USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT, made this 8th day of March, 2004 by and among USAllianz
Advisers, LLC (the "Manager"), USAllianz Variable Insurance Products Trust (the
"Trust"), and Founders Asset Management 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 subadviser for the Fund(s) for the periods and on
the terms set forth in this Agreement. The Adviser 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. 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 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 all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code (the "Code") and all other applicable
federal and state laws and regulations, and with any applicable procedures
adopted by the Trustees which have been provided to the Portfolio Manager in
writing by the Manager;
(b) use reasonable efforts to manage the Assets, and to coordinate its
activities with the Manager and any other adviser of the applicable Fund, 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 Exchange Act of 1934) provided to the Portfolio Manager, 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;
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(d) furnish to the Trust, the Manager and any other portfolio manager
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, 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 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 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: (1) becomes aware that it or any of its affiliates is subject
to a statutory disqualification that prevents the Portfolio Manager from serving
as a subadviser pursuant to this Agreement or is the subject of an
administrative proceeding or enforcement action by the SEC; or (2) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
any other regulatory authority. 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 respecting or relating to the Portfolio
Manager 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 the Fund's portfolio holdings to no one other than the
Manager, the Trust, or the Administrator, or as may be necessary for operational
purposes.
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 shall not be responsible for pursuing legal
causes of action that may be based on the purchase, sale or holding of a
security by a Fund. The Portfolio Manager shall, however, provide notice to the
Manager of any such potential claim of which the Portfolio Manager receives
notice and provide reasonable cooperation to the Manager in any possible
proceeding.
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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.
4. ALLOCATION OF CHARGES AND EXPENSES. The Portfolio Manager shall pay the
compensation and expenses of all its directors, officers and employees
The Portfolio Manager shall not be required to pay any expenses of the
Trust or the Fund. In particular, but without limiting the generality of the
foregoing, the Portfolio Manager shall not be responsible 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 advisers 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, 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. 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
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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 regular trading on 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 that records it maintains and preserves pursuant to Rules
31a-1 and 31 a-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 request. 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 Manager, 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 Manager, 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.
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8. SERVICES 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 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
directors, 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
and its directors, officers, affiliates or employees may acquire for its or
their own accounts or for the account of another client, if in the reasonable
discretion of the Portfolio Manager, it is not feasible or desirable to acquire
a position in such investment for the Fund.
The Manager and the Trust acknowledge that the Portfolio Manager may give advice
and take action with respect to any of their other clients or for their 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 a 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 the Portfolio Manager 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 directors, 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
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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 (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 names "Dreyfus," "Founders" and "Founders Funds" are
the property of the Portfolio Manager or its affiliates for trademark, service
xxxx, copyright and all other purposes. The Portfolio Manager, for itself and
its affiliates, hereby grants to the Trust a non-exclusive, non-transferable
license to use the names "Dreyfus Founders" as a component of the legal name of
the Fund(s). Such use of the names "Dreyfus Founders" may include use of the
names in Fund prospectuses, reports, and sales materials. The Manager and the
Trust covenant not, at any time, to challenge the rights of the Portfolio
Manager or its affiliates to such names, or the validity or distinctiveness
thereof. The Manager and the Trust further covenant not to do or permit to be
done any act calculated to prejudice, affect, impair or destroy the right, title
and interest of the Portfolio Manager or its affiliates in and to the names
"Dreyfus Founders." The Manager and the Trust acknowledge that the names
"Dreyfus Founders" may be used by the Portfolio Manager or its affiliates for
other investment companies, entities or purposes. In the event that the
Portfolio Manager is no longer the portfolio manager for a particular Fund
previously managed by the Portfolio Manager, the Manager and the Trust shall
with reasonable promptness take all necessary actions to remove the names
"Dreyfus Founders" from the name of the Fund.
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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 /s/ Xxxxxxxxxxx X. Xxxxxxxxx
President
Founders Asset Management LLC
By /s/ [illegible]
Title President and CEO
USAllianz Advisers, LLC
By /s/ Xxxxxxx Xxxxxx
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 Dreyfus Founders Growth $0 up to $60 million 0.55%
and Income Fund $60 million and more 0.50%
The management fee shall be accrued and paid to the Portfolio Manager as
provided in Section 5 of the Porfolio Management Agreement.
