SECURITIES LENDING CUSTOMER AGREEMENT
Exhibit
(g)(16) under Form N-1A
Exhibit
10 under Item 601/Reg. S-K
(INDEMNIFIED)
Agreement, approved and ratified as of
the 19th day of
September, 2007, by and between The Huntington Funds, a registered investment
company organized as a statutory trust under the laws of the State of Delaware
(“Customer”) and PFPC Trust Company (“PFPC”). Capitalized terms not
otherwise defined shall have the meanings set forth in Section 15.
WHEREAS, Customer has utilized PFPC to
act as Customer's agent since the Commencement Date to effect loans of
securities in accordance with the terms hereof on behalf of
Customer;
NOW, THEREFORE, Customer and PFPC,
intending to be legally bound, agree as follows:
1. Appointment of PFPC; Terms
of Loans.
(a) Customer
authorizes and appoints PFPC as of the Commencement Date, and PFPC agrees to act
as of the Commencement Date, as Customer's agent to lend Available Securities to
Eligible Borrowers pursuant to the terms of this Agreement. For
clarity, and notwithstanding anything in this Agreement or otherwise to the
contrary, the Customer and PFPC agree that (i) the appointment of PFPC under
this Agreement, and the terms, conditions, agreements, representations,
warranties, acknowledgements and covenants set forth in this Agreement have
governed the parties hereto, and it is the intent of the Customer and PFPC that
the terms, conditions, agreements, representations, warranties, acknowledgments
and covenants set forth in this Agreement shall be deemed to have governed the
parties hereto, since the Commencement Date. PFPC may from time to
time, in its sole discretion, contact Eligible Borrowers on Customer's behalf
and lend Available Securities to such Eligible Borrowers. Each such
loan (“Loan”) is made pursuant to and upon the terms and conditions set forth in
an agreement (“Borrowing Agreement”) substantially in the form of
Attachment A hereto, as such form may be amended by PFPC from time to time;
provided,
however, that no such amendment shall become effective with respect to any Loan
until five (5) Business Days after written notice of such amendment to
Customer. PFPC will act as the “Lender” under each Borrowing
Agreement (as such term “Lender” is defined in the particular Borrowing
Agreement), provided that Customer agrees that PFPC acts solely as Customer’s
agent and not as principal with respect to any loan transaction. PFPC
is required to make available to Customer prompt notice of each Loan and to
disclose fully to Eligible Borrowers that PFPC acts as agent for customers and
not as principal.
(b) PFPC
is required make available to Customer (i) a daily statement setting forth
information relating to securities on loan, xxxx-to-market valuations and
securities which have been returned from loan for each Sub-account (as
hereinafter defined) and (ii) on or about the seventh (7th)
Business Day of each month, a statement indicating for the preceding calendar
month the securities lent from the Custodian Account for each Sub-account, the
value of such securities, the identity of the Borrowers, transactions in the
Collateral Account (including the nature and amount of Collateral received as
security for the Loaned Securities), the income received (or loss incurred) from
the daily investment of cash Collateral and the amounts of any fees or payments
paid to Borrowers or others with respect to each Loan.
(c) For
purposes of this Agreement,
(i) “Eligible
Borrowers” means any entity to which Available Securities may be loaned pursuant
hereto, as listed in Attachment B hereto, as the same is amended from time to
time by PFPC upon ten (10) Business Days written notice to Customer; provided,
that (x) no such amendment is effective with respect to any
prospective Borrower to the addition of which Customer objects by written notice
to PFPC within such ten (10) Business Day period and (y) Customer may, by
written notice, instruct PFPC to remove an Eligible Borrower from Attachment B
hereto and upon such instruction PFPC shall cease arranging Loans with such
entity and shall as promptly as practicable attempt to terminate all Loans with
such entity (provided that such entity shall continue to be a “Borrower” and an
“Eligible Borrower” with respect to this Agreement until all transactions
relating to such entity and all other matters with respect to such entity
relating to this Agreement have been fully and finally closed,
resolved and settled).
(ii) “Available
Securities” means all securities now or hereafter held or maintained in the
Custodian Account other than those that Customer from time to time specifically
identifies by written notice to PFPC as being unavailable for
Loans. PFPC has no authority or responsibility for determining
whether any of Customer's securities should be excluded from those available for
Loans. PFPC shall be entitled to rely fully on information provided
to it by Custodian regarding the securities held or maintained in the Custodian
Account, and Customer is required to indemnify PFPC and hold it harmless from
and against any and all liability, loss, damages and claims (including
attorney’s fees and all other expenses reasonably incurred in PFPC’s defense) to
which PFPC may be subjected in connection with or related to such
reliance.
(d) Each
Loan shall be terminable by PFPC or the Borrower upon notice to the other
party. PFPC is required to notify the Borrower of the termination of
any Loan promptly upon being directed to do so by Customer. Customer
is required to inform PFPC on the trade date of any sale of a Loaned Security;
provision of such information will constitute a direction by Customer to PFPC to
terminate the related Loan. The termination date for each Loan
terminated by PFPC is required to be no later than the standard settlement date
for trades of the Loaned Securities entered into on the date of the termination
notice in the principal market for such securities (or, if Customer is subject
to the requirements of ERISA, the earlier of such settlement date or the fifth
Business Day following such notice), provided that if such notice is provided
after the close of regular trading on the principal market for such securities,
the date of such notice shall be deemed to be the next following regular trading
day on such principal market.
(e) With
respect to a Loan that is to be collateralized by cash, PFPC will not enter into
that Loan if at the time the Loan is to be entered into the Loan has a negative
spread (i.e., the rebate rate being paid to the applicable Borrower with respect
to that Loan is in excess of the investment rate applicable to the cash
collateral relating to that Loan). In addition, on the Business Day
after the Business Day that PFPC becomes aware that a Loan collateralized by
cash has a negative spread (as defined in the preceding sentence), PFPC is
required to reset the rebate rate paid to the Borrower in an effort to reverse
the negative spread or if the Borrower is unwilling to reset the rebate rate to
an amount sufficient to reverse the negative spread PFPC is directed to notify
the Borrower of the termination of the Loan.
(f) Notwithstanding
any other provision of this Agreement, if one or more portfolios, series,
sub-trusts or other sub-accounts (each, a “Sub-account”) are identified on
Exhibit 1 hereto:
(i) the
assets and liabilities of each Sub-account are separate and distinct from the
assets and liabilities of each other Sub-account, and no Sub-account is liable
or is to be charged for any debt, obligation or liability of any other
Sub-account under this Agreement; and
(ii) the
relationships and agreements set forth in this Agreement between the Customer,
acting on behalf of any Sub-account, and PFPC shall be several, separate and
distinct from those between the Customer, acting on behalf of any other
Sub-account, and PFPC, to the same effect as would be the case if the Customer
had executed a separate agreement with PFPC in the form hereof with respect to
such Sub-account.
(g) If
Customer is a business or statutory trust, notice is hereby given that this
instrument is executed on behalf of the Trustees of Customer as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees or shareholders of Customer individually but are binding
upon the assets and property of Customer.
(h) If
Loaned Securities are the subject of a voluntary corporate action, unless
Customer provides PFPC with timely written directions to the contrary, PFPC is
required to attempt to terminate Loans of such Loaned Securities at a time that
(assuming compliance by the Borrower with the redelivery requirements specified
in the applicable Borrowing Agreement) will result in the Loaned
Securities being returned on or before the record date for such voluntary
corporate action. In addition, unless Customer indicates otherwise in
Attachment F hereto, each Sub-account will be coded as “proxy
sensitive;” PFPC is required to attempt to terminate Loans of U.S.
equity securities and ADRs in proxy sensitive Sub-accounts at a time that
(assuming compliance by the Borrower with the redelivery requirements specified
in the applicable Borrowing Agreement) will result in the Loaned Securities
being returned on or before the record date for any shareholder vote with
respect to such Loaned Securities. Notwithstanding the foregoing,
PFPC has no liability for any failure of PFPC to so terminate a Loan for any
reason, or for any failure of any Borrower to return the Loaned Securities, in
time for Customer to exercise any voluntary corporate action or in time for such
Loaned Securities to be voted by Customer.
2. Authority of PFPC with
Respect to Loans.
(a) PFPC
is permitted:
(i) to
make, execute, acknowledge and deliver any and all documents of transfer and
conveyance and any and all other instruments that may be necessary or
appropriate to effect a transfer of Available Securities to Eligible
Borrowers pursuant to a Borrowing Agreement or to complete any
Loan;
(ii) to
register title to any and all Collateral (and assets acquired through the
investment of cash Collateral) in its own or its subcustodian’s name as agent,
in the name of its or its subcustodian’s nominee or in
bearer form, and to combine certificates representing such Collateral (and/or
assets acquired through the investment of cash Collateral) with certificates of
the same issue held by PFPC in a custodian or fiduciary capacity, or to deposit
or arrange for the deposit of securities Collateral (and assets acquired through
the investment of cash Collateral) in a depository even though, when so
deposited, such securities may be held in bulk in the name of the nominee of
such depository or otherwise with other securities deposited therein by
any other person, but the books and records of PFPC shall at all
times show that all such assets are a part of the Collateral
Account;
(iii) to exercise all of the rights of
Lender under the Borrowing Agreements and to do all acts, whether or not
expressly authorized, which it may deem necessary or proper for the protection
of the Collateral (and assets acquired through the investment of cash
Collateral); and
(iv) to
request a third party bank to undertake custodial functions in connection with
some or all of the Collateral (and/or assets acquired through the investment of
cash Collateral); in connection therewith, PFPC is permitted to instruct such
third party to establish and maintain one or more accounts for PFPC wherein all
cash or other Collateral (and/or assets acquired through the investment of cash
Collateral) may be maintained, and to establish and maintain one or more
accounts for the Borrowers in any Loans.
(b) Customer
acknowledges and agrees that:
(i) Customer is required to direct
Custodian to take such actions, to provide such information to PFPC and to
accept such instructions from PFPC as shall be necessary or appropriate to
enable PFPC to perform its duties and obligations with respect to Customer
and/or under any Borrowing Agreement, including without limitation with respect
to the free delivery of Loaned Securities (or the free delivery of securities to
be loaned or which are returned from loan), the payment of any amounts payable
to Borrowers, and the payment of any and all expenses and other amounts in
connection with the Loans or otherwise in connection with this
Agreement;
(ii) PFPC has full discretion
regarding the selection of the particular Eligible Borrowers to whom Loans of
Available Securities may be made and as to the selection of the particular
Available Securities loaned in any Loan;
(iii) there
is no assurance that Loans of Available Securities will be made at any
time;
(iv) PFPC
is permitted perform securities lending activities for other clients of
PFPC;
(v) PFPC
is permitted to allocate securities lending opportunities among its clients,
using such reasonable methods as PFPC may follow from time to time;
(vi) Customer
is not be entitled to participate in any particular lending
opportunities;
(vii) Customer
has no claim against PFPC for its not having made any minimum volume of Loans or
with respect to lending opportunities given to other clients of PFPC, whether or
not such opportunities could have been satisfied through Loans of Available
Securities;
(viii) PFPC
is permitted to utilize agents in carrying out its obligations and other
activities hereunder; and
(ix) PFPC
acts only as agent, not as principal, in effecting the transactions contemplated
herein.
3. Collateral; Collateral
Accounts; Loaned Securities.
(a) PFPC
is required to establish and maintain the Collateral Account and to maintain all
Collateral allocated to the Loans, together with any and all assets acquired
through the investment of cash Collateral, in the Collateral
Account. Under the terms of each Loan, the Borrower is required to
maintain with PFPC Eligible Collateral having a Market Value, determined daily,
equal to at least the applicable Required Value (in no event less than 100% of
the Market Value of the securities loaned in such Loan) set forth and defined in
the applicable Borrowing Agreement (the “Collateral Requirement”). In
connection with the provisions of the foregoing sentence, PFPC will value, on a
daily basis, in accordance with the applicable Borrowing Agreement, the Loaned
Securities and related Collateral relating to each Loan and, where applicable,
PFPC is required to make the demand upon the Borrower provided for in Section
8.2 of the applicable Borrowing Agreement. For purposes of this
Agreement, “Eligible Collateral” means Collateral consisting of (i) cash,
or (ii) securities or other items of property of the types identified as being
acceptable on Attachment C hereto, as the same may be amended from time to time
by mutual agreement of Customer and PFPC.
(b) The
Collateral Account shall be administered as follows:
(i) PFPC
is required to invest cash Collateral in accordance with the investment
guidelines (“Investment Guidelines”) set forth in Attachment D hereto, as the
same from time to time may be modified by Customer by ten (10) Business Days
written notice (or such longer time as reasonably necessary under the
circumstances) to PFPC. All such investments and reinvestments shall
be for the account of Customer and solely at the Customer's risk;
(ii) to
the extent consistent with the Investment Guidelines, PFPC is permitted to
invest the Collateral in (A) commingled funds advised or otherwise serviced by
PFPC or its Affiliates, and Customer consents to the retention by PFPC and its
Affiliates of any advisory or other fees paid by such funds to PFPC and/or its
Affiliates and (B) repurchase agreements with PFPC or its
Affiliates;
(iii) PFPC is required to credit to
the Collateral Account any income received from, and any interest, dividends or
other distributions paid on, the Collateral, and any amounts received from the
Borrower in lieu of such interest, dividends or other distributions, less any
amount due to the Borrower; and
(iv) PFPC
is required to remit the net earnings on the Collateral Account to the Custodian
Account on a monthly basis, within 15 days after the end of the calendar month,
and is required to remit to the Custodian Account any loan fees paid by
Borrowers to PFPC in res-pect of any Loan within 15 days after the end of the
calendar month to which the fees relate, in each case less any compensation due
to PFPC pursuant to Section 6. With respect to amounts to be
remitted by PFPC to the Custodian Account pursuant to this Section 3(b)(iv),
PFPC is required to advise Custodian of such remittance prior to making such
remittance.
(c) PFPC or its designee receives in “free”
those securities that are
to be loaned in connection with this Agreement, and will (subject to Section
12(e) hereof) transfer such securities to the relevant Borrower. Upon
receipt of Loaned Securities that are returned by a Borrower, PFPC or its
designee (subject to Section 12(e) hereof) transfers such securities “free” to
the Custodian Account. Except as specifically set forth in Section
3(d) below, PFPC has no responsibility (express or implied) with respect to the
Loaned Securities or the securities which are to be loaned pursuant to this
Agreement or the securities which are returned from loan, other than (1) to
receive and transfer such securities as specifically set forth in the first two
sentences of this Section 3(c), (2) to perform the activities specifically
referenced in Section 5 hereof and (3) to facilitate processing of voluntary
corporate actions pursuant to such procedures as agreed to between Customer and
PFPC with respect to those securities to which a voluntary corporate action
relates which have not been returned from loan on or before the record date for
such voluntary corporate action. The foregoing sentence will not
affect PFPC's responsibility specifically set forth in Section 8(a)
hereof.
(d) Except
as provided in Section 3(e) below, PFPC is required to remit to the Custodian
Account, on the date received by PFPC from the Borrower, any interest, dividends
or other distributions paid on Loaned Securities, or amounts received in lieu
thereof.
(e) Non-cash
distributions on Loaned Securities in the nature of stock splits or stock
dividends shall be added to the Loan and become Loaned Securities.
4. Representations, Warranties
and Covenants.
(a) Customer
represents, warrants and covenants as follows:
(i) this
Agreement is a legal, valid and binding obligation of Customer, enforceable
against it in accordance with its terms, and Customer has the requisite
power to perform, and has been duly authorized to perform, the obligations
imposed under this Agreement and any loan effected pursuant to this
Agreement;
(ii) the
execution, delivery and performance by Customer of this Agreement, execution of
each Borrowing Agreement by PFPC on behalf of Customer, and PFPC's entering into
Loans under Borrowing Agreements on behalf of Customer, have been duly and
validly authorized by Customer, and Loans made in accordance with the terms
hereof (as well as the execution, delivery and performance by
Customer of this Agreement, execution of each Borrowing Agreement by PFPC on
behalf of Customer, and PFPC’s entering into Loans under Borrowing Agreements on
behalf of Customer) will comply with all laws and regulations, including those
of securities regulatory and self-regulatory organizations, applicable to
Customer;
(iii) Customer
is authorized to lend securities to brokers, dealers, banks, and other types of
entities included in the list of Eligible Borrowers and Customer has the
requisite power to perform the obligations imposed on it under this Agreement
and any Loan effected pursuant thereto;
(iv) Customer
owns, and will own at the time that any Loan is outstanding, all Available
Securities free and clear of any lien or encumbrance, and no Available
Securities have been, or will at the time of any Loan have been,
sold;
(v) Customer
has made its own determination as to the tax treatment of any dividends,
interest, payments in lieu of dividend or interest on Loaned Securities,
remuneration or other funds received hereunder and of any transaction or
activity related to this Agreement;
(vi) Customer
and any party serving as an investment adviser to Customer have approved the
lending of the Available Securities, have determined that each of the Eligible
Borrowers, the Eligible Collateral and the Investment Guidelines listed on the
Attachments hereto (as the same may be amended pursuant to the terms hereof) are
appropriate for Loans hereunder and have directed PFPC to comply with the same,
and have determined that lending the Available Securities in accordance with the
terms hereof is an appropriate activity for Customer consistent with its
investment objectives and policies;
(vii) the
Available Securities are not “plan assets” within the meaning of ERISA, or if
the Available Securities are such plan assets, a Loan of the Available
Securities to an Eligible Borrower would not constitute a prohibited transaction
for purposes of ERISA;
(viii) no
Loan of the Available Securities in accordance with the terms set out in this
Agreement violates or will violate any statute, regulation, rule, order,
judgment, agreement or arrangement binding on Customer or any of its assets;
and
(ix) Customer
is a “qualified investor” (as defined in section 3(a)(54)(A) of the United
States Securities Exchange Act of 1934, as amended) or is an employee benefit
plan that owns and invests on a discretionary basis at least $25,000,000 in
investments as contemplated by rule 15a-11 under the Securities Exchange Act of
1934, as amended.
(b) PFPC
represents, warrants and covenants as follows:
(i) this
Agreement is a legal, valid and binding obligation of PFPC, enforceable against
it in accordance with its terms;
(ii) the
execution, delivery and performance by PFPC of this Agreement and of each
Borrowing Agreement, and PFPC's entering into Loans under Borrowing Agreements
on behalf of Customer, have been duly and validly authorized by PFPC;
and
(iii) PFPC
has the requisite power to perform the obligations imposed on it under this
Agreement and any Loan effected pursuant thereto.
(c) The
undersigned signatory of Customer represents, warrants and covenants that (i)
the terms of this Agreement, (ii) the fees and expenses associated with this
Agreement and (iii) any benefits accruing to Customer or any affiliate of
Customer in connection with this Agreement, including but not limited to any fee
waivers, conversion cost reimbursements, up front payments, signing payments or
periodic payments made or to be made by PFPC to Customer or any affiliate of
Customer relating to this Agreement have been fully disclosed to Customer’s
Board of Trustees and that, if required by applicable law, such Board of
Trustees has approved or will approve the terms of this Agreement, any such fees
and expenses, and any such benefits.
(d) Each
of the above representations and warranties shall be deemed made and repeated
for all purposes at and as of all times when any Loan entered into under the
Borrowing Agreement is outstanding. With respect to each Loan of
Available Securities owned by or held for a Sub-account, each of the above
representations and warranties of Customer is also deemed made by Customer with
respect to that Sub-account as if the word “Sub-account” had been used in lieu
of the word “Customer” therein.
(e) Customer
acknowledges that a Borrower is permitted to exercise any voting rights with
respect to any Loaned Securities until the Loan relating to such Loaned
Securities has been terminated and the Loaned Securities have been returned to
Customer, and Customer waives its right to vote any Loaned
Securities. If so directed by Customer pursuant to Section 1(d) or
1(e), PFPC will be required to give the Borrower a notice terminating a
Loan.
(f) In
connection with this Agreement, Customer and its investment adviser, if any,
retain ultimate authority with respect to lending Customer's securities and have
directed PFPC to lend Available Securities in accordance with the terms set out
in this Agreement, and PFPC is not, and shall not be considered to be, an
investment adviser for Customer.
5. Statements. PFPC
is required to maintain current records of the Loans and is required to make
available to Customer and/or third parties agreed upon between Customer and PFPC
the daily and monthly statements described in Section 1(b) (within the
timeframes set forth in Section 1(b)) and such other information as Customer and
PFPC may agree upon.
6. Compensation of
PFPC. PFPC
is compensated for its services hereunder by retaining (and is entitled to
retain) a portion of the earnings from the investment and
reinvestment of cash Collateral and a portion of any loan fees paid by Borrowers
in respect of Loans, in accordance with the compensation schedule set forth on
Attachment E hereto. Loan fees paid by Borrowers in respect of Loans shall be at
such rates and on such basis as established by PFPC from time to
time. PFPC is required to seek in good faith to establish such loan
fees that are consistent with then-current industry norms.
7. Modification and Termination
of Agreement.
(a) This
Agreement is a continuing agreement and shall remain in full force and
effect until terminated in accordance with this Section. This
Agreement may be modified or terminated at any time upon mutual written
agreement of PFPC and Customer, expressly referring to this Agreement and
indicating an intention to effect such modification or
termination. This Agreement also may be terminated at any time by
PFPC or Customer upon three days prior written
notice to the other party.
(b) Following
any termination of this Agreement, PFPC shall:
(i) immediately
cease making new Loans;
(ii) terminate,
as promptly as possible, any outstanding Loans, but shall continue to administer
any such outstanding Loans as necessary to effect their termination, including,
without limitation, (A) the return to Borrowers of Collateral on
Loans as to which Loaned Securities are returned and the Borrower is not in
default, and (B) the co-ordination of the liquidation of Collateral, all in the
manner and on the terms permitted under the Borrowing Agreements and deemed
necessary or appropriate by PFPC; and
(iii) remit
and deliver to the Custodian Account all securities, earnings and other items
due to Customer.
(c) Regardless
of any agreement as to, or the receipt of any notice of, termination and the
cessation of lending, this Agreement shall not entirely terminate until all
Loans have been closed, all Collateral liquidated or returned, all deliveries
and remittances due Customer have been made, and all final reports required
hereunder have been made or made available.
8. Liability of
PFPC.
(a) With
respect to any Loan, if a Borrower fails to return Loaned Securities promptly
upon termination of the Loan and the Collateral for such Loan is not sufficient
to satisfy the obligations of such Borrower thereunder, then subject to the
provisions of Section 8(d) and at the option of PFPC, either:
(i) PFPC
shall pay into the Custodian Account a dollar amount equal to the excess, if
any, of: (A) the sum of (x) the Market Value of the Loaned Securities as of the
date of termination of the Loan, (y) to the extent not already included in such
Market Value, an amount equal to any broker’s fees, commissions and taxes, and
(z) the amount of any outstanding obligations of such Borrower to Customer then
due and payable under the related Borrowing Agreement; over (B) the Market Value
of the Collateral as of the date of termination of the Loan; or
(ii) PFPC
shall (A) transfer to the Custodian Account securities identical in type and
amount to the Loaned Securities, and (B) pay into the Custodian Account cash in
an amount equal to any outstanding obligations of the Borrower to PFPC on behalf
of Customer due and payable under the related Borrowing Agreement as of the date
of termination of the Loan.
(b) PFPC
agrees to notify Customer promptly of which option it has chosen and to pay or
transfer cash and/or securities to the Custodian Account promptly after such
notification.
(c) Effective
upon any payment or transfer to the Custodian Account by PFPC pursuant to
Section 8(a), Customer hereby assigns to PFPC, free and clear of any liens or
encumbrances created by Customer, all of Customer’s right, title and interest in
and to, and PFPC is hereby subrogated to, any outstanding obligations of such
Borrower to Customer then due and payable under the Borrowing
Agreement. Effective upon an event described in Section 8(a)(ii),
Customer hereby assigns to PFPC, free and clear of any liens or encumbrances
created by Customer, all of Customer’s right, title and interest in and to the
Collateral (and assets acquired through the investment of cash
Collateral). PFPC has the right to pursue recovery of any Collateral
deficiency from a Borrower and/or its successors and assigns, and Customer
assigns all of the rights and remedies which it may have against such Borrower
and/or its successors and assigns to PFPC. If for any reason PFPC
cannot fully assert any rights or remedies against such other Borrower and/or
its successors and assigns without the assistance of Customer, Customer is
required, at the request and expense of PFPC, to file and prosecute such
complaints and lawsuits and take such other action as PFPC may reasonably
request in connection with the recovery of any such deficiency and shall
otherwise cooperate with PFPC in any such litigation.
(d) Provided
that PFPC has invested cash Collateral in the manner prescribed under Section
3(b)(i):
(i) PFPC
shall not be liable to Customer for any investment losses in the Collateral
Account;
(ii) if
at any time that cash Collateral for a Loan is required to be returned to a
Borrower pursuant to a Borrowing Agreement or otherwise, the Market Value of
such Collateral, as invested or reinvested, is insufficient to return to the
Borrower the full amount of the cash Collateral required to be returned plus any
and all rebate fees or other amounts due and owing to the Borrower in respect of
the Loan, Customer is solely responsible for such deficiency, and Customer
hereby agrees to pay an amount equal to such deficiency to Borrower;
and
(iii) the
amount payable by PFPC pursuant to Section 8(a)(i) shall be reduced by any
decline in the Market Value of such Collateral (as invested or reinvested) from
the time of the commencement of the Loan, and in the event PFPC elects the
option in Section 8(a)(ii), Customer shall pay to PFPC (in addition to any other
obligations it may have to PFPC) the amount of such decline in Market
Value.
(e) Customer
agrees to be responsible for and to pay any amounts payable by Customer pursuant
to Section 8(d). Without limitation of the foregoing, Customer
irrevocably authorizes and directs Custodian (without the need for further
instruction from Customer) to pay such amounts from the Custodian Account upon
receipt of a direction from PFPC to do so.
(f) Notwithstanding
anything in this Agreement or otherwise to the contrary, (i) PFPC has no
responsibility to supervise, recommend or otherwise advise Customer relative to
the loan of assets in any particular country, nor to advise on any risks related
thereto, including without limitation any Country Risk arising in such country
and (ii) in no instance will PFPC have any liability or responsibility for any
loss or damage which may arise from assets being loaned, traded, custodied or
otherwise dealt with in a particular country, including without limitation any
loss or damage which may arise from Country Risk.
9. Standard of Care;
Indemnification.
(a) PFPC
is responsible to perform only those duties specifically set out in this
Agreement, and no duties shall be implied against PFPC. Subject to
the obligations of PFPC pursuant to Section 8(a) of the Agreement and to the
requirements of ERISA with respect to Loans involving “plan assets” within the
meaning of ERISA, PFPC isl not be liable for any loss or damage suffered or
incurred by Customer in connection with this Agreement, any Loan, or the
adminis-tration or operation of PFPC's securities lending program, whether or
not resulting from any act or omission to act hereunder or otherwise, unless and
except to the extent such loss or damage has been determined by a final judgment
of a court of competent jurisdiction to have arisen out of PFPC's own negligence
or willful misconduct. Notwithstanding anything in this Agreement or
otherwise to the contrary, PFPC is not liable to Customer for any consequential,
special or indirect losses or damages incurred or suffered by Customer, whether
or not the likelihood of such losses or damages was known by PFPC, nor shall
PFPC be liable for any losses or damages beyond PFPC’s control or for any losses
or damages resulting from PFPC's having complied with or relied upon any
Investment Guidelines or any communications from, or requirements of, Customer
or Custodian.
(b) Customer
is required to indemnify and defend PFPC and hold it harmless from and against
any and all liability, loss, damages and claims, including claims of other
parties and including attorneys' fees and all other expenses reasonably incurred
in PFPC’s defense, to which PFPC is or may be subjected in connection with this
Agreement, any Loan, or the administration or operation of PFPC’s securities
lending program, whether or not resulting from any act or omission to
act hereunder or otherwise, except that this indemnity does not
apply: (i) to the extent that a court of
competent jurisdiction in a final order has determined that PFPC's loss and
damages resulted from PFPC's own negligence or willful misconduct; or (ii) if
Available Securities are “plan assets” within the meaning of ERISA, but only to
the extent that PFPC acts as a fiduciary with respect to such plan assets, to a
breach of fiduciary duty by PFPC under ERISA. Customer is
required to pay the costs and expenses, including attorneys' fees, of enforcing
this right of indemnification. The terms of this Section 9(b) shall
survive termination of the Agreement.
10. Governing
Law. This
Agreement shall be construed in accordance with the laws of the State of
Delaware without giving effect to the conflict of laws principles
thereof.
11. WAIVER OF JURY
TRIAL. EACH OF CUSTOMER AND PFPC IRREVOCABLY WAIVES ANY AND
ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF
ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
DOCUMENTS. CUSTOMER AND PFPC ACKNOWLEDGE THAT THE FOREGOING WAIVER IS
KNOWING AND VOLUNTARY. Customer acknowledges that it has read and
understood all the provisions of this Agreement, including the waiver of jury
trial, and has been advised by counsel as necessary or appropriate.
12. Miscellaneous.
(a) This
Agreement supersedes any prior agreements between the parties with respect to
the subject matter hereof. This Agreement cannot be assigned by
either party without the prior written consent of the other party.
(b) Customer
and PFPC are permitted to disclose information relating to the Agreement to the
extent such information is requested or required to be disclosed pursuant to a
court order, subpoena, governmental or regulatory request or law (provided the
disclosing party provides the other party written notice thereof, if such notice
is permitted).
(c) To
help the U.S. government fight the funding of terrorism and money laundering
activities, U.S. Federal law requires each financial institution to obtain,
verify, and record certain information that identifies each person who initially
opens an account with that financial institution on or after October 1, 2003.
Consistent with this requirement, PFPC may request (or may have already
requested) Customer’s name, address and taxpayer identification number or other
government-issued identification number, and, if such party is a natural person,
that party’s date of birth. PFPC may also ask (and may have already asked) for
additional identifying information, and PFPC may take steps (and may have
already taken steps) to verify the authenticity and accuracy of these data
elements.
(d) Customer
and PFPC by specific written agreement may agree (or have already agreed) to
additional procedures applicable to the subject matter of this Agreement, which
procedures (to the extent such procedures relate to Customer and/or PFPC) and
the carrying out of which procedures (to the extent such procedures relate to
Customer and/or PFPC) are subject to the terms of this Agreement.
(e) Either
PFPC or PNC Bank, N.A. (“PNC Bank”) is permitted to, in its sole discretion and
whether or not requested by Customer, advance funds to pay any amounts payable
by Customer to any Borrower pursuant to this Agreement. Neither PFPC
nor PNC Bank is required to make any such advance. Any such advance
is payable by Customer on demand and bears interest at such rate as specified by
PFPC or PNC Bank from time to time. To secure Customer’s
obligation to repay any such advance, Customer grants to PFPC and PNC Bank a
first priority security interest in any and all property at any time held by or
in the possession or control of either of them for the benefit of Customer or in
which Customer may have an interest (including, without limitation, any
securities received by PFPC or its designee pursuant to Section 3(c)
hereof). Each of PFPC and PNC Bank have all of the rights and
remedies of a pledgee at common law and of a secured creditor under the Delaware
Uniform Commercial Code in respect of all such collateral.
13. Notices. All
notices, reports and statements are required to be mailed, sent by express
delivery service, or facsimile transmitted to the parties at the following
addresses and facsimile telephone numbers (provided that information is also
permitted to be made available by PFPC by electronic means, including PFPC’s web
browser) and shall be effective upon receipt thereof:
To PFPC:
Address:
Xxx Xxxxxxxx, XX
PFPC Trust Company
Securities Lending
0000 Xxxxxxx Xxxxxxxxx
0xx Xxxxx
Xxxxxxxxxxxx,
XX 00000
Fax: (000) 000-0000
To
Customer:
Address:
Institutional Trust
Custody
Huntington Bank
0 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000)
000-0000
Attention: Xxxxxxxxxx
Xxxxxxxxx
If an
ERISA fiduciary is executing an Addendum to this Agreement, send copies
to:
______________________________
______________________________
______________________________
Fax: ______________________________
Attention: ______________________________
14. SECURITIES INVESTOR
PROTECTION ACT OF 1970 NOTICE. CUSTOMER IS ADVISED AND
ACKNOWLEDGES THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF
1970 MAY NOT PROTECT CUSTOMER WITH RESPECT TO THE LOAN OF SECURITIES HEREUNDER
AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO PFPC AND PFPC’S OBLIGATIONS
UNDER SECTION 8 HEREOF MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF
BORROWER'S OBLIGATION IN THE EVENT THE BORROWER FAILS TO RETURN THE
SECURITIES.
15. Definitions. For
the purposes hereof:
(a)
“Affiliate” means any entity which controls, is controlled by, or is under
common control with another entity;
(b) “Available
Securities” has the meaning set forth in Section 1;
(c) “Borrower”
means, with respect to any Loan, the party that is a borrower under the
Borrowing Agreement;
(d) “Borrowing
Agreement” has the meaning set forth in Section 1;
(e) “Business
Day” means any day other than (i) a Saturday or Sunday or (ii) a day on which
banking institutions in Philadelphia, Pennsylvania are authorized or obligated
by law or executive order to be closed; provided, however,
that for purposes of the notice required to terminate any Loan, “Business Day”
has the meaning established under the related Borrowing Agreement;
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(f)
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“Collateral”
means all securities and other items of property pledged
as
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collateral
for a Loan;
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(g)
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“Collateral
Account” means a segregated account established by
PFPC
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pursuant
to Section 3 for the benefit of Customer to maintain Collateral received
for a Loan, any and all assets acquired through the investment of cash
Collateral and the earnings and other proceeds thereon and thereof;
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(h)
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“Collateral
Requirement” has the meaning set forth in Section
3(a);
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(i)
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“Country
Risk” means nationalization, expropriation or
other
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governmental
action; laws, regulations, market conditions or market practices affecting
transactions in securities or currency; laws, regulations, market conditions or
market practices affecting financial institutions, exchanges, or clearance or
settlement systems; settlement and custody infrastructure and
practices; changes in the value of the local currency relative to other
currencies; political or civil unrest; financial infrastructure of a
country; disruption of the operation of a payment or settlement system; or
market conditions which may prevent the orderly execution or settlement of
securities transactions;
(j) “Commencement
Date” means June 23, 2006.
(k) “Custodian”
means Huntington National Bank or such other entity as shall have been
designated by Customer as custodian of its portfolio securities and agreed to by
PFPC;
(l) “Custodian
Account” means the custodian account identified on Exhibit 1 hereto as relating
to a particular Sub-account which Customer maintains with Custodian (or any
successor custodian account thereto of which PFPC is informed in writing by
Custodian);
(m) “Eligible
Borrower” has the meaning set forth in Section 1;
(n) “Eligible
Collateral” has the meaning set forth in Section 3;
(o) “ERISA”
means the Employee Retirement Income Security Act of
1974, as
the same may now or hereafter be amended;
(p) “Investment
Guidelines” has the meaning set forth in Section 3;
(q) “Loan”
has the meaning set forth in Section 1;
(r) “Loaned
Securities” means, with respect to any Loan, the securities loaned by PFPC
hereunder on behalf of Customer; and
(s) “Market
Value” means, with respect to any Collateral or Loaned Securities for any Loan,
the market value thereof determined in the manner specified in the related
Borrowing Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed by their respective officers thereto
duly authorized effective as of the day and year first above
written.
The
Huntington
Funds PFPC
Trust Company
BY: /s/ Xxxxxx X.
Xxxxxxx BY:
/s/
Xxxxxxxxxx Xxxxx
NAME: Xxxxxx
X.
Xxxxxxx NAME: Xxxxxxxxxx
Xxxxx
TITLE: Vice
President TITLE: Senior
Vice President
ERISA
PLAN ADDENDUM
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(To
be included when Customer is an ERISA Plan as to which PFPC is a Trustee
or Other Party In Interest)
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This
Addendum is executed as of ________________, by _______________
(“Fiduciary”) and is hereby made a part of the Securities Lending Customer
Agreement dated as of the date hereof (“Agreement”), by and
between _____________ (“Customer”) and PFPC Trust Company
(“PFPC”). Capitalized terms not otherwise defined shall have
the meanings set forth in the main body of the
Agreement.
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WHEREAS,
PFPC acts as a trustee or is otherwise a party in interest (as defined in
ERISA or the regulations promulgated thereunder) of Customer, and
Fiduciary is the investment adviser, plan sponsor or other fiduciary (as
defined in ERISA or the regulations promulgated thereunder) of
Customer.
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NOW,
THEREFORE,
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1.
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Fiduciary
hereby represents, warrants and covenants to PFPC and to Customer as
follows:
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(a)
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Fiduciary
has reviewed the listing of Eligible Borrowers contained in Attachment B
to the Agreement and has determined that none of the entities listed
thereon is a party who has discretionary authority or who renders advice
with respect to Customer or the Available Securities, or is an affiliate
(as defined in ERISA or the regulations promulgated thereunder) of any
such party or of the Fiduciary (a “Prohibited
Borrower”);
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(b)
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Within
the time period permitted for objections to amendments to such Attachment
B, Fiduciary will notify PFPC in the event that any entity proposed to be
added as an Eligible Borrower by such an amendment would be a Prohibited
Borrower;
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(c)
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Fiduciary
has determined that the terms of the Agreement and of the Borrowing
Agreement and compensation schedule set forth in Attachments A and E to
the Agreement constitute terms that are at least as favorable to the
Customer as would be an arm’s-length transaction between a Borrower and an
unrelated party;
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(d)
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Fiduciary
has determined that the Investment Guidelines as set forth in Attachment D
provide an opportunity, after taking into account the compensation
schedule set forth in Attachment E to the Agreement, for the Customer to
derive reasonable compensation through the investment of cash Collateral
and that the compensation to PFPC, computed in the manner set forth in
such Attachment E, is reasonable;
and
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(e)
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Fiduciary
is independent of PFPC and PNC Bank, N.A. and has the authority to approve
the Agreement with respect to Customer pursuant to Prohibited Transaction
Class Exemption 82-63, such approval being evidenced by Fiduciary’s
execution of this Addendum.
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2.
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[ ] (Applicable
Only if Marked.) PFPC’s capacity with respect to Customer is
that of a directed trustee, and Fiduciary hereby directs PFPC, as such
directed trustee, to execute the Agreement on behalf of Customer and to
make the representations, warranties, acknowledgements and agreements, and
undertake the obligations, under the Agreement, on behalf of Customer, in
PFPC’s capacity as directed trustee. PFPC shall not be subject
to any individual liability by reason of executing the Agreement in such
capacity or by reason of making such representations, warranties,
acknowledgments or agreements or undertaking such
obligations.
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____________________________
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(“Fiduciary”)
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By:
_________________________
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Title:
________________________
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AMENDMENT
TO
This Amendment is an amendment to the
Securities Lending Customer Agreement (Indemnified) by and between The
Huntington Funds (“Customer”) and PFPC Trust Company (“PFPC”), approved and
ratified as of September 19, 2007 (“Agreement”). This Amendment is
made as of October 18, 2007.
WHEREAS, Customer and PFPC are parties
to the Agreement referenced above; and
WHEREAS, Customer and PFPC wish to
amend the Agreement as set forth below.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound, Customer and PFPC hereby agree as
follows:
1. Exhibit
1 to the Agreement shall be amended and restated in its entirety to read as set
forth in Exhibit 1 to this Amendment.
2. The
Agreement shall remain in full force and effect and unchanged except as
expressly amended hereby.
IN WITNESS WHEREOF, the parties hereto
have caused this Amendment to be executed by their respective duly authorized
officers as of October 18, 2007.
THE
HUNTINGTON
FUNDS
PFPC TRUST COMPANY
BY: /s/ Xxxxxx X.
Xxxxxxx BY: /s/ illegible
signature
TITLE: Vice
President TITLE: Vice
President
AMENDED
AND RESTATED EXHIBIT 1
AS
OF MAY 1, 2008
EXHIBIT
1
(LISTING
OF SUB-ACCOUNTS)
Huntington
Dividend Capture Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account No.:
9070223602
Huntington
Fixed Income Securities Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070222809
Huntington
Tax Free Money Market Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account No.:
9070223309
Huntington
Growth Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070222505
Huntington
Income Equity Fund
Lending Limit: 33⅓ 1/3% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070222603
Huntington
Intermediate Government Income Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223103
Huntington
Macro 100 Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223933
Huntington
Michigan Tax-Free Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account No.:
9070223201
Huntington
Mid Corp America Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223700
Huntington
Money Market Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account No.:
9070222104
Huntington
Mortgage Securities Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223005
Huntington
New Economy Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223407
Huntington
Ohio Municipal Money Market Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account No.:
0000000000
Huntington
Ohio Tax-Free Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account No.:
9070222701
Huntington
Rotating Markets Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223906
Huntington
Situs Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223924
Huntington
Short/Intermediate Fixed Income Securities Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070222907
Huntington
Technical Opportunities Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account No.:
9070224022
Huntington
U.S. Treasury Money Market Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account No.:
9070222300
Huntington
VA Dividend Capture Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 907022382
Huntington
VA Growth Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223915
Huntington
VA Income Equity Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070222355
Huntington
VA Macro 100 Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223960
Huntington
VA Mid Corp America Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070222364
Huntington
VA Mortgage Securities Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223951
Huntington
VA New Economy Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 907022238
Huntington
VA Rotating Markets Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070222337
Huntington
VA Situs Fund
Lending Limit: 33⅓% of total assets
(including the value of the loan collateral)
Custodian Account
No.: 9070223942
Huntington
Real Strategies Fund
Lending Limit: 33⅓% of total
assets (including the value of the loan collateral)
Custodian Account
No.: 9070224004
Huntington
VA Real Strategies Fund
Lending Limit: 33⅓% of total
assets (including the value of the loan collateral)
Custodian Account
No.: 9070224013
* Note:
Lending Limit applies at time of loan.
This
Exhibit 1, amended and restated as of May 1, 2008, is hereby incorporated and
made part of the Securities Lending Customer Agreement (Indemnified) approved
and ratified as of September 19, 2007 and amended as of October 18, 2007 by and
between the parties named below (the “Agreement”), and replaces any and all
prior versions of Exhibit 1 to the Agreement.
Witness
the due execution hereof this 30th day of April, 2008.
The
Huntington
Funds PFPC
Trust Company
By: /s/ Xxxxxx X.
Xxxxxxx By: /s/ Xxx Xxxxxxxx,
XX
Name: Xxxxxx
X.
Xxxxxxx Name: Xxx
Xxxxxxxx, XX
Title: Vice
President Title: Senior
Vice President &
Managing Director
ATTACHMENT
A
SECURITIES
LOAN AGREEMENT
(BORROWER)
SECURITIES
LOAN AGREEMENT dated ___________, 2______ by and between PFPC Trust Company, 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 one or more Accounts
identified in accordance with Section 1.3 may, from time to time, lend to
Borrower certain securities held in the Accounts against a pledge of
collateral. References to Lender in this Agreement refer only to
Lender in its representative capacity as agent for its Accounts and in no case
shall be construed so as to render Lender liable as
principal. Capitalized terms not otherwise defined herein shall have
the meanings provided in Section 29.
Lender
and Borrower, intending to be legally bound, agree as follows:
1. Loans of
Securities.
1.1 Subject
to the terms and conditions of this Agreement, either party hereto may,
from time to time, orally seek to initiate a transaction whereby Lender will
lend securities to Borrower (each, a “Loan”). The parties shall agree
orally on the terms of each Loan, which shall be subject to the terms and
conditions of this Agreement and which shall include: (a) the date of
commencement of the Loan (“Commencement Date”); (b) a description
(including the identity of the issuer) and the amount of the Loaned Securities;
(c) the account to which the Loaned Securities are to be transferred; (d) the
terms of compensation (including any applicable rebate); (e) the Margin
Percentage; (f) the types of Collateral acceptable for the Loan; and (g) the
account or accounts to which the cash and non-cash Collateral for the Loan are
to be transferred. Such terms may be amended during the term of the
Loan upon mutual agreement of the parties, provided that any such amendment is
consistent with the terms of this Agreement.
1.2 Each
Loan shall be evidenced by Lender's books and records pertaining to such loans,
as maintained by Lender in the regular course of its business, 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. Borrower agrees to examine such statements
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.
1.3 Lender
shall, on a monthly basis, furnish to the Borrower a list of Accounts on whose
behalf Lender is authorized to effect Loans as agent. With respect to
any Loan, the identity of the Account shall be promptly furnished to Borrower
upon its request and, in any event, shall be automatically furnished to Borrower
by Lender as required under Section 18 (relating to Loans involving assets of an
ERISA Plan) or upon the occurrence of a Default involving such
Account.
1.4 Notwithstanding
anything to the contrary contained in this Agreement with respect to when a Loan
commences, a Loan hereunder shall not occur until the Loaned Securities and the
Collateral therefor have been transferred in accordance with Section
16.
1.5 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
SATISFACTION OF BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE
LOANED SECURITIES.
2. Transfer of Loaned
Securities.
2.1 On
the date fixed for the commencement of a Loan, Lender shall transfer the Loaned
Securities to Borrower.
2.2 Borrower
agrees that the completion of a transfer 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 a representation by
Borrower that as of the date of such transfer, (a) all representations and
warranties by Borrower herein are true and correct, as if made on and as of such
date, (b) no Default hereunder has occurred and is continuing, and (c) 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 of Borrower 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 Prior
to or concurrently with the transfer of the Loaned Securities to Borrower,
Borrower shall transfer to Lender Collateral having a Market Value in an amount
at least equal to the Required Value. “Required Value” shall be an
amount equal to the Margin Percentage of the Market Value of the Loaned
Securities. The “Margin Percentage” shall be a percentage that is not
less than 100% and that, unless otherwise agreed to by the parties, is equal to
the percentage specified in Annex I hereto for securities of the same
type as the Loaned Securities.
3.2 Unless
otherwise agreed between the parties, where any Loaned Securities
or
Collateral (in the form of securities) are Foreign Securities and are
transferred through a book entry transfer or settlement system which
automatically generates a payment or delivery, or obligation to pay or deliver,
against the transfer of such securities, then:
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(i)
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such
automatically generated payment, delivery or obligation shall be treated
as a payment or delivery by the transferee to the transferor, and except
to the extent that it is applied to discharge an obligation of the
transferee to effect payment or delivery, such payment or delivery, or
obligation to pay or deliver, shall be deemed to be a transfer of
Collateral made by the transferee until such time as the Collateral is
substituted with other Collateral if an obligation to deliver other
Collateral existed immediately prior to the transfer of Loaned Securities
or Collateral; and
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(ii)
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the
party receiving such substituted Collateral, or if no obligation to
deliver other Collateral existed immediately prior to the transfer of
Loaned Securities or Collateral, the party receiving the deemed transfer
of Collateral shall cause to be made to the other party for value the same
day either, where such transfer is a payment, an irrevocable payment in
the amount of such transfer or, where such transfer is a delivery, an
irrevocable delivery of securities (or other property, as the case may be)
equivalent to such property.
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3.3 The
Collateral transferred by Borrower to Lender in respect of any Loan, 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 first priority
security interest in, and a lien upon, the Collateral, which shall attach upon
the transfer of the Loaned Securities by Lender to Borrower and which shall
cease upon the transfer of the Loaned Securities by Borrower to
Lender. In addition to all the rights and remedies given to Lender
hereunder, Lender shall have all the rights and remedies of a secured party
under the Pennsylvania Uniform Commercial Code (“UCC”), as the same may be
amended from time to time.
3.4 Lender
may use or invest the Collateral, if such consists of cash, at the risk, and for
the benefit, of the Accounts, which 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 the Collateral with other collateral or with its own
assets. Borrower irrevocably appoints Lender as its attorney-in-fact
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 transfer any Collateral to a third party or to
otherwise realize upon any Collateral.
3.5 Provided
that Borrower is not in Default hereunder, upon the transfer to Lender of all
Loaned Securities in respect of a Loan and the payment of all Loan Fees due upon
termination of such Loan, Lender shall transfer to Borrower the Collateral
relating to such Loan. Lender's sole obligation to Borrower in
respect of the Collateral is to return such to Borrower pursuant to this Section
3.5 and Section 5.4.
3.6 If
Borrower transfers Collateral in respect of a Loan to Lender and Lender does not
transfer the Loaned Securities to Borrower, Borrower shall have the absolute
right to the immediate return of the Collateral; and if Lender transfers
Loaned Securities to Borrower and Borrower does not transfer Collateral to
Lender as required under Section 3.1, 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 would be acceptable Collateral in
accordance with the agreement of the parties at the time of the commencement of
the Loan or Loans; and (b) have a Market Value that, when added to the Market
Value of the remaining Collateral for such Loan, is equal to or in excess of the
Required Value. Substituted Collateral shall constitute Collateral
for all purposes hereunder.
3.8 Collateral
shall be allocated to Loans as follows:
3.8.1 Except
as provided in the following sentence, Collateral transferred to Lender in
connection with a specific Loan 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 acceptable for such
Loan. 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 and records, which shall be
conclusive evidence of such allocations.
3.8.2 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.
3.8.3 It
is expressly understood and agreed by the parties hereto that no allocation of
Collateral to any Loan or liabilities due to any Account pursuant to the terms
hereof shall in any 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.
3.9 No
later than seven days prior to the scheduled expiration date of any Letter of
Credit supporting Borrower's obligations hereunder, Borrower shall deliver an
extension of the expiration of such Letter of Credit or replace such Letter of
Credit by providing Lender with a substitute Letter of Credit in an amount at
least equal to the amount of the Letter of Credit for which it is
substituted.
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 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 as follows:
(a) in
the case of any Loan of securities other than Government Securities, upon the
earlier of (i) the fifteenth day of the month following the calendar month in
which such fee was incurred or (ii) the termination of all Loans hereunder (or,
if a transfer of Loaned Securities or Collateral could not be effected under
Section 16 hereof on such fifteenth day or the day of such termination, as the
case may be, the next day on which such a transfer may be effected);
and
(b) in
the case of any Loan of Government Securities, upon the termination of such
Loan.
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. Cash Collateral Fees shall cease to accrue upon the
occurrence of a Default hereunder by Borrower.
5. Termination of the
Loan.
5.1 Each
Loan shall be terminable by either party by demand made in accordance with this
Section 5.
5.2 Borrower
may terminate a Loan on any Business Day by giving notice to Lender and
transferring the Loaned Securities to Lender prior to the close of business on
such Business Day. Such notice of termination must be received by
Lender prior to the cutoff time agreed to by the parties or, in the absence of
any such agreement, prior to the time by which such termination notices may be
given in accordance with market practice.
5.3 Lender
may terminate a Loan on any termination date established by notice given to
Borrower prior to the close of business on a Business Day. The
termination date so established shall (unless Lender and Borrower otherwise
agree in writing, by specific reference to this Section 5.3 to alter the terms
of this Section 5.3) be a Business Day no later than the earlier of: (a) the
standard settlement date for trades of the Loaned Securities entered into on the
date of such notice in the principal market for such securities, or (b) the
fifth Business Day following such notice.
5.4 On
or prior to the termination date of any Loan, Borrower shall transfer the Loaned
Securities to Lender, whereupon Lender shall transfer the Collateral (as
adjusted pursuant to Section 8) to Borrower pursuant to Section
3.5.
6. Rights of Borrower in
Respect of the Loaned Securities. Until a Loan is terminated
in accordance herewith and except as set forth in Sections 7.1, 7.2 and 7.7
hereof, 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, or to provide any
consent or to take any similar action with respect to, the Loaned Securities
during the term of the Loan. The foregoing sentence shall not in any
way derogate, detract from or otherwise limit Section 7.7 of this
Agreement.
7. Dividends, Distributions,
Etc.
7.1 Lender
shall be entitled to receive all distributions made on or in respect of the
Loaned Securities 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 distributions (subject to the provisions of
Section 7.4), so long as Lender is not then in Default. Non-cash
distributions received by Borrower shall be added to the Loaned Securities
(unless otherwise 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 Borrower
shall be entitled to receive all cash and non-cash distributions made on or in
respect of non-cash Collateral 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 of cash 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 thereof, in an amount equal to such cash distribution (subject
to the provision of Section 7.4), so long as Borrower is not then in
Default.
7.4 (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”) or (ii) Lender is required to make a payment (a
“Lender Payment”) with respect to cash distributions on Collateral under Section
7.3 (“Collateral Distributions”), and (ii) Borrower, Lender or their
respective custodians, as the case may be (“Payor”), shall be required by law to
collect any withholding or other tax, duty, fee, levy or charge required to be
deducted or withheld from such Borrower Payment or Lender Payment (“Tax”), then
Payor shall pay such additional amounts as may be necessary in order that the
net amount of the Borrower Payment or Lender Payment received by Lender or
Borrower, as the case may be (“Payee”), after payment of such Tax equals the net
amount of the Securities Distribution or Collateral Distribution that would
have been received by the Payee if such Securities Distribution or Collateral
Distribution had been paid directly to the Payee; provided, however,
that any Borrower Payment shall also take into account (and Borrower shall pay
such additional amounts which reflect) the value (as specified in a notice by
Lender to Borrower) to the Account of any tax refund, reclaim or credit to which
such Account would otherwise have been entitled had the Loaned Securities not
been loaned.
(b) Each
party shall supply to the other notice of 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. Borrower represents that, as of the
commencement of any Loan hereunder, no Tax would be imposed on any cash
distribution paid to it with respect to Collateral for any Loan, unless Borrower
has given notice to the contrary to Lender (specifying the rate at which such
Tax would be imposed), and that each party will notify the other party in the
event of any change that occurs during the term of a Loan in the rate of any Tax
that would be imposed on any such cash distribution.
7.5 To
the extent that, under the provisions of Sections 7.1 through 7.4, a transfer of
cash or other property by Borrower would give rise to a Margin Excess or a
transfer of cash or other property by Lender would give rise to a Margin
Deficit, Borrower or Lender, as the case may be, shall not be obligated to make
such transfer but, in lieu thereof, shall immediately credit the amounts that
would have been transferable under such Sections to the account of Lender or
Borrower, as the case may be.
7.6 Borrower
and Lender agree that, on the Business Day following the record date for the
cash distribution relating to any Borrower or Lender Payment, Lender will
notify Borrower that Lender will charge or credit (as appropriate)
Borrower's account for such Borrower or Lender Payment on the date the payment
is payable by Borrower or Lender pursuant to Sections 7.2 or 7.3 hereof, and
Lender will effect such charge or credit on such date; provided, however,
that no failure on the part of Lender to provide such notice or to effect such
charge or credit shall affect the parties' respective rights and obligations
under Sections 7.1, 7.2 or 7.3.
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7.7
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Where,
in respect of any Loaned Securities, any discretionary rights
relating
|
to
conversion, sub-division, consolidation, pre-emption, rights arising under a
takeover offer, rights to receive securities or a certificate which may at a
future date be exchanged for securities or other rights become exercisable prior
to the redelivery of Loaned Securities, then Lender may, up to the number of
Business Days required by the Borrower before the latest time for the exercise
of the right or option, give written notice to Borrower that on redelivery of
the Loaned Securities it wishes to receive Loaned Securities (and/or cash if
applicable) in such form as will arise if the right is exercised or, in the case
of a right which may be exercised in more than one manner, is exercised as is
specified in such written notice, and on redelivery Borrower will redeliver such
Loaned Securities (and/or cash if applicable).
8. Xxxx to Market
Margin.
8.1 Borrower
shall daily xxxx to market any Loan hereunder, and in the event that at the
close of trading on any Business Day the Market Value of the Collateral for any
Loan to Borrower shall be less than 100% of the Market Value of all the
outstanding Loaned Securities for such Loan, Borrower shall immediately transfer
additional Collateral to Lender so that the Market Value of such additional
Collateral, when added to the Market Value of the other Collateral for such
Loan, shall equal or exceed the Required Value.
8.2 In
addition to the rights of Lender under Section 8.1, in the event that at the
close of trading on any Business Day the Market Value of Collateral for a Loan
shall be less than the Required Value (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 for such Loan, shall
equal or exceed the Required Value. Unless otherwise agreed, such
transfer shall be made in accordance with Lender's instructions by no later than
the close of the Federal Reserve Wire on the day of demand if such demand is
made prior to 10:00 a.m. Philadelphia time on a Business Day; otherwise
such transfer shall be made on the next Business Day; provided, however,
that any such transfer of additional Collateral comprised of Foreign Securities
may be made on the next Business Day. If the additional Collateral to
be posted is intended to be through adjustment of a Letter of Credit previously
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.
8.3 In
the event that at the close of trading on any Business Day the Market Value of
all Collateral for a Loan shall be greater than the Required Value (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 for such Loan, after deduction of
such amount, shall not exceed the Required Value. Unless otherwise agreed, such
transfer shall be made in accordance with Borrower's instructions by no later
than the close of the Federal Reserve Wire on the day of demand if such
demand is made prior to 10:00 a.m. Philadelphia time on a Business Day;
otherwise such transfer shall be made on the next Business Day; provided, however,
that any such transfer of Collateral comprised of Foreign Securities may be
made on the next Business Day. If Lender is requested to return to
Borrower a portion of any security constituting Collateral, 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 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, provided that
Borrower delivers to Lender an amended Letter of Credit within the time period
described in the second sentence of this Section 8.3.
8.4 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
Account-by-Account basis.
8.5 Borrower
and Lender may agree, with respect to any or all Loans hereunder, that the
respective rights of Lender and Borrower under Sections 8.2 and 8.3 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 for such Loans (which amount or percentage shall be agreed to by
Borrower and Lender prior to entering into any such Loans). In no
event, however, shall such an agreement preclude Lender from exercising its
rights under Section 8.2 if a Margin Deficit would result in the Market Value of
the Collateral for any Loan to Borrower being less than 100% of the Market Value
of all the outstanding Loaned Securities for such Loan.
9. Representations of the
Parties Hereto. The parties hereby make the following
representations and warranties:
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
accordance with its terms (in the case of Lender, solely in its capacity as
agent for the Account or Accounts whose securities are the subject of a Loan or
Loans).
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 (in the case of Lender,
solely in its capacity as agent for the Account or Accounts whose securities are
the subject of a Loan or Loans).
9.3 Each
party hereto represents and warrants that it has not relied on the other for any
tax or accounting advice covering this Agreement (except as expressly provided
herein) and has made its own determination as to the tax and accounting
treatment of any Loan and any dividends, remuneration or other funds received
hereunder.
9.4 Borrower
represents and warrants that all Loans will comply with the applicable
regulations of the Board of Governors of the Federal Reserve System governing
margin lending (“Margin Regulations”), 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 the Margin Regulations.
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 for which it is acting in any Loan
shall have 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 to Lender that all
Loaned Securities returned hereunder 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 (a) 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, and (b) 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.
9.8 Notwithstanding
any other provision of this Agreement, each of the representations and
warranties set out in Section 2.2 and in this Section 9 shall be deemed made and
repeated for all purposes at the time that any Loan is made and to be in effect
as of all times when Borrower's obligations with respect to any Loan remain
outstanding.
10. Covenants.
10.1 Financial
information shall be delivered as follows:
10.1.1 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.
10.1.2 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.
10.2 Borrower
shall be liable as principal with respect to its obligations
hereunder.
10.3 Borrower
shall at all times in respect of each Loan effected pursuant hereto maintain
Collateral having a Market Value at least equal to the Required
Value.
10.4 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.
10.5 Borrower
shall give Lender immediate notice of any development in the business affairs of
Borrower or of any direct or indirect parent of Borrower that has resulted in,
or which in the reasonable judgment of Borrower could result in, a material
adverse effect on the ability of Borrower to perform its obligations under
this Agreement. Any such notice shall set forth, in reasonable
detail, a description of the event which has occurred and of the action, if any,
that 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 10.5.
10.6 Borrower
and Lender hereby 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 Borrower or an Account 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.
10.7 Borrower
will, from time to time, do and perform any and all acts and execute any and all
further instruments 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 UCC.
10.8 Borrower
will notify Lender promptly upon the occurrence of any change of control with
respect to Borrower or if Borrower enters into an agreement providing for such a
change of control. For purposes of this paragraph, a “change of
control” shall occur if Borrower consolidates or amalgamates with or merges with
or into, or transfers all or substantially all of its assets to another entity,
or if any person or entity acquires directly or indirectly the beneficial
ownership of equity securities having the power to elect a majority of the board
of directors of Borrower or otherwise acquires directly or indirectly the power
to control the policy making decisions of Borrower.
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 Section 11.6
below), be terminated immediately upon the occurrence of any one or more of the
following events (individually, a “Default”):
11.1 Any
Loaned Securities shall not be transferred to Lender on the termination date of
the Loan as required by Section 5;
11.2 Any
Collateral shall not be transferred to Borrower as required by Section 3.6 and
Section 5;
11.3 Borrower
shall fail to comply with the obligation to replace an expiring Letter of Credit
under Section 10.4 and such default is not cured within one Business Day after
notice of such failure to Borrower.
11.4 Borrower
or Lender shall fail to transfer Collateral as required by Section
8;
11.5 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 after notice of such
failure to Borrower or Lender, as the case may be;
11.6 (a)
The Account, Borrower or any direct or indirect parent of Borrower 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
person or any substantial part of its property, or (b) any such case or
proceeding shall be commenced against the Account, Borrower, or any direct or
indirect parent of the Borrower, or another shall seek such an appointment, or
any application shall be filed against such person for a protective decree under
the provisions of SIPA, which (i) is consented to or not timely contested by
such party, (ii) 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 (iii) is not dismissed within 15 days, or
(c) the Account, Borrower or any direct or indirect parent of Borrower shall
make a general assignment for the benefit of creditors, or (d) the Account,
Borrower or any direct or indirect parent of Borrower shall admit in writing its
inability to pay its debts as they become due;
11.7 The
Account, Borrower or any direct or indirect parent of Borrower 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;
11.8 Borrower,
Lender or the Account or any direct or indirect parent of Borrower 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;
11.9 Any
representation made or deemed to be made by a party in respect of this Agreement
or any Loan or Loans made hereunder shall be incorrect or untrue in any material
respect during the term of any Loan hereunder;
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11.10
|
Borrower
or Lender (a) notifies the other, orally or in writing, of its
inability
|
to or its
intention not to perform its obligations hereunder; or (b) otherwise disaffirms,
rejects or repudiates any of its obligations hereunder;
11.11 Borrower
or Lender (a) shall fail to perform any material obligation under
this
Agreement
not specifically set forth in this Section 11, 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, (b) shall have received notice of such failure from the
non-defaulting party, and (c) shall not have cured such failure by the next day
after such notice on which a transfer of funds, Loaned Securities or Collateral,
as the case may be, could be effected pursuant to Section 16.4
hereof;
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11.12
|
Borrower
or any Affiliate of Borrower shall default under any other
securities
|
loan
agreement with PFPC Trust Company or any Affiliate of PFPC Trust Company;
or
|
11.13
|
A
party to this Agreement (“X”) consolidates or amalgamates with, or
merges
|
into, or
transfers all or substantially all of its assets to, another entity and (a) 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 (b) 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.
12.1 If:
(a) any
Default shall occur involving Borrower or an Affiliate of Borrower under Section
11 hereof; or
(b) 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 becomes obligated to return, or is otherwise
deprived of its rights to, any Loaned Securities after their return to Lender,
or Lender is in any way required to pay their value or any related sum
over,
Lender
shall have the right, in addition to any other remedies provided herein or under
applicable law or in equity and without further notice to Borrower:
(i) to
purchase, in a commercially reasonable time and manner (taking into
consideration the nature of the market for the Loaned Securities), a like amount
of the Loaned Securities (“Replacement Securities”) in the principal market
for such securities; or
(ii) to
sell any Collateral in the principal market for such Collateral in a
commercially reasonable time and manner (taking into consideration the nature of
the market for the Collateral) 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
(iii) to
apply and set off the Collateral (including any amounts drawn under a Letter of
Credit supporting any Loan) and any proceeds thereof against the payment of the
purchase price for any Replacement Securities and any amounts due Lender under
Sections 4, 7, 14 and 17 hereof. Lender may also apply the Collateral and any
proceeds thereof to any other obligation of Borrower under this Agreement,
including Borrower's obligations with respect to distributions paid to Borrower
(and not forwarded to Lender) in respect of Loaned Securities.
In the
event that Lender exercises such rights, Borrower's obligation to return a like
amount of Loaned Securities shall terminate.
12.2 In
the event the purchase price of Replacement Securities, plus any and all amounts
due to Lender hereunder, exceeds the Market Value of the Collateral on the date
the Replacement Securities are purchased, Borrower shall be liable to Lender for
the amount of such excess, together with interest on such excess at a per annum
rate that, in the case of purchases of Foreign Securities, is equal to LIBOR,
and in the case of purchases of any other securities and all other amounts due
to Lender hereunder, that is equal to the Fed Funds Rate, in each case as such
rates fluctuate from day to day, from the date of such purchase until the date
of payment of such excess. Lender shall have, and Borrower hereby
grants to Lender, as security for Borrower's obligation to pay such excess, a
security interest in any property of Borrower (including, without limitation,
the Collateral) then held by Lender and a right of setoff against such property
and against any other amount payable by Lender to Borrower. The
purchase price of securities purchased under this Section 12 shall include, and
the proceeds of any sale of Collateral shall be determined after the deduction
of, broker's fees, taxes and commissions and all other reasonable costs, fees
and expenses related to such purchase or sale or to the exercise of Lender's
remedies including, without limitation, reasonable legal fees and
expenses. Upon the satisfaction of all obligations hereunder, any
remaining Collateral shall be returned to Borrower.
13. Borrower's
Remedies.
13.1 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 or in equity and without further notice to
Lender:
(i) to
purchase, in a commercially reasonable time and manner (taking into
consideration the nature of the market for the Collateral), a like amount of
Collateral (“Replacement Collateral”) in the principal market for such
Collateral; or
(ii) to
sell a like amount of Loaned Securities in the principal market for such Loaned
Securities in a commercially reasonable time and manner (taking into
consideration the nature of the market for the Loaned Securities) or to treat
the Collateral as having been purchased by Lender at a purchase price equal to
the Market Value thereof on the day of the Default; and
(iii) to
apply and set off the Loaned Securities and any proceeds thereof against the
payment of the purchase price for any Replacement Collateral, Lender's
obligation to return any cash or other Collateral and any amounts due Borrower
under Sections 4, 7 and 17 hereof. Borrower may also apply the Loaned
Securities and any proceeds thereof to any other obligation of Lender or the
Account under this Agreement, including Lender's obligations with respect to
distributions paid to Lender (and not forwarded to Borrower) in respect of
Collateral.
In the
event that Borrower exercises such rights, Lender's obligation to return a like
amount of Collateral shall terminate; provided, however,
that, where Collateral consists of a Letter of Credit, upon the exercise or
deemed exercise by Borrower of its termination rights under Section 11, Lender
shall immediately return the Letter of Credit to Borrower, and Borrower shall
return to Lender the Loaned Securities or an amount equal to the net proceeds
from the sale (or deemed sale) of the Loaned Securities in the manner described
above, reduced by any other amounts owed by the Account to
Borrower.
13.2 In
the event the sales price received from such Loaned Securities is less than
the purchase price of Replacement Collateral (plus the amount of any cash and
the Market Value of any other Collateral not replaced by Borrower on the date
that the Loaned Securities are sold, and all amounts due to Borrower hereunder),
the Account shall be liable to Borrower for the amount of such deficiency,
together with interest on such deficiency at a per annum rate that, in the case
of Collateral consisting of Foreign Securities, is equal to LIBOR, and in the
case of Collateral consisting of any other securities and all other amounts due
to Borrower hereunder, that is equal to the Fed Funds Rate, in each case as such
rates fluctuate from day to day, from the date of such sale until the date of
payment of such deficiency. Borrower shall have, and Lender as agent
for the Account hereby grants to Borrower, as security for the Account's
obligation to pay such excess, a security interest in any property of the
Account (including, without limitation, the Loaned Securities) then held by
Borrower and a right of setoff against such property and against any other
amount payable by Borrower to Lender in respect of such Account arising
hereunder. The purchase price of any Replacement Collateral purchased
under this Section 13 shall include, and the proceeds of any sale of any Loaned
Securities shall be determined after the deduction of, broker's fees, taxes and
commissions and all other reasonable costs, fees and expenses related to such
purchase or sale or to the exercise of Borrower's 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.
14. Transfer Taxes and
Costs. All transfer taxes, stamp duties and fees and similar
charges 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. Market
Value.
15.1 If
the principal market for the securities to be valued is a national securities
exchange in the United States, their Market Value shall be determined by their
last sale price on such exchange on the preceding Business Day or, if there was
no sale on that day, by the last sale price on the next preceding Business Day
on which there was a sale on such exchange, all as quoted on the consolidated
tape or if not quoted on the consolidated tape, then as quoted by such
exchange.
15.2 If
the principal market for the securities to be valued is the over-the-counter
market, their Market Value shall be determined as follows. If the
securities are quoted on NASDAQ, their Market Value shall be the closing sale
price on NASDAQ on the preceding Business Day or, if the securities are issues
for which last sale prices are not quoted on NASDAQ, the closing bid price on
such day. If the securities to be valued are not quoted on NASDAQ,
their Market Value shall be the highest bid quotation as quoted in or by any of
The Wall Street Journal, the National Quotation Bureau pink sheets, or a
recognized, independent pricing source chosen by the Lender. If the
securities to be valued are Government Securities, their Market Value shall be
the average of the bid and ask quotation as quoted by any recognized,
independent pricing service chosen by the Lender or, if not available from such
a service, as quoted in The Wall Street Journal. In each case, if the
relevant quotation did not exist on such day, then the relevant quotation on the
next preceding Business Day on which there was such a quotation shall be the
Market Value.
15.3 Unless
otherwise agreed, if the securities to be valued are Foreign Securities, their
Market Value shall be determined by Lender in a commercially reasonable manner
as of the close of business on the preceding Business Day (or if there is a
material dispute between Borrower and Lender as to the Market Value of a
particular Foreign Security, the Market Value of such Foreign Security shall be
the price provided by Bloomberg with respect to such Foreign Security as of the
close of business on the preceding Business Day).
15.4 Market
Value shall include, where applicable, accrued interest to the extent not
already included therein (other than any interest transferred to the other party
pursuant to Section 7).
15.5 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.
15.6 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.
16. Transfers.
16.1 All
transfers by either Borrower or Lender of Loaned Securities or Collateral
consisting of “financial assets” (within the meaning of the UCC) hereunder shall
be by (a) in the case of certificated securities, physical delivery of
certificates representing such securities together with duly executed stock and
bond transfer powers, as the case may be, with signatures guaranteed by a bank
or a member firm of the New York Stock Exchange, Inc., (b) registration of an
uncertificated security in the transferee’s name by the issuer of such
uncertificated security, (c) the crediting by a Clearing Organization or other
“securities intermediary” (within the meaning of the UCC) of such financial
assets to the transferee’s “securities account” (within the meaning of the UCC)
maintained with such Clearing Organization or “securities intermediary” (within
the meaning of the UCC), or (d) such other means as Borrower and Lender may
agree. For avoidance of doubt, the parties agree and acknowledge that
the term “securities,” as used in this Agreement (except in this Section 16.1),
shall include any “security entitlements” with respect to such securities
(within the meaning of the UCC). In every transfer of “financial
assets” (within the meaning of the UCC) hereunder, the transferor shall take all
steps necessary (i) to effect a delivery to the transferee under Section 8-301
of the UCC, or cause the creation of a security entitlement in favor of the
transferee under Section 8-501 of the UCC, (ii) to enable the transferee to
obtain “control” (within the meaning of Section 8-106 of the UCC), and (iii) to
provide the transferee with comparable rights under any applicable foreign law
or regulation or under any amended version of Article 8 of the UCC that may
hereafter be in effect.
16.2 All
transfers of cash hereunder shall be by (a) wire transfer in immediately
available, freely transferable funds or (b) such other means as Borrower and
Lender may agree.
16.3 All
transfers of a Letter of Credit from Borrower to Lender shall be made by
physical delivery of the Letter of Credit to Lender. Transfer of a
Letter of Credit from Lender to Borrower shall be made by causing such Letter of
Credit to be returned or by causing the amount of such Letter of Credit to be
reduced to the amount required after such transfer.
16.4 A
transfer of securities, cash or Letters of Credit may be effected under this
Section 16 on any day except (a) a day on which the transferee is closed for
business at its address set forth on the signature page hereof or (b) 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.
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, so notify Borrower in writing upon the execution of this Agreement
or upon initiation of such Loan under Section 1.1. 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, January 23, 1981; as amended, 52 Fed. Reg.
18754, May 19, 1987), or any successor thereto, unless Borrower certifies that
neither it nor any of its Affiliates is a party-in-interest to the Plan for
purposes of the Employee Retirement Income Security Act of 1974. If a
Loan is to be conducted in accordance with Prohibited Transaction Exemption
81-6, then Borrower represents and warrants to Lender that it is either (a) a
bank subject to federal or state supervision, (b) a broker-dealer registered
under the Exchange Act or (c) 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 (d) 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 Title I 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 for which such Loan is made 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 or, in the case of an Account that is a portfolio, series or sub-trust
of an investment company registered as such under the Investment Company
Act of 1940, be binding upon or affect any assets of any other portfolio, series
or sub-trust of such investment company. Without limitation of
Lender's obligations to Borrower under Sections 1.2 and 1.3 hereof, neither PFPC
Trust Company (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 Account in the event
of the occurrence of a Default involving the Account.
20. Indemnification. Borrower
agrees to indemnify and hold harmless Lender and the Account (including the
sponsor and fiduciaries of any Account which is a Plan) from any and all
damages, losses, liabilities, claims, costs and expenses (including attorneys'
fees) which Lender or the 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. Except
as provided in Section 8.1, all determinations of the Market 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. With respect to each Account that has represented
to the Lender that it is a business or statutory trust, notice is hereby given
that this instrument is executed by Lender as agent on behalf of the Trustees of
each such Account as Trustees and not individually and that the obligations of
such Account under 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 Commonwealth of Pennsylvania without giving
effect to the conflict of laws principles thereof. Borrower hereby
irrevocably consents to the exclusive jurisdiction of any state or Federal court
located in Philadelphia, Pennsylvania; provided, that nothing contained in this
Agreement will prevent Lender from bringing any action, enforcing any award or
judgment or exercising any rights against Borrower individually, against any
security or against any property of Borrower within any other county, state or
nation. Lender and Borrower agree that the venue provided above is
the most convenient forum for both Lender and Borrower, and Borrower waives any
objection to venue and any objection based on a more convenient forum in any
action instituted under this Agreement.
24. WAIVER OF JURY
TRIAL. EACH OF BORROWER AND LENDER IRREVOCABLY WAIVES ANY AND
ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF
ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
DOCUMENTS. BORROWER AND LENDER ACKNOWLEDGE THAT THE FOREGOING WAIVER
IS KNOWING AND VOLUNTARY. Borrower acknowledges that it has read and
understood all the provisions of this Agreement, including the waiver of jury
trial, and has been advised by counsel as necessary or appropriate.
25. Waiver. The
failure of either party to exercise any remedy or 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 exercise any of its
remedies or 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.
26. Remedies. All
remedies hereunder and all obligations with respect to any Loan shall
survive the termination of the relevant Loan, return of Loaned Securities or
Collateral and termination of this Agreement. The parties agree that,
in the event that Lender fails to enforce any of its rights or remedies
hereunder, such rights and remedies may be enforced against Borrower by the
Account.
27. 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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28.
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Miscellaneous.
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28.1 This
Agreement constitutes the entire agreement between the parties and supersedes
any other agreement between the parties concerning loans of securities between
the parties hereto, other than any agreement between the parties that specifies
that it relates exclusively to loans of securities of a particular Account or
group of Accounts. 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 specifically referring hereto,
signed by the party against whom enforcement is sought.
28.2 Borrower
authorizes Lender to record any and all telephonic or other oral communications
given or received by Lender. Borrower is hereby informed that
telephonic communications made to or from Lender’s trading desk and/or
operations department will be recorded.
29. Definitions. For
the purposes hereof:
29.1 “Account”
means, with respect to any Loan, the account for which Lender is acting as agent
in making the Loan.
29.2
“Affiliate” shall mean any entity which controls, is controlled by, or is under
common control with another entity.
29.3 “Bankruptcy
Code” shall have the meaning set forth in Section 10.6.
29.4 “Borrower”
shall have the meaning set forth in the introduction.
29.5 “Borrower
Payment” shall have the meaning set forth in Section 7.4.
29.6 “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 the purposes of computing Market Value in Section 15, “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) (a) on which regular trading
occurs in the principal market for any Loaned Securities or for any securities
Collateral under any outstanding Loan or (b) on which transfers of cash
Collateral may be effected by Lender and Borrower (or any nominee or agent
thereof).
29.7 “Cash
Collateral Fee” shall have the meaning set forth in Section 4.1.
29.8 “Clearing
Organization” shall mean (a) The Depository Trust Company or any other domestic
clearing agency registered with the United States Securities and Exchange
Commission; (b) a Federal Reserve Bank, to the extent that it maintains a
book-entry system; (c) with respect to Foreign Securities, Euroclear,
Clearstream and any other securities depository or clearing agency approved by
Lender that is incorporated under the laws of a country other than the United
States and that is authorized to act as a securities depository or clearing
agency; or (d) if agreed to by Borrower and Lender, such other “securities
intermediary” (within the meaning of the UCC) at which Borrower (or Borrower's
agent) and Lender (or Lender's agent) maintain accounts.
29.9
“Collateral” shall mean: (a) all cash, Government Securities and other
marketable securities or Letters of Credit that Borrower and Lender agree shall
be acceptable as collateral, whether now owned or hereafter acquired, which are
transferred to Lender pursuant to Sections 3 or 8; (b) all accounts in which
such property is deposited and all securities, instruments or other investment
property in which any cash collateral is invested or reinvested; and (c) any
payments, distributions and proceeds of the foregoing. For purposes
of the return of Collateral by Lender or purchase or sale of securities in
connection with the exercise of Lender's or Borrower's remedies, such term shall
include securities of the same issuer, class and quantity as the Collateral
initially transferred by Borrower to Lender.
29.10
“Collateral Distributions” shall have the meaning set forth in Section
7.4.
29.11
“Contractual Currency” shall mean: (a) with respect to any payment in respect of
a distribution under Section 7, the currency in which the underlying
distribution was made; (b) with respect to any return of cash, the currency in
which the underlying transfer of cash was made; (c) with respect to any other
payment of cash in connection with a Loan, United States dollars or such other
currency as may be agreed upon by Borrower and Lender; and (d) for purposes of
determining Market Value of Loaned Securities and Collateral in respect of a
Loan in which the Loaned Securities and the Collateral are denominated in
different currencies, the currency in which the Collateral is
denominated.
29.12
“Default” shall have the meaning set forth in Section 11.
29.13
“Exchange Act” shall have the meaning set forth in Section 2.
29.14
“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.
29.15
“Foreign Securities” shall mean securities that are principally cleared and
settled outside of the United States.
29.16
“Government Securities” shall mean government securities as defined in Section
3(a)(42)(A)-(C) of the Exchange Act.
29.17
“Lender” shall have the meaning set forth in the introduction.
29.18
“Lender Payment” shall have the meaning set forth in Section 7.4.
29.19
“Letter of Credit” shall mean an irrevocable, unconditional, stand-by letter of
credit, in form and substance satisfactory to Lender, 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).
29.20
“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).
29.21
“Loan” shall have the meaning set forth in Section 1.1.
29.22
“Loan Fee” shall have the meaning set forth in Section 4.1.
29.23
“Loaned Securities” shall mean any security (as defined in the Exchange Act)
that is transferred in a Loan until such security (or an identical security) is
transferred back to Lender hereunder, except that if any new or different
security shall be exchanged for any Loaned Security by recapitalization, merger,
consolidation or other corporate action, such new or different security shall,
effective upon such exchange, be deemed to become a Loaned Security in
substitution for the former Loaned Security for which such exchange is
made. For purposes of the return of Loaned Securities by Borrower or
purchase or sale of securities in connection with the exercise of Lender's or
Borrower's remedies hereunder, such term shall include securities of the same
issuer, class and quantity as the Loaned Securities, as adjusted pursuant to the
preceding sentence.
29.24
“Margin Deficit” and “Margin Excess” shall have the meanings set forth in
Sections 8.2 and 8.3, respectively.
29.25
“Margin Percentage” shall have the meaning set forth in Section
3.1.
29.26
“Margin Regulations” shall have the meaning set forth in Section
9.4.
29.27
“Market Value” shall mean market value determined in accordance with Section
15.
29.28
“Plan” shall have the meaning set forth in Section 18.
29.29
“Required Value” shall have the meaning set forth in Section 3.1.
29.30
“Securities Distributions” shall have the meaning set forth in Section
7.4.
29.31
“SIPA” shall mean the Securities Investor Protection Act.
29.32
“Tax” shall have the meaning set forth in Section 7.4.
29.33 “Transfer”
or “transfer” of cash, securities or Letters of Credit by Lender to Borrower or
by Borrower to Lender shall mean a transfer effected in accordance with Section
16.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
|
Address
for Notices:
|
PFPC
Trust Company, in its capacity as agent for Accounts and not in its
individual capacity
|
|
|
Securities
Lending
|
0000
Xxxxxxx Xxxx.
0xx Xxxxx,
Xxxxx 000
Xxxxxxxxxxxx,
XX 00000 By:___________________________
Attn: Xxx
Xxxxxxxx,
XX Name:
President Title:
Facsimile
No.: 000-000-0000
Telephone
No.: 000-000-0000
Address
for
Notices: ______________________________
as Borrower
Attn:
By:___________________________
Name:
Title:
Facsimile
No.:
Telephone
No.:
ANNEX
I
Type of Loaned
Securities Margin
Percentage1/
Foreign
equity and corporate
securities 105%
United
States equity and corporate
securities 102%
(including
American Depository Receipts)
Government
Securities 102%
Foreign
government and agency
securities 105%
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|
ATTACHMENT
B
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ELIGIBLE
BORROWERS
The
following list of Eligible Borrowers relates to all of the Sub-accounts set
forth on Exhibit 1 and may be amended from time to time in the manner set forth
in the Agreement.
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Banc
of America Securities LLC
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Xxxxxx
Brothers Inc.
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Barclays
Capital, Inc.
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Xxxxxxx
Xxxxx Government Securities Inc.
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Bear
Xxxxxxx & Co.
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Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx
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Citigroup
Global Markets Inc.
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Incorporated
|
|
Credit
Suisse First Boston Corporation
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Xxxxxx
Xxxxxxx Securities Services Inc.
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|
Xxxxxxx
Sachs & Co.
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Xxxxxx
Xxxxxxx & Co. Incorporated
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|
X.X.
Xxxxxx Securities Inc.
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UBS
Securities LLC
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ATTACHMENT
C
ELIGIBLE
COLLATERAL
(Capitalized
terms have the same meanings as in the Agreement.)
Type of
Collateral Yes No
A. Cash
in the following currencies:
(1) U.S.
dollars
X ___
(2) Other:
____________ ___ X_
B.
Government
Securities ___ X
C.
Letters of
Credit ___ X
D. Other
Investments, as described below:
1. Money
market instruments, including:
___________________________________
___________________________________
___________________________________
2. ___________________________________
___________________________________
___________________________________
ATTACHMENT
D
INVESTMENT
GUIDELINES
Permissible
Investments: (A) securities
issued or guaranteed as to principal and interest by
the U.S. Government or by its agencies
or instrumentalities
and related custodial
receipts;
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(B)
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commercial
paper and other obligations issued or guaranteed by U.S. or foreign
corporations;
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(C)
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U.S.
dollar-denominated obligations issued or supported by the credit of U.S.
or foreign banks or savings institutions with total assets in excess of $1
billion (including obligations of foreign branches of such banks) (i.e.
CD’s, BA’s, and time deposits);
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|
(D)
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repurchase
agreements relating to the above instruments (provided the instruments
meet the “quality” standard set forth below), as well as Agency
mortgage-backed securities and equity
securities (collateralization: 102% on Treasuries; 103% on
Agencies (including Agency mortgage-backed); 105% on
equities);
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(E)
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unaffiliated
money market funds; and
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(F)
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Institutional
Money Market Trust (IMMT).
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Quality:
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First
Tier Securities, as defined by Rule 2a-7 of the Investment Company Act of
1940, or of comparable quality, if unrated. IMMT is deemed to
meet this requirement provided that it complies with its stated investment
policies. Quality is determined at time of
acquisition.
|
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Maturity:
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397
days or less from date of purchase. Currently, investments will
be overnight only, unless matched to a specific term
loan.
|
ATTACHMENT
E
COMPENSATION
SCHEDULE
PFPC
Fee:
30% of
the Spread (if cash Collateral) or of the Fee Paid By Borrower (if non-cash
Collateral).
METHOD OF
CALCULATION - EXAMPLE
Cash
Collateral
Investment Rate
(hypothetical) 8%
Rebate to Borrower
(negotiated) 6%
Spread 2%
Loan Days Income
on
Size Open Investment* Rebate Spread PFPC
Fee Income to
Customer
$500,000 8 $889.89 $666.67 $222.22 $66.67 $155.55
* Formula: Loan Value x Investment Rate
x # Days Open
360
Non-Cash
Collateral
Fee Paid by Borrower
(negotiated) 1.5%
Loan Days Fee
Paid By
Size Open Borrower**
PFPC FeeIncome to
Customer
$500,000
8 $166.66
$50.00 $116.66
** Computation: Loan Value x Fee Rate x # of
Days Open
360
ATTACHMENT
F
PROXY
SENSITIVE
Check
this box if you do not wish to have each Sub-account coded as “proxy sensitive”
as referenced in Section 1(h) of the Agreement:
Sub-accounts
which are not “proxy-sensitive”:
______________________________
______________________________
______________________________
