SECUITIES LENDING AGREEMENT ("Lending Agreement"), dated December 22,
1998, between each of those registered investment companies listed on Schedule A
acting on behalf of certain of one or more of its series (each a "Lender")
having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ and The Chase Manhattan Bank ("Chase"), having its principal place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Lender and Chase have entered into a Securities Lending
Agreement dated as of May 8, 1998; and
WHEREAS, Lender and Chase wish to restate in full the terms of that
Agreement;
NOW, THEREFORE, Lender and Chase hereby agree as follows:
Section 1 - Definitions
Unless the context clearly requires otherwise, the following words
shall have the meanings set forth below when used herein:
a) "Account" shall mean the securities account established and
maintained by Chase on behalf of each Lender pursuant to a
separate agreement ("Agreement"), dated as of May 1, 1996, between
Chase and Lender, which Agreement provides, inter alia, for the
safekeeping of Securities received by Chase from time to time on
behalf of Lender.
b) "Agreement" shall have the meaning assigned thereto in the
definition of Account.
c) "Authorized Investment" shall mean any type of instrument,
security, participation or other property in which Cash Collateral
may be invested or reinvested, as described in Section 5(e) hereof
and Appendix 4 hereto (and as such Appendix may be amended from
time to time by written agreement of the parties).
d) "Authorized Person" shall mean, except to the extent that Chase is
advised to the contrary by Proper Instruction, any person who is
authorized to give instructions to Chase pursuant to the Agreement
and any mandates given to Chase in connection with such Agreement.
An Authorized Person shall continue to be so until such time as
Chase receives Proper Instructions that any such person is no
longer an Authorized Person.
e) "Borrower" shall mean an entity listed on Appendix 1 hereto other
than any entity which Chase shall have been instructed to delete
from such list pursuant to Written Instructions and as such
Appendix may be amended in accordance with Section 4(b) hereof.
f) "Business Day" shall have the meaning assigned thereto in the
applicable MSLA.
g) "Cash Collateral" shall mean fed funds, New York Clearing House
Association funds and such U.S. and non-U.S. currencies as may be
pledged by a Borrower in connection with a particular Loan.
h) "Collateral" shall have the meaning assigned thereto in the
applicable MSLA, together with Cash Collateral.
i) "Collateral Account" shall mean, as the case may be, a segregated
account maintained by Chase with itself, with any Depository or
with any Triparty Institution and designated as a Collateral
Account for the benefit of Lender on the books of Chase for the
purpose of holding any one or more of Collateral, Authorized
Investments, and Proceeds in connection with Loans hereunder.
j) "Collateral Requirement" shall have the meaning assigned thereto
in Section 5(c) hereof.
k) "Depository" shall mean: (i) the Depository Trust Company, the
Participants' Trust Company and any other securities depository or
clearing agency (and each of their respective successors and
nominees) registered with the U.S. Securities and Exchange
Commission or registered with or regulated by the applicable
foreign equivalent thereof or otherwise able to act as a
securities depository or clearing agency, (ii) any transnational
depository, (iii) the Federal Reserve book-entry system for the
receiving and delivering of U.S. Government Securities, and (iv)
any other national system for the receiving and delivering of that
country's government securities.
l) "Difference" shall have the meaning assigned thereto in Section
7(c)(ii) hereof.
m) "Dispute Notice" shall have the meaning assigned thereto in
Section 5(g)(iii) hereof.
n) "Distributions" shall have the meaning thereto in Section 3(b)(v)
hereof.
o) "Dollars" shall have the meaning assigned thereto in Section 5(c)
hereof.
p) "Enforcement Notice" shall have the meaning assigned thereto in
Section 5(g)(iii) hereof.
q) "Final Notice" shall have the meaning assigned thereto in Section
5(g)(iii) hereof.
r) "Foreign Securities" shall mean Securities issued by an issuer
that is not organized under the laws of the United States.
s) "Loan" shall mean a loan of Securities hereunder and under the
applicable MSLA.
t) "Loan Fee" shall mean the amount payable by a Borrower to Chase
pursuant to the applicable MSLA in connection with Loans
collateralized other than by Cash Collateral.
u) "Market Value" shall have the meaning assigned thereto in the
applicable MSLA.
v) "MSLA" shall mean a master securities lending agreement or
securities borrowing agreement between Chase and a Borrower,
pursuant to which Chase lends securities on behalf of its
customers (including Lender) from time to time. A copy of Chase's
standard forms of MSLA, including (as applicable) the
international addendum thereto, are annexed as Appendix 3A in the
case of borrowers domiciled in the United States, and as Appendix
3B in the case of borrowers domiciled in the United Kingdom. The
form of MSLA applicable to each Borrower is indicated in Appendix
1.
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w) "Obligation" shall have the meaning assigned thereto in Section
5(g)(i) hereof.
x) "Oral Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
y) "Proceeds" shall mean interest, dividends and other payments and
Distributions received by Chase in connection with Authorized
Investments.
z) "Proper Instructions" shall mean Oral Instructions and Written
Instructions.
aa) "Rebate" shall mean the amount payable by Chase on behalf of
Lender to a Borrower in connection with Loans collateralized by
Cash Collateral, which shall be a percentage of the Cash
Collateral as agreed by the Borrower and Chase.
bb) "Return Date" shall have the meaning assigned thereto in Section
7(c)(i) hereof.
cc) "Securities" shall mean government securities (including U.S.
Government Securities), equity securities, bonds, debentures,
other corporate debt securities, notes, mortgages or other
obligations, and any certificates, warrants or other instruments
representing rights to receive, purchase, or subscribe for the
same, or evidencing or representing any other rights or interests
therein and held pursuant to the Agreement other than those that
Lender from time to time identifies to Chase by Written
Instructions as being unavailable for Loan. Lender may also
specify the maximum percentage (and dollar value) of the total
Market Value of the Account that may be on Loan at any given time
and only that percentage of Securities held in the Account shall
be deemed Securities (it being understood that increases in the
Market Value of Securities on Loan occurring subsequent to the
date of a Loan shall not cause Chase to be in violation of the
foregoing limitation).
dd) "Similar Lending Client" shall have the meaning assigned thereto
in Section 7(e) hereof.
ee) "Term Loan" shall have the meaning assigned thereto in Section
5(h) hereof.
ff) "Triparty Institution" shall mean a financial institution with
which Chase shall have previously entered a triparty agreement
among itself, such Triparty Institution and a particular Borrower
providing, among other things, for the holding of Collateral in
the Collateral Account at such Triparty Institution in Chase's
name on behalf of Chase's lending customers and for the
substitution of Collateral; provided, however, that any
substituted Collateral shall meet the then standards for
acceptable Collateral set by Chase.
gg) "U.S. Government Security" shall mean book-entry securities issued
by the U.S. Treasury (as defined in Subpart 0 of Treasury
Department Circular No. 300 and any successor provisions) and any
other securities issued or fully guaranteed by the United States
government or any agency, instrumentality or establishment of the
U.S. government, including, without limitation, securities
commonly known as "▇▇▇▇▇▇ ▇▇▇▇," ▇▇▇▇▇ ▇▇▇▇," "Fannies ▇▇▇▇" and
"Freddies Macs".
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hh) "U.S. Securities" shall mean Securities issued by an issuer that
is organized under the laws of the United States or any State
thereof or that are otherwise traded in the U.S.
ii) "Written Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
Section 2 - Appointment. Authority
(a) Appointment. Lender hereby appoints Chase as its agent to lend
Securities in the Account on Lender's behalf on a fully disclosed basis to
Borrowers from time to time in accordance with the term hereof and on such terms
and conditions and at such times as Chase shall reasonably determine and Chase
may exercise all rights and powers provided under any MSLA as may be incidental
thereto, and Chase hereby accepts appointment as such agent and agrees to so
act.
(b) Authority. Lender hereby authorizes and empowers Chase to execute
in Lender's name and on its behalf and at its risk all agreements and documents
as may be reasonably necessary to carry out any of the powers herein granted to
Chase. Lender grants Chase the authority set forth herein notwithstanding its
awareness that Chase, in its individual capacity or acting in a fiduciary
capacity for other accounts, may have transactions with the same institutions to
which Chase may be lending Securities hereunder, which transactions may give
rise to actual or potential conflict of interest situations. Chase shall not be
bound to: (i) account to Lender for any such sum received or profit made by
Chase for its own account or the account of any other person or (ii) disclose or
refuse to disclose any information or take any other action if the same would or
might in Chase's judgment, made in good faith, constitute a breach of any law or
regulation or be otherwise actionable with respect to Chase; provided that, in
circumstances mentioned in (ii) above, Chase shall promptly inform Lender of the
relevant facts (except where doing so would, or might in Chase's judgment, made
in good faith, constitute a breach of any law or regulation or be otherwise
actionable as aforesaid).
Section 3 - Representations and Warranties
(a) Representations of each party. Each party hereto represents and
warrants to the other that: (i) it has the power to execute and deliver this
Lending Agreement, to enter into the transactions contemplated hereby, and to
perform its obligations hereunder; (ii) it has taken all necessary action to
authorize such execution, delivery and performance; (iii) this Lending Agreement
constitutes a legal, valid and binding obligation enforceable against it; and
(iv) the execution, delivery and performance by it of this Lending Agreement
shall at all times comply with all applicable laws and regulations.
(b) Representations of Lender. Lender represents and warrants to Chase
that: (i) this Lending Agreement is, and each Loan shall be, legally and validly
entered into, and does not and shall not violate any statute, regulation, rule,
order or judgment binding on Lender, or any provision of Lender's charter or
by-laws, or any agreement binding on Lender or affecting its property; (ii) the
person executing this Lending Agreement and all Authorized Persons acting on
behalf of Lender has and have been duly and properly authorized to do so; (iii)
it is lending Securities as principal and shall not transfer, assign or encumber
its interest in, or rights with respect to, any Securities available for Loan
hereunder; and (iv) it is the beneficial owner of all Securities or otherwise
has the right to lend Securities pursuant to the policies and restrictions
contained in each Lender's prospectus and statement of additional information;
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and (v) it is entitled to receive all interest, dividends and other
distributions ("Distributions") made by the issuer with respect to such
Securities. Lender shall promptly identify to Chase by notice, which notice may
be oral, any Securities that are no longer subject to the representations
contained in (b).
(c) Chase represents and warrants to Lender that: (i) this Lending
Agreement is validly entered into, and does not violate any statute, regulation,
rule, order or judgment binding on Chase, or any provision of Chase's charter or
by-laws, or any agreement binding on Chase or affecting its property; (ii) the
execution, delivery and performance of by Chase of its obligation under each
MSLA and Chase entering into Loans as agent under each MSLA on behalf of Lender,
have been and will be as respects Chase validly entered into, and does not and
will not violate any statute, regulation, rule, order or judgment binding on
Chase, or any provision of Chase's charter or by-laws, or any agreement binding
on Chase or affecting its property and will comply with all laws and regulations
relating to the lending of securities applicable to it; and (iii) it has the
requisite power to perform the obligations imposed on it hereunder and under any
MSLA and any Loan effected pursuant hereto.
(d) Survival of Representations. The representations of each of the
parties made herein shall be deemed made and repeated for all purposes at and as
of all times when any Loan is made.
Section 4 - Borrowers
(a) MSLA. Lender hereby acknowledges receipt of the forms of MSLA and
authorizes Chase to lend Securities in the Account to Borrowers thereunder
pursuant to an agreement substantially in the form thereof. Any material
revisions of an MSLA from the forms annexed shall require the prior written
consent of Lender with respect to Loans of its Securities, which consent shall
not be unreasonably withheld.
(b) Borrowers. Securities may be lent to any Borrower listed in
Appendix 1, as such Appendices may be updated from time to time to add new
Borrowers and to delete entities that have ceased to be potential Borrowers.
Chase will provide Lender with notice of each addition of a Borrower to such
list. If Lender notifies Chase in writing within twenty Business Days from the
date of any such notice that it objects to a potential Borrower, no Loans of
Securities will be made to such potential Borrower. If Lender does not so object
within such twenty Business Day period, each potential Borrower notified to
Lender by Chase shall be deemed acceptable to Lender. If Lender notifies Chase
that a Borrower or potential Borrower is not acceptable, Chase shall be
responsible for ensuring that no Securities are lent to such entity.
Section 5 - Loans
(a) Securities to be lent. Lending opportunities. Loan initiation. All
Securities of Lender held by Chase that are issued, settled or traded in the
markets that have been approved by Chase from time to time for purposes of
Chase's discretionary securities lending program shall be subject to the terms
hereof, except that Foreign Securities which are not subject to payable date
credit by Chase pursuant to ss.5(c) of the Custody Agreement shall not be
available for lending hereunder. Chase shall seek to assure that Lender receives
a fair allocation of lending opportunities vis-a-vis other lenders, taking into
account the demand for and availability of Securities, types of Collateral,
eligibility of Borrowers, limitations on investments of Cash Collateral, tax
treatment, and similar commercial factors. From time to time, Chase may lend to
Borrowers Securities held in the Account (except Securities that are no longer
subject to the representations set forth in Section 3) and shall deliver such
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Securities against receipt of Collateral in accordance with the applicable MSLA.
Chase shall have the right to decline to make any Loans to any Borrower and to
discontinue lending to any Borrower in its sole discretion and without notice to
Lender.
(b) Receipt of Collateral. Collateral substitution. For each Loan,
Chase or a Triparty Institution shall receive and hold all other Collateral
required by the applicable MSLA in a Collateral Account, and Chase is hereby
authorized and directed, without obtaining any further approval from Lender, to
invest and reinvest all or substantially all Cash Collateral in Authorized
Investments. Chase shall credit, or where applicable shall have a Triparty
Institution credit, all Collateral, Authorized Investments and Proceeds to a
Collateral Account and Chase shall ▇▇▇▇ its books and records to identify
Lender's interest therein, it being understood, however, that all monies
credited to a Collateral Account may for purposes of investment be commingled
with cash collateral held for other lenders of securities on whose behalf Chase
may act. Chase may, in its sole discretion, liquidate any Authorized Investment
and credit the net proceeds to a Collateral Account. Chase shall accept
substitutions of Collateral in accordance with the applicable MSLA, and shall
credit, or where applicable shall have a Triparty Institution credit, all such
substitutions to a Collateral Account. Letters of credit are not acceptable as
Collateral.
(c) ▇▇▇▇ to market procedures. (i) Chase shall require initial
Collateral for a Loan in an amount determined by applying the then applicable
"Collateral Requirement" (as defined below) to the Market Value of the Security
that is the subject of the Loan. The Collateral Requirement with respect to a
given Security shall be not less than 102% for Securities issued in the U.S. and
105% for Securities issued outside the U.S. of the Market Value of the Security
which is the subject of a Loan as determined as of the close of trading on the
proceeding Business Day. (ii) With respect to each Loan, if the aggregate Market
Value of the Collateral held by Chase on behalf of Lender of such Loan on any
Business Day is less than the aggregate Market Value of the Securities which are
the subject to such Loan, the Borrower, upon notice thereof by Chase on behalf
of Lender, shall provide additional Collateral, which shall be delivered by the
close of trading that Business Day or for Collateral denominated other than in
United States dollars ("Dollars"), as provided in the applicable MSLA. Such
additional Collateral, together with the Collateral then held by Chase on behalf
of Lender for such Loan, shall be not less than the applicable Collateral
Requirement. In accordance with general market practice, the Market Value of
certain Securities (including, without limitation, U.S. Government Securities),
whether on Loan or received as Collateral, may be determined on a same day basis
by reference to recognized pricing services. Chase may from time to time
establish de minimis guidelines pursuant to which a ▇▇▇▇ would not be made even
where otherwise required hereunder. Chase's de minimis guidelines are as set
forth in Exhibit A hereto and Chase shall not change such guidelines without
first advising Lender.
(d) Changes in procedures applicable to Collateral. The Collateral
procedures set forth in Sections 5(b)-(c) above reflect Chase's current practice
and may be changed by Chase from time to time based on general market conditions
(including volatility of Securities on Loan and of securities Collateral), the
Market Value of Securities on Loan to a given Borrower, and in accordance with
general market practice and regulatory requirements. Chase shall notify Lender
of material revisions to the foregoing procedures. No such change shall reduce
the Collateral Requirement without Lender's prior written consent.
(e) Administration of Cash Collateral. (i) Chase is hereby authorized
to act as the administrator of Cash Collateral in accordance with the investment
guidelines annexed hereto as Appendix 4. (ii) Authorized Investments are made
for the account of, and at the sole risk of, Lender. In that connection, Lender
shall pay to Chase on demand in cash an amount equal to any deficiency in the
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amount of Collateral available for return to a Borrower under a Loan with Lender
pursuant to an applicable MSLA. Chase is authorized to select brokers and
dealers for the execution of trades in connection with the administration of
Cash Collateral, which broker or dealer may be an affiliate of Chase provided
that a competitive execution price is obtained.
(f) Distributions.
(i) Chase shall credit Lender's account on payable date with the
amount of all cash Distributions with respect to Securities on Loan over their
record date that Lender would have received had such Securities not been on Loan
over record date; provided, that with respect to Foreign Securities, Chase's
obligation to credit Lender's account shall extend only to record dates up to
and including the date of any Event of Default (as defined in the applicable
MSLA). To the extent that cash Distributions are not delivered to Chase by
Borrower and Chase has so credited Lender's account with such Distributions,
Chase will be subrogated to Lender's rights against Borrower as provided in
Section 7(d). In connection with the foregoing, Lender shall promptly return any
amount so credited upon oral or written notification from Chase; (a) that such
amount has not been paid by the issuer of the Securities or the paying agent
therefor (as applicable) in the ordinary course of business or (b) that such
amount was incorrectly credited. If Lender does not promptly return any amount
upon such notification, Chase shall be entitled, upon prior written notification
to Lender, to reverse such credit by debiting Lender's account for the amount
previously credited.
(ii) (a) Any non-cash Distribution which is in the nature of a
stock split or a stock dividend shall be added to the existing Loan to which
such dividend relates as of the date such non-cash Distribution is payable and
shall be subject to the provisions of this Lending Agreement and the applicable
MSLA. (b) Any non-cash Distribution which is in the nature of warrants or rights
to purchase shares made with respect to any Loaned Securities shall be deemed to
be a new Loan made by Lender to Borrower (and shall be considered to constitute
Securities on Loan) as of the date such non-cash Distribution is payable and
shall be subject to the provisions of this Lending Agreement and the provisions
of the applicable MSLA; provided that Lender may, by giving Chase ten (10)
Business Days' notice prior to the date of such non-cash Distribution (or such
different amount of time as Chase may from time to time reasonably request and
with Lender's prior written consent require on advice to Lender), direct Chase
to request that the Borrower deliver such non-cash Distribution to Chase
pursuant to the applicable MSLA, in which case, and provided such delivery has
been made, Chase shall credit such non-cash Distribution to Lender's account on
the payable date. (c) If upon Chase's request on behalf of Lender, Borrower
fails to deliver the non-cash Distribution on its payable date, the indemnity
provisions and corresponding subrogation rights set forth in Section 7 will
apply.
(iii) During the term of any Loan, Chase will permit the Securities
on Loan to be transferred into the name of and be voted by the Borrower or
others. Lender shall not be entitled to participate in any dividend reinvestment
program with respect to Securities eligible for Loan or, subject to the proviso
hereto, to vote proxies with respect to Securities that are on Loan as of the
applicable record date for such Securities; provided that, if the Lender so
requires, Chase, on a best efforts basis, will attempt to recall, for the sole
purpose of voting a proxy, any security on loan, prior to record date, if Chase
is notified by the Lender within one settlement period prior to that record
date.
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(g) Advances, overdrafts and indebtedness. Security Interest.
(i) Chase may, in its sole discretion, advance funds on behalf of
Lender in order to pay to Borrowers any Rebates or to return to Borrowers Cash
Collateral to which they are entitled pursuant to the applicable MSLA. Lender
shall repay Chase on demand the amount of any advance or any other amount owed
by Lender hereunder (each an "Obligation"). Any such advance shall be deemed a
service provided by Chase hereunder for which Chase is entitled to recover its
costs as may be determined by Chase in good faith. In order to secure repayment
of any advance or other indebtedness of Lender to Chase arising hereunder, Chase
shall have security interest in and to all assets now or hereafter held in the
Account and any Collateral Account (to which Lender is entitled hereunder) and
any other property at any time held by it for the benefit of Lender or in which
Lender may have an interest which is then in Chase's possession or control or in
the possession or control of any third party acting on Chase's behalf. In this
regard, Chase shall be entitled to all the rights and remedies of a pledgee
under common law and a secured party under the New York Uniform Commercial Code
and/or any other applicable laws and/or regulations as then in effect.
(ii) Chase and Lender each acknowledge that the purpose of
Obligations is to temporarily finance Rebates or the return of Cash Collateral
to meet expenses not reasonably foreseeable by Lender and otherwise to meet
Lender's obligations hereunder, and that no such Obligation is intended to
create a "Senior Security as that term is defined in the Investment Company Act
of 1940, as amended.
(iii) Chase shall not, other than in the event of Lender's
bankruptcy, insolvency or the like, enforce any security interest hereunder
without first notifying Lender of its intent of enforce the security interest
("Enforcement Notice"), which notice shall specify the amount of the Obligation
Chase has determined that it is owed and setting forth the reason that such
Obligation was incurred. Lender shall have ten Business Days from its receipt of
the Enforcement Notice either to pay the Obligation or notify Chase that it
disputes its responsibility to repay all or part of the Obligation ("Dispute
Notice") and request that the parties negotiate in good faith to resolve the
dispute. In the event that Lender does not dispute a portion of an Obligation it
shall pay the undisputed portion no later than the date of the Dispute Notice.
If the dispute is not resolved within 20 Business Days from the date of the
Dispute Notice, Chase may at any time thereafter, and upon two Business Day's
notice to Lender ("Final Notice"), enforce its security interest by taking title
to (at the then prevailing fair market value) or selling in a commercially
reasonable manner, as much of the Securities as shall be required to repay such
Obligation in full. To the extent that a specific Security is subject to a
security interest hereunder, Lender may, at any time replace such Security with
an otherwise unencumbered security of equal fair market value and credit quality
as measured by Moody's and Standard & Poors but, where Chase has sent a Final
Notice, such replacement must be advised to Chase prior to the expiration of the
applicable two Business Day period.
(h) Termination of a Loan. (i) Loans shall be terminable on demand.
With the prior approval of Lender, however, Loans may be made on the basis of a
reasonably anticipated termination date ("Term Loan") and without providing for
the right of substitution of equivalent securities. Termination of a Term Loan
prior to its anticipated termination date by either Lender or Borrower may
result in the terminating party having to pay the non-terminating party damages
based on the cost of obtaining a replacement loan. (ii) Chase shall terminate
any Loan of Securities to a Borrower as soon as practicable after: (a) receipt
by Chase of a notice of termination of the respective MSLA; (b) receipt by Chase
of Written Instructions directing it to terminate a Loan; (c) receipt by Chase
of Written Instructions it to delete from Appendix 1 the Borrower to whom such
8
Loan was made; (d) receipt by Chase of Written Instructions advising that the
Security subject to a Loan is no longer subject to the representations contained
in Section 3 hereof; (e) receipt by Chase of notice advising that an Event of
Default (as defined in the applicable MSLA) has occurred and is continuing
beyond any applicable grace period; (f) whenever Chase, in its sole discretion,
elects to terminate such termination of Loans by Lender (for whatever reason)
the termination date shall be (a) for Foreign Securities, the standard
settlement date for trades of the particular Foreign Securities subject to the
terminated Loan entered into on the date of such notice to Chase in the
principal market for such securities, or (b) for U.S. Securities, the third
Business Day following receipt of such notice by Chase. (iii) If Securities
which are the subject of a Loan being terminated are to be sold by Lender,
Written Instructions shall not be given to Chase later than the time and date as
set forth in Appendix 5 hereto. Chase shall not be liable for any fails
occurring on a settlement date for sale of Securities if timely notice is not
given by Lender as provided in this Section, and shall not be liable in any
event (except as provided in ss.7) for failure of a Borrower to return
Securities on Loan in a timely fashion.
(i) Recordkeeping and Reports. Chase shall establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. Chase shall provide Lender with a monthly statement
describing the Loans made during the preceding month, and the income derived
from Loans, during the period covered by such statement. A party shall comply
with the reasonable requests of the other party for information necessary to the
requester's performance of its duties hereunder.
Section 6 - Default by Borrower
(j) Chase may assume (unless it has actual knowledge to the contrary)
that any representations made by a Borrower in connection with any Loan are
true, that no event which is or may become an Event of Default (as defined in
the applicable MSLA) has occurred and that a Borrower has compiled with its
obligations under the applicable MSLA. Subject to ss.ss.5(f) and 7(b)-(c), Chase
shall have no responsibility for the breach of any obligation, by any Borrower
under or in connection with any MSLA or Loan. Subject to the foregoing, in no
event shall Chase be responsible for the accuracy or completeness of any
information supplied, by any Borrower. (ii) If any Borrower with respect to any
Loan effected pursuant hereto and pursuant to the applicable MSLA fails to
return any loaned Securities when due thereunder for reasons other than relating
to the solvency of the Borrower, Chase shall then take whatever action it deems
appropriate in accordance with general market practice and Chase's reasonable
judgment, including, but not necessarily limited to, claiming compensation from
such Borrower on behalf of Lender in the event a trade executed by Lender fails
on account of such Borrower's failure timely to have returned Securities on Loan
or, where Chase deems it necessary, such other action as may be permitted by the
applicable MSLA, including collecting any applicable penalties or fines. (iii)
If any Borrower with respect to any Loan effected pursuant hereto and pursuant
to the applicable MSLA fails to return any Securities on Loan when due
thereunder for reasons relating to the solvency of the Borrower, Chase shall
take such action as it deems appropriate in accordance with Chase's reasonable
judgment under the applicable MSLA.
Section 7 - Standard of Care. Liabilities. Indemnification
(a) Standard of care. Liabilities. Except as provided in ss.5(f) and
paragraphs (b) and (c) hereof, Chase shall not be liable for any costs,
expenses, damages, liabilities or claims (including attorneys' and accountants'
fees) incurred by Lender, except those costs, expenses, damages, liabilities and
claims arising out of the breach of this Agreement by Chase or Chase's
9
negligence, bad faith or willful misconduct. Chase shall have no obligation
hereunder for: (i) costs, expenses, damages, liabilities or claims (including
attorneys' and accountants' fees), which are sustained or incurred by Lender by
reason of any action or inaction by any pricing service, any Depository or a
Triparty Institution or their respective successors or nominees; and (ii) any
failure to perform any obligation due to any matters beyond the control of
Chase. In no event shall Chase be liable for indirect or consequential damages
or lost profits or loss of business, arising hereunder or in connection
herewith, even if previously informed of the possibility of such damages and
regardless of the form of action.
Except for any costs or expenses incurred by Chase in performing its
obligations pursuant to ss.5(f) paragraphs (b) and (c) hereof, Lender shall
indemnify Chase and hold it harmless from and against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Chase may sustain or incur or which may be asserted against
Chase by reason of or as a result of any action taken or omitted by Chase in
connection with operating under this Lending Agreement or enforcing Lender's
rights under the applicable MSLA, other than those costs, expenses, damages,
liabilities or claims arising out of the negligence, bad faith or willful
misconduct of Chase. The foregoing indemnity shall be a continuing obligation of
Lender, its successors and assigns, notwithstanding the termination of any Loans
hereunder or of this Lending Agreement. Chase may charge any amounts to which it
is entitled hereunder against the Account, and Lender shall be entitled to an
accounting of all amounts so charged. Actions taken or omitted in reliance upon
Proper Instructions, or upon any information, indenture, stock certificate,
power of attorney, assignment, affidavit or other instrument reasonably believed
by Chase, in good faith, to be genuine or bearing the signature of a person or
persons believed, in good faith, to be authorized to sign, countersign or
execute the same, shall be conclusively presumed to have been taken or omitted
in good faith.
(b) Indemnification of Lender in respect of Distributions. If the
Borrower in respect of any Loan effected pursuant hereto and pursuant to the
applicable MSLA fails to deliver any non-cash Distributions with respect to
Securities on Loan as and when requested to do so by Chase as provided in
Section 5(f) hereof, Chase shall, (x) with respect to U.S. Securities at its
option, credit such non-cash Distribution or an amount equivalent thereto to
Lender's account on the date it is due, or (y) with respect to Foreign
Securities at its option, either (i) purchase replacement securities (of an
equal amount of the same issue, class, type or series as the Distribution) on
the principal market in which such securities are traded or (ii) credit Lender's
account, with the Market Value in Dollars of such Distributions on the due date
as determined by Chase in good faith.
(c) Indemnification of Lender in respect of Securities.
(i) U.S. Securities. If the Borrower in respect of any Loan of U.S.
Securities effected hereto and pursuant to the applicable MSLA fails to return
any Securities on Loan to Chase for the Account when due thereunder (the "Return
Date") which is the date of default, then Chase shall, at its expense (subject
to paragraph (d) hereof) deposit replacement Securities of the same issue, type,
class and series to the Account, as soon as practicable. If Chase is unable to
obtain replacement Securities, Chase will credit Lender's account in Dollars
with the Market Value of such loaned Securities on the credit date (including,
in the case of debt Securities, accrued interest up to and including the credit
date). To the extent that the Market Value of the Collateral at the time of
default by the Borrower on a credit date is less than that which is required to
purchase replacement securities or to credit the Lender's account, with the
Market Value of Authorized Investments (and not as a result of a failure by
Chase to perform its obligations pursuant to ss.5(c) hereof), Chase will not be
responsible for that decrease and will deposit replacement securities or credit
Lender's account, with the Market Value of such Loaned Securities only to an
amount net of the decrease in Market Value of Authorized Investments.
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(ii) Foreign Securities. If the Borrower in respect of any Loan of
Foreign Securities effected pursuant hereto and pursuant to the applicable MSLA
fails to return any Securities on Loan to Chase for the Account on the Return
Date, Chase will, at Chase's sole election and at its expense (subject to
paragraph (d) hereof), as soon as practicable, either (x) deposit replacement
Securities of the same issue, type, class and series to the Account or (y)
credit to Lender's Account, in Dollars with the difference ("Difference") (where
a positive number), if any, between (xx) the market value of such lent
Securities on the Return Date (including, in the case of debt Securities,
accrued but unpaid interest), and (yy) in the case of Loans collateralized by
(i) Cash Collateral, the greater of (A) the Market Value of the Cash Collateral
on the date of initial pledge as adjusted for any subsequent marks-to-market
through the Return Date and (B) the Market Value of Authorized Investments on
the Return Date, or (ii) non-Cash Collateral comprising securities Collateral,
the Market Value of such Collateral on the Return Date. Market Value shall be
determined by Chase in accordance with the applicable MSLA, including the
computation of Dollar equivalents where Securities on Loan and/or Collateral
(and Proceeds) are denominated in a currency other than Dollars. Where Cash
Collateral and non-Cash Collateral have been allocated to a Loan as of the
Return Date, the Difference payable by Chase shall be computed in accordance
with the foregoing as if there had been two Loans in effect on the Return Date,
one collateralized by Cash Collateral and the other collateralized by non-Cash
Collateral.
(d) Subrogation. If Chase makes a payment of a purchase pursuant to
ss.ss.5(f), 7(b) or 7(c) Chase shall, to the extent of such payment or purchase,
be subrogated to, and Lender shall assign and be deemed to have assigned to
Chase, all of its rights in, to and against the Borrower (and any guarantor
thereof) in respect of such Loan, any Collateral pledged by the Borrower in
respect of such Loan, and all proceeds of such Collateral. In the event that
Lender receives or is credited with any payment, benefit or value from or on
behalf of the Borrower in respect of rights to which Chase is subrogated as
provided herein, Lender shall promptly remit or pay to Chase the same (or its
Dollar equivalent).
(e) Most Favored Nation. With respect to the indemnity in favor of
Lender contained in ss.7(c) hereof, please be advised that no other "Similar
Lending Client" (as hereinafter defined) of Chase has been given a more
favorable indemnity when such indemnity is viewed in its entirety. A "Similar
Lending Client" shall mean a similar client, giving due consideration to client
type (i.e. a registered investment company), Securities available for Loan and
anticipated revenue to Chase. If a Similar Lending Client is given a more
favorable indemnity when such indemnity is viewed in its entirety, then Lender
shall be given the benefit of such indemnity in its entirety.
Section 8 - Chase Compensation
(a) In connection with each Loan hereunder of: (A) U.S. Securities,
Lender shall pay to Chase a fee equal to 35% of (i) net earnings (i.e. less any
Rebate paid by Chase to a Borrower) derived from Authorized Investments in
connection with Loans collateralized by cash, and (ii) any Securities Loan Fee
paid or payable by the Borrower on Loans not collateralized by cash; and (B)
Foreign Securities, Lender shall pay to Chase a fee equal to 40% of (i) earnings
(less any Rebate paid by Chase to a Borrower) derived from Authorized
Investments in connection with Loans collateralized by cash, and (ii) any
Securities Loan Fee paid or payable by the Borrower on Loans not collateralized
by cash. (b) Effective August 1, 1998, services performed pursuant to Section
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5(e) hereof shall be equal to five one hundredths of one percent (0.05%) of the
Authorized Investments. All Securities constituting Authorized Investments shall
be valued based on their amortized cost. Fees shall be accrued or charged daily,
as appropriate, commencing August 1, 1998, and shall be payable monthly in
arrears on the first business day of the month in which earned. (c) Chase is
authorized, on a monthly basis, to charge all the foregoing fees (together with
reasonable expenses incurred by Chase hereunder) and any other amounts owed by
Lender hereunder against the Account and/or a Collateral Account.
Section 9 - Taxes
Lender shall be responsible for all filings, tax returns and reports on
any Loans undertaken by Chase on Lender's behalf which are to be made to any
authority whether governmental or otherwise and for the payment on Lender's
behalf of all unpaid calls, taxes (including, without limitation, any value
added tax), imposts, levies or duties due on any principal or interest, or any
other liability or payment arising out of or in connection with any Securities
or any Collateral, and in so far as Chase is under any obligation (whether of a
governmental nature or otherwise) to pay the same on Lender's behalf Chase may
do so out of any monies or assets held by it pursuant to the terms of the
Agreement or hereunder. Chase shall advise Lender of all payments made by Chase
on Lender's behalf pursuant to this Section promptly after receiving a request
therefor from Lender.
Section 10 - Instructions
(a) (i) Written Instructions. "Written Instructions" shall mean written
communications actually received by Chase from an Authorized Person or from a
person reasonably believed by Chase to be an Authorized Person by letter,
memorandum, telegram, cable, telex, telecopy facsimile, computer, video (CRT)
terminal or other on-line system, or any other method reasonably acceptable to
Chase and whereby Chase is able to verify with a reasonable degree of certainty
the identity of the sender of such communications or which communications are
transmitted with proper testing or authentication pursuant to terms and
conditions which Chase may specify.
(ii) Oral Instructions. "Oral Instructions" shall mean oral
communications issued to, and actually received by, Chase from an Authorized
Person or from a person reasonably believed by Chase to be an Authorized Person.
Oral Instructions shall promptly thereafter be confirmed in writing by an
Authorized Person (which confirmation may bear the facsimile signature of such
Person), but Lender will hold Chase harmless for the failure of an Authorized
Person to send such confirmation in writing, the failure of such confirmation to
conform to the Oral Instructions received, or Chase's failure to produce such
confirmation at any subsequent time. Lender shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
Chase may make available to Lender or its Authorized Persons.
(b) Unless otherwise expressly provided, all Proper Instructions shall
continue in full force and effect until canceled or superseded.
Section 11 - Pricing Services
Chase may use any pricing service referred to in an applicable MSLA and
any other recognized pricing service (including itself and any of its
affiliates) in order to perform its valuation responsibilities with respect to
Securities, Collateral and Authorized Investments, and Lender shall hold Chase
harmless from and against any loss or damage suffered or incurred as a result of
errors or omissions of any such pricing service (except for prices determined by
Chase itself or an affiliate of Chase).
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Section 12 - Termination
This Lending Agreement may be terminated at any time by either party
upon delivery to the other party of notice specifying the date of such
termination, which shall be not less than 30 days after the date of receipt of
such notice. Notwithstanding any such notice, this Lending Agreement shall
continue in full force and effect with respect to al Loans outstanding on the
termination date, which Loans shall, however, be terminated as soon as
reasonably practicable.
Section 13 - Miscellaneous
(a) Legal proceedings. Chase may refrain from bringing any legal action
or proceeding on behalf of Lender and arising out of or in connection with any
Loan until it shall have received such security as it may reasonably require for
all costs, expenses (including legal fees) and liabilities which it will or may
expend or incur in relation thereto.
(b) Integration. Lending Agreement to Govern. This Lending Agreement
and the Agreement contain the complete agreement of the parties with respect to
the subject matter hereof and supersede and replace the Securities Lending
Agreement between Lender and Chase dated as of May 8, 1997 and any other
previously made proposals, representations, warranties or agreements with
respect thereto by the parties. In the event of any conflict between this
Lending Agreement and the Agreement, this Lending Agreement shall govern.
(c) Notices. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipted courier
service. All such notices which are mailed shall be deemed delivered upon
receipt. Notices shall be addressed as follows (or to such other address as a
party may from time to time designate on notice duly given in accordance with
this paragraph): notices to Chase shall be addressed to it at, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Securities Lending Division; notices to be
given to Lender shall be addressed to at its offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention ▇▇. ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇.
(d) Amendments. Waiver. This Lending Agreement may be modified only by
a written amendment signed by both parties, and no waiver of any provision
hereof shall be effective unless expressed in a writing signed by the party to
be charged.
(e) Governing Law. Consent to Jurisdiction. Waiver of Immunity. This
Lending Agreement shall be construed in accordance with the laws of the State of
New York, without regard to the conflict of laws principles thereof. Lender
hereby consents that any litigation commenced hereunder by Lender shall be
subject to the jurisdiction of a state or federal court situated in New York
City, New York and Chase hereby consents that any litigation commenced hereunder
by Chase shall be subject to the jurisdiction of a state or federal court
situated in Philadelphia, Pennsylvania and Lender and Chase hereby waive any
claim of forum non conveniens to the extent that it may lawfully do so. To the
extent that in any jurisdiction Lender may now or hereafter be entitled to
claim, for itself or its assets, immunity from suit, execution, attachment
(before or after judgment) or other legal process, Lender irrevocably shall not
claim, and it hereby waives, such immunity.
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(f) Counterparts. Headings. This Lending Agreement may be executed in
several counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument. The headings of the sections
hereof are included for convenience of reference only and do not form part of
this Lending Agreement.
(g) Severability. Any provisions of this Lending Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(h) Several obligations. Notwithstanding any other provision hereof, it
is agreed that: (i) the assets and liabilities of each Lender and the individual
series of each such Lender are separate and distinct from the assets and
liabilities of Lender's other series and the assets and liabilities of each
other Lender, and no series of a Lender shall be liable or shall be charged for
any debt, obligation or liability of any other series of Lender or any other
Lender hereunder; and (ii) the relationships and agreements set forth in the
Lending Agreement between Lender, acting on behalf of one or more of its series,
and Chase shall be several, separate and distinct from those between Lender,
acting on behalf of any other series or any other Lender, and Chase, to the same
effect as would be the case if Lender had executed a separate agreement with
Chase in the form hereof with respect to each such series.
IN WITNESS WHEREOF, the parties have executed this Lending Agreement as
of the date first above-written.
DELAWARE FUNDS THE CHASE MANHATTAN BANK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------- ----------------------------------
Title Senior Vice President/Treasurer Title Vice President
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