EX99.B(g)(3)
XXXXX FARGO FUNDS TRUST
SECURITIES LENDING AGREEMENT
This Agreement, made as of the 8th day of November, 1999, by and among
Xxxxx Fargo Funds Trust (the "Trust") on behalf of its funds now existing or
hereafter created (the "Funds"), Xxxxx Fargo Bank, N.A., as adviser for the
Funds ("Xxxxx Fargo") and Norwest 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, Xxxxx Fargo'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.
2. Delegation of Authority
Xxxxx Fargo hereby delegates to the Custodian the administration
of the Funds' securities lending activities, subject to the
monitoring and supervision of Xxxxx Fargo 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 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 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 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
In acting as Custodian for the Funds, the Custodian will receive a
transaction-based charge for every securities movement in the
Account associated with each loan (the "Transaction Charge"). The
Transaction Charge will be in the amounts shown on Exhibit A to
this Agreement, provided that, on a monthly basis, the aggregate
Transaction Charge shall not exceed 40% of the Account Revenues,
as defined below. Total Transaction Charges will be determined and
charged monthly. As of the effective date of this Agreement, an
exemptive order (the "Order") is being sought from the Commission,
which would permit the Custodian to receive a percentage of the
Account Revenues. 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. Until the Order is
obtained, and all conditions of the Order have been satisfied, the
Funds will retain all Account Revenues. After the Order is
obtained, and all conditions of the Order have been satisfied, the
Funds will receive 60% of the Account Revenues, and the Custodian
will receive the remaining 40% of the Account Revenues in lieu of
the Transaction Charge. 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.
12. Notices
Notice to the Funds shall be directed and mailed as follows:
Xxxxx Fargo Funds Trust
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Xx.
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X., #0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Notice to the Advisers shall be directed and mailed as follows:
Xxxxx Fargo Bank, N.A.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
With a copy to:
Xxxxx Fargo Bank, N.A.
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: C. Xxxxx Xxxxxxx
Notice to the Custodian shall be directed and mailed as follows:
Norwest Bank Minnesota, N.A.
Investment Management & Trust- Securities Lending
Norwest 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.
16. Effective Date and Term
This Agreement shall be effective on the 8th day of November,
1999. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
XXXXX FARGO FUNDS TRUST
By: /s/ Xxxxxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxx, Xx.
Assistant Secretary
XXXXX FARGO BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Executive Vice President
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Vice President
NORWEST BANK MINNESOTA, N.A.
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Managing Director of Securities
Lending
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. Minnesota Intermediate Tax-Free Fund
37. Minnesota Money Market Fund
38. Minnesota Tax-Free Fund
39. Moderate Balanced Fund
40. Money Market Fund
41. Money Market Trust
42. National Limited Term Tax-Free Fund
43. National Tax-Free Fund
44. National Tax-Free Institutional Money Market Fund
45. National Tax-Free Money Market Fund
46. National Tax-Free Money Market Trust
47. Oregon Tax-Free Fund
48. Overland Express Sweep Fund
49. Prime Investment Money Market Fund
50. Small Cap Growth Fund
51. Small Cap Opportunities Fund
52. Small Cap Value Fund
53. Small Company Growth Fund
54. Stable Income Fund
55. Strategic Income Fund
56. Treasury Plus Institutional Money Market Fund
57. Treasury Plus Money Market Fund
58. 100% Treasury Money Market Fund
59. Variable Rate Government Fund
60. Wealthbuilder Growth & Income Portfolio
61. Wealthbuilder Growth Balanced Portfolio
62. Wealthbuilder Growth Portfolio
Approved by Board of Trustees: August 19, 1999
EXHIBIT B
Fee Schedule for Securities Lending Activity
$25.00 for each new loan and return
$5.00 for each debit xxxx and credit xxxx per loan
Reasonable hourly charges as required for special lending situations
Effective Date: November 8, 1999
