1
SERVICES AGREEMENT
------------------
This AGREEMENT is made as of this 6th day of October, 1999, by and
between USALLIANZ FUNDS, a Delaware business trust (the "Company"), and BISYS
FUND SERVICES OHIO, INC. ("BISYS"), an Ohio corporation.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest ("Shares");
and
WHEREAS, the Company desires BISYS to provide, and BISYS is willing to
provide, administration, transfer agency and fund accounting services (the
"Services") to such series of the Company that are currently in existence and
which may hereafter be created (the "Portfolios") on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
herein set forth, the Company and BISYS hereby agree as follows:
ARTICLE 1. Retention of BISYS. The Company hereby appoints BISYS,
subject to the supervision, direction and control of the Company's Board of
Trustees, to furnish the Portfolios with the Services that are more particularly
set forth in Article 2 herein. BISYS hereby accepts such appointment and agrees
to perform said Services for the compensation provided for in Article 4 and
Schedule A hereto.
BISYS shall, for all purposes herein, be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Company in any way and shall not be deemed
an agent of the Company.
ARTICLE 2. Services.
A. Administration Services.
------------------------
BISYS shall perform or supervise the performance by others of
the Services described herein in connection with the operations of the
Portfolios, and, on behalf of the Company, will investigate, assist in the
selection of and conduct relations with custodians, depositories, accountants,
legal counsel, underwriters, brokers and dealers, corporate fiduciaries,
insurers, banks and persons in any other capacity deemed to be necessary or
desirable for the Portfolios' operations. BISYS shall provide the Trustees of
the Company with such reports regarding the Portfolios' investment performance
as they may reasonably request but shall have no responsibility for supervising
the performance by any investment adviser or subadviser of its responsibilities.
BISYS shall provide the Company with regulatory reporting, all
necessary office space, equipment, personnel, and facilities (including
facilities for Shareholders' and Trustees'
2
meetings) for handling the affairs of the Portfolios and such other services as
BISYS shall, from time to time, determine to be necessary to perform its
obligations under this Agreement. In addition, at the request of the Company's
Board of Trustees, BISYS shall make reports to the Trustees concerning the
performance of its obligations hereunder.
Without limiting the generality of the foregoing, BISYS shall:
(i) Calculate contractual Company expenses and control
all disbursements for the Company, and as appropriate
compute the Company's yields, total return, expense
ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighted maturity;
(ii) Assist Company counsel with the preparation of
prospectuses, statements of additional information,
registration statements and proxy materials;
(iii) Prepare such reports, applications and documents
(including reports regarding the sale and redemption
of Shares as may be required in order to comply with
Federal and state securities law) as may be necessary
or desirable to register the Company's Shares with
state securities authorities, monitor the sale of
Company Shares for compliance with state securities
laws, and file with the appropriate state securities
authorities the registration statements and reports
for the Company and the Company's Shares and all
amendments thereto, as may be necessary or convenient
to register and keep effective the Company and the
Company's Shares with state securities authorities to
enable the Company to make a continuous offering of
its Shares;
(iv) Develop and prepare, with the assistance of the
Company's investment adviser, communications to
Shareholders, including the annual report to
Shareholders, coordinate the mailing of prospectuses,
notices, proxy statements, proxies and other reports
to Company Shareholders, and supervise and facilitate
the proxy solicitation process for all shareholder
meetings, including the tabulation of shareholder
votes;
(v) Administer contracts on behalf of the Company with,
among others, the Company's investment adviser,
distributor, custodian, transfer agent and fund
accountant;
(vi) Supervise the Company's transfer agent with respect
to the payment of dividends and other distributions
to Shareholders;
(vii) Calculate performance data of the Portfolios for
dissemination to information services covering the
investment company industry;
2
3
(viii) Coordinate and supervise the preparation and filing
of the Company's tax returns;
(ix) Examine and review the operations and performance of
the various organizations providing services to the
Company or any Portfolio of the Company, including,
without limitation, the Company's investment adviser,
distributor, custodian, fund accountant, transfer
agent, outside legal counsel and independent public
accountants, and at the request of the Trustees,
report to the Board on the performance of
organizations;
(x) Assist with the layout and printing of publicly
disseminated prospectuses and assist with and
coordinate layout and printing of the Company's
semi-annual and annual reports to Shareholders;
(xi) Assist with the design, development, and operation of
the Portfolios, including new classes, investment
objectives, policies and structure;
(xii) Provide individuals reasonably acceptable to the
Company's Trustees to serve as officers of the
Company, who will be responsible for the management
of certain of the Company's affairs as determined by
the Company's Trustees;
(xiii) Advise the Company and its Trustees on matters
concerning the Company and its affairs;
(xiv) Obtain and keep in effect fidelity bonds and trustees
and officers/errors and omissions insurance policies
for the Company in accordance with the requirements
of Rules 17g-1 and 17d-1(7) under the 1940 Act as
such bonds and policies are approved by the Company's
Trustees;
(xv) Monitor and advise the Company and its Portfolios on
their regulated investment company status under the
Internal Revenue Code of 1986, as amended;
(xvi) Perform all administrative services and functions of
the Company and each Portfolio to the extent
administrative services and functions are not
provided to the Company or such Portfolio pursuant to
the Company's or such Portfolio's investment advisory
agreement, distribution agreement, custodian
agreement, transfer agent agreement and fund
accounting agreement;
(xvii) Furnish advice and recommendations with respect to
other aspects of the business and affairs of the
Portfolios as the Company and BISYS shall determine
desirable;
3
4
(xviii) Prepare and file with the SEC the semi-annual report
for the Company on Form NSAR and all required notices
pursuant to Rule 24f-2; and
BISYS shall perform such other administration services for the Company
that are mutually agreed upon by the parties from time to time, which may result
in an additional charge, the amount of which shall be agreed upon between the
parties. In performing its duties under this Agreement, BISYS will act in
conformity with the Company's Declaration of Trust, By-Laws, prospectuses and
statements of additional information as in effect from time to time and will
conform to and comply with the requirements of the 1940 Act and all applicable
federal and state laws and regulations.
B. Fund Accounting Services.
-------------------------
BISYS shall perform the fund accounting services described in
this Article 2 in connection with the operations of the Company and each of the
Portfolios. Such services shall include the following:
(a) Maintenance of Books and Records. BISYS will keep and
maintain the following books and records of each
Portfolio pursuant to Rule 31a1 under the Investment
Company Act of 1940 (the "Rule"):
(i) Journals containing an itemized daily record
in detail of all purchases and sales of
securities, all receipts and disbursements
of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income
and expense accounts, including interest
accrued and interest received, as required
by subsection (b)(2)(i) of the Rule;
(iii) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule;
and
(iv) A monthly trial balance of all ledger
accounts (except shareholder accounts) as
required by subsection (b)(8) of the Rule.
(b) Performance of Daily Accounting Services. In addition
to the maintenance of the books and records specified
above, BISYS shall perform the following accounting
services daily for each Portfolio:
(i) Calculate the net asset value per share
utilizing prices obtained from the sources
described in subsection 1(b)(ii) below;
4
5
(ii) Obtain security prices from independent
pricing services, or if such quotes are
unavailable, then obtain such prices from
each Portfolio's investment adviser or its
designee, as approved by the Company's Board
of Trustees ("Trustees");
(iii) Verify and reconcile with the Company's
custodian all daily trade activity;
(iv) Compute, as appropriate, each Portfolio's
7-day yields, 7-day effective yields, 30-day
yields, and weighted average portfolio
maturity;
(v) Review daily the net asset value calculation
and dividend factor (if any) for each
Portfolio prior to release to shareholders,
check and confirm the net asset values and
dividend factors for reasonableness and
deviations, and distribute net asset values
and yields to NASDAQ;
(vi) Report to the Company the daily market
pricing of securities in any money market
Portfolios, with the comparison to the
amortized cost basis;
(vii) Determine, where applicable, unrealized
appreciation and depreciation on securities
held in the Portfolios;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than
face value, in accordance with the pricing
policies that are established for the
Company;
(ix) Update fund accounting system to reflect
rate changes, as received from a Portfolio's
investment adviser, on variable interest
rate instruments;
(x) Post Portfolio transactions to appropriate
categories;
(xi) Accrue expenses of each Portfolio according
to instructions received from the Company's
Administrator;
(xii) Determine the outstanding receivables and
payables for all (1) security trades, (2)
Portfolio share transactions and (3) income
and expense accounts;
5
6
(xiii) Provide accounting reports in connection
with the Company's regular annual audit and
other audits and examinations by regulatory
agencies; and
(xiv) Provide such periodic reports as the parties
shall agree upon.
(c) Special Reports and Services.
(i) BISYS may provide additional special reports
upon the request of the Company or a
Portfolio's investment adviser, which may
result in an additional charge, the amount
of which shall be agreed upon between the
parties.
(ii) BISYS may provide such other similar
services with respect to a Portfolio as may
be reasonably requested by the Company,
which may result in an additional charge,
the amount of which shall be agreed upon
between the parties.
(d) Additional Accounting Services. BISYS shall also
perform the following additional accounting services
for each Portfolio:
(i) Provide monthly a download (and hard copy
thereof) of the financial statements
described below, upon request of the
Company. The download will include the
following items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information.
(ii) Provide accounting information for the
following:
(A) the Company's semi-annual reports
with the Securities and Exchange
Commission ("SEC") on Form N-SAR;
(B) the Company's annual, semi-annual
and quarterly (if any) shareholder
reports;
(C) registration statements on Form
N-1A and other filings relating to
the registration of shares;
(D) BISYS's monitoring of each
Portfolio's status as a regulated
investment company under Subchapter
M of the Internal Revenue Code, as
amended;
(E) annual audit by the Company's
auditors; and
(F) examinations performed by the SEC.
6
7
C. Transfer Agency Services.
-------------------------
BISYS shall perform for the Company the transfer agent
services set forth herein. BISYS also agrees to perform for the Company such
special services incidental to the performance of the services enumerated herein
as agreed to by the parties from time to time. BISYS shall perform such
additional services as are provided on an amendment to this agreement hereof, in
consideration of such fees as the parties hereto may agree.
1. Shareholder Transactions
------------------------
a. Process shareholder purchase and redemption
orders.
b. Set up account information, including
address, dividend option, taxpayer
identification numbers and wire
instructions.
c. Issue confirmations in compliance with Rule
10b-10 under the Securities Exchange Act of
1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the
purchase of new shares, through dividend
reimbursement.
2. Shareholder Information Services
--------------------------------
a. Make information available to shareholder
servicing unit and other remote access units
regarding trade date, share price, current
holdings, yields, and dividend information.
b. Produce detailed history of transactions
through duplicate or special order
statements upon request.
c. Provide mailing labels for distribution of
financial reports, prospectuses, proxy
statements or marketing material to current
shareholders.
3. Compliance Reporting
--------------------
a. Provide reports to the Securities and
Exchange Commission, the National
Association of Securities Dealers and the
States in which each Portfolio is
registered.
7
8
b. Prepare and distribute appropriate Internal
Revenue Service forms for corresponding
Portfolio and shareholder income and capital
gains.
c. Issue tax withholding reports to the
Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
--------------------------------------
a. Provide reports for tracking rights of
accumulation and purchases made under a
Letter of Intent.
b. Account for separation of shareholder
investments from transaction sale charges
for purchase of Portfolio shares.
c. Calculate fees due under 12b-1 plans for
distribution and marketing expenses.
d. Track sales and commission statistics by
dealer and provide for payment of
commissions on direct shareholder purchases
in a load Portfolio.
5. Shareholder Account Maintenance
-------------------------------
a. Maintain all shareholder records for each
account in each Portfolio.
b. Issue customer statements on scheduled
cycle, providing duplicate second and third
party copies if required.
c. Record shareholder account information
changes.
d. Maintain account documentation files for
each shareholder.
6. Reports
-------
BISYS will furnish to the Company and to its
properly-authorized auditors, investment advisers,
examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated
by the Company in writing, the reports that are set
forth below and such additional reports, if any, that
are subsequently agreed upon by the parties pursuant
to an amendment hereto. The Company agrees to examine
each such report or copy promptly and will report or
cause to be reported any errors or discrepancies
therein.
a. Daily Shareholder Activity Journal
8
9
b. Daily Fund Activity Summary Report
(i) Beginning Balance
(ii) Dealer Transactions
(iii) Shareholder Transactions
(iv) Reinvested Dividends
(v) Exchanges
(vi) Adjustments
(vii) Ending Balance
c. Daily Wire and Check Register
d. Monthly Dealer Processing Reports
e. Monthly Dividend Reports
f. Sales Data Reports for Blue Sky Registration
g. Annual report by independent public
accountants concerning BISYS' shareholder
system and internal accounting control
systems to be filed with the Securities
Exchange Act of 1934, as amended
h. Such special reports and additional
information that the parties may agree upon,
from time to time
ARTICLE 3. Allocation of Charges and Expenses.
(A) BISYS. BISYS shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this Agreement. BISYS shall also provide the items which it is obligated to
provide under this Agreement, and shall pay all compensation, if any, of
officers of the Company as well as all Trustees of the Company who are
affiliated persons of BISYS or any other organization affiliated with BISYS;
provided, however, that unless otherwise specifically provided, BISYS shall not
be obligated to pay the compensation of any employee of the Company retained by
the Trustees of the Company to perform services on behalf of the Company.
(B) The Company. The Company assumes and shall pay or cause to be paid
all other expenses of the Company not otherwise allocated herein, including,
without limitation, organization
9
10
costs, taxes, expenses for legal and auditing services, the expenses of
preparing (including typesetting), printing and mailing reports, prospectuses,
statements of additional information, proxy solicitation material and notices to
existing Shareholders, all expenses incurred in connection with issuing and
redeeming Shares, the costs of custodial services, the cost of initial and
ongoing registration of the Shares under Federal and state securities laws, fees
and out-of-pocket expenses of Trustees who are not affiliated persons of BISYS
or the investment adviser to the Company or any other organization affiliated
with BISYS or the investment adviser, insurance, interest, brokerage costs,
litigation and other extraordinary or nonrecurring expenses, and all fees and
charges of investment advisers to the Company.
ARTICLE 4. Compensation of BISYS.
(A) Service Fees. For the services to be rendered, the facilities
furnished and the expenses assumed by BISYS pursuant to this Agreement, the
Company shall pay to BISYS during the term of this Agreement compensation in
accordance with, and in the manner set forth in the Schedule A attached hereto.
Such compensation shall be calculated and accrued daily, and paid to BISYS
monthly.
(B) Reimbursement of Expenses. In addition to paying BISYS the fees
described in paragraph (A) of this Article 4, the Company agrees to reimburse
BISYS for BISYS' reasonable out-of-pocket expenses in providing services
hereunder, including without limitation, the following:
(i) All freight and other delivery and bonding charges
incurred by BISYS in delivering materials to and from
the Company;
(ii) All direct telephone, telephone transmission and
telecopy or other electronic transmission expenses
incurred by BISYS in communication with the Company,
or others as required for BISYS to perform the
services to be provided hereunder;
(iii) The cost of obtaining security market quotes pursuant
to Article 2(B)(b)(ii) above;
(iv) The cost of microfilm or microfiche of records or
other materials;
(v) All systems-related expenses associated with the
provision of special reports and services under this
Agreement;
(vi) All travel and lodging expenses incurred by officers
and employees of BISYS in connection with attendance
at Company Board meetings;
(vii) Any expenses BISYS shall incur at the written
direction of an officer of the Company; and
10
11
(vii) Any additional expenses reasonably incurred by BISYS
and approved in advance by the Company in the
performance of its duties and obligations under this
Agreement.
(C) Survival of Compensation Rights.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the termination of this
Agreement.
ARTICLE 5. Limitation of Liability of BISYS. The duties of BISYS shall
be confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against BISYS hereunder. BISYS shall not be liable
for any error of judgment or mistake of law or for any loss arising out of any
act or omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "BISYS" shall include directors, officers, employees and other agents of
BISYS as well as BISYS itself.) Any person, even though also an officer,
director, employee or agent of BISYS, who may be or become an officer, Trustee,
employee or agent of the Company, shall be deemed, when rendering services to
the Company or to any Portfolio, or acting on any business of the Company or of
any Portfolio (other than services or business in connection with BISYS's duties
hereunder) to be rendering such services to or acting solely for the Company or
the Portfolio and not as an officer, director, employee or agent or one under
the control or direction of BISYS even though paid by BISYS.
So long as BISYS acts in good faith and with due diligence and without
negligence, the Company assumes full responsibility and shall indemnify BISYS
and hold it harmless from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all losses,
damages, costs, charges, reasonable counsel fees and disbursements, payments,
expenses and liabilities (including reasonable investigation expenses) arising
directly or indirectly out of BISYS's actions taken or nonactions with respect
to the performance of services hereunder. The indemnity and defense provisions
set forth herein shall indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold
BISYS harmless, the Company shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further understood that
BISYS will use all reasonable care to identify and notify the Company promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification against the Company, but failure
to do so in good faith shall not affect BISYS's indemnification rights
hereunder.
11
12
The Company shall be entitled to participate at its own expense or, if
it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Company elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
Company and satisfactory to BISYS, whose approval shall not be unreasonably
withheld. In the event that the Company elects to assume the defense of any suit
and retain counsel, BISYS shall bear the fees and expenses of any additional
counsel retained by it. If the Company does not elect to assume the defense of a
suit, it will reimburse BISYS for the reasonable fees and expenses of any
counsel retained by BISYS.
BISYS may apply to the Company at any time for instructions and may
consult counsel for the Company or its own counsel and with accountants and
other experts with respect to any matter arising in connection with BISYS's
duties, and BISYS shall not be liable or accountable for any reasonable action
taken or omitted by it in good faith in accordance with such instruction or with
the opinion of such counsel, accountants or other experts.
Also, BISYS shall be protected in acting in good faith upon any
document which it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons.
ARTICLE 6. Duration of this Agreement. The duration of this Agreement
shall be as specified in Schedule B hereto.
ARTICLE 7. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
BISYS may, at its expense, subcontract with any entity or person concerning the
provision of the services contemplated hereunder. BISYS shall not, however, be
relieved of any of its obligations under this Agreement by the appointment of
such subcontractor and provided further, that BISYS shall be responsible, to the
extent provided in Article 5 hereof, for all acts of such subcontractor as if
such acts were its own. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective successors and permitted
assigns.
ARTICLE 8. Amendments. No provision of this Agreement may be changed,
waived, discharged or terminated, except by an instrument in writing signed by
the party against whom an enforcement of the change, waiver, discharge or
termination is sought.
ARTICLE 9. Certain Records. BISYS shall maintain customary records in
connection with its duties as specified in this Agreement. Any records required
to be maintained and preserved pursuant to applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the 1940
Act, which are prepared or maintained by BISYS on behalf of the Company shall be
prepared and maintained at the expense of BISYS, but shall be the property of
the Company and will be made available to or surrendered promptly to the Company
on request.
12
13
In case of any request or demand for the inspection of such records by
another party, BISYS shall notify the Company and follow the Company's
instructions as to permitting or refusing such inspection; provided that BISYS
may exhibit such records to any person in any case where it is advised by its
counsel that it may be held liable for failure to do so, unless (in cases
involving potential exposure only to civil liability) the Company has agreed to
indemnify BISYS against such liability.
ARTICLE 10. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 11. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following addresses: if to the Company, at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President; if to BISYS, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; or at such
other addresses as such party may from time to time specify in writing to the
other party pursuant to this Section.
ARTICLE 12. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Ohio, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 13. Multiple Originals. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 14. Confidentiality. BISYS agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the
Company, all records and other information relative to the Company and prior,
present or potential Shareholders, and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except, after prior notification to and approval in writing by the
Company, which approval shall not be unreasonably withheld and may not be
withheld where BISYS may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company.
ARTICLE 15. Uncontrollable Events. BISYS assumes no responsibility
hereunder, and shall not be liable for any damage, loss of data, delay or any
other loss whatsoever caused by events beyond it reasonable control. BISYS
shall, however, be obligated to design and institute reasonable procedures to
prevent or limit any such damages, loss of data, delay or other loss.
13
14
ARTICLE 16. Legal Advice. BISYS shall notify the Company at any time
BISYS believes that it is in need of the advice of counsel (other than counsel
in the regular employ of BISYS or any affiliated companies) with regard to
BISYS's responsibilities and duties pursuant to this Agreement. After so
notifying the Company, BISYS, at its discretion, shall be entitled to seek,
receive and act upon advice of qualified legal counsel of its choosing, such
advice to be at the expense of the Company unless relating to a matter involving
BISYS's willful misfeasance, bad faith, negligence or reckless disregard with
respect to BISYS's responsibilities and duties hereunder and BISYS shall in no
event be liable to the Company or any Portfolio or any shareholder or beneficial
owner of the Company for any action reasonably taken pursuant to such advice.
ARTICLE 17. Representations of the Company. The Company certifies to
BISYS that: (a) as of the close of business on the effective date of this
Agreement, each Portfolio which is in existence as of such effective date has
authorized unlimited shares; and (b) this Agreement has been duly authorized by
the Company and, when executed and delivered by the Company, will constitute a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to equitable principles and
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
ARTICLE 18. Representations of BISYS. BISYS represents and warrants
that: (a) it has been in, and shall continue to be in, substantial compliance
with all applicable provisions of law in connection with the performance of its
duties under this Agreement; (b) the various procedures and systems which BISYS
has implemented with regard to safekeeping from loss or damage attributable to
fire, theft or any other cause of the blank checks, records, and other data of
the Company and BISYS's records, data, equipment, facilities and other property
used in the performance of its obligations hereunder are adequate and that it
will make such changes therein from time to time as are required for the secure
performance of its obligations hereunder; and (c) this Agreement has been duly
authorized by BISYS, and when executed and delivered by BISYS, will constitute a
legal, valid and binding obligation of BISYS, enforceable against BISYS in
accordance with its terms, subject to equitable principles and bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
ARTICLE 19. Insurance. BISYS shall notify the Company should BISYS's
insurance coverage with respect to professional liability or errors and
omissions coverage be canceled or reduced. Such notification shall include the
date of change and the reasons therefor. BISYS shall notify the Company of any
material claims against BISYS with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Company from time to time as may be appropriate of the total outstanding claims
made by BISYS under its insurance coverage.
ARTICLE 20. Bank Accounts. The Company and the Portfolios shall
establish and maintain such bank accounts with such bank or banks as are
selected by the Company, as are necessary in order that BISYS may perform the
services required to be performed hereunder. To the
14
15
extent that the performance of such services shall require BISYS directly to
disburse amounts for payment of dividends, redemption proceeds or other
purposes, the Company and Portfolios shall provide such bank or banks with all
instructions and authorizations necessary for BISYS to effect such
disbursements.
ARTICLE 21. Information Furnished by the Company. The Company has
furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Company and of any
amendments thereto, certified by the proper official of the
state in which such Declaration has been filed.
(b) Copies of the following documents:
1. The Company's Bylaws and any amendments thereto;
2. Certified copies of resolutions of the Board of
Trustees covering the approval of this Agreement and
the authorization of a specified officer of the
Company to execute and deliver this Agreement and
authorization for specified officers of the Company
to instruct BISYS hereunder.
(c) A list of all officers of the Company, together with specimen
signatures of those officers, who are authorized to instruct
BISYS in all matters.
(d) Two copies of the Prospectuses and Statement of Additional
Information for each Portfolio.
(e) A certificate as to shares of beneficial interest of the
Company authorized, issued and outstanding as of the effective
date of BISYS's appointment under this Agreement (or as of the
date on which BISYS's services are commenced, whichever is the
later date) and as to receipt of full consideration by the
Company for all shares outstanding, such statement to be
certified by the Treasurer of the Company.
ARTICLE 22. Information Furnished by BISYS. BISYS has furnished to the
Company the following:
(a) BISYS's Articles of Incorporation.
(b) BISYS's Bylaws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the following
matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver
this Agreement; and
15
16
2. Authorization of BISYS to act as fund administrator,
fund accountant and transfer agent for the Company.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
USALLIANZ FUNDS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: President
----------------------------
BISYS FUND SERVICES OHIO, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: President
----------------------------
16
17
SCHEDULE A
TO THE SERVICES AGREEMENT
BETWEEN
USALLIANZ FUNDS
AND
BISYS FUND SERVICES OHIO, INC.
PORTFOLIOS:
This Agreement shall apply to all Portfolios of the Company, either now
or hereafter created. The current Portfolios are set forth below:
FEES:
Pursuant to Article 4, in consideration of services rendered and
expenses assumed pursuant to this Agreement, the Company will pay BISYS on the
first business day of each month, or at such time(s) as BISYS shall request and
the parties hereto shall agree, the fees set forth below:
Asset-Based Fees:
-----------------
Subject to the annual minimum fee set forth below, the Company
shall pay to BISYS a fee computed daily at the annual rate of:
Ten one-hundredths of one percent (.10%) of the
Company's average daily net assets up to and
including $5 billion;
Seven one-hundredths of one percent (.07%) of the
next $5 billion of the Company's average daily net
assets; and
Five one-hundredths of one percent (.05%) of the
Company's average daily net assets over $10 billion.
The above referenced fee schedule shall be subject to (i) an annual per
Portfolio minimum fee of $85,000 and (ii) an annual fund complex (i.e., all
investment companies advised by Allianz of America, Inc., or its affiliates for
which BISYS performs services of the nature contemplated by this Agreement)
minimum fee of $250,000.
A-1
18
Annual Per Account Fee:
-----------------------
The Company shall also pay to BISYS a fee of $20 per
shareholder account.
Additional Fee for Separate Classes of Shares:
----------------------------------------------
To the extent the Company maintains two or more classes of
shares, BISYS shall be entitled to receive an additional
annual fee for each class of shares that is in addition to the
initial class of shares. Such fee shall be equal to $37,500
per class.
Out-of-pocket Expenses:
-----------------------
BISYS shall be entitled to be reimbursed for the out-of-pocket
expenses set forth in Article 4 of this Agreement.
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇
TO THE SERVICES AGREEMENT
BETWEEN
USALLIANZ FUNDS
AND
BISYS FUND SERVICES OHIO, INC.
DURATION AND TERMINATION
------------------------
Pursuant to Article 6, the term of this Agreement shall commence on
October 6, 1999 and shall remain in effect through October 5, 2002 (the "Initial
Term"). Thereafter, unless otherwise terminated as provided herein, this
Agreement shall be renewed automatically for successive three-year periods
("Rollover Periods"). This Agreement may be terminated without penalty (i) by
provision of a notice of nonrenewal in the manner set forth below, (ii) by
mutual agreement of the parties or (iii) for "cause," as defined below, upon the
provision of 60 days advance written notice by the party alleging cause. Written
notice of nonrenewal must be provided at least 60 days prior to the expiration
of the Initial Term or any Rollover Period in order to avoid automatic renewal.
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the party to be terminated with respect to its obligations and duties set forth
herein; (b) a final, unappealable judicial, regulatory or administrative ruling
or order in which the party to be terminated has been found guilty of criminal
or unethical behavior in the conduct of its business; or (c) financial
difficulties on the part of the party to be terminated which are evidenced by
the authorization or commencement of, or involvement by way of pleading, answer,
consent or acquiescence in, a voluntary or involuntary case under Title 11 of
the United States Code, as from time to time is in effect, or any applicable
law, other than said Title 11, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the rights
of creditors.
Notwithstanding the foregoing, after such termination for so long as
BISYS, with the written consent of the Company, in fact continues to perform any
one or more of the services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including without limitation
the provisions dealing with indemnification, shall continue in full force and
effect. Compensation due BISYS and unpaid by the Company upon such termination
shall be immediately due and payable upon and notwithstanding such termination.
BISYS shall be entitled to collect from the Company, in addition to the
compensation described in Schedule A, the amount of all of BISYS's reasonable
cash disbursements for services in connection with BISYS's activities in
effecting such termination, including without limitation, the delivery to the
Company and/or its
B-1
20
designees of the Company's property, records, instruments and documents, or any
copies thereof.
If, for any reason other than nonrenewal, mutual agreement of the
parties or "cause," BISYS is replaced as the service provider under this
Agreement, or if a third party is added to perform all or a part of the Services
provided by BISYS under this Agreement (excluding any subcontractor appointed by
BISYS as provided in Article 7 herein), then the Company shall make a one-time
cash payment, in consideration of the fee structure and services to be provided
under this Agreement and not as a penalty, to BISYS equal to the balance due
BISYS for the lesser of (A) the next 12 months or (B) the remainder of the
then-current term of this Agreement, assuming for purposes of calculation of the
payment that such balance shall be based upon the average amount of Company
assets and the average number of Company shareholder accounts for the twelve
months prior to the date BISYS is replaced or a third party is added.
In the event the Company is merged into another legal entity in part or
in whole pursuant to any form of business reorganization or is liquidated in
part or in whole prior to the expiration of the then-current term of this
Agreement, the parties acknowledge and agree that the liquidated damages
provision set forth above shall be applicable in those instances in which BISYS
is not retained to provide Services consistent with this Agreement, including
the level of assets subject to such Services. The one-time cash payment
referenced above shall be due and payable on the day prior to the first day in
which BISYS is replaced or a third party is added.
The parties further acknowledge and agree that, in the event BISYS is
replaced, or a third party is added, as set forth above, (i) a determination of
actual damages incurred by BISYS would be extremely difficult, and (ii) the
liquidated damages provision contained herein is intended to adequately
compensate BISYS for damages incurred and is not intended to constitute any form
of penalty.
B-2