Contract
SECURITIES LENDING AGENCY AGREEMENT (the “Agreement”) dated as of October 20, 2008 between
each investment company and series thereof listed on Appendix A (“Lender”), and The Xxxxxxx
Xxxxx Trust Company, doing business as Xxxxxxx Sachs Agency Lending (“GSAL”).
WHEREAS, Lender and each custodian to the Lender listed on Appendix B (“Custodian”)
have entered into a Custody Agreement pursuant to which Custodian has assumed certain
responsibilities with respect to securities and other property held for the benefit of Lender in a
custody account (the “Custody Account”);
WHEREAS, Lender wishes to retain the services of GSAL to act as its agent in lending
securities from time to time held in the Custody Account to certain borrowers, on the terms and
conditions hereinafter set forth; and
WHEREAS, GSAL is willing to act as agent for Lender in lending such securities owned by Lender
to certain borrowers, on the terms and conditions hereinafter set forth including, but not limited
to, liaising with Custodian with respect to the administration of such lending activity on Lender’s
behalf and Lender has provided notification to Custodian to such effect.
NOW, THEREFORE, in consideration of the premises and agreements contained herein, the parties
hereto, intending to be bound, hereby agree as follows:
1. With respect to those securities (“Available Securities”) identified in Schedule 1
hereto which are held in the Custody Account (and until Lender notifies GSAL otherwise), Lender
hereby appoints and authorizes GSAL, as its agent on a disclosed basis, to lend such securities,
upon such terms and conditions and at such time or times, as GSAL, in its discretion, shall
determine, provided that all lending of securities and other activities expressly set forth herein
or contemplated hereby is consistent with Lender’s investment restrictions specified in Schedule 1
and the other restrictions, rules and/or requirements specified in Schedule 1, and GSAL hereby
accepts such appointment. To facilitate performance of its lending agency activities (as more
fully described below), GSAL may, provided that GSAL shall remain responsible for the actions of
sub-agents the same as if it had taken such actions directly itself as provided herein: (i) in its
discretion and with the prior written permission of Lender, from time to time appoint one or more
non-affiliated persons to act as its sub-agent hereunder and under any securities loan agreement
(“SLA”) entered into with respect to the loan of securities held in the Custody Account and
(ii) with the prompt notice to Lender, appoint one or more of its affiliates to act as sub-agent(s)
with respect to the
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performance of operational and administrative back office supporting functions, including without
limitation the performance of monitoring and processing asset servicing events and performing
credit analyses; provided, however that GSAL shall not be liable for Lender’s losses resulting from
the acts or omissions of any non-affiliated sub-agents appointed by GSAL and approved of by Lender
except to the extent such losses result from GSAL’s negligence, bad faith, fraud or willful
misconduct in appointing such non-affiliated sub-agents or monitoring the performance of such
sub-agents (it being understood that GSAL shall not be considered to have acted with negligence,
bad faith, fraud or willful misconduct in appointing any of the external price vendors listed on
Schedule 2). In the event of any act or omission on the part of a non-affiliate sub-agent which
causes Lender to suffer a loss and which Lender believes in good faith results from the negligence,
bad faith, fraud or willful misconduct of such sub-agent, GSAL shall assign to Lender any rights it
may have in respect of such act or omission and the rights of Lender hereunder shall apply with
respect to each such non-affiliated sub-agent as if such sub-agent were a party to this Agreement,
provided that no such assignment shall occur in the event it would not be permissible under
applicable law. In the event that Lender obtains outside legal advice that such assignment would
be ineffective to enable Lender to pursue its claim, then GSAL shall in good faith claim and pursue
at Lender’s reasonable expense damages or compensation from the sub-agent on Lender’s behalf.
Notwithstanding the foregoing, GSAL shall not be required to pursue any claim hereunder to the
extent it determines in good faith that Lender’s claim does not have a reasonable chance of
surviving a motion to dismiss or is contrary to applicable law. GSAL shall provide Lender with a
list of the affiliated sub-agents appointed by GSAL with respect to the performance of operational
and administrative functions as of the date of this Agreement. GSAL may also use (i) one or more
external price vendors listed on Schedule 2 hereto, and without the permission of Lender (ii)
systems for its operations that are under license from third party vendors, provided that with
respect to (i) and (ii), GSAL shall be responsible for the actions of such sub-agents to the extent
described earlier in this paragraph. GSAL shall in accordance with the provisions herein promptly
notify Lender in the event GSAL becomes aware of any act or omission by a sub-agent that results in
a materially adverse effect with respect to the Lender or the securities lent hereunder. GSAL
shall have the right, in its discretion, to terminate any appointment of a sub-agent or to modify
the terms of any appointment of an affiliated sub-agent provided that any such termination or
modification shall be accompanied by a prompt notice to Lender. GSAL shall immediately notify
Lender if any act or omission of any sub-agent constitutes a breach of this Agreement.
In case of any difference or inconsistency between the terms in this Agreement and the terms
in the SLA, the terms of this Agreement shall control.
2. During the term of any securities loan, GSAL shall permit the loaned securities to be
transferred into the name of and voted (where applicable) by the borrower or others, except that in
order for the Lender to exercise its voting rights with respect to a matter affecting securities on
loan, Lender may instruct GSAL to recall a securities loan and immediately thereafter GSAL shall
issue a recall of such securities
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loan to the borrower intended to enable Lender to vote securities that are requested by Lender.
Lender shall have the right at any time prior to the close of business on any Business Day, upon
demand and without condition, to recall any lent securities, and borrower shall be obligated to
return equivalent securities to Lender no later than the earlier to occur of (i) the number of days
in the standard settlement cycle in the principal market in which such loaned securities trade and
(ii) five Business Days thereafter, subject to the provisions in the SLA regarding the timing of
the borrower’s obligation to return equivalent securities. For purposes of this paragraph,
“Business Day” shall have the meaning ascribed to such term in the applicable SLA.
For each loan of securities, the borrower shall pledge cash (including U.S. dollar and
non-U.S. dollar currency) as collateral that constitutes in no event less than 102% of the value of
lent securities which are United States equity and corporate securities, United States government
and agency securities or foreign government and agency securities and in no event less than 105% of
the value of lent securities which are foreign equity and corporate securities
(“Collateral”). Collateral shall be security for borrower’s obligations in respect of such
loan under the relevant SLA (including without limitation borrower’s obligations to return the
securities and manufacture cash and non-cash distributions on the loaned securities) and is
intended to be received, held and administered for the benefit of Lender by Custodian in the
Custody Account, except as otherwise provided herein. Pursuant to each SLA entered into with
respect to the loan of securities held in the Custody Account, the borrower shall assign to and
grant Lender a continuing first security interest in, and a lien upon, the Collateral. GSAL is
authorized in its discretion to terminate, on Lender’s behalf, any securities loan entered into
with a borrower, subject to the conditions of the relevant SLA. GSAL shall provide a daily report
indicating loans that have been recalled but for which equivalent securities to the lent securities
have not yet been returned by a borrower. Lender may itself instruct GSAL to terminate any loan on
any date subject to the conditions of the relevant SLA. GSAL agrees to comply with any such
instruction.
3. Without intending to limit the discretion granted by Lender to GSAL in paragraph 1 hereof,
GSAL may lend securities from the Custody Account, as agent, to any one or more of the institutions
(each, an “Approved Borrower”) listed on Schedule 3 hereto, and Lender hereby specifically
approves such list of institutions. Lender understands and agrees that Schedule 3 may be amended by
GSAL from time to time to add or delete borrowers and that GSAL will notify Lender of each such
proposed change. With respect to a GSAL-initiated deletion of a borrower, such change shall be
effective immediately upon notification to Lender to such effect. With respect to a proposed
additional borrower, unless Lender notifies GSAL of Lender’s disapproval of any such additional
borrower(s), within three business days of the receipt by the Lender of written notice from GSAL of
the proposed additional borrower(s), Lender agrees that Schedule 3 shall be deemed amended to add
the name(s) of such borrower(s), provided that throughout the term of this Agreement Lender
reserves the right to delete a borrower listed on Schedule 3, as amended from time to time. With
respect to a Lender-initiated deletion of a borrower, such change shall be effective promptly but
in no event later than one business day after Lender’s notification to GSAL of such deletion.
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4. Notwithstanding anything herein to the contrary, during such time that Lender is a plan or
other entity subject to the requirements of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), (any such plan or other entity referred to herein as an “ERISA Plan
Lender”), the provisions of Annex I to this Agreement shall become effective (and shall be deemed
incorporated by reference in this Agreement as if fully set forth herein) and any provision of
Annex I or of ERISA governing the lending of securities of an ERISA Plan Lender under this
Agreement shall override any inconsistent provisions otherwise contained in this Agreement. Lender
represents that at the time of this Agreement (check appropriate item):
o it is an ERISA Plan Lender, or
þ it is not an ERISA Plan Lender.
Lender shall notify GSAL in writing if at any time during the term of this Agreement its status
changes from that specified above, and, until such notice is received, GSAL shall be entitled to
rely on the status of Lender represented to it as aforesaid.
5. Lender fully understands and agrees that GSAL intends to execute or cause to be executed an
SLA (in substantially the form of Schedule 4) as Lender’s agent on a disclosed basis with each
borrower, and Lender hereby approves such form of SLA. Lender understands and agrees that GSAL may
make changes that are not material, without notice to Lender, the terms of any SLA with any
borrower as GSAL deems necessary or appropriate, in its discretion, for the effectuation of any
transaction contemplated hereby or thereby. Lender also agrees to promptly furnish to GSAL its
financial statements to enable GSAL to comply with any request therefor by a borrower in connection
with any SLA.
6. GSAL is authorized by Lender to negotiate on Lender’s behalf with each borrower all terms
of a securities loan, including the amounts of rebates (interest earned on pledged Collateral) or
fees to be received or paid pursuant to the applicable SLA, subject to the terms and conditions of
this Agreement. GSAL shall prepare a transactional confirmation in respect of each loan effected
pursuant to an SLA, setting forth the securities borrowed and the material terms of the loan, and
shall transmit the same to the borrower in accordance with such SLA. Lender understands and agrees
that the identity of Lender will be disclosed by GSAL to a borrower under a securities loan at any
time upon request of the borrower. The basis of GSAL’s compensation for its activities hereunder
and in respect of any securities loan is set forth in Schedule 5 hereto.
7. GSAL is authorized to notify Lender or Custodian whenever a securities loan has been agreed
to on behalf of Lender with an Approved Borrower. In respect of the commencement of any loan, GSAL
shall instruct the borrower to transfer to the Custody Account, or as otherwise specified herein,
the required collateral and
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shall advise Lender or Custodian to receive the same. GSAL shall also advise Lender or Custodian
which securities in the Custody Account have been lent and the transfer instructions supplied by
the borrower with respect thereto. Upon termination of the loan, GSAL shall instruct the borrower
to return the loaned securities to the Custody Account and shall advise Lender or Custodian to
receive the same. GSAL shall also advise Lender or Custodian as to Collateral due the borrower and
the borrower’s transfer instructions with respect thereto.
8. In respect of loans of securities entered into on Lender’s behalf, GSAL will value on a
daily basis, in accordance with the applicable SLA, the loaned securities and all pledged
Collateral and, where applicable, GSAL shall, in accordance with the provisions of the applicable
SLA, request the borrower to deliver sufficient additional collateral to the Custody Account, or as
otherwise specified herein to satisfy the applicable margin requirement and shall advise the Lender
or Custodian to receive the same; provided that, notwithstanding any provision to the contrary, in
the event that Lender reasonably disputes the valuation of any loaned security which lacks a
closing price as of the trading day (for the principal market in which such loaned security trades)
immediately preceding the day of valuation as determined by an independent pricing source, GSAL
shall present to the relevant borrower that the Market Value (as defined in the applicable SLA) of
such loaned security is the valuation and pricing with respect to such loaned security that is the
result of commercially reasonable valuation calculations and methodologies used by the valuation
committee of the Lender to resolve such dispute; provided further that Lender shall disclose
methodologies used to calculate such price and valuation upon reasonable request by GSAL or the
applicable borrower. If, as a result of marking to market, Collateral is required to be returned
to the borrower under the SLA, GSAL may advise Lender or Custodian regarding the amount of
Collateral requested by borrower to be returned and the manner, timing and means by which such
return was requested by borrower to be effected. Until contrary instructions are furnished to GSAL
by Lender, GSAL is directed by Lender (upon Lender’s own initiative and as determined in Lender’s
sole discretion without input from GSAL) to effect the investment of cash collateral on behalf of
Lender as specified in Schedule 6 hereto, as may be amended from time to time.
9. (a) Lender shall have the right, pursuant to the SLA, to invest Collateral received in
respect of any loan, subject to an obligation, upon the termination of the loan, to return to the
borrower the amount of cash initially pledged (as adjusted for any interim marks-to-market).
(b) Lender acknowledges and agrees that any income or gains and losses from investing and
reinvesting Collateral delivered by a borrower to Custodian or Lender pursuant to an SLA shall be
at Lender’s risk and for Lender’s account, and Lender agrees that to the extent any such losses
reduce the amount of cash below the amount required to be returned to the borrower upon the
termination of any loan made on Lender’s behalf (after giving effect to any Cash Collateral Fee (as
defined in the applicable SLA) due the borrower), Lender will, on demand of GSAL, promptly pay to
GSAL (for transmission to such borrower) an equivalent amount in cash in any currency
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specified by GSAL. All proceeds and earnings derived from such investment shall be deposited in
the Custody Account unless otherwise directed by Lender.
10. GSAL shall advise Custodian, on the due date therefor, of any Cash Collateral Fees or
amounts that are due to a borrower, and on behalf of Lender, to effect prompt payment thereof to
the borrower by appropriate debit to the Custody Account, or as otherwise specified herein, and
transfer to the borrower. With respect to fees and amounts (including in lieu of distributions on
loaned securities) due to Lender from a borrower, GSAL shall advise Custodian of the fees and
amounts to be received on the due date therefor in the Custody Account pursuant to Lender’s
direction. Lender acknowledges and agrees that, in respect of any loan entered into on Lender’s
behalf, GSAL may at its option advance its own funds to pay any such Cash Collateral Fee or other
fees or amounts due the borrower. If GSAL makes any such advance, or if Lender does not pay to
GSAL when due the applicable securities lending fee, Lender will be liable to GSAL until payment in
full of such liability, at a rate per annum equal to 1/2% above the highest broker call rate of
interest as published in the Wall Street Journal (Eastern edition) from day to day. Lender
acknowledges and agrees that the obligation of Lender to pay to the borrower the Cash Collateral
Fee in respect of any loan of securities is independent of the results of investment of the related
Collateral.
11. In the event of a default by a borrower with respect to any loan entered into pursuant to
an SLA, GSAL shall, and is hereby authorized by Lender to, exercise on Lender’s behalf, with prompt
notification to Lender, any and all remedies provided under this section 11 as are available under
applicable law.
(a) If a borrower fails, pursuant to the SLA with GSAL, to return loaned securities with
respect to a loan when due for any reason (“Default Event”), then GSAL shall indemnify the Lender
as set forth below.
GSAL shall, at its expense, Buy-In for the Lender’s account, for settlement in the normal
course, replacement securities of the same issue, type, class and series as that of the loaned
securities; provided however, that if the value of the collateral (“Collateral Value”, as defined
below) is less than the purchase cost of replacement securities (inclusive of transaction costs),
GSAL shall be responsible for satisfying such shortfall only to the extent that such shortfall is
not due to any diminution in the Collateral Value due to reinvestment risk (which is borne by
Lender pursuant to Section 9 of this Agreement); and provided, further, however, that GSAL shall
not be obligated to initiate such a Buy-In in the event Lender terminated a loan of the securities
for the purpose of effecting settlement of a sale by it of such securities. If GSAL is otherwise
compelled to initiate a Buy-In but GSAL and Lender mutually determine that a Buy-In is commercially
impracticable, GSAL shall in lieu of effecting a Buy-In, but only upon Lender’s request, pay to
Lender an amount (in cash in U.S. dollars) equal to the market value of the Loaned Securities on
the day of the deemed Buy-In. GSAL shall indemnify Lender for overdraft charges at the Custodian
during the Default Event Period. For purposes of this Section 11(a), “Default Event Period” shall
mean the period from the date of the Default Event until (i) the settlement date of the
Buy-In, (ii)
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the date payment is received by the Lender (if Lender receives cash in lieu of the
Buy-In at its request or otherwise), or (iii) the date of the return of the loaned securities,
whichever is applicable. In the event the Lender fails to meet its sale settlement obligations
with respect to loaned securities as a result of a Default Event and the applicable exchange or
purchasing broker performs a “buy-in” to prevent a “market” short position, and the Lender provides
notification of such sale to GSAL by the close of business on trade date in the principal market
for the affected security, GSAL shall be liable for direct losses, expenses (including transaction
costs) and liabilities incurred by the Lender in connection with such buy-in except to the extent
of the negligence of the Custodian.
(b) Collateral Value for purposes of this Section 11 shall be the value of the Collateral
pledged by a borrower with respect to a loan.
(c) If, on the date of the Default Event, GSAL is not in possession or control of the
Collateral allocated to the defaulted Loan, Lender shall promptly cause such Collateral to be
transferred to GSAL for application against the cost of any Buy-In.
(d) In the event that GSAL is required to perform or make any payment under this Section, the
Lender agrees that, to the extent of such performance or payment, GSAL shall be subrogated to, and
the Lender shall assign, and be deemed to have assigned, to GSAL all of Lender’s rights in, to and
against the Borrower in respect of the related loan, any Collateral pledged by the Borrower in
respect of such loan . 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 GSAL is subrogated as
provided herein, Lender shall promptly remit or pay to GSAL the same (or, where applicable, its
United States dollar equivalent).
12. GSAL (i) will make available to Lender a daily statement of activity setting forth
information relating to loaned securities, marks-to-market and terminations and (ii) will make
available to Lender on or about the 7th (seventh) Business Day of each month, a statement
indicating for the preceding calendar month the securities lent from the Custody Account, the value
of such securities, the identity of the borrowers, the nature and amount of Collateral received as
security for the loaned securities, the income received (or loss incurred) from such invested
Collateral (as supplied to it by Lender, Custodian or the GSAL Trust), the amounts of any fees or
payments paid with respect to each loan, the names of entities used to obtain valuations and such
other information as GSAL and Lender may agree to from time to time. For purposes hereof,
“Business Day” means any day on which GSAL is open for business in Boston, Massachusetts.
GSAL (unless otherwise instructed by Lender) shall instruct the borrower to remit directly to the
Custody Account all amounts and fees due Lender pursuant to any loan of securities.
13. The parties acknowledge that:
THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970 MAY NOT PROTECT THE LENDER
WITH RESPECT TO THE SECURITIES LOAN TRANSACTION AND THAT, THEREFORE, THE
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COLLATERAL DELIVERED BY THE BROKER OR DEALER, AS BORROWER, TO THE LENDER MAY CONSTITUTE THE ONLY
SOURCE OF SATISFACTION OF THE BROKER’S OR DEALER’S OBLIGATION IN THE EVENT THE BROKER OR DEALER
FAILS TO RETURN THE SECURITIES.
14. Lender acknowledges that, under the applicable SLA, the borrowers will not be required to
return loaned securities immediately upon receipt of notice from GSAL terminating the applicable
loan, but instead will be required to return such loaned securities within such period of time
following such notice as is specified in the applicable SLA. Upon receiving a notice from
Custodian, Lender or Lender’s investment manager that Available Securities which have been lent to
a borrower should no longer be considered Available Securities (whether because of the sale of such
securities or otherwise), GSAL shall use its best efforts to promptly notify the borrower, which
shall be within one business day upon receiving the notice from Custodian, that has borrowed such
securities that the loan of such securities is terminated and that such securities are to be
returned within the time specified by the applicable SLA.
15. (a) With respect to 15(b) and (c), Lender acknowledges that the tax treatment of such
payments may differ from the tax treatment of interest or dividend. Lender also acknowledges that
GSAL or Custodian may be required to withhold tax on amounts payable to or by Lender pursuant to a
securities loan and GSAL may at any time claim from Lender any shortfall in the amount GSAL so
withheld.
(b) Lender shall be entitled to receive all distributions (made on, or in respect of the
Available Securities that are lent to a borrower as contemplated hereby), which are not otherwise
received by Lender, to the full extent it would be so entitled if the Available Securities (i.e.,
those which are lent) had not been lent to the borrower, including, but not limited to cash and all
other property, dividends, securities received as dividends, interest payments and rights to
purchase securities and all other distributions, if any.
(c) Any cash distribution made on or in respect of the Available Securities that are lent,
which Lender is entitled to receive under Section 15(b), shall be paid by the transfer of cash to
Lender by the borrower and GSAL shall arrange for such payment on or as soon as is practicable
after the date such distribution is paid, in an amount equal to such distribution. Non-cash
distributions received by the borrower shall be added to the Available Securities that are lent to
the borrower on the date of distribution and shall be considered such for all purposes, except that
if the loan has terminated, GSAL shall arrange for the immediate transfer of same to the Lender.
16. GSAL acknowledges that the Lender may be required to seek information from GSAL in order
to comply with Rule 38a-1 of the Investment Company Act of 1940, as amended. GSAL shall use its
best efforts to respond to such requests for information from the chief compliance officer, subject
to policies and procedures of GSAL designed to protect (a) confidential information relating to
other customers of GSAL, and (b) documents and information that are considered proprietary to GSAL
and not for external distribution as determined by GSAL’s legal or compliance advisers.
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Accordingly and subject to the foregoing, throughout the term of this Agreement, GSAL agrees to
provide the Lender with any certifications, information and access to personnel and resources that
the Lender may reasonably request to enable the Lender to comply with Rule 38a-1 under the
Investment Company Act of 1940, as amended.
Subject to the requirements of applicable law, GSAL shall not be liable with respect to any
losses incurred by Lender in connection with this securities lending program or under any provision
hereof, except to the extent that such losses result from the negligence, bad faith or willful
misconduct of GSAL in the performance of its duties under this Agreement.
17. The responsibilities of GSAL and Custodian with respect to negotiating and administering
each securities loan shall be set forth in, and governed by, the written operational procedures
established from time to time by GSAL and Custodian and are incorporated by reference herein. GSAL
shall have no liability to Lender or any borrower arising from or based upon any failure or delay
by Custodian, to perform Custodian’s obligations to Lender as Custodian under any loan of
securities (including complying with any instructions, orders or directions with respect to receipt
and delivery of securities, Collateral and fees, and investment and liquidation/redemption of
investments of Collateral), except to the extent that such losses result from the negligence, bad
faith or willful misconduct of GSAL in the performance of its duties under this Agreement. Fees
and expenses of Custodian shall be the sole responsibility of Lender, except as otherwise provided
herein.
18. Each party represents and warrants to each other that (i) it has due authority to enter
into and perform this Agreement and any transactions contemplated thereby; (ii) the execution and
performance of this Agreement and any transaction contemplated thereby has been duly authorized by
all necessary action, corporate or otherwise, and does not and will not violate any law,
regulation, charter, by-law or other instrument, restriction or provision applicable to it; and
(iii) this Agreement constitutes such party’s legal, valid and binding obligation enforceable in
accordance with its terms. In addition, Lender represents that, as to any securities lent at any
time and from time to time from the Custody Account, Lender shall be the owner thereof with clear
title thereto and no lien, charge or encumbrance upon such securities shall exist except as
otherwise created hereunder.
19. Lender grants GSAL the authority set forth in this Agreement notwithstanding its awareness
that GSAL, in its individual capacity or acting in a fiduciary capacity for other accounts, may
have transactions or existing relationships with the same institutions to which loans of securities
may be made hereunder, which transactions or relationships may give rise to potential conflict of
interest situations.
20. GSAL shall have no duties or responsibilities in respect of securities lending
transactions except those expressly set forth in this Agreement. GSAL shall not be responsible or
liable for any failure or delay in the performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by
circumstances
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beyond its control, including without limitation, acts of God; earthquakes; fires;
floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or
malfunctions of utilities, transportation, computer (hardware or software) or communications
service; accidents; labor disputes; acts of civil or military authority; governmental actions; or
inability to obtain labor, material, equipment or transportation; provided, however, that in the
event of such circumstances, GSAL shall seek to mitigate any such failure or delay to the extent
practicable and without undue risk or expense to GSAL. GSAL shall be entitled to conclusively rely
upon any certification, notice or other communication (including by telephone, telex, facsimile,
email, telegram or cable) reasonably believed by it to be genuine and correct and to have been
signed or sent by or on behalf of an approved person (“Approved Person”) of Lender. Set
forth in Schedule 7 hereto is a list of Approved Persons, which list may be amended by Lender from
time to time upon notice to GSAL.
21. Lender hereby authorizes and empowers GSAL to execute in Lender’s name and on its behalf
and at its risk each SLA with an Approved Borrower, Notices of buy-in provided to a Borrower in
connection with the default of the Borrower, and other documents reasonably necessary in accordance
with the intentions of Lender to facilitate GSAL’s day to day role as agent on behalf of Lender
with respect to loans hereunder provided that notice of such execution is provided to Lender. It is
understood and agreed that GSAL is authorized to supply any information regarding Lender and any
loan of securities effected pursuant hereto which is required by applicable law.
22. This Agreement may be terminated by any party on sixty-days’ written notice to the other
party to such effect. The only effects of any such termination of this Agreement will be that (a)
following such termination notice, no further loans shall be made hereunder by GSAL on behalf of
Lender unless mutually agreed by both parties; (b) GSAL shall, promptly after termination of this
Agreement, terminate any and all outstanding loans, provided that Lender may instruct GSAL to
terminate any loan on any date as provided in Section 2 of this Agreement; and (c) GSAL shall
cooperate with the Lender in any transition of the security lending program of the Lender. The
provisions hereof shall continue in full force and effect in all other respects until all loans
have been terminated and all obligations satisfied as herein provided.
23. All notices, demands and other communications hereunder shall be in writing and delivered
or transmitted (as the case may be) by registered mail, facsimile, telex or courier, or be effected
by telephone promptly confirmed in writing and delivered or transmitted as aforesaid, to the
intended recipient in accordance with Schedule 8 hereto. Notices shall be effective upon receipt.
24. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York. This Agreement shall not be modified or amended except by an instrument in writing
signed by Lender and GSAL. This Agreement supersedes any other agreement between the Lender and
GSAL concerning loans of securities held in the Custody Account. This Agreement shall not be
assigned by either party without the prior written consent of the other party.
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25. Any confidential information about Lender, including but not limited to the identification
and amount of securities positions held by Lender, disclosed to or obtained by GSAL or its
sub-agents hereunder as well as the details of transactions hereunder, shall be kept confidential
by GSAL except to the extent reasonably necessary for GSAL to perform its role as Lender’s agent
(or for GSAL’s sub-agents to perform their roles on behalf of Agent) hereunder and except as may be
necessary to comply with applicable law, regulation or to cooperate with any reasonable request
made by an entity with regulatory jurisdiction over GSAL or to obtain confidential legal, tax or
accounting advice and, notwithstanding anything contrary in this Agreement, GSAL agrees to prohibit
its employees from trading on the basis of any such confidential information and GSAL’s obligations
in this section 25 shall continue following any expiration or termination of this Agreement.
26. A copy of the Agreement and Declaration of Trust of the Lender is on file with the
Secretary of State of The Commonwealth of Massachusetts. The parties hereto acknowledge and agree
that, except in the situation where Lender or one of its trustees, officers or shareholders has
committed fraud: (i) recourse with respect to this Agreement and instruments referenced and
contemplated hereby is limited to the assets and property of the Lender; and (ii) the obligations
of, or arising under, this Agreement are not binding upon any of the trustees, officers or
shareholders of the Lender individually, but are binding only upon the assets and property of the
Lender.
EACH OF THE FUNDS LISTED ON APPENDIX A HERETO |
||||
By | /s/ Xxxxxxx X. Xxxxx | |||
Name: | Xxxxxxx X. Xxxxx | |||
Title: | Chief Financial Officer | |||
THE XXXXXXX XXXXX TRUST COMPANY |
||||
By | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx Xxxxxx | |||
Title: | Vice President |
V/agreemnt/standard/agency with indemnification
APPENDIX A
INVESTMENT COMPANIES AND SERIES THEREOF (“LENDER”)
Xxxx Xxxxxxx Trust & Xxxx Xxxxxxx Funds II
Xxxx Xxxxxxx Trust
JHT 500 Index Trust
JHT 500 Index Trust B
JHT Active Bond Trust
JHT All Cap Core Trust
JHT All Cap Growth Trust
JHT All Cap Value Trust
JHT Alpha Opportunities Trust
JHT Blue Chip Growth Trust
JHT Bond Index Trust A
JHT Bond Index Trust B
JHT Capital Appreciation Trust
JHT Capital Appreciation Value Trust
JHT Classic Value Trust
JHT Core Allocation Plus Trust
JHT Core Bond Trust
JHT Core Equity Trust
JHT Disciplined Diversification Trust
JHT Emerging Growth Trust
JHT Emerging Markets Value Trust
JHT Emerging Small Company Trust
JHT Equity-Income Trust
JHT Financial Services Trust
JHT Floating Rate Income Trust
JHT Fundamental Value Trust
JHT Global Allocation Trust
JHT Global Bond Trust
JHT Global Real Estate Trust
JHT Global Trust
JHT Growth Equity Trust
JHT High Income Trust
JHT High Yield Trust
JHT Income and Value Trust
JHT Income Trust
JHT International Equity Index Trust A
JHT International Equity Index Trust B
JHT 500 Index Trust B
JHT Active Bond Trust
JHT All Cap Core Trust
JHT All Cap Growth Trust
JHT All Cap Value Trust
JHT Alpha Opportunities Trust
JHT Blue Chip Growth Trust
JHT Bond Index Trust A
JHT Bond Index Trust B
JHT Capital Appreciation Trust
JHT Capital Appreciation Value Trust
JHT Classic Value Trust
JHT Core Allocation Plus Trust
JHT Core Bond Trust
JHT Core Equity Trust
JHT Disciplined Diversification Trust
JHT Emerging Growth Trust
JHT Emerging Markets Value Trust
JHT Emerging Small Company Trust
JHT Equity-Income Trust
JHT Financial Services Trust
JHT Floating Rate Income Trust
JHT Fundamental Value Trust
JHT Global Allocation Trust
JHT Global Bond Trust
JHT Global Real Estate Trust
JHT Global Trust
JHT Growth Equity Trust
JHT High Income Trust
JHT High Yield Trust
JHT Income and Value Trust
JHT Income Trust
JHT International Equity Index Trust A
JHT International Equity Index Trust B
V/agreemnt/standard/agency with indemnification
13
JHT International Opportunities Trust
JHT International Small Cap Trust
JHT International Small Company Trust
JHT International Value Trust
JHT Investment Quality Bond Trust
JHT International Core Trust
JHT Large Cap Trust
JHT Large Cap Value Trust
JHT Managed Trust — GMO
JHT Mid Cap Index Trust
JHT Mid Cap Intersection Trust
JHT Mid Cap Stock Trust
JHT Mid Cap Value Equity Trust
JHT Mid Cap Value Trust
JHT Mid Value Trust
JHT Mutual Shares Trust
JHT Natural Resources Trust
JHT Optimized All Cap Trust
JHT Optimized Value Trust
JHT Overseas Equity
JHT Pacific Rim Trust
JHT Real Estate Equity Trust
JHT Real Estate Securities Trust
JHT Real Return Bond Trust
JHT Science and Technology Trust
JHT Small Cap Growth Trust
JHT Small Cap Index Trust
JHT Small Cap Intrinsic Value Trust
JHT Small Cap Opportunities Trust
JHT Small Cap Value Trust
JHT Small Company Growth Trust
JHT Small Company Trust
JHT Small Company Value Trust
JHT Smaller Company Growth Trust
JHT Spectrum Income Trust
JHT Strategic Bond Trust
JHT Total Return Trust
JHT Total Stock Market Index Trust
JHT U.S Core Trust
JHT U.S Large Cap Trust
JHT U.S. Government Securities Trust
JHT U.S. High Yield Bond Trust
JHT U.S. Multi Sector Trust
JHT International Small Cap Trust
JHT International Small Company Trust
JHT International Value Trust
JHT Investment Quality Bond Trust
JHT International Core Trust
JHT Large Cap Trust
JHT Large Cap Value Trust
JHT Managed Trust — GMO
JHT Mid Cap Index Trust
JHT Mid Cap Intersection Trust
JHT Mid Cap Stock Trust
JHT Mid Cap Value Equity Trust
JHT Mid Cap Value Trust
JHT Mid Value Trust
JHT Mutual Shares Trust
JHT Natural Resources Trust
JHT Optimized All Cap Trust
JHT Optimized Value Trust
JHT Overseas Equity
JHT Pacific Rim Trust
JHT Real Estate Equity Trust
JHT Real Estate Securities Trust
JHT Real Return Bond Trust
JHT Science and Technology Trust
JHT Small Cap Growth Trust
JHT Small Cap Index Trust
JHT Small Cap Intrinsic Value Trust
JHT Small Cap Opportunities Trust
JHT Small Cap Value Trust
JHT Small Company Growth Trust
JHT Small Company Trust
JHT Small Company Value Trust
JHT Smaller Company Growth Trust
JHT Spectrum Income Trust
JHT Strategic Bond Trust
JHT Total Return Trust
JHT Total Stock Market Index Trust
JHT U.S Core Trust
JHT U.S Large Cap Trust
JHT U.S. Government Securities Trust
JHT U.S. High Yield Bond Trust
JHT U.S. Multi Sector Trust
V/agreemnt/standard/agency with indemnification
14
JHT Utilities Trust
JHT Value & Restructuring Trust
JHT Value Trust
JHT Vista Trust
JHT Value & Restructuring Trust
JHT Value Trust
JHT Vista Trust
Xxxx Xxxxxxx Funds II
JHFII Active Bond Fund
JHFII All Cap Core Fund
JHFII All Cap Growth Fund
JHFII All Cap Value Fund
JHFII Alpha Opportunities Fund
JHFII Blue Chip Growth Fund
JHFII Capital Appreciation Fund
JHFII Core Bond Fund
JHFII Core Equity Fund
JHFII Emerging Growth Fund
JHFII Emerging Markets Value Fund
JHFII Emerging Small Company Fund
JHFII Equity-Income Fund
JHFII Floating Rate Income Fund
JHFII Fundamental Value Fund
JHFII Global Bond Fund
JHFII Global Real Estate Fund
JHFII High Income Fund
JHFII High Yield Fund
JHFII Index 500 Fund
JHFII International Equity Index Fund
JHFII International Opportunities Fund
JHFII International Small Cap Fund
JHFII International Small Company Fund
JHFII International Value Fund
JHFII Investment Quality Bond Fund
JHFII Large Cap Fund
JHFII Large Cap Value Fund
JHFII Mid Cap Index Fund
JHFII Mid Cap Intersection Fund
JHFII Mid Cap Stock Fund
JHFII Mid Cap Value Equity Fund
JHFII Mid Cap Value Fund
JHFII Natural Resources Fund
JHFII Optimized All Cap Fund
JHFII All Cap Core Fund
JHFII All Cap Growth Fund
JHFII All Cap Value Fund
JHFII Alpha Opportunities Fund
JHFII Blue Chip Growth Fund
JHFII Capital Appreciation Fund
JHFII Core Bond Fund
JHFII Core Equity Fund
JHFII Emerging Growth Fund
JHFII Emerging Markets Value Fund
JHFII Emerging Small Company Fund
JHFII Equity-Income Fund
JHFII Floating Rate Income Fund
JHFII Fundamental Value Fund
JHFII Global Bond Fund
JHFII Global Real Estate Fund
JHFII High Income Fund
JHFII High Yield Fund
JHFII Index 500 Fund
JHFII International Equity Index Fund
JHFII International Opportunities Fund
JHFII International Small Cap Fund
JHFII International Small Company Fund
JHFII International Value Fund
JHFII Investment Quality Bond Fund
JHFII Large Cap Fund
JHFII Large Cap Value Fund
JHFII Mid Cap Index Fund
JHFII Mid Cap Intersection Fund
JHFII Mid Cap Stock Fund
JHFII Mid Cap Value Equity Fund
JHFII Mid Cap Value Fund
JHFII Natural Resources Fund
JHFII Optimized All Cap Fund
V/agreemnt/standard/agency with indemnification
15
JHFII Optimized Value Fund
JHFII Real Estate Equity Fund
JHFII Real Estate Securities Fund
JHFII Real Return Bond Fund
JHFII Small Cap Fund
JHFII Small Cap Growth Fund
JHFII Small Cap Index Fund
JHFII Small Cap Opportunities Fund
JHFII Small Company Fund
JHFII Small Company Growth Fund
JHFII Small Company Value Fund
JHFII Smaller Company Growth Fund
JHFII Spectrum Income Fund
JHFII Strategic Bond Fund
JHFII Strategic Income Fund
JHFII Total Bond Market
JHFII Total Return Fund
JHFII U.S. Government Securities Fund
JHFII U.S. High Yield Bond Fund
JHFII U.S. Multi Sector Fund
JHFII Value & Restructuring Fund
JHFII Value Fund
JHFII Vista Fund
JHFII Real Estate Equity Fund
JHFII Real Estate Securities Fund
JHFII Real Return Bond Fund
JHFII Small Cap Fund
JHFII Small Cap Growth Fund
JHFII Small Cap Index Fund
JHFII Small Cap Opportunities Fund
JHFII Small Company Fund
JHFII Small Company Growth Fund
JHFII Small Company Value Fund
JHFII Smaller Company Growth Fund
JHFII Spectrum Income Fund
JHFII Strategic Bond Fund
JHFII Strategic Income Fund
JHFII Total Bond Market
JHFII Total Return Fund
JHFII U.S. Government Securities Fund
JHFII U.S. High Yield Bond Fund
JHFII U.S. Multi Sector Fund
JHFII Value & Restructuring Fund
JHFII Value Fund
JHFII Vista Fund
V/agreemnt/standard/agency with indemnification
16
APPENDIX B
CUSTODIANS TO LENDER
State Street Bank and Trust Company
V/agreemnt/standard/agency with indemnification
SCHEDULE 1
AVAILABLE SECURITIES
Securities held by Lender listed in Schedule A to this Agreement, except for securities
specifically excluded from the list of Available Securities (“Excluded Securities”), as such list
is revised or amended from time to time by Lender; provided that, at all times, the Available
Securities shall not exceed any limits on lending securities set forth in Lender’s investment
restrictions communicated to GSAL by Lender.
Excluded Securities as of the date of this Agreement are attached hereto.
V/agreemnt/standard/agency with indemnification
SCHEDULE 2
PRICE VENDORS
Primary — Interactive Data Corporation (“IDC”)
Secondary — Bloomberg
V/agreemnt/standard/agency with indemnification
SCHEDULE 3
LIST OF APPROVED BORROWERS AND SUB-AGENTS
BORROWERS
Abbey National Securities Inc.
ABN AMRO Incorporated
Banc of America Securities LLC
Barclays Capital Inc.
Bear, Xxxxxxx Securities Corp.
BNP Paribas Prime Brokerage, Inc.
BNP Paribas Securities Corp.
CIBC World Markets Corp.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Dresdner Kleinwort Xxxxxxxxxxx Securities LLC
Deutsche Bank Securities Inc.
Xxxxxxx, Sachs & Co.
ING Financial Markets LLC
Jefferies & Co.
XX Xxxxxx Xxxxx Bank
Macquarie Securities (USA)
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
MS Securities Services Inc.
National Financial Services LLC
Nomura Securities International, Inc.
UBS Securities LLC
ABN AMRO Incorporated
Banc of America Securities LLC
Barclays Capital Inc.
Bear, Xxxxxxx Securities Corp.
BNP Paribas Prime Brokerage, Inc.
BNP Paribas Securities Corp.
CIBC World Markets Corp.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Dresdner Kleinwort Xxxxxxxxxxx Securities LLC
Deutsche Bank Securities Inc.
Xxxxxxx, Sachs & Co.
ING Financial Markets LLC
Jefferies & Co.
XX Xxxxxx Xxxxx Bank
Macquarie Securities (USA)
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
MS Securities Services Inc.
National Financial Services LLC
Nomura Securities International, Inc.
UBS Securities LLC
SUB-AGENTS
Affiliated Sub-Agents:
Xxxxxxx, Sachs & Co
Xxxxxxx Xxxxx International
Xxxxxxx Sachs Asia LLC
Xxxxxxx, Sachs & Co
Xxxxxxx Xxxxx International
Xxxxxxx Sachs Asia LLC
Non-Affiliated Sub-Agents:
V/agreemnt/standard/agency with indemnification
SCHEDULE 4
FORM OF SECURITIES LOAN AGREEMENT
SECURITIES LOAN AGREEMENT dated by and between The Xxxxxxx Xxxxx Trust Company,
doing business as Boston Global Advisors, as agent for accounts (in such capacity and not in its
individual capacity, “Lender”), and (“Borrower”) setting
forth the terms and conditions under which Lender, on behalf of disclosed accounts (each, an
“Account” and, collectively, the “Accounts”) hereto lends to Borrower certain
securities against a pledge of collateral.
Lender and Borrower as the parties hereto agree as follows:
1. Loan of Securities.
1.1 Subject to the terms and conditions of this Agreement, either party hereto may orally
initiate a transaction whereby Lender may, from time to time, lend securities to Borrower. The
parties shall agree orally on the terms of each Loan, including the date of commencement of the
Loan, the issuer of the securities, the description and amount of securities to be lent and the
method and location of their delivery, the terms of compensation (including any applicable rebate),
the Margin Percentage, and the type(s) and amount of Collateral to be transferred by Borrower and
the method and location of their delivery, which terms may be amended during the Loan upon mutual
agreement of the parties.
1.2 (a) Each Loan shall be evidenced by a written confirmation (“Confirmation”) to
be prepared by Lender and delivered to Borrower at or about the commencement of the Loan. The
Confirmation shall set forth the material terms of the Loan. The Confirmation, together with this
Agreement, shall constitute conclusive evidence of the terms of any Loan agreed to by Borrower and
Lender, unless with respect to the Confirmation specific objection is made immediately after
receipt thereof by Borrower.
(b) If the parties heretofore agree, each Loan shall not be evidenced by the method specified
in 1.2(a) but rather by Lender’s records pertaining to such Loans maintained by Lender in the
regular course of its business and which shall represent conclusive evidence thereof except for
manifest error or willful misconduct. Lender shall send Borrower monthly statements of outstanding
Loans showing Loan activity which Borrower agrees to examine promptly and to advise Lender of any
errors or exceptions. Borrower’s failure to so advise Lender within twenty (20) days after
delivery of any such statement shall be deemed to be Borrower’s admission of the accuracy and
correctness of the contents thereof and Borrower shall be fully bound thereby. The foregoing shall
not be construed to prevent the parties hereto from mutually agreeing to amend or correct such
statements if there has been manifest error in the preparation of such statements.
(c) Irrespective of whether the parties agree to 1.2(a) or (b) above, on a monthly basis,
Lender shall furnish to Borrower a list of Accounts on whose behalf Lender is authorized to effect
loans as agent. In respect to any Loan, the identity of the Account acting as lender shall be
promptly furnished to Borrower upon its request and, in any event, shall be automatically furnished
to Borrower by Lender upon the occurrence of a Default involving such Account.
1.3 Notwithstanding the provisions in this Agreement with respect to when a Loan occurs, a
Loan hereunder shall not occur until the Loaned Securities and the Collateral therefore are
transferred.
1.4 WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER, IT IS UNDERSTOOD AND AGREED THAT
THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970 MAY NOT PROTECT LENDER WITH
RESPECT TO LOANED SECURITIES HEREUNDER AND THAT,
THEREFORE, THE COLLATERAL DELIVERED TO LENDER MAY CONSTITUTE THE ONLY SOURCE OF
V/agreemnt/standard/agency with indemnification
SATISFACTION OF
BORROWER’S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE LOANED SECURITIES.
2. Transfer of Loaned Securities. On the date for the commencement of the Loan,
Lender shall transfer the Loaned Securities to Borrower or its designee by either (a) delivering to
Borrower or its designee certificates representing the Loaned Securities together with duly
executed stock or bond transfer powers or certificates or other instruments of transfer or
assignment as are customary in the market in which such Loaned Securities are delivered; (b)
causing the Loaned Securities to be credited to Borrower’s account and debited to Lender’s account
at a clearing agency (“Clearing Organization”) at which Borrower and Lender maintain
accounts; or (c) any other method of transfer as agreed upon by the parties. Borrower agrees that
the completion of a delivery of Loaned Securities to it pursuant to a Loan shall constitute its
acceptance and receipt thereof and each such acceptance and receipt shall be deemed to constitute,
and shall constitute, a representation by Borrower that as of the date of such acceptance and
receipt (i) all representations and warranties by 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 Lender in writing, there has been no material adverse change
in the financial condition or business of Borrower or any direct or indirect parent since the date
of the most recent financial statements of Borrower provided to Lender hereunder and that, where
Borrower is a registered broker-dealer under the Securities Exchange Act of 1934, as amended
(“Exchange Act”), it is in compliance with Rule 15c3-1 thereunder.
3. Transfer of Collateral.
3.1 On or prior to the receipt of the Loaned Securities, Borrower shall transfer to Lender
Collateral in an amount (the “Required Value”) equal to the percentage (the “Margin
Percentage”) of the market value of the Loaned Securities as agreed to by the parties (which
shall not be less than 100% of the market value of the Loaned Securities) and shall be equal to the
percentage specified in Annex I hereto for particular types of loans.
3.2 All transfers of Collateral consisting of securities (including those made pursuant to
Section 8) shall be effected in the same manner as that provided in Section 2 for Loaned
Securities. All transfers of Collateral consisting of cash (including those made pursuant to
Section 8) shall be made by (a) wire transfer in immediately available, freely transferable funds
or (b) such other means as the parties hereto may agree. All transfers of Collateral consisting of
a letter of credit from Borrower to Lender shall be made by delivery to Lender of an irrevocable
performance letter of credit issued by a bank (not affiliated with Borrower) which is acceptable to
Lender and is insured by the Federal Deposit Insurance Corporation or is a foreign bank that has
filed an agreement with the Board of Governors of the Federal Reserve System on Form FR T-2 (or any
successor). Transfer of a letter of credit from Lender to Borrower shall be made by causing such
letter of credit to be returned or, through the written consent of Lender, causing the amount of
such letter of credit to be reduced to the amount required after such transfer.
3.3 The Collateral transferred by Borrower to Lender, as adjusted pursuant to Section 8,
shall be security for Borrower’s obligations in respect of such Loan and for any other obligations
of Borrower to Lender, and Borrower hereby pledges with, assigns to, and grants Lender a continuing
security interest in, and a lien upon, the Collateral (other than letters of credit), which shall
attach upon the delivery of the Collateral to Lender and which shall cease upon the redelivery of
the Collateral to Borrower.
3.4 Lender may use or invest the Collateral, if such consists of cash, at its own risk and
for its own benefit and shall be entitled to retain all income and profits therefrom and shall bear
all losses with respect thereto. If the Collateral consists of securities, Lender may pledge,
repledge, hypothecate, rehypothecate, lend, relend, sell or otherwise transfer the Collateral and
commingle, with other collateral or with its own assets, the Collateral. Borrower irrevocably
appoints Lender to be the attorney-in-fact of Borrower for the purpose of doing or performing any
act or thing (including, without limitation, executing any document) and to take all other steps as
may be required to enable Lender to effect transfer thereof to a third party or to otherwise
realize upon any Collateral which has been transferred to it pursuant to any Loan.
3.5 Except as provided in Section 12, Lender shall be obligated to return the Collateral to
Borrower upon tender to Lender of the Loaned Securities on termination of the Loan.
V/agreemnt/standard/agency with indemnification
3.6 If, on any Business Day corresponding to the commencement date for a Loan, Borrower
transfers the Collateral and Lender does not transfer the Loaned Securities, Borrower shall have
the absolute right to the immediate return of the Collateral; and if, on any such Business Day,
Lender transfers Loaned Securities and Borrower does not transfer Collateral hereunder, Lender
shall have the absolute right to the immediate return of the Loaned Securities.
3.7 Borrower may, upon reasonable notice to Lender and with Lender’s consent (which shall not
be unreasonably withheld), substitute Collateral for Collateral securing any Loan;
provided, however, that such substituted Collateral shall (a) consist only of cash,
securities or other property that the parties agreed would be acceptable Collateral prior to the
commencement of the Loan or Loans and (b) have a market value such that the aggregate market value
of such substituted Collateral shall equal or exceed the agreed upon Margin Percentage of the
market value of the Loaned Securities. Substituted Collateral shall constitute Collateral
hereunder for all purposes.
3.8 A transfer of Loaned Securities or Collateral may be effected on any day except (i) a day
on which the intended transferee is closed for business (which transferee may be a designee or
agent) or (ii) a day on which a Clearing Organization or wire transfer system is closed, if the
facilities of such Clearing Organization or wire transfer system are required to effect such
transfer.
3.9 (a) 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 Lender 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. Any
Collateral received by Lender with respect to a Loan in excess of the Required Value for such Loan
may be held by Lender as collateral security for all Loans made to Borrower at any time without
being allocated to any one Loan or, in the sole discretion of Lender, may be allocated at any time
to any Loan or Loans then outstanding hereunder. All allocations of Collateral shall be marked in
Lender’s books, which shall be conclusive evidence of such allocations.
(b) Lender 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.
(c) 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 Lender to apply such Collateral to the satisfaction of any obligation of
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 Lender hereunder without distinction of any kind and
upon any default hereunder may be applied to any such obligation or obligations as Lender in its
sole discretion may elect.
4. Fees for Loan.
4.1 Unless otherwise agreed, (a) Borrower agrees to pay Lender a loan fee (a “Loan
Fee”), computed daily on each Loan to the extent such Loan is secured by cash Collateral or
Collateral other than cash, based on the aggregate market value, on each day for which such Loan
Fee is being computed, of the Loaned Securities so secured, and (b) Lender agrees to pay Borrower a
fee or rebate (a “Cash Collateral Fee”) on Collateral consisting of cash, computed daily
based on the amount of cash held by Lender as Collateral. In the case of each of the Loan Fee and
the Cash Collateral Fee, the parties shall agree on the applicable rates therefor. Unless
otherwise agreed, Loan Fees shall accrue from and including the date on which the Loaned Securities
are transferred to Borrower to, but excluding, the date on which such Loaned Securities are
returned to Lender, and Cash Collateral Fees shall accrue from and including the date on which the
cash Collateral is transferred to Lender to, but excluding, the date on which such cash Collateral
is returned to Borrower.
4.2 Unless otherwise agreed, any Loan Fee or Cash Collateral Fee payable hereunder shall be
payable upon the earlier of (i) the seventh day of the month following the calendar month in which
such fee was incurred or
V/agreemnt/standard/agency with indemnification
(ii) the termination of all Loans hereunder (or, if a transfer of cash
under Section 3.8 may not be effected on such seventh
day or the day of such termination, as the case may be, the next day on which such a transfer may
be effected). Notwithstanding the foregoing, all Loan Fees shall be payable by Borrower
immediately in the event of a Default hereunder by Borrower and all Cash Collateral Fees shall be
payable immediately by Lender in the event of a Default hereunder by Lender.
5. Termination of the Loan.
5.1 Each Loan shall be terminable on demand, notwithstanding any expectation by any party
that a Loan would remain outstanding for a given time period. Borrower may terminate a loan at any
time by giving notice to Lender at least two Business Days prior to the termination date
established by such notice. On the termination date, Borrower shall transfer the Loaned Securities
to Lender in the same manner as initial transfer thereof from Lender to Borrower was effected
pursuant to Section 2, whereupon Lender shall transfer to Borrower the Collateral (as adjusted
pursuant to Section 8) by close of the day (which must be a day upon which Lender or its designee
or agent holding the Collateral is open for business in the jurisdiction in which such Collateral
is held) next succeeding the day of such receipt of the Loaned Securities.
5.2 Lender may terminate a Loan at any time by giving notice to Borrower prior to the close
of business on a Business Day. The termination date established by such notice shall be a Business
Day no later than the earlier to occur of (i) the standard settlement date for trades of the Loaned
Securities entered into on the date of such notice in the principal market therefor or (ii) five
Business Days from the giving of such notice. On the termination date, Borrower shall transfer to
Lender the Loaned Securities in the same manner as initial transfer thereof from Lender to Borrower
was effected pursuant to Section 2, whereupon Lender shall transfer to Borrower the Collateral (as
adjusted pursuant to Section 8) by close of the day (which must be a day upon which Lender or its
designee or agent holding the Collateral is open for business in the jurisdiction in which such
Collateral is held) next succeeding the day of such receipt of the Loaned Securities.
5.3 For purposes of this Agreement, any required return by Borrower of Loaned Securities
shall include securities identical in issuer, type, class and face amount to those actually
transferred by Lender to Borrower at the commencement of the related Loan, and any required return
by Lender of Collateral consisting of securities shall include securities identical in issuer,
type, class and face amount to those actually transferred by Borrower to Lender during the term of
the Loan.
6. Rights of Borrower in Respect of the Loaned Securities. Until a Loan is
terminated in accordance herewith, Borrower shall have all of the incidents of ownership of the
Loaned Securities, including the right to transfer the Loaned Securities to others. Lender hereby
waives the right to vote the Loaned Securities during the term of the Loan.
7. Dividends, Distributions, Etc.
7.1 Lender shall be entitled to receive all distributions made on or in respect of the Loaned
Securities the record dates for which occur during the term of the Loan (or the record date for
which occurs at a time following return of Loaned Securities upon termination of the Loan but prior
to re-registration thereof in the name of Lender or its designee in the normal course) and which
are not otherwise received by Lender, to the full extent it would be so entitled if the Loaned
Securities had not been lent to Borrower, including, but not limited to: (a) all property
(including cash dividends and all other distributions of cash or property), (b) stock dividends and
bonus issues, (c) securities received as a result of split ups of the Loaned Securities and
distributions in respect thereof, (d) interest payments, (e) all rights to purchase additional
securities, and (f) payments upon maturity or other redemption.
7.2 Any cash distributions made on or in respect of the Loaned Securities, which Lender is
entitled to receive pursuant to Section 7.1, shall be paid by the transfer of cash (denominated in
the currency of issue for the Loaned Securities, unless otherwise agreed) to Lender by Borrower on
the relevant payment date therefor, in an amount equal to such cash distribution (subject to the
provisions of Section 7.6), so long as Lender is not then in Default. Non-cash distributions
received by Borrower shall be added to the Loaned Securities (unless otherwise
V/agreemnt/standard/agency with indemnification
agreed by the
parties) and shall be considered such for all purposes, except that if the Loan has terminated,
Borrower shall forthwith deliver the same to Lender.
7.3 So long as Loaned Securities have not been returned to Lender and re-registered in the
name of Lender or its nominee, the parties agree that all rights arising in respect of conversions,
subdivisions, consolidations, redemptions, takeovers, preemptions, options or other rights shall be
for the benefit of Lender and shall be deemed to have been exercised for the benefit of Lender in
accordance with Lender’s prior instructions to Borrower. Borrower will use its best efforts to
seek instructions from Lender with respect to each of the foregoing at such time and in such manner
as to be able to act timely in accordance with such instructions. Borrower’s obligation to remit
distributions and to return Loaned Securities upon the termination of the Loan shall be made after
giving full effect to such instructions, irrespective of the extent of Borrower’s compliance with
such instructions.
7.4 Borrower shall be entitled to receive all cash distributions made on or in respect of
non-cash Collateral the record or payment dates for which occur during the term of the Loan and
which are not otherwise received by Borrower, to the full extent it would be so entitled if the
Collateral had not been delivered to Lender. Any distributions made on or in respect of such
Collateral which Borrower is entitled to receive hereunder shall be paid by the transfer of cash
(denominated in the currency of issue of the non-cash Collateral, unless otherwise agreed) by
Lender to Borrower, upon the date of Lender’s receipt, in an amount equal to such cash distribution
(subject to the provision of Section 7.6), so long as Borrower is not then in Default.
7.5 Lender shall not be required to take any action pursuant to Section 7.4 to the extent
that, as a result of such action, Borrower would become obligated to transfer Collateral to Lender
under Section 8.
7.6 (a) If (i) Borrower is required to make a payment (a “Borrower Payment”) with
respect to cash distributions on Loaned Securities under Sections 7.1 and 7.2 (“Securities
Distributions”) and (ii) Borrower, Borrower’s custodian or Lender (“Payor”) shall be
required by law to collect any withholding or other tax required to be deducted or withheld from
such Borrower Payment (“Tax”), then Borrower shall pay such additional amounts as may be
necessary in order that the net amount of the Borrower Payment received by Lender for the benefit
of the Affected Account, after payment of such Tax equals the net amount of the Securities
Distribution that would have been received by the Affected Account if such Securities Distribution
had been paid directly to it, provided, however, that any Borrower Payment shall also take into
account (and Borrower shall pay such additional amounts which reflect) the value to the Affected
Account (as notified, orally or in writing, by Lender to Borrower) of any tax refund, reclaim or
credit which such Affected Account would otherwise have been entitled to had it not lent the
securities to Borrower but instead had retained ownership thereof.
(b) If Lender is required to make a payment (“Lender Payment”) with respect to
distributions on Collateral under Section 7.4 (“Collateral Distributions”), Lender shall
pay to Borrower the net amount of the Collateral Distribution which Borrower would have received
had it not pledged the Collateral and such Collateral Distribution had instead been paid directly
by the applicable issuer(s) to Borrower.
(c) Each party shall supply to the other such tax information as may be requested by the
other to enable it to effect the Borrower Payment or Lender Payment in the required amount,
computed as per the immediately preceding paragraphs of this Section 7.
8. Xxxx to Market Margin.
8.1 In the event that on any Business Day the market value of Collateral subject to a Loan
shall be less than the Margin Percentage of the market value of the outstanding Loaned Securities
subject to such Loan (a “Margin Deficit”), Lender may, by notice (which may be oral) to
Borrower, demand that Borrower transfer to Lender additional Collateral so that the market value of
such additional Collateral, when added to the market value of all other Collateral subject to such
Loan, shall equal or exceed the agreed upon Margin Percentage of the market value of the Loaned
Securities. Unless otherwise agreed, such transfer (in the case of Collateral denominated in U.S.
dollars) is to be made in the United States in accordance with Lender’s instructions no later than
3:00 p.m. Boston time on the day of such demand if demand is made prior to 11:00 a.m. Boston time;
in the case of all other types of Collateral and in the case of Collateral denominated in U.S.
dollars where demand is made subsequent to
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11:00 a.m. Boston time, such transfer shall be completed
by the close of business of Lender (or its designee) in the location specified to Borrower for
transfer of additional Collateral on the next succeeding day on which Lender (or its
designee) is open for business thereat and not authorized or required to be closed. If the
additional Collateral to be posted is intended to be through adjustment of a letter of credit
heretofore delivered to Lender as Collateral, Borrower agrees to cause the issuing bank to amend
the original letter of credit by delivery of an amended letter of credit to Lender within the
applicable time period described in the preceding sentence.
8.2 In the event that on any Business Day the market value of all Collateral subject to a
Loan shall be greater than the Margin Percentage of the market value of the outstanding Loaned
Securities subject to such Loan (a “Margin Excess”), Borrower may, by notice (which may be
oral) to Lender, demand that Lender transfer to Borrower such amount of the Collateral selected by
Borrower so that the market value of the Collateral, after deduction of such amount, shall not
exceed the Margin Percentage of the market value of the Loaned Securities. Unless otherwise
agreed, such transfer (in the case of Collateral denominated in U.S. dollars) is to be made in the
United States in accordance with Borrower’s instructions no later than the close of business of
Lender on the day of such demand if demand is made prior to 11:00 a.m. Boston time; in the case of
all other types of Collateral and in the case of Collateral denominated in U.S. dollars where
demand is made subsequent to 11:00 a.m. Boston time, such transfer shall be completed by the close
of business of Borrower (or its designee) in the location specified to Lender for transfer of
excess Collateral on the next succeeding day on which Borrower (or its designee) is open for
business thereat and not authorized or required to be closed; provided, however, that if Lender is
requested to return a portion of any security constituting Collateral to Borrower pursuant to this
Agreement, Borrower shall, at the oral request of Lender, take all such action as is necessary to
cause such security to be reissued in such denominations as are required to permit such a partial
return and in such case Lender 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 such securities in such amounts as are, as nearly as practicable, equal to but not
greater than the required return. The return to Borrower of securities the market value of which
on the date 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 Lender’s obligation to make such return, notwithstanding the fact that at the date of
such return the market value of any such securities may have declined. Where Collateral is in the
form of a letter of credit, Lender agrees to promptly consent to a reduction in the undrawn balance
of the letter of credit sufficient to eliminate the Margin Excess, and if Borrower delivers to
Lender an amended letter of credit within the time period described in the second sentence of this
Section 8.2.
8.3 Borrower and Lender may agree, with respect to one or more Loans hereunder, to xxxx the
values to market pursuant to Sections 8.1 and 8.2 by valuing the Loaned Securities lent and the
Collateral given in respect thereof on an aggregate basis.
8.4 Borrower and Lender may agree, with respect to any or all Loans hereunder, that the
respective rights of Lender and Borrower under Sections 8.1 and 8.2 may be exercised only where a
Margin Excess or Margin Deficit exceeds a specified dollar amount or a specified percentage of the
market value of the Loaned Securities under such Loans (which amount or percentage shall be agreed
to by Borrower and Lender prior to entering into any such Loans).
9. Representations of the Parties Hereto. The parties hereby make the following
representations and warranties, which shall continue during the term of any Loan hereunder:
9.1 Each party hereto represents and warrants that (a) it has the power to execute and
deliver this Agreement, to enter into the Loans contemplated hereby and to perform its obligations
hereunder; (b) it has taken all necessary action to authorize such execution, delivery and
performance; and (c) this Agreement constitutes a legal, valid and binding obligation enforceable
against it (in the case of Lender, solely in its capacity as agent for the Account whose securities
are the subject of a Loan).
9.2 Each party hereto represents and warrants that the execution, delivery and performance by
it of this Agreement and each Loan hereunder will at all times comply with all applicable laws and
regulations including those of applicable securities regulatory and self-regulatory organizations.
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9.3 Each party hereto represents and warrants that it has made its own determination as to
the tax treatment of any dividends, remuneration or other funds received hereunder.
9.4 Borrower represents and warrants that all Loans will comply with Regulation T and,
without limiting the generality of the foregoing, that it (or the party to whom it relends the
Loaned Securities) is borrowing the Loaned Securities for the purpose of making delivery of such
securities in the case of short sales, failure to receive securities required to be delivered or
other similar situations or as otherwise permitted pursuant to Regulation T of the Board of
Governors of the Federal Reserve System.
9.5 Borrower represents and warrants that it has, or will have at the time of transfer to
Lender of any Collateral hereunder (other than letters of credit), the right to grant to Lender a
first priority security interest therein subject to the terms and conditions hereof. As to
Collateral consisting of letters of credit transferred to Lender hereunder, Borrower represents and
warrants that Lender shall have full unencumbered title thereto.
9.6 Lender represents and warrants that the Account acting as lender in any Loan has
represented and warranted to it that the Loaned Securities transferred to Borrower shall be free
and clear of any lien or encumbrance at the time of transfer, and Borrower represents and warrants
that the return to Lender of Loaned Securities shall be free and clear of any lien or encumbrance
at the time of such return.
9.7 Lender represents and warrants that as to each Account, such Account has represented and
warranted to it that (i) such Account has duly authorized Lender, as agent, to execute and deliver
this Agreement on its behalf, and to enter into Loans on its behalf, (ii) such Account has the
requisite power to perform, and has been duly authorized to perform, the obligations imposed
hereunder and under any Loan effected pursuant hereto, and (iii) the obligations of such Account in
respect of any Loan effected pursuant to this Agreement constitute legal, valid and binding
obligations of the Account, enforceable in accordance with their terms.
9.8 Each of the representations and warranties set out in Section 2(i), (ii), and (iii) and
in Section 9, shall, notwithstanding any provision of Section 2 or 9 or any other provision of the
Agreement, be deemed made and repeated for all purposes at and as of all times when any Loan
entered into hereunder is outstanding.
10. Covenants.
10.1 (a) If Borrower is not a broker-dealer registered under the Exchange Act, it covenants
as follows: Upon execution of this Agreement, Borrower shall deliver to the Lender Borrower’s and
any parent company’s most recent available financial information, including (without limitation)
the most recent available audited and unaudited statements of Borrower’s and any parent company’s
financial condition that Borrower or such parent company is required to provide to any governmental
agency or self regulatory body. As long as any Loan is outstanding under this Agreement, Borrower
will promptly deliver to Lender all such financial information that is subsequently available, and
any other financial information or statements that Lender may reasonably request.
(b) If Borrower is a broker-dealer registered under the Exchange Act, it covenants as
follows: Upon execution of this Agreement, Borrower shall deliver to Lender the most recent
statements of Borrower required to be furnished to Borrower’s customers by Rule 17a-5(c) and (d)
under the Exchange Act. As long as any Loan is outstanding under this Agreement, Borrower shall
promptly deliver to Lender all such statements subsequently required to be furnished to Borrower’s
customers by such Rule (or any successor thereto). Upon execution of this Agreement, Borrower
shall also deliver to Lender Borrower’s and any parent company’s most recent financial information
otherwise available to its shareholders, the SEC, or the public, as the case may be including
(without limitation) the most recent available audited and unaudited statements of Borrower’s or
any parent company’s financial condition and any report or notice required by Rules 17a-5(a)(2)(i)
and (ii) and 17a-11 under the Exchange Act. As long as any Loan is outstanding under this
Agreement, Borrower will promptly deliver to the Lender all such financial information that is
subsequently available, and any other financial information or statements that Lender may
reasonably request including profit and loss information.
(c) Upon request of Borrower, Lender shall request of any Account that such Account provide
to Lender (for delivery to Borrower) a copy of such Account’s most recent financial statement.
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10.2 Borrower shall be liable as principal with respect to its obligations hereunder and
shall at all times in respect of each Loan effected pursuant hereto maintain Collateral having a
market value at least equal to 100% of the market value of the Loaned Securities.
10.3 Borrower agrees to cause every letter of credit delivered by it and constituting
Collateral hereunder to be renewed or replaced by Collateral (including, without limitation, a
renewal or replacement letter of credit) satisfactory to Lender at least seven days prior to the
scheduled expiration date of such letter of credit.
10.4 Borrower will give Lender immediate notice (i) if at any time there is entered against
Borrower or any direct or indirect parent 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 which could have a material adverse effect on
the ability of 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 Borrower, (ii) if at any time there is commenced any
investigation or proceeding which may result in the expulsion of Borrower from any stock exchange
or from any self-regulatory organization, or a suspension of the Borrower’s power under any law to
transact business as a broker or dealer in securities or if Borrower is so expelled or suspended,
(iii) if at any time any communication is received by Borrower or any direct or indirect parent
from any stock exchange, government agency, or regulatory body, constituting a warning to Borrower
or any direct or indirect parent of the violation, or threatened violation, of any rule or a
failure to comply with which could have a material adverse effect on the ability of 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 Borrower, (iv) if at any time Borrower or any direct or indirect parent
will receive information that Borrower or any direct or indirect parent is under special
surveillance by any stock exchange, or by any other self-regulatory organization, (v) if at any
time Borrower or any direct or indirect parent shall receive information that the Securities
Investor Protection Corporation (“SIPC”) has been notified pursuant to Section 5(a) (1) of
the Securities Investor Protection Act of 1970 (“SIPC Act”) of facts which indicate
that Borrower is in or is approaching financial difficulty, or (vi) 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 Borrower proposes to take with respect thereto.
Borrower will forward to Lender 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 10.4.
10.5 Borrower and Lender hereto agree and acknowledge that (a) each Loan hereunder is a
“securities contract,” as such term is defined in Section 741(7) of Title 11 of the United States
Code (the “Bankruptcy Code”), (b) each and every transfer of funds, securities and other
property under this Agreement and each Loan hereunder is a “settlement payment” or a “margin
payment,” as such terms are used in Sections 362(b)(6) and 546(e) of the Bankruptcy Code, and (c)
the rights given to Borrower and Lender hereunder upon a Default by the other constitute the right
to cause the liquidation of a securities contract and the right to set off mutual debts and claims
in connection with a securities contract, as such terms are used in Sections 555 and 362(b)(6) of
the Bankruptcy Code. Each party hereto further agrees and acknowledges that if a party hereto is
an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act,
as amended (“FDIA”), then each Loan hereunder is a “securities contract” and “qualified
financial contract,” as such terms are defined in the FDIA and any rules, orders or policy
statements thereunder.
10.6 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 Lender 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 applicable Uniform Commercial Code.
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11. Events of Default. All Loans between Borrower and Lender may, at the option of
the non-defaulting party exercised by notice to the defaulting party (which option shall be deemed
to have been exercised, even if no
notice is given, immediately upon the occurrence of an event specified in subsection (e) below), be
terminated immediately upon the occurrence of any one or more of the following events
(individually, a “Default”):
(a) | if any Loaned Securities shall not be transferred to Lender on the termination date of the Loan as required by Section 5.2; | ||
(b) | if any Collateral shall not be transferred to Borrower as contemplated by Section 5.1; | ||
(c) | if Borrower shall fail to comply with the obligation to replace an expiring letter of credit under Section 10.3 and such default is not cured within one Business Day of notice of such failure to Borrower or Borrower or Lender shall fail to deliver or return Collateral, as the case may be, as required by Section 8; | ||
(d) | if Borrower or Lender shall fail to make the payment of distributions as required by Section 7 and such default is not cured within one Business Day of notice of such failure to Borrower or Lender, as the case may be; | ||
(e) | if (i) Borrower or any direct or indirect parent or the Affected Account shall commence as debtor any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law, or seek the appointment of a receiver, conservator, trustee, custodian or similar official for such party or any substantial part of its property, or (ii) any such case or proceeding shall be commenced against either party or any direct or indirect parent, or another shall seek such an appointment, or any application shall be filed against either party for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for relief, such an appointment, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days, or (iii) either party or any direct or indirect parent shall make a general assignment for the benefit of creditors, or (iv) either party or any direct or indirect parent shall admit in writing its inability to pay its debts as they become due; | ||
(f) | if Borrower or any direct or indirect parent or the Affected Account shall have been suspended or expelled from membership or participation in any securities exchange or association or other self-regulatory organization to whose rules it is subject or if it is suspended from dealing in securities by any governmental agency or regulatory body; | ||
(g) | if Borrower or any direct or indirect parent or the Affected Account shall have its license, charter, or other authorization necessary to conduct a material portion of its business withdrawn, suspended or revoked by any applicable government or agency or regulatory body thereof; | ||
(h) | if any representation made or deemed to be made by a party shall be incorrect or untrue in any material respect during the term of any Loan hereunder; | ||
(i) | if Borrower or Lender (i) fails to provide to the other party reasonable assurances of its ability to perform its obligations hereunder or under any Loan within 24 hours after request therefor is made in good faith by the requesting party; (ii) notifies the other, orally or in writing, of its inability to or its intention not to perform its obligations hereunder; or (iii) otherwise disaffirms, rejects or repudiates any of its obligations hereunder; |
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(j) | if Borrower or Lender (i) shall fail to perform any obligation under this Agreement not specifically set forth in clauses (a) through (i) above, including but not limited to the payment of fees as required by Section 4, and the payment of transfer taxes as required by Section 14, (ii) shall have received notice of such failure from the non-defaulting party and (iii) shall not have cured such failure by the next day after such notice on which a transfer of cash may be effected; | ||
(k) | any Affiliate of Borrower shall default under any other securities loan agreement with Boston Global Advisors; or | ||
(l) | if a party (“X”) consolidates or amalgamates with, or merges into, or transfers all or substantially all its assets to, another entity and (i) the resulting, surviving, or transferee entity has not assumed all the obligations of X under this Agreement pursuant to an agreement reasonably satisfactory to the other party or (ii) the financial condition of the resulting, surviving, or transferee entity is, in the judgment of the other party, materially weaker than that of X prior to such transaction. |
12. Lender’s Remedies. If (a) any Default shall occur in respect of which Borrower
is the defaulting party or (b) Lender is obligated to redeliver, or is otherwise deprived of its
rights to, any Loaned Securities after their return, or is in any way required to pay their value
or any related sum over, as a result of any bankruptcy, insolvency, liquidation, reorganization, or
other similar proceeding relating to Borrower or pursuant to any legal requirement, including
without limitation any laws relating to so-called ‘preferences’ or preferential payments, Lender
shall have the right, in addition to any other remedies provided herein or under applicable law
(without further notice to Borrower), (i) to purchase, within a commercially reasonable time
(taking into consideration the nature of the market for the Loaned Securities), a like amount of
the Loaned Securities in the principal market for such securities, (ii) or to treat the Loaned
Securities as having been purchased by Borrower at a purchase price equal to the market value
thereof on the day of the Default (or on the date of the event referred to in (b) above, as the
case may be), and may apply the Collateral to the payment of such purchase (whether actual or
deemed), after deducting therefrom all amounts, if any, due Lender under Sections 4, 7, 14 and 17
hereof. Lender may also apply the Collateral to any other obligation of Borrower under this
Agreement, including distributions paid to Borrower (and not forwarded to Lender) in respect of
Loaned Securities. In the event the purchase price exceeds the market value of the Collateral on
the date of purchase, Borrower shall be liable to Lender for the amount of such excess (plus all
amounts, if any, due to Lender hereunder) together with interest on all such amounts, in the case
of purchases of Foreign Securities, at a per annum rate equal to LIBOR plus 2%, and in the case of
purchases of any other securities (or other amounts, if any, due to Lender hereunder) at a per
annum rate equal to the Fed Funds Rate plus 2%, as it fluctuates from day to day, from the date of
such purchase until the date of payment of such excess. Lender shall have, as security for
Borrower’s obligation to pay such excess, a security interest in or right of setoff against any
property of Borrower then held by Lender and any other amount payable by Lender to Borrower. The
purchase price of securities purchased under this Section 12 shall include broker’s fees and
commissions and all other reasonable costs, fees and expenses related to such purchase or exercise
of remedies including, without limitation, reasonable legal fees and expenses. Upon the
satisfaction of all obligations hereunder, any remaining Collateral shall be returned to Borrower.
Notwithstanding any provision of the Agreement, Lender shall not be obligated to make any payment
to Borrower under the Agreement or in respect of any Loan (including without limitation any return
of Collateral) at any time after a Default by Borrower has occurred unless and until Borrower has
satisfied all of its obligations (contingent or otherwise) to Lender, whether or not such
obligations have at the time matured.
13. Borrower’s Remedies. In the event of any Default involving Lender or an Account
under Section 11 hereof, Borrower shall have the right, in addition to any other remedies provided
herein or under applicable law (without further notice to Lender) to sell (or be deemed to have
sold) a like amount of the Loaned Securities in the principal market for such securities in a
commercially reasonable manner on the day of the Default and to retain (or be deemed to have
realized) the proceeds of such sale. In such event, Borrower may treat the Loaned Securities as
its own and Lender’s obligation to return the Collateral consisting of cash or securities shall
terminate. In the event the sales price received (or deemed to have been received) from such
securities is less than the market value of the
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Collateral consisting of cash or securities on the
date of sale (or deemed sale), the Account which defaulted on the Loan shall be liable to Borrower
for the amount of any deficiency (plus all amounts, if any, due to Borrower hereunder), together
with interest on all such amounts, in the case of Collateral consisting of Foreign Securities, at a
per annum rate equal to LIBOR plus 2%, and in the case of Collateral consisting of any other
securities (or other amounts due, if any, to Borrower hereunder), at a per annum rate equal to the
Fed Funds Rate plus 2%, as it
fluctuates from day to day, from the date of such sale until the date of payment of such
deficiency. Borrower shall have, as security for the Account’s obligation to pay such deficiency,
a security interest in or right of setoff against any property of the Account then held by Borrower
pursuant to this Agreement and any other amount payable by Borrower to Lender in respect of such
Account arising hereunder. In calculating this deficiency, there shall be deducted from the
proceeds of the securities sold under this Section 13, broker’s fees and commissions and all other
reasonable costs, fees and expenses related (or deemed related) to such sale or exercise of
remedies including, without limitation, reasonable legal fees and expenses. Upon the satisfaction
of all the Account’s obligations hereunder, any remaining Loaned Securities (or remaining net cash
proceeds from sale or deemed sale thereof) shall be returned to Lender.
Where Collateral consists of a letter of credit, Lender, upon the exercise or deemed exercise by
Borrower of its termination rights under Section 11, shall immediately return the letter of credit
to Borrower and not seek to draw thereunder and Borrower shall return to Lender an amount equal to
the net proceeds from the sale (or deemed sale) of the Loaned Securities as reduced by all other
amounts due to Borrower.
14. Transfer Taxes. All necessary costs, including, without limitation, transfer
taxes, stamp duties and fees with respect to any transfers hereunder of Loaned Securities or
Collateral shall be paid by Borrower. Borrower covenants and agrees that it shall ensure that this
Agreement and all instruments of transfer in respect of any Loaned Securities or Collateral shall
have been stamped in accordance with all applicable laws.
15. Definitions. For the purposes hereof:
15.1 “Account” and “Accounts” shall have the meanings set forth in the
introduction.
15.2 “Affected Account” shall have the meaning set forth in Section 19.
15.3 “Affiliate” shall mean any entity which controls, is controlled by, or is under
common control with another entity.
15.4 “Bankruptcy Code” shall have the meaning set forth in Section 10.5.
15.5 “Borrower” shall have the meaning set forth in the introduction.
15.6 “Borrower Payment” shall have the meaning set forth in Section 7.6.
15.7 “Business Day” shall mean, with respect to any Loan hereunder, any day (other
than a Saturday or Sunday) recognized as a settlement day in the principal market in which the
Loaned Securities are traded, provided, however, that for purposes of computing
market value in Section 16, “Business Day” shall mean a day on which regular trading occurs in the
principal market for the securities whose value is being determined. Notwithstanding the
foregoing, for purposes of marking to market in Section 8, “Business Day” shall mean any day (other
than a Saturday or Sunday) (i) on which regular trading occurs in the principal market for any
Loaned Securities or for any securities Collateral under any outstanding Loan or (ii) on which
transfers of cash Collateral may be effected by Lender and Borrower (or any nominee or agent
thereof).
15.8 “Cash Collateral Fee” shall have the meaning set forth in Section 4.1.
15.9 “Clearing Organization” shall have the meaning set forth in Section 2.
15.10 “Collateral” shall mean, whether now owned or hereafter acquired, (a) all cash
in a currency acceptable to Lender which is delivered to Lender pursuant to Section 3 or 8, (b) any
property in which such cash is
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invested or reinvested (but not the income or distributions thereon
or realized gains derived from Lender’s use or investment of such collateral, all of which shall in
any event be the property of Lender), (c) any securities issued or guaranteed by the United States
government or issued by agencies or instrumentalities thereof which may not be guaranteed by the
United States government or by a foreign sovereign acceptable to Lender which are delivered to
Lender pursuant to Section 3 or 8, including the interest or distributions thereon or other income
therefrom, (d) all
irrevocable letters of credit, issued by issuers acceptable to Lender and otherwise satisfactory in
form and substance to Lender, which are delivered to Lender pursuant to Section 3 or 8, and (e) all
proceeds of each of the foregoing.
15.11 “Collateral Distributions” shall have the meaning set forth in Section 7.6.
15.12 “Confirmation” shall have the meaning set forth in Section 1.2.
15.13 “Contractual Currency” shall have the meaning set forth in Section 16.2.
15.14 “Default” shall have the meaning set forth in Section 11.
15.15 “Exchange Act” shall have the meaning set forth in Section 2.
15.16 “FDIA” shall have the meaning set forth in Section 10.5.
15.17 “Federal Funds Rate” shall mean the rate of interest (expressed as an annual
rate), as published in Federal Reserve Statistical Release H.15(519) or any publication substituted
therefor, charged for federal funds (dollars in immediately available funds borrowed by banks on an
overnight unsecured basis) on that day or, if that day is not a banking day in New York City, on
the next preceding banking day.
15.18 “Foreign Securities” shall mean, unless otherwise agreed, securities that are
principally cleared and settled outside the United States.
15.19 “Lender” shall have the meaning set forth in the introduction.
15.20 “Lender Payment” shall have the meaning set forth in Section 7.6.
15.21 “LIBOR” shall mean for any date, the offered rate for deposits in U.S. dollars
for a period of three months which appears on the Reuters Screen LIBOR page as of 11:00 A.M.,
London time, on such date (or, if at least two such rates appear, the arithmetic mean of such
rates).
15.22 “Loan” shall mean a loan of securities hereunder.
15.23 “Loaned Security” shall mean any security which is transferred pursuant to any
Loan and shall be deemed to include any securities into which any Loaned Securities may at any time
be converted or for which they may be exchanged, any additional securities distributed with respect
to Loaned Securities, and any securities issued otherwise in respect thereof, including without
limitation in any sub-division, consolidation, or exchange, unless the Confirmation in respect of
the Loan in question specifically provides to the contrary.
15.24 “Loan Fee” shall have the meaning set forth in Section 4.1.
15.25 “Margin Deficit” and “Margin Excess” shall have the meanings set forth
in Sections 8.1 and 8.2, respectively.
15.26 “Margin Percentage” shall have the meaning set forth in Section 3.1.
15.27 “Plan” shall have the meaning set forth in Section 18.
15.28 “Required Value” shall have the meaning set forth in Section 3.1.
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15.29 “Securities Distributions” shall have the meaning set forth in Section 7.6.
15.30 “SIPC” and “SIPC Act” shall have the meanings set forth in Section
10.4.
15.31 “Tax” shall have the meaning set forth in Section 7.6.
16. Market Value.
16.1 With respect to Loaned Securities and Collateral consisting of securities, market value
as of any date shall be determined on the basis of the closing prices therefor as of the trading
day (for the principal market in which the securities are traded) immediately preceding the day of
valuation, such determination to be made by the independent pricing source notified to Borrower by
Lender upon Borrower’s request. Such notification may be oral. Market value shall include accrued
interest in the case of debt securities. With respect to Collateral consisting of cash, market
value as of any date shall be the face amount thereof held by Lender at the time of determination
and, with respect to Collateral consisting of letters of credit, market value as of any date shall
be the undrawn balance thereof which Lender may at such time draw thereunder except that if, in the
judgment of Lender, the creditworthiness of the issuer of any letter of credit has been or may be
impaired, then, upon notice to Borrower, the market value of such letter of credit shall be zero.
16.2 Unless otherwise agreed, where the Loaned Securities in respect of a Loan are
denominated in a currency other than the currency in which the related Collateral is denominated,
the currency which shall be applicable for purposes of determining market value shall be the
currency in which the Collateral is denominated (the “Contractual Currency”), and any
Loaned Security not denominated in the Contractual Currency shall be converted into a Contractual
Currency equivalent based on the most current spot rate of exchange quoted by the independent
source of exchange rates as notified to Borrower by Lender upon Borrower’s request. Such
notification may be oral.
17. Contractual Currency.
17.1 Unless otherwise agreed, each payment of cash under this Agreement (except as provided
in Section 7.2) shall be made in the Contractual Currency. Notwithstanding the foregoing, the
payee of any such payment may, at its option, accept tender thereof in any other currency;
provided, however, that, to the extent permitted by applicable law, the obligation
of the payor to make such payment will be discharged only to the extent of the amount of
Contractual Currency that such payee may, consistent with normal banking procedures, purchase with
such other currency (after deduction of any premium and costs of exchange) on the banking day next
succeeding its receipt of such currency.
17.2 If for any reason the amount in the Contractual Currency received under Section 17.1,
including amounts received after conversion of any recovery under any judgment or order expressed
in a currency other than the Contractual Currency, falls short of the amount in the Contractual
Currency due in respect of this Agreement, the party required to make the payment will (unless a
Default has occurred and such party is the non defaulting party), as a separate and independent
obligation and to the extent permitted by applicable law, immediately pay such additional amount in
the Contractual Currency as may be necessary to compensate for the shortfall.
17.3 If for any reason the amount in the Contractual Currency received under Section 17.1
exceeds the amount in the Contractual Currency due in respect of this Agreement, then the party
receiving the payment will (unless a Default has occurred and such party is the non defaulting
party) refund promptly the amount of such excess.
18. ERISA. Lender shall, if any of the securities transferred to Borrower hereunder
for any Loan have been or shall be obtained, directly or indirectly, from or using the assets of
any Plan (as hereafter defined), so notify Borrower in writing upon the execution of the Agreement
or upon initiation of such Loan under Section 1.1 or as required pursuant to Section 1.2. If
Lender so notifies Borrower, then Borrower and Lender shall conduct the Loan in accordance with the
terms and conditions of Department of Labor Prohibited Transaction Exemption 81-6 (46 Fed. Reg.
7527, Jan. 23, 1981; as amended, 52 Fed. Reg. 18754, May 19, 1987), or any successor thereto,
unless
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Borrower certifies that it is not a party-in-interest to the plan for purposes of the
Employee Retirement Income Security Act of 1974. If the parties are relying on Prohibited
Transaction Exemption 81-6 to effect any Loan, then Borrower represents and warrants to Lender that
it is either (i) a bank subject to federal or state supervision, (ii) a broker-dealer registered
under the Exchange Act or (iii) exempt from registration under Section 15(a)(1) of the Exchange Act
as a dealer in exempted government securities (as defined in Section 3(a)(12) of the Exchange Act)
and (iv) neither it nor any affiliate (as defined in Prohibited Transaction Exemption 81-6) of
Borrower has any discretionary authority or control with respect to the investment of the assets of
the Plan involved in the Loan or
renders investment advice (within the meaning of 29 C.F.R. Section 2510.3-21(c)) with respect to
the assets of the Plan involved in the Loan. For purposes hereof, “Plan” shall mean (a)
any “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974 which is subject to Part 4 of Subtitle B of such Act; (b) any “plan” as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986; or (c) any entity the assets of which are
deemed to be assets of any such “employee benefit plan” or “plan” by reason of the Department of
Labor’s plan asset regulation, 29 C.F.R. Section 2510.3-101.
19. Obligations to be Separate. Each and every obligation, liability or undertaking
of an Account with respect to any Loan shall be solely an obligation, liability or undertaking of,
and binding upon, the Account by which such Loan is made (“Affected Account”) and 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. Neither Boston Global Advisors (in
its individual capacity) nor any Affiliate thereof shall have any liability to Borrower whatsoever
in respect of any Loan, it being understood and agreed that Borrower shall have recourse solely to
the Affected Account in the event of the occurrence of a Default involving the Affected Account.
20. Indemnification. Borrower agrees to indemnify and hold harmless Lender and the
Affected Account (including the sponsor and fiduciaries of any Affected Account which is a Plan)
from any and all damages, losses, liabilities, costs and expenses (including attorneys’ fees) which
Lender or the Affected Account may incur or suffer arising in any way out of the use by Borrower of
Loaned Securities or any failure of Borrower to deliver Loaned Securities in accordance herewith or
to otherwise comply with the terms of this Agreement.
21. Calculations. All determinations of the value of securities, Collateral, or
other property or amounts for any purpose under this Agreement shall be made in good faith by
Lender.
22. Limitation of Liability. A copy of the Agreement and Declaration of Trust of
each Account which is a Massachusetts business trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of each such Account as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or shareholders of such
Account individually but are binding only upon the assets and property of each such Account.
23. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the conflict of law principles
thereof.
24. Waiver. The failure of either party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
All waivers in respect of a Default must be in writing.
25. Remedies. All remedies hereunder shall survive the termination of the relevant
Loan, return of Loaned Securities or Collateral and termination of this Agreement.
26. Notices and Other Communications. Except as otherwise provided in this
Agreement, all notices, demands, and other communications hereunder shall be sufficient if made in
writing and delivered or transmitted (as the case may be) by registered mail, facsimile, telex, or
courier, or by telephone promptly confirmed in writing and delivered or transmitted as aforesaid,
to the intended recipient at the addresses (or to the numbers) set forth on the signature page
hereof. Notices shall be effective upon receipt.
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27. Miscellaneous. This Agreement supersedes any other agreement between the parties
concerning loans of securities between the parties hereto. This Agreement shall not be assigned by
either party without the prior written consent of the other party. Subject to the foregoing, this
Agreement shall be binding upon and shall enure to the benefit of the parties hereto and their
respective heirs, representatives, successors and assigns. This Agreement may be terminated by
either party upon giving written notice to the other, subject only to fulfillment of any
obligations then outstanding. This Agreement shall not be modified, except by an instrument in
writing signed by the party against whom enforcement is sought.
THE XXXXXXX XXXXX TRUST COMPANY in its capacity as agent for Accounts not in its individual capacity |
||||
By: | ||||
Name: | ||||
Title: | ||||
Address for Notices:
Attention:
Facsimile No.:
Telephone No.:
Facsimile No.:
Telephone No.:
BORROWER NAME as Borrower |
||||
By: | ||||
Name: | ||||
Title: | ||||
Address for Notices:
Attention:
Facsimile No.:
Telephone No.:
Facsimile No.:
Telephone No.:
ANNEX I
Type of Loaned Security | Margin Percentage1 | |||
Foreign equity and corporate securities |
105 | % | ||
United States equity and corporate securities |
102 | % | ||
(including American Depository Receipts) |
1 | Pursuant to Section 3.1. |
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Type of Loaned Security | Margin Percentage1 | |||
United States government and agency securities |
102 | % | ||
Foreign government and agency securities |
102 | % |
SCHEDULE 5
FEES
As full compensation for services provided under this Agreement, GSAL shall be entitled to
compensation at an annual rate as follows:
1. | For the period commencing on the first date in which (a) GSAL has access to Available Securities on behalf of all Lenders and (b) the effective date of the completion of the change of custodian from The Bank of New York to State Street Bank and Trust Company with respect to all Lenders has occurred (the “Conversion Date”): | ||
Annual Rate of Compensation | |||
2. | For the period prior to the Conversion Date: | ||
Annual Rate of Compensation |
1 | The term “Estimated Gross Revenue” is defined as the Gross Revenue estimated by GSAL for the Lenders to be earned for the 12 month period agreed to by the parties from time to time. | |
2 | The term "Gross Revenue” means the difference between the net investment income received from investment of cash collateral in the Cash Investment Trust or other similar cash investment collateral vehicle as directed by Lenders, less any fees payable to borrowers for loans facilitated by GSAL on behalf of Lenders. |
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SCHEDULE 6
INVESTMENTS OF COLALTERAL
Collateral shall be invested in Cash Investment Trust managed by MFC Global Investment Management
(U.S.), LLC or its affiliates
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SCHEDULE 7
LIST OF APPROVED PERSONS
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxxx
Xxxx Xxxx
Xxxxxxx X. Xxxxx
Xxx XxXxxxxx
Xxxx Xxxxx
Xxxxxx X. Xxxxx
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SCHEDULE 8
NOTICES
If to Lender:
Address: | 000 Xxxxxxxx Xxxxxx | |||
Xxxxxx Xxxxxxxxxxxxx 00000 | ||||
Attention: | Xxxxxxx X. Xxxxx, Chief Financial Officer | |||
Telephone: | 000-000-0000 | |||
Facsimile: | 000-000-0000 |
If to GSAL:
Address: | 000 Xxxx Xxxxxx, Xxxxxx Xxxxxx Xxxxx | |||
Xxxxx 0000 | ||||
Xxxxxx, XX 00000 | ||||
Att: | Xxxx Xxxxxx, Vice President | |||
Telephone: | 000-000-0000 | |||
Facsimile: | 000-000-0000 |
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