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THE
BOND
MARKET
ASSOCIATION
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Exhibit (h)(7)
MASTER SECURITIES LOAN AGREEMENT
BETWEEN: DATED AS OF JUNE 19, 2000
MS Securities Services Inc. ("MS")
and
Nvest Kobrick Investment Trust on behalf of each of the funds identified on
Schedule B (each a "Fund" and, together, the "Funds")
This Agreement sets forth the terms and conditions under which one party
("Lender") may, from time to time, lend to the other party ("Borrower") certain
securities against a pledge of collateral. Capitalized terms not otherwise
defined herein shall have the meanings provided in Section 26.
The parties hereto agree as follows:
1. LOANS OF SECURITIES.
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1.1 Subject to the terms and conditions of this Agreement, Borrower or
Lender may, from time to time, orally seek to initiate a transaction in which
Lender will lend securities to Borrower. Borrower and Lender shall agree orally
on the terms of each Loan, including the issuer of the securities, the amount of
securities to be lent, the basis of compensation, and the amount of Collateral
to be transferred by Borrower, which terms may be amended during the Loan.
1.2 Notwithstanding any other provision in this Agreement regarding when a
Loan commences, a Loan hereunder shall not occur until the Loaned Securities and
the Collateral therefor have been transferred in accordance with Section 16.
1.3 WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER, 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 HEREUNDER AND THAT,
THEREFORE, THE COLLATERAL DELIVERED TO LENDER MAY CONSTITUTE THE ONLY SOURCE OF
SATISFACTION OF BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE
LOANED SECURITIES.
2. TRANSFER OF LOANED SECURITIES.
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2.1 Unless otherwise agreed, Lender shall transfer Loaned Securities to
Borrower hereunder on or before the Cutoff Time on the date agreed to by
Borrower and Lender for the commencement of the Loan.
2.2 Unless otherwise agreed, Borrower shall provide Lender, in each Loan in
which Lender is a Customer, with a schedule and receipt listing the Loaned
Securities. Such schedule and receipt may consist of (a) a schedule provided to
Borrower by Lender and executed and returned by Borrower when the Loaned
Securities are received, (b) in the case of securities transferred through a
Clearing Organization which provides transferors
with a notice evidencing such transfer, such notice, or (c) a confirmation or
other document provided to Lender by Borrower.
3. COLLATERAL.
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3.1 Unless otherwise agreed, Borrower shall, prior to or concurrently with
the transfer of the Loaned Securities to Borrower, but in no case later than the
close of business on the day of such transfer, transfer to Lender Collateral
with a market value at least equal to a percentage of the market value of the
Loaned Securities agreed to by Borrower and Lender (which shall be not less than
100% of the market value of the Loaned Securities) (the "Margin Percentage").
3.2 The Collateral transferred by Borrower to Lender, as adjusted pursuant
to Section 8, shall be security for Borrower's obligations in respect of such
Loan and for any other obligations of Borrower to Lender. Borrower hereby
pledges with, assigns to, and grants Lender a continuing first security interest
in, and a lien upon, the Collateral, which shall attach upon the transfer of the
Loaned Securities by Lender to Borrower and which shall cease upon the transfer
of the Loaned Securities by Borrower to Lender. In addition to the rights and
remedies given to Lender hereunder, Lender shall have all the rights and
remedies of a secured party under the New York Uniform Commercial Code. It is
understood that Lender may use or invest the Collateral, if such consists of
cash, at its own risk, but that (unless Lender is a Broker-Dealer) Lender shall,
during the term of any Loan hereunder, segregate Collateral from all securities
or other assets in its possession. Lender may pledge, repledge, hypothecate,
rehypothecate, lend, relend, sell or otherwise transfer the Collateral, or
re-register Collateral evidenced by physical certificates in any name other than
Borrower's, only (a) if Lender is Broker-Dealer or (b) in the event of a Default
by Borrower. Segregation of Collateral may be accomplished by appropriate
identification on the books and records of Lender if it is a "financial
intermediary" or a "clearing corporation" within the meaning of the New York
Uniform Commercial Code.
3.3 Except as otherwise provided herein, upon transfer to Lender of the
Loaned Securities on the day a Loan is terminated pursuant to Section 5, Lender
shall be obligated to transfer the Collateral (as adjusted pursuant to Section
8) to Borrower no later than the Cutoff Time on such day or, if such day is not
a day on which a transfer of such Collateral may be effected under Section 16,
the next day on which such a transfer may be effected.
3.4 If Borrower transfers Collateral to Lender, as provided in Section 3.1,
and Lender does not transfer the Loaned Securities to Borrower, Borrower shall
have the absolute right to the return of the Collateral; and if Lender transfers
Loaned Securities to Borrower and Borrower does not transfer Collateral to
Lender as provided in Section 3.1, Lender shall have the absolute right to the
return of the Loaned Securities.
3.5 Borrower may, upon reasonable notice to Lender (taking into account all
relevant factors, including industry practice, the type of Collateral to be
substituted and the applicable method of transfer), substitute Collateral for
Collateral securing any Loan or Loans; provided, however, that such substituted
Collateral shall (a) consist only of cash, securities or other property that
Borrower and Lender agreed would be acceptable Collateral prior to the Loan or
Loans and (b) have a market value such that the aggregate market value of such
substituted Collateral, together with all other Collateral for Loans in which
the party substituting such Collateral is acting as Borrower, shall equal or
exceed the agreed upon Margin Percentage of the market value of the Loaned
Securities. Prior to the expiration of any letter of credit supporting
Borrower's obligations hereunder, Borrower shall, no later than the Cutoff Time
on the date such letter of credit expires, obtain an extension of the expiration
of such letter of credit or replace such letter of credit by providing Lender
with a substitute letter of credit in an amount at least equal to the amount of
the letter of credit for which it is substituted.
3.6 Lender acknowledges that, in connection with Loans of Government
Securities and as otherwise permitted by applicable law, some securities
provided by Borrower as Collateral under this Agreement may not be guaranteed by
the United States.
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4. FEES FOR LOAN.
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4.1 Unless otherwise agreed, (a) Borrower agrees to pay Lender a loan fee
(a "Loan Fee"), computed daily on each Loan to the extent such Loan is secured
by Collateral other than cash, based on the aggregate par value (in the case of
Loans of Government Securities) or the aggregate market value (in the case of
all other Loans) of the Loaned Securities on the day for which such Loan Fee is
being computed, and (b) Lender agrees to pay Borrower a fee or rebate (a "Cash
Collateral Fee") on Collateral consisting of cash, computed daily based on the
amount of cash held by Lender as Collateral, in the case of each of the Loan Fee
and the Cash Collateral Fee at such rates as Borrower and Lender may agree.
Except as Borrower and Lender may otherwise agree (in the event that cash
Collateral is transferred by clearing house funds or otherwise), Loan Fees shall
accrue from and including the date on which the Loaned Securities are
transferred to Borrower to, but excluding, the date on which such Loaned
Securities are returned to Lender, and Cash Collateral Fees shall accrue from
and including the date on which the cash Collateral is transferred to Lender to,
but excluding, the date on which such cash Collateral is returned to Borrower.
4.2 Unless otherwise agreed, any Loan Fee or Cash Collateral Fee payable
hereunder shall be payable:
(a) in the case of any Loan of securities other than Government
Securities, upon the earlier of (i) the fifteenth day of the month
following the calendar month in which such fee was incurred or (ii)
the termination of all Loans hereunder (or, if a transfer of cash in
accordance with Section 16 may not be effected on such fifteenth day
or the day of such termination, as the case may be, the next day on
which such a transfer may be effected); and
(b) in the case of any Loan of Government Securities, upon the termination
of such Loan.
Notwithstanding the foregoing, all Loan Fees shall be payable by Borrower
immediately in the event of a Default hereunder by Borrower and all Cash
Collateral Fees shall be payable immediately by Lender in the event of a Default
by Lender.
5. TERMINATION OF THE LOAN. Unless otherwise agreed, (a) Borrower may terminate
a Loan on any Business Day by giving notice to Lender and transferring the
Loaned Securities to Lender before the Cutoff Time on such Business Day, and (b)
Lender may terminate a Loan on a termination date established by notice given to
Borrower prior to the close of business on a Business Day. The termination date
established by a termination notice given by Lender to Borrower shall be a date
no earlier than the standard settlement date for trades of the Loaned Securities
entered into on the date of such notice, which date shall, unless Borrower and
Lender agree to the contrary, be (i) in the case of Government Securities, the
next Business Day following such notice and (ii) in the case of all other
securities, the third Business Day following such notice. Unless otherwise
agreed, Borrower shall, on or before the Cutoff Time on the termination date of
a Loan, transfer the Loaned Securities to Lender; PROVIDED, HOWEVER, that upon
such transfer by Borrower, Lender shall transfer the Collateral (as adjusted
pursuant to Section 8) to Borrower in accordance with Section 3.3.
6. RIGHTS OF BORROWER IN RESPECT OF THE LOANED SECURITIES. Except as set forth
in Sections 7.1 and 7.2 and as otherwise agreed by Borrower and Lender, until
Loaned Securities are required to be redelivered to Lender upon termination of a
Loan hereunder, Borrower shall have all of the incidents of ownership of the
Loaned Securities, including the right to transfer the Loaned Securities to
others. Lender hereby waives the right to vote, or to provide any consent or to
take any similar action with respect to, the Loaned Securities in the event that
the record date or deadline for such vote, consent or other action falls during
the term of the Loan.
7. DIVIDENDS, DISTRIBUTIONS, ETC.
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7.1 Lender shall be entitled to receive all distributions made on or in
respect of the Loaned Securities which are not otherwise received by Lender, to
the full extent it would be so entitled if the Loaned Securities had not been
lent to Borrower, including, but not limited to: (a) cash and all other
property, (b) stock dividends, (c) securities received as a result of split ups
of the Loaned Securities and distributions in respect thereof, (d) interest
payments, and (e) all rights to purchase additional securities.
7.2 Any cash distributions made on or in respect of the Loaned Securities,
which Lender is entitled to receive pursuant to Section 7.1, shall be paid by
the transfer of cash to Lender by Borrower, on the date any such distribution is
paid, in an amount equal to such cash distribution, so long as Lender is not in
Default at the time of such payment. Non-cash distributions received by Borrower
shall be added to the Loaned Securities on the date of distribution and shall be
considered such for all purposes, except that if the Loan has terminated,
Borrower shall forthwith transfer the same to Lender.
7.3 Borrower shall be entitled to receive all cash distributions made on or
in respect of non-cash Collateral which are not otherwise received by Borrower,
to the full extent it would be so entitled if the Collateral had not been
transferred to Lender. Any distributions of cash made on or in respect of such
Collateral which Borrower is entitled to receive hereunder shall be paid by the
transfer of cash to Borrower by Lender, on the date any such distribution is
paid, in an amount equal to such cash distribution, so long as Borrower is not
in Default at the time of such payment.
7.4 (a) Unless otherwise agreed, if (i) Borrower is required to make a
payment (a "Borrower Payment") with respect to cash distributions on Loaned
Securities under Sections 7.1 and 7.2 ("Securities Distributions"), or (ii)
Lender is required to make a payment (a "Lender Payment") with respect to cash
distributions on Collateral under Section 7.3 ("Collateral Distributions"), and
(iii) Borrower or Lender, as the case may be ("Payor"), shall be required by law
to collect any withholding or other tax, duty, fee, levy or charge required to
be deducted or withheld from such Borrower Payment or Lender Payment ("Tax"),
then Payor shall (subject to subsections (b) and (c) below), pay such additional
amounts as may be necessary in order that the net amount of the Borrower Payment
or Lender Payment received by the Lender or Borrower, as the case may be
("Payee"), after payment of such Tax equals the net amount of the Securities
Distribution or Collateral Distribution that would have been received if such
Securities Distribution or Collateral Distribution had been paid directly to the
Payee.
(b) No additional amounts shall be payable to a Payee under subsection (a)
above to the extent that Tax would have been imposed on a Securities
Distribution or Collateral Distribution paid directly to the Payee.
(c) No additional amounts shall be payable to a Payee under subsection (a)
above to the extent that such Payee is entitled to an exemption from, or
reduction in the rate of, Tax on a Borrower Payment or Lender Payment subject to
the provision of a certificate or other documentation, but has failed timely to
provide such certificate or other documentation.
(d) Each party hereto shall be deemed to represent that, as of the
commencement of any Loan hereunder, no Tax would be imposed on any cash
distribution paid to it with respect to (i) Loaned Securities subject to a Loan
in which it is acting as Lender or (ii) Collateral for any Loan in which it is
acting as Borrower, unless such party has given notice to the contrary to the
other party hereto (which notice shall specify the rate at which such Tax would
be imposed). Each party agrees to notify the other of any change that occurs
during the term of a Loan in the rate of any Tax that would be imposed on any
such cash distributions payable to it.
7.5 To the extent that, under the provisions of Sections 7.1 through 7.4
(a) a transfer of cash or other property by Borrower would give rise to a Margin
Excess (as defined in Section 8.3 below) or (b) a transfer of cash or other
property by Lender would give rise to a Margin Deficit (as defined in Section
8.2 below), Borrower or Lender (as the case may be) shall not be obligated to
make such transfer of cash or other property in
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accordance with such Sections, but shall in lieu of such transfer immediately
credit the amounts that would have been transferable under such Sections to the
account of Lender or Borrower (as the case may be).
8. XXXX TO MARKET.
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8.1 Borrower shall daily xxxx to market any Loan hereunder and in the event
that at the close of trading on any Business Day the market value of the
Collateral for any Loan to Borrower shall be less than 100% of the market value
of all the outstanding Loaned Securities subject to such Loan, Borrower shall
transfer additional Collateral no later than the close of the next Business Day
so that the market value of such additional Collateral, when added to the market
value of the other Collateral for such Loan, shall equal 100% of the market
value of the Loaned Securities.
8.2 In addition to any rights of Lender under Section 8.1, in the event
that at the close of trading on any Business Day the aggregate market value of
all Collateral for Loans by Lender shall be less than the Margin Percentage of
the market value of all the outstanding Loaned Securities subject to such Loans
(a "Margin Deficit"), Lender may, by notice to Borrower, demand that Borrower
transfer to Lender additional Collateral so that the market value of such
additional Collateral, when added to the market value of all other Collateral
for such Loans, shall equal or exceed the agreed upon Margin Percentage of the
market value of the Loaned Securities. Unless otherwise agreed, such transfer is
to be made no later than the close of the next Business Day following the day of
Lender's notice to Borrower.
8.3 In the event that at the close of trading on any Business Day the
market value of all Collateral for Loans to Borrower shall be greater than the
Margin Percentage of the market value of all the outstanding Loaned Securities
subject to such Loans (a "Margin Excess"), Borrower may, by notice to Lender,
demand that Lender transfer to Borrower such amount of the Collateral selected
by Borrower so that the market value of the Collateral for such Loans, after
deduction of such amounts, shall thereupon not exceed the Margin Percentage of
the market value of the Loaned Securities. Unless otherwise agreed, such
transfer is to be made no later than the close of the next Business Day
following the day of Borrower's notice to Lender.
8.4 Borrower and Lender may agree, with respect to one or more Loans
hereunder, to xxxx the values to market pursuant to Sections 8.2 and 8.3 by
separately valuing the Loaned Securities lent and the Collateral given in
respect thereof on a Loan-by-Loan basis.
8.5 Borrower and Lender may agree, with respect to any or all Loans
hereunder, that the respective rights of Lender and Borrower under Sections 8.2
and 8.3 may be exercised only where a Margin Excess or Margin Deficit exceeds a
specified dollar amount or a specified percentage of the market value of the
Loaned Securities under such Loans (which amount or percentage shall be agreed
to by Borrower and Lender prior to entering into any such Loans).
9. REPRESENTATIONS. Each party to this Agreement hereby makes the following
representations and warranties, which shall continue during the term of any Loan
hereunder:
9.1 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 in
accordance with its terms.
9.2 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 regulatory and self-regulatory organizations.
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9.3 Each party hereto represents and warrants that it has not relied on the
other for any tax or accounting advice concerning this Agreement and that it has
made its own determination as to the tax and accounting treatment of any Loan
and any dividends, remuneration or other funds received hereunder.
9.4 Borrower represents and warrants that it is acting for its own account.
Lender represents and warrants that it is acting for its own account unless it
expressly specifies otherwise in writing and complies with Section 10.3(b).
9.5 Borrower represents and warrants that (a) it has, or will have at the
time of transfer of any Collateral, the right to grant a first security interest
therein subject to the terms and conditions hereof, and (b) it (or the person to
whom it relends the Loaned Securities) is borrowing or will borrow the Loaned
Securities (except for Loaned Securities that qualify as "exempted securities"
under Regulation T of the Board of Governors of the Federal Reserve System) for
the purpose of making delivery of such securities in the case of short sales,
failure to receive securities required to be delivered, or as otherwise
permitted pursuant to Regulation T as in effect from time to time.
9.6 Lender represents and warrants that it has, or will have at the time of
transfer of any Loaned Securities, the right to transfer the Loaned Securities
subject to the terms and conditions hereof.
10. COVENANTS.
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10.1 Each party hereto agrees and acknowledges that (a) each Loan hereunder
is a "securities contract," as such term is defined in Section 741(7) of Title
11 of the United States Code (the "Bankruptcy Code"), (b) each and every
transfer of funds, securities and other property under this Agreement and each
Loan hereunder is a "settlement payment" or a "margin payment," as such terms
are used in Sections 362(b)(6) and 546(e) of the Bankruptcy Code, and (c) the
rights given to Borrower and Lender hereunder upon a Default by the other
constitute the right to cause the liquidation of a securities contract and the
right to set off mutual debts and claims in connection with a securities
contract, as such terms are used in Sections 555 and 362(b)(6) of the Bankruptcy
Code. Each party hereto further agrees and acknowledges that if a party hereto
is an "insured depository institution," as such term is defined in the Federal
Deposit Insurance Act, as amended ("FDIA"), then each Loan hereunder is a
"securities contract" and "qualified financial contract," as such terms are
defined in the FDIA and any rules, orders or policy statements thereunder.
10.2 Borrower agrees to be liable as principal with respect to its
obligations hereunder.
10.3 Lender agrees either (a) to be liable as principal with respect to its
obligations hereunder or (b) to execute and comply fully with the provisions of
Annex I (the terms and conditions of which Annex are incorporated herein and
made a part hereof).
10.4 Promptly upon (and in any event within seven (7) Business Days after)
demand by Lender, Borrower shall furnish Lender with Borrower's most recent
publicly-available financial statements and any other financial statements
mutually agreed upon by Borrower and Lender. Unless otherwise agreed, if
Borrower is subject to the requirements of Rule 17a-5(c) under the Exchange Act,
it may satisfy the requirements of this Section by furnishing Lender with its
most recent statement required to be furnished to customers pursuant to such
Rule.
10.5 Except to the extent required by applicable law or regulation or as
otherwise agreed, Borrower and Lender agree that Loans hereunder shall in no
event be "exchange contracts" for purposes of the rules of any securities
exchange and that Loans hereunder shall not be governed by the buy-in or similar
rules of any such exchange, registered national securities or other
self-regulatory organization.
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11. EVENTS OF DEFAULT. All Loans hereunder may, at the option of the
non-defaulting party exercised by notice to the defaulting party (which option
shall be deemed to have been exercised even if no notice is given, immediately
upon the occurrence of an event specified in subsection 11.5 below), be
terminated immediately upon the occurrence of any one or more of the following
events (individually, a "Default"):
11.1 if any Loaned Securities shall not be transferred to Lender upon
termination of the Loan as required by Section 5;
11.2 if any Collateral shall not be transferred to Borrower upon
termination of the Loan as required by Sections 3.3 and 5;
11.3 if either party shall fail to transfer Collateral as required by
Section 8;
11.4 if either party (i) shall fail to transfer to the other party
amounts in respect of distributions required to be transferred by
Section 7, (ii) shall have received notice of such failure from the
non-defaulting party, and (iii) shall not have cured such default by
the Cutoff Time on the next day after such notice on which a transfer
of cash may be effected in accordance with Section 16;
11.5 if (i) either party shall commence as debtor any case or
proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law, or seek the appointment of a
receiver, conservator, trustee, custodian or similar official for such
party or any substantial part of its property, (ii) any such case or
proceeding shall be commenced against either party, or another shall
seek such an appointment, or any application shall be filed against
either party for a protective decree under the provisions of the
Securities Investor Protection Act of 1970, which (A) is consented to
or not timely contested by such party, (B) results in the entry of an
order for relief, such an appointment, the issuance of such a
protective decree or the entry of an order having a similar effect, or
(C) is not dismissed within 15 days, (iii) either party shall make a
general assignment for the benefit of creditors, or (iv) either party
shall admit in writing its inability to pay its debts as they become
due;
11.6 if either party shall have been suspended or expelled from
membership or participation in any national securities exchange or
registered national securities association of which it is a member or
other self-regulatory organization to whose rules it is subject or if
it is suspended from dealing in securities by any federal or state
government agency thereof;
11.7 if either party shall have 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;
11.8 if any representation made by either party in respect of this
Agreement or any Loan or Loans hereunder shall be incorrect or untrue
in any material respect during the term of any Loan hereunder;
11.9 if either party notifies the other, orally or in writing, of its
inability to or its intention not to perform its obligations hereunder
or otherwise disaffirms, rejects or repudiates any of its obligations
hereunder; or
11.10 if either party (i) shall fail to perform any material
obligation under this Agreement not specifically set forth in clauses
11.1 through 11.9 above, including but not limited to the payment of
fees as required by Section 4, and the payment of transfer taxes as
required by Section 14, (ii) shall have received notice of such
failure from the non-defaulting party and (iii) shall not have
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cured such failure by the Cutoff Time on the next day after such
notice on which a transfer of cash may be effected under Section 16.
12. LENDER'S REMEDIES. Upon the occurrence of a Default under Section 11
entitling Lender to terminate all Loans hereunder, Lender shall have the right
(without further notice to Borrower), in addition to any other remedies provided
herein or under applicable law, (a) to purchase a like amount of Loaned
Securities ("Replacement Securities") in the principal market for such
securities in a commercially reasonable manner, (b) to sell any Collateral in
the principal market for such Collateral in a commercially reasonable manner and
(c) to apply and set off the Collateral and any proceeds thereof (including any
amounts drawn under a letter of credit supporting any Loan) against the payment
of the purchase price for such Replacement Securities and any amounts due to
Lender under Sections 4, 7, 14 and 17. In the event Lender shall exercise such
rights, Borrower's obligation to return a like amount of the Loaned Securities
shall terminate. Lender may similarly apply the Collateral and any proceeds
thereof to any obligation of Borrower under this Agreement, including Borrower's
obligations with respect to distributions paid to Borrower (and not forwarded to
Lender) in respect of Loaned Securities. In the event that (i) the purchase
price of Replacement Securities (plus all other amounts, if any, due to Lender
hereunder) exceeds (ii) the amount of the Collateral, Borrower shall be liable
to Lender for the amount of such excess together with interest thereon at a rate
equal to (A) in the case of purchases of Foreign Securities, LIBOR, (B) in the
case of purchases of any other securities (or other amounts, if any, due to
Lender hereunder), the Federal Funds Rate or (C) such other rate as may be
specified in Schedule B, in each case as such rate fluctuates from day to day,
from the date of such purchase until the date of payment of such excess. As
security for Borrower's obligation to pay such excess, Lender shall have, and
Borrower hereby grants, a security interest in any property of Borrower then
held by or for Lender and a right of setoff with respect to such property and
any other amount payable by Lender to Borrower. The purchase price of
Replacement Securities purchased under this Section 12 shall include, and the
proceeds of any sale of Collateral shall be determined after deduction of,
broker's fees and commissions and all other reasonable costs, fees and expenses
related to such purchase or sale (as the case may be). In the event Lender
exercises its rights under this Section 12, Lender may elect in its sole
discretion, in lieu of purchasing all or a portion of the Replacement Securities
or selling all or a portion of the Collateral, to be deemed to have made,
respectively, such purchase of Replacement Securities or sale of Collateral for
an amount equal to the price therefor on the date of such exercise obtained from
a generally recognized source or the most recent closing bid quotation from such
a source. Subject to Section 19, upon the satisfaction of all obligations
hereunder, any remaining Collateral shall be returned to Borrower.
13. BORROWER'S REMEDIES. Upon the occurrence of a Default under Section 11
entitling Borrower to terminate all Loans hereunder, Borrower shall have the
right (without further notice to Lender), in addition to any other remedies
provided herein or under applicable law, (a) to purchase a like amount of
Collateral ("Replacement Collateral") in the principal market for such
Collateral in a commercially reasonable manner, (b) to sell a like amount of the
Loaned Securities in the principal market for such securities in a commercially
reasonable manner and (c) to apply and set off the Loaned Securities and any
proceeds thereof against (i) the payment of the purchase price for such
Replacement Collateral (ii) Lender's obligation to return any cash or other
Collateral and (iii) any amounts due to Borrower under Sections 4, 7 and 17. In
such event, Borrower may treat the Loaned Securities as its own and Lender's
obligation to return a like amount of the Collateral shall terminate; provided,
however, that Lender shall immediately return any letters of credit supporting
any Loan upon the exercise or deemed exercise by Borrower of its termination
rights under Section 11. Borrower may similarly apply the Loaned Securities and
any proceeds thereof to any other obligation of Lender under this Agreement,
including Lender's obligations with respect to distributions paid to Lender (and
not forwarded to Borrower) in respect of Collateral. In the event that (i) the
sales price received from such Loaned Securities is less than (ii) the purchase
price of Replacement Collateral (plus the amount of any cash or other Collateral
not replaced by Borrower and all other amounts, if any, due to Borrower
hereunder), Lender shall be liable to Borrower for the amount of any such
deficiency, together with interest on such amounts at a rate equal to (A) in the
case of Collateral consisting of Foreign Securities, LIBOR, (B) in the case of
Collateral consisting of any other securities (or other amounts due, if any, to
Borrower hereunder), the Federal Funds Rate or (C) such other rate as may be
specified in Schedule B in each case as such rate fluctuates from day to day,
from the date of such sale until the
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date of payment of such deficiency. As security for Lender's obligation to pay
such deficiency, Borrower shall have and Lender hereby grants, a security
interest in any property of Lender then held by or for Borrower and a right of
setoff with respect to such property and any other amount payable by Borrower to
Lender. The purchase price of any Replacement Collateral purchased under this
Section 13 shall include, and the proceeds of any sale of Loaned Securities
shall be determined after deduction of, broker's fees and commissions and all
other reasonable costs, fees and expenses related to such purchase or sale (as
the case may be). In the event Borrower exercises its rights under this Section
13, Borrower may elect in its sole discretion, in lieu of purchasing all or a
portion of the Replacement Collateral or selling all or a portion of the Loaned
Securities, to be deemed to have made, respectively, such purchase of
Replacement Collateral or sale of Loaned Securities for an amount equal to the
price therefor on the date of such exercise obtained from a generally recognized
source or the most recent closing bid quotation from such a source. Subject to
Section 19, upon the satisfaction of all Lender's obligations hereunder, any
remaining Loaned Securities (or remaining cash proceeds thereof) shall be
returned to Lender. Without limiting the foregoing, the parties hereto agree
that they intend the Loans hereunder to be loans of securities. If, however, any
Loan is deemed to be a loan of money by Borrower to Lender, then Borrower shall
have, and Lender shall be deemed to have granted, a security interest in the
Loaned Securities and the proceeds thereof.
14. TRANSFER TAXES. All transfer taxes with respect to the transfer of the
Loaned Securities by Lender to Borrower and by Borrower to Lender upon
termination of the Loan shall be paid by Borrower.
15. MARKET VALUE.
-------------
15.1 Unless otherwise agreed, if the principal market for the securities to
be valued is a national securities exchange in the United States, their market
value shall be determined by their last sale price on such exchange on the
preceding Business Day or, if there was no sale on that day, by the last sale
price on the next preceding Business Day on which there was a sale on such
exchange, all as quoted on the Consolidated Tape or, if not quoted on the
Consolidated Tape, then as quoted by such exchange.
15.2 Except as provided in Section 15.3 or 15.4 or as otherwise agreed, if
the principal market for the securities to be valued is the over-the-counter
market, their market value shall be determined as follows. If the securities are
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), their market value shall be the closing sale price on NASDAQ
on the preceding Business Day or, if the securities are issues for which last
sale prices are not quoted on NASDAQ, the closing bid price on such day. If the
securities to be valued are not quoted on NASDAQ, their market value shall be
the highest bid quotation as quoted in any of The Wall Street Journal, the
National Quotation Bureau pink sheets, the Salomon Brothers quotation sheets,
quotations sheets of registered market makers and, if necessary, dealers'
telephone quotations on the preceding Business Day. In each case, if the
relevant quotation did not exist on such day, then the relevant quotation on the
next preceding Business Day in which there was such a quotation shall be the
market value.
15.3 Unless otherwise agreed, if the securities to be valued are Government
Securities, their market value shall be the average of the bid and ask prices as
quoted on Prophesy at 3:30 P.M. New York time on the Business Day preceding the
date on which such determination is made. If the securities are not so quoted on
such day, their market value shall be determined as of the next preceding
Business Day on which they were so quoted. If the securities to be valued are
Government Securities that are not quoted on Prophesy, their market value shall
be determined as of the close of business on the preceding Business Day in
accordance with market practice for such securities.
15.4 Unless otherwise agreed, if the securities to be valued are Foreign
Securities, their market value shall be determined as of the close of business
on the preceding Business Day in accordance with market practice in the
principal market for such securities.
9
15.5 Unless otherwise agreed, the market value of a letter of credit shall
be the undrawn amount thereof.
15.6 All determinations of market value under Sections 15.1, 15.2, 15.3,
and 15.4 shall include, where applicable, accrued interest to the extent not
already included therein (other than any interest transferred to the other party
pursuant to Section 7), unless market practice with respect to the valuation of
such securities in connection with securities loans is to the contrary. All
determinations of market value that are required to be made at the close of
trading on any Business Day pursuant to Section 8 or otherwise hereunder shall
be made as if being determined at the commencement of trading on the next
Business Day. The determinations of market value provided for in this Section 15
shall apply for all purposes under this Agreement, except for purposes of
Sections 12 and 13.
16. TRANSFERS.
----------
16.1 All transfers of securities hereunder shall by be (a) physical
delivery of certificates representing such securities together with duly
executed stock and bond transfer powers, as the case may be, with signatures
guaranteed by a bank or a member firm of the New York Stock Exchange, Inc., (b)
transfer on the books of a Clearing Organization, or (c) such other means as
Borrower and Lender may agree. In every transfer of securities hereunder, the
transferor shall take all steps necessary (i) to effect a "transfer" under
Section 8-313 of the New York Uniform Commercial Code or, where applicable,
under any U.S. federal regulation governing transfers of securities and (ii) to
provide the transferee with comparable rights under any applicable foreign law
or regulation.
16.2 All transfers of cash Collateral hereunder shall be by (a) wire
transfer in immediately available, freely transferable funds or (b) such other
means as Borrower and Lender may agree. All other transfers of cash hereunder
shall be made in accordance with the preceding sentence or by delivery of a
certified or official bank check representing next-day New York Clearing House
Funds.
16.3 All transfers of a letter of credit from Borrower to Lender shall be
made by physical delivery to Lender of an irrevocable letter of credit issued by
a "bank" as defined in Section 3(a)(6)(A)-(C) of the Exchange Act. Transfer of a
letter of credit from Lender to Borrower shall be made by causing such letter of
credit to be returned or by causing the amount of such letter of credit to be
reduced to the amount required after such transfer.
16.4 A transfer of securities, cash or letters of credit may be effected
under this Section 16 on any day except (a) a day on which the transferee is
closed for business at its address set forth in Schedule A hereto or (b) a day
on which a Clearing Organization or wire transfer system is closed, if the
facilities of such Clearing Organization or wire transfer system are required to
effect such transfer.
17. CONTRACTUAL CURRENCY.
---------------------
17.1 Borrower and Lender agree that: (a) any payment in respect of a
distribution under Section 7 shall be made in the currency in which the
underlying distribution of cash was made; (b) any return of cash shall be made
in the currency in which the underlying transfer of cash was made and (c) any
other payment of cash in connection with a Loan under this Agreement shall be in
the currency agreed upon by Borrower and Lender in connection with such Loan
(the currency established under clause (a), (b) or (c) hereinafter referred to
as the "Contractual Currency"). Notwithstanding the foregoing, the payee of any
such payment may, at its option, accept tender thereof in any other currency;
provided, however, that, to the extent permitted by applicable law, the
obligation of the payor to make such payment will be discharged only to the
extent of the amount of Contractual Currency that such payee may, consistent
with normal banking procedures, purchase with such other currency (after
deduction of any premium and costs of exchange) on the banking day next
succeeding its receipt of such currency.
10
17.2 If for any reason the amount in the Contractual Currency received
under Section 17.1, including amounts received after conversion of any recovery
under any judgment or order expressed in a currency other than the Contractual
Currency, falls short of the amount in the Contractual Currency due in respect
of this Agreement, the party required to make the payment will (unless a Default
has occurred and such party is the non-defaulting party) as a separate and
independent obligation and to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall.
17.3 If for any reason the amount in the Contractual Currency received
under Section 17.1 exceeds the amount in the Contractual Currency due in respect
of this Agreement, then the party receiving the payment will (unless a Default
has occurred and such party is the non-defaulting party) refund promptly the
amount of such excess.
18. ERISA. Lender shall, if any of the securities transferred to the Borrower
hereunder for any Loan have been or shall be obtained, directly or indirectly,
from or using the assets of any Plan, so notify Borrower in writing upon the
execution of the Agreement or upon initiation of such Loan under Section 1.1. If
Lender so notifies Borrower, then Borrower and Lender shall conduct the Loan in
accordance with the terms and conditions of Department of Labor Prohibited
Transaction Exemption 81-6 (46 Fed. Reg. 7527, Jan. 23, 1981; as amended, 52
Fed. Reg. 18754, May 19, 1987), or any successor thereto (unless Borrower and
Lender have agreed prior to entering into a Loan that such Loan will be
conducted in reliance on another exemption, or without relying on any exemption,
from the prohibited transaction provisions of Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, and Section 4975 of the
Internal Revenue Code of 1986, as amended). Without limiting the foregoing and
notwithstanding any other provision of this Agreement, if the Loan will be
conducted in accordance with Prohibited Transaction Exemption 81-6, then:
18.1 Borrower represents and warrants to Lender that it is either (i)
a bank subject to federal or state supervision, (ii) a
broker-dealer registered under the Exchange Act or (iii) exempt
from registration under Section 15(a)(1) of the Exchange Act as a
dealer in Government Securities.
18.2 Borrower represents and warrants that, during the term of any
Loan hereunder, neither Borrower nor any affiliate of Borrower
has any discretionary authority or control with respect to the
investment of the assets of the Plan involved in the Loan or
renders investment advice (within the meaning of 29 C.F.R.
Section 2510.3-21(c)) with respect to the assets of the Plan
involved in the Loan. Lender agrees that, prior to or at the
commencement of any Loan hereunder, it will communicate to
Borrower information regarding the Plan sufficient to identify to
Borrower any person or persons that have discretionary authority
of control with respect to the investment of the assets of the
Plan involved in the Loan or that render investment advice (as
defined in the preceding sentence) with respect to the assets of
the Plan involved in the Loan. In the event Lender fails to
communicate and keep current during the term of any Loan such
information, Lender rather than Borrower shall be deemed to have
made the representation and warranty in the first sentence of
this clause 18.2.
18.3 Borrower and Lender agree that:
(a) the term "Collateral" shall mean cash, securities issued or
guaranteed by the United States government or its agencies
or instrumentalities, or irrevocable bank letters of credit
issued by a person other than Borrower or an affiliate
thereof;
(b) prior to the making of any Loans hereunder, Borrower shall
provide Lender with (A) the most recent available audited
statement of Borrower's financial condition and (B) the most
recent available unaudited statement of Borrower's financial
condition (if more recent than the most recent audited
statement), and each Loan made hereunder shall be deemed a
representation by Borrower that there has been no material
adverse change in Borrower's financial condition subsequent
to the date of the latest financial statements or
information furnished in accordance herewith;
(c) the Loan may be terminated by Lender at any time, whereupon
Borrower shall deliver the Loaned Securities to Lender
within the lesser of (A) the customary delivery period for
such securities; (B) five Business Days and (C) the time
negotiated for such delivery between Borrower and Lender;
provided, however, that Borrower and Lender may agree to a
longer period only if permitted by Prohibited Transaction
Exemption 81-6; and
(d) the Collateral transferred shall be security only for
obligations of Borrower to the Plan with respect to Loans,
and shall not be security for any obligation of Borrower to
any agent or affiliate of the Plan.
19. SINGLE AGREEMENT. Borrower and Lender acknowledge that, and have entered
into this Agreement in reliance on the fact that, all Loans hereunder constitute
a single business and contractual relationship and have been entered into in
consideration of each other. Accordingly, Borrower and Lender hereby agree that
payments, deliveries and other transfers made by either of them in respect of
any Loan shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Loan hereunder, and the
obligations to make any such payment, deliveries and other transfers may be
applied against each other and netted. In addition, Borrower and Lender
acknowledge that, and have entered into this Agreement in reliance on the fact
that, all Loans hereunder have been entered into in consideration of each other.
Accordingly, Borrower and Lender hereby agree that (a) each shall perform all of
its obligations in respect of each Loan hereunder, and that a default in the
performance of any such obligation by Borrower or by Lender (the "Defaulting
Party") in any Loan hereunder shall constitute a default by the Defaulting Party
under all such Loans hereunder, and (b) the non-defaulting party shall be
entitled to set off claims and apply property held by it in respect of any Loan
hereunder against obligations owing to it in respect of any other Loan with the
Defaulting Party.
20. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.
21. WAIVER. The failure of a party to this Agreement 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 or any other term of this Agreement. All waivers in
respect of a Default must be in writing.
22. REMEDIES. All remedies hereunder and all obligations with respect to any
Loan shall survive the termination of the relevant Loan, return of Loaned
Securities or Collateral and termination of this Agreement.
23. NOTICES AND OTHER COMMUNICATIONS. Unless another address is specified in
writing by the respective party to whom any notice or other communication is to
be given hereunder, all such notices or communications shall be in writing or
confirmed in writing and delivered at the respective addresses set forth in
Schedule A attached hereto. All notices shall be effective upon actual receipt,
provided, however, that if any notice shall be received by a party on a day on
which such party is not open for business at its office located at the address
set forth in Schedule A, such notice shall be deemed to have been received by
such party at the opening of business on the next day on which such party is
open for business at such address.
24. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
24.1 EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY SUCH COURT, SOLELY
FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT TO ENFORCE ITS
OBLIGATIONS HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY LOAN
HEREUNDER AND (B) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF ITS PLACE OF
RESIDENCE OR DOMICILE.
24.2 EACH PARTY HERETO 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.
25. MISCELLANEOUS. This Agreement supersedes any other agreement between the
parties hereto concerning loans of securities between Borrower and Lender. This
Agreement shall not be assigned by either party without the prior written
consent of the other party and any attempted assignment without such consent
shall be null and void. Subject to the foregoing, this Agreement shall be
binding upon and shall ensure to the benefit of Borrower and Lender and their
respective heirs, representatives, successors and assigns. This Agreement may be
terminated by either party upon written notice to the other, subject only to
fulfillment of any obligations then outstanding. This Agreement shall not be
modified, except by an instrument in writing signed by the party against whom
enforcement is sought. The parties hereto acknowledge and agree that, in
connection with this Agreement and each Loan hereunder, time is of the essence.
Each provision and agreement herein shall be treated as separate and independent
from any other provision herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.
26. Definitions. For the purposes hereof:
------------
26.1 "Broker-Dealer" shall mean any person that is a broker (including a
municipal securities broker), dealer, municipal securities dealer, government
securities broker or government securities dealer as defined in the Exchange
Act, regardless of whether the activities of such person are conducted in the
United States or otherwise require such person to register with the Securities
and Exchange Commission or other regulatory body.
26.2 "Business Day" shall mean, with respect to any Loan hereunder, a day
on which regular trading occurs in the principal market for the Loaned
Securities subject to such Loan, provided, however, that for purposes of Section
15, such term shall mean a day on which regular trading occurs in the principal
market for the securities whose value is being determined. Notwithstanding the
foregoing, (i) for purposes of Section 8, "Business Day" shall mean any day on
which regular trading occurs in the principal market for any Loaned Securities
or for any securities Collateral under any outstanding Loan hereunder and "next
Business Day" shall mean the next day on which a transfer of Collateral may be
effected in accordance with Section 16; and (ii) in no event shall a Saturday or
Sunday be considered a Business Day.
26.3 "Clearing Organization" shall mean The Depository Trust Company, or,
if agreed to by Borrower and Lender, such other clearing agency at which
Borrower (or Borrower's agent) and Lender (or Lender's agent) maintain accounts,
or a book-entry system maintained by a Federal Reserve Bank.
26.4 "Collateral" shall mean, whether now owned or hereafter acquired and
to the extent permitted by applicable law, (a) any property which Borrower and
Lender agree shall be acceptable collateral prior to the Loan and which is
transferred to Lender pursuant to Section 3 or 8 (including as collateral, for
definitional purposes, any letters of credit mutually acceptable to Lender and
Borrower), (b) any property substituted therefor pursuant to Section 3.5, (c)
all accounts in which such property is deposited and all securities and the like
in which any cash collateral is invested or reinvested, and (d) any proceeds of
any of the foregoing. For purposes of return of Collateral by Lender or purchase
or sale of securities pursuant to Section 12 or 13, such term shall include
securities of the same issuer, class and quantity as the Collateral initially
transferred by Borrower to Lender.
26.5 "Customer" shall mean any person that is a customer of Borrower under
Rule 15c3-3 under the Exchange Act or any comparable regulation of the Secretary
of the Treasury under Section 15C of the Exchange Act (to the extent that
Borrower is subject to such Rule or comparable regulation).
26.6 "Cutoff Time" shall mean a time on a Business Day by which a transfer
of cash, securities or other property must be made by Borrower or Lender to the
other, as shall be agreed by Borrower and Lender in Schedule B or otherwise
orally or in writing or, in the absence of any such agreement, as shall be
determined in accordance with market practice.
26.7 "Default" shall have the meaning assigned in Section 11.
26.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
26.9 "Federal Funds Rate" shall mean the rate of interest (expressed as an
annual rate), as published in Federal Reserve Statistical Release H.15(519) or
any publication substituted therefor, charged for federal funds (dollars in
immediately available funds borrowed by banks on an overnight unsecured basis)
on that day or, if that day is not a banking day in New York City, on the next
preceding banking day.
26.10 "Foreign Securities" shall mean, unless otherwise agreed, securities
that are principally cleared and settled outside the United States.
26.11 "Government Securities" shall mean government securities as defined
in Section 3(a)(42)(A)-(C) of the Exchange Act.
26.12 "LIBOR" shall mean for any date, the offered rate for deposits in
U.S. dollars for a period of three months which appears on the Reuters Screen
LIBO page as of 11:00 A.M., London time, on such date (or, if at least two such
rates appear, the arithmetic mean of such rates).
26.13 "Loan" shall mean a loan of securities hereunder.
26.14 "Loaned Security" shall mean any security which is a security as
defined in the Exchange Act, transferred in a Loan hereunder until such security
(or an identical security) is transferred back to Lender hereunder, except 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 is made. For purposes of return of Loaned Securities by Borrower or
purchase or sale of securities pursuant to Section 12 or 13, such term shall
include securities of the same issuer, class and quantity as the Loaned
Securities, as adjusted pursuant to the preceding sentence.
26.15 "Plan" shall mean (a) any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 which is
subject to Part 4 of Subtitle B of Title I of such Act; (b) any "plan" as
defined in Section 4975(e)(1) of the Internal Revenue Code of 1986 or (c) any
entity the assets of which are deemed to be assets of any such "employee benefit
plan" or "plan" by reason of the Department of Labor's plan asset regulation, 29
C.F.R. Section 2510.3-101.
NVEST KOBRICK INVESTMENT TRUST ON
BEHALF OF EACH OF THE FUNDS IDENTIFIED
MS SECURITIES SERVICES INC. ON SCHEDULE B
By:/s/ Xxxxxx X. Tell By: /s/ Xxxxxxx Xxxxxxx
------------------------ -------------------
Title: President Title: Secretary
15
Schedule A
NAMES AND ADDRESSES FOR COMMUNICATIONS
MS SECURITIES SERVICES INC.
1221 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxx Tell, President
Tel.: (000) 000-0000
Fax: (000) 000-0000
NVEST KOBRICK INVESTMENT TRUST
c/x Xxxxxxx Funds LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxxxxx, Chief Operating Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
SCHEDULE B
Kobrick Capital Fund
Kobrick Emerging Growth Fund
Kobrick Growth Fund
ANNEX I
[Intentionally omitted.]
ANNEX II
SUPPLEMENTAL TERMS AND CONDITIONS
The following Supplemental Terms and Conditions (the "Supplement") supplement
and amend the Bond Market Association Master Securities Loan Agreement dated
June 19, 2000 (the "Agreement") between MS Securities Services Inc. and Nvest
Kobrick Investment Trust on behalf of each of the funds identified on Schedule
B:
1. The words "or Lender" shall be deleted from the first line of Section 1.1
of this Agreement.
2. The phrase "arising out of this Agreement" shall be inserted at the end of
the first sentence of Section 3.2 of the Agreement. The words "securities
intermediary" shall be inserted after the words "financial intermediary" in
the last sentence of Section 3.2.
3. The term "substituted Collateral" in first sentence of Section 3.5 of the
Agreement after the phrases "provided however that such" and "the aggregate
market value of such", shall be changed to "substitute Collateral" in both
instances, and the phrase "(or other Collateral acceptable to Lender)"
shall be inserted after the words "substitute letter of credit" in the last
sentence of such Section.
4. The phrase "market or" shall be inserted after the words "based on the
aggregate" in first sentence of Section 4.1 of the Agreement and the phrase
"as agreed" shall be inserted after the words "par value" in the first
sentence of such Section.
5. The word "equal" in the first sentence of Section 7.2 of the Agreement
shall be deleted and replaced with the word "equivalent".
6. The word "equal" in the second sentence of Section 7.3 of the Agreement
shall be deleted and replaced with the word "equivalent".
7. The phrase "Subject to Section 7.4 (d)," shall be inserted at the beginning
of Section 9.3 of the Agreement.
8. The following sentence shall be added at the end of the definition of
"Collateral" in Section 26.4: "Notwithstanding the foregoing, the parties
agree that the following types of property shall be the only acceptable
Collateral for any Loan: (i) cash and (ii) securities issued or guaranteed
by the U.S. government or its agencies."
9. Unless otherwise agreed, the Margin Percentage shall be as follows: (a) US
and Canadian exchange traded and over-the-counter equity securities: 102%
(b) Non-US and Non-Canadian exchange traded equity securities: 105% (c) All
fixed income securities: 102%
10. Unless otherwise agreed by the parties, when Borrower gives other than cash
Collateral, Fees shall be calculated in accordance with Section 4, except
that Fees shall be based on the Market Value of Loaned Securities plus
accrued and unpaid interest to the extent accrued interest is not included
in the market value of the Loaned Securities.
11. Notwithstanding anything contained in the Agreement, Lender and Borrower
agree that in effecting Loans transfers between Lender's Account and Borrower's
Account are intended to be, and shall be deemed to be, simultaneous.
Notwithstanding the foregoing, if Lender has failed to deliver the Loaned
Securities to Borrower's Account or Borrower has failed to deliver the
Collateral to Lender's Account by the applicable Cutoff time for such Loan, then
no Loan shall have occurred and Borrower (in the case of Lender's failure to
deliver) or Lender (in the case of Borrower's failure to deliver), shall have
the absolute right to the return of the Collateral or Loaned Securities, as the
case may be. Until such Collateral or Loaned Securities are redelivered to
either Borrower (in the case of Lender's failure to deliver) or Lender (in the
case of Borrower's failure to deliver), the party that failed to deliver such
Collateral or Loaned Securities shall hold such securities in escrow for the
other party and shall be required to pay to such party interest based on the
market value of the Collateral or Loaned Securities, as the case may be, (i) in
the case of foreign securities, at the LIBOR rate and (ii) in the case of any
other securities, at the Federal Funds Rate, for each day that such redelivery
obligation remains outstanding. For purposes of this Paragraph 10, the following
terms shall have the following meanings:
"Lender's Account" shall mean the account maintained by Lender for the
deposit of Collateral with respect to each Loan and, for such purposes,
Lender's Account shall be deemed to be a "securities account" within the
meaning of the New York Uniform Commercial Code. For purposes of this
Amendment, Lender's Account shall include any account for the deposit of
cash in connection therewith.
"Borrower's Account" shall mean the account maintained by Borrower for the
deposit of Loaned Securities with respect to each Loan and, for such
purposes, Borrower's Account shall be deemed to be a "securities account"
within the meaning of the New York Uniform Commercial Code. For purposes of
this Amendment, Borrower's Account shall include any account for the
deposit of cash in connection therewith.
12. The parties agree that the Agreement shall constitute a separate and
discrete agreement between MS and each Fund, as if set out in a separate
writing executed only by MS and by or on behalf of such Fund alone.
Notwithstanding any other provision of the Agreement (including any
confirmation, whether now in existence or hereafter coming into being or
any Supplement to the Agreement), no Fund shall have any obligation or
incur any liability in respect of any Loan entered into by or on behalf of,
or any action, omission, or course of dealing of or in respect of, any
other Fund.
Each Loan entered into pursuant the Agreement shall for all purposes be and
be deemed to be entered into between MS and only the individual Fund named
in the confirmation relating to such Loan, and no other Fund, whether or
not a series of shares of the same business trust or other entity, shall
have any obligation or incur any liability in respect of such Loan.
Specifically, and without limiting the generality of the foregoing, (i) the
provisions as to collateral in the Agreement in respect of any Loan shall
be the obligations solely of the Fund which is a party to such Loan; (ii)
an Event of Default in respect of one Fund under Paragraph 11 of the
Agreement shall not create any right or obligation with respect to any
other Fund, and MS's remedies under the Agreement upon the occurrence of an
Event of Default shall be determined as if each Fund had entered into a
separate Master Securities Loan Agreement with MS, and conversely, an Event
of Default in respect of MS against a Fund under Paragraph 11 of the
Agreement shall not create any right or obligation with respect to any
other Fund, and (iii) MS shall have no right to set off claims or
obligations arising out of or in respect of any Loan entered into by any
one Fund against claims or obligations arising out of or in respect of any
Loan entered into by any other Fund.
Each Fund hereby represents to MS that a copy of the "Agreement and
Declaration of Trust" of the Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts. Notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees
and not individually, and that the obligations arising out of this
instrument are not binding upon any of the Trustees, officers, or
shareholders individually but are binding only upon the assets and property
of the Trust.
13. THIS SUPPLEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF.
Except as otherwise set forth herein, the Agreement shall remain unchanged
and in full force and effect. From and after the date hereof, any reference
to the Agreement shall be a reference to the Agreement as amended hereby.
NVEST KOBRICK INVESTMENT TRUST
ON BEHALF OF EACH OF THE FUNDS
MS SECURITIES SERVICES INC. IDENTIFIED ON SCHEDULE B
By:/s/ Xxxxxx X. Tell By: /s/ Xxxxxxx Xxxxxxx
------------------------ -------------------
Title: President Title: Secretary
3
