Exhibit (g)(3)(ii)
GLOBAL SECURITIES LENDING SUPPLEMENT
In addition to the provisions of that certain securities lending agreement
dated as of August 7, 2003 pursuant to which ING Funds (the "Lender") has
appointed The Bank of New York (the "Bank") as its agent to lend securities in
the Lender's custody account at the Bank and to perform related activities (the
"Agreement"), the following provisions shall apply to loans involving Non-U.S.
Securities, Non-U.S. Collateral and/or Approved Non-U.S. Investments.
ARTICLE I
DEFINITIONS
For purposes hereof, the following terms shall have the meanings ascribed
below:
1. "Approved Non-U.S. Investment" shall mean any type of security,
participation or interest in property in which Cash Collateral or Non-U.S. Cash
Collateral may be invested or reinvested, as more fully described on Schedule I
to this Supplement (which may be amended from time to time by execution of a
revised Schedule I).
2. "Approved Investment" shall mean any type of security, instrument,
participation or interest in property in which the Lender has previously
authorized the Bank to invest or reinvest Cash Collateral pursuant to the
Agreement.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for receiving and delivering Government Securities (as defined
herein), its successors and nominees.
4. "Business Day" shall mean any day on which all of the following are
open for business: (a) the Bank; (b) the Book-Entry System, Depositories or
Clearing Organizations, as applicable for particular Loans; and (c) the
principal exchanges or markets for the relevant Securities, Collateral or
Non-U.S. Collateral.
5. "Clearing Organization" shall mean (a) Euro-clear, CEDEL and any
other depository or clearing agency (and their respective successors and
nominees) for Non-U.S. Securities incorporated under the laws of a country other
than the United States and authorized to act as a securities depository or
clearing agency, and (b) any other entity which provides for the clearance or
settlement of transactions involving Non-U.S. Securities which is designated by
the Bank as the institution for clearance or settlement of the transaction in
loaned Non-U.S. Securities or Collateral.
6. "Collateral Requirement" shall mean with respect to Loans pursuant
to this Supplement, the following percentage of the Market Value of Loaned
Securities as of the close of trading on the preceding Business Day, (a) 105%
when the Loaned Securities and the Collateral or Non-U.S. Collateral delivered
in connection therewith are denominated in different currencies, or (b) 102%
when the Loaned Securities and the Collateral or Non-U.S. Collateral delivered
in connection therewith are denominated in the same currency.
7. "Depository" shall mean the Depository Trust Company and any other
securities depository or clearing agency (and their respective successors and
nominees) registered with the Securities and Exchange Commission or otherwise
authorized to act as a securities depository or clearing agency.
8. "Global Securities Borrowing Supplement" shall mean the agreement
pursuant to which the Bank lends Securities or Non-U.S. Securities to Borrowers
on behalf of its customers (including the Lender) from time to time.
9. "Government Security" shall mean securities that are both (a)
book-entry Treasury Securities (as defined in 31 C.F.R. Part 357.2) or any other
securities issued or fully guaranteed by the United States government or an
agency, instrumentality or establishment of the United States government and (b)
marked with a "YES" on Schedule I-B to the Agreement.
10. "Loan" shall mean a loan of Securities or Non-U.S. Securities
authorized pursuant to this Supplement.
11. "Loaned Security" shall mean any Security or Non-U.S. Security which
is subject to a Loan.
12. "Market Value" of cash represented by foreign currencies shall be
its amount. The market value of loaned Non-U.S. Securities or Non-U.S.
Collateral (other than cash) shall be determined on the basis of the last (or
latest available) sale price in the primary market in which they are traded or
as otherwise agreed between the Borrower and the Bank.
13. "Non-U.S. Cash Collateral" shall mean (a) monies in the currencies
in which the loaned Non-U.S. Securities are traded in the principle market
therefor, (b) monies in the official currency of any member country of the OECD,
and (c) monies in such
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other currencies as may be agreed by the Lender (and which are acceptable to the
Bank); whether in the form of cash, credits of immediately available funds to
the Bank's account at a Clearing Organization or represented by a certified or
bank draft payable to the order of the Bank as agent for the Lender.
14. "Non-U.S. Collateral" shall mean Non-U.S. Cash Collateral and debt
obligations issued and sold primarily outside the United States by the central
government of any OECD country or any agency or instrumentality thereof.
15. "Non-U.S. Security" shall include, without limitation, securities
issued and sold primarily outside the United States by the central government of
any country or any agency or instrumentality thereof or a corporation or other
entity incorporated or organized under the laws of any country, and any
certificates, warrants or other instruments representing rights to receive,
purchase, or subscribe for the same, or evidencing or representing any other
rights or interests therein.
16. "OECD" shall mean the Organization for Economic Cooperation and
Development.
17. "Overseas Securities Borrowing Agreement" shall mean the agreement
pursuant to which the Bank lends Securities or Non-U.S. Securities to Non-U.S.
Borrowers on behalf of its customers (including the Lender) from time to time.
18. "Security" shall include Government Securities, Non-U.S. Securities,
common stock and other equity securities, bonds, debentures, corporate debt
securities, notes, mortgages or other obligations, and any certificates,
warrants or other instruments representing rights to receive, purchase, or
subscribe for the same, or evidencing or representing any other rights or
interests therein.
All capitalized terms not defined herein shall have the meanings given
them in the Agreement.
ARTICLE II
AUTHORIZATION
1. Authorization. The Lender hereby acknowledges receipt of the Bank's
standard forms of Global Securities Borrowing Supplement and Overseas Securities
Borrowing Agreement and authorizes the Bank to make Loans pursuant to agreements
substantially in the form thereof and in accordance with the parameters set
forth in Schedule II hereto (as such Schedule may be amended from time to time).
2. Use of Clearing Organizations. The Lender hereby authorizes the Bank
on a continuous and on-going basis, to deposit in the appropriate Clearing
Organizations all Non-U.S. Securities eligible for deposit therein and to
utilize the Clearing Organizations to the extent possible in connection with its
receipt and delivery of Non-U.S. Securities, Non-U.S. Collateral, Approved
Non-U.S. Investments and monies pursuant to this Supplement. Where Non-U.S.
Securities, Non-U.S. Collateral and Approved Non-U.S. Investments eligible for
deposit in a Clearing Organization are transferred to the Account, the Bank
shall identify as belonging to the Lender a quantity of securities in a fungible
bulk of securities shown on the Bank's account on the books of the appropriate
Clearing Organization. Non-U.S. Securities, Non-U.S. Collateral and Approved
Non-U.S. Investments deposited in a Clearing Organization will be represented in
accounts which include only assets held by the Bank for customers, including but
not limited to accounts in which the Bank acts in a fiduciary or agency
capacity.
ARTICLE III
SECURITIES LENDING TRANSACTIONS
1. Receipt of Non-U.S. Collateral; Approved Non-U.S. Investments. Upon
entering Loans, the Bank shall receive all Collateral and Non-U.S. Collateral in
accordance with the Global Securities Borrowing Supplement, or Overseas
Securities Borrowing Agreement, as appropriate, in such amount that the Market
Value of such Collateral and Non-U.S. Collateral is not less than the Collateral
Requirement. Subject to Schedule I hereto and any restrictions set form by the
Lender in a Certificate, the Bank is hereby authorized and directed to invest
and reinvest all or substantially all of the Collateral represented by cash and
Non-U.S. Cash Collateral in any Approved Investment or Approved Non-U.S.
Investment.
2. Distributions on Loaned Non-U.S. Securities. Unless otherwise
agreed, cash distributions paid on Loaned Securities which are Non-U.S.
Securities shall be credited to the Account in the currency in which such
distributions are paid on the Business Day following receipt from the Borrower.
3. Marks to Market. The Bank shall on each Business Day mark to market
the value of all Loaned Securities and demand from the appropriate Borrowers
additional Collateral or Non-U.S. Collateral when the Market Value of Collateral
and Non-U.S. Collateral received by the Bank from such Borrowers is less than
the then current Market Value of all of the Loaned Securities (a "Margin
Deficit"). Notwithstanding the foregoing, Xxxxxx agrees that the Bank may
exercise its right to demand additional Collateral
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or Non-U.S. Collateral from Borrowers only where a Margin Deficit exceeds a
specified amount or specified percentage of the Market Value of the Loaned
Securities determined by the Bank to be immaterial (but at all times consistent
with generally accepted industry practices). Whenever the Bank demands
additional Collateral or Non-U.S. Collateral pursuant to the foregoing, such
additional Collateral together with the Collateral and Non-U.S. Collateral then
held by the Bank in connection with Loans shall have a Market Value of not less
than the Collateral Requirement.
4. Collateral Substitutions. The Bank shall accept substitutions of
Collateral or Non-U.S. Collateral in accordance with the Global Securities
Borrowing Supplement or Overseas Securities Borrowing Agreement, as appropriate.
5. Foreign Exchange. Where the Bank is authorized or directed by the
Lender to convert currency received hereunder into other currency, the Bank
shall effect such transactions through customary banking channels. The Lender
shall be responsible for all fees and expenses in connection with such
conversion. The Bank shall have no responsibility and shall not be liable for
losses resulting from nationalization, expropriation or other governmental
actions, regulation of the banking industry, currency controls or restrictions,
devaluations or fluctuations, or market conditions that prevent the orderly
settlement of exchange transactions.
6. Miscellaneous. The provisions of this Supplement shall apply solely
with respect to Loans hereunder. All provisions of the Agreement shall
nevertheless remain in full force and effect with respect to Loans made pursuant
to this Supplement, and all capitalized terms and provisions contained in the
Agreement shall be read so as to apply fully to Loans made pursuant to this
Supplement; provided, that in the event of any conflict between the provisions
of the Agreement and the provisions of this Supplement, the provisions of this
Supplement shall control.
Dated: ING FUNDS
By: /s/ Xxxxxxx X. Xxxxxx
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Title: Executive Vice President, CFO
THE BANK OF NEW YORK
By: /s/ Xxxxxxx X. Xxxxx
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Title: Managing Director
SCHEDULE I
APPROVED NON-U.S. INVESTMENTS
(check where appropriate and execute below)
Limit(if any)
Investment
[X] Approved Investments
[ ] "AAA" (or equivalent) rated non-subordinated debt issued by the
International Bank for Reconstruction and Development, European Bank for
Reconstruction and Development, European Investment Bank, Asian
Development Bank, African Development Bank or Inter-American Development
Bank
[ ] certificates of deposit, time deposits and other bank deposit obligations
issued outside the U.S. by banks operating under the laws of any OECD
country
[ ] bankers' acceptances issued outside the U.S. by xxxxx operating under the
laws of any OECD country
[ ] obligations issued by the central government of any OECD country or any of
their agencies or instrumentalities
[ ] high-grade commercial paper and other money market instruments issued by
obligors operating under the laws of any OECD country
[ ] repurchase and reverse repurchase agreements collateralized by any or all
of the types of investments approved in this Schedule I and entered into
with counterparties approved by The Bank of New York (including The Bank
of New York and its affiliates)
Dated: ING FUNDS
BY: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President, CFO
SCHEDULE II
PERMITTED GLOBAL LENDING ACTIVITIES
(check where appropriate and execute below)
The Bank is hereby authorized to make the following types of Loans
pursuant to the Global Securities Lending Supplement:
[ ] Securities loans vs. receipt of Non-U.S. Collateral
[X] Non-U.S. Securities loans vs. receipt of Collateral
[ ] Non-U.S. Securities loans vs. receipt of Non-U.S. Collateral
Dated: ING FUNDS
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President, CFO
