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2018 Global Master Securities Lending Agreement (Pledge Version)
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Section 2 in a Nutshell™
Use at your own risk, campers!
Full text of Section 2
2. Interpretation
2.1 In this Agreement:
Act of Insolvency means in relation to either Party:
- (a) its making a general assignment for the benefit of, or entering into a reorganisation, arrangement, or composition with creditors; or
- (b) its stating in writing that it is unable to pay its debts as they become due; or
- (c) its seeking, consenting to or acquiescing in the appointment of any trustee, administrator, receiver or liquidator or analogous officer of it or any material part of its property; or
- (d) the presentation or filing of a petition in respect of it (other than by the other Party to this Agreement in respect of any obligation under this Agreement) in any court or before any agency alleging or for the bankruptcy, winding up or insolvency of such Party (or any analogous proceeding) or seeking any reorganisation, arrangement, composition, re adjustment, administration, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such petition not having been stayed or dismissed within 30 days of its filing (except in the case of a petition for winding-up or any analogous proceeding in respect of which no such 30 day period shall apply); or
- (e) the appointment of a receiver, administrator, liquidator or trustee or analogous officer of such Party over all or any material part of such Party’s property; or
- (f) the convening of any meeting of its creditors for the purpose of considering a voluntary arrangement as referred to in Section 3 of the Insolvency Act 1986 (or any analogous proceeding);
Applicable Law means the laws, rules and regulations (including double taxation conventions) of any relevant jurisdiction, including published practice of any government or other taxing authority in connection with such laws, rules and regulations;
Base Currency means the currency indicated in paragraph 2 of the Schedule;
Business Day means:
- (a) in relation to Delivery of any Securities, a day other than a Saturday or a Sunday on which banks and Securities markets are open for business generally in the place(s) where the relevant Securities are to be delivered;
- (b) in relation to any payments under this Agreement, a day other than a Saturday or a Sunday on which banks are open for business generally in the principal financial centre of the country of which the currency in which the payment is denominated is the official currency and, if different, in the place where any account designated by the Parties for the making or receipt of the payment is situated (or, in the case of a payment in euro, a day on which TARGET operates);
- (c) in relation to a notice or other communication served under this Agreement, any day other than a Saturday or a Sunday on which banks are open for business generally in the place designated for Delivery in accordance with paragraph 4 of the Schedule; and
- (d) in relation to paragraph 5.4(a) and in any other case, a day other than a Saturday or a Sunday on which banks are open for business generally in each place stated in paragraph 4 of the Schedule;
Buy-in means any arrangement under which, in the event of a seller or transferor failing to deliver Securities to the buyer or transferee, the buyer or transferee of such Securities is entitled under the terms of such arrangement to buy or otherwise acquire Securities Equivalent to such Securities and to recover the cost of so doing from the seller or transferor;
Cash means money in any currency credited to an account or similar claims for the payment or repayment of money;
Cash Collateral means Collateral taking the form of Cash;
Close of Business means the time at which the relevant banks, securities settlement systems or depositaries close in the business centre in which payment is to be made or Securities or Collateral are to be delivered or in the place designated for Delivery in accordance with paragraph 4 of the Schedule (as applicable);
Collateral means such Securities, financial instruments or Cash as are referred to in the table set out under paragraph 1 of the Schedule as being acceptable, from time to time, or any combination thereof as agreed between the Parties;
Control Agreement has the meaning given in the Security Agreement;
Custodian has the meaning given in the Security Agreement;
Defaulting Party has the meaning given in paragraph 10;
Delivery in relation to any Securities, Equivalent Securities or Collateral comprising Securities means:
- (a) the crediting of such Securities (i) in the case of Collateral to be delivered by Borrower, to the relevant Secured Account of Borrower, (ii) in the case of Collateral to be delivered by Lender, to an account of Borrower or (iii) in any other case, to an account of Borrower or Lender, as the case may be, or as it shall direct, or
- (b) by such other means as may be agreed, and deliver shall be construed accordingly;
Designated Office means the branch or office of a Party which is specified as such in paragraph 7 of the Schedule or such other branch or office as may be agreed to in writing by the Parties;
Equivalent or equivalent to in relation to any Loaned Securities provided under this Agreement means Securities or other property, of an identical type, nominal value, description and amount to particular Loaned Securities so provided. If and to the extent that such Loaned Securities consists of Securities that are partly paid or have been converted, subdivided, consolidated, made the subject of a takeover, rights of pre-emption, rights to receive securities or a certificate which may at a future date be exchanged for Securities, the expression shall include such Securities or other assets to which Lender is entitled following the occurrence of the relevant event, and, if appropriate, the giving of the relevant notice in accordance with paragraph 6.4 and provided that Lender has paid to Borrower all and any sums due in respect thereof. In the event that such Loaned Securities have been redeemed, are partly paid, are the subject of a capitalisation issue or are subject to an event similar to any of the foregoing events described in this paragraph, the expression shall have the following meanings:
- (a) in the case of redemption, a sum of money equivalent to the proceeds of the redemption;
- (b) in the case of a call on partly-paid Securities, Securities equivalent to the relevant Loaned Securities, provided that Lender shall have paid Borrower, an amount of money equal to the sum due in respect of the call;
- (c) in the case of a capitalisation issue, Securities equivalent to the relevant Loaned Securities together with the securities allotted by way of bonus thereon;
- (d) in the case of any event similar to any of the foregoing events described in this paragraph, Securities equivalent to the Loaned Securities together with or replaced by a sum of money or Securities or other property equivalent to that received in respect of such Loaned Securities, resulting from such event;
Income means any interest, dividends or other distributions of any kind whatsoever with respect to any Securities;
Income Record Date, with respect to any Securities and an Income payment in respect of such Securities, means the date by reference to which holders of such Securities are identified as being entitled to such payment of Income;
Loaned Securities means Securities which are or are to be the subject of an outstanding Loan;
Market Value means:
- (a) in relation to the valuation of Securities or Equivalent Securities on any date:
- (a)(i) such price as is equal to the market quotation for the mid price of such Securities and/or Equivalent Securities as derived from a reputable pricing information service reasonably chosen in good faith by Lender; or
- (a)(ii) if unavailable the Market Value thereof as derived from the mid price or rate bid by a reputable dealer for the relevant instrument reasonably chosen in good faith by Lender,
- in each case at Close of Business on the previous Business Day, or as specified in the Schedule, unless agreed otherwise or, at the option of either Party where in its reasonable opinion there has been an exceptional movement in the price of the asset in question since such time, the latest available price as determined by Lender, plus (in each case):
- (a)(iii) the aggregate amount of Income which has accrued but not yet been paid in respect of the Securities or Equivalent Securities concerned to the extent not included in such price,
- provided that the price of Securities or Equivalent Securities that are suspended or that cannot legally be transferred, credited or that are transferred or credited or required to be transferred or credited to a government, trustee or third party (whether by reason of nationalisation, expropriation or otherwise) shall for all purposes be a commercially reasonable price agreed between the Parties, or absent agreement, be a price provided by a third party dealer agreed between the Parties, or if the Parties do not agree a third party dealer then a price based on quotations provided by the Reference Dealers. If more than three quotations are provided, the Market Value will be the arithmetic mean of the prices, without regard to the quotations having the highest and lowest prices. If three quotations are provided, the Market Value will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest or lowest price, then one of such quotations shall be disregarded. If fewer than three quotations are provided, the Market Value of the relevant Securities or Equivalent Securities shall be determined by the Party making the determination of Market Value acting reasonably;
- (b) in relation to the valuation of Collateral on any date and subject as provided below, the Market Value of such Collateral determined in accordance with the valuation method specified in the Control Agreement as adjusted to take into account any applicable haircut or margin percentage specified in the Control Agreement, provided that, the value of Collateral that is suspended or that cannot legally be transferred, credited or that is transferred or credited or required to be transferred or credited to a government, trustee or third party (whether by reason of nationalisation, expropriation or otherwise) shall for all purposes be deemed to be zero;
Nominee means a Nominee or agent appointed by either Party to accept Delivery of, hold or deliver Securities, Equivalent Securities and/or Collateral or to receive or make payments on its behalf;
Non-Defaulting Party has the meaning given in paragraph 10;
Notification Time means the time specified in paragraph 1.2 of the Schedule;
Parties means Lender and Borrower and Party shall be construed accordingly;
Posted Collateral means all Collateral, interest, Income, other property and all proceeds of any of the foregoing that have been credited to or received into the relevant Secured Account or otherwise credited to the relevant Secured Account by Custodian (excluding any such Collateral delivered to Borrower from such Secured Account pursuant to paragraph 5.3(b) on the instruction of Lender);
Reference Dealers means, in relation to any Securities, Equivalent Securities or Collateral, four leading dealers in the relevant Securities selected by the Party making the determination of Market Value in good faith;
Required Collateral Value has the meaning given in paragraph 5.3;
Sales Tax means value added tax and any other Tax of a similar nature (including, without limitation, any Sales Tax of any relevant jurisdiction);
Secured Account has the meaning given in the Security Agreement;
Security Agreement means the agreement or instrument specified as such in paragraph 2 of the Schedule;
Settlement Date means the date upon which Securities are due to be delivered to Borrower in accordance with this Agreement;
Stamp Tax means any stamp, transfer, registration, documentation or similar Tax;
Tax means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) imposed by any government or other taxing authority in respect of any transaction effected pursuant to or contemplated by, or any payment under or in respect of, this Agreement; and
Unsettled Loans means, at any time, any Loans in respect of which the relevant Securities have not yet been delivered by Lender to Borrower.
2.2 Headings
- All headings appear for convenience only and shall not affect the interpretation of this Agreement.
2.3 Market terminology
- Notwithstanding the use of expressions such as “borrow”, “lend” etc. which are used to reflect terminology used in the market for transactions of the kind provided for in this Agreement, title to Securities “borrowed” or “lent” shall pass from Lender to Borrower as provided for in this Agreement, Borrower being obliged to deliver Equivalent Securities.
2.4 Currency conversions
- Subject to paragraph 11, for the purposes of determining any prices, sums or values (including, without limitation, the Market Value of Securities and Required Collateral Value) prices, sums or values stated in currencies other than the Base Currency shall be converted into the Base Currency at the latest available spot rate of exchange quoted by a bank selected by Lender (or if an Event of Default has occurred in relation to Lender, by Borrower) in the London inter-bank market for the purchase of the Base Currency with the currency concerned on the day on which the calculation is to be made or, if that day is not a Business Day, the spot rate of exchange quoted at Close of Business on the immediately preceding Business Day on which such a quotation was available.
2.5 The Parties confirm that the introduction of and/or substitution (in place of an existing currency) of a new currency as the lawful currency of a country shall not have the effect of altering, or discharging, or excusing performance under, any term of the Agreement or any Loan thereunder, nor give a Party the right unilaterally to alter or terminate the Agreement or any Loan thereunder. Securities will for the purposes of this Agreement be regarded as Equivalent to other Securities notwithstanding that as a result of such introduction and/or substitution those Securities have been redenominated into the new currency or the nominal value of the Securities has changed in connection with such redenomination.
2.6 Modifications etc. to legislation
- Any reference in this Agreement to an act, regulation or other legislation shall include a reference to any statutory modification or re-enactment thereof for the time being in force.
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