SECURITIES LENDING AGREEMENT ("Lending Agreement"), dated as of
November ,1999, between the Trusts named on Schedule A hereto (each, a
"Lender"), acting on behalf of the Fund or Funds listed in Schedule A hereto,
each having its principal place of business at Xxx Xxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, and The Chase Manhattan Bank ("Chase"), having its
principal place of business at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
It is hereby agreed as follows:
Section 1 - Definitions
Unless the context clearly requires otherwise, the following words
shall have the meanings set forth below when used herein:
a) "Account" shall mean the securities account established and
maintained by Chase on behalf of Lender pursuant to a separate
agreement ("Agreement"), dated as of , 199 , between Chase and
Lender, which Agreement provides, inter alia, for the safekeeping
of Securities received by Chase from time to time on behalf of
Lender.
b) "Agreement" shall have the meaning assigned thereto in the definition of
Account.
c) "Authorized Investment" shall mean any type of instrument,
security, participation or other property in which Cash Collateral
may be invested or reinvested, as described in Section 5(e) hereof
and Appendix 4 hereto (and as such Appendix may be amended from
time to time by written agreement of the parties).
d) "Authorized Person" shall mean, except to the extent that Chase is
advised to the contrary by Proper Instruction, any person who is
authorized to give instructions to Chase pursuant to the Agreement
and any mandates given to Chase in connection with such Agreement.
An Authorized Person shall continue to be so until such time as
Chase receives Proper Instructions that any such person is no
longer an Authorized Person.
e) "Borrower" shall mean an entity listed on Appendix 1 hereto other
than any entity which Chase shall have been instructed to delete
from such list pursuant to Written Instructions and as such
Appendix may be amended in accordance with Section 4(b) hereof.
f) "Business Day" shall have the meaning assigned thereto in the applicable
MSLA.
g) "Cash Collateral" shall mean fed funds and such U.S. and non-U.S.
currencies as may be pledged by a Borrower in connection with a
particular Loan.
h) "Collateral" shall mean the types of collateral acceptable to Lender
as set forth in Appendix 5 hereto, together with Cash Collateral.
i) "Collateral Account" shall mean, as the case may be, an account
maintained by Chase with itself, with any Depository or with any
Triparty Institution and designated as a Collateral Account for
the purpose of holding any one or more of Collateral, Authorized
Investments, and Proceeds in connection with Loans hereunder.
j) "Collateral Amount" shall have the meaning assigned thereto in Section 5(c)
hereof.
k) "Collateral Requirement" shall have the meaning assigned thereto in Section
5(c) hereof.
l) "Depository" shall mean: (i) the Depository Trust Company, and any
other securities depository or clearing agency (and each of their
respective successors and nominees) registered with the U.S.
Securities and Exchange Commission or registered with or regulated
by the applicable foreign equivalent thereof or otherwise able to
act as a securities depository or clearing agency, (ii) any
transnational depository, (iii) the Federal Reserve book-entry
system for the receiving and delivering of U.S. Government
Securities, and (iv) any other national system for the receiving
and delivering of that country's government securities.
m) "Distributions" shall have the meaning assigned thereto in Section 3(b)(v)
hereof.
n) "Dollars" shall have the meaning assigned thereto in Section 5(c) hereof.
o) "Foreign Securities" shall mean Securities issued by an issuer that is not
organized under the laws of the United States.
p) "Letter of Credit", to the extent acceptable to Lender as
Collateral in accordance with Appendix 5 hereto, shall have the
meaning assigned thereto in the applicable MSLA and be issued by a
bank listed on Appendix 2 hereto (as such list may be amended by
Chase from time to time on notice to Lender), other than a bank
deleted from such list pursuant to Written Instruction.
q) "Loan" shall mean a loan of Securities hereunder and under the applicable
MSLA.
r) "Loan Fee" shall mean the amount payable by a Borrower to Chase
pursuant to the applicable MSLA in connection with Loans
collateralized other than by Cash Collateral.
s) "Market Value" shall have the meaning assigned thereto in the
applicable MSLA, and shall include, in the case of fixed income
securities, accrued but unpaid interest.
t) "MSLA" shall mean a master securities lending agreement or
securities borrowing agreement between Chase and a Borrower,
pursuant to which Chase lends securities on behalf of its
customers (including Lender) from time to time. A copy of Chase's
standard forms of MSLA, including (as applicable) the
international addendum thereto, are annexed (i) as Appendix 3A in
the case of borrowers domiciled in the United States, and as
Appendix 3B in the case of borrowers domiciled in the United
Kingdom. The form of MSLA applicable to each Borrower is indicated
in Appendix 1.
u) "Oral Instructions" shall have the meaning assigned thereto in Section 10
hereof.
v) "Proceeds" shall mean interest, dividends and other payments and
Distributions received by Chase in connection with Authorized
Investments.
w) "Proper Instructions" shall mean Oral Instructions and Written
Instructions.
x) "Rebate" shall mean the amount payable by Chase on behalf of
Lender to a Borrower in connection with Loans collateralized by
Cash Collateral, which shall be a percentage of the Cash
Collateral as agreed by the Borrower and Chase.
y) "Return Date" shall have the meaning assigned thereto in Section 7(c)(i)
hereof.
z) "Securities" shall mean government securities (including U.S.
Government Securities), equity securities, bonds, debentures,
other 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 and held pursuant to the Agreement.
aa) "Term Loan" shall have the meaning assigned thereto in Section
5(h) hereof.
bb) "Triparty Institution" shall mean a financial institution with
which Chase shall have previously entered a triparty agreement
among itself, such Triparty Institution and a particular Borrower
providing, among other things, for the holding of Collateral in a
Collateral Account at such Triparty Institution in Chase's name on
behalf of Chase's lending customers and for the substitution of
Collateral; provided, however, that any substituted Collateral
shall meet the then standards for acceptable Collateral set by
Chase.
cc) "U.S. Government Security" shall mean book-entry securities issued
by the U.S. Treasury (as defined in Subpart 0 of Treasury
Department Circular No. 300 and any successor provisions) and any
other securities issued or fully guaranteed by the United States
government or any agency, instrumentality or establishment of the
U.S. government, including, without limitation, securities
commonly known as "Xxxxxx Xxxx," "Xxxxx Xxxx," "Xxxxxx Xxxx" and
"Xxxxxxx Macs".
dd) "U.S. Securities" shall mean Securities issued by an issuer that
is organized under the laws of the United States or any State
thereof or that are otherwise traded in the United States.
ee) "Written Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
Section 2 - Appointment. Authority
(a) Appointment. Lender hereby appoints Chase as its agent to lend
Securities in the Accounts on Lender's behalf on a fully disclosed basis to
Borrowers from time to time in accordance with the terms hereof and on such
terms and conditions and at such times as Chase shall determine and Chase may
exercise all rights and powers provided under any MSLA as may be incidental
thereto, and Chase hereby accepts appointment as such agent and agrees to so
act.
(b) Authority. Lender hereby authorizes and empowers Chase to execute
in Lender's name and on its behalf and at its risk all agreements and documents
as may be necessary to carry out any of the powers herein granted to Chase.
Lender grants Chase the authority set forth herein notwithstanding its awareness
that Chase, in its individual capacity or acting in a fiduciary capacity for
other accounts, may have transactions with the same institutions to which Chase
may be lending Securities hereunder, which transactions may give rise to actual
or potential conflict of interest situations. Chase shall not be bound to: (i)
account to Lender for any sum received or profit made by Chase for its own
account or the account of any other person or (ii) disclose or refuse to
disclose any information or take any other action if the same would or might in
Chase's judgment, made in good faith, constitute a breach of any law or
regulation or be otherwise actionable with respect to Chase; provided that, in
circumstances mentioned in (ii) above, Chase shall promptly inform Lender of the
relevant facts (except where doing so would, or might in Chase's judgment, made
in good faith, constitute a breach of any law or regulation or be otherwise
actionable as aforesaid).
Section 3 - Representations and Warranties
(a) Representations of each party. Each party hereto represents and
warrants to the other that: (i) it has the power to execute and deliver this
Lending Agreement, to enter into the transactions contemplated hereby, and to
perform its obligations hereunder; (ii) it has taken all necessary action to
authorize such execution, delivery, and performance; (iii) this Lending
Agreement constitutes a legal, valid, and binding obligation enforceable against
it; and (iv) the execution, delivery, and performance by it of this Lending
Agreement shall at all times comply with all applicable laws and regulations.
(b) Representations of Lender. Lender represents and warrants to Chase
that: (i) this Lending Agreement is, and each Loan shall be, legally and validly
entered into, and does not and shall not violate any statute, regulation, rule,
order or judgment binding on Lender, or any provision of Lender's charter or
by-laws, or any agreement binding on Lender or affecting its property; (ii) the
person executing this Lending Agreement and all Authorized Persons acting on
behalf of Lender has and have been duly and properly authorized to do so; (iii)
it is lending Securities as principal and shall not transfer, assign or encumber
its interest in, or rights with respect to, any Securities available for Loan
hereunder; and (iv) it is the beneficial owner of all Securities or otherwise
has the right to lend Securities; and (v) it is entitled to receive all
interest, dividends and other distributions ("Distributions") made by the issuer
with respect thereto. Lender shall promptly identify to Chase by notice, which
notice may be oral, any Securities that are no longer subject to the
representations contained in (b).
Section 4 - Borrowers
(a) MSLA. Lender hereby acknowledges receipt of the forms of MSLA and
authorizes Chase to lend Securities in the Account to Borrowers thereunder
pursuant to an agreement substantially in the form thereof.
(b) Borrowers. Securities may be lent to any Borrower listed in
Appendix 1, as such Appendix may be updated from time to time to add new
Borrowers and to delete entities that have ceased to be potential Borrowers.
Chase shall provide Lender with notice of each addition of a Borrower to such
list. If Lender notifies Chase in writing within five Business Days from the
date of any such notice that it objects to a potential Borrower, no Loans of
Securities shall be made to such potential Borrower. If Lender does not so
object within such five Business Day period, each potential Borrower notified to
Lender by Chase shall be deemed acceptable to Lender.
Section 5 - Loans
(a) Securities to be lent. Lending opportunities. Loan initiation. All
Securities of Lender held by Chase that are issued, settled or traded in the
markets that have been approved by Chase from time to time for purposes of
Chase's discretionary securities lending program shall be subject to the terms
hereof. Chase shall seek to assure that Lender receives a fair allocation of
lending opportunities vis-a-vis other lenders, taking into account the demand
for and availability of Securities, types of Collateral, eligibility of
Borrowers, limitations on investments of Cash Collateral, tax treatment, and
similar commercial factors. From time to time, Chase may lend to Borrowers
Securities held in the Account (except Securities that Lender has notified to
Chase are unavailable or Securities that are no longer subject to the
representations set forth in Section 3) and shall deliver such Securities
against receipt of Collateral in accordance with the applicable MSLA. Chase
shall have the right to decline to make any Loans to any Borrower and to
discontinue lending to any Borrower in its sole discretion and without notice to
Lender.
(b) Receipt of Collateral. Collateral substitution. For each Loan,
Chase shall receive and hold Letters of Credit received as Collateral and Chase
or a Triparty Institution shall receive and hold all other Collateral required
by the applicable MSLA in a Collateral Account, and Chase is hereby authorized
and directed, without obtaining any further approval from Lender, to invest and
reinvest all or substantially all Cash Collateral. Chase shall credit, or where
applicable shall have a Triparty Institution credit, all Collateral, Authorized
Investments and Proceeds to a Collateral Account and Chase shall xxxx its books
and records to identify Lender's interest therein, it being understood, however,
that all monies credited to a Collateral Account may for purposes of investment
be commingled with cash collateral held for other lenders of securities on whose
behalf Chase may act. Chase may, in its sole discretion, liquidate any
Authorized Investment and credit the net proceeds to a Collateral Account. Chase
shall accept substitutions of Collateral in accordance with the applicable MSLA,
and shall credit, or where applicable shall have a Triparty Institution credit,
all such substitutions to a Collateral Account.
(c) Xxxx to market procedures. (i) Chase shall require initial
Collateral for a Loan in an amount determined by applying the then applicable
"Collateral Requirement" (as defined below) to (x) the Market Value of the
Security that is the subject of the Loan plus (y) in the case of fixed income
Securities, any accrued but unpaid interest thereon. The Collateral Requirement
with respect to a given Security shall be an amount equal to the then applicable
percentage (currently 102% for securities denominated in U.S. dollars
("Dollars") and securities for which Collateral is denominated in the same
currency, and 105% for all other securities of the Market Value of the Security
which is the subject of a Loan (plus accrued but unpaid interest thereon in the
case of fixed income Securities) as determined as of the close of trading on the
preceding Business Day; provided, however, that with respect to Securities such
as U.S. Treasury strips and bills, where the market functions to allow for the
sale of such Securities at par, the Collateral Requirement shall be 100%.
(ii)(A) With respect to each Loan of Securities denominated in Dollars, if the
aggregate Market Value of the Collateral held by Chase on behalf of Lender for
such Loan on any Business Day is less than the aggregate Market Value of the
Securities which are the subject of such Loan (together with accrued but unpaid
interest in the case of fixed income Securities), Chase shall demand on behalf
of Lender that the Borrower, shall provide additional Collateral in accordance
with the applicable MSLA. Such additional Collateral, together with the
Collateral then held by Chase on behalf of Lender for such Loan, shall be not
less than the applicable Collateral Requirement. Chase shall not xxxx a Security
denominated in Dollars except where the Market Value of the Collateral held for
such Security falls below the Market Value of such Security (plus accrued but
unpaid interest thereon in the case of fixed income Securities). (B) With
respect to all loans of Securities denominated other than in Dollars from all
lenders to a given Borrower, each Business Day Chase shall determine if the
Market Value of all Collateral received by Chase from that Borrower in
connection with all such loans is at least equal to the aggregate amount
("Collateral Amount") determined by applying the applicable Collateral
Requirement to each Security denominated other than in Dollars on loan to such
Borrower from all lenders. If the Market Value of the Collateral held for any
individual Security falls below the Market Value of such Security, or if the
Market Value of all Collateral received from a given Borrower in respect of such
loans is not at least equal to the Collateral Amount, Chase shall demand on
behalf of Lender that Borrower shall provide additional Collateral in accordance
with the applicable MSLA so as to meet the Collateral Amount by marking specific
Loans. In accordance with general market practice, the Market Value of certain
Securities (including, without limitation, U.S. Government Securities), whether
on Loan or received as Collateral, may be determined on a same day basis by
reference to recognized pricing services. Chase may from time to time establish
de minimis guidelines with respect to Collateral for Securities denominated
other than in Dollars pursuant to which a xxxx would not be made even where
otherwise required hereunder.
(d) Changes in procedures applicable to Collateral The Collateral
procedures set forth in Sections 5(b)-(c) above reflect Chase's current practice
and may be changed by Chase from time to time based on general market conditions
(including volatility of Securities on Loan and of securities Collateral), the
Market Value of Securities on Loan to a given Borrower, and in accordance with
general market practice and regulatory requirements. Chase shall notify Lender
of material revisions to the foregoing procedures.
(e) Investment of Cash Collateral. (i) Chase is hereby authorized to
invest and reinvest Cash Collateral in accordance with the investment guidelines
annexed hereto as Appendix 4. (ii) Authorized Investments are made for the
account of, and at the sole risk of, Lender. In that connection, Lender shall
pay to Chase on demand in cash an amount equal to any deficiency in the amount
of Collateral available for return to a Borrower pursuant to an applicable MSLA.
Chase is authorized to select brokers and dealers for the execution of trades in
connection with the investment of Cash Collateral, which broker or dealer may be
an affiliate of Chase provided that a competitive execution price is obtained.
(f) Distributions and Voting Rights.
(i) Chase shall credit Lender's account on payable date with the amount
of all cash Distributions with respect to Securities on Loan over their record
date that Lender would have received under the Agreement had such Securities not
been on Loan over record date; provided, that with respect to Foreign
Securities, Chase's obligation to credit Lender's account shall extend only to
record dates up to and including the date of any Event of Default (as defined in
the applicable MSLA). To the extent that cash Distributions are not delivered to
Chase by Borrower and Chase has so credited Lender's account with such
Distributions, Chase shall be subrogated to Lender's rights against Borrower as
provided in Section 7(d). In connection with the foregoing, Lender shall
promptly return any amount so credited upon oral or written notification from
Chase: (a) that such amount has not been paid by the issuer of the Securities or
the paying agent therefor (as applicable) in the ordinary course of business or
(b) that such amount was incorrectly credited. If Lender does not promptly
return any amount upon such notification, Chase shall be entitled, upon oral or
written notification to Lender, to reverse such credit by debiting Lender's
account for the amount previously credited.
(ii) (a) Any non-cash Distribution which is in the nature of a stock
split or a stock dividend shall be added to the existing Loan to which such
dividend relates as of the date such non-cash Distribution is payable and shall
be subject to the provisions hereof and the applicable MSLA. (b) Any non-cash
Distribution which is in the nature of warrants or rights to purchase shares
made with respect to any Loaned Securities shall be deemed to be a new Loan made
by Lender to Borrower (and shall be considered to constitute Securities on Loan)
as of the date such non-cash Distribution is payable and shall be subject to the
provisions hereof; provided that Lender may, by giving Chase ten (10) Business
Days' notice prior to the date of such non-cash Distribution (or such different
amount of time as Chase may from time to time require on advice to Lender),
direct Chase to request that the Borrower deliver such non-cash Distribution to
Chase pursuant to the applicable MSLA, in which case Chase shall credit such
non-cash Distribution to Lender's account. (c) If upon Chase's request on behalf
of Lender, Borrower fails to deliver the non-cash Distribution on its payable
date, the indemnity provisions and corresponding subrogation rights set forth in
Section 7 shall apply.
(iii) During the term of any Loan, Chase shall permit the Securities on
Loan to be transferred into the name of and be voted by the Borrower or others.
Lender shall not be entitled to participate in any dividend reinvestment program
or to vote proxies with respect to Securities that are eligible for Loan
(whether or not actually on Loan) as of the applicable record date for such
Securities.
(g) Advances, overdrafts and indebtedness. Security Interest. Chase
may, in its sole discretion, advance funds on behalf of Lender in order to pay
to Borrowers any Rebates or to return to Borrowers Cash Collateral to which they
are entitled pursuant to the applicable MSLA. Lender shall repay Chase on demand
the amount of any advance or any other amount owed by Lender hereunder. Any such
advance shall be deemed a service provided by Chase hereunder for which Chase is
entitled to recover its costs as may be determined by Chase in good faith. In
order to secure repayment of any advance or other indebtedness of Lender to
Chase arising hereunder, Chase shall have a continuing lien and security
interest in and to all assets now or hereafter held in the Account and any
Collateral Account (to which Lender is entitled hereunder) and any other
property at any time held by it for the benefit of Lender or in which Lender may
have an interest which is then in Chase's possession or control or in the
possession or control of any third party acting on Chase's behalf. In this
regard, Chase shall be entitled to all the rights and remedies of a pledgee
under common law and a secured party under the New York Uniform Commercial Code
and/or any other applicable laws and/or regulations as then in effect.
(h) Termination of a Loan. (i) Loans shall generally be terminable on
demand. With the prior approval of Lender, however, Loans may be made on the
basis of a reasonably anticipated termination date ("Term Loan") and without
providing for the right of substitution of equivalent securities. Termination of
a Term Loan prior to its anticipated termination date by either Lender or
Borrower may result in the terminating party having to pay the non-terminating
party damages based on the cost of obtaining a replacement loan. (ii) Chase
shall terminate any Loan of Securities to a Borrower as soon as practicable
after: (a) receipt by Chase of a notice of termination of the respective MSLA;
(b) receipt by Chase of Written Instructions directing it to terminate a Loan;
(c) receipt by Chase of Written Instructions instructing it to delete from
Appendix 1 the Borrower to which such Loan was made; (d) receipt by Chase of
Written Instructions advising that the Security subject to a Loan is no longer
subject to the representations contained in Section 3 hereof; (e) receipt by
Chase of notice advising that an Event of Default (as defined in the applicable
MSLA) has occurred and is continuing beyond any applicable grace period; (f)
whenever Chase, in its sole discretion, elects to terminate such Loan other than
a Term Loan; or (g) termination hereof. (iii) If Securities which are the
subject of a Loan being terminated are to be sold by Lender, Written
Instructions shall in no event be given to Chase later than the trade date in
the local market for such Securities or at such earlier time as Chase may advise
Lender from time to time with respect to particular markets. Chase shall not be
liable for any fails occurring on a settlement date for sale of Securities if
timely notice is not given by Lender as provided in this Section, and shall not
be liable in any event (except as provided in ss.7) for failure of a Borrower to
return Securities on Loan in a timely fashion.
(i) Recordkeeping and Reports. Chase shall establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. Chase shall provide Lender with a monthly statement
describing the Loans made during the preceding month, and the income derived
from Loans, during the period covered by such statement. A party shall comply
with the reasonable requests of the other party for information necessary to the
requester's performance of its duties hereunder.
Section 6 - Default by Borrower
(i) Chase may assume (unless it has actual knowledge to the contrary)
that any representations made by a Borrower in connection with any Loan are
true, that no event which is or may become an Event of Default (as defined in
the applicable MSLA) has occurred and that a Borrower has complied with its
obligations under the applicable MSLA. Subject to ss.ss.5(f) and 7(b)-(c), Chase
shall have no responsibility for any breach of any obligation, by any Borrower
under or in connection with any MSLA or Loan. Chase shall have no responsibility
for the accuracy or completeness of any information supplied by any Borrower.
Chase shall not be liable as a result of taking or omitting to take any action
provided that Chase shall have carried out its responsibilities hereunder in
good faith. (ii) If any Borrower with respect to any Loan effected pursuant
hereto and pursuant to the applicable MSLA fails to return any Securities on
Loan when due thereunder for reasons other than relating to the solvency of the
Borrower, Chase shall then, in addition to taking whatever action may be
required by ss.7(c), take whatever action its deems appropriate in accordance
with general market practice and Chase's reasonable judgment, including, but not
necessarily limited to, claiming compensation from such Borrower on behalf of
Lender in the event a trade executed by Lender fails on account of such
Borrower's failure timely to have returned Securities on Loan or, where Chase
deems it necessary, such other action as may be permitted by the applicable
MSLA, including collecting any applicable penalties or fines. (iii) If any
Borrower with respect to any Loan effected pursuant hereto and pursuant to the
applicable MSLA fails to return any Securities on Loan when due thereunder for
reasons relating to the solvency of the Borrower, Chase shall then, in addition
to taking whatever action may be required by ss.7(c), take such action as its
deems appropriate in accordance with Chase's reasonable judgment under the
applicable MSLA.
Section 7 - Liabilities. Indemnification
(a) Liabilities. Except as provided in ss.5(f) and paragraphs (b) and
(c) hereof, Chase shall not be liable for any costs, expenses, damages,
liabilities or claims (including attorneys' and accountants' fees) incurred by
Lender, except those costs, expenses, damages, liabilities and claims arising
out of the negligence, bad faith or willful misconduct of Chase. Chase shall
have no obligation hereunder for: (i) costs, expenses, damages, liabilities or
claims (including attorneys' and accountants' fees), which are sustained or
incurred by Lender by reason of any action or inaction by any pricing service,
any Depository or a Triparty Institution or their respective successors or
nominees; and (ii) any failure to perform any obligation due to any matters
beyond the control of Chase. In no event shall Chase be liable for indirect or
consequential damages or lost profits or loss of business, arising hereunder or
in connection herewith, even if previously informed of the possibility of such
damages and regardless of the form of action.
Except for any costs or expenses incurred by Chase in performing its
obligations pursuant to ss.5(f) paragraphs (b) and (c) hereof and ordinary
operating expenses incurred by Chase in providing services hereunder, Lender
shall indemnify Chase and hold it harmless from and against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Chase may sustain or incur or which may be asserted against
Chase by reason of or as a result of any action taken or omitted by Chase in
connection with operating hereunder or enforcing Lender's rights under the
applicable MSLA, other than those costs, expenses, damages, liabilities or
claims arising out of the negligence, bad faith or willful misconduct of Chase.
The foregoing indemnity shall be a continuing obligation of Lender, its
successors and assigns, notwithstanding the termination of any Loans hereunder
or of this Lending Agreement. Chase may charge any amounts to which it is
entitled hereunder against the Account, and Lender shall be entitled to an
accounting of all amounts so charged. Actions taken or omitted in reliance upon
Proper Instructions, or upon any information, order, indenture, stock
certificate, power of attorney, assignment, affidavit or other instrument
reasonably believed by Chase, in good faith, to be genuine or bearing the
signature of a person or persons believed, in good faith, to be authorized to
sign, countersign or execute the same, shall be conclusively presumed to have
been taken or omitted in good faith.
(b) Indemnification of Lender in respect of Distributions. If the
Borrower in respect of any Loan effected pursuant hereto and pursuant to the
applicable MSLA fails to deliver any non-cash Distributions with respect to
Securities on Loan as and when requested to do so by Chase as provided in
Section 5(f) hereof, (x) Chase shall with respect to U.S. Securities at its
option, credit such non-cash Distribution or an amount equivalent thereto to
Lender's account on the date it is due, or (y) with respect to Foreign
Securities, for any non-cash Distributions for which the record date occurs on
or before the date of any Event of Default, Chase shall, at its option, either
(i) purchase replacement securities (of an equal amount of the same issue,
class, type or series as the Distribution) on the principal market in which such
securities are traded or (ii) credit Lender's account, with the Market Value in
Dollars of such Distributions on the due date as determined by Chase in good
faith.
(c) Indemnification of Lender in respect of Securities.
(i) U.S. Securities. If the Borrower in respect of any Loan of U.S.
Securities effected pursuant hereto and pursuant to the applicable MSLA fails to
return any Securities on Loan to Chase for the Account when due thereunder,
which is the date an Event of Default shall have occurred under the applicable
MSLA (the "Return Date"), then Chase shall, at its expense (subject to paragraph
(d) hereof) deposit replacement Securities of the same issue, type, class and
series to the Account, as soon as practicable, but in any event within one
customary settlement cycle. If Chase is unable to obtain replacement Securities
upon the expiration of one customary settlement cycle, Chase shall credit
Lender's account in Dollars with the Market Value of such loaned Securities
determined as of the Return Date (including, in the case of debt Securities,
accrued interest up to and including the credit date). With respect to and to
the extent that a Loan is made against Letter of Credit Collateral, in the event
of a default by both the issuer of the Letter of Credit and the Borrower, Chase
shall not be responsible for any resulting decrease in the Market Value of such
Letter of Credit Collateral or have any obligation to either contribute to or
otherwise provide for any resulting Collateral deficiency.
(ii) Foreign Securities. If the Borrower in respect of any Loan of
Foreign Securities effected pursuant hereto and pursuant to the applicable MSLA
fails to return any Securities on Loan to Chase for the Account on the Return
Date, Chase will, at Chase's sole election and at its expense (subject to
paragraphs 7(c)(iii) and 7(d) hereof), as soon as practicable, either (x)
deposit replacement Securities of the same issue, type, class and series to the
Account or (y) credit Lender's Account, in Dollars with the Market Value of the
Collateral as determined as of the Return Date (up to but not to exceed the
Market Value of the Loaned Securities as of the Return Date); provided, however,
that if the Market Value of the Collateral as of the Return Date is less than
the Market Value of the Loaned Securities as of the Return Date (other than as a
consequence of losses on Authorized Investments as provided in paragraph
7(c)(iii) following), Chase will credit Lender's Account with such further
amount as shall account for the difference between the Market Value of the
Collateral and the Market Value of the Loaned Securities as of the Return Date.
For purposes of this Section, Market Value in the case of fixed income
Securities shall include accrued but unpaid interest. Market Value shall be
determined by Chase in accordance with the applicable MSLA, including the
computation of Dollar equivalents where Securities on Loan and/or Collateral
(and Proceeds) are denominated in a currency other than Dollars.
(iii) In connection with (i) and (ii) above, if the Market Value of the
Cash Collateral at the time of default by the Borrower on a credit date or a
Return Date is less than that which is required to purchase replacement
securities or to credit the Lender's account with the Market Value in Dollars of
the Loaned Securities as a result of a decrease in the Market Value of
Authorized Investments, Chase shall not be responsible for that decrease and
shall deposit replacement securities or credit Lender's account, with the Market
Value of such Loaned Securities only to an amount net of the decrease in Market
Value of Authorized Investments
(d) Subrogation. If Chase makes a payment or a purchase pursuant to
ss.ss.5(f), 7(b) or 7(c) Chase shall, to the extent of such payment or purchase,
be subrogated to, and Lender shall assign and be deemed to have assigned to
Chase, all of its rights in, to and against the Borrower (and any guarantor
thereof) in respect of such Loan, any Collateral pledged by the Borrower in
respect of such Loan (including any Letters of Credit and the issuers thereof),
and all proceeds of such Collateral. In the event that Lender receives or is
credited with any payment, benefit or value from or on behalf of the Borrower in
respect of rights to which Chase is subrogated as provided herein, Lender shall
promptly remit or pay to Chase the same (or its Dollar equivalent).
Section 8 - Chase Compensation
(a) In connection with each Loan hereunder, Lender shall pay to Chase
(i) a fee equal to 30% of earnings (less any Rebate paid by Chase to a Borrower)
derived from Authorized Investments in connection with Loans of U.S. Securities
collateralized by cash; (ii) a fee equal to 35% of earnings (less any Rebate
paid by Chase to a Borrower) derived from Authorized Investments in connection
with Loans of Foreign Securities collateralized by cash; (iii) a fee equal to
30% of any Loan Fee paid or payable by the Borrower in connection with Loans of
U.S. Securities not collateralized by cash; and (iv) a fee equal to 35% of any
Loan Fee paid or payable by the Borrower in connection with Loans of Foreign
Securities not collateralized by cash. (b) Chase is authorized, on a monthly
basis, to charge all the foregoing fees (together with reasonable expenses
incurred by Chase hereunder) and any other amounts owed by Lender hereunder
against the Account and/or a Collateral Account.
Section 9 - Taxes
Lender shall be responsible for all filings, tax returns and reports on
any Loans undertaken by Chase on Lender's behalf which are to be made to any
authority whether governmental or otherwise and for the payment of all unpaid
calls, taxes (including, without limitation, any value added tax), imposts,
levies or duties due on any principal or interest, or any other liability or
payment arising out of or in connection with any Securities or any Collateral,
and in so far as Chase is under any obligation (whether of a governmental nature
or otherwise) to pay the same on Lender's behalf Chase may do so out of any
monies or assets held by it pursuant to the terms of the Agreement or hereunder.
Section 10 - Instructions
(a)(i) Written Instructions. "Written Instructions" shall mean written
communications actually received by Chase from an Authorized Person or from a
person reasonably believed by Chase 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 reasonably acceptable to
Chase and whereby Chase is able to verify with a reasonable degree of certainty
the identity of the sender of such communications or which communications are
transmitted with proper testing or authentication pursuant to terms and
conditions which Chase may specify. (ii) Oral Instructions. "Oral Instructions"
shall mean oral communications actually received by Chase from an Authorized
Person or from a person reasonably believed by Chase to be an Authorized Person.
Oral Instructions shall promptly thereafter be confirmed in writing by an
Authorized Person (which confirmation may bear the facsimile signature of such
Person), but Lender shall hold Chase harmless for the failure of an Authorized
Person to send such confirmation in writing, the failure of such confirmation to
conform to the Oral Instructions received, or Chase's failure to produce such
confirmation at any subsequent time. Lender shall be responsible for
safeguarding any testkeys,
identification codes or other security devices which Chase may make available to
Lender or its Authorized Persons.
(b) Unless otherwise expressly provided, all Proper Instructions shall
continue in full force and effect until canceled or superseded.
Section 11 - Pricing Services
Chase may use any pricing service referred to in an applicable MSLA and
any other recognized pricing service (including itself and any of its
affiliates) in order to perform its valuation responsibilities with respect to
Securities, Collateral and Authorized Investments, and Lender shall hold Chase
harmless from and against any loss or damage suffered or incurred as a result of
errors or omissions of any such pricing service.
Section 12 - Termination
This Lending Agreement may be terminated at any time by either party
upon delivery to the other party of notice specifying the date of such
termination, which shall be not less than 30 days after the date of receipt of
such notice. Notwithstanding any such notice, this Lending Agreement shall
continue in full force and effect with respect to all Loans outstanding on the
termination date, which Loans shall, however, be terminated as soon as
reasonably practicable.
Section 13 - Miscellaneous
(a) Legal proceedings. Chase may refrain from bringing any legal action
or proceeding arising out of or in connection with any Loan until it shall have
received such security as it may require for all costs, expenses (including
legal fees) and liabilities which it shall or may expend or incur in relation
thereto.
(b) Integration. Lending Agreement to Govern. This Lending Agreement
and the Agreement contain the complete agreement of the parties with respect to
the subject matter hereof and supersede and replace any previously made
proposals, representations, warranties or agreements with respect thereto by the
parties. In the event of any conflict between this Lending Agreement and the
Agreement, this Lending Agreement shall govern.
(c) Notices. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipted courier
service. All such notices which are mailed shall be deemed delivered upon
receipt. Notices shall be addressed as follows (or to such other address as a
party may from time to time designate on notice duly given in accordance with
this paragraph): notices to Chase shall be addressed to it at , 0 Xxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Global Securities Lending ; notices
to be given to Lender shall be addressed to it at its offices c/o Colonial
Management Associates, Inc., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: General Counsel.
(d) Amendments. Waiver. This Lending Agreement may be modified only by
a written amendment signed by both parties, and no waiver of any provision
hereof shall be effective unless expressed in a writing signed by the party to
be charged.
(e) Governing Law. Consent to Jurisdiction. Waiver of Immunity. This
Lending Agreement shall be construed in accordance with the laws of the State of
New York, without regard to the conflict of laws principles thereof. Chase and
Lender each hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and Lender hereby waives any claim of forum non conveniens to the
extent that it may lawfully do so. To the extent that in any jurisdiction Lender
may now or hereafter be entitled to claim, for itself or its assets, immunity
from suit, execution, attachment (before or after judgment) or other legal
process, Lender irrevocably shall not claim, and it hereby waives, such
immunity.
(f) Counterparts. Headings. This Lending Agreement may be executed in
several counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument. The headings of the sections
hereof are included for convenience of reference only and do not form part of
this Lending Agreement.
(g) Severability. Any provisions hereof which may be determined by
competent authority to be prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 14 - Authority of Adviser/Administrator; Several Liability
The parties acknowledge and agree that the Trust which has executed
this Lending Agreement, and any other instruments pursuant to this Lending
Agreement, as Lender, is comprised of one or more separate series (commonly
referred to as a mutual fund) under the Investment Company Act of 1940 and that
such execution by the Trust is made only on behalf of the mutual fund series
identified on the signature page hereof. Each Loan shall constitute a separate
agreement between such mutual fund series and Chase and any liability or
obligation of any mutual fund series under this Lending Agreement shall be on a
several, and not on a joint, or joint and several, basis. Execution of this
Lending Agreement by more than one Trust or mutual fund series shall not create
any contractual or other obligation between or among mutual fund series or
between or among Trusts.
The Lender confirms that Colonial Management Associates, Inc., as
administrator or investment adviser to Lender, has been duly authorized to act
on behalf of such Lender for purposes of this Lending Agreement and may take all
actions which Lender is entitled or required to take hereunder, including,
without limitation, requesting the making or continuation of Loans hereunder and
instructing Chase in respect thereof. Notwithstanding the foregoing, the parties
acknowledge and agree that (a) in taking such action, Colonial Management
Associates, Inc. is acting solely in its capacity as administrator or investment
adviser and not in its individual capacity, (b) neither Colonial Management
Associates, Inc. nor any of its officers, employees or agents shall have any
liability for any action take or omitted to be taken by any of them in
connection with this Lending Agreement nor shall any of them be bound by or
liable for any indebtedness, liability or obligation hereunder, and (c) none of
Colonial Management Associates, Inc. or any of its officers, employees or agents
shall be responsible to Chase for the truth, completeness or accuracy of any
statement, representation, warranty or certification contained in this Lending
Agreement or in any information, report, certificate or other document furnished
on behalf of any Trust or mutual fund series in connection with this Agreement.
IN WITNESS WHEREOF, the parties have executed this Lending Agreement as
of the date first above-written.
LIBERTY FUNDS TRUST VII THE CHASE MANHATTAN BANK on behalf of the Fund or Funds
listed in Schedule A hereto
By: By:
Name: Name:
Title: Title: 243553
US Borrowers
1. X.X. Xxxxxxx & Sons, Inc.
2. ABN AMRO Inc.
3. ABN AMRO Sage Corporation
4. Advest Inc.
5. Xxxxx & Company
6. Alpine Associates
7. Asiel & Company
8. Xxxxxx X. Xxxxxxx & Co. Inc.
9. Australia & New Zealand Banking Group Limited
10. Banc of America Securities LLC
11. Banc One Capital Markets, Inc
12. Barclays Capital, Inc.
13. Bear, Xxxxxxx & Co., Inc.
14. Bear Xxxxxxx Securities Corp
15. BHC Securities, Inc.
16. BHF Securities Corp.
17. Bleichroeder (Xxxxxxx & S.), Inc.
18. BNY Clearing Services LLC
19. BT Alex. Xxxxx Inc.
20. Cantor Xxxxxxxxxx & Company
21. Cantor, Xxxxxxxxxx Securities
22. Xxxxxxx Xxxxxx & Co., Inc.
23. * The Chase Manhattan Bank
24. * Chase Securities, Inc.
25. CIBC World Markets Corp.
26. Citadel Trading Group L.L.C.
27. Commerzbank Capital Markets Corporation
28. Credit Agricole Indosuez Securities, Inc.
29. Credit Lyonnais Securities (USA) Inc.
30. Credit Suisse First Boston Corporation
31. Xxxx Xxxxxxxx Inc.
32. Daiwa Securities America, Inc.
33. Datek Online Brokerage Services Corp.
34. Xxxx Xxxxxx Xxxxxxxx, Inc.
35. Deutsche Bank Securities Inc.
36. * Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corp.
37. Dresdner, Kleinwort, Benson, N.A., LLC
38. E D & F Man International, Inc.
39. Xxxxxxxxxx & Co., Inc.
40. Xxxxxx Xxxxx Xxxxx Inc.
41. First Albany Corporation
42. First Options of Chicago, Inc.
43. Xxxxxxx Securities Company, Inc.
44. Fuji Securities, Inc.
45. G.X. Xxxxxx & Co.
46. Garban Corporates, LLC
47. Xxxxxxx, Xxxxx & Co.
48. Greenwich Capital Markets, Inc.
49. Gruntal & Co., LLC
50. Gruss (Oscar) & Sons, Incorporated
51. Herzog, Heine, Geduld, Inc.
52. HSBC Securities, Inc.
53. ING (U.S.) Securities Future and Options, Inc.
54. ING Barings LLC
55. Investec Ernst & Company
56. X.X. Xxxxxxxx & Company
57. X.X. Xxxxxx Securities Inc.
58. Xxxxxx Xxxxxxxxxx Xxxxx, Inc.
59. Xxxxxxxxx & Company, Inc.
60. Xxxxxxx, XxXxx & Company
61. Xxxxxxx X. Xxxx Government Securities, Inc.
62. Lazard Freres & Co. LLC
63. Xxxx Xxxxx Xxxx Xxxxxx, Inc.
64. Xxxxxx Brothers Inc
65. Lewco Securities Corp.
66. Lipper Convertibles LP
67. Lipper Convertibles Series II
68. Lipper & Company LP
69. M.S. Securities Services, Inc.
70. Madoff, Xxxxxxx X.
71. Maple Partners U.S.A. Inc.
72. Xxxxxxx Xxxxx Government Securities Inc.
73. Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Inc.
74. Mesirow Financial
75. Xxxxxx Guaranty Trust Co. of NY
76. Xxxxxx Xxxxxxx & Co. Incorporated
77. National Financial Services Corp.
78. Xxxxxxx Xxxxx Securities, Inc.
79. Xxxxxxxxx & Xxxxxx
80. Nomura Securities International, Inc.
81. Norwest Investment Services
82. X'Xxxxxx & Company L.L.C.
83. PaineWebber Incorporated
84. Paloma Securities, L.P.
85. Paribas Corporation
86. Pax Clearing Corp. Ltd Partnership
87. Xxxxxx Financial Services, Inc.
88. Prudential Securities Inc.
89. Xxxxxxx Xxxxx & Associates, Inc.
90. RBC Dominion Securities Corporation
91. Refco Securities, Inc.
92. Republic New York Securities Corp.
93. Xxxx Xxxx XxXxxxx Clearing Corp.
94. Xxxxxxx Xxxxx Xxxxxx Inc.
95. Scotia Capital Markets (USA) Inc. .
96. Xxxxxxxx & Co., Inc.
97. XX Xxxxx Securities Corp.
98. Societe Generale, New York Branch
99. Southwest Securities
100. Spear, Leeds & Xxxxxxx
101. Xxxxxxxx, Inc.
102. Swiss American Securities Inc.
103. Timber Hill, LLC
104. TD Securities (USA) Inc.
105. Tullet & Tokyo Securities Inc.
106. US Bancorp Xxxxx Xxxxxxx, Inc.
107. US Clearing Corporation
108. USAA Investment Management Company
109. Van Der Moolen Specialists USA, LLC
110. Warburg Dillon Read LLC
111. Wedbush Xxxxxx Securities, Inc.
112. Xxxxx, Xxxx & Xxxxx
113. Westdeutsche Landesbank Girozentrale (NY Branch)
114. Zions First National Bank
November 17, 1999
UK Borrowers
1. Bankers Trust International PLC
2. Banque Paribas
3. Barclays Capital Securities Ltd.
4. Bear Xxxxxxx International Limited
5. Xxxxx Xxxxx Int'l Limited
6. CIBC World Markets PLC
7. Chase Manhattan International Limited
8. Commerzbank AG
9. Credit Suisse First Boston Europe Limited
10. Daiwa Europe Limited
11. Deutsche Bank AG
12. Gerrard & National Inter Commodities
13. Xxxxxxx Xxxxx International
14. ING Baring Securities Ltd.
15. XX Xxxxxx Securities Limited
16. Xxxxxx Brothers International (Europe)
17. London Global Securities
18. Maple Partners (UK) Ltd
19. Xxxxxxx Xxxxx International
20. Xxxxxx Xxxxxxx & Co. International
21. Nomura International PLC
22. Xxxxx Xxxxxx International (UK) Limited
23. SG Securities (London) Ltd.
24. Salomon Brothers International Ltd.
25. UBS AG
26. Credit Suisse First Boston Equities Limited
(UK Global One Borrower Only)
27. Investec Bank UK Ltd. (UK Global One Borrower Only)
28. Lazard Brothers & Co. Ltd (UK Global One Borrower Only)
29. Xxxxxx Xxxxxxxx & Co. Limited (UK Global One Borrower Only)
30. Xxxxxx Xxxxxxx Securities Ltd. (UK Global One Borrower Only)
31. Xxxxxxx Xxxxx Equities (Australia) Ltd.
(Australia clients only)
32. Xxxxxxx Xxxxx Barney Australia Capital Markets Pty Limited
(Australia clients only)
November 2, 0000
Xxxxxxxx 2
CHASE GLOBAL SECURITIES LENDING
LETTER OF CREDIT BANKS
ABN AMRO Bank
Banco Santander S.A.
Bank of America NA
Bank of Montreal
Bank of New York
Bankers Trust Co.
Banque Nationale de Xxxxx
Xxxxxxx'x Bank PLC
Bayerische Landesbank GZ
Canadian Imperial Bank of Commerce
Citibank
Credit Suisse First Boston
Deutsche Bank
First National Bank of Chicago
Fleet National Bank
HypoVereinsbank
Lloyds TSB Bank PLC
Mellon Bank N.A.
Midland Bank PLC
Xxxxxx Guaranty Trust Co. of NY
National Westminister Bank PLC
PNC Bank N.A.
Rabobank Nederland
Republic National Bank of NY
Royal Bank of Canada
Royal Bank of Scotland PLC
Societe Generale
Svenska Handelsbanken
Toronto-Dominion Bank
UBS AG
FP - 9/17/99
Appendix 3 A
MASTER SECURITIES LENDING AGREEMENT
This MASTER SECURITIES LENDING AGREEMENT dated as of _____________199
by and between (the "Borrower") and THE CHASE MANHATTAN BANK, as
trustee or managing agent for those certain trusts and accounts (including
accounts subject to ERISA, as hereinafter defined) from
time to time listed in Appendix A hereto (The Chase Manhattan Bank, acting in
its capacity as trustee or managing agent for each such
trust or account, and not in its individual capacity, is hereinafter referred
to as the "Trustee").
W I T N E S S E T H T H A T:
WHEREAS, the Borrower desires to borrow, from time to time, certain
securities from the Accounts, as hereinafter defined, on the terms and
conditions hereinafter set forth; and
WHEREAS, the Trustee is willing, subject to mutual agreement as to
each loan in the manner hereinafter set forth, to lend such securities to the
Borrower from time to time on behalf of the Accounts on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto hereby agree as follows:
1. Definitions. As used in this Agreement the following words and terms
shall have the meanings set forth below, unless the context clearly indicates
otherwise:
"Account" shall mean each trust or account from time to time listed in
Appendix A hereto, as the same may be amended from time to time in accordance
with paragraph 12 hereof.
"Approved Securities" shall mean book-entry securities issued by the
U.S. Treasury (as defined in Subpart O of Treasury Department Circular No. 300
and any successor provisions) and any other securities issued or fully
guaranteed by the United States government or any agency, instrumentality or
establishment of the U.S. government, including, without limitation, securities
commonly known as "Xxxxxx Xxxx", "Xxxxx Xxxx", "Xxxxxx Xxxx" and "Xxxxxxx Macs",
and any other securities as agreed to by the Borrower and the Trustee from time
to time, which are acceptable to the Trustee in its sole discretion.
"Business Day" shall mean any day on which national banks and the NYSE
are open for business in New York City.
"Collateral" shall mean, collectively, (a) all Pledged Cash from time
to time held by the Trustee hereunder, any property in which such Pledged Cash
may from time to time be invested or reinvested by the Trustee and held by it
(but not the income or distributions thereon or gains therefrom), and any
amounts or other proceeds arising in connection with the sale, exchange,
collection or other disposition of any of the foregoing, (b) all Approved
Securities from time to time delivered by the Borrower and held by the Trustee
hereunder, the interest or other income therefrom and the proceeds thereof, and
(c) all Letters of Credit from time to time held by the Trustee hereunder and
the proceeds thereof, in each case regardless of whether the same has been
allocated at any time or from time to time to any particular Loan.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Equivalent Securities" shall mean securities of an identical type,
nominal value, description and number, of the same issuer and of the same class,
as the Loaned Securities.
"Letter of Credit" shall mean an irrevocable performance letter of
credit issued by a bank acceptable to the Trustee for the account of the
Borrower or any other person acceptable to the Trustee, which letter of credit
(a) expires not earlier than such time as shall be agreed between the Borrower
and the Trustee, (b) names as beneficiary The Chase Manhattan Bank, as trustee
or managing agent, (c) is payable to the beneficiary upon presentation of a
draft in the amount of any drawing and a statement of the beneficiary that the
amount being drawn thereunder represents money owed to the beneficiary in
connection with a loan or loans of securities, (d) permits any number of partial
drawings (which pro tanto reduce the amount available under the Letter of
Credit), and (e) otherwise contains such terms and provisions as are required by
or acceptable to the Trustee.
"Loaned Securities" shall mean all securities loaned to the Borrower
hereunder or an equal principal amount of the same issue or series and any
securities issued in exchange therefor.
"Loan" shall mean each securities loan made pursuant to paragraph 2
hereof.
"Market Value" shall mean, with respect to any security, as of any date
of determination thereof, (a) the closing price of such security on the NYSE on
the trading day next preceding such date of determination, or (b) if such
security is not listed on the NYSE, the closing price of such security on any
national securities exchange selected by the Trustee on which such security is
listed on the trading day next preceding such date of determination, or (c) if
such security is not listed on any national securities exchange, the asked price
of such security as quoted by a recognized pricing service selected by the
Trustee (including as evidenced by quotations available through Bloomberg's
Financial Service and any pricing service provided by The Chase Manhattan Bank,
or any affiliate thereof), at or as nearly as practicable at the close of
business on the last trading day during which such security was traded next
preceding such date of determination, or (d) with respect to a marketable United
States government obligation, the price of such security as quoted by a
recognized pricing service selected by the Trustee (including as evidenced by
quotations available through Bloomberg's Financial Service and any pricing
service provided by The Chase Manhattan Bank, or any affiliate thereof), or if
the Trustee so chooses the dealer asked price quoted by a recognized dealer in
such security (which may be The Chase Manhattan Bank or any affiliate thereof)
at or as nearly as practicable at the close of business on the last Business Day
preceding such date of determination; provided, that the market value of any
security held as Collateral as to which the issuer of such security is in
default or as to which any third party has asserted an interest shall be zero
for purposes hereof. In addition, the term "Market Value", shall mean, as of any
date of determination thereof, (a) with respect to any Pledged Cash or
Collateral in which such Pledged Cash is invested, the amount of such Pledged
Cash originally paid to the Trustee, as reduced by any payments of such Pledged
Cash to or for the account of the Borrower, and (b) with respect to any Letter
of Credit, the undrawn balance thereof which the Trustee may at any such time
prior to the expiration of such Letter of Credit, draw thereunder; provided,
however, that the market value of any Letter of Credit as to which the issuing
bank has defaulted in honoring any draft drawn thereunder or has indicated its
intention not to honor any such draft or as to which any judicial or similar
restraint on payments thereunder exists shall be zero for all purposes hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Pledged Cash" shall mean the aggregate amount of cash paid to the
Trustee from time to time as Collateral with respect to any Loan, as reduced to
reflect any amounts thereof paid to or for the account of the Borrower and any
increases or decreases resulting from marking to market adjustments.
"Required Value" shall mean at any date, with respect to any Loan, an
amount equal to at least 102% of the then current Market Value of the relevant
Loaned Securities which are the subject of that Loan as of the close of trading
on the preceding Business Day, except in the case of certain discounted
securities at or approaching maturity, for which "Required Value" shall mean,
with respect to any Loan, an amount eaqual to at least 100% of the par value of
the relevant Loaned Securities.
"SEC" shall mean the Securities and Exchange Commission.
2. Loans of Securities.
(a) The Loans. From time to time, upon the request of the Borrower, the
Trustee may, in its sole discretion, lend securities to the Borrower from one or
more of the Accounts. Each such Loan shall be made on the terms and subject to
the conditions hereinafter set forth, except as may be otherwise expressly
agreed in writing by the parties hereto at the time such Loan is made. The
Borrower hereby unconditionally agrees that it will punctually return all Loaned
Securities to the Trustee at the times when the Loan of such Loaned Securities
is terminated hereunder or when such Loaned Securities are otherwise required to
be returned to the Trustee in accordance with the terms hereof, and that it will
punctually pay, or cause to be paid, when due, all other amounts at any time
payable by it hereunder or in connection herewith.
(b) Obligations to be Separate. Each and every obligation, liability or
undertaking of the Trustee or an Account with respect to any Loan (i) shall be
solely an obligation, liability or undertaking of, and binding upon, the Account
by which such Loan is made and the Trustee acting for such Account in its
capacity as such and (ii) shall be payable solely from the available assets of
such Account. No such obligation, liability or undertaking shall be binding upon
or affect any other Account, the Trustee acting in any other capacity or The
Chase Manhattan Bank in its individual capacity.
3. Method of Making the Loans.
(a) Delivery of Loaned Securities. Each Loan hereunder shall be made by
the Trustee delivering to the Borrower the Loaned Securities that are the
subject of such Loan against receipt by the Trustee of the Collateral required
to secure such Loan. The Trustee may deliver Loaned Securities to the Borrower
either by (i) delivering to the Borrower certificates representing the Loaned
Securities, duly endorsed in blank or accompanied by duly executed stock or bond
transfer powers, as the case may be, with signatures guaranteed by a bank or a
member firm of the New York Stock Exchange, Inc., in which event the Trustee
shall list the Loaned Securities on a schedule and receipt, which the Borrower
shall execute and return when the Loaned Securities are received, or (ii)
causing the Loaned Securities to be credited to the Borrower's account or the
Borrower's agent's account at the Depository Trust Company (or any other
depository or clearing agency agreed by the Borrower and the Trustee), including
the Federal Reserve/Treasury Book Entry System. The Borrower agrees that the
completion of a delivery of Loaned Securities to it as provided in this
paragraph 3 shall constitute its acceptance and receipt thereof and that each
such acceptance and receipt shall be deemed to constitute, and shall constitute,
a representation by the Borrower that as of the date of such acceptance and
receipt (i) all representations and warranties by the Borrower herein are true
and correct, as if made on and as of such date, (ii) no default hereunder has
occurred and is continuing, and (iii) except as otherwise theretofore disclosed
to the Trustee in writing, there has been no material adverse change in the
financial condition or business of the Borrower since the date of the most
recent financial statements of the Borrower provided to the Trustee in
accordance with subparagraph 7(c) or 8(a) hereof.
(b) Delivery of Collateral. The Borrower hereby agrees that, as a
condition precedent to the making of any Loan, or, in the Trustee's sole
discretion, simultaneously with the making of any Loan, it shall deliver to the
Trustee Collateral consisting of (i) cash, (ii) Approved Securities, and/or
(iii) Letters of Credit having an aggregate Market Value on the date of such
Loan at least equal to the Required Value with respect to such Loan on such
date. Collateral at any time delivered to the Trustee under this paragraph or
paragraph 6 hereof shall be of such type or types listed above as are then
acceptable to the Trustee in its sole discretion.
(c) Manner of Collateral Delivery. Unless otherwise agreed by the
Trustee and the Borrower, the delivery of Pledged Cash shall be made by (i) the
Borrower transferring funds by wire, (ii) the Borrower delivering to the Trustee
a certified or bank check representing New York Clearing House funds, (iii) the
Borrower causing the Borrower's account or the Borrower's agent's account at a
depository to be debited and the Trustee's account to be credited in a
corresponding amount, (iv) if agreed to, at the time, by the parties hereto,
causing the Borrower's account at The Chase Manhattan Bank to be charged or (v)
any combination of any of the foregoing. Delivery of Approved Securities shall
be effected for purposes hereof by normal and customary delivery procedures
satisfactory, at the time, to the Trustee. Such procedures shall include, but
are not limited to, delivery through book entry transfer pursuant to the rules
and procedures of the Depository Trust Company (or any other clearing agency
registered by the SEC) or the Federal Reserve/Treasury Book Entry System, as the
case may be. All such deliveries shall be deemed to have been effected for
purposes hereof when final, irreversible, credit has been made to the account of
the party entitled to the receipt of such credit under the rules of such
clearing agency or book entry system.
(d) Delivery of Letters of Credit. The delivery of a Letter of Credit
shall be effected for the purposes of this Agreement by (i) physical delivery of
the original executed Letter of Credit or (ii) tested telex by the issuing,
confirming or advising bank to the Trustee. Unless the Trustee otherwise agrees
to same day delivery of a Letter of Credit, no such delivery shall be effective
until one Business Day after the receipt of a Letter of Credit by the Trustee,
during which period the Trustee may reject such Letter of Credit, by oral notice
to the Borrower, if such Letter of Credit is not in the form approved by the
Trustee.
4. The Collateral.
(a) Pledge. As security for the prompt payment and performance of any
and all obligations of the Borrower at any time or from time to time existing
hereunder, or in connection with any Loan, the Borrower hereby pledges to the
Trustee, and grants to the Trustee a security interest in, all Collateral (other
than Letters of Credit) whether now owned or hereafter acquired, and whenever
delivered to the Trustee (except insofar as greater rights are provided in
subparagraph 4(b) hereof) and agrees that such pledge and grant of a security
interest shall be effective immediately as to any Collateral upon delivery
thereof to the Trustee. The Borrower hereby agrees that the Trustee shall have
all right, title and interest in and to the Letters of Credit delivered as
Collateral hereunder. The Trustee shall not be obligated to release Collateral,
or take any other action with respect thereto, except as expressly provided
herein.
(b) Pledged Cash. The Trustee shall have the unrestricted right to use
and invest Collateral consisting of Pledged Cash, and any Collateral in which
Pledged Cash is invested and reinvested, as it may elect, for the sole account
of the Accounts. So long as appropriate records allocating such Pledged Cash or
other Collateral are maintained, the Trustee may commingle such Pledged Cash or
other Collateral with any other Collateral or other funds or assets, including
funds or assets held by The Chase Manhattan Bank acting in any capacity as
collateral agent under other lending agreements, and may hold the same in its
own name or the name of its nominee. The Trustee shall be entitled to collect
and retain, for the account of the affected Account or Accounts, any income on
such Collateral and any net gains realized upon the sale, maturity, payment,
retirement or other disposition of such investments or reinvestments. The
Accounts shall bear the risk of all losses in value of the principal amount of
any Collateral in which Pledged Cash is invested or reinvested. The sole
obligation of the Trustee with respect to Pledged Cash is to repay such Pledged
Cash to the Borrower as required by paragraphs 6, 9, and 10 hereof.
(c) Approved Securities. The Trustee may commingle any Approved
Securities held by it with other Collateral or other assets, including assets
held by The Chase Manhattan Bank acting in any capacity as collateral agent
under other lending agreements, and may hold the same in its own name or the
name of its nominee. Unless a default by the Borrower hereunder shall have
occurred and be continuing, the Borrower shall be entitled to receive all
interest payments or other distributions on Approved Securities held as
Collateral that are received by the Trustee (if any). The parties hereto shall
deliver such suitable assignments, orders and other instruments as may be
required in order to effectuate the provisions of the preceding sentence. If any
interest or other distribution on any Approved Securities is paid to the
Borrower or to the Trustee in respect of a time when the recipient thereof is
not entitled to receive such distribution, such recipient shall forthwith pay or
deliver such distribution, or the equivalent thereof, to the party entitled to
receive the same. The Borrower shall bear the risk of all losses in value of the
principal amount of Approved Securities held as Collateral. The sole obligation
of the Trustee with respect to Approved Securities held as Collateral, except as
provided in this paragraph, is to deliver such Approved Securities to the
Borrower as required by paragraphs 6, 9 and 10 hereof.
(d) Substitutions of Approved Securities. Prior to the maturity of any
Approved Securities, the Borrower may substitute other securities for the
Approved Securities if (i) such substituted securities, together with all
Collateral then held by the Trustee for such Loan, shall equal no less than the
Required Value for such Loan, and (ii) such substituted securities Collateral is
reasonably acceptable to the Trustee and the Account. In addition, the Trustee
shall have the right to request that other securities be substituted by the
Borrower for the Approved Securities if for any reason the Approved Securities
are not at any time reasonably acceptable to the Trustee or the Account.
5. Rights of Borrower and Trustee with Respect to Loaned Securities.
(a) Borrower's Rights. Until a Loan is terminated in accordance with the
provisions hereof, the Borrower shall have all the incidents of ownership of the
relevant Loaned Securities, including, without limitation, the right to transfer
such Loaned Securities or any part thereof to others, free and clear of any
right, title or interest of the Trustee, and to vote or otherwise consent as
holder thereof, subject, however, to all rights of the Trustee and all
obligations of the Borrower hereunder, including the provisions of subparagraphs
5(b) and (c) hereof.
(b) Trustee's Rights. The Trustee shall be entitled to receive all
interest, dividends and other distributions of any kind whatsoever on or with
respect to the Loaned Securities made during the period of the relevant Loan or
for which the record date occurs during the period of the relevant Loan. Upon
the payment or distribution of any of the foregoing to any person other than the
Trustee, the Borrower shall, on the due date for payment or distribution
thereof, pay and deliver the same or identical property (with any such
endorsements or assignments as shall be customary and appropriate to effect the
delivery) to the Trustee, for the account of the relevant Account, irrespective
of whether the Borrower received the same; provided, however, that (i) any
distribution of securities made in exchange for Loaned Securities shall be
considered as substituted for such Loaned Securities and need not be delivered
to the Trustee until the relevant Loan is terminated hereunder, (ii) any
dividend payable solely in shares of stock which is distributed with respect to
any Loaned Securities shall become a new Loan (and shall constitute Loaned
Securities, on the same terms as the Loaned Securities in respect of which they
were distributed, for all purposes hereof) and need not be delivered to the
Trustee until such new Loan is terminated hereunder, if at or before the
delivery of such dividend the Borrower shall have delivered such additional
Collateral for such new Loan to the Trustee as shall be necessary to make the
aggregate Market Value of the Collateral for such Loan, determined on the date
of such distribution, at least equal to the Required Value with respect to such
Loan determined on such date, and (iii) any distribution of warrants or rights
to purchase shares made with respect to any Loaned Securities shall be deemed to
be, and shall be, a new Loan made to the Borrower from the Account which loaned
the Borrower the Loaned Securities with respect to which such distribution is
made (and shall be treated as Loaned Securities, and as a separate Loan, for all
purposes hereof) and need not to be delivered to the Trustee until such new Loan
is terminated in accordance herewith, if at or before the delivery of such
distribution the Borrower and the Trustee shall have agreed upon the Required
Value for such new Loan and the Borrower shall have delivered to the Trustee
Collateral for such new Loan having a Market Value acceptable to the Trustee.
6. Allocation and Adjustment of Collateral.
(a) Allocation of Collateral. Except as provided in the following
sentence, upon receipt of Collateral for a Loan, such Collateral shall be
allocated to such Loan; provided that, if Collateral is received on the same day
for more than one Loan, the Trustee shall allocate such Collateral to each Loan
then being made so that each such Loan is secured by not less than the Required
Value of Collateral as specified herein. Any Collateral received by the Trustee
with respect to a Loan in excess of the Required Value for such Loan may be held
by the Trustee as collateral security for all Loans made to the Borrower at any
time without being allocated to any one Loan or, in the sole discretion of the
Trustee, may be allocated at any time to any Loan or Loans then outstanding
hereunder. All allocations of Collateral shall be marked in the Trustee's books,
which shall be conclusive evidence of such allocations.
(b) Marking to Market. If at any time the aggregate Market Value of the
Collateral allocated to any Loan exceeds the Required Value for such Loan, then
the Trustee shall, upon oral demand, redeliver to the Borrower Collateral having
an aggregate Market Value equal to such excess by the close of business on such
Business Day or as otherwise agreed. If at any time the aggregate Market Value
of the Collateral allocated to any Loan is less than the Required Value for such
Loan, then the Borrower shall, upon oral demand by the Trustee, deliver to the
Trustee additional Collateral having a Market Value at least equal to such
deficiency. The Borrower unconditionally agrees to deliver such additional
Collateral to the Trustee in the manner specified herein before the close of
business on the date of such demand or as otherwise agreed.
(c) Reallocation of Collateral. The Trustee shall have the right, at its
sole election, at any time and from time to time, to allocate and/or reallocate
any Collateral held by it hereunder to or among any outstanding Loan or Loans.
(d) Partial Returns of Collateral. If, at the time, less than all of the
Collateral held by the Trustee which has been allocated to any Loan or which is
unallocated is required to be returned by the Trustee to the Borrower, the
selection of the portion of such Collateral to be returned shall be solely at
the election of the Trustee. If at any time the Trustee is required, or desires,
to return a portion of any Approved Security to the Borrower pursuant to this
Agreement, the Borrower shall, at the oral request of the Trustee, take all such
action as is necessary to cause such Approved Security to be reissued in such
denominations as are required to permit such a partial return and in such case
the Trustee shall not be obligated to return Collateral hereunder unless and
until such action has been taken and may thereafter make required returns of
Collateral hereunder by returning Approved Securities in such amounts as are, as
nearly as practicable, equal to but not greater than the required return. The
return to the Borrower of Approved Securities the Market Value of which on the
day on which the requirement to return the same was established was then
sufficient to comply with such requirement of return shall be in full compliance
with this Agreement and a full discharge of the Trustee's obligation to make
such return, notwithstanding the fact that at the date of such return the Market
Value of any such Approved Securities may have declined. Whenever a Letter of
Credit is to be returned in part, such return shall be effected by the Trustee's
consent to a reduction equivalent to such part in the amount available for
drawings under such Letter of Credit.
7. Representations and Warranties of Borrower. The Borrower hereby
represents and warrants to the Trustee that:
(a) Due Authorization, etc. The making and performance by the Borrower
of this Agreement and the transactions contemplated hereby have been duly
authorized by the Borrower; the Borrower has the requisite power and authority
to make and perform the same; and such making and performance will not violate
any applicable provision of law or regulation or result in the breach of or
constitute a default or result in the creation of any lien or encumbrance under
any agreement or other instrument to which the Borrower is a party or by which
the Borrower or its property may be bound or affected. This Agreement
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms. At any time that any Collateral is delivered to
the Trustee hereunder the Borrower shall have the absolute right to transfer
title to, and dispose of, such Collateral to the Trustee, and the Trustee shall
at all times have a perfected security interest in all such Collateral, except
that in the case of Letters of Credit the Trustee shall have all right, title
and interest therein, in each case subject to no equal, prior or other liens,
charges, encumbrances or other claims of any kind (except, in the case of
Approved Securities, those in favor of The Chase Manhattan Bank or the Federal
Reserve Bank).
(b) Borrower's Status. The Borrower is either a bank or a broker- dealer
registered under the Securities Exchange Act of 1934, as amended. Neither the
Borrower nor any affiliate (as defined in Department of Labor Prohibited
Transaction Exemption 81-6) of the Borrower has discretionary authority or
control with respect to investment of any plan assets held in any Account to
which this Agreement is applicable or renders investment advice (within the
meaning of 29 CFR 2510.3-21(c)) with respect to such assets, and the Borrower
will promptly notify the Trustee of any change which would make the foregoing
representation untrue. In connection with the foregoing, Trustee acknowledges
that such representation and warranty shall not take effect until the Borrower
has been furnished with a list of Lenders and has been given a reasonable
opportunity to review the same (but in no event greater than 10 Business Days
from the date such list is furnished to the Borrower). The Borrower shall advise
the Trustee as soon as possible, but in no event later than the expiration of
the 10 Day period referred to in the preceding sentence of the identity of any
Lender(s) as to which Borrower cannot make the representation and warranty
referred to in this subsection (b), in which event any such Lender(s) shall be
deleted from the list of Lenders eligible to lend to the Borrower.
(c) Financial statements. The Borrower has heretofore delivered to the
Trustee a copy of the most recent annual consolidated financial statements of
the Borrower and its consolidated subsidiaries, duly audited by independent
certified public accountants, including a balance sheet as at the end of the
fiscal year, and a copy of the most recent unaudited consolidated financial
statements of the Borrower and its consolidated subsidiaries, including a
balance sheet as at the end of the period covered thereby, and each of said
statements and the related notes thereto are complete and correct and fairly
present the consolidated financial condition and results of operations of the
Borrower and its consolidated subsidiaries, all in conformity with generally
accepted accounting principles consistently applied.
7A. Representations and Warranties of Trustee on Behalf of Each
Lender. The Trustee represents and warrants that each Lender has represented and
warranted to the Trustee that it: (i) has authorized Trustee to execute and
deliver an agreement substantially in the form hereof, to enter into the
transactions contemplated hereby, and to perform Trustee's obligations
hereunder; (ii) is the beneficial owner of all securities lent by it hereunder
or otherwise has the right to lend such securities; and (iii) is entitled to
receive all interest, dividends and other distributions made by the issuer with
respect to such securities.
8. Covenants of Borrower. The Borrower hereby covenants and agrees with
the Trustee as follows:
(a) Delivery of Financial Statements, etc. The Borrower will furnish to
the Trustee, (i) as soon as available, a copy of the annual consolidated
financial statements of the Borrower and its consolidated subsidiaries duly
audited by independent certified public accountants, including a balance sheet
as at the end of such fiscal year,prepared in accordance with generally accepted
accounting principles consistently applied, (ii) as soon as available for each
quarter, a copy of the consolidated financial statements of the Borrower and its
consolidated subsidiaries for the period then ended, including a balance sheet
as at the end of such period, prepared in accordance with generally accepted
accounting principles on a basis consistent with that used in the preparation of
the financial statements referred to in clause (i) above and certified by an
appropriate officer of the Borrower, (iii) promptly after the filing thereof, a
copy of each report or other instrument filed by the Borrower with the SEC, (iv)
promptly after the occurrence of any default under this Agreement, a written
notice setting forth the nature of such default and the steps being taken by the
Borrower to remedy such default, and (v) from time to time such further
information (whether or not of the kind mentioned above) regarding the business,
affairs and financial condition of the Borrower as the Trustee may reasonably
request.
(b) Notice of Certain Actions. The Borrower will give the Trustee
immediate notice (i) if at any time there is entered against the Borrower any
order, decree, determination or instruction issued on the authority of any rule,
regulation or proceeding of any governmental commission, bureau or other
administrative agency or self-regulatory organization, including the SEC and the
NYSE, which could have a material adverse effect on the ability of the Borrower
to perform its obligations under this Agreement or to carry on its business as
conducted at the date of this Agreement or which would prohibit expansion or
require reduction of the business of the Borrower as conducted at the date of
this Agreement or which might adversely affect the borrowing of securities by
the Borrower, (ii) if at any time any litigation, arbitration or similar
proceeding against or affecting the Borrower is commenced which could have a
material adverse effect on the ability of the Borrower to perform its
obligations under this Agreement or to carry on its business as conducted at the
date of this Agreement or which would prohibit expansion or require reduction of
the business of the Borrower as conducted at the date of this Agreement or which
might adversely affect the borrowing of securities by the Borrower, (iii) if at
any time there is commenced any investigation or proceeding which may result in
the expulsion of the Borrower from any stock exchange, including the NYSE, or
from the National Association of Securities Dealers, Inc., or from any
self-regulatory organization, or a suspension of the Borrower's power under
Federal or state law to transact business as a broker or dealer in securities or
if the Borrower is so expelled or suspended, (iv) if at any time any
communication is received by the Borrower from the SEC or any stock exchange,
including the NYSE, constituting a warning to the Borrower of the violation, or
threatened violation, of any rule of the SEC or of such exchange a failure to
comply with which could have a material adverse effect on the ability of the
Borrower to perform its obligations under this Agreement or to carry on its
business as conducted at the date of this Agreement or result in a prohibition
on expansion or a requirement for reduction of the business of the Borrower as
conducted at the date of this Agreement or adversely affect the borrowing of
securities by the Borrower, (v) if at any time the Borrower shall receive
information that the Borrower is under special surveillance by any stock
exchange, including the NYSE, or by any other self-regulatory organization, (vi)
if at any time the Borrower shall receive information that the SEC or any
self-regulatory organization, including the NYSE, has notified the Securities
Investor Protection Corporation ("SIPC") pursuant to Section 5(a) (1) of the
Securities Investor Protection Act of 1970 ("SIPC Act") of facts which indicate
that the Borrower is in or is approaching financial difficulty, or (vii) if at
any time SIPC shall file an application for a protective decree with respect to
the Borrower under Section 5(a) (3) of the SIPC Act. Any such notice shall set
forth in reasonable detail a description of the event which has occurred and of
the action, if any, which the Borrower proposes to take with respect thereto.
The Borrower will forward to the Trustee a copy of any order, decree,
determination, instruction or other written evidence received by it of or with
respect to any matter referred to in the first sentence of this subparagraph (b)
with respect to which notice is required to be given to the Trustee by such
sentence. The Borrower will comply with any such order, decree, determination or
instruction within the time required for such compliance and with any changes of
rules or regulations of the SEC or the NYSE or any other self-regulatory
organization by the effective date thereof or the time for compliance specified
therein or, within the time required for compliance, shall cause the same to be
revoked, reversed or modified to the satisfaction of the Trustee.
(c) Further Acts. The Borrower will, from time to time, do and perform
any and all acts and execute any and all further instruments required or
reasonably requested by the Trustee more fully to effect the purposes of this
Agreement and the pledge of the Collateral hereunder, including, without
limitation, the execution and filing of financing statements and continuation
statements relating to the Collateral under the provisions of the New York State
Uniform Commercial Code.
9. Termination of Loans without a Default.
(a) Termination by the Borrower. The Borrower may at any time terminate
any Loan by (unless otherwise agreed) giving the Trustee oral notice of such
termination and delivering the Loaned Securities or Equivalent Securities with
respect to such Loan to the Trustee on the date specified in such oral notice.
The date so specified shall be as agreed by the Borrower and the Trustee. In the
event that the Borrower terminates any term loan prior to the expiration of the
agreed term, the Borrower may be liable for any costs or expenses incurred as a
result thereof.
(b) Termination by the Trustee. Each Loan made hereunder shall be a
demand loan. The Trustee may at any time terminate any Loan, in whole or in
part, by giving the Borrower oral notice of such termination, whereupon such
Loan, or the portion thereof being terminated, shall become due on the date
specified in such notice unless it shall become due sooner pursuant to paragraph
10 hereof. The date so specified shall be as agreed between the Trustee and the
Borrower. The Borrower hereby unconditionally promises to redeliver the Loaned
Securities that are the subject of any Loan so terminated to the Trustee through
the same delivery means as the Loaned Securities were delivered by the Trustee
to the Borrower, on the date so specified with respect to such Loan, which shall
be within the same timeframe as applicable to the delivery of the Loaned
Securities by the Trustee to the Borrower.
(c) Return of Collateral. Upon the termination of any Loan in accordance
with this paragraph 9 and the return of the Loaned Securities with respect to
such Loan to the Trustee, the Trustee shall, unless otherwise directed by the
Borrower, deliver the Collateral then allocated to such Loan to the Borrower;
provided, however, that if any default hereunder shall have occurred and be
continuing the Trustee shall not be obligated to return any such Collateral
until such default shall have been cured, and that if a record date for any
distribution with respect to the Loaned Securities occurred during the period of
such Loan and such distribution has not been paid or delivered to the Trustee,
the Trustee may retain a portion of the Collateral for such Loan sufficient to
satisfy the Borrower's obligation with respect to such distribution until such
obligation has been satisfied in accordance with paragraph 5(b) hereof. Such
delivery shall occur on the date of the return of the relevant Loaned
Securities. The Trustee acknowledges that, if at the election of the Borrower,
upon the termination in accordance with this paragraph 9 of any Loan which is
secured by a Letter of Credit, or a portion thereof, and the return of the
Loaned Securities with respect to such Loan, such Letter of Credit, or portion
thereof, is not returned to the Borrower, the Trustee shall have no further
right to draw under such Letter of Credit with respect to such Loan to the
extent that the obligations of the Borrower with respect to such Loan have been
fully discharged and the payments and deliveries of Loaned Securities made in
respect of such obligations are not subsequently recovered from the Trustee in
any bankruptcy, insolvency or similar proceeding.
10. Defaults.
(a) Events of Default. Any one or more of the following events shall
constitute an "Event of Default" hereunder:
(i) A failure by the Borrower to deliver any Loaned Securities on the
date specified for such delivery in accordance with subparagraph 9(a) or (b)
hereof or any other default by the Borrower in the due performance or observance
of any covenant or agreement contained herein; or
(ii) Any representation or warranty made by the Borrower herein or in
connection herewith or with any borrowing hereunder shall be breached or prove
to have been untrue when made; or
(iii) A violation by the Borrower, in connection with any Loaned
Securities or the holding or disposition thereof by the Borrower, of any
applicable law, regulation or rule of the United States, any state or any
instrumentality of either thereof, the NYSE or any other national securities
exchange to the requirements of which the Borrower may be subject, or the Board
of Governors of the Federal Reserve System or the National Association of
Securities Dealers, Inc.; or
(iv) A violation by the Borrower of any rule limiting its aggregate
indebtedness or requiring a minimum net capital imposed under the Securities
Exchange Act of 1934, as amended, or the rules and regulations thereunder or
imposed by any stock exchange, or the imposition, under any such rule, of a
prohibition against expansion, or a requirement of any reduction, of the
business of the Borrower; or
(v) The occurrence of any event of which the Borrower is required to
notify the Trustee pursuant to clause (i), (iii), (vi), or (vii) of subparagraph
8(b) hereof; or
(vi) The Borrower or any bank which has issued a Letter of Credit held
as Collateral shall (1) apply for or consent to the appointment of or the taking
of possession by a trustee, receiver, custodian, liquidator, conservator or the
like of itself or of all or any substantial part of its property, (2) admit in
writing its inability, or be generally unable, to pay its debts as such debts
become due or voluntarily suspend payment of its obligations, (3) make a general
assignment for the benefit of its creditors, (4) commence a voluntary case under
the Federal Bankruptcy Code (as now or hereafter in effect) or, in the case of
any such bank, under the analogous law pertaining to it, (5) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, (6) fail to
controvert in a timely or appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under such Bankruptcy Code or
analogous law, or (7) take any corporate action for the purpose of effecting any
of the foregoing; or
(vii) A proceeding or case shall be commenced, without the application
or consent of the Borrower or any bank which has issued a Letter of Credit held
as Collateral, as the case may be, before any court, agency or supervisory
authority having jurisdiction in the premises, seeking (1) the liquidation,
reorganization, dissolution, winding-up, marshaling of assets or composition or
adjustment of debts of the Borrower or such bank, (2) the appointment of a
trustee, receiver, custodian, liquidator, conservator or the like of the
Borrower or such bank or of all or any substantial part of its assets or (3)
similar relief in respect of the Borrower or such bank under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition and adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 30 days; or any action
shall be taken by any agency or supervisory authority having jurisdiction which
results in the occurrence of any of the events specified in clauses (1) through
(3) above; or any order for relief against the Borrower or any such bank shall
be entered in an involuntary proceeding or case under such Bankruptcy Code or,
in the case of any such bank, under the analogous law pertaining to it.
(b) Automatic Termination. Upon the occurrence of any Event of Default
all outstanding Loans shall terminate and become immediately due, without any
notice or other action on the part of the Trustee, and the Borrower shall
immediately deliver all Loaned Securities to the Trustee.
(c) Trustee's Remedies. If an Event of Default shall have occurred and
be continuing the Trustee may take whatever action at law or in equity may
appear necessary or desirable to collect any and all amounts due and thereafter
to become due hereunder and to enforce the performance or observance by the
Borrower of any and all obligations, covenants and agreements of the Borrower
under or in connection with this Agreement. Without in any way limiting the
foregoing, if the Borrower shall fail to immediately deliver any Loaned
Securities to the Trustee in accordance with subparagraph 10(b) hereof, the
Trustee may in its sole discretion either (i) purchase securities equivalent to
the Loaned Securities which have not been delivered, or any part thereof, in any
principal market for such securities and apply such purchased securities towards
the Borrower's obligation to deliver such Loaned Securities, or (ii) by oral
notice to the Borrower (confirmed in writing), and without purchasing equivalent
securities, hold the Borrower liable for an amount equal to the Market Value
(including for this purpose accrued interest to the date of such oral notice) of
the Loaned Securities which have not been delivered, or any part thereof as
specified in such notice, determined as of the date of such oral notice,
whereupon the Borrower's obligation to deliver such Loaned Securities to the
Trustee hereunder (to the extent equivalent securities have been purchased or
the Trustee has given an oral notice with respect thereto pursuant to clause
(ii) above) shall terminate for all purposes and the Borrower shall thereafter
be obligated to the Trustee hereunder for, and hereby agrees to pay to the
Trustee, the full amount of the purchase price of such securities or the Market
Value (including accrued interest as provided above) thereof, as the case may
be.
(d) Application of Collateral. The Trustee shall have all of the rights,
powers and remedies with respect to the Collateral of a secured party, or, in
the case of Letters of Credit, a beneficiary, under the New York State Uniform
Commercial Code as in effect from time to time. Without in any way limiting the
foregoing, upon the occurrence of any Event of Default the Trustee may draw upon
any Letters of Credit then held as Collateral and liquidate any or all other
Collateral then held by it. The proceeds of the foregoing, together with any
Pledged Cash then held, may be applied by the Trustee to the payment of any and
all amounts due and to become due to it hereunder, including without limitation
amounts due to the Trustee in accordance with subparagraph 10(c) hereof. In
addition to and without limiting the foregoing, the Trustee may sell or cause to
be sold all or any of the Collateral in the Borough of Manhattan, New York City,
or elsewhere, in one or more sales, at such price as the Trustee may deem best,
and for cash or on credit or for future delivery, without assumption of any
credit risk, at public or private sale, without demand of performance or notice
of intention to sell or of time or place of sale (except such notice as is
required by applicable statute and cannot be waived), and the Trustee or anyone
else may be the purchaser of any or all of the Collateral so sold and thereafter
hold the same absolutely, free from any claim or right of whatsoever kind,
including any equity of redemption, of the Borrower, any such demand, notice or
right and equity being hereby expressly waived and released. It is expressly
understood and agreed by the parties hereto that any allocation of Collateral to
any Loan or liabilities due to any Account pursuant to the terms hereof shall in
no way affect the ability of the Trustee to apply such Collateral to the
satisfaction of any obligation of the Borrower hereunder upon any default
hereunder, regardless of the Loan or Account to which such obligation relates,
and that all Collateral at any time given hereunder shall constitute collateral
security for all the Borrower's obligations to the Trustee hereunder without
distinction of any kind and upon any default hereunder may be applied to any
such obligation or obligations as the Trustee in its sole discretion may elect.
(e) Borrower's Remedies. If at any time any Lender Default (as such term
is hereinafter defined) shall have occurred and be continuing with respect to
any Account, the Borrower may, by oral notice to the Trustee, declare all
outstanding Loans made by such Account (the "Defaulted Loans") to be terminated
and to be immediately due, whereupon the same shall terminate and become
immediately due without any further notice or other action on the part of the
Borrower, and the Trustee shall immediately deliver all Collateral for such
Defaulted Loans to the Borrower in accordance with subparagraph 9(c) hereof
against receipt of the Loaned Securities which are the subject of such Defaulted
Loans; provided, however, that upon the occurrence of any Lender Default
referred to in clause (iv) of the definition of Lender Default below with
respect to any Account all outstanding Loans made by such Account shall
automatically terminate and become immediately due, without any notice or other
action on the part of the Borrower, and the Trustee shall immediately deliver
all Collateral for such Defaulted Loans to the Borrower in accordance with
subparagraph 9(c) after tender to the Trustee of the Loaned Securities which are
the subject of such Defaulted Loans. If the Trustee shall fail to deliver any
such Collateral to the Borrower in accordance with this sub- paragraph 10(e)
after tender to the Trustee of the Loaned Securities which are the subject of
the Loan secured by such Collateral, the Borrower shall have the right, in
addition to any other remedies which may be available at law or in equity, after
oral notice (confirmed in writing) to the Trustee, to sell in a commercially
reasonable manner, the Loaned Securities then held by it which are the subject
of the Loan secured by such Collateral, for the account of the Account which
made such Loan, and apply the proceeds of such sale in accordance with this
subparagraph 10(e). Upon receipt by the Trustee of any such notice of sale, the
Trustee's obligation to return any Pledged Cash or Approved Securities allocated
to the Loan with respect to which such notice was given which have not
theretofore been returned to the Borrower shall terminate for all purposes and
the Trustee shall thereafter be obligated, on behalf of the Account, to the
Borrower hereunder, with respect to such Loan, for, and hereby agrees to pay to
the Borrower, an amount equal to such Pledged Cash and the Market Value
(including for this purpose accrued interest to the date of the relevant Lender
Default) of such Approved Securities, determined as of the date of the relevant
Lender Default. The proceeds of any sale of Loan Securities under this
subparagraph 10(e) shall be automatically applied to the payment of any and all
amounts due to the Borrower hereunder from the Account which loaned such Loaned
Securities to the Borrower, including without limitation amounts due to the
Borrower in accordance with this subparagraph 10(e). Except as otherwise
provided in this subparagraph 10(e), if a Lender Default has occurred with
respect to any Account and the Loans made by such Account have been terminated
pursuant to this subparagraph 10(e), the Borrower shall not be obligated to (i)
return any Loaned Securities which are the subject of any Defaulted Loan made by
such Account, or the proceeds of any sale thereof, or (ii) pay or deliver to the
Trustee pursuant to subparagraph 5(b) hereof any interest, dividends or other
distributions with respect to the Loaned Securities which are the subject of any
Defaulted Loan made by such Account until all of the obligations hereunder of
such Account have been satisfied; provided, however, that upon satisfaction of
all obligations of such Account hereunder any and all such Loaned Securities,
proceeds, interest, dividends and other distributions which have not been
applied to the satisfaction of such obligations shall be returned to the Trustee
for the account of such Account. As used herein, the term "Lender Default" shall
mean, with respect to any Account, any one or more of the following events: (i)
a failure by such Account to deliver any Pledged Cash or Approved Securities to
the Borrower in accordance with subparagraph 9(c) hereof; (ii) a failure by such
Account to deliver any Collateral to the Borrower in accordance with
subparagraph 6(b) hereof; (iii) a failure by such Account to pay or deliver to
the Borrower any interest payment or other distribution on any Approved
Securities held as Collateral in accordance with subparagraph 4(c) hereof and
the continuance of such default for a period of one Business Day after written
notice thereof has been given to the Trustee by the Borrower; (iv) such Account,
if such Account is not an employee benefit plan subject to ERISA, shall make a
general assignment for the benefit of its creditors, or shall admit in writing
its inability to pay its debts as they become due, or shall file a petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or shall file a
petition seeking reorganization, liquidation, dissolution or similar relief
under any present or future statute, law or regulation, or shall seek, consent
to or acquiesce in the appointment of any liquidator (or similar official) of
itself or of any material part of its properties, or any petition, not dismissed
within 30 calendar days, shall be filed against such Account (other than by the
Borrower) in any court or before any agency alleging the bankruptcy or
insolvency of such Account or seeking any reorganization, arrangement,
composition, readjustment of debts, liquidation, dissolution or similar relief
with respect to such Account under any present or future statute, law or
regulation, or the appointment of a liquidator of all or any material part of
such Account's property, or, if such Account is an employee benefit plan subject
to ERISA, the Pension Benefit Guaranty Corporation, or any successor thereof,
shall institute proceedings to terminate such plan under section 4042 of ERISA;
or (v) such Account, if such Account is not an employee benefit plan subject to
ERISA, shall have any 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, or, if such
Account is an employee benefit subject to ERISA, a final determination shall be
rendered that such plan no longer is exempt from tax under Section 501(a) of the
Internal Revenue Code of 1986, as amended.
(f) Payment of Expenses. If any Event of Default shall occur the
Borrower shall pay to the Trustee, on demand, all out-of-pocket expenses,
including reasonable attorneys' fees, paid or incurred by the Trustee in
realizing upon any Collateral or enforcing any covenants or obligations
hereunder and all fees, commissions, taxes and other out-of-pocket expenses,
including reasonable attorneys' fees, paid or incurred in connection with the
purchase of any equivalent securities in accordance with subparagraph 10(c)
hereof. Amounts payable under this subparagraph 10(f) and subparagraph 10(c)
hereof shall be paid to the Trustee by the Borrower on demand, together with
interest thereon from the date such amounts were paid by the Trustee or
otherwise became payable to the Trustee to the date of the payment of such
amounts to the Trustee, whether out of the proceeds of Collateral or otherwise,
at a rate per annum equal to 1/2 of 1% above the prime commercial lending rate
per annum as announced from time to time by The Chase Manhattan Bank (National
Association) at its principal office in New York, as in effect from time to time
during such period, but in no event at a rate in excess of the highest rate
permissible under any applicable usury law.
(g) Remedies Cumulative. No remedy herein conferred upon the Trustee or
the Borrower shall be exclusive of any other remedy but each and every such
remedy shall be cumulative and shall be in addition to every remedy given to
such party under this Agreement or now or hereafter existing at law or in equity
or by statute.
(h) Return of Collateral After a Default. If the Loans hereunder have
been terminated pursuant to subparagraph 10(b) hereof, the Trustee shall not be
obligated to return any Collateral to the Borrower until (i) all Loaned
Securities have been returned to the Trustee or securities equivalent to such
Loaned Securities have been acquired by the Trustee, (ii) all amounts due and to
become due hereunder have been paid to the Trustee in full, and (iii) the
Borrower has delivered to the Trustee any and all property of any kind which it
is then or may thereafter be required to deliver to the Trustee hereunder. If
each of the conditions in the preceding sentence is satisfied the Trustee shall
deliver all Collateral then held by it which has not been applied to the
satisfaction of the Borrower's obligations hereunder to the Borrower.
11. Transfer Taxes, Necessary Costs and Compensation. The Borrower shall
pay all transfer taxes and necessary costs with respect to the transfer of
Loaned Securities by the Trustee to the Borrower and from the Borrower to the
Trustee upon the termination of each Loan. In addition, the Borrower shall
reimburse the Trustee for any loss, including interest and/or penalties,
incurred by the Trustee by reason of the Borrower's failure to pay all such
taxes and costs. Except as otherwise expressly provided in paragraph 10 hereof,
the Borrower shall pay the Trustee interest on any and all amounts not paid when
due hereunder from the date due until paid at the current daily average offered
rate for federal funds.
12. Addition and Removal of Accounts. The Account which makes any
particular Loan shall be determined in the sole discretion of the Trustee at the
time such Loan is made and recorded in the Trustee's books (which shall be
conclusive). The Borrower agrees to accept any loan of securities requested by
it from any Account or Accounts listed in Appendix A hereto (except that
Borrower may delete one or more Lenders from Appendix A on not less than five
Business Days prior notice to the Trustee), and the Trustee shall not be
required to notify the Borrower at any time as to which of such Accounts has
made or may make any Loan hereunder; provided, however, that the Trustee shall
record with respect to each Loan the identity of the lending Account. The
Trustee may at any time amend Appendix A hereto to add further trusts and
accounts to the list of Accounts set forth therein and to remove Accounts from
such list by delivering a copy of the amendment to Appendix A to the Borrower.
Any such amendment shall become effective three Business Days after the receipt
thereof by the Borrower unless the Trustee has theretofore received a written
notice from the Borrower objecting to such amendment.
13. Indemnification. The Borrower agrees to indemnify and hold harmless
the Trustee from any and all damages, losses, liabilities, costs and expenses
(including reasonable attorneys' fees) which the Trustee may incur or suffer
arising in any way out of the use by the Borrower of Loaned Securities or any
failure of the Borrower to deliver Loaned Securities in accordance herewith or
otherwise comply with the terms of this Agreement, except those caused by the
gross negligence or willful misconduct of the Trustee.
14. Notices, Deliveries, etc. All oral notices specified herein shall be
given in person or by telephone. All other notices and communications hereunder
shall be in writing and all such other notices and communications, and all
deliveries and payments hereunder, shall be delivered by hand or mailed by
certified or registered mail, or given by telegram confirmed by certified or
registered mail as follows:
If to the Trustee, to:
The Chase Manhattan Bank
Global Securities Lending
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Business Executive
Telephone: (000) 000-0000
If to the Borrower, to:
or, in either case, to such other person and at such other address or telephone
number as either party may designate by written notice to the other hereunder.
15. Miscellaneous. Neither this Agreement, any obligation to return a
security borrowed hereunder or any other obligation of the Borrower hereunder
shall be assignable 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 successors
and assigns. This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except to the extent such law is
preempted by ERISA or other applicable Federal law. This Agreement shall not be
modified or amended except by an instrument in writing signed by each of the
parties hereto.
16 Fees. The compensation in connection with Loans and the manner of
payment thereof shall be as agreed upon from time to time by the parties hereto.
With respect to Loans secured by Approved Securities, the Borrower shall pay to
the Trustee a loan fee negotiated at the time of the Loan. With respect to Loans
secured by Pledged Cash, the Trustee shall pay to the Borrower a rate of
interest earned on Pledged Cash investments as negotiated at the time of the
Loan or subsequently revised from time to time by the mutual consent of the
parties. Each agreement by the parties hereto with respect to the foregoing
matters shall be evidenced by a written confirmation from the Trustee to the
Borrower and shall be deemed to be, and shall be, a part of this Agreement for
all purposes hereof as fully as if such agreement were set forth herein in full,
and each and every amount due under any such agreement shall be deemed to
constitute, and shall constitute, an amount due under this Agreement for all
purposes hereof.
17. SIPC Act. THE TRUSTEE ACKNOWLEDGES THAT THE PROVISIONS OF THE
SECURITIES INVESTORS PROTECTION ACT OF 1970 MAY NOT PROTECT THE TRUSTEE OR THE
ACCOUNTS WITH RESPECT TO THE SECURITIES LOAN TRANSACTIONS HEREUNDER BETWEEN THE
TRUSTEE AND THE BORROWER AND THAT, THEREFORE, THE COLLATERAL DELIVERED BY THE
BORROWER TO THE TRUSTEE MAY IN EFFECT CONSTITUTE THE ONLY SOURCE OF SATISFACTION
OF THE BORROWER'S OBLIGATIONS IN THE EVENT THE BORROWER FAILS TO RETURN THE
SECURITIES. The Trustee agrees to notify the Accounts of this provision. This
provision does not constitute a limitation on any obligations of the Borrower
hereunder or a waiver by the Trustee of any of its rights hereunder.
18. Effective Date. This Agreement shall be and become effective as of
the date first above written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officers as of the
date first above written.
THE CHASE MANHATTAN BANK
as trustee and managing agent
By ____________________________________
Name:
Title:
Date:
----------------------------------------
Insert name of Borrower
By ____________________________________
Name:
Title:
Date:
134234
49
WPDOCS\ISLAOSLA.DOC
INTERNATIONAL ADDENDUM TO MASTER
SECURITIES LENDING AGREEMENT
ADDENDUM, dated , 199 , to the master securities lending agreement, as
amended ("Agreement"), dated , 19 , between (the "Borrower") and The Chase
Manhattan Bank,, as trustee or managing agent for certain trusts or accounts
(the "Trustee").
It is hereby agreed as follows:
1. Unless otherwise provided herein, all terms and conditions of the
Agreement are expressly incorporated herein by reference and except as modified
hereby, the Agreement is confirmed in all respects. Capitalized terms used
herein without definition shall have the meanings ascribed to them in the
Agreement.
2. Section 1 of the Agreement is amended as follows:
a. The definition of "Approved Securities" is amended by
inserting the phrase "("U.S. Government Securities") or any other securities, in
each case" after the word "government".
b. The definition of "business day" is deleted and replaced in
appropriate alphabetic sequence by the following:
"Foreign Business Day" shall mean (unless otherwise agreed) with
respect to: (i) International Securities (whether comprising Loaned Securities
or Collateral consisting of Approved Securities), any day on which banks are
open for business in the country in which the principal market for such
Securities is located and on which regular trading therein occurs in such
Securities in such market, and (ii) cash Collateral denominated in other than
U.S. dollars, any day on which banks are open for business in the country of
issuance of such cash.
"New York Business Day" shall mean (unless otherwise agreed) with
respect to (i) Loaned Securities other than International Securities and (ii)
Collateral comprising Letters of Credit, and U.S. dollar-denominated Approved
Securities and cash, any day on which national banks and the NYSE are open for
business in New York City.
c. The definition of "Collateral" is amended by adding the
words "or International Securities" after the words "Approved Securities" in
clause (b) thereof.
d. A new term, "Dollar Equivalent", is added. "'Dollar
Equivalent' shall mean, as of any date of determination thereof, in respect of
any International Securities or Collateral denominated or issued in an
International Currency or otherwise, the equivalent thereof in United States
dollars calculated by the Trustee on the basis of the most current spot rate of
exchange quoted by The Chase Manhattan Bank, or other source selected by the
Trustee in its sole discretion, for selling the relevant International Currency
for United States dollars in a recognized foreign exchange market selected by
the Trustee in its sole discretion."
e. A new term, "International Currency", is added. "'International
Currency' shall mean a currency other than United States dollars which is freely
transferable and freely convertible into United States dollars."
f. A new term, "International Securities", is added.
"'International Securities' shall mean, with respect to a Loan, securities
denominated or issued in an International Currency which are acceptable to the
Trustee in its sole discretion."
g. The definition of "Letter of Credit" is amended in clause
(e) by adding the words "and is payable in such currency or currencies" after
the word "provisions" and by adding the words "in its sole discretion" after the
word "Trustee".
h. The definition of "Market Value" is amended as follows: The
reference to "national" in clause (b) is replaced with the words "foreign or
domestic"; the reference to "national" in clause (c) is replaced with the word
"such"; the parenthetical in clause (c) is amended by deleting the words "the
Associated Press as evidenced by quotations published in the New York Times and"
and also by adding the words "to or" following the word "provided"; the
parenthetical in clause (d) is amended by adding the words "to or" following the
word "provided"; the proviso clause in the first sentence is amended by adding,
between the words "security" and "held", the words "determined in clauses
(a)-(d) hereinabove shall include accrued interest and the market value of any
security"; the phrase "New York Business Day" is substituted for the phrase
"business day"; and the phrase "New York Business Days" is substituted for the
phrase "business days"; and a new last sentence is added, namely, "In all cases
involving International Securities or Collateral denominated or issued in an
International Currency, Market Value shall be adjusted by the Trustee to a
Dollar Equivalent".
3. Section 3(a) of the Agreement is amended by inserting the phrase
"prior or contemporaneous" after the word "against" in the first sentence
thereof.
4. Section 3(b) of the Agreement is amended by adding a new clause
(iii), "International Securities" and designating existing clause (iii) as (iv).
5. Section 3(c) of the Agreement is amended by adding to the first
sentence thereof the words "as evidenced in the relevant Loan Confirmation"
after the word "Borrower" and by adding the words "(other than International
Securities)" after the reference to both "Loaned Securities" and "Approved
Securities" therein.
Section 3(c) is further amended by adding a new last sentence, namely,
"Delivery of International Securities shall be effected in the manner agreed to
by the Trustee and the Borrower, as evidenced in the relevant Loan
confirmation."
6. Section 3(d) of the Agreement is amended by substituting the phrase
"New York Business Day" for the phrase "business day".
7. Section 4(c) of the Agreement is amended by adding the words "or
International Securities" after each reference to the words "Approved
Securities" in the first, second, fourth, fifth, and sixth sentences thereof.
Section 4(c) is further amended by adding the words ", as the case may
be," after the word Trustee in the fourth sentence thereof.
8. Section 5(b) of the Agreement is amended by inserting the following
after the phrase "the Borrower shall, within one business day after the payment
or distribution thereof" in the second sentence thereof: "(and such business day
shall be a New York Business Day with respect to interest, dividends and
distributions denominated in U.S. dollars or otherwise paid or issued in respect
of Loaned Securities other than International Securities and shall be a Foreign
Business Day in respect of all other interest, dividends and distributions)".
9. Section 6(b) of the Agreement is amended by inserting the following
after the phrase "such demand" in the first sentence thereof: ", and such
business day shall be a New York Business Day with respect to Collateral
denominated in U.S. dollars or delivered to the Trustee in New York and shall be
a Foreign Business Day in respect of all other Collateral".
10. Section 6(d) of the Agreement is amended by substituting the
following sentence for the existing second sentence:
"If at any time the Trustee is required, or desires, to return a
portion of any Approved Security or International Security held by it as
Collateral to the Borrower pursuant to this Agreement, the Borrower shall, at
the oral request of the Trustee, take all such action as is necessary to cause
such Approved Security or International Security to be reissued in such
denominations as are required to permit such a partial return and in such case
the Trustee shall not be obligated to return Collateral hereunder unless and
until such action has been taken and may thereafter make required returns of
Collateral hereunder by returning Approved Securities or International
Securities, as the case may be, in such amounts as are, as nearly as
practicable, equal to but not greater than the required return."
Section 6(d) is further amended by inserting, in the third sentence
thereof, the words "or International Securities, as the case may be," after the
initial reference to "Approved Securities" therein.
11. Section 9(a) of the Agreement is amended by adding the following at
the end thereof: "and whether such business days shall be New York Business Days
or Foreign Business Days shall be determined by reference to the location of the
principal trading market for the Loaned Securities which are the subject of the
Loan being terminated.
12. Section 9(b) of the Agreement is amended by deleting the third
sentence thereof, and inserting in lieu thereof the following:
"The date so specified shall be not less than: (i) in the case of a
Loan of U. S. Government Securities, one New York Business Day subsequent to the
giving of such notice; and (ii) in the case of a Loan of any other Loaned
Securities (unless otherwise agreed by the parties hereto as evidenced in the
confirmation relating to a Loan), the lesser of five days or the standard market
settlement time in the principal market in which the Loaned Securities are
traded. For purposes of clause (ii), if there is a difference between the
settlement time for sales and purchases in the applicable market, the standard
market settlement time for such market for purposes of this ss.9(b) shall be the
shorter of the two times."
13. Section 9(c) of the Agreement is amended by inserting: the (i)
phrase "of Collateral" after the phrase "Such delivery" in the second sentence
thereof"; and (ii) following after the phrase "Loaned Securities" in the second
sentence thereof: "where the Loaned Securities are not International Securities.
Where the Loaned Securities are International Securities, return of Collateral
shall occur on or before the New York Business Day next succeeding the Foreign
Business Day on which the Loaned Securities were returned."
14. Section 10(a)(iii) of the Agreement is amended by adding the words
"or any foreign jurisdiction" after the words "rule of the United States" and
deletion of the word "national" in the words "the NYSE or any other national
securities exchange.
Section 10(a)(vi)(7) of the Agreement is amended by adding the words
"or effect any process under the laws of any jurisdiction" after the words "take
any corporate action".
15. Section 10(c) of the Agreement is amended by substituting the
following clause for existing clause (i):
"purchase securities equivalent to the Loaned Securities which have not
been delivered, or any part thereof, in any principal market for such securities
and apply the Market Value of such purchased securities against the Market Value
of the Loaned Securities on the date of such purchase."
Section 10(c) of the Agreement is further amended by adding the
following as a new subparagraph at the end thereof:
"If the Borrower fails to return Loaned Securities when due (at a time
when the Account is obligated to deliver the Loaned Securities to settle a sale
to third party ("Account Counterparty")) and this results in a buy-in of
equivalent securities by the Account Counterparty, Borrower shall, promptly upon
demand therefor, reimburse Trustee for any loss, including interest and/or
penalties, incurred by the Trustee and the Account arising from or relating to
such buy-in."
16. Section 10(e) of the Agreement is amended by substituting the
phrase "New York Business Day" for the phrase "business day".
17. Section 10(f) is amended as follows: In the first sentence thereof,
the words "and as of the date of any" are added immediately prior to the word
"demand" and immediately subsequent to the word "demand" the comma is deleted
and the following words are added: "therefor, an amount in United States dollars
equal to the Dollar Equivalent of". The first two clauses of the second sentence
(but no other clauses therein) are revised to read as follows: "Amounts payable
under this subparagraph 10(f) and subparagraph 10(c) hereof shall be paid in
United States dollars to the Trustee by the Borrower on and as of the date of
any demand therefor, together with the interest thereon in United States dollars
from the date such amounts were paid by the Trustee (including, where
applicable, Dollar Equivalents thereof) to the date of the repayment of such
amounts to the Trustee,".
18. Section 11 of the Agreement is amended by inserting the following:
(i) as a new first sentence, "All transfers of Loaned Securities shall be in
good deliverable form."; (ii) after the word "taxes" in the existing first
sentence thereof, ", relevant stamp duties, registration fees"; and (iii) after
the word "costs" in the existing first sentence thereof, "and shall arrange for
transfer deeds and/or documents, and shall pay any other applicable fees and
expenses".
Section 11 of the Agreement is further amended so that the second and
third sentences read as follows:
"In addition, the Borrower shall reimburse the Trustee in
United States dollars for the Dollar Equivalent of any loss, including interest
and/or penalties, incurred by the Trustee by reason of the Borrower's failure to
pay all such taxes and costs and to arrange for such transfer deeds and/or
documents and to pay any other applicable fees and expenses, as of the date of
the incurrence of any such loss by the Trustee. Except as otherwise expressly
provided in paragraph 10 hereof, the Borrower shall pay the Trustee interest in
United States dollars on any and all amounts (including, where applicable,
Dollar Equivalents thereof) not paid when due hereunder from the date due until
paid at the current daily average offered rate for federal funds."
19. Section 12 of the Agreement is amended by substituting the phrase
"New York Business Days" for the phrase "business days" in the last sentence
thereof.
20. Section 13 of the Agreement is amended by adding the following
sentences:
"Without limiting the foregoing, if, under any applicable law and
whether pursuant to a judgment, against the Borrower or the liquidation,
bankruptcy or analogous process of the Borrower or for any other reason, any
amount due to the Trustee hereunder or in respect of any Loan is paid in a
currency other than United States dollars, then to the extent that the payment
actually received by the Trustee (when converted into a Dollar Equivalent on the
first day after the date of payment on which it is practicable for the Trustee
to effect the conversion) falls short of the amount due hereunder or under the
terms of the relevant Loan, the Borrower shall, as a separate and independent
obligation, indemnify the Trustee and hold the Trustee harmless against the
amount of such shortfall."
21. Section 14 of the Agreement is amended by deleting the first two
sentences thereof and substituting, in lieu thereof, the following:
"14. Notices, Deliveries, etc. All oral notices specified
herein shall be given in person or by telephone, if to the Trustee, to the
Securities Lending Business Executive at the address for the Trustee specified
below or at telephone number [ ] and, if to the Borrower, to at the address for
the Borrower specified below or at telephone number , or to such other person
and at such other address or telephone number as either party may designate by
written notice to the other hereunder. All other notices and communications
hereunder shall be in writing and delivered by hand or mailed by certified or
registered mail, if to the Trustee, to The Chase Manhattan Bank, [ ], Attention:
Securities Lending Division, Securities Lending Business Executive, and if to
the Borrower to , or at such other address and number as either party may
designate by written notice to the other hereunder."
Section 14 of the Agreement is further amended by adding the following
at the end thereof:
"Deliveries of Loaned Securities and Collateral and payments due
hereunder or in respect of any Loan may be made in any manner to any designee of
the Borrower or the Trustee, as the case may be, upon agreement of the other
party as evidenced in the relevant Loan confirmation."
IN WITNESS WHEREOF, the parties have executed this Addendum as of the
date first above written.
THE CHASE MANHATTAN BANK.
_______________________ as trustee or managing agent
Insert name of Borrower
By: By:
Name: Name:
Title: Title:
Date: Date:
134234
HONG KONG ADDENDUM TO
MASTER SECURITIES LENDING AGREEMENT
ADDENDUM dated August , 1999, to the Master Securities Lending
Agreement, as amended (the "Agreement") dated August , 1999, between (the
"Borrower") and The Chase Manhattan Bank, as trustee or managing agent for
certain trusts or accounts (the "Trustee").
WHEREAS:
The parties desire that all stock loan transactions entered into by
them from the date hereof shall be subject to the terms of this Addendum.
THE PARTIES HEREBY AGREE THAT:
1. Interpretation
(a) "Collector" means the Collector of Stamp Revenue appointed
under Section 3 of the Ordinance;
"Hong Kong" means the Hong Kong Stamp Duty Ordinance
(Cap.117), as amended from time to time; and
"Ordinance" stock has the meaning set out in section 2 of
the Ordinance;
"stock borrowing" has the meaning set out in section 19(16)
of the Ordinance.
(b) Reference in the "Agreement" in the Agreement and in this Addendum
shall be deemed to include a reference to the Agreement as amended by the terms
of this Addendum, unless the context otherwise indicates.
(c) Capitalized terms which are not otherwise defined in this
Addendum shall have the meaning ascribed to them in the Agreement.
2. Application
(a) The parties hereby agree that the terms of this Addendum shall
apply in addition to the terms set out in the Agreement in the event
that Securities borrowed by the Borrower under the Agreement fall
within the definition of Hong Kong stock. For the avoidance of doubt,
where the Securities do not comprise Hong Kong stock the terms of this
Addendum shall not apply.
(b) In the event of conflict between the terms of this Addendum and the
terms of the Agreement, the terms of this Addendum shall prevail.
Except as otherwise set forth herein, the Agreement shall remain
unchanged and in full force and effect.
3. Taxation and Indemnity
The Borrower undertakes to the Trustee as follows:
(a) promptly to pay and account for any transfer, registration or
similar charges or duties or taxes (including for the avoidance of
doubt, stamp duty and any penalties relating thereto) chargeable on the
Borrower or the Trustee and/or accounts in connection with any
transaction effected pursuant to or contemplated by the Agreement; and
(b) to indemnify and keep indemnified the Trustee and/or the Accounts
against any liability, losses, expenses and costs (including reasonable
legal costs) arising as a result of the Borrower's failure to make any
payment under paragraph 3(a) above on its due date or as a result of
any breach by the Borrower of any or all of the undertakings given by
the Borrower to the Trustee under paragraphs 4(a), 4(b) and 5(a) below.
4. Borrower's Warranties and Undertakings
In addition to the warranties and undertakings set out in the Agreement
and in order to comply with the requirements of the Ordinance, the
Borrower hereby undertakes to the Trustee on a continuing basis with
the intent that such warranties and undertakings shall survive the
completion of any transaction contemplated herein that:
(a) the Borrower is borrowing or will borrow securities under the
Agreement for one or more of the following purposes:
(i) to settle a contract to sell such Securities wherever
effected, whether by the Borrower or another person;
(ii) to settle a future contract to sell such Securities,
whether agreed or not when the transaction is effected and
whether by the Borrower or another person;
(iii) to replace, in whole or in part, Securities obtained by
the Borrower under another stock borrowing agreement;
(iv) to on-lend the Securities to another borrower who effects
a stock borrowing in respect of the same; or
(v) such other purpose as the Collector may in writing agree;
and
(b) in order to comply with the requirements of the Ordinance and
without prejudice to the rights of the Trustee under the Agreement, the
Borrower shall return to the Trustee Securities or Equivalent
Securities before the expiry of twelve (12) months after the day on
which the Securities were borrowed from the Trustee under the Agreement
or, if the Securities were borrowed in order to replace in whole or in
part Securities obtained by the Borrower under another stock borrowing,
before the expiry of twelve (12) months after the day on which the
Borrower first borrowed Securities in relation to such borrowing.
5. Borrower's Obligations
(a) The Borrower undertakes to the Trustee on a continuing basis
that it shall:
(i) as soon as practicable, but in any event within (A) ten
(10) Business Days of the execution of this Addendum if such
execution occurs in Hong Kong, (B) one (1) month thereof if
such execution occurs outside of Hong Kong or (C) such other
period as the Collector may from time to time specify, provide
the Collector with an executed copy (or otherwise as the
Collector may permit) of the Agreement, this Addendum, such
fees as may be specified from time to time by the Financial
Secretary for these purposes and such other documents,
particulars and information as the Collector may require;
(ii) promptly notify the Trustee upon its having complied with
its undertaking under paragraph 5(a)(i) above and to provide
to the Trustee such documents as the Trustee may reasonably
request in respect of the same; and
(iii) promptly comply with all record keeping, filing and
reporting obligations within such a time as may be specified
by the Collector and do all other acts and things as may be
required by the Collector from time to time.
(b) In the event that the Borrower is in breach of its undertaking
under paragraphs 5(a)(i), (ii) or (iii) above, the Trustee reserves the
right (but shall not be obliged) to provide the Agreement and this
Addendum, pay such fee and provide such other documents, particulars
and information and do all other acts and things for and on behalf of
the Borrower and at the cost and expense of the Borrower, without
prejudice to the provisions of the Agreement and paragraphs 3 and 4
above.
IN WITNESS WHEREOF, this Addendum has been executed on behalf of the
parties the date and year above written.
SIGNED BY
ON BEHALF OF
DATE
SIGNED BY
ON BEHALF OF The Chase Manhattan Bank
IN XXX XXXXXXXX XX
00000
XXXXX XXXXXX ADDENDUM
TO MASTER SECURITIES LENDING AGREEMENT
ADDENDUM dated , 199 , to the Master Securities Lending Agreement
dated , 199 , between (the "Borrower" and The Chase Manhattan Bank, as trustee
or managing agent for certain trusts or accounts (the "Trustee").
It is hereby agreed as follows:
Section 9(a) of the Agreement is amended by adding the following at the
end thereof: "In any event, with respect to any Loaned Securities issued by a
South African entity, the Borrower shall terminate any Loan of such Securities
no later than six months from the making of such Loan, regardless of whether the
Borrower shall have received notice of termination. This obligation of
termination shall be solely the Borrower's, and the Borrower shall be
responsible for any stamp or other taxes or charges, including but not limited
to any applicable Marketable Securities Tax, that may be attributable to
Borrower's failure to terminate such Loans within such six month period."
In witness whereof, the parties have executed this Addendum as of the
day and year above written.
[Name of Borrower] The Chase Manhattan Bank
By By
130292
Appendix 3 B
DATED
-----------------------------------------
OVERSEAS SECURITIES LENDER'S AGREEMENT
-----------------------------------------
CONTENTS
Clause Page
INTERPRETATION................................................................2
LOANS OF SECURITIES..........................................................14
DELIVERY OF SECURITIES.......................................................15
RIGHTS AND TITLE.............................................................15
RATES 18
COLLATERAL...................................................................19
REDELIVERY OF EQUIVALENT SECURITIES..........................................24
SET-OFF ETC..................................................................25
TAXATION 27
LENDER'S WARRANTIES..........................................................28
BORROWER'S WARRANTIES........................................................28
EVENTS OF DEFAULT............................................................29
OUTSTANDING PAYMENTS.........................................................30
TRANSACTIONS ENTERED INTO AS AGENT...........................................31
TERMINATION OF COURSE OF DEALINGS BY NOTICE..................................33
GOVERNING PRACTICES..........................................................33
OBSERVANCE OF PROCEDURES.....................................................33
SEVERANCE....................................................................33
SPECIFIC PERFORMANCE.........................................................34
NOTICES 34
ASSIGNMENT...................................................................34
NON-WAIVER...................................................................34
ARBITRATION AND JURISDICTION.................................................34
TIME 35
RECORDING....................................................................35
GOVERNING LAW................................................................35
SCHEDULE 37
ISLAOSLA.DOC
THIS AGREEMENT is made the day of , 19
BETWEEN:-
(1) THE CHASE MANHATTAN BANK (London branch) incorporated with limited
liability as a New York State chartered bank registered in England as a
branch; and whose registered branch address is 000 Xxxxxx Xxxx, Xxxxxx,
XX0X 0XX.
(2) a company incorporated under the laws of England and Wales whose
registered office is at.
WHEREAS:-
1. The Parties hereto are desirous of agreeing a procedure whereby either
one of them (the "Lender") will make available to the other of them
(the "Borrower") from time to time Securities (as hereinafter defined)
in order to enable the Borrower, subject to any Inland Revenue
provisions then in force, to fulfil a contract to sell such Securities
or to on lend such Securities to a third party to enable such party to
fulfil a contract to sell such Securities, whether or not as part of a
chain of arrangements to enable the final party in such chain to fulfil
a contract to sell such Securities or to replace an existing loan of
Securities to such third party, or for other purposes.
2. All transactions carried out under this Agreement will be effected in
accordance with the Rules (as hereinafter defined) TOGETHER WITH
current market practices, customs and conventions.
NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED AS FOLLOWS:-
66
1. INTERPRETATION INTERPRETATION INTERPRETATION
(A) In this Agreement:-
"Act of Insolvency" means in relation to either Party
(i) its making a general assignment for
the benefit of, or entering into a
reorganisation, arrangement, or
composition with creditors, or
(ii) its admitting in writing that it is
unable to pay its debts as they
become due, or
(iii) its seeking, consenting to or
acquiescing in the appointment of
any trustee, administrator, receiver
or liquidator or analogous officer
of it or any material part of its
property, or;
(iv) the presentation or filing of a
petition in respect of it (other
than by the other Party
to this Agreement in respect of
any obligation under this
Agreement) in any court or
before any agency alleging or for
the bankruptcy, winding-up or
insolvency of such Party
(or any analogous proceeding) or
seeking any reorganisation,
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 in respect of
which no such 30 day
period shall apply) not having been
stayed or dismissed within 30 days
of its filing;
(v) the appointment of a receiver,
administrator, liquidator or trustee
or analogous officer of such Party
over all or any material part of
such Party's property; or
(vi) the convening of any meeting of its
creditors for the purpose of
considering a voluntary arrangement
as referred to in Section 3 of the
Insolvency Act 1986 (or any
analogous proceeding);
"Agent" shall have the same meaning given in
Clause 14;
"Alternative Collateral" means Collateral of a
Value equal to the Collateral
delivered pursuant to Clause 6 and
provided by way of substitution for
Collateral originally delivered or
previously substituted in accordance
with the provisions of Clauses 6(F)
or 6(G);
"Appropriate Tax Vouchers" means:-
(i) either such tax vouchers
and/or certificates as
shall enable the
recipient to
claim and receive from
any relevant tax
authority, in respect of
interest, dividends,
distributions and/or
other amounts (including
for the avoidance of
doubt any manufactured
payment) relating to
particular Securities,
all and any
repayment of tax or
benefit of tax credit to
which the Lender would
have been entitled but
for the loan of
Securities in accordance
with this Agreement
and/or to which the
Lender is entitled in
respect of tax withheld
and accounted
for in respect of any
manufactured payment; or
such tax vouchers and/or
certificates as are
provided by the Borrower
which evidence an amount
of overseas tax deducted
which shall enable the
recipient to claim and
receive from any relevant
tax authority all and any
repayment of tax from the
UK Inland
Revenue or benefits of
tax credit in the
jurisdiction of the
recipient's
residence; and
(ii) such vouchers and/or
certificates in respect
of interest, dividends,
distributions and/or
other amounts relating to
particular Collateral;
"Approved UK Collecting Agent" means a person
who is approved as such for the
purposes of the Rules of the UK
Inland Revenue relating to
stocklending and manufactured
interest and dividends;
"Approved Intermediary" means a person who is approved as
such for the purposes of the Rules
of the UK Inland
Revenue relating to stocklending and
manufactured interest and dividends;
"Assured Payment" means a payment obligation
of a Settlement Bank arising (under
the Assured Payment Agreement) as a
result of a transfer of stock or
other securities to a CGO stock
account of a member of the CGO for
whom that Settlement Bank is acting;
"Assured Payment Agreement" means an
agreement dated 24 October 1986
between the Bank of England and all
the other banks which are for the
time being acting as Settlement
Banks in relation to the CGO
regulating the obligations of such
banks to make payments in respect of
transfers of securities through the
CGO as supplemented and amended from
time to time;
"Base Currency" has the meaning given in the
Schedule hereto;
"Bid Price" in relation to Equivalent
Securities or Equivalent Collateral
means the best available bid price
thereof on the most appropriate
market in a standard size;
"Bid Value" Subject to Clause 8(E) means:-
(a) in relation to Equivalent
Collateral at a particular time:-
(i) in relation to
Collateral
Types B(x) and
C (more
specifically
referred to in
the Schedule)
the Value
thereof as
calculated in
accordance with
such Schedule;
(ii) in relation to all other types of Collateral (more specifically
referred to in the Schedule) the amount which would be received on a
sale of such Collateral at the Bid Price thereof at such time less
all costs, fees and expenses that would be incurred in connection
with selling or otherwise realising such Equivalent Collateral,
calculated on the assumption that the aggregate thereof is the least
that could reasonably be expected to be paid in order to carry out
such sale or realisation and adding thereto the amount of any
interest, dividends, distributions or other amounts paid to the
Lender and in respect of which equivalent amounts have not been paid
to the Borrower in accordance with Clause 6(G) prior to such time in
respect of such Equivalent Collateral or the original Collateral
held gross of all and any tax deducted or paid in respect thereof;
and
(b) in relation to Equivalent
Securities at a
particular time the
amount which would be
received on a sale of
such Equivalent
Securities at the Bid
Price thereof at such
time less all costs, fees
and expenses that would
be incurred in connection
therewith, calculated on
the assumption that the
aggregate thereof is the
least that could
reasonably be expected to
be paid in order to carry
out the transaction;
"Borrower" with respect to a particular loan of
Securities means the Borrower as referred to in Recital 1 of
this Agreement;
"Borrowing Request" means a request made (by
telephone or otherwise) by the
Borrower to the Lender pursuant to
Clause 2(A) specifying the
description, title and amount of the
Securities required by the Borrower,
the proposed Settlement Date and
duration of such loan and the date,
time, mode and place of delivery
which shall, where relevant, include
the bank agent clearing or
settlement system and account to
which delivery of the Securities is
to be made;
"Business Day" means a day on which banks and
securities markets are open for
business generally in London and, in
relation to the delivery or
redelivery of any of the following
in relation to any loan, in the
place(s) where the relevant
Securities, Equivalent Securities,
Collateral (including Cash
Collateral) or Equivalent Collateral
are to be delivered;
"Cash Collateral" means Collateral that takes the form
of a deposit of currency;
"Central Gilts Office" or "CGO" means the
computer based system managed by the
Bank of England to facilitate the
book-entry transfer of gilt-edged
securities;
"CGO Collateral" shall have the meaning specified in
paragraph A of the Schedule;
"CGO Rules" means the requirements of the CGO for the time
being in force as defined in the membership agreement
regulating membership of the CGO;
"Close of Business" means the time at which banks close
in the business centre in which
payment is to be made
or Collateral is to be delivered;
"Collateral" means such securities or financial
instruments or deposits of currency
as are referred to in the Schedule
hereto or any combination thereof
which are delivered by the Borrower
to the Lender in accordance with
this Agreement and shall include the
certificates and other documents of
or evidencing title and transfer in
respect of the foregoing (as
appropriate), and shall include
Alternative Collateral;
"Defaulting Party" shall have the meaning given in
Clause 12;
"Equivalent Collateral" or in relation to any Collateral
provided under this Agreement
"Collateral equivalent to" means securities, cash or other
property, as the case may be,
of an identical type, nominal value,
description and amount to particular
Collateral so provided and shall
include the certificates and other
documents of or evidencing title and
transfer in respect of the foregoing
(as appropriate). If and to the
extent that such Collateral consists
of securities that are partly paid
or have been converted, subdivided,
consolidated, redeemed, made the
subject of a takeover,
capitalisation issue, rights issue
or event similar to any of the
foregoing, the expression shall have
the following meaning:
(a) in the case of
conversion, subdivision
or consolidation the
securities into which the
relevant Collateral has
been converted,
subdivided or
consolidated PROVIDED
THAT, if appropriate,
notice has been given in
accordance with Clause
4(B)(vi);
(b) in the case of
redemption, a sum of
money equivalent to the
proceeds of the
redemption;
(c) in the case of a
takeover, a sum of money
or securities, being the
consideration or
alternative consideration
of which the Borrower has
given notice to the
Lender in accordance with
Clause 4(B)(vi);
(d) in the case of a call on
partly paid securities,
the paid-up securities
PROVIDED THAT the
Borrower shall have paid
to the Lender an amount
of money equal to the sum
due in respect of the
call;
(e) in the case of a
capitalisation issue,
the relevant Collateral
TOGETHER WITH
the securities allotted
by way of a bonus
thereon;
(f) in the case of a rights
issue, the relevant
Collateral TOGETHER WITH
the securities allotted
thereon, PROVIDED THAT
the Borrower has given
notice to the Lender in
accordance with Clause
4(B)(vi), and has paid to
the Lender all and any
sums due in respect
thereof;
(g) in the event that a
payment or delivery of
Income is made in respect
of the relevant
Collateral in the form of
securities or a
certificate which may at
a future date be
exchanged for securities
or in the event of an
option to take Income in
the form of securities or
a certificate which may
at a future date be
exchanged for securities,
notice has been given to
the Borrower in
accordance with Clause
4(B)(vi) the relevant
Collateral TOGETHER WITH
securities or a
certificate equivalent to
those allotted;
(h) in the case of any event
similar to any of the
foregoing, the relevant
Collateral TOGETHER WITH
or replaced by a sum of
money or securities
equivalent to that
received in respect of
such Collateral resulting
from such event;
For the avoidance of doubt, in the
case of Bankers' Acceptances
(Collateral type B(v)), Equivalent
Collateral must bear dates,
acceptances and endorsements (if
any) by the same entities as the
xxxx to which it is intended to be
equivalent and for the purposes of
this definition, securities are
equivalent to other securities where
they are of an identical type,
nominal value, description and
amount and such term shall include
the certificate and other documents
of or evidencing title and transfer
in respect of the foregoing (as
appropriate);
"Equivalent Securities" means securities of an identical
type, nominal value, description and amount to
particular Securities borrowed and such term shall include the certificates
and other documents of or evidencing title and transfer in respect of
the foregoing (as appropriate). If and to the extent that such Securities
are partly paid or have been converted, subdivided, consolidated,
redeemed, made the subject of a takeover,
capitalisation issue, rights issue or event similar to any of the
foregoing, the expression shall have the following meaning:
(a) in the case of
conversion, subdivision
or consolidation the
securities into which the
borrowed Securities have
been converted,
subdivided or
consolidated PROVIDED
THAT if appropriate,
notice has been given in
accordance with Clause
4(B)(vi);
(b) in the case of
redemption, a sum of
money equivalent to the proceeds of the
redemption;
(c) in the case of takeover,
a sum of money or
securities, being the
consideration or
alternative consideration
of which the Lender has
given notice to the
Borrower in accordance
with Clause 4(B)(vi);
(d) in the case of a call on
partly paid securities,
the paid-up securities
PROVIDED THAT the Lender
shall have paid to the
Borrower an amount of
money equal to the sum
due in respect of the
call;
(e) in the case of a
capitalisation issue, the borrowed Securities TOGETHER WITH
the securities allotted by way of a bonus thereon;
(f) in the case of a rights
issue, the borrowed
Securities TOGETHER WITH
the securities allotted
thereon, PROVIDED THAT
the Lender has given
notice to the Borrower in
accordance with Clause
4(B)(vi), and has paid to
the Borrower all and any
sums due in respect
thereof;
(g) in the event that a
payment or delivery of
Income is made in respect
of the borrowed
Securities in the form of
securities or a
certificate which may at
a future date be
exchanged for securities
or in the event of an
option to take Income in
the form of securities or
a certificate which may
at a future date be
exchanged for securities,
notice has been given to
the Borrower in
accordance with Clause
4(B)(vi) the borrowed
Securities TOGETHER WITH
securities or a
certificate equivalent to
those allotted;
(h) in the case of any
event similar to any of the foregoing, the borrowed
Securities TOGETHER WITH
or replaced by a sum of money or securities equivalent
to that received in
respect of such borrowed Securities resulting from such
event;
For the purposes of
this definition, securities are equivalent to other
securities where they are
of an identical type, nominal value, description and
amount and such term
shall include the certificate and other documents of or
evidencing title and
transfer in respect of the foregoing (as appropriate);
"Event of Default" has the meaning given in Clause 12;
"Income" any interest, dividends or other
distributions of any kind whatsoever with respect to any
Securities or Collateral;
"Income Payment Date", with respect to any
Securities or Collateral means the
date on which Income is paid in
respect of such Securities or
Collateral, or, in the case of
registered Securities or Collateral,
the date by reference to which
particular registered holders are
identified as being entitled to
payment of Income;
"Lender" with respect to a particular
loan of Securities means the Lender as referred to in
Recital 1 of this Agreement;
"Manufactured Dividend" shall have the meaning given in
Clause 4(B)(ii);
"Margin" shall have the meaning specified in
the Schedule hereto;
"Nominee" means an agent or a nominee
appointed by either Party and
approved (if appropriate) as such by
the Inland Revenue to accept
delivery of, hold or deliver
Securities, Equivalent Securities,
Collateral and/or Equivalent
Collateral on its behalf whose
appointment has been notified to the
other Party;
"Non-Defaulting Party" shall have the meaning given in Clause 12;
"Offer Price" in relation to Equivalent
Securities or Equivalent Collateral
means the best available offer price
thereof on the most appropriate
market in a standard size;
"Offer Value" Subject to Clause 8(E) means:-
(a) in relation to Collateral
equivalent to Collateral
types B (ix) and C (more
specifically referred to
in the Schedule hereto)
the Value thereof as
calculated in accordance
with such Schedule; and
(b) in relation to Equivalent
Securities or Collateral
equivalent to all other
types of Collateral (more
specifically referred to
in the Schedule hereto)
the amount it would cost
to buy such Equivalent
Securities or Equivalent
Collateral at the Offer
Price thereof at such
time together with all
costs, fees and expenses
that would be incurred in
connection therewith,
calculated on the
assumption that the
aggregate thereof is the
least that could
reasonably be expected to
be paid in order to carry
out the transaction;
"Parties" means the Lender and the Borrower
and "Party" shall be construed accordingly;
"Performance Date" shall have the meaning given in Clause 8;
"Principal" shall have the meaning given in Clause 14;
"Reference Price" means:
(a) in relation to the
valuation of Securities, Equivalent Securities, Collateral
and/or Collateral
equivalent to types B (ii), (viii), (xi) and (xii) (more
specifically referred to
in the Schedule hereto) such price as is equal to the
mid market quotation of
such Securities, Equivalent Securities, Collateral
and/or Equivalent
Collateral as derived from a reputable pricing information
service (such as the
services provided by Reuters, Extel Statistical Services
and Telerate)
reasonably chosen in good faith by the Lender or if unavailable
the market value
thereof as derived from the prices or rates bid by a reputable
dealer for the
relevant instrument reasonably chosen in good faith by the
Lender, in each case at
Close of Business on the previous Business Day;
(b) in relation to the
valuation of Collateral
and/or Collateral
equivalent to Collateral
types A and B(i) (more
specifically referred to
in the Schedule hereto),
the CGO Reference Price
of such Securities,
Equivalent Securities,
Collateral and/or
Equivalent Collateral
then current as
determined in accordance
with the CGO Rules from
time to time in force.
(c) in relation to the
valuation of Collateral
and/or Collateral
equivalent to Collateral
types B(iii), (iv), (v),
(vi) (vii) and (ix),
(more specifically
referred to in the
Schedule hereto), the
market value thereof as
derived from the rates
bid by Barclays Bank PLC
for such instruments or,
in the absence of such a
bid, the average of the
rates bid by two leading
market makers for such
instruments at Close of
Business on the previous
Business Day;
"Relevant Payment Date" shall have the meaning given in
Clause 4(B)(i);
"Rules" means the rules for the time being
of the Stock Exchange (where either Party is a member
of the Stock Exchange) and/or any
other regulatory authority whose rules and regulations
shall from time to time affect the
activities of the Parties pursuant to this Agreement
including but not limited to the
stocklending regulations and guidance notes relating to
both stocklending and manufactured
interest and dividends for the time being in force of
the Commissioners of the Inland
Revenue and any associated procedures required pursuant
thereto (PROVIDED THAT in an Event
of Default, where either Party is a member of the
Stock Exchange, the Rules and
Regulations of the Stock Exchange shall prevail);
"Securities" means Overseas Securities as defined in the
Income Tax (Stock Lending) Regulations 1989 (S.1. 1989
No. 1299) (as amended by the
Income Tax (Stock Lending) (Amendment) Regulations 1990
(S.I. 1990 No. 2552)and 1993
(S.I. 1993 No. 2003)) or any statutory modification or
re-enactment thereof for the time
being in force which the Borrower is entitled to borrow
from the Lender in accordance
with the Rules and which are the subject of a loan pursuant
to this Agreement and such term
shall include the certificates and other documents of
title in respect of the foregoing;
"Settlement Bank" means a settlement member of
the CHAPS and Town Clearing systems
who has entered into contractual
arrangements with the CGO to provide
Assured Payment facilities for
members of the CGO;
"Settlement Date" means the date upon which
Securities are or are to be transferred to the Borrower in
accordance with this Agreement;
"Stock Exchange" means the London Stock Exchange
Limited;
"Value" at any particular time means in
respect of Securities and Equivalent
Securities, the Reference Price
thereof then current and in respect
of Collateral and/or Equivalent
Collateral such worth as determined
in accordance with the Schedule
hereto.
(B) All headings appear for convenience only and shall not affect the
interpretation hereof.
(C) Notwithstanding the use of expressions such as "borrow", "lend",
"Collateral", "Margin", "redeliver" etc. which are used to reflect
terminology used in the market for transactions of the kind
provided for in this Agreement, title to Securities "borrowed" or
"lent" and "Collateral" provided in accordance with this Agreement
shall pass from one Party to another as provided for in this
Agreement, the Party obtaining such title being obliged to
redeliver Equivalent Securities or Equivalent Collateral as the
case may be.
(D) For the purposes of Clauses 6(H)-6(K) and 8(C)-8(E) of this
Agreement or otherwise where a conversion into the Base Currency is
required, all prices, sums or values (including any Value, Offer
Value and Bid Value) of Securities, Equivalent Securities,
Collateral or Equivalent Collateral (including Cash Collateral)
stated in currencies other than the Base Currency shall be
converted into the Base Currency at the spot rate of exchange at
the relevant time in the London interbank market for the purchase
of the Base Currency with the currency concerned.
(E) Where at any time there is in existence any other agreement between
the Parties the terms of which make provision for the lending of
Securities (as defined in this Agreement) as well as other
securities the terms of this Agreement shall apply to the lending
of such Securities to the exclusion of any other such agreement.
2. LOANS OF SECURITIES LOANS OF SECURITIESLOANS OF SECURITIES
(A) The Lender will lend Securities to the Borrower, and the Borrower
will borrow Securities from the Lender in accordance with the terms
and conditions of this Agreement and with the Rules PROVIDED ALWAYS
THAT the Lender shall have received from the Borrower and accepted
(by whatever means) a Borrowing Request.
(B) The Borrower has the right to reduce the amount of Securities
referred to in a Borrowing Request PROVIDED THAT the Borrower has
notified the Lender of such reduction no later than midday London
time on the day which is two Business Days prior to the Settlement
Date unless otherwise agreed between the Parties and the Lender
shall have accepted such reduction (by whatever means).
3. DELIVERY OF SECURITIESDELIVERY OF SECURITIESDELIVERY OF SECURITIES
The Lender shall procure the delivery of Securities to the Borrower or deliver
such Securities in accordance with the relevant Borrowing Request TOGETHER WITH
appropriate instruments of transfer duly stamped where necessary and such other
instruments as may be requisite to vest title thereto in the Borrower. Such
Securities shall be deemed to have been delivered by the Lender to the Borrower
on delivery to the Borrower or as it shall direct of the relevant instruments of
transfer, or in the case of Securities held by an agent or a clearing or
settlement system on the effective instructions to such agent or the operator of
such system to hold the Securities absolutely for the Borrower, or by such other
means as may be agreed.
4. RIGHTS AND TITLERIGHTS AND TITLERIGHTS AND TITLE
(A) The Parties shall execute and deliver all necessary documents
and give all necessary instructions to procure that all
right, title and interest in:
(i) any Securities borrowed pursuant to Clause 2;
(ii) any Equivalent Securities redelivered pursuant to
Clause 7;
(iii) any Collateral delivered pursuant to Clause 6;
(iv) any Equivalent Collateral redelivered pursuant to
Clauses 6 or 7;
shall pass from one Party to the other subject to the terms and
conditions mentioned herein and in accordance with the Rules, on
delivery or redelivery of the same in accordance with this
Agreement, free from all liens, charges and encumbrances. In the
case of Securities, Collateral, Equivalent Securities or Equivalent
Collateral title to which is registered in a computer based system
which provides for the recording and transfer of title to the same
by way of book entries, delivery and transfer of title shall take
place in accordance with the rules and procedures of such system as
in force from time to time. The Party acquiring such right, title
and interest shall have no obligation to return or redeliver any of
the assets so acquired but, in so far as any Securities are
borrowed or any Collateral is delivered to such Party, such Party
shall be obliged, subject to the terms of this Agreement, to
redeliver Equivalent Securities or Equivalent Collateral as
appropriate.
(B) (i) Where Income is paid in relation to any Securities on or
by reference to an Income Payment Date on
which such Securities are the subject of a loan hereunder, the
Borrower shall, on the date of the payment of such
Income, or on such other date as the Parties may from time to time
agree, (the "Relevant Payment Date") pay and
deliver a sum of money or property equivalent to the same
(with any such endorsements or assignments as shall
be customary and appropriate to effect the delivery) to the Lender
or its Nominee, irrespective of whether the
Borrower received the same. The provisions of sub-paragraphs (ii)
to (v) below shall apply in relation thereto.
(ii) Subject to sub-paragraph (iii) below, in the case of any
Income comprising a payment, the amount (the "Manufactured
Dividend") payable by theBorrower shall be equal to the amount of
the relevant Income together with an amount equivalent to any
deduction, withholding or payment for or on account of tax made by
the relevant issuer (or on its behalf) in respect of such Income
together with an amount equal to any other tax credit associated
with such Income unless a lesser amount is agreed between the
Parties or an Appropriate Tax Voucher (together with any further
amount which may be agreed between the Parties to be paid) is
provided in lieu of such deduction, withholding tax credit or
payment.
(iii) Where either the Borrower, or any person to whom the
Borrower has on-lent the Securities, is unable to make payment of
the Manufactured Dividend to the Lender without accounting to the
Inland Revenue for any amount of relevant tax (as required by
Schedule 23A to the Income and Corporation Taxes Act 1988) the
Borrower shall pay to the Lender or its Nominee, in cash, the
Manufactured Dividend less amounts equal to such tax. The Borrower
shall at the same time if requested supply Appropriate Tax
Vouchers to the Lender.
(iv) If at any time any Manufactured Dividend falls to be paid and
neither of the Parties is an Approved UK Intermediary or an
Approved UK Collecting Agent, the Borrower shall procure that the
payment is paid through an Approved UK Intermediary or an Approved
UK Collecting Agent agreed by the Parties for this purpose, unless
the rate of relevant withholding tax in respect of any Income that
would have been payable to the Lender but for the loan of the
Securities would have been zero and no income tax liability under
Section 123 of the Income and Corporation Taxes Act 1988 would
have arisen in respect thereof.
(v) In the event of the Borrower failing to remit either directly
or by its Nominee any sum payable pursuant to this Clause, the
Borrower hereby undertakes to pay a rate to the Lender (upon
demand) on the amount due and outstanding at the rate provided for
in Clause 13 hereof. Interest on such sum shall accrue daily
commencing on and inclusive of the third Business Day after the
Relevant Payment Date, unless otherwise agreed between the
Parties.
(vi) Each Party undertakes that where it holds securities of the
same description as any securities borrowed by it or transferred
to it by way of collateral at a time when a right to vote arises
in respect of such securities, it will use its best endeavours to
arrange for the voting rights attached to such securities to be
exercised in accordance with the instructions of the Lender or
Borrower (as the case may be) PROVIDED ALWAYS THAT each Party
shall use its best endeavours to notify the other of its
instructions in writing no later than seven Business Days prior to
the date upon which such votes are exercisable or as otherwise
agreed between the Parties and that the Party concerned shall not
be obliged so to exercise the votes in respect of a number of
Securities greater than the number so lent or transferred to it.
For the avoidance of doubt the Parties agree that subject as
hereinbefore provided any voting rights attaching to the relevant
Securities, Equivalent Securities, Collateral and/or Equivalent
Collateral shall be exercisable by the persons in whose name they
are registered or in the case of Securities, Equivalent
Securities, Collateral and/or Equivalent Collateral in bearer
form, the persons by or on behalf of whom they are held, and not
necessarily by the Borrower or the Lender (as the case may be).
(vii) Where, in respect of any borrowed Securities or any
Collateral, any rights relating to conversion, sub-division,
consolidation, pre-emption, rights arising under a takeover offer
or other rights, including those requiring election by the holder
for the time being of such Securities or Collateral, become
exercisable prior to the redelivery of Equivalent Securities or
Equivalent Collateral, then the Lender or Borrower, as the case
may be, may, within a reasonable time before the latest time for
the exercise of the right or option give written notice to the
other Party that on redelivery of Equivalent Securities or
Equivalent Collateral, as the case may be, it wishes to receive
Equivalent Securities or Equivalent Collateral in such form as
will arise if the right is exercised or, in the case of a right
which may be exercised in more than one manner, is exercised as is
specified in such written notice.
(viii) Any payment to be made by the Borrower under this Clause
shall be made in a manner to be agreed
between the Parties.
5. RATESRATESRATES
(A) In respect of each loan of Securities, the Borrower shall pay to
the Lender, in the manner prescribed in sub-Clause (C), sums
calculated by applying such rate as shall be agreed between the
Parties from time to time to the daily Value of the relevant
Securities.
(B) Where Cash Collateral is deposited with the Lender in respect of
any loan of Securities in circumstances where:
(i) interest is earned by the Lender in respect of such Cash
Collateral and that interest is paid to the Lender
without deduction of tax, the Lender shall pay to the
Borrower, in the manner prescribed in sub-Clause (C), an
amount equal to the gross amount of such interest earned.
Any such payment due to the Borrower may be set-off
against any payment due to the Lender pursuant to
sub-Clause (A) hereof if either the Borrower has
warranted to the Lender in this Agreement that it is
subject to tax in the United Kingdom under Case I of
Schedule D in respect of any income arising pursuant to
or in connection with the borrowing of Securities
hereunder or the Lender has notified the Borrower of the
gross amount of such interest or income; and
(ii) sub-Clause (B)(i) above does not apply, the Lender shall
pay to the Borrower, in the manner presented in
sub-Clause (C), sums calculated by applying such rates as
shall be agreed between the Parties from time to time to
the amount of such Cash Collateral. Any such payment due
to the Borrower may be set-off against any payment due to
the Lender pursuant to sub-Clause (A) hereof.
(C) In respect of each loan of Securities, the payments referred to
in sub-Clauses (A) and (B) of this Clause shall accrue
daily in respect of the period commencing on and inclusive of the
Settlement Day and terminating on and exclusive of the
Business Day upon which Equivalent Securities are redelivered or
Cash Collateral is repaid. Unless otherwise agreed, the
sums so accruing in respect of each calendar month shall be
paid in arrears by the Borrower to the Lender or to the
Borrower by the Lender (as the case may be) not later than the
Business Day which is one week after the last Business Day
of the calendar month to which such payments relate or such other
date as the Parties shall from time to time agree. Any
payment made pursuant to sub-Clauses (A) and (B) hereof shall be
in such currency and shall be paid in such manner and at
such place as shall be agreed between the Parties.
6. COLLATERALCOLLATERALCOLLATERAL
(A) (i) Subject to sub-Clauses (B), (C) and (E) below the Borrower
undertakes to deliver Collateral to the Lender (or in accordance with
the Lender's instructions) TOGETHER WITH appropriate instruments of
transfer duly stamped where necessary and such other instruments as may
be requisite to vest title thereto in the Lender simultaneously with
delivery of the borrowed Securities and in any event no later than
Close of Business on the Settlement Date. Collateral may be provided in
any of the forms specified in the Schedule hereto (as agreed between
the Parties);
where Collateral is delivered to the Lender's Nominee any obligation
under this Agreement to redeliver or otherwise account for Equivalent
Collateral shall be an obligation of the Lender notwithstanding that
any such redelivery may be effected in any particular case by the
Nominee.
(B) Where CGO Collateral is provided to the Lender or its Nominee by member
-to-member delivery or delivery-by-value in
accordance with the provisions of the CGO Rules from time to time in
force, the obligation of the Lender shall be to
redeliver Equivalent Collateral through the CGO to the Borrower in
accordance with this Agreement. Any references,
(howsoever expressed) in this Agreement, the Rules, and/or any other
agreement or communication between the Parties to an
obligation to redeliver such Equivalent Collateral shall be construed
accordingly. If the loan of Securities in respect of
which such Collateral was provided has not been discharged when the
Collateral is redelivered, the Assured Payment
obligation generated on such redelivery shall be deemed to constitute
a payment of money which shall be treated as Cash
Collateral until the loan is discharged, or further Equivalent
Collateral is provided later during that Business Day. This
procedure shall continue daily where CGO Collateral is
delivered-by-value for as long as the relevant loan remains
outstanding.
(C) Where CGO Collateral or other collateral is provided by
delivery-by-value to a Lender or its Nominee the Borrower may
consolidate such Collateral with other Collateral provided by the same
delivery to a third party for whom the Lender or its Nominee is acting.
(D) Where Collateral is provided by delivery-by-value through an
alternative book entry transfer system, not being the CGO, the
obligation of the Lender shall be to redeliver Equivalent Collateral
through such book entry transfer system in accordance with this
Agreement. If the loan of Securities in respect of which such
Collateral was provided has not been discharged when the Collateral is
redelivered, any payment obligation generated within the book entry
transfer system on such redelivery shall be deemed to constitute a
payment of money which shall be treated as Cash Collateral until the
loan is discharged, or further Equivalent Collateral is provided later
during that Business Day. This procedure shall continue when Collateral
is delivered-by-value for as long as the relevant loan remains
outstanding;
(E) Where Cash Collateral is provided the sum of money so deposited may be
adjusted in accordance with Clause 6(H). Subject to Clause 6(H)(ii),
the Cash Collateral shall be repaid at the same time as Equivalent
Securities in respect of the Securities borrowed are redelivered, and
the Borrower shall not assign, charge, dispose of or otherwise deal
with its rights in respect of the Cash Collateral. If the Borrower
fails to comply with its obligations for such redelivery of Equivalent
Securities the Lender shall have the right to apply the Cash Collateral
by way of set-off in accordance with Clause 8.
(F) The Borrower may from time to time call for the repayment of Cash
Collateral or the redelivery of Collateral equivalent to any Collateral
delivered to the Lender prior to the date on which the same would
otherwise have been repayable or redeliverable PROVIDED THAT at the
time of such repayment or redelivery the Borrower shall have delivered
or delivers Alternative Collateral acceptable to the Lender.
(G) (i) Where Collateral (other than Cash Collateral) is delivered in
respect of which any Income may become payable, the Borrower shall call
for the redelivery of Collateral equivalent to such Collateral in good
time to ensure that such Equivalent Collateral may be delivered prior
to any such Income becoming payable to the Lender, unless in relation
to such Collateral the Parties are satisfied before the relevant
Collateral is transferred that no tax will be payable to the UK Inland
Revenue under Schedule 23A of the Income and Corporation Taxes Xxx
0000. At the time of such redelivery the Borrower shall deliver
Alternative Collateral acceptable to the Lender.
(ii) Where the Lender receives any Income in circumstances where the
Parties are satisfied as set out in Clause 6(G)(i) above, then the
Lender shall on the date on which the Lender receives such Income or on
such date as the Parties may from time to time agree, pay and deliver a
sum of money or property equivalent to such Income (with any such
endorsements or assignments as shall be customary and appropriate to
effect the delivery) to the Borrower and shall supply Appropriate Tax
Vouchers (if any) to the Borrower.
(H) Unless the Schedule to this Agreement indicates that Clause 6(I) shall
apply in lieu of this Clause 6(H), or unless otherwise agreed between
the Parties, the Value of the Collateral delivered to or deposited with
the Lender or its nominated bank or depositary (excluding any
Collateral repaid or redelivered under sub-Clauses (H)(ii) or (I)(ii)
below (as the case may be) ("Posted Collateral")) in respect of any
loan of Securities shall bear from day to day and at any time the same
proportion to the Value of the Securities borrowed under such loan as
the Posted Collateral bore at the commencement of such loan.
Accordingly:
(i) the Value of the Posted Collateral to be delivered or deposited
while the loan of Securities continues shall be equal to the Value of
the borrowed Securities and the Margin applicable thereto (the
"Required Collateral Value");
(ii) if on any Business Day the Value of the Posted Collateral in
respect of any loan of Securities exceeds the Required Collateral Value
in respect of such loan, the Lender shall (on demand) repay such Cash
Collateral and/or redeliver to the Borrower such Equivalent Collateral
as will eliminate the excess; and
(iii) if on any Business Day the Value of the Posted Collateral falls
below the Required Collateral Value, the Borrower shall (on demand)
provide such further Collateral to the Lender as will eliminate the
deficiency.
(I) Subject to Clause 6(J), unless the Schedule to this Agreement indicates
that Clause 6(H) shall apply in lieu of this Clause 6(I), or unless
otherwise agreed between the Parties:-
(i) the aggregate Value of the Posted Collateral in respect of all
loans of Securities outstanding under this Agreement shall equal the
aggregate of the Required Collateral Values in respect of such loans;
(ii) if at any time the aggregate Value of the Posted Collateral in
respect of all loans of Securities outstanding under this Agreement
exceeds the aggregate of the Required Collateral Values in respect of
such loans, the Lender shall (on demand) repay such Cash Collateral
and/or redeliver to the Borrower such Equivalent Collateral as will
eliminate the excess;
(iii) if at any time the aggregate Value of the Posted Collateral in
respect of all loans of Securities outstanding under this Agreement
falls below the aggregate of Required Collateral Values in respect of
all such loans, the Borrower shall (on demand) provide such further
Collateral to the Lender as will eliminate the deficiency.
(J) Where Clause 6(I) applies, unless the Schedule to this Agreement
indicates that this Clause 6(J) does not apply, if a Party
(the "first Party") would, but for this Clause 6(J), be required under
Clause 6(I) to repay Cash Collateral, redeliver
Equivalent Securities or provide further Collateral in circumstances
where the other Party (the "second Party") would, but
for this Clause 6(J), also be required to repay Cash Collateral or
provide or redeliver Equivalent Collateral under Clause
6(I), then the Value of the Cash Collateral or Equivalent Collateral
deliverable by the first Party ("X") shall be set-off
against the Value of the Cash Collateral, or Equivalent Collateral or
further Collateral deliverable by the second Party
("Y") and the only obligation of the Parties under Clause 6(I) shall
be, where X exceeds Y, an obligation of the first Party,
or where Y exceeds X, an obligation of the second Party, to repay Cash
Collateral, redeliver Equivalent Collateral or to
deliver further Collateral having a Value equal to the difference
between X and Y.
(K) Where Cash Collateral is repaid, Equivalent Collateral is redelivered
or further Collateral is provided by a Party under Clause 6(I), the
Parties shall agree to which loan or loans of Securities such
repayment, redelivery or further provision is to be attributed and
failing agreement it shall be attributed, as determined by the Party
making such repayment, redelivery or further provision to the earliest
outstanding loan and, in the case of a repayment or redelivery up to
the point at which the Value of Collateral in respect of such loan is
reduced to zero and, in the case of a further provision up to the point
at which the Value of the Collateral in respect of such loan equals the
Required Collateral Value in respect of such loan, and then to the next
earliest outstanding loan up to the similar point and so on.
(L) Where any Cash Collateral falls to be repaid or Equivalent Collateral
to be redelivered or further Collateral to be provided under this
Clause 6, it shall be delivered within the minimum period after demand
specified in the Schedule or if no appropriate period is there
specified within the standard settlement time for delivery of the
relevant type of Cash Collateral, Equivalent Collateral or Collateral,
as the case may be.
7. REDELIVERY OF EQUIVALENT SECURITIESREDELIVERY OF EQUIVALENT
SECURITIESREDELIVERY OF EQUIVALENT SECURITIES
(A) The Borrower undertakes to redeliver Equivalent Securities in
accordance with this Agreement and the terms of the relevant
Borrowing Request. For the avoidance of doubt any reference herein
or in any other agreement or communication between the Parties
(howsoever expressed) to an obligation to redeliver or account for
or act in relation to borrowed Securities shall accordingly be
construed as a reference to an obligation to redeliver or account
for or act in relation to Equivalent Securities.
(B) Subject to Clause 8 hereof and the terms of the relevant Borrowing
Request the Lender may call for the redelivery of all
or any Equivalent Securities at any time by giving notice on any
Business Day of not less than the standard settlement
time for such Equivalent Securities on the exchange or in the
clearing organisation through which the relevant borrowed
Securities were originally delivered. The Borrower shall as
hereinafter provided redeliver such Equivalent Securities
not later than the expiry of such notice in accordance
with the Lender's instructions. Simultaneously with the
redelivery of the Equivalent Securities in accordance with
such call, the Lender shall (subject to Clause 6(I), if
applicable) repay any Cash Collateral and redeliver to the
Borrower Collateral equivalent to the Collateral delivered
pursuant to Clause 6 in respect of the borrowed Securities. For
the avoidance of doubt any reference herein or in any
other agreement or communication between the Parties (however
expressed) to an obligation to redeliver or account for or
act in relation to Collateral shall accordingly be construed as
a reference to an obligation to redeliver or account for
or act in relation to Equivalent Collateral.
(C) If the Borrower does not redeliver Equivalent Securities in
accordance with such call, the Lender may elect to continue the
loan of Securities PROVIDED THAT if the Lender does not elect to
continue the loan the Lender may by written notice to the Borrower
elect to terminate the relevant loan. Upon the expiry of such
notice the provisions of Clauses (8) (B) to (F) shall apply as if
upon the expiry of such notice an Event of Default had occurred in
relation to the Borrower (who shall thus be the Defaulting Party
for the purposes of this Agreement) and as if the relevant loan
were the only loan outstanding.
(D) In the event that as a result of the failure of the Borrower to
redeliver Equivalent Securities to the Lender in accordance with
this Agreement a "buy-in" is exercised against the Lender then
provided that reasonable notice has been given to the Borrower of
the likelihood of such a "buy-in", the Borrower shall account to
the Lender for the total costs and expenses reasonably incurred by
the Lender as a result of such "buy-in".
(E) Subject to the terms of the relevant Borrowing Request, the
Borrower shall be entitled at any time to terminate a particular
loan of Securities and to redeliver all and any Equivalent
Securities due and outstanding to the Lender in accordance with the
Lender's instructions. The Lender shall accept such redelivery and
simultaneously therewith (subject to Clause 6(I) if applicable)
shall repay to the Borrower any Cash Collateral or, as the case may
be, redeliver Collateral equivalent to the Collateral provided by
the Borrower pursuant to Clause 6 in respect thereof.
(F) Where a TALISMAN short term certificate (as described in paragraph
C of the Schedule) is provided by way of Collateral, the obligation
to redeliver Equivalent Collateral is satisfied by the redelivery
of the certificate to the Borrower or its expiry as provided for in
the Rules applying to such certificate.
(G) Where a Letter of Credit is provided by way of Collateral, the
obligation to redeliver Equivalent Collateral is satisfied by the
Lender redelivering for cancellation the Letter of Credit so
provided, or where the Letter of Credit is provided in respect of
more than one loan, by the Lender consenting to a reduction in the
value of the Letter of Credit.
8. SET-OFF ETC.SET-OFF ETC.SET-OFF ETC.
(A) On the date and time (the "Performance Date") that Equivalent
Securities are required to be redelivered by the Borrower
in accordance with the provisions of this Agreement the Lender
shall simultaneously redeliver the Equivalent Collateral
and repay any Cash Collateral held (in respect of the Equivalent
Securities to be redelivered) to the Borrower. Neither
Party shall be obliged to make delivery (or make a payment as the
case may be) to the other unless it is satisfied that
the other Party will make such delivery (or make an appropriate
payment as the case may be) to it simultaneously. If it
is not so satisfied (whether because an Event of Default has
occurred in respect of the other Party or otherwise) it
shall notify the other party and unless that other Party has
made arrangements which are sufficient to assure full
delivery (or the appropriate payment as the case may be) to the
notifying Party, the notifying Party shall (provided it
is itself in a position, and willing, to perform its own
obligations) be entitled to withhold delivery (or payment, as
the case may be) to the other Party.
(B) If an Event of Default occurs in relation to either Party, the
Parties' delivery and payment obligations (and any other
obligations they have under this Agreement) shall be accelerated so
as to require performance thereof at the time such Event of Default
occurs (the date of which shall be the "Performance Date" for the
purposes of this clause) and in such event:
(i) the Relevant Value of the Securities to be delivered (or
payment to be made, as the case may be) by each Party
shall be established in accordance with Clause 8(C); and
(ii) on the basis of the Relevant Values so established, an
account shall be taken (as at the Performance Date) of
what is due from each Party to the other and (on the
basis that each Party's claim against the other in
respect of delivery of Equivalent Securities or
Equivalent Collateral or any cash payment equals the
Relevant Value thereof) the sums due from one Party shall
be set-off against the sums due from the other and only
the balance of the account shall be payable (by the Party
having the claim valued at the lower amount pursuant to
the foregoing) and such balance shall be payable on the
Performance Date.
(C) For the purposes of Clause 8(B) the Relevant Value:-
(i) of any cash payment obligation shall equal its par value
(disregarding any amount taken into account under (ii) or
(iii) below);
(ii) of any securities to be delivered by the Defaulting Party
shall, subject to Clause 8(E) below, equal the Offer
Value thereof; and
(iii) of any securities to be delivered to the Defaulting Party
shall, subject to Clause 8(E) below, equal the Bid Value
thereof.
(D) For the purposes of Clause 8(C), but subject to Clause 8(E) below,
the Bid Value and Offer Value of any securities shall be calculated
as at the Close of Business in the most appropriate market for
securities of the relevant description (as determined by the
Non-Defaulting Party) on the first Business Day following the
Performance Date, or if the relevant Event of Default occurs
outside the normal business hours of such market, on the second
Business Day following the Performance Date (the "Default Valuation
Time");
(E) (i) Where the Non-Defaulting Party has following the
occurrence of an Event of Default but prior
to the Default Valuation Time purchased securities forming
part of the same issue and being of an identical type and
description to those to be delivered by the Defaulting Party and in
substantially the same amount as those securities or
sold securities forming part of the same issue and being of an
identical type and description to those to be delivered by
him to the Defaulting Party and in substantially the same amount
as those securities, the cost of such purchase or the
proceeds of such sale, as the case may be, (taking into account
all reasonable costs, fees and expenses that would be
incurred in connection therewith) shall be treated as the Offer
Value or Bid Value, as the case may be, of the relevant
securities for the purposes of this Clause 8.
(i) Where the amount of any securities sold or purchased as
mentioned in (E)(i) above is not in substantially the same amount
as those securities to be valued for the purposes Clause 8(C) the
Offer Value or the Bid Value (as the case may be) of those
securities shall be ascertained by dividing the net proceeds of
sale or cost of purchase by the amount of the securities sold or
purchased so as to obtain a net unit price and multiplying that net
unit price by the amount of the securities to be valued.
(F) Any reference in this Clause 8 to securities shall include any
asset other than cash provided by way of Collateral.
(G) If the Borrower or the Lender for any reason fail to comply with
their respective obligations under Clauses 6(F) or 6(G) in respect
of redelivery of Equivalent Collateral or repayment of Cash
Collateral such failure shall be an Event of Default for the
purposes of this Clause 8, and the person failing to comply shall
thus be the Defaulting Party.
(H) Subject to and without prejudice to its rights under Clause 8(A)
either Party may from time to time in accordance with market
practice and in recognition of the practical difficulties in
arranging simultaneous delivery of Securities, Collateral and cash
transfers waive its right under this Agreement in respect of
simultaneous delivery and/or payment PROVIDED THAT no such waiver
in respect of one transaction shall bind it in respect of any other
transaction.
9. TAXATIONTAXATIONTAXATION
(A) The Borrower hereby undertakes promptly to pay and account for any
transfer or similar duties or taxes chargeable in connection with
any transaction effected pursuant to or contemplated by this
Agreement, and shall indemnify and keep indemnified the Lender
against any liability arising in respect thereof as a result of the
Borrower's failure to do so.
(B) The Borrower shall only make a Borrowing Request where the purpose
of the loan meets the requirements of the Rules regarding the
conditions that must be fulfilled for Section 129 of the Income and
Corporation Taxes Act 1988 (or any statutory modification or
re-enactment thereof for the time being in force) to apply to the
arrangement concerning the loan, unless the Lender is aware that
the transaction is unapproved for the purposes of the Rules of the
UK Inland Revenue or such purpose is not met.
(C) A Party undertakes to notify the other Party if it becomes or
ceases to be an Approved UK Intermediary or an Approved UK
Collecting Agent.
10. LENDER'S WARRANTIESLENDER'S WARRANTIESLENDER'S WARRANTIES
Each Party hereby warrants and undertakes to the other on a continuing basis to
the intent that such warranties shall survive the completion of any transaction
contemplated herein that, where acting as a Lender:
(A) it is duly authorised and empowered to perform its duties and
obligations under this Agreement;
(B) it is not restricted under the terms of its constitution or in any
other manner from lending Securities in accordance with this
Agreement or from otherwise performing its obligations hereunder;
(C) it is absolutely entitled to pass full legal and beneficial
ownership of all Securities provided by it hereunder to the
Borrower free from all liens, charges and encumbrances;
(D) where the Schedule to this Agreement specifies that this Clause
10(D) applies, it is not resident in the United Kingdom
for tax purposes and either is not carrying on a trade in the
United Kingdom through a branch or agency or if it is
carrying on such a trade the loan is not entered into in the course
of the business of such branch or agency, and it has
(i) delivered or caused to be delivered to the Borrower 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) has taken all necessary steps to enable a specific
authorisation to make gross payment of the Manufactured Dividend
to be issued by the Inland Revenue;
11. BORROWER'S WARRANTIES BORROWER'S WARRANTIESBORROWER'S WARRANTIES
Each Party hereby warrants and undertakes to the other on a continuing basis to
the intent that such warranties shall survive the completion of any transaction
contemplated herein that, where acting as a Borrower:
(A) it has all necessary licenses and approvals, and is duly authorised
and empowered, to perform its duties and obligations under this
Agreement and will do nothing prejudicial to the continuation of
such authorisation, licences or approvals;
(B) it is not restricted under the terms of its constitution or in any
other manner from borrowing Securities in accordance with this
Agreement or from otherwise performing its obligations hereunder;
(C) it is absolutely entitled to pass full legal and beneficial
ownership of all Collateral provided by it hereunder to the
Lender free from all liens, charges and encumbrances;
(D) it is acting as principal in respect of this Agreement;
(E) where the Schedule to this Agreement specifies this Clause 11(E)
applies, it is subject to tax in the United Kingdom under Case I of
Schedule D in respect of any income arising pursuant to or in
connection with the borrowing of Securities hereunder.
12. EVENTS OF DEFAULTEVENTS OF DEFAULTEVENTS OF DEFAULT
Each of the following events occurring in relation to either Party (the
"Defaulting Party", the other Party being the "Non-Defaulting Party") shall be
an Event of Default for the purpose of Clause 8:-
(A) the Borrower or Lender failing to pay or repay Cash Collateral or
deliver or redeliver Collateral or Equivalent Collateral upon the
due date, and the Non-Defaulting Party serves written notice on the
Defaulting Party;
(B) the Lender or Borrower failing to comply with its obligations under
Clause 6, and the Non-Defaulting Party serves written
notice on the Defaulting Party;
(C) the Borrower failing to comply with Clause 4(B)(i), (ii) or (iii)
hereof, and the Non-Defaulting Party serves written
notice on the Defaulting Party;
(D) an Act of Insolvency occurring with respect to the Lender or the
Borrower and (except in the case of an Act of Insolvency which is
the presentation of a petition for winding up or any analogous
proceeding or the appointment of a liquidator or analogous officer
of the Defaulting Party in which case no such notice shall be
required) the Non-Defaulting Party serves written notice on the
Defaulting Party;
(E) any representations or warranties made by the Lender or the
Borrower being incorrect or untrue in any material respect when
made or repeated or deemed to have been made or repeated, and the
Non-Defaulting Party serves written notice on the Defaulting Party;
(F) the Lender or the Borrower admitting to the other that it is
unable to, or it intends not to, perform any of its
obligations hereunder and/or in respect of any loan hereunder,
and the Non-Defaulting Party serves written notice on the
Defaulting Party;
(G) the Lender (if appropriate) or the Borrower being declared in
default by the appropriate authority under the Rules or being
suspended or expelled from membership of or participation in any
securities exchange or association or other self-regulatory
organisation, or suspended from dealing in securities by any
government agency, and the Non-Defaulting Party serves written
notice on the Defaulting Party;
(H) any of the assets of the Lender or the Borrower or the assets of
investors held by or to the order of the Lender or the Borrower
being transferred or ordered to be transferred to a trustee by a
regulatory authority pursuant to any securities regulating
legislation and the Non-Defaulting Party serves written notice on
the Defaulting Party, or
(I) the Lender or the Borrower failing to perform any other of its
obligations hereunder and not remedying such failure within 30 days
after the Non-Defaulting Party serves written notice requiring it
to remedy such failure, and the Non-Defaulting Party serves a
further written notice on the Defaulting Party.
Each Party shall notify the other if an Event of Default occurs in relation to
it.
13. OUTSTANDING PAYMENTS
In the event of either Party failing to remit either directly or by its Nominee
sums in accordance with this Agreement such Party hereby undertakes to pay a
rate to the other Party upon demand on the net balance due and outstanding of 1%
above the Barclays Bank PLC base rate from time to time in force.
14. TRANSACTIONS ENTERED INTO AS AGENTTRANSACTIONS ENTERED INTO AS
AGENTTRANSACTIONS ENTERED INTO AS AGENT
(A) Subject to the following provisions of this Clause, the Lender may
enter into loans as agent (in such capacity, the "Agent") for a
third person (a "Principal"), whether as custodian or investment
manager or otherwise (a loan so entered into being referred to in
this clause as an "Agency Transaction").
(B) A Lender may enter into an Agency Transaction if, but only if:-
(i) if specifies that loan as an Agency Transaction at the
time when it enters into it;
(ii) it enters into that loan on behalf of a single Principal
whose identity is disclosed to the Borrower (whether by
name or by reference to a code or identifier which the
Parties have agreed will be used to refer to a specified
Principal) at the time when it enters into the loan; and
(iii) it has at the time when the loan is entered into actual
authority to enter into the loan and to perform on behalf
of that Principal all of that Principal's obligations
under the agreement referred to in (D)(ii) below.
(C) The Lender undertakes that, if it enters as agent into an Agency
Transaction, forthwith upon becoming aware:-
(i) of any event which constitutes an Act of Insolvency with
respect to the relevant Principal; or
(ii) of any breach of any of the warranties given in Clause
14(E) below or of any event or circumstance which has the
result that any such warranty would be untrue if repeated
by reference to the current facts;
it will inform the Borrower of that fact and will, if so required
by the Borrower, furnish it with such additional information as it
may reasonably request.
(D) (i) Each Agency Transaction shall be a transaction between the
relevant Principal and the Borrower and no person other than the
relevant Principal and the Borrower shall be a party to or have any
rights or obligations under an Agency Transaction. Without limiting
the foregoing, the Lender shall not be liable as principal for the
performance of an Agency Transaction or for breach of any warranty
contained in Clause 10(D) or 11(E) of this Agreement, but this is
without prejudice to any liability of the Lender under any other
provision of this Clause.
(ii) All the provisions of the Agreement shall apply separately as
between the Borrower and each Principal for whom the Agent has entered
into an Agency transaction or Agency Transactions as if each such
Principal were a party to a separate agreement with the Borrower in all
respects identical with this Agreement other than this paragraph and as
if the Principal were Lender in respect of that agreement.
PROVIDED THAT
if there occurs in relation to the Agent an Event of
Default or an event which would constitute an Event of
Default if the Borrower served written notice under any
sub-Clause of Clause 12, the Borrower shall be entitled
by giving written notice to the Principal (which notice
shall be validly given if given to the Lender in
accordance with Clause 20) to declare that by reason of
that event an Event of Default is to be treated as
occurring in relation to the Principal. If the Borrower
gives such a notice then an Event of Default shall be
treated as occurring in relation to the Principal at the
time when the notice is deemed to be given; and
if the Principal is neither incorporated nor has
established a place of business in Great Britain, the
Principal shall for the purposes of the agreement
referred to in (D)(ii) be deemed to have appointed as its
agent to receive on its behalf service of process in the
courts of England the Agent, or if the Agent is neither
incorporated nor has established a place of business in
the United Kingdom, the person appointed by the Agent for
the purposes of this Agreement, or such other person as
the Principal may from time to time specify in a written
notice given to the other party.
(iii) The foregoing provisions of this Clause do not affect the
operation of the Agreement as between the Borrower and
the Lender in respect of any transactions into which the
Lender may enter on its own account as principal.
(D) The Lender warrants to the Borrower that it will, on every occasion
on which it enters or purports to enter into a transaction as an
Agency Transaction, have been duly authorised to enter into that
loan and perform the obligations arising thereunder on behalf of
the person whom it specifies as the Principal in respect of that
transaction and to perform on behalf of that person all the
obligations of that person under the agreement referred to in
(D)(ii).
15. TERMINATION OF COURSE OF DEALINGS BY NOTICE
-------------------------------------------
TERMINATION OF COURSE OF DEALINGS BY NOTICE
-------------------------------------------
Each Party shall have the right to bring the course of dealing contemplated
under this Agreement to an end by giving not less than 15 Business Days' notice
in writing to the other Party (which notice shall specify the date of
termination) subject to an obligation to ensure that all loans and which have
been entered into but not discharged at the time such notice is given are duly
discharged in accordance with this Agreement and with the Rules.
16. GOVERNING PRACTICESGOVERNING PRACTICESGOVERNING PRACTICES
The Borrower shall use its best endeavours to notify the Lender (in writing) of
any changes in legislation or practices governing or affecting the Lender's
rights or obligations under this Agreement or the treatment of transactions
effected pursuant to or contemplated by this Agreement.
17. OBSERVANCE OF PROCEDURESOBSERVANCE OF PROCEDURESOBSERVANCE OF PROCEDURES
Each of the Parties hereto agrees that in taking any action that may be required
in accordance with this Agreement it shall observe strictly the procedures and
timetable applied by the Rules and, further, shall observe strictly any
agreement (oral or otherwise) as to the time for delivery or redelivery of any
money, Securities, Equivalent Securities, Collateral or Equivalent Collateral
entered into pursuant to this Agreement.
18. SEVERANCESEVERANCESEVERANCE
If any provision of this Agreement is declared by any judicial or other
competent authority to be void or otherwise unenforceable, that provision shall
be severed from the Agreement and the remaining provisions of this Agreement
shall remain in full force and effect. The 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.
19. SPECIFIC PERFORMANCESPECIFIC PERFORMANCESPECIFIC PERFORMANCE
Each Party agrees that in relation to legal proceedings it will not seek
specific performance of the other Party's obligation to deliver or redeliver
Securities, Equivalent Securities, Collateral or Equivalent Collateral but
without prejudice to any other rights it may have.
20. NOTICESNOTICESNOTICES
All notices issued under this Agreement shall be in writing (which shall include
telex or facsimile messages) and shall be deemed validly delivered if sent by
prepaid first class post to or left at the addresses or sent to the telex or
facsimile number of the Parties respectively or such other addresses or telex or
facsimile numbers as each Party may notify in writing to the other.
21. ASSIGNMENTASSIGNMENTASSIGNMENT
Neither Party may charge assign or transfer all or any of its rights or
obligations hereunder without the prior consent of the other Party.
22. NON-WAIVERNON-WAIVERNON-WAIVER
No failure or delay by either Party to exercise any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise of any right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege as herein
provided.
23. ARBITRATION AND JURISDICTION ARBITRATION AND JURISDICTIONARBITRATION AND
JURISDICTION
(A) All claims, disputes and matters of conflict between the Parties
arising hereunder shall be referred to or submitted for arbitration
in London in accordance with English Law before a sole arbitrator
to be agreed between the Parties or in default of agreement by an
arbitrator to be nominated by the Chairman of The Stock Exchange on
the application of either Party, and this Agreement shall be deemed
for this purpose to be a submission to arbitration within the
Arbitration Acts 1950 and 1979, or any statutory modification or
re-enactment thereof for the time being in force.
(B) This Clause shall take effect notwithstanding the frustration or
other termination of this Agreement.
(C) No action shall be brought upon any issue between the Parties under
or in connection with this Agreement until the same has been
submitted to arbitration pursuant hereto and an award made.
24. TIMETIMETIME
Time shall be of the essence of the Agreement.
25. RECORDINGRECORDINGRECORDING
The Parties agree that each may electronically record all telephonic
conversations between them.
26. GOVERNING LAWGOVERNING LAWGOVERNING LAW
This Agreement is governed by, and shall be construed in accordance with,
English Law.
IN WITNESS WHEREOF this Agreement has been executed on behalf of the Parties
hereto the day and year first before written.
SIGNED BY )
)
)
ON BEHALF OF )
The Chase Manhattan )
Bank (London branch) )
IN THE PRESENCE OF: )
SIGNED BY )
)
)
ON BEHALF OF )
)
IN THE PRESENCE OF: )
SCHEDULESCHEDULESCHEDULE
COLLATERAL
Types
Collateral acceptable under this Agreement may include the following or
otherwise, as agreed between the Parties from time to time whether transferable
by hand or within a depositary:-
A. British Government Stock and other stock registered at the Bank of
England which is transferable through the CGO to the Lender or its
Nominee against an Assured Payment, hereinbefore referred to as CGO
Collateral.
B. (i)British Government Stock and Sterling Issues by
foreign governments (transferable through the CGO), in
the form of an enfaced transfer deed or a long term
collateral certificate or overnight collateral chit
issued by the CGO accompanied (in each case) by an
executed unenfaced transfer deed;
(ii)Corporation and Commonwealth Stock in the form of registered
stock or allotment letters duly renounced;
(iii)UK Government Treasury Bills;
(iv)U.S. Government Treasury Bills;
(v)Bankers' Acceptances;
(vi)Sterling Certificates of Deposit;
(vii)Foreign Currency Certificates of Deposit;
(viii)Local Authority Bonds;
(ix)Local Authority Bills;
(x)Letters of Credit;
(xi)Bonds or Equities in registrable form or allotment letters
duly renounced;
(xii)Bonds or Equities in bearer form.
C. Unexpired TALISMAN short-term certificates issued by The Stock
Exchange; and
D. Cash Collateral.
Valuation of Collateral
Collateral provided in accordance with this Agreement shall be evaluated by
reference to the following, or by such means as the Parties may from time to
time agree:-
(A) in respect of Collateral types A(i) and B(i), the current CGO value
calculated by reference to the middle market price of each stock as
determined daily by the Bank of England, adjusted to include the
accumulated interest thereon (the CGO Reference Price);
(B) in respect of Collateral types B(ii) to (ix), (xi) and (xii) the
Reference Price thereof;
(C) in respect of Collateral types B(x) and C the value specified therein.
Margin
The Value of the Collateral delivered pursuant to Clause 6 by the Borrower to
the Lender under the terms and conditions of this Agreement shall on each
Business Day represent not less than the Value of the borrowed Securities
TOGETHER WITH the following additional percentages hereinbefore referred to as
("the Margin") unless otherwise agreed between the Parties:-
(i)in the case of Collateral types B(i) to (x) and D: %,
(for Certificates of Deposit the Margin shall be the accumulated interest
thereon);
or
(ii)in the case of Collateral types B(xi), (xii) and C : %
If the Value of the borrowed Securities includes any margin over the mid market
price of the borrowed Securities this shall be taken into account in determining
the Margin applicable.
Basis of Margin Maintenance
Clause 6(H) (transaction by transaction margining)*/Clause 6 (I)(global
margining)* shall apply.
Clause 6(J) (netting of margin where one party both a Borrower and Lender)
shall/shall not* apply,
Minimum period after demand for transferring Cash Collateral or Equivalent
Collateral:
BASE CURRENCY
The Base Currency applicable to this Agreement is
LENDER'S WARRANTIES
Clause 10(D) shall/shall not* apply.
BORROWER'S WARRANTIES
Clause 11/(E) shall/shall not* apply.
[NB* Delete as appropriate.]
CHASE OVERSEAS SECURITIES LENDER'S AGREEMENT
APPENDIX
The terms of this Appendix amend various of the provisions of the Overseas
Securities Lender's Agreement entered into between the Parties (the
"Agreement").
This Appendix supplements and forms part of the Agreement and accordingly the
Appendix and Agreement shall be treated as one single agreement between the
Parties.
Capitalised words in this Appendix bear the same meaning (save as otherwise
amended herein) as in the Agreement.
1. Recital 1 on page 1 shall be replaced with the following:-
"From time to time the Parties hereto may enter into transactions in
which one (the "Lender") agrees to lend to the other (the "Borrower" )
from time to time Securities (as hereinafter defined), subject to any
Inland Revenue provisions then in force."
2. The following shall be inserted as Recital 3:-
The Lender shall enter into loans of Securities as agent on behalf of
third party beneficial owners and clause 14 shall take effect in
accordance therewith.
3. The definition of "Collateral" shall be replaced with the following:-
"Collateral" shall mean, collectively, all cash, Approved Securities
and Letters of Credit from time to time paid or delivered by the
Borrower to the Lender pursuant to Clause 6 and shall include the
certificates and other documents of or evidencing title and transfer
with respect to the foregoing (as appropriate) and shall include
Alternative Collateral. For the purposes of this definition a Letter of
Credit shall mean an irrevocable letter of credit issued by a bank
acceptable to the Lender for the account of the Borrower or any other
person acceptable to the Lender and which contains such terms and
provisions as are required by or acceptable to the Lender in its
discretion. Approved Securities shall mean securities of such class or
classes falling within Paragraph B of the Schedule hereto but only in
so far as any such class has been designated by notice in writing given
by the Lender to the Borrower from time to time hereafter as capable of
being Approved Securities for the purposes of this Agreement and which
are acceptable to the Lender for the purposes hereof in its sole
discretion and such term shall include the certificates and other
documents of or evidencing title and transfer with respect to such
securities."
4. The definition of "Securities" shall be replaced with the following:-
"Securities means Overseas Securities as defined in paragraph 1(1) of
Schedule 23A to the Income and Corporation Taxes Act 1988."
5. The following definitions shall be added to Clause 1 of the Agreement:-
"Relevant Bank" shall mean, with respect to any loan, a bank which has
issued a Letter of Credit which, or a portion of which, is for the time
being allocated as Collateral for such Loan;
"Relevant Organisation" shall mean any governmental agency, bureau,
commission or department and any self-regulatory or other organisation
concerned with dealings, and any association of dealers, in securities
of any description;
6. Clause 4(B)(viii) shall be replaced by the following provisions (which
shall take effect as sub-clauses (viii), (ix) and (x) respectively) and
existing sub-clause (viii) of the Agreement shall be renumbered as
sub-clause (xi):-
"(viii) any distribution of securities made in exchange for loaned
Securities shall be considered as substituted for such loaned
Securities and need not be delivered to the Lender until the relevant
loan of Securities is terminated hereunder;
(ix) any distribution solely in the form of securities with respect to
any loaned Securities shall be added to such loaned Securities (and
shall constitute loaned Securities, and be part of the relevant loan of
Securities, for all purposes hereof) and need not be delivered to the
Lender until the relevant loan of Securities is terminated hereunder,
if at or before the making of such distribution the Borrower shall have
delivered such additional Collateral for the relevant loan to the
Lender for the account of the relevant Principal as shall be necessary
to make the aggregate of the Collateral for such Loan, determined on
the date of such distribution, at least equal to the Margin with
respect to such Loan (after giving effect to the addition of the
securities being distributed) determined on such date; and
(x) any distributions of warrants or rights to purchase shares made
with respect to any loaned Securities shall be deemed to be, and shall
be, a new loan of Securities made to the Borrower by the Principal
which loaned to the Borrower the loaned Securities with respect to
which such distribution is made (and shall be treated as Loaned
Securities, and as a separate loan, for all purposes hereof) and need
not be delivered to the Lender until such new loan is terminated in
accordance herewith, if at or before the making of such distribution
the Borrower and the Lender shall have agreed upon the Margin for such
new loan and the Borrower shall have delivered to the Lender Collateral
for such new Loan having a value acceptable to the Lender".
7. The following shall be substituted for clause 6(A)(i):-
"(A)(i) Unless the Parties agree otherwise and subject to sub-clauses
(B), (C) and (E) below the Borrower agrees that, as a condition
precedent to the making of any Loan, it shall deliver Collateral to the
Lender (or in accordance with the Lender's instructions) TOGETHER WITH
appropriate instruments of transfer duly stamped where necessary and
such other instruments as may be requisite to vest title thereto in the
Lender."
8. The words commencing "... unless in relation to ..." in the fifth line
down in clause 6(G)(i) to the end of that clause
shall be deleted and the whole of clause 6(G)(ii) shall be deleted.
9. The following shall be inserted as clause 6(M):-
"(M) The delivery of a Letter of Credit shall be effected for the
purposes of this Agreement by physical delivery of the original
executed Letter of Credit by the issuing, confirming or advising bank
to the Lender at its address for delivery of notices or as the Lender
may otherwise agree, provided, however, that no such delivery shall be
effective until one Business Day after the receipt of a Letter of
Credit by the Lender (or, if the relevant Letter of Credit is received
by the Lender prior to 3 p.m. (London time) on a Business Day, until
5.30 p.m. (London time) on such Business Day), during which period the
Lender may reject such Letter of Credit, by oral notice to the
Borrower, if such Letter of Credit is not in the form required by or
acceptable to the Lender."
10. Clause 7B shall be amended as follows:-
(i) by the insertion of the following words at the end of the
first sentence:-
"(and where there is a difference between the settlement time
for sales and purchases on the relevant exchange or clearing
organisation, the standard settlement time shall be the shorter of the
two times)."
(ii) in the third sentence, by the insertion of the following words
after "Simultaneously with the redelivery of the Equivalent Securities
in accordance with such call,":-
"or at such other time as may be agreed by the Parties,"
11. The requirements pursuant to clause 9(B) shall not apply as between the
Parties.
12. The following shall be inserted as clause 11(F):-
"(F) The Borrower has heretofore delivered to the Lender a copy of the
annual [consolidated] financial statements of the Borrower [and its
consolidated subsidiaries] for its [fiscal/financial] year ended [ ],
19[ ] duly audited by independent [certified public
accountants/internationally recognised auditors], including a balance
sheet as at the end of such [fiscal/financial] year [and the related
statement of income and changes in financial position for such fiscal
year], and a copy of the unaudited [consolidated] financial statements
of the Borrower [and its consolidated subsidiaries] for the [ ] month
period ended [ ], 19[ ] including a balance sheet as at the end of such
period [and the related statement of income and changes in financial
position for such period], and each of the said statements and related
notes thereto are complete and correct and fairly present the
[consolidated] financial condition and results of operation of the
Borrower [and its consolidated subsidiaries] as at the said dates and
for such periods, all in conformity with generally accepted accounting
principles consistently applied;"
13. The following shall be inserted as Clause 11(G):-
"(G) it is an Approved Intermediary."
14. Clause 12 shall be amended as follows:-
(i) by the deletion of "or" at the end of Sub-clause (H);
(ii) in Sub-clause (I) by the deletion of all the words after
"hereunder" and the substitution therefor of "and the Non-Defaulting
Party serves written notice on the Defaulting Party";
(iii) by the addition of the following Sub-clauses:-
"(J) a violation by the Borrower in connection with any
Securities the subject of a loan hereunder or
the holding or disposition thereof by the Borrower, of
any applicable law, regulation or rule of any
jurisdiction, or of any Relevant Organisation to
the requirements of which the Borrower may be
subject;
(K) the occurrence of any other event which the Borrower
is required to notify to the Lender
pursuant to Clause 27(B) hereof; or
(L) an Act of Insolvency occurring with respect to any
Relevant Bank and (except in the case of an Act of Insolvency which is
the presentation of a petition for winding up or any analogous officer
of the Relevant Bank in which case no such notice shall be required)
the Lender serves written notice on the Borrower."
15. The following shall take effect as clause 27 of the Agreement:-
"Covenants of the Borrower:
The Borrower hereby covenants and agrees with the Lender as follows:
(A) The Borrower will furnish to the Lender (i) as soon as available
and in any event within [ ] days after the end of each of its
[fiscal/financial] years, a copy of the annual [consolidated] financial
statements of the Borrower [and its consolidated subsidiaries] duly
audited by independent [certified public accountants/internationally
recognised auditors], including a balance sheet as at the end of such
[fiscal/financial] year [and the related statement of income and
changes in financial position for such fiscal year], prepared in
accordance with generally accepted accounting principles consistently
applied, (ii) as soon as available and in any event within [ ] days
after the end of each of the first three quarters of each of its
[fiscal/financial] years, a copy of the [consolidated] financial
statements of the Borrower [and its consolidated subsidiaries] for the
period then ended, including a balance sheet as at the end of such
period [and the related statement of income and changes in financial
position for such period], prepared in accordance with generally
accepted accounting principles on a basis consistent with that used in
the preparation of the financial statements referred to in
sub-paragraph (i) above and certified by an appropriate officer of the
Borrower, (iii) promptly after the occurrence of any default under this
Agreement, a written notice setting forth the nature of such default
and the steps being taken by the Borrower to remedy such default, and
(iv) from time to time such further information (whether or not of the
kind mentioned above) regarding the business, affairs and financial
condition of the Borrower as the Lender may reasonably request.
.
(B) The Borrower will give the Lender immediate notice if at any time
any order, decree, determination or instruction is issued on the
authority of any rule, regulation or proceeding of any Relevant
Organisation in relation to the Borrower, or any litigation,
arbitration or similar proceeding against or affecting the Borrower is
commenced, which in any such case could have a material adverse effect
on the ability of the Borrower to perform its obligations under this
Agreement or to carry on its business as conducted as at the date of
this Agreement or which might adversely affect the borrowing of
securities by the Borrower. Any such notice shall set forth in
reasonable detail a description of the event which has occurred and of
the action, if any which the Borrower proposes to take with respect
thereto."
16. The Schedule shall be deleted and replaced by the following:-
"Types
The following types of collateral shall unless otherwise agreed
constitute Collateral acceptable under this Agreement;
(i) US Government securities which shall mean book-entry securities
issued by the U.S. Treasury (as defined in Subpart O of Treasury
Department Circular No. 300 and any successor provisions) and any other
securities issued or fully guaranteed by the United States government
or any agent, instrumentality or establishment of the U.S. government,
including without limitation, securities commonly known as "Xxxxxx
Xxxx", Xxxxx Xxxx" and "Xxxxxxx Xxxx".
(ii) Letters of Credit;
(iii) Cash Collateral.
Valuation of Collateral
Collateral provided in accordance with this Agreement shall be
evaluated by reference to the following, or by such means as the
Parties may from time to time agree:-
(a) in respect of Collateral type (i) above, the Reference Price
thereof;
(b) in respect of Collateral type (ii) above, the value specified
therein.
Margin
"The Value of the Collateral delivered pursuant to Clause 6 by the
Borrower to the Lender under the terms and conditions of this Agreement
shall on each Business Day represent not less than 100% of the Value of
the borrowed Securities, and otherwise as agreed between the Parties
with respect to each loan".
Basis of Margin Maintenance
"Clause 6(H) (transaction by transaction margining) shall apply in lieu
of Clause 6(I); however, the Lender shall have the right at its sole
election, at any time from time to time, to allocate and/or reallocate
any Collateral held by it hereunder to or among any outstanding loans.
Clause 6(J) (netting of Margin where one party both a Borrower and
Lender) shall apply, notwithstanding that Clause 6(I) does not apply.
The minimum period after demand for transferring Cash Collateral or
Equivalent Collateral shall be the same Business Day if demand is made
before 11.00 am, and otherwise as agreed between the parties".
Base Currency
The Base Currency applicable to this Agreement is United States Dollars
(US$).
Lenders' Warranties
Clause 10(D) shall apply.
Borrowers' Warranties
Clause 11(E) shall apply.
CHASE GLOBAL SECURITIES LENDING
INVESTMENT GUIDELINES
Liberty Funds Trust VII
Appendix 4
A. FUND OBJECTIVE
This short term, fixed income fund (the "Fund") is designed to maximize
the yield on securities lending cash collateral by investing in securities that
satisfy these guidelines, as applied at the time of purchase.
B. PERMISSIBLE INVESTMENTS
1. Instruments
The Fund is permitted to purchase both fixed-income securities and
other securities with debt-like characteristics on a fixed rate and floating
rate basis, including:
Asset Backed Securities
Bank Notes
Bankers' Acceptances
Certificates of Deposit
Commercial Paper, including unregistered (so-called 4(2)) Commercial
Paper
Corporate Bonds
Corporate Notes
Deposit Notes
Investment Agreements, Funding Agreements, or GICs entered into with,
or guaranteed by, a property or
casualty insurance company
Loan Participations
Master Notes
Medium Term Notes
Municipal Bonds
Promissory Notes
Repurchase Agreements, subject to the requirements of paragraph G
Time Deposits
U.S. Government Securities, which shall include securities issued or
guaranteed as to principal and
interest by the United States Government, its agencies
instrumentalities or establishments
2. Commingled Vehicles
In addition, for purposes of these guidelines, (a) shares of a money
market mutual fund registered with the Securities and Exchange Commission as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and (b) units in a short term collective investment fund managed by
The Chase Manhattan Bank: (i) shall be permissible investments, (ii) shall not
be subject to any limitation under the Concentration Guidelines in paragraph E,
(iii) shall be deemed to have a Final Maturity of one day for purposes of the
Maturity Guidelines in paragraph F and (iv) shall be deemed to meet the
applicable Quality Guidelines in paragraph H.
3. Certain Derivatives
The Fund will not invest in any instrument whose coupon rate will move
in the opposite direction of the index to which such instrument is tied. In
addition, in the event that the Fund invests in any instrument whose coupon rate
moves when the index to which such rate is tied moves, the Fund shall invest
only in those of such instruments whose movements in the coupon rate are
equivalent to movements in the index.
4. Currency
Only U.S. Dollar denominated securities will be permissible under these
guidelines.
5. Limitation on Foreign Issuers
There are no limitations on foreign issuers.
C. PROHIBITED INVESTMENTS
1. Equity securities (except that equity securities, such as owner
trust certificates, that have predominant debt characteristics shall not be
prohibited)
2. Floating rate securities with an interest rate cap, with the
exception of those capped at a rate in
excess of 20% to comply with state usury laws
D. LIMITATIONS ON AMOUNTS INVESTED/CASH RESERVE; PERMITTED BORROWING
1. The Fund will seek to be fully invested in permissible securities
as of the close of business on each
day.
2. On a temporary basis not to exceed seven days, but not for
leveraging, the Fund may enter into reverse repurchase agreements with respect
to U.S. Government Securities. While any such borrowing is outstanding, the Fund
will not make additional investments.
E. CONCENTRATION GUIDELINES
1. The greater of 25 million or 10% of the Fund's total assets,
measured at the time of purchase, may be invested in the securities of a single
issuer (other than U.S. Government Securities, repurchase agreements and the
commingled vehicles identified in paragraph B, as to which there is no
limitation).
F. MATURITY GUIDELINES
1. Fixed rate instruments must have a Final Maturity at the time of
purchase that does not exceed 2
years.
2. Floating rate instruments which are U.S. Government Securities must
have a Final Maturity that does not exceed 5 years and all other floating rate
instruments must have a Final Maturity that does not exceed 2 years.
3. Final Maturity for purposes of these guidelines means the earliest
of (i) the date noted on the face of the instrument as the date on which the
principal amount must be paid, (ii) in the case of an instrument with an
unconditional put or unconditional demand feature, the date on which the
principal amount of the instrument can be recovered by demand, or (iii) in the
case of a floating rate instrument, the next readjustment of the interest rate,
provided that, if the maturity of a floating rate instrument is determined by
reference to an unconditional put or unconditional demand feature, the period
remaining between adjustments of the interest rate must not exceed the period
specified in paragraph F.1. A floating rate instrument shall be deemed to have a
maturity equal to the period remaining until the next readjustment of the
interest rate, for purposes of calculating days to maturity of the instrument
and the portfolio's weighted average maturity.
4. A repurchase agreement shall be deemed to have a maturity equal to
the period remaining until the date on which the repurchase of the underlying
securities is scheduled to occur, or, where no date is specified, but the
agreement is subject to a demand, the notice period applicable to a demand for
the repurchase of the securities.
5. Adjustable rate mortgages will have a maturity equal to the period
remaining until the last principal payment is required by the terms of the
underlying obligation to be paid.
6. The Fund's maximum weighted average days to maturity may not exceed
120.
G. REPURCHASE AGREEMENTS (including term repurchase agreements,
entered into using custodians deemed
appropriate by the Lender's Agent)
1. Permitted Collateral
Bills, bonds or notes issued by the United States Treasury, or other
securities guaranteed as to principal and interest by the Government of the
United States, its agencies, instrumentalities or establishments;
mortgage-backed securities sponsored by agencies of the Government of the United
States; corporate obligations of domestic and foreign issuers with a minimum
rating of AA by Standard & Poor's Corporation ("S&P") or Aa by Xxxxx'x Investor
Services, Inc. ("Moody's"); asset-backed securities with a minimum rating of AAA
by S&P or Aaa by Moody's; or money market instruments (including, but not
limited to, certificates of deposit, bank notes, deposit notes, bankers'
acceptances and commercial paper issued by domestic issuers with a minimum
rating of A-1 by S&P and P-1 by Moody's).
2. Diversification
A repurchase agreement shall be deemed to be an acquisition of the
underlying securities, provided that the obligation of the seller to repurchase
the securities from the Fund is fully collateralized.
H. QUALITY GUIDELINES
1. Ratings
Except as otherwise provided with respect to repurchase agreement
collateral in paragraph G:
Specified rating categories at initial time of purchase:
a. Short-Term: Any two of the following : A-1 by S&P, P-1 by Moody's,
F-1 by Fitch, D-1
by Duff.
b. Long-Term: At least A-by S&P and A-3 by Moody's.
A security without its own rating will be considered to be rated if it
has been issued by an issuer that is rated with respect to (i) a class of
short-term debt obligations, in the case of short-term ratings or (ii) a class
of long-term debt obligations, in the case of long-term ratings, or any security
within the relevant class that is comparable in priority and security with the
purchased security. Long-term ratings will be used only if a security is not
rated and no security of the same issuer that is comparable in priority with
such security is rated.
2. Downgrades
The Fund may not purchase securities based on either an S&P, Moody's,
Fitch, or Duff rating where the rating organization has announced publicly that
it is examining the rating for a possible downgrade. This limitation does not
apply to securities rated A1+ by S&P.
In the event that a security held in the portfolio falls below the
minimum guideline as detailed in this paragraph H as a result of being
downgraded by either S&P Moody's, Fitch, or Duff, Chase will notify the client
and await instructions. In no event, however, will Chase be liable for any
consequences of the fallen rating, including retention of the security in the
absence of instructions from the client.
* * *
Each client should analyze these guidelines continually to determine their
continued appropriateness, recognizing that all investments bear risks and that
the return of principal is not assured.
Liberty Funds Trust VII
By: __________________________
Name:________________________
Title: _________________________
Appendix 5
CHASE GLOBAL SECURITIES LENDING
ACCEPTABLE COLLATERAL
1) CASH
2) SECURITIES
3) LETTERS OF CREDIT
SCHEDULE A
To Securities Lending Agreement dated as of November , 1999
Between Liberty Trust Funds VII and The Chase Manhattan Bank
Newport Tiger Fund
