1
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the day of October, 1999, by and between
USALLIANZ FUNDS, a Delaware business trust (the "Trust"), and Allianz of
America, Inc., a Delaware corporation (the "Adviser").
WHEREAS, the Trust and the Adviser wish to enter into an Agreement
setting forth the terms on which the Adviser will perform certain services for
the Trust, its series of shares as listed on Schedule A to this agreement and
each series of shares subsequently issued by the Trust (each singly a "Fund" or
collectively the "Funds").
THEREFORE, in consideration of the promises and the mutual
agreements hereinafter contained, the Trust and the Adviser agree as follows:
1. (a) The Trust hereby employs the Adviser to manage the
investment and reinvestment of the assets of each Fund of the Trust in
conformity with such Fund's investment objectives and restrictions as may be set
forth from time to time in the Fund's then current prospectus and statement of
additional information, if any, and other governing documents, and to supervise
the provision of services to the Trust and each of its Funds by others, all
subject to the supervision of the Board of Trustees of the Trust, for the period
and on the terms set forth in this Agreement. The Adviser hereby accepts such
employment and agrees during such period, at its own expense, to render the
services and to assume the obligations set forth herein, for the compensation
provided herein. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
(b) In the event that the Trust establishes one or more Funds, in
addition to the Funds listed on Schedule A, for which it wishes the Adviser to
perform services hereunder, it shall notify the Adviser in writing. If the
Adviser is willing to render such services, it shall notify the Trust in writing
and upon execution of an addendum hereto such Fund shall become a Fund hereunder
and the compensation payable to the Adviser by the new Fund will be as agreed in
writing at the time and set forth in such addendum.
2. The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of each Fund with broker-dealers selected
by the Adviser. In executing portfolio transactions and selecting
broker-dealers, the Adviser will use its best efforts to seek best execution on
behalf of each Fund. In assessing the best execution available for any
transaction, the Adviser 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 Adviser may
also consider the brokerage and research services (as those terms are used in
Section 28(e) of the Securities Exchange Act of 1934 (the "1934 Act")) provided
to a Fund and/or other accounts over which the Adviser or an affiliate of the
Adviser exercises investment discretion. The Adviser is authorized to pay a
broker-dealer who provides such brokerage and research services a commission for
executing a
2
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 Adviser 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.
3. To the extent not otherwise arranged by the Trust pursuant to
other agreements for management, administration and/or other services, the
Adviser, at its own expense, shall furnish to the Trust office space in the
offices of the Adviser or in such other place as may be agreed upon by the
parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Trust, for members of the Adviser's organization to serve without
salaries from the Trust as officers or, as may be agreed from time to time, as
agents of the Trust. The Adviser assumes and shall pay or reimburse the Trust
for:
(a) the compensation (if any) of the Trustees of the Trust who are
affiliated with the Adviser or with its affiliates, or with any adviser retained
by the Adviser, and of all officers of the Trust affiliated with the Adviser or
any of its affiliates, and
(b) all expenses of the Adviser incurred in connection with its
services hereunder.
The Trust assumes and shall pay all other expenses of the Trust
and its Funds, including, without limitation:
(c) all charges and expenses of any custodian or depository
appointed by the Trust for the safekeeping of the cash, securities and other
property of any of its Funds;
(d) all charges and expenses for administration and management
services (except as otherwise specifically provided in Section 1(a) hereof;
(e) all charges and expenses for bookkeeping and auditors;
(f) all charges and expenses of any transfer agents and registrars
appointed by the Trust;
(g) all fees of all Trustees of the Trust who are not affiliated
with the Adviser or any of its affiliates, or with any adviser retained by the
Adviser;
(h) all brokers' fees, expenses, and commissions and issue and
transfer taxes chargeable to a Fund in connection with transactions involving
securities and other property to which the Fund is a party;
(i) all costs and expenses of distribution of shares of its Funds
incurred pursuant to Plans of Distribution adopted under Rule 12b-1 under the
Investment Company Act of 1940 ("1940 Act");
(j) all costs and expenses of shareholder servicing;
2
3
(k) all taxes and trust fees payable by the Trust or its Funds to
Federal, state, or other governmental agencies;
(l) all costs of certificates representing shares of the Trust or
its Funds;
(m) all fees and expenses involved in registering and maintaining
registrations of the Trust, its Funds and of their shares with the Securities
and Exchange Commission (the "Commission") and registering or qualifying the
Funds' shares under state or other securities laws, including, without
limitation, the preparation and printing of registration statements,
prospectuses, and statements of additional information for filing with the
Commission and other authorities;
(n) expenses of preparing, printing, and mailing prospectuses and
statements of additional information to shareholders of each Fund of the Trust;
(o) all expenses of shareholders' and Trustees' meetings and of
preparing, printing, and mailing notices, reports, and proxy materials to
shareholders of the Funds;
(p) all charges and expenses of legal counsel for the Trust and
its Funds and for Trustees of the Trust in connection with legal matters
relating to the Trust and its Funds, including, without limitation, legal
services rendered in connection with the Trust and its Funds' existence, trust,
and financial structure and relations with its shareholders, registrations and
qualifications of securities under Federal, state, and other laws, issues of
securities, expenses which the Trust and its Funds has herein assumed, whether
customary or not, and extraordinary matters, including, without limitation, any
litigation involving the Trust and its Funds, its Trustees, officers, employees,
or agents;
(q) all charges and expenses of filing annual and other reports
with the Commission and other authorities; and
(r) all extraordinary expenses and charges of the Trust and its
Funds.
In the event that the Adviser provides any of these services or
pays any of these expenses, the Trust and any affected Fund will promptly
reimburse the Adviser therefor.
The services of the Adviser to the Trust and its Funds hereunder
are not to be deemed exclusive, and the Adviser shall be free to render similar
services to others.
4. As compensation for the Adviser's services to the Trust with
respect to each Fund during the period of this Agreement, the Trust will pay to
the Adviser a fee at the annual rate set forth on Schedule A for such Fund.
The Adviser's fee is computed as of the close of business on each
business day.
A pro rata portion of the Trust's fee with respect to a Fund shall
be payable in arrears at the end of each day or calendar month as the Adviser
may from time to time specify to the Trust. If and when this Agreement
terminates, any compensation payable hereunder for the period ending with the
date of such termination shall be payable upon such termination. Amounts payable
hereunder shall be promptly paid when due.
3
4
The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of one
or more of the Funds) to the extent that any Fund's expenses exceed such lower
expense limitation as the Adviser may, by notice to the Trust, voluntarily
declare to be effective.
5. The Adviser may enter into an agreement to retain, at its own
expense, a firm or firms ("SubAdviser") to provide the Trust with respect to all
or any of its Funds all of the services to be provided by the Adviser hereunder,
if such agreement is approved as required by law. Such agreement may delegate to
such SubAdviser all of Adviser's rights, obligations, and duties hereunder.
6. The Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust or any of its Funds in
connection with the performance of this Agreement, except a loss resulting from
the Adviser's willful misfeasance, bad faith, gross negligence, or from reckless
disregard by it of its obligations and duties under this Agreement. Any person,
even though also an officer, Director, partner, employee, or agent of the
Adviser, who may be or become an officer, Trustee, employee, or agent of the
Trust, shall be deemed, when rendering services to the Trust or any of its Funds
or acting on any business of the Trust or any of its Funds (other than services
or business in connection with the Adviser's duties hereunder), to be rendering
such services to or acting solely for the Trust or any of its Funds and not as
an officer, Director, partner, employee, or agent or one under the control or
direction of the Adviser even though paid by it.
7. The Trust shall cause the books and accounts of each of its
Funds to be audited at least once each year by a reputable independent public
accountant or organization of public accountants who shall render a report to
the Trust.
8. Subject to and in accordance with the Declaration of Trust of
the Trust, the governing documents of the Adviser and the governing documents of
any SubAdviser, it is understood that Trustees, Directors, officers, agents and
shareholders of the Trust or any Adviser are or may be interested in the Adviser
(or any successor thereof) as Directors and officers of the Adviser or its
affiliates, as stockholders of Allianz AG Holding or otherwise; that Directors,
officers and agents of the Adviser and its affiliates or stockholders of Allianz
AG Holding are or may be interested in the Trust or any Adviser as Trustees,
Directors, officers, shareholders or otherwise; that the Adviser (or any such
successor) is or may be interested in the Trust or any SubAdviser as
shareholder, or otherwise; and that the effect of any such adverse interests
shall be governed by the Declaration of Trust of the Trust, governing documents
of the Adviser and governing documents of any SubAdviser.
9. This Agreement shall continue in effect for two years from the
date set forth above and after such date if (a) such continuance is specifically
approved at least annually by the Board of Trustees of the Trust or by a vote of
a majority of the outstanding voting securities of the Trust, and (b) such
renewal has been approved by the vote of the majority of Trustees of the Trust
who are not interested persons, as that term is defined in the 1940 Act, of the
Adviser or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
10. On sixty days' written notice to the Adviser, this Agreement
may be terminated at any time without the payment of any penalty by the Board of
Trustees of the Trust or by vote of the holders of a majority of the outstanding
voting securities of the affected Funds;
4
5
and on sixty days' written notice to the Trust, this Agreement may be terminated
at any time without the payment of any penalty by the Adviser. This Agreement
shall automatically terminate upon its assignment (as that term is defined in
the 1940 Act). Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postage prepaid, to the other party at the
main office of such party.
11. This Agreement may be amended at any time by an instrument in
writing executed by both parties hereto or their respective successors, provided
that with regard to material amendments such execution by the Trust shall have
been first approved by the vote of the holders of a majority of the outstanding
voting securities of the affected Funds and by the vote of a majority of
Trustees of the Trust who are not interested persons (as that term is defined in
the ▇▇▇▇ ▇▇▇) of the Adviser, or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Trust or the affected Funds" shall have,
for all purposes of this Agreement, the meaning provided therefor in the 1940
Act.
12. Any compensation payable to the Adviser hereunder for any
period other than a full year shall be proportionately adjusted.
13. The Trust acknowledges that the Adviser and its affiliates
have granted the Trust the non-exclusive right to use of the name "USAllianz
Funds" and agrees that all rights in and to such name and any and all service
marks or other intellectual property related thereto or associated therewith are
and remain the property of the Adviser and its affiliates. Without limiting the
generality of the foregoing, the Trust acknowledges that the Adviser and its
affiliates may withdraw the right to use such name and related intellectual
property by notice in writing to the Trust and upon receipt of such notice, the
Trust agrees to promptly take such steps as may be necessary to change its name
and/or the name of any Funds and to cease use of any intellectual property
belonging to the Adviser or its affiliates.
14. The provisions of this Agreement shall be governed, construed,
and enforced in accordance with the laws of The State of Delaware.
5
6
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
USALLIANZ FUNDS
By: ___________________________________
Name:
Title:
ALLIANZ OF AMERICA, INC.
By: ___________________________________
Name:
Title:
7
Schedule A
----------
Name of Fund Compensation
------------------------------------------------- ------------------------
Diversified Assets Fund 0.55%
Global Opportunities Fund 0.95%
Growth Fund 0.75%
Fixed Income Fund 0.50%
Money Market Fund 0.35%
The advisory fee shall be accrued daily at the rate of 1/365th of
the applicable percentage applied to the daily net assets of each Fund. The
advisory fee so accrued shall be paid to the Adviser as provided in Section 4 of
the Investment Advisory Agreement.