Exhibit 99. (h)(2)
SECURITIES LENDING AND REPURCHASE AGENCY AGREEMENT
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This Securities Lending and Repurchase Agency Agreement (the "Agency Agreement")
is entered into on the 25th day of September, 2001 between:
(1) Deutsche Bank AG, New York Branch, with offices at 00 Xxxx 00xx Xx., Xxx
Xxxx, Xxx Xxxx 00000 ("the Bank")
and
(2) Flag Investors Communications Fund, Inc. and Flag Investors Equity Partners
Fund, Inc. and any series thereof, each a registered investment company
under the Investment Company Act of 1940 ("1940 Act"), with offices at Xxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (each, the "Client").
Whereas
A. The Client wishes the Bank, as its agent and on its behalf, to sell, lend
or otherwise transfer on behalf of each of the portfolios set forth on
Schedule 1 attached hereto (each a "Portfolio") certain of the Client's
Securities held in custody by the relevant Custodian to various
Counterparties (each a "Counterparty") under the terms of certain
Agreements against the deposit of Collateral by the Counterparty subject to
an obligation of the Counterparty to sell or transfer Equivalent Securities
to the Client at a certain date or on demand; and
B. The Bank has agreed to do so on the terms and conditions set forth below;
NOW THEREFORE, in consideration of the mutual covenants, terms and conditions
contained herein, the Bank and the Client agree as follows:
1. Definitions
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The following terms, as used herein, shall have the following meanings:
"Agreement" means (as appropriate) the securities lending
agreement or repurchase agreement or any
other agreement under which legal and
beneficial ownership of Securities may be
transferred from the Client to the
Counterparty.
"Bank Affiliate" means any office or branch of the Bank and
any other entity that directly, or indirectly
through one or more intermediaries, controls
the Bank or that is controlled by or is under
common control with the Bank.
"Business Day" means any day on which (i) transfers are made
by the clearing organization through which
Securities subject to Transactions are
transferred; and (ii) transfers are made by
the clearing organization through which the
Collateral relating to Transactions is
transferred; and (iii) the relevant branch of
Deutsche Bank is open for a full range of
business.
"Collateral" means cash, Securities issued or guaranteed
by the United States Government or its
agencies or instrumentalities, and
irrevocable letters of credit or any
combination thereof.
"Client's Account(s)" means the Client's account(s) set forth on
Exhibit A.
"Counterparty" means any of the entities entering into
Agreements with Client through the agency of
the Bank.
"Counterparty Affiliate" means any office or branch of a Counterparty
and any other entity that directly, or
indirectly through one or more
intermediaries, controls, is controlled by or
is under common control with a Counterparty.
"Counterparty Agreements" has the meaning set forth in Section 2.02.
"Custodian" means the custodian(s) set forth in Exhibit
A.
"Default" has the meaning set forth in Section 13.01.
"Distributions" has the meaning set forth in Section 8.01.
"Equivalent Securities" means Securities equivalent to Transferred
Securities being Securities of the same
issuer, issue, class and quantity as
Transferred Securities (or equivalent thereof
in the event of a reorganization,
recapitalization or merger of the issuer of
the Transferred Securities).
"Indemnity Proceeds" means amounts paid by the Bank to the
Client under Section 15.01.
"Investments" has the meaning set forth in Section 12.01.
"Liquidation Proceeds" means, in the case of Transactions
collateralized by cash, the principal amount
of the cash Collateral delivered by the
Counterparty to the Bank,
acting on behalf of the Client, or, in the
case of Transactions collateralized by
irrevocable letters of credit, the stated
amount of the letter of credit, or, in the
case of Transactions collateralized by
Securities, the market value of such
Securities on the date that the Bank takes
action with respect to such Collateral under
Section 14, as such Market Value is
determined to be by the Bank in good faith.
"Market Value" means with respect to any Securities as of
any time on any date, the bid, mid-market or
offer price for such Securities (as selected
by the Bank or appropriate to the relevant
Counterparty Agreement) as of such time on
such date obtained from a generally
recognized source (as appropriate to the
relevant Counterparty Agreement or, failing
which the price as determined by the Bank in
its sole discretion, acting in good faith in
a commercially reasonable manner) plus the
aggregate amount of any such Distributions
which, as of such date, have accrued but not
yet been paid in respect of the Securities to
the extent not included in such price as of
such date. The foreign exchange rate used to
calculate the Market Value of Securities or
cash Collateral not denominated in U.S.
dollars shall be the foreign exchange rate
quoted by the Bank at the close of business
on the preceding day.
"OTC" means "over-the-counter".
"Realized Income" shall have the meaning given in Section 5.02.
"Recall Notice" has the meaning set forth in Section 9.01.
"Recall Period" has the meaning set forth in Section9.01.
"Securities" means shares, stocks, bonds, debentures,
notes, certificates of indebtedness, warrants
or other securities or financial instruments
(whether represented by a certificate or by a
book-entry on the records of the issuer or
other entity responsible for recording such
book-entries).
"Transaction" means each transaction entered into between
the Client and a Counterparty (through the
agency of the Bank) under the terms of an
Agreement.
"Transfer" means a transfer of Securities from the
Client to a Counterparty, or the transfer of
Equivalent Securities by a Counterparty to
the Client (in either case through the agency
of the Bank) pursuant to the terms of the
relevant Agreement, and cognate expressions
shall be construed accordingly.
"Transferred Securities" means Securities which are subject to a
Transfer as provided herein.
2. Appointment of Agent; Identity Disclosure; Approved Counterparties
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2.01 The Client hereby appoints the Bank, and the Bank hereby accepts
appointment, as its agent to enter into Transactions on behalf of each of
the Portfolios listed on Schedule I attached hereto.
2.02 Until this Agency Agreement is terminated pursuant to Section 21, the Bank
shall be authorized, as the Client's agent, to enter into Transactions with
and Transfer the Securities held in Client's Account(s) to Counterparties
upon such terms as the Bank shall approve, subject always to the terms
hereof. The Bank acknowledges and agrees that such Counterparties may not
include the Bank and Bank Affiliates. The Client hereby authorizes and
grants the Bank its power of attorney, to negotiate
and execute, as the Client's agent, all and any Agreements deemed by the
agent to be necessary or desirable (including but not limited to the PSA
Master Securities Loan Agreement, the PSA Master Repurchase Agreement,
the PSA/ISMA Global Master Repurchase Agreement, the Overseas Securities
Lender's Agreement, the ISDA Master Agreement, and netting agreements,
with Counterparties and issuers of and Counterparties on Investments and
tri-party custodians (collectively the "Counterparty Agreements"), and to
take all and any other actions necessary to enter into such Transactions
or make Investments (including, without limitation, making required
undertakings to regulatory and tax authorities having jurisdiction with
respect to the Transactions and Investments).
2.03 The Bank shall be authorized to disclose the Client's identity to (i) the
Counterparties, (ii) issuers and Counterparties of the Investments and
(iii) regulatory and tax authorities having jurisdiction with respect to
the Transactions.
2.04 The Client acknowledges that the Bank acts as agent for other clients who
may hold some of the same Securities as the Client and accordingly,
Transactions with a Counterparty may be allocated among several of the
Bank's clients at the sole discretion of the Bank. The Client further
acknowledges that the Bank shall have no obligation to include the
Client's Securities in such allocation.
2.05 Because Transactions are generally carried out in the OTC market, the
Bank may deal for the Client in circumstances in which the relevant deal
is not regulated by the rules of any stock exchange or investment
exchange.
2.06 The parties acknowledge that no Transfer of Securities shall be made on
behalf of a Portfolio if, as a result, the aggregate Market Value of all
Transferred Securities of such Portfolio will exceed 331/3 % (or such
other level as maybe communicated to the Bank by the Client) of the value
of such Portfolio's total assets, including the value of Collateral
received in respect of Transferred Securities.
3. REPRESENTATIONS, AND WARRANTIES AND COVENANTS OF THE CLIENT
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3.01 The Client represents that it is a Massachusetts business trust
established pursuant to the laws of the Commonwealth of Massachusetts and
is registered under the Investment Company Act of 1940 (the "1940 Act").
3.02 The Client represents, warrants and covenants that the Client has and
will have the legal right, power and authority to enter into and carry
out all of the Transactions and Investments contemplated by this Agency
Agreement and Transfer the Securities subject to Transactions. The Client
further represents that this Agency Agreement constitutes a legal, valid
and binding obligation enforceable against it in accordance with its
terms and that is has duly authorized the relevant Custodian to Transfer
the Securities to Counterparties as directed by the Bank.
3.03 The Client represents, warrants and covenants that a majority of its
Board of Directors (including a majority of the directors who are not
"interested persons," within the meaning of the 1940 Act, of the Client),
will initially and at least annually thereafter determine that the
investment of securities lending cash Collateral in shares of the BT
Institutional Funds - Daily Assets Fund Institutional ("DAF") is in the
best interest of the shareholders of each Portfolio; (iv) investment in
shares of the DAF by a particular Portfolio will be consistent with such
Portfolio's investment objectives and policies; (v) investment in shares
of DAF by a particular Portfolio will be in accordance with guidelines
regarding the investment of cash Collateral specified by the Client and
DAF has been approved for investment by each Portfolio or DAF invests in
the types of instruments that such Portfolio has authorized for the
investment of its cash collateral; and (vi) the securities lending
program or each Portfolio will comply with all present and future
applicable positions of the Securities and Exchange Commission and its
staff regarding such arrangements.
3.04 References herein to the "Client Obligations" means:
3.04.01 the execution, delivery and performance of this Agency Agreement
by the Client; and
3.04.02 the entering into and performance of the obligations arising
under any Transaction for the loan of Securities or for the sale
and repurchase of Securities entered into or made hereunder or
under the applicable Counterparty Agreement; and
3.04.03 the entering into and performance of the obligations arising
under any Investment entered into or made hereunder or under the
applicable Counterparty Agreement;
3.05 The Client further represents and warrants that the Client Obligations:
3.05.01 are within the Client's corporate, trust or other constitutive
powers;
3.05.02 have been duly authorized by all necessary corporate, trust or
other appropriate action;
3.05.03 require no action by or in respect of, or filing with or
approval of, any governmental body, agency, regulatory authority
or official (including without limitation any exchange control
approvals) that has not been respectively taken, filed or
obtained; and
3.05.04 do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the organizational
documents of the Client or of any agreement, judgement,
injunction, order, decree or other instrument binding upon the
Client.
3.06 The Client hereby represents and warrants that it has taken its own advice
and made its own determination with respect to any consequences (including
those relating to tax, legal and accounting issues) of the Investments and
the Transactions envisaged by this Agency Agreement, and has not relied on
any statement or representation by the Bank or its agents made with
respect to such consequences.
3.07 The Client hereby represents and warrants that it is not a plan subject to
the requirements of the Employee Retirement Income Security Act of 1974,
as amended, and agrees to promptly notify the Bank if this representation
shall cease to be true at any time during the term of this Agency
Agreement. On the date on which any Transaction is entered into pursuant
to a relevant Agreement, and on each day on which Securities, or
Equivalent Securities are to be transferred under any Transaction, the
Client shall be deemed to repeat all the foregoing representations.
3.08 In relation to loans to Counterparts domiciled in the United Kingdom or
otherwise subject to the Income Tax (Stocklending) Regulations 1989 as
amended, supplemented or replaced from time to time (the "Regulations"),
the Client represents and warrants that : where it is not resident in the
United Kingdom for tax purposes and is not carrying on a trade in the
United Kingdom through a branch or agency, the Client will (where
appropriate) (i) have delivered or cause to be delivered to the Bank a
duly completed and certified Certificate (MOD2) or a photocopy thereof
bearing an Inland Revenue acknowledgement and unique number and such
Certificate or photocopy remains valid or (ii) have taken all necessary
steps to enable a specific authorisation to make gross payment of the
relevant manufactured dividend to be issued by the Inland Revenue.
3.09 The Client agrees to inform the Bank immediately if any statement set
forth in this Section ceases to be true and correct as of any date after
the date hereof.
3.010 The Client acknowledges that the Bank will not pay interest on
non-reinvested cash Collateral unless otherwise agreed.
4. REPRESENTATIONS, AND WARRANTIES OF THE BANK
4.01 The Bank represents and warrants that it has and will have the legal
right, power and authority to carry out all of the Transactions
contemplated by this Agency Agreement, on the Client's behalf, and that
the execution, delivery and performance of this Agency Agreement by the
Bank:
4.01.01 are within the Bank's corporate powers; and
4.01.02 have been duly authorized by all necessary corporate action
under its charter.
4.02 The Bank hereby undertakes:
4.02.01 to account to the Client for all outstanding Transactions;
4.02.02 to take all steps available under the terms of the relevant
Agreement to maintain adequate Collateral; and
4.02.03 to comply with all of its responsibilities and obligations
relating to Investments.
4.03 On the date on which any Transaction is entered into pursuant to a
relevant Agreement, and on each day on which Securities, or Equivalent
Securities are to be transferred under any Transaction, the Bank shall
be deemed to repeat all of the foregoing representations.
5. FEES
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5.01 In connection with each Transaction hereunder the Bank shall calculate
the Realized Income which shall be as set out below.
5.02 The Realized Income shall be:
5.02.01 any fees charged to a Counterparty in the case of Transactions
entered into where the Counterparty has provided Collateral
other than cash, PLUS the net realized income derived from
Investments (derived from the interest of cash collateral if
any); LESS;
5.02.02 any interest or rebate payable, if applicable, LESS any
commissions or similar transaction costs, if applicable,
5.03 The Realized Income will be divided between the parties pursuant to the
agreed upon percentage set forth in Exhibit C. The Bank agrees to credit
the Client's percentage of the Realized Income to the Client's account
monthly on a provisional basis regardless of when such fees are actually
received.
5.04 The Realized Income shall be payable in the same currency as that
received by the Bank or such other currency agreed to in writing between
the parties hereto from time to time.
5.05 The aforesaid fee, interest or rebate shall, in the absence of any
contrary written arrangement between the Bank and the Client, be
reasonably determined by the Bank in accordance with its internal
procedures.
6. STATEMENTS OF TRANSACTION ACTIVITY AND FEES
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Periodically as agreed with the Client, the Bank shall advise the Client
by written or electronic means of Transactions entered into by the Bank
on the Client's behalf and certain other information relating thereto.
7. SECURITIES RESTRICTED FROM LENDING
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Each Portfolio shall have the right to designate in writing from time to
time, at its discretion, Securities that will not be included in the
securities lending program. The portfolio manager of the fund or
portfolio will notify in writing both the Securities Lending Relationship
Manager and the Securities Lending Documentation Unit of any additions or
deletions to the securities designated at the time of change. Both the
Securities Lending Relationship Manager and the Securities Lending
Documentation Unit will acknowledge the change in writing to the
portfolio manager.
8. PAYMENTS IN LIEU OF DISTRIBUTIONS ON THE SECURITIES
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8.01 It is understood that under the applicable Counterparty Agreement, each
Counterparty shall be required to pay or deliver to the Bank payments in
the amount of all interest payments, stock or cash dividends or other
distributions, rights and warrants (collectively, the "Distributions")
made on the Transferred Securities during the term of any Transaction.
The Distributions shall be credited by the Bank to the Client's Account
on the value date due of the Distributions from the Counterparty. If any
Distributions are credited to the Client's Account prior to the Bank's
receipt of such Distributions from the Counterparty, such Distributions
shall be provisional and may be reversed if they are not received from
the Counterparty.
8.02 If any Distributions are not received by the Bank from a Counterparty by
the expiration of the applicable delivery period specified in the
relevant Counterparty Agreement, the Bank shall notify the Client of such
fact and shall take all actions, on the Client's behalf and at the
Client's expense, that the Bank deems appropriate to secure the prompt
delivery of such Distributions. The Bank may exercise, on the Client's
behalf, all rights of the Client that it may have against the
Counterparty.
9. TERMINATION OF TRANSACTIONS; TRANSFER OF EQUIVALENT SECURITIES
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9.01 The Client may instruct the Bank to terminate any Transaction in whole or
in part by giving the Bank written notice in accordance with Section 22
or such other electronic notice as may be agreed between the parties from
time to time (each a "Recall Notice"). On receipt of a Recall Notice, the
Bank shall immediately demand that the relevant Counterparty effect a
Transfer of Equivalent Securities, pursuant to the Counterparty
Agreement. Upon any such termination, the Counterparty shall be required,
under the Counterparty Agreement, to effect a transfer of Equivalent
Securities within the Recall Period. Unless otherwise indicated to the
Client by the Bank, the Recall Period for each type of security (as
identified below) shall be, subject to Section 9.03 below, the relevant
standard settlement period for such security, but in no event longer than
five days.
9.02 The Recall Period shall commence on:
9.02.01 the Business Day the Recall Notice is received, if such Recall
Notice is received by the Bank prior to 12:00 noon in the city
of settlement on such day; or
9.02.02 the Business Day next following the day on which the Recall
Notice is received if it is received by the Bank after 12:00
noon in the city of settlement;
9.03 The Recall Period shall terminate upon
9.03.01 the close of the standard settlement period for such security;
or
9.03.02 at the end of such other period negotiated by the Bank, as the
Client's agent, and the Counterparty,
but in no event shall any such period be longer than five days.
9.04 The Client acknowledges that if a Transaction is terminated for any
reason, any losses (including Investment losses), interest penalties
charged by Counterparties and other costs incurred as a result of
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such early termination shall be the sole responsibility of, and shall be
borne by, the Client. Nothing in this Section shall derogate from the
Bank's standard of care set forth in Section 17, nor from the Bank's
obligations set forth in Section 15.
10. ELIGIBLE COLLATERAL
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10.01 Prior to or simultaneously with the Transfer of the Securities to a
Counterparty, the Bank shall obtain Collateral on the Client's behalf.
The principal amount of cash Collateral, the Market Value (at the time of
delivery by the Counterparty) of Collateral in the form of Securities,
and the stated value of Collateral in the form of irrevocable letters of
credit shall, in each case, be not less than 102 percent, for loans of
Securities the Collateral for which is all denominated in the same
currency as the Transferred Securities, or not less than 105 percent, for
loans of Securities the Collateral for which is not all denominated in
the same currency as the Transferred Securities, of the aggregate Market
Value of the Transferred Securities plus any accrued but unpaid
Distributions thereon.
10.02 The Bank shall identify on its books and records all Collateral received
by the Bank, on the Client's behalf.
11. SECURITIES AND COLLATERAL VALUATION PROCEDURE
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The Bank shall xxxx-to-market the value of the Securities subject to a
Transaction relative to Collateral each Business Day in accordance with
its internal policies and procedures. If on any Business Day the value of
the Collateral held for Transactions with any Counterparty is less than
102 percent, for loans of Securities the Collateral for which is all
denominated in the same currency as the Transferred Securities, or less
than 105 percent, for loans of Securities the Collateral for which is not
all denominated in the same currency as the Transferred Securities, of
the aggregate market value of the Securities subject to Transactions plus
any accrued but unpaid Distributions thereon, the Bank shall use its best
efforts to obtain from such Counterparty additional Collateral so that
the Market Value of the Collateral is equal to or greater than 102 or 105
percent, respectively, of the aggregate Market Value of the Securities
subject to Transactions plus any accrued but unpaid Distributions
thereon. The Client expressly acknowledges and agrees that the "Market
Value of Collateral" (as described in this Section) shall, in the case of
cash Collateral, be deemed to mean the principal amount of the cash
Collateral actually delivered by the Counterparty to the Bank, acting on
behalf of the Client (and not the Market Value of the Investments
purchased with such cash Collateral). The Client further expressly
acknowledges that the Bank may not obtain additional Collateral from the
Counterparty until the Client is undercollateralized by more than a de
minimis amount.
12. INVESTMENT OF CASH COLLATERAL
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12.01 The Bank is hereby authorized to invest cash Collateral delivered in
connection with Transactions on the Client's behalf and for the Client's
account, in Securities, instruments, transactions and investments
(together, the "Investments") contemplated by the guidelines contained in
Exhibit B. The Client agrees that approved Investments may include
Securities, instruments, Transactions and investments issued by,
purchased through or entered into with the Bank, the Bank Affiliates and
customers of the Bank for whom the Bank acts in any capacity.
12.02 The Bank may sell, close-out, liquidate or unwind any Investment, on the
Client's behalf and for the Client's account, to or through the Bank, the
Bank Affiliates and customers of the Bank for whom the Bank acts in any
capacity.
12.03 The Client agrees to accept all investment risks associated with any such
Investments, including, but not limited to, interest rate, market, credit
and liquidity risk associated with any Investments
purchased or entered into with cash Collateral. The Client agrees to pay
the Bank upon demand any amounts necessary to enable the Bank to return
the cash Collateral and satisfy other requirements imposed under the
terms of the applicable Counterparty Agreement to the Counterparty upon
termination of a Transaction and the transfer of Equivalent Securities by
the Counterparty.
12.04 Subject to Section 19, the Bank shall maintain the property relating to
or arising from Investments made on the Client's behalf as contemplated
by this Section in one or more custody accounts segregated from the
Bank's own assets.
13. DEFAULT
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13.01 If there shall occur any of the following (each a "Default"):
13.01.01 any Counterparty makes a general assignment for the benefit of,
or enters into a reorganization, arrangement, or composition
with creditors; or
13.01.02 any Counterparty admits in writing its inability to pay its
debts as they become due; or
13.01.03 any Counterparty seeks, consents to or acquiesces in the
appointment of any trustee, administrator, receiver or
liquidator or analogous officer of it or any material part of
its property; or
13.01.04 If there is a presentation or filing of a petition in respect
of a Counterparty (other than by the Client in respect of any
obligation under this Agency Agreement) in any court or before
any agency alleging or for the bankruptcy, winding-up or other
insolvency of that Counterparty (or any analogous proceeding)
or seeking any reorganization, arrangement, composition,
re-adjustment, administration, liquidation, dissolution or
similar relief under any present or future statute, law or
regulation, such petition (except in the case of a petition for
winding-up or any analogous proceeding) not having been stayed
or dismissed within 30 days of its filing; or
13.01.05 a receiver, administrator, liquidator or trustee or analogous
officer of such party is appointed over all or any material
part of the property of a Counterparty;
13.02 the Bank shall, on becoming aware thereof, promptly notify the Client of
such Default in accordance with Section 22.
14. CLOSE-OUT, LIQUIDATION OF, OR ENFORCEMENT OF RIGHTS TO COLLATERAL AND
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INDEMNIFICATION
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14.01 On the occurrence of a Default, the Bank shall take all actions available
under the terms of the relevant Counterparty Agreement, on the Client's
behalf and at the Client's expense, to immediately close-out, liquidate,
or enforce rights to any Collateral supporting Transactions with such
Counterparty and apply the Liquidation Proceeds to
14.01.01 first, the purchase of Equivalent Securities as replacement for
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the Securities Transferred to such Counterparty;
14.01.02 next, any other obligations of the Counterparty under the
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relevant Counterparty Agreement; and
14.01.03 next, any Bank expenses associated with the close-out,
----
liquidation of, or enforcement of rights to the Collateral and
the purchase of such Equivalent Securities.
14.02 For two Business Days from the date of close-out, liquidation of, or
enforcement of rights to the Collateral, the Bank shall use all
reasonable efforts to effect the purchase of Equivalent Securities with
the aggregate of the Liquidation Proceeds (less any amounts applied
pursuant to Section 14.01) and Indemnity Proceeds (if any), but any such
purchase shall be made only in such markets, in such manner and on such
terms as the Bank shall consider appropriate in its sole discretion. If
the Bank cannot purchase Equivalent Securities during such two Business
Day period, the Bank shall credit the Client's Account with the
Liquidation Proceeds, and Indemnity Proceeds, if any, in cash.
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15. MARGIN SHORTFALL INDEMNITY
--------------------------
15.01 If the value of the Liquidation Proceeds is less than the Market Value of
the Securities subject to the Transactions with such Counterparty on the
date of close-out, liquidation of, or enforcement of rights to the
Collateral, the Bank shall indemnify the Client for any such difference.
Such Indemnity Proceeds shall be applied toward the purchase of
Equivalent Securities in accordance with Section 14.02. It is understood
and agreed that nothing in this Section obliges the Bank to bear market,
credit, or other risks associated with the Investments.
15.02 Any indemnities provided with respect to Transactions where Deutsche Bank
Alex.Xxxxx, Inc. is the Counterpart shall be deemed to be issued by the
Bank acting through its Head Office in Frankfurt or its London Branch.
For the avoidance of doubt, no indemnity shall be issued or deemed to be
issued, where Deutsche Bank Alex.Xxxxx, Inc. is the Counterpart, by the
Bank acting through its branch in New York.
15.03 Except as provided in Section 15.01, the Bank shall have no liability to
the Client for any failure of a Counterparty to transfer Equivalent
Securities upon the termination of a Transaction. To the extent that the
Bank makes any payments to the Client under Section 15.01, the Bank shall
become and remain subrogated to all of the Client's rights that the
Client may have against the Counterparty, and the Client hereby assigns
all such rights to the Bank. The Client agrees to execute and deliver all
such written documents, and to take all other actions reasonably
requested by the Bank, from time to time, to give effect to any rights of
subrogation referred to in this Section.
16. THE BANK'S RELATIONSHIP WITH A COUNTERPARTY
-------------------------------------------
The Client acknowledges that the Bank may be a creditor for its own
account or represent in a fiduciary capacity, or any other capacity, any
Counterparty or any creditor or client of a Counterparty, even though the
interests so represented may conflict with those of the Client. The
Bank's obligations hereunder are only those expressly set forth in this
Agency Agreement. Without limiting the generality of the foregoing, the
Bank shall not be required to disclose any financial information about a
Counterparty obtained in the course of its relationship with such
Counterparty, except as expressly provided in Section 13.
17. STANDARD OF CARE
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The Bank shall use reasonable care in the performance of its duties
hereunder consistent with that exercised by banks generally in the
performance of duties arising from acting as agent for clients in
securities lending and repurchase transactions (as appropriate).
18. INDEMNIFICATION; RELEASE; LIMITATION OF LIABILITY
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18.01 The Client shall indemnify the Bank and hold the Bank harmless from any
loss or liability (including without limitation, the reasonable fees and
disbursements of counsel) incurred by the Bank in rendering services
hereunder or in connection with any breach of the terms of this Agency
Agreement by the Client, except such loss or liability which results from
the Bank's failure to exercise the standard of care required by Section
17 hereof. Nothing in this Section shall derogate from the indemnities
provided by the Bank in Section 15.
18.02 Notwithstanding any express provision to the contrary herein, the Bank
shall not be liable for any consequential, incidental, special or
exemplary damages, even if the Bank has been apprised of the likelihood
of such damages occurring.
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18.03 The Client agrees that the Bank's duties and responsibilities shall only
be those expressly set forth herein and the Bank may consult with counsel
and be fully protected with respect to any action taken or omitted to be
taken in good faith upon written advice of counsel.
18.04 The Client agrees that the Bank may rely on any certificate, statement,
request, consent, agreement or other instrument which it believes to be
genuine and to have been signed or presented by a proper person or
persons.
19. AGENTS
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The Bank may use such agents, including but not limited to, such
regulated clearing agents, securities depositaries, nominees,
sub-custodians and the Bank Affiliates, as the Bank deems appropriate to
carry out its duties under this Agency Agreement. To the extent the Bank
Affiliates act as the Bank's agent hereunder, the Bank agrees to be
responsible for the acts and omissions of such the Bank Affiliates as
though performed by the Bank directly. The Client agrees that the Bank's
sole liability for the acts or omissions of any other agent shall be
limited to liability arising from the Bank's failure to use reasonable
care in the selection of such agent.
20. FORCE MAJEURE
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20.01 The Bank shall not be responsible for any losses costs or damages
suffered or incurred by the Client resulting directly or indirectly from:
20.01.01 any action, omission, suspension of trading, decision or
ruling of any exchange or regulatory, governmental or other
body or of any other person which is beyond the Bank's control
(including floor broker, exchange, dealing or clearing house
error);
20.01.02 any war, strike, lock-out, national disaster, act of
terrorism, delay in postal service or any other delay or
inaccuracy in the transmission of orders or other information,
or any breakdown, failure or malfunction beyond the control of
the Bank of any telecommunication or computer system or any
other cause (whether similar or disimilar to the foregoing)
whatsoever beyond the Bank's control;
provided that the Bank shall use reasonable efforts to inform the Client
of the occurrence of any such event.
21. TERMINATION OF THE AGENCY AGREEMENT
-----------------------------------
This Agency Agreement may at any time be terminated by either party by
giving to the other not less than thirty calendar days prior notice in
writing (such termination becoming effective upon expiry of such notice),
provided that such termination shall not affect any Transaction or any
obligation under this Agency Agreement (including that of indemnity)
which is then outstanding and the provisions of this Agency Agreement
shall continue to apply to each such Transaction and each obligation
until all the obligations of each party to the other under this Agreement
and each such Transaction have been fully performed.
22. NOTICES
-------
22.01 All notices under this Agency Agreement shall be in writing, hand
delivered, sent by registered mail, or facsimile addressed as follows, or
by electronic-mail addressed to such address as shall have been furnished
by the receiving party pursuant to the provisions hereof:
22.01.01 To the Bank:
Deutsche Bank AG, New York Branch
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Securities Lending Documentation Unit
Facsimile No.: (000) 000-0000
22.01.02 To the Client:
Deutsche Asset Management Funds
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No.: 000-000-0000
22.02 Notices shall be effective upon receipt. The address of either party may
be changed by prior notice to the other party.
23. GOVERNING LAW; JURISDICTION
---------------------------
23.01 This Agency Agreement shall be governed by and construed in accordance
with the laws of the State of New York (without giving effect to
conflicts of laws principles thereof).
23.02 The parties irrevocably consent to the exclusive jurisdiction and venue
of any Federal or state court in the Borough of Manhattan, City of New
York, in connection with any legal action or proceeding arising out of or
relating to this Agency Agreement and Client irrevocably consents to
service of process in any such action or proceeding in any such courts by
mailing of copies thereof, postage prepaid to it at Xxx Xxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, such service to be effective 10 days after such
mailing. Client hereby waives, in relation to any such action or
proceeding, any sovereign immunity or other immunity to suit or to the
execution or attachment (whether before or after judgement) to which
Client or any of Client's property may be or become entitled, or any
defenses to any action or proceeding based on venue or that the action
has been brought in an inconvenient forum.
24. SUCCESSORS AND ASSIGNS
----------------------
24.01 Except as provided by Section 24.02 below, the rights and obligations of
the Client under this Agency Agreement and under each Transaction shall
not be capable of assignment without the prior written consent of the
Bank.
24.02 Any obligations of the Bank under this Agency Agreement may be performed
by any Bank Affiliate and any and all rights and obligations of the
Client expressed to be in favor of the Bank shall be held by the Bank for
any Bank Affiliate which performs the relevant services, provided that
the Bank shall remain liable to the Client under the terms hereof as if
such obligations were performed by the Bank.
25. SEVERABILITY
------------
If any provision of this Agency Agreement is declared by any judicial or
other competent authority to be void or otherwise unenforceable, that
provision shall be severed from this Agency Agreement and the remaining
provisions of this Agency Agreement shall remain in full force and
effect. This Agency Agreement shall, however, thereafter be amended by
the parties in such reasonable manner so as to achieve, without
illegality, the intention of the Parties with respect to that severed
provision.
26. GENERAL
-------
26.01 Any provision of this Agency Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by both
parties hereto.
26.02 The Bank's books and records (whether on paper, microfilm, microfiche, by
electronic or magnetic recording, or any other mechanically reproducible
form or otherwise) shall be deemed to constitute, in the absence of
manifest error, sufficient evidence of the facts stated therein and of
any obligations of the parties hereto.
26.03 This Agency Agreement (including the Exhibits hereto) constitutes the
entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes any and all prior agreements and
understandings, oral or written, relating to such subject matter,
PROVIDED THAT, for the avoidance of doubt, this agreement shall not
supersede or derogate from any Agency Agreement between the Bank and the
Client which sets forth any terms of dealing between the parties as
principal to principal.
26.04 This Agency Agreement may be signed in any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the
same instrument.
27. TAXES
-----
The Client shall indemnify, release and hold the Bank harmless for the
full amount of any tax which the Bank is obliged to deduct or withhold or
otherwise pay to any relevant taxing authority, whether or not the claim
for such payment of taxes by that taxing authority was correctly or
legally asserted. The Bank may (but shall not be obliged to) consent to
contest the Client's liability to such tax on behalf of the Client (but
at the expense of the Client). If such taxing authority agrees (or a
court of final jurisdiction determines) that the tax was not correctly or
legally levied, and such tax is refunded to the Bank, then the Bank shall
return such amount (together with interest, if any, paid by the relevant
taxing authority) to the Client.
IN WITNESS WHEREOF the parties have caused this Agency Agreement to be executed
on the day and date first above written.
DEUTSCHE BANK AG, NEW YORK BRANCH
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxxx
-------------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxx Xxxxxxxx
Title: Director Title: MD
FLAG INVESTORS COMMUNICATIONS FUND, INC.
AND FLAG INVESTORS EQUITY PARTNERS FUND, INC.
By: /s/ Xxx X. Xxxxxx
-------------------------
Name: Xxx X. Xxxxxx
Title: Secretary
SCHEDULE I
----------
List of Participating Portfolios
Flag Investors Communications Fund, Inc.
Flag Investors Equity Partners Fund, Inc.
EXHIBIT A
---------
CLIENT'S ACCOUNT(S) CUSTODIAN(S)
Flag Investors Communications Fund, Inc. 96342 Bankers Trust Company
Flag Investors Equity Partners Fund, Inc. 96340 Bankers Trust Company
EXHIBIT B
---------
INVESTMENT GUIDELINES
The Client authorizes Bank to invest all cash Collateral in the Daily Assets
Fund Institutional in accordance with the guidelines attached hereto.
[See Attached Prospectus for the Daily Assets Fund Institutional.]
EXHIBIT C
---------
In accordance with the Agency Agreement, the Realized Income shall be divided as
follows: 75% to the Client and 25% to the Bank.
September 25, 2001
Deutsche Bank, AG New York Branch
Securities Lending
000 Xxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Re: Securities Lending Agreement - Fees
Dear Sirs:
In accordance with the Securities Lending Agreement between you and us
dated September 25, 2001 ("Agreement"), we hereby confirm our agreement that we
shall be entitled to 75% ("Our Percentage"), and Deutsche Bank, AG, New York
Branch ("DB") shall be entitled to a securities lending fee of 25%, of the fee
paid by the borrower to DB, net of commissions, if any, with respect to each
loan which is not collateralized by cash. In the case of each loan
collateralized by cash, DB shall receive on our behalf the income derived from
approved investments of the cash collateral ("Income"). From the Income DB shall
pay the borrower's rebate and commissions, if any, (collectively "Rebate"),
shall credit to our account Our Percentage of the difference between (i) the sum
of the Income plus an amount computed at an annual rate of 0.12% on the cash
collateral invested during the term of such investment and (ii) the Rebate, and
shall retain the remainder of the Income as its securities lending fee. The
monthly securities lending earnings statement you provide to us pursuant to the
Agreement will reflect the computation in clause (i) above.
Very truly yours,
Flag Investors communications fund, inc., and flag investors equity partners
fund, inc.
By: /s/ Xxx X. Xxxxxx
--------------------
Name: Xxx X. Xxxxxx
Title: Secretary
AGREED TO AND ACCEPTED:
DEUTSCHE BANK, AG, NEW YORK BRANCH
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
---------------------- ---------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: Director Title: MD
