EXHIBIT h(12)
SECURITIES LENDING AUTHORIZATION AGREEMENT
Between
NEW ENGLAND FUNDS TRUST I and NEW ENGLAND FUNDS TRUST II,
on behalf of each of their respective series as listed on Schedule C,
severally and not jointly
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
PAGE
1 DEFINITIONS ...................................................... 1
0 XXXXXXXXXXX XX XXXXX XXXXXX ...................................... 2
3 SECURITIES TO BE LOANED .......................................... 2
4 BORROWERS ........................................................ 2
5 SECURITIES LOAN AGREEMENTS ....................................... 4
6 LOANS OF AVAILABLE SECURITIES .................................... 4
7 DISTRIBUTIONS ON AND VOTING RIGHTS WITH RESPECT TO LOANED
SECURITIES ....................................................... 5
8 COLLATERAL ....................................................... 5
9 INVESTMENT OF CASH COLLATERAL AND COMPENSATION ................... 7
10 FEE DISCLOSURE ................................................... 8
11 RECORDKEEPING AND REPORTS ........................................ 8
12 STANDARD OF CARE ................................................. 8
13 REPRESENTATIONS AND WARRANTIES ................................... 8
14 INDEMNIFICATION .................................................. 9
15 CONTINUING AGREEMENT AND TERMINATION ............................. 9
16 NOTICES .......................................................... 9
17 MISCELLANEOUS .................................................... 10
18 SECURITIES INVESTORS PROTECTION ACT .............................. 10
19 COUNTERPARTS ..................................................... 11
20 TRUST NOTICE ..................................................... 11
21 MODIFICATION ..................................................... 12
EXHIBITS AND SCHEDULES
EXHIBIT I (State Street Securities Loan Agreement)
EXHIBIT II (MOD-2)
EXHIBIT III (Securities Loan Agreement)
SCHEDULE A (Fee Schedule)
SCHEDULE B (Acceptable Forms of Collateral)
SCHEDULE C (Funds)
SCHEDULE D (Schedule of Borrowers)
SCHEDULE E (Fund Restrictions)
SECURITIES LENDING AUTHORIZATION AGREEMENT
Agreement dated the 30th day of November, 1998 between NEW ENGLAND FUNDS
TRUST I and NEW ENGLAND FUNDS TRUST II, on behalf of each of their respective
series as listed on Schedule C, severally and not jointly, each a registered
management investment company organized and existing under the laws of
Massachusetts (each a "Trust" and collectively, the "Trusts"), and STATE STREET
BANK AND TRUST COMPANY ("State Street"), setting forth the terms and conditions
under which State Street is authorized to act on behalf of the Trusts with
respect to the lending of certain securities of the Trusts held by State Street
as trustee, agent or custodian.
This Agreement shall be deemed for all purposes to constitute a separate
and discrete agreement between State Street and each of the series of shares of
the Trusts listed on Schedule C to this Agreement (each a "Fund" and
collectively, the "Funds") as it may be amended by the parties, and no series of
shares of a Trust shall be responsible or liable for any of the obligations of
any other series of shares of either Trust under this Agreement or otherwise,
notwithstanding anything to the contrary contained herein.
NOW, THEREFORE, in consideration of the mutual promises and of the mutual
covenants contained herein, each of the parties does hereby covenant and agree
as follows:
1. Definitions. For the purposes hereof:
(a) "Available Securities" means the securities of the Funds that
are available for Loans pursuant to Section 3.
(b) "Borrower" means any of the entities to which Available
Securities may be loaned under a Securities Loan Agreement, as described in
Section 4.
(c) "Collateral" means collateral delivered by a Borrower to secure
its obligations under a Securities Loan Agreement.
(d) "Investment Manager" when used in any provision means the person
or entity who has discretionary authority over the investment of the Available
Securities to which the provision applies.
(e) "Loan" means a loan of Available Securities to a Borrower.
(f) "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.
(g) "Market Value" of a security means the market value of such
security (including, in the case of a Loaned Security that is a debt security,
the accrued interest on such security) as determined by the independent pricing
service designated by State Street, or such other independent sources as may be
selected by State Street on a reasonable basis.
(h) "Securities Loan Agreement" means the agreement between a
Borrower and State Street (on behalf of the Funds) that governs Loans, as
described in Section 5.
(i) "Replacement Securities" means securities of the same issuer,
class and denomination as Loaned Securities.
2. Appointment of State Street. Each Fund hereby appoints and authorizes
State Street as its agent to lend Available Securities to Borrowers in
accordance with 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 determine to be desirable, necessary, or appropriate to implement and
administer this securities lending program, consistent with applicable law and
the investment policies of each Fund as set forth on Schedule E. Each Fund
agrees that State Street is acting as a fully disclosed agent and not as
principal in connection with the securities lending program and that State
Street may take action as agent of the Fund on an undisclosed or a disclosed
basis.
3. Securities to be Loaned. State Street acts or will act as agent and
custodian of certain securities owned by the Funds. All of a Fund's securities
held by State Street as custodian shall be subject to this securities lending
program and constitute Available Securities hereunder, except for five percent
(5%) of the shares or other units or principal amount owned by the Fund of any
class or series of issuer's securities and except for those securities which a
Fund or its Investment Manager specifically identifies in notices to State
Street as not being Available Securities. In the absence of any such notice
identifying specific securities, and except for such five percent (5%)
exclusion, State Street shall have no authority or responsibility for
determining whether any of a Fund's securities should be excluded from the
lending program.
4. Borrowers. The Available Securities may be loaned to any Borrower
identified on the Schedule of Borrowers attached hereto as Schedule D, as such
schedule may be modified from time to time with respect to a particular Fund by
mutual agreement of State Street and such Fund, which schedule includes without
limitation, the Financial Markets Group of State Street; provided, however, if
Available Securities are loaned to the Financial Markets Group, in addition to
being consistent with the terms hereof, said Loan shall be made in accordance
with the terms of the Securities Loan Agreement attached hereto as Exhibit I, as
modified from time to time in accordance with the provisions hereof
(hereinafter, the "State Street Securities Loan Agreement"). The form of the
State Street Securities Loan Agreement may be modified by State Street from time
to time, without the consent of the Funds, in order to comply with the
requirements of law or any regulatory authority having jurisdiction over State
Street, the Funds or the securities lending program or in any other manner that
is not material and adverse to the interests of any Fund. State Street shall
notify the Funds of any material amendment to the State Street Securities Loan
Agreement within a reasonable period of time after such amendment.
The Funds acknowledge that each is aware that State Street, acting as
"Lender's Agent" hereunder and under the State Street Securities Loan Agreement,
is or may be deemed to be the same legal entity as State Street acting as
"Borrower" under the State Street Securities Loan Agreement, notwithstanding the
different designations used herein and therein or the dual roles assumed by
State Street hereunder and thereunder. The Funds represent that the power
granted herein to State Street, as agent, to lend U.S. securities owned by the
Funds (including, in legal effect, the power granted to State Street to make
Loans to itself) and the other powers granted to State Street, as agent herein,
are given expressly for the purpose of averting and waiving any prohibitions
upon such lending or other exercise of such powers which might exist in the
absence of such powers, and that transactions effected pursuant to and in
compliance with this Agreement and the State Street Securities Loan Agreement
will not in and of themselves constitute a breach of trust or other fiduciary
duty by State Street.
Each Fund further acknowledges that such Fund has granted State Street the
power to effect securities lending transactions with the Financial Markets Group
of State Street and other powers assigned to State Street hereunder and under
the Securities Loan Agreements and the State Street Securities Loan Agreement as
a result of the Fund's desire to increase the opportunity for each Fund to lend
securities held in its account on fair and reasonable terms to qualified
Borrowers without such loans being considered a breach of State Street's
fiduciary duty. In connection therewith, each of the Financial Markets Group and
the Fund hereby agrees that it shall furnish to the other party, upon request
(i) the most recent available audited statement of its financial condition, and
(ii) the most recent available unaudited statement of its financial condition,
if more recent than the audited statement. As long as any Loan is outstanding
under this Agreement, each party shall also promptly deliver to the other party
all such financial information that is subsequently available, and any other
financial information or statements that such other party may reasonably
request.
In the event any such Loan is made to the Financial Markets Group, State
Street hereby covenants and agrees for the benefit of the Funds that it has
adopted and implemented procedural safeguards to help ensure that all actions
taken by it hereunder will be effected by individuals other than, and not under
the supervision of, individuals who are acting in a capacity as Borrower
thereunder, and that all trades effected hereunder will take place at the same
fully negotiated "arms length" prices offered to similarly situated third
parties by State Street when it acts as lending agent, notwithstanding the
inherent conflict of interest with respect to Loans to be effected by State
Street to the Financial Markets Group.
In the event a Fund approves lending to Borrowers resident in the United
Kingdom, the Fund shall complete Part 1 of the document known as a "MOD-2 form,"
which is attached hereto as Exhibit II.
In the event that State Street undertakes lending activity hereunder
through its London office, State Street becomes subject to additional regulation
in the U.K., and State Street is obliged to notify the Funds of the following
matters:
i. State Street shall make available to you 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 neither State Street nor any such
affiliate shall be obliged to disclose such interest or account to you 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 not be
treated by State Street as the 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.
5. Securities Loan Agreements. The Funds authorize State Street to enter
into one or more Securities Loan Agreements with such Borrowers identified
on the Schedule of Borrowers as may be selected by State Street. Subject to
the terms of this Agreement, 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. A form of the Securities Loan Agreement is attached hereto
as Exhibit III. State Street represents to the Fund that clause 9.3
(cross-default/cross-collateralization provision) and clause 12 (indemnification
provision) in Exhibit III is not subject to negotiation with its Borrowers.
6. Loans of Available Securities. State Street shall have authority to
make Loans of Available Securities to Borrowers identified on the Schedule of
Borrowers, and to deliver such securities to such Borrowers. State Street shall
be responsible for determining whether any such Loan shall be made, and 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 a Fund.
The Funds acknowledge 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 Fund's
Available Securities will in fact be loaned to Borrowers. The Funds agree that
each 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.
The Funds also acknowledge that, under the applicable Securities Loan
Agreements, the 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 the
customary settlement period for such securities. Upon receiving a notice from a
Fund or its 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), 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 customary settlement period.
7. Distributions on and Voting Rights with Respect to Loaned Securities.
Each Fund 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 no such
security has been sold, and that it is entitled to receive all distributions
made by the issuer with respect to Loaned 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 Fund's account on the date
such amounts are delivered by the Borrower to State Street with the exception of
those securities markets in which State Street provides the Fund with
predetermined income. Such predetermined income shall be credited to the Fund's
account on the payable date of the issuer. 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 such non-cash distribution is received by the Borrower; provided
that the Fund (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 Fund's account
on the date it is delivered to State Street.
Each Fund 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.
Each Fund also acknowledges that any payments of distributions from
Borrower to the Fund 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.
If an installment, call or rights issue becomes payable on or in respect
of any Loaned Securities, State Street shall use all reasonable endeavors to
ensure that any timely instructions from the Fund are complied with, but State
Street shall not be required to make any payment unless the Fund has first
provided State Street with funds to make such payment.
8. Collateral.
(a) Receipt of Collateral. Each Fund authorizes State Street to receive
and to hold, on the that Fund's behalf, Collateral from Borrowers to secure the
obligations of Borrowers with respect to any Loan of securities made on behalf
of a Fund pursuant to the Securities Loan Agreements. All investments of cash
Collateral shall be for the account and at the risk of the Fund. Notwithstanding
the foregoing, State Street and the Fund have agreed, as set forth in
subparagraph (c) below, that in the event the value of the cash Collateral so
invested is insufficient to the rebate fee (i.e., the return to the Borrower for
the use of cash Collateral), the Fund and State Street shall share the
responsibility for making up the amount of the shortfall in accordance with the
fee split as set forth on Schedule A. Concurrently with the delivery of the
Loaned Securities to the Borrower under any Loan, State Street shall receive
from the Borrower Collateral in any of the forms listed on Schedule B. Said
Schedule may be amended from time to time by the mutual written agreement of
State Street and the Funds.
The initial Collateral received shall have a Market Value of not less
than one hundred two percent (l02%) of the Market Value of the Loaned Securities
in the case of Loaned Securities denominated in United States Dollars or whose
primary trading market is located in the United States or sovereign debt issued
by foreign governments, or one hundred five percent (105%) of the Market Value
of the Loaned Securities in the case of Loaned Securities which are not
denominated in United States Dollars or whose primary trading market is not
located in the United States. Thereafter, subject to the next paragraph, State
Street shall value all Loaned Securities in accordance with its customary
practices and prevailing industry practices and take such action as is
appropriate with respect to Collateral under the applicable Securities Loan
Agreement.
State Street shall value all Loaned Securities in accordance with its
customary practice. 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
accordance with the above percentages 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 Loaned Securities shall be less than (i) in the
case of Loaned Securities denominated in United States Dollars or whose primary
trading market is located in the United States or sovereign debt issued by
foreign governments, 101.5% of the Market Value of the Loaned Securities or (ii)
in the case of Loaned Securities whose primary trading market is not located in
the United States (other than sovereign debt issued by foreign governments)
104.5% of the Market Value of the Loaned Securities or (iii) such higher
percentage as may be applicable in the jurisdiction in which such Loaned
Securities are customarily traded.
(b) Return of Collateral. 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.
(c) Limitations. State Street shall invest cash Collateral in accordance
with any directions, including any limitations, established by the Funds in a
writing identified to this Agreement and acknowledged in writing by State Street
and shall exercise reasonable care, skill, diligence and prudence in the
investment of 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. If the value of the cash Collateral so
invested is insufficient to the rebate fee (i.e., the return to the Borrower for
the use of cash Collateral), the Fund and State Street shall share the
responsibility for making up the amount of the shortfall in accordance with the
fee split as set forth on Schedule A. If the value of the cash Collateral so
invested is insufficient to return full amount of the Collateral (U.S. dollar or
otherwise) and any and all other amounts due to such Borrower pursuant to the
Securities Loan Agreement with respect to a particular Loan or Loans (other than
rebate fee), the Fund shall be solely responsible for such shortfall and shall
promptly deliver such amount to State Street upon receipt of notice from State
Street.
9. Investment of Cash Collateral and Compensation. To the extent that a
Loan is secured by cash Collateral, such cash Collateral, including money
received with respect to the investment of the same, or upon the maturity, sale,
or liquidation of any such investments, shall be invested by State Street,
subject to the directions referred to above, if any, in short-term instruments,
short term investment funds maintained by State Street, money market mutual
funds and such other investments as State Street may from time to time select,
including 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.
Each Fund 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. Each Fund 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 the preceding
paragraph of this Section 9 shall be allocated among the Borrower, State Street,
and the Fund, as follows: (a) the rebate fee shall be paid to the Borrower; (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 Fund in
accordance with the fee schedule attached hereto as Schedule A.
To the extent that a Loan is secured by non-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 Fund as follows: (a) such 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 Schedule A hereto; and (b) the remainder of
such loan premium shall be credited to the Fund's account.
Each Fund acknowledges that in the event that the its participation in
securities lending generates income for the Fund, State Street may be required
to withhold tax or may claim such tax from the Fund as is appropriate in
accordance with applicable law.
Each Fund shall reimburse State Street for any and all funds advanced by
State Street on behalf of the Fund as a consequence of the Fund's obligations
hereunder, including the Fund's obligation to return cash Collateral to the
Borrower and to pay any fees due the Borrower, all as provided in Section 8
hereof.
10. Fee Disclosure. The fees associated with the investment of cash
Collateral in funds maintained or advised by State Street are disclosed on
Schedule A hereto. Said Schedule may be amended from time to time by mutual
consent of the Funds and State Street. An annual report with respect to such
funds is available to the Funds, 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 daily basis, the Fund will be able to
electronically view on-loan activity, Borrower exposure and monthly earnings. On
a monthly basis, State Street will provide the Funds with a statement describing
the Loans made, and the income derived from the 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 with respect to any losses incurred by the Funds in
connection with this securities lending program or under any provision hereof,
except to the extent that such losses result from the negligence, willful
misconduct, recklessness, bad faith, misfeasance or nonfeasance on the part of
itself and any party to whom State Street delegates any of its duties hereunder
or breach by State Street of the terms of this Agreement and State Street shall
indemnify and hold the Funds harmless against losses arising therefrom.
The Funds acknowledge that when lending Gilt securities there is intra-day
settlement exposure from the Borrower's settlement bank. In particular, the
Funds have daily exposure that the Gilt Collateral position backed by the
assured payment from the Borrower's settlement bank is unsecured.
State Street, in determining the Market Value of Securities, including
without limitation, Collateral, may rely upon any recognized pricing service and
shall not be liable for any errors made by such service; provided such pricing
service was selected and relied on by State Street with reasonable care.
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.
Each Fund represents and warrants that (a) it has made its own
determination as to the tax treatment of any dividends, remuneration or other
funds received hereunder; and (b) the financial statements delivered to State
Street pursuant to Section 4 fairly present its financial condition and there
has been no material adverse change in its financial condition or the financial
condition of any parent company since the date of the balance sheet included
within such financial statements. Each Loan shall constitute a present
representation by the a Fund that there has been no material adverse change in
its financial condition that has not been disclosed in writing to State Street
since the date of the most recent financial statements furnished to State Street
pursuant to Section 4.
The person executing this Agreement on behalf of the Funds represents that
he or she has the authority to execute this Agreement on behalf of the Funds.
Each Fund hereby represents to State Street that: (i) its policies
generally permit it to engage in securities lending transactions; (ii) its
policies permit it to purchase shares of the Navigator Securities Lending Trust
with cash Collateral; (iii) its participation in the securities lending program,
including the investment of cash Collateral in the Navigator Securities Lending
Trust, and the existing series' thereof, has been approved by a majority of the
directors or trustees that are not "interested persons" within the meaning of
section 2(a)(19) of the Investment Company Act of 1940, and such directors or
trustees will evaluate the securities lending program no less frequently than
annually to determine that the investment of cash Collateral in the Navigator
Securities Lending Trust, including any series thereof, is in the Fund's best
interest, and (iv) its prospectus provides appropriate disclosure concerning its
securities lending activity.
Each Fund hereby further represents that it is not subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") with
respect to this Agreement and the Securities; it qualifies as an "accredited
investor" within the meaning of Rule 501 of Regulation D under the Securities
Act of 1933, as amended; and that the taxpayer identification numbers and
corresponding tax year ends are as set forth on Schedule B.
14. Indemnification.
(a) If at the time of a 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 have not been returned by the Borrower,
and subject to the terms of this Agreement, State Street shall indemnify the
Fund against the failure of the Borrower as follows. State Street shall purchase
a number of Replacement Securities equal to the number of such unreturned Loaned
Securities, to the extent that such Replacement Securities are available on the
open market. 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 the Fund's obligations pursuant to Section 8
hereof, 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 State Street is unable to purchase Replacement Securities
pursuant to Section 14(a) hereof, State Street shall credit to the Fund's
account an amount equal to 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, if higher.
(c) In addition to making the purchases or credits required by
Paragraphs (a) and (b) hereof, State Street shall credit to the Fund's account
the value of all distributions on the Loaned Securities (not otherwise credited
to the Fund's accounts with State Street), the record dates for which occur
before the date that State Street purchases Replacement Securities pursuant to
Paragraph (a) or credits the Fund's account pursuant to Paragraph (b).
(d) Any credits required under Paragraphs (b) and (c) hereof shall
be made by application of the proceeds of the Collateral (if any) that remains
after the purchase of Replacement Securities pursuant to Paragraph (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 Paragraphs (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 Paragraphs (a) through (d) above,
and then to credit to the Fund's account all other amounts owed by the Borrower
to the Fund 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 Fund against the Borrower under the applicable Securities
Loan Agreement.
(g) The provisions of this Section 14 shall not apply to losses
attributable to war, riot, revolution, acts of government or other causes beyond
the reasonable control or apprehension of State Street (other than default by a
Borrower in returning when due some or all of the Loaned Securities that are the
subject of any Loan or in otherwise performing any of its obligations under the
applicable Securities Loan Agreement).
15. Continuing Agreement and Termination. 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 Funds and State Street may each at any time terminate this
Agreement upon five (5) business days' written notice to the other to that
effect. The only effects of any such termination of this Agreement will be that
(a) following such termination, no further Loans shall be made hereunder by
State Street on behalf of the Funds, and (b) State Street shall, within a
reasonable time after 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.
16. Notices. Except as otherwise specifically provided herein, notices
under this Agreement may be made orally (and confirmed in writing), in writing,
or by any other means mutually acceptable to the parties. If in writing, a
notice shall be sufficient if delivered to the party entitled to receive such
notices at the following addresses:
If to the Funds:
c/o New England Funds, L.P.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Treasurer
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.
Whenever this Agreement permits or requires a Fund to give notice to,
direct, provide information to State Street, such notice, direction, or
information shall be provided to State Street on the Fund's behalf by any
individual designated for such purpose by the Fund in a written notice to State
Street. (This Agreement shall be considered such a designation of the person
executing the Agreement on the Funds' 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.
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
Funds. 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. 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. THE FUND IS HEREBY
ADVISED AND ACKNOWLEDGES THAT THE PROVISIONS OF THE SECURITIES INVESTOR
PROTECTION ACT OF 1970 MAY NOT PROTECT THE FUND WITH RESPECT TO THE LOAN OF
SECURITIES HEREUNDER AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO THE FUND
MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF THE BROKER'S OR DEALER'S
OBLIGATION IN THE EVENT THE BROKER OR DEALER FAILS TO RETURN THE SECURITIES.
19. Counterparts. The 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 (1) instrument.
20. Trust Notice.
(a) A copy of the Agreement and Declaration of Trust establishing New
England Funds Trust I (the "Trust") is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed with respect to the Trust's series as listed on Schedule C, severally
and not jointly, on behalf of the Trust by officers of the Trust as officers and
not individually and that the obligations of or arising out of this Agreement
are not binding upon any of the trustees, officers or shareholders individually
but are binding only upon the assets and property belonging respectively to each
such Fund.
(b) A copy of the Agreement and Declaration of Trust establishing New
England Funds Trust II (the "Trust") is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed with respect to the Trust's series as listed on Schedule C, severally
and not jointly, on behalf of the Trust by officers of the Trust as officers and
not individually and that the obligations of or arising out of this Agreement
are not binding upon any of the trustees, officers or shareholders individually
but are binding only upon the assets and property belonging respectively to each
such Fund.
21. Modification. This Agreement shall not be modified, except by an
instrument in writing signed by the parties hereto.
NEW ENGLAND FUNDS TRUST I, on behalf of its
respective series as listed on Schedule C,
severally and not jointly
Name: XXXXX XXXXX
----------------------------
By: /s/ XXXXX XXXXX
----------------------------
Its: PRESIDENT
----------------------------
NEW ENGLAND FUNDS TRUST II,on behalf of each of
its respective series as listed on Schedule C,
severally and not jointly
Name: XXXXX XXXXX
----------------------------
By: /s/ XXXXX XXXXX
----------------------------
Its: PRESIDENT
----------------------------
STATE STREET BANK AND TRUST COMPANY
Name: XXXXXX XXXXXXX
----------------------------
By: /s/ XXXXXX XXXXXXX
----------------------------
Its: SVP
----------------------------
SCHEDULE A
This Schedule is attached to and made part of the Securities Lending
Authorization Agreement, dated the ____day of _______, 1998 between NEW ENGLAND
FUNDS TRUST I and NEW ENGLAND FUNDS TRUST II, ON BEHALF OF EACH OF THEIR
RESPECTIVE SERIES, AS LISTED ON SCHEDULE C, SEVERALLY AND NOT JOINTLY (the
"Funds") 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 follows
- Sixty five percent (65%) payable to the Client, and
- Thirty five percent (35%) payable to State Street.
2. All payments to be allocated under Paragraph 1 above shall be made after
deduction of such other amounts payable to State Street or to the Borrower under
the terms of the attached Securities Lending Authorization Agreement and
Securities Loan Agreement.
3. Investment Management Fees
The Securities Lending Quality Trust:
On an annualized basis, the management/trustee/custody/fund administration fee
for investing cash Collateral in the Securities Lending Quality Trust is not
more than 7.00 basis points netted out of yield. The trustee may pay out of the
assets of the Trust all reasonable expenses and fees of the Trust, including
professional fees or disbursements incurred in connection with the operation of
the Trust.
SCHEDULE B
This Schedule is attached to and made part of the Securities Lending
Authorization Agreement, dated the ____day of _______, 1998 between NEW ENGLAND
FUNDS TRUST I and NEW ENGLAND FUNDS TRUST II, ON BEHALF OF EACH OF THEIR
RESPECTIVE SERIES, AS LISTED ON SCHEDULE C, SEVERALLY AND NOT JOINTLY (the
"Funds") and STATE STREET BANK AND TRUST COMPANY ("State Street").
ACCEPTABLE FORMS OF COLLATERAL
- Cash (U.S. and foreign currency);
- Securities issued or guaranteed by the United States government
or its agencies or instrumentalities; and
- Such other Collateral as the parties may agree to in writing from
time to time.
SCHEDULE C
This Schedule is attached to and made part of the Securities Lending
Authorization Agreement, dated the ____day of _______, 1998 between NEW ENGLAND
FUNDS TRUST I and NEW ENGLAND FUNDS TRUST II, ON BEHALF OF EACH OF THEIR
RESPECTIVE SERIES, AS LISTED ON SCHEDULE C, SEVERALLY AND NOT JOINTLY (the
"Funds") and STATE STREET BANK AND TRUST COMPANY ("State Street").
FUND NAME TAXPAYER IDENTIFICATION NUMBER TAX YEAR END
SERIES OF NEW ENGLAND FUNDS TRUST I
New England Bond Income Fund 00-0000000 December 31
New England Government Securities Fund 00-0000000 December 31
New England International Equity Fund 00-0000000 December 31
New England Strategic Income Fund 00-0000000 December 31
SERIES OF NEW ENGLAND FUNDS TRUST II
New England Adjustable Rate U.S. Government Fund 00-0000000 December 31
New England High Income Fund 00-0000000 December 31
New England Limited Term U.S. Government Fund 00-0000000 December 31
SECURITIES LOAN AGREEMENT
Between
STATE STREET BANK AND TRUST COMPANY,
as Lender's Agent
And
STATE STREET BANK AND TRUST COMPANY, as Borrower
TABLE OF CONTENTS
PAGE
1. TERMS OF LOAN 1
2. DELIVERIES AND TREATMENT OF BORROWED SECURITIES 3
3. DELIVERIES AND TREATMENT OF COLLATERAL 4
4. MARKS TO MARKET; MAINTENANCE OF COLLATERAL 5
5. FEES 6
6. REPRESENTATIONS OF THE PARTIES 8
7. COVENANTS 8
8. TERMINATION OF LOAN WITHOUT DEFAULT 9
9. EVENTS OF XXXXXXX 00
00. LENDER'S REMEDIES ON BORROWER'S DEFAULT 11
11. BORROWER'S REMEDIES ON LENDER'S DEFAULT 12
12. DEFINITIONS 12
13. INDEMNIFICATION 14
14. WAIVERS, GENERAL 14
15. STANDARD OF CARE 14
16. CONTINUING AGREEMENT; TERMINATION; REMEDIES 14
17. NOTICES 15
18. TIME 15
19. SECURITIES CONTRACTS 15
20. DECLARATION OF TRUST 16
21. MISCELLANEOUS 16
22. MODIFICATION 16
SECURITIES LOAN AGREEMENT
Agreement dated the 15th day of December, 1997 between STATE STREET BANK
AND TRUST COMPANY, a Massachusetts trust company, acting through its Global
Securities Lending Division, in its capacity as trustee, agent or custodian for
certain securities of its clients (in such capacity, "Lender's Agent"), and
STATE STREET BANK AND TRUST COMPANY, acting through the Money Market Division of
the Financial Markets Group, as Borrower ("Borrower"), setting forth the terms
and conditions under which one or more clients of Lender's Agent (hereinafter,
each a "Lender") from time to time, may lend to Borrower Securities (as defined
herein), against the receipt of collateral as specified herein.
Capitalized terms not otherwise defined shall have the meanings ascribed
to them in Section 12.
WHEREAS, each Lender has appointed Lender's Agent as its agent to act on
its behalf with respect to the lending of Securities to Borrower in accordance
with the terms of a securities lending authorization agreement (hereinafter, the
Securities Lending Authorization Agreement) between such Lender and Lender's
Agent.
WHEREAS, pursuant to each Securities Lending Authorization Agreement,
Lender's Agent has been granted the responsibility and authority to do or cause
to be done all acts Lender's Agent shall determine to be desirable, necessary or
appropriate to implement or administer a securities lending program on behalf of
the Lender party thereto.
WHEREAS, upon request of Borrower, Lender's Agent may, from time to time,
in its discretion and on behalf of one or more Lenders, lend Available
Securities to Borrower against the receipt of Collateral (as defined herein)
delivered by Borrower.
NOW, THEREFORE, Lender's Agent and Borrower agree as follows:
1. Terms of Loan.
1.1 Upon request of Borrower, Lender's Agent may, from time to time, in
its discretion and on behalf of the Lenders, lend Securities to Borrower against
the receipt of Collateral delivered by Borrower. Lender's Agent and Borrower
shall agree on the terms of each Loan, including the identity and amount of the
securities to be loaned, the basis of compensation, and the type and amount of
Collateral to be delivered by Borrower (subject to the terms and conditions of
this Agreement), which terms may be amended during the period of the Loan only
by mutual agreement of the parties hereto.
1.2 Loans, all applicable terms and conditions thereof, and amendments and
activity, if any, with respect thereto, shall be evidenced by Lender's Agent's
records pertaining to such Loans maintained by Lender's Agent in the regular
course of its business and such records shall represent conclusive evidence
thereof except for manifest error or willful misconduct. Lender's Agent will
send Borrower monthly statements of outstanding Loans showing Loan activity
which Borrower agrees to examine promptly and to advise Lender's Agent of any
error or exceptions. Borrower's failure to so advise Lender's Agent within
twenty (20) days after delivery of any such statement shall be deemed to be such
party's admission of the accuracy and correctness of the contents thereof and
such party shall be fully bound thereby.
1.3 Notwithstanding any other provisions in this Agreement with respect to
when a Loan occurs, a Loan hereunder shall not occur until the Borrowed
Securities and the Collateral therefor are delivered. If, on any Business Day,
Borrower delivers Collateral, as provided in Section 3.1 hereunder, and Lender's
Agent does not deliver the Borrowed Securities, Borrower shall have the absolute
right to the prompt return of the Collateral; and if, on any Business Day,
Lender's Agent delivers Borrowed Securities and Borrower does not deliver
Collateral as provided in Section 3.1 hereunder, Lender's Agent shall have the
absolute right to the prompt return of the Borrowed Securities.
1.4 Lender's Agent shall maintain records in accordance with its usual
practice showing the allocation among the participating Lenders of the Loans,
the compensation therefor, the collateral with respect thereto and other
relevant information. Lender's Agent shall implement appropriate procedures and
policies to restrict lending of Securities hereunder on behalf of the respective
Lenders beyond the maximum credit risk and financial exposure limits which may
be set by such Lenders and Borrower.
2. Deliveries and Treatment of Borrowed Securities.
2.1 With respect to each Loan, Lender's Agent shall deliver the Borrowed
Securities to Borrower (a) by delivering to Borrower certificates representing
the Borrowed Securities together with such transfer documents as are customary
for such securities, if any, (b) by causing the Borrowed Securities to be
credited to Borrower's Account and debited from the Relevant Lender's Account at
a clearing organization agreed to by the Parties, and such crediting and
debiting shall result in receipt by Borrower and Lender's Agent of a notice of
such crediting and debiting, which notice shall constitute a schedule of the
Borrowed Securities, or (c) by any other method customary for the delivery of
such Securities at the Securities Trading Location and as agreed to by the
Parties.
2.2 Except as provided in Section 2.3, Borrower shall exercise all of the
incidents of ownership with respect to the Borrowed Securities, including the
right to transfer the Borrowed Securities to others, until the Borrowed
Securities are returned to Lender's Agent in accordance herewith.
2.3 Lender's Agent, on behalf of the Relevant Lender, shall be entitled to
receive all distributions (including payments upon maturity and other
redemption) made on or in respect of the Borrowed Securities, the payable dates
for which are during the term of the Loan and which are not otherwise received
by Lender's Agent, to the full extent the Relevant Lender would be so entitled
if the Borrowed Securities had not been loaned to Borrower, including, without
limitation, (a) all cash dividends, (b) all other distributions of cash or
property, (c) stock dividends and bonus issues, (d) securities received as a
result of split-ups of the Borrowed Securities and distributions in respect
thereof, (e) interest payments, (f) in the case of a rights issue, the Borrowed
Securities together with the securities allotted thereon; (g) in the case of
redemptions, a sum of money equivalent to the proceeds of redemption; (h) any
rights relating to conversion, sub-division, consolidation, preemption, rights
arising under a takeover offer or other rights, including those requiring
election by the holder for the time being of such securities which become
exercisable prior to the redelivery of Borrowed Securities, in which event the
Lender may, within a reasonable time before the latest time for the exercise of
the right or option give written notice to the Borrower that on redelivery of
securities it wishes to receive redelivered Borrowed Securities in such form as
if the right is exercised or, in the case of a right which may be exercised in
more than one manner, is specified in such written notice; (i) in the case of a
capitalized issue, the Borrowed Securities together with the securities allotted
by way of a bonus thereon; (j) in the case of any event similar to any of the
foregoing, the Borrowed Securities together with or replaced by a sum of money
or securities equivalent to that received in respect of such Borrowed Securities
resulting from such event; and (k) all rights to purchase additional securities.
Cash dividends and other distributions shall be paid gross of any foreign
withholding taxes. Any cash distributions made on or in respect of the Borrowed
Securities which Lender's Agent is entitled to receive pursuant to this Section
shall be paid to Lender's Agent for the Account of the Relevant Lender by
Borrower on payable, maturity, or redemption date. Non-cash distributions other
than those in the nature of stock splits or stock dividends shall be paid to
Lender's Agent for the Account of the Relevant Lender as soon as possible under
the best efforts of Borrower. Accordingly, Borrower shall either: (i) redeliver
the Borrowed Securities in time to allow the respective Relevant Lender to
participate in rights, fees or other benefits which attach to the Borrowed
Securities as described in this Section 2; or (ii) exercise such rights, fees or
other benefits as directed by Lender's Agent. Furthermore, in the event a
re-registration process is necessary in order to transfer such rights, fees or
other benefits, and a Loan is terminated prior to the applicable record/payable
date but not sufficiently prior to the record/payable date to enable Lender's
Agent to re-register the Borrowed Securities in its own name, Borrower is to
forward, and/or act on Lender Agent's behalf in accordance with Lender Agent's
instructions with respect to, all rights, fees and other benefits on the
Borrowed Securities.
2.4 With respect to Section 2.3(k) above, Lender's Agent may, at its sole
option, (A) direct Borrower to purchase additional securities or (B) terminate
the Loan of specified securities so that Lender's Agent may exercise its
purchase rights. In the case of option (A) under the next preceding sentence,
Borrower may elect either (i) to retain such additional securities as part of
its Loan, in which case Lender's Agent and Borrower shall make such arrangements
as are necessary to provide that Borrower has adequate funds to purchase such
additional securities and that the Loan of such additional securities is
collateralized as required herein; or, (ii) to deliver such additional
securities to Lender's Agent (on the date specified by Lender's Agent). In the
case of option (B) under the second preceding sentence, the applicable
provisions of this Agreement regarding termination of Loans shall apply.
Non-cash distributions which are in the nature of stock splits or stock
dividends and which are received by Borrower shall be added to the Borrowed
Securities and shall be considered such for all purposes, except that: (i) if
the Borrowed Securities have been returned to Lender's Agent or if Borrower is
in Default hereunder, Borrower shall forthwith deliver any such non-cash
distributions to Lender's Agent; and (ii) Lender's Agent may direct Borrower,
upon no less than six Business Days' notice prior to the date of such a non-cash
distribution, to deliver the same to Lender's Agent on the Business Day next
following the date of such non-cash distribution.
3. Deliveries and Treatment of Collateral.
3.1 Simultaneous to or prior to the transfer of Borrowed Securities
hereunder, Borrower shall deliver to Lender's Agent Collateral in an amount not
less than the applicable Margin Percentage of the current Market Value of the
Borrowed Securities. The Collateral shall be delivered by one or more of the
following methods, as agreed to by the parties pursuant to Section 1.1: (a)
Borrower delivering Securities to Lender's Agent, (b) Borrower delivering funds
to the Lender's Agent for the Account of the Relevant Lender, (c) Borrower
transferring funds by wire, (d) Borrower delivering to Lender Agent, or causing
to be credited to Lender Agent's account at a Clearing Organization, a certified
or official bank check representing New York Clearing House funds, (e) Borrower
delivering to Lender's Agent an irrevocable letter of credit issued by mutually
acceptable "bank" (as defined in Section 3(a)(6)(A)-(C) of the Securities
Exchange Act of 1934) that is not an Affiliate of Borrower, (f) Borrower
delivering U.S. Securities through the Federal Reserve book-entry system to the
account of Lender's Agent at the Federal Reserve Bank of Boston, (g) Borrower
delivering federal funds to the Lender Agent's account at the Federal Reserve
Bank of Boston or at a Clearing Organization, (h) Borrower delivering non-cash
Collateral through any Clearing Organization agreed to by the parties, and/or
(i) Borrower delivering to Lender's Agent, one or more other types of Collateral
as the Parties may agree.
As further security for the due and punctual performance by Borrower of
any and all of its obligations to Lender's Agent hereunder, Borrower hereby
grants and transfers to Lender's Agent a lien upon and a security interest in
any and all property (together with the proceeds thereof) in which the Borrower
at any time has rights and which at any time has been delivered, transferred, or
deposited in or credited to an account with, the Lender's Agent or otherwise at
any time is in the possession or under the control or recorded on the books of
the Lender's Agent, provided such property is delivered as collateral for a Loan
hereunder or under any other loan agreement with the Relevant Lender, including
(without limitation) any property which may be in transit by mail or carrier for
such purpose, or converted or affected by any documents in the Lender Agent's
possession for such purpose.
3.2 With respect to each Loan, the Collateral delivered by Borrower to
Lender's Agent, as adjusted pursuant to Section 4 below, shall be security for
the due and punctual performance by Borrower of any and all of its obligations
to Lender's Agent on behalf of the Relevant Lender hereunder now or hereafter
arising, and Borrower hereby pledges with, assigns to, and grants to Lender's
Agent on behalf of the Relevant Lender a continuing first security interest in,
and a lien upon, the Collateral and its proceeds. Borrower shall make
appropriate notations on its books and records so as to ensure the validity of
such security interest. Such first security interest shall attach upon the
delivery of the Collateral to Lender's Agent, shall survive the termination of
this Agreement, and shall cease only upon the return of the Collateral to
Borrower subsequent to the return of the Borrowed Securities to Lender's Agent.
In addition to the rights and remedies given to Lender's Agent hereunder,
Lender's Agent, on behalf of the Relevant Lender, shall have all the rights and
remedies of a secured party under the Uniform Commercial Code of Massachusetts.
3.3 Borrower understands that Lender's Agent may use or invest the
Collateral, to the extent that such Collateral consists of cash. Such use or
investment shall be at the risk of the Relevant Lender and, subject to the
payment of an agreed rebate fee pursuant to Section 5.2, and any other fees
payable hereunder, the Relevant Lender shall be entitled to retain all income
and profits therefrom and shall bear all losses therefrom. Except as provided in
Section 10, neither Lender's Agent nor any Lender may pledge, repledge,
hypothecate, rehypothecate, lend, or relend the Collateral, to the extent such
Collateral consists of other than cash. However, Lender's Agent may commingle
and hold non-cash Collateral in bulk.
3.4 With the approval of Lender's Agent, Borrower may at any time
substitute for any Securities held by Lender's Agent as Collateral for the
Borrowed Securities other Collateral with respect to the Borrowed Securities of
equal current Market Value to the Securities for which it is to be substituted.
Prior to the maturity of any U.S. Security (as defined in Section 12) that is
delivered to Lender's Agent as Collateral, Borrower shall replace such U.S.
Security with other Collateral acceptable to Lender's Agent and of equal current
Market Value to the U.S. Security for which it is to be substituted. Substituted
collateral shall be considered Collateral for all purposes hereof.
3.5 Borrower shall be entitled to receive all distributions made on or in
respect of non-cash Collateral the payable dates for which are during the term
of a Loan and which are not otherwise received by Borrower, to the full extent
it would be so entitled if the Collateral had not been delivered to Lender's
Agent; provided, however, that the amount, type or value of such distribution
which Borrower is entitled to receive hereunder shall not exceed the amount,
type and value received by State Street or its agents. Any distributions made on
or in respect of such Collateral which Borrower is entitled to receive under
this section shall be paid in the same currency as such distribution is paid by
the issuer, by Lender's Agent, acting on behalf of the Relevant Lender, to
Borrower forthwith upon receipt thereof by Lender's Agent, so long as Borrower
has not committed a Default at the time of such receipt. Cash dividends and
other distributions shall be paid gross of any withholding taxes. Borrower
acknowledges that distributions on non-cash Collateral may be afforded different
treatment than Borrower would have been so entitled had it not delivered the
Collateral to Lender's Agent, and agrees not to claim Lender's Agent or any
Relevant Lender for any disparate treatment as a result of its receiving the
distribution from Lender' Agent (as opposed to a distribution from issuer
directly).
3.6 Except as provided in Sections 10 and 11 hereunder, Lender's Agent
shall be obligated to return the Collateral to Borrower upon the return to
Lender's Agent of the Borrowed Securities.
4. Marks to Market; Maintenance of Collateral.
4.1 Borrower shall daily xxxx to market any Loans hereunder and in the
event that at the close of trading on any day the Market Value of all the
Collateral delivered by Borrower to Lender's Agent with respect to any Loan
hereunder shall be less than the Margin Percentage of the Market Value of all
Borrowed Securities outstanding with respect to such Loan, Borrower shall
deliver to Lender's Agent for the benefit of the Relevant Lender additional
Collateral by the close of the next Business Day so that the Market Value of the
additional Collateral when added to the Market Value of the Collateral with
respect to such Loan shall equal at least the Margin Percentage of the Market
Value of the Borrowed Securities outstanding with respect to such Loan. Such
additional Collateral shall be delivered as provided in Section 3.1 above.
4.2 In the event that at the close of trading on any day the Market Value
of all the Collateral delivered by Borrower to Lender's Agent with respect to
any Loan hereunder shall be less than the Margin Percentage of the Market Value
of all the Borrowed Securities outstanding with respect to such Loan, Lender's
Agent may, by oral notice to Borrower, demand that Borrower deliver to Lender's
Agent for the benefit of the Relevant Lender additional Collateral such that the
Market Value of such additional Collateral when added to the Market Value of the
Collateral with respect to such Loan shall equal at least the Margin Percentage
of the Market Value of the Borrowed Securities outstanding with respect to such
Loan. Except as provided below, such delivery is to be made by the close of
business on the day of Lender's Agent's notice to Borrower if such notice is
given before 11:30 a.m. on a Business Day, or on the next Business Day if agreed
to between the Parties. If Lender's Agent's notice is given after 11:30 a.m. on
a Business Day or is given on a day other than a Business Day, such delivery is
to be made by the close of business of the next Business Day, unless such notice
has been superseded by a proper demand made pursuant to Section 4.3 before 11:30
a.m. of that next Business Day. Such Collateral shall be delivered as provided
in Section 3.1 above. If the transfer of Collateral is to occur outside the
United States, such delivery is to be made not later than the time on such day
that is customary in such location.
4.3 In the event that at the close of trading on any day the Market Value
of all the Collateral delivered by Borrower to Lender's Agent with respect to
any Loan hereunder shall be greater than the Margin Percentage of the Market
Value of all the Borrowed Securities outstanding with respect to such Loan,
Borrower may, by oral notice to Lender's Agent, demand that Lender's Agent
deliver to Borrower such amount of Collateral as may be selected by Borrower, so
long as the Market Value of the remaining Collateral equals at least the Margin
Percentage of the Market Value of the Borrowed Securities outstanding with
respect to such Loan. Except as provided below, such delivery is to be made by
the close of business on the day of Borrower's notice to Lender's Agent if such
notice is given before 11:30 a.m. on a Business Day, or on the next Business Day
if agreed to between the Parties. If Borrower's notice is given after 11:30 a.m.
on a Business Day or is given on a day other than a Business Day, such delivery
is to be made by the close of business of the next Business Day, unless (a) such
notice has been superseded by a proper demand made pursuant to Section 4.2 or
this Section 4.3 given before 11:30 a.m. of that next Business Day, or (b)
additional Collateral is required to be delivered on that next Business Day
pursuant to Section 4.1. Such Collateral shall be delivered as provided in
Section 3.1 above. If the transfer of Collateral is to occur outside the United
States, such delivery is to be made not later than the time on such day that is
customary in such location.
5. Fees and Investment of Cash Collateral.
5.1 When an agreement to lend securities is made, Lender's Agent and
Borrower shall agree on the basis of compensation to be paid in respect of the
Loan.
5.2 To the extent that a Loan of Borrowed Securities is collateralized by
cash, the parties hereby agree that Lender's Agent for the benefit of the
Relevant Lender shall use and invest such cash Collateral, and that, in
consideration for such right to use and invest cash Collateral, Lender's Agent,
on behalf of the Relevant Lender, will pay Borrower a loan rebate fee computed
daily for each such Loan and based on the amount of cash Collateral delivered
with respect to such Loan. In the event Securities other than U.S. Securities
are borrowed hereunder, the amount of such loan rebate fee shall be computed (a)
from the first Business Day next following the day that cash Collateral is
delivered to Lender's Agent to the extent that such Loan is collateralized by
cash through a means other than Borrower's delivery of federal funds, and (b)
from the first Business Day that cash Collateral is delivered to Lender's Agent,
to the extent that the Loan is collateralized by Borrower's delivery of federal
funds. Computation of such loan rebate fee shall be made daily, through and
including the earliest of: (i) the date that such cash Collateral is returned to
Borrower, to the extent that such Loan is collateralized by cash through a means
other than Borrower's delivery of federal funds; (ii) the date next preceding
the date such cash Collateral is returned to Borrower, to the extent that such
Loan is collateralized by Borrower's delivery of federal funds; (iii) the date
of a Default by Borrower; and (iv) the date Lender's Agent gives notice of
termination pursuant to Section 8.2, provided that the parties may mutually
agree that a loan rebate fee will be paid for all or an agreed upon number of
days after such notice is given (but in no event for a period beyond the
earliest of the dates described in clauses (i), (ii), and (iii) of this
sentence). Such loan rebate fee shall be payable before the tenth Business Day
following the rendering of a correct invoice by Borrower. In the event U.S.
Government Securities are borrowed hereunder, the amount of such loan rebate fee
shall be computed daily from the first Business Day that cash Collateral is
delivered to Lender's Agent, through and including the earliest of (I) the date
next preceding the date that such cash Collateral is returned to Borrower; (II)
the date of a Default by Borrower; and (III) the date Lender's Agent gives
notice of termination pursuant to Section 8.2, provided that the parties may
mutually agree that a loan rebate fee will be paid for all or an agreed upon
number of days, and provided the Borrower is not in Default, such loan rebate
fee shall be payable upon the date the Borrowed Securities are returned to the
Lender's Agent upon termination of the Loan. If requested by any party to this
agreement, Lender's Agent and Borrower shall renegotiate the loan rebate fee
from time to time.
5.3 To the extent that a Loan of Borrowed Securities is collateralized by
other than cash, Lender's Agent and Borrower may agree that Borrower shall pay
to Lender's Agent, for the account of the Relevant Lender, a loan premium based
on the par value of the borrowed securities. The amount of such loan premium
shall be computed from the first Business Day that the borrowed securities are
delivered to Borrower, through and including the date next preceding the date
that securities identical to the Borrowed Securities are returned to Lender's
Agent pursuant to Section 8 or the date that Lender's Agent makes a purchase of
securities or an election to treat the Borrowed Securities as sold pursuant to
Section 10.1. Any fee payable by Borrower hereunder shall be payable upon the
earliest of the following: (a) the seventh Business Day of the month following
the month in which the fee was incurred; or (b) immediately, in the event of a
Default hereunder by Borrower; or (c) the date this Agreement is terminated.
5.4 All necessary costs, including any and all taxes (such as, but not
limited to, transfer taxes), duties (including, without limitation, stamp
duties) and fees (if any), with respect to any transfers hereunder of the
Borrowed Securities or Collateral shall be paid by Borrower when the same become
due.
6. Representations of the Parties.
The parties hereby make the following representations and warranties,
which shall continue during the term of any Loan hereunder;
6.1 Each party hereto represents and warrants that (a) it has the power to
execute and deliver this Agreement, to enter into the Loans contemplated hereby,
and to perform its obligations hereunder; (b) it has taken all necessary action
to authorize such execution, delivery, and performance; and (c) this Agreement
constitutes a legal, valid, and binding obligation enforceable against it.
6.2 Each party hereto represents and warrants that the execution, delivery
and performance by it of this Agreement and each Loan hereunder will at all
times comply with all applicable laws and regulations, including those of
applicable securities regulatory and self-regulatory agencies and organizations.
6.3 Borrower represents and warrants for the benefit of Lender's Agent and
each Lender that (a) it is a trust company duly organized and validly existing
under the laws of the Commonwealth of Massachusetts, (b) it is a bank within the
meaning of Section 3(a)(6)(A)-(C) of the Exchange Act, (c) it has, or will have
at the time of delivery of any Collateral, the right to grant a first security
interest therein subject to the terms and conditions hereof, and (d) the
purposes for which it borrows securities hereunder shall not violate the laws of
the Commonwealth of Massachusetts or the federal laws applicable therein.
6.4 Borrower represents that the statements provided pursuant to Section
7.1 fairly represent its financial condition, and that there has been no
material adverse change in its financial condition or the financial condition of
any parent company since that date that has not been disclosed in writing to
Lender's Agent. Lender's Agent represents that it has not been informed of any
material adverse change in Lender's financial condition. Each Loan effected
hereunder shall constitute a present representation by: (i) Borrower that there
has been no material adverse change in its financial condition or the financial
condition of any parent company that has not been disclosed in writing to
Lender's Agent since the date of the most recent statement furnished to Lender's
Agent pursuant to Section 7.1; and (ii) Lender's Agent that it knows of no
material adverse change in the financial condition of any Lender that the
Borrower is not aware of.
7. Covenants.
7.1 To the extent that Lender's Agent has provided Borrower with written
statements identifying any of the Lenders as employee benefit plans subject to
Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA"), each
request by Borrower for a Loan shall constitute a present representation that,
except as disclosed in writing by Borrower to Lender's Agent, neither borrower
nor any Affiliate of Borrower is a "fiduciary" (within the meaning of Section
3(21) of ERISA) with respect to the assets of the Lender so identified that may
be Borrowed Securities hereunder. Borrower hereby makes the following covenants:
Upon execution of this Agreement, Borrower shall furnish to Lender's Agent (i)
the most recent available audited statement of Borrower's financial condition,
and (ii) the most recent available unaudited statement of Borrower's financial
condition. As long as any Loan is outstanding under this Agreement, Borrower
will promptly deliver to Lender's Agent all such financial information that is
subsequently available, and any other financial information or statements that
Lender's Agent may reasonably request.
7.2 Lender's Agent hereby makes the following covenants. Subject to
confidentiality restrictions, if any, Lender's Agent shall furnish to Borrower,
upon request, any of the following statements received from each Lender,
promptly upon such receipt (i) the most recent available audited statement of
such Lender's financial condition, and (ii) the most recent available unaudited
statement of such Lender's financial condition. As long as any Loan is
outstanding under this Agreement, Lender's Agent will promptly deliver to
Borrower, upon request, all such financial information that is subsequently
delivered to Lender's Agent and any other financial information or statements
pertaining to a Lender and received by Lender's Agent that Borrower may
reasonably request.
7.3 Lender's Agent and Borrower hereby covenant and agree for the benefit
of the Lenders that they each have adopted and implemented procedural safeguards
to help ensure that all actions taken by Lender's Agent hereunder will be
effected by individuals other than, and not under the supervision of,
individuals who are acting in a capacity as Borrower hereunder, and that all
transactions effected hereunder will take place at the same fully negotiated
"arms length" prices offered to similarly situated third parties by Lender's
Agent when it acts as lending agent for the various participants in its
securities lending program, notwithstanding the inherent conflict of interest
with respect to Loans to be effected by Lender's Agent to Borrower.
7.4 The Borrower covenants that it shall ensure that this Agreement and
all instruments of transfer of any Securities provided or returned pursuant to
the terms of this Agreement have been duly stamped in accordance with all
applicable legislation.
7.5 The Borrower covenants that at all times it shall ensure compliance
with those provisions of applicable law concerning the taxation of securities
lending arrangements so that Lender does not incur any unnecessary tax or
capital gains tax (other than income tax in respect of fees payable under this
Agreement) arising out of the provision of Borrowed Securities to the Borrower
and the return to Lender's Agent of Borrowed Securities.
8. Termination of Loan without Default.
8.1 Borrower may cause the termination of a Loan at any time by returning
the Borrowed Securities to Lender's Agent.
8.2 Lender's Agent may cause the termination of a Loan by giving notice of
termination of such Loan to Borrower, prior to the close of business on any
Business Day. Upon such notice, Borrower shall deliver the applicable Borrowed
Securities to Lender's Agent (i) in the event U.S. Securities are loaned, no
later than the close of business on the next Business Day; or (ii) in the event
Securities other than U.S. Securities are loaned, no later than the earlier of
(a) the end of the customary delivery period for such Securities or (b) the
third Business Day following the day on which Lender gives notice of termination
of such Loan Borrower.
8.3 Borrower's delivery of the Borrowed Securities to Lender's Agent
pursuant to Section 8.1 or 8.2 shall be made by causing Lender's Agent to credit
the Account of the Relevant Lender with the Borrowed Securities, by causing the
Borrowed Securities to be credited to the Account of the Relevant Lender at the
applicable Clearing Organization, or, if Lender's Agent consents, by physical
delivery to Lender of certificates representing the Borrowed Securities. Upon
such delivery by or on behalf of Borrower, Lender's Agent shall concurrently
therewith deliver the Collateral (as adjusted pursuant to Section 4) to
Borrower; provided, however, that if upon the return of the Borrowed Securities
there is not sufficient time for Lender's Agent to effect a return of the
Collateral to Borrower's Account, Lender's Agent may return such Collateral on
the next Business Day such return can be so effected.
9. Events of Default.
With respect to each Loan, the following shall constitute defaults
hereunder (individually, a "Default")
(a) if Lender's Agent or Borrower fails to return the relevant Borrowed
Securities or Collateral as required by Section 8 hereof;
(b) if Lender's Agent or Borrower fails to deliver or return the relevant
Collateral, as required by Section 4 hereof;
(c) if Lender's Agent or Borrower fails to make the payment of
distributions with respect to such Loan as required by Section 2.3 and 3.5
hereof and such default is not cured within one Business Day of notice of such
failure to Borrower or Lender's Agent, as the case may be;
(d) if any party fails to make any payment with respect to such Loan due
hereunder;
(e) if any party, or any parent company of Borrower, or the Relevant
Lender makes a general assignment for the benefit of creditors, or admits in
writing its inability to pay its debts as they become due, or files or becomes
subject to a petition in bankruptcy or is adjudicated as bankrupt or insolvent,
or files or becomes subject to a petition seeking reorganization, liquidation,
dissolution, or similar relief under any present or future law or regulation, or
seeks, consents to or acquiesces in the appointment of any trustee, receiver, or
liquidator of it or any material part of its properties;
(f) if Borrower or the Relevant Lender has its license, charter, or other
authorization necessary to conduct a material portion of its business withdrawn,
suspended or revoked by any applicable federal or state government or agency
thereof;
(g) if it is found that Borrower or the Relevant Lender has made a
material misrepresentation of its financial condition;
(h) if Borrower breaches any covenants, representations, or agreements
herein;
(i) if a final judgment for the payment of money shall be rendered against
Borrower and such judgment shall not have been discharged or its execution
stayed pending appeal within sixty (60) days of entry or such judgment shall not
have been discharged within sixty (60) days of expiration of any such stay.
10. Lender's Remedies on Borrower's Default.
10.1 In the event of any Default by Borrower under Section 9 hereof with
respect to a Loan, Lender's Agent, on behalf of the Relevant Lender, shall have
the right, in addition to any other remedies provided herein or under applicable
law, to terminate all Loans of such Relevant Lender, effective immediately upon
receipt of notice to that effect by Borrower, and at the option of Lender's
Agent (without further notice to Borrower) with respect to any or each such
Loan, either (a) to purchase a like amount of the Borrowed Securities in any
market for such securities or (b) to elect to treat the Borrowed Securities as
having been purchased by Borrower at a purchase price equal to the Replacement
Value. Lender's Agent may apply the relevant Collateral to the payment of such
purchase, after deducting therefrom all amounts, if any, due the Relevant
Lender, or Lender's Agent on its behalf, from Borrower under this Agreement. In
such event, Borrower's obligation to return the applicable Borrowed Securities
shall terminate. Borrower shall be liable to Lender's Agent, on behalf of the
Relevant Lender, for the cost of funds which Lender's Agent, on behalf of the
Relevant Lender, must advance to purchase such securities during any stay on the
application of the Collateral (whether such stay is automatic or imposed by a
court or any other governmental agency). In the event such purchase price or
Replacement Value exceeds the amount of the Collateral, Borrower shall be liable
to Lender's Agent, on behalf of the Relevant Lender, for the amount of such
excess (plus all amounts, if any, due by Borrower to the Lender's Agent, on
behalf of the Relevant Lender, hereunder) together with interest on all such
amounts at the Prime Rate, as it fluctuates from day to day, on demand from the
date of such purchase or election until the date of payment of such excess. Each
Lender shall have, as security for Borrower's obligation to such Lender to pay
such excess, a first security interest in or right of setoff against any
property of Borrower then held by such Lender and any other amount payable by
such Lender to Borrower. The purchase price of securities purchased under this
Section 10 shall include broker's fees and commissions and all other reasonable
costs, fees, and expenses related to such purchase. Lender's Agent shall
allocate among the Lenders and their respective Loans, in accordance with any
reasonable allocation method selected by Lender's Agent, the funds received,
Collateral realized upon and the costs of collection, including without
limitation, the cost of purchase of replacement securities. Upon the
satisfaction of all of Borrower's obligations to Lender's Agent, on behalf of
the Relevant Lender hereunder, any remaining Collateral held by Lender's Agent
on behalf of the Relevant Lender shall be returned to Borrower.
11. Borrower's Remedies on or Lender's Agent Default.
11.1 With respect to each Loan, in the event of any Default by the
Relevant Lender, or by Lender's Agent by reason of the Relevant Lender's failure
to perform its obligations under the terms of its Securities Lending
Authorization Agreement, Borrower shall have the right to sell an amount of the
Borrowed Securities applicable to the Loans from the Relevant Lender, in the
principal market for such securities, that will provide proceeds equal in value
to the Market Value of the Collateral on the date of Default. In such event,
Borrower may retain the proceeds of such sale and the obligation of Lender's
Agent to return the Collateral applicable to the Loans from the Relevant Lender
shall terminate. In the event the sale price received from such securities is
less than the value of the Collateral, Lender's Agent shall be liable to
Borrower (but only if and to the extent of the funds received from the Relevant
Lender under its Securities Lending Authorization Agreement) for the amount of
any deficiency (plus all amounts, if any, due to Borrower hereunder). Upon the
satisfaction of all of the obligations of Lender's Agent thereunder, any
remaining Borrowed Securities applicable to the Loans from the Relevant Lender
shall be returned to Lender's Agent.
12. Definitions.
For the purposes hereof:
12.1 "Account of the Relevant Lender" shall mean, with respect to each
Relevant Lender, either: (i) such Relevant Lender's sub-account reflected on the
books and records of Lender's Agent within the 3E Special Account of Lender's
Agent held in the Federal Reserve Book-Entry System; or (ii) an account
designated on the books and records of State Street Bank and Trust Company as
representing cash Collateral held by Lender's Agent as custodian on the Relevant
Lender's behalf.
12.2 "Affiliate" means (i) any person directly or indirectly, through one
or more intermediaries, controlling, controlled by, or under common control with
another person; (ii) any officer, director, or partner, or employee of such
other person; and (iii) any corporation or partnership of which such other
person is an officer, director or partner. For purposes of this definition the
term "control" means the power to exercise a controlling influence over the
management or policies of a person other than an individual.
12.3 "Available Securities" shall mean the securities available to be
loaned hereunder, as described in Section 1 hereof.
12.4 "Borrowed Security" shall mean any "security" (as defined in the
Exchange Act) which is either: (i) a U.S. Security, and is delivered as a Loan
hereunder, until such security is credited through the Federal Reserve
book-entry system, to the Lender's account at the Federal Reserve Bank of Boston
or until the security is replaced by purchase. For purposes of the return of
Borrowed Securities by Borrower pursuant to Section 8 or the purchase of
securities pursuant to Section 10, such term shall include securities of the
same issuer, class, and quantity as the Borrowed Securities; or (ii) not a U.S.
Security and which is delivered as a Loan hereunder, until the Clearing
Organization credits the Lender's accounts or the certificate for such security
is delivered or otherwise accepted back hereunder or until the security is
replaced by purchase, except that, if any new or different security shall be
exchanged for any Borrowed Security by recapitalization, merger, consolidation
or other corporate action, such new or different security shall, effective upon
such exchange, be deemed to become a Borrowed Security in substitution for the
former Borrowed Security for which such exchange was made. For purposes of the
return of Borrowed Securities by Borrower pursuant to Section 8 or the purchase
of securities pursuant to Sections 10 or 11 hereunder, such term shall include
securities of the same issuer, class and quantity as the Borrowed Securities, as
adjusted pursuant to the preceding sentence.
12.5 "Borrower's Account" shall mean the 3A Investment Account of State
Street Bank and Trust Company held through the Federal Reserve Book-Entry
System.
12.6 "Business Day" shall mean any day recognized as a settlement day by
the Federal Reserve Bank of Boston and on which Lender's Agent is open for
business to the public.
12.7 "Clearing Organization" means any clearing agency for the transfer of
securities, the use of which is agreed to by the parties.
12.8 "Collateral" shall mean, with respect to each Loan whether now owned
or hereafter acquired, (a) that collateral delivered to Lender's Agent pursuant
to Section 3 or 4, and (b) all accounts in which such collateral is deposited
and all securities and the like in which all cash collateral is invested or
reinvested.
12.9 "Default" shall have the meaning set forth in Section 9 hereof.
12.10 "Loan" shall mean a single transaction for the loan of securities
hereunder by Lender's Agent to Borrower on behalf of a designated Relevant
Lender.
12.11 "Loaned Securities" shall mean securities subject to a Loan.
12.12 "Margin Percentage" shall mean one hundred and two percent (102%) in
respect of U.S. Securities or Sovereign Debt, one hundred and five percent
(105%) in respect of all other Securities or such other percentage as is agreed
to by the Lender's Agent and Borrower pursuant to Section 1.1.
12.13 "Market Value" of a security shall mean the fair market value of
such security (including, in the case of any Borrowed Security that is a debt
security, the accrued interest on such security) as determined by the
independent pricing service designated by Lender's Agent, or by such other
independent sources as may be selected on a reasonable basis by Lender's Agent.
"Market Value" of cash shall mean the notional amount thereof.
12.14 "Prime Rate" shall mean the prime rate as quoted in The Wall Street
Journal, New York Edition, for the business day preceding the date on which such
determination is made. If more than one rate is so quoted, the Prime Rate shall
be the average of the rates so quoted.
12.15 "Relevant Lender" shall mean, with respect to each Loan, the Lender
to whom such Loan is allocated as shown on the books of Lender's Agent
maintained pursuant to Section 1.4 hereof.
12.16 "Replacement Value" shall mean the price, including any brokerage or
other expenses and accrued interest, at which a like amount of securities
identical to the Borrowed Securities could be purchased in the principal market
for such securities at the time of the election of Lender's Agent under Section
10.1 hereof.
12.17 "Security" means any security (as defined in the Exchange Act) which
is delivered for Loan hereunder.
12.18 "State Street" shall mean State Street Bank and Trust Company.
12.19 "U.S. Security" means a security issued or guaranteed by the United
States government or any of its agencies.
13. Indemnification.
Borrower hereby agrees to indemnify and hold harmless each Lender and
Lender's Agent from any and all damages, losses, costs, and expenses (including
attorney's fees) that such Lender or Lender's Agent may incur or suffer due to
the failure of the Borrower to perform its obligations under this Agreement.
This right to indemnification shall survive the termination of any Loan or of
this Agreement.
14. Waivers, General.
The failure of either party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term of
any other term of this Agreement. All waivers in respect of a Default must be in
writing.
15. Standard of Care.
Subject to the requirements of applicable law, Lender's Agent shall not be
liable with respect to any losses incurred by Borrower in connection with this
Agreement except to the extent that such losses result from the negligence of
Lender's Agent in the performance of its duties hereunder.
16. Continuing Agreement; Termination; Remedies.
It is the intention of the parties hereto that, subject to the termination
provisions set forth herein, this Agreement shall constitute a continuing
agreement in every respect and shall apply to each and every Loan, whether now
existing or hereafter made by Lender's Agent to Borrower. Lender's Agent and
Borrower may each at any time terminate this Agreement upon five (5) days'
written notice to the other parties to that effect. The sole effect of any such
termination of this Agreement will be that, following such termination, no
further Loans by Lender's Agent shall be made or considered made hereunder, but
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.
17. Notices.
Except as otherwise specifically provided herein, notices under this
Agreement may be made orally, in writing, or by any other means mutually
acceptable to the parties. If in writing, a notice shall be sufficient if
delivered to the party entitled to receive such notices at the following
addresses:
If to Lender's Agent:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Securities Lending Department
If to Borrower:
State Street Bank and Trust Company
Financial Markets Group
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Money Markets Area
or to such other addresses as either party may furnish the other party by
written notice under this section.
Telephone and facsimile notices shall be sufficient if communicated to the
party entitled to receive such notice at the following numbers:
If to Lender's Agent:
Telephone (6l7) 000-0000 Facsimile (6l7) 664-2660
If to Borrower:
Telephone: 000-0000 Facsimile 654-4270
18. Time.
All times specified herein shall be based on Boston time.
19. Securities Contracts.
Each party hereto agrees that this Agreement and the Loans made hereunder
shall be a "qualified financial contracts" for purposes of Section 11 (e)(8) of
the Federal Deposit Insurance Act, as amended, and any receivership or
conservationship proceeding thereunder.
20. Declaration of Trust.
Lender's Agent hereby covenants and agrees that with respect to any
Collateral delivered to Lender's Agent by Borrower hereunder, Lender's Agent
shall hold such Collateral, or, in the case of cash Collateral, shall hold any
securities or units representing the investment of such cash Collateral,
separate and apart from Lender's Agent's assets and Lender's Agent hereby
further declares that it holds such Collateral or such securities or units, as
the case may be, in trust for the benefit of the Relevant Lender.
21. Miscellaneous.
With respect to loans of Securities to Borrower by Lender's Agent on
behalf of Lenders, this Agreement supersedes any other agreement between the
parties. This Agreement shall not be assigned by any party without the prior
written consent of the other parties. 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. 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.
22. Modification.
This Agreement shall not be modified, except by an instrument in writing
signed by the party against whom enforcement is sought.
BORROWER: STATE STREET BANK AND TRUST COMPANY
Officer: XXXXXX X.XXXXXX
----------------------------------------
Title: Superintendant and
General Manager, London Branch
----------------------------------------
Signature: /s/ XXXXXX X.XXXXXX
----------------------------------------
LENDER'S AGENT: STATE STREET BANK AND TRUST COMPANY
Officer: XXXXXXX X. XXXXXX
----------------------------------------
Title: SUPERINTENDANT
----------------------------------------
Signature: /s/ XXXXXXX X. XXXXXX
----------------------------------------
FIRST AMENDMENT TO THE SECURITIES
LOAN AGREEMENT
BETWEEN STATE STREET BANK AND TRUST COMPANY ACTING THRUGH ITS
SECURITIES LENDING DIVISION
AND
STATE STREET BANK AND TRUST COMPANY ACTING THROUGH
THE MONEY MARKET DIVISION OF THE FINANCIAL MARKETS GROUP
WHEREAS, State Street Bank and Trust Company, a Massachusetts trust
company, acting through its Securities Lending Division, in its capacity as
trustee, agent or custodian for certain securities of its clients (in such
capacity , "Lender's Agent') and State Street Bank and Trust Company, a
Massachusetts trust company, acting through the Money Market Division of
Financial Markets Group ("Borrower'), entered into a Securities Loan Agreement
dated 15 December, 19997, setting for the terms and conditions under which one
or more clients of Lender's Agent (each a "Lender") from time to time, may lend
to Borrow Securities against the receipt of collateral (the "Agreement");
WHEREAS, Section 22 of the Agreement provides that the Agreement shall not
be modified except by a writing signed by the party against whom enforcement is
sought; and
WHEREAS, the Borrower and State Street both desire to amend the Agreement
to provide for certain additional terms and conditions with respect to the
borrowing of Australian Government and Semi-Government Securities.
NOW, THEREFOR, for value received and in order to induce the parties to
enter into the amendment contemplated hereby, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties mutually agree to amend the Agreement in the following respect:
1. Section 8.3 is hereby amended by adding the following at the end of said
section:
"if a Loan shall have been terminated sooner by the Lender or
Borrower, Borrower shall be obligated to terminate the Loan within
six(6) months."
2. Section 2 is hereby amended by adding the following to said section:
"Notwithstanding anything to the contrary to the Agreement,
including, without limitation, this Section 2, title to the Borrowed
Securities and Collateral shall pass through from one party to the
other. Lender and the Borrower shall execute and deliver all
necessary instructions to procure that all right, title and interest
in:
(a) any Borrowed Securities pursuant to the term of the Agreement;
and
(b) any Collateral delivered pursuant to the terms of the Agreement;
shall pass from one party to the other subject to the terms and
conditions mentioned herein and on return of the same in accordance
with the Agreement, free from all liens, charges and encumbrances.
Until a Loan is terminated in accordance with the Agreement and
subject to the terms of the Agreement, the Borrower shall have all
the incidents of ownership of the Borrowed Securities and Lender
shall have all incidents of the Collateral, including the right to
transfer the same to others upon an event of Default."
3. Section 3 is hereby amended by adding the following as Section 3.7:
"Notwithstanding anything to the contrary to the Agreement,
including, without limitation, this Section 2, title to the Borrowed
Securities and Collateral shall pass through from one party to the
other. Lender and the Borrower shall execute and deliver all
necessary instructions to procure that all right, title and interest
in:
(a) any Borrowed Securities pursuant to the term of the Agreement;
and
(b) any Collateral delivered pursuant to the terms of the Agreement;
shall pass from one party to the other subject to the terms and
conditions mentioned herein and on return of the same in accordance
with the Agreement, free from all liens, charges and encumbrances.
Until a Loan is terminated in accordance with the Agreement and
subject to the terms of the Agreement, the Borrower shall have all
the incidents of ownership of the Borrowed Securities and Lender
shall have all incidents of the Collateral, including the right to
transfer the same to others upon an event of Default."
4. The Agreement shall remain in effect in all other respects.
Dated the 18th day of May, 1998
IN WITNESS WHEREOF, the parties hereto agree to the execution of the above
Amendment by affixing their signatures below.
BORROWER: STATE STREET BANK AND
TRUST COMPANY
Name: /s/ XXXXXXX X. XXXXXXX
----------------------------
By: XXXXXXX X. XXXXXXX
----------------------------
Its: Executive Vice President
----------------------------
LENDER'S AGENT: STATE STREET BANK
AND TRUST COMPANY
Name: /s/ Xxxxxx X. X'Xxxxx
----------------------------
By: Xxxxxx X. X'Xxxxx
----------------------------
Its: Senior Vice President
----------------------------
