USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT, made this 27th day of April, 2001 by and between USAllianz
Advisers, LLC (the "Manager"), USAllianz Variable Insurance Products Trust (the
"Trust") and Xxx Xxxxxx Investment Advisory Corp. ("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 Trust with respect to each of
its present and future series not advised by its affiliate Allianz of America,
Inc. ("Sub-Advised 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 Funds 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 each Fund's
assets 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, upon receipt of reasonable notice from the Manager,
report to the Board of Trustees of the Trust regularly at such times and in such
detail as the Board or the Manager may from time to time determine to be
appropriate,. The Manager has herewith furnished the Portfolio Manager copies of
each 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; (b) use reasonable efforts to manage the Assets, and to
coordinate its activities with the Manager and any other portfolio manager of a
particular 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.
The Manager shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M and Section 817(h) of
the Code. In connection with such compliance tests, the Manager shall prepare
and provide reports to the Portfolio Manager within ten (10) business days of a
calendar quarter end relating to the diversification of the Fund under
Subchapter M and Section 817(h) of the Code. If the Manager determines that the
Fund is not in compliance with the requirements noted above, the Portfolio
Manager, upon notification from the Manager, will take prompt action to bring
the Fund back into compliance within the time permitted under the Code;
(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
Funds 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
commission 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;
(d) furnish to the Trust and the Manager whatever statistical information
the Trust , the Manager or such other portfolio manager, if any, may reasonably
request with respect to the Assets or contemplated investments; keep the Manager
and the Trustees informed of developments materially affecting a Fund's
portfolio; and, on the Portfolio Manager's own initiative, furnish to the Trust
and the Manager from time to time whatever information the Portfolio Manager
believes appropriate;
(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 a Fund as may be required to assist the
Administrator, the Trust and the Manager in their compliance with applicable
laws and regulations. The Portfolio Manager will furnish the Trustees with such
periodic and special reports regarding the Fund as the Trustees may reasonably
request;
(f) immediately notify the Trust and the Manager in the event that the
Portfolio Manager or any of its advisory affiliates as defined in the
instructions to Form ADV: (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 that it is the subject
of a publicly announced administrative proceeding or enforcement action by the
SEC or 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 Funds, 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
inside 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.
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 Funds or otherwise
providing accounting services to the Funds and such services shall be provided
by others retained by the Funds. The Portfolio Manager shall have access to such
reports and records to assist it in performing its services hereunder.
3. Banking and Custody Accounts. The Portfolio Manager shall not be
required to provide or arrange for banking accounts for the Funds or to hold
money or assets on a 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. Each
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. 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, if any (including the Trust's
share of payroll taxes), and the Portfolio Manager shall make available, without
expense to the Funds, 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 Funds 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,
if any, 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, 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 Funds pursuant to the Investment Management Agreement or from
other resources of the Manager, 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. The Portfolio
Manager may, but is not required to, from time to time and for such periods as
deemed appropriate reduce its compensation to the extent that the Fund's
expenses exceed such lower expense as the manager may, by notice to the Trust,
voluntarily declare to be effective. If the Manager deems it appropriate to
reduce its compensation, this shall not affect the amount payable to the
Portfolio Manager pursuant to Exhibit A.
6. Books and Records. The Portfolio Manager agrees to maintain such books
and records with respect to its services to the Funds 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 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 request. And 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 Funds 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 a 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 a Fund.
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 Funds or
another Sub-advised 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 Funds hereunder. 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 a 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 a
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 Sub-Advised 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 a 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, or (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 timely
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 a 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. 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 Funds. e.
This Agreement may be executed via facsimile signature and in any number of
counterparts, each of which, when executed and delivered shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
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
Xxx Xxxxxx Investment Advisory Corp.
By ______________________________
President
USAllianz Advisers, LLC
By ______________________________
President
EXHIBIT A
Fees payable to the Portfolio Manager pursuant to paragraph 5 hereof shall be at
the following annual rates for each Fund:
Aggressive Growth Fund* $0 up to $100 million 0.55%
$100 million up to $250 million 0.50%
$250 million up to $500 million 0.475%
$500 million and more 0.45%
Capital Growth Fund* $0 up to $100 million 0.50%
$100 million up to $250 million 0.45%
$250 million up to $500 million 0.425%
$500 million and more 0.40%
* The minimum fee payable per fund shall be $100,000 per calendar year,
commencing January 1, 2002.
The management fee shall be accrued and paid to the Portfolio Manager as
provided in Section 5 of the Portfolio Management Agreement.
