Exhibit 99.B(h)(6)
SECURITIES LENDING AGREEMENT AND GUARANTY
AGREEMENT, dated as of August 7, 2003, between each Investment Company
listed on Exhibit A hereto, for itself and for each Series listed on Exhibit A
(each Investment Company and each Series is hereinafter referred to as
"Lender"), and The Bank of New York ("Bank").
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, unless the context otherwise requires,
the following words shall have the meanings set forth below:
1. "Act of Insolvency" shall mean (i) the filing by a Borrower of a
petition in bankruptcy or a petition seeking reorganization, liquidation or
similar relief, or the filing of any such petition against a Borrower which is
not dismissed or stayed within 60 calendar days, (ii) the adjudication of a
Borrower as bankrupt or insolvent, (iii) the seeking or consenting to the
appointment of a trustee, receiver or liquidator by a Borrower, or (iv) the
making of a general assignment for the benefit of creditors by a Borrower or a
Borrower's admission in writing of its inability to pay its debts as they become
due.
2. "Account" shall mean the custodial account established and
maintained by Bank on behalf of Lender for the safekeeping of Securities and
monies received by Bank from time to time.
3. "Approved Investment" shall mean any type of security, instrument,
participation or interest in property, as set forth on Schedule I hereto (which
may be amended from time to time by execution of a revised Schedule I, I-A or
I-B) in which Cash Collateral may be invested or reinvested by Bank in
accordance with Paragraph 2 of Article IV hereof.
4. "Authorized Person" shall mean any officer of Lender and any other
person, whether or not any such person is an officer or employee of Lender, duly
authorized by corporate resolutions of the Board of Lender to give Oral and/or
Written Instructions on behalf of Lender, such persons to be designated in a
Certificate which contains a specimen signature of such person.
5. "Board" shall mean the Board of Directors or Board of Trustees of
the Funds, as applicable.
6. "Book-Entry System" shall mean the Federal Reserve/Treasury
Automated book-entry system for receiving and delivering Government Securities
(as defined herein), its successors and nominees.
7. "Borrower" shall mean any entity named on a certificate supplied by
Lender to Bank (as such Certificate may be amended by Lender from time to time),
other than any entity deleted from such Certificate by Bank.
8. "Business Day" shall mean any day on which Bank is open for
business and on which the Book-Entry System and/or the applicable Depositories
are open for business.
9. "Cash Collateral" shall mean either fed funds or New York Clearing
House funds, as applicable for a particular Loan.
10. "Certificate" shall mean any notice, instruction, schedule or other
instrument in writing, authorized or required by this Agreement to be given to
Bank, which is actually received by Bank and signed on behalf of Lender by an
Authorized Person or a person reasonably believed by Bank to be an Authorized
Person.
11. "Collateral" shall mean Government Securities and/or Cash
Collateral.
12. "Collateral Account" shall mean a segregated account in the name of
Lender established and maintained by Bank for the purpose of holding Collateral,
Approved Investments and Proceeds.
13. "Collateral Requirement" shall mean with respect to Loans an amount
equal to 102% of the then current Market Value of Loaned Securities which are
the subject of Loans as of the close of trading on the preceding Business Day.
14. "Depository" shall mean the Depository Trust Company, Participants
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.
15. "Distributions" shall mean interest, dividends and other payments
and distributions payable by Borrowers to Bank
for the account of Lender pursuant to the Securities Borrowing Agreement with
Bank in respect of Loaned Securities.
16. "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
securities issued or fully guaranteed by the United States government or an
other agency, instrumentality or establishment of the United States government
and (b) marked with a "YES" on Schedule I-B hereto.
17. "Loan" shall mean a loan of Securities hereunder.
18. "Loaned Security' shall mean any Security which is subject to a
Loan.
19. "Market Value" shall mean (a) with respect to Government
Securities, the price of such Securities as quoted by a nationally recognized
pricing information service at the time the determination of Market Value is
made, plus accrued but unpaid interest, if any, on the particular Security,
(b) with respect to other Securities, the price of such Securities as quoted by
a nationally recognized pricing information service at the time such
determination is made, plus accrued but unpaid interest, if any, to the extent
not included in the price as quoted, and (c) with respect to Cash Collateral,
its amount. Notwithstanding the foregoing, Lender may dispute any such price, in
which case Lender and Bank will negotiate an adjustment (if appropriate).
20. "Oral Instructions" shall mean verbal instructions actually
received by Bank from an Authorized Person or from a person reasonably believed
by Bank to be an Authorized Person.
21. "Proceeds" shall mean any interest, dividends and other payments
and distributions received by Bank in respect of Collateral and Approved
Investments.
22. "Rebate" shall mean the amount payable by Lender to a Borrower in
connection with Loans at any time collateralized by Cash Collateral.
23. "Receipt" shall mean an advice or confirmation setting forth the
terms of a particular Loan.
24. "Securities Borrowing Agreement" shall mean the agreement pursuant
to which Bank lends securities to a Borrower on behalf of its customers
(including Lender) from time to time.
25. "Securities Loan Fee" shall mean the amount payable by a Borrower
to Bank pursuant to the Securities Borrowing Agreement in connection with Loans
collateralized by Collateral other than Cash Collateral.
26. "Security" shall include Government 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.
27. "Written Instructions" shall mean written communications actually
received by Bank from an Authorized Person or from a person reasonably believed
by Bank to be an Authorized Person by letter, memorandum, telegram, cable,
telex, telecopy, facsimile, computer, video (CRT) terminal or other on-line
system, or any other method whereby Bank is able to verify with a reasonable
degree of certainty the identity of the sender of such communications or the
sender is required to provide a password or other identification code.
ARTICLE II
APPOINTMENT OF BANK: SCOPE OF AGENCY AUTHORITY
1. APPOINTMENT. (a) Subject to the limitations contained in
Schedule II hereto, as such Schedule II may be amended by Lender from time to
time, Lender hereby appoints Bank as its agent to lend Securities in the Account
to Borrowers from time to time, except Securities which Lender has advised Bank
by Written Instruction are (a) no longer subject to the representations set
forth in Article III, sub-paragraph (e) hereof, or (b) not to be the subject of
a Loan hereunder. Bank hereby accepts appointment as such agent, agrees to so
act, and further agrees that Lender may deliver Written Instructions described
in the immediately preceding sentence in its discretion from time to time.
(b) Bank shall not make any Loans if the aggregate Market Value of all
Loaned Securities at any time exceeds 30% of the total assets of Lender, which
shall be advised to Bank by Lender in a Certificate, or such other percentage as
may be specified by Lender in a Certificate.
2. SECURITIES BORROWING AGREEMENT. Lender hereby acknowledges receipt
of Bank's standard form(s) of Securities Borrowing Agreement and authorizes Bank
to lend Securities in the Account to Borrowers pursuant to agreements
2
substantially in the form thereof. Bank is hereby authorized to negotiate with
each Borrower the amount of Rebates payable in connection with particular Loans.
Bank shall deliver to Lender a Receipt relating to each Loan.
3. LOAN OPPORTUNITIES. Bank shall treat Lender equitably with other
lenders of like circumstances in making lending opportunities available to it
hereunder, taking into account the demand for specific securities, availability
of securities, types of collateral, eligibility of borrowers, limitations on
investments of cash collateral and such other factors as Bank deems appropriate.
Bank shall nevertheless have the right to decline to make any Loans pursuant to
any Securities Borrowing Agreement and to discontinue lending under any
Securities Borrowing Agreement in its sole discretion and without notice to
Lender.
4. USE OF BOOK-ENTRY SYSTEM AND DEPOSITORIES. Lender hereby authorizes
Bank on a continuous and on going basis, to deposit in the Book-Entry System and
the applicable Depositories all Securities eligible for deposit therein and to
utilize the Book-Entry System and Depositories to the extent possible in
connection with its receipt and delivery of Securities, Collateral, Approved
Investments and monies under this Agreement. Where Securities, Collateral and
Approved Investments eligible for deposit in the Book-Entry System or a
Depository are transferred to Lender hereunder, Bank shall identify as belonging
to Lender a quantity of securities in a fungible bulk of securities shown on
Bank's account on the books of the Book-Entry System or the applicable
Depository. Securities, Collateral and Approved Investments deposited in the
Book-Entry System or a Depository will be represented in accounts which include
only assets held by Bank for customers, including but not limited to accounts in
which Bank acts in a fiduciary or agency capacity.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Lender hereby represents and warrants to Bank, which representations
and warranties shall be deemed to be continuing and to be reaffirmed on any day
that a Loan is outstanding, that:
(a) This Agreement is, and each Loan entered into in accordance with
this Agreement,)and each investment or reinvestment of Cash Collateral by Bank
in accordance with Paragraph 2 of Article IV hereof, will be, legally and
validly entered into, does not, and will not, to the best of Lender's knowledge
and belief; violate any statute, regulation, rule, order or judgment binding on
Lender, or any provision of Lender's charter or by-laws, or any agreement
binding on Lender or affecting its property, and is enforceable against Lender
in accordance with its terms, except as may be limited by bankruptcy, insolvency
or similar laws, or by equitable principles relating to or limiting creditors'
rights generally;
(b) The person executing this Agreement and all Authorized Persons
acting on behalf of Lender has and have been duly and properly authorized to do
so;
(c) If it is lending Securities as principal for its own account it
will not transfer, assign or encumber its interest in, or rights with respect
to, any Loans;
(d) If it is acting as agent for one or more third parties, Lender is
either authorized by virtue of standing instructions or is a fiduciary with the
authority to enter into, execute and bind such third parties to this Agreement
and the Loans effected for such third parties, and Lender is authorized to make,
and makes each of the representations and warranties set forth in sub-paragraphs
(a) through (c) above for each such third party; and
(e) All Securities in the Account are free and clear of all liens,
claims, security interests and encumbrances and no such Security has been sold.
Lender shall promptly deliver to Bank Written Instructions identifying any and
all Securities which are no longer subject to the representations contained in
this sub-paragraph (e).
ARTICLE IV
SECURITIES LENDING TRANSACTIONS
1. GENERAL BANK RESPONSIBILITIES. Bank shall enter Loans pursuant to
the Securities Borrowing Agreement and take all actions deemed necessary or
appropriate in order to perform on Lender's behalf thereunder, including
receiving Collateral having a Market Value of not less than the Collateral
Requirement, collecting Distributions, and demanding additional Collateral from
the appropriate Borrowers when the Market Value of Collateral received by Bank
from such Borrowers is less than the then current Market Value of all of the
Loaned Securities. The Bank shall on each Business Day xxxx to market the value
of all Loaned Securities and demand from each Borrower additional Collateral
when the Market Value of Collateral received by Bank from such Borrower is less
than the current Market Value of all Loaned Securities loaned to such Borrower.
Whenever Bank demands additional Collateral pursuant to the foregoing, such
additional Collateral together with the Collateral then held by Bank in
connection with Loans shall have a Market Value of not less than the Collateral
Requirement.
3
2. APPROVED INVESTMENTS. (a) Bank is hereby authorized and directed,
without obtaining any further approval from Lender, to invest and reinvest all
or substantially all of the Cash Collateral received in any Approved Investment
in accordance with the priorities set forth in Schedule I hereto (which may be
amended from time to time by execution by Lender of a revised Schedule I, I-A or
I-B). If during a Business Day an officer or employee in New York of the
security lending department of Bank obtains actual knowledge that a rating(s) of
an Approved Investment is less than the minimum ratings specified in Schedule I,
Bank shall promptly give notice of such rating(s) to Lender. Bank shall credit
all Collateral, Approved Investments and Proceeds received with respect to
Collateral and Approved Investments to the Collateral Account and xxxx its books
-and records to identify Lender's interest therein as appropriate. Bank reserves
the right, in its sole discretion, to liquidate any Approved Investment and
credit the net proceeds to the Collateral Account.
(b) Lender may deliver to Bank Written Instructions from time to time
instructing Bank not to make Approved Investments with particular financial
institutions or issuers.
(c) All Approved Investments shall be for the account and risk of
Lender. To the extent any loss arising out of Approved Investments results in a
deficiency in the amount of Collateral available for return to a Borrower,
Lender agrees to pay Bank on demand cash in an amount equal to such deficiency.
(d) Except as otherwise provided herein, all Collateral, Approved
Investments and Proceeds credited to the Collateral Account shall be controlled
by, and subject only to the instructions of, Bank, and Bank shall not be
required to comply with any instructions of Lender with respect to the same,
except that if Bank has advised Lender that an Approved Investment has a rating
lower than the rating required by Schedule I, Bank shall liquidate such Approved
Investment upon receipt of Written or Oral Instruction instructing Bank to do
so.
(e) Bank shall not purchase any Approved Investment from an entity
identified by Lender as an affiliate in Written Instructions actually received
by Bank.
3. TERMINATION OF LOANS. (a) Bank shall terminate any Loan as soon as
practicable after:
(i) receipt by Bank of a notice of termination from a Borrower;
(ii) receipt by Bank of Oral or Written Instructions to do so;
(iii) receipt by Bank of Written Instructions instructing it to delete
the Borrower to whom such Loan was made from the list referred to in Article I,
paragraph 6 hereof;
(iv) receipt by Bank of Written Instructions described in Paragraph I
of Article II hereof advising that the Loaned Security is no longer subject to
the representations contained in Article III, sub-paragraph (e) hereof; or is
not to be the subject of a Loan hereunder;
(v) receipt by Bank of notice or Written Instructions advising that
an Event of Default (as defined in the Securities Borrowing Agreement) has
occurred and is continuing beyond any applicable grace period;
(vi) whenever Bank, in its sole discretion, elects to terminate such
Loan; or
(vii) termination of this Agreement.
Unless otherwise agreed between Bank and Lender, Bank will ensure that
-if it receives on a Business Day prior to 12:30 p.m. N.Y. time Oral or Written
Instructions to terminate a Loan, Bank shall send a notice on the same Business
Day to Borrower terminating such Loan and requiring Borrower to return the
Loaned Securities within the standard settlement time for trades in the
particular Loaned Security (never to exceed 5 Business Days) beginning on the
date Bank is required to send a notice of termination. If the Oral or Written
Instructions to terminate a Loan are received by Bank on a Business Day after
12:30 p.m. N.Y. time but prior to 2:00 p.m., Bank shall use reasonable care to
send the notice of termination to Borrower on the same date Bank received such
Oral or Written Instructions; if such Oral or Written Instructions are received
after 2:00 p.m. Bank need not send to Borrower a notice terminating the Loan
until the next Business Day.
(b) Upon termination of any Loan (which shall be effected according to
the standard settlement time for trades in the particular Loaned Security, never
to exceed 5 Business Days) and receipt from the Borrower of the Loaned
Securities and any Distributions then due, Bank shall return to the Borrower
such amount of Collateral as is required by the Securities Borrowing Agreement
and pay the Borrower any Rebates then payable.
4
(c) In order for Bank to timely settle the sale of Loaned Securities,
it shall be Lender's responsibility to ensure prompt notification to Bank
regarding any such sale specifying the settlement date therefor. If Lender
provides such prompt notification to Bank, Bank shall pay to Lender an amount
equal to any interest expense incurred by Lender which is directly attributable
to the failure of a Borrower to return Loaned Securities on or prior to the
settlement date of such sale specified in such notification.
4. CORPORATE ACTIONS AND PROXY RIGHTS. Lender acknowledges that, with
respect to Loaned Securities which are out on loan over the applicable record
date for such action, it will not, unless otherwise agreed, be entitled to
(a) participate in any dividend reinvestment program; (b) receive stock in an
optional cash/stock dividend plan; or (c) vote any proxies, provided however,
that Lender will be entitled to (i) participate in any dividend reinvestment
program; (ii) receive stock in an optional cash/stock dividend plan; and
(iii) vote such proxies for such Loaned Securities if (A) it has provided notice
to Bank pursuant to Paragraph 3 of Article IV of this Agreement terminating the
Loan, and (B) such Loaned Securities have been returned to and received by Bank
or its agents by the applicable deadline as provided by Bank.
5. GUARANTEE AND SUBROGATION. (a) If as a result of an Act of
Insolvency or for any other reason a Borrower fails to return any Loaned
Securities or any other Distributions due when required, Bank shall promptly
notify Lender, if in its reasonable discretion, it believes that such notice is
warranted and take all actions which it deems necessary or appropriate to
liquidate Approved Investments and Collateral in connection with Loans to such
Borrower and, unless advised by Lender to the contrary, shall make a reasonable
effort for two Business Days (the "Replacement Period") to apply the proceeds
thereof to the purchase of Securities identical to the Loaned Securities and
non-cash Distributions (or the equivalent thereof in the event of a
reorganization or recapitalization of the issuer) not returned (collectively,
"Replacement Securities") and to the payment of any cash Distributions then due.
If during the Replacement Period the Collateral liquidation proceeds are
insufficient to replace any of the Loaned Securities and any Distributions then
due, Bank shall, subject to satisfaction of Lender's obligations under Paragraph
2(c) of this Article, pay such additional amounts as are necessary to make such
replacement or payment. Purchases of Replacement Securities by Bank shall be
made only in such markets, in such manner and upon such terms as Bank shall
consider appropriate, in its reasonable discretion and Bank shall make
reasonable efforts to advise Lender of such efforts. Replacement Securities
shall be credited to the Account upon receipt by Bank. If Bank is unsuccessful
in purchasing any Replacement Securities during the Replacement Period, the
proceeds of the liquidation of Approved Investments and Collateral pursuant
hereto shall be credited to the Account, and Bank shall, subject to satisfaction
of Lender's obligations under Paragraph 2(c) of this Article, credit to the
Account cash in an amount (if any) equal to (X) the Market Value of the Loaned
Securities and Distributions not returned, minus (Y) the Collateral liquidation
proceeds, such calculation to be made on the date of such credit. If following
such crediting Lender purchases Replacement Securities within five Business Days
of such crediting in the principal market, if any, in which the Securities
regularly trade, or from any dealer who from time to time is an Approved
Borrower under this Agreement or a similar agreement with Bank, the price paid
by Lender on settlement of such purchase shall be deemed the Market Value for
purposes of the prior sentence, and Bank shall adjust its credit to the Account
accordingly. If Lender is unsuccessful in so purchasing any Replacement
Securities during such five Business Day period following such crediting, Bank
shall promptly purchase Replacement Securities upon its receipt from Lender of
the following: (i) Written Instructions directing Bank to make such purchase,
(ii) an amount equal to any unsatisfied demands previously made by the Bank
pursuant to Paragraph 2(c) of this Article, and (iii) an amount equal to the sum
of (A) the Collateral liquidation proceeds credited to the Account and (B) any
additional amounts credited to the Account pursuant to the second preceding
sentence of this Paragraph, exclusive of cash Distributions not returned. In
addition to any other amounts payable pursuant to this Paragraph 5(a), Bank
shall pay to Lender the following amounts that are directly attributable to the
failure of a Borrower to return any Loaned Securities and/or Distributions when
required: (i) any interest expense incurred by Lender, (ii) any buy-in-costs or
buy-in expenses actually incurred, and (iii) the loss incurred by Lender on any
cancelled sale of Loaned Securities and/or Distributions.
(b) Lender understands and agrees that, notwithstanding preceding
Paragraph 5(a), if a Borrower fails to return Loaned Securities or any
Distributions for reasons other than an Act of Insolvency, Bank may, in its
reasonable discretion, elect not to liquidate Approved Investments and such
Approved Investments shall continue to be subject to Paragraph 2(c) of this
Article. Bank shall be responsible to Lender for the Market Value of the Loaned
Securities and Distributions as of the settlement date specified by Bank in its
notice of termination in accordance with the Securities Borrowing Agreement,
and, except to the extent caused by Lender's failure to provide Bank prompt
notification pursuant to Paragraph 3(c) of Article IV, in addition, Bank shall
pay to Lender the following amounts that are directly attributable to the
failure of a Borrower to return any Loaned Securities and/or Distributions when
required: (i) any interest expense incurred by Lender, (ii) any buy-in-costs or
buy-in expenses actually incurred, and (iii) the loss incurred by Lender on any
cancelled sale of Loaned Securities and/or Distributions.
(c) Lender agrees, without the execution of any documents or the giving
of any notice, that Bank is and will remain subrogated to all of Lender's rights
under the Securities Borrowing Agreement or otherwise (to the extent of any
credit pursuant to Paragraphs 5(a) or 5(b) of this Article), including but not
limited to, Lender's rights with respect to Loaned Securities and Distributions,
and Collateral, Approved Investments and Proceeds. Lender agrees to execute and
deliver to Bank such documents as Bank may require and to otherwise fully
cooperate with Bank to give effect to its rights of subrogation hereunder.
(d) Bank shall have no obligation to take any actions pursuant to
Paragraphs 5(a) or 5(b) of this Article if it believes that such action will
violate any applicable statute, regulation, rule, order or judgment.
Furthermore, except as expressly provided in
5
Paragraphs 5(a) and 5(b) of this Article, Bank shall have no other liability to
Lender relating to any Borrower's failure to return Loaned Securities and no
duty or obligation to take action to effect payment by a Borrower of any amounts
owed by such Borrower pursuant to the Securities Borrowing Agreement.
(e) Either party may terminate the provisions of Paragraphs 5(a) or
5(b) of this Article with respect to any Borrower at any time by delivery of a
notice to the other party specifying a termination date not earlier then the
date of receipt of such notice by the other party. No such termination shall be
effective with respect to then existing rights or obligations of either party
under this Paragraph 4 or outstanding Securities Loans hereunder. Following any
such termination with respect to a Borrower, Bank shall not make any further
Loans to such Borrower.
(f) Bank may offset any amounts payable by Lender under this Agreement
against amounts payable by Bank under Paragraphs 5(a) or 5(b) of this Article.
ARTICLE V
CONCERNING BANK
1. STANDARD OF CARE; REIMBURSEMENT. (a) Except as provided in
Paragraph l(b) of this Article, Bank shall not be liable for any costs,
expenses, damages, liabilities or claims (including attorneys' and accountants'
fees) incurred by Lender, except those costs, expenses, damages, liabilities or
claims arising out of the negligence, bad faith or willful misconduct of Bank,
its directors, officers, employees, affiliates or agents. Actions taken or
omitted in reliance upon Oral or Written Instructions, any Certificate, or upon
any information, order, indenture, stock certificate, power of attorney,
assignment, affidavit or other instrument delivered by Lender to Bank hereunder
and reasonably believed by Bank to be genuine or bearing the signature of a
person or persons reasonably believed to be authorized to sign, countersign or
execute the same as an Authorized Person, shall be presumed to have been taken
or omitted in good faith. Bank shall have no obligation hereunder for costs,
expenses, damages, liabilities or claims (including attorneys' and accountants'
fees), which are sustained or incurred by reason of any action or inaction by
the Book-Entry System or any Depository or their respective successors or
nominees. Except as otherwise expressly provided in Paragraph 4 of Article IV,
in no event shall either party be liable to the other for special, indirect or
consequential damages, or lost profits or loss of business, arising under or in
connection with this Agreement, even if previously informed of the possibility
of such damages and regardless of the form of action.
(b) In the event Bank fails to invest any Cash Collateral that is
timely received, or fails to reinvest any Cash Collateral, and such failure is
not caused by circumstances described in Paragraph 12 of this Article, Bank
shall be liable to Lender for each day during which such failure persists for an
amount of liquidated damages equal to the difference between the average money
market rate as reasonably determined by Bank minus the Rebate.
(c) Subject to sub-paragraph (a) of this Paragraph 1, Bank agrees to
reimburse Lender and to hold it harmless from and against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Lender may sustain or incur or which may be asserted against
Lender by reason or as a result of, or arising out of, any breach by Bank of
this Agreement, provided, however, that Bank shall not indemnify Lender for any
costs, expenses, liabilities or claims, including fees and expenses of counsel,
arising out of Lender's negligence or willful misconduct. The foregoing shall be
a continuing obligation of Bank, its successors and assigns, notwithstanding the
termination of any Loans hereunder or of this Agreement.
(d) Subject to the exclusion of special, indirect and consequential
damages contained in sub-paragraph (a) of this Paragraph 1, Lender agrees to
reimburse Bank and to hold it harmless from and against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Bank may sustain or incur or which may be asserted against
Bank by reason or as a result of, or arising out of, any breach by Lender of
this Agreement, including, without limitation, any representation or warranty of
Lender being untrue, provided, however, that Lender shall not indemnify Bank for
any costs, expenses, liabilities or claims, including fees and expenses of
counsel, arising out of Bank's negligence, bad faith or willful misconduct. The
foregoing shall be a continuing obligation of Lender, its successors and
assigns, notwithstanding the termination of any Loans hereunder or of this
Agreement.
2. NO OBLIGATION TO INQUIRE. Without limiting the generality of the
foregoing, Bank shall be under no obligation to inquire into, and shall not be
liable for, the validity of the issue of any Securities, Collateral or Approved
Investments held in the Account or Collateral Account, or the legality or
propriety of any Loans hereunder.
3. RELIANCE ON BORROWERS' STATEMENTS, REPRESENTATIONS AND WARRANTIES.
Provided that it acts with reasonable care, Bank shall be entitled to rely upon
the most recently available audited and unaudited statements of financial
condition and representations and warranties made by Borrowers, and Bank shall
not be liable for any loss or damage suffered as a result of any such reliance.
6
4. ADVANCES; SECURITY INTEREST. (a) Bank may, in its sole discretion,
advance funds to Lender in order to pay to Borrowers any Rebates or to return to
Borrowers Cash Collateral to which they are entitled.
(b) Lender agrees to repay Bank on demand the amount of any advance
plus accrued interest at a rate per annum (based on a 360-day year for the
actual number of days involved) not to exceed the fed funds rate as publicly
announced to be in effect from time to time, such rate to be adjusted on the
effective date of any change in such fed funds rate. In order to secure
repayment of any advance of Lender arising hereunder, Lender hereby agrees that
Bank shall have a continuing lien and security interest in and to all assets now
or hereafter held in the Collateral Account (held on Lender's behalf). In this
regard, Bank shall be entitled to all the rights and remedies of a pledgee under
common law and a secured party under the New York Uniform Commercial Code and/or
any other applicable laws and/or regulations as then in effect.
5. ADVICE OF COUNSEL. Bank may, with respect to questions of law,
apply for and obtain the advice and opinion of counsel and shall be fully
protected with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion.
6. NO COLLECTION OBLIGATIONS. Bank shall be under no obligation or
duty to take action to effect collection of, or be liable for, any amounts
payable in respect of Securities or Approved Investments if such Securities or
Approved Investments are in default, or if payment is refused after due demand
and presentation.
7. PRICING SERVICES. Bank is authorized to utilize any nationally
recognized pricing information service which Bank, in its judgment, deems
reliable in order to perform its valuation responsibilities with respect to
Loaned Securities, Collateral and Approved Investments. Lender shall have the
right to dispute any such price, and Lender and Bank shall negotiate an
adjustment (if appropriate).
8. AGENT'S FEE. For its performance as Lender's agent in making and
administering Loans, Lender shall pay to Bank a fee, accrued daily, equal to 20%
of the sum of all interest, dividends and other distributions earned from
Approved Investments net of Rebates paid by Bank to relevant Borrowers and net
of brokerage commissions, if any, incurred in making Approved Investments, and
including any amounts paid to Lender as liquidated damages by Bank pursuant to
Paragraph l(b) of this Article. Bank is authorized, on a monthly basis, to
charge its fees against the Collateral Account. In the event that on a calendar
month basis the amount of such interest, dividends and other distributions
earned from Approved Investments are, net of brokerage commissions incurred in
making Approved Investments, less than the amount of any Rebate owed any
Borrower, Bank and Lender shall pay, respectively, 20% and 80% of such
deficiency. For its services in making and administering Approved Investments,
Lender shall pay to Bank a collateral management fee, accrued daily, equal to 7
basis points of the total amount of Cash Collateral delivered by the relevant
Borrowers in respect of Loans.
9. RELIANCE ON CERTIFICATES AND INSTRUCTIONS. Bank shall be entitled
to rely upon any Certificate, Written or Oral Instruction actually received by
Bank and reasonably believed by Bank to be duly authorized and delivered. Lender
agrees to forward to Bank Written Instructions confirming Oral Instructions in
such manner so that such Written Instructions are received by Bank by the close
of business of the same day that such Oral Instructions are given to Bank.
Lender and Bank agree that the fact that such confirming Written Instructions
are not received or that contrary instructions are received by Bank shall in no
way affect the validity or enforceability of (a) the transactions authorized by
Lender by Oral Instructions, or (b) any obligation of Bank to act upon Oral
Instructions under the terms of this Agreement (to the extent that contrary Oral
or Written Instructions are not received by Bank). In this regard, the records
of Bank shall be presumed to reflect accurately any Oral Instructions given by
an Authorized Person or a person believed by Bank to be an Authorized Person.
10. DISCLOSURE OF ACCOUNT INFORMATION. It is understood and agreed that
Bank is authorized to supply any information regarding the Account or Collateral
Account which is required by any statute, regulation, rule or order now or
hereafter in effect. If Bank is required to provide any such information to any
person, Bank shall use its best efforts to notify Lender in advance in order to
permit Lender to raise any reasonable objection to disclosure that may be
available to it.
11. STATEMENTS. Bank will at least monthly furnish Lender with
statements relating to Loans hereunder, which statements shall include such
information as Lender may reasonably request.
12. FORCE MAJEURE. Bank shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
which are not the result of Bank's negligence but which have arisen out of or
are caused, directly or indirectly, by circumstances beyond its control,
including without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; epidemics; riots; interruptions, loss
or malfunctions of utilities, transportation, computer (hardware or software) or
communications service; accidents; labor disputes; acts of civil or military
authority; governmental actions; or inability to obtain labor, material,
equipment or transportation. Upon the occurrence of any such delay or failure,
Bank shall use commercially reasonable best efforts to resume performance as
soon as practicable under the circumstances. Bank has established and agrees to
7
maintain such disaster recovery plans and systems that it reasonably believes to
be necessary and appropriate to its operations and which comply, in all material
respects, with any statute, regulation or rule to which it is subject.
13. NO IMPLIED DUTIES. Bank shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement, and no covenant or obligation shall be implied against Bank
in connection with this Agreement.
ARTICLE VI
TERMINATION
This Agreement may be terminated at any time by either party upon
delivery to the other party of a written notice specifying the date of such
termination, which shall be not less than 60 days after the date of receipt of
such notice. Notwithstanding any such notice, this Agreement shall continue in
full force and effect with respect to all Loans outstanding on the date of
termination.
ARTICLE VII
MISCELLANEOUS
1. EXCLUSIVITY. Lender agrees that it shall not enter into any other
agreement with any third party whereby such third party is permitted to make
loans on behalf of Lender of Securities held by Bank from time to time, until
after Lender has given a notice to Bank terminating this Agreement.
2. CERTIFICATES. Lender agrees to furnish to Bank a new Certificate in
the event that any present Authorized Person ceases to be an Authorized Person
or in the event that any other Authorized Persons are appointed and authorized.
Until such new Certificate is received, Bank shall be fully protected in acting
in reasonable good faith upon Oral Instructions or signatures of the present
Authorized Persons.
3. NOTICES. (a) Any notice or other instrument in writing, authorized
or required by this Agreement to be given to Bank, shall be sufficiently given
if addressed to Bank and received by it at its offices at 00 Xxx Xxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Securities Lending Division, or at
such other place as Bank may from time to time designate in writing.
(b) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to Lender shall be sufficiently given if addressed
to Lender and received by it at its office at 0000 X. Xxxxxxxxxx Xxxxx Xxxx,
Xxxxxxxxxx, XX 00000 Attention: Chief Counsel, or at such other place as Lender
may from time to time designate in writing.
4. CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted to a
party hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of a party to exercise, and
no delay in exercising, any right will operate as a waiver thereof, nor will any
single or partial exercise by a party of any right preclude any other or future
exercise thereof or the exercise of any other right.
5. SEVERABILITY. In case any provision in or obligation under this
Agreement, other than Lender's obligation with respect to Approved Investments
contained in Paragraph 2(c) of Article IV hereof or Bank's obligations under
Paragraphs 5(a) and (b) of Article IV hereof, shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations shall not in any way be affected or
impaired thereby, and if any provision, other than Lender's obligation with
respect to Approved Investments contained in Paragraph 2(c) of Article IV hereof
or Bank's obligations under Paragraphs 5(a) and (b) of Article IV hereof is
inapplicable to any person or circumstances, it shall nevertheless remain
applicable to all other persons and circumstances.
6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement represents the entire
understanding of the parties hereto with regard to the subject matter contained
herein and may not be amended or modified in any manner except by a written
agreement executed by both parties, except that Schedules I (including Schedules
I-A and I-B thereto) and II may be amended by Lender executing a revised
Schedule I, I-A, I-B or II, as the case may be, and such amendment shall become
effective upon receipt by Bank of such executed revised schedule.
7. SUCCESSORS AND ASSIGNS. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by either party
without the written consent of the other. Bank may not delegate or assign any of
its duties hereunder without the written consent of Lender.
8. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF IMMUNITY; JURY
TRIAL WAIVER. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflict of laws principles thereof.
Lender and Bank hereby each consents to the jurisdiction of a state or federal
court situated in New York City, New York in
8
connection with any dispute arising hereunder. To the extent that in any
jurisdiction either Lender or Bank may now or hereafter be entitled to claim,
for itself or its assets, immunity from suit, execution, attachment (before or
after judgment) or other legal process. Lender and Bank each irrevocably agrees
not to claim, and it hereby waives, such immunity. Each party hereby waives its
right to a trial by jury.
9. NO THIRD PARTY BENEFICIARIES. In performing hereunder, Bank is
acting solely on behalf of Lender and no contractual or service relationship
shall be deemed to be established hereby between Bank and any other person.
10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
11. SIPA NOTICE. THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION
ACT OF 1970 MAY NOT PROTECT LENDER WITH RESPECT TO LOANS HEREUNDER AND,
THEREFORE, THE COLLATERAL DELIVERED TO BANK AS AGENT FOR LENDER MAY CONSTITUTE
THE ONLY SOURCE OF SATISFACTION OF A BORROWER'S OBLIGATION IN THE EVENT SUCH
BORROWER FAILS TO RETURN THE LOANED SECURITIES.
12. CONSTRUCTION. This Agreement shall be deemed to be a separate
agreement between Bank and each investment company or Series listed on Exhibit A
hereto, and each such investment company or Series shall be a separate Lender
for purposes of this Agreement. A copy of the Declaration of Trust of each Fund
that is a Massachusetts Business Trust is on file with the Secretary of the
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Board of Trustees of the Fund as trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees or shareholders individually but are binding only upon the
assets and property of the Fund; provided, however, that the Declaration of
Trust of the Fund provides that the assets of a particular Series of the Fund
shall under no circumstance be charged with liabilities attributable to any
other Series of the Fund and that all persons extending credit to, or
contracting with or having any claim against a particular Series of the Fund
shall look only to the assets of that particular Series for payment of such
credit, contract or claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers, thereunto duly authorized, as
of the day and year first above written.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
On behalf of the Investment
Companies Listed on Exhibit A
hereto
THE BANK OF NEW YORK
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Name: Xxxxxx X. Xxxx
Title: EVP
9
SCHEDULE I
APPROVED INVESTMENTS
A. GENERAL GUIDELINES
Bank is hereby authorized to invest and reinvest Cash Collateral in the
following U.S. dollar denominated investments, subject in each case to the
limits set forth below:
1. Securities that are both (a) 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 hereto.
2. High-grade commercial paper (including asset-backed commercial paper), notes
and bonds, whether or not registered under the Securities Act of 1933, as
amended, issued by an entity organized under the laws of the United States,
any state thereof, or the District of Columbia, and if guaranteed or
insured, guaranteed or insured by an entity organized under the laws of the
United States, any state thereof, the District of Columbia, or a foreign
bank whose deposit obligations would qualify for investment under paragraph
4 below. Such obligations may have fixed, floating or variable rate interest
payment provisions. Obligations will be rated A-l and P-l by Standard &
Poor's and Moody's. Single or split ratings are not permitted.
3. Certificates of deposit, time deposits and other deposit obligations of
U.S. banks, their branches and subsidiaries, and the branches and
subsidiaries of foreign banks. Issuers must have short-term debt ratings of
at least A-l by Standard & Poor's and P-I by Moody's. Foreign bank issuers
must also have long term debt ratings of at least AA- by Standard & Poor's
and Aa3 by Moody's. Single or split ratings are not permitted.
4. Repurchase agreements (including those entered into with The Bank of
New York) with any entity listed on Schedule I-A hereto (collectively "repo
transactions"), provided that such entity is at the time of the transaction
on Bank's internal list of approved repo counterparties. No repo transaction
may exceed 7 days in duration. Collateral must be marked-to marked daily.
Collateral received in repurchase agreements shall include only (a) cash;
(b) Approved Investments; or (c) mortgage-backed securities or
collateralized mortgage obligations issued by GNMA, FNMA, or FHLMC of the
types marked "Yes" on Schedule I-B.
5. Securities, units, shares or other participations in money market funds,
short term investment funds, pools or trusts, (including those managed by
The Bank of New York); provided that the investments made by such short term
investment fund pools or trusts are largely consistent with Rule 2a-7.
SCHEDULE I
APPROVED INVESTMENTS
B. INVESTMENT LIMITS:
1. PER ISSUER: The greater (a) 5% of the Collateral Account and (b) $1 million.
Per issuer limitation does not apply to the BNY Institutional Cash Reserves
Fund.
2. PER REPO COUNTERPARTY: The lesser of (a) 25% of the Collateral Account and
(b) $500 million; provided, however, that such limit shall never be less
than $1 million per counterparty.
3. DURATION LIMITS:
(a) 70-day maximum weighted average maturity for the entire Collateral
Account (using the reset period for floating rate assets)
(b) 270-day maximum maturity for commercial paper
(c) 397-day maximum maturity for (i) fixed rate investments and (ii)
floating rate investments that reset quarterly or more frequently
(d) 20% minimum invested in overnight maturities
C. OTHER: The investments described herein are largely consistent with Rule 2a-7
of the Investment Company Act.
ING FUNDS
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Title: EXECUTIVE VICE PRESIDENT
PRINCIPAL FINANCIAL OFFICER
SCHEDULE I-A
BNP Paribas Securities Corp.
Banc of America Securities LLC
Banc One Capital Markets. Inc.
Barclays Capital Inc.
Bear, Steams & Co., Inc.
CIBC World Markets Corp.
Citigroup Global Markets Inc.
Credit Suisse First Boston LLC
Deutsche Bank Securities Inc.
Dresdner Kleinwort Xxxxxxxxxxx Securities LLC
Xxxxxxx, Xxxxx & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
X. X. Xxxxxx Securities, Inc.
Xxxxxx Brothers Inc.
Xxxxxxx Xxxxx Government Securities Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
UBS Warburg LLC
ING FUNDS
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Title: EXECUTIVE VICE PRESIDENT
PRINCIPAL FINANCIAL OFFICER
SCHEDULE I-B
YES/NO
U.S. TREASURIES
BILLS Yes
BONDS Yes
NOTES Yes
STRIPS Yes
SYNTHETIC TREASURIES No
(x.x.XX TS,COUGRS, TIGRS)
AGENCY DEBENTURES RESIDUALS
FAMC (Fed Agriculture Mtge Corp) No
FCFAC (Farm Credit Xxxxx. Asst.) Yes
FFCB (Farm Credit System Banks) Yes
FmHA (Fanners Home Admin) No
FHLB (Federal Home Loan Banks) Yes
FJLMC (Federal Home Loan Mtge Yes
FICO (Financing Corp.) No
FLBB (Federal Land Bank Bonds) Yes
REFCO (Resolution Funding Corp.) Yes
SLMA (Student Loan Mtge Corp.) Yes
TVA (Tennessee Valley Authority) No
USPS (U.S. Postal Service) No
AGENCY STRUCTURED NOTES No
GNMA
TRUST RECEIPTS Yes
GNMA I II-SINGLE FAMILY Yes
GNMA I II-OTHERS-FIXED RATE Yes
GNMA I II OTHER-ADJUST RATE Yes
AGENCY MORTGAGE BACKS
TRUST RECEIPTS Yes
PASSED THROUGHS-FIXED RATE Yes
PASS THROUGHS-ADJUST. RATE Yes
MBS STRIPS (IO,PO,RECOMB) No
AGENCY REMICS/CMOS
REMIC TYPES:
RESIDUALS No
INVERSE IO FLOATERS No
IOETTERS No
INTEREST ONLY (IO) No
PRINCIPAL (PO) No
INVERSE FLOATERS No
COMPANION FLOATERS No
SEQUENTIAL FLOATERS Yes
PAC & OTHER SEQUENTIAL FLOATERS Yes
Z BONDS No
COMPANION BONDS No
SEQUENTIAL BONDS Yes
TAC BONDS Yes
PAC & OTHER SCHEDULED BONDS Yes
ING FUNDS
By: /s/ [ILLEGIBLE]
------------------
Title: EXECUTIVE VICE PRESIDENT
PRINCIPAL FINANCIAL OFFICER
