SECURITIES LENDING AUTHORIZATION AGREEMENT
Between
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
PAGE
1. APPOINTMENT OF STATE STREET. . . . . . . . . . . . . . . . . . . 1
2. SECURITIES TO BE LOANED. . . . . . . . . . . . . . . . . . . . . 1
3. BORROWERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. SECURITIES LOAN AGREEMENTS . . . . . . . . . . . . . . . . . . . 3
5. LOANS OF AVAILABLE SECURITIES. . . . . . . . . . . . . . . . . . 3
6. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 5
7. DISTRIBUTIONS ON AND VOTING RIGHTS WITH RESPECT TO
LOANED SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . 7
8. COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9. COMPENSATION FOR THE CLIENT AND STATE STREET . . . . . . . . . . 10
10. FEE DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . 11
11. RECORDKEEPING AND REPORTS. . . . . . . . . . . . . . . . . . . . 11
12. STANDARD OF CARE . . . . . . . . . . . . . . . . . . . . . . . . 11
13. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 12
14. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
15. CONTINUING AGREEMENT; TERMINATION; REMEDIES. . . . . . . . . . . 14
16. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 15
18. SECURITIES INVESTORS PROTECTION ACT. . . . . . . . . . . . . . . 15
19. MODIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 16
20. PROTECTION OF TRUSTEES . . . . . . . . . . . . . . . . . . . . . 16
21. AUTHORITY OF STATE STREET. . . . . . . . . . . . . . . . . . . . 16
22. CUSTODY AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 17
EXHIBIT 1.1
EXHIBIT 3.1
EXHIBIT 4.1
EXHIBIT 4.2
EXHIBIT 8.1
EXHIBIT 8.2
EXHIBIT 9
SECURITIES LENDING AUTHORIZATION AGREEMENT
Agreement dated the 6th day of September, 1996 between OLD MUTUAL SOUTH
AFRICA EQUITY TRUST, a Massachusetts trust and investment company registered
under the Investment Company Act of 1940, as amended (the "Client"), and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company ("State Street"),
setting forth the terms and conditions under which State Street is authorized to
act on behalf of the Client with respect to the lending of certain securities of
the Client held by State Street under a Custodian Contract dated October 23,
1995 (the "Custodian Contract").
Certain capitalized terms used in this Agreement are defined in Section 14.
The Client and State Street, as the parties hereto, hereby agree as
follows:
1. APPOINTMENT OF STATE STREET. The Client hereby authorizes State Street
as its agent to lend Available Securities to Borrowers in accordance with the
terms of this Agreement. Subject to the terms of this Agreement, State Street
shall have the responsibility and authority to do or cause to be done all acts
State Street shall reasonably determine to be desirable, necessary, or
appropriate to implement and administer this securities lending program. State
Street shall use all reasonable efforts to arrange loans of Available Securities
on behalf of the Client in accordance with and subject to the terms of this
Agreement, provided State Street shall: (i) not arrange any loans if as a result
thereof securities loaned by the Client would exceed 33 1/3% of the value of its
net assets; and (ii) terminate existing loans in the applicable amount in order
that securities on loan at any time do not exceed 33 1/3% of the value of
Client's net assets.
EXHIBIT 1.1 specifies the maximum percentage of the Client's holdings of
any particular security that may be lent in the aggregate to any and all
Borrowers at any time, provided that at no time shall more than 75% of the
Client's holding of any particular security be lent. EXHIBIT 1.1 may be amended
from time to time by the Client upon advance written notice to State Street with
respect to new loans. State Street shall observe the limitations set forth in
EXHIBIT 1.1, and if necessary, terminate loans in accordance with the terms
hereof to comply with such limits.
Client agrees that State Street is acting as a fully disclosed agent and
not as principal in connection with the securities lending program. State
Street may take action as agent of the Client on an undisclosed or a disclosed
basis.
2. SECURITIES TO BE LOANED. State Street acts pursuant to the Custodian
Contract as custodian of the securities owned by the Client. All of the
Client's securities held by State Street as custodian shall, subject to EXHIBIT
1.1, be subject to this securities lending program, except those securities
which the Client or the Investment Manager specifically identifies in notices to
State Street as not being Available Securities, and those securities which the
Investment Manager advises State Street have been, or are to be, sold or
otherwise disposed of for the Client. Without limiting State Street's duty not
to make Loans of securities so identified by the Client or the Investment
Manager, State Street shall have no authority or responsibility for determining
whether any of the Client's securities should be identified by the Investment
Manager as not being Available Securities.
3. BORROWERS. The Available Securities may be loaned to and only to
Borrowers selected by State Street from among the Borrowers listed on the
Schedule of Borrowers, attached hereto as EXHIBIT 3.1, which Schedule of
Borrowers shall unless otherwise agreed in writing include only Borrowers
resident in the United Kingdom for tax purposes. Subject as mentioned above,
State Street may from time to time amend the Schedule of Borrowers with at least
fifteen days prior notice to the Client, provided no such amendment shall become
effective if the Client or the Investment Manager objects thereto within such
notice period. In no case shall State Street make or maintain loans of
Available Securities representing at any time more than 10% of the market value
of the Client's portfolio to any one Borrower.
State Street hereby represents and warrants that its London office is an
approved United Kingdom collecting agent as defined in the Income Tax
(Manufactured Overseas Dividends) Regulations 1993 (SI 1993/2004).
State Street shall maintain books and records to facilitate the withholding
of United Kingdom tax at the rate (if any) required under United Kingdom law.
State Street shall take such reasonable steps, to the extent permissible
under applicable law, as are necessary to enable all manufactured payments to be
made under the lending program to be paid without deduction of United Kingdom
tax, provided that the Client shall comply with all reasonable requests of State
Street for information and/or assistance in this regard.
In the event that securities lending activity is undertaken through its
London office, State Street becomes subject to additional regulation in the UK,
and the parties acknowledge that:
i. State Street shall make available to Client established
procedures in accordance with the requirements of the Securities and
Futures Authority for the effective consideration of complaints concerning
State Street's activities carried on in the UK.
ii. Where a liability in one currency is to be matched by an asset in a
different currency, or where an investment transaction relates to an
investment denominated in a currency other than sterling, a movement of
exchange rates may have a separate effect, favorable or unfavorable, on the
gain or loss which would otherwise be experienced on the investment.
iii. State Street or an affiliate may have an interest that is material to the
investment or transaction concerned and, except as expressly provided in
this Agreement, neither State Street nor any such affiliate shall be
obliged to disclose such interest or account to Client for any profits or
benefits made or derived by it or any of its associates from any such
transaction.
iv. Any assets which State Street holds in the form of money shall be held
pursuant to the Custodian Contract but shall not be treated by State Street
as Clients' Money as defined by The Financial Services (Client Money)
Regulations 1991 of the United Kingdom as amended (the "Clients' Money
Regulations") and will not be held in accordance with the Clients' Money
Regulations or such other regulations as shall amend or replace the
Clients' Money Regulations from time to time.
4. SECURITIES LOAN AGREEMENTS. The Client authorizes State Street to
enter into one or more Securities Loan Agreements, consistent with the terms
hereof and substantially in the form of the Lending Agreement attached hereto as
EXHIBIT 4.1, including an Appendix thereto for loans of South African Securities
in the form of EXHIBIT 4.2 hereto. State Street shall not, without prior
consent of Client, enter into any Securities Loan Agreement (or any waiver or
modification of any existing Securities Loan Agreement) that shall adversely
affect Client's rights hereunder or under that Securities Loan Agreement in
any material manner. Subject to the foregoing, each Securities Loan Agreement
shall have such terms and conditions as State Street may negotiate with the
Borrower, however certain terms of individual loans, including rebate fees to be
paid to the Borrower for the use of Cash Collateral, shall be negotiated at the
time a loan is made. Except as expressly authorized in writing by Client from
time to time (other than as set forth in Section 8.4(a) of the Securities Loan
Agreement in EXHIBIT 4.1 hereto), State Street shall make no representations or
warranties on behalf of the Client to any Borrower in any Securities Loan
Agreement or otherwise without proper authority hereunder.
5. LOANS OF AVAILABLE SECURITIES. State Street shall be
responsible for determining whether any Loan of Available Securities shall be
made, and, subject to Section 4, for negotiating and establishing the terms of
each such Loan. State Street shall have the authority to terminate any Loan in
its discretion, at any time and without prior notice to the Client.
The Client acknowledges that State Street administers securities lending
programs for other clients of State Street. State Street will allocate
securities lending opportunities among
its clients, using reasonable and equitable methods established by State Street
from time to time. State Street does not represent or warrant that any amount
or percentage of the Client's Available Securities will in fact be loaned to
Borrowers. Client agrees that it shall have no claim against State Street and
State Street shall have no liability arising from, based on, or relating to,
loans made for other clients, or loan opportunities refused hereunder, whether
or not State Street has made fewer or more loans for any other client, and
whether or not any loan for another client, or the opportunity refused, could
have resulted in loans made under this Agreement.
State Street shall terminate any Loan in accordance with the applicable
Securities Loan Agreement as soon as practicable after:
(i) receipt by State Street of a notice from the Borrower terminating
the Loan in accordance with the Securities Loan Agreement;
(ii) receipt by State Street of a notice from the Client or the
Investment Manager: (a) to the effect that the Securities subject to the Loan
are no longer Available Securities; or (b) of an amendment to EXHIBIT 1.1
reducing the maximum percentage of the Client's holdings of any particular
security that may be lent to a percentage that is less than the current
percentage on loan to any and all Borrowers at that time; and
(iii) receipt by State Street of a notice from the Client or the
Investment Manager to the effect that the Borrower is no longer to be included
in EXHIBIT 3.1.
State Street will perform from time to time, or will cause a third party
(which may be an affiliate of State Street) to perform, a credit analysis and
set trading limits deemed appropriate by State Street with respect to Borrowers
and shall report to the Client with respect to such credit analyses and trading
limits upon request (subject to State Street's obligations to maintain the
confidentiality of non-public information). As part of this credit analysis
State Street shall continuously monitor publicly available information with
respect to such Borrowers, and shall report to the Client any publicly
available material adverse change with respect to a Borrower upon request.
The Client also acknowledges that, under the applicable Securities Loan
Agreements, Borrowers will not be required to return Loaned Securities
immediately upon receipt of notice from State Street terminating the applicable
Loan, but instead will be required to return such Loaned Securities within such
period of time following such notice as is specified in the applicable
Securities Loan Agreement. Upon receiving a notice from the Client or the
Investment Manager that Available Securities which have been loaned to a
Borrower should no longer be considered Available Securities (whether because of
the sale of such securities or otherwise) or that a Loan should otherwise be
terminated, State Street shall notify promptly thereafter the Borrower which 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
Securities Loan Agreement. State Street shall in a timely manner give all
demands and notices required to be given by or on behalf of the Client under the
Securities Loan Agreement. If (a) any event occurs with respect to any Borrower
that would, upon notice from State Street, become a default under the applicable
Securities Loan Agreement and (b) the Client instructs State Street to give such
notice, State Street shall forthwith comply with such instruction.
State Street agrees with the Client that neither it nor any person acting
as custodian of the Client's assets will accept the delivery of any instrument
of transfer of Equivalent Securities or Collateral (as defined in each case in
the applicable Securities Loan Agreement) from a Borrower unless that instrument
is duly stamped in accordance with all applicable laws. Except as the Client
may otherwise instruct, State Street may accept Equivalent Securities (as
defined in the applicable Securities Loan Agreement) that are registered on a
Register of Members maintained in either the United Kingdom or South Africa.
6. INDEMNIFICATION.
(a) If following the occurrence of an Event of Default by a Borrower
with respect to a Loan (within the meaning of the applicable Securities Loan
Agreement) some or all of the Loaned Securities under such Loan are not returned
by the Borrower as required by the applicable Securities Loan Agreement, State
Street shall indemnify the Client against the failure of the Borrower as
follows. State Street shall acquire and hold for the account of the Client a
number of Replacement Securities equal to the number of such unreturned Loaned
Securities. Such Replacement Securities shall be purchased by applying the
proceeds of the Collateral with respect to such Loan to the
purchase of such Replacement Securities. Subject to Client's obligations to
assume market and investment losses with respect to the investment of Cash
Collateral, if and to the extent that such proceeds are insufficient or the
Collateral is unavailable, the purchase of such Replacement Securities shall be
made at State Street's expense.
(b) If and to the extent that State Street is unable after diligent
efforts for a period of 30 days to purchase Replacement Securities or if at any
time prior to the end of such 30 day period the Client instructs State Street to
make a cash settlement of its obligation to procure Replacement Securities, and,
in either case, the Collateral continues to be successfully marked to market
against the unreturned Loaned Securities as required by the applicable
Securities Loan Agreement, State Street shall forthwith credit to the Client's
account an amount equal to the Market Value of the unreturned Loaned Securities
for which Replacement Securities are not so purchased as of the Business Day on
which the credit is made. If State Street is unable after diligent efforts to
purchase Replacement Securities and the Borrower has failed (and such failure is
continuing) to deliver to State Street additional collateral for the unreturned
Loaned Securities as required by the applicable Securities Loan Agreement, State
Street shall credit to the Client's account the greater of the Market Value of
the unreturned Loaned Securities for which Replacement Securities are not so
purchased determined as of (i) the last day the Collateral continues to be
successfully marked to market against the unreturned Loaned Securities; or (ii)
the next Business Day following the day referred to in (i) above.
(c) In addition to making the purchases or credits required by
Section 6 (a) and (b) hereof, State Street shall credit to the Client's account
the value of all distributions on the Loaned Securities (not otherwise credited
to the Client's account with State Street), the record dates for which occur
before the date that State Street purchases Replacement Securities pursuant to
Section 6 (a) or credits the Client's account pursuant to Section 6 (b).
(d) Any credits required under Section 6 (b) and (c) hereof shall be
made by application of the proceeds of the Collateral (if any) that remain after
the purchase of Replacement Securities pursuant to Section 6 (a). If and to the
extent that the Collateral is unavailable or the value of the proceeds of the
remaining Collateral is less than the value of the sum of the credits required
to be made under Paragraphs (b) and (c), such credits shall be made at State
Street's expense.
(e) If after application of Section 6 (a) through (d) hereof,
additional Collateral remains or any previously unavailable Collateral becomes
available or any additional
amounts owed by the Borrower with respect to such Loan are received from the
Borrower, State Street shall apply the proceeds of such Collateral or such
additional amounts first to reimburse itself for any amounts expended by State
Street pursuant to Section 6 (a) through (d) above, and then to credit to the
Client's account all other amounts owed by the Borrower to Client with respect
to such Loan under the applicable Securities Loan Agreement.
(f) In the event that State Street is required to make any payment
and/or incur any loss or expense under this Section, State Street shall, to the
extent of such payment, loss, or expense, be subrogated to, and succeed to, all
of the rights of the Client against the Borrower under the applicable Securities
Loan Agreement.
(g) The provisions of this Section shall not apply to losses
attributable to war, riot, revolution, moratoria, embargoes, or similar acts of
government or other similar extreme and unusual circumstances beyond the
reasonable control or apprehension of State Street. State Street's obligations
shall not be affected by (i) any invalidity or non-perfection of any lien in any
Collateral, (ii) any change in corporate existence, structure, or ownership of
any Borrower, (iii) any bankruptcy, reorganization or similar proceeding
affecting any Borrower, or (iv) any invalidity or unenforceability relating to
the applicable Securities Loan Agreement with the Borrower. However, if at any
time any Collateral, Loaned Securities, Replacement Securities, credits, or
payments must be restored, delivered or paid in connection with the bankruptcy,
insolvency, or reorganization of a Borrower or otherwise, State Street's
obligations with respect to such Collateral, Loaned Securities, Replacement
Securities, credits, or payments shall be reinstated as though due and
outstanding at such time.
7. DISTRIBUTIONS ON AND VOTING RIGHTS WITH RESPECT TO LOANED SECURITIES.
The Client represents and warrants that it is the beneficial owner of (or
exercises complete investment discretion over) all Available Securities free and
clear of all liens, claims, security interests and encumbrances and that it is
entitled to receive all distributions made by the issuer with respect to
Available Securities. Except as provided in the next sentence, all interest,
dividends, and other distributions paid with respect to Loaned Securities shall
be credited to the Client's account pursuant to the Custodian Contract on the
date such amounts are delivered by the Borrower to State Street. Any non-cash
distribution on Loaned Securities which is in the nature of a stock split or a
stock dividend shall be added to the Loan (and shall be considered to constitute
Loaned Securities) as of the date the Borrower becomes entitled to such non-cash
distribution and such non-cash distribution is paid by the issuer; PROVIDED
that the Client (or Investment Manager) may, by giving State Street ten (l0)
Business Days' notice prior to the
date of such non-cash distribution, direct State Street to request that the
Borrower deliver such non-cash distribution to State Street, pursuant to the
applicable Securities Loan Agreement, in which case State Street shall credit
such non-cash distribution to the Client's account pursuant to the Custodian
Contract on the date it is delivered to State Street.
The Client acknowledges that it will not be entitled to participate in any
dividend reinvestment program or to vote with respect to securities that are on
loan on the applicable record date for such securities.
The Client also acknowledges that any payments of distributions from
Borrower to Client are in substitution for the interest or dividend accrued or
paid in respect of Loaned Securities and that the tax treatment of such payment
may differ from the tax treatment of such interest or dividend. State Street
shall use its best efforts to minimize any resulting liability for tax.
If an installment, call or rights issue becomes payable on or in respect of
any Loaned Securities or if an issuer makes available the opportunity to elect
to receive a dividend in either cash or securities, State Street shall use all
reasonable endeavors to ensure that any timely instructions which are given in
accordance with the Custodian Contract from the Client or the Investment Manager
are complied with, but State Street shall not be required to make any payment
unless the Client has first placed it in funds to make such payment.
8. COLLATERAL. The Client authorizes State Street to receive and to hold,
on the Client's behalf, Collateral from Borrowers to secure the obligations of
Borrowers with respect to any loan of securities made on behalf of the Client
pursuant to the Securities Loan Agreements. Prior to the delivery of the Loaned
Securities to the Borrower under any Loan, State Street shall receive from the
Borrower Collateral having an initial Market Value of not less than 105% of the
Market Value of the Loaned Securities in any of the following forms as may be
approved from time to time by the Board of Trustees of the Client: (i) U.S.
dollar federal funds or New York Clearing House funds ("Cash Collateral"), (ii)
book entry Treasury securities (as defined in Subpart O of Treasury Department
Circular No. 300, 31 C.F.R. 306) and any other securities issued or fully
guaranteed by the United States government or any agency, instrumentality, or
establishment of the United States government that is AAA rated by Standard &
Poor's Corporation or Aaa rated by Xxxxx'x Investors Service, (iii) a clean,
unconditional, and irrevocable letter of credit in favor of State Street as
custodian for the Client, issued by a bank named in EXHIBIT 8.1 hereto, as such
Exhibit may from time to time be modified by the Client with notice to State
Street, or (iv) such other Collateral as may be permitted under the 1940 Act.
Pursuant to the terms of the applicable Securities Loan Agreement, State
Street shall, in accordance with State Street's reasonable and customary
practices and prevailing industry practices, xxxx each Loaned Security and its
Collateral to their Market Value each Business Day based upon the Market Value
of the Collateral and the Loaned Security at the close of business on the
preceding Business Day employing the most recently available pricing
information, and ensure that each applicable Securities Loan Agreement shall
require each Borrower to deliver additional Collateral to State Street in the
event that at the close of business on any Business Day the Market Value of the
Collateral delivered by such Borrower with respect to all Loans between such
Borrower and Client shall be less than 105% of the Market Value of the Loaned
Securities.
The Collateral shall be returned to Borrower at the termination of the Loan
upon the return of the Loaned Securities by Borrower to State Street in
accordance with the applicable Securities Loan Agreement.
State Street shall invest Cash Collateral in investments of the types
specified on EXHIBIT 8.2, subject to any directions, including any limitations
established by the Client in notices addressed to State Street and shall
exercise reasonable care, skill, diligence and prudence in the investment of
Cash Collateral. Subject to the foregoing limits and standard of care, State
Street does not assume any market or investment risk of loss with respect to the
investment of Cash Collateral and, subject as aforesaid, if, at any time during
the term of any Loan, the value of the Cash Collateral so invested is
insufficient to return the full amount of the Collateral or pay any and all
other amounts (exclusive of any rebate fee) due to such Borrower pursuant to the
Securities Loan Agreement, Client shall be solely responsible for such
shortfall and hereby agrees to pay an amount equal to such shortfall to State
Street. State Street shall be entitled to charge Client's accounts for any such
shortfall. Notwithstanding the foregoing, State Street and Client shall each be
responsible for their pro rata share (based on EXHIBIT 9) of the amount by which
any rebate fee due the Borrower exceeds the investment return on Cash
Collateral.
In no case will State Street accept as Collateral any security in respect
of which the Borrower may pursuant to the applicable Securities Loan Agreement
be entitled to exercise, or instruct State Street or the Client as to the
exercise of, any voting rights.
State Street shall accept substitutions of Collateral in accordance with
the applicable Securities Loan Agreement and shall hold such substitutions for
the account of the Client,
provided that, unless other Collateral has been mutually agreed in writing by
the Client and State Street, no other Collateral shall be substituted for Cash
Collateral.
9. COMPENSATION FOR THE CLIENT AND STATE STREET. Investments of Cash
Collateral may, subject to Section 8, include without limitation investments in
obligations or other securities of State Street or of any State Street affiliate
and investments in any short-term investment fund, mutual fund, securities
lending trust or other collective investment fund with respect to which State
Street and/or its affiliates provide investment management or advisory, trust,
custody, transfer agency, shareholder servicing and/or other services for which
they are compensated.
The Client acknowledges that interests in such mutual funds, securities
lending trusts and other collective investment funds, to which State Street
and/or one or more of its affiliates provide services are not guaranteed or
insured by State Street or any of its affiliates or by the Federal Deposit
Insurance Corporation or any government agency. The Client hereby authorizes
State Street to purchase or sell investments of Cash Collateral to or from other
accounts held by State Street or its affiliates.
The net income generated by any investment made pursuant to this Section
9 shall be allocated among the Borrower, State Street, and the Client, as
follows: (a) a portion of such income shall be paid to the Borrower in
accordance with the applicable Securities Loan Agreement; (b) the balance, if
any, shall be split between State Street as compensation for its services in
connection with this securities lending program and the Client as such income
shall be credited to the Client's account, in accordance with the fee
schedule attached hereto as EXHIBIT 9.
To the extent the sums due the Borrower under the applicable Securities
Loan Agreement are in excess of the income generated from investment of Cash
Collateral, such negative income expense shall be borne by State Street and the
Client in the same ratio as positive income sharing.
To the extent that a Loan is secured by Collateral other than Cash
Collateral, the Borrower shall be required to pay a loan premium, the amount of
which shall be negotiated by State Street. Such loan premium shall be allocated
between State Street and the Client as follows: (a) a portion of such loan
premium shall be paid to State Street as compensation for its services in
connection with this securities lending program, in accordance with EXHIBIT 9
hereto; and (b) the remainder of such loan premium shall be credited to the
Client's account.
Client acknowledges that in the event that Client's participation in
securities lending generates income for the Client, State Street may be required
to withhold tax or may claim such tax from the Client as is appropriate in
accordance with applicable law. State Street shall comply with all reasonable
requests made by the Client in order to minimize any such liability to tax.
The Client shall reimburse State Street for (i) S.W.I.F.T. international
telecommunication charges associated with the movement of securities in
connection with the securities lending activity contemplated by this Agreement;
and (ii) any and all funds advanced by State Street on behalf of the Client with
respect to the Client's obligation to return Cash Collateral to the Borrower and
to pay any fees due to the Borrower, all as provided in Section 8 hereof or as
otherwise authorized by the Client.
10. FEE DISCLOSURE. The fees associated with the investment of Cash
Collateral in funds maintained or advised by State Street are disclosed on
EXHIBIT 9 hereto. Such fees may be modified from time to time by State Street
upon thirty days' prior notice to Client. An annual report with respect to such
funds is available to the Client, at no expense, upon request.
11. RECORDKEEPING AND REPORTS. State Street will establish and maintain
such records as are reasonably necessary to account for Loans that are made and
the income derived therefrom. On a monthly basis, State Street will provide the
Client with a statement describing the Loans made, and the income derived from
Loans, during the period covered by such statement. Each party to this
Agreement shall comply with the reasonable requests of the other for information
necessary to the requester's performance of its duties in connection with this
securities lending program.
12. STANDARD OF CARE. Subject to the requirements of applicable law, State
Street shall not be liable for any loss or damage, including counsel fees and
court costs, whether or not resulting from their acts or omissions to act
hereunder or otherwise, unless the loss or damage arises out of State Street's
own negligence, willful misfeasance or misconduct in the performance of its
duties hereunder. Except for any liability, loss, or expense arising from or
connected with State Street's own negligence, willful misfeasance or misconduct
in the performance of its duties hereunder or that is to be borne by State
Street pursuant to this Agreement, the Client agrees to reimburse and hold State
Street harmless (a) from and against any liability, loss and expense, including
counsel fees and expenses and court costs, arising in connection with this
Agreement or any Loan including claims of any third parties, including any
Borrower, and (b) from and against all taxes and other
governmental charges with respect to the Loans to the extent not required to be
borne by the Borrower under the applicable Securities Loan Agreement (other than
taxes applicable to State Street's income, profits and receipts under this
Agreement and the Securities Loan Agreements, which shall be borne solely by
State Street).
Subject to Section 6 hereof, but without limiting the generality of the
above paragraph, Client agrees: (i) that State Street shall not be responsible
for any statements, representations or warranties which any Borrower makes in
connection with any Loans hereunder and upon which State Street reasonably
relies, or for the performance by any Borrower of the terms of a Loan, or any
agreement related thereto; and (ii) that State Street shall be fully protected
in acting in accordance with the oral or written instructions of any person
designated in a notice from the Client or the Investment Manager, as the case
may be, to State Street as a person authorized in connection with this Agreement
to give instructions on behalf of the Client (an "Authorized Person"). (This
Agreement shall be considered such a designation of the person executing the
Agreement on the Client's behalf.) After its receipt of such a notice of
designation, and until its receipt of a notice revoking such designation, State
Street shall be fully protected in relying upon the notices, directions, and
information given by such designee.
State Street, in determining the Market Value of securities, including
without limitation, Collateral, shall value said securities on a basis
consistent with the valuations undertaken in the Administrative Services
Agreement dated October 23, 1995 between the Client and State Street Cayman
Trust Company, Ltd.
13. REPRESENTATIONS AND WARRANTIES. Each party hereto represents and
warrants that (a) it has the power to execute and deliver this Agreement, to
enter into the transactions contemplated hereby, and to perform its obligations
hereunder; (b) it has taken all necessary action to authorize such execution,
delivery, and performance; (c) this Agreement constitutes a legal, valid, and
binding obligation enforceable against it; and (d) the execution, delivery, and
performance by it of this Agreement will at all times comply with all applicable
laws and regulations to which it is subject.
14. DEFINITIONS. For the purposes hereof:
(a) "Available Securities" means the securities of the Client that
are available for Loans pursuant to Section 2.
(b) "Borrower" means any of the entities to which Available
Securities may be loaned under a Securities Loan Agreement as provided in
Section 3.
(c) "Business Day" means a day on which the New York Stock Exchange
is open for trading.
(d) "Cash Collateral" has the meaning assigned to it in Section 8.
(e) "Collateral" means collateral delivered by a Borrower to secure
its obligations under a Securities Loan Agreement and includes Cash Collateral.
(f) "Custodian" means State Street in its capacity as custodian of
the Client pursuant to the Custodian Contract, and any successors to State
Street in its capacity under such Contract.
(g) "Investment Manager," means Old Mutual Asset Managers (Bermuda)
Ltd. or its successor as investment adviser of Client.
(h) "Loan" means a loan of Available Securities to a Borrower.
(i) "Loaned Security" shall mean any "security" which is delivered as
a Loan under a Securities Loan Agreement; provided 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 was made.
(j) "Replacement Securities" shall mean with respect to any Loaned
Securities, securities of the same issuer, class and denomination as the Loaned
Securities.
(k) "Market Value" of a security means the market value of such
security in accordance with Section 12 hereof.
(l) "Securities Loan Agreement" means the agreement between a
Borrower and State Street (on behalf of the Client) that governs Loans to such
Borrower, as described in Section 4.
15. CONTINUING AGREEMENT; TERMINATION; REMEDIES. It is the intention of
the parties hereto that this Agreement shall constitute a continuing agreement
in every respect and shall apply to each and every Loan, whether now existing or
hereafter made. The Client and State Street may each at any time terminate this
Agreement upon five (5) Business Days' written notice to the other to that
effect. Without limiting the generality of the foregoing, the Client may
terminate this Agreement in the event KPMG Peat Marwick identifies any material
tax issues concerning the Agreement or the transactions contemplated hereby.
The only effects of any termination under this Section 15 will be that
(a) following such termination, no further Loans shall be made hereunder by
State Street on behalf of the Client, and (b) State Street shall forthwith upon
termination of this Agreement, terminate any and all outstanding Loans. 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. State Street hereby waives any right to set-off amounts owed
hereunder against amounts it holds for the benefit of the Master Trust under the
Custodian Contract.
16. NOTICES. Except as otherwise specifically provided herein, notices
under this Agreement shall be in writing. A notice shall be sufficient if
delivered to the party entitled to receive such notices at the following
addresses:
If to Client:
Old Mutual South Africa Equity Trust
C/O Old Mutual Asset Managers (Bermuda) Ltd.
00 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx
If to State Street:
State Street Bank and Trust Company
Global Securities Lending Division
Two International Place, Floor 31
Xxxxxx, Xxxxxxxxxxxxx 00000
or to such other addresses as either party may furnish the other party by
written notice under this section.
17. MISCELLANEOUS. This Agreement supersedes any other agreement between
the parties or any representations made by one party to the other, whether oral
or in writing, concerning loans of securities by State Street on behalf of the
Client, provided, however, this Agreement does not supersede (and is instead
subject to) that certain letter agreement dated the date hereof between State
Street and the Client with respect to acceptable forms of Collateral. This
Agreement shall not be assigned by either party without the prior written
consent of the other party. Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, representatives, successors, and assigns. This Agreement
shall be governed and construed in accordance with the laws of the Commonwealth
of Massachusetts. Client hereby irrevocably submits to the jurisdiction of any
Massachusetts state or federal court sitting in The Commonwealth of
Massachusetts in any action or proceeding arising out of or related to this
Agreement, hereby irrevocably agrees that all claims in respect of such action
or proceeding may be heard and determined in such Massachusetts state or Federal
court except that this provision shall not preclude any party from removing
any action to federal court. Client hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. Client also irrevocably consents to
the service of any and all process in any such action or proceeding by the
mailing of copies of such process to Client at its address specified in Section
16 hereof. Client agrees that a final judgement in any such action or
proceeding, all appeals having been taken or the time period for such appeals
having expired, shall be conclusive and may be enforced in other jurisdictions
by suit on the judgement or in any other manner provided by law. 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. If in
the construction of this Agreement any court should deem any provision to be
invalid because of scope or duration, then such court shall forthwith reduce
such scope or duration to that which is appropriate and enforce this Agreement
in its modified scope or duration.
18. SECURITIES INVESTORS PROTECTION ACT OF 1970 NOTICE. CLIENT IS HEREBY
ADVISED AND ACKNOWLEDGES THAT THE PROVISIONS OF THE SECURITIES INVESTOR
PROTECTION ACT OF 1970 MAY NOT PROTECT THE CLIENT WITH RESPECT TO THE LOAN OF
SECURITIES HEREUNDER AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO STATE
STREET AS AGENT FOR THE CLIENT MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF
A BORROWER'S OBLIGATION IN THE EVENT THE BORROWER FAILS TO RETURN THE LOANED
SECURITIES. STATE STREET HEREBY ACKNOWLEDGES THAT THE PROVISIONS OF THE
SECURITIES INVESTOR PROTECTION ACT OF 1970 SHALL NOT INTERFERE WITH ITS
OBLIGATIONS HEREUNDER, INCLUDING ITS OBLIGATIONS UNDER SECTION 6.
19. MODIFICATION. This Agreement shall not be modified, except by an
instrument in writing signed by the party against whom enforcement is sought.
20. PROTECTION OF TRUSTEES. This Agreement is executed and made by the
trustees of the Master Trust and not individually, but as trustees under the
Declaration of Trust dated as of September 1, 1995, and the obligations of this
Agreement are not binding upon any of such trustees individually.
21. AUTHORITY OF STATE STREET Except as otherwise expressly provided
herein and subject to the provisions of Section 12, all authority and discretion
conferred upon State Street pursuant to this Agreement or any Securities Loan
Agreement shall (a) be subject to the particular limitations on the conduct of
State Street set forth in this Agreement, and (b) be exercised on a basis
consistent with State Street's common law agency duties.
22. CUSTODY AGREEMENT. Nothing in this Agreement shall limit the
obligations of State Street, in its capacity as custodian for the Client
pursuant to the Custodian Contract with respect to any assets held by State
Street under this Agreement for the account of the Client, including any
Collateral.
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
By:________________________________
Name:______________________________
Title: ____________________________
STATE STREET BANK AND TRUST COMPANY
By:________________________________
Name:______________________________
Title:_____________________________
EXHIBIT 3.1
This Exhibit is attached to and made part of the Securities Lending
Authorization Agreement, dated the 6th day of September, 1996 between OLD MUTUAL
SOUTH AFRICA EQUITY TRUST ("Client") and XXXXX XXXXXX XXXX XXX XXXXX XXXXXXX
("Xxxxx Xxxxxx").
SECURITIES LENDING BY THE MASTER TRUST
1. Barclays Xxxxx Xxxxx LTD.
2. Bankers Trust International LTD
3. Lazard Money Broking Limited
4. Xxxxxxx Xxxxx International
5. Xxxxxx Xxxxxxx & Co. International Limited
6. Natwest Securities Limited
7. Nomura International PLC
8. Salomon Brothers International Limited
EXHIBIT 8.1
This Exhibit is attached to and made part of the Securities Lending
Authorization Agreement, dated the 6th day of September, 1996 between OLD MUTUAL
SOUTH AFRICA EQUITY TRUST ("Client") and STATE STREET BANK AND TRUST COMPANY
("State Street").
Banks Approved for Letters of Credit:
None
EXHIBIT 8.2
This Exhibit is attached to and made part of the Securities Lending
Authorization Agreement, dated the 6th day of September, 1996 between OLD MUTUAL
SOUTH AFRICA EQUITY TRUST ("Client") and STATE STREET BANK AND TRUST COMPANY
("State Street").
Investment Guidelines:
As State Street and the Client may agree to from time to time.
EXHIBIT 9
This Exhibit is attached to and made part of the Securities Lending
Authorization Agreement, dated the 6th day of September, 1996 between OLD MUTUAL
SOUTH AFRICA EQUITY TRUST ("Client") and STATE STREET BANK AND TRUST COMPANY
("State Street").
SCHEDULE OF FEES
1. Subject to Paragraph 2 below, all proceeds collected by State Street on
investment of Cash Collateral or any fee income shall be allocated as provided
Section 9 and in accordance with the following percentages:
- Seventy percent (70%) payable to the Client, and
- Thirty percent (30%) payable to State Street.
2. All payments to be allocated under Paragraph 1 above shall be made after
deduction of: (i) the fees associated with the investment of Cash Collateral,
any S.W.I.F.T. international telecommunication charges and any and all funds
advanced by State Street on behalf of Client, all as described in Sections 9 and
10 hereof; and (ii) such amounts payable to the Borrower under the terms of the
applicable Securities Lending Agreement.
3. Investment Management Fees
To be agreed to by State Street and the Client in writing.
