SECURITIES LENDING AUTHORIZATION
This Agreement (this "Agreement") made as of the [ __ ] day of [_____],
2002, by and between the [REGISTRANT] on behalf of one or more of its series
Funds, as hereinafter defined (the "Client"), and MELLON BANK, N.A. (the
"Lending Agent").
WITNESSETH:
WHEREAS, the Lending Agent holds certain securities on behalf of each
of the series funds of the Client listed on Schedule 1 attached hereto and made
a part hereof (each a "Fund" and collectively the "Funds") as custodian; and
WHEREAS, the Client desires to authorize the Lending Agent to
establish, manage and administer a Securities Lending Program in accordance with
the provisions hereof (the "Program") with respect to the lendable securities
held by the Funds; and
WHEREAS, the Lending Agent is willing to lend securities from time to
time on behalf of the Funds; and
WHEREAS, having determined that such loan transactions are suitable for
its Funds and that the Funds have the financial resources for such transactions,
the Client has authorized the Lending Agent to engage in lending such
securities, subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Appointment of Lending Agent. The Client hereby authorizes the
Lending Agent, as agent for the Funds, to lend US Securities and Foreign
Securities, if any, (as hereinafter defined) held by the Lending Agent as
custodian for the Funds to such borrowers as may be selected by the Lending
Agent for the Program (each a "Borrower") on a fully disclosed basis. The Client
hereby acknowledges that it is independent of the Lending Agent and that it has
authority to execute this Agreement with the Lending Agent on behalf of the
Funds. The Lending Agent shall from time to time provide the Client with a list
of the Borrowers in the Program but in no event less than ten (10) days prior to
making any loan of the Fund's securities to any Borrower not previously
disclosed. The Client may, with written notice to the Lending Agent, restrict
one or more Borrowers from borrowing securities from the Funds. Exhibit A
attached hereto lists the Borrowers in the Program as of the date hereof. For
purposes hereof and unless otherwise specified by the Lending Agent, (i) "U.S
Securities" shall mean securities which are cleared and principally settled in
the United States; and (ii) "Foreign Securities" shall mean securities which are
cleared and principally settled outside of the United States.
2. Requirements of Client. If required to prevent self-dealing or any
other transaction prohibited by law, rule or regulation, the Client agrees to
identify for the Lending Agent those persons who exercise investment discretion
or render investment advice with respect to assets held in the Funds who (or
whose affiliates) are Borrowers under the Program. The Client also agrees to
notify the Lending Agent promptly in writing of all future appointments and
terminations regarding such persons.
3. Conduct of Program. The Lending Agent shall have responsibility for
negotiating the terms of each loan and, for collecting all required collateral,
whether in the form of U.S. Dollar cash, securities issued or guaranteed by the
United States Government or its agencies or instrumentalities, or other forms
approved by the Client for use as collateral (the "Collateral"), on behalf of
the Funds. Subject to the provisions of this Agreement, the Lending Agent shall
have authority to do or cause to be done all acts by and on behalf of each Fund
as it shall in good faith determine to be desirable, necessary or appropriate to
implement and administer the Program contemplated hereby. The Lending Agent
covenants and agrees that it shall undertake periodic credit reviews of
borrowers and establish credit limits applicable thereto in accordance with its
established credit policies and procedures and otherwise consistent with safe
and sound banking practices. In addition, each loan of a Fund's' securities
shall be made pursuant to a written agreement between the Lending Agent, as
agent for its clients including the Fund, and the Borrower. Attached hereto as
Attachment 1 is a current master form of securities lending agreement used by
the Lending Agent with Borrowers resident in the United States ("US Borrowers").
With respect to Borrowers who are resident outside of the United States ("Non
U.S. Borrowers"), each such loan of securities of a Fund shall be made pursuant
to a written Borrower Agreement which is substantially in the form of the
standard Overseas Securities Lender's (Agency) Agreement (the "OSLA Agreement"),
as amended from time to time, the current version of which is attached hereto as
Attachment 2. The Lending Agent shall not amend or modify its current master
form of securities lending agreement for use with any US Borrowers or Non-U.S.
Borrowers of any securities of the Funds in any manner which is inconsistent
with the provisions of this Agreement without the prior written consent of the
Client. Notwithstanding the foregoing, the Client acknowledges and agrees that
the non-material provisions of the Lending Agent's agreement with any Borrower
may differ from the Lending Agent's then current master form of borrower
agreement (as attached hereto) as a result of the customary negotiation process
between the Lending Agent and the Borrowers.
This Agreement shall be deemed to create a separate agreement
for each Fund comprising a series of a multi-series investment company as though
each such Fund had separately executed an identical agreement. Any reference to
a Fund in this Agreement shall be deemed to refer solely and exclusively to a
particular Fund, or series thereof, to which a given lending transaction under
this Agreement relates. The rights and obligations of each Fund, or series
thereof, pursuant hereto or in connection with any transaction hereunder, are
independent of, and separate and distinct from, the rights and obligations of
each and every other Fund, or series thereof, pursuant hereto or in connection
with any transaction hereunder. Under no circumstances shall the rights,
obligations or remedies with respect to a particular Fund, or series thereof,
constitute a right, obligation or remedy applicable to any other Fund or series.
In particular, and without limiting the generality of the foregoing, the parties
hereto agree that: (a) any event of default regarding one Fund, or series
thereof, shall not create any right or obligation with respect to any other Fund
or series thereof; (b) neither the Lending Agent nor any Borrower shall have any
right to set off any claims of or against a Fund, or a series thereof, by
applying property or rights of any other Fund, or series thereof, and (c) no
Fund, or series thereof, shall have claims to, or the right to set off against,
assets or property held by a Borrower on account of any other Fund or series
thereof.
4. Collateral. Concurrently with the delivery of a Fund's securities to
a Borrower, the Lending Agent shall obtain from such Borrower Collateral in an
amount equal, as of such date, to the Required Percentage, of the market value
of any securities loaned, including any accrued interest. For purposes hereof,
"Required Percentage" shall mean (i) 102% with respect to U.S. Securities; (ii)
105% with respect to Foreign Securities; except in the case of loans of Foreign
Securities which are denominated and payable in US Dollars, in which event the
"Required Percentage" shall be 102% and (iii) such other percentage(s) as may be
otherwise mutually agreed from time to time by Addendum to this Agreement.
5. Marking to Market. If at the close of trading on any business day,
the Market Value of the Collateral previously delivered by the Borrower and held
in connection with loans of a Fund's securities is less than the Minimum
Percentage of the market value of such loaned securities as of such business
day, the Lending Agent shall demand that the Borrower deliver an amount of
additional Collateral by the close of the next business day sufficient to cause
the Market Value of all Collateral delivered in connection with such loan to
equal not less than the Required Percentage of the Market Value of such loaned
securities, including accrued interest. Notwithstanding the foregoing, for
Collateral held in connection with loans of Foreign Securities, it is understood
and agreed that certain standard industry practices may from time-to-time
preclude the Lending Agent from obtaining additional Collateral by the close of
the next business day unless the Market Value of the Collateral previously
delivered by the Borrower is less than 100% of the market value of such loaned
securities, including accrued interest. For purposes hereof, the term "Market
Value" of cash Collateral means the value of any cash Collateral or additional
cash Collateral as of the time of receipt thereof by the Lending Agent from the
Borrower, unadjusted for any subsequent increases or decreases in value as a
result of any investment thereof by the Lending Agent pursuant to Section 6
below. For purposes hereof, "Minimum Percentage" shall mean" shall mean (i) 100%
with respect to U.S. Securities; (ii) 105% with respect to Foreign Securities;
except in the case of loans of Foreign Securities which are denominated and
payable in US Dollars, in which event the "Minimum Percentage" shall be 100% and
(iii) such other percentage(s) as may be otherwise mutually agreed from time to
time by Addendum to this Agreement.
6. Collateral Investment. (a) The Lending Agent is hereby authorized to
invest and reinvest, on behalf of each Fund, any and all cash Collateral in
accordance with the provisions hereof. Cash Collateral received by the Lending
Agent on behalf of a Fund shall be invested by the Lending Agent in one or more
collective investment vehicles created and maintained by the Lending Agent or an
affiliate (each a "Collective Investment Vehicle"). The assets of such
Collective Investment Vehicle shall be invested and reinvested in accordance
with the investment guidelines established for such collective investment
vehicle a copy of which guidelines are attached hereto as Exhibit B and which
may be revised or substituted by the Lending Agent from time to time upon not
less than thirty (30) prior notice to the Client of any such revision or
substitution. In the event that the amount of earnings on invested cash
Collateral is insufficient to pay the entire rebate or other amount payable to a
Borrower under any loan of securities and, therefore, results in negative
earnings, the amount of such negative earnings shall be paid by the Fund for
whose account such Collateral is held and the Lending Agent, on a monthly basis,
in accordance with and in the same proportion as their respective percentage
entitlements to earnings as set forth in Exhibit C hereto. In addition, in the
event that the amount of earnings on invested cash Collateral is insufficient to
pay the entire rebate or other amount payable to a Borrower in respect of any
loan of securities and, therefore, results in negative earnings, unless remedied
by the Lending Agent as soon as practicable under the circumstances, the Lending
Agent shall notify the Client of the continuance of such occurrence as soon as
reasonably practicable under the prevailing circumstances. Notwithstanding any
other provision hereof, the Client acknowledges and agrees that any losses of
principal from investing and reinvesting cash Collateral in accordance with the
provisions hereof shall be at the Fund's risk and for the applicable Fund's
account. If at any time the Collateral is insufficient to satisfy the obligation
to return the full amount owed to the Borrower, the Fund for whose account such
Collateral is held shall be solely responsible for such shortfall except to the
extent that any such shortfall results from the negligence or bad faith of the
Lending Agent. In the event the Lending Agent is unable to obtain such Fund's
share of negative earnings or shortfalls from losses of principal from revenues
derived from securities lending activities, the Client hereby agrees to cause
such amounts to be paid immediately upon receipt of Lending Agents statement;
provided, however, that if such amounts are not paid by the Client or otherwise
contested by the Client in good faith by written notice thereof to the Lending
Agent, the Lending Agent is hereby authorized to obtain such amounts directly
from the applicable Fund, to the extent permitted by applicable law. In order to
facilitate the investment of cash Collateral on behalf of the Funds, the Client
shall, at the request of the Lending Agent, execute on behalf of each Fund and
deliver to the Lending Agent, a Subscription Agreement in the form attached
hereto as Exhibit D or such other form as may be prescribed by the applicable
investment fund from time to time.
(b) All Collateral, investments thereof, and proceeds received
or held by the Lending Agent on behalf of a Fund shall be held in an account of
such Fund and shall be segregated on the books and records of the Lending Agent
from all similar property of the Lending Agent or held by the Lending Agent for
other clients, funds or third parties. Lending Agent shall obtain and maintain
at all times a first-priority perfected security interest in and to all
Collateral received and held for the account of any Fund and all such Collateral
shall be held by the Lending Agent in the United States. The Lending Agent shall
not re-lend, hypothecate, or otherwise grant to any third party a security
interest in any Collateral held by the Lending Agent for the account of any
Fund.
(c) In the event that the expenses incurred and paid by and
from a Collective Investment Vehicle shall at any time exceed an annualized
amount equal to .05% of the total assets of such Collective Investment Vehicle
at such time, the Lending Agent and the Client, (on behalf of each Fund) shall
adjust the allocation of Net Securities Lending Revenues to which each is
entitled pursuant to Section 12 to such extent as may be necessary to cause each
Fund to receive such amount as it would have received had the expenses incurred
and paid by and from such Collective Investment Vehicle at such time been in an
annualized amount equal to .05% of the total assets of such Collective
Investment Vehicle at such time.
7. Allocation of Lending Opportunities. The Client acknowledges that
the Lending Agent has been appointed Lending Agent by other clients on behalf of
other funds and that the Lending Agent will allocate securities loan
opportunities among its securities lending clients, including the Funds, by such
reasonable and equitable methods as the Lending Agent deems appropriate. While
the Lending Agent will make reasonable efforts to lend the Funds' securities,
nothing in this Agreement shall be deemed to impose upon the Lending Agent any
obligation, in the event it makes a loan of another securities lending client's
securities, to make a loan of any Fund's securities, whether or not such loan
could have been made in accordance with this Agreement, and whether or not the
Lending Agent has made fewer or more loans for any other securities lending
client than for any Fund. Lending Agent does not represent or warrant that any
amount or percentage of any Fund's securities will in fact be loaned to a
Borrower.
8. Rights of Borrower in Respect of the Securities. (a) Until such time
as a loan of securities is terminated and such securities are returned to the
Lending Agent, a Borrower shall have all incidents of ownership of the
securities loaned, including, but not limited to, the right to transfer the
securities to others; provided, however, that Borrower will be obligated to the
Lending Agent with respect to amounts equivalent to all dividends, interest and
distributions pertaining to the securities. The Client hereby waives the right
to vote any voting securities loaned to a Borrower or participate in any
dividend reinvestment program during the term of any such loan.
(b) The Lending Agent shall collect for, and credit to, the
account of the Fund from which any loan of securities is made amounts equivalent
to all interest, dividends or other distributions paid with respect to
securities loaned to Borrowers on behalf of such Fund, subject to any applicable
withholding taxes, transfer taxes and other necessary costs. In the event that a
Borrower fails to deliver amounts equivalent to any cash distribution in respect
to any securities loaned or fails to deliver any non-cash distribution in
respect to any securities loaned then:
(i) the Lending Agent shall credit to the account of the Fund
from which any loan of securities is made, on payable date, even if not actually
collected by the Lending Agent, amounts equivalent to all interest and/or
dividends in respect of loaned securities that such Fund would have received had
the securities not been on loan over the record date, subject to any applicable
withholding taxes, and other necessary costs;
(ii) unless otherwise requested by the Client, the Lending
Agent shall add any non-cash distribution in the nature of a stock split or a
stock dividend to the existing securities on loan to which such distribution
relates as of the payable date; and
(iii) the Lending Agent shall record any non-cash distribution
in the nature of a warrant or right to purchase shares made with respect to
securities on loan as a new loan made on behalf of the applicable Fund to the
Borrower as of the date of receipt by the Borrower of such non-cash
distribution, provided, however, that the Client may direct the Lending Agent to
cause the Borrower to deliver such non-cash distribution to the Lending Agent
for the applicable Fund's account, in which case the Lending Agent shall credit
such non-cash distribution to such Fund's account as and when received.
9. Remedies for Failure to Deliver Securities. (a) In the event that
any loan made pursuant to this Agreement is terminated and the loaned
securities, or any portion thereof, shall not have been returned to the Fund
from which such loan of securities is made for any reason (including, without
limitation, the insolvency or bankruptcy of the Borrower) within the time
specified by the applicable securities loan agreement, the Lending Agent, at its
expense and subject to (b) below shall (i) promptly replace the loaned
securities, or any portion thereof, not so returned with other securities of the
same issuer, class, and denomination and with the same dividend rights and other
economic benefits as such securities possessed at the close of business on the
date as of which the loaned securities should have been returned, or (ii) if it
is unable to purchase such securities on the open market, credit the effected
Fund with the market value of such unreturned loaned securities, such market
value to be determined as of the close of business on the date immediately
preceding the date upon which such Fund is so credited and based upon such
valuation methods as the Client and the lending Agent may mutually agree. Until
such time as the actions in clauses (i) or (ii) have been consummated, any
dividends or interest which have accrued on the loaned securities, whether or
not received from the Borrower, shall be credited by the Lending Agent to the
applicable Fund in accordance with Section 8 hereof.
(b) The Client and the Funds shall have, as to the Collateral,
all of the rights and remedies of a secured party under applicable law. In the
event that the Lending Agent should be required to make any payment or incur any
loss or expense in connection with any securities loaned pursuant to (a) above,
the Lending Agent shall, to the extent of any such payment and/or loss or
expense, be subrogated and succeed to all such rights and remedies of the Client
and/or the applicable Fund against the Borrower under the applicable securities
loan agreement and to the collateral securing the Borrowers obligations to the
Lending Agent under such securities loan agreement. If for any reason the
Lending Agent cannot assert any such rights and remedies against the Borrower
and/or its successors and assigns in its own right, the Client and/or the
applicable Fund shall, at the expense of the Lending Agent, file and prosecute
such complaints and lawsuits and take such action as the Lending Agent may
reasonably request in connection with the recovery of any such deficiency and
shall otherwise cooperate with the Lending Agent in any such litigation.
(c) In the event of a failure of a pending sale of securities
by the Fund to a third-party buyer resulting from failure or refusal of a
Borrower to return loaned securities, or any portion thereof, to the Fund from
which such loan of securities is made for any reason as and when required
pursuant to the applicable securities loan agreement, the Lending Agent shall be
responsible for collecting from such non-performing Borrower any direct costs
incurred by the Client or the Fund to its buyer as a result of such settlement
failure, including without limitation, all buy-in costs for which the Client or
the Fund might otherwise be responsible. For purposes hereof, "buy-in costs"
shall mean the cost of the security purchased in the market by the buyer as a
result of the Client's failure to deliver such security together with all
commissions incurred in connection with such buy-in.
10. Lending Limitations. Notwithstanding any other provision of this
Agreement, the Client and the Lending Agent agree as follows:
(a) The aggregate market value of a Fund's loaned securities
outstanding at any one time shall not exceed an amount equal to twenty five
(25%) percent (or such other percentage as the Client may specify to the Lending
Agent in writing from time to time) of such Fund's total assets.
(b) The market value of a Fund's securities which are loaned
to any one Borrower shall not at any time exceed an amount equal to five (5%)
percent (or such other percentage as the Client may specify to the Lending Agent
in writing from time to time) of such Fund's total assets.
(c) The Client shall advise the Lending Agent, in writing, an
at such intervals as the Client shall deem appropriate, of the dollar amount of
each Fund's total assets and the dollar amounts which can be lent on behalf of
such Fund pursuant to Sections 8(a) and 8(b) during the period to which such
notice pertains (the "Lending Limitations). Subject to receipt by the Lending
Agent of the Lending Limitations to be provided by the Client pursuant to the
preceding sentence, the Lending Agent shall have the responsibility to ensure
the Program's compliance with Sections 8(a) and 8(b), except to the extent that
any non compliance results from a change in the applicable Lending Limitations,
provided, however, that in the event that the Lending Limitations as of any date
(or other period specified by the Client) are less than the Lending Limitations
in effect during the immediately preceding period, the Lending Agent shall
promptly take such actions as may reasonably be necessary or appropriate to
cause the Program to comply with such revised Lending Limitations.
11. Standard of Care; Indemnification. Except as specifically provided
in Section 9, the Lending Agent shall not be liable with respect to any losses
incurred by any Fund in connection with the Program, except to the extent that
such losses result from the Lending Agent's negligence, bad faith or willful
misconduct in its administration of the Program. Further, the Client on behalf
of each Fund hereby indemnifies and agrees to defend, hold and save harmless the
Lending Agent from any and all claims, actions, demands or lawsuits of any kind
whatsoever arising in any way out of the performance of the Lending Agents
duties under this Agreement, except to the extent caused by the negligence or
willful misconduct of the Lending Agent in its administration of the Program.
12. Compensation to the Lending Agent. In consideration for the
securities lending services to be provided by the Lending Agent hereunder, the
Lending Agent shall be entitled to compensation as set forth in Exhibit C
attached hereto, as amended from time to time upon agreement of the parties. The
Lending Agent is hereby authorized to charge such fees against and collect such
fees from the revenues derived from the securities lending activities. The fees
paid to the Lending Agent hereunder are solely in consideration of securities
lending services rendered by the Lending Agent and are in addition to any other
fees or compensation to which the Lending Agent may be entitled for services
rendered for Client or any Fund under other agreements.
13. Assignability. The parties hereto will not assign this Agreement
without first obtaining the written consent of the other party This Agreement
will be binding upon, and inure to the benefit of, the respective successors or
permitted assigns of the Lending Agent and the Client. Notwithstanding the
foregoing, it is hereby acknowledged and agreed that the Lending Agent may
utilize the services of one or more of its affiliates including, without
limitation, Boston Safe Deposit and Trust Company, as sub-agent, for the Funds,
to perform all or any portion of the services to be provided by the Lending
Agent pursuant hereto, provided, however, that the use of such sub-agent shall
not limit the liability of the Lending Agent for the performance of its
obligations hereunder and the Lending Agent shall be responsible for the acts
and omissions of such sub-agent to the same extent as though such acts or
omissions were (and such acts or omissions shall be deemed to be) the acts or
omissions of the Lending Agent.
14. Amendment and Termination.(a) The Client may, in its sole and
absolute discretion, direct the Lending Agent in writing to terminate any loan
of any Fund's securities at any time and for any reason in which event the
Lending Agent shall, promptly upon receipt of notice thereof from the Client,
take all steps necessary to cause the termination of such Loan and the return of
the loaned securities to the account of the Fund from which such loan was made
within the standard settlement period for such securities.
(b) This Agreement may not be amended or modified except by written
agreement duly executed by or on behalf of the parties hereto. This Agreement
may be terminated at any time at the option of either party upon thirty (30)
days prior written notice to the other party. In the event that this Agreement
is terminated, the Lending Agent shall not make any further securities loans on
behalf of the Funds after it has given or received, as the case may be, notice
of such termination and shall promptly take all reasonable actions to terminate
all securities loans then outstanding. In accordance with Section 6 of this
Agreement, the Client acknowledges that certain events, including but not
limited to termination of any loan or loans in accordance with (a) above or the
Clients termination of participation in the Program, certain changes to the
composition of a Fund's lendable securities, extraordinary changes in applicable
interest rates or the bankruptcy or insolvency of any issuer of a security may
result in a loss to the Funds. The obligations and the rights of the Client, the
Funds and the Lending Agent under this Agreement with respect to any outstanding
loans shall survive and continue despite any termination of this Agreement until
fully performed or satisfied.
15. Accounting for Cash Collateral Investment Vehicles. While the
vehicles maintained by the Lending Agent or its affiliate for the investment of
cash collateral are currently accounted for based upon a $1.00 net asset value
per unit, there is no guarantee that such accounting treatment shall continue
since the vehicles governing instruments permit a change to account for fund
assets on a marked to market basis, or that even if a $1.00 net asset value is
utilized, that there will not be differences from time to time between $1.00 and
the underlying fair market value of the net assets attributable to such unit.
16. Notices. Any notice, request, demand or other communication in
connection with this Agreement shall be deemed to have been given or made when
received by the party to whom directed. All such notices and other
communications shall be in writing unless otherwise provided herein and shall be
directed, if to the Lending Agent to:
Mellon Bank, N.A.
Two Mellon Bank Center, Room 675
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Global Securities Lending Contract Administration Unit
and if to the Client to:
Delaware Investments
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X'Xxxxxx, Senior Vice President
With a copy to:
Delaware Investments
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
or otherwise in accordance with the latest unrevoked written direction from any
party to the other party hereto.
17. Representations. The Client and the Lending Agent hereby each
represent and warrant to the other (i) that it has full authority to enter into
this Agreement upon the terms and conditions hereof; (ii) all such action has
been duly authorized by all necessary proceedings on its part; and (iii) that
the individual executing this Agreement on its behalf has the requisite
authority to bind it to this Agreement. The Client further represents and
warrants that each Fund may legally enter into the securities loans contemplated
by this Agreement, that it will have the legal right to transfer the lendable
securities in connection with such loans, and that such loans will create legal,
valid and binding obligations enforceable against the applicable Fund in
accordance with their terms.
18. Reporting. On or before the last day of each month the Lending
Agent shall provide the Client with a comprehensive report concerning each
Fund's participation in the Program during the immediately preceding month,
which reports shall include, without limitation, holdings and performance of any
collective investment vehicle in which the Lending Agent invests such Fund's
cash Collateral pursuant to this Agreement and the Lending Agent shall provide
such other information to the Client concerning the Program as the Client may
reasonably request from time to time subject, however, to the Lending Agents
duty of confidentiality to its other clients and policies regarding proprietary
information.
19. Governing Law. This Agreement shall be construed in accordance
with, and the rights of the parties are to be governed by, the laws of the
Commonwealth of Pennsylvania, exclusive of its conflict of laws principles, and
except insofar as the same are or may be preempted or superseded by applicable
Federal law.
20. Miscellaneous. This Agreement supersedes any other agreement
between the parties covering loans of securities by the Lending Agent on behalf
of any of the Funds. The provisions of this Agreement are severable and the
invalidity or unenforceability of any provision hereof shall not affect any
other provision of this Agreement. No single or partial waiver of any right
hereunder shall preclude any other or further exercise thereof, or the exercise
of any other right hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
[REGISTRANT] on behalf of the
Funds identified on Schedule 1 hereto
By:
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Title:
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MELLON BANK, N.A.
By:
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Title:
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EXHIBIT A
Global Securities Lending
Approved Borrowers
The following is the list of Borrowers in the Program referred to in
Section 1 (entitled Appointment of Lending Agent) of the Securities Lending
Authorization dated [ _____ ] 2002, by and between MELLON BANK, N.A., as Lending
Agent, and [REGISTRANT] on behalf of one or more of its series, as Client.
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Domestic Broker/Dealers Other Domestic
1. ABN AMRO Incorporated * 43. BNY Capital Markets, Inc.
2. ABN AMRO Securities LLC 44. First Union National Bank
3. Banc Of America Securities LLC * 45. XX Xxxxxx Xxxxx Bank
4. Barclays Capital, Inc. * 46. State Street Bank and Trust Company
5. Bear Xxxxxxx & Company, Inc. *(1) 47. State Street Corporation
6. Bear Xxxxxxx Securities Corp. (1)
7. BMO Xxxxxxx Xxxxx Corp* International Brokers & Banks
8. BNP Paribas Securities Corp*
9. CIBC World Markets Corporation * 48. ABN Amro Bank N.V.
10. Credit Lyonnais Securities (USA) Inc. 49. ABN Amro Bank, N.V., New York Branch*
11. Credit Suisse First Boston Corporation * 50. ABN Amro Equities (UK) Ltd.
12. Xxxx Xxxxxx Xxxxxxxx, Inc. 51. Barclays Bank, PLC
13. Deutsche Bank Xxxx Xxxxx, Inc.* 52. Barclays Capital Securities Ltd.
14. Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation 53. BNP Paribas
15 Dresdner Kleinwort Xxxxxx North America LLC * 54. CDC IXIS Capital Markets
16. First Union Securities, Inc. 55. Commerzbank AG
17. Fleet Securities, Inc. 56. Credit Suisse First Boston (Europe), Ltd.
18. Fortis Investment Services LLC 57. Deutsche Bank, AG
19. Fuji Securities, Inc. * 58. Dresdner Kleinwort Xxxxxxxxxxx Securities Limited
20. Xxxxxxx, Sachs & Company * 59. Fortis Bank (Netherlands) N.V.
21. Greenwich Capital Markets, Inc. * 60. Xxxxxxx Xxxxx International
22. HSBC Securities (USA) Inc. * 61. X.X. Xxxxxx Securities, Ltd.
23. ING Barings Corp. 62. Xxxxxx Brothers International (Europe)
24. Xxxxxxxx and Co., Inc. 63. Xxxxxxx Xxxxx International Ltd.
25. X.X. Xxxxxx Securities, Inc. * 64. Xxxxxx Xxxxxxx & Co. International, Ltd.
26. Xxxxxx Brothers, Inc. * 65. Nomura International PLC
27. Lewco Securities Corp. 66. Rabobank International
28. Xxxxxxx Xxxxx Government Securities, Inc. * (2) 67. Salomon Brothers International, Ltd.
29. Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Inc. (2) 68. Salomon Brothers UK Equity Limited
30. Xxxxxx Xxxxxxx & Co., Inc. * (3) 69. Societe Generale
31. MS Securities Services, Inc. (3) 70. UBS AG
32. Xxxxxxxxx & Xxxxxx, LLC 71. Westdeutsche Landesbank Girozentrale, New York
33. Nomura Securities International, Inc. * Branch
34. Prudential Securities, Inc.
35. Xxxxxxx Xxxxx & Associates, Inc. * Denotes Primary US Government Securities Dealer
36. RBC Dominion Securities Corp. 1 Treated as single entity for credit & processing purposes.
37. Xxxxxxx Xxxxx Barney, Inc. * 2 Treated as single entity for credit & processing purposes.
38. XX Xxxxx Securities Corp.* 3 Treated as single entity for credit & processing purposes.
39. TD Securities (USA) Inc.
40. UBS PaineWebber Inc..
41. UBS Warburg LLC *
42. Xxxxx, Xxxx & Xxxxx
02/04/02 (ALLEXA)
EXHIBIT B
SECURITIES LENDING
INVESTMENT POLICY AND GUIDELINES FOR COLLECTIVE INVESTMENT VEHICLES
MELLON GSL DBT II COLLATERAL FUND
The following are the Collateral Investment Guidelines referred to in
Section 6 (entitled Collateral Investment) of the Securities Lending
Authorization Agreement dated [ ________ ], 2002, by and between the and
[REGISTRANT] on behalf of one or more of its series, as Client and MELLON BANK,
N.A, as Lending Agent.
Portfolio Management:
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Lending Agent will manage (or cause the management of) the investment of cash
collateral received by the Lending Agent in respect of loans of securities in
accordance with the following guidelines:
1. Objectives:
The Fund shall be for the investment and management of cash collateral
supporting securities loans the key objectives of which management of
cash collateral are to:
o safeguard principal,
o assure that all cash collateral is invested in a timely
manner,
o maintain a diversified portfolio of investments,
o maintain adequate liquidity to meet the anticipated needs
of clients and/or their investment
advisors, and
o consistent with these objectives, to optimize the spread
between the collateral earnings and the rebate rate paid to
the borrower of securities.
The following standards have been designated to complement the
preceding objectives:
Amortized Cost
Collateral which is invested in the Fund is assigned a value of
approximately $1.00 per unit. Because the Fund is currently operated on
a cost, rather than market value basis, for purposes of subscriptions
and redemptions, if non-cash assets are to be sold prior to their
maturity for purposes of effecting a participants withdrawal from the
Fund, it is possible that a loss may be realized. In addition, there is
no guarantee that the Fund will continue to be maintained on a cost,
rather than a market value basis. The amortized or book value of the
Fund's assets and underlying fair market value of its assets may differ
to a certain degree, and accordingly, admissions or withdrawals from a
fund utilizing such amortized or book value may be made when the fair
market value of the underlying assets of the Fund is less than, or
exceeds, such amortized or book value.
2. Allowable Instruments and Credit Quality
A. Instruments issued or fully guaranteed by the U.S. Government,
Federal agencies, or sponsored agencies or sponsored
corporations.
B. Instruments issued by domestic corporations including
corporate notes and floating rate notes rated A3 or better at
time of purchase by Xxxxx'x Investor Service or A- by Standard
& Poors. Commercial paper of domestic corporations must be
rated A-1 and P-1 at time of purchase. Floating rate notes
must reprice daily, weekly, monthly or quarterly and utilize a
standard repricing index such as LIBOR, Treasury Bills,
commercial paper or Federal funds. Capped floating rate notes
are acceptable as long as the ceiling rate is five hundred
basis points above the current repricing index at time of
purchase.
C. Obligations of approved domestic and foreign banks including
bankers acceptances, certificates of deposit, domestic and
off-shore bank time deposits, bonds (Euro), floating rate
notes (Euro) and other debt instruments. The banks must be
rated at least A3 by Moody's or A- by Standard & Poor's at
time of purchase.
D. U.S. dollar-denominated instruments issued by sovereigns,
sovereign supported credits, and instruments of foreign banks
and corporations. The foreign banks or corporations must be
rated at least A- by Standard & Poor's or A3 by Moody's.
Commercial paper of foreign banks and corporations must be
rated A-1 and P-1.
E. Yankee Securities subject to the quality constraints outlined
in "D" above.
F. Repurchase agreements subject to a minimum of 102%
collateralization with daily updated valuation.
G. Insurance company funding agreements, guaranteed investment
contracts (GICs) and bank investment contracts (BICs) are
acceptable if the issuer has a long term debt rating or claims
paying ability rating at least A1 at time of purchase by
Xxxxx'x Investor Service or A+ by Standard & Poor's. In
addition, GIC/BIC investments must contain an unconditional
put feature that can be exercised within 90 days at par value.
H. Asset-backed securities having a minimum rating, at the time
of purchase, of AA- by Standard & Poor's or AA3 by Xxxxx'x
Investor Service.
I. Money market mutual funds including money market mutual funds
and other commingled funds of an affiliate of the Lending
Agent.
J. All credit ratings set forth herein shall be applicable at
time of purchase. If a security is rated by more than one
nationally recognized statistical organization, the higher
rating shall prevail for purposes of these guidelines.
K. All obligations shall be payable as to principal and interest
in U.S. currency.
Note:
The following securities are not acceptable investments for the Fund:
o Unsecured obligations of institutions whose primary business
is to function as a broker/dealer.
o Interest only and principal only (IO, PO) stripped mortgages.
o Complex derivative structures including, but not limited to:
inverse floating rate notes, defined range floating rate
notes, trigger notes, and callable step-up notes.
o No individual investment which can acquire a negative coupon
or whose return of principal is linked to any set methodology
may be made for any reason. However, zero coupon securities
such as commercial paper, short term discount notes, original
issue discount (OID) notes, and Treasury bills which are
purchased at prevailing market yields will be deemed to be
acceptable for purchase.
o The Lending Agent may not be a direct party in swap, futures
and option transactions.
3. Maturity
o The dollar-weighted maturity will be maintained with the
objective of preserving principal. The maximum weighted
average maturity of the Fund is 90 days. Put features and
floating and variable rate note reset dates will be used as
the proxy for maturity date in calculating the weighted
average maturity of the Fund.
o No instrument will have a maturity date or expected weighted
average life in excess of thirteen months from time of
purchase, except:
o floating and variable rate securities which may have a
three-year final maturity, and
o floating rate asset-backed securities which may have an
expected weighted average life no greater than three
years. Amortizing floating rate asset-backed securities
may have an expected weighted average life no greater than
three years and an expected final payment date not
exceeding five years from date of purchase.
o All normal settlement period practices are not considered in
applying the maturity constraints or calculating the weighted
average maturity of the Fund.
4. Diversification
o The Fund's minimum overnight (next business day) liquidity
level will be targeted at not less than 20%.
o At the time of purchase, the combined holdings of securities
from one issuer should not constitute more than five percent
of the Fund with the exception of repurchase agreements, money
market funds, instruments issued or fully guaranteed by the
U.S. government, federal agencies, or sponsored agencies or
sponsored corporations.
Agreed to and Approved by Client
By:
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Title:
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Date:
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Agreed to and Approved by Lending Agent
By:
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Title:
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Date:
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EXHIBIT C
Securities Lending Fee Split
The following is the fee split referred to in Section 11 (entitled
Compensation to the Lending Agent) of the Securities Lending Authorization dated
[ _____ ], 2002, by and between MELLON BANK, N.A., as Lending Agent, and
[REGISTRANT] on behalf of one or more of its series, as Client. Lending Agent
shall retain 30% of the net securities lending revenues generated under this
Agreement as compensation for its securities lending services and the Fund shall
be entitled to the remainder of such net securities lending revenues. For
purposes hereof, net securities lending revenues shall mean (i) all loan premium
fees derived from Lending Agents acceptance of non-cash Collateral; plus (ii)
all gains and losses, income and earnings from the investment and reinvestment
of the Funds cash Collateral minus rebate and similar fees paid by the Lending
Agent to the Borrower.
EXHIBIT D
Collective Investment Vehicles For Investment of Cash Collateral
MELLON GSL REINVESTMENT TRUST
Mellon GSL DBT II Collateral Fund
The following is additional information about the collective investment
vehicles for the investment of cash collateral referenced in Section 6 (entitled
Collateral Investment) of the Securities Lending Authorization Agreement dated [
______ ], 2002 by and between the [REGISTRANT], as Client (on behalf of the Fund
identified therein) and MELLON BANK, N.A. as Lending Agent. Pursuant to the
Agreement, the Lending Agent is authorized to invest Cash Collateral of the Fund
in a collective investment vehicle that satisfies the requirements of such
Section 6. None of these collective investment vehicles are guaranteed or
insured by the Lending Agent or its affiliates or by the Federal Deposit
Insurance Corporation or any government agency.
Set forth below is information about the MELLON GSL DBT II COLLATERAL
FUND Series of the MELLON GSL REINVESTMENT TRUST, a collective investment
vehicle to be utilized by the Lending Agent pursuant to the Agreement for the
investment of Cash Collateral.
Delaware Business Trust. A Delaware business trust, known as the Mellon
GSL Reinvestment Trust (the "Trust"), has been established for the purpose of
investment and reinvestment of Cash Collateral on behalf of clients in the
securities lending programs of the Lending Agent and its affiliates,
particularly clients who are not eligible to participate in collective trusts or
common trust funds maintained by the Lending Agent or its affiliates. A complete
copy of the Declaration of Trust establishing the Trust is available upon
request.
Portfolios. Under the Declaration of Trust, the Trustee may establish
one or more portfolio series (each, a "Portfolio" or "Series") and has
established a Series entitled "Mellon GSL DBT II Collateral Fund". Each
Portfolio is an identified pool of assets and corresponding liabilities. The
debts, liabilities, obligations and expenses incurred with respect to a
particular Portfolio are enforceable only against the assets of that Portfolio
and not against the assets of the Trust generally of the assets of any other
Portfolio.
Service Providers. The Lending Agent serves as custodian of the Trust
and as the Investment Manager of each Portfolio of the Trust (the "Investment
Manager") and directs the investment and reinvestment of assets of each Series
of the Trust. Mellon Bank (DE) National Association, an affiliate of the Lending
Agent, serves as the trustee of the Trust (the "Trustee"). None of these parties
will receive any additional compensation from the Trust for their services to
the Trust.
Fees and Expenses. The Trust bears its own costs and expenses in
connection with its establishment and operation, the expenses incurred in
connection with its investments and certain other expenses as set forth in the
Declaration of Trust, such as audit fees.
Units. When the Lending Agent invests Cash Collateral in the Trust, the
Fund on whose behalf the Client is acting will become a beneficial owner of
units of the Trust representing interests in a particular Portfolio ("Units").
Each Unit represents an undivided proportionate interest in all assets and
liabilities of a Portfolio, each without priority or preference over the other.
Initially, each Unit is valued at $1.00 and the Trust will, as a general rule,
use amortized cost methods of valuing the assets of each Portfolio. Each
Portfolio is managed to maintain a constant value of $1.00 per Unit, although
the Declaration of Trust provides that the Trustee may change this constant
valuation in certain unusual circumstances. Each business day the net income
accrued by the Trust for a Portfolio will be calculated and the accrued net
income of the Portfolio will be allocated for the benefit of the beneficial
owners of Units of the Portfolio.
Non-Transferability of Units; Redemption of Units. Units are
transferable only with consent of the Trustee; however, the Trust is obligated
to redeem all or any part of each beneficial owner's Units at a redemption price
equal to the net asset value per Unit, as determined by the Trustee. Payment of
the redemption price will be made in cash on the redemption date in ordinary
circumstances, provided redemption has been requested in a timely manner as
determined by the Trustee.
Tax Status. Each Portfolio will be treated as a partnership for federal
income tax purposes. Each Portfolio will also be exempt from taxation in the
State of Delaware.
Client Authorization. By execution of this Exhibit D below, the Client
hereby represents to the Lending Agent and authorizes the Lending Agent, on
behalf of the Fund or Funds identified in the Agreement, to execute and deliver
one or more documents representing as follows: (i) the securities issued by any
collective investment vehicle for the benefit of the Fund are being acquired
only for investment and not with a view to distribution, (ii) the Fund qualifies
as an accredited investor within the meaning of Rule 501 of Regulation D under
the Securities Act of 1933, as amended, and (iii) the Fund qualifies as a
qualified purchaser under the Investment Company Act of 1940, as amended. By
execution of this Exhibit D below, the Client also agrees to notify the Lending
Agent promptly if at any time any of the representations set forth herein are no
longer true and correct.
TAX INFORMATION. UNDER PENALTIES OF PERJURY, THE FUND* (AS PAYEE)
HEREBY CERTIFIES TO THE TRUST (AS PAYER) THAT (1) THE NUMBER SHOWN BELOW IS ITS
CORRECT TAXPAYER IDENTIFICATION NUMBER AND (2)** THE FUND* IS NOT SUBJECT TO
BACKUP WITHHOLDING BECAUSE (A) IT IS EXEMPT FROM BACKUP WITHHOLDING OR (B) IT
HAS NOT BEEN NOTIFIED BY THE IRS THAT IT IS SUBJECT TO BACKUP WITHHOLDING AS A
RESULT OF FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (C) THE IRS HAS
NOTIFIED THE FUND* THAT IT IS NO LONGER SUBJECT TO BACKUP WITHHOLDING.
Please enter the Fund's taxpayer identification numbers(s):
_______________________ __________________________
ACCOUNTS THAT HAVE MISSING OR INCORRECT TAXPAYER IDENTIFICATION NUMBERS
WILL BE SUBJECT TO BACKUP WITHHOLDING AT A 31% RATE, OR THE THEN APPLICABLE
RATE, ON DISTRIBUTIONS AND OTHER PAYMENTS, BACKUP WITHHOLDING IS NOT AN
ADDITIONAL TAX: THE TAX LIABILITY OF PERSONS SUBJECT TO BACKUP WITHHOLDING WILL
BE REDUCED BY THE AMOUNT OF TAX WITHHELD.
----------------
* Please note this information relates to the Fund the assets of which are being
invested, not to the Client signing this document.
** PLEASE CROSS OUT ITEM (2) ABOVE IN ITS ENTIRETY IF THE FUND* HAS BEEN
NOTIFIED BY THE IRS THAT THE FUND IS SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDERREPORTING INTEREST OR DIVIDENDS.
The Fund* is the following type of entity:
_____ Qualified Plan
_____ Governmental Plan
_____ VEBA
_____ Foundation
_____ Endowment Fund
_____ Corporation
_____ Partnership
_____ Trust
__X__ Other: specify: Registered Mutual Funds
The Fund's tax year ends on the following date in each year: 6/30
----
The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications required to avoid
backup withholding.
Agreed to and Approved by Client:
By:
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Title:
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Date:
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ATTACHMENT 1
The following is a copy of the Lending Agent's Master form of Agreement
for use with US Borrowers referred to in Section 1 of the Securities Lending
Authorization dated as of [ ______], 2002 by and between MELLON BANK, N.A., as
Lending Agent, , and [REGISTRANT] on behalf of one or more of its series, as
Client.
US BORROWER AGREEMENT
[See Attached]
ATTACHMENT 2
The following is a copy of the Lending Agents Master form of (ISLA)
Agreement for use with Non-U.S. Borrowers referred to in Section 1 of the
Securities Lending Authorization dated as of [ _______], 2002, by and between
MELLON BANK, N.A., as Lending Agent, and [REGISTRANT], on behalf of one or more
of its series as Client.
NON-U.S. BORROWER (OSLA) AGREEMENT
[See Attached]
SCHEDULE 1
The following is the list of the "Funds" referred to in the Securities
Lending Authorization dated [ _______ ], 2002, by and between MELLON BANK, N.A.,
as Lending Agent, and [REGISTRANT], as Client.
[LIST OF FUNDS IN THE REGISTRANT]
