For period ended 07/31/2002 Series 15
Sub-Item 77Q1(e): Exhibits
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The following is an interim investment sub-advisory agreement between USAA
INVESTMENT MANAGEMENT COMPANY and BATTERYMARCH FINANCIAL MANAGEMENT, INC.,
approved by the Board of Directors of USAA Mutual Fund, Inc. at its special
meeting on June 26, 2002.
INTERIM INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 28th day of June, 2002 (the Effective Date),
between USAA INVESTMENT MANAGEMENT COMPANY, a corporation organized under the
laws of the State of Delaware and having its principal place of business in San
Antonio, Texas (IMCO) and BATTERYMARCH FINANCIAL MANAGEMENT, INC., a corporation
organized under the laws of the State of Maryland and having its principal place
of business in Boston, MA (Batterymarch).
WHEREAS, IMCO serves as the investment adviser to USAA Mutual Fund,
Inc. a corporation organized under the laws of the state of Maryland (the
Company) and registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, under its Investment Advisory Agreement with the Company
(Investment Advisory Agreement), IMCO is authorized to appoint subadvisers for
series of the Company (each a Fund, or collectively Funds); and
WHEREAS, IMCO wishes to retain Batterymarch to render investment
advisory services to such series (or portions thereof) of the Company as now or
hereafter may be identified in Schedule A to this Agreement, as such Schedule A
may be amended from time to time (each such series or portion thereof referred
to herein as a Fund Account and collectively as Fund Accounts); and
WHEREAS, Batterymarch is willing to provide such services to the Fund
Accounts and IMCO upon the terms and conditions and for the compensation set
forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT OF BATTERYMARCH. IMCO hereby appoints Batterymarch to act
as subadviser for each Fund Account in accordance with the terms and conditions
of this Agreement. Batterymarch will be an independent contractor and will have
no authority to act for or represent the Company or IMCO in any way or otherwise
be deemed an agent of the Company or IMCO except as expressly authorized in this
Agreement or another writing by the Company, IMCO and Batterymarch. Batterymarch
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. DUTIES OF BATTERYMARCH.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO
and the Company's Board of Directors (the Board), Batterymarch, at its own
expense, shall have full discretion to manage, supervise and direct the
investment and reinvestment of Fund Accounts allocated to it by IMCO from time
to time. It is understood that a Fund Account may consist of all, a portion of,
or none of the assets of the Fund, and that IMCO has the right to allocate and
reallocate such assets to a Fund Account at any time. Batterymarch shall perform
its duties described herein in a manner consistent with the investment
objective, policies and restrictions
881179 v1
set forth in the then current Prospectus and Statement of Additional Information
(SAI) for each Fund. Should Batterymarch anticipate materially modifying its
investment process, it must provide written notice in advance to IMCO, and any
affected Prospectus and SAI should be amended accordingly.
With respect to the management of each Fund Account pursuant to this
Agreement, Batterymarch shall determine what investments shall be purchased,
held, sold or exchanged by each Fund Account and what portion, if any, of the
assets of each Fund Account shall be held in cash or cash equivalents, and
purchase or sell portfolio securities for each Fund Account; except that, to the
extent Batterymarch wishes to hold cash or cash equivalents in excess of 10% of
a Fund Account's assets, Batterymarch must request in writing and receive
advance permission from IMCO.
In accordance with Subsection (b) of this Section 2, Batterymarch shall
arrange for the execution of all orders for the purchase and sale of securities
and other investments for each Fund Account and will exercise full discretion
and act for the Company in the same manner and with the same force and effect as
the Company might or could do with respect to such purchases, sales, or other
transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales, or other
transactions.
In the performance of its duties, Batterymarch will act in the best
interests of each Fund and will comply with (i) applicable laws and regulations,
including, but not limited to, the 1940 Act and the Investment Advisers Act of
1940, as amended (Advisers Act), and the rules under each, (ii) the terms of
this Agreement, (iii) the stated investment objective, policies and restrictions
of each Fund, as stated in the then-current Registration Statement of each Fund,
(iv) the Company's compliance procedures and other policies, procedures or
guidelines as the Board or IMCO reasonably may establish from time to time, (v)
the provisions of the Internal Revenue Code of 1986, as amended (Code),
applicable to "regulated investment companies" (as defined in Section 851 of the
Code), as from time to time in effect, and (vi) the written instructions of
IMCO. Batterymarch shall establish compliance procedures reasonably calculated
to ensure compliance with the foregoing. IMCO shall be responsible for providing
Batterymarch with the Company's Articles of Incorporation, as amended and
supplemented, the Company's By-Laws and amendments thereto and current copies of
the materials specified in Subsections (a)(iii) and (iv) of this Section 2. IMCO
shall provide Batterymarch with prior written notice of any material change to
the Company's Registration Statement that would affect Batterymarch's management
of a Fund Account.
(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, Batterymarch will
select the brokers or dealers that will execute purchase and sale transactions
for the Fund Accounts, subject to the conditions herein. In the selection of
broker-dealers and the placement of orders for the purchase and sale of
portfolio investments for the Fund Accounts, Batterymarch shall use its best
efforts to obtain for the Fund Accounts the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In using its
best efforts to obtain the most favorable price and execution available,
Batterymarch, bearing in mind each Fund's best interests at all times, shall
consider all factors it deems relevant, including by way of illustration, price,
the size of the transaction, the nature of the
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market for the security, the amount of the commission and dealer's spread or
mark-up, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker-dealer
involved, the general execution and operational facilities of the broker-dealer
and the quality of service rendered by the broker-dealer in other transactions.
Batterymarch shall not be responsible for any acts or omissions by any
such broker or brokers, or any third party not owned by Batterymarch, provided
that Batterymarch is not negligent in the selection of such broker or brokers,
or third parties.
Subject to such policies as the Board may determine and to the extent
authorized by Section 28(e) of the Securities Exchange Act of 1934 (Exchange
Act), Batterymarch shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused a Fund Account to pay a broker-dealer that provides brokerage and
research services to Batterymarch an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer offering equally good execution capability in the portfolio
investment would have charged for effecting that transaction if Batterymarch
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or
Batterymarch's overall responsibilities with respect to the Fund and to other
clients of Batterymarch as to which Batterymarch exercises investment
discretion. The Board or IMCO may direct Batterymarch to effect transactions in
portfolio securities through broker-dealers in a manner that will help generate
resources to pay the cost of certain expenses that the Company is required to
pay or for which the Company is required to arrange payment.
On occasions when Batterymarch deems the purchase or sale of a security
to be in the best interest of a Fund as well as other clients of Batterymarch,
Batterymarch, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by Batterymarch in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to its other clients over time.
Batterymarch may buy securities for a Fund Account at the same time it
is selling such securities for another client account and may sell securities
for a Fund Account at the time it is buying such securities for another client
account. In such cases, subject to applicable legal and regulatory requirements,
and in compliance with such procedures of the Company as may be in effect from
time to time, Batterymarch may effectuate cross transactions between a Fund
Account and such other account if it deems this to be advantageous.
Batterymarch will advise the Funds' custodian or such depository or
agents as may be designated by the custodian and IMCO promptly of each purchase
and sale of a portfolio security, specifying the name of the issuer, the
description and amount or number of shares of the security purchased, the market
price, the commission and gross or net price, the trade date and settlement
date, the identity of the effecting broker or dealer and any other pertinent
data that the Funds' custodian may need to settle a security's purchase or sale.
Batterymarch shall not have possession or custody of any Fund's investments. The
Company shall be responsible for all
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custodial agreements and the payment of all custodial charges and fees and, upon
Batterymarch giving proper instructions to the custodian, Batterymarch shall
have no responsibility or liability for the acts, omissions or other conduct of
the custodian.
Notwithstanding the foregoing, Xxxxxxxxxxxx agrees that IMCO shall have
the right by written notice to identify securities that may not be purchased on
behalf of any Fund and/or brokers and dealers through which portfolio
transaction on behalf of the Fund may not be effected, including, without
limitation, brokers or dealers affiliated with IMCO. Batterymarch shall refrain
from purchasing such securities for a Fund Account or directing any portfolio
transaction to any such broker or dealer on behalf of a Fund Account, unless and
until the written approval of IMCO to do so is obtained.
In addition, Batterymarch agrees that it shall not direct portfolio
transactions for the Fund Accounts through any broker or dealer that is an
"affiliated person" (as that term is defined in the 1940 Act or interpreted
under applicable rules and regulations of the Commission) of Batterymarch,
except as permitted under the 1940 Act. IMCO agrees that it will provide
Batterymarch with a list of brokers and dealers that are affiliated persons of
the Funds, or affiliated persons of such persons, and shall timely update that
list as the need arises. The Funds agree that any entity or person associated
with IMCO or Batterymarch that is a member of a national securities exchange is
authorized to effect any transaction on such exchange for the account of the
Funds that is permitted by Section 11(a) of the Exchange Act, and the Funds
consent to the retention of compensation for such transactions.
(C) EXPENSES. Batterymarch, at its expense, will furnish all necessary
facilities and personnel, including salaries, expenses and fees of any personnel
required for them to faithfully perform their duties under this Agreement and
administrative facilities, including bookkeeping, and all equipment and services
necessary for the efficient conduct of Batterymarch's duties under this
Agreement. However, Batterymarch shall not be obligated to pay any expenses of
IMCO, the Company or the Funds, including without limitation, interest and
taxes, brokerage commissions and other costs in connection with the purchase or
sale of securities or other investment instruments for the Funds and custodian
fees and expenses.
(D) VALUATION. Securities traded on a national securities exchange or
the NASDAQ market for which market quotes are readily available are valued on
each day the New York Stock Exchange is open for business. For those securities
for which market quotes are not readily available, Batterymarch, at its expense
and in accordance with procedures and methods established by the Board, which
may be amended from time to time, will provide assistance to IMCO in determining
the fair value of such securities, including providing market price information
relating to these assets of the Fund. Batterymarch also shall monitor for
"significant events" that occur after the closing of a market but before the
Funds calculate their net asset values and that may affect the valuation of any
Fund Account's portfolio securities and shall notify IMCO immediately of the
occurrence of any such events.
(E) REPORTS AND AVAILABILITY OF PERSONNEL. Batterymarch, at its
expense, shall render to the Board and IMCO such periodic and special reports as
the Board and IMCO may reasonably request with respect to matters relating to
the duties of Batterymarch set forth herein. Batterymarch, at its expense, will
make available to the Board and IMCO at reasonable times its
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portfolio managers and other appropriate personnel in order to review investment
policies of the Funds and to consult with the Board and IMCO regarding the
investment affairs of the Funds, including economic, statistical and investment
matters relevant to Batterymarch's duties hereunder.
(F) COMPLIANCE MATTERS. Batterymarch, at its expense, will provide IMCO
with such compliance reports relating to its duties under this Agreement as may
be agreed upon by such parties from time to time. Batterymarch also shall
cooperate with and provide reasonable assistance to IMCO, the Company's
administrator, the Company's custodian and foreign custodians, the Company's
transfer agent and pricing agents and all other agents and representatives of
the Company and IMCO, keep all such persons fully informed as to such matters as
they may reasonably deem necessary to the performance of their obligations to
the Company and IMCO, provide prompt responses to reasonable requests made by
such persons and maintain any appropriate interfaces with each so as to promote
the efficient exchange of information.
(G) BOOKS AND RECORDS. Batterymarch will maintain for the Funds all
books and records required to be maintained by the Funds pursuant to the 1940
Act and the rules and regulations promulgated thereunder insofar as such records
relate to the investment affairs of the Fund Accounts. Pursuant to Rule 31a-3
under the 1940 Act, Batterymarch agrees that: (i) all records it maintains for a
Fund Account are the property of the Fund; (ii) it will surrender promptly to a
Fund or IMCO any such records (or copies of such records) upon the Fund's or
IMCO's request; and (iii) it will preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records it maintains for any Fund Account.
Notwithstanding subsection (ii) above, Batterymarch may maintain copies of such
records to comply with its recordkeeping obligations.
(H) PROXIES. Batterymarch will, unless and until otherwise directed by
IMCO or the Board, vote proxies with respect to a Fund Account's securities and
exercise rights in corporate actions or otherwise in accordance with
Batterymarch's proxy voting guidelines, as amended from time to time, which
shall be provided to IMCO.
XXXX agrees to instruct the Custodian to forward to Batterymarch copies
of all proxies and shareholder communications relating to securities held in the
Fund Account. XXXX agrees that Batterymarch will not be liable for failing to
vote any proxies where it has not received such proxies or related shareholder
communications on a timely basis. Batterymarch will not be responsible for
taking any action or rendering any advice with respect to any legal proceedings
or bankruptcies involving the issuers of securities held in the Fund Account. To
the extent, however, Batterymarch receives materials requiring action relating
to any legal proceedings or bankruptcies involving the issuers of securities
held in the Fund Account, Batterymarch shall promptly forward such materials to
IMCO.
3. ADVISORY FEE. IMCO shall pay to Batterymarch as compensation for
Batterymarch's services rendered pursuant to this Agreement a fee based on the
average daily net assets of each Fund Account at the annual rates set forth in
Schedule B, which schedule can be modified from time to time, subject to any
appropriate approvals required by the 1940 Act. Such fees shall be calculated
daily and payable monthly in arrears within 15 business days after the end of
such month. IMCO (and not the Funds) shall pay such fees. If Batterymarch shall
serve for less than the whole of a month, the compensation as specified shall be
prorated based upon the number of
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calendar days during which this Agreement is in effect during such month, and
the fee shall be computed based upon the average daily net assets of a Fund
Account for such days.
4. REPRESENTATIONS AND WARRANTIES.
(A) BATTERYMARCH. Batterymarch represents and warrants to IMCO that (i)
the retention of Batterymarch by IMCO as contemplated by this Agreement is
authorized by Batterymarch's governing documents; (ii) the execution, delivery
and performance of this Agreement does not violate any obligation by which
Batterymarch or its property is bound, whether arising by contract, operation of
law or otherwise; (iii) this Agreement has been duly authorized by appropriate
action of Batterymarch and when executed and delivered by Batterymarch will be a
legal, valid and binding obligation of Batterymarch, enforceable against
Batterymarch in accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or law); (iv) Batterymarch is registered as
an investment adviser under the Advisers Act; (v) Batterymarch has adopted a
written code of ethics complying with the requirements of Rule 17j-1 under the
1940 Act and that Batterymarch and certain of its employees, officers, partners
and directors are subject to reporting requirements thereunder and, accordingly,
agrees that it shall, on a timely basis, furnish a copy of such code of ethics
to IMCO, and with respect to such persons, Batterymarch shall furnish to IMCO
all reports and information provided under Rule 17j-1(c)(2); (vi) Batterymarch
is not prohibited by the 1940 Act, the Advisers Act or other law, regulation or
order from performing the services contemplated by this Agreement; (vii)
Batterymarch will promptly notify IMCO of the occurrence of any event that would
disqualify Batterymarch from serving as investment manager of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise; (viii)
Batterymarch has provided IMCO with a copy of its Form ADV, which as of the date
of this Agreement is its Form ADV as most recently filed with the SEC, and
promptly will furnish a copy of all amendments to IMCO at least annually; (ix)
Batterymarch will notify IMCO of any "assignment" (as defined in the 1940 Act)
of this Agreement or change of control of Batterymarch, as applicable, and any
changes in the key personnel who are either the portfolio manager(s) of any Fund
Account or senior management of Batterymarch, in each case prior to or promptly
after, such change; and (x) Batterymarch has adequate disaster recovery and
interruption prevention measures to ensure business resumption in accordance
with applicable law and within industry standards.
(B) IMCO. IMCO represents and warrants to Batterymarch that (i) the
retention of Batterymarch by IMCO as contemplated by this Agreement is
authorized by the respective governing documents of the Company and IMCO; (ii)
the execution, delivery and performance of each of this Agreement and the
Investment Advisory Agreement does not violate any obligation by which the
Company or IMCO or their respective property is bound, whether arising by
contract, operation of law or otherwise; (iii) each of this Agreement and the
Investment Advisory Agreement has been duly authorized by appropriate action of
the Company and IMCO and when executed and delivered by IMCO will be a legal,
valid and binding obligation of the Company and IMCO, enforceable against the
Company and IMCO in accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or law); (iv) IMCO is registered as an
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investment adviser under the Advisers Act; (v) IMCO has adopted a written code
of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and
that IMCO and certain of its employees, officers and directors are subject to
reporting requirements thereunder; (vi) IMCO is not prohibited by the 1940 Act,
the Advisers Act or other law, regulation or order from performing the services
contemplated by this Agreement; and (vii) IMCO will promptly notify Batterymarch
of the occurrence of any event that would disqualify IMCO from serving as
investment manager of an investment company pursuant to Section 9(a) of the 1940
Act or otherwise.
5. LIABILITY AND INDEMNIFICATION.
(A) BATTERYMARCH. Batterymarch shall be liable for any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) to which the Company, a Fund, IMCO, any affiliated persons thereof
(within the meaning of the 1940 Act) and any controlling persons thereof (as
described in Section 15 of the Securities Act of 1933, as amended (the 1933
Act)) (collectively, IMCO Indemnities) may become subject under the 1933 Act,
the 1940 Act, the Advisers Act, or under any other statute, at common law or
otherwise arising out of (i) any negligence, willful misconduct, bad faith or
reckless disregard of Batterymarch in the performance of any of its duties or
obligations hereunder or (ii) any untrue statement of a material fact contained
in the Prospectus and SAI, proxy materials, reports, advertisements, sales
literature, or other materials pertaining to the Funds or the omission to state
therein a material fact known to Batterymarch 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 information furnished to IMCO or
the Company by Batterymarch Indemnities (as defined below) for use therein.
Batterymarch shall indemnify and hold harmless the IMCO Indemnities for any and
all such losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses). IMCO must obtain Batterymarch's prior
written consent to any settlement or compromise relating to a claim that would
otherwise fall under this provision.
(B) IMCO. IMCO shall be liable for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which Batterymarch, any affiliated persons thereof (within the meaning of the
1940 Act) and any controlling persons thereof (as described in Section 15 of the
1933 Act) (collectively, Batterymarch Indemnities) may become subject under the
1933 Act, the 1940 Act, the Advisers Act, or under any other statute, at common
law or otherwise arising out of (i) any negligence, willful misconduct, bad
faith or reckless disregard by IMCO in the performance of any of its duties or
obligations hereunder or (ii) any untrue statement of a material fact contained
in the Prospectus and SAI, proxy materials, reports, advertisements, sales
literature, or other materials pertaining to the Funds or the omission to state
therein a material fact known to IMCO which was required to be stated therein or
necessary to make the statements therein not misleading, unless such statement
or omission was made in reliance upon information furnished to IMCO or the
Company. IMCO shall indemnify and hold harmless Batterymarch Indemnities for any
and all such losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses). Batterymarch must obtain IMCO's prior
written consent to any settlement or compromise relating to a claim that would
otherwise fall under this provision.
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6. DURATION AND TERMINATION OF THIS AGREEMENT. Unless sooner terminated as
provided herein, this Agreement shall continue in effect until the sooner of (a)
150 days from the date this Agreement is entered into or (b) the date upon which
Fund shareholders and the Board, including a majority of the Board members who
are not "interested persons" of the Funds, IMCO or Batterymarch (Independent
Board Members), approve the retention of Batterymarch in accordance with Section
15(a) of the 1940 Act and IMCO executes a Subadvisory Agreement with
Batterymarch; provided, however, that this Agreement may continue for a period
in excess of 150 days upon the written agreement of the parties and consistent
with SEC or SEC staff action or interpretation of applicable law. This Agreement
may be terminated at any time, without payment of any penalty, by vote of the
Board, by vote of a majority of the outstanding shares (as defined in the 1940
Act), or by IMCO. In addition, this Agreement may be terminated by Batterymarch
on sixty days' written notice to the other party. Any notice of termination
served on Batterymarch by the Company or IMCO shall be without prejudice to the
obligation of Batterymarch to complete transactions already initiated or acted
upon with respect to the Fund. This Agreement shall terminate automatically in
the event of its assignment (as defined in the 1940 Act).
7. AMENDMENT OF AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this Agreement shall be
effective until approved in the manner required by the 1940 Act, any rules
thereunder or any exemptive or other relief granted by the SEC or its staff
(Applicable Law).
8. APPROVAL, AMENDMENT, OR TERMINATION BY INDIVIDUAL FUND. Any approval,
amendment, or termination of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 1940 Act) of any Fund shall be
effective to continue, amend or terminate this Agreement with respect to any
such Fund notwithstanding (i) that such action has not been approved by the
holders of a majority of the outstanding voting securities of any other Fund
affected thereby, and/or (ii) that such action has not been approved by the vote
of a majority of the outstanding voting securities of the Company, unless such
action shall be required by any applicable law or otherwise.
9. SERVICES NOT EXCLUSIVE. The services of Batterymarch to IMCO in
connection with the Funds hereunder are not to be deemed exclusive, and
Batterymarch shall be free to render investment advisory services to others so
long as its services hereunder are not impaired thereby. It is understood that
the persons employed by Batterymarch to assist in the performance of its duties
hereunder will not devote their full time to such services and nothing contained
herein shall be deemed to limit or restrict in any manner whatsoever the right
of Batterymarch to engage in or devote time and attention to other businesses or
to render services of whatever kind or nature. It is understood that IMCO may
appoint at any time in accordance with Applicable Law one or more subadvisers,
in addition to Batterymarch, or IMCO itself, to perform investment advisory
services to any portion of the Funds.
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10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. Batterymarch shall, upon reasonable notice,
afford IMCO at all reasonable times access to Batterymarch's officers,
employees, agents and offices and to all its relevant books and records and
shall furnish IMCO with all relevant financial and other data and information as
requested; provided, however, that nothing contained herein shall obligate
Batterymarch to provide IMCO with access to the books and records of
Batterymarch relating to any other accounts other than the Funds.
(B) CONFIDENTIALITY. Batterymarch, and its officers, employees and
authorized representatives, shall treat confidentially and as proprietary
information of the Company all records and information relative to the Company
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 Company, which approval shall not be unreasonably withheld and may not be
withheld where Batterymarch 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.
(C) PRIVACY POLICY. Batterymarch acknowledges that nonpublic customer
information (as defined in Regulation S-P, including any amendments thereto) of
customers of the Funds received from IMCO is subject to the limitations on
redisclosure and reuse set forth in Section 248.11 of such Regulation, and
agrees such information (i) shall not be disclosed to any third party for any
purpose without the written consent of IMCO unless permitted by exceptions set
forth in Sections 248.14 or 248.15 of such Regulation and (ii) shall be
safeguarded pursuant to procedures adopted under Section 248.30 of such
Regulation if so required.
(D) PUBLIC ANNOUNCEMENTS. No party shall issue any press release or
otherwise make any public statements with respect to the matters covered by this
Agreement without the prior written consent of the other parties hereto, which
consent shall not be unreasonably withheld; provided, however, that consent
shall not be required if, in the opinion of counsel, such disclosure is required
by law; provided further, however, that the party making such disclosure shall
provide the other parties hereto with as much prior written notice of such
disclosure as is practical under the circumstances.
(E) NOTIFICATIONS. Batterymarch agrees that it will promptly notify
IMCO in the event that Batterymarch or any of its affiliates is or expects to
become the subject of an administrative proceeding or enforcement action by the
Commission or other regulatory body with applicable jurisdiction.
Notwithstanding the above, Batterymarch is not obligated to notify the Company
or IMCO of any routine regulatory inspection of Batterymarch except to the
extent a Fund Account is involved.
(F) INSURANCE. Batterymarch agrees to maintain errors and omissions or
professional liability insurance coverage in an amount that is reasonable in
light of the nature and scope of Batterymarch's business activities.
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(G) SHAREHOLDER MEETING EXPENSES. In the event that the Company shall
be required to call a meeting of shareholders solely due to actions involving
Batterymarch, including, without limitation, a change of control of
Batterymarch, Batterymarch shall bear all reasonable expenses associated with
such shareholder meeting.
11. MISCELLANEOUS.
(A) NOTICES. All notices or other communications given under this
Agreement shall be made by guaranteed overnight delivery, telecopy or certified
mail; notice is effective when received. Notice shall be given to the parties at
the following addresses:
IMCO: USAA Investment Management Company
0000 Xxxxxxxxxxxxxx Xxxx, X-X0-X
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Securities Counsel & Compliance Dept.
Batterymarch: Batterymarch Financial Management, Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Chief Financial Officer
(B) SEVERABILITY. 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 thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
(C) GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Texas conflict with the applicable provisions of
the 1940 Act, the latter shall control.
(D) COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(E) HEADINGS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
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(F) ENTIRE AGREEMENT. This Agreement states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act. IN WITNESS WHEREOF, IMCO and Batterymarch have
caused this Agreement to be executed as of the date first set forth above.
Attest: USAA INVESTMENT MANAGEMENT COMPANY
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxx
--------------------------- ---------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxxxxxx X. Xxxxx
Title: Assistant Secretary Title: President
Attest: BATTERYMARCH FINANCIAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
--------------------------- -----------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Assistant Secretary Title: President
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SCHEDULE A
USAA CAPITAL GROWTH FUND
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SCHEDULE B
FEES
Rate per annum of the average daily
Fund Account net assets of the Fund Account
------------ -----------------------------------
USAA Capital Growth Fund 0.50%
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