Exhibit 99(h)(5)
SECURITIES LENDING AGREEMENT ("Lending Agreement"), dated as of October 15,
2002, between each of the JPMorgan Funds listed on Exhibit A hereto (each a
"Lender"), having its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, and JPMorgan Chase Bank ("Bank"), having its principal place of
business at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
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 Bank on behalf of Lender pursuant to a separate Global Custody
Agreement ("Custody Agreement"), dated as of September 7, 2001,
between Bank and Lender, which Custody Agreement provides, INTER ALIA,
for the safekeeping of Securities received by Bank from time to time
on behalf of Lender.
b) "Affiliate" shall mean an entity controlling, controlled by, or under
common control with, Bank.
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 1 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 Bank is
advised to the contrary by Proper Instruction, any person who is
authorized to give instructions to Bank pursuant to the Agreement and
any mandates given to Bank in connection with such Agreement. An
Authorized Person shall continue to be so until such time as Bank
receives Proper Instructions that any such person is no longer an
Authorized Person.
e) "Borrower" shall mean an entity listed on Appendix 2 hereto other than
any entity which Bank 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, including any applicable Addendum or Exhibit thereto
and shall, include, as applicable, a New York Business Day and a
Foreign Business Day.
g) "Cash Collateral" shall mean fed funds and such U.S. currency 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 3 hereto. As of the date hereof, Appendix 3
is limited to Cash Collateral.
i) "Collateral Account" shall mean, as the case may be, an account
maintained by Bank 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.
1) "Custody Agreement" shall have the meaning assigned thereto in the
definition of Account.
m) "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 central handling of that country's
government securities.
n) "Distributions" shall have the meaning assigned thereto in
Section 3(b)(v) hereof.
o) "Dollars" shall have the meaning assigned thereto in Section 5(c)
hereof.
p) "Loan" shall mean a loan of Securities hereunder.
q) "Loan Fee" shall mean the amount payable by a Borrower to Bank
pursuant to the applicable MSLA in connection with Loans
collateralized other than by Cash Collateral (it being understood that
until further notice from Lender, only Cash Collateral may be accepted
on behalf of Lender).
r) "Market Value" shall have the meaning assigned thereto in Section
7(c)(iii) hereof.
s) "MSLA" shall mean a master securities lending agreement or securities
borrowing agreement between Bank and a Borrower, pursuant to which
Bank lends securities on behalf of its customers (including Lender)
from time to time. A copy of Bank's standard forms of MSLA, including
(as applicable) the international addendum thereto, are annexed (i)
as Appendix 5A in the case of borrowers located in the United States,
and (ii) as Appendix 5B in the case of borrowers located outside the
United States. (The location of each Borrower is indicated in Appendix
2.)
t) "Non-U.S. Securities" shall mean Securities other than "U.S.
Securities" as defined below, and shall include Global Depositary
Receipts.
u) "Oral Instructions" shall have the meaning assigned thereto in Section
10 hereof.
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v) "Proceeds" shall mean interest, dividends and other payments and
Distributions received by Bank in connection with Authorized
Investments.
w) "Proper Instructions" shall mean Oral Instructions and Written
Instructions.
x) "Rebate" shall mean the amount payable by Bank 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 Bank.
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 Custody 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
Bank 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 Bank's name on behalf of Bank'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 Bank.
cc) "U.S. Government Securities" 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, and shall include
American Depositary Receipts.
ee) "Written Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
SECTION 2 - APPOINTMENT. AUTHORITY
(a) APPOINTMENT. Lender hereby appoints Bank 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 Bank shall determine and Bank may
exercise all rights and powers provided under any MSLA as may be incidental
thereto, and Bank hereby accepts appointment as such agent and agrees to so act.
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(b) AUTHORITY. Lender hereby authorizes and empowers Bank 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 Bank. Lender
grants Bank the authority set forth herein notwithstanding its awareness
the Bank, in its individual capacity or acting in a fiduciary capacity for
other accounts, may have transactions with the same institutions to which
Bank may be lending Securities hereunder, which transactions may give rise to
actual or potential conflict of interest situations. Bank shall not be bound to:
(i) account to Lender for any sum received or profit made by Bank 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 Bank's judgment, made in good faith, constitute a breach of any law or
regulation or be otherwise actionable with respect to Bank; provided that, in
circumstances mentioned in (ii) above, Bank shall promptly inform Lender of
the relevant facts (except where doing so would, or might in Bank'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 Bank 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; (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 (including, but not limited to, payments made
by the depositary in connection with American Depositary Receipts and Global
Depositary Receipts) ("Distributions") made by the issuer with respect thereto.
Lender shall promptly identify to Bank by notice, which notice may be oral, any
Securities that are no longer subject to the representations contained in (b).
(c) REPRESENTATIONS OF LENDER IN RESPECT OF THE MSLAs. Lender further
represents and warrants to Bank that the representations and warranties to be
given by Bank on Lender's behalf as set out in the MSLAs are true and will
continue to be true at all times until termination of Bank's authority to act as
Lender's agent as provided in this Lending Agreement.
SECTION 4 - BORROWERS
(a) MSLA. Lender hereby acknowledges receipt of the forms of MSLA (as set
forth in Appendices 5A and 5B) and authorizes Bank 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 2,
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. Bank shall provide
Lender with notice of each proposed addition of a Borrower to such list. If
Lender notifies Bank 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
Bank shall be deemed acceptable to Lender as of the expiration of such five
Business Day period.
SECTION 5 - LOANS
(a) SECURITIES TO BE LENT. LENDING OPPORTUNITIES. LOAN INITIATION. All
Securities of Lender held by Bank that are issued, settled or traded in the
markets that have been approved by Bank from time to time for purposes of Bank's
discretionary securities lending program shall be subject to the terms hereof.
Bank 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, Bank may lend to Borrowers Securities
held in the Account (except Securities that Lender has notified to Bank 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. Bank 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, Bank or
a Triparty Institution shall receive and hold all Collateral required by the
applicable MSLA in a Collateral Account, and Bank is hereby authorized and
directed, without obtaining any further approval from Lender, to invest and
reinvest all or substantially all Cash Collateral in accordance with Appendix 1
as promptly as practicable. Bank shall credit, or where applicable shall have a
Triparty Institution credit, as promptly as practicable, all Collateral,
Authorized Investments and Proceeds to a Collateral Account and Bank 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 Bank may act. Bank may, in its sole discretion,
liquidate any Authorized Investment and credit the net proceeds to a Collateral
Account. Bank 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) Bank shall require initial Collateral
for a Loan in an amount determined by applying the then applicable "Collateral
Requirement" (as defined below) to the Market Value of the Security that is the
subject of the Loan together with, 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% where securities and the collateral therefor are 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 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 not allow for the sale of such Securities at greater than par, the Collateral
Requirement shall equal the lesser of 100% of the par value of the Security or
102% of its Market Value. (ii)(A) With respect to
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each Loan of Securities denominated in U.S. dollars ("Dollars") if, and only if,
the aggregate Market Value of the Collateral held by Bank 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, but in any event exclusive
of any diminution in the value of Cash Collateral investments), Bank shall
demand, as needed, on each such Business Day on behalf of Lender, that the
Borrower, provide additional Collateral in accordance with the applicable MSLA
(it being acknowledged that pursuant to the forms of MSLA, Collateral shall be
delivered by a Borrower by the close of the Business Day following the Business
Day on which a Collateral demand is made by Bank). Such additional Collateral
demanded, together with the Collateral then held by Bank on behalf of Lender for
such Loan, shall be not less than the applicable Collateral Requirement. (B)
With respect to all loans of Securities denominated other than in Dollars from
all lenders to a given Borrower (including Loans made hereunder), each Business
Day Bank shall determine if the Market Value of all Collateral received by Bank
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, Bank shall
demand, as needed, on each such Business Day on behalf of Lender, that Borrower
provide additional Collateral in accordance with the applicable MSLA so as to
meet the Collateral Amount by marking specific Loans (it being acknowledged
that pursuant to the forms of MSLA, Collateral shall be delivered by a Borrower
by the close of the Business Day following the Business Day on which a
Collateral demand is made by Bank). In respect of the forgoing, additional
Collateral shall not be demanded to the extent that a Collateral shortfall is
on account of a diminution in the value of Cash Collateral investments. 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. Bank may from time to time establish DE MINIMIS
guidelines with respect to Collateral pursuant to which a xxxx to market 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 Bank's current practice
and may be changed by Bank from time to time based on general market conditions
(including volatility of Securities on Loan and of securities Collateral, if and
when taken), the Market Value of Securities on Loan to a given Borrower, and in
accordance with general market practice and regulatory requirements. Bank shall
notify Lender of material revisions to the foregoing procedures.
(e) INVESTMENT OF CASH COLLATERAL. (i) Bank is hereby authorized to invest
and reinvest Cash Collateral in accordance with the investment guidelines
annexed hereto as Appendix 1. (ii) Authorized Investments are made for the
account of, and at the sole risk of, Lender. In that connection, Lender shall
pay to Bank on demand in cash an amount equal to any deficiency in the amount of
Collateral available for return to a Borrower pursuant to the applicable MSLA.
Bank 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 Bank provided that a competitive execution price is obtained.
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(f) DISTRIBUTIONS AND VOTING RIGHTS.
(i) Bank shall credit the Account on payable date with the amount of all
cash Distributions (but for purposes of this Section 5(f) and Section 7(b)
hereof, the term "cash Distributions" shall not include any principal payment,
whether paid upon the maturity of any debt Security or prior to its maturity)
with respect to Securities on Loan over their record date that Lender would
have received under the Custody Agreement had such Securities not been on Loan
over record date; provided, that with respect to Non-U.S. Securities, Bank's
obligation to credit the Account shall extend only to record dates (and
Distributions made during the period of the relevant Loan) 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 Bank by Borrower and Bank
has so credited the Account with such Distributions, Bank 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 Bank that: (a) 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) such amount was incorrectly credited. If
Lender does not promptly return any amount upon such notification, Bank shall be
entitled, upon oral or written notification to Lender, to reverse such credit
by debiting the 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 Securities on Loan 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 Bank ten (10)
Business Days' notice prior to the date of such non-cash Distribution (or such
different amount of time as Bank may from time to time require on advice to
Lender), direct Bank to request that the Borrower deliver such non-cash
Distribution to Bank pursuant to the applicable MSLA, in which case Bank shall
credit such non-cash Distribution to the Account. (c) If, despite (a) and (b)
Lender requests that Bank instruct the Borrower to deliver a non-cash
Distribution on its payable date, and Borrower fails so to deliver the non-cash
Distribution, the indemnity provisions and corresponding subrogation rights set
forth in Section 7 shall apply.
(iii) During the term of any Loan, Bank 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: (a) participate in any dividend reinvestment
program with respect to Securities that are eligible for Loan (whether or not
actually on Loan) as of the applicable record date for such Securities or (b)
vote proxies with respect to Securities that are on Loan as of the applicable
record date for such Securities. In those markets where it is not practical or
permissible to do so, Lender shall not be entitled to vote proxies with respect
to Securities that are eligible for Loan (but not actually on Loan) as of the
applicable record date for such Securities. Notwithstanding the foregoing,
Lender shall be entitled to instruct Bank to recall Securities on Loan to vote
proxies (it being understood and agreed that in such cases the right to vote
shall be contingent on such Securities being received back from Loan prior to
any applicable proxy voting deadlines imposed by the issuer and Bank). Lender
may also request that Bank obtain from a Borrower a commitment to vote or
consent as directed with respect to a material event affecting Securities on
Loan when Lender's Board of
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Trustees believes it necessary to so vote or consent, it being understood,
however, that a Borrower has no obligation to so vote or consent and may, in
some circumstances, be unable to do so.
(g) ADVANCES, OVERDRAFTS AND INDEBTEDNESS. SECURITY INTEREST. Bank 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 Bank on demand
the amount of any advance or any other amount owed by Lender hereunder. Any such
advance shall bear interest at the rate customarily charged by Bank for such
advances at the time such advance is made. In order to secure repayment of any
advance or other indebtedness of Lender to Bank arising hereunder, Bank 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
Bank's possession or control or in the possession or control of any third party
acting on Bank's behalf. In this regard, Bank shall be entitled to all the
rights and remedies of a pledged 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) Bank shall
terminate any Loan of Securities to a Borrower as soon as practicable after: (a)
receipt by Bank of a notice of termination of the respective MSLA; (b) receipt
by Bank of Written Instructions directing it to terminate a Loan; (c) receipt by
Bank of Written Instructions instructing it to delete from Appendix 2 the
Borrower to which such Loan was made; (d) receipt by Bank 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 Bank 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
Bank, in its sole discretion, elects to terminate such Loan other than a Term
Loan; or (g) termination hereof. (iii) Lender acknowledges that: (1)
termination hereof may result in the termination of certain Authorized
Investments prior to their maturity which, in turn, may result in losses being
realized in such Authorized Investments; and (2) any such losses shall be for
the account and sole risk of Lender.
(i) SALE OF A SECURITY ON LOAN. Lender shall advise Bank of the sale of
Securities no later than 9:00 a.m. on the Business Day after the sale date
(which notice need not be limited to Securities on Loan, but must include such
Securities). Bank shall not be liable for any failures occurring on a settlement
date for sale of Securities if timely notice is not given by Lender as provided
in the preceding sentence, and shall not be liable in any event (except as
provided in Section 7) for failure of a Borrower to return Securities on Loan in
a timely fashion; provided that, if notice is given by Lender to Bank by the
time set out in the preceding sentence and the Borrower does not return the
Security on Loan within the settlement time frame applicable to the sale of such
Security, Bank shall credit Lender for any related overdraft charges and
reimburse Lender for those charges that may be incurred in connection with any
resulting sale fail or, alternatively, Bank shall credit to the Account a
security identical to the Security on Loan. In connection with the foregoing,
Lender shall subrogate Bank to any rights Lender may have
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against the Borrower to the extent Bank makes any such payment or credit (where
the credit or payment resulted in any expense to Bank). Lender shall receive
contractual settlement date accounting (as described in Section 6(b) of the
Custody Agreement) with respect to Securities that are on Loan to the same
extent that Lender would be entitled to contractual settlement date accounting
under the Custody Agreement for the sale of Securities that were not on Loan; it
being understood and agreed, however, that in any given case Lender shall not
be entitled to be credited with a security identical to a Security on Loan and
to receive contractual settlement date accounting in respect of the sale of such
Security.
(j) RECORDKEEPING AND REPORTS. Bank shall establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. Bank 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
reasonable requests of the other party for information necessary to the
requester's performance of its duties hereunder.
SECTION 6 - DEFAULT BY BORROWER
(i) Bank 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 Sections 5(f)(i)-(ii) and
Sections 7(b)-(c) hereof, Bank shall have no responsibility for any breach of
any obligation by any Borrower under or in connection with any MSLA or Loan.
Bank shall have no responsibility for the accuracy or completeness of any
information supplied by any Borrower. Bank shall not be liable as a result of
taking or omitting to take any action, provided that Bank shall have carried out
its responsibilities as lending agent 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, Bank shall
then, in addition to taking whatever action may be required by Section 7(c)
hereof, take whatever action it deems appropriate in accordance with general
market practice and Bank'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 Bank deems it necessary,
such other action as may be permitted by the applicable MSLA. (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, Bank shall then, in addition
to taking whatever action may be required by Section 7(c) hereof, take such
action as its deems appropriate in accordance with Bank's reasonable judgment
under the applicable MSLA.
SECTION 7 - LIABILITIES. INDEMNIFICATION
(a) LIABILITIES. Except as provided in Sections 5(f)(i)-(ii) and Sections
7(b)-(c) hereof, Bank 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 Bank. Bank 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
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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 Bank. In no event shall Bank
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 Bank in performing its
obligations pursuant to Sections 5(f)(i)-(ii) and Sections 7(b)-(c) hereof and
ordinary operating expenses incurred by Bank in providing services hereunder,
Lender shall indemnify Bank and hold it harmless from and against any and all
costs, expenses, damages, liabilities or claims, including reasonable fees and
expenses of counsel, which Bank may sustain or incur or which may be asserted
against Bank by reason of or as a result of any action taken or omitted by Bank
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 Bank.
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. Bank 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 Bank, 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 Bank as provided in Section 5(f)(ii)(c)
hereof, Bank shall with respect to: (x) U.S. Securities at its option, credit
such non-cash Distribution or an amount equivalent thereto to the Account on the
date it is due, and (y) Non-U.S. Securities, for any non-cash Distributions made
during the period of the relevant Loan (up to and including the date of any
Event of Default) or for any non-cash Distributions for which the record date
occurs on or before the date of any Event of Default, Bank shall, at its option,
either (i) purchase for the Account 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 the Account with the
Market Value in Dollars of such Distributions on the due date as determined by
Bank in good faith. The foregoing shall, subject to Sections 7(c)(iii) and 7(d)
hereof, be at Bank's expense.
(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 Bank 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 Bank shall, at its expense, but subject to
Sections 7(c)(iii) and 7(d) hereof, deposit replacement Securities of the same
issue, type, class and series to the Account, as soon as practicable. If Bank is
unable to obtain replacement Securities, Bank shall, at its expense, but subject
to Sections 7(c)(iii) and 7(d) hereof, credit the Account in Dollars with the
Market Value of such Securities on Loan on the credit date.
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(ii) NON-U.S. SECURITIES. If the Borrower in respect of any Loan of
Non-U.S. Securities effected pursuant hereto and pursuant to the applicable MSLA
fails to return any such Securities on Loan to Bank for the Account on the
Return Date, Bank shall, at Bank's sole election and at its expense, but subject
to Sections 7(c)(iii) and 7(d) hereof and to Bank not being responsible to
compensate Lender for any increase in the Market Value of such Non-U.S.
Securities after the Return Date, as soon as practicable, either (x) deposit
replacement Securities of the same issue, type, class and series to the Account
as the Securities on Loan up to the Market Value of such Securities determined
as of the Return Date or (y) credit the Account, in Dollars, with the Market
Value of the Securities on Loan determined as of the Return Date.
(iii) In connection with Section 7(b) and Section (c)(i) and (ii) above,
"Market Value" (or "Value" in the case of Borrowers subject to Appendix 5B)
shall: (y) be determined by Bank 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; and
(z) in the case of fixed income Securities, including any accrued but unpaid
interest thereon. If the Market Value of the Cash Collateral on a credit date or
a Return Date is less than that which is required to purchase replacement
securities (and non-cash Distributions) or to credit the Account with the Market
Value in Dollars of the Securities on Loan (and non-cash Distributions) as a
result of a decrease in the Market Value of Authorized Investments, Bank shall
not be responsible for that decrease and shall deposit replacement securities or
credit the Account, with the Market Value of such Securities on Loan only to an
amount net of the decrease in Market Value of Authorized Investments.
(d) SUBROGATION. If Bank makes a payment or a purchase pursuant to Sections
5(f), 7(b) or 7(c) Bank shall, to the extent of such payment or purchase, be
subrogated to, and Lender shall assign and be deemed to have assigned to Bank,
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, 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 Bank is subrogated as provided herein,
Lender shall promptly remit or pay to Bank the same (or its Dollar equivalent).
SECTION 8 - BANK COMPENSATION
The compensation payable to Bank hereunder shall be as set forth in the fee
schedule annexed hereto as Appendix 6, as the same may be amended from time to
time. Bank is authorized, on a monthly basis, to charge such fees (together
with reasonable expenses incurred by Bank hereunder) and any other amounts owed
by Lender hereunder against the Account and/or a Collateral Account.
SECTION 9 - TAXES
(a) Lender shall be responsible for all filings, tax returns and reports on
any Loans undertaken by Bank 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 insofar as Bank is under any obligation (whether of a governmental nature or
otherwise) to pay the
11
same on Lender's behalf, Bank may do so out of any monies or assets held by it
pursuant to the terms of the Custody Agreement or hereunder.
(b) Lender acknowledges that: (i) the tax treatment of the payments made
by a Borrower to Lender in lieu of Distributions (including, by way of
illustration and not of limitation, with respect to any dividends received
deduction and amounts paid by the depositary on American Depositary Receipts
and Global Depositary Receipts) may differ from the tax treatment of the
Distribution to which such payments relate; and (ii) it has made its own
determination as to the tax treatment of any Loan made pursuant hereto, of any
in lieu of payments made by a Borrower and of any remuneration and any other
amounts that may be received by it hereunder.
(c) The parties intend any Loan to qualify as a securities lending
transaction subject to Section 1058 of the Internal Revenue Code of 1986, as
amended, and, in that connection, Bank confirms that its documentation is
designed to help assure that lending transactions so qualify. Each party shall
refrain from taking any action that would reasonably be expected to cause any
Loan to fail to so qualify.
SECTION 10 - INSTRUCTIONS
(a)(i) WRITTEN INSTRUCTIONS. "Written Instructions" shall mean written
communications actually received by Bank from an Authorized Person or from a
person reasonably believed by Bank 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 Bank and whereby Bank 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 Bank may specify. (ii) ORAL INSTRUCTIONS. "Oral
Instructions" shall mean oral communications actually received by Bank from an
Authorized Person or from a person reasonably believed by Bank 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 Bank 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 Bank'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 Bank 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
Bank 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 Bank
harmless from and against any loss or damage suffered or incurred as a result of
errors or omissions of any such pricing service. If Lender advises Bank that
there is a material discrepancy between the price assigned to a Security in
the calculation of a Lender's net asset value by Lender and the price assigned
by Bank in connection with the indemnity contained in
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Section 7(c) where Bank credits the Market Value of a Security to Lender, the
parties shall negotiate in good faith on the price to apply.
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. Bank 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 Custody 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
Custody Agreement, this Lending Agreement shall govern.
(c) NOTICES. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by facsimile, 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 Section): notices to Bank 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 at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx, Esq., with copies to Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxx and Xxxxxxxx Xxxxxxx.
(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. Bank 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.
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(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.
(h) IDENTITY OF ADVISER. If Lender is a registered investment company, the
name of the investment adviser (and subadvisers, if any), to Lender is set forth
on Exhibit A. Lender shall promptly notify Bank of any change in the identity of
any of the foregoing.
(i) MULTIPLE LENDERS. This Lending Agreement shall, and shall be deemed to,
create a separate agreement for each series or investment company (in the case
of an investment company that does not consist of a separate series) listed on
Exhibit A. For any Loan, each reference in this Lending Agreement to Lender
shall be, and shall be deemed to be, a reference solely to the particular series
or investment company to which that Loan relates. In no circumstances shall the
rights, obligations or remedies with respect to a particular series or
investment company, as the case may be, constitute a right, obligation or remedy
with respect to any other series or investment company. Specifically, and
without limiting the scope of the foregoing, Bank shall have no right to set off
claims of, or amounts payable to, one series or investment company, as the case
may be, by applying property of any other series or investment company.
IN WITNESS WHEREOF, the parties have executed this Lending Agreement as of
the date first above-written.
X.X. Xxxxxx Funds JPMORGAN CHASE BANK
X.X. Xxxxxx Institutional Funds
X.X. Xxxxxx Series Trust
Mutual Fund Group
Xxxxxxx Mutual Fund Group, Inc.
Mutual Fund Select Group
Mutual Fund Investment Trust
(on behalf of each of the respective
funds listed on Exhibit A to which
the above entities relate)
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxx
--------------------- -------------------
Name: Xxxxxxx Xxxxxxxx Name: XXXX XXXXXXX
Title: Vice President & Assistant Treasurer Title: VICE PRESIDENT
Date: 10/15/02 Date: 10/18/02
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EXHIBIT A
X.X. XXXXXX FUNDS
JPMorgan U.S. Small Company Opportunities Fund (1)
X.X. XXXXXX INSTITUTIONAL FUNDS
JPMorgan Xxxxxxx Emerging Markets Equity Fund(1)
JPMorgan Xxxxxxx International Value Fund(1)
JPMorgan Xxxxxxx International Opportunities Fund(1)
JPMorgan U.S. Equity Fund(1)
JPMorgan U.S. Small Company Fund(1)
JPMorgan Diversified Fund(1)
JPMorgan Disciplined Equity Fund(1)
X.X. XXXXXX SERIES TRUST
JPMorgan Global 50 Fund(1)
JPMorgan Global Healthcare Fund(1)
JPMorgan Market Neutral Fund(1)
JPMorgan Disciplined Equity Value Fund(1)
X.X. XXXXXX MUTUAL FUND GROUP
JPMorgan Xxxxxxx Asia Equity Fund(1)
JPMorgan Xxxxxxx European Fund(2)
JPMorgan Xxxxxxx Japan Fund(2)
JPMorgan Capital Growth Fund(2)
JPMorgan Growth & Income Fund(2)(3)
JPMorgan Dynamic Small Cap Fund(2)
JPMorgan Small Cap Equity Fund(2)
JPMorgan Select Growth and Income Fund(2)(3)
X.X. XXXXXX XXXXXXX MUTUAL FUND GROUP, INC.
JPMorgan Mid Cap Value Fund(4)
JPMorgan Small Cap Growth Fund(4)
X.X. XXXXXX MUTUAL FUND SELECT GROUP
JPMorgan Xxxxxxx International Equity Fund(2)
JPMorgan Mid Cap Equity Fund(2)
JPMorgan Trust Small Cap Equity Fund(2)
X.X. XXXXXX MUTUAL FUND INVESTMENT TRUST
JPMorgan Equity Income Fund (2)
JPMorgan Mid Cap Growth Fund (2)
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(1) X.X. Xxxxxx Investment Management Inc. is the Fund's investment adviser.
(2) X.X. Xxxxxx Xxxxxxx Asset Management (USA) Inc. is the Fund's investment
adviser
(3) Part of Growth & Income Portfolio
(4) Xxxxxx Xxxxxxx Inc. is the Fund's investment adviser
