EX-99.(g)(3)
XXXXX FARGO FUNDS TRUST
XXXXX FARGO MASTER TRUST
XXXXX FARGO VARIABLE TRUST
SECURITIES LENDING AGENCY AGREEMENT
This SECURITIES LENDING AGENCY AGREEMENT is made as of August 9, 2006 (this
"Agreement") among Xxxxx Fargo Funds Trust, Xxxxx Fargo Master Trust and Xxxxx
Fargo Variable Trust (the "Trusts" and each a "Trust") on behalf of their funds
now existing or hereafter created (the "Funds"), Xxxxx Fargo Funds Management,
LLC, as adviser for the Funds ("Adviser") and Xxxxx Fargo Bank, N.A., as
lending agent for the Funds ("Lending Agent").
WHEREAS, Lending Agent has established a securities lending program (the
"Program") to permit its retirement plan, trust and custody clients to loan
securities;
WHEREAS, the Funds listed on Schedule 1 hereto (the "Participating Funds")
desire to participate in the Program and the Boards of Trustees of the Trusts
have approved their participation in the Program;
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, the parties hereto, intending to be bound, hereby agree as follows:
1. Duties of Adviser. As investment adviser to the Participating Funds, Adviser
shall have the authority and responsibilities and perform the duties relating
to the Participating Funds' securities lending activities provided in this
Section 1.
1.1 Approve Borrowers. Adviser shall evaluate the creditworthiness of and
approve borrowers (the "Approved Borrowers").
1.2 Approve Loan Terms. Adviser shall evaluate and approve the overall
terms and conditions of securities loans entered into by the Participating
Funds pursuant to this Agreement, by evaluating the terms and conditions of
a master form of securities loan agreement ("MSLA") attached hereto as
Schedule 3 and any material deviations therefrom.
1.3 Approve Cash Collateral Investments. Adviser shall evaluate and
approve permissible investments for cash Collateral (as defined in Section 6
herein) received from the Approved Borrowers that borrow securities from the
Participating Funds (the "Borrowers") or obtained through repurchase
transactions with respect to non-cash Collateral received from the Borrowers.
1.4 Identify Securities. Adviser shall identify to Lending Agent any
securities in the Participating Funds that are not eligible to be loaned
under the Program.
1.5 Monitor and Supervise. Adviser shall monitor and supervise the
Lending Agent's performance of its duties and obligations under this
Agreement.
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1.6 Comply with Instructions from Participating Funds and Sub-Advisers.
Adviser shall promptly comply with any instruction from a Participating Fund
to take or not to take any action permitted to be taken by Adviser under
this Agreement in accordance with its terms. Adviser shall, in its
discretion and to the extent it deems appropriate, comply with any such
instruction from a Participating Fund's sub-adviser.
2. Delegation of Authority to Lending Agent. The Participating Funds hereby
delegate to Lending Agent the administration of the Participating Funds'
securities lending activities, subject to the monitoring and supervision of
Adviser, and Lending Agent hereby accepts such delegation.
2.1 Retained Authority of Adviser. Adviser retains full discretion and
power to prevent any loan from being made or to instruct Lending Agent to
terminate any loan once made.
2.2 Limited Delegation by Lending Agent. With the prior written consent
of Adviser, Lending Agent may delegate the performance of any or all of its
duties under this Agreement, but shall remain directly responsible for the
performance of all such duties by any such delegate.
3. Duties of Lending Agent. In accordance with securities lending guidelines
approved by the Boards of Trustees of the Trusts (the "Guidelines") and subject
to the direction and supervision of Adviser, Lending Agent shall perform
certain duties relating to the Participating Funds' securities lending
activities as provided in this Section 3.
3.1 Lending to Approved Borrowers. Lending Agent shall enter into loans
only with entities whose creditworthiness has been evaluated by Adviser and
who have been approved by Adviser to act as Approved Borrowers as set forth
on Schedule 2 hereto.
3.1.1 Schedule of Approved Borrowers. Either Adviser or Lending Agent
may remove a borrower from the Schedule of Approved Borrowers at any
time with or without cause by executing a revised Schedule 2 and
delivering it to the other parties hereto. Borrowers may be added to the
Schedule of Approved Borrowers only upon mutual consent of Adviser and
Lending Agent by executing a revised Schedule 2.
3.2 Lending on Approved Terms. Lending Agent shall negotiate and enter
into loans on terms and conditions evaluated and approved by Adviser. Any
such loan shall be made pursuant to an MSLA substantially in the form set
forth in Schedule 3 hereto, unless Adviser otherwise authorizes or directs
in writing.
3.3 Investing Cash Collateral. Lending Agent shall invest cash Collateral
received from the Approved Borrowers only in investments that are consistent
with the investment objectives, principal investment strategies and
investment policies of the Participating Fund whose securities are loaned
pursuant to this Agreement and have been evaluated and approved by Adviser.
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3.4 Lending of Available Securities. Lending Agent shall lend securities
that are held in accounts maintained with Lending Agent (each a "Custody
Account"). Except as set forth in a written instrument provided from time to
time by Adviser, any securities held in a Custody Account for a
Participating Fund shall be available for lending pursuant to this Agreement
("Available Securities").
3.5 Authorizations by the Participating Funds. Each Participating Fund
hereby authorizes and empowers Lending Agent to execute in the Participating
Fund's name all agreements and documents as may be necessary or appropriate
to carry out the purposes of this Agreement. It is understood and agreed
that Lending Agent is authorized to supply any information regarding the
Participating Fund and any loan of securities effected pursuant to an MSLA
that is required by this Agreement or under applicable law.
4. Securities Loan Agreement. Lending Agent is hereby authorized to execute an
MSLA as each Participating Fund's agent on a disclosed basis with each Approved
Borrower. Subject to Section 3.2 hereto, each Participating Fund hereby
authorizes Lending Agent to revise, without notice to the Participating Fund,
the terms of any MSLA with any Approved Borrower as Lending Agent deems
necessary or appropriate, in its discretion, for the effectuation of any
transaction contemplated hereby or thereby. Each Participating Fund agrees to
be bound by the terms of MSLA's entered into by Lending Agent with Borrowers
with respect to the Participating Fund's participation in the Program as though
the Participating Fund were itself a party to all of such agreements. Lending
Agent shall negotiate on behalf of each Participating Fund with each Approved
Borrower all terms of a securities loan, including the amounts or fees to be
received or paid pursuant to the applicable MSLA. Lending Agent may prepare a
transactional confirmation in respect of each loan effected pursuant to an
MSLA, setting forth the securities borrowed and the material terms of the loan,
and may transmit the same to the Approved Borrower in accordance with such
MSLA. Each Participating Fund understands and agrees that the identity of the
Participating Fund will be disclosed by Lending Agent to the Approved Borrower
in accordance with the MSLA.
5. Loan of Securities. During the term of any securities loan, each
Participating Fund shall permit the loaned securities to be transferred,
pursuant to an MSLA, into the name of and voted (where applicable) by an
Approved Borrower. Lending Agent is authorized in its discretion to terminate
any securities loan entered into with a Borrower without notice to the
Participating Fund or Adviser, subject to the conditions of the relevant MSLA.
Adviser may instruct Lending Agent to terminate any loan on any date, subject
to the conditions of the relevant MSLA. Lending Agent shall promptly comply
with any such instruction.
5.1 Limits on Return of Loaned Securities. Each Participating Fund
acknowledges that, under the applicable MSLA, Borrowers will not be required
to return loaned securities immediately upon notice from Lending Agent
terminating the applicable loan, but instead will be required to return such
loaned securities within the earlier of: (i) the standard settlement period
for trades of the loaned securities entered into on the date of such notice
in the principal market therefor; or (ii) in the case of corporate
securities, three business days (as defined in the MSLA) from the giving of
such notice or, in the case of securities of the U.S. Government, its
agencies or instrumentalities ("U.S. Government Securities"), no later than
the next business day from the giving of such notice.
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5.2 Recall of Loaned Securities. Upon receiving a notice from Adviser
that Available Securities that have been loaned to a Borrower should no
longer be considered Available Securities or have been sold, Lending Agent
shall notify promptly thereafter the Borrower that has borrowed such
securities that the loan of such securities is terminated and that such
securities are to be returned within the time specified by the applicable
MSLA.
5.3 Notification of Sales of Loaned Securities. Any loaned securities may
be sold by a Participating Fund's portfolio manager at any time. Adviser
hereby acknowledges its obligation to Lending Agent to provide notification
of any sale of securities that are out on loan by the close of business, in
the principal market therefor, on the trade date of such sale.
6. Loan Collateral. For each loan of securities, Lending Agent shall require
the Borrower to pledge as collateral the following items: (i) cash in U.S.
dollars; (ii) U.S. Government Securities; or (iii) irrevocable performance
letters of credit issued by (a) a domestic bank that is organized under the
laws of the United States, (b) a domestic bank that is organized under the laws
of a State, or (c) a foreign bank that has filed an agreement with the Federal
Reserve Board to comply with the same rules and regulations applicable to U.S.
banks in securities credit transactions (collectively, "Collateral") having an
initial market value (as determined by Lending Agent pursuant to the applicable
MSLA) at least equal to 102% of the market value (including any accrued
interest) of any domestic securities loaned or 105% of the market value
(including any accrued interest) of any foreign securities loaned, as the case
may be (as determined pursuant to the applicable MSLA).
6.1 Receipt of Collateral. Prior to the commencement of any loan, Lending
Agent shall instruct the Borrower to transfer to Lending Agent the required
Collateral. Collateral will be received from a Borrower prior to or
simultaneous with delivery of securities loaned. If the Borrower does not
provide the required Collateral to Lending Agent, as agreed, then Lending
Agent will cancel the corresponding loan instruction prior to delivery.
6.2 Holding and Administration of Collateral. All Collateral consisting
of cash and securities shall be received, held and administered by Lending
Agent for the benefit of a Participating Fund in the applicable Custody
Account or other account established for the purpose of holding Collateral.
Collateral consisting of cash shall be placed in an investment listed in the
attached Schedule 4 ("Permitted Investments") in accordance with Section 8
herein. To the extent permitted under the Investment Company Act of 1940,
and as interpreted by the staff of the Securities and Exchange Commission,
or pursuant to any exemptive order thereunder, cash Collateral may be
commingled for investment purposes. Collateral consisting of letters of
credit shall be received, held and administered by Lending Agent for the
benefit of a Participating Fund in accordance with the terms of this
Agreement.
6.2.1 Maintenance of Collateral Margin. In respect of loans of
securities entered into on behalf of a Participating Fund, Lending Agent
will xxxx-to-market on a daily basis, in accordance with the applicable
MSLA, the loaned securities and all Collateral and, where applicable,
Lending Agent shall, in accordance with the provisions of the applicable
MSLA, request the Borrower to deliver sufficient additional Collateral
to a Participating Fund to satisfy the
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applicable Collateral requirement. With respect to loans involving
domestic securities, Collateral shall be remarked to 102% of the market
value of the securities loaned (including any accrued interest). With
respect to loans involving foreign securities, Collateral shall be
remarked to 105% of the market value of the securities loaned (including
any accrued interest). With respect to loans of U.S. Government
Securities, Collateral shall be remarked to 102% of market value only if
the market value of such Collateral falls below 100% of the market value
of the securities loaned (including any accrued interest). If, as a
result of marking-to-market, Collateral is required to be returned to
the Borrower under the MSLA, Lending Agent will timely return such
Collateral to the Borrower. Lending Agent is authorized to consent to
any adjustment in the amount available to be drawn under any letter of
credit in order to satisfy any requirement under an MSLA to return
excess Collateral to a Borrower as a result of marking-to-market.
6.2.2 Substitution of Collateral. Each Participating Fund
acknowledges and agrees that, pursuant to any MSLA, Lending Agent may
permit a Borrower to substitute Collateral of the type specified in this
Section 6 during the term of any loan, so long as the required margin in
respect of such loan continues to be satisfied at the time of such
substitution.
6.2.3 Return of Collateral. Upon termination of the loan, Lending
Agent shall instruct the Borrower to return the loaned securities to the
applicable Custody Account. Lending Agent shall monitor the return of
loaned securities. Once Lending Agent has confirmed settlement of the
return of the loaned securities, Lending Agent shall effect, on behalf
of each Participating Fund, the redemption of any Permitted Investment,
if applicable, and effect the return of Collateral due the Borrower in
accordance with the Borrower's transfer instructions with respect
thereto.
7. Income, Corporate Actions and Substitute Payments. The parties hereto shall
deal with corporate actions and income and related payments as provided in this
Section 7.
7.1 Income and Related Payments to Participating Funds. Lending Agent
shall instruct each Borrower that is a party to an MSLA to remit to Lending
Agent for the account of the Participating Fund any interest or distribution
declared on loaned securities including, but not limited to, all cash
dividends, stock dividends, stock splits, rights of distribution, conversion
privileges, tender and exchange offers, and similar corporate actions.
Lending Agent shall receive, hold and administer the same, for the account
of the Participating Fund. Lending Agent shall also instruct each Borrower
that is a party to an MSLA to remit to Lending Agent for the account of the
Participating Fund any other fees payable on loaned securities, and Lending
Agent shall receive, hold and administer the same for the account of the
Participating Fund.
7.2 Income and Related Payments to Borrowers. Where Collateral consists
of securities and the Borrower, pursuant to an MSLA, is due to receive an
amount equal to the interest or distribution declared in respect of such
Collateral during the term of the related securities loan, Lending Agent
shall promptly remit or cause to be remitted such payment on
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behalf of each Participating Fund to the Borrower in accordance with such
Borrower's instructions.
7.3 Corporate Actions and Proxy Rights. Each Participating Fund
acknowledges that, with respect to securities that are out on loan over the
applicable record date for corporate actions, unless otherwise agreed
hereto, it will not be entitled to (i) participate in any dividend
reinvestment program; (ii) receive stock in an optional cash/stock dividend
plan; or (iii) vote any proxies. Corporate actions will otherwise be
processed in accordance with the MSLA.
8. Investment of Collateral. Lending Agent shall invest cash Collateral
received in respect of any loan, subject to an obligation, upon the termination
of the loan, to return to the Borrower the amount of cash initially pledged (as
adjusted for any interim marks-to-market).
8.1 Collateral Investment Direction. Each Participating Fund hereby
authorizes and directs Lending Agent to cause to be invested, on the
Participating Fund's behalf and at the Participating Fund's sole risk, all
Collateral in the form of cash, including money received with respect to the
investment of the same, by effecting purchases and sales and/or
subscriptions and redemptions of such Collateral in any Permitted Investment
set forth on Schedule 4 hereto (which may from time to time be updated in
writing by Adviser). Upon receipt of instructions (which may be in the form
of a standing instruction) from Adviser, Lending Agent shall, where
applicable, send timely instructions to the transfer agent of a Permitted
Investment with respect to any cash transfers required to be completed in
conjunction with any subscription or redemption in one or more Permitted
Investments.
8.2 Collateral Investment Risk. Any such investment shall be at the sole
risk of a Participating Fund. Any income or gains and losses from investing
and reinvesting any cash Collateral delivered by a Borrower pursuant to an
MSLA shall be at the Participating Fund's risk, and the Participating Fund
agrees that to the extent any such losses reduce the amount of cash below
the amount required to be returned to the Borrower upon the termination of
any loan, the Participating Fund will, on demand of Lending Agent,
immediately pay or cause to be paid to such Borrower an equivalent amount in
cash.
8.3 No Investment Advice. Each Participating Fund understands and agrees
that (i) Lending Agent shall not provide investment advice or exercise any
decision-making authority or control with respect to the investment of cash
Collateral, and (ii) any investment of cash Collateral in one or more
Permitted Investments may only be effected consistent with Adviser's
instruction to Lending Agent (which may be in the form of a standing
instruction).
9. Borrower Default. In the event of a default by a Borrower with respect to
any loan entered into pursuant to an MSLA, Lending Agent shall exercise its
best judgment to pursue such remedies on behalf of the Participating Funds as
Lending Agent is entitled to pursue under the applicable MSLA.
10. Statements. Lending Agent will provide to each Participating Fund: (i) upon
request, a daily statement of activity setting forth information relating to
loans made, outstanding and terminated, and marks-to-market, collateral and
income earned; and (ii) promptly after the end of
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each month, a statement indicating for the preceding calendar month the
securities loaned by the Participating Fund, the value of such securities, the
identity of the Borrowers, the nature and amount of Collateral pledged or
delivered as security for the loaned securities, the income received (or loss
incurred) from the daily investment of cash Collateral, the amounts of any fees
or payments paid with respect to each loan and such other information as the
parties hereto may agree to from time to time.
11. Fund Information. Each Participating Fund covenants and agrees to promptly
furnish to Lending Agent any information regarding the Participating Fund that
is necessary to effect transactions on behalf of the Participating Fund
including, but not limited to, restrictions it wishes to impose with respect to
the acceptance of forms of Collateral or lending to any Borrower or any
limitations imposed pursuant to any applicable law, regulation, authority,
charter, by-law, statute or other instrument.
12. Tax Treatment. Each Participating Fund acknowledges that it has made its
own determination as to the tax treatment of any securities loan transactions
undertaken pursuant to this Agreement and of any dividends, distributions,
remuneration or other funds received hereunder. Each Participating Fund also
acknowledges that, to the extent that either the Participating Fund or the
Borrower is a non-U.S. resident, Lending Agent may be required to withhold tax
on amounts payable to or by the Participating Fund pursuant to a securities
loan and may at any time claim from the Participating Fund any shortfall in the
amount Lending Agent so withheld.
13. Allocation of Securities Loans Among Participants. The Participating Funds
acknowledge that Lending Agent maintains a list of securities available for
lending through the Program, including available Participating Fund securities.
Lending Agent will use reasonable efforts to allocate loans among participants
in the Program in a manner that is fair to all participants, including the
Participating Funds. As a result of this allocation, the Participating Funds
understand that a single Approved Borrower may be loaned a significant portion,
or all, of the Participating Fund's securities available for lending. Each
Participating Fund also understands that other Program participants may absorb
all demand for particular securities and that the Participating Fund's
securities may not be loaned even where identical securities are being loaned
by Lending Agent as part of the Program on behalf of other participants.
14. Representations and Warranties. Each party represents and warrants to each
other that (i) it has due authority to enter into and perform this Agreement
and any transactions contemplated thereby; (ii) the execution and performance
of this Agreement and any transaction contemplated thereby has been duly
authorized by all necessary action, corporate or otherwise, and does not and
will not violate any law, regulation, charter, by-law or other instrument,
restriction or provision applicable to it; and (iii) this Agreement constitutes
such party's legal, valid and binding obligation enforceable in accordance with
its terms. In addition, each Participating Fund represents that: (a) any loan
authorized hereunder and the performance of this Agreement in respect of such
loan is authorized by the prospectus and other constitutive documents of the
Participating Fund (including any limits as to the aggregate amount of
authorized lending under such documents); (b) as to any securities loaned at
any time and from time to time on behalf of a Participating Fund, the
Participating Fund shall be the owner thereof with clear title thereto and no
lien, charge or encumbrance upon such securities shall exist; (c) it
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is not a plan subject to the requirements of the Employee Retirement Income
Security Act of 1974, as amended, and agrees to promptly notify the Agent if
this representation shall cease to be true at any time during the term of this
Agreement; and (d) the reinvestment of cash Collateral in each Permitted
Investment is consistent with the Participating Fund's investment policies and
the Guidelines. Lending Agent represents that: (a) any loan made hereunder
shall be consistent with the Guidelines and (b) any reinvestment of cash
Collateral shall be consistent with the investment objectives, principal
investment strategies and investment policies of the Participating Fund whose
securities were loaned pursuant to this Agreement.
15. Non-Exclusivity of Agency Service and Similar Matters. Each Participating
Fund acknowledges that Lending Agent, acting on behalf of other accounts, may
effect transactions with or for the same institutions to which loans of
securities may be made hereunder, which transactions may give rise to potential
conflicts of interest. Each Participating Fund further acknowledges that
Lending Agent may engage in securities lending transactions as agent for other
lenders. Lending opportunities among borrowers under the Program, including
Approved Borrowers, shall be allocated at the discretion of Lending Agent in an
equitable manner.
16. Reliance on Participating Fund Communications. Lending Agent shall be
entitled to conclusively rely upon any certification, notice or other
communication (including by telephone (if promptly confirmed in writing),
facsimile, or email) reasonably believed by it to be genuine and correct and to
have been signed or sent by or on behalf of an approved person ("Approved
Person") of the party sending such certification, notice or other
communication. Set forth on Schedule 5 hereto is a list of Approved Persons for
each of the parties hereto, which list may be amended by any party from time to
time upon notice to the other parties. No provision of this Agreement shall
require Lending Agent to expend or risk its own funds in the performance of its
duties hereunder. Lending Agent reserves the right to notify a Participating
Fund of any restrictions (self-imposed or otherwise) concerning its activities
worldwide.
17. Compensation. An exemptive order obtained from the Securities and Exchange
Commission permits Lending Agent to receive a percentage of the Account
Revenues for serving as Securities Lending Agent. As used herein, "Account
Revenues" means all revenue, in the form of (i) earnings on the investment of
cash Collateral provided by a Borrower in connection with a loan made pursuant
to this Agreement, net of any agreed-upon amount payable to the Borrower out of
such earnings, or (ii) separate lending fees payable by a Borrower when the
Collateral provided by the Borrower is in the form of letters of credit or U.S.
Government Securities. Account Revenues will be calculated and credited
monthly. Lending Agent shall be responsible for all costs of the Program. The
percentage of the Account Revenues payable to Lending Agent as compensation for
its services as lending agent shall be agreed upon in writing by each Trust and
Lending Agent from time to time.
18. Termination. This Agreement may be terminated at the option of any of the
parties upon 60 days' notice to the others with or without cause. Upon mutual
agreement, the parties may waive all or part of the notice period.
19. Action on Termination. It is agreed that: (i) upon receipt of notice of
termination, no further loans shall be made hereunder by Lending Agent; and
(ii) Lending Agent shall, within a reasonable time after receipt of notice of
termination of this Agreement, begin the process of
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terminating all outstanding loans so that all loaned securities shall be
returned to the Participating Funds prior to the effective date of any such
termination. The provisions hereof shall continue in full force and effect in
all other respects until all loans have been terminated and all obligations
satisfied as herein provided.
20. Notices. All notices, demands and other communications hereunder shall be
in writing and delivered or transmitted (as the case may be) by registered
mail, facsimile, courier, email or be effected by telephone promptly confirmed
in writing and delivered or transmitted as aforesaid, to the intended
recipient. Notices shall be effective upon receipt.
Notice to the Participating Funds shall be directed as follows:
Xxxxx Fargo Funds Trust
Xxxxx Fargo Master Trust
Xxxxx Fargo Variable Trust
c/o Wells Fargo Funds Management, LLC
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: C. Xxxxx Xxxxxxx
Notice to Adviser shall be directed as follows:
Xxxxx Fargo Funds Management, LLC
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Notice to Lending Agent shall be directed as follows:
Xxxxx Fargo Bank, N.A.
Asset Management Group - Securities Lending
Xxxxx Xxxxx Xxxxxx, Xxxxx Xxxxx, XXX X0000-000
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
21. Force Majeure. Lending Agent shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of, or caused directly or indirectly by, circumstances beyond its
control, including without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; epidemics; riots;
interruptions, loss or malfunctions of utilities, transportation, computer
(hardware or software) or communications service; accidents; labor disputes;
acts of civil or military authority; governmental actions; or inability to
obtain labor, material, equipment or transportation. Without limiting the
foregoing, Lending Agent shall not be responsible for economic, political or
investment risks incurred through the Participating Fund's participation in the
Program.
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22. Governing Law and Jurisdiction. This Agreement and all transactions
hereunder shall be governed by, interpreted, construed and enforced in
accordance with the laws of the State of California.
23. Section Headings. The headings of sections in this Agreement are inserted
for convenience of reference and shall not be deemed to be a part of or used in
the construction of this Agreement.
24. Construction. Notwithstanding any commingling of cash Collateral pursuant
to Paragraph 6.2 herein, each Participating Fund shall be deemed to have
entered into this Agreement severally and not jointly, and the provisions of
this Agreement shall be construed accordingly. Each reference hereunder to the
Participating Funds or a Participating Fund shall be deemed a separate
reference solely to the Participating Fund to which a particular loan under
this Agreement relates. Under no circumstances shall the rights, obligations or
remedies hereunder with respect to a particular Participating Fund constitute a
right, obligation or remedy applicable to any other Participating Fund. In
particular, and without otherwise limiting the scope of this Section: (i) the
Collateral and xxxx-to-market requirements specified in Section 6 of this
Agreement shall be calculated separately based solely upon the loans entered
into by each Participating Fund; and (ii) Lending Agent shall have no right to
set off claims against or amounts owed by one Participating Fund by applying
property of another Participating Fund.
25. Amendment and Effect. This Agreement shall not be modified or amended
except by an instrument in writing signed by the parties hereto. This Agreement
supersedes any other agreement between the parties hereto concerning loans of
securities owned by the Participating Funds. This Agreement shall be binding on
and enforceable against the successors and assigns of the parties. This
Agreement shall not be assigned by any party without the prior written consent
of the other parties. This Agreement may be executed in several counterparts
each of which shall be an original and all of which shall constitute one and
the same. This Agreement constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof.
26. Effective Date and Term. This Agreement shall be effective on the 9/th/ day
of August, 2006 and supersedes the agreement dated as of August 16, 2005 among
the parties hereto. This Agreement shall continue in effect for one year,
unless earlier terminated in accordance with Section 18 herein, and from year
to year thereafter provided it shall be renewed at least annually by each
Trust's Board of Trustees, including a majority of each Trust's disinterested
Trustees.
[Signature page follows]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf as of the day and year first set forth above.
XXXXX FARGO FUNDS TRUST
XXXXX FARGO MASTER TRUST
XXXXX FARGO VARIABLE TRUST
By: /s/ C. Xxxxx Xxxxxxx
------------------------------
C. Xxxxx Xxxxxxx
Secretary
XXXXX FARGO FUNDS MANAGEMENT, LLC
By: /s/ A. Erdem Cimen
------------------------------
A. Erdem Cimen
Vice President
XXXXX FARGO BANK, N.A.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
Senior Vice President
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SCHEDULE 1
Participating Funds
Xxxxx Fargo Funds Trust
1. Asia Pacific Fund
2. Asset Allocation Fund
3. Balanced Fund
4. Capital Growth Fund
5. C&B Mid Cap Value Fund
6. Common Stock Fund
7. Corporate Bond Fund
8. Discovery Fund
9. Dividend Income Fund
10. Emerging Markets Focus Fund
11. Endeavor Large Cap Fund
12. Endeavor Select Fund
13. Enterprise Fund
14. Equity Index Fund
15. Government Securities Fund
16. Growth Fund
17. Growth and Income Fund
18. High Income Fund
19. High Yield Bond Fund
20. Income Plus Fund
21. Institutional Emerging Markets Fund
22. Intermediate Government Income Fund
23. International Core Fund
24. International Equity Fund
25. Large Cap Growth Fund
26. Large Company Core Fund
27. Mid Cap Disciplined Fund
28. Mid Cap Growth Fund
29. Opportunity Fund
30. Overseas Fund
31. Short Duration Government Bond Fund
32. Short-Term Bond Fund
33. Short-Term High Yield Bond Fund
34. Small Cap Disciplined Fund
35. Small Cap Growth Fund
36. Small Cap Opportunities Fund
37. Small Cap Value Fund
38. Small/Mid Cap Value Fund
39. Specialized Financial Services Fund
40. Specialized Health Sciences Fund
41. Specialized Technology Fund
42. Strategic Income Fund
43. Ultra-Short Duration Bond Fund
44. Ultra Short-Term Income Fund
45. U.S. Value Fund
46. Value Fund
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Xxxxx Fargo Master Trust
1. C&B Large Cap Value Portfolio
2. Disciplined Growth Portfolio
3. Disciplined Fixed Income Portfolio
4. Diversified Stock Portfolio
5. Equity Income Portfolio
6. Equity Value Portfolio
7. Index Portfolio
8. Inflation-Protected Bond Portfolio
9. International Core Portfolio
10. International Growth Portfolio
11. International Index Portfolio
12. International Value Portfolio
13. Large Cap Appreciation Portfolio
14. Large Company Growth Portfolio
15. Managed Fixed Income Portfolio
16. Small Cap Index Portfolio
17. Small Company Growth Portfolio
18. Small Company Value Portfolio
19. Stable Income Portfolio
20. Strategic Small Cap Value Portfolio
21. Total Return Bond Portfolio
Xxxxx Fargo Variable Trust
1. VT Asset Allocation Fund
2. VT C&B Large Cap Value Fund
3. VT Discovery Fund
4. VT Equity Income Fund
5. VT International Core Fund
6. VT Large Company Core Fund
7. VT Large Company Growth Fund
8. VT Opportunity Fund
9. VT Small Cap Growth Fund
10. VT Small/Mid Cap Value Fund
11. VT Total Return Bond Fund
Schedule 1 Approved by the Board of Trustees: August 9, 2006
13
SCHEDULE 2
Approved Borrowers*
ABN Amro Inc.
Alpine Associates, a Limited Partnership
Ameritrade, Inc.
Banc of America Securities LLC
Banca IMI Securities Corp.
Barclays Capital Inc.
Bear, Xxxxxxx & Co./Bear, Xxxxxxx Securities Corporation
BNP Paribas Securities Corp.
Calyon Securities (USA) Inc. (f/k/a Credit Lyonnais Securities (USA) Inc.)
Cantor Xxxxxxxxxx Securities
CIBC World Markets Corporation
Citadel Trading Group, LLC
Citigroup Global Markets Inc. (f/k/a Xxxxxxx Xxxxx Barney, Inc.)
Credit Suisse Securities (USA) LLC (f/k/a Credit Suisse First Boston LLC)
Deutsche Bank Securities Inc.
Dresdner Kleinwort Xxxxxxxxxxx Securities LLC
Fimat USA, LLC (f/k/a Fimat USA, Inc.)
First Clearing LLC (f/k/a First Clearing Corporation)
Xxxxxxx, Sachs & Co. (Gtyd)
Greenwich Capital Markets Inc.
HBK Global Securities L.P.
HSBC Securities (USA) Inc.
ING Financial Markets LLC
X.X. Xxxxxx Securities Inc.
Xxxxxxxxx & Company Inc
Xxxxxx Brothers Inc.
Xxxxxxx Xxxxx Xxxxxx Xxxxxx Xxxxx/ML Govt Sec
Xxxxxx Xxxxxxx & Co. Inc.
Xxxxxx Xxxxxxx & Co. Inc. / MS Securities Services Inc.
Nomura Securities International, Inc.
Paloma Securities LLC
Pershing LLC
RBC Xxxx Xxxxxxxx Incorporated
SG Americas Securities LLC
UBS Securities LLC (f/k/a UBS Warburg LLC)
Wachovia Capital Markets, LLC
JPMorgan Chase Bank, N.A. (f/k/a JPMorgan Chase Bank)
Wachovia Bank, N.A.
Societe Generale
* Updated June 30, 2006
14
SCHEDULE 3
Form of Master Securities Loan Agreement
[LOGO] Master Securities Loan Agreement
2000 Version
Dated as of _______________2006
Between ______________________________, as Borrower
and XXXXX FARGO BANK, N.A., as Lender
1. Applicability.
From time to time the parties hereto may enter into transactions in which
one party ("Lender") will lend to the other party ("Borrower") certain
Securities (as defined herein) against a transfer of Collateral (as defined
herein). Each such transaction shall be referred to herein as a "Loan" and,
unless otherwise agreed in writing, shall be governed by this Agreement,
including any supplemental terms or conditions contained in an Annex or
Schedule hereto and in any other annexes identified herein or therein as
applicable hereunder. Capitalized terms not otherwise defined herein shall
have the meanings provided in Section 25.
2. Loans of Securities.
2.1 Subject to the terms and conditions of this Agreement, Borrower or
Lender may, from time to time, seek to initiate a transaction in which
Lender will lend Securities to Borrower. Borrower and Lender shall agree
on the terms of each Loan (which terms may be amended during the Loan),
including the issuer of the Securities, the amount of Securities to be
lent, the basis of compensation, the amount of Collateral to be
transferred by Borrower, and any additional terms. Such agreement shall
be confirmed (a) by a schedule and receipt listing the Loaned Securities
provided by Borrower to Lender in accordance with Section 3.2,
(b) through any system that compares Loans and in which Borrower and
Lender are participants, or (c) in such other manner as may be agreed by
Borrower and Lender in writing. Such confirmation (the "Confirmation"),
together with the Agreement, shall constitute conclusive evidence of the
terms agreed between Borrower and Lender with respect to the Loan to
which the Confirmation relates, unless with respect to the Confirmation
specific objection is made promptly after receipt thereof. In the event
of any inconsistency between the terms of such Confirmation and this
Agreement, this Agreement shall prevail unless each party has executed
such Confirmation.
2.2 Notwithstanding any other provision in this Agreement regarding when a
Loan commences, unless otherwise agreed, a Loan hereunder shall not
occur until the Loaned
Securities and the Collateral therefor have been transferred in
accordance with Section 15.
3. Transfer of Loaned Securities.
3.1 Unless otherwise agreed, Lender shall transfer Loaned Securities to
Borrower hereunder on or before the Cutoff Time on the date agreed to by
Borrower and Lender for the commencement of the Loan.
3.2 Unless otherwise agreed, Borrower shall provide Lender, for each Loan in
which Lender is a Customer, with a schedule and receipt listing the
Loaned Securities. Such schedule and receipt may consist of (a) a
schedule provided to Borrower by Lender and executed and returned by
Borrower when the Loaned Securities are received, (b) in the case of
Securities transferred through a Clearing Organization which provides
transferors with a notice evidencing such transfer, such notice, or
(c) a confirmation or other document provided to Lender by Borrower.
3.3 Notwithstanding any other provision in this Agreement, the parties
hereto agree that they intend the Loans hereunder to be loans of
Securities. If, however, any Loan is deemed to be a loan of money by
Borrower to Lender, then Borrower shall have, and Lender shall be deemed
to have granted, a security interest in the Loaned Securities and the
proceeds thereof.
4. Collateral.
4.1 Unless otherwise agreed, Borrower shall, prior to or concurrently with
the transfer of the Loaned Securities to Borrower, but in no case later
than the Close of Business on the day of such transfer, transfer to
Lender Collateral with a Market Value at least equal to the Margin
Percentage of the Market Value of the Loaned Securities.
4.2 The Collateral transferred by Borrower to Lender, as adjusted pursuant
to Section 9, shall be security for Borrower's obligations in respect of
such Loan and for any other obligations of Borrower to Lender hereunder.
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 the rights and remedies
given to Lender hereunder, Lender shall have all the rights and remedies
of a secured party under the UCC. It is understood that Lender may use
or invest the Collateral, if such consists of cash, at its own risk, but
that (unless Lender is a Broker-Dealer) Lender shall, during the term of
any Loan hereunder, segregate Collateral from all securities or other
assets in its possession. Lender may Retransfer Collateral only (a) if
Lender is a Broker-Dealer or (b) in the event of a Default by Borrower.
Segregation of Collateral may be accomplished by appropriate
identification on the books and records of Lender if it is a "securities
intermediary" within the meaning of the UCC.
4.3 Except as otherwise provided herein, upon transfer to Lender of the
Loaned Securities on the day a Loan is terminated pursuant to Section 6,
Lender shall be obligated to transfer the Collateral (as adjusted
pursuant to Section 9) to Borrower no later than the Cutoff Time on such
day or, if such day is not a day on which a transfer of such Collateral
may be effected under Section 15, the next day on which such a transfer
may be effected.
4.4 If Borrower transfers Collateral to Lender, as provided in Section 4.1,
and Lender does not transfer the Loaned Securities to Borrower, Borrower
shall have the absolute right to the return of the Collateral; and if
Lender transfers Loaned Securities to Borrower and Borrower does not
transfer Collateral to Lender as provided in Section 4.1, Lender shall
have the absolute right to the return of the Loaned Securities.
4.5 Borrower may, upon reasonable notice to Lender (taking into account all
relevant factors, including industry practice, the type of Collateral to
be substituted, and the applicable method of transfer), substitute
Collateral for Collateral securing any Loan or Loans; provided, however,
that such substituted Collateral shall (a) consist only of cash,
securities or other property that Borrower and Lender agreed would be
acceptable Collateral prior to the Loan or Loans and (b) have a Market
Value such that the aggregate Market Value of such substituted
Collateral, together with all other Collateral for Loans in which the
party substituting such Collateral is acting as Borrower, shall equal or
exceed the agreed upon Margin Percentage of the Market Value of the
Loaned Securities.
4.6 Prior to the expiration of any letter of credit supporting Borrower's
obligations hereunder, Borrower shall, no later than the Extension
Deadline, (a) obtain an extension of the expiration of such letter of
credit, (b) 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, or (c) transfer such
other Collateral to Lender as may be acceptable to Lender.
5. Fees for Loan.
5.1 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 of the Loaned Securities on the day for which such Loan Fee is
being computed, 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 at such rates as
Borrower and Lender may agree. Except as Borrower and Lender may
otherwise agree (in the event that cash Collateral is transferred by
clearing house funds or otherwise), 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.
5.2 Unless otherwise agreed, any Loan Fee or Cash Collateral Fee payable
hereunder shall be payable:
(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 and
(ii) the termination of all Loans hereunder (or, if a transfer of
cash in accordance with Section 15 may not be effected 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 and at such other times, if any, as may be
customary in accordance with market practice.
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 by Lender.
6. Termination of the Loan.
6.1 (a) Unless otherwise agreed, either party may terminate a Loan on a
termination date established by notice given to the other party
prior to the Close of Business on a Business Day. The termination
date established by a termination notice shall be a date no earlier
than the standard settlement date that would apply to a purchase or
sale of the Loaned Securities (in the case of a notice given by
Lender) or the non-cash Collateral securing the Loan (in the case
of a notice given by Borrower) entered into at the time of such
notice, which date shall, unless Borrower and Lender agree to the
contrary, be (i) in the case of Government Securities, the next
Business Day following such notice and (ii) in the case of all
other Securities, the third Business Day following such notice.
(b) Notwithstanding paragraph (a) and unless otherwise agreed, Borrower
may terminate a Loan on any Business Day by giving notice to Lender
and transferring the Loaned Securities to Lender before the Cutoff
Time on such Business Day if (i) the Collateral for such Loan
consists of cash or Government Securities or (ii) Lender is not
permitted, pursuant to Section 4.2, to Retransfer Collateral.
6.2 Unless otherwise agreed, Borrower shall, on or before the Cutoff Time on
the termination date of a Loan, transfer the Loaned Securities to
Lender; provided, however, that upon such transfer by Borrower, Lender
shall transfer the Collateral (as adjusted pursuant to Section 9) to
Borrower in accordance with Section 4.3.
7. Rights in Respect of Loaned Securities and Collateral.
7.1 Except as set forth in Sections 8.1 and 8.2 and as otherwise agreed by
Borrower and Lender, until Loaned Securities are required to be
redelivered to Lender upon termination of a Loan hereunder, 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 in the event
that the record date or deadline for such vote, consent or other action
falls during the term of the Loan.
7.2 Except as set forth in Sections 8.3 and 8.4 and as otherwise agreed by
Borrower and Lender, if Lender may, pursuant to Section 4.2, Retransfer
Collateral, Borrower hereby waives the right to vote, or to provide any
consent or take any similar action with respect to, any such Collateral
in the event that the record date or deadline for such vote, consent or
other action falls during the term of a Loan and such Collateral is not
required to be returned to Borrower pursuant to Section 4.5 or Section 9.
8. Distributions.
8.1 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.
8.2 Any cash Distributions made on or in respect of the Loaned Securities,
which Lender is entitled to receive pursuant to Section 8.1, shall be
paid by the transfer of cash to Lender by Borrower, on the date any such
Distribution is paid, in an amount equal to such cash Distribution, so
long as Lender is not in Default at the time of such payment. Non-cash
Distributions that Lender is entitled to receive pursuant to Section 8.1
shall be added to the Loaned Securities on the date of distribution and
shall be considered such for all purposes, except that if the Loan has
terminated, Borrower shall forthwith transfer the same to Lender.
8.3 Borrower shall be entitled to receive all 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 transferred to Lender.
8.4 Any cash Distributions made on or in respect of such Collateral, which
Borrower is entitled to receive pursuant to Section 8.3, shall be paid
by the transfer of cash to Borrower by Lender, on the date any such
Distribution is paid, in an amount equal to such cash Distribution, so
long as Borrower is not in Default at the time of such payment. Non-cash
Distributions that Borrower is entitled to receive pursuant to
Section 8.3 shall be added to the Collateral on the date of distribution
and shall be considered such for all purposes, except that if each Loan
secured by such Collateral has terminated, Lender shall forthwith
transfer the same to Borrower.
8.5 Unless otherwise agreed by the parties:
(a) If (i) Borrower is required to make a payment (a "Borrower Payment")
with respect to cash Distributions on Loaned Securities under
Sections 8.1 and 8.2 ("Securities Distributions"), or (ii) Lender is
required to make a payment (a "Lender Payment") with respect to cash
Distributions on Collateral under Sections 8.3 and 8.4 ("Collateral
Distributions"), and (iii) Borrower or Lender, 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 (subject to subsections (b) and (c) below), pay such
additional amounts as may be necessary in order that the net amount
of the Borrower Payment or Lender Payment received by the 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 if such Securities
Distribution or Collateral Distribution had been paid directly to the
Payee.
(b) No additional amounts shall be payable to a Payee under subsection
(a) above to the extent that Tax would have been imposed on a
Securities Distribution or Collateral Distribution paid directly to
the Payee.
(c) No additional amounts shall be payable to a Payee under subsection
(a) above to the extent that such Payee is entitled to an exemption
from, or reduction in the rate of, Tax on a Borrower Payment or
Lender Payment subject to the provision of a certificate or other
documentation, but has failed timely to provide such certificate or
other documentation.
(d) Each party hereto shall be deemed to represent that, as of the
commencement of any Loan hereunder, no Tax would be imposed on any
cash Distribution paid to it with respect to (i) Loaned Securities
subject to a Loan in which it is acting as
Lender or (ii) Collateral for any Loan in which it is acting as
Borrower, unless such party has given notice to the contrary to the
other party hereto (which notice shall specify the rate at which such
Tax would be imposed). Each party agrees to notify the other 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 Distributions payable to it.
8.6 To the extent that, under the provisions of Sections 8.1 through 8.5,
(a) a transfer of cash or other property by Borrower would give rise to
a Margin Excess or (b) 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 of cash or other
property in accordance with such Sections, but shall in lieu of such
transfer immediately credit the amounts that would have been
transferable under such Sections to the account of Lender or Borrower
(as the case may be).
9. Xxxx to Market.
9.1 If Lender is a Customer, 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 subject to such Loan, Borrower shall transfer additional
Collateral no later than the Close of Business on the next Business Day
so that the Market Value of such additional Collateral, when added to
the Market Value of the other Collateral for such Loan, shall equal 100%
of the Market Value of the Loaned Securities.
9.2 In addition to any rights of Lender under Section 9.1, if at any time
the aggregate Market Value of all Collateral for Loans by Lender shall
be less than the Margin Percentage of the Market Value of all the
outstanding Loaned Securities subject to such Loans (a "Margin
Deficit"), Lender may, by notice 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 Loans, shall equal or exceed the Margin Percentage
of the Market Value of the Loaned Securities.
9.3 Subject to Borrower's obligations under Section 9.1, if at any time the
Market Value of all Collateral for Loans to Borrower shall be greater
than the Margin Percentage of the Market Value of all the outstanding
Loaned Securities subject to such Loans (a "Margin Excess"), Borrower
may, by notice 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 Loans, after deduction of such amounts, shall
thereupon not exceed the Margin Percentage of the Market Value of the
Loaned Securities.
9.4 Borrower and Lender may agree, with respect to one or more Loans
hereunder, to xxxx the values to market pursuant to Sections 9.2 and 9.3
by separately valuing the Loaned Securities lent and the Collateral
given in respect thereof on a Loan-by-Loan basis.
9.5 Borrower and Lender may agree, with respect to any or all Loans
hereunder, that the respective rights of Lender and Borrower under
Sections 9.2 and 9.3 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 under such Loans
(which amount or percentage shall be agreed to by Borrower and Lender
prior to entering into any such Loans).
9.6 If any notice is given by Borrower or Lender under Sections 9.2 or 9.3
at or before the Margin Notice Deadline on any day on which a transfer
of Collateral may be effected in accordance with Section 15, the party
receiving such notice shall transfer Collateral as provided in such
Section no later than the Close of Business on such day. If any such
notice is given after the Margin Notice Deadline, the party receiving
such notice shall transfer such Collateral no later than the Close of
Business on the next Business Day following the day of such notice.
10. Representations.
The parties to this Agreement hereby make the following representations and
warranties, which shall continue during the term of any Loan hereunder:
10.1 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.
10.2 Each party hereto represents and warrants that it has not relied on the
other for any tax or accounting advice concerning this Agreement and
that it has made its own determination as to the tax and accounting
treatment of any Loan and any dividends, remuneration or other funds
received hereunder.
10.3 Each party hereto represents and warrants that it is acting for its own
account unless it expressly specifies otherwise in writing and complies
with Section 11.1(b).
10.4 Borrower represents and warrants that it has, or will have at the time
of transfer of any Collateral, the right to grant a first priority
security interest therein subject to the terms and conditions hereof.
10.5 (a) Borrower represents and warrants that it (or the person to whom it
relends the Loaned Securities) is borrowing or will borrow Loaned
Securities that are Equity Securities for the purpose of making
delivery of such Loaned Securities in the case of short sales,
failure to receive securities required to be delivered, or as
otherwise permitted pursuant to Regulation T as in effect from time
to time.
(b) Borrower and Lender may agree, as provided in Section 24.2, that
Borrower shall not be deemed to have made the representation or
warranty in subsection (a) with respect to any Loan. By entering
into any such agreement, Lender shall be deemed to have represented
and warranted to Borrower (which representation and warranty shall
be deemed to be repeated on each day during the term of the Loan)
that Lender is either (i) an "exempted borrower" within the meaning
of Regulation T or (ii) a member of a national securities exchange
or a broker or dealer registered with the U.S. Securities and
Exchange Commission that is entering into such Loan to finance its
activities as a market maker or an underwriter.
10.6 Lender represents and warrants that it has, or will have at the time of
transfer of any Loaned Securities, the right to transfer the Loaned
Securities subject to the terms and conditions hereof.
11. Covenants.
11.1 Each party agrees either (a) to be liable as principal with respect to
its obligations hereunder or (b) to execute and comply fully with the
provisions of Annex I (the terms and conditions of which Annex are
incorporated herein and made a part hereof).
11.2 Promptly upon (and in any event within seven (7) Business Days after)
demand by Lender, Borrower shall furnish Lender with Borrower's most
recent publicly-available financial statements and any other financial
statements mutually agreed upon by Borrower and Lender. Unless otherwise
agreed, if Borrower is subject to the requirements of Rule 17a-5(c)
under the Exchange Act, it may satisfy the requirements of this Section
by furnishing Lender with its most recent statement required to be
furnished to customers pursuant to such Rule.
12. Events of Default.
All Loans hereunder may, at the option of the non-defaulting party (which
option shall be deemed to have been exercised immediately upon the
occurrence of an Act of Insolvency), be terminated immediately upon the
occurrence of any one or more of the following events (individually, a
"Default"):
12.1 if any Loaned Securities shall not be transferred to Lender upon
termination of the Loan as required by Section 6;
12.2 if any Collateral shall not be transferred to Borrower upon termination
of the Loan as required by Sections 4.3 and 6;
12.3 if either party shall fail to transfer Collateral as required by
Section 9;
12.4 if either party (a) shall fail to transfer to the other party amounts in
respect of Distributions required to be transferred by Section 8,
(b) shall have been notified of such failure by the other party prior to
the Close of Business on any day, and (c) shall not have cured such
failure by the Cutoff Time on the next day after such Close of Business
on which a transfer of cash may be effected in accordance with
Section 15;
12.5 if an Act of Insolvency occurs with respect to either party;
12.6 if any representation made by either party in respect of this Agreement
or any Loan or Loans hereunder shall be incorrect or untrue in any
material respect during the term of any Loan hereunder;
12.7 if either party notifies the other of its inability to or its intention
not to perform its obligations hereunder or otherwise disaffirms,
rejects or repudiates any of its obligations hereunder; or
12.8 if either party (a) shall fail to perform any material obligation under
this Agreement not specifically set forth in clauses 12.1 through 12.7,
above, including but not limited to the payment of fees as required by
Section 5, and the payment of transfer taxes as required by Section 14,
(b) shall have been notified of such failure by the other party prior to
the Close of Business on any day, and (c) shall not have cured such
failure by the Cutoff Time on the next day after such Close of Business
on which a transfer of cash may be effected in accordance with
Section 15.
The non-defaulting party shall (except upon the occurrence of an Act of
Insolvency) give notice as promptly as practicable to the defaulting party
of the exercise of its option to terminate all Loans hereunder pursuant to
this Section 12.
13.Remedies.
13.1 Upon the occurrence of a Default under Section 12 entitling Lender to
terminate all Loans hereunder, Lender shall have the right, in addition
to any other remedies provided herein, (a) to purchase a like amount of
Loaned Securities ("Replacement Securities") in the principal market for
such Loaned Securities in a commercially reasonable manner, (b) to sell
any Collateral in the principal market for such Collateral in a
commercially reasonable manner and (c) to apply and set off the
Collateral and any proceeds thereof (including any amounts drawn under a
letter of credit supporting any Loan) against the payment of the
purchase price for such Replacement Securities and any amounts due to
Lender under Sections 5, 8, 14 and 16. In the event that Lender shall
exercise such rights, Borrower's obligation to return a like amount of
the Loaned Securities shall terminate. Lender may similarly 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 (i) the purchase price of
Replacement Securities (plus all other amounts, if any, due to Lender
hereunder) exceeds (ii) the amount of the Collateral, Borrower shall be
liable to Lender for the amount of such excess together with interest
thereon at a rate equal to (A) in the case of purchases of Foreign
Securities, LIBOR, (B) in the case of purchases of any other Securities
(or other amounts, if any, due to Lender hereunder), the Federal Funds
Rate or (C) such other rate as may be specified in Schedule B, in each
case as such rate fluctuates from day to day, from the date of such
purchase until the date of payment of such excess. As security for
Borrower's obligation to pay such excess, Lender shall have, and
Borrower hereby grants, a security interest in any property of Borrower
then held by or for Lender and a right of setoff with respect to such
property and any other amount payable by Lender to Borrower. The
purchase price of Replacement Securities purchased under this
Section 13.1 shall include, and the proceeds of any sale of Collateral
shall be determined after deduction of, broker's fees and commissions
and all other reasonable costs, fees and expenses related to such
purchase or sale (as the case may be). In the event Lender exercises its
rights under this Section 13.1, Lender may elect in its sole discretion,
in lieu of purchasing all or a portion of the Replacement Securities or
selling all or a portion of the Collateral, to be deemed to have made,
respectively, such purchase of Replacement Securities or sale of
Collateral for an amount equal to the price therefor on the date of such
exercise obtained from a generally recognized source or the last bid
quotation from such a source at the most recent Close of Trading.
Subject to Section 18, upon the satisfaction of all obligations
hereunder, any remaining Collateral shall be returned to Borrower.
13.2 Upon the occurrence of a Default under Section 12 entitling Borrower to
terminate all Loans hereunder, Borrower shall have the right, in
addition to any other remedies provided herein, (a) to purchase a like
amount of Collateral ("Replacement Collateral") in the principal market
for such Collateral in a commercially reasonable manner, (b) to sell a
like amount of the Loaned Securities in the principal market for such
Loaned Securities in a commercially reasonable manner and (c) to apply
and set off the Loaned Securities and any proceeds thereof against
(i) the payment of the purchase price for such Replacement Collateral,
(ii) Lender's obligation to return any cash or other Collateral, and
(iii) any amounts due to Borrower under Sections 5, 8 and 16. In such
event, Borrower may treat the Loaned Securities as its own and Lender's
obligation to return a
like amount of the Collateral shall terminate; provided, however, that
Lender shall immediately return any letters of credit supporting any
Loan upon the exercise or deemed exercise by Borrower of its termination
rights under Section 12. Borrower may similarly apply the Loaned
Securities and any proceeds thereof to any other obligation of Lender
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 (i) the sales price received from such
Loaned Securities is less than (ii) the purchase price of Replacement
Collateral (plus the amount of any cash or other Collateral not replaced
by Borrower and all other amounts, if any, due to Borrower hereunder),
Lender shall be liable to Borrower for the amount of any such
deficiency, together with interest on such amounts at a rate equal to
(A) in the case of Collateral consisting of Foreign Securities, LIBOR,
(B) in the case of Collateral consisting of any other Securities (or
other amounts due, if any, to Borrower hereunder), the Federal Funds
Rate or (C) such other rate as may be specified in Schedule B, in each
case as such rate fluctuates from day to day, from the date of such sale
until the date of payment of such deficiency. As security for Lender's
obligation to pay such deficiency, Borrower shall have, and Lender
hereby grants, a security interest in any property of Lender then held
by or for Borrower and a right of setoff with respect to such property
and any other amount payable by Borrower to Lender. The purchase price
of any Replacement Collateral purchased under this Section 13.2 shall
include, and the proceeds of any sale of Loaned Securities shall be
determined after deduction of, broker's fees and commissions and all
other reasonable costs, fees and expenses related to such purchase or
sale (as the case may be). In the event Borrower exercises its rights
under this Section 13.2, Borrower may elect in its sole discretion, in
lieu of purchasing all or a portion of the Replacement Collateral or
selling all or a portion of the Loaned Securities, to be deemed to have
made, respectively, such purchase of Replacement Collateral or sale of
Loaned Securities for an amount equal to the price therefor on the date
of such exercise obtained from a generally recognized source or the last
bid quotation from such a source at the most recent Close of Trading.
Subject to Section 18, upon the satisfaction of all Lender's obligations
hereunder, any remaining Loaned Securities (or remaining cash proceeds
thereof) shall be returned to Lender.
13.3 Unless otherwise agreed, the parties acknowledge and agree that (a) the
Loaned Securities and any Collateral consisting of Securities are of a
type traded in a recognized market, (b) in the absence of a generally
recognized source for prices or bid or offer quotations for any
security, the non-defaulting party may establish the source therefor in
its sole discretion, and (c) all prices and bid and offer quotations
shall be increased to include accrued interest to the extent not already
included therein (except to the extent contrary to market practice with
respect to the relevant Securities).
13.4 In addition to its rights hereunder, the non-defaulting party shall have
any rights otherwise available to it under any other agreement or
applicable law.
14. Transfer Taxes.
All transfer taxes with respect to the transfer of the Loaned Securities by
Lender to Borrower and by Borrower to Lender upon termination of the Loan
and with respect to the transfer of Collateral by Borrower to Lender and by
Lender to Borrower upon termination of the Loan or pursuant to Section 4.5
or Section 9 shall be paid by Borrower.
15. Transfers.
15.1 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 of such financial assets to
the transferee's "securities account" (within the meaning of the UCC)
maintained with such Clearing Organization, or (d) such other means as
Borrower and Lender may agree.
15.2 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.
15.3 All transfers of letters of credit from Borrower to Lender shall be made
by physical delivery to Lender of an irrevocable letter of credit issued
by a "bank" as defined in Section 3(a)(6)(A)-(C) of the Exchange Act.
Transfers of letters of credit from Lender to Borrower shall be made by
causing such letters of credit to be returned or by causing the amount
of such letters of credit to be reduced to the amount required after
such transfer.
15.4 A transfer of Securities, cash or letters of credit may be effected
under this Section 15 on any day except (a) a day on which the
transferee is closed for business at its address set forth in Schedule A
hereto 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.
15.5 For the avoidance of doubt, the parties agree and acknowledge that the
term "securities," as used herein (except in this Section 15), 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 (a) to effect a delivery to the transferee under
Section 8-301 of the UCC, or to cause the creation of a security
entitlement in favor of the transferee under Section 8-501 of the UCC,
(b) to enable the transferee to obtain "control" (within the meaning of
Section 8-106 of the UCC), and (c) to provide the transferee with
comparable rights under any applicable foreign law or regulation.
16. Contractual Currency.
16.1 Borrower and Lender agree that (a) any payment in respect of a
Distribution under Section 8 shall be made in the currency in which the
underlying Distribution of cash was made, (b) any return of cash shall
be made in the currency in which the underlying transfer of cash was
made, and (c) any other payment of cash in connection with a Loan under
this Agreement shall be in the currency agreed upon by Borrower and
Lender in connection with such Loan (the currency established under
clause (a), (b) or (c) hereinafter referred to as 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.
16.2 If for any reason the amount in the Contractual Currency received under
Section 16.1, 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.
16.3 If for any reason the amount in the Contractual Currency received under
Section 16.1 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.
17. ERISA.
Lender shall, if any of the Securities transferred to the 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 2.1. 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, Jan. 23,
1981; as amended, 52 Fed. Reg. 18754, May 19, 1987), or any successor
thereto (unless Borrower and Lender have agreed prior to entering into a
Loan that such Loan will be conducted in reliance on another exemption, or
without relying on any exemption, from the prohibited transaction provisions
of Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, and Section 4975 of the Internal Revenue Code of 1986, as amended).
Without limiting the foregoing and notwithstanding any other provision of
this Agreement, if the Loan will be conducted in accordance with Prohibited
Transaction Exemption 81-6, then:
17.1 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 Government
Securities.
17.2 Borrower represents and warrants that, during the term of any Loan
hereunder, neither Borrower nor any affiliate 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. Lender agrees that, prior
to or at the commencement of any Loan hereunder, it will communicate to
Borrower information regarding the Plan sufficient to identify to
Borrower any person or persons that have discretionary authority or
control with respect to the investment of the assets of the Plan
involved in the Loan or that render investment advice (as defined in the
preceding sentence) with respect to the assets of the Plan involved in
the Loan. In the event Lender fails to communicate and keep current
during the term of any Loan such information, Lender rather than
Borrower shall be deemed to have made the representation and warranty in
the first sentence of this Section 17.2.
17.3 Borrower shall xxxx to market daily each Loan hereunder pursuant to
Section 9.1 as is required if Lender is a Customer.
17.4 Borrower and Lender agree that:
(a) the term "Collateral" shall mean cash, securities issued or
guaranteed by the United States government or its agencies or
instrumentalities, or irrevocable bank letters of credit issued by a
person other than Borrower or an affiliate thereof;
(b) prior to the making of any Loans hereunder, Borrower shall provide
Lender with (i) the most recent available audited statement of
Borrower's financial condition and (ii) the most recent available
unaudited statement of Borrower's financial condition (if more recent
than the most recent audited statement), and each Loan made hereunder
shall be deemed a representation by Borrower that there has been no
material adverse change in Borrower's financial condition subsequent
to the date of the latest financial statements or information
furnished in accordance herewith;
(c) the Loan may be terminated by Lender at any time, whereupon Borrower
shall deliver the Loaned Securities to Lender within the lesser of
(i) the customary delivery period for such Loaned Securities,
(ii) five Business Days, and (iii) the time negotiated for such
delivery between Borrower and Lender; provided, however, that
Borrower and Lender may agree to a longer period only if permitted by
Prohibited Transaction Exemption 81-6; and
(d) the Collateral transferred shall be security only for obligations of
Borrower to the Plan with respect to Loans, and shall not be security
for any obligation of Borrower to any agent or affiliate of the Plan.
18. Single Agreement.
Borrower and Lender acknowledge that, and have entered into this Agreement
in reliance on the fact that, all Loans hereunder constitute a single
business and contractual relationship and have been entered into in
consideration of each other. Accordingly, Borrower and Lender hereby agree
that payments, deliveries and other transfers made by either of them in
respect of any Loan shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Loan
hereunder, and the obligations to make any such payments, deliveries and
other transfers may be applied against each other and netted. In addition,
Borrower and Lender acknowledge that, and have entered into this Agreement
in reliance on the fact that, all Loans hereunder have been entered into in
consideration of each other. Accordingly, Borrower and Lender hereby agree
that (a) each shall perform all of its obligations in respect of each Loan
hereunder, and that a default in the performance of any such obligation by
Borrower or by Lender (the "Defaulting Party") in any Loan hereunder shall
constitute a default by the Defaulting Party under all such Loans hereunder,
and (b) the non-defaulting party shall be entitled to set off claims and
apply property held by it in respect of any Loan hereunder against
obligations owing to it in respect of any other Loan with the Defaulting
Party.
19. APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
20. Waiver.
The failure of a party to this Agreement to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. All waivers in
respect of a Default must be in writing.
21. Survival of 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.
22. Notices and Other Communications.
Any and all notices, statements, demands or other communications hereunder
may be given by a party to the other by telephone, mail, facsimile, e-mail,
electronic message, telegraph, messenger or otherwise to the individuals and
at the facsimile numbers and addresses specified with respect to it in
Schedule A hereto, or sent to such party at any other place specified in a
notice of change of number or address hereafter received by the other party.
Any notice, statement, demand or other communication hereunder will be
deemed effective on the day and at the time on which it is received or, if
not received, on the day and at the time on which its delivery was in good
faith attempted; provided, however, that any notice by a party to the other
party by telephone shall be deemed effective only if (a) such notice is
followed by written confirmation thereof and (b) at least one of the other
means of providing notice that are specifically listed above has previously
been attempted in good faith by the notifying party.
23. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
23.1 EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK
STATE COURT SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY
SUCH COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING
BROUGHT TO ENFORCE ITS OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO
THIS AGREEMENT OR ANY LOAN HEREUNDER AND (B) WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY
RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR DOMICILE.
23.2 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
24. Miscellaneous.
24.1 Except as otherwise agreed by the parties, this Agreement supersedes any
other agreement between the parties hereto concerning loans of
Securities between Borrower and Lender. This Agreement shall not be
assigned by either party without the prior written consent of the other
party and any attempted assignment without such consent shall be null
and void. Subject to the foregoing, this Agreement shall be binding upon
and shall inure to the benefit of Borrower and Lender and their
respective heirs,
representatives, successors and assigns. This Agreement may be
terminated by either party upon notice to the other, subject only to
fulfillment of any obligations then outstanding. This Agreement shall
not be modified, except by an instrument in writing signed by the party
against whom enforcement is sought. The parties hereto acknowledge and
agree that, in connection with this Agreement and each Loan hereunder,
time is of the essence. Each provision and agreement herein shall be
treated as separate and independent from any other provision herein and
shall be enforceable notwithstanding the unenforceability of any such
other provision or agreement.
24.2 Any agreement between Borrower and Lender pursuant to Section 10.5(b) or
Section 25.37 shall be made (a) in writing, (b) orally, if confirmed
promptly in writing or through any system that compares Loans and in
which Borrower and Lender are participants, or (c) in such other manner
as may be agreed by Borrower and Lender in writing.
25. Definitions.
For the purposes hereof:
25.1 "Act of Insolvency" shall mean, with respect to any party, (a) the
commencement by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, moratorium,
dissolution, delinquency or similar law, or such party's seeking the
appointment or election of a receiver, conservator, trustee, custodian
or similar official for such party or any substantial part of its
property, or the convening of any meeting of creditors for purposes of
commencing any such case or proceeding or seeking such an appointment or
election, (b) the commencement of any such case or proceeding against
such party, or another seeking such an appointment or election, or the
filing against a party of an application for a protective decree under
the provisions of the Securities Investor Protection Act of 1970, 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 or election,
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, (c) the
making by such party of a general assignment for the benefit of
creditors, or (d) the admission in writing by such party of such party's
inability to pay such party's debts as they become due.
25.2 "Bankruptcy Code" shall have the meaning assigned in Section 26.1
25.3 "Borrower" shall have the meaning assigned in Section 1.
25.4 "Borrower Payment" shall have the meaning assigned in Section 8.5(a).
25.5 "Broker-Dealer" shall mean any person that is a broker (including a
municipal securities broker), dealer, municipal securities dealer,
government securities broker or government securities dealer as defined
in the Exchange Act, regardless of whether the activities of such person
are conducted in the United States or otherwise require such person to
register with the U.S. Securities and Exchange Commission or other
regulatory body.
25.6 "Business Day" shall mean, with respect to any Loan hereunder, a day on
which regular trading occurs in the principal market for the Loaned
Securities subject to such Loan, provided, however, that for purposes of
determining the Market Value of any Securities hereunder, such term
shall mean a day on which regular trading occurs in the principal market
for the Securities whose value is being determined. Notwithstanding the
foregoing, (a) for purposes of Section 9, "Business Day" shall mean any
day on which
regular trading occurs in the principal market for any Loaned Securities
or for any Collateral consisting of Securities under any outstanding
Loan hereunder and "next Business Day" shall mean the next day on which
a transfer of Collateral may be effected in accordance with Section 15,
and (b) in no event shall a Saturday or Sunday be considered a Business
Day.
25.7 "Cash Collateral Fee" shall have the meaning assigned in Section 5.1.
25.8 "Clearing Organization" shall mean (a) The Depository Trust Company, or,
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, or
(b) a Federal Reserve Bank, to the extent that it maintains a book-entry
system.
25.9 "Close of Business" shall mean the time established by the parties in
Schedule B or otherwise orally or in writing or, in the absence of any
such agreement, as shall be determined in accordance with market
practice.
25.10 "Close of Trading" shall mean, with respect to any Security, the end of
the primary trading session established by the principal market for such
Security on a Business Day, unless otherwise agreed by the parties.
25.11 "Collateral" shall mean, whether now owned or hereafter acquired and to
the extent permitted by applicable law, (a) any property which Borrower
and Lender agree prior to the Loan shall be acceptable collateral and
which is transferred to Lender pursuant to Sections 4 or 9 (including as
collateral, for definitional purposes, any letters of credit mutually
acceptable to Lender and Borrower), (b) any property substituted
therefor pursuant to Section 4.5, (c) all accounts in which such
property is deposited and all securities and the like in which any cash
collateral is invested or reinvested, and (d) any proceeds of any of the
foregoing; provided, however, that if Lender is a Customer, "Collateral"
shall (subject to Section 17.4(a), if applicable) be limited to cash,
U.S. Treasury bills and notes, an irrevocable letter of credit issued by
a "bank" (as defined in Section 3(a)(6)(A)-(C) of the Exchange Act), and
any other property permitted to serve as collateral securing a loan of
securities under Rule 15c3-3 under the Exchange Act or any comparable
regulation of the Secretary of the Treasury under Section 15C of the
Exchange Act (to the extent that Borrower is subject to such Rule or
comparable regulation) pursuant to exemptive, interpretive or no-action
relief or otherwise. If any new or different Security shall be exchanged
for any Collateral by recapitalization, merger, consolidation or other
corporate action, such new or different Security shall, effective upon
such exchange, be deemed to become Collateral in substitution for the
former Collateral for which such exchange is made. For purposes of
return of Collateral by Lender or purchase or sale of Securities
pursuant to Section 13, such term shall include Securities of the same
issuer, class and quantity as the Collateral initially transferred by
Borrower to Lender, as adjusted pursuant to the preceding sentence.
25.12 "Collateral Distributions" shall have the meaning assigned in
Section 8.5(a).
25.13 "Confirmation" shall have the meaning assigned in Section 2.1.
25.14 "Contractual Currency" shall have the meaning assigned in Section 16.1.
25.15 "Customer" shall mean any person that is a customer of Borrower under
Rule 15c3-3 under the Exchange Act or any comparable regulation of the
Secretary of the Treasury under Section 15C of the Exchange Act (to the
extent that Borrower is subject to such Rule or comparable regulation).
25.16 "Cutoff Time" shall mean a time on a Business Day by which a transfer of
cash, securities or other property must be made by Borrower or Lender to
the other, as shall be agreed by Borrower and Lender in Schedule B or
otherwise orally or in writing or, in the absence of any such agreement,
as shall be determined in accordance with market practice.
25.17 "Default" shall have the meaning assigned in Section 12.
25.18 "Defaulting Party" shall have the meaning assigned in Section 18.
25.19 "Distribution" shall mean, with respect to any Security at any time, any
distribution made on or in respect of such Security, including, but not
limited to: (a) cash and all other property, (b) stock dividends,
(c) Securities received as a result of split ups of such Security and
distributions in respect thereof, (d) interest payments, (e) all rights
to purchase additional Securities, and (f) any cash or other
consideration paid or provided by the issuer of such Security in
exchange for any vote, consent or the taking of any similar action in
respect of such Security (regardless of whether the record date for such
vote, consent or other action falls during the term of the Loan). In the
event that the holder of a Security is entitled to elect the type of
distribution to be received from two or more alternatives, such election
shall be made by Lender, in the case of a Distribution in respect of the
Loaned Securities, and by Borrower, in the case of a Distribution in
respect of Collateral.
25.20 "Equity Security" shall mean any security (as defined in the Exchange
Act) other than a "nonequity security," as defined in Regulation T.
25.21 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
25.22 "Extension Deadline" shall mean, with respect to a letter of credit, the
Cutoff Time on the Business Day preceding the day on which the letter of
credit expires.
25.23 "FDIA" shall have the meaning assigned in Section 26.4.
25.24 "FDICIA" shall have the meaning assigned in Section 26.5.
25.25 "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.
25.26 "Foreign Securities" shall mean, unless otherwise agreed, Securities
that are principally cleared and settled outside the United States.
25.27 "Government Securities" shall mean government securities as defined in
Section 3(a)(42)(A)-(C) of the Exchange Act.
25.28 "Lender" shall have the meaning assigned in Section 1.
25.29 "Lender Payment" shall have the meaning assigned in Section 8.5(a).
25.30 "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
LIBO 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).
25.31 "Loan" shall have the meaning assigned in Section 1.
25.32 "Loan Fee" shall have the meaning assigned in Section 5.1.
25.33 "Loaned Security" shall mean any Security transferred in a Loan
hereunder 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 return of Loaned Securities by
Borrower or purchase or sale of Securities pursuant to Section 13, such
term shall include Securities of the same issuer, class and quantity as
the Loaned Securities, as adjusted pursuant to the preceding sentence.
25.34 "Margin Deficit" shall have the meaning assigned in Section 9.2.
25.35 "Margin Excess" shall have the meaning assigned in Section 9.3.
25.36 "Margin Notice Deadline" shall mean the time agreed to by the parties in
the relevant Confirmation, Schedule B hereto or otherwise as the
deadline for giving notice requiring same-day satisfaction of
xxxx-to-market obligations as provided in Section 9 hereof (or, in the
absence of any such agreement, the deadline for such purposes
established in accordance with market practice).
25.37 "Margin Percentage" shall mean, with respect to any Loan as of any date,
a percentage agreed by Borrower and Lender, which shall be not less than
100%, unless (a) Borrower and Lender agree otherwise, as provided in
Section 24.2, and (b) Lender is not a Customer. Notwithstanding the
previous sentence, in the event that the writing or other confirmation
evidencing the agreement described in clause (a) does not set out such
percentage with respect to any such Loan, the Margin Percentage shall
not be a percentage less than the percentage obtained by dividing
(i) the Market Value of the Collateral required to be transferred by
Borrower to Lender with respect to such Loan at the commencement of the
Loan by (ii) the Market Value of the Loaned Securities required to be
transferred by Lender to Borrower at the commencement of the Loan.
25.38 "Market Value" shall have the meaning set forth in Annex II or otherwise
agreed to by Borrower and Lender in writing. Notwithstanding the
previous sentence, in the event that the meaning of Market Value has not
been set forth in Annex II or in any other writing, as described in the
previous sentence, Market Value shall be determined in accordance with
market practice for the Securities, based on the price for such
Securities as of the most recent Close of Trading obtained from a
generally recognized source agreed to by the parties or the closing bid
quotation at the most recent Close of Trading obtained from such source,
plus accrued interest to the extent not included therein (other than any
interest credited or transferred to, or applied to the obligations of,
the other party pursuant to Section 8, unless market practice with
respect to the valuation of such Securities in
connection with securities loans is to the contrary). If the relevant
quotation did not exist at such Close of Trading, then the Market Value
shall be the relevant quotation on the next preceding Close of Trading
at which there was such a quotation. The determinations of Market Value
provided for in Annex II or in any other writing described in the first
sentences of this Section 25.38 or, if applicable, in the preceding
sentence shall apply for all purposes under this Agreement, except for
purposes of Section 13.
25.39 "Payee" shall have the meaning assigned in Section 8.5(a).
25.40 "Payor" shall have the meaning assigned in Section 8.5(a).
25.41 "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.
25.42 "Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
25.43 "Retransfer" shall mean, with respect to any Collateral, to pledge,
repledge, hypothecate, rehypothecate, lend, relend, sell or otherwise
transfer such Collateral, or to re-register any such Collateral
evidenced by physical certificates in any name other than Borrower's.
25.44 "Securities" shall mean securities or, if agreed by the parties in
writing, other assets.
25.45 "Securities Distributions" shall have the meaning assigned in
Section 8.5(a).
25.46 "Tax" shall have the meaning assigned in Section 8.5(a).
25.47 "UCC" shall mean the New York Uniform Commercial Code.
26. Intent.
26.1 The parties recognize that each Loan hereunder is a "securities
contract," as such term is defined in Section 741 of Title 11 of the
United States Code (the "Bankruptcy Code"), as amended (except insofar
as the type of assets subject to the Loan would render such definition
inapplicable).
26.2 It is understood that 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.
26.3 It is understood that 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.
26.4 The parties agree and acknowledge that if a party hereto is an "insured
depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then each Loan hereunder is a
"securities contract" and "qualified financial
contract," as such terms are defined in the FDIA and any rules, orders
or policy statements thereunder (except insofar as the type of assets
subject to the Loan would render such definitions inapplicable).
26.5 It is understood that this Agreement constitutes a "netting contract" as
defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment
obligation under any Loan hereunder shall constitute a "covered
contractual payment entitlement" or "covered contractual payment
obligation," respectively, as defined in and subject to FDICIA (except
insofar as one or both of the parties is not a "financial institution"
as that term is defined in FDICIA).
26.6 Except to the extent required by applicable law or regulation or as
otherwise agreed, Borrower and Lender agree that Loans hereunder shall
in no event be "exchange contracts" for purposes of the rules of any
securities exchange and that Loans hereunder shall not be governed by
the buy-in or similar rules of any such exchange, registered national
securities association or other self-regulatory organization.
27. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS.
27.1 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.
27.2 LENDER ACKNOWLEDGES THAT, IN CONNECTION WITH LOANS OF GOVERNMENT
SECURITIES AND AS OTHERWISE PERMITTED BY APPLICABLE LAW, SOME SECURITIES
PROVIDED BY BORROWER AS COLLATERAL UNDER THIS AGREEMENT MAY NOT BE
GUARANTEED BY THE UNITED STATES.
(borrower)
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
XXXXX FARGO BANK, N.A.
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
Annex I
Party Acting as Agent
This Annex sets forth the terms and conditions governing all transactions in
which a party lending or borrowing Securities, as the case may be ("Agent"), in
a Loan is acting as agent for one or more third parties (each, a "Principal").
Unless otherwise defined, capitalized terms used but not defined in this Annex
shall have the meanings assigned in the Securities Loan Agreement of which it
forms a part (such agreement, together with this Annex and any other annexes,
schedules or exhibits, referred to as the "Agreement") and, unless otherwise
specified, all section references herein are intended to refer to sections of
such Securities Loan Agreement.
1. Additional Representations and Warranties. In addition to the
representations and warranties set forth in the Agreement, Agent hereby
makes the following representations and warranties, which shall continue
during the term of any Loan: Principal has duly authorized Agent to execute
and deliver the Agreement on its behalf, has the power to so authorize Agent
and to enter into the Loans contemplated by the Agreement and to perform the
obligations of Lender or Borrower, as the case may be, under such Loans, and
has taken all necessary action to authorize such execution and delivery by
Agent and such performance by it.
2. Identification of Principals. Agent agrees (a) to provide the other party,
prior to any Loan under the Agreement, with a written list of Principals for
which it intends to act as Agent (which list may be amended in writing from
time to time with the consent of the other party), and (b) to provide the
other party, before the Close of Business on the next Business Day after
agreeing to enter into a Loan, with notice of the specific Principal or
Principals for whom it is acting in connection with such Loan. If (i) Agent
fails to identify such Principal or Principals prior to the Close of
Business on such next Business Day or (ii) the other party shall determine
in its sole discretion that any Principal or Principals identified by Agent
are not acceptable to it, the other party may reject and rescind any Loan
with such Principal or Principals, return to Agent any Collateral or Loaned
Securities, as the case may be, previously transferred to the other party
and refuse any further performance under such Loan, and Agent shall
immediately return to the other party any portion of the Loaned Securities
or Collateral, as the case may be, previously transferred to Agent in
connection with such Loan; provided, however, that (A) the other party shall
promptly (and in any event within one Business Day of notice of the specific
Principal or Principals) notify Agent of its determination to reject and
rescind such Loan and (B) to the extent that any performance was rendered by
any party under any Loan rejected by the other party, such party shall
remain entitled to any fees or other amounts that would have been payable to
it with respect to such performance if such Loan had not been rejected. The
other party acknowledges that Agent shall not have any obligation to provide
it with confidential information regarding the financial status of its
Principals; Agent agrees, however, that it will assist the other party in
obtaining from Agent's Principals such information regarding the financial
status of such Principals as the other party may reasonably request.
3. Limitation of Agent's Liability. The parties expressly acknowledge that if
the representations and warranties of Agent under the Agreement, including
this Annex, are true and correct in all material respects during the term of
any Loan and Agent otherwise complies with the provisions of this Annex,
then (a) Agent's obligations under the Agreement shall not include a
guarantee of performance by its Principal or Principals and (b) the other
party's remedies shall not include a right of setoff against obligations, if
any, of Agent arising in other transactions in which Agent is acting as
principal.
4. Multiple Principals.
(a) In the event that Agent proposes to act for more than one Principal
hereunder, Agent and the other party shall elect whether (i) to treat
Loans under the Agreement as transactions entered into on behalf of
separate Principals or (ii) to aggregate such Loans as if they were
transactions by a single Principal. Failure to make such an election in
writing shall be deemed an election to treat Loans under the Agreement
as transactions on behalf of separate Principals.
(b) In the event that Agent and the other party elect (or are deemed to
elect) to treat Loans under the Agreement as transactions on behalf of
separate Principals, the parties agree that (i) Agent will provide the
other party, together with the notice described in Section 2(b) of this
Annex, notice specifying the portion of each Loan allocable to the
account of each of the Principals for which it is acting (to the extent
that any such Loan is allocable to the account of more than one
Principal), (ii) the portion of any individual Loan allocable to each
Principal shall be deemed a separate Loan under the Agreement, (iii) the
xxxx to market obligations of Borrower and Lender under the Agreement
shall be determined on a Loan-by-Loan basis (unless the parties agree to
determine such obligations on a Principal-by-Principal basis), and
(iv) Borrower's and Lender's remedies under the Agreement upon the
occurrence of a Default shall be determined as if Agent had entered into
a separate Agreement with the other party on behalf of each of its
Principals.
(c) In the event that Agent and the other party elect to treat Loans under
the Agreement as if they were transactions by a single Principal, the
parties agree that (i) Agent's notice under Section 2(b) of this Annex
need only identify the names of its Principals but not the portion of
each Loan allocable to each Principal's account, (ii) the xxxx to market
obligations of Borrower and Lender under the Agreement shall, subject to
any greater requirement imposed by applicable law, be determined on an
aggregate basis for all Loans entered into by Agent on behalf of any
Principal, and (iii) Borrower's and Lender's remedies upon the
occurrence of a Default shall be determined as if all Principals were a
single Lender or Borrower, as the case may be.
(d) Notwithstanding any other provision of the Agreement (including, without
limitation, this Annex), the parties agree that any transactions by
Agent on behalf of a Plan shall be treated as transactions on behalf of
separate Principals in accordance with Section 4(b) of this Annex (and
all xxxx to market obligations of the parties shall be determined on a
Loan-by-Loan basis).
5. Interpretation of Terms. All references to "Lender" or "Borrower," as the
case may be, in the Agreement shall, subject to the provisions of this Annex
(including, among other provisions, the limitations on Agent's liability in
Section 3 of this Annex), be construed to reflect that (i) each Principal
shall have, in connection with any Loan or Loans entered into by Agent on
its behalf, the rights, responsibilities, privileges and obligations of a
"Lender" or "Borrower," as the case may be, directly entering into such Loan
or Loans with the other party under the Agreement, and (ii) Agent's
Principal or Principals have designated Agent as their sole agent for
performance of Lender's obligations to Borrower or Borrower's obligations to
Lender, as the case may be, and for receipt of performance by Borrower of
its obligations to Lender or Lender of its obligations to Borrower, as the
case may be, in connection with any Loan or Loans under the Agreement
(including, among other things, as Agent for each Principal in connection
with transfers of securities, cash or other property and as agent for giving
and receiving all notices under the Agreement). Both Agent and its Principal
or Principals shall be deemed "parties" to the Agreement and all references
to a
"party" or "either party" in the Agreement shall be deemed revised
accordingly (and any Default by Agent under the Agreement shall be deemed a
Default by Lender or Borrower, as the case may be).
(borrower)
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
XXXXX FARGO BANK, N.A.
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
Annex II
Market Value
Unless otherwise agreed by Borrower and Lender:
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 at the most recent
Close of Trading or, if there was no sale on the Business Day of the most
recent Close of Trading, by the last sale price at the Close of Trading 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.
2. If the principal market for the Securities to be valued is the
over-the-counter market, and the Securities are quoted on The Nasdaq Stock
Market ("Nasdaq"), their Market Value shall be the last sale price on Nasdaq
at the most recent Close of Trading or, if the Securities are issues for
which last sale prices are not quoted on Nasdaq, the last bid price at such
Close of Trading. If the relevant quotation did not exist at such Close of
Trading, then the Market Value shall be the relevant quotation on the next
preceding Close of Trading at which there was such a quotation.
3. Except as provided in Section 4 of this Annex, if the principal market for
the Securities to be valued is the over-the-counter market, and the
Securities are not quoted on Nasdaq, their Market Value shall be determined
in accordance with market practice for such Securities, based on the price
for such Securities as of the most recent Close of Trading obtained from a
generally recognized source agreed to by the parties or the closing bid
quotation at the most recent Close of Trading obtained from such a source.
If the relevant quotation did not exist at such Close of Trading, then the
Market Value shall be the relevant quotation on the next preceding Close of
Trading at which there was such a quotation.
4. If the Securities to be valued are Foreign Securities, their Market Value
shall be determined as of the most recent Close of Trading in accordance
with market practice in the principal market for such Securities.
5. The Market Value of a letter of credit shall be the undrawn amount thereof.
6. All determinations of Market Value under Sections 1 through 4 of this Annex
shall include, where applicable, accrued interest to the extent not already
included therein (other than any interest credited or transferred to, or
applied to the obligations of, the other party pursuant to Section 8 of the
Agreement), unless market practice with respect to the valuation of such
Securities in connection with securities loans is to the contrary.
7. The determinations of Market Value provided for in this Annex shall apply
for all purposes under the Agreement, except for purposes of Section 13 of
the Agreement.
(borrower)
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
XXXXX FARGO BANK, N.A.
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
Annex III
Term Loans
This Annex sets forth additional terms and conditions governing Loans
designated as "Term Loans" in which Lender lends to Borrower a specific amount
of Loaned Securities ("Term Loan Amount") against a pledge of cash Collateral
by Borrower for an agreed upon Cash Collateral Fee until a scheduled
termination date ("Termination Date"). Unless otherwise defined, capitalized
terms used but not defined in this Annex shall have the meanings assigned in
the Securities Loan Agreement of which it forms a part (such agreement,
together with this Annex and any other annexes, schedules or exhibits, referred
to as the "Agreement").
1. The terms of this Annex shall apply to Loans of Equity Securities only if
they are designated as Term Loans in a Confirmation therefor provided
pursuant to the Agreement and executed by each party, in a schedule to the
Agreement or in this Annex. All Loans of Securities other than Equity
Securities shall be "Term Loans" subject to this Annex, unless otherwise
agreed in a Confirmation or other writing.
2. The Confirmation for a Term Loan shall set forth, in addition to any terms
required to be set forth therein under the Agreement, the Term Loan Amount,
the Cash Collateral Fee and the Termination Date. Lender and Borrower agree
that, except as specifically provided in this Annex, each Term Loan shall be
subject to all terms and conditions of the Agreement, including, without
limitation, any provisions regarding the parties' respective rights to
terminate a Loan.
3. In the event that either party exercises its right under the Agreement to
terminate a Term Loan on a date (the "Early Termination Date") prior to the
Termination Date, Lender and Borrower shall, unless otherwise agreed, use
their best efforts to negotiate in good faith a new Term Loan (the
"Replacement Loan") of comparable or other Securities, which shall be
mutually agreed upon by the parties, with a Market Value equal to the Market
Value of the Term Loan Amount under the terminated Term Loan (the
"Terminated Loan") as of the Early Termination Date. Such agreement shall,
in accordance with Section 2 of this Annex, be confirmed in a new
Confirmation at the commencement of the Replacement Loan and be executed by
each party. Each Replacement Loan shall be subject to the same terms as the
corresponding Terminated Loan, other than with respect to the commencement
date and the identity of the Loaned Securities. The Replacement Loan shall
commence on the date on which the parties agree which Securities shall be
the subject of the Replacement Loan and shall be scheduled to terminate on
the scheduled Termination Date of the Terminated Loan.
4. Borrower and Lender agree that, except as provided in Section 5 of this
Annex, if the parties enter into a Replacement Loan, the Collateral for the
related Terminated Loan need not be returned to Borrower and shall instead
serve as Collateral for such Replacement Loan.
5. If the parties are unable to negotiate and enter into a Replacement Loan for
some or all of the Term Loan Amount on or before the Early Termination Date,
(a) the party requesting termination of the Terminated Loan shall pay to the
other party a Breakage Fee computed in accordance with Section 6 of this
Annex with respect to that portion of the Term Loan Amount for which a
Replacement Loan is not entered into and (b) upon the transfer by Borrower
to Lender of the Loaned Securities subject to the Terminated Loan, Lender
shall transfer to Borrower Collateral for the Terminated Loan in accordance
with and to the extent required under the Agreement, provided that no
Default has occurred with respect to Borrower.
6. For purposes of this Annex, the term "Breakage Fee" shall mean a fee agreed
by Borrower and Lender in the Confirmation or otherwise orally or in
writing. In the absence of any such agreement, the term "Breakage Fee" shall
mean, with respect to Loans of Government Securities, a fee equal to the sum
of (a) the cost to the non-terminating party (including all fees, expenses
and commissions) of entering into replacement transactions and entering into
or terminating hedge transactions in connection with or as a result of the
termination of the Terminated Loan, and (b) any other loss, damage, cost or
expense directly arising or resulting from the termination of the Terminated
Loan that is incurred by the non-terminating party (other than consequential
losses or costs for lost profits or lost opportunities), as determined by
the non-terminating party in a commercially reasonable manner, and (c) any
other amounts due and payable by the terminating party to the
non-terminating party under the Agreement on the Early Termination Date.
(borrower)
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
XXXXX FARGO BANK, N.A.
By:
--------------------------
Title:
--------------------------
Date:
--------------------------
Schedule A
Names and Addresses for Communications
(borrower)
(street address)
(city, state, zip)
Attention:
--------------------------
Telephone:
--------------------------
Fax:
--------------------------
E-mail
--------------------------
Xxxxx Fargo Securities Lending
Xxxxx Fargo Center, MAC X0000-000
0Xx Xxxxxx & Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxx XX 00000
Attn: Operations Manager
Telephone: 000 000 0000
Fax: 000 000 0000
E-mail: Xxxxxxxx.Xxxxxxxxx@xxxxxxxxxx.xxx
Schedule B
Defined Terms and Supplemental Provisions
This Schedule B, dated as of ____________, 2004, between
________________________ ("Borrower") and Xxxxx Fargo Bank, N.A. ("Lender")
hereby amends and supplements the Master Securities Loan Agreement dated as of
_____________, 2004, including Annexes I, II and III thereto as they may be
amended hereby, between Borrower and Lender (the "Agreement"). In the event of
any conflict between the terms of this Schedule B and the terms of the
Agreement, the terms of this Schedule B shall control. Unless otherwise defined
in this Schedule B, all capitalized terms used, but not defined, herein shall
have the meanings assigned to such terms in the Agreement, and references
herein to Sections are, unless indicated to the contrary, to Sections of the
Agreement. In all other respects the Agreement remains unchanged, and as
amended hereby supersedes all prior writings in respect thereof.
Section 25.37 "Margin Percentage" is hereby deleted and restated to read:
"Margin Percentage" shall mean, with respect to any Loan as of any date, a
percentage agreed by Borrower and Lender, which shall be not less than 102%
for US Securities and 105% for non-US Securities, unless (a) Borrower and
Lender agree otherwise, as provided in Section 24.2, and (b) Lender is not a
Customer. Notwithstanding the previous sentence, in the event that the
writing or other confirmation evidencing the agreement described in clause
(a) does not set out such percentage with respect to any such Loan, the
Margin Percentage shall not be a percentage less than the percentage
obtained by dividing (i) the Market Value of the Collateral required to be
transferred by Borrower to Lender with respect to such Loan at the
commencement of the Loan by (ii) the Market Value of the Loaned Securities
required to be transferred by Lender to Borrower at the commencement of the
Loan.
IN WITNESS WHEREOF, the parties hereto, through their duly authorized
representatives, have executed this Schedule B as of the day and year set forth
above.
(borrower) XXXXX FARGO BANK, N.A.
By: By:
-------------------------------- -------------------------------
Name: Name:
Title: Title:
SCHEDULE 4
Permitted Collateral Investments
[LOGO] Xxxxx Fargo Securities Lending
Xxxxx Fargo Advantage Mutual Funds
Collateral Investment Portfolio Guidelines
Investment Objective:
The Portfolio seeks to provide a positive return compared to the daily Fed
Funds rate by investing in high-quality, U.S. dollar-denominated short-term
money market instruments, where the prime considerations for the Portfolio
shall be safety of principal and daily liquidity requirements. The Portfolio
may invest in securities with fixed, variable, or floating rates of interest.
The Portfolio seeks to achieve a stable $1.00 price per share, and the interest
is determined daily, accumulated and distributed monthly. Portfolio investments
are valued based upon the amortized cost valuation technique pursuant to Rule
2a-7 under the Investment Company Act of 1940.
Portfolio Guidelines:
Quality:
.. An obligation must be rated in the highest short-term rating category by
one of two Nationally Recognized Statistical Reporting Organization
(NRSRO), for example A-1 by Standard & Poor's Corp, or P-1 by Xxxxx'x
Investor Services, Inc. If the obligor is rated by more than one NRSRO,
each rating must meet the minimum rating criteria. In the event the obligor
does not have a short-term rating, its long-term debt rating must be within
the 'A' or better category.
.. A financial institution approved for repurchase agreement transactions must
carry the highest short-term rating category by at least two NRSROs. One of
the two highest short-term ratings of the NRSROs must be either Standard &
Poor's Corp., or Xxxxx'x Investors Service Inc.
Maturity:
.. The maximum weighted average maturity of the Portfolio will not exceed 45
days.
.. Issues must mature in 397 days or less. Issues with fixed rates must mature
in 365 days or less.
.. Repurchase agreements must mature in one year or less.
Diversification:
.. Maximum of 5% of the Portfolio will be invested in any single issuer except
for U.S. Governments, it's agencies, and instrumentalities, and repurchase
agreements.
.. Maximum of 35% of the Portfolio will be invested in variable rate issues.
.. Minimum of 20% of the Portfolio will be invested on an overnight basis.
.. Maximum of 10% of the Portfolio will be invested in illiquid instruments.
Issue Selection:
.. U.S. Treasury and Government sponsored agency obligations
.. Repurchase agreements
.. Variable rate or put issues
.. Approved money market funds
.. Domestic and foreign bank obligations, and bankers' acceptances
.. Debt obligations, including commercial paper and participations, corporate
notes, bonds and debentures
.. Mortgage-backed and mortgage pass-through securities
.. Asset-backed securities
.. Rule 144A securities
.. Taxable municipal securities
Compliance Standards:
.. Compliance with all standards will be determined at time of purchase.
.. The purchase of structured and/or derivative securities must meet the
provisions outlined in the Derivatives Guidelines.
.. The Portfolio may retain a security whose rating has been lowered below the
Portfolio's lowest permissible rating category if it is determined that
retaining the security is in the best interest of the Portfolio, as
approved by Securities Lending Management.
.. Policy is governed by Securities Lending Management, through established
Guidelines, and may be amended from time to time according to approved
policy. Specific pre-approved exceptions to these policies may be made
after presentation to Management.
.. The Securities Lending Compliance Manager or designee shall review the
Portfolio against guidelines daily to ensure compliance, and shall report
this compliance to Securities Lending Management on a monthly basis.
Maturity:
.. The maturity of repurchase agreements must meet the provision of the
Guidelines for the Use of Repurchase Agreements.
.. Securities with a floating or variable rate, and with a reset date, shall
use the reset date as the maturity date for interest rate sensitivity
calculations.
.. For securities using a weighted average life for the maximum maturity
determinant, the industry convention for these types of securities will be
used.
Diversification:
.. Maximum of 25% of the Portfolio will be invested in any industry or sector,
except the financial services or banking industry.
.. The 20% overnight liquidity requirement will use the contractual maturity
date.
Issue Selection:
.. No investments shall be made in securities or deposits of Xxxxx Fargo &
Company or any of its affiliates.
.. Transactions involving repurchase agreements, funding agreements, and
master notes will be preceded by an appropriately executed investment
agreement. All other transactions involving the investment of cash
collateral will require a post transaction confirmation.
.. All other US dollar- denominated money market instruments, not listed
above, and meeting the quality standards outlined above, may be purchased
after review and approval by Securities Lending Management.
.. Money market funds must be 2a(7) or 2a(7) like; they use amortized cost
accounting.
SCHEDULE 5
Approved Persons
Xxxxx Fargo Funds Trust
Xxxxx Fargo Master Trust
Xxxxx Fargo Variable Trust
C. Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxxx Fargo Funds Management, LLC
A. Erdem Cimen
C. Xxxxx Xxxxxxx
Xxxxxx Xxxx
Xxxxxx Xxxx
Xxxxx Xxxxxxx
Xxxxx Fargo Bank, N.A.
Xxxxxx X. Xxxxx
Xxxxxxx Xxxxxx-Xxxxxx
Xxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxx
