SUBADVISORY AGREEMENT
Agreement made as of the 26[th] day of October, 2009, by and between
Allianz Investment Management LLC, a Minnesota limited liability company
("Manager"), and Franklin Mutual Advisers, LLC, a Delaware limited liability
company ("Subadviser").
WHEREAS each fund listed in Schedule A (each severally, a "Fund," and
collectively, the "Funds") is a series of the Allianz Variable Insurance
Products Trust (the "Trust"), a Delaware statutory trust registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS Manager has entered into an investment management agreement (the
"Management Agreement") with the Funds pursuant to which Manager provides
investment advisory services to the Funds; and
WHEREAS Manager and the Funds each desire to retain Subadviser to manage
all or a part of the assets of each Fund, and Subadviser is willing to render
such investment management services in accordance with the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
1. Subadviser's Duties.
(a) Portfolio Management. Subject to supervision by Manager and the
Funds' Board of Trustees (the "Board"), Subadviser shall manage the
investment operations and the composition of that portion of assets
of each of the Funds which is allocated to Subadviser from time to
time by Manager (the "Allocated Portion," which portion may include
any or all of the Funds' assets), including the purchase,
retention, and disposition thereof, in accordance with the Funds'
investment objectives, policies, and restrictions as stated in the
Funds' then current registration statement filed with the
Securities and Exchange Commission (the "SEC"), as from time to
time amended (the "Registration Statement"), and subject to the
following understandings:
(i) Investment Decisions. Subadviser shall determine from time
to time what investments and securities will be purchased,
retained, or sold with respect to the Allocated Portion, and
what portion of such assets will be invested or held
uninvested as cash. Subadviser is prohibited from
consulting with any other subadviser of any of the Funds
concerning transactions of the Funds in securities or other
assets, other than for purposes of complying with the
conditions of Rule 12d3-1(a) or (b) under the 1940 Act.
Unless Manager or the applicable Fund gives written
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instructions to the contrary, Subadviser shall vote, or
abstain from voting, all proxies with respect to companies
whose securities are held in the Allocated Portion, using
its best good faith judgment to vote, or abstain from
voting, such proxies in the manner that serves the best
interests of the Funds. The Funds' custodian, or other agent
of the Funds, will provide timely notice of proxies to the
Subadviser. The Subadviser is not expected to vote proxies
for which it has not received timely notice.
Subadviser shall not be expected or required to take any action with respect to
lawsuits or other legal proceedings involving securities
presently or formerly held in the Funds, or involving
issuers of such securities or related parties; provided that
Subadviser will cooperate reasonably with Manager in any
possible proceeding. Without limiting the foregoing,
Subadviser shall not be responsible for: (a) researching
whether the Funds are eligible to file, or filing on behalf
of the Funds, proofs of claim to participate in any class
action lawsuit settlement or judgment, or governmental or
regulatory victim fund; (b) recommending that the Funds
pursue litigation against an issuer or related parties
(whether by opting out of an existing class action lawsuit
or otherwise); or (c) filing proofs of claim or otherwise
participating in any bankruptcy proceedings.
(ii) Investment Limits. In the performance of its duties and
obligations under this Agreement, Subadviser shall act, with
respect to the Allocated Portion, in conformity with
applicable limits and requirements, as amended from time
to time, as set forth in (A) each Fund's Prospectus and
Statement of Additional Information ("SAI"), to the extent
that Subadviser receives such Prospectus and SAI; (B)
instructions and directions of Manager and of the Board
communicated to Subadviser in writing; (C) requirements of
the 1940 Act and the Internal Revenue Code of 1986, as
amended (the "Code"), and all other applicable federal and
state laws and regulations as applicable to the Funds,
except that, unless otherwise requested in writing by the
Fund, the obligations of Subadviser under the Code are
limited to compliance with Code Sections 817(h), 851(b)(2)
and 851(b)(3); (D) the procedures and standards set forth
in, or established in accordance with, the Management
Agreement to the extent communicated to Subadviser in
writing; and (E) any policies and procedures of Subadviser
communicated to the Funds and/or Manager. The parties
acknowledge and agree that Subadviser's acting, with respect
to the Allocated Portion, in conformity with the applicable
limits and requirements as set forth in clauses (A), (B),
(C), (D) and (E) of this paragraph 1(a)(ii), does not
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necessarily mean the Fund will so conform. The parties
further acknowledge and agree that Subadviser shall be
deemed to have complied with Code Sections 817(h), 851(b)(2)
and 851(b)(3) if and to the extent that Adviser apprises
Subadviser promptly after each quarter end of any potential
non-compliance with the requirements of Code Sections
817(h), 851(b)(2) and 851(b)(3) and, if so advised,
Subadviser takes prompt action, as directed by Adviser.
(iii) Portfolio Transactions.
(A) Trading. With respect to the securities and other
investments to be purchased or sold for the Funds,
Subadviser shall place orders with or through such
persons, brokers, dealers, or futures commission
merchants (including, but not limited to, broker-
dealers that are affiliated with Manager or
Subadviser) as may be selected by Subadviser;
provided, however, that such orders shall be
consistent with the brokerage policy set forth in
each Fund's Prospectus and SAI, or approved by the
Board; conform with federal securities laws; and be
consistent with seeking best execution. Within the
framework of this policy, Subadviser may, to the
extent permitted by applicable law, consider the
research provided by, and the financial
responsibility of, brokers, dealers, or futures
commission merchants who may effect, or be a party
to, any such transaction or other transactions to
which Subadviser's other clients may be a party.
(B) Aggregation of Trades. On occasions when Subadviser
deems the purchase or sale of a security or futures
contract to be in the best interest of one or more of
the Funds as well as other clients of Subadviser,
Subadviser, to the extent permitted by applicable
laws and regulations, may, but shall be under no
obligation to, aggregate the securities or futures
contracts to be sold or purchased in order to seek
best execution. In such event, Subadviser will make
allocation of the securities or futures contracts so
purchased or sold, as well as the expenses incurred
in the transaction, in the manner Subadviser
considers to be the most equitable and consistent
with its fiduciary obligations to the Funds and to
such other clients.
(iv) Records and Reports. Subadviser (A) shall maintain such
books and records as are required based on the services
provided by Subadviser pursuant to this Agreement under the
1940 Act and as are necessary for Manager to meet its record
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keeping obligations generally set forth under Section 31 and
related rules thereunder, (B) shall render to the Board such
periodic and special reports as the Board or Manager may
reasonably request in writing, and (C) shall meet with any
persons at the request of Manager or the Board for the
purpose of reviewing Subadviser's performance under this
Agreement at reasonable times and upon reasonable advance
written notice.
(v) Transaction Reports. On each business day Subadviser shall
provide to the Funds' custodian and the Funds' administrator
information relating to all transactions concerning the
Funds' assets that is reasonably necessary to enable the
Funds' custodian and the Funds' administrator to perform
their respective duties with respect to the Funds, and shall
provide Manager with such information upon Manager's
request.
(b) Compliance Program and Ongoing Certification(s). As requested,
Subadviser shall timely provide to Manager (i) information and
commentary for the Funds' annual and semi-annual reports, in a
format approved by Manager, and shall (A) certify that such
information and commentary discuss the factors that materially
affected the performance of the Allocated Portion, including the
relevant market conditions and the investment techniques and
strategies used, and, to the best of Subadviser's knowledge, do not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the information and commentary not
misleading, and (B) provide such additional certifications as
Manager may reasonably request related to Subadviser's management
of the Funds in order to support the Funds' filings on Form N-CSR
and Form N-Q, and the Funds' Principal Executive Officer's and
Principal Financial Officer's certifications under Rule 30a-2 under
the 1940 Act, thereon; (ii) a quarterly sub-certification with
respect to compliance matters related to Subadviser and the
Subadviser's management of the Funds, in a format reasonably
requested by Manager, as it may be amended from time to time; (iii)
an annual sub-certification with respect to matters relating to the
Funds' compliance program under Rule 38a-1, as reasonably requested
by Manager, and (iv) an annual certification from the Subadviser's
Chief Compliance Officer, appointed under Rule 206(4)-7 under the
Investment Advisers Act of 1940 (the "Advisers Act"), or his or her
designee, with respect to the design and operation of Subadviser's
compliance program, in a format reasonably requested by Manager.
(c) Maintenance of Records. Subadviser shall timely furnish to Manager
all information relating to Subadviser's services hereunder which
are needed by Manager to maintain the books and records of the
Funds required under the 1940 Act. Subadviser shall maintain for
the Funds the records required by paragraphs (b)(5), (b)(6),
(b)(7), (b)(9), (b)(10) and (f) of Rule 31a-1 under the 1940 Act
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and any additional records as agreed upon by Subadviser and
Manager. Subadviser agrees that all records that it maintains for
the Funds are the property of the Funds and Subadviser will
surrender promptly to the Funds any of such records upon the Funds'
request; provided, however, that Subadviser may retain a copy of
such records. Subadviser further agrees to preserve for the
periods prescribed under the 1940 Act any such records as are
required to be maintained by it pursuant to Section 1(a) hereof.
(d) Fidelity Bond and Code of Ethics. Subadviser will provide the
Funds with such periodic written certifications as Manager may
reasonably request that, with respect to its activities on behalf
of the Funds, Subadviser maintains (i) adequate fidelity bond
insurance and (ii) an appropriate Code of Ethics and related
reporting procedures.
(e) Confidentiality. Each party agrees that it shall exercise the same
standard of care that it uses to protect its own confidential and
proprietary information, but no less than reasonable care, to
protect the confidentiality of information supplied by the other
party that is not otherwise in the public domain or previously
known to the other party in connection with the performance of its
obligations and duties hereunder, including the Portfolio
Information. As used herein, "Confidential Information" means
confidential and proprietary information of the Funds, Subadviser
and its affiliates, or Manager, including portfolio holdings of the
Funds or other portfolio managed by Manager or Subadviser, that is
received by one of the other parties in connection with this
Agreement, including information with regard to the portfolio
holdings and characteristics of the Allocated Portion. Except as
set forth in this Agreement or otherwise required by applicable
law, each party will restrict access to the Confidential
Information to those employees who will use it only for the purpose
for which the Confidential Information was provided to that party.
The foregoing shall not prevent the Subadviser from disclosing
Confidential Information, to the extent reasonably necessary for
the performance of Subadviser's duties under this Agreement, to
persons and agents which it employs, to which it delegates, or with
which it associates in accordance with Section 1(f) of this
Agreement and shall not prevent a party from disclosing
Confidential Information that is (1) publicly known or becomes
publicly known through no unauthorized act of its own, (2)
rightfully received from a third party without obligation of
confidentiality, (3) approved in writing by the other party for
disclosure, or (4) required to be disclosed pursuant to a
requirement of a governmental agency, court order, or law so long
as the disclosing party provides the other party with prompt
written notice of such requirement prior to any such disclosure.
(f) Delegation. In rendering the services required under this
Agreement, Subadviser may, consistent with applicable law and
regulations, from time to time, employ, delegate, or associate with
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itself such affiliated or unaffiliated person or persons as it
believes necessary to assist it in carrying out its obligations
under this Agreement; provided, however, that any such delegation
shall not involve any such person serving as an "investment
adviser" to the Fund within the meaning of the 1940 Act.
Subadviser shall remain liable to Manager for the performance of
Subadviser's obligations hereunder and for the acts and omission of
such other person, and Manager shall not be responsible for any
fees that any such person may charge to Subadviser for such
services.
2. Manager's Duties. Manager shall oversee and review Subadviser's
performance of its duties under this Agreement. Manager shall also
retain direct portfolio management responsibility with respect to any
assets of the Funds that are not allocated by it to the portfolio
management of Subadviser as provided in Section 1(a) hereof or to any
other subadviser. Manager will periodically provide to Subadviser a list
of the affiliates of Manager or the Funds (other than affiliates of
Subadviser) to which investment restrictions apply, and will specifically
identify in writing (a) all publicly traded companies in which the Funds
may not invest, together with ticker symbols for all such companies
(Subadviser will assume that any company name not accompanied by a ticker
symbol is not a publicly traded company), and (b) any affiliated brokers
and any restrictions that apply to the use of those brokers by the Funds.
3. Documents Provided to Subadviser. Manager has delivered or will deliver
to Subadviser current copies and supplements thereto of the Funds'
Prospectus and SAI, and will promptly deliver to it all future amendments
and supplements, if any.
4. Compensation of Subadviser. Subadviser will bear all expenses that it
incurs in connection with the performance of its services under this
Agreement, which expenses shall not include any expenses of Manager, the
Fund or the Allocated Portion, including without limitation: (a)
brokerage fees or commissions in connection with the effectuation of
securities transactions for the Funds; (b) interest and taxes; (c)
custodian fees and expenses; and (d) costs, including without limitation
external legal costs, of entering into all agreements, documents,
authorizations, forms and other instruments needed to trade or enter into
instruments and investments for the Fund, including exchange traded and
over-the-counter derivative contracts, securities and instruments.
The Fund or the Manager, and not Subadviser, are responsible for post investment
decision, pre-acquisition due diligence expenses ("Due Diligence")
incurred on behalf of the Fund as part of the cost of acquisition of
certain investment opportunities and post investment expenditures to
protect or enhance an investment or expenditures incurred to pursue other
claims or legal action ("Legal Services"). Compensation payable for Due
Diligence and Legal Services shall be the responsibility of Manager or
the Fund, not the Subadviser. Manager represents and warrants to
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Subadviser that it will pay to Subadviser any reasonable amounts due to
Subadviser with respect to Due Diligence and Legal Services that are not
paid promptly by Fund. The Manager's or the Fund's obligation to pay
expenses or compensation under this paragraph is contingent on the
Manager's receipt of such documentation as the Manager may reasonably
require. All other expenses not specifically assumed by the Subadviser
hereunder or by the Manager under the Management Agreement are borne by
the Fund.
For the services provided and the expenses assumed pursuant to this Agreement,
Manager will pay to Subadviser, effective from the date of this
Agreement, a fee which shall be accrued daily and paid monthly, on or
before the last business day of the next succeeding calendar month, based
on the assets of the Allocated Portion at the annual rates as a
percentage of such average daily net assets set forth in the attached
Schedule A, which Schedule may be modified from time to time upon mutual
written agreement of the parties to reflect changes in annual rates,
subject to any approvals required by the 0000 Xxx. For the purpose of
determining fees payable to Subadviser, the value of the Funds' average
daily assets allocated to Subadviser under this Agreement shall be
computed at the times and in the manner specified in the Funds'
Prospectus or Statement of Additional Information as from time to time in
effect. If this Agreement becomes effective or terminates before the end
of any month, the fee for the period from the effective date to the end
of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the
proportion that such partial month bears to the full month in which such
effectiveness or termination occurs.
5. Representations of Subadviser. Subadviser represents and warrants as
follows:
(a) Subadviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as
this Agreement remains in effect; (ii) is not prohibited by the
1940 Act or the Advisers Act from performing the services
contemplated by this Agreement; (iii) has appointed a Chief
Compliance Officer under Rule 206(4)-7 under the Advisers Act; (iv)
has adopted and implemented written policies and procedures that
are reasonably designed to prevent violations of the Advisers Act
and the 1940 Act, and the rules thereunder, and will provide
promptly notice of any material violations relating to any of the
Funds to Manager; (v) has met and will seek to continue to meet for
so long as this Agreement remains in effect, any other applicable
federal or state requirements, or the applicable requirements of
any regulatory or industry self-regulatory agency; (vi) has the
authority to enter into and perform the services contemplated by
this Agreement; and (vii) will promptly notify Manager and the
Funds of the occurrence of any event that would disqualify
Subadviser from serving as an investment adviser of an investment
company pursuant to Section 9(a) of the 1940 Act or in the event
that Subadviser or any of its affiliates becomes aware that it is
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the subject of an administrative proceeding or enforcement action
by the SEC or other regulatory authority that is reasonably likely
to result in the occurrence of such a disqualifying event.
Subadviser further agrees to notify Manager and the Funds promptly
of any material fact known to Subadviser concerning Subadviser that
is not contained in the Funds' Registration Statement, or any
amendment or supplement to any Fund prospectus or SAI, but that is
required to be disclosed therein, and of any material statement
contained therein that becomes untrue in any material respect.
(b) Subadviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide
Manager with a copy of the code of ethics. Within 60 days of the
end of the last calendar quarter of each year that this Agreement
is in effect, an appropriate and duly authorized officer of
Subadviser shall upon Manager's request certify to Manager that, to
the best of such authorized officer's knowledge, Subadviser has
complied with the requirements of Rule 17j-1 during the previous
year and that there has been no material violation of Subadviser's
code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation.
(c) <3>Subadviser has provided Manager with a copy of its Form ADV Part
II, which as of the date of this Agreement is its Form ADV Part II
as most recently deemed to be filed with the Securities and
Exchange Commission ("SEC"), and promptly will furnish a copy of
all amendments thereto to Manager.
(d) Subadviser will promptly notify Manager of any changes in its
controlling shareholders or in the key personnel who are either the
portfolio manager(s) responsible for the Allocated Portion or the
Subadviser's Chief Executive Officer or President, or Chief
Investment Officer, or if there is otherwise a change in control of
Subadviser. For purposes of this section "control" shall have the
same meaning as under the 1940 Act.
(e) Unless required under applicable law, Subadviser agrees that
neither it nor any of its affiliates will in any way refer directly
or indirectly to its relationship with the Funds or Manager, or any
of their respective affiliates in offering, marketing, or other
promotional materials without the prior written consent of Manager,
which consent will not be unreasonably withheld, provided, however,
that Subadviser may include performance of the Allocated Portion
and/or a Fund in composite performance information for Subadviser
and its affiliates without consent of Manager.
6. Representations of Manager. Manager represents and warrants as follows:
(a) Manager (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as
this Agreement remains in effect; (ii) is not prohibited by the
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1940 Act or the Advisers Act from performing the services
contemplated by this Agreement or the Management Agreement, (iii)
has met and will seek to continue to meet for so long as this
Agreement remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or
industry self-regulatory agency necessary to be met in order to
perform the services contemplated by this Agreement or the
Management Agreement; (iv) has the authority to enter into and
perform the services contemplated by this Agreement; and (v) will
promptly notify Subadviser of the occurrence of any event that
would disqualify Manager from serving as an investment adviser of
an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise.
(b) Unless required by applicable law, Manager agrees that neither it
nor any of its affiliates will in any way refer directly or
indirectly to its relationship with Subadviser, or any of its
affiliates in offering, marketing, or other promotional materials
without the prior written consent of Subadviser, which consent
shall not be unreasonably withheld.
(c) Manager and the Trust have duly entered into the Management
Agreement pursuant to which the Trust authorized Manager to enter
into this Agreement. Shareholders of the Funds have approved this
Agreement or are not required to approve this Agreement under
applicable law.
7. Liability and Indemnification.
(a)Subadviser agrees to perform faithfully the services required to be
rendered by Subadviser under this Agreement, but nothing herein
contained shall make Subadviser or any of its affiliated persons,
as defined in Section 2(a)(3) of the 1940 Act, agents, or assignees
(collectively, "Subadviser Parties") liable for any loss sustained
by the Funds, Manager, or their respective affiliated persons, as
defined in Section 2(a)(3) of the 1940 Act, agents, assignees, or
shareholders (collectively, "Fund Parties"), or any other person on
account of the services which Subadviser may render or fail to
render under this Agreement; provided, however, that nothing herein
shall protect Subadviser against liability to the Fund Parties, or
any other person to which Subadviser would otherwise be subject, by
reason of its willful misfeasance, bad faith, or gross negligence
in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
Nothing in this Agreement shall protect Subadviser from any
liabilities that it may have under the Securities Act of 1933, as
amended, (the "1933 Act"), the 1940 Act, or the Advisers Act.
Subadviser does not warrant that the Allocated Portion will achieve
any particular rate of return or that its performance will match
that of any benchmark index or other standard or objective.
(b)Except as may otherwise be provided by the 1940 Act or any other
federal securities law, Subadviser Parties shall not be liable for
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any losses, claims, damages, liabilities, or litigation (including
legal and other expenses) incurred or suffered by the Funds,
Manager, their respective officers, directors or trustees (or
persons occupying similar positions), or shareholders, or any
affiliated persons thereof (within the meaning of Section 2(a)(3)
of the 0000 Xxx) or controlling persons thereof (as described in
Section 15 of the 1933 Act) (collectively, "Fund and Manager
Indemnitees") as a result of any error of judgment or mistake of
law by Subadviser with respect to the Funds, except that, subject
to paragraph (a) above, nothing in this Agreement shall operate or
purport to operate in any way to exculpate, waive, or limit the
liability of Subadviser for, and Subadviser shall indemnify and
hold harmless the Funds and Manager Indemnitees against, any and
all losses, claims, damages, liabilities, or litigation (including
reasonable legal and other expenses) to which any of the Fund and
Manager Indemnitees may become subject under the 1933 Act, the 1940
Act, the Advisers Act, or under any other statute, at common law,
or otherwise arising out of or based on (i) any willful misconduct,
bad faith, reckless disregard, or gross negligence of Subadviser in
the performance of any of its duties or obligations hereunder; (ii)
any untrue statement of a material fact regarding Subadviser
contained in the Prospectus and SAI, proxy materials, reports,
advertisements, sales literature, or other materials pertaining to
the Funds or the omission to state therein a material fact
regarding the Subadviser which was required to be stated therein or
necessary to make the statements therein not misleading, if such
statement or omission was made in reliance upon written information
furnished to Manager or the Funds by the Subadviser Indemnitees (as
defined below) for use therein; or (iii) any violation of federal
or state statutes or regulations by Subadviser; provided, however,
that the Fund and Manager Indemnitees shall not be indemnified for
any losses, claims, damages, liabilities, or litigation sustained
as a result of Fund Parties' willful misfeasance, bad faith, gross
negligence, or reckless disregard of their duties under this
Agreement or the Management Agreement, or violation of applicable
law. It is further understood and agreed that Subadviser may rely
upon information furnished to it by Manager that it reasonably
believes to be accurate and reliable. The federal securities laws
impose liabilities in certain circumstances on persons who act in
good faith, and therefore nothing herein shall in any way
constitute a waiver or limitation of any rights that Manager may
have under any securities laws.
(c)Except as may otherwise be provided by the 1940 Act or any other
federal securities law, Manager and the Funds shall not be liable
for any losses, claims, damages, liabilities, or litigation
(including legal and other expenses) incurred or suffered by
Subadviser or any of its affiliated persons thereof (within the
meaning of Section 2(a)(3) of the 0000 Xxx) or controlling persons
(as described in Section 15 of the 1933 Act) (collectively,
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"Subadviser Indemnitees") as a result of any error of judgment or
mistake of law by the Trust or Manager with respect to the Funds,
except that nothing in this Agreement shall operate or purport to
operate in any way to exculpate, waive, or limit the liability of
Manager for, and Manager shall indemnify and hold harmless the
Subadviser Indemnitees against any and all losses, claims, damages,
liabilities, or litigation (including reasonable legal and other
expenses) to which any of the Subadviser Indemnitees may become
subject under the 1933 Act, the 1940 Act, the Advisers Act, or
under any other statute, at common law, or otherwise arising out of
or based on (i) any willful misconduct, bad faith, reckless
disregard, or gross negligence of Manager in the performance of any
of its duties or obligations hereunder; (ii) any untrue statement
of a material fact contained in the Prospectus and SAI, proxy
materials, reports, advertisements, sales literature, or other
materials pertaining to the Funds or the omission to state therein
a material fact which was required to be stated therein or
necessary to make the statements therein not misleading, unless
such statement or omission concerned Subadviser and was made in
reliance upon written information furnished to Manager or the Funds
by a Subadviser Indemnitee for use therein, or (iii) any violation
of federal or state statutes or regulations by Manager or the
Funds; provided, however, that the Subadviser Indemnitees shall not
be indemnified for any losses, claims, damages, liabilities, or
litigation sustained as a result of Subadviser Parties' willful
misfeasance, bad faith, gross negligence, or reckless disregard of
their duties under this Agreement, or violation of applicable law.
It is further understood and agreed that Manager may rely upon
information furnished to it by Subadviser that it reasonably
believes to be accurate and reliable.
(d)After receipt by Manager, the Funds, or Subadviser, their
affiliates, or any officer, director or trustee (or person
occupying a similar position), employee, or agent of any of the
foregoing, entitled to indemnification as stated in (b) or (c)
above ("Indemnified Party") of notice of the commencement of any
action, if a claim in respect thereof is to be made against any
person obligated to provide indemnification under this section
("Indemnifying Party"), such Indemnified Party shall notify the
Indemnifying Party in writing of the commencement thereof as soon
as practicable after the summons or other first written
notification giving information about the nature of the claim that
has been served upon the Indemnified Party; provided that the
failure to so notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability under this section, except to
the extent that such Indemnifying Party is damaged as a result of
the failure to give such notice. The Indemnifying Party, upon the
request of the Indemnified Party, shall retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified
Party in the proceeding, and shall pay the fees and disbursements
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of such counsel related to such proceeding. In any such proceeding,
any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (1) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the
retention of such counsel, or (2) the named parties to any such
proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation by
both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. The
Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, which consent
shall not be unreasonably withheld, but if settled with such
consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from
and against any loss or liability by reason of such settlement or
judgment.
8. Duration and Termination.
(a)Unless sooner terminated as provided herein, this Agreement shall
continue in effect for a period of more than two years from the
date written above only so long as such continuance is specifically
approved at least annually in conformity with the requirements of
the 1940 Act. Thereafter, if not terminated, this Agreement shall
continue automatically for successive periods of 12 months each
with respect to any Fund, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority
of the Board members who are not parties to this Agreement or
interested persons (as defined in the 0000 Xxx) of any such party,
and (ii) by the Board or by a vote of the holders of a majority of
the outstanding voting securities (as defined in the 0000 Xxx) of
the Funds.
(b)Notwithstanding the foregoing, this Agreement may be terminated
with respect to any Fund at any time, without the payment of any
penalty, by the Board or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of one or more of
the Funds on 60 days' written notice to Subadviser. This Agreement
may also be terminated, without the payment of any penalty, by
Manager (i) upon 60 days' written notice to Subadviser; (ii) upon
material breach by Subadviser of any representations and warranties
set forth in this Agreement, if such breach has not been cured
within 20 days after written notice of such breach; or (iii)
immediately if, in the reasonable judgment of Manager, Subadviser
becomes unable to discharge its duties and obligations under this
Agreement, including circumstances such as the insolvency of
Subadviser or other circumstances that could adversely affect the
Funds or Manager. Subadviser may terminate this Agreement at any
time, without payment of any penalty, (1) upon 60 days' written
notice to Manager; or (2) upon material breach by Manager of any
representations and warranties set forth in the Agreement, if such
breach has not been cured within 20 days after written notice of
such breach. This Agreement shall terminate automatically in the
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event of its assignment (as defined in the 1940 Act), except as
otherwise provided by any rule of, or action by, the SEC, or upon
the termination of the Management Agreement.
(c)In the event of termination of the Agreement, those sections of the
Agreement which govern conduct of the parties' future interactions
with respect to Subadviser having provided investment management
services to the Funds for the duration of the Agreement, including,
but not limited to, Sections 1(a)(iv)(A), 1(e), 7, 14, 16, and 17,
shall survive such termination of the Agreement.
9. Subadviser's Services Are Not Exclusive. Nothing in this Agreement shall
limit or restrict the right of Subadviser or Subadviser Parties to engage
in any other business or to devote his or her time and attention in part
to the management or other aspects of any business, whether of a similar
or a dissimilar nature, or limit or restrict Subadviser's right to engage
in any other business or to render services of any kind to any other
mutual fund, corporation, firm, individual, or association.
10. References to Subadviser.
(a) The parties to this Agreement agree that the names of the
Subadviser and its affiliates and any of their logos or trademarks
or service marks or trade names or any derivatives of them
(collectively, "Subadviser Names") are the valuable property of the
Subadviser and its affiliates. The Manager and the Fund may use the
name of the Subadviser to identify it as a subadviser to the Fund
as required by law or regulation. Subadviser consents to the Fund
names as set out in the attached Schedule A. Any other use of a
Subadviser Name must be expressly pre approved in writing by the
Subadviser and all marketing materials, advertisements, sales
literature and notices using a Subadviser Name must be submitted to
the Subadviser for approval at least ten (10) business days prior
to the date such approval is needed. The Manager and the Fund
agree that, with respect to such materials submitted to the
Subadviser, the Subadviser shall have no responsibility to ensure
the adequacy of the form or content of such materials for purposes
of the 1940 Act or other applicable laws and regulations. Once
approved in writing by the Subadviser, any change in any approved
use of a Subadviser Name including, without limitation, change in
phrases identifying or associated with the Fund, requires prior
approval in writing by the Subadviser. Upon termination of this
Agreement, the Manager and the Fund shall forthwith cease to use
all Subadviser Names, except as may be required by law or
regulation. If a Manager or a Fund makes any unauthorized use of a
Subadviser Name, the parties acknowledge that the Subadviser and
its affiliates shall suffer irreparable harm for which monetary
damages may be inadequate and thus the Subadviser and its
affiliates shall be entitled to injunctive relief, as well as any
other remedy available under law.
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(b) During the term of this Agreement, Manager agrees to furnish to
Subadviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other
material prepared for external distribution to sales personnel,
shareholders of the Funds or the public, which refer to Subadviser
or its clients in any way, prior to use thereof and not to use such
material unless Subadviser consents.
11. Notices. Any notice under this Agreement must be given in
writing as provided below or to another address as either party
may designate in writing to the other.
Subadviser:
Franklin Mutual Advisers, LLC
000 Xxxx X. Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: CEO
with a copy to:
Franklin Xxxxxxxxx Investments
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Manager:
Xxxxx Xxxxxx, Vice President
Allianz Investment Management LLC
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Tel: 000.000.0000
Fax: 000.000.0000
with a copy to:
H. Xxxxx xxx Xxxxx, Chief Legal Officer
Allianz Investment Management LLC
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Tel: 000.000.0000
Fax: 000.000.0000
12. Amendments. This Agreement may be amended by mutual agreement in
writing, subject to approval by the Board and the Funds' shareholders to
the extent required by the 1940 Act.
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13. Assignment. Subadviser shall not make an assignment of this Agreement
(as defined in the 0000 Xxx) without the prior written consent of the
Funds and Manager. Notwithstanding the foregoing, no assignment shall be
deemed to result from any changes in the directors or trustees (or
persons occupying similar positions), officers, or employees of Manager
or Subadviser except as may be provided to the contrary in the 1940 Act
or the rules and regulations thereunder.
14. Governing Law. This Agreement, and, in the event of termination of the
Agreement, those sections that survive such termination of the Agreement
under Section 8, shall be governed by the laws of the State of New York,
without giving effect to the conflicts of laws principles thereof, or any
applicable provisions of the 1940 Act. To the extent that the laws of
the State of New York, or any of the provision of this Agreement,
conflict with applicable provisions of the 1940 Act, the latter shall
control.
15. Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter hereof.
16. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement and, in the event
of termination of the Agreement, those sections that survive such
termination of the Agreement under Section 8, shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors.
17. Interpretation. Any questions of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such
term or provision in the 1940 Act and to interpretation thereof, if any,
by the federal courts or, in the absence of any controlling decision of
any such court, by rules, regulations, or orders of the SEC validly
issued pursuant to the 1940 Act. Where the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is altered by a
rule, regulation, or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation, or order.
18. Headings. The headings in this Agreement are intended solely as a
convenience and are not intended to modify any other provision herein.
19. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute one instrument.
20. Authorization. Each of the parties represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by
15
all necessary corporate action by such party and when so executed and
delivered, this Agreement will be the valid and binding obligation of
such party in accordance with its terms.
21. Performance. The Manager and the Funds understand, consent and agree that
the performance of the Allocated Portion and of any Fund will not be the
same as, and may differ significantly from, the performance of any mutual
fund or portion of mutual fund, or combination of mutual funds for which
Subadviser or its affiliates serves as investment adviser ("Franklin
Xxxxxxxxx Fund"), including any Franklin Xxxxxxxxx Fund that may have
investment goals and strategies that are similar to that of the Allocated
Portion, based on, but not limited to, the following factors:
(i) differences in inception dates, cash flows, asset allocation,
security selection, liquidity, income distribution or retention, fees,
fair value pricing procedures, and diversification methodology; (ii) use
of different foreign exchange rates and different pricing vendors; (iii)
ability to access certain markets due to country registration
requirements; (iv) legal restrictions or custodial issues, (v) legacy
holdings in a Fund or the Allocated Portion; (vi) availability of
applicable trading agreements such as ISDAs, futures agreements or other
trading documentation, (vii) restrictions placed on the account
(including country, industry or environmental and social governance
restrictions); and (viii) other operational issues that impact the
ability of a fund to trade in certain instruments or markets. The
Manager and the Funds further understand, consent and agree that any
similarity of investment goals and strategies between the Allocated
Portion and any Franklin Xxxxxxxxx Fund is subject to, among other
things, the discretion and decisions of the Board of Trustees of the
Trust and any Franklin Xxxxxxxxx Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ALLIANZ INVESTMENT FRANKLIN MUTUAL ADVISERS, LLC
MANAGEMENT LLC
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxx X Xxxxxxxxx
______________________ ________________________
Name: Xxxxx Xxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Vice President Title: Chairman, President & CEO
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SCHEDULE A
Compensation pursuant to Section 4 of this Subadvisory Agreement shall be
calculated at the rate or rates shown below based on the average daily net
assets that are subject to the Subadviser's investment discretion in the
relevant subportfolios of the AZL Franklin Xxxxxxxxx Founding Strategy Plus
Fund.
Rate
Mutual Shares Strategy 0.51% on all assets
Date: October 26, 2009
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