§ 43. Required elements of a cooperative investment agreement. Every
cooperative investment agreement shall contain, at a minimum, the
following:

1. a description of the creation, membership, powers and
responsibilities of the governing board of the cooperative investment
agreement as set forth in sections forty-four and forty-five of this
article.

2. a statement designating one of the participants as the lead
participant. Moneys to be invested pursuant to the cooperative
investment agreement and the investments made pursuant to the
cooperative investment shall be held in the custody of the lead
participant on behalf of all the participants. Moneys or investments
held in the custody of the lead participant on behalf of the
participants shall not be commingled with other moneys or investments of
the lead participant.

3. a statement that each participant shall have an undivided interest
in moneys and investments held by the lead participant on behalf of the
participants in the proportion that the total amount of contributions
made by that participant bears to the total amount of contributions by
all the participants.

4. a statement of the investment policy applicable to investments made
pursuant to the agreement. This investment policy shall conform to the
requirements of section thirty-nine of this chapter and shall also
include:

(a) a statement of the governing board's intention to maintain the
value of each participant's interest in the cooperative investments at a
stable value of one dollar,

(b) a statement of the types of investments authorized by section
eleven of this chapter in which moneys may be invested under the
agreement and, if deemed appropriate, further limitations pertaining to
matters such as the use of repurchase agreements and the purchase of
variable rate and structured obligations,

(c) a statement of the maximum time remaining to maturity of
individual investments permitted under the agreement and the maximum
weighted average maturity of all investments made pursuant to the
agreement as are deemed necessary to fulfill the investment policy
stated in the agreement and to ensure that a participant's investment
will be available when needed to meet expenditures; provided, however,
that the maximum time remaining to maturity of individual investments
shall not exceed three hundred ninety-seven days and the maximum
weighted average maturity of all investments shall not exceed sixty
days. Compliance under the cooperative investment agreement with the
maturity limitations stated in this subdivision shall be deemed to be
compliance with the requirements of paragraph a of subdivision three of
section eleven of this chapter, and

(d) standards for the diversification of investments, including
diversification with respect to types of investments and firms with whom
the governing board transacts business.

5. the participants' rights to make contributions and receive
distributions, the frequency with which earnings will be distributed
to the participants, and the circumstances, if any, under which a
participant's rights to make contributions or receive distributions may
be limited or deferred.

6. a description of the manner in which expenses incurred by the
governing board in administering the cooperative investment agreement,
including, but not limited to, the cost of procuring the services of
professionals to assist the governing board, the compensation of an
executive director, if one is appointed, and other costs of
administering the investments made pursuant to the agreement, are to be
apportioned among the participants.

7. a description of the methodology, including, but not limited to,
the amortized cost method, that will be utilized to establish the value
of each participant's interest in investments made pursuant to the
agreement, including the value of contributions and distributions, and
the calculation of yield thereon.

8. a provision requiring that the market value of investments made
pursuant to the agreement shall be determined at least monthly and
whenever the method of valuation authorized by the agreement does not
accurately reflect the value of participants' interests in such
investments.

9. a provision requiring that, at least once a month, the portfolio of
investments made pursuant to the agreement be tested for sensitivity to
changes in interest rates. This provision must require that the testing
methodology adopted by the board be reasonably designed to reliably
quantify the effect of a change in interest rates on the market
value of the portfolio.

10. a provision requiring that the governing board secure an
irrevocable letter of credit in an amount sufficient to cover any
potential losses as quantified pursuant to the testing described in
subdivision nine of this section. The cost of such irrevocable letter of
credit shall be deemed to be an expense incurred by the board in
administering the investments made pursuant to the agreement.

11. a statement that the governing board may procure the services of
professionals such as an administrator, investment advisor, independent
auditor, custodial bank, and any other professional services it deems
appropriate to assist the governing board in fulfilling its
responsibilities under the agreement, provided that: (a) the
professionals who will render such services, individually and
collectively, shall meet all qualifications deemed appropriate by the
governing board; (b) the procurement of such services shall be in
compliance with section one hundred four-b of this chapter, subject
to a request for proposal process at least every three years; (c) the
contracts for such services shall ensure compliance with the
requirements of sections ten and eleven of this chapter; and (d) the
charges, fees and other compensation for any contracted services
shall be clearly stated in written service contracts.

12. a provision requiring that each participant receive written
confirmation of each contribution made by or distribution made to the
participant no later than the following business day after which the
contribution or distribution occurs.

13. a provision requiring that each participant receive a monthly
statement that sets forth the following information for the preceding
month: (a) all activity by the participant; (b) the value of the
participant's interest under the agreement at the beginning and end of
the month; and (c) an itemization of all investments held under the
agreement as of the end of the month, including the market value of
each investment as of that date.

14. a provision requiring that each participant and the state
comptroller receive immediate notification of any event or
circumstance that may require a deferral of distributions or may cause
investment losses not anticipated by the investment policy and of any
other material adverse event relating to the investments made pursuant
to the agreement.

15. a provision requiring that a certified public accountant annually
conduct an audit, in accordance with generally accepted government
auditing standards, of the activities undertaken pursuant to the
agreement. A copy of this annual audit shall be distributed to each
participant and to the state comptroller within ninety days after the
close of the fiscal year established under the agreement.

16. a provision requiring that each participant annually receive,
and each prospective participant receive prior to their participation
in the agreement, an information statement that includes, at a
minimum, the following: (a) a brief history of the agreement; (b) a
description of the organization and terms of the cooperative
investment agreement, including the powers and responsibilities of the
governing board and the qualifications of any professionals retained
under the agreement; (c) a description of the investment objectives,
policies and practices contained in the agreement including those
pertaining to liquidity, methodology for determining participants'
interests, distribution of earning and calculation of yield; (d) a
description of the current investments held under the agreement; (e) a
listing of any fees or charges to be incurred by participants; and (f)
a description of the required procedures for initiation and termination
of participation in the agreement.

17. a provision requiring that all participants receive at least
once a year a report detailing the following information for the
preceding twelve months: (a) the portfolio of investments currently
held pursuant to the agreement, including, for each investment, the
market value, time remaining to maturity, interest earned and
realized, and unrealized gains and losses; (b) the overall investment
results, yield and weighted average maturity; (c) a list of the fees
paid for all professional services procured under the agreement; and
(d) a statement of all other expenses incurred by the governing board in
administering the investments made pursuant to the agreement.

18. a provision requiring that, if the governing board obtains a
rating from a nationally recognized statistical rating organization,
such rating and any subsequent changes therein be disclosed to each
participant.