Exhibit 99 (h)(6)
SECURITIES LENDING AGENCY AGREEMENT dated as of January 3, 2005 among AMR
Investment Services Trust (the "Trust"), on behalf of its International Equity
Portfolio (the "Portfolio"), an investment company organized under the laws of
the Commonwealth of Massachusetts (the Trust on behalf of the Portfolio, the
"Fund"), and ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co., a New York limited partnership with
an office in Boston, Massachusetts ("BBH&Co.").
WHEREAS, the Fund intends to lend securities to securities brokers and
other borrowers which have been or will be approved by the Fund; and
WHEREAS, the Fund intends to appoint BBH&Co. as its lending agent to act
as its agent in connection with the securities lending program and to lend in
accordance with operational procedures established by BBH&Co. and which govern
securities lending activity by the Fund, hereinafter referred to as "Operational
Procedures". Such Operational Procedures shall not be modified or amended except
by instrument in writing signed by the parties hereto;
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, the parties hereto, intending to be bound, hereby agree as follows:
1. APPOINTMENT. The Fund hereby appoints BBH&Co. as its lending agent for
the purposes set forth herein. BBH&Co. hereby accepts such appointment. BBH&Co.
is acting solely as a directed agent of the Fund hereunder and owes no fiduciary
duties to any person with respect to this Agreement. BBH&Co. shall have no
duties or responsibilities in respect to securities lending transactions except
those expressly set forth in this Agreement.
2. AUTHORIZATIONS. The Fund hereby authorizes BBH&Co. to act as its agent
as set forth in this Section.
2.1 LENDING OF AVAILABLE SECURITIES. The Fund hereby authorizes the
lending of those securities identified in Schedule 1 hereto, as the
same may be amended by the Fund from time to time and as otherwise
limited by notice from the Fund ("Available Securities") which are
held in accounts maintained with either the Fund's custodian or
subcustodian (each a "Custody Account").
2.2 LENDING TO APPROVED BORROWERS UNDER APPROVED TERMS. The Fund hereby
authorizes the lending of Available Securities to any one or more of
the institutions prescribed by the Fund and listed on Schedule 2
hereto (each, an "Approved Borrower"). Any such loan shall be on the
terms set forth in a securities loan agreement substantially in the
form of Schedule 3 ("SLA") hereof (including any percentage limits
for loans to each Approved Borrower as reflected on Schedule 2
hereto) unless the Fund otherwise authorizes in writing (the terms
set forth in Schedules 2 and 3 as well as any terms otherwise
authorized by the Fund in writing, "Approved Terms").
2.3 AUTHORIZATIONS BY FUND. The Fund hereby authorizes and empowers
BBH&Co. to execute in the Fund's name all agreements and documents as
may be necessary or appropriate in their judgment to carry out the
purposes of this Agreement. It is understood and agreed that BBH&Co.
is authorized to supply any information regarding the Fund and any
loan of securities effected pursuant to the terms hereof that is
required by this Agreement or under applicable law.
The Fund may approve changes to the Available Securities, Approved
Borrowers or Approved Terms by executing an updated Schedule 1, 2 or 3 as
appropriate and delivering it to BBH&Co..
3. SECURITIES LOAN AGREEMENT. BBH&Co. is hereby authorized to execute a
SLA as the Fund's agent on a disclosed basis with each Approved Borrower. The
Fund hereby authorizes BBH&Co. to revise, without notice to the Fund, the terms
of any SLA with any Approved Borrower as BBH&Co. deems necessary or appropriate,
in its discretion, for the effectuation of any transaction contemplated hereby
or thereby provided that, as so revised, the SLA remains substantially in the
form of Schedule 3 and is not inconsistent with the terms hereof. The Fund
agrees to be bound by the terms of SLA's entered into by BBH&Co. with Approved
Borrowers with respect to the Fund's participation in the securities lending
program as though the Fund were itself a party to all of such agreements. The
Fund specifically approves such form of agreement as set forth in Schedule 3 and
agrees, upon request, to promptly furnish or cause to be furnished to BBH&Co.
the Fund's financial statements to enable BBH&Co. to comply with any request
therefor by any Approved Borrower in connection with any SLA. BBH&Co. shall
negotiate on behalf of the Fund with each Approved Borrower all terms of a
securities loan, including the amounts or fees to be received or paid pursuant
to the applicable SLA. BBH&Co. may prepare a transactional confirmation in
respect of each loan effected pursuant to an SLA, setting forth the securities
borrowed and the material terms of the loan, and may transmit the same to the
Approved Borrower in accordance with such SLA. The Fund understands and agrees
that the identity of the Fund will be disclosed by BBH&Co. to the Approved
Borrower in accordance with the SLA.
4. LOAN OF SECURITIES. During the term of any securities loan, the Fund
shall permit the loaned securities to be transferred, pursuant to an SLA, into
the name of and voted (where applicable) by an Approved Borrower. BBH&Co. is
authorized in its discretion to terminate any securities loan entered into with
an Approved Borrower without prior notice to the Fund, subject to the conditions
of the relevant SLA. The Fund may itself instruct BBH&Co. to terminate any loan
on any date, subject to the conditions of the relevant SLA. BBH&Co. agrees to
comply with any such instruction.
4.1 LIMITS ON RETURN OF LOANED SECURITIES. The Fund acknowledges that,
under the applicable SLA, Approved Borrowers will not be required to
return loaned securities immediately upon receipt of notice from
BBH&Co. terminating the applicable loan, but instead will be required
to return such loaned securities within such period of time following
such notice which is equal to the earlier of (i) the standard
settlement period for trades of the loaned securities entered into on
the date of such notice in the principal market therefor, or (ii)
five business days (as defined in the SLA) from the giving of such
notice.
4.2 RECALL OF LOANED SECURITIES. Upon receiving a notice from the Fund
that Available Securities which have been lent to an Approved
Borrower should no longer be considered Available Securities (whether
because of the sale of such securities or otherwise), BBH&Co. shall
(a) notify promptly thereafter the Approved Borrower which has
borrowed such securities that the loan of such securities is
terminated and that such securities are to be returned within the
time specified by the applicable SLA, or (b) otherwise cause to be
delivered, at its discretion, an equivalent amount of such security
if such amount is available to be loaned from assets of other clients
participating in BBH&Co.'s securities lending program, to the Fund.
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4.3 NOTIFICATION OF SALES OF LOANED SECURITIES. The Fund hereby
acknowledges its obligation to BBH&Co., as applicable, to provide
notification of any sale of securities which are out on loan by the
close of business, in the principal market therefor, on trade date of
such sale, or as otherwise provided for in the Operational
Procedures.
5. LOAN COLLATERAL. For each loan of securities, the Approved Borrower
shall pledge as collateral the following items: (a) cash in U.S. dollars or
foreign currency; or (b) securities issued or fully guaranteed by the United
States government (collectively, "Collateral") having an initial market value
(as determined by BBH&Co. pursuant to the applicable SLA) at least equal to the
market value of the loaned securities (as determined pursuant to the Operating
Procedures and applicable SLA).
5.1 RECEIPT OF COLLATERAL. In respect of the commencement of any loan,
BBH&Co. shall instruct the Approved Borrower to transfer to BBH&Co.
the required Collateral. Collateral will be received from an Approved
Borrower prior to or simultaneous with delivery of securities loaned.
If the Approved Borrower does not provide Collateral to BBH&Co., as
previously agreed, then BBH&Co. will cancel the corresponding loan
instruction prior to delivery.
5.2 HOLDING AND ADMINISTRATION OF COLLATERAL. All Collateral consisting
of cash and securities shall be received, held and administered by
BBH&Co. (as set forth in Operational Procedures) for the benefit of
the Fund in the applicable Custody Account or other account
established for the purpose of holding Collateral. Collateral
consisting of cash shall be placed in an investment listed in the
attached Schedule 4, which may be updated from time to time by the
Fund ("Permitted Investments") in accordance with Section 7 hereof.
5.2.1 MAINTENANCE OF COLLATERAL MARGIN. In respect of loans of
securities entered into on behalf of the Fund, BBH&Co. will
value on a daily basis, in accordance with the applicable SLA,
the loaned securities and all Collateral and, where applicable,
BBH&Co. shall, in accordance with the provisions of the
applicable SLA, request the Approved Borrower to deliver
sufficient additional Collateral to the Fund to satisfy the
applicable margin requirement. If, as a result of
marking-to-market, Collateral is required to be returned to the
Approved Borrower under the SLA, BBH&Co. will timely return
such Collateral to the Approved Borrower.
5.2.2 SUBSTITUTION OF COLLATERAL. The Fund acknowledges and agrees
that, pursuant to any SLA, BBH&Co. may permit an Approved
Borrower to substitute Collateral, which is of the type
specified in Section 5 hereto, during the term of any loan so
long as the required margin in respect of such loan continues
to be satisfied at the time of such substitution.
5.2.3 RETURN OF COLLATERAL. Upon termination of the loan, BBH&Co.
shall instruct the Approved Borrower to return the loaned
securities to the applicable Custody Account. BBH&Co. will
instruct any subcustodian, if applicable, to accept such return
delivery of loaned securities. BBH&Co. shall monitor the return
of loaned securities. Once BBH&Co. has confirmed settlement of
the return of the loaned securities, BBH&Co. shall effect, on
behalf of the Fund, the redemption of any Permitted Investment,
if applicable, and effect the return of Collateral due the
Approved Borrower in accordance with the Approved Borrower's
transfer instructions with respect thereto.
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6. INCOME, CORPORATE ACTIONS AND SUBSTITUTE PAYMENTS. Income, corporate
actions and Substitute Payments (as defined in Sections 6.1 and 6.2) shall be
dealt with as provided in this Section 6.
6.1 INCOME AND RELATED PAYMENTS TO BORROWER. Where Collateral consists of
securities and the Approved Borrower, pursuant to an SLA, is due to
receive an amount equal to the interest or distribution declared
("Collateral Substitute Payment") in respect of such Collateral
during the term of the related securities loan, BBH&Co. shall
promptly remit or cause to be remitted such Collateral Substitute
Payment on behalf of the Fund to the Approved Borrower in accordance
with such Approved Borrower's instructions. BBH&Co. shall likewise
remit, or cause to be remitted, to any Approved Borrower the
applicable Cash Collateral Fee (as defined in the SLA) when due in
accordance with the Approved Borrower's instructions.
6.2 INCOME AND RELATED PAYMENTS TO FUND. BBH&Co. shall instruct each
Approved Borrower which is a party to an SLA to remit any payment
in-lieu-of the interest or distribution declared on loaned securities
("Loan Substitute Payment") which is (i) denominated in a currency
other than U.S. dollars and (ii) denominated in U.S. dollars when the
Loan Substitute Payment is not automatically distributed to the
BBH&Co. depository account on behalf of the Fund by the applicable
depository, and BBH&Co. shall receive, hold and administer the same,
for the account of the Fund. BBH&Co. shall also instruct each
Approved Borrower which is a party to an SLA to remit any other fees
payable on loaned securities to BBH&Co. for the account of the Fund,
and BBH&Co. shall receive, hold and administer the same for the
account of the Fund.
6.3 CORPORATE ACTIONS AND PROXY RIGHTS. The Fund acknowledges that, with
respect to securities which are out on loan over the applicable
record date for such action, unless otherwise agreed hereto, it will
not be entitled to (i) participate in any dividend reinvestment
program; (ii) receive stock in an optional cash/stock dividend plan;
or (iii) vote any proxies. Corporate actions will otherwise be
processed in accordance with the SLA and the Operational Procedures.
7. INVESTMENT OF CASH COLLATERAL. Pursuant to the SLA, the Fund shall have
the right to invest cash Collateral received in respect of any loan, subject to
an obligation, upon the termination of the loan, to return to the borrower the
amount of cash initially pledged (as adjusted for any interim marks-to-market).
7.1 COLLATERAL INVESTMENT DIRECTION. The Fund hereby authorizes and
directs BBH&Co. to cause to be invested, on the Fund's behalf and at
the Fund's sole risk, all Collateral in the form of cash by effecting
purchase and sales and/or subscriptions and redemptions of such
Collateral in any Permitted Investment. BBH&Co. shall, where
applicable, send timely instructions to the transfer agent of the
Permitted Investment with respect to any cash transfers required to
be completed in conjunction with any subscription or redemption in a
Permitted Investment.
7.2 COLLATERAL INVESTMENT RISK. Any such investment shall be at the sole
risk of the Fund. Any income or gains and losses from investing and
reinvesting any cash Collateral delivered by an Approved Borrower
pursuant to an SLA shall be at the Fund's risk, and the Fund agrees
that to the extent any such losses reduce the amount of cash below
the amount required to be returned to the Approved Borrower upon the
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termination of any loan (including any Cash Collateral Fee), the Fund
will, on demand of BBH&Co., immediately pay or cause to be paid to
such Approved Borrower an equivalent amount in cash.
8. BORROWER DEFAULT. In the event of default by an Approved Borrower with
respect to any loan entered into pursuant to a SLA, BBH&Co. will take such
actions as are set forth in the applicable SLA. In addition, the following
provisions shall apply.
8.1 REPLACEMENT OF LOANED SECURITIES. If a borrower fails, pursuant to
the SLA with BBH&Co., to return loaned securities with respect to a
loan when due ("Default Event"), then BBH&Co. shall be responsible to
the Fund as follows: BBH&Co. shall use the Collateral or the proceeds
of the liquidation of such Collateral as soon as reasonably
practicable to purchase for the affected Fund's account, for
settlement in the normal course, replacement securities of the same
issue, type, class and series as that of the loaned securities
("Buy-In"). If the value of the Collateral is less than the purchase
cost of replacement securities (or liquidated damages calculated
under Section 8.2), BBH&Co. shall be responsible for satisfying such
shortfall but only to the extent that such shortfall is not due to
any diminution in the Collateral Value (as defined in this Section)
which is due to the reinvestment risk borne by the Fund pursuant to
Section 7.2 of this Agreement. For purposes of this Section,
"Collateral Value" shall be calculated in accordance with the
following terms:
8.1.1 VALUE OF CASH COLLATERAL. In the case of loans
collateralized solely by cash Collateral, the amount of the
cash Collateral pledged by a borrower with respect to a
loan.
8.1.2 VALUE OF SECURITIES COLLATERAL. In the case of loans
collateralized solely by securities Collateral, the market
value of such Collateral.
8.1.3 VALUATION DATE. Collateral Value shall be determined on the
date of the Buy-In (or the payment made pursuant to Section
8.2 below).
8.1.4 MARKET VALUE. Market value shall be determined by BBH&Co.,
where applicable, based upon prices obtained from recognized
pricing services or dealer price quotations.
8.1.5 MULTIPLE FORMS OF COLLATERAL. Where a loan is collateralized by
more than one type of Collateral, the aggregate market value of
Collateral securing such loan (for the purpose of computing the
indemnity) shall be the sum of the market values for each
relevant type of Collateral.
8.2 IMPOSSIBILITY OF REPLACEMENT/LIQUIDATED DAMAGES. If BBH&Co.
determines that a Buy-In is commercially impracticable, BBH&Co.
shall, in lieu of effecting a Buy-In, pay to the affected Fund an
amount equal to the market value of the loaned securities determined
at the close of business on the date of the Default Event to be
reduced by any shortfall in the Collateral Value that is due to the
reinvestment risk borne by the Fund pursuant to Section 7.2.
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8.3 REPLACEMENT OF DISTRIBUTIONS. In addition to making the purchases or
payments required above, BBH&Co. shall pay to the Fund the value of
all distributions on the loaned securities, the record dates for
which occur before the date that BBH&Co. executes a Buy-In or makes
the payments to the Fund required pursuant to Section 8.2 and that
have not otherwise been credited to the Fund's Custody Account. For
purposes of this Section, the value of such distributions shall be
calculated net of taxes, expenses or other deductions that would
normally accrue to such distributions. BBH&Co. shall use Collateral
or the proceeds of such Collateral to the extent available to make
such payments of distributions and BBH&Co. shall be responsible for
satisfying any shortfall, but only to the extent that such shortfall
in the Collateral Value is not due to the reinvestment risk borne by
the Fund pursuant to Section 7.2 of this Agreement.
8.4 COLLATERAL NOT IN POSSESSION OR CONTROL OF BBH&CO. If, on the date of
the Default Event by reason of the Fund's request or actions, BBH&Co.
is not in possession or control of the Collateral allocated to the
defaulted Loan, the Fund shall cause such Collateral to be
transferred to BBH&Co. by the close of business on the day BBH&Co.
requests such a transfer or, if such request is made by BBH& Co.
after 3:00 p.m. ET on a business day, the next business day. Upon
BBH&Co.'s timely receipt such Collateral shall be applied by BBH&Co.
against the cost of any Buy-In or replacement payment in accordance
with Section 8.2. In the event that such Collateral is not timely
transferred to BBH&Co., the Buy-In or replacement provisions of
Section 8.2 shall not apply and the compensation to the Fund shall be
limited to the shortfall, if any, between the Collateral Value and
the market value of the loaned securities as determined at the close
of business on (i) the date of the Default Event or (ii) the date
such Collateral is so transferred, but only to the extent that any
such shortfall in the Collateral Value is not due to the reinvestment
risk borne by the Fund pursuant to Section 7.2 of this Agreement. The
date of the valuation of the loaned securities pursuant to (i) or
(ii) of this Section 8.4 shall be determined by BBH&Co. in its sole
discretion.
8.5 SUBROGATION AND ASSIGNMENT OF RIGHTS IN COLLATERAL. In the event that
BBH&Co. is required to perform a Buy-In, make any payment of
distributions, and/or make any payment of liquidated damages under
this Section, the Fund agrees that, to the extent of such performance
or payment, BBH&Co. shall be subrogated to, and the Fund shall
assign, and be deemed to have assigned, to BBH&Co. all of such Fund's
rights in, to and against the Borrower in respect of the related
loan, any Collateral pledged by the Borrower in respect of such loan
and all proceeds of such Collateral. In the event that the Fund
receives or is credited with any payment, benefit or value from or on
behalf of the Borrower in respect of rights to which BBH&Co. is
subrogated as provided herein, the Fund shall promptly remit or pay
to BBH&Co. the same (or, where applicable, its United States dollar
equivalent).
9. STATEMENTS. BBH&Co. will provide to the Fund (i) upon request, a daily
statement of activity setting forth information relating to loaned securities,
marks-to-market and termination and (ii) on or about the 7th (seventh) Business
Day of each month, a statement indicating for the preceding calendar month the
securities lent by the Fund, the value of such securities, the identity of the
borrower for each loan, the nature and amount of Collateral pledged or delivered
as security for each loan, the income received (or loss incurred) from the daily
investment of cash Collateral, the amounts of any fees or payments paid with
respect to each loan and such other information as the parties hereto may agree
to from time to time. For purposes hereof, "Business Day" means any day on which
BBH&Co. is open for business in Boston, Massachusetts. BBH&Co. (unless otherwise
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instructed by the Fund) shall instruct any Approved Borrower to remit directly
to BBH&Co., as applicable, all amounts and fees due the Fund pursuant to any
loan of securities, which BBH&Co. shall in turn promptly credit to the Fund's
Custody Account.
10. SIPC COVERAGE. THE PARTIES ACKNOWLEDGE THAT THE PROVISIONS OF THE
SECURITIES INVESTOR PROTECTION ACT OF 1970 MAY NOT PROTECT THE FUND WITH RESPECT
TO THE SECURITIES LOAN TRANSACTION AND THAT, THEREFORE, THE COLLATERAL DELIVERED
BY AN APPROVED BORROWER TO THE FUND MAY CONSTITUTE THE ONLY SOURCE OF
SATISFACTION BY THE APPROVED BORROWER OF ITS OBLIGATION IN THE EVENT THE
APPROVED BORROWER (OR ITS AGENT) FAILS TO RETURN THE SECURITIES.
11. FUND INFORMATION. The Fund covenants and agrees to promptly furnish to
BBH&Co. any information regarding the Fund which is necessary to effect
transactions on behalf of the Fund including, but not limited to, restrictions
it wishes to impose with respect to the acceptance of forms of collateral or
lending to any Approved Borrower(s) or any limitations imposed pursuant to any
applicable law, regulation, authority, charter, by-law, statute or other
instrument.
12. TAX TREATMENT. The Fund acknowledges that the tax treatment of
Substitute Payments may differ from the tax treatment of the interest or
dividend to which such payment relates and that the Fund has made its own
determination as to the tax treatment of any securities loan transactions
undertaken pursuant to this Agreement and of any dividends, distributions,
remuneration or other funds received hereunder. The Fund also acknowledges that,
to the extent that either the Fund or the Approved Borrower is a non-U.S.
resident, BBH&Co. may be required to withhold tax on amounts payable to or by
the Fund pursuant to a securities loan and may at any time claim from the Fund
any shortfall in the amount BBH&Co. so withheld.
13. RESPONSIBILITY OF BBH&CO. Subject to Section 8 hereof and the
requirements of applicable law, BBH&Co. shall not be liable with respect to any
losses incurred by the Fund in connection with this securities lending program
or under any provision hereof, except to the extent that such losses result from
its negligence or willful misconduct in the performance of its duties under this
Agreement. BBH&Co. shall not be liable for losses, costs, expenses or
liabilities caused by or resulting from the acts or omissions of the Fund or of
any agent or third party custodian of the Fund. BBH&Co. shall not be responsible
for any special, punitive, indirect or consequential damages, whether or not
BBH&Co. has been apprised of the likelihood of such damages.
14. FUND INDEMNITY. The Fund hereby indemnifies BBH&Co. (which, for
purposes of this paragraph shall include their respective officers, directors,
partners, managers, employees and agents) from and against any and all claims,
damages, liabilities, losses, costs or expenses (including the fees and expenses
of counsel) incurred, suffered or sustained by BBH&Co., other than pursuant to
Section 8 hereof, which directly or indirectly arise from performance of this
Agreement or any transaction effected pursuant to an SLA, except to the extent
that such claims, damages, liabilities, losses, costs or expenses were caused
solely by the negligence or willful misconduct of BBH&Co.. This indemnity shall
survive the termination of this Agreement and the resignation or removal of
BBH&Co. as agent.
15. SECURITY INTEREST. The Fund hereby grants a lien and security interest
(each a "Security Interest") to BBH&Co. in its interest in any and all
securities to which this Agreement relates, said Security Interests to secure
payment and performance of any indebtedness or other liability the Fund incurs
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to BBH&Co. under this Agreement, including (without limitation) reimbursement of
any payment made under this Agreement in advance of the receipt of good funds
for account of the Fund, as the case may be, in respect of any securities
lending transaction hereunder ("Securities Lending Obligations")
16. REPRESENTATIONS AND WARRANTIES. Each party represents and warrants to
each other that (i) it has due authority to enter into and perform this
Agreement and any transactions contemplated thereby; (ii) the execution and
performance of this Agreement and any transaction contemplated thereby has been
duly authorized by all necessary action, corporate or otherwise, and does not
and will not violate any law, regulation, charter, by-law or other instrument,
restriction or provision applicable to it; and (iii) this Agreement constitutes
such party's legal, valid and binding obligation enforceable in accordance with
its terms. In addition, the Fund represents that: (a) any loan authorized
hereunder and the performance of this Agreement in respect of such loan is
authorized by the prospectus and other constitutive documents of the Fund
(including any limits as to the aggregate amount of authorized lending under
such documents); and (b) as to any securities lent at any time and from time to
time on behalf of the Fund, the Fund shall be the owner thereof with clear title
thereto and no lien, charge or encumbrance upon such securities shall exist.
17. NON-EXCLUSIVITY OF AGENCY SERVICE AND SIMILAR MATTERS. The Fund
acknowledges that BBH&Co., acting on behalf of other accounts, may effect
transactions with or for the same institutions to which loans of securities may
be made hereunder, which transactions may give rise to potential conflict of
interest situations. The Fund further acknowledges that BBH&Co. may engage in
securities lending transactions as agent for other lenders. Lending
opportunities among borrowers shall be allocated at the discretion of BBH&Co. in
an equitable manner.
18. DISCLOSURE OF INFORMATION. The Fund acknowledges that BBH&Co. may
share general information on its securities lending program including statistics
at the Fund and/or aggregate level for consulting practices and benchmarking
purposes. The Fund hereby authorizes BBH&Co. to disclose from time to time
certain Fund information to non-affiliated companies for the above purposes, but
in no event shall such information include the name of the Fund.
19. FORCE MAJEURE. BBH&Co. 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 God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; epidemics; riots; interruptions,
loss or malfunctions of utilities, transportation, computer (hardware or
software) or communications service; accidents; labor disputes; acts of civil or
military authority; governmental actions; or inability to obtain labor,
material, equipment or transportation; provided, however, that BBH&Co. shall be
responsible for exercising reasonable efforts to mitigate the effect of such an
event and to avoid continuing harm to the Fund. Without limiting the foregoing
and subject to Section 8 hereof, BBH&Co. shall not be responsible for economic,
political or investment risks incurred through the Fund's participation in this
securities lending program. Notwithstanding anything to the contrary in Sections
13, 14 and 19 herein, BBH&Co. shall not be responsible for diminution in the
Collateral Value (as defined in this Section) which is due to the reinvestment
risk borne by the Fund pursuant to Section 7.2 of this Agreement
20. RELIANCE ON FUND COMMUNICATIONS. BBH&Co. shall be entitled to
conclusively rely upon any certification, notice or other communication
(including by telephone (if promptly confirmed in writing), telex, facsimile,
telegram or cable) reasonably believed by it to be genuine and correct and to
have been signed or sent by or on behalf of an approved person ("Approved
Person") of the Fund. Set forth in Schedule 5 hereto is a list of Approved
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Persons for each of the parties hereto, which list may be amended by any party
from time to time upon notice to the other parties. No provision of this
Agreement shall require BBH&Co. to expend or risk its own funds in the
performance of its duties hereunder. BBH&Co. reserves the right to notify the
Fund of any restrictions (self-imposed or otherwise) concerning its activities
worldwide. BBH&Co. shall have the right to consult with counsel with respect to
its rights and duties hereunder and shall not be liable for actions taken or not
taken in reliance on such advice.
21. COMPENSATION. The basis of BBH&Co.'s compensation for its activities
hereunder and in respect of any loan is set forth in Schedule 6 hereto. BBH&Co.
shall notify the Fund, on or about the 7th (seventh) Business Day of each month,
of the amount of fees due BBH&Co. hereunder and, promptly upon receipt of such
notice, the Fund shall effect the requisite payment to BBH&Co. in immediately
available funds of U.S. dollars, or pursuant to such other means as provided for
in the Operational Procedures.
22. TERMINATION. This Agreement may be terminated at the option of any of
the parties and, subject to Section 23 hereto, shall be effective upon delivery
of written notice to the other parties hereto or on such date as the written
notice shall provide; provided that the Fund's indemnification and the
obligations of BBH&Co. pursuant to Section 8 hereto shall survive any such
termination. The Fund may remove BBH&Co. as lending agent, with or without
cause. Such removal shall be effective upon delivery of written notice to the
party being removed.
23. ACTION ON TERMINATION. It is agreed that (a) upon receipt of notice
of termination, no further loans shall be made hereunder by BBH&Co. and (b)
BBH&Co. shall, within a reasonable time after termination of this Agreement,
terminate any and all outstanding loans. The provisions hereof shall continue in
full force and effect in all other respects until all loans have been terminated
and all obligations satisfied as herein provided.
24. NOTICES. All notices, demands and other communications hereunder
shall be in writing and delivered or transmitted (as the case may be) by
registered mail, facsimile, telex, courier, or be effected by telephone promptly
confirmed in writing and delivered or transmitted as aforesaid, to the intended
recipient in accordance with Schedule 7 hereto. Notices shall be effective upon
receipt.
25. GOVERNING LAW AND JURISDICTION. This agreement shall be governed by
and construed in accordance with the laws of the State of New York without
reference to conflict of law provisions thereof. The parties hereto hereby
irrevocably consent to the exclusive jurisdiction of (and waive dispute of venue
in) the courts of the State of New York and the federal courts located in New
York City in the Borough of Manhattan.
26. AMENDMENT AND EFFECT. This Agreement shall not be modified or amended
except by an instrument in writing signed by the parties hereto. This Agreement
supersedes any other agreement between the parties hereto concerning loans of
securities owned by the Fund. This Agreement shall not be assigned by any party
without the prior written consent of the other parties. This Agreement may be
executed in several counterparts each of which shall be an original and all of
which shall constitute one and the same. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
9
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf as of the day and year first set forth above.
AMR INVESTMENT SERVICES TRUST, ON BEHALF
OF ITS SERIES, INTERNATIONAL EQUITY PORTFOLIO
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO.
AS AGENT
By:
Name:
Title:
10
SCHEDULE 1
----------
ACCOUNT NOS. AVAILABLE SECURITIES
------------ --------------------
All Securities held in custody at State
Street Bank & Trust Co.
, The maximum market value of securities on loan for the Fund is limited to 33
1/3% of Fund's total assets. Total assets will include the market value of
collateral held.]
11
SCHEDULE 2
----------
APPROVED U.S. BORROWERS
-----------------------
ABN AMRO Incorporated
Barclays Capital Inc.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Bear, ▇▇▇▇▇▇▇ Securities Corp.
Citigroup Global Markets Inc.
Deutsche Bank Securities Inc.
▇▇▇▇▇▇▇, Sachs & Co.
ING Financial Markets LLC
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated/MS Securities Services Inc.
SG Americas Securities, LLC
UBS Securities LLC
The maximum allowable market value of securities on loan per borrower is 25% of
the Fund's total assets. For avoidance of doubt, total assets includes the
market value of collateral held by the Fund.
12
SCHEDULE 3
----------
FORM OF SECURITIES LOAN AGREEMENT
13
SCHEDULE 4
----------
AMR INVESTMENT SERVICES TRUST
AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
SECURITY LENDING CASH COLLATERAL
REINVESTMENT GUIDELINES
APPROVED INVESTMENTS:
---------------------
| | American AAdvantage Money Market Select Fund ("Select Fund")
| | AMR Investments Enhanced Cash Business Trust ("ECBT")
| | Money Market Funds (other than the Select Fund) Registered Pursuant to
Rule 2a-7 ("MMFs")
| | The following Rule 2a-7 Eligible Obligations:
- U.S. Treasury and Agency Obligations
- Domestic, Eurodollar and Yankee:
Bankers' Acceptances
Certificates of Deposit
Commercial Paper
Time Deposits
- Repurchase Agreements
MATURITY:
---------
| | Weighted Average Maturity of 45 Days or Less (The Weighted Average
Maturity of the Select Fund, EYBT and MMFs is the Number of Days
Between When a Redemption Order is Placed and Redemption Proceeds are
Received)
| | Stated Final Maturity of a Fixed Rate Obligation Must Be 90 Days or Less
| | Obligations May Be Variable or Floating Rate; However, the Stated Final
Maturity of a Variable Rate Obligation Must Be 397 Days or Less and
Must Reset Based on a Leading Money Market Indicator (Fed Funds, 1
Month LIBOR or 3 Month LIBOR) at Least Every 90 Days
| | Repurchase Agreements Must Mature Within 7 Days
CREDIT QUALITY:
---------------
| | Securities (other than the Select Fund, MMFs, EYBT and U.S. Treasury
and Agency Securities) Must be Rated at Least A-1 by Standard & Poors and
P-1 by ▇▇▇▇▇'▇
DIVERSIFICATION:
----------------
| | Investments in the Securities of Any One Issuer Cannot Exceed 5% of
the Portfolio Value at the Time of Purchase, except (i) 100% of the
Portfolio Value may be Invested in the Securities of the Select Fund,
MMFs and U.S. Treasury and Agency Securities, and (ii) up to 75% of the
Portfolio Value may be Invested in the Securities of EYBT
| | Industry Concentration, as Determined by the SEC Directory, Will be
Limited to 25% of the Portfolio Value
14
OTHER GUIDELINES:
-----------------
| | Obligations with Caps are Prohibited
| | Investments with Exposure to Foreign Currencies are Prohibited
| | Portfolio Leveraging is Prohibited
| | Illiquid Securities are Prohibited
| | Mortgage-Backed and Asset-Backed Securities are Prohibited
|X| Guideline Limitations Shall be Applied on a Portfolio by Portfolio Basis,
and Not in the Aggregate
15
SCHEDULE 5
----------
LIST OF APPROVED PERSONS
For the Fund: For the Agent:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
16
SCHEDULE 6
----------
FEES
For each cash collateralized loans effected hereunder, 15% of the difference
between (i) the income earned on the investment of cash Collateral held with
respect to such loan (after deduction of any custody, investment, management or
related fees) and (ii) the Cash Collateral Fee (as defined in the applicable
SLA) paid to the borrower in respect of such loan.
For each non-cash collateralized loan effected hereunder, 15% of the Loan Fee
(as defined in the applicable SLA) paid by the borrower with respect to such
loan.
17
SCHEDULE 7
----------
NOTICES
If to the Fund:
Address: 4151 ▇▇▇▇ ▇▇▇▇▇▇ Blvd., MD 2450
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. (at the same address)
If to the Agent:
Address: ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇-▇▇▇▇
18
