6-3-03
SECURITIES LENDING
AUTHORIZATION AGREEMENT
This Agreement is by and among the USALLIANZ VARIABLE INSURANCE
PRODUCTS TRUST, an open-end management investment company registered under the
Investment Company Act of 1940 (herein referred to as the "Company"), on behalf
of its existing and future separate investment portfolios or series (herein
referred to each as a "Lending Fund"), USAllianz Advisers LLC, as Adviser to the
Lending Funds, and THE NORTHERN TRUST COMPANY, the custodian of each of the
Lending Funds (herein referred to as "Agent"), and governs the lending of U.S.
and non-U.S. securities ("Securities") by Agent as agent of any Lending Fund
from one or more accounts of such Lending Fund in the custody of Agent. This
Agreement includes as attachments Schedule A, the Borrower Schedule attached
thereto, Schedule B (Collateral Guidelines), Schedule C (the Fee Schedule), the
form of Borrowing Agreement at Annex I, and the current prospectus for the
Northern Institutional Funds' Liquid Assets Portfolio at Annex II, all of which,
together with any substitutions therefor, are hereby incorporated in this
Agreement. Certain capitalized terms used herein are defined in section 12
below.
1. AUTHORIZATION. The Company hereby appoints Agent for the purpose of
lending Securities of each Lending Fund, to act in accordance with the
terms of this Agreement and pursuant to the directions of the Company,
the Lending Fund and the Adviser. Notwithstanding the foregoing, Agent
shall not loan Securities of a Lending Fund if, as a result of a Loan
of such Securities, more than one-third of the Market Value of the
total assets of the Lending Fund (determined at the time of making the
Loan) would be on loan.
1.1 The Company hereby authorizes and directs Agent to enter
into Loans on behalf of each Lending Fund with only such Borrowers
(other than Agent or any parent, subsidiary or affiliate of Agent),
with only such types of Collateral, making only such investments of
cash Collateral, and only on such other terms and conditions, as are
specifically provided for under this Agreement and the Schedules
attached hereto (all of which are hereby specifically approved by the
Adviser) or on such other terms and conditions as the Company, the
Lending Fund or the Adviser may from time to time direct in writing.
1.2 It is understood and agreed that each Lending Fund and its
Adviser retain the ultimate authority regarding the lending of
Securities of the Lending Fund and that the Agent is subject to the
direction of the Lending Funds in carrying out its responsibilities
with respect to the lending of Securities in accordance with this
Agreement.
1.3 Agent may only lend Securities of a Lending Fund to
Borrowers specifically approved by the Company or the Adviser, which
approval may be sufficiently evidenced by the execution by the Company
(or the Adviser) of Schedule A, attached hereto.
2. AGENT'S RESPONSIBILITY AS TO LOANS. Before entering into any Loan with
a Borrower, Agent shall be responsible for the following:
2.1 Agent shall enter into a Borrowing Agreement with the Borrower, the
terms of which may vary depending upon the country of domicile of the
Borrower, the jurisdictions in which the Borrower does business, any
separate negotiation between Agent and Borrower and other factors, but
shall comply in all material respects with the requirements of this
Agreement concerning the Borrowing Agreement. A copy of the sample form
of Borrowing Agreement currently offered to potential Borrowers is
attached hereto as Annex I.
2.2 Upon receipt of notice from a Borrower of its desire to borrow
Securities upon stated terms, Agent shall determine the account or
accounts from which to loan Securities by using Agent's impartial
sequential systems that match Loan requests with the accounts of
Agent's various lending customers holding eligible Securities.
2.3 Agent shall obtain from the potential Borrower the most recent
audited statement of its financial condition and the most recent
unaudited statement of its financial condition, if more recent than the
audited statement, and shall make a reasoned determination that the
potential Borrower is creditworthy.
2.4 Agent shall require the Borrower to furnish, with respect to each
Loan, or agree in the Borrowing Agreement that each Loan shall
constitute, a representation that there has been no material adverse
change in its financial condition since the date of the most recent
financial statement furnished pursuant to the preceding paragraph.
3. COLLATERAL. In the lending of Borrowed Securities, protection is
afforded by the Collateral received from a Borrower pursuant to the
terms of the Borrowing Agreement. All Collateral so received, and all
investments of cash Collateral, shall be held either in the physical
custody of Agent or for the account of Agent by an agent or
subcustodian of Agent or a central bank, depository or clearing
corporation acting as a depository.
3.1 Collateral shall be held in a separate account for each Lending
Fund (each referred to as a "Separate Account"). All Collateral
received from Borrowers supporting Loans of Securities of a Lending
Fund, and all investments of cash Collateral, shall be credited to and
held in the Separate Account. All property of the Separate Account
shall be held in the Separate Account for the sole benefit and at the
sole risk of the relevant Lending Fund. Cash Collateral shall be
invested, and non-cash Collateral shall be accepted, for each Lending
Fund in accordance with the guidelines, rules, procedures, and
standards set forth in the Collateral Guidelines attached hereto as
Schedule B and hereby made a part hereof.
3.2 For purposes of investments of cash Collateral, the designation by
the Company of a cash Collateral investment option for a Lending Fund
pursuant to this Agreement shall prevail over any contrary provisions
of any other instrument between the parties concerning investment of
cash of the Lending Fund.
3.3 The risk of any loss of Collateral or investments of cash
Collateral (including a loss of income or principal, or loss of market
value thereof) shall be allocated as follows:
(i) any loss resulting from the insufficiency of income from
the investment of cash Collateral of a Lending Fund to pay Rebate
Fees or other expenses properly paid from such income shall be
allocated to Agent in the same percentage as Agent's fee under
Schedule C, with the balance of such losses allocated to the Lending
Fund;
(ii) any loss of principal or principal value within any
Separate Account shall be allocated solely to the relevant Lending
Fund;
(iii) any loss resulting from an insufficiency of Collateral
or its proceeds to pay for the cost of purchasing Equivalent
Securities or otherwise to make any Lending Fund whole in the event
of a default by a Borrower that is not recoverable from the Borrower
or within the scope of Agent's obligations under section 16 shall be
borne solely by such Lending Fund; and
(iv) notwithstanding the foregoing, Agent shall be liable for
losses resulting from its negligence or intentional misconduct in
performing the duties allocated to it under this Agreement with
respect to Collateral.
3.4 Each Lending Fund shall pay to Agent, upon Agent's written demand
therefor, such amounts as are determined by Agent to be necessary from
time to time to satisfy the Lending Fund's obligations under this
Agreement with respect to insufficiencies of cash Collateral income or
Collateral principal. The Company, on behalf of each Lending Fund,
hereby grants to Agent a lien upon and security interest in any
property of or due the Lending Fund at any time in the possession of
Agent to secure the payment of such obligations.
4. COLLATERAL MARGIN.
4.1 The Borrowing Agreement shall provide that at the time a Loan is
made there shall be a transfer of Borrowed Securities against a
transfer (occurring prior thereto or, in the case of Securities
transferred through a depository, central bank or clearing
organization, before the close of the same business day in accordance
with the rules, customs and practices of that depository, bank or
organization) of Collateral having a Market Value equal to such
percentage of the Market Value of the Borrowed Securities as Agent and
the Borrower shall agree; provided that such percentage shall not be
less than the minimum percentage required in the Collateral Guidelines
at Schedule B (which minimum percentage shall not in any event be less
than 100%).
4.2 Each business day the Agent and the Borrower shall determine the
Market Value of the Collateral and the Borrowed Securities. If on any
business day the Market Value of all the Collateral shall be less than
the Required Value (as hereinafter defined), Agent shall demand from
the Borrower, subject to a de minimis rule of change in value
appropriate to the type of Borrowed Securities, additional Collateral
so that the Market Value of the additional Collateral, when added to
the Market Value of the Collateral previously delivered to Agent, shall
equal the Required Value. If the Borrower fails to deliver such
additional Collateral, Agent may terminate the Loan in accordance with
paragraph 5.1 hereof.
4.3 If on any business day the Market Value of all the Collateral shall be
greater than the Required Value, Agent shall, upon request from the
Borrower, subject to a de minimis rule of change in value appropriate
to the type of Borrowed Securities, redeliver to Borrower such amount
of Collateral selected by Borrower so that the Market Value of all
Collateral equals the Required Value.
4.4. Notwithstanding the de minimis rules referred to in this section
4, nothing in this Agreement shall relieve or be construed to relieve
the Agent from its responsibility to demand additional Collateral from
the Borrower should the Market Value of the Collateral fall below 100%
of the Market Value of the Borrowed Securities of any Lending Fund.
5. TERMINATION OF LOANS; REMEDIES UPON DEFAULT.
5.1 Agent shall retain the right pursuant to the terms of the Borrowing
Agreement to terminate a Loan at any time, whereupon the Borrower shall
deliver Equivalent Securities to Agent within (a) the customary
delivery period for such Securities, (b) five business days or (c) the
time negotiated for such delivery by Agent and the Borrower, whichever
period is least, and Agent shall concurrently therewith deliver
collateral identical to the Collateral to the Borrower. A Borrower may
terminate a Loan at any time upon notice to Agent and by delivery to
Agent of Equivalent Securities. The Company, on behalf of a Lending
Fund, shall have the right at any time to direct Agent to terminate a
Loan of the Lending Fund's Securities, in whole or in part.
5.2 If upon termination of a loan a Borrower shall fail to deliver
Equivalent Securities, Agent shall exercise the remedies available to
it under the relevant Borrowing Agreement and applicable law, customs
and practices for the benefit of the Lending Funds thereby affected.
Agent shall have the right to, and in the event of a Filing with
respect to a Borrower shall, purchase Equivalent Securities, apply the
Collateral to the payment of the purchase price of the Securities
purchased, any other obligations of the Borrower under the Borrowing
Agreement and all reasonable related expenses, and either pay to the
Borrower any amounts then remaining, or demand from the Borrower any
amounts then due and owing, all in accordance with the requirements of
applicable law and the provisions of the relevant Borrowing Agreement,
together with interest on such amounts and at such rates as are
permitted by the Borrowing Agreement and applicable law. All recoveries
for the benefit of a Lending Fund under this paragraph shall be
credited to the Lending Fund's account when received. The Company, on
behalf of each Lending Fund, hereby authorizes Agent, as such Lending
Fund's agent and Nominee, to exercise on behalf of such Lending fund
all remedies (including rights of set-off) otherwise available to the
Lending Fund under all applicable U.S. and non-U.S. laws in order to
secure the return of Equivalent Securities (or their value) to the
Lending Fund.
5.3 In the event Lender sells Securities that are Borrowed Securities,
the Borrower of the Securities fails to return them during the period
permitted by the applicable Borrowing Agreement, and Agent is unable to
mitigate the effect of such failure by reallocating the Borrowed
Securities to another Participating Lender, and as a result the Lender
fails to deliver the Securities on the required delivery date, Agent
shall provide Lender with "sell-fail" protection as specified in
Agent's Investment Manager Guidelines then in effect applicable to such
Securities.
6. DISTRIBUTIONS; VOTING, ETC.
6.1 The Company and each Lending Fund acknowledge that during the term
of any Loan the Borrower shall otherwise hold all incidents of
ownership with respect to the Borrowed Securities, including but
without limitation the rights to vote the Borrowed Securities and to
transfer or loan Borrowed Securities to others subject, however, to the
Company's right to terminate any such Loan in accordance with paragraph
5.1 hereof.
6.2 The Borrower shall, in accordance with the terms of the Borrowing
Agreement, be required to pay to Agent the equivalent (herein called
"Substitute Payments") of all distributions made by the issuer of the
Borrowed Securities during the term of a Loan to which the Lending Fund
would have been entitled had the Securities not been loaned, including,
but not limited to, cash dividends, interest payments, shares of stock
as a result of stock splits and stock dividends and the rights to
purchase additional Securities. Agent shall credit to the account of
the Lending Fund the net amount of all Substitute Payments of cash on
the payable dates thereof, subject to section 9.3 of this Agreement.
All other Substitute Payments shall be credited to the Lending Fund
when received from the Borrower, except that stock splits shall be
deemed part of the Borrowed Securities. All Substitute Payments shall
be subject to any requirements of applicable taxing authorities
concerning withholding of tax on such payments. Agent shall pay to a
Borrower the distributions Agent receives on Securities delivered by
the Borrower as Collateral.
6.3 The rates of tax withholding or credit used to determine the amount
of any Substitute Payment of cash by a Borrower with respect to
Borrowed Securities shall be determined and agreed to by Agent at the
time a Loan is made and shall not thereafter be subject to retroactive
adjustment for any reason. Agent shall have no liability for errors
made in determining such amounts, if Agent acted in good faith and
without negligence based on all the most current relevant information
in the possession of Agent at that time.
7. REVENUES.
7.1 The Net Revenue of a Lending Fund during any period shall consist
of (a) in the case of cash Collateral, the aggregate income derived
from the investments of cash Collateral during the period, net of (i)
any applicable payment or withholding of tax, (ii) aggregate Rebate
Fees paid or accrued to the Borrowers pursuant to the Borrowing
Agreements and (iii) certain expenses, adjustments and charges as
disclosed in the Collateral Guidelines at Schedule B, and (b) in all
other cases, the aggregate loan Premiums or Loan Fees paid by the
Borrowers pursuant to the Borrowing Agreements; reduced by any
applicable payment or withholding of tax.
7.2 The Net Revenue of a Lending Fund shall be credited by Agent
monthly to the account of the Lending Fund, provided that Agent may
simultaneously deduct from that account, as compensation for Agent's
services under the securities lending program, a fee equal to such
amounts as shall be agreed upon in writing from time to time by the
parties and set forth in Schedule C attached hereto.
8. REPORTS. Within approximately two weeks after the end of each month,
Agent shall furnish to the Company with respect to each Lending Fund
and the Adviser a statement of account for the month listing the
Borrowed Securities, the Borrowers to whom they have been lent, the
Collateral held by Agent against all Loans of the Borrowed Securities,
the Loan revenue received during the period and the fees of the Agent.
In addition, the Company shall have the right to request a list of
Borrowed Securities and Collateral (and the Market Values thereof) as
of any specified date.
9. CONCERNING THE AGENT.
9.1 Agent shall administer the securities lending program in conformity
with the applicable laws governing each Loan and all rules, regulations
and exemptions from time to time promulgated and issued under the
authority of those laws. Nothing in this Agreement shall be construed
to require Agent to take any action which in Agent's reasonable belief
could cause Agent or a Lending Fund to violate any applicable law. In
the event of a change in the securities lending program required in
order to comply with a change in applicable laws, rules, regulations or
exemptions, Agent shall notify the Company and such change shall be
deemed to be a part of this Agreement.
9.2 Agent shall not be responsible for delays or failures in
performance caused by circumstances reasonably beyond Agent's control,
including but not limited to fires, storms, earthquakes and other
similar occurrences, power outages, work stoppages, closure or
malfunctioning of central banks, securities exchanges, or depositories,
defaults by subcustodians chosen by Agent in the exercise of reasonable
care, political disturbances, and breakdowns in governmental functions
of all types.
9.3 Agent may at its discretion, but shall not be required to, make
loans or advances to a Lending Fund in order to provide temporary
liquidity to such Lending Fund as a result of a Collateral default or
otherwise. All such loans or advances shall bear interest at the
Treasury Rate until paid if permitted under applicable statutes,
regulations, exemptions and SEC opinions. Agent may also advance funds
to a Lending Fund for the payment of Rebate Fees or other amounts due
to a Borrower, or for the payment of Substitute Payments, Net Revenues
or any other amounts due from the Borrower to the Lending Fund
hereunder. Any advance to a Lending Fund of amounts due from a Borrower
shall be conditional upon receipt by Agent of final payment from the
Borrower and may be reversed to the extent final payment is not
received. Any interest received by the Agent under this paragraph shall
be in addition to Agent's other compensation under this Agreement.
9.4 In performing its duties hereunder, Agent shall be held to the
standard of care exercised by banks generally in performing similar
duties and shall be responsible only for its negligence or intentional
misconduct. In no event shall Agent be liable for special, indirect or
consequential damages of any kind, even though Agent may have been
previously informed of the possibility that such damages may occur.
10. REPRESENTATIONS AND WARRANTIES. The parties hereby make the following
representations and warranties to each other, each of which shall
continue throughout the term of this Agreement and of each Loan
hereunder.
10.1 Agent hereby represents and warrants as follows:
10.1.1 It has all necessary corporate and governmental
authority to execute and deliver this Agreement, to engage in the
transactions contemplated hereby and to perform its obligations
hereunder.
10.1.2 The person executing this Agreement on behalf of Agent
has all necessary authority to render this Agreement the legal, valid
and binding obligation of Agent.
10.1.3 It has, or at the time of any relevant Loan shall have,
obtained all necessary approvals of applicable governmental and
self-regulatory organizations (including approval by Inland Revenue as
an agent for the purposes of stock lending regulations and an approved
UK collecting agent), and satisfied all conditions and qualifications
imposed by applicable taxing authorities, necessary in order to comply
with all statutes, laws, rules and regulations applicable to that Loan.
10.2 The Company hereby represents and warrants as follows:
10.2.1 Each Lending Fund has taken all necessary action
(including making all necessary disclosure in the applicable
prospectus(es) of the Lending Fund) and obtained all necessary
governmental, administrative, and other approvals (including any
approvals of the investors of the Lending Fund) necessary to execute
and deliver this Agreement, to engage in the transactions contemplated
hereby and to perform its obligations hereunder and the Company is duly
authorized to enter into and perform this Agreement on behalf of each
Lending Fund.
10.2.2 The person or entity executing this Agreement on behalf
of the Company and each Lending Fund has all necessary authority to
render this Agreement the legal, valid and binding obligation of the
Company and of each Lending Fund.
10.2.3 The execution, delivery and performance of this
Agreement by the Company and each Lending Fund will not result in a
violation of any law, statute, rule, regulation, exemption or
administrative order applicable to such entity.
10.2.4 Each Lending Fund is absolutely entitled to pass all
incidents of ownership with respect to all Securities provided
hereunder to Borrowers free from all liens, charges and encumbrances.
10.2.5 The Board of Trustees of the Company and each Lending
Fund (including a majority of the Independent Trustees of the Lending
Fund), have approved the terms of this Agreement and, in particular,
the List of Borrowers approved by the Company as set forth in Schedule
A hereof, the types of eligible Collateral and the investment of cash
Collateral in the Liquid Assets Portfolio as set forth in Schedule B
hereof, and the fees of the Agent as set forth in Schedule C hereof.
10.2.6 As to investments by any Lending Fund in shares of the
Liquid Assets Portfolio, (a) the policies of the Lending Fund generally
permit the Fund to engage in securities lending transactions, (b) such
transactions are conducted in accordance with the guidelines of the
Securities and Exchange Commission and/or its staff; (c) the policies
of such Lending Fund permit it to purchase such shares with cash
Collateral and (d) the securities lending activities of such Lending
Fund will be conducted in accordance with all representations and
conditions contained in the Application.
10.2.7 The Independent Trustees of any Lending Fund investing
in the Liquid Assets Portfolio have approved the investment of cash
Collateral in shares of the Liquid Assets Portfolio.
10.3 Adviser hereby represents and warrants as follows:
10.3.1 It has all necessary corporate and governmental
authority to execute and deliver this Agreement and to perform its
obligations hereunder.
10.3.2 The person executing this Agreement on behalf of the
Adviser has all necessary authority to render this Agreement the legal,
valid and binding obligation of the Adviser.
10.3.3 The execution, delivery and performance of this
Agreement by the Adviser will not result in a violation of any law,
statute, rule, regulation, exemption or administrative order applicable
to the Adviser.
11. DISCLOSURE AND CONFIDENTIALITY. The Company, on behalf of each Lending
Fund, authorizes Agent to disclose, to any Borrower who at any time so
requests, (1) the name of the Company and the Lending Fund; (2) the
fact that the Company, on behalf of the Lending Fund, has authorized
Agent to lend Securities of the Lending Fund to the Borrower; (3) the
fact that specific Securities loaned to the Borrower are owned by the
Lending Fund; and (4) any publicly available financial information
concerning the Company or the Lending Fund in Agent's possession.
Before disclosing any information described in this paragraph to a
Borrower who has requested it, Agent shall obtain from the Borrower,
as a condition for such disclosure, a written agreement (which may be
the Borrowing Agreement) requiring the Borrower to hold such
information in confidence.
12. DEFINITIONS. For the purposes of this Agreement, the following
definitions shall apply.
12.1 "Act" shall mean the Investment Company Act of 1940, as amended.
12.2 "Adviser" shall mean, as applied to any Lending Fund, the then
acting investment adviser (within the meaning of the Act) of the
Lending Fund.
12.3 "Application" shall mean the First Amended and Restated
Application filed July 23, 2001 with the Securities and Exchange
Commission in the matter of Northern Institutional Funds et al., being
File No. 812-12126, requesting an order pursuant to certain sections of
the Act and rules thereunder.
12.4 "Borrowed Securities" shall mean, (a) with respect to any Loan,
the Securities of a Lending Fund that are the subject of the Loan, and
(b) with respect to paragraphs 4.2 through 4.4, all Securities of the
Lending Fund that have been loaned to a Borrower; plus in either case
(1) all cash, securities or other property received in the event of a
call, redemption, exchange, maturity or similar action or event with
respect to the Borrowed Securities, and (2) all cash, securities or
other property received or issued in exchange or replacement for the
Borrowed Securities in the event of a merger, consolidation,
recapitalization, reorganization, liquidation or takeover of the issuer
of the Borrowed Securities.
12.5 "Borrowing Agreement" shall mean the master borrowing agreement,
as amended, entered into between Agent and a Borrower establishing the
general terms and conditions governing all Loans to that Borrower.
12.6 "Collateral" shall mean (a), with respect to any Loan, the cash or
other property delivered to the Agent by a Borrower with respect to the
relevant Borrowed Securities, and (b), with respect to paragraphs 4.2
through 4.4, all Collateral held by Agent in respect to Borrowed
Securities of a Lending Fund that have been loaned to a Borrower.
12.7 "Equivalent Securities" shall mean Securities identical (as to
issuer, class, quantity and description) to the relevant Borrowed
Securities, and such term shall include the certificates and other
documents of or evidencing title and transfer in respect of the
foregoing (as appropriate).
12.8 "Filing" shall mean a filing by a Borrower (or by a creditor or,
or some other person acting with respect to, the Borrower) of a
petition in bankruptcy or a petition seeking reorganization,
winding-up, liquidation, dissolution or similar relief, including
appointment of a trustee, receiver or liquidator of a substantial part
of the property of the Borrower under a bankruptcy, insolvency or
similar statute, code, law, rule or regulation of any jurisdiction.
12.9 "Independent Trustees" of a Lending Fund shall mean those trustees
who are not "interested persons" within the meaning of Section 2(a)(19)
of the Act.
12.10 "Liquid Assets Portfolio" shall mean a money market fund as
defined under SEC Rule 2a-7, which is offered by Northern Institutional
Funds pursuant to the prospectus attached to this Agreement as Annex
II, and which meets the eligibility requirements set forth in the
Application for an investment of cash Collateral supporting a Loan .
12.11 "Loan" shall mean a loan of Securities to a Borrower from an
account of a Lending Fund.
12.12 "Market Value" of Borrowed Securities and Collateral shall be
determined as provided in the relevant Borrowing Agreement, and shall
include accrued interest if appropriate to particular Securities.
12.13 "Premium or Loan Fee" shall mean an agreed fee required to be
paid by a Borrower to Agent for the benefit of a Lending Fund in
respect of each Loan of the Lending Fund's Securities as to which the
Borrower has furnished non-cash Collateral.
12.14 "Rebate Fee" shall mean an agreed amount required to be paid by
Agent for the account of a Lending Fund to a Borrower in respect of
each Loan of the Lending Fund's Securities as to which the Borrower has
furnished cash as Collateral.
12.15 "Required Value" shall mean the Market Value of all the Borrowed
Securities outstanding to a Borrower plus any additional margin as
agreed upon between Agent and the Borrower.
12.16 "Treasury Rate" shall mean the rate per annum on 90-day U.S.
Treasury bills as quoted in the Midwest Edition of THE WALL STREET
JOURNAL from time to time during the relevant period (or if not there
quoted, as quoted in any publication reasonably selected by Agent).
13. TAX CONSIDERATIONS.
13.1 Each Borrower shall represent, as a condition for any Loan, that
it has obtained all necessary approvals of applicable governmental and
self-regulatory organizations (including approval by Inland Revenue as
an approved Borrower or UK intermediary), and has satisfied all
conditions and qualifications imposed by applicable taxing authorities,
necessary in order to comply with all statutes, laws, rules and
regulation applicable to that Loan, which representation shall continue
throughout the term of each Loan.
13.2 The Company on behalf of each Lending Fund shall provide Agent
with complete, accurate and current information necessary to permit
Agent to comply with applicable tax statutes, rules and regulations
relating to the lending of Securities. In addition, the Lending Fund
shall properly execute and deliver to Agent any and all forms,
undertakings, and other documents reasonably requested by Agent in
order to comply with such statutes, rules and regulations.
13.3 Notwithstanding the first sentence of paragraph 9.1 hereof, Agent
shall attempt in good faith to comply with all applicable tax laws,
treaties, rules and regulations governing the Lending Fund's
participation in Agent's securities lending program based on Agent's
best interpretation of those laws, treaties, rules and regulations and
the information furnished by the Lending Fund; provided, however, that
notwithstanding the foregoing the Company, on behalf of each Lending
Fund, shall indemnify Agent for taxes payable by Agent that otherwise
should have been paid from amounts received by the Lending Fund, plus
interest on such taxes at the Treasury Rate until paid, plus any
penalties other than penalties resulting from Agent's negligence or
intentional misconduct.
13.4 The Adviser, on behalf of each Lending Fund, acknowledges that it
is responsible for satisfying itself as to the tax consequences to the
Company or any Lending Fund relating to the lending of Securities of a
Lending Fund by Agent pursuant to this Agreement. Agent does not offer
any advice as to such matters.
14. MISCELLANEOUS.
14.1 This Agreement may be amended by instrument in writing signed by
the parties, subject to such additional conditions as may be provided
in the Application. This Agreement may be terminated by any party at
any time by written notice to the other parties, subject to the
performance of any obligations outstanding at the time of termination.
Upon termination of this Agreement by a party, Agent shall terminate
all outstanding Loans of a Lending Fund's Securities and shall make no
further Loans thereof.
14.2 This Agreement supersedes any preexisting securities lending
agreement, and prevails over any contrary provisions of any other
agreement, between or among the parties. This Agreement represents the
entire agreement of the parties concerning its subject matter and
supersedes any and all prior written or oral communications with regard
thereto. The invalidity or lack of enforceability of any portion of
this Agreement shall not impair the validity or enforceability of any
other portion hereof.
14.3 No party may assign its obligations hereunder without the prior
written consent of the other parties. This Agreement is solely for the
benefit of the parties hereto and their successors and permitted
assigns. Nothing in this Agreement shall be construed to give any
rights whatever against any party to any person who is not a party
hereto, nor shall any such person be considered a "third party
beneficiary" of this Agreement.
14.4 Section headings are for convenience only and may not be used for
interpretation.
14.5 The Company, on behalf of each Lending Fund, acknowledges that
PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970 MAY NOT
PROTECT THE LENDING FUND WITH RESPECT TO LOANS OF BORROWED SECURITIES
AND THEREFORE THE COLLATERAL DELIVERED BY BORROWER TO AGENT MAY
CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF BORROWER'S OBLIGATIONS IN
THE EVENT BORROWER FAILS TO RETURN THE BORROWED SECURITIES.
14.6 Agent uses the services of EquiLend, a joint venture in which
Agent has an indirect ownership interest. EquiLend is an electronic
platform over which subscribing borrowers and lenders can share
information and negotiate loans of securities. Agent may also purchase
or license related data or analytic tools from EquiLend. Use of the
EquiLend platform is intended to increase the efficiency by which
information is exchanged between Borrowers and Agent but will not
change the way in which the securities lending program is administered.
Neither the Company nor any Lending Fund will be required to pay any
additional fees relating to transactions between Agent and EquiLend.
15. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Illinois other than the
conflict of law principles thereof, except to the extent pre-empted by
the laws of the United States of America, which shall govern to that
extent.
16. INDEMNIFICATION.
16.1 Agent shall indemnify, defend and hold the Company, each Lending
Fund and the Adviser harmless from and against any losses, damages,
costs and expenses (other than special, incidental, indirect or
consequential losses, damages, costs or expenses) they may respectively
incur if upon the occurrence of a Filing Agent is unable to recover
Borrowed Securities and distributions made during the term of the Loan
or Loans with respect to those Securities as a result of Agent's
failure to have performed its duties and responsibilities under this
Agreement in accordance with the terms hereof or applicable law.
16.2 Agent's obligations to any Lending Fund under this section 16
shall be subject to set-off against the obligations (if any) of such
Lending Fund under paragraph 3.4 of this Agreement with respect to
losses within the Collateral Account of such Lending Fund. Agent shall
be subrogated to, and the Company shall be deemed to have assigned to
Agent, all of a Lending Fund's corresponding rights against a Borrower
(and against any guarantor thereof) and in the Collateral and its
proceeds to the extent of any payment, transfer or credit made pursuant
to this section 16.
17. RIGHTS AND OBLIGATIONS OF COMPANY AND LENDING FUNDS.
17.1 This Agreement shall be deemed to create a separate agreement for
each Lending Fund, as though each Lending Fund had separately executed
an identical agreement.
17.2 With respect to any Loan, each reference in this Agreement to
"Company" shall be deemed a reference solely to a particular Lending
Fund to which the Loan relates. In no circumstances shall the rights,
obligations or remedies with respect to a particular Lending Fund
constitute a right, obligation or remedy applicable to any other
Lending Fund. Specifically, and without otherwise limiting the scope of
this paragraph, Agent shall have no right to set off claims or amounts
payable related to one Lending Fund by applying property of any other
Lending Fund.
IN WITNESS WHEREOF the parties, by their authorized officers, have
executed this Agreement, dated and effective as of August 4, 2003.
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
By: /S/ XXXXXXXXXXX X. XXXXXXXXX
Name: XXXXXXXXXXX X. XXXXXXXXX
Title: PRESIDENT
USAllianz Advisers LLC
By: /S/ XXXXXXX XXXXXX
Name: XXXXXXX XXXXXX
Title: VP
THE NORTHERN TRUST COMPANY
By: /S/ XXXXX X XXXXXX
-------------------
Name: XXXXX X XXXXXX
---------------
Title: VP
---------------------
SCHEDULE A
TO SECURITIES LENDING AUTHORIZATION AGREEMENT
("AGREEMENT")
LIST OF BORROWERS AND PARENT COMPANIES
The attached list constitutes the entities who are the Borrowers, or
the parent companies of the Borrowers, to whom Agent may currently lend
Securities pursuant to this Agreement. The Company, on behalf of each Lending
Fund, hereby authorizes and directs Agent to lend Securities to the entities so
listed and to any U.S. subsidiary or affiliate of an entity so listed, except as
designated below. The listing of a parent company on the attached does not
necessarily imply that there is a guarantee in favor of the Agent by the parent
of the Securities borrowing obligations of a subsidiary or affiliate. All
Borrowers shall be selected based on procedures as set forth in the Agreement,
to which this Schedule forms a part.
Notwithstanding the foregoing, the Company, on behalf of each Lending
Fund, hereby directs that Agent not lend Securities from the accounts listed
below to the following entities, or their respective subsidiaries or affiliates:
NAME OF ENTITY ACCOUNT(S)
ALLIANZ AG ALL ACCOUNTS
DEUTSCHE BANK AG ALL ACCOUNTS
XXXXXX XXXXXXX (US) ALL ACCOUNTS
PRUDENTIAL FINANCIAL, INC. (US) ALL ACCOUNTS
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
By: /S/ XXXXXXXXXXX X. XXXXXXXXX
---------------------------------------
Name: XXXXXXXXXXX X. XXXXXXXXX
---------------------------------------
Title: PRESIDENT
---------------------------------------
Date: 8/1/03
---------------------------------------
SCHEDULE B
TO SECURITIES LENDING AUTHORIZATION AGREEMENT
GUIDELINES FOR SEPARATE ACCOUNT
COLLATERALIZATION LEVELS
Initial Collateral levels shall not be less than 102% of the Market
Value of the Borrowed Securities (105% if the Collateral and the
Borrowed Securities are denominated in different currencies). Marking
to market is performed every business day (subject to de minimis rules
of change in Market Value) for each Separate Account, and each Borrower
is required to deliver additional Collateral when necessary so that the
total Collateral held in the Separate Account for all loans of the
Lending Fund to the Borrower will be not less than 100% of the Market
Value of all the Borrowed Securities loaned to the Borrower by such
Lending Fund.
COLLATERAL GUIDELINES
Listed below are the cash and non-cash Collateral guidelines specifying
eligible Collateral, eligible investments of non-cash Collateral,
credit quality standards, and diversification requirements. All
requirements listed in these guidelines are effective at the time of
purchase of any security or instrument as a cash Collateral investment
and at the time of receipt of any non-cash Collateral. Capitalized
terms used in this Schedule have the meanings ascribed to them in the
Agreement.
ACCEPTABLE COLLATERAL
Acceptable Collateral consists of (1) cash in U.S. dollars, (2)
obligations issued or guaranteed by the United States Treasury or by
any agency or instrumentality of the United States Government, and (3)
irrevocable stand-by letters of credit issued by banks domiciled or
doing business within the United States that are approved by Agent's
Trust Credit Committee at the time of issuance. Collateral, including
cash Collateral investments, must be held in a segregated account for
each Lending Fund, which is referred to in the Agreement and this
Schedule as a "Separate Account."
ELIGIBLE INVESTMENTS OF CASH COLLATERAL
Cash Collateral shall be invested in shares of the Liquid Assets
Portfolio. A copy of the current prospectus for the Liquid Assets
Portfolio is attached to the Agreement as Annex II.
DIVERSIFICATION OF NON-CASH COLLATERAL
o Obligations issued or guaranteed by the U.S. Government, or its agencies
and instrumentalities, may be accepted without limit.
o Agent shall establish from time to time a maximum percentage of the
Separate Account which may be exposed to the risks of any one foreign
country, and individual country limits.
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
The Northern Trust Company BY:
--------------------------------------------------
Xxxxxxx X. Xxxxxx NAME:
------------------------------------------------
00 X. XxXxxxx Xxxxxx, X-0 XXXXX:
-----------------------------------------------
Xxxxxxx, XX 00000 DATE:__________________________________
SCHEDULE C
TO SECURITIES LENDING AUTHORIZATION AGREEMENT
("AGREEMENT")
FEES
THE AGENT SHALL BE ENTITLED TO RECEIVE THE FOLLOWING FEES FOR SERVICES
PROVIDED UNDER THIS AGREEMENT. THE FEES BELOW ARE EXPRESSED AS A PERCENTAGE OF
COMPANY'S NET REVENUE (AS DEFINED IN PARAGRAPH 7.1 OF THE AGREEMENT).
40% LOANS OF U.S.GOVERNMENT AND AGENCY SECURITIES
40% LOANS OF U.S.CORPORATE EQUITY AND FIXED INCOME SECURITIES
40% LOANS OF NON-U.S. SOVEREIGN FIXED INCOME AND NON-U.S. CORPORATE
FIXED INCOME SECURITIES
40% LOANS OF NON-U.S.CORPORATE EQUITY SECURITIES
USALLIANZ VARIABLE
INSURANCE PRODUCTS TRUST
BY: /S/ XXXXXXXXXXX X. XXXXXXXXX
--------------------------------
NAME: XXXXXXXXXXX X. XXXXXXXXX
--------------------------------
TITLE: PRESIDENT
--------------------------------
DATE: 8/1/03
--------------------------------
THE NORTHERN TRUST COMPANY
00 XXXXX XXXXXXX XXXXXX
XXXXXXX, XXXXXXXX 00000
4-16-01
ANNEX I
TO SECURITIES LENDING AUTHORIZATION AGREEMENT
("AGREEMENT")
FORM OF BORROWING AGREEMENT
ATTACHED IS A COPY OF THE STANDARD FORM OF BORROWING AGREEMENT
CURRENTLY OFFERED TO POTENTIAL BORROWERS. THE ATTACHED FORM OF AGREEMENT DOES
NOT NECESSARILY REFLECT THE EXACT TERMS OF ANY ACTUAL BORROWING AGREEMENT DUE TO
SEPARATE NEGOTIATIONS WITH BORROWERS OVER TIME, BUT IS MEANT TO REPRESENT THE
TERMS UNDER WHICH LOANS ARE GOVERNED GENERALLY. CAPITALIZED TERMS USED IN THIS
ANNEX ARE DEFINED IN THE AGREEMENT.
THE NORTHERN TRUST COMPANY
00 XXXXX XXXXXXX XXXXXX
XXXXXXX, XX 00000
ANNEX II
TO SECURITIES LENDING AUTHORIZATION AGREEMENT
PROSPECTUS FOR THE NORTHERN INSTITUTIONAL FUNDS' LIQUID ASSETS PORTFOLIO
PLUS ALL APPLICABLE STATEMENTS OF ADDITIONAL INFORMATION.
