Ex. H.7.
SECURITIES LENDING MANAGEMENT AGREEMENT
(Mutual Fund Lenders)
SECURITIES LENDING MANAGEMENT AGREEMENT (this "Agreement"), dated as of
March 1, 2005, by and between each of the entities listed on Annex B (each a
"Lender") and Credit Suisse First Boston, New York Branch ("Manager").
IN CONSIDERATION OF the mutual representations, warranties and covenants
made herein, the parties hereto hereby agree as follows:
1. DEFINITIONS. Terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A.
2. APPOINTMENT AND AUTHORIZATION.
(a) Appointment.
(i) Lender hereby appoints Manager as Lender's agent for the purpose
of providing, and hereby authorizes Manager to provide, the securities
lending management services set forth in this Agreement (the "Securities
Lending Management Services"), and Manager hereby accepts such appointment
subject to the terms and conditions of this Agreement.
(ii) Lender hereby authorizes Manager to engage in such acts as
Manager deems necessary or desirable for the performance of the Securities
Lending Management Services and Lender hereby appoints Manager as Lender's
attorney-in-fact to execute any documents or instruments deemed by Manager
to be necessary or desirable to effect the same (including, without
limitation, any applicable Related Agreements). Lender agrees to be bound
by each such Related Agreement as if the same were executed and delivered
directly by Lender. Upon Lender's request, Manager shall make available to
Lender copies of all such agreements then in effect.
(b) Acknowledgements. Lender hereby acknowledges that it has been fully
informed with respect to, consents to, and makes such appointment
notwithstanding the following facts and circumstances, which may give rise to a
conflict of the interests of Manager with those of Lender: (i) Manager or its
affiliates may from time to time act on behalf of (including in a fiduciary
capacity), or engage in transactions other than Loans with, Approved Borrowers;
(ii) Manager or its affiliates acts as agent for other lenders of securities and
in such capacity may make loans and investments and reinvestments of cash
collateral for such loans and proceeds thereof, which may from time to time
preclude Manager from making Loans or Cash Collateral Investments for, or be on
terms more favorable than those afforded to, Lender; (iii) Manager or its
affiliates may from time to time act as borrower or counterparty with respect to
Loans and Cash Collateral Investments; (iv) Manager or its affiliates may act as
broker, dealer or investment advisor with respect to such Cash Collateral
Investments; (v) Manager may select and utilize any broker, dealer or agent,
including affiliates of Manager, to effect Cash Collateral Investments; and (vi)
Manager may use any recognized pricing information service in order to perform
its valuation responsibilities with respect to Loaned Securities and Loan
Collateral; provided, however, that, with respect to Loaned Securities
consisting of mortgage-backed securities, Manager may use its internal pricing
sources (including its affiliates) to perform such valuation responsibilities.
3. SECURITIES LENDING MANAGEMENT SERVICES.
(a) Operating Guidelines. Manager, Lender and Custodian shall operate in
accordance with the Operating Guidelines, as agreed.
1
(b) Securities Borrowing Agreements. Manager may from time to time in its
sole discretion enter into Securities Borrowing Agreements. Subject to the terms
and conditions of this Agreement, Manager agrees, as Lender's agent, to exercise
Lender's rights and remedies under Securities Borrowing Agreements, including,
without limitation: (x) marking Loans to the market; and (y) collecting all Loan
Collateral, all interest and other distributions payable by Approved Borrowers
in respect of Loaned Securities and any Loan Fees and causing the same to be
deposited in the Collateral Account or otherwise credited to Lender, as
applicable. Manager shall delete any Approved Borrower from the list of Approved
Borrowers upon receipt of Written Instructions to do so.
(c) Loans.
(i) Manager may from time to time negotiate and make Loans for and on
behalf of Lender on such terms as Manager determines are commercially
reasonable and are set forth herein and in the Securities Borrowing
Agreement. All Loans will be made in accordance with the Investment Company
Act of 1940, as amended, and the regulations thereunder. Loans shall be
subject to oversight by Lender or Lender's investment manager. Lender shall
be bound by the terms of each such Loan as if the same were negotiated and
made with the Approved Borrower party thereto directly by Lender on its own
behalf. Loans shall generally be terminable on demand in accordance with
the terms of the Securities Borrowing Agreement. With the prior consent of
Lender, however, Loans may be made on the basis of a reasonably anticipated
termination date ("Term Loan"). Manager may terminate any Loan with an
Approved Borrower in its reasonable discretion upon obtaining consent from
Lender. Notwithstanding the foregoing, Manager shall terminate any such
Loan other than a Term Loan, without obtaining consent from Lender, as soon
as practicable: (A) after receipt by Manager of a notice of termination of
such Loan from such Approved Borrower; (B) after receipt by Manager of
Written Instructions to do so; (C) after receipt by Manager of Written
Instructions requesting the deletion of such Approved Borrower from the
list of Approved Borrowers; and (D) upon the termination of this Agreement.
Manager shall equitably allocate securities loans (including Loans) made by
it as agent among all lenders for which it acts as agent, and the making of
a loan for a lender other than Lender shall not give rise to any obligation
on the part of Manager to allocate any portion of such loan to Lender or to
make any Loan on behalf of Lender.
(ii) Lender acknowledges and agrees that Lender shall have no voting
rights and may not participate in any dividend reinvestment plans with
respect to Loaned Securities. It is further acknowledged and agreed that
(x) Lender shall be responsible for notifying Manager of any return of
Loaned Securities required to enable Lender to exercise any voting rights,
participate in any rights offering, warrant or option transaction, or take
any other similar action in respect of such Loaned Securities, (y) Manager
shall have no obligation to determine when and whether the return of Loaned
Securities is required for such purposes and, absent such notice from
Lender given on a timely basis, Manager shall have no obligation to make
Loaned Securities available to Lender for any such purposes, and (z) upon
receipt of such timely notice from Lender, Manager shall use its best
efforts to cause the return of Loaned Securities to Lender. Manager shall
cause to be credited to Lender the amount of all cash dividends and other
cash distributions received from the applicable Approved Borrower on Loaned
Securities that are out on Loan on the record date therefor that Lender
would have received had the same not been then out on Loan; Manager shall
have no obligation to credit such amounts to Lender unless and until
Manager receives such cash dividends or cash distributions, but Manager
shall use its best efforts to collect payment of such amounts. All non-cash
dividends or distributions, if any, on Loaned Securities shall be deemed to
be Loaned Securities. Manager shall maintain records of all dividends and
distributions paid to Lender and make such records available to Lender upon
request.
(iii) Manager and Lender agree that the Market Value of Loaned
Securities of Lender shall not exceed either (i) 50% of the sum of the
market value of all securities of Lender and the Market Value of Loan
Collateral of Lender or (ii) 33.33% of the market value of all securities
of Lender; provided, however, that if on any day the Market Value of Loaned
Securities of Lender exceeds the maximum percentage, Manager shall reduce
the Loaned Securities of Lender by the amount of such excess no later than
the close of business on the following business day. Lender shall notify
Manager in writing of any applicable restrictions or limitations regarding
any Loanable Securities including, without limitation, the amount of
2
Loanable Securities that may be out on Loan at any time, the type of
permissible collateral and restrictions or prohibitions, if any, as to the
identity of, and credit exposure limits for, any Approved Borrower.
(iv) It is understood and agreed that (A) the identity of Lender may
be disclosed by Manager to an Approved Borrower under a Loan at any time on
and after the making of the Loan, (B) all Loans will be transacted by
Manager for Lender on a fully disclosed agency basis and (C) Lender shall
provide to Manager Lender's financial statements and such other information
as Manager may request.
(d) Collateral. At the making of each Loan, Manager shall require the
deposit in the Collateral Account by the applicable Approved Borrower of Loan
Collateral in an amount at least equal to the Required Margin Level (the
"Required Margin Level") set forth on Schedule III hereto. Manager shall xxxx to
market all Loans on a daily basis in accordance with Manager's customs and
practices. Lender acknowledges and agrees that Manager may determine not to
require the deposit of any additional Loan Collateral if the amount thereof is,
in the sole judgment of Manager, not material in relation to the Market Value of
the related Loaned Securities, but at no time shall the Loan Collateral be less
than 100% of the Market Value of the Loaned Securities. Lender acknowledges and
agrees that it shall be obligated to pay, or cause to be paid, a Rebate to
Approved Borrowers with respect to Cash Collateral. Manager shall have the right
to hold back delivery of related Loan Collateral to the Approved Borrower upon
termination of a Loan in an amount at least equal to the declared but unpaid
distributions or any other sum due and owing at the time until such
distributions or sum are paid in full.
(e) Cash Collateral Investments.
(i) Manager shall, for and on behalf of Lender, invest and reinvest in
Approved Investments all or substantially all of the Cash Collateral and
proceeds of Cash Collateral Investments held from time to time in the
Collateral Account and, in connection therewith, may buy, sell, liquidate,
or offset any Cash Collateral Investments. Lender acknowledges and agrees
that Cash Collateral may be invested and reinvested on a commingled basis
with cash that collateralizes securities loans made by Manager as agent for
principals other than Lender, provided that, in each such case, (A)
Manager's records shall reflect the portion of any commingled investments
that are allocable as collateral for the obligations owing to Lender in
respect of the Loans and (B) Manager and Lender shall comply with the
conditions set forth in The Chase Manhattan Bank (July 24, 2001) no-action
letter.
(ii) Lender acknowledges and agrees that any income or gains and
losses from investing and reinvesting any Cash Collateral delivered by an
Approved Borrower pursuant to the applicable Securities Borrowing Agreement
shall be at Lender's risk and for Lender's account, and Lender agrees that
to the extent any such losses reduce the amount of Cash Collateral required
to be returned to an Approved Borrower upon the termination of any Loan
made on Lender's behalf (after giving effect to any Rebate), Lender shall,
on demand by Manager and in immediately available funds, deposit in the
Collateral Account an amount equal to such losses. Manager is hereby
authorized and instructed, and Manager agrees, to effect any required
liquidation of Approved Investments to satisfy Lender's obligation to
return Cash Collateral pursuant to a xxxx to market or upon termination of
any Loan.
(f) Recordkeeping and Reports. Manager shall establish and maintain records
reasonably necessary to account for all Loans, Program Income and Manager's
Fees, and shall provide to Lender a report thereof on a monthly basis for the
preceding month, all in accordance with Manager's customs and practices as in
effect from time to time.
(g) Exercise of Remedies. Manager shall, in its sole judgment and
discretion, determine whether there has been a Borrower Event of Default and
exercise on behalf of Lender (and Manager, if applicable) its or their remedies
against an Approved Borrower upon the occurrence of a Borrower Event of Default.
Manager shall be under no obligation or duty to exercise on behalf of Lender or
Manager any specific remedy available to Lender or Manager under a Securities
Borrowing Agreement.
3
4. MANAGER'S COMPENSATION. For the performance of its obligations under
this Agreement, Lender shall pay to Manager monthly in arrears the fee (the
"Manager's Fee") set forth on Schedule III hereto.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Representations and Warranties of Manager. Manager represents and
warrants to Lender that:
(i) This Agreement and each other Related Agreement have been duly
authorized by it and this Agreement and each other Related Agreement are
the legal, valid and binding obligations of Manager, enforceable against
Manager in accordance with their terms.
(ii) Neither this Agreement nor any other Related Agreement to which
Manager is a party, upon its execution and delivery, does or will violate
any statute, regulation, rule, order or judgment binding on Manager or any
provision of any of Manager's organizational documents, or any agreement
binding on Manager or affecting Manager's property.
(iii) The persons executing this Agreement and all other Related
Agreements to which Manager is a party have and will be duly and properly
authorized to do so.
(iv) Each representation and warranty made by Manager in the Related
Agreements is true, correct and complete on the date hereof and will be
true, correct and complete on the date each Loan is made and continually
throughout the term of this Agreement and each other Related Agreement.
(b) Representations and Warranties of Lender. Lender represents and
warrants to Manager that:
(i) Lender has the power and authority to enter into this Agreement
and each other Related Agreement to which it is a party. Each of this
Agreement and the other Related Agreements to which Lender is a party has
been duly authorized by Lender and, upon the execution and delivery hereof
and thereof by Lender or Manager, as Lender's agent is and will be the
legal, valid and binding obligation of Lender, enforceable against Lender
in accordance with its terms.
(ii) Lender has, or will have at the time of transfer of any Loanable
Security, the right to transfer such Loanable Security subject to the terms
and conditions hereof, and such Loanable Securities, at the time of each
Loan, will be free and clear of any liens, encumbrances or other adverse
claims.
(iii) Neither this Agreement nor any other Related Agreement to which
Lender is a party, upon its execution and delivery, does or will violate
any statute, regulation, rule, order or judgment binding on Lender or any
provision of any of Lender's organizational documents, or any agreement
binding on Lender or affecting Lender's property.
(iv) The person executing this Agreement and all other Related
Agreements to which Lender is a party and all Authorized Persons acting on
behalf of Lender, have and will be duly and properly authorized to do so.
(v) Lender has not relied on Manager for any tax, accounting,
regulatory, legal, financial or investment advice concerning this
Agreement, any Related Agreement or any Loans or Cash Collateral
Investments and has made its own determination as to the tax, accounting,
regulatory, legal and financial treatment of this Agreement, any Related
Agreement and all Loans and Cash Collateral Investments and any dividends,
distributions or other funds received hereunder or under any Securities
Borrowing Agreement.
(vi) Each representation and warranty made by Lender in the Related
Agreements is true, correct and complete on the date hereof and will be
true, correct and complete on the date each Loan is made and continually
throughout the term of this Agreement and each other Related Agreement.
4
(vii) None of the Loanable Securities are assets of an "employee
benefit plan" as defined in the Employee Retirement Income Security Act of
1974, as amended.
(c) Continued Effectiveness of Representations and Warranties. All of the
representations and warranties of Manager and Lender made in this Section 5
shall be deemed to be continuing and reaffirmed at the time of the making of
each Loan and at all times such Loan is outstanding.
6. BORROWER DEFAULT; GUARANTY BY MANAGER.
(a) If an Approved Borrower fails to return any Loaned Securities when due
in accordance with the terms of the applicable Securities Borrowing Agreement
(the "Return Date") due to (i) a Default (as such term is defined in the
applicable Securities Borrowing Agreement) of the Approved Borrower as set forth
in Section 11.5 (if the applicable Securities Borrowing Agreement is the 1993
version of the Bond Market Association's Master Securities Loan Agreement) or
Section 12.5 (if the applicable Securities Borrowing Agreement is the 2000
version of the Bond Market Association's Master Securities Loan Agreement) of
the applicable Securities Borrowing Agreement, or (ii) an Event of Default (as
such term is defined in the applicable Securities Borrowing Agreement) of the
Approved Borrower as set forth in Clause 12(D) (if the applicable Securities
Borrowing Agreement is the 1995 version of the International Securities Lending
Association's Overseas Securities Lender's Agreement) or Paragraph 14.1 (if the
applicable Securities Borrowing Agreement is the 2000 version of the
International Securities Lending Association's Global Master Securities Lending
Agreement) of the applicable Securities Borrowing Agreement, then Manager shall
pay to Lender any shortfall amount if the Collateral Value related to such
Loaned Securities as of the date determined by Manager in its discretion is less
than the Market Value of such Loaned Securities as of the Return Date; provided,
however, that such shortfall amount is not due to any diminution in the
Collateral Value due to reinvestment risk (which is borne by Lender pursuant to
Section 3(e)(ii) of this Agreement).
(b) Upon and to the extent of performance by Manager under Section 6(a)
hereof, Manager shall be subrogated to all rights of Lender against the
applicable Approved Borrower and Lender shall assign and be deemed to have
assigned to Manager, all of such Lender's rights in, to and against such
Approved Borrower in respect of the related Loan. In addition, in the event that
Lender receives or is credited with any payment in cash or in-kind from or on
behalf of the Approved Borrower in respect of rights to which Manager is
subrogated as provided herein, Lender shall promptly remit or pay to Manager the
same (or, where applicable, its United States Dollar equivalent). To the extent
that any rights or interests to which Manager is subrogated, or which are
assigned to Manager, in accordance with this paragraph (b) are reduced or
impaired in respect of rights of setoff or defenses relating to Lender, Lender
will make appropriate reimbursement to Manager as reasonably determined in good
faith by Manager.
(c) Any indemnities provided under Section 6(a) with respect to Loans where
any entity that directly, or indirectly through one or more intermediaries,
controls Credit Suisse First Boston or that is controlled by or is under common
control with Credit Suisse First Boston is the Approved Borrower shall be deemed
to be issued by Credit Suisse First Boston acting through its head office in
Zurich, Switzerland.
(d) WITHOUT LIMITING THE PROVISIONS OF THIS SECTION 6 OR WAIVER OF ANY
RIGHTS GIVEN TO LENDER UNDER ANY SECURITIES BORROWING AGREEMENT, IT IS
UNDERSTOOD AND AGREED THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION
ACT OF 1970 MAY NOT PROTECT LENDER WITH RESPECT TO LOANED SECURITIES AND THAT,
THEREFORE, THE LOAN COLLATERAL MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF
AN APPROVED BORROWER'S OBLIGATIONS IN THE EVENT SUCH APPROVED BORROWER FAILS TO
RETURN THE LOANED SECURITIES.
7. CONCERNING MANAGER.
(a) Liability of Manager. Except as otherwise expressly provided in this
Agreement, Manager shall not be liable for any costs, expenses, damages,
liabilities or claims (including attorneys' and accountants' fees) incurred by
Lender, except those costs, expenses, damages, liabilities or claims arising out
of the negligence, bad faith or willful
5
misconduct of Manager. Manager shall have no obligation under this Agreement for
costs, expenses, damages, liabilities or claims (including attorneys' and
accountants' fees) which are sustained or incurred by reason of any action,
inaction or financial failure by or of a Clearing System or depository or
subcustodian, or their nominees, and the successors and assigns of the foregoing
(including, without limitation, Custodian holding Loanable Securities, Loan
Collateral or other property in connection with this Agreement), or as a result
of reliance by Manager upon information provided by any pricing information
service. Manager shall not be liable for the acts or omissions of any broker,
dealer or agent selected by it to execute Cash Collateral Investments. Except as
otherwise expressly provided in this Agreement, in no event shall Manager be
liable for special, indirect, consequential or punitive damages, or lost profits
or loss of business, arising under or in connection with this Agreement or the
transactions contemplated hereby, even if previously informed of the possibility
of such damages or losses.
(b) Approved Borrowers. Lender shall have responsibility for approving the
borrowers, and Manager shall not be liable for any loss or damage suffered as a
result of any such approval (other than as provided in Section 6(a)).
(c) Reliance on Instructions. Manager shall be entitled to rely upon any
Written Instructions or oral instructions of an Authorized Person or a person
believed by Manager to be an Authorized Person received by Manager and believed
by Manager to be duly authorized and delivered.
(d) Force Majeure. Manager shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including, without limitation, acts of terrorism, acts of God,
earthquakes, fires, floods, wars, civil or military disturbances, market
disruptions, sabotage, epidemics, riots, interruptions, loss or malfunctions of
utilities, transportation, computer (hardware or software) or communications
services, labor disputes, acts of civil or military authority, or governmental
actions, or inability to obtain labor, material, equipment, services, or
transportation.
(e) Disaster Recovery. Manager acknowledges its responsibility for the
backup and recovery procedures for Lender's data maintained on Manager's system,
as well as the preparation and maintenance of Lender's data.
8. INDEMNIFICATION OF MANAGER. Lender agrees to indemnify, reimburse and
hold Manager harmless from and against any and all costs, expenses, damages,
liabilities or claims, including reasonable fees and expenses of counsel and
accountants, which Manager may sustain or incur by reason of or as a result of
Manager's acceptance of its appointment under this Agreement or any action taken
or omitted by Manager in connection with the performance of its obligations or
the exercise of its rights under this Agreement, any Securities Borrowing
Agreement and any other Related Agreement; provided that such indemnification
shall not extend to liabilities, losses, costs or expenses to the extent that
such liabilities, losses, costs or expenses (i) represent Manager's commercially
reasonable operating expenses not incurred in connection with this Agreement,
(ii) are found by a final judgment of a court of competent jurisdiction to have
resulted from Manager's own bad faith, willful misconduct or negligence or (iii)
result from the performance of Manager's indemnity obligation under Section 6(a)
hereof. Lender's obligations under this Section 8 shall be continuing
obligations of Lender, and its successors and assigns and shall survive the
termination of any Loans, this Agreement or any other Related Agreement. Except
as otherwise expressly provided in this Agreement, in no event shall Lender be
liable for special, indirect, consequential or punitive damages, or lost profits
or loss of business, arising under or in connection with this Agreement or the
transactions contemplated hereby, even if previously informed of the possibility
of such damages or losses.
9. TRANSFERS FROM SECURITIES ACCOUNT AND COLLATERAL ACCOUNT.
Lender hereby:
(a) Instructs and directs Custodian, and authorizes Manager, to transfer or
cause the transfer from the Collateral Account to Manager, to be retained by
Manager as payment, any and all amounts due and payable to
6
Manager hereunder, including without limitation, the Manager's Fee and the
amount of any indemnities due under Section 8 hereof provided, however, that
such transfer shall be reported to Lender in accordance with Section 3(f).
(b) Instructs and directs Custodian to transfer or cause the transfer from
the Securities Account and/or Collateral Account to Manager and/or any Approved
Borrower any and all property in such accounts in accordance with written
instructions from Manager as may be required under this Agreement. Lender agrees
and acknowledges that (i) delivery of a copy of this Agreement to Custodian
shall constitute written instructions to Custodian, (ii) Custodian is authorized
to rely on such written instructions and (iii) Custodian shall be under no duty
to inquire into the validity or accuracy of any such instructions.
10. MULTIPLE LENDERS AND LENDER AS BUSINESS TRUST. For any Loan under this
Agreement, each reference in the Agreement to Lender shall be deemed a reference
solely to the particular Lender to which such Loan relates. In no circumstances
shall the rights, obligations or remedies of Manager with respect to a
particular Lender constitute a right, obligation or remedy applicable to any
other lender. Furthermore, in no circumstances shall the rights, obligations or
remedies of a particular Lender with respect to Manager be applicable to any
other lender with respect to Manager. With respect to any Lender that is
organized as a business trust (or a series thereof), Manager is hereby expressly
put on notice of the limitation of liability set forth in the Declaration of
Trust or similar instrument of such Lender and agrees that the obligations
assumed by such Lender hereunder shall be limited in all cases to that Lender
and its assets, and Manager shall not seek satisfaction of any such obligation
from the officers, agents, employees, directors, trustees, or shareholders of
such Lender.
11. TAXES. Lender shall be responsible for all filings, tax returns and
reports on any Loans which are to be made to any authority whether governmental
or otherwise and for the payment of all Taxes and, insofar as Manager is under
any obligation (whether of a governmental nature or otherwise) to pay the same
on Lender's behalf, Manager may do so out of any moneys or assets of Lender held
by Manager, Custodian or provided by Lender. Manager shall promptly notify
Lender when Manager pays such amounts on Lender's behalf. Lender further
acknowledges that the tax treatment of any amounts paid by an Approved Borrower
in respect of dividends or distributions on Loaned Securities may be different
from the tax treatment of such dividends or distributions had the Loaned
Securities not been out on Loan to such Approved Borrower, and that Manager
shall not be responsible for collecting any payments from Approved Borrower due
to a retroactive change in law or rule of any governmental agency regarding the
tax treatment of the interest or dividend to which such payment relates.
12. MISCELLANEOUS PROVISIONS.
(a) Transaction Costs. All transaction costs charged by Custodian shall be
borne by Lender.
(b) Termination. This Agreement shall continue unless terminated earlier by
either party upon delivery to the other party of a written notice, which shall
be delivered no less than 30 days prior to the then effective termination date.
On such date of termination (whether on or before its stated term, the
"Termination Date"), Manager shall (i) terminate outstanding Loans in accordance
with the terms of each applicable Securities Borrowing Agreement, (ii) cease
making Loans and investing and reinvesting Cash Collateral (however, Manager may
continue making Loans and/or investing and reinvesting Cash Collateral if
Manager determines, in its sole judgment and discretion, that to do so would
facilitate the orderly termination of the Loans and liquidation of the Cash
Collateral Investments) and (iii) in its sole judgment and discretion proceed to
liquidate Cash Collateral Investments in an orderly fashion (which may not occur
until after the Termination Date), it being understood by Lender that early
termination of Loans may result in losses on the liquidation of Cash Collateral
Investments, which losses shall be for the account of Lender. Notwithstanding
the foregoing, Manager may terminate this Agreement upon 5 days notice in the
event of a material financial deterioration of Lender (as determined in
Manager's sole discretion). Manager shall be entitled to receive the Manager's
Fee on the Termination Date, calculated as if such date were the end of the
month in which such Termination Date occurs, and all other amounts due and owing
to it hereunder. To the extent Manager provides services after the Termination
Date in order to provide for the orderly termination of this Agreement, Manager
also shall be entitled to receive any Manager's Fees and all other amounts for
the performance of its obligations hereunder after the Termination Date.
Further, to the extent that any Approved Borrower owes obligations to Manager to
which Manager has been subrogated, such subrogation rights shall
7
survive the termination of this Agreement. Notwithstanding anything to the
contrary herein contained, the terms and conditions of this Agreement shall
remain in full force and effect with respect to any Loan or Cash Collateral
Investment remaining outstanding after the Termination Date. In addition,
notwithstanding anything to the contrary herein contained, the obligations set
forth in Section 8 hereof shall survive the termination of this Agreement.
(c) Notices. All notices shall be given to the party entitled to receive
such notices at the addresses and telephone numbers set forth on Schedule III
hereto and shall be effective only when received.
(d) Entire Agreement; Modification or Amendment. This Agreement constitutes
the entire agreement of the parties with respect to this subject matter and
supersedes all prior oral or written agreements in regard thereto.
(e) Rights and Remedies Cumulative. The rights and remedies conferred upon
the parties hereto shall be cumulative, and the exercise or waiver of any
thereof shall not preclude or inhibit the exercise of any additional rights and
remedies.
(f) Amendment. Unless otherwise specifically stated in this Agreement, no
amendment to, or modification or waiver of, this Agreement, or any provision
hereof, shall be valid unless made in writing and signed by all parties hereto.
(g) Assignment. Neither this Agreement nor any Loan nor any interest or
obligation in or under this Agreement may be transferred by either party without
the prior written consent of the other party (other than pursuant to a
consolidation or amalgamation with, or merger into, or transfer of all or
substantially all of a party's assets to, another entity, in each case whose
financial condition is not materially worse than the financial condition of the
transferring party) and any purported transfer without such consent will be
void. Notwithstanding the foregoing, Manager may, without the consent of Lender,
delegate to another branch or the head office of Manager any or all of the
rights and obligations of the New York Branch of Manager under this Agreement,
and (i) the New York Branch shall thereupon be relieved of all such transferred
obligations under this Agreement, and (ii) all references to the State of New
York or the United States in this Agreement (other than such as regard
jurisdiction and governing law) shall be deemed to be references to the
jurisdiction in which the principal offices of such other branch or head office,
as applicable, are located, provided that such other branch or head office shall
expressly assume the performance or observance of every obligation on the part
of the New York Branch delegated thereto.
(h) Severability. Should any provision(s) of this Agreement be declared or
found to be illegal, unenforceable, ineffective or void, then each party shall
be relieved of any obligations contained in such provision(s) and the balance of
this Agreement, if capable of performance, shall remain in full force and
effect.
(i) Counterparts; Exchange of Facsimile. This Agreement may be executed in
one or more counterparts, all of which taken together shall constitute one
instrument. This Agreement may be delivered by exchange of facsimile copies of
the executed counterparts with the same effect as if the parties had exchanged
executed original counterparts.
(j) Governing Law; Consent to Jurisdiction; Process Agent, etc.
(i) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(ii) MANAGER AND LENDER IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY.
(iii) LENDER HEREBY IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8
(iv) TO THE EXTENT, IF ANY, LENDER MAY BE DEEMED TO HAVE OR HEREAFTER
ACQUIRES IMMUNITY, ON THE GROUNDS OF SOVEREIGNTY OR OTHERWISE, FROM ANY
JUDICIAL PROCESS OR PROCEEDING TO ENFORCE THIS AGREEMENT OR TO COLLECT
AMOUNTS DUE HEREUNDER (INCLUDING, WITHOUT LIMITATION, ATTACHMENT
PROCEEDINGS PRIOR TO JUDGMENT OR IN AID OF EXECUTION) IN ANY JURISDICTION,
LENDER HEREBY WAIVES SUCH IMMUNITY AND AGREES NOT TO CLAIM THE SAME.
13. NETWORK ACCESS.
(a) Lender shall use its access to Manager's computer network, intranet
website and other online facilities (collectively, the "System") only from
Manager's facilities or from Lender's designated office location set forth on
Schedule III hereto, and shall limit such access to Authorized Persons.
(b) Lender further represents and warrants that it shall not access,
analyze, evaluate, attack, test, intrude upon, invade, connect with, penetrate,
probe, or manipulate the System in any way except as agreed to, in writing, by
Manager.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf by its duly authorized representative as of the
date and year first above written.
STI CLASSIC FUNDS
/s/ R. Xxxxxxx Xxxxx
----------------------------------------
Name: R. Xxxxxxx Xxxxx
Title: President
STI CLASSIC VARIABLE TRUST
/s/ R. Xxxxxxx Xxxxx
----------------------------------------
Name: R. Xxxxxxx Xxxxx
Title: President
CREDIT SUISSE FIRST BOSTON,
NEW YORK BRANCH
/s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Lauren. Pretre
Title: Vice President
/s/ Xxxxx X. Xxxxxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Vice President
9
ANNEX A TO SECURITIES LENDING MANAGEMENT AGREEMENT
DEFINITIONS
"Approved Borrower" shall mean any entity specified on Schedule I hereto (which
may be amended from time to time pursuant to Section 3(b) hereof).
"Approved Investment" shall mean any type of security, instrument, participation
or interest in property, and any repurchase, reverse-repurchase or sell and
buy-back agreement in respect thereof, in which Cash Collateral and reinvestment
proceeds may be invested or reinvested hereunder, and which are specified on
Schedule II hereto (which may be amended from time to time in a writing executed
by Lender and Manager).
"Authorized Person" shall mean any person specified by Lender on Schedule III
hereto (which may be amended from time to time by Lender giving five days' prior
written notice to Manager) to give Written Instructions on behalf of Lender.
"Borrower Event of Default" shall mean, with respect to any Securities Borrowing
Agreement, the occurrence of an Event of Default (as defined therein) or Default
(as defined therein) entitling Lender to terminate Loans thereunder.
"Cash Collateral" shall mean Loan Collateral in the form of cash denominated in
United States Dollars.
"Cash Collateral Investments" shall mean investments and reinvestments of Cash
Collateral and proceeds of such investments and reinvestments in Approved
Investments.
"Clearing System" shall mean, in the case of U.S. securities, the Depository
Trust Company, Participants Trust Company, Government Securities Clearing
Corporation and any other securities depository or clearing agency (and their
respective successors and nominees) registered with the Securities and Exchange
Commission or otherwise authorized to act as a securities depository or clearing
agency and, in the case of non-U.S. securities, Euroclear, Clearstream and any
other depository or clearing agency generally recognized as acting in such
capacity or performing similar services with respect thereto.
"Collateral Account" shall mean one or more accounts established by Lender with
SunTrust Bank for the purpose of holding Loan Collateral and Loan Fees paid by
Approved Borrowers.
"Collateral Value" shall mean, in respect of any Loan Collateral as of any date
of determination, the value (in U.S. Dollars as determined by the Manager in
good faith in accordance with its standard procedures) of the Cash Collateral
plus, without duplication, the Market Value of Cash Collateral Investments.
"Custodian" shall mean SunTrust Bank and Xxxxx Brothers Xxxxxxxx & Co., as the
case may be.
"Income" shall mean, with respect to a Cash Collateral Investment and the
relevant period of calculation, the greater of (i) income realized and (ii)
income expected by Manager, at the time such investment was made, to be realized
in accordance with the agreement, security or instrument governing such Cash
Collateral Investment (whether or not such investment is performing and/or
subsequently restructured).
"Loan" shall mean each loan of a Loanable Security to an Approved Borrower
pursuant to a Securities Borrowing Agreement.
"Loan Collateral" shall mean all Cash Collateral delivered by Approved Borrowers
as collateral for Loans and, without duplication, all cash amounts delivered by
Lender pursuant to Section 3(e)(ii) of this Agreement, all Cash Collateral
Investments and proceeds of Cash Collateral Investments.
"Loan Fee" shall mean the Loan Fee (as defined in the applicable Securities
Borrowing Agreement) payable by an Approved Borrower with respect to any Loan.
"Loanable Security" shall mean each security designated as loanable by Lender.
"Loaned Security" shall mean each security that is the subject of a Loan.
10
"Manager's Fee" shall have the meaning set forth in Section 4 hereof.
"Market Value" shall mean, with respect to any Loaned Securities or Loan
Collateral at any time of determination, the market value thereof (including, in
the case of fixed income securities, accrued and unpaid interest, unless
contrary to market practice) at such time as determined in good faith by Manager
in accordance with the provisions of the applicable Securities Borrowing
Agreement.
"Operating Guidelines" shall mean the agreement or other instrument which sets
forth the operating procedures applicable to the Manager, Lender and the
applicable Custodian in connection with the Securities Lending Program.
"Program Income" shall mean, with respect to any calendar month, an amount equal
to (i) the sum of (x) all gross Income from all Cash Collateral Investments
during such month (not including capital gains or losses and before deduction of
any fees and expenses (including, without limitation, investment management
fees, custody fees or administrative fees) incurred in connection with such
Income), plus (y) all Loan Fees paid or payable during such month, minus (ii)
all Rebates, if any, paid to Approved Borrowers during such month.
"Rebate" shall mean, with respect to any Loan collateralized by Cash Collateral,
the Cash Collateral Fee (as defined in the applicable Securities Borrowing
Agreement) payable by Lender to the Approved Borrower under the applicable
Securities Borrowing Agreement.
"Related Agreements" shall mean, individually or collectively, as the context
may require, the Securities Borrowing Agreements, the Custody Agreement, all
repurchase, reverse-repurchase and sell and buy-back agreements, if any,
executed by Manager on behalf of Lender in connection with Approved Investments,
and all other agreements, documents, instruments and instructions executed by
Manager pursuant to Section 2(a) hereof.
"Required Margin Level" shall have the meaning set forth in Section 3(d) hereof.
"Return Date" shall have the meaning set forth in Section 6(a) hereof.
"Securities Account" shall mean each account established and maintained by
Lender with the applicable Custodian for the purpose of holding Loanable
Securities.
"Securities Borrowing Agreement" shall mean each agreement, and each annex,
schedule, and exhibit thereto, entered into by Manager, as Lender's agent, and
an Approved Borrower, setting forth the terms and conditions pursuant to which
Lender may from time to time lend Loanable Securities to such Approved Borrower.
"Securities Lending Management Services" shall have the meaning set forth in
Section 2(a) hereof.
"Securities Lending Program" shall mean the lending of Loanable Securities to
Approved Borrowers and the making of Cash Collateral Investments hereunder, and
all of the other transactions contemplated hereunder and under the Related
Agreements.
"Taxes" shall mean all unpaid calls, taxes (including, without limitation, any
value added taxes and any stamp taxes), imposts, levies or duties due on any
principal, interest, or other payment or distribution, or transfer, in each case
payable on or in connection with any Loan, Loanable Security, Loaned Security,
Loan Collateral, Rebate or Loan Fee.
"Term Loan" shall have the meaning set forth in Section 3(c)(i) hereof.
"Written Instructions" shall mean written communications actually received by
Manager from an Authorized Person, or from a person believed by Manager to be an
Authorized Person, by letter, memorandum, telegram, telex, cable, telecopy,
facsimile, computer, video (CRT) terminal or other on-line system, or any other
method whereby Manager is able to verify the identity of the sender of such
communications or the sender is required to provide a password or other
identification code.
11
ANNEX B TO SECURITIES LENDING MANAGEMENT AGREEMENT
List of Lenders
STI CLASSIC FUNDS:
High Income Fund
Investment Grade Bond Fund
Limited-Term Federal Mortgage Securities Fund
Short-Term Bond Fund
U.S. Government Securities Fund
Seix Institutional High Yield Fund
Balanced Fund
Classic Institutional Short-Term Bond Fund
Capital Appreciation Fund
Growth and Income Fund
International Equity Fund
International Equity Index Fund
Mid-Cap Equity Fund
Mid-Cap Value Equity Fund
Small Cap Value Equity Fund
Small Cap Growth Stock Fund
Tax Sensitive Growth Stock Fund
Value Income Stock Fund
Classic Institutional Super Short Income Plus Fund
Classic Institutional U.S. Government Securities Super Short Income Plus Fund
Strategic Income Fund
STI CLASSIC VARIABLE TRUST:
Capital Appreciation Fund
Growth & Income Fund
International Equity Fund
Investment Grade Bond Fund
Mid-Cap Equity Fund
Small Cap Value Equity Fund
Value Income Stock Fund
12
SCHEDULE I TO SECURITIES LENDING MANAGEMENT AGREEMENT
List of Approved Borrowers
1. ABN AMRO Bank N.V., New York Branch
2. ABN AMRO Incorporated
3. Banc of America Securities LLC
4. Barclays Capital Inc.
5. Bear Xxxxxxx & Co. Inc.
6. Bear Xxxxxxx Securities Corp.
7. BNP Paribas Securities Corp.
8. Citigroup Global Markets Inc.
9. Credit Suisse First Boston LLC
10. Daiwa Securities America Inc.
11. Deutsche Bank Securities Inc.
12. Xxxxxxx Xxxxx & Co.
13. Greenwich Capital Markets Inc.
14. Xxxxxxxxx & Company Inc.
15. X.X. Xxxxxx Securities, Inc.
16. Xxxxxx Brothers Inc.
17. Xxxxxxx Xxxxx Government Securities Inc.
18. Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
19. Xxxxxx Xxxxxxx & Co., Incorporated
20. MS Securities Services Inc.
21. Nomura Securities International Inc.
22. SG Americas Securities, LLC
23. Societe Generale, New York Branch
24. UBS Securities LLC
13
SCHEDULE II TO SECURITIES LENDING MANAGEMENT AGREEMENT
Approved Investment
CSFB Enhanced Liquidity Fund
14
SCHEDULE III TO SECURITIES LENDING MANAGEMENT AGREEMENT
MANAGER'S FEE: 15% of Program Income
SECURITIES LENDING REVENUE:
STI Classic Funds ("SCF") and STI Classic Variable Trust ("SCVT") shall
receive 85% of Program Income pursuant to the terms of this Agreement.
To the extent that the aggregate Program Income earned at the end of each
quarterly period by SCF and SCVT during the first year starting on March 14,
2005 and ending on March 13, 2006 is less than $1,323,529.41, Manager shall pay
an amount equal to the difference between (i) $1,125,000 and (ii) 85% of such
aggregate Program Income (the "Shortfall Amount") in the month following such
quarterly period. Manager shall pay such Shortfall Amount only if, on a
cumulative basis, a deficiency exists after taking into account the aggregate
Program Income of all previous quarterly periods during such first year.
Manager, SCF and SCVT shall determine each pro-rata amount of the Shortfall
Amount to be paid to SCF and SCVT. Upon payment of any such pro-rata amount,
Manager shall have satisfied its financial obligations to SCF and SCVT, as the
case may be, for such quarterly period.
If (i) by reason of a regulatory, legal, political or any other event, SCF
or SCVT suspends securities lending, and/or the securities lending business in
the United States or any other country that is the subject of this arrangement
is terminated or materially restricted or (ii) a Material Change occurs with
respect to the Loanable Securities, the parties (following delivery of notice as
set forth in the next succeeding sentence) will enter into negotiations for a
period of at least thirty (30) days for a new arrangement (or longer upon mutual
agreement of the parties) (the "Negotiation Period") to reflect the changed
regulatory, legal, political or business environment. Upon the occurrence of any
of the events set forth in the preceding sentence, SCF, SCVT or Manager, as
applicable, shall promptly give notice to the other party. If the parties fail
to reach an agreement following such negotiations, either party may terminate
this arrangement effective on not less than five (5) days' prior written notice
to the other party following the last day of such Negotiation Period.
"Material Change" shall mean, as of any date of determination, (i) a
fundamental change in the investment strategy of SCF or SCVT (as in effect on
March 14, 2005) or (ii) a decrease in excess of 25% of the market value of the
Loanable Securities calculated by reference to $11,322,701,229.52 (the market
value of the Loanable Securities as of March 1, 2005).
"Program Income" shall mean, for the first year starting on March 14, 2005
and ending on March 13, 2006 only, an amount equal to (i) the sum of (x) all
gross Income from all Cash Collateral Investments during such quarterly period
(not including capital gains or losses and before deduction of any fees and
expenses (including, without limitation, investment management fees, custody
fees or administrative fees) incurred in connection with such Income), plus (y)
all Loan Fees paid or payable during such quarterly period, minus (ii) all
Rebates, if any, paid to Approved Borrowers during such quarterly period.
15
SCHEDULE III TO SECURITIES LENDING MANAGEMENT AGREEMENT (CONT.)
REQUIRED MARGIN LEVEL: The Required Margin Level for a Loan of any type of
Loaned Security shall be an amount equal to the product of (i) the margin
percentage specified below with respect to the relevant security type for such
Loan and (ii) the Market Value of the Loaned Security (determined as of the date
of computation).
Type of Loaned Security Margin Percentage
----------------------- -----------------
U.S. Equity Securities
- initially and thereafter 102%
U.S. Fixed Income Securities
- initial margin 102%
- maintenance margin 100%
International Securities
- initial margin 105%
- maintenance margin 103%
LIST OF AUTHORIZED PERSONS:
BISYS Trusco SunTrust
----- ------ --------
Xxxx Xxxxx Xxxxxxx Xxxx Xxx Xxxxxxxx
Xxx Xxxxxxxx Xxxxx Xxxxx
Xxxx Xxxxxx Xxxx Xxxxx
Xxxxx Xxxx
Xxx Xxxxxxxx
Xxxx Xxxxxx
Xxxxx Xxxxxx
CONTACT INFORMATION FOR NOTICES:
Manager
Credit Suisse First Boston, for Legal Notices, Credit Suisse First Boston,
New York Branch with a copy to: Xxx Xxxx Xxxxxx
Xxx Xxxxxxx Xxxxxx, 0xx Xxxxx One Madison Avenue, 9th Floor
New York, NY 10010-3629 Xxx Xxxx, XX 00000-0000
Attn: Operations Department Attn: Xxxxx X. Xxxxxxxxxxx
Tel: 000-000-0000 Vice President
Fax: 000-000-0000 Legal and Compliance Department
Tel: 000-000-0000
Fax: 000-000-0000
Lender
BISYS Fund Services Ohio, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Manager
Tel: 000-000-0000
Fax: 000-000-0000
16
