AMENDMENT
TO SECURITIES LENDING AUTHORIZATION AGREEMENT
Between USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST (now known
as ALLIANZ VARIABLE INSURANCE PRODUCTS TRUST), USALLIANZ
ADVISERS, LLC (now known as ALLIANZ INVESTMENT
MANAGEMENT LLC) and THE NORTHERN TRUST COMPANY, dated
August 4th, 2003
WHEREAS:
I. Reference is made to the securities lending authorization agreement
between The Northern Trust Company (the "Agent"), USAllianz Variable
Insurance Products Trust, now known as Allianz Variable Insurance
Products Trust (the "Company") on behalf of its existing and future
separate investment portfolios or series (herein referred to each as a
"Lending Fund") and USAllianz Advisers LLC, now known as Allianz
Investment Management LLC, as Adviser to the Lending Funds, dated
August 4th 2003, as amended from time to time, (the "Agreement").
II. In addition to the provisions contained in the Agreement, the Agent and
the Lender wish to amend the Agreement, as set out in this agreement
(the "Amendment Agreement").
NOW THEREFORE, in consideration of the mutual agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
A) Indemnification. Pursuant to Clause 14.1 of the Agreement, Section
16 of the Agreement is hereby amended and restated in its entirety
as follows:
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 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:
(i) Agent's failure to make a reasonable
determination of the creditworthiness of a Borrower through adequate
analysis of all material, public information available to Agent's
credit committee before lending a Security as provided in section 2 of
this Agreement and during the term of the Loan or Loans a Filing occurs
with respect to the Borrower;
(ii) Agent's failure to demand adequate and
appropriate Collateral as provided in section 4 hereof, perfect a
security interest or obtain rights equivalent thereto in the
Collateral, maintain control of the Collateral as provided in this
Agreement and make a reasonable determination of the quality and
suitability of Collateral investments through adequate analysis of all
material, public information available to Agent's relevant committees;
or
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(iii) Agent's failure otherwise to perform its duties
and responsibilities under this Agreement in accordance with the terms
of this Agreement and applicable law, including, without limitation, a
failure by the Agent's credit committee to review and consider
material, public information available to such committee.
16.2 In addition to the indemnity provided by, and irrespective of the
applicability of, paragraph 16.1, in the event of a Default by a
Borrower that is not a Sale-Related Default, Agent shall (1) credit the
applicable Lending Fund's Account with the amount of distributions made
with respect to the Borrowed Securities of such Lending Fund that are
due and payable by the Borrower on or before the Default Date but not
so paid and (2) transfer into the applicable Lending Fund's Account
replacement Securities that are Equivalent Securities by purchasing
such securities in the principal market in which such securities are
traded; except that Agent may, at its option, in lieu of replacing some
part or all of the Borrowed Securities, credit such Lending Fund's
Account with an amount equal to the Market Value on the Default Date of
Borrowed Securities not replaced, which amount shall be satisfiable at
Agent's option in cash, or by a transfer to such Lending Fund's Account
of Collateral securities (which Collateral securities shall be
"Acceptable Collateral" as defined in Amended Schedule B to the
Agreement) valued as of the Default Date, or by a combination of both
cash and Collateral securities so valued.
16.3 In addition to the indemnity provided by, and irrespective of, the
applicability of paragraph 16.1, in the event a Borrower fails to
return Borrowed Securities upon termination of a Loan, and such failure
constitutes a Sale-Related Default, Agent shall, in accordance with
Agent's Investment Manager Guidelines then in effect, in lieu of the
indemnification provided in paragraph 16.2, (a) waive any overdraft
charges arising from any investment made for the applicable Lending
Fund's account in anticipation of timely receipt of the proceeds, (b)
credit the applicable Lending Fund's account with interest at the
applicable short-term investment rate on the sale proceeds not
reinvested up to the date such proceeds are credited to the Account,
(c) credit Lending Fund with the amounts of any distributions made with
respect to such Borrowed Securities that have not otherwise been
received by the Lending Fund and (d) indemnify Lending Fund from and
against any Buy-in Costs or other direct expenses for which Lending
Fund would otherwise be liable as a result of the failure of the sale
to settle in a timely fashion.
16.4 For purposes of this section 16, the following definitions shall
apply.
16.4.1 "Buy-in Costs" shall mean out-of-pocket expenses incurred by the
applicable Lending Fund in connection with the failed settlement of a
sale of Lending Fund's Securities that are on loan hereunder at the
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time of sale, as a result of the purchase of substitute securities at a
higher price by the buyer's broker in accordance with applicable
exchange rules.
16.4.2 "Default" shall mean (a) a Filing, or (b) any other failure by a
Borrower to return Borrowed Securities within the time period allowed
by the relevant Borrowing Agreement after demand by Agent, except such
a failure that is waived by Agent or cured by the Borrower within one
business day of the Borrower after the Default Date.
16.4.3 "Default Date" shall mean, with respect to any Default, the
earliest date on which the Agent is entitled under the provisions of
the applicable Borrowing Agreement to treat the relevant Loan or Loans
to the Borrower as having terminated.
16.4.4 "Investment Manager Guidelines" shall mean the rules and
procedures established by Agent governing the conduct of securities
transactions in its custodial accounts and the required communications
between Agent and its custodial clients and their investment managers
regarding those transactions.
16.4.5 "Sale-Related Default" shall mean a Default by a Borrower in
returning Borrowed Securities that have been recalled by Agent due to a
sale of such securities by Lending Fund, or an investment agent of
Lending Fund.
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.
B) Collateral. Pursuant to Clause 14.1 of the Agreement, Schedule B
of the Agreement is hereby amended and restated as follows:
SCHEDULE B
TO SECURITIES LENDING AUTHORIZATION AGREEMENT
Guidelines for Separate Account
Collateralization Levels
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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 and (2)
obligations issued or guaranteed by the United States Treasury or by any
agency or instrumentality of the United States Government. 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.
C) Fees. Pursuant to Clause 14.1 of the Agreement, Schedule C of the
Agreement is hereby amended and restated as follows:
SCHEDULE C
TO SECURITIES LENDING AUTHORIZATION AREEMENT
("Agreement")
FEES
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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).
25% Loans of U.S. Government and Agency Securities
25% Loans of U.S. Corporate Equity and
Fixed Income Securities
25% Loans of non-U.S. Sovereign Fixed Income and
non-U.S. Corporate Fixed Income Securities
25% Loans of non-U.S. Corporate Equity Securities
D) Except as hereby specifically amended, the Agreement as heretofore
set forth shall remain in full force and effect.
E) This Amendment Agreement will be governed by, and construed in
accordance with laws governing the Agreement.
F) The terms of this Amendment Agreement shall be effective as of
April 1st 2008.
Executed in three originals
ALLIANZ VARIABLE ALLIANZ INVESTMENT MANAGEMENT
INSURANCE PRODUCTS TRUST LLC
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx Name: Xxxxx Xxxxxx
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Title:Vice President Title:Vice President
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Date: May 6, 2008 Date: May 6, 2008
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AGREED TO AND ACCEPTED BY:
THE NORTHERN TRUST COMPANY
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
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Title: Senior Vice president
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Date: May 22, 2008