EX-99.B(g)(3)
XXXXX FARGO FUNDS TRUST
SECURITIES LENDING AGREEMENT
This AGREEMENT, made as of the 1st day of March, 2001 by and among Xxxxx
Fargo Funds Trust (the "Trust") on behalf of its funds now existing or hereafter
created (the "Funds"), Xxxxx Fargo Funds Management, LLC, as adviser for the
Funds ("Funds Management") and Xxxxx Fargo Bank Minnesota, N.A., as custodian
for the Funds (the "Custodian").
WHEREAS, the Custodian has established a securities lending program (the
"Program") to permit its retirement plan, trust and custody clients to loan
securities;
WHEREAS, the Funds listed in Exhibit A desire to participate in the Program
and the Board of Trustees having approved their participation in the Program;
and
NOW, THEREFORE, the parties hereto agree as follows:
1. Adviser's Activities
--------------------
As investment adviser to the Funds, Funds Management's responsibility
with respect to securities lending activities shall be to perform or
supervise the performance by sub-advisers or, to the extent delegated
by this Agreement, the Custodian, in accordance with securities lending
guidelines approved by the Board of Trustees of the Trust (the
"Guidelines"), of the following:
a. To negotiate or approve the terms and conditions of securities loans
entered into by the Funds.
b. To evaluate the creditworthiness of and select borrowers (the
"Borrowers").
c. To invest any cash collateral received from the Borrowers or
obtained through repurchase transactions with respect to non-cash
collateral received from the Borrowers.
d. To identify to the Custodian securities in the Funds that are
eligible to be loaned under the Program and securities that are not
eligible to be loaned.
e. To provide to the Custodian a schedule of permitted lending rates.
f. To update all such information as necessary in consultation with the
Custodian.
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2. Delegation of Authority
-----------------------
Funds Management hereby delegates to the Custodian the administration
of the Funds' securities lending activities, subject to the monitoring
and supervision of Funds Management and/or the appropriate sub-advisers
(the "Advisers"), and the Custodian hereby accepts such delegation.
Pursuant to this delegation of authority:
a. The Custodian may only enter into loans on terms and conditions
approved by the Advisers (the "Securities Loan Agreement").
b. The Custodian may only enter into loans with entities whose
creditworthiness have been evaluated by the Advisers and who have
been approved by the Advisers to act as Borrowers.
c. The Custodian may only invest cash collateral received from the
Borrowers or obtained through repurchase arrangements with respect
to non-cash collateral in securities specified by the Adviser in
writing, as provided to the Custodian from time to time.
d. The Advisers retain full discretion and power to prevent any loan
from being made or to instruct the Custodian to terminate any loan
once made.
3. Custodian's Activities
----------------------
For the compensation described below and in accordance with the
Guidelines, and subject to the direction and supervision of the
Advisers, the Custodian undertakes the following:
a. To enter into a Securities Loan Agreement with each Borrower setting
forth the general terms governing loans made under the Program.
b. To open an account (the "Account") for each Fund participating in
the Program. Each loan made will be made on behalf of and solely for
the benefit of an Account.
c. To implement loans consistent with its delegated authority and with
the Funds' prospectuses directly or through a finder, for a minimum
of one day but within the term as set forth in the Guidelines,
retaining the power to terminate the loan at any time unless
otherwise agreed with the Funds.
d. To require each loan when made to be collateralized in the amount of
102% of the market value of any domestic securities loaned or 105%
of the market value of any international securities loaned, as the
case may be, and accrued interest.
e. To xxxx each loaned security to market daily using the closing
valuation as of the prior business day. The Custodian shall use a
pricing service to
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obtain market valuation. If the market value of
the given collateral falls to 100% of the market value of the loaned
security plus accrued interest, the Custodian shall request
additional collateral from the Borrower to bring the
collateralization back to 102% for any domestic securities loaned or
105% for any international securities loaned. Collateral in excess
of 102% or 105%, as the case may be, will be returned to the
Borrower if requested.
f. To receive and take possession of collateral in the form of cash,
government securities (as defined in the Investment Company Act of
1940 (the "Act")), irrevocable letters of credit issued by certain
approved banks, or such other collateral as may be permitted by the
Securities and Exchange Commission (the "Commission") or its staff.
To the extent permitted under the Act, and as interpreted by the
staff of the Commission or pursuant to any exemptive order
thereunder, cash received from all loans from Accounts may be
commingled for investment purposes. Such cash may be invested only
in securities approved in writing by the Advisers that are
permissible investments for each Fund.
g. Normally, securities loaned and cash or government securities
transferred as collateral will be processed, similar to security
purchases and sales, through the Depository Trust Company or a
Federal Reserve Bank or any other appropriate clearing organization
(the "Clearing Organization").
4. Allocation of Security Loans Among Participants
-----------------------------------------------
The Custodian maintains a list of securities available for lending
through the Program, including available Fund securities. The Custodian
will use reasonable efforts to allocate loans among participants in the
Program in a way that is fair to all participants, including the Funds.
As a result of this allocation, the Funds understand that a single
Borrower may be lent a significant portion, or all, of the Funds'
securities available for lending. The Funds also understand that other
Program participants may absorb all demand for particular securities
and that the Funds' securities may not be loaned even where identical
securities are being loaned by the Custodian as part of the Program on
behalf of other participants.
5. Termination of Any Security Loan
--------------------------------
A loan may be terminated by the Custodian or the Borrower at any time
pursuant to the Securities Loan Agreement covering the loan. The
Advisers may request the Custodian to terminate any loan of securities
for any reason at any time. Upon such loan termination, the Custodian
will take delivery or receive through a Clearing Organization the
securities to be returned. The Custodian will return to the Borrower
directly or through the Clearing Organization the collateral securing
the loan. The Securities Loan Agreement will provide for the return of
corporate securities no later than the third business day following
loan termination notice and, in the case of government
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securities, no later than the next business day following loan
termination notice. Notwithstanding the foregoing, the Custodian will
have a reasonable time after receiving the Advisers' loan termination
request to liquidate cash collateral investments prior to terminating
the loan.
6. Portfolio Investment Activity and Corporate Actions in Regard to Loaned
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Securities
----------
The Funds' Accounts are entitled to all cash dividends, stock
dividends, stock splits, rights of distribution, conversion privileges,
tender and exchange offers, and similar corporate actions with respect
to any loaned securities as if the securities had not been loaned.
During any period when securities are loaned, the Funds waive their
right to vote such securities. The Funds may regain the right to vote
securities by causing a timely termination of a loan in advance of the
record date established for determining stockholder entitlement to
vote. Any securities of the portfolio that are on loan may be sold by
the Advisers at any time. Upon receipt by the Custodian of notice from
the Advisers of any sale, the Custodian will initiate action to
terminate the loan of the securities sold. If such notice is not
received by the Custodian, the Custodian assumes no liability for the
failure of the transaction to settle on contractual settlement date.
7. Recordkeeping and Reporting
---------------------------
The Custodian will monitor daily the value of the loaned security and
the collateral. The Custodian will provide recordkeeping and accounting
services necessary for the operation of the Program. The Custodian will
keep security loan records separate from the Funds' custodial or
fiduciary portfolio records. The Custodian will credit income from each
loan to the Funds' Accounts at least once a month. The Custodian will
provide the Advisers with a detailed monthly report, which shall
include all loan activity, Borrowers to whom loans were made, and
income earned. The Custodian will also provide the Advisers with a list
of each Fund's securities lending positions on a daily basis and will
provide such other reports as the Advisers or the Board of Trustees of
the Trust may reasonably request.
8. Fees
----
An exemptive order (the "Order") was obtained from the Commission,
which permits the Custodian to receive a percentage of the Account
Revenues for acting as Securities Lending Agent. As used herein,
"Account Revenues" means all revenue, in the form of (a) earnings on
the investment of cash collateral provided by a Borrower in connection
with a loan from an Account through the Program, net of any agreed-upon
amount payable to the Borrower out of such earnings, or (b) separate
lending fees payable by a Borrower when the collateral provided by the
Borrower is in the form of letters of credit or government securities,
in each case net of expenses. The Funds will receive
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60% of the Account Revenues, and the Custodian will receive the
remaining 40% of the Account Revenues. Account Revenues will be
calculated and credited monthly.
9. Risk of Loss
------------
The Funds assume all risk of loss arising out of Borrower defaults on
return of lent securities, collateral deficiencies or collateral
investment loss, provided the terms and conditions of this Agreement
and the Guidelines have been observed by the Custodian. If the Borrower
defaults on the return of a lent security, in accordance with the
Securities Loan Agreement, the Funds or the Custodian, if authorized,
may purchase securities identical to the lent securities (or their
equivalent in the event of reorganization, recapitalization or merger
of the issuer of the borrowed security) and may apply the collateral to
the payment of the purchase price, expenses and other obligations under
the Securities Loan Agreement. The Custodian assumes all risk of loss
arising out of negligent operation of its Program or any failure by it
to observe the terms and conditions of this Agreement or the
Guidelines.
10. Termination
-----------
This Agreement may be terminated at any time by any party upon 60 days'
written notice to the others. Upon mutual agreement, the parties may
waive all or part of the notice period. The Custodian will terminate
all loans from the Funds' Accounts in accordance with the Security Loan
Agreement in time for lent securities to be returned to the Funds prior
to the effective date of any such termination.
11. Construction
------------
Each Fund shall be deemed to have entered into this Agreement severally
and not jointly, and the provisions of this Agreement shall be
construed accordingly. Each reference hereunder to the Funds or a Fund
shall be deemed a separate reference solely to the Fund to which a
particular loan under this Agreement relates. Under no circumstances
shall the rights, obligations or remedies hereunder with respect to a
particular Fund constitute a right, obligation or remedy applicable to
any other Fund. In particular, and without otherwise limiting the scope
of this Section: (i) the collateral and xxxx to market requirements
specified in Section 3 of this Agreement shall be calculated separately
based solely upon the loans entered into by each Fund; and (ii) the
Custodian shall have no right to set off claims against or amounts owed
by one Fund by applying property of another Fund.
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12. Notices
-------
Notice to the Funds shall be directed and mailed as follows:
Xxxxx Fargo Funds Trust
c/o Wells Fargo Funds Management, LLC
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: C. Xxxxx Xxxxxxx
Notice to the Adviser shall be directed and mailed as follows:
Xxxxx Fargo Funds Management, LLC
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Notice to the Custodian shall be directed and mailed as follows:
Xxxxx Fargo Bank Minnesota, N.A.
Investment Management & Trust- Securities Lending
Xxxxx Fargo Center
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxx
13. Section Headings
----------------
The headings of sections in this Agreement are inserted for convenience
of reference and shall not be deemed to be a part of or used in the
construction of this Agreement.
14. Governing Law
-------------
This Agreement and all transactions hereunder shall be governed by,
interpreted, construed and enforced in accordance with the laws of the
State of California.
15. Successors and Assigns
----------------------
This Agreement shall be binding on and enforceable against the
successors and assigns of the parties. This Agreement may not be
assigned by any party without the prior written consent of the other
parties hereto.
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16. Effective Date and Term
-----------------------
This Agreement shall be effective on the lst day of March, 2001 and
relates to the agreement dated as of July 25, 2000 among Xxxxx Fargo
Funds Trust, Xxxxx Fargo Bank, N.A. and Xxxxx Fargo Bank Minnesota,
N.A. as approved by the Board of Trustees on August 19, 1999, May 9,
2000 and July 25, 2000. This Agreement shall continue in effect for one
year, unless earlier terminated in accordance with Section 10, and from
year to year thereafter provided it shall be renewed at least annually
by the Trust's Board of Trustees, including a majority of the Trust's
disinterested Trustees.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
XXXXX FARGO FUNDS TRUST
By: /s/ C. Xxxxx Xxxxxxx
---------------------------------
C. Xxxxx Xxxxxxx
Secretary
XXXXX FARGO FUNDS
MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President, Chief Administrative
Officer and Chief Financial Officer
XXXXX FARGO BANK MINNESOTA, N.A.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx
Vice President
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Exhibit A
FUNDS OF XXXXX FARGO FUNDS TRUST
1. Aggressive Balanced-Equity Fund
2. Arizona Tax-Free Fund
3. Asset Allocation Fund
4. California Limited Term Tax-Free Fund
5. California Tax-Free Fund
6. California Tax-Free Money Market Fund
7. California Tax-Free Money Market Trust
8. Cash Investment Money Market Fund
9. Colorado Tax-Free Fund
10. Corporate Bond Fund
11. Disciplined Growth Fund
12. Diversified Bond Fund
13. Diversified Equity Fund
14. Diversified Small Cap Fund
15. Equity Income Fund
16. Equity Index Fund
17. Equity Value Fund
18. Government Money Market Fund
19. Growth Balanced Fund
20. Growth Equity Fund
21. Growth Fund
22. Income Fund
23. Income Plus Fund
24. Index Allocation Fund
25. Index Fund
26. Intermediate Government Income Fund
27. International Equity Fund
28. International Fund
29. Large Company Growth Fund
30. LifePath Opportunity Fund
31. LifePath 2010 Fund
32. LifePath 2020 Fund
33. LifePath 2030 Fund
34. LifePath 2040 Fund
35. Limited Term Government Income Fund
36. Mid Cap Growth Fund
37. Minnesota Intermediate Tax-Free Fund
38. Minnesota Money Market Fund
39. Minnesota Tax-Free Fund
40. Moderate Balanced Fund
41. Money Market Fund
42. Money Market Trust
43. National Limited Term Tax-Free Fund
44. National Tax-Free Fund
45. National Tax-Free Institutional Money Market Fund
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46. National Tax-Free Money Market Fund
47. National Tax-Free Money Market Trust
48. Nebraska Tax-Free Fund
49. Oregon Tax-Free Fund
50. OTC Growth Fund
51. Overland Express Sweep Fund
52. Prime Investment Money Market Fund
53. Small Cap Growth Fund
54. Small Cap Opportunities Fund
55. Small Cap Value Fund
56. Small Company Growth Fund
57. Specialized Health Sciences Fund
58. Specialized Technology Fund
59. Stable Income Fund
60. Strategic Income Fund
61. Treasury Plus Institutional Money Market Fund
62. Treasury Plus Money Market Fund
63. 100% Treasury Money Market Fund
64. Variable Rate Government Fund
65. Wealthbuilder Growth & Income Portfolio
66. Wealthbuilder Growth Balanced Portfolio
67. Wealthbuilder Growth Portfolio
Approved by Board of Trustees: October 24, 2000, December 18, 2000, and
February 6, 2001.
The above list of funds is agreed to as of March 1, 2001.
XXXXX FARGO FUNDS TRUST
By: /s/ C. Xxxxx Xxxxxxx
---------------------------------------
C. Xxxxx Xxxxxxx
Secretary
XXXXX FARGO FUNDS MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President, Chief
Administrative Officer and Chief
Financial Officer
XXXXX FARGO BANK MINNESOTA, N.A.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
Vice President
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