Board of Directors of iShares MSCI Russia Capped Index Fund, Inc., and the Board of Directors of iShares MSCI Emerging Markets Small Cap Index Fund, Inc. on September16, 2010
[Signature page to Securities Lending Agency Agreement]