SUBADVISORY AGREEMENT
Agreement made as of the 26th day of January, 2009, by and between
Allianz Investment Management LLC, a Minnesota limited liability company
("Manager"), and ▇.▇. ▇▇▇▇▇▇ Investment Management Inc., a Delaware corporation
("Subadviser").
WHEREAS each of the funds listed in Schedule A (each, a "Fund," and
collectively, the "Funds") is a series of a Delaware business trust (the
"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 in accordance with the terms and
conditions set forth in this Agreement.
WHEREAS Manager and the Funds each desire to retain Subadviser to provide
investment advisory services to the Funds, and Subadviser is willing to render
such investment advisory services.
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 (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, in its sole discretion,
shall determine from time to time what investments and
securities will be purchased, retained, or sold with respect
to that portion of each of the Funds allocated to it by
Manager, 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.
Subadviser shall vote, or abstain from voting, all proxies
with respect to companies whose securities are held in that
1
portion of each of the Funds allocated to it by Manager, in
accordance with its proxy voting guidelines and procedures
in effect from time to time. Subadviser shall not be
responsible for pursuing rights, including class action
settlements, relating to the purchase, sale, or holding of
securities by the Funds.
(ii) Investment Limits. In the performance of its duties and
obligations under this Agreement, Subadviser shall act in
conformity with applicable limits<1> and requirements, as
amended from time to time, as set forth in (A) each Fund's
Prospectus and Statement of Additional Information ("SAI");
(B) instructions and directions of Manager and of the Board
communicated to Subadviser in writing which are not
inconsistent with (A) or (C); (C) requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended, as
applicable to the Funds, including, but not limited to,
Section 817(h); and all other applicable federal and state
laws and regulations; provided, however, that with respect
to state insurance laws and regulations, Manager shall
communicate in writing to Subadviser any limits and
requirements applicable to the Funds,; (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.
(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 conform
with federal securities laws; and be consistent with
seeking the best overall terms available. In
assessing the best overall terms available for any
transaction, Subadviser will consider factors it
deems relevant, including, without limitation, the
breadth of the market in the security, the price of
the security, the financial condition and execution
capability of the broker or dealer and the
reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In
selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms
available, Subadviser is authorized to consider the
2
brokerage and research services (within the meaning
of Section 28(e) of the Securities Exchange Act of
1934, as amended) provided to the Funds and/or other
accounts over which Subadviser or its investment
management or bank affiliates exercise investment
discretion. To the extent that any market
counterparty with whom Subadviser deals requires
information relating to the Funds (including, but not
limited to, the identity of the Funds and their
market value), Subadviser shall be permitted to
disclose such information to the extent necessary to
effect transactions on behalf of the Funds in
accordance with the terms of this Agreement.
(B) Aggregation of Trades. On occasions when Subadviser
deems the purchase or sale of a security, futures
contract, or other instrument 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, futures contracts, or other instruments
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
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.
3
(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 portion of each of the Funds
allocated to Subadviser under this Agreement, including the
relevant market conditions and the investment techniques and
strategies used, and 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
additional certifications 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 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, and (iv) an annual
certification from 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
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) (iv)
hereof.
(d) Fidelity Bond and Code of Ethics. Subadviser will provide the
Funds with periodic written certifications 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.
4
(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 Confidential
Information. As used herein, "Confidential Information" means
confidential and proprietary information of the Funds, Subadviser,
or Manager 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 portion of
each of the Funds allocated to Subadviser that Subadviser manages
under the terms of this Agreement. Except as set forth in this
Agreement or otherwise required by applicable law, each party will
restrict access to the other party's Confidential Information to
its and its affiliates' employees who will use it only for the
purpose for which the Confidential Information was provided to that
party. The foregoing 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 or requested to be disclosed pursuant
to a requirement of a governmental agency, court order, or law so
long as the disclosing party, if legally permitted, provides the
other party with prompt written notice of such requirement prior to
any such disclosure; provided however that either party may
disclose, without notice of any kind, any Confidential Information
received from the other party to any regulatory agency having
jurisdiction over such party, its direct or indirect corporate
parents and such parents direct or indirect subsidiaries.
(f) Delegation. In rendering the services required under this
Agreement, Subadviser may, consistent with applicable law and
regulations, and without the prior written consent of Manager, from
time to time, employ, delegate, or associate with itself such
affiliated or unaffiliated person or persons as it believes
necessary to perform any accounting, administrative, reporting and
ancillary services required to enable Subadviser to perform its
functions under this Agreement; provided, however, that Subadviser
shall give Manager prior written notice of the delegation of any
responsibility that would be material to the investment management
of the Funds. In addition, no such delegation shall involve any
such person serving as an "investment adviser" to the Fund within
the meaning of the 1940 Act. Notwithstanding any other provision
of the Agreement, Subadviser may provide information about the
Funds to any such affiliate or other third party for the purpose of
providing the services contemplated under this clause. Subadviser
5
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 brokerage fees or commissions
in connection with the effectuation of securities transactions for the
Funds. 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 Funds' assets allocated to Subadviser under this Agreement
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 ▇▇▇▇
▇▇▇. 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
6
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 of such policies and
procedures 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 necessary to be met in order to perform the
services contemplated by this Agreement; has the authority to enter
into and perform the services contemplated by this Agreement; (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; and (viii) notify Manager and the Funds if
Subadviser is the subject of an administrative proceeding or
enforcement action by the SEC or other regulatory authority that
could reasonably result in the disqualification of Subadviser as a
registered investment adviser under the Advisers Act. 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, a duly authorized officer of Subadviser shall certify
to Manager that 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) 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 will furnish a copy of all annual
updates of its Form ADV Part II to Manager.
(d) Subadviser will promptly notify Manager of any changes in its
controlling shareholders or in the key personnel who are either the
7
portfolio manager(s) responsible for the Funds or the Subadviser's
Chief Executive Officer or President, or Chief Investment Officer,
or if there is otherwise an actual or expected change in control or
management 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.
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
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
8
defined in Section 2(a)(3) of the 1940 Act, agents, assignees,
(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 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 portion of the assets of each of the Funds
managed by Subadviser 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
any losses, claims, damages, liabilities, or litigation (including
legal and other expenses) incurred or suffered by the Funds,
Manager, their respective officers, directors, or any affiliated
persons thereof (within the meaning of Section 2(a)(3) of the ▇▇▇▇
▇▇▇) 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 proximately caused by (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, the Funds' annual and
semi-annual reports, advertisements, sales literature, pertaining
to the Funds or the omission to state therein a material fact
regarding 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 Subadviser Indemnitees (as
defined below) for use therein; or (iii) Subadviser's violation of
federal or state statutes or regulations, but in the case of state
insurance laws and regulations or only those laws and regulations
that Manager has communicated to Subadviser in writing are
9
applicable to the Funds; provided, however, that the Funds 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 ▇▇▇▇ ▇▇▇) or controlling persons
(as described in Section 15 of the 1933 Act) (collectively,
"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
Subadviser Indemnitees against any and all losses, claims, damages,
liabilities, or litigation (including reasonable legal and other
expenses) to which any 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 proximately caused by
(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, the Funds'
annual and semi-annual reports, advertisements, or sales literature
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 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.
10
(d) After receipt by Manager, the Funds, or Subadviser, their
affiliates, or any officer, director, 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
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.
(e) Neither Manager nor Subadviser shall be liable for special,
consequential or incidental damages.
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 ▇▇▇▇ ▇▇▇) of any such
11
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
▇▇▇▇ ▇▇▇) 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 ▇▇▇▇ ▇▇▇) 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
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, including
other mutual funds and accounts following the same investment strategy as
the Funds.
10. References to Subadviser.
(a) The name "JPMorgan" is the property of Subadviser for copyright and
other purposes. Subadviser agrees that, for so long as Subadviser
is the sole subadviser of any Fund, the name "JPMorgan" may be used
in the name of such Fund and that such use of the name "JPMorgan"
12
may include use of the name in prospectuses, reports, and sales
materials. Upon termination of this Agreement, the Fund shall
forthwith cease to use the name of JPMorgan (or any derivative or
logo) as appropriate and to the extent that continued use is not
required by applicable laws, rules and regulations.
(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 distribution to sales personnel, shareholders
of the Funds or the public, which refer to Subadviser or its
affiliates in any way, prior to use thereof and not to use such
material if Subadviser reasonably objects in writing five business
days (or such other time as may be mutually agreed upon) after
receipt thereof. Sales literature may be furnished to Subadviser
hereunder by first-class or overnight mail, electronic or facsimile
transmission, or hand delivery. Subadviser's right to object to
such materials is limited to the portions of such materials that
expressly relate to Subadviser, its services, and its affiliates.
Any reference to Subadviser or description of Subadviser or its
services in such literature shall be consistent with the
information contained in the Registration Statement.
<4>
2. 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:
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Investment Management Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: ▇▇▇.▇▇▇.▇▇▇▇
Manager:
▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
Allianz Investment Management LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇
13
with a copy to:
H. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Chief Legal Officer
Allianz Investment Management LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇
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.
13. Assignment. Subadviser shall not make an assignment of this Agreement
(as defined in the ▇▇▇▇ ▇▇▇) 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, 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.
14
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
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.
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 ▇.▇. ▇▇▇▇▇▇ INVESTMENT
MANAGEMENT LLC MANAGEMENT INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President Title: Vice President
15
SCHEDULE A
This Schedule shall apply to the following Funds:
AZL JPMorgan U.S. Equity Fund
AZL JPMorgan Large Cap Equity Fund
Compensation pursuant to Section 4 of the Subadvisory Agreement shall be
calculated based on the combined average daily net assets of the Funds named
above using the schedule set forth below:
Average Daily Net Assets* Rate
First $100 million 0.45%
Thereafter 0.40%
*When average daily net assets exceed the first breakpoint, multiple rates will
apply, resulting in a blended rate, e.g. if average daily net assets are $300
million, a rate of 45 bps would apply to $100 million, and a rate of 40 bps
would apply to the remaining $200 million.
The rates set forth above apply to average daily net assets that are subject to
Subadviser's investment discretion in the Funds.
Date: January 26, 2009
16