USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT, made this ___ day of April, 2005 by and among USAllianz
Advisers, LLC (the "Manager"), USAllianz Variable Insurance Products Trust (the
"Trust"), and Franklin Advisory Services, LLC ("Portfolio Manager").
WHEREAS, the Trust is a Delaware business trust of the series type
organized under an Agreement and Declaration of Trust dated July 13, 1999 (the
"Declaration") and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, management series-type investment
company;
WHEREAS, the Manager has been appointed by the Trust, pursuant to an
investment management agreement dated April 27, 2001 ("Investment Management
Agreement"), to act as investment manager to the series of the Trust (the
"Managed Funds");
WHEREAS, the Manager wishes to retain the Portfolio Manager to render
portfolio management services to the Trust with respect to the portfolio(s) set
forth in Exhibit A hereto (the "Fund(s)") and the Portfolio Manager is willing
to furnish such services;
WHEREAS, the Portfolio Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Manager and the Portfolio Manager as
follows:
1. APPOINTMENT. Pursuant to authority granted in the Investment
Management Agreement and with the approval of the Trustees, the Manager hereby
appoints the Portfolio Manager, to act as portfolio manager for the Fund(s) for
the periods and on the terms set forth in this Agreement. The Portfolio Manager
accepts such appointment and agrees to furnish the services herein set forth,
for the compensation herein provided.
2. PORTFOLIO MANAGEMENT DUTIES. Subject to the overall supervision of
the Trustees of the Trust and the Manager, the Portfolio Manager is hereby
granted full responsibility and discretion, with respect to such portion of the
assets of the Fund(s) as shall be allocated to it by the Manager for management
pursuant to this Agreement from time to time (the "Assets"), for (a) the
management of the Assets in accordance with the Fund's investment objectives,
policies and limitations as stated in its prospectus and Statement of Additional
Information included as part of the Trust's registration statement filed with
the Securities and Exchange Commission ("SEC"), as they may be amended from time
to time ("Registration Statement"), copies of which shall be provided to the
Portfolio Manager by the Manager; and (b) the placement of orders to purchase
and sell securities for the Fund. The Portfolio Manager may from time to time
employ any person or persons to assist in its performance of services pursuant
to this Agreement. The Portfolio Manager will pay the compensation of any such
person(s), and no obligation will be incurred by, or on behalf of the Trust, the
Fund or the Manager with respect to such person(s). At the request of the
Trustees or the Manager, the Portfolio Manager shall report to the Board of
Trustees of the Trust or Manager regularly at such times and in such detail as
the Board or Manager may from time to time reasonably determine to be
appropriate. The Manager has herewith furnished the Portfolio Manager copies of
the Fund's current Prospectus, Statement of Additional Information, Declaration
and Bylaws and agrees during the continuance of this Agreement to furnish the
Portfolio Manager copies of any amendments or supplements thereto before or at
the time the amendments or supplements become effective. The Portfolio Manager
will be entitled to rely on all such documents furnished to it by the Manager or
the Trust.
The Portfolio Manager further agrees that, in performing its duties
hereunder, it will:
(a) comply with the 1940 Act and the Advisers Act and all rules and
regulations thereunder, and all other applicable federal and state laws and
regulations, and with any applicable procedures adopted by the Trustees;
(b) comply with the Internal Revenue Code (the "Code"), which shall
include using reasonable efforts to manage the Assets, and coordinating its
activities with the Manager and any other portfolio managers of the applicable
Fund, if any, so that the Fund will qualify, and continue to qualify, as a
regulated investment company under Subchapter M of the Code and regulations
issued thereunder; (c) place orders for the investment of the Assets directly
with the issuer, or with any broker or dealer, in accordance with applicable
policies expressed in the prospectus and/or Statement of Additional Information
with respect to the Fund and in accordance with applicable legal requirements.
Specifically, in executing portfolio transactions and selecting broker-dealers,
the Portfolio Manager will use its best efforts to seek best execution on behalf
of each Fund. In assessing the best execution available for any transaction, the
Portfolio Manager shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker-dealer, the reasonableness of
the commission, if any (all for the specific transaction and on a continuing
basis). In evaluating the best execution available, and in selecting the
broker-dealer to execute a particular transaction, the Portfolio Manager may
also consider the brokerage and research services (as those terms are used in
Section 28(e) of the Securities and Exchange Act of 1934) provided to a Fund and
/or other accounts over which the Portfolio Manager or an affiliate of the
Portfolio Manager exercises investment discretion. The Portfolio Manager is
authorized to pay a broker-dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for a Fund which is
in excess of the amount of commissions another broker-dealer would have charged
for effecting that transaction if, but only if the Portfolio Manager determines
in good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker-dealer viewed in
terms of that particular transaction or in terms of all of the accounts over
which investment discretion is so exercised.
Provided the investment objectives of the Fund and applicable law are adhered
to, the Portfolio Manager may aggregate sale and purchase orders of securities
and other investments held in the Fund with similar orders being made
simultaneously for other accounts managed by the Portfolio Manager or with
accounts of affiliates of the Portfolio Manager, if in the Portfolio Manager's
reasonable judgment such aggregation shall result in an overall economic benefit
to the Fund, taking into consideration an advantageous selling or purchase
price, brokerage commissions and other expenses, and beneficial timing of
transactions, or a combination of these and other factors;
(d) furnish to the Trust, the Manager and any other portfolio manager
of a Fund, if any, whatever statistical information the Trust , the Manager or
such other portfolio manager may reasonably request with respect to the Assets
or contemplated investments; keep the Manager and the Trustees and, as
appropriate, such other portfolio managers informed of developments materially
affecting the Fund's portfolio; and, on the Portfolio Manager's own initiative,
furnish to the Trust, the Manager or such other portfolio manager from time to
time whatever information the Portfolio Manager believes appropriate for this
purpose;
(e) make available to the Trust's administrator (the "Administrator"),
the Trust or the Manager, promptly upon their request, such copies of its
investment records and ledgers with respect to the Fund as may reasonably be
required to assist the Administrator, the Trust or the Manager in their
compliance with applicable laws and regulations. The Portfolio Manager will
furnish the Trustees or the Manager with such periodic and special reports
regarding the Fund as the Trustees or the Manager may reasonably request;
(f) immediately notify the Trust and the Manager in the event that the
Portfolio Manager or any of their affiliates: (1) becomes aware that it is
subject to a statutory disqualification that prevents the Portfolio Manager from
serving as a portfolio manager pursuant to this Agreement; or (2) becomes aware
of important developments materially affecting the Fund, including but not
limited to any material legal or administrative proceedings against the
Portfolio Manager by the SEC or other regulatory authority relating to
violations of state or federal securities laws by the Portfolio Manager. The
Portfolio Manager further agrees to notify the Trust and the Manager immediately
of any material fact known to the Portfolio Manager respecting or relating to
the Portfolio Manager that is not contained in the Trust's Registration
Statement regarding the Fund, or any amendment or supplement thereto, but that
is required to be disclosed therein, and of any statement contained therein that
becomes untrue in any material respect;
(g) in making investment decisions with respect to the Assets, use no
material non-public information that may be in its possession or in the
possession of any of its affiliates, nor will the Portfolio Manager seek to
obtain any such information.
(h) disclose portfolio holdings to no one other than the Manager, the
Trust, the Custodian(s), or the Administrator, except as may be required by
applicable federal or state laws, rules or regulations.
(i) in connection with securities transactions, the Portfolio Manager
(or any affiliated person of the Portfolio Manager) and any other portfolio
manager that is advising an affiliate of the Fund entering into the transaction
are prohibited from knowingly consulting with each other concerning transactions
for the Fund in securities or other assets. This prohibition does not apply to
communications in connection with the Manager's (i) responsibility for
evaluating and monitoring the portfolio manager(s); (ii) determination of the
allocation of assets among the portfolio managers; and (iii) investment
discretion with respect to the investment of Fund assets not otherwise assigned
to a portfolio manager.
Except as otherwise provided in this Agreement, the Portfolio Manager
shall not be responsible hereunder for compliance monitoring, reporting or
testing or for preparing or maintaining books and records for the Fund or
otherwise providing accounting services to the Fund and such services shall be
provided by others retained by the Fund. The Portfolio Manager shall have access
to such reports and records to assist it in performing its services hereunder.
The Portfolio Manager is not required to take any action other than the
rendering of investment-related advice with respect to lawsuits involving
securities presently or formerly held by the Fund or the issuers thereof,
including actions involving bankruptcy, provided however, that the Portfolio
Manager will use its commercially reasonable efforts to file proofs of claim in
class action suits or bankruptcy proceedings. The Portfolio Manager shall
provide notice to the Manager of any such potential claim and shall also provide
reasonable cooperation to the Manager in any possible proceeding. Should the
Portfolio Manager commence litigation or file proofs of claim against an issuer
on behalf of accounts which it manages that are shareholders of such issuer, the
Trust agrees to pay its portion of any applicable legal fees and related
expenses reasonably associated with the action, based upon the amount of its
proportionate investment in the issues relative to other of the Portfolio
Manager's plaintiffs' accounts, or to forfeit any claim to any assets the
Portfolio Manager may recover for its other accounts, and in such case agrees to
hold the Portfolio Manager harmless for excluding the Fund from such action.
In the case of class action suits or bankruptcy proceedings involving
issues held by the Fund, the Portfolio Manager may include information about the
Fund for purposes of participating in any settlements.
3. BANKING AND CUSTODY ACCOUNTS. The Portfolio Manager shall not be
required to provide or arrange for banking accounts for the Fund or to hold
money or assets on the Fund's behalf. The Portfolio Manager shall not be
required to act as the registered holder of any investment or to provide or
procure any custody or settlement services in connection with its services
hereunder. The Fund has entered into one or more agreements with providers of
banking and custody services (Custodians) whom the Fund will authorize to act
upon instructions from properly authorized representatives of the Portfolio
Manager, in connection with its services hereunder, directing the Custodian(s)
to pay, deliver or receive cash and securities in settlement of transactions
authorized by the Portfolio Manager on the Fund's behalf. The Fund's
agreement(s) with such Custodian(s) will require the Custodian(s) to settle all
transactions directed by the Portfolio Manager on the Fund's behalf. The Fund or
the Manager shall instruct the Custodian(s) to provide the Portfolio Manager
with such information as the Portfolio Manager may reasonably request relating
to daily cash levels of the Fund.
4. ALLOCATION OF CHARGES AND EXPENSES. Except as otherwise specifically
provided in this section 4, the Portfolio Manager shall pay the compensation and
expenses of all its directors, officers and employees who serve as Trustees,
officers and executive employees of the Trust (including the Trust's share of
payroll taxes), and the Portfolio Manager shall make available, without expense
to the Fund, the services of its directors, officers and employees who may be
duly elected officers or Trustees of the Trust, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio Manager shall not be required to pay any expenses of the
Trust or the Fund other than those specifically allocated to the Portfolio
Manager in this section 4. In particular, but without limiting the generality of
the foregoing, the Portfolio Manager shall not be responsible, except to the
extent of the reasonable compensation of such of the Trust's employees as are
officers or employees of the Portfolio Manager whose services may be involved,
for the following expenses of the Trust or the Fund: organization and offering
expenses of the Trust and the Fund (including out-of-pocket expenses, but not
including the Portfolio Manager's overhead and employee costs); fees payable to
or expenses of other portfolio managers or consultants; legal expenses; auditing
and accounting expenses; interest expenses; telephone, telex, facsimile, postage
and other communications expenses; taxes and governmental fees; fees, dues and
expenses incurred by or with respect to the Trust or the Fund in connection with
membership in investment company trade organizations; costs of insurance; fees
and expenses of the Trust's Administrator or of any custodian, subcustodian,
transfer agent, registrar, or dividend disbursing agent of the Trust or the
Fund; payments for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; other expenses in connection
with the issuance, offering, distribution, marketing, redemption or sale of
securities issued by the Fund; expenses relating to investor and public
relations; expenses of registering and qualifying shares of the Fund for sale;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; brokerage commissions or other costs of acquiring
or disposing of any portfolio securities or other assets of the Fund, or of
entering into other transactions or engaging in any investment practices with
respect to the Fund; expenses of printing and distributing prospectuses,
Statements of Additional Information, reports, notices and dividends to
shareholders; costs of preparing, printing and filing documents with regulatory
agencies; costs of stationery and other office supplies; expenses of any
litigation or other extraordinary or nonrecurring events and expenses relating
to the issuance, registration and qualification of the shares of the Fund; costs
of shareholders' and other meetings; the compensation and all expenses
(specifically including travel expenses relating to the business of the Trust or
the Fund) of officers, Trustees and employees of the Trust who are not
interested persons of the Portfolio Manager; and travel expenses (or an
appropriate portion thereof) of officers or Trustees of the Trust who are
officers, directors or employees of the Portfolio Manager to the extent that
such expenses relate to attendance at meetings of the Board of Trustees of the
Trust , or any committees thereof or advisory group thereto or other business of
the Trust or the Funds.
5. COMPENSATION. As compensation for the services provided and expenses
assumed by the Portfolio Manager under this Agreement, the Manager, out of its
fees from the Fund pursuant to the Investment Management Agreement, will pay the
Portfolio Manager at the end of each calendar month an investment management fee
computed daily at an annual rate equal to the percentage of each Fund's average
daily net assets specified in Exhibit A hereto. The "average daily net assets"
shall mean the average of the values placed on the net Assets as of the time at
which, and on such days as, the Fund lawfully determines the value of its net
assets in accordance with the prospectus or otherwise. The value of the net
Assets, and of the net assets of the Fund, shall always be determined pursuant
to the applicable provisions of the Declaration and the Registration Statement.
If, pursuant to such provisions, the determination of net asset value for a Fund
is suspended for any particular business day, then for the purposes of this
section 5, the value of the net Assets as last determined shall be deemed to be
the value of the net Assets as of the close of the New York Stock Exchange, or
as of such other time as the value of the net assets of the Fund's portfolio may
lawfully be determined, on that day. If the determination of the net asset value
of the shares of the Fund has been so suspended for a period including any month
end when the Portfolio Manager's compensation is payable pursuant to this
section, then the Portfolio Manager's compensation payable at the end of such
month shall be computed on the basis of the value of the net Assets as last
determined (whether during or prior to such month). If the Fund determines the
value of the net assets of its portfolio more than once on any day, then the
last such determination thereof with respect to the net Assets on that day shall
be deemed to be the sole determination thereof on that day with respect to the
net Assets for the purposes of this section 5. If the Portfolio Manager serves
less than the whole of any period specified, its compensation will be prorated.
6. BOOKS AND RECORDS. The Portfolio Manager agrees to maintain such
books and records with respect to its services to the Fund as are required by
Section 31 under the 1940 Act, and rules adopted thereunder, and by other
applicable legal provisions, and to preserve such records for the periods and in
the manner required by that Section, and those rules and legal provisions. The
Portfolio Manager also agrees with respect to the records it maintains and
preserves pursuant to Rules 31a-1 and 31a-2 under the 1940 Act and otherwise in
connection with its services hereunder are the property of the Trust and will be
surrendered promptly to the Trust upon its reasonable request. The Portfolio
Manager may retain copies of such records. The Portfolio Manager further agrees
that it will furnish to regulatory authorities having the requisite authority
any information or reports in connection with its services hereunder which may
be requested in order to determine whether the operations of the Trust and the
Fund are being conducted in accordance with applicable laws and regulations.
7. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Portfolio Manager
shall exercise its best judgment in rendering the services provided by it under
this Agreement. The Portfolio Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust or the Fund or
the holders of the Fund's shares in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect the Portfolio Manager against any liability to the
Trust, the Fund or to holders of the Fund's shares to which the Portfolio
Manager would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or by reason of
the Portfolio Manager's reckless disregard of its obligations and duties under
this Agreement. As used in this Section 7, the term "Portfolio Manager" shall
include any officers, directors, employees or other affiliates of the Portfolio
Manager performing services with respect to the Trust or the Fund.
0.XXXXXXXX NOT EXCLUSIVE. It is understood that the services of the Portfolio
Manager are not exclusive, and that nothing in this Agreement shall prevent
the Portfolio Manager from providing similar services to other investment
companies or to other series of investment companies (whether or not their
investment objectives and policies are similar to those of the Fund or another
subadvised Fund of the Trust) or from engaging in other activities, provided
such other services and activities do not, during the term of this Agreement,
interfere in a material manner with the Portfolio Manager's ability to meet
its obligations to the Trust, the Manager and the Fund hereunder.
The Manager and the Trust acknowledge that the Portfolio Manager and its
officers, affiliates, and employees, and the Portfolio Manager's other clients,
may at any time have, acquire, increase, decrease, or dispose of positions in
investments which are at the same time being acquired for or disposed of from
the Fund. The Portfolio Manager shall have no obligation to acquire for the Fund
a position in any investment which the Portfolio Manager or its officers,
affiliates or employees may acquire for its or their own accounts or for the
account of another client.
The Manager and the Trust also acknowledge that the Portfolio Manager may give
advice and take action with respect to any of its other clients or for its own
account which may differ from the timing or nature of action taken by the
Portfolio Manager with respect to the Fund (s). The Manager and the Trust
acknowledge that the performance of the Fund may differ from the performance of
other accounts or investment companies managed by the Portfolio Manager and that
the Portfolio Manager is not expected to replicate the holdings or returns of
any other account or fund that it manages.
When the Portfolio Manager recommends the purchase or sale of a security for
other investment companies and other clients, and at the same time the Portfolio
Manager recommends the purchase or sale of the same security for the Fund, it is
understood that in light of its fiduciary duty to the Fund, such transactions
will be executed on a basis that is fair and equitable to the Fund. In
connection with purchases or sales of portfolio securities for the account of
the Fund, neither the Portfolio Manager nor any of its Trustees, officers or
employees shall act as a principal or agent or receive any commission. If the
Portfolio Manager provides any advice to its clients concerning the shares of
the Fund or other funds of the Trust, the Portfolio Manager shall act solely as
investment counsel for such clients and not in any way on behalf of the Trust,
the Fund or another fund of the Trust.
9. DURATION AND TERMINATION. This Agreement shall continue in effect
for two years from the date set forth above and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (i) the Trustees or (ii) by vote of a
"majority" (as defined in the 0000 Xxx) of the Fund's outstanding voting
securities (as defined in the 1940 Act), provided that in either event the
continuance is also approved by a majority of the Trustees who are not parties
to this Agreement or "interested persons" (as defined in the 0000 Xxx) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated: (a) at any time without penalty (i) by the Manager,
(ii) by the Trust upon the vote of a majority of the Trustees or (iii) by vote
of the majority of the Fund's outstanding voting securities, each upon sixty
(60) days' written notice to the Portfolio Manager; or (b) by the Portfolio
Manager at any time without penalty, upon sixty (60) days' written notice to the
Trust or the Manager. This Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act).
10. AMENDMENTS. Except as otherwise provided by applicable law or
regulatory relief, no provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) a majority of the outstanding
voting securities of the Fund, and (ii) a majority of the Trustees, including a
majority of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
11. PROXIES AND RIGHTS. Unless the Trust or the Manager gives written
instructions to the contrary, the Portfolio Manager shall use commercially
reasonable efforts to (a) vote all proxies solicited by or with respect to the
issuers of securities in which the Assets are invested, using its best good
faith judgment to vote such proxies in a manner which best serves the interests
of the Fund's shareholders, and (b) exercise all other rights attaching to or
arising with respect to the Assets, subject to the Fund's investment objectives,
policies and limitations as stated in its Registration Statement, directing the
Custodian to make any required payment or settlement in connection therewith.
12. USE OF NAME. The Portfolio Manager hereby gives the Manager and the
Trust, for the term of this Agreement, a royalty-free, non-exclusive,
non-transferable right to use the name "Franklin"(the "Xxxx") in the United
States as part of the name of the Fund(s) listed on Schedule A in connection
with the activities of the Manager or the Fund contemplated by this Agreement.
This right shall permit affiliates of the Manager to use the Xxxx in marketing
materials generated by such parties for variable products offered or distributed
by them though which the Fund(s) or any other such funds are sold. This right to
use the Xxxx does not include the right to allow third parties to use the Xxxx
except as specifically provided in this Agreement. Neither the Manager nor the
Fund shall retain any right to the use of the Xxxx after the termination of this
Agreement. Upon termination of this Agreement, the Manager and the Fund will
promptly terminate all use of the Xxxx and destroy any remaining material that
includes the Xxxx. The Manager agrees to take reasonable efforts to ensure that
the nature and quality of the services rendered in connection with the Xxxx
shall conform to the terms of this Agreement, and any amendments thereto.
All sales documents, promotional, marketing, advertising or other written,
printed or electronic material or performance information or data which includes
the Xxxx, which is prepared, instructed, controlled and/or issued by or on
behalf of the Fund and/or the Manager, and/or its agents or affiliates, or with
the express or implied permission of the Manager, shall require the written
approval of the Portfolio Manager prior to distribution. Such approval shall be
presumed if the Portfolio Manager does not transmit a disapproval that is
received within 10 business days of receipt of the materials. Such written or
printed material may be distributed only in the U.S. and shall bear the
following legend: "Franklin" is a trademark of Franklin Resources, Inc. and/or
its subsidiaries."
The Manager shall cooperate with the Portfolio Manager in any prosecution or
defense of the Xxxx that, in the judgment of the Portfolio Manager, may be
necessary or desirable. However, the Portfolio Manager has no obligation to take
any action whatsoever in the event that a claim of infringement arises with
respect to the Xxxx. In the event that the Portfolio Manager determines that the
Xxxx is invalid or infringing, the Portfolio Manager may so notify the Manager,
which shall upon notification immediately discontinue all use of the allegedly
invalid or infringing Xxxx.
The Portfolio Manager for its own account and the account of its affiliates,
reserves all rights to the Xxxx. The Manager acknowledges and agrees that it
does not have and will not assert any proprietary rights whatsoever in the Xxxx,
either on its own behalf or on behalf of any party other than the Portfolio
Manager and the Fund.
13. MISCELLANEOUS.
a. This Agreement shall be governed by the laws of the State
of Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder.
b. The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
c. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected hereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
d. Nothing herein shall be construed as constituting the
Portfolio Manager as an agent of the Trust or the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the date first above
written.
USAllianz Variable Insurance Products Trust
By ______________________________
President
Franklin Advisory Services, LLC
By ______________________________
Title:__________________________
USAllianz Advisers, LLC
By ______________________________
Senior Vice President
SCHEDULE A
Fees payable to the Portfolio Manager pursuant to paragraph 5 hereof
shall be at the following annual rates for each Fund:
FUND PERCENTAGE OF AVERAGE NET ASSETS
USAZ Franklin Small Cap Value Fund First $200 million 0.60%
Next $300 million 0.52%
Greater than $500 million 0.50%
The management fee shall be accrued and paid to the Portfolio Manager as
provided in Section 5 of the Portfolio Management Agreement.
