SUB-SUBADVISORY AGREEMENT
AGREEMENT made as of the 30th day of April, 2007 by and among Allianz
Life Advisers, LLC a Minnesota limited liability company (the "Manager"),
investment adviser for the AZL PIMCO Fundamental IndexPLUS Total Return Fund
(the "Fund"), a series of the Allianz Variable Insurance Products Trust, a
Delaware business trust (the "Trust"), Pacific Investment Management Company
LLC, subadviser to the Fund, a Delaware limited liability company (hereinafter
"PIMCO") and Research Affiliates, LLC, a California limited liability company
("Research Affiliates");
WHEREAS, PIMCO has been retained by the Manager to provide investment
advisory services to the Fund, an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), pursuant to an Amended and Restated Subadvisory Agreement (the
"Subadvisory Agreement");
WHEREAS, PIMCO, on behalf of the Fund, wishes to obtain equity exposure
by investing in total return swaps based upon an enhanced version of Research
Affiliates' index series known as Research Affiliates Fundamental Index (the
"RAFI(TM)") tracking the top 1000 U.S. equity issuers (the "Enhanced RAFI(TM)
1000"), as produced, and revised from time to time, by Research Affiliates;
WHEREAS, PIMCO wishes to retain Research Affiliates to assist PIMCO in
providing investment advisory services ("Advisory Services") in connection with
the Fund;
WHEREAS, Research Affiliates is willing to provide such services to
PIMCO upon the terms and conditions and for the compensation set forth below;
and
WHEREAS, Research Affiliates is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among the Manager, PIMCO and Research Affiliates
as follows:
1. The Trust is an open-end investment company which has separate
investment portfolios. Additional investment portfolios may be established in
the future. This Agreement shall pertain to the Fund and to such additional
investment portfolios as shall be designated in supplements to this Agreement,
as further agreed among the Manager, PIMCO and Research Affiliates. The Trust
engages in the business of investing and reinvesting the assets of the Fund in
the manner and in accordance with the investment objective and restrictions
applicable to the Fund as specified in the currently effective prospectus (the
"Prospectus") for the Trust included in the registration statement, as amended
from time to time (the "Registration Statement"), filed by the Trust under the
1940 Act and the Securities Act of 1933, as amended (the "1933 Act"). Copies of
the documents referred to in the preceding sentence have been furnished by the
Manager to Research Affiliates. Any amendments to those documents shall be
furnished by the Manager to Research Affiliates promptly.
2. PIMCO hereby appoints Research Affiliates to provide Advisory
Services specified in this Agreement and Research Affiliates hereby accepts such
appointment and agrees to render the services herein set forth.
3. (a) Research Affiliates shall, at its expense, (i) employ or
associate with itself such persons as it believes appropriate to assist it in
performing its obligations under this Agreement and (ii) provide all services,
equipment and facilities necessary to perform its obligations under this
Agreement. Research Affiliates may from time to time seek research assistance
and rely on investment management resources available to it through its
affiliated companies, but in no case shall such reliance relieve Research
Affiliates of any of its obligations hereunder, nor shall the Fund be
responsible for any additional fees or expenses hereunder as a result. Research
Affiliates shall not retain any other person to serve as an investment adviser
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or subadviser to the Fund. Research Affiliates shall not pay any fee, based on
the assets of the Fund, to any person providing research and/or investment
advice to Research Affiliates without the express written consent of the
Manager.
(b) Research Affiliates shall not be required to pay any expenses of
the Fund other than those specifically allocated to Research Affiliates in this
Agreement. In particular, but without limiting the generality of the foregoing,
Research Affiliates shall not be responsible, except to the extent of the
reasonable compensation of such of the Trust's employees (if any) as are
officers or employees of Research Affiliates whose services may be involved, for
any of the following expenses of the Fund: compensation of the Trustees who are
not affiliated with the Manager, PIMCO or Research Affiliates, the Fund's
distributor or any of its affiliates; taxes and governmental fees; interest
charges; fees and expenses of the Fund's independent registered public
accounting and legal counsel; trade association membership dues; fees and
expenses of any custodian (including maintenance of books and accounts and
calculation of the net asset value of shares of the Fund), transfer agent,
registrar and dividend disbursing agent of the Fund; expenses of issuing,
selling, redeeming, registering and qualifying for sale shares of beneficial
interest in the Fund; expenses of preparing and printing share certificates,
prospectuses and reports to shareholders, notices, proxy statements and reports
to regulatory agencies; the cost of office supplies, including stationery;
travel expenses of all officers, Trustees and employees; insurance premiums;
brokerage and other expenses of executing portfolio transactions; expenses of
shareholders' meetings; organizational expenses; and extraordinary expenses.
4. (a) Subject to the supervision of PIMCO, Research Affiliates shall
provide to the Fund Advisory Services, including investment guidance and policy
direction in connection with the management of the Fund, oral and written
research, analysis, advice, and statistical and economic data and information.
(b) As part of its Advisory Services, Research Affiliates shall provide
PIMCO with a model portfolio reflecting the composition of Enhanced RAFI(TM)
1000, as amended from time to time, based on Research Affiliates' fundamental
analysis process. Research Affiliates also will provide the model portfolio to
such investment banks or counterparties as PIMCO shall designate for purposes of
developing the derivative instruments to be used by PIMCO in obtaining exposure
to Enhanced RAFI(TM) 1000. Such Advisory Services shall not include (i)
determining the securities and other assets to be purchased or sold by the Fund;
or (ii) determining what portion of the Fund shall be invested in securities or
other assets, and what portion, if any, should be held uninvested.
(c) Research Affiliates shall not use any non-public inside information
relating to the Manager, PIMCO, the Fund or the Trust obtained in connection
with this Agreement that may be in its possession or in the possession of any of
its affiliates beyond the performance of its obligations under this Agreement.
(d) Research Affiliates also shall provide to the Manager, PIMCO, and
the officers of the Trust, administrative assistance in connection with the
operation of the Fund, which shall include (i) compliance with all reasonable
requests of the Manager, PIMCO, or the Trust for information, including
information required in connection with the Trust's filings with the Securities
and Exchange Commission (the "SEC") and state securities commissions, and (ii)
such other services as the Manager, PIMCO and/or Research Affiliates shall from
time to time determine to be necessary or useful to the administration of the
Fund. Research Affiliates will keep the Manager and PIMCO informed of any
developments it becomes aware of which may materially affect the Fund.
(e) Research Affiliates shall provide Advisory Services for the account
of the Fund in accordance with Research Affiliates' best judgment and within the
investment objectives, policies, and restrictions set forth in the Prospectus,
the 1940 Act and the provisions of the Internal Revenue Code of 1986, as amended
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(the "Code") relating to regulated investment companies, subject to policy
decisions adopted by the Trust's Board of Trustees.
(f) Research Affiliates shall furnish to the Manager, PIMCO and the
Trust's Board of Trustees periodic and special reports (including any
statistical information) on the investment performance of the Fund and on the
performance of its obligations under this Agreement and shall supply such
additional reports and information as the Trust's officers or Board of Trustees
shall reasonably request.
5. Research Affiliates shall exercise its best judgment in rendering
the services provided by it under this Agreement. Subject to the provisions of
Section 9(a) hereof, Research Affiliates shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Manager, PIMCO, the
Trust or the Fund in connection with the matters to which this Agreement
relates, except that Research Affiliates shall be liable to the Manager, PIMCO,
the Trust or the Fund for a loss resulting from a breach of fiduciary duty by
Research Affiliates under the 1940 Act with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of Research Affiliates in the performance
of its duties or from reckless disregard by it of its obligations or duties
under this Agreement. In no case shall Research Affiliates be liable for actions
taken or non-actions with respect to the performance of services under this
Agreement based upon specific information, instructions or requests given or
made to Research Affiliates by PIMCO or the Manager. As used in this Section,
the term "Research Affiliates" shall include any officers, directors, employees
or other affiliates of Research Affiliates performing services with respect to
the Fund.
6. (a) Research Affiliates agrees that it will comply with all
applicable laws, rules and regulations of all federal and state regulatory
agencies having jurisdictions over Research Affiliates in performance of its
duties hereunder. Research Affiliates will treat as confidential and proprietary
information of the Fund, all records and information relative to the Fund and
prior, present or potential shareholders, and will not 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 Fund, which approval shall not be unreasonably withheld, and Research
Affiliates shall not 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 Fund.
(b) Research Affiliates will notify the Fund in the event that Research
Affiliates or any of its affiliates (i) becomes aware that it is subject to a
statutory disqualification that prevents Research Affiliates from serving as
investment adviser pursuant to this Agreement, or (ii) becomes aware that it is
the subject of an administrative proceeding or enforcement action by the SEC or
other regulatory authority. Research Affiliates further agrees to notify the
Fund immediately of any material fact known to Research Affiliates relating to
Research Affiliates that is not contained in the Fund's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed thereon, and of any statement contained therein that becomes
untrue in any material respect.
7. Research Affiliates will bear all expenses in connection with the
performance of its services under this Agreement. For the services provided and
the expenses assumed pursuant to this Agreement, PIMCO will pay to Research
Affiliates, 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 Fund's assets allocated to PIMCO under
the Subadvisory 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 Research Affiliates, the
value of the Fund's average daily assets allocated to PIMCO under the
Subadvisory Agreement shall be computed at the times and in the manner specified
in the Fund's Prospectus or Statement of Additional Information as from time to
time in effect. If this Agreement becomes effective or terminates before the end
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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.
Payment of said compensation shall be the sole responsibility of PIMCO and shall
in no way be an obligation of the Manager, the Fund or the Trust.
8. (a) This Agreement shall become effective with respect to the Fund
as of the date hereof (and, with respect to any amendment, or with respect to
any additional fund, the date of the amendment or supplement hereto) and shall
continue in effect with respect to the Fund for a period of more than two years
from that date (or, with respect to any additional fund, the date of the
supplement) only so long as the continuance is specifically approved at least
annually (i) by the vote of a majority of the outstanding voting securities (as
defined in the ▇▇▇▇ ▇▇▇) of the Fund or by the Trust's Board of Trustees; (ii)
by the vote, cast in person at a meeting called for the purpose, of a majority
of the Trust's Trustees who are not parties to this Agreement or "interested
persons" (as defined in the ▇▇▇▇ ▇▇▇) of any such party. This Agreement shall
terminate immediately upon the receipt of written notice to Research Affiliates
of the termination of the Subadvisory Agreement.
(b) This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by: (i) a vote of a majority of the
outstanding voting securities (as defined in the ▇▇▇▇ ▇▇▇) of the Fund; (ii) a
vote of a majority of the Trust's entire Board of Trustees on 60 days' written
notice to Research Affiliates; (iii) PIMCO on 60 days' written notice to
Research Affiliates; (iv) the Manager on 60 days' written notice to Research
Affiliates; or (v) Research Affiliates on 60 days' written notice to the Trust.
This Agreement (or any supplement hereto) shall terminate automatically in the
event of its assignment (as defined in the 1940 Act).
9. (a) Research Affiliates shall indemnify and hold harmless the
Manager and PIMCO and their officers, directors, trustees, employees and agents
from and against any and all liabilities, losses, claims, damages and expenses,
including reasonable attorneys' fees and expenses, of any kind or nature
directly or indirectly resulting solely from or solely out of: (i) any material
misrepresentation, breach of any material representation or failure to comply
with any provision, warranty or obligation made by Research Affiliates in
connection with this Agreement or any applicable laws and regulations; (ii) any
actions or failure to act by Research Affiliates in connection with this
Agreement that results in a violation of any law; or (iii) any gross negligence,
willful misfeasance, bad faith or reckless disregard in fulfilling its
obligations under this Agreement.
(b) PIMCO shall indemnify and hold harmless Research Affiliates and its
officers, directors, trustees, employees and agents from and against any and all
liabilities, losses, claims, damages and expenses, including reasonable
attorneys' fees and expenses, of any kind or nature directly or indirectly
resulting solely from or solely out of: (i) any material misrepresentation,
breach of any material representation or failure to comply with any provision,
warranty or obligation made by PIMCO in connection with this Agreement or any
applicable laws and regulations; (ii) any actions or failure to act by PIMCO in
connection with this Agreement that results in a violation of any law; or (iii)
any gross negligence, willful misfeasance, bad faith or reckless disregard in
fulfilling its obligations under this Agreement.
10. Except to the extent necessary to perform Research Affiliates'
obligations under this Agreement and/or as otherwise agreed to by the parties,
nothing herein shall be deemed to limit or restrict the right of Research
Affiliates, or any affiliate of Research Affiliates, or any employee of Research
Affiliates, to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association, provided such other services and activities do
4
not, during the term of this Agreement, interfere in a material manner with
Research Affiliates' ability to meet its obligations to the Fund hereunder.
11. It is understood that the names "Allianz," "Allianz Life Advisers,"
"AZL PIMCO Fundamental IndexPLUS Total Return Fund," "Allianz Variable Insurance
Products Trust," "PIMCO" or any derivative thereof or logo associated therewith
are the valuable property of the Manager, PIMCO or their affiliates. Research
Affiliates (or any of its affiliates) agrees that it shall not use any such
names (or derivative or logo) without the prior consent of the Manager or PIMCO,
as the case may be. In addition, Research Affiliates hereby consents to the use
of its name and any logo, ▇▇▇▇ or symbol associated therewith, as well as the
names of its business affiliates including ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the Fund's
Registration Statement, other disclosure documents, shareholder communications,
advertising, sales literature and similar communications.
12. It is understood that "Research Affiliates", "RAFI(TM)",
"Fundamental Index(TM)", any associated logos and the method of formulation of
the RAFI(TM) series of indexes and the enhanced versions of the RAFI(TM) series
are the proprietary and valuable property of Research Affiliates. While Research
Affiliates consents to the use of the marks and logos so long as this Agreement
is in effect and will provide PIMCO, the Manager and the Fund with the necessary
information on RAFI(TM) index series and Enhanced RAFI(TM) 1000, rights to such
intellectual property will remain with Research Affiliates and nothing in this
Agreement shall be construed otherwise.
13. Any recommendations concerning the Fund's investment program
proposed by Research Affiliates to the Fund and PIMCO pursuant to this
Agreement, as well as any other activities undertaken by Research Affiliates on
behalf of the Fund pursuant thereto shall at all times be subject to any
applicable directives of the Board of Trustees of the Trust.
14. In compliance with the requirements of Rule 31a-3 under the 1940
Act, and any other applicable federal or state rule, Research Affiliates hereby
agrees that all records that it maintains for the Trust are the property of the
Trust and further agrees to surrender promptly to the Trust any such records
upon the Trust's request. Research Affiliates further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act and any other applicable
Rule, the records required to be maintained by Research Affiliates hereunder
pursuant to Rule 31a-1 of the 1940 Act and any other applicable federal or state
rule. Research Affiliates further agrees that it will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable law and regulations.
15. This Agreement shall be construed in accordance with the laws of
the State of California without regard to the conflicts of law principles
thereof, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder.
16. No provision of this Agreement may be changed, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, discharge or termination is sought.
17. (a) PIMCO, the Manager and Research Affiliates shall treat forever
as confidential and shall not disclose or transmit to any third party or use
other than as expressly authorized hereunder, except to an affiliate (as defined
in the ▇▇▇▇ ▇▇▇) of PIMCO, the Manager or Research Affiliates, as the case may
be, or to any investment bank or counterparty designated by PIMCO pursuant to
Section 4(b) above, any information, documentation or other written material
with respect to the business affairs of the other party, including but not
limited to information that is marked as "Confidential" by Research Affiliates,
PIMCO, the Manager or the Fund ("Confidential Information"). Each party agrees
5
to hold the Confidential Information in confidence and not to disclose or use
the Confidential Information for any purpose whatsoever other than as
contemplated by this Agreement and to require each of its directors, officers,
employees, affiliates, representatives or agents (including, without
limitations, such investment banks referred to in Section 4(b) of this
Agreement) not to disclose or use Confidential Information, except as authorized
or permitted by this Agreement. Notwithstanding the foregoing, PIMCO may
disclose or transmit Confidential Information with respect to the Fund (i) to
the Trust's Board of Trustees; (ii) to the Manager; or (iii) with the prior
written consent of Research Affiliates.
(b) Confidential Information shall not include (i) any information that
is available to the public or to the receiving party hereunder from sources
other than the providing party (provided that such source is not, to the
knowledge of the receiving party, subject to any confidentiality agreement with
regard to such information) or (ii) any information that is independently
developed by the receiving party without use of or reference to information from
the providing party. Notwithstanding the foregoing, the parties may reveal
Confidential Information to any regulatory agency or court of competent
jurisdiction if such information to be disclosed is (i) approved in writing by
the other party for disclosure or (ii) required by law, regulatory agency or
court order to be disclosed by a party, provided, if permitted by law, that
written notice of such required disclosure is given to the other party prior to
its disclosure if reasonably possible or as soon thereafter as is reasonably
practicable and provided further that the providing party shall cooperate with
the other party to limit the scope of such disclosure to the extent permitted by
law.
18. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected hereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
19. Any notice or other communication required or permitted to be given
hereunder shall be given in writing and mailed, faxed or delivered to the other
party at the addresses set forth below:
If to Research Affiliates:
▇▇▇▇▇▇ ▇▇▇▇▇▇
Principal, Director, Administration
Chief Legal & Compliance Officer
▇▇▇ ▇. ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to PIMCO:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Allianz Life Advisers:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Allianz Life Advisers, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
H. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Senior Securities Counsel Allianz Life
Advisers, LLC ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Notice shall be deemed given upon receipt.
20. This Agreement constitutes the entire agreement of the parties
hereto with respect to its subject matter and may be amended or modified only by
a writing signed by duly authorized officers of all parties. This Agreement
supersedes all previous agreements between the parties with respect to the
subject matter of this Agreement. There are no oral or written collateral
representations, agreements or understandings except as provided herein.
21. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be one and the same
agreement.
22. No breach, default or threatened breach of this Agreement by any
party shall relieve any other party of its obligations or liabilities under this
Agreement with respect to the protection of the property or proprietary or
confidential nature of any property which is the subject of this Agreement.
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.
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
RESEARCH AFFILIATES, LLC
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
ALLIANZ LIFE ADVISERS, LLC
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
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SCHEDULE A
Compensation pursuant to Section 7 of this Agreement shall be calculated at the
rate of
0.12%
of the average daily net assets that are subject to Research Affiliates'
investment discretion in the following fund:
AZL PIMCO Fundamental IndexPLUS Total Return Fund
Date: April 30, 2007
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