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VAN. Rev:stJ 9/20188
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BATUS INC.
INVESTMZNT GUIDELINES
WAGEMENT-OF FUNDS
BATUS will manage the investment portfolio intern;lly through the
corporate Finance Department. However, the use o external
Investment managers tot investment of ill or part of:thedpottfollo
m!y be autbortz:d,by the Treasurer. Such investment as by
0 cside manager USE adhere to these guidelines unl so a cific
writ-ton approval for different gul.dolines art authorized @V
advance by the Treasurer.
JNVESTMENT M&TURITIES -
BATUS generally will invest only In high jr:de manol market
instruments which have minimal principal :1 k and w cb a maximum
maturity of 270 days. Investments in high Stade 10 term
instruments such as sodium term notes and municipal'Uds of up to
three years may be made with the specific approval of the
Treasurer or Assistant Treasurer. However, Investments in
instruments beyond 270 days will not be made unless there to
active secondary market which assures the liquidity of the Is us.
No more than 13% of the portfolio may have a maturityltreater than
270 d:yt and the average maturity of the whole portfo o may not
excee 20 days.
APPROVED LIST
Any proposed investment must be Included Ih a current list of
@pproved Investments. which will b* maintained b the Cor rate
FAInance Department. All names Included on the list will re
@oviewtd at least annually and Immediately If 'that: Is any change
to any credit rating, If the company Is placed on credit watch
11ato or if there Is a significant cbw4o In the prof Itability cc
prospects of the company or its Industry. Additions to, or
deletions from that list must be approved In writing by the
Treasurer or Assistant Trestauvot on the basis of the following
guidelines.
U.S. GOVERMIJIST S&CURITIES
SATUS may Invest In U.S. Government Securities without limit.
MNK INSTRUMENTS
BATUS may invest in U.S. dollar denominated certificates of
deposit, eurodollar certificates of deposit, *urodollar time
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B.A.T INDusTRIEs P.L.C. - MmNEsaTA oEposFroRy COPV - PRODUCED PuRsuANT To I VILD. OF
CoNsEwT JuoamEvT DATED SAM IN SrA TV OF A&WAfSOTA, ET AL V. PWV SWRIL ET CASE 140. C14M4M5
11/16/W 16-36 V50256M233 NE Fimnce, 20 2902
deposits. floacing rate cercificates of deposit, fully hedged euro
cer:ifica:es of deposit denominated In other major convercibl*
cut-.*ncios, variable money market certificates, floating rate
notes and bankers a@ceptancos which are direct obligations of U.S.
or foreign banks wh ich meet the following criteria:
Fur U.S. Banks
1. The bank must have assets of at least $2 billion.
2. The bank must be raced at least a "C" on the "A-E" scale of
Keefe. Bruyette & Woods Bank Watch Service.
3. The total direct Investment in a bank (including the bank
holding company and other special purpose financing affiliates
in the case of an Investment limit r lating to a bank group's
lead bank) Is limited to the lesser :f the following:
0 10% of the bank's equity capital.
6 $10 million if total assets are Less than $10 billion.
0 $15 million if total assets are less than 620 billion.
0 $20 million if the KBW rating in lower than B.
0 $25 million under any circumstances.
for foreign 549ks
1. The bank must have assets of at least $20 billion.
2. The bank's hom country must be economically developed and
politically aligned with the West.
3. For banks with assets of at 1:ast $50 billion, the bank must
be rated at least a "C" on th "A-Z" scale of JBCA.
4. For banks with aseats of at least $20 billion but less than
$50 billion, the bank must be rated at least a "B" on the IBCA
scale.
5. The bank must have one of thl.toe two ratings on tha JBCA 1-5
scale which gauges the likel Doc of Upport b the bank's
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home country In the event of financial alfficulty.
6. The total direct Investment In a bank (including the bank
holding company and other special purpose financing affiliates
in the case of an Investmat limit c:lotingft
0;1: bank group's
lead bank) is limited to the lesser f the wing-
$15 million for banks with less than $50 billion In assets.
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B.A.T MmwmiEs P.LC. - MINNESOTA DEPOSMAY COPY - PRODUCED PURSUANT To I VIIA OF
CONSENT JUDGMENT DATED MM w STATFOFMW*MTA, ETAL V. PMOINORM. ETA CASENO.CJ-9"M5
sc:!-6822-T!
ii/16/w 36 V502SWO23.1 BIN Finance. 20 ;Z983
ror banks with at less: $50 billion In assets:
$25 million for banks raced A/11-2 or higher.
$20 million for banks rated 3-1 or B-2.
$15 million for banks rated A/C-l or B/C-2.
$10 million for banks rated C-1 or C-2.
BAN%S - INDIRECT EXPOSURE
Certain investments are supported by bank letters of credit which
help to maintain them as better credit rlsks than they would be as
a fteestandin$ basis. An a result, IIATUS may have an indirect
exposure to various banks.
BATUS will track and accumulate the letter of cr:d1t :upport
offered by the banks for other securities and an ure hat the
total indirect exposure to any one bank does not exceed 1% of the
equity of the bank. The 1% indirect exposure limit Is in addition
to the bank's direct investment limit.
When the security supported by Cho letter of credit Is rated,
investment will continue to be subject to existing guidelines as
veil as the Indirect exposure constraint.
r.OWZRCIAL PAPER AND MeDIMM TERM NOTES
BATUS may Invest only in names rated by either Moody's or Standard
Poor, subject co the following criteria:
1. If rated by both, the p&por must be at Isaac A-1, P-1.
2. If It! by only one, It must be at losit A-I or P-1 and oust
have t higbest rating of any otber agency which r&tes Lt.
3. If theta Is no second rating. the case ray be evaluated on Its
merits.
4. if the can ny has a long term debt ratio&, it must be at
least an Va..
5. The total investment in any one credit must not exceed the
following limits:
- $10 million if equity is less than $1 billion.
- $15 million If long term debt racing Is less than AA.
- $25 million under any circumstances.
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BAT INDUSTRIES P.I-C. - MnmoTA DVVSffM Copy _ pROOUCED pURSU
CONSENT JUOGMENr DATED ANT TO I VILD. OF
SAL" IN STATE OF AIMMULA, -Er AL K P#KP NOMA ET AL. CASE No. C1.9"as
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11/16/90 16 - .07 e502%ans SSW Fin&nce, 20
NOTE: in the case of Investments in comm*rcisl paper and/or
medium te:m notes issued by bank holding companies, including
affilia:es whose securlti re tuarant"AlbLthe parent, the
detar=1nation of the inve:.!m1*2oc imit shal made with reference
to bank investment limit standards but by utilizing the
consolidated companyls assets and equity. Notwithstanding the use
of bank investment limit standards to determine the investment
limit. the minimum rating standards for commercial paper and
medium terms Does& must also be satisfied.
TAX EXEMPT MUNICIPAL-BONDS, PUT BONDS AND COMMERCIAL PAPER
BATUS may invest only in rated Instruments with at least a single
A long term debt r ting. It the Invescment bat a short term
rating, It must be rated by either Standard & Poor's or Moody's.
If rated by both, :t must at least A-1. P-1. If rated by only
one, it must be at least A-1 or P-1 and have the highest rating of
ny ocher agency which rates It.
:
he maximum investment permitted in any one credit is $10 million.
MONEY MARKET PREFERRED STOCK
RATUS may Inves t oul in com anies with a preferred stock rating
of at lease A by altKer Scansatd & Poor's or Moody's. If rated by
bota, both to tints must be at least an A. The maximum Investment
in any one credit may not exceed the following limits:
1. $20 million if the preferred stock rating Is AA or higher.
2. $10 million if the preferred stock rating is A.
ffES IN SECURITIES OF AFFILIATED CO)VANIES
investments in securities of any member of an affiliated Sroup May
not be charged against the Investment limit of another member of
the Stoup unless payment on the security Is guaranteed by that
member. A a arate investment limit must be approved Subject to
the guidelin:ps noted above.
Furthermore, at no time shall the total of all Invescments In
securities of all members of an afflLl:tedgroup exceed the
investment limit of the member with tb bI *at Individual limit.
INVESTHENT LIMITS BY INSTRUMENT
In addition to the Individual credit Investment limits. the
following limitations apply based on type of instrument:
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B.A.T INDusTRiEs P.Lc. - MMESOTA DEposffoRy Copy - PmmcEo PuFtsuANr To I VILD. OF
CONSENT JUOQUENr DATED 5/646 iN SyATE OF A$V&XWrA, Er AL, V. pNW #jo"& ET CASE NO. CI-944=5
5025688233
11/16/W 16:37 VW2SM2?3 B&I Finance. 20 (Aess
Instrucenc Limit
U.S. Government Securities No limit.
Repu rchase agreements No limit.
Eurodollar Certificates of
501.1 of portfolio.
D
poslc. Eurodollar Time
:
D posits and fully hedged
Euro Certificates of Deposit
denominuted In othee major
convectible currencies
Commercial Paper, Bankers
50% of portfolio.
Acceptances and Domescic
Certificates of Deposit
Flo cing Rate Certificates of
15% of portfolio (no longer than
D&;oslr and Floating Race
A months)
Notes
Money Market Preferred Stock 30% of portfolio.
(no more than 10% In S&L's)
Tax Exempt bonds and Tax The lower of 25% of portfolio or
Exempt Commercial Paper 2% of assets (IILS safe harbor
guideline).
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S.A..T Ita)UMIES P.LC- MWAESOTA DEPOWORY COPY PRODUCED PURSUAkT To I VILD. OF
CONSEW JUDOWISM 0AND WOM w SrAlf gE A&SMOTA, ET AL. V. Pf" MORM, CAsE No. C14M-W5