Interfund Lending Program Sample Clauses
The Interfund Lending Program clause authorizes the temporary transfer of funds between different investment funds managed by the same advisor. In practice, this allows one fund experiencing a short-term cash shortfall to borrow from another fund with excess liquidity, typically at market-based interest rates and under strict regulatory guidelines. The core function of this clause is to enhance liquidity management across funds, ensuring that each fund can meet its obligations without the need to sell portfolio assets at inopportune times, thereby protecting investor interests and maintaining operational stability.
Interfund Lending Program. The Funds have received an exemptive order effective December 15, 2011 pursuant to certain sections of the 1940 Act, permitting loans (“Interfund Loans”) from any one of the Funds or portfolios thereof (the “Portfolios”) to any other of the Funds or Portfolios (the “Interfund Lending Program”) as set forth in Investment Company Act Release 29865, File No. 812-13621 (Notice) and Investment Company Act Release No. 29885, File 812-13621 (the “Exemptive Order”). Each Fund, with respect to itself or certain of its Portfolios, has entered into an interfund lending facility, dated as of March 26, 2012, (the “Credit Facility”), so that each Fund, on behalf of itself or its Portfolios, may (i) borrow funds from time to time for temporary purposes (a Fund acting in such capacity, a “Borrower”) and (ii) loan funds from time to time to any such Borrower in accordance with the terms of the Credit Facility (a Fund acting in such capacity, a “Lender”). Under the terms of the Exemptive Order, a Borrower may only borrow on an unsecured basis through the Credit Facility if there is no secured loan outstanding from any other lender and as such require certain modifications of its custodial lien, as otherwise described in this Section 14 above, in order to facilitate unsecured Interfund Loans. As such, the parties agree that upon Custodian’s receipt of written notice from a Borrower that the Borrower intends to borrow on an unsecured basis from a Lender in accordance with the terms of the Interfund Lending Program, Custodian shall subordinate to the Lender its first priority security interest in the Borrower’s assets for one business day, measured from the Borrower’s receipt of the Interfund Loan, unless (i) the terms of such Interfund Loan violate the terms of the Exemptive Order or (ii) shareholder redemptions during the pendency of such Interfund Loan exceed 10% of the Borrower’s net assets, in which event Custodian’s first priority security interest in the Fund’s assets shall be automatically reinstated with no further action by Custodian. For the avoidance of doubt, the foregoing waiver shall not apply to Interfund Loans made on a secured basis. For the avoidance of doubt, (i) as used in this Section 14(c), "shareholder redemptions" shall mean the actual payment of shareholder redemptions (and not merely the receipt or pendency of shareholder requests for redemption), (ii) each such waiver shall be automatic and not require the execution and delivery of any instrument or...