Exhibit (h)(2)
SECURITIES LENDING AGREEMENT
CUSTOMER AGREEMENT
(PORTICO FUNDS, INC.)
AGREEMENT, made as of this____day of _________, 2001, by the between
U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States of America with its principal place
of business at Minneapolis, Minnesota (hereinafter referred to as "U.S. Bank"),
and PORTICO FUNDS, INC., a Minnesota corporation ("Portico Funds"), on behalf of
each respective series identified in Exhibit "A" attached hereto (each such
series hereinafter referred to as a separate "Customer").
WITNESSETH:
WHEREAS, Portico Funds is an open-end management investment companies
registered under the Investment Company Act of 1940 (the "1940 Act") which offer
its shares in separate series, with each such series representing a separate and
distinct pool of cash, securities, and other assets; and
WHEREAS, U.S. Bank acts as custodian of the assets of each Customer
pursuant to a separate Custodian Agreement between PORTICO FUNDS, on behalf of
each Customer, and U.S. Bank; and
WHEREAS, each Customer heretofore has opened one or more separate
accounts with U.S. Bank, as such custodian (the account or accounts of each
separate Customer being referred to in this Agreement collectively as that
Customer's "Account"); and
WHEREAS, each Customer now desires to have U.S. Bank engage in
securities lending as Customer's agent with respect to securities from time to
time held in its Account; and
WHEREAS, U.S. Bank and each Customer desire to specify the terms and
conditions under which such securities lending will be performed; and
WHEREAS, U.S. Bank understands that Portico Funds is permitted to
engage U.S. Bank as such securities lending agent only in accordance with the
terms and conditions of that exemptive order granted by the Securities and
Exchange Commission, SEC Release No. IC-22245 (September 24, 1996), including
the Securities and Exchange Commission no-action letters entitled Sife Trust
Fund (pub. Avail. Feb. 17, 1982) and Norwest Bank Minnesota, N.A. (pub. Avail.
May 25, 1995), copies of which have previously been delivered to U.S. Bank (such
exemptive order and letters being referred to herein collectively as the "SEC
Requirements"); and
WHEREAS, U.S. Bancorp Xxxxx Xxxxxxx Asset Management, Inc., a wholly
owned subsidiary of U.S. Bank, acts as investment adviser to each Customer
(referred to herein in such capacity as the "Adviser"); and
WHEREAS, pursuant to the SEC Requirements, the Adviser is permitted to
delegate to U.S. Bank, subject to monitoring by the Adviser, the tasks of
entering into securities loans on behalf of the Customers with pre-approved
borrowers on pre-approved terms, and investing cash received as collateral for
the loans in instruments pre-approved by the Adviser, provided that such
delegation of authority, as well as the borrowers, loan terms, and investment
instruments pre-approved by the Adviser, are detailed in writing.
NOW, THEREFORE, in consideration of the mutual premises, covenants and
undertakings set forth herein, the parties hereto agree as follows:
1. Definitions: For purposes hereof:
a. "Borrower" shall be one or more registered
broker-dealers, or other eligible borrowers as
defined under the Employee Retirement Income Security
Act of 1974, as amended, with which U.S. Bank has
established a securities borrowing agreement whereby
Borrower may borrow securities which U.S. Bank lends
from a Customer's account, and which have been
approved by the Adviser. Such Borrowers are listed in
Exhibit "B" attached hereto. Borrowers may be added
to or deleted from Exhibit "B" by the Adviser by
means of (i) written notice delivered by the Adviser
to U.S. Bank, or (ii) written notice delivered by
U.S. Bank to the Adviser which is approved in writing
by the Adviser.
b. "Collateral" shall be collateral which U.S. Bank
shall receive from Borrower(s) to secure Loans on
behalf of a Customer in the form of (i) cash ("Cash
collateral"), (ii) securities issued or guaranteed by
the United States Government or its agencies, or
(iii) such bank letter of credit or equivalent
obligation as may be pre-approved by the Adviser.
c. "Loans" shall be the lending of securities to
Borrower(s) from a Customer" Account.
d. "Loaned Securities" shall be those securities which
are loaned to the Borrower(s) by U.S. Bank from a
Customer's Account, securities identical to such
securities, or securities equivalent to such loaned
securities in the event of a reorganization,
recapitalization or merger affecting the originally
loaned securities.
e. "Xxxx to Market" shall be the procedure whereby U.S.
Bank determines market value of securities Collateral
and Loaned Securities based upon final publicly
quoted prices as of the close of business daily. Such
market value ("Market Value") of Loaned Securities
and securities Collateral
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shall be deemed to be in the case of equity
securities and corporate bonds their closing price on
the exchange on which they are traded as of the close
of business on the preceding business day, and in the
case of government-guaranteed obligations their
ending bid price as listed in pricing sources
utilized by U.S. Bank as of the close of business on
the preceding business day; or such other reasonable
valuation method as is agreed upon among U.S. Bank,
the Adviser, and the Borrower. The face value of cash
Collateral shall be deemed to be its market value as
of the close of business daily.
2. Appointment and Acceptance. Each Customer hereby appoints U.S. Bank
as its agent for the purpose of lending securities from its account; and U.S.
Bank hereby agrees to act in such capacity.
3. Delivery of Securities; Receipt of Collateral; Return of Collateral.
Until given written notice of termination pursuant to Section 16 herein, each
Customer hereby authorizes U.S. Bank and U.S. Bank agrees to undertake the
following:
a. To enter into securities lending agreements with
Borrowers which set forth terms consistent with this
Agreement. All such securities lending agreements
shall include substantially the terms contained in
Exhibit C attached hereto or such other terms as may
be approved from time to time in writing by the
Adviser. Any Customer may direct U.S. Bank not to
enter into securities lending with any particular
Borrower as Customer specifies by written notice to
U.S. Bank.
b. To negotiate fees with Borrowers in connection with
securities lending, subject to the following
requirements: In the case of a Loan for which the
Collateral is Cash Collateral, U.S. Bank shall
negotiate a loan rebate fee to be paid by U.S. Bank
to the Borrower on behalf of the Customer. In the
case of a Loan for which the Collateral is non-cash,
U.S. Bank shall negotiate a securities lending fee to
be paid by the Borrower.
c. To deliver to Borrowers, from time to time, such
securities held in a Customer's Account as U.S. Bank
may in its discretion select for securities lending,
subject to limitations contained in the SEC
Requirements and the respective Customers'
prospectuses and statements of additional information
concerning the percentages of a customer's assets
which may be subject to securities lending
transactions at any one time.
d. To use the custodial and/or securities lending
services of other financial institutions as agents of
U.S. Bank, for the benefit of the Customers and the
Accounts, as U.S. Bank in its discretion shall
determine to be necessary to perform securities
lending on behalf of the Customers.
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e. In connection with each Loan, to receive, at the time
the securities are loaned, from the Borrower
Collateral of a value at least equal to one-hundred
two percent of the then Market Value of the Loaned
Securities and accrued interest, if any. Such
Collateral shall be held as security for the due and
punctual performance by the Borrower of any and all
of the Borrower's obligations under the Borrower's
loan arrangement with U.S. Bank.
f. To hold each Customer's Collateral separate and apart
from other securities lending collateral held by U.S.
Bank for other customers of U.S. Bank (including,
subject to g. below, other Customers) in a manner
such that each Customer shall have a perfected
security interest in such Collateral free and clear
of any creditor of any Borrower or U.S. Bank, and
each Customer's specific interest in that Customer's
Collateral shall at all times be noted in the records
of U.S. Bank.
g. To hold Cash Collateral and invest it in the types of
investment vehicles listed in Exhibit "D" attached
hereto. Types of investment vehicles may be added to
or deleted form Exhibit "D" by the Adviser by means
of (i) written notice delivered by the Adviser to
U.S. Bank, or (ii) written notice delivered by U.S.
Bank to the Adviser which is approved in writing by
the Adviser. If the Adviser notifies U.S. Bank that
the Customers have received appropriate exemptive
order relief from the Securities and Exchange
Commission, investments of Cash Collateral may be
made on a poled basis among Customers (but not among
other customers of U.S. Bank), subject to the
conditions contained in such exemptive order relief.
h. Upon termination of any Loan, to return the
Collateral to the Borrower so long as the Borrower is
not in default and U.S. Bank receives the Loaned
Securities from the Borrower.
i. To receive from the Borrower payments in amounts
equal to all cash dividends and interest due and
payable with respect to the Loaned Securities
("substitute payments"), and to dispose of substitute
payments pursuant to the instructions of the Adviser.
Provided that there is no default by the Borrower, in
cases where the Borrower has provided non-cash
Collateral, U.S. Bank shall pay to the Borrower all
interest payments received by U.S. Bank on securities
which are held as Collateral.
j. To originate or terminate any Loan at any time as
U.S. Bank may in its sole discretion determine
pursuant to the terms of this Agreement, without
prior notice to the Customer.
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k. In connection with Customer's Loaned Securities, to
collect securities lending fees owned by Borrowers
and income earned on Cash Collateral investments, and
to dispose of such monies pursuant to Section 3b and
8 of this Agreement.
l. To disclose the names of Customers to any Borrower,
or to any party to an investment entered into
pursuant to 3g above, as U.S. Bank may in its
discretion deem necessary.
4. Voting Rights. No Customer shall retain voting rights of Loaned
Securities while loaned to any Borrower.
5. Xxxx to Market. U.S. Bank shall on a daily basis (a) Xxxx to Market
Loaned Securities and Collateral, and (b) demand additional Collateral from the
Borrower or, on demand, release excess Collateral to the Borrower whenever
either action is required pursuant to the securities borrowing agreement with
the Borrower. U.S. Bank shall require that the Borrower provide Collateral for
Loaned Securities equal to at least 100% of the Market Value of the Loaned
Securities and any accrued interest thereon as of the close of business on each
preceding business day.
6. Accountings. U.S. Bank shall include in a regular report to each
Customer to be produced on a daily basis a listing of all securities loans
outstanding. On a monthly basis U.S. Bank shall provide to each Customer an
accounting of all securities lending transactions.
7. Loan Termination by Customers.
a. Unless otherwise agreed, any Customer may at any
time, and in its sole discretion, elect to terminate
a Loan upon notice to U.S. Bank. Upon receipt of such
notice, U.S. Bank shall notify the appropriate
Borrower for return of the Loaned Securities as
provided in U.S. Bank's agreement with the Borrower.
b. The Customer or its agent shall immediately notify
U.S. Bank of the Customer's intention to sell a
security which is in its Account. Such notice shall
in no event be given later than 3:00 p.m. Central
Time on the trade date established by the Customer
for the sale of such security. U.S. Bank shall not be
liable to the Customer for fails occurring at
settlement of such a sale if timely notice is not
given by the Customer as required by this Section 7.
c. U.S. Bank shall be deemed to have received
appropriate notice as required by this Section 7 upon
receipt of written or oral directions (i) signed or
given by any person whose name and signature is
listed on the most recent certificate delivered by
the Customer to U.S. Bank which lists those persons
authorized to give directions in the name and on
behalf of the Customer or (ii) signed or given by any
other person(s), including the
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Adviser, duly authorized by the Customer to give
directions to U.S. Bank hereunder or whom U.S. Bank
reasonably believes to be so authorized. Appropriate
notice as required by this section shall include
notice sent to U.S. Bank or its agent by letter,
memorandum, telegram, cable, telex, telecopy
facsimile, video (CRT) terminal or other "on-line"
system, or similar means of communication, or given
over the telephone or in person.
8. Fees.
a. Each Customer shall pay fees to U.S. Bank in the
amount and at such times set forth on Exhibit "E"
attached hereto and made a part hereof as though
fully set forth herein. The provisions of Exhibit "E"
may be renegotiated at any time upon five days
written notice by either party hereto. Such fees
shall be charged by U.S. Bank against the income
received by the Customer from securities lending
transactions; provided, that if not so charged, the
Customer shall pay such fees.
b. Any loan rebate fee incurred by a Customer arising
from the receipt of cash as Collateral for Loaned
Securities shall be charged by U.S. Bank against the
income received by the Customer form securities
lending transactions and U.S. Bank shall pay such
loan rebate fee to the appropriate Borrower on behalf
of the Customer; provided, that if not so charged,
the Customer shall pay such loan rebate fee.
9. Customer Representations and Warranties.
a. Each Customer represents and warrants that: (i)
Customer has the legal right, power and authority to
execute, deliver and perform this Agreement and to
carry out all of the transactions contemplated
hereby; (ii) the execution and delivery of this
Agreement by Customer will not violate any law,
regulation, charter, bylaws, order or any court or
other government agency, or judgment, applicable to
Customer; (iii) Customer has obtained all necessary
authorizations, including those from any persons who
may have an interest in the Account securities,
including the consent or approval of any governmental
agency or instrumentality; (iv) the execution,
delivery and performance of this Agreement and the
carrying out of any of the transactions contemplated
hereby will not be in conflict with, result in a
breach of or constitute a default under any agreement
or other instrument to which Customer is a party or
which is otherwise known to Customer, including but
not limited to, liens against and/or pledges of
Account securities; and (v) all persons executing
this Agreement on behalf of Customer and carrying out
the transactions contemplated hereby on behalf of
Customer are duly authorized to do so.
b. Customer is not an "employee benefit plan" as defined
in ERISA.
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10. U.S. Bank Responsibilities. U.S. Bank's duties and responsibilities
shall only be those expressly set forth in this Agreement. U.S. Bank may consult
with counsel for U.S. Bank and shall be fully protected with respect to any
action taken or omitted by U.S. Bank in good faith on advice of counsel. U.S.
Bank shall not be responsible for any loss or liability arising from U.S. Bank's
performance of its duties under this agreement, except for direct loss or
liability (but not consequential damages) arising from U.S. Bank's willful
misfeasance, bad faith or negligence in performance of its duties under this
Agreement.
11. Customer Responsibilities. Each Customer acknowledges that U.S.
Bank is acting as agent on such Customer's behalf in connection with the lending
of such Customer's assets and the investment of cash received as Collateral for
such Loans. Customer understands that it bears the risk of loss resulting from
any securities lending default by a Borrower and/or any decline in value of Cash
Collateral investments.
12. Borrower Default. Upon its actual knowledge thereof U.S. Bank shall
immediately advise each affected Customer of any Borrower default which U.S.
Bank deems in any respect material, including but not limited to Borrower
insolvency or failure to return loaned securities in a timely manner. In the
event of a default by a Borrower, an affected Customer, at its option, may (a)
direct U.S. Bank to deliver to such Customer the Collateral held for the Loaned
Securities up to the Market Value of the Loaned Securities and any accrued
interest thereon plus any other amount owed by Borrower to such Customer under
this Agreement, (b) direct U.S. Bank to use its best efforts to purchase
replacement securities using Collateral held by U.S. Bank for the Loaned
Securities or its proceeds to pay for the purchase, or (c) direct U.S. Bank to
hold the Collateral and take action to limit such Customer's loss on behalf of
such Customer, including action to pursue the Borrower for the return of the
Loaned Securities. In the absence of direction from such Customer, U.S. Bank
shall take such action, including any of the above options, which U.S. Bank in
its sole discretion shall deem to be appropriate to limit such Customer's loss
from such default. In any event, such Customer any direct U.S. Bank to take
legal or other action against the Borrower on behalf of such Customer to recover
any losses incurred by such customer as a result of such a default; and if so
directed, U.S. Bank agrees to undertake such action. Each Customer agrees that
any excess Collateral shall be returned by U.S. Bank to the Borrower and each
Customer agrees to reimburse U.S. Bank for any costs incurred by U.S. Bank which
exceed the Collateral. Notwithstanding the foregoing, U.S. Bank shall not be
required to act inconsistently with any court or government agency order
regarding such Collateral.
13. SEC Requirements to Control. In the event that any provisions of
this Agreement are found to be inconsistent with the provisions of the SEC
Requirements, the parties agree, to the extent of such inconsistency, to be
bound by the provisions of the SEC Requirements.
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14. Agreement Modification. This Agreement, together with the Exhibits
hereto, contains a complete statement of the parties with respect to its subject
matter, supersedes all existing agreements between them concerning the subject
and cannot be amended or modified in any manner except by a written agreement
executed by all parties hereto. Notwithstanding the foregoing, Exhibit "B" may
be amended in the manner set forth in Section 1a; Exhibit "D" may be amended in
the manner set forth in Section 3g; and, pursuant to Section 8a, either party
may renegotiate the fee schedule set forth in Exhibit "E".
15. Notice. Any notice required to be given in writing under this
Agreement shall be delivered by hand or mailed by registered mail, postage
prepaid, to U.S. Bank c/o U.S. Bank Securities Lending Department, U.S. Bank
National Association, U.S. Bank Place, 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, Attention: [ ], and to each Customer at its most
recent address provided to U.S. Bank.
16. Termination. This Agreement may be terminated at any time by U.S.
Bank or any Customer upon five business days prior written notice to the other
party. All outstanding Loans, unless a Customer shall specify otherwise, shall
remain outstanding until such Loans terminate pursuant to the loan agreement
with Borrower, even if such date is past the termination date established by
either party pursuant to this Section 16.
17. Assignment. This Agreement shall not be assignable by U.S. Bank or
any Customer without the written consent of the other party, except that U.S.
Bank may assign this Agreement to an affiliate of U.S. Bank. Subject to the
preceding sentence hereof, this Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors and assigns.
18. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as
of the day and year first above written.
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PORTICO FUNDS, INC., on behalf of U.S. BANK NATIONAL ASSOCIATION
each series thereof listed on
Exhibit "A" hereto
By By
-------------------------------- --------------------------------
Its Its
----------------------------- -----------------------------
U.S. Bancorp Xxxxx Xxxxxxx Asset Management, Inc. as the "Adviser"
referred to herein, hereby delegates to U.S. Bank National Association, subject
to monitoring by the Adviser, the tasks of entering into securities loans by
Customers with pre-approved borrowers on pre-approved terms, and investing cash
received as collateral for the loans in instruments pre-approved by the Adviser,
all upon the terms and conditions hereinabove set forth.
U.S. BANCORP XXXXX XXXXXXX ASSET
MANAGEMENT, INC.
By
--------------------------------
Its
-----------------------------
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EXHIBIT A
TO SECURITIES LENDING AGREEMENT
CUSTOMERS
The series of Portico Funds, respectively, which constitute "Customers"
under the Agreement are as follows:
SERIES OF PORTICO FUNDS:
Large Cap Growth Fund
A-1
EXHIBIT B TO SECURITIES LENDING AGREEMENT
Initial list of "Borrowers"
(Current as of __________________________, 2001)
The following entities are pre-approved as "Borrowers" pursuant to section 1a of
the Agreement
[ ]
B-1
EXHIBIT C
SECURITIES LOAN AGREEMENT
Form of Borrower Agreement
AGREEMENT, Made this ______ day of _______________, 19____, by and between U.S.
BANK NATIONAL ASSOCIATION, a national banking association organized and existing
under the laws of the United States of America with its principal place of
business at Minneapolis, Minnesota (the "Lender"), as agent on behalf of certain
of its trust, other fiduciary, and custody accounts (the "Accounts"), and
_________ _____________________, a ________________________________________
having an office in ______________________________________ (the "Borrower").
WITNESSETH:
WHEREAS, Subject to the provisions hereinafter set forth, the Lender desires to
lend to the Borrower from time to time securities held in its Accounts or other
similar situations; and
WHEREAS, Subject to the provisions hereinafter set forth, the Borrower desires
to borrow from time to time securities held in the Lender's Accounts for the
purpose of covering short sales or failures-to-deliver incurred by the Borrower
or its customers;
NOW, THEREFORE, For and in consideration of the foregoing premises and the
mutual undertakings of the parties hereto, the Lender and the Borrower, on
behalf of themselves and their respective successors and assigns, hereby agree
as follows:
SECTION 1. LOAN OF SECURITIES. Subject to the terms and conditions of this
Agreement, either party hereto may orally initiate a transaction whereby Lender
may, from time to time as agent for its customers, lend securities to the
Borrower (the "Loan"). The parties shall agree orally on the terms of each Loan,
including the issuer of the securities and the amount of securities to be lent
(the "Loaned Securities"), the basis of compensation, and the amount of
collateral to be delivered by the Borrower (the "Collateral"); which terms may
be amended during the Loan. Notwithstanding the provisions in this Agreement
with respect to when a Loan occurs, a Loan hereunder shall not occur until the
Loaned Securities and the Collateral therefor are delivered.
(a) The Lender shall deliver the Loaned Securities and any required instruments
of transfer to the Borrower against receipt from the Borrower of Collateral on
any business day if the Lender receives the Borrower's request to borrow the
Loaned Securities prior to the time after which the applicable central
depository or Federal Reserve Bank will no longer accept a transaction for
completion; or shall deliver the Loaned Securities and any required instruments
of transfer to the Borrower against receipt from the Borrower of Collateral on
the business day next succeeding the date on which the Borrower requests to
borrow the Loaned Securities if such request is made after the aforementioned
times.
(b) WITHOUT WAIVING ANY RIGHTS GIVEN TO THE LENDER HEREUNDER, IT IS UNDERSTOOD
AND AGREED THAT THE PROVISIONS OF THE SECURITIES
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INVESTOR PROTECTION ACT OF 1970 MAY NOT PROTECT THE LENDER WITH RESPECT TO
LOANED SECURITIES HEREUNDER AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO THE
LENDER MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF THE BORROWER'S
OBLIGATIONS IN THE EVENT THE BORROWER FAILS TO RETURN THE LOANED SECURITIES.
SECTION 2. COLLATERAL.
(a) Type and Amount. The Collateral which is to be delivered by the Borrower to
the Lender in accordance with Section 1 hereof, shall consist of either (i) cash
transferred to the Lender by (I) wire transfer, (II) certified or official bank
check or checks in clearing house (i.e., next day) funds payable to the Lender
(both I and II collectively the "Cash Collateral"), or (III) credit to an
account maintained by the Lender at a financial institution or depository and
designated by the Lender as the account to which Cash Collateral may be
transferred; (ii) direct general obligations of, or obligations the payment of
the principal of, and interest on, which are unconditionally guaranteed by the
United States of America ("Securities Collateral"); or (iii) an unconditional
and irrevocable letter of credit issued to the Lender as beneficiary by a bank
other than the Borrower or an affiliate thereof, which is acceptable to the
Lender ("Credit Collateral"). The market value of the Collateral to be delivered
on the day a Loan is made shall equal at least one hundred two percent of the
market value of the Loaned Securities and any accrued interest thereon, (or at
least one hundred five percent in the case of foreign Loaned Securities) as of
the close of business on the first business day next preceding the day on which
the Loan is made. For purposes of this Agreement, the market value of the Loaned
Securities and the Collateral shall be deemed to be in the case of equity and
corporate securities their closing price on the exchange on which they are
traded as of the close of business on the preceding business day, and in the
case of Government Securities their ending bid price as listed in pricing
sources utilized by the Lender as of the close of business on the preceding
business day. The term "Collateral" shall include any securities in which any
Collateral may be invested, all proceeds of any such investment and all
securities and other properties exchanged therefore or distributed with respect
thereto, any substitute Collateral delivered by the Borrower to the Lender in
accordance with Subsection (b) hereof and any additional Collateral delivered by
the Borrower to the Lender in accordance with Subsection (c) hereof.
(b) Substitution of Collateral. With the prior consent of the Lender, the
Borrower may substitute Collateral of the type specified in Subsection (a)
hereof for Collateral previously delivered by the Borrower to the Lender,
provided such substitute Collateral has a market value on the date of
substitution at least equal to that of the Collateral for which it is being
substituted.
(c) Marks to Market. If, at the close of trading on any business day, the market
value of the Collateral falls below one hundred two percent of the then market
value of the Loaned Securities and any accrued interest thereon, the Lender may,
by oral notice to the Borrower given on the next business day not later than
10:00 a.m. New York Time, in the case of Government Securities, or 11:30 a.m.
New York Time, in the case of equity or corporate securities, demand that the
Borrower deliver additional Collateral of the type specified by the Lender, with
a market value which, when added to the market value of the Collateral then held
by the Lender, will equal at least one hundred two percent of the then market
value of the Loaned Securities and any
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accrued interest thereon. If, at the close of trading on any business day, the
then market value of the Collateral held with respect to the Loaned Securities
exceeds one hundred two percent of the then market value of the Loaned
Securities and any accrued interest thereon the Borrower may, by oral notice to
the Lender given on the next business day not later than 10:00 a.m. New York
Time, in the case of Government Securities, or 11:30 a.m. New York Time, in the
case of equity or corporate securities, demand that the Lender return to the
Borrower an amount of Collateral equal to the amount by which the market value
of the Collateral exceeds one hundred two percent of the then market value of
the Loaned Securities and any accrued interest thereon. All demands made
pursuant to this Subsection (c) shall be complied with not later than the close
of business on the same business day if such demand is given by the
aforementioned times. Notwithstanding the foregoing, if such Loaned Securities
are foreign securities, the return of excess Collateral by the Lender and the
delivery of additional Collateral by the Borrower shall be based upon and
determined by a then market value of the foreign Loaned Securities and any
accrued interest thereon of one hundred five percent.
(d) Lender's Rights with Respect to Cash Collateral. The Lender shall have the
right to use or invest any Cash Collateral, which shall include cash received
upon the maturity of any Securities Collateral and any other Cash Collateral
received by the Lender in connection with a Loan to the Borrower, and,
notwithstanding the Borrower's right, if any, to receive a loan rebate fee in
connection with its delivery of Cash Collateral, any interest or other income
received as a result of investing Cash Collateral shall become, and remain, the
property of the Lender.
(e) Security Interest in Collateral. As security for the due and punctual
performance by the Borrower of any and all obligations of the Borrower hereunder
in accordance with the terms hereof, the Borrower hereby grants to the Lender a
continuing security interest in the Collateral, whether now or hereafter
existing or acquired and all present and future proceeds of the Collateral,
including but not limited to, any property in which the Collateral may be
invested. Upon substitution or addition of Collateral hereunder, the security
interest granted herein shall immediately attach to each item of such substitute
or additional Collateral. Except for the security interest granted hereby, the
Borrower shall not create or suffer to exist any security interest, lien or
encumbrance with respect to the Collateral. Subject to the provisions of
Subsection (c) hereof, in no event shall the Lender be obligated to return the
Collateral, or any part thereof, to the Borrower, except upon the return by the
Borrower of the Loaned Securities in accordance with Section 4(a).
SECTION 3. LENDER'S AND BORROWERS' RIGHTS WITH RESPECT TO LOANED SECURITIES.
(a) Loaned Securities Proceeds. All interest, dividends and other payments and
distributions of cash or property with respect to the Loaned Securities, and all
options, warrants, rights, privileges and other securities of every kind
distributed with respect thereto or in exchange thereof, shall be, and remain,
the property of the Lender. Any cash distributions made on or in respect of the
Loaned Securities, which the Lender is entitled to receive pursuant to this
section, shall be paid to the Lender by the Borrower upon receipt by the
Borrower of such cash if payment is received in immediately available funds, or
in the case of clearing house funds, on the business day following receipt by
the Borrower. Non-cash distributions received by the
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Borrower shall be added to the Loaned Securities and shall be considered such
for all purposes, except that if the Loan has terminated, the Borrower shall
forthwith deliver the same to Lender.
(b) Collateral Proceeds. The Borrower shall be entitled to receive all
distributions made on or in respect of non-cash Collateral the payment dates for
which occur during the term of the Loan and which are not otherwise received by
the Borrower, to the full extent it would be so entitled if the Collateral had
not been delivered to the Lender. Any distributions made on or in respect of
such Collateral which the Borrower is entitled to receive hereunder shall be
paid by the Lender to the Borrower upon receipt by the Lender if payment is
received in immediately available funds, or in the case of clearing house funds,
on the business day following receipt by the Lender, so long as the Borrower is
not in default at the time of receipt of such payment.
(c) Voting of Loaned Securities. The Lender hereby waives any right to vote any
Loaned Securities during the term of the Loan thereof.
(d) Ownership of Loaned Securities. No Loan or delivery of securities made under
this Agreement shall be construed to constitute a purchase or sale of the
securities so Loaned or delivered, the Lender retaining ownership of the Loaned
Securities at all times during the period of any Loan hereunder. Until a Loan is
terminated in accordance with this Agreement, Borrower shall have all the
incidents of ownership of the Loaned Securities, including the right to sell or
transfer the Loaned Securities to others, provided that the foregoing shall not
be deemed to modify or limit the Borrower's obligating under Section 4 herein.
SECTION 4. TERMINATION OF THE LOAN
(a) Unless otherwise agreed, (i) Borrower may terminate a Loan on any business
day by giving notice to Lender before 10 a.m. New York Time in the case of
Government Securities, or 11:30 a.m. New York Time in the case of equity or
corporate securities, on such business day, and (ii) Lender may terminate a Loan
on a termination date established by notice given to Borrower prior to the close
of business on a business day. The termination date established by a termination
notice given by Lender to Borrower shall be a date no earlier than the standard
settlement date for trades of the Loaned Securities entered into on the date of
such notice, which date shall, unless Borrower and Lender agree to the contrary,
be (i) in the case of Government Securities, the next business day following
such notice and (ii) in the case of all other securities, the third business day
following such notice. Unless otherwise agreed, Borrower shall transfer the
Loaned Securities to Lender prior to the time after which the applicable central
depository or Federal Reserve Bank will no longer accept a transaction for
completion on the termination date of a Loan, provided, however, that upon such
transfer by Borrower, Lender shall transfer the Collateral to Borrower in
accordance with the Agreement. In the case of Credit Collateral, the return of
the Loaned Securities shall be considered settlement.
(b) Events of Default. The occurrence of any one or more of the following events
shall be an event of default, and may, at the option of the non-defaulting
party, exercised by oral notice to the defaulting party, followed by written
notice, effect an immediate termination of the particular Loan in default or
every Loan of securities outstanding as of the date of default: (i) Non-delivery
by the Borrower of any Loaned Securities within the time period specified in
Subsection
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(a) hereof following the termination of any Loan made pursuant to this
Agreement; (ii) Non-delivery by the Lender of any Collateral within the time
period specified in Subsection (a) hereof following the termination of any Loan
made pursuant to this Agreement; (iii) Failure by either party to deliver or
return Collateral, as the case may be, as required pursuant to this Agreement;
(iv) Failure of the Borrower to extend the term of any letter of credit
delivered as Credit Collateral on or before one day prior to its original or
previously-extended expiration date, unless on or before such day substitute
Collateral (with a then current market value equal to the amount available for
drawing under such letter of credit) is duly pledged and delivered to the Lender
hereunder; (v) Non-payment by either party, when due, of any payments,
distributions or exchanges required to be made by the parties pursuant to
Sections 3(a)and 3(b) if such default is not cured within one business day's
notice thereof; (vi) Non-payment by the Borrower, when due, of the securities
loan fee required to be paid pursuant to Section 11; (vii) Breach by either
party of any material provision or representation, warranty or covenant
hereunder, if such breach is not cured within one business day's notice thereof;
(viii) A violation by the Borrower, in connection with the Loaned Securities or
the holding or disposition thereof by the Borrower, of any applicable law,
regulation or rule of the United States or any instrumentality thereof, the New
York Stock Exchange, Inc. or any other stock exchange to the requirements of
which the Borrower is subject, the Board of Governors of the Federal Reserve
System or the National Association of Securities Dealers, Inc.; (ix) If either
party makes a general assignment for the benefit of creditors; admitting in
writing its inability to pay its debts as they become due; filing a petition in
bankruptcy; being adjudicated a bankrupt or insolvent; filing a petition seeking
any reorganization, arrangement, composition, liquidation, dissolution or
similar relief under any present or future statute or regulation; seeking
consent to or acquiescence in the appointment of any trustee, receiver or
liquidator of the party or any material part of its assets or properties; having
filed against it any petition in any court or before any agency alleging the
bankruptcy or insolvency of the party, or seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute or regulation; or having a receiver
or trustee appointed with respect to all or a portion of its property; (x)
Failure of either party, within sixty days following the entry of any final
judgment for the payment of money against such party, to discharge or stay the
execution pending appeal of such judgment, or the failure, within sixty days
following the expiration of any such stay, to discharge such judgment; (xi) The
suspension or expulsion of the Borrower from membership or participation in any
national securities exchange or association or other self-regulatory
organization or if it is suspended from dealing in securities by any
governmental agency; and (xii) The revocation or suspension by any applicable
federal or state government or agency thereof of the Lender's license, charter,
or other authorization necessary to conduct a material portion of its business.
SECTION 5. LENDER'S REMEDIES. In the event the Borrower fails to deliver to the
Lender the Loaned Securities in accordance with the provisions of Section 4(a),
or in the event of any default by Borrower under Section 4(b) of this Agreement,
the Lender shall have, as to the Collateral, all the rights and remedies of a
secured party under the New York Uniform Commercial Code and all such other
rights provided by law and, in addition, the Lender shall have the right to sell
any Securities Collateral or draw a draft or drafts under any Credit Collateral
and use the proceeds thereof together with any Cash Collateral to purchase
securities identical to the Loaned Securities which were not returned to the
Lender on the open market and cover any expenses associated with the purchase of
such securities and disposition of Collateral
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and any payments due from the Borrower to the Lender under this Agreement. In
the event the sum of the purchase price for such securities, plus expenses
associated with such purchase and the disposition of Collateral, plus the amount
of any payments due from the Borrower to the Lender under this Agreement exceeds
the proceeds of the Collateral, the Borrower shall be liable to the Lender for
the amount of such excess together with the interest thereon at the lesser of
(i) the prime rate as quoted in The Wall Street Journal (New York Edition) for
the business day preceding the date on which such determination is made or (ii)
the highest rate permissible under applicable usury law, from the date of such
securities purchase to the date of payment by the Borrower thereof. In the event
the proceeds of the Collateral exceeds the sum specified in the preceding
sentence, such excess shall be delivered by the Lender to the Borrower.
SECTION 6. BORROWER'S REMEDIES. In the event that the Lender fails to return to
the Borrower the Collateral as required by Section 4(a), or in the event of any
default by Lender under Section 4(b) of this Agreement, the Borrower shall, upon
notice to the Lender, have the right, in addition to any other remedies provided
herein or under applicable law, to sell a like amount of the Loaned Securities
in the principal market for such securities and to retain the proceeds of such
sale. In such event, the Borrower may treat the Loaned Securities as its own and
the Lender's obligation to return the Collateral shall terminate. In the event
the sale price received from such securities is less than the value of the
Collateral, the Lender shall be liable to the Borrower for the amount of any
deficiency (plus all amounts, if any, due to the Borrower hereunder), together
with interest thereon at the lesser of (i) the prime rate as quoted in The Wall
Street Journal (New York Edition) for the business day preceding the date on
which such determination is made or (ii) the highest rate permissible under
applicable usury law, from the date of such sale until the date of payment of
such deficiency. In calculating this deficiency, there shall be deducted from
the proceeds of the securities sold under this Section 6, broker's fees and
commissions and all other reasonable costs, fees and expenses related to such
sale. Upon the satisfaction of all of the Lender's obligations hereunder, any
remaining Loaned Securities, or cash in an amount equal to the value of the
Collateral on the termination date minus amounts which the Borrower has received
pursuant to this Section 6, shall be returned to the Lender.
SECTION 7. DELIVERY OF SECURITIES. Whenever the Lender or the Borrower are
required to deliver securities to the other under this Agreement, provided the
Lender and the Borrower are each participants in a central securities
depository, at the request of the party to whom the securities are to be
delivered, such delivery, or portion thereof so requested, shall be accomplished
by the delivering party causing its account at the depository to be debited and
the account thereat of the other party to be credited with the securities to be
delivered, in accordance with the rules and regulations of such depository.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
(a) The Borrower represents, warrants and covenants: The Borrower has the legal
right and authority to execute, deliver and perform this Agreement, and no
disability or contractual obligation exists which would prohibit the Borrower
from so doing; the Borrower has obtained all necessary approvals or
authorizations from all regulatory bodies for the transactions contemplated
hereby; the execution and delivery of this Agreement complies, and all
transactions contemplated hereby will comply, with all applicable laws and
regulations,
C-6
including without limitation, all applicable rules and regulations of the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc. ("NASD"), any applicable provisions of Regulation of the Board of
Governors of the Federal Reserve System and all applicable requirements of the
New York Stock Exchange, Inc. and of any other stock exchange to the
requirements of which the Borrower may be subject;
(b) The Borrower is borrowing the Loaned Securities only for the purpose of
making delivery of such securities in the case of short sales or failure to
receive securities which the Borrower is required to deliver, in connection with
specific transactions which have already occurred or are in immediate prospect,
or as otherwise permitted pursuant to Regulation T;
(c) Except with respect to any transfers made by the Borrower to other persons
for the purposes specified in clause (b) hereof, the Borrower shall, at all
times, hold the Loaned Securities in its possession, shall keep the Loaned
Securities specifically and physically set aside as identifiable property of the
Lender and shall at no time commingle the Loaned Securities with any other
property of the Borrower or any other person; provided, that the Loaned
Securities may be held in the manner provided in Rule 15c3-3(c)(1) of the
General Rules and Regulations of the Securities and Exchange Commission under
the Securities Exchange Act of 1934, if the books or records of the Borrower
identify such securities;
(d) The Borrower will give prompt notice to the Lender of (i) the commencement
of any investigation or proceedings which the Borrower has reason to believe may
result in the suspension or expulsion of the Borrower from any stock exchange or
from the NASD or the suspension of the Borrower's power under Federal or State
law to transact business as a broker or dealer in securities, and of any such
suspension or expulsion; (ii) any violation by the Borrower of any rule limiting
its aggregate indebtedness or requiring a minimum net capital imposed under the
Securities Exchange Act of 1934 or the rules and regulations thereunder or by
any stock exchange or, under any such rule, the imposition of a prohibition
against expansion, or of a requirement of any reduction, of the business of the
Borrower; (iii) any communication to the Borrower from the Securities and
Exchange Commission or any exchange constituting notice to the Borrower of any
violation of the rules referred to in item (ii) above or a warning to the
Borrower of a threatened violation of any such rules; (iv) any information that
the Borrower is under special surveillance by any stock exchange; and (v) any
information that the Securities and Exchange Commission or any self-regulatory
organization has notified the Securities Investor Protection Corporation,
pursuant to Section 5(a)(1) of the Securities Investor Protection Act of 1970,
of facts which indicate that the Borrower is in, or is approaching, financial
difficulty;
(e) The Borrower has furnished the Lender with either (i) a complete list of
those employee benefit plans subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), for which Borrower or any affiliates of
Borrower have discretionary authority or control or render investment advice
(within the meaning of 29 CFR 2510.3-21(c)) with respect to any assets in such
plans, or (ii) a complete list of Borrower and any affiliates of the Borrower
which have discretionary authority or control or render investment advice
(within the meaning of 29 CFR 2510.3-21(c)) with respect to any assets held in
any ERISA plans. On a continuing basis, the Borrower shall immediately advise
the Lender of any changes to the list provided to Lender pursuant to this
Section 8(e);
C-7
(f) The Borrower has furnished the Lender with (i) the most recent available
audited statement of its financial condition, and (ii) the most recent available
unaudited statement of its financial condition (if more recent than such audited
statement);
(g) Each Loan that is negotiated constitutes a representation that, at the time
the Loan is made, the financial statements referenced in clause (f) above are
true, complete and correct and present fairly the financial condition of the
Borrower as of the date of such statements and the results of its operations for
the period covered by such statements, and that there has been no material
adverse change in its financial condition since the date of the most recent
financial statement furnished to the Lender that has not been disclosed to the
Lender;
(h) The Borrower agrees that this Agreement and the Loans made hereunder shall
be "securities contracts" for purposes of the Bankruptcy Code and any bankruptcy
proceedings thereunder.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF LENDER. The Lender represents and
warrants to the Borrower: (a) The Lender has legal right and authority to
execute, deliver and perform this Agreement, and no contractual obligation
exists which would prohibit it from so doing; (b) At the time of delivery of the
Loaned Securities from the Lender to the Borrower, the Lender knows of no
present intention to sell the Loaned Securities; and (c) The Lender agrees that
this Agreement and the Loans made hereunder shall be "securities contracts" for
purposes of the Bankruptcy Code and any bankruptcy proceedings thereunder.
SECTION 10. TRANSFER TAXES. The Borrower shall pay all transfer taxes and
necessary costs with respect to (a) the transfer of Loaned Securities or their
equivalent between the Lender and the Borrower, and (b) the transfer of any
Collateral between the Lender and the Borrower or the disposition thereof by the
Lender pursuant to Section 5. If the Lender shall incur any loss by reason of
the Borrower's failure to pay all such costs and taxes, the Borrower shall be
liable to the Lender for such loss, which the Lender may satisfy by retaining an
amount of the Collateral sufficient to satisfy its claim against the Borrower
with respect to such costs and taxes.
SECTION 11. PAYMENT OF SECURITIES LOAN FEE. Unless otherwise agreed upon by the
parties, the Borrower shall, not later than fifteen days after the end of each
month, pay to the Lender, in immediately available funds, a securities loan fee,
if any, accrued on a daily basis through the end of such month, expressed as a
percentage per annum of the market value of the Loaned Securities, provided,
first that no securities loan fee shall be payable in connection with a Loan
collateralized continuously and completely by Cash Collateral; and second, that,
for purposes of determining the amount of the securities loan fee under a Loan
collateralized in part by Cash Collateral and in part by other Collateral, the
securities loan fee shall be applicable to the extent only of Collateral other
than Cash Collateral.
SECTION 12. PAYMENT OF LOAN REBATE FEE. Unless otherwise agreed upon by the
parties, the Lender shall, not later than fifteen days after the end of each
month, pay to the Borrower, in immediately available funds, a loan rebate fee,
if any, accrued on a daily basis through the end of such month, expressed as a
percentage per annum of the balance of Cash Collateral held by the Lender;
provided, first, that a loan rebate fee shall be payable only in connection with
a Loan
C-8
collateralized in whole or in part by Cash Collateral; and second, that, for
purposes of determining the amount of the loan rebate fee under a Loan
collateralized in part by Cash Collateral and in part by other Collateral, the
loan rebate fee shall be applicable only to the extent of Cash Collateral.
SECTION 13. INDEMNIFICATION. The Borrower agrees to indemnify, defend, hold and
save harmless the Lender from any claims, actions, demands, expenses, costs and
lawsuits of any kind whatsoever arising from or in any way out of the use that
the Borrower makes of the Loaned Securities, except such as are made and caused
by the negligence or willful acts of the Lender. If the Lender does not return
any Collateral which, under the terms of this Agreement, are required to be
returned, or if the Borrower fails to return the Loaned Securities, then and in
such event such failing party agrees to reimburse the other party for any losses
caused by such party's failure to redeliver such securities to a subsequent
purchaser, except that the other party shall take all reasonable steps to
minimize any such loss.
SECTION 14. MISCELLANEOUS
(a) Any written communications between the parties shall be effective upon
receipt and shall be personally delivered or mailed by registered or certified
mail, postage prepaid, (i) if to the Lender,
U.S. Bank National Association
Attn: U.S. Bank Securities Lending Department
000 0xx Xxxxxx Xxxxx - 00xx Xxxxx
Xxxxxxxxxxx, XX 00000
(ii) if to the Borrower
--------------------------------
--------------------------------
--------------------------------
--------------------------------
or to such other address or attention as either the Lender or the Borrower shall
have furnished to the other in writing; provided, that any written
communications may be sent by telegram, telex or facsimile transmission and
later confirmed by registered or certified mail.
(b) No action or inaction by the Lender hereunder, including but not limited to,
demanding additional Collateral, shall constitute a waiver of any right, and a
right may only be waived expressly by a signed instrument in writing.
(c) This Agreement supersedes any other agreement between the parties concerning
Loans of securities and may not be amended or modified except by an instrument
in writing signed by both parties hereto.
(d) This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
C-9
(e) This Agreement shall not be assignable by either party hereto without prior
written consent of the other party, and shall be binding upon each party hereto
and their respective successors and assigns.
(f) The parties hereto agree that each section and provision herein shall be
treated as a separate and independent clause and the enforceability of any one
clause shall in no way impair the enforceability of any of the other clauses.
If, moreover, at any time in the future, any one or more of the provisions
contained in the Agreement shall for any reason be held to be excessively broad
as to scope, activity or subject so as to be unenforceable, such sections or
provisions shall be construed by limiting and reducing them so as to be
enforceable to the extent compatible with the applicable law as it shall then
appear.
(g) It is the intention of the parties hereto that, subject to the termination
provisions set forth herein, this Agreement shall constitute a continuing
agreement in every respect and shall apply to each and every Loan, whether now
existing or hereafter made by Lender to Borrower. Borrower and Lender may each
at any time terminate this Agreement upon five (5) business days' written notice
to the other to that effect. The sole effect of any such termination of this
Agreement will be that, following such termination, no further Loans by Lender
shall be made or considered made hereunder, but the provisions hereof shall
continue in full force and effect in all other respects until all then
outstanding Loans have been terminated and all obligations satisfied as herein
provided.
(h) This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
IN WITNESS WHEREOF, The parties hereto have caused this instrument to be
executed as of the day and year first above written
U.S. BANK NATIONAL ASSOCIATION
[LENDER]
By
--------------------------------
Its
--------------------------------
-------------------------------------
[BORROWER]
By
--------------------------------
Its
--------------------------------
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EXHIBIT D
TO SECURITIES LENDING AGREEMENT
Permitted Investment of Cash Collateral
General Objectives
The objective of the policy is to provide for the short-term investment of cash
for participants in the U.S. Bank Securities Lending Program as it applies to
the Portico Funds. The prime considerations for the investment of cash shall be
safety of principal and liquidity requirements.
Standards
I. TYPES OF INVESTMENTS
A. Cash collateral may be invested in, and is limited to,
repurchase agreements, master notes (VAN), mutual funds, U.S.
Government and Agency securities, U.S. or Eurodollar
certificates of deposit and time deposits, commercial paper,
sovereign obligations, corporate fixed and floating rate
notes, and other short-term money market instruments
denominated in U.S. dollars.
II. QUALITY OF INVESTMENTS
A. Commercial Banks/Insurance Companies: The bank/insurance
company shall have a minimum rating of A-1 by Standard and
Poor's Corporation or Prime-1 by Xxxxx'x Investor Service, or
an equivalent rating by another NRSRO, or, if not rated, have
an outstanding debt issue currently rated Aa or better by
Moody's or AA or better by Standard and Poor's, or an
equivalent rating by another NRSRO. All banks/insurance
companies must be on the U.S. Bancorp Xxxxx Xxxxxxx Asset
Management Approved List.
B. Foreign Banks: The bank shall have a minimum rating of A-1 by
Standard and Poor's Corporation or Prime-1 by Xxxxx'x Investor
Service, or an equivalent rating by another NRSRO, or, if not
rated, have an outstanding debt issue currently rated Aa or
better by Moody's or AA or better by Standard and Poor's, or
an equivalent rating by another NRSRO. All banks must be on
the U.S. Bancorp Xxxxx Xxxxxxx Asset Management Approved List.
C. Commercial Paper / Corporate Notes: All commercial paper,
notes and loan participations in approved domestic and foreign
corporations shall have a minimum rating of A-1 by Standard
and Poor's Corporation or Prime-1 by Xxxxx'x Investor Service,
or an equivalent rating by another NRSRO, or. if not rated,
issued by companies having an outstanding debt issue currently
rated Aa or better by Moody's or, AA or better by Standard and
Poor's, or an equivalent rating by another NRSRO. All paper
must be on the U.S. Bancorp Xxxxx Xxxxxxx Asset Management
Approved List.
D-1
D. Repurchase Agreements: Those broker/dealers approved for
repurchase agreement transactions shall be limited to
broker/dealers for which a securities lending line has been
approved by the U.S. Bank Financial Services Division.
Repurchase agreements may also be executed with any approved
bank.
The following requirements shall apply to all repurchase agreement
transactions:
1. The sum of the dollar amount of the collateral for the
securities on loan and the dollar amount of any funds invested
in repurchase agreements at any one time with a particular
broker/dealer shall not exceed the approved securities lending
line.
2. U.S. Bank on behalf of Participant will use a standard form or
repurchase agreement such as the Public Securities Associates
("PSA") model repurchase agreement, or another form of
agreement which contains comparable provisions, when entering
into repurchase agreements.
3. U.S. Bank shall perfect the security interest of the
Participant in the collateral underlying the repurchase
agreement, so that to the maximum extent permitted by law, the
Participant's interest will be protected if there is a default
by the other party to the repurchase agreement.
4. Repurchase agreements entered into by U.S. Bank on behalf of
Participant shall be adequately collateralized, i.e., the
amount of the collateral required at inception of a repurchase
agreement transaction shall be equal to at least 102% of the
principal amount of the transaction. In addition, the market
value of the securities held as collateral shall be marked to
the market daily during the entire term of the transaction and
the repurchase agreement shall provide that additional
collateral will be required from the broker/dealer or bank if
the market value of the securities falls below the excess
collateral percentage agreed to at the inception of the
repurchase agreement.
5. Repurchase agreements safe kept with the seller on a
"Hold-in-Custody" basis, rather than delivered to U.S. Bank or
its agent, shall be required to be on par for repayment with
the seller's senior unsecured debt which must be on the U.S.
Bancorp Xxxxx Xxxxxxx Asset Management approved list.
Diversification requirements for transactions of this nature
shall be controlled by the requirements in unsecured debt.
E. Master Notes: Master Notes shall conform to the standards set
forth in the Comptroller's Regulation 9 and opinions on
"Variable Amount Notes", and the issuer must be on the U.S.
Bancorp Xxxxx Xxxxxxx Asset Management, Inc. Approved List.
F. Mutual Funds: Only top tier institutional money market funds
are acceptable.
G. Sovereign Obligations: Investments shall be with sovereign
entities rated AAA by Standard and Poor's or Aaa by Moody's,
or equivalent rating by another NRSRO; and be denominated in
U.S. dollars.
III. DIVERSIFICATION
A. There is no diversification limitation for U.S. Government and
U.S. Government Agency securities purchased.
X-0
X. Xxxxxxxxxx agreements other than those collateralized with
U.S. Government securities and U.S. Government agency
securities, shall contain collateral from one issuer that is
no greater than $50 million if the repurchase agreement
maturity extends longer than overnight.
C. At the time of purchase, not more than 20 percent of the
Securities Lending Short Term Investment portfolio may be
invested in a repurchase agreement with a particular broker /
dealer or eligible bank.
D. At the time of purchase, not more than 20 percent of the
Securities Lending Short Term Investment portfolio or 5
percent of the market value of the mutual fund, whichever is
less, may be inveested in a single mutual fund.
E. Except for repurchase agreements, mutual funds, and U.S.
Government securities purchased, at the time of purchase, not
more than 10 percent of the Securities Lending Short Term
Investment portfolio may be invested with a single issuer.
F. At the time of purchase, not more than 25 percent of the
Securities Lending Short Term Investment portfolio may be
invested in any one foreign country. This includes foreign
branches of domestic banks; foreign banks; U.S. branches of
foreign banks and their affiliates; foreign corporations and
their U.S. affiliates and sovereign debt.
IV. MATURITY
A. There is no maturity limitation for securities received as
repurchase agreement collateral.
B. A minimum of 20% of the portfolio must mature or be
redeemable on any business day.
C. An instrument that is issued or guaranteed by the United
States Government or any agency thereof which has a variable
rate of interest, set off a money market index (i.e. Fed
Funds, Bills, LIBOR, CP, Prime), readjusted no less frequently
than every 95 days, shall be deemed to have a maturity equal
to the period remaining until the next readjustment of the
interest rate.
D. An instrument that is issued by a corporation which has a
variable rate of interest, set off a money market index (i.e.
Fed Funds, Bills, LIBOR, CP, Prime), readjusted no less
frequently than every 95 days, shall be deemed to have a
maturity not to exceed 430 days or have an unconditional put
back to the issuer not to exceed 95 days.
E. The maximum maturity on fixed rate investments shall not
exceed 190 days.
F. The maximum maturity on repurchase agreements shall not exceed
190 days.
G. No investment maturity or reset date on an investment or
loan(s) shall be greater than 95 days unless loans and
investments are matched to each other.
D-3
V. MISCELLANEOUS
The Account's investment officer is authorized, consistent with policies and the
above guidelines, to invest and trade without limitation as necessary to
accomplish the Account's objectives.
Any investment other than those on the U.S. Bancorp Xxxxx Xxxxxxx Asset
Management approved list or otherwise explicitly covered by this policy must be
approved by the U.S. Piper Bancorp Xxxxx Xxxxxxx Asset Management Credit
Committee.
For purposes of investment risk, each investment held in the Securities Lending
Short Term Investment Portfolio is allocated to securities lending participants
pro rata, based upon the loans outstanding.
Exception and/or structural changes to this policy must be approved by the U.S.
Bancorp Xxxxx Xxxxxxx Asset Management Investment Policy Committee.
Securities Lending shall not purchase any derivative securities as defined by
the Trust Derivative policy.
D-4
EXHIBIT E
Securities Lending Fee Schedule
U.S. Bank shall be paid a fee for administering a securities lending program for
the Customer. The fee will be charged monthly by U.S. Bank against the income
received by the Customer and will be [ ] percent of the total income from
the securities lending transactions.
E-1
