This Novation and Amendment Agreement is dated as of February 25, 2008.
Reference is hereby made to the Securities Lending Agency Agreement dated as of
March 17, 2003, as amended to date (the "Agreement") by and among Touchstone
Investment Trust, Touchstone Strategic Trust, and Touchstone Variable Series
Trust (each a "Trust") acting with respect to each series thereof as set forth
on Exhibit A hereto (each a "Series") (each Trust on behalf of each of its
respective Series thereof, each the "Fund"), and Xxxxx Brothers Xxxxxxxx & Co.,
a limited partnership organized under the laws of the State of New York (the
"Lending Agent").
WITNESSETH:
WHEREAS, pursuant to the terms and conditions of the Agreement the
Lending Agent acts as securities lending agent on behalf of each Fund.
WHEREAS, the Lending Agent and each Fund wish to add the Touchstone Tax
Free Trust, the Touchstone Institutional Funds Trust, and the Touchstone Funds
Group Trust and certain series thereof (each a "Novated Party") as additional
parties to the Agreement for the purpose of each Novated Party receiving
securities lending services from the Lending Agent, and certain Trusts wish to
add new Series to the Agreement.
NOW THEREFORE, the Lending Agent, each Trust and each Novated Party
hereby agree by execution of this Novation Agreement that (i) the Lending Agent
is hereby appointed as Lending Agent of the Novated Party and each series
thereof designated series thereof set forth on Exhibit A and Schedule 1 hereto,
(ii) each Novated Party and each series thereof shall hence forth be known as a
"Trust" and a "Series", respectively, as such terms are defined in the Agreement
and shall be fully bound by the terms and conditions of the Agreement effective
immediately upon execution of this Novation Agreement as if such Novated Party
were an original party to the Agreement, (iii) certain new Series have been
added to Exhibit A and Schedules 1 of the Agreement as per the request of the
respective Trust, (iv) the Agreement is amended by deleting Schedules 5 and 7
therefrom and substituting Schedules 5 and 7 attached hereto therefore, and (v)
the Agreement is further amended by adding the following new Section 26 thereto:
"26. BORROWER DEFAULT. In the event of default by an Approved Borrower
with respect to any loan entered into pursuant to a SLA, BBH&Co. will take such
actions as are set forth in the applicable SLA. In addition, the following
provisions shall apply.
26.1 REPLACEMENT OF LOANED SECURITIES. If a borrower fails,
pursuant to the SLA with BBH&Co., to return loaned securities
with respect to a loan when due ("Default Event"), then
BBH&Co. shall be responsible to the Fund as follows: BBH&Co.
shall use the Collateral or the proceeds of the liquidation of
such Collateral to purchase for the affected Fund's account,
for settlement in the normal course, replacement securities of
the same issue, type, class and series as that of the loaned
securities ("Buy-In"). If the value of the Collateral is less
than the purchase cost of replacement securities (or
liquidated damages calculated under Section 26.2), BBH&Co.
shall be responsible for satisfying such shortfall but only to
the extent that such shortfall is not due to any diminution in
the Collateral Value (as defined in this Section) which is due
to the reinvestment risk borne by the Fund pursuant to this
Agreement. For purposes of this Section, "Collateral Value"
shall be calculated in accordance with the following terms:
26.1.1 VALUE OF CASH COLLATERAL. In the case of loans
collateralized solely by cash Collateral, the greater
of: (i) the amount of the cash Collateral pledged by
a borrower with respect to a loan, or (ii) the market
value of the investment of such cash Collateral.
NOVATION AGREEMENT
26.1.2 VALUE OF SECURITIES COLLATERAL. In the case of loans
collateralized solely by securities Collateral, the
market value of such Collateral.
26.1.3 VALUE OF LETTERS OF CREDIT. In the case of loans
collateralized solely by letters of credit, the
respective available undrawn amounts.
26.1.4 VALUATION DATE. Collateral Value shall be determined
on the date of the Buy-In (or the payment made
pursuant to Section 26.2 below).
26.1.5 MARKET VALUE. Market value shall be determined by
BBH&Co., where applicable, based upon prices obtained
from recognized pricing services or dealer price
quotations.
26.1.6 MULTIPLE FORMS OF COLLATERAL. Where a loan is
collateralized by more than one type of Collateral,
the aggregate market value of Collateral securing
such loan (for the purpose of computing the
indemnity) shall be the sum of the market values for
each relevant type of Collateral.
26.2 IMPOSSIBILITY OF REPLACEMENT/LIQUIDATED DAMAGES. If BBH&Co.
determines that a Buy-In is commercially impracticable,
BBH&Co. shall, in lieu of effecting a Buy-In, pay to the
affected Fund an amount equal to the market value of the
loaned securities determined at the close of business on the
date of the Default Event to be reduced by any shortfall in
the Collateral Value that is due to the reinvestment risk
borne by the Fund pursuant to this Agreement.
26.3 REPLACEMENT OF DISTRIBUTIONS. In addition to making the
purchases or payments required above, BBH&Co. shall pay to the
Fund the value of all distributions on the loaned securities,
the record dates for which occur before the date that BBH&Co.
executes a Buy-In or makes the payments to the Fund required
pursuant to Section 26.2 and that have not otherwise been
credited to the Fund's Custody Account. For purposes of this
Section, the value of such distributions shall be calculated
net of taxes, expenses or other deductions that would normally
accrue to such distributions. BBH&Co. shall use Collateral or
the proceeds of such Collateral to the extent available to
make such payments of distributions and BBH&Co. shall be
responsible for satisfying any shortfall, but only to the
extent that such shortfall in the Collateral Value is not due
to the reinvestment risk borne by the Fund pursuant to the
Agreement.
26.4 COLLATERAL NOT IN POSSESSION OR CONTROL OF BBH&CO. If, on the
date of the Default Event by reason of the Fund's request or
actions, BBH&Co. is not in possession or control of the
Collateral allocated to the defaulted Loan, the Fund shall
cause such Collateral to be transferred to BBH&Co. by the
close of business on the day BBH&Co. requests such a transfer.
Upon BBH&Co.'s timely receipt such Collateral shall be applied
by BBH&Co. against the cost of any Buy-In or replacement
payment in accordance with Section 26.2. In the event that
such Collateral is not timely transferred to BBH&Co., the
Buy-In or replacement provisions of Section 8.2 shall not
apply and the compensation to the Fund shall be limited to the
shortfall, if any, between the Collateral Value and the market
value of the loaned securities as determined at the close of
business on (i) the date of the Default Event or (ii) the date
such Collateral is so transferred, but only to the extent that
any such shortfall in the Collateral Value is not due to the
reinvestment risk borne by the Fund pursuant to this
Agreement. The date of the valuation of the loaned securities
pursuant to (i) or (ii) of this Section 26.4 shall be
determined by BBH&Co. in its sole discretion.
2
NOVATION AGREEMENT
26.5 SUBROGATION AND ASSIGNMENT OF RIGHTS IN COLLATERAL. In the event
that BBH&Co. is required to perform a Buy-In, make any payment
of distributions, and/or make any payment of liquidated damages
under this Section, the Fund agrees that, to the extent of such
performance or payment, each of them shall be subrogated to, and
the Fund shall assign, and be deemed to have assigned, to them
all of such Fund's rights in, to and against the Borrower in
respect of the related loan, any Collateral pledged by the
Borrower in respect of such loan (including any letters of
credit and the issuers thereof) and all proceeds of such
Collateral. In the event that the Fund receives or is credited
with any payment, benefit or value from or on behalf of the
Borrower in respect of rights to which BBH&Co. is subrogated as
provided herein, the Fund shall promptly remit or pay to BBH&Co.
the same (or, where applicable, its United States dollar
equivalent)."
This Novation and Amendment Agreement together with the Agreement
represents the entire agreement and understanding of the parties hereto and
shall be governed by the laws of the State of New York.
The undersigned acknowledges that (I/we) have received a copy of this document.
XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name:
Title: Managing Director
TOUCHSTONE INVESTMENT TRUST FOR ITSELF
AND ON BEHALF OF EACH SERIES THEREOF SET FORTH
IN EXHIBIT A HERETO
By: /s/ Xxxxxxx Xxxx
----------------------------------
Name: Xxxxxxx Xxxx
Title: X.X.
XXXXXXXXXX STRATEGIC TRUST FOR ITSELF
AND ON BEHALF OF EACH SERIES THEREOF SET FORTH
IN EXHIBIT A HERETO
By: /s/ Xxxxxxx Xxxx
---------------------------------
Name: Xxxxxxx Xxxx
Title: V.P.
3
NOVATION AGREEMENT
TOUCHSTONE VARIABLE SERIES TRUST FOR ITSELF
AND ON BEHALF OF EACH SERIES THEREOF SET FORTH
IN EXHIBIT A HERETO
By: /s/ Xxxxxxx Xxxx
----------------------------------
Name: Xxxxxxx Xxxx
Title: X.X.
XXXXXXXXXX FUNDS GROUP TRUST FOR ITSELF
AND ON BEHALF OF EACH SERIES THEREOF SET FORTH
IN EXHIBIT A HERETO
By: /s/ Xxxxxxx Xxxx
----------------------------------
Name:
Title: X.X.
XXXXXXXXXX TAX FREE TRUST FOR ITSELF
AND ON BEHALF OF EACH SERIES THEREOF SET FORTH
IN EXHIBIT A HERETO
By: /s/ Xxxxxxx Xxxx
----------------------------------
Name:
Title: X.X.
XXXXXXXXXX INSTITUTIONAL FUNDS TRUST FOR ITSELF
AND ON BEHALF OF EACH SERIES THEREOF SET FORTH
IN EXHIBIT A HERETO
By: /s/ Xxxxxxx Xxxx
----------------------------------
Name:
Title: V.P.
4
NOVATION AGREEMENT
EXHIBIT A
Touchstone Investment Trust on behalf
of the following Series thereof:
Touchstone High Yield Fund
Touchstone Core Bond Fund
Touchstone US Government Money Market Fund
Touchstone Institutional Money Market Fund
Touchstone Money Market Fund
Touchstone Strategic Trust on behalf
of each of the following Series thereof:
Touchstone Large Cap Growth Fund
Touchstone Growth Opportunities Fund
Touchstone Small Cap Growth Fund
Touchstone Micro Cap Growth Fund
Touchstone Large Cap Value Fund
Touchstone Mid Cap Growth Fund
Touchstone Diversified Small Cap Growth Fund
Touchstone Large Cap Core Equity Fund
Touchstone Variable Series Trust on behalf
of each of the following Series thereof:
Touchstone Balanced Fund
Touchstone Value Plus Fund
Touchstone Enhanced Dividend 30 Fund
Touchstone Eagle Capital Appreciation Fund
Touchstone Growth & Income Fund
Touchstone High Yield Fund
Touchstone Third Avenue Value Fund
Touchstone Mid Cap Growth Fund
Touchstone Baron Small Cap Fund
Touchstone Bond Fund
Touchstone Money Market
Touchstone Conservative ETF
Touchstone Moderate ETF
Touchstone Aggressive ETF
Touchstone Enhanced ETF
Touchstone Tax Free Trust on behalf
of each of the following Series thereof:
Touchstone Florida Tax Free Money Market Fund
Touchstone Ohio Insured Tax Free Fund
Touchstone Ohio Tax Free Money Market Fund
Touchstone Tax Free Money Market Fund
5
NOVATION AGREEMENT
Touchstone Institutional Funds Trust on behalf
of each of the following Series thereof:
Touchstone Sands Capital Institutional Growth Fund
Touchstone JSAM Institutional Large Cap Value Fund
Touchstone JSAM Institutional Value Fund
Touchstone Mazama Institutional Growth Fund
Touchstone Funds Group Trust on behalf
of each of the following Series thereof:
Touchstone Value Opportunities Fund
Touchstone Health Care and Biotechnology Fund
Touchstone Ultra Short Duration Fixed Income Fund
Touchstone Sands Capital Select Growth Fund
Touchstone International Equity Fund
Touchstone Mid Cap Fund
Touchstone Strategic Value and High Income Fund
Touchstone Clover Core Fixed Income Fund
Touchstone Short Duration Fixed Income Fund
Touchstone Small Cap Value Opportunities Fund
Touchstone Small Cap Value Opportunities Fund
Touchstone Small Cap Value Opportunities Fund
Touchstone Diversified Small Cap Value Fund
Touchstone Diversified Small Cap Value Fund
6
NOVATION AGREEMENT
SCHEDULE 1
All Securities held in each series set forth on Exhibit A hereto of Touchstone
Investment Trust, Touchstone Strategic Trust, Touchstone Variable Series Trust,
Touchstone Tax Free Trust, Touchstone Institutional Funds Trust, and Touchstone
Institutional Funds Group Trust held in custody at BBH.
7
NOVATION AGREEMENT
SCHEDULE 5
PERMITTED INVESTMENTS
FOR CASH COLLATERAL
o Securities Lending Investment Fund, a Series of the Xxxxx Brothers
Investment Trust
o Touchstone Institutional Money Market Fund
8
NOVATION AGREEMENT
SCHEDULE 7
FEES
For each cash collateralized loans effected hereunder, 20% of the difference
between (i) the income earned on the investment of cash Collateral held with
respect to such loan (after deduction of any custody, investment, management or
related fees) and (ii) the Cash Collateral Fee (as defined in the applicable
SLA) paid to the borrower in respect of such loan.
For each non-cash collateralized loan effected hereunder, 20% of the Loan Fee
(as defined in the applicable SLA) paid by the borrower with respect to such
loan.
9
