EXHIBIT 4(i)
DRAFT
MANAGEMENT AGREEMENT
AGREEMENT made as of the 27th day of October, 2000, between USAA
INVESTMENT MANAGEMENT COMPANY, a corporation organized under the laws of the
state of Delaware and having a place of business in San Antonio, Texas (the
"Manager"), and USAA MUTUAL FUND, INC., a corporation organized under the laws
of the state of Maryland and having a place of business in San Antonio, Texas
(the "Company").
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Manager is engaged principally in the business of rendering
investment management services and is registered under the Investment Advisers
Act of 1940, as amended; and
WHEREAS, the Company is authorized to issue shares of capital stock (the
"Shares") in separate classes with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company has established a new series of Shares, namely, the
Extended Market Index Fund (the "Fund"); and
WHEREAS, the Company desires to retain the Manager to render certain
management and investment advisory services as described hereunder and the
Manager is willing to perform such services; and
WHEREAS, the Company initially desires to invest all of its investable
assets in another mutual fund with a substantially similar investment objective
(the "Portfolio");
NOW, THEREFORE, WITNESSETH: That it is agreed between the parties hereto
as follows:
1. APPOINTMENT OF MANAGER.
The Company hereby appoints the Manager to act as manager and investment
adviser to the Fund for the period and on the terms herein set forth. The
Manager accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. DUTIES OF MANAGER.
The Manager, at its own expense, shall furnish the following services to
the Fund:
(a) MONITORING. The Manager will monitor the services provided to
the Portfolio, subject always to the control of the Company's Board of
Directors. Such monitoring may include among other things, review of
Portfolio reports showing tracking with the Wilshire 4500 Index, review
of Portfolio reports showing the composition of securities in the
Portfolio on a periodic basis and periodic review of investment
practices of the Portfolio. The Manager will report to the Company's
Board of Directors, at least annually, on the results of such monitoring
such that the Board may determine whether continued investment
exclusively in the Portfolio is in the best interests of the Fund's
shareholders.
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(b) INVESTMENT PROGRAM. Should the Company's Board of Directors
determine it is in the best interests of the Fund's shareholders to
withdraw its investment in the Portfolio, the Manager will directly
manage the assets of the Fund. At such time, the Manager will (i)
furnish continuously an investment program for the Fund, (ii) determine
(subject to the overall supervision and review of the Board of Directors
of the Company) what investments shall be purchased, held, sold or
exchanged by the Fund and what portion, if any, of the assets of the
Fund shall be held uninvested, and (iii) make changes on behalf of the
Company in the investments of the Fund. The Company's Board of Directors
would then consider whether to invest in a different master portfolio or
take other action, such as the selection of a different sub-adviser.
3. SUB-ADVISERS.
Should the Manager provide services pursuant to subparagraph (b) of
paragraph 2 above, then the Manager may employ one or more sub-advisers from
time to time to perform such of the acts and services of the Manager, including
the selection of brokers or dealers to execute the Fund's portfolio security
transactions, and upon such terms and conditions as may be agreed upon between
the Manager and such investment adviser and approved by the Company's Board of
Directors.
4. ALLOCATION OF EXPENSES.
Except for the services to be provided by the Manager set forth in
paragraph 2 above and the services and facilities provided by the Manager set
forth in an Administration Agreement between the Company and the Manager, the
Fund assumes and shall pay all expenses for all other Fund operations and
activities and shall reimburse the Manager for any such expenses incurred by
the Manager. The expenses to be borne by the Fund shall include, without
limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the
Company for the safekeeping of the Fund's cash, portfolio securities and
other property;
(b) the charges and expenses of auditors;
(c) brokerage commissions, if any, for transactions in the portfolio
securities of the Fund;
(d) all taxes, including issuance and transfer taxes, and fees
payable by the Fund to federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of the Fund;
(f) fees involved in registering and maintaining registrations of
the Company and of its Shares with the Securities and Exchange
Commission and various states and other jurisdictions;
(g) all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, quarterly reports,
semiannual reports, annual reports and other communications (including
prospectuses) to existing shareholders;
(h) compensation and travel expenses of Directors who are not
"interested persons" within the meaning of the 1940 Act;
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(i) the expense of furnishing or causing to be furnished to each
shareholder a statement of his account, including the expense of
mailing;
(j) charges and expenses of legal counsel in connection with matters
relating to the Fund, including, without limitation, legal services
rendered in connection with the Fund's legal and financial structure and
relations with its shareholders, issuance of Fund Shares, and
registration and qualification of securities under federal, state and
other laws;
(k) membership or association dues for the Investment Company
Institute or similar organizations;
(l) interest payable on Fund borrowings; and
(m) postage.
5. MANAGEMENT FEE.
(a) For the services to be provided by the Manager as provided in
subparagraph (a) of paragraph 2 hereof, the Fund shall pay to the
Manager no fee for providing such services.
(b) For the services and facilities that may be provided by the
Manager as provided in subparagraph (b) of paragraph 2 hereof, the Fund
shall pay to the Manager a monthly fee computed as a percentage of
aggregate average net assets of the Fund, which on an annual basis is
equal to thirty hundredths of one percent (.30%) of the Monthly Average
Net Assets (defined below) of the Fund for such calendar month.
(c) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i) the sum of
the net assets of such Fund, determined in accordance with procedures
established from time to time by or under the direction of the Board of
Directors of the Fund in accordance with the Articles of Incorporation
of the Company, for each calendar day of such month, by (ii) the number
of such days.
(d) The Manager may from time to time and for such periods as it
deems appropriate voluntarily waive fees or otherwise reduce its
compensation hereunder.
(e) From time to time, the Manager may voluntarily waive all or a
portion of the management fee payable with respect to the Fund or pay
expenses of the Fund. In addition to any amounts otherwise payable to
the Manager as a management fee for current services under the
Management Agreement, the Company shall be obligated to pay the Manager
all amounts previously waived or expenses paid by the Manager with
respect to the Fund, provided that such additional payments are made not
later than three years from the date first set forth above and provided
further that the amount of such additional payment in any year, together
with all other expenses of the Fund, in the aggregate, would not cause
the Fund's expense ratio in such year to exceed .50% of the average net
assets of the Fund.
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6. EXPENSE LIMITATION.
In the event that the expenses of the Fund exceed any expense limitation
which the Manager may, by written notice to the Fund, voluntarily declare to be
effective subject to such terms and conditions as the Manager may prescribe in
such notice, the compensation due the Manager shall be reduced, and, if
necessary, the Manager shall assume expenses of the Fund, to the extent
required by such expense limitation.
In the event this Agreement is terminated as of a date other than the
last day of the fiscal year of the Company, the Manager shall pay the Company a
pro rata portion of the amount that the Manager would have been required to
pay, if any, had this Agreement remained in effect for the full fiscal year.
7. FUND TRANSACTIONS.
Should the Manager provide services pursuant to subparagraph (b) of
paragraph 2 above, the Manager, acting by its own officers, directors or
employees or by a duly authorized subcontractor, is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Fund and is directed to use its best efforts to obtain the best available price
and most favorable execution with respect to all such purchases and sales of
portfolio securities for the Fund. Subject to this primary requirement, and
maintaining as its first consideration the benefits to the Fund and its
shareholders, the Manager shall have the right, subject to the control of the
Board of Directors, to follow a policy of selecting brokers and dealers who
furnish statistical, research and other services to the Fund or to the Manager.
The Manager agrees that neither it nor any of its officers or directors
will take any long or short position in the capital stock of the Fund;
provided, however, that such prohibition:
(a) shall not prevent the Manager from purchasing shares of the
capital stock of the Fund if orders to purchase such shares are placed
upon the receipt by the Manager of purchase orders for such shares and
are not in excess of such purchase orders received by the Manager; and
(b) shall not prevent the purchase of shares of capital stock of the
Company by any of the persons above described for their account and for
investment at the price at which such shares are available to the public
at the time of purchase or as part of the initial capital of the Fund.
8. RELATIONS WITH COMPANY.
Subject to and in accordance with the Articles of Incorporation and
Bylaws of the Company and of the Manager, respectively, it is understood that
Directors, officers, agents and shareholders of the Company are or may be
interested in the Manager (or any successor thereof) as directors, officers, or
otherwise, that directors, officers, agents and shareholders of the Manager are
or may be interested in the Company as Directors, officers, shareholders or
otherwise, that the Manager (or any such successor) is or may be interested in
the Company as a shareholder or otherwise and that the effect of any such
interests shall be governed by said Articles of Incorporation and Bylaws.
9. LIABILITY OF MANAGER.
No provision of this Agreement shall be deemed to protect the Manager
against any liability to the Fund or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under
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this Agreement. Nor shall any provision hereof be deemed to protect any
Director or officer of the Company against any such liability to which he might
otherwise be subject by reason of any willful misfeasance, bad faith or gross
negligence in the performance of his duties or the reckless disregard of his
obligations and duties. 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.
10. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective on the date upon
which the Agreement shall have been approved by a majority of the
outstanding voting securities (as that term is defined in the 0000 Xxx)
of the Fund. Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two years after such date and shall
continue in full force and effect for periods of one year thereafter so
long as such continuance is approved at least annually (a) by either the
Directors of the Company or by vote of a majority of the outstanding
voting shares (as defined in the 0000 Xxx) of the Fund, and (b) in
either event by the vote of a majority of the Directors of the Company
who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(b) TERMINATION. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Directors of the Company
or by vote of a majority of the outstanding shares (as defined in the
1940 Act), or by the Manager on sixty (60) days' written notice to the
other party.
(c) AUTOMATIC TERMINATION. This Agreement shall automatically
terminate in the event of its assignment.
11. NAME OF FUND.
It is understood that the name "USAA," and any logo associated with that
name, is the valuable property of the United Services Automobile Association,
and that the Fund has the right to include "USAA" as a part of its name only so
long as this Agreement shall continue and the Manager is a wholly owned
subsidiary of the United Services Automobile Association. Upon termination of
this Agreement the Fund shall forthwith cease to use the "USAA" name and logo
and shall take such action as necessary to change the Fund's name.
12. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
13. SERVICES NOT EXCLUSIVE.
The services of the Manager to the Fund hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others
so long as its services hereunder are not impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USAA MUTUAL FUND, INC. USAA INVESTMENT MANAGEMENT
COMPANY
By: By:________________________________
-------------------------------
Name: Xxxxxxx X.X. Xxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: Senior Vice President
ATTEST: ATTEST:
By: By:________________________________
-------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: Secretary Title: Assistant Secretary
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EXHIBIT 4(j)
DRAFT
ADMINISTRATION AGREEMENT
AGREEMENT made as of the 27th day of October, 2000, between USAA
INVESTMENT MANAGEMENT COMPANY, a corporation organized under the laws of the
state of Delaware and having a place of business in San Antonio, Texas (the
"Administrator"), and USAA MUTUAL FUND, INC., a corporation organized under the
laws of the state of Maryland and having a place of business in San Antonio,
Texas (the "Company").
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator, among other things, provides administrative
services to registered investment companies; and
WHEREAS, the Company is authorized to issue shares of capital stock (the
"Shares") in separate classes with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company has established a new series of Shares, namely the
Extended Market Index Fund (the "Fund"); and
WHEREAS, the Company desires to retain the Administrator to render
certain administrative services as described hereunder and the Administrator is
willing to perform such services; and
WHEREAS, the Fund initially desires to invest all of its investable
assets in another mutual fund with an identical investment objective (the
"Portfolio");
NOW, THEREFORE, WITNESSETH: That it is agreed between the parties hereto
as follows:
1. APPOINTMENT OF ADMINISTRATOR.
The Company hereby appoints the Administrator to act as administrator to
the Fund for the period and on the terms herein set forth. The Administrator
accepts such appointment and agrees to render the services herein set forth,
for the compensation herein provided.
2. DUTIES OF ADMINISTRATOR.
The Administrator shall supervise the Fund's business and affairs and
shall provide such services required for effective administration of the Fund
as are not provided by employees or other agents engaged by the Fund; provided,
that the Administrator shall not have any obligation to provide under this
Agreement any direct or indirect services to Fund shareholders, any services
related to the distribution of Fund shares, or any other services which are the
subject of a separate agreement or arrangement between the Fund and the
Administrator. Subject to the foregoing, in providing administrative services
hereunder, the Administrator shall:
(a) OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to
the Fund, or pay the cost of, such office space, office equipment and
office facilities as are adequate for the Fund's needs.
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(b) PERSONNEL. Provide, without remuneration from or other cost to
the Fund, the services of individuals competent to perform all of the
Fund's executive, administrative and clerical functions which are not
performed by employees or other agents engaged by the Fund or by the
Administrator acting in some other capacity pursuant to a separate
agreement or arrangement with the Fund.
(c) AGENTS. Assist the Fund in selecting and coordinating the
activities of the other agents engaged by the Fund, including the Fund's
transfer agent, custodian, independent auditors and legal counsel.
(d) DIRECTORS AND OFFICERS. Authorize and permit the Administrator's
directors, officers and employees who may be elected or appointed as
directors or officers of the Fund to serve in such capacities, without
remuneration from or other cost to the Fund.
(e) BOOKS AND RECORDS. Assure that all financial, accounting and
other records required to be maintained and preserved by the Fund are
maintained and preserved by it or on its behalf in accordance with
applicable laws and regulations.
(f) REGULATORY REPORTS AND FILINGS. Assist in the preparation of
(but not pay for) all periodic reports by the Fund and all reports and
filings required to maintain the registration and qualification of the
Fund, or to meet other regulatory or tax requirements applicable to the
Fund under federal and state securities and tax laws.
(g) BOARD REPORTS. Prepare and coordinate materials to be presented
to the Fund's board in preparation for its meetings.
(h) FIDELITY BOND. Provide and maintain a bond issued by a reputable
insurance company authorized to do business in the place where the bond
is issued, against larceny and embezzlement covering each officer and
employee of the Company who may singly or jointly with others have
access to funds or securities of the Company, with direct or indirect
authority to draw upon such funds or to direct generally the disposition
of such funds. The bond shall be in such reasonable amount as a majority
of the Board of Directors of the Company who are not officers or
employees of the Company shall determine, with due consideration to the
aggregate assets of the Company to which any such officer or employee
may have access.
(i) DELEGATION. Delegate, at its expense, some or all of its duties
hereunder to other persons or entities approved by the Administrator
upon notice to the Fund.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the
Administrator set forth in paragraph 2 above and the services provided by the
Administrator set forth in an Management Agreement between the Company and the
Administrator, the Fund assumes and shall pay all expenses for all other Fund
operations and activities and shall reimburse the Administrator for any such
expenses incurred by the Administrator. The expenses to be borne by the Fund
shall include, without limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the
Company for the safekeeping of the Fund's cash, portfolio securities and
other property;
(b) the charges and expenses of auditors;
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(c) brokerage commissions, if any, for transactions in the portfolio
securities of the Fund;
(d) all taxes, including issuance and transfer taxes, and fees
payable by the Fund to federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of the Fund;
(f) fees involved in registering and maintaining registrations of
the Company and of its Shares with the Securities and Exchange
Commission and various states and other jurisdictions;
(g) all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, quarterly reports,
semiannual reports, annual reports and other communications (including
prospectuses) to existing shareholders;
(h) computation of the Fund's net asset value per share, including
the use of equipment or services to price or value the Fund's investment
portfolio;
(i) compensation and travel expenses of Directors who are not
"interested persons" within the meaning of the 1940 Act;
(j) the expense of furnishing or causing to be furnished to each
shareholder a statement of his account, including the expense of
mailing;
(k) charges and expenses of legal counsel in connection with matters
relating to the Fund, including, without limitation, legal services
rendered in connection with the Fund's legal and financial structure and
relations with its shareholders, issuance of Fund Shares, and
registration and qualification of securities under federal, state and
other laws;
(l) membership or association dues for the Investment Company
Institute or similar organizations;
(m) interest payable on Fund borrowings; and
(n) postage.
4. ADMINISTRATION FEE.
(a) For the services and facilities to be provided by the
Administrator as provided in paragraph 2 hereof, the Fund shall pay to
the Administrator a monthly fee computed as a percentage of aggregate
average net assets of the Fund, which on an annual basis is equal to
thirty-eight hundredths of one percent (.38%) of the Monthly Average Net
Assets (defined below) of the Fund for such calendar month.
(b) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i) the sum of
the net assets of the Fund, determined in accordance with procedures
established from time to time by or under the direction of the Board of
Directors of the Company in accordance with the Articles of
Incorporation of the Company, for each calendar day of such month, by
(ii) the number of such days.
(c) The Administrator may from time to time and for such periods as
it deems appropriate voluntarily waive fees or otherwise reduce its
compensation hereunder.
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(d) From time to time, the Manager may voluntarily waive all or a
portion of the administration fee payable with respect to the Fund or
pay expenses of the Fund. In addition to any amounts otherwise payable
to the Manager as an administration fee for current services under the
Administration Agreement, the Company shall be obligated to pay the
Manager all amounts previously waived or expenses paid by the Manager
with respect to the Fund, provided that such additional payments are
made not later than three years from the date first set forth above and
provided further that the amount of such additional payment in any year,
together with all other expenses of the Fund, in the aggregate, would
not cause the Fund's expense ratio in such year to exceed .50% of the
average net assets of the Fund.
5. LIABILITY OF ADMINISTRATOR.
No provision of this Agreement shall be deemed to protect the
Administrator against any liability to the Fund or its shareholders to which it
might otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence in the performance of its duties or the reckless disregard of
its obligations and duties under this Agreement. Nor shall any provision hereof
be deemed to protect any Director or officer of the Company against any such
liability to which he might otherwise be subject by reason of any willful
misfeasance, bad faith or gross negligence in the performance of his duties or
the reckless disregard of his obligations and duties. 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.
6. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective on the date of
commencement of investment operation of the Fund and unless terminated
shall continue in force from year to year thereafter, but only so long
as such continuance is specifically approved annually (a) by the
Company's Board of Directors or by a vote of a majority of the Fund's
outstanding voting securities (as that term is defined in the 0000 Xxx)
and (b) by a majority of the Directors who are not parties to this
Agreement or interested persons of any such party.
(b) TERMINATION. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Directors of the Company
or by vote of a majority of the outstanding shares (as defined in the
1940 Act), or by the Administrator on sixty (60) days' written notice to
the other party. This Agreement shall automatically terminate upon its
assignment by the Administrator; provided, however, that the
Administrator may delegate its duties as provided in subparagraph (j) of
paragraph 2 hereof.
7. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
8. SERVICES NOT EXCLUSIVE.
The services of the Administrator to the Fund hereunder are not to be
deemed exclusive, and the Administrator shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USAA MUTUAL FUND, INC. USAA INVESTMENT MANAGEMENT
COMPANY
By: By:________________________________
--------------------------------------
Name: Xxxxxxx X.X. Xxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: Senior Vice President
ATTEST: ATTEST:
By: By:________________________________
--------------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: Secretary Title: Assistant Secretary
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EXHIBIT 4(k)
DRAFT
ADVISORY AGREEMENT
AGREEMENT made as of the 27th day of October, 2000, between USAA
INVESTMENT MANAGEMENT COMPANY, a corporation organized under the laws of the
state of Delaware and having a place of business in San Antonio, Texas (the
"Manager"), and USAA MUTUAL FUND, INC., a corporation organized under the laws
of the state of Maryland and having a place of business in San Antonio, Texas
(the "Company").
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Manager is engaged principally in the business of rendering
investment management services and is registered under the Investment Advisers
Act of 1940, as amended; and
WHEREAS, the Company is authorized to issue shares of capital stock (the
"Shares") in separate classes with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company has established two new series of Shares, namely,
the Nasdaq-100 Index Fund and the Global Titans Index Fund (herein collectively
referred to as the "Funds" and individually as a "Fund"); and
WHEREAS, the Company desires to retain the Manager to render certain
management and investment advisory services as described hereunder and the
Manager is willing to perform such services;
NOW, THEREFORE, WITNESSETH: That it is agreed between the parties hereto
as follows:
1. APPOINTMENT OF MANAGER.
The Company hereby appoints the Manager to act as manager and investment
adviser to the Funds for the period and on the terms herein set forth. The
Manager accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. DUTIES OF MANAGER.
The Manager, at its own expense, shall furnish the following services to
the Funds:
(a) INVESTMENT PROGRAM. The Manager will directly manage the assets
of the Funds. The Manager will (i) furnish continuously an investment
program for the Funds, (ii) determine (subject to the overall
supervision and review of the Board of Directors of the Company) what
investments shall be purchased, held, sold or exchanged by the Funds and
what portion, if any, of the assets of the Funds shall be held
uninvested, and (iii) make changes on behalf of the Company in the
investments of the Funds.
(b) MONITORING. Should the Company's Board of Directors determine it
is in the best interests of the Fund's shareholders to invest all of its
investable assets in another mutual fund with an identical investment
objective (the "Portfolio"), the Manager will monitor the services
provided
107859
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to the Portfolio, subject always to the control of the Company's Board
of Directors. Such monitoring may include among other things, review of
Portfolio reports showing tracking with the Nasdaq-100 Index and the Dow
Xxxxx Global Titans Index, as applicable, review of Portfolio reports
showing the composition of securities in the Portfolio on a periodic
basis and periodic review of investment practices of the Portfolio. The
Manager will report to the Company's Board of Directors, at least
annually, on the results of such monitoring such that the Board may
determine whether continued investment exclusively in the Portfolio is
in the best interests of the Fund's shareholders.
3. SUB-ADVISERS.
The Manager may employ one or more sub-advisers from time to time to
perform such of the acts and services of the Manager, including the selection
of brokers or dealers to execute the Fund's portfolio security transactions,
and upon such terms and conditions as may be agreed upon between the Manager
and such investment adviser and approved by the Company's Board of Directors.
4. ALLOCATION OF EXPENSES.
Except for the services to be provided by the Manager set forth in
paragraph 2 above and the services and facilities provided by the Manager set
forth in an Administration Agreement between the Company and the Manager, the
Funds assume and shall pay all expenses for all other Funds operations and
activities and shall reimburse the Manager for any such expenses incurred by
the Manager. The expenses to be borne by the Funds shall include, without
limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the
Company for the safekeeping of the Funds' cash, portfolio securities and
other property;
(b) the charges and expenses of auditors;
(c) brokerage commissions, if any, for transactions in the portfolio
securities of the Funds;
(d) all taxes, including issuance and transfer taxes, and fees
payable by the Funds to federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of the Funds;
(f) fees involved in registering and maintaining registrations of
the Company and of its Shares with the Securities and Exchange
Commission and various states and other jurisdictions;
(g) all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, quarterly reports,
semiannual reports, annual reports and other communications (including
prospectuses) to existing shareholders;
(h) compensation and travel expenses of Directors who are not
"interested persons" within the meaning of the 1940 Act;
(i) the expense of furnishing or causing to be furnished to each
shareholder a statement of his account, including the expense of
mailing;
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(j) charges and expenses of legal counsel in connection with matters
relating to the Funds, including, without limitation, legal services
rendered in connection with the Funds' legal and financial structure and
relations with its shareholders, issuance of Shares, and registration
and qualification of securities under federal, state and other laws;
(k) membership or association dues for the Investment Company
Institute or similar organizations;
(l) interest payable on Fund borrowings; and
(m) postage.
5. ADVISORY FEE.
(a) For the services and facilities to be provided by the Manager as
provided in subparagraph (a) of paragraph 2 hereof, the Funds shall pay
to the Manager a monthly fee computed as a percentage of aggregate
average net assets of each respective Fund, which on an annual basis is
equal to (i) twenty hundredths of one percent (.20%) of the Monthly
Average Net Assets (defined below) of the USAA Nasdaq-100 Index Fund for
such calendar month, and (ii) twenty-five hundredths of one percent
(.25%) of the Monthly Average Net Assets (defined below) of the USAA
Global Titans Index Fund for such calendar month.
(b) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i) the sum of
the net assets of such Fund, determined in accordance with procedures
established from time to time by or under the direction of the Board of
Directors of the Fund in accordance with the Articles of Incorporation
of the Company, for each calendar day of such month, by (ii) the number
of such days.
(c) The Manager may from time to time and for such periods as it
deems appropriate voluntarily waive fees or otherwise reduce its
compensation hereunder.
(d) From time to time, the Manager may voluntarily waive all or a
portion of the advisory fee payable with respect to a Fund or pay
expenses of a Fund. In addition to any amounts otherwise payable to the
Manager as an advisory fee for current services under the Advisory
Agreement, the Company shall be obligated to pay the Manager all amounts
previously waived or expenses paid by the Manager with respect to the
Nasdaq-100 Index Fund or the Global Titans Index Fund, provided that
such additional payments are made not later than three years from the
date first set forth above and provided further that the amount of such
additional payment in any year, together with all other expenses of the
Fund, in the aggregate, would not cause the Fund's expense ratio in such
year to exceed, in the case of the Nasdaq-100 Index Fund, .85% of the
average net assets of the Fund or, in the case of the Global Titans
Index Fund, .85% of the average net assets of the Fund.
(e) For the services that may be provided by the Manager as provided
in subparagraph (b) of paragraph 2 hereof, the Funds shall pay to the
Manager no fee for providing such services.
107859
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DRAFT
6. EXPENSE LIMITATION.
In the event that the expenses of the Funds exceed any expense
limitation which the Manager may, by written notice to the Funds, voluntarily
declare to be effective subject to such terms and conditions as the Manager may
prescribe in such notice, the compensation due the Manager shall be reduced,
and, if necessary, the Manager shall assume expenses of the Funds, to the
extent required by such expense limitation.
In the event this Agreement is terminated as of a date other than the
last day of the fiscal year of the Company, the Manager shall pay the Company a
pro rata portion of the amount that the Manager would have been required to
pay, if any, had this Agreement remained in effect for the full fiscal year.
7. FUND TRANSACTIONS.
The Manager, acting by its own officers, directors or employees or by a
duly authorized subcontractor, is authorized to select the brokers or dealers
that will execute purchase and sale transactions for the Funds and is directed
to use its best efforts to obtain the best available price and most favorable
execution with respect to all such purchases and sales of portfolio securities
for the Funds. Subject to this primary requirement, and maintaining as its
first consideration the benefits to the Funds and its shareholders, the Manager
shall have the right, subject to the control of the Board of Directors, to
follow a policy of selecting brokers and dealers who furnish statistical,
research and other services to the Funds or to the Manager.
The Manager agrees that neither it nor any of its officers or directors
will take any long or short position in the capital stock of the Funds;
provided, however, that such prohibition:
(a) shall not prevent the Manager from purchasing shares of the
capital stock of the Funds if orders to purchase such shares are placed
upon the receipt by the Manager of purchase orders for such shares and
are not in excess of such purchase orders received by the Manager; and
(b) shall not prevent the purchase of shares of capital stock of the
Company by any of the persons above described for their account and for
investment at the price at which such shares are available to the public
at the time of purchase or as part of the initial capital of the Funds.
8. RELATIONS WITH COMPANY.
Subject to and in accordance with the Articles of Incorporation and
Bylaws of the Company and of the Manager, respectively, it is understood that
Directors, officers, agents and shareholders of the Company are or may be
interested in the Manager (or any successor thereof) as directors, officers, or
otherwise, that directors, officers, agents and shareholders of the Manager are
or may be interested in the Company as Directors, officers, shareholders or
otherwise, that the Manager (or any such successor) is or may be interested in
the Company as a shareholder or otherwise and that the effect of any such
interests shall be governed by said Articles of Incorporation and Bylaws.
9. LIABILITY OF MANAGER.
No provision of this Agreement shall be deemed to protect the Manager
against any liability to the Funds or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless disregard of its
obligations and
107859
4
DRAFT
duties under this Agreement. Nor shall any provision hereof be deemed to
protect any Director or officer of the Company against any such liability to
which he might otherwise be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of his duties or the reckless
disregard of his obligations and duties. 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.
10. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective on the date upon
which the Agreement shall have been approved by a majority of the
outstanding voting securities (as that term is defined in the 0000 Xxx)
of the Funds. Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two years after such date and shall
continue in full force and effect for periods of one year thereafter so
long as such continuance is approved at least annually (a) by either the
Directors of the Company or by vote of a majority of the outstanding
voting shares (as defined in the 0000 Xxx) of the Funds, and (b) in
either event by the vote of a majority of the Directors of the Company
who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(b) TERMINATION. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Directors of the Company
or by vote of a majority of the outstanding shares (as defined in the
1940 Act), or by the Manager on sixty (60) days' written notice to the
other party.
(c) AUTOMATIC TERMINATION. This Agreement shall automatically
terminate in the event of its assignment.
11. NAME OF FUNDS.
It is understood that the name "USAA," and any logo associated with that
name, is the valuable property of the United Services Automobile Association,
and that the Funds have the right to include "USAA" as a part of its name only
so long as this Agreement shall continue and the Manager is a wholly owned
subsidiary of the United Services Automobile Association. Upon termination of
this Agreement the Funds shall forthwith cease to use the "USAA" name and logo
and shall take such action as necessary to change the Funds' name.
12. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
13. SERVICES NOT EXCLUSIVE.
The services of the Manager to the Funds hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others
so long as its services hereunder are not impaired thereby.
107859
5
DRAFT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USAA MUTUAL FUND, INC. USAA INVESTMENT MANAGEMENT
COMPANY
By: By:________________________________
-----------------------------------
Name: Xxxxxxx X.X. Xxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: Senior Vice President
ATTEST: ATTEST:
By: By:________________________________
-----------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: Secretary Title: Assistant Secretary
107859
6
EXHIBIT 4(l)
DRAFT
ADMINISTRATION AGREEMENT
AGREEMENT made as of the 27th day of October, 2000, between USAA
INVESTMENT MANAGEMENT COMPANY, a corporation organized under the laws of the
state of Delaware and having a place of business in San Antonio, Texas (the
"Administrator"), and USAA MUTUAL FUND, INC., a corporation organized under the
laws of the state of Maryland and having a place of business in San Antonio,
Texas (the "Company").
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator, among other things, provides administrative
services to registered investment companies; and
WHEREAS, the Company is authorized to issue shares of capital stock (the
"Shares") in separate classes with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company has established two new series of Shares, namely
the Nasdaq-100 Index Fund and the Global Titans Index Fund (herein collectively
referred to as the "Funds" and individually as a "Fund"); and
WHEREAS, the Company desires to retain the Administrator to render
certain administrative services as described hereunder and the Administrator is
willing to perform such services;
NOW, THEREFORE, WITNESSETH: That it is agreed between the parties hereto
as follows:
1. APPOINTMENT OF ADMINISTRATOR.
The Company hereby appoints the Administrator to act as administrator to
the Funds for the period and on the terms herein set forth. The Administrator
accepts such appointment and agrees to render the services herein set forth,
for the compensation herein provided.
2. DUTIES OF ADMINISTRATOR.
The Administrator shall supervise the Funds' business and affairs and
shall provide such services required for effective administration of the Funds
as are not provided by employees or other agents engaged by the Funds;
provided, that the Administrator shall not have any obligation to provide under
this Agreement any direct or indirect services to Funds shareholders, any
services related to the distribution of Funds shares, or any other services
which are the subject of a separate agreement or arrangement among the Funds
and the Administrator. Subject to the foregoing, in providing administrative
services hereunder, the Administrator shall:
(a) OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to
the Funds, or pay the cost of, such office space, office equipment and
office facilities as are adequate for the Funds' needs.
(b) PERSONNEL. Provide, without remuneration from or other cost to
the Funds, the services of individuals competent to perform all of the
Funds' executive, administrative and clerical functions
107861
1
DRAFT
which are not performed by employees or other agents engaged by the
Funds or by the Administrator acting in some other capacity pursuant to
a separate agreement or arrangement with the Funds.
(c) AGENTS. Assist the Funds in selecting and coordinating the
activities of the other agents engaged by the Funds, including the
Funds' transfer agent, custodian, independent auditors and legal
counsel.
(d) DIRECTORS AND OFFICERS. Authorize and permit the Administrator's
directors, officers and employees who may be elected or appointed as
directors or officers of the Funds to serve in such capacities, without
remuneration from or other cost to the Funds.
(e) BOOKS AND RECORDS. Assure that all financial, accounting and
other records required to be maintained and preserved by the Funds are
maintained and preserved by it or on its behalf in accordance with
applicable laws and regulations.
(f) REGULATORY REPORTS AND FILINGS. Assist in the preparation of
(but not pay for) all periodic reports by the Funds and all reports and
filings required to maintain the registration and qualification of the
Funds, or to meet other regulatory or tax requirements applicable to the
Funds under federal and state securities and tax laws.
(g) BOARD REPORTS. Prepare and coordinate materials to be presented
to the Funds' board in preparation for its meetings.
(h) FIDELITY BOND. Provide and maintain a bond issued by a reputable
insurance company authorized to do business in the place where the bond
is issued, against larceny and embezzlement covering each officer and
employee of the Company who may singly or jointly with others have
access to funds or securities of the Company, with direct or indirect
authority to draw upon such funds or to direct generally the disposition
of such funds. The bond shall be in such reasonable amount as a majority
of the Board of Directors of the Company who are not officers or
employees of the Company shall determine, with due consideration to the
aggregate assets of the Company to which any such officer or employee
may have access.
(i) DELEGATION. Delegate, at its expense, some or all of its duties
hereunder to other persons or entities approved by the Administrator
upon notice to the Funds.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the
Administrator set forth in paragraph 2 above and the services provided by the
Administrator set forth in a Advisory Agreement between the Company and the
Administrator, the Funds assume and shall pay all expenses for all other Funds
operations and activities and shall reimburse the Administrator for any such
expenses incurred by the Administrator. The expenses to be borne by the Funds
shall include, without limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the
Company for the safekeeping of the Funds' cash, portfolio securities and
other property;
(b) the charges and expenses of auditors;
107861
2
DRAFT
(c) brokerage commissions, if any, for transactions in the portfolio
securities of the Funds;
(d) all taxes, including issuance and transfer taxes, and fees
payable by the Funds to federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of the Funds;
(f) fees involved in registering and maintaining registrations of
the Company and of its Shares with the Securities and Exchange
Commission and various states and other jurisdictions;
(g) all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, quarterly reports,
semiannual reports, annual reports and other communications (including
prospectuses) to existing shareholders;
(h) compensation and travel expenses of Directors who are not
"interested persons" within the meaning of the 1940 Act;
(i) the expense of furnishing or causing to be furnished to each
shareholder a statement of his account, including the expense of
mailing;
(j) charges and expenses of legal counsel in connection with matters
relating to the Funds, including, without limitation, legal services
rendered in connection with the Funds' legal and financial structure and
relations with its shareholders, issuance of Funds Shares, and
registration and qualification of securities under federal, state and
other laws;
(k) membership or association dues for the Investment Company
Institute or similar organizations;
(l) interest payable on Funds borrowings; and
(m) postage.
4. ADMINISTRATION FEE.
(a) For the services and facilities to be provided by the
Administrator as provided in paragraph 2 hereof, the Funds shall pay to
the Administrator a monthly fee computed as a percentage of aggregate
average net assets of each respective Fund, which on an annual basis is
equal to thirty-five hundredths of one percent (.35%) of the Monthly
Average Net Assets (defined below) of each of the Funds for such
calendar month.
(b) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i) the sum of
the net assets of the Fund, determined in accordance with procedures
established from time to time by or under the direction of the Board of
Directors of the Company in accordance with the Articles of
Incorporation of the Company, for each calendar day of such month, by
(ii) the number of such days.
(c) The Administrator may from time to time and for such periods as
it deems appropriate voluntarily waive fees or otherwise reduce its
compensation hereunder.
(d) From time to time, the Manager may voluntarily waive all or a
portion of the administration
107861
3
DRAFT
fee payable with respect to a Fund or pay expenses of a Fund. In
addition to any amounts otherwise payable to the Manager as an
administration fee for current services under this Administration
Agreement, the Company shall be obligated to pay the Manager all amounts
previously waived or expenses paid by the Manager with respect to the
Nasdaq-100 Index Fund or the Global Titans Index Fund, provided that
such additional payments are made not later than three years from the
date first set forth above and provided further that the amount of such
additional payment in any year, together with all other expenses of the
Fund, in the aggregate, would not cause the Fund's expense ratio in such
year to exceed, in the case of the Nasdaq-100 Index Fund, .85% of the
average net assets of the Fund or, in the case of the Global Titans
Index Fund, .85% of the average net assets of the Fund.
5. LIABILITY OF ADMINISTRATOR.
No provision of this Agreement shall be deemed to protect the
Administrator against any liability to the Funds or its shareholders to which
it might otherwise be subject by reason of any willful misfeasance, bad faith
or gross negligence in the performance of its duties or the reckless disregard
of its obligations and duties under this Agreement. Nor shall any provision
hereof be deemed to protect any Director or officer of the Company against any
such liability to which he might otherwise be subject by reason of any willful
misfeasance, bad faith or gross negligence in the performance of his duties or
the reckless disregard of his obligations and duties. 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.
6. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective on the date of
commencement of investment operation of the Funds and unless terminated
shall continue in force from year to year thereafter, but only so long
as such continuance is specifically approved annually (a) by the
Company's Board of Directors or by a vote of a majority of the Fund's
outstanding voting securities (as that term is defined in the 0000 Xxx)
and (b) by a majority of the Directors who are not parties to this
Agreement or interested persons of any such party.
(b) TERMINATION. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Directors of the Company
or by vote of a majority of the outstanding shares (as defined in the
1940 Act), or by the Administrator on sixty (60) days' written notice to
the other party. This Agreement shall automatically terminate upon its
assignment by the Administrator; provided, however, that the
Administrator may delegate its duties as provided in subparagraph (j) of
paragraph 2 hereof.
7. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
8. SERVICES NOT EXCLUSIVE.
The services of the Administrator to the Funds hereunder are not to be
deemed exclusive, and the Administrator shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
107861
4
DRAFT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USAA MUTUAL FUND, INC. USAA INVESTMENT MANAGEMENT
COMPANY
By: By:________________________________
---------------------------------
Name: Xxxxxxx X.X. Xxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: Senior Vice President
ATTEST: ATTEST:
By: By:________________________________
---------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: Secretary Title: Assistant Secretary
107861
5
EXHIBIT 4(m)
USAA Investment Management Company
00000 Xxxxxx X. XxXxxxxxx Xxxxxxx
Xxx Xxxxxxx, XX 00000
Gentlemen:
Pursuant to Section 1(b) of the Advisory Agreement dated as of September
21, 1990 between USAA Mutual Fund, Inc. (the "Company") and USAA Investment
Management Company (the "Manager"), please be advised that the Company has
established a new series of its shares, namely, the Capital Growth Fund (the
"Fund"), and please be further advised that the Company desires to retain the
Manager to render management and investment advisory services under the
Advisory Agreement to the Fund at the fee stated below:
ADVISORY FEE SCHEDULE
-----------------------
Eighty-five one hundredths of one percent (.85) of the aggregate net assets of
the Capital Growth Fund
From time to time, the Manager may voluntarily waive all or a portion of
the advisory fee payable with respect to a Fund or pay expenses of the Fund. In
addition to any amounts otherwise payable to the Manager as an advisory fee for
current services under the Advisory Agreement, the Company shall be obligated
to pay the Manager all amounts previously waived or expenses paid by the
Manager with respect to the Capital Growth Fund, provided that such additional
payments are made not later than three years from the date first set forth
below and provided further that the amount of such additional payment in any
year, together with all other expenses of the Fund, in the aggregate, would not
cause the Fund's expense ratio in such year to exceed, in the case of the
Capital Growth Fund, .85% of the average net assets of the Fund.
Please state below whether you are willing to render such services at
the fee stated above.
USAA MUTUAL FUND, INC.
Attest: ___________________________ By: __________________________
Secretary President
Dated: October 27, 2000
We as the sole shareholder of the above named Fund, do hereby approve
the Advisory Agreement and are willing to render management and investment
advisory services to the Capital Growth Fund at the fee stated above.
USAA INVESTMENT MANAGEMENT
COMPANY
Attest: ___________________________ By: ___________________________
Assistant Secretary Senior Vice President
Dated: October 27, 2000
EXHIBIT 4(n)
DRAFT
10/09/2000
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 27th day of October, 2000 (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 (the "Adviser") and BARCLAYS GLOBAL FUND
ADVISORS, a corporation organized under the laws of the State of California and
having its principal place of business in San Francisco, California (the
"Sub-Adviser").
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"); and
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Advisers Act; and
WHEREAS, USAA MUTUAL FUND, INC., a corporation organized under the
laws of the State of Maryland (the "Company"), is an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Company is authorized to issue shares of beneficial
interest in separate series, with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company has established two (2) separate series, the USAA
Nasdaq-100 Index Fund and the USAA Global Titans Index Fund, such series
together with all other series subsequently established by the Company with
respect to which the Sub-Adviser renders investment advisory services pursuant
to the terms of this Agreement, being herein collectively referred to as the
"Funds" and individually as a "Fund"; and
WHEREAS, pursuant to an Advisory Agreement, dated as of October 27,
2000, between the Company and the Adviser (the "Advisory Agreement"), the
Adviser is required to perform investment advisory services for the Funds.
108484
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10/09/2000
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. APPOINTMENT OF SUB-ADVISER.
(a) USAA NASDAQ-100 INDEX FUND AND USAA GLOBAL
TITANS INDEX FUND. The Adviser hereby employs the Sub-Adviser to
provide investment advisory services to the USAA Nasdaq-100 Index Fund
and the USAA Global Titans Index Fund for the period and on the terms
herein set forth. The Sub-Adviser accepts such appointment and agrees
to render the services herein set forth, for the compensation herein
provided.
(b) ADDITIONAL FUNDS. In the event that the Company
establishes one or more series of shares other than the USAA
Nasdaq-100 Index Fund and the USAA Global Titans Index Fund with
respect to which the Adviser desires to retain the Sub-Adviser to
render investment advisory services hereunder, the Adviser shall so
notify the Sub-Adviser in writing, indicating the advisory fee to be
payable with respect to the additional series of shares. If the
Sub-Adviser is willing to render such services on the terms provided
for herein, it shall so notify the Adviser in writing, whereupon such
series shall become a Fund hereunder.
2. DUTIES OF ADVISER AND SUB-ADVISER.
(i) DELIVERY OF DOCUMENTS. The Adviser has furnished the
Sub-Adviser with true copies of each of the following:
(a) The Company's Articles of Incorporation, as
filed with the Department of Assessments and Taxation of the
State of Maryland and all amendments and supplements thereto
(such Articles of Incorporation, as presently in effect and
as it shall from time to time be amended or supplemented, is
herein called the "Declaration");
(b) The Company's By-Laws and amendments and
supplements thereto (such By-Laws, as presently in effect and
as it shall from time to time be amended and supplemented, is
herein called the "By-Laws");
(c) Resolutions of the Company's Board of Directors
authorizing the appointment of the Adviser and Sub-Adviser
and approving the Advisory Agreement and this Agreement and
copies of the written consent in lieu of initial meeting of
sole shareholder of each Fund;
108484
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DRAFT
10/09/2000
(d) The most recent amendment to the Company's
Registration Statement on Form N-1A under the Securities Act
of 1933 as amended (the "1933 Act") and the 1940 Act (File
Nos. 2-49560 and 811-2429) as filed with the Securities and
Exchange Commission on August 4, 2000; and
(e) The current prospectus and Statement of
Additional Information (collectively, such prospectus and
Statement of Additional Information, as in effect from time
to time and all amendments and supplements thereto, are
herein called the "Prospectus") of each Fund.
The Adviser will furnish the Sub-Adviser from time
to time with copies of all amendments of or supplements to
items (a), (b), (c), (d) and (e) to the extent such
amendments or supplements relate to or affect the obligations
of the Sub-Adviser hereunder with respect to any Fund.
(ii) The Sub-Adviser, at its own expense, shall furnish the
following services to the Company:
(a) INVESTMENT PROGRAM. The Sub-Adviser is hereby
authorized and directed and hereby agrees, subject to the
overall supervision of the Adviser and the Board of Directors
of the Company, to (i) develop and furnish continuously an
investment program and strategy for each Fund, (ii) provide
index information and analysis relative to the investment
program and investments of each Fund, (iii) determine what
investments shall be purchased, held, sold or exchanged by
each Fund and what portion, if any, of the assets of each
Fund shall be held in cash or cash equivalents, and (iv) make
changes on behalf of the Company in the investments of each
Fund. The Sub-Adviser shall perform these duties in
conformity with (1) the stated investment objectives,
policies and restrictions of the Funds as set forth in the
Company's current Registration Statement, (2) any additional
policies or guidelines established by the Adviser or Board of
Directors of the Company that have been furnished in writing
to the Sub-Adviser, (3) the provisions of the Internal
Revenue Code of 1986, as amended (the "Code") applicable to
"regulated investment companies" (as defined in Section 851
of the Code), as from time to time in effect, and (4)
applicable provisions of law, including without limitation
all applicable provisions of the 1940 Act and the rules and
regulations thereunder. The Adviser shall provide the
Sub-Adviser with reasonable notice of any material change to
the Company's Registration Statement that would affect the
Sub-Adviser's management of the Fund. In accordance with
paragraph 2(ii)(b), the Sub-Adviser shall arrange for the
placing of all orders for the purchase and sale of securities
and other investments for each Fund's 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
108484
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DRAFT
10/09/2000
things necessary or incidental to the furtherance or conduct
of such purchases, sales or transactions. The Sub-Adviser
will make its officers and employees available to meet with
the Adviser's officers and directors on due notice at
reasonable times to review the investments and investment
program of each Fund in the light of current and prospective
economic and market conditions.
In the performance of its duties hereunder, the
Sub-Adviser is and shall be an independent contractor and
except as expressly provided for herein or otherwise
expressly provided or authorized shall have no authority to
act for or represent any Fund or the Company in any way or
otherwise be deemed to be an agent of any Fund, the Company
or of the Adviser. If any occasion should arise in which the
Sub-Adviser gives any advice to its clients concerning the
shares of a Fund, the Sub-Adviser will act solely as
investment counsel for such clients and not in any way on
behalf of the Company or any Fund.
(b) PORTFOLIO TRANSACTIONS. In connection with the
management of the investment and reinvestment of each Fund,
the Sub-Adviser, acting by its own officers, directors or
employees or by a duly authorized subcontractor, is
authorized to select the broker or dealers that will execute
purchase and sale transactions for the Company.
In executing portfolio transactions and selecting
brokers or dealers, if any, the Sub-Adviser will use its best
efforts to seek on behalf of a Fund the best overall terms
available. In assessing the best overall terms available for
any transaction, the Sub-Adviser shall consider all factors
it deems relevant, including the breadth of the market in and
the price of the security, the financial condition and
execution capability of the broker or dealer, and the
reasonableness of the commission, if any, with respect to the
specific transaction and on a continuing basis.
The Sub-Adviser may buy securities for a Fund at the
same time it is selling such securities for another client
account and may sell securities for a Fund 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, the
Sub-Adviser may effectuate cross transactions between a Fund
and such other account if it deems this to be advantageous.
The Sub-Adviser also may cause a Fund to enter into other
types of investment transactions (e.g., a long position on a
particular securities index) at the same time it is causing
other client accounts to take opposite economic positions
(e.g., a short position on the same index).
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On occasions when the Sub-Adviser deems the purchase
or sale of a security to be in the best interest of a Fund as
well as other clients, the Sub-Adviser, to the extent
permitted by applicable laws and regulations, and in
compliance with such procedures of the Company as may be in
effect from time to time, may aggregate the securities to be
sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event,
allocation of the securities so purchased or sold, as well as
the expenses incurred in the transaction, will be made by the
Sub-Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to
the subject Fund and to such clients.
The Sub-Adviser will advise the Fund's custodian or
such depository or agents as may be designated by the
custodian and the Adviser 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 Fund's custodian may need to settle a
security's purchase or sale. The Sub-Adviser shall not have
possession or custody of any Fund investments. The Company
shall be responsible for all custodial agreements and the
payment of all custodial charges and fees and, upon the
Sub-Adviser giving proper instructions to the custodian, the
Sub-Adviser shall have no responsibility or liability for the
acts, omissions or other conduct of the custodian.
Notwithstanding the foregoing, the Sub-Adviser
agrees that the Adviser 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 Funds may not be
effected, including, without limitation, brokers or dealers
affiliated with the Adviser. The Sub-Adviser shall refrain
from purchasing such securities for the Fund or directing any
portfolio transaction to any such broker or dealer on behalf
of the Fund, unless and until the written approval of the
Adviser to do so is obtained. In addition, the Sub-Adviser
agrees that it shall not direct portfolio transactions for
the Fund through any broker or dealer that is an "affiliated
person" of the Sub-Adviser (as that term is defined in the
Act or interpreted under applicable rules and regulations of
the Securities and Exchange Commission) without the prior
written approval of the Adviser and in no event shall the
Sub-Adviser direct portfolio transactions on behalf of the
Fund to any broker/dealer in recognition of sales of shares
of any investment company or receipt of research or other
service without prior written approval of the Adviser. The
Adviser agrees that it will provide the Sub-Adviser with a
list of brokers and dealers that are "affiliated persons" of
the Funds.
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(c) REPORTS. The Sub-Adviser shall render to the
Board of Directors of the Company such periodic and special
reports as the Board of Directors may reasonably request with
respect to matters relating to the duties of the Sub-Adviser
set forth herein.
3. SUB-ADVISORY FEE.
For the services to be provided by the Sub-Adviser as provided in
Paragraph 2 hereof, the Adviser shall pay to the Sub-Adviser an annual fee as
set forth on Schedule A to this Agreement.
In the case of commencement or termination of this Agreement with
respect to any Fund during any calendar month, the fee with respect to such
Fund for that month shall be reduced proportionately based upon the number of
calendar days during which it is in effect, and the fee shall be computed based
upon the average daily net assets of such Fund for the days during which it is
in effect.
4. EXPENSES.
During the term of this Agreement, the Sub-Adviser will bear all
expenses incurred by it in the performance of its duties hereunder, other than
those expenses specifically assumed by the Company hereunder. The Company shall
assume and shall pay (i) expenses, fees and taxes chargeable to the Company in
connection with securities transactions to which any Fund is a party, (ii)
interest on borrowed money, if any, (iii) all brokers' and underwriting
commissions chargeable to the Company in connection with the securities
transactions to which any Fund is a party, and (iv) transaction costs and fees
payable in connection with any securities lending program.
5. COMPLIANCE WITH APPLICABLE REGULATIONS.
In performing its duties hereunder, the Sub-Adviser
(i) shall establish compliance procedures reasonably
calculated to ensure compliance at all times with: all
applicable provisions of the 1940 Act and the Advisers Act,
and any rules and regulations adopted thereunder; Subchapter
M of the Code; the provisions of the Registration Statement;
the provisions of the Declaration and the By-Laws of the
Company, as the same may be amended from time to time; and
any other applicable provisions of state, federal or foreign
law.
(ii) acknowledges that it has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under
the Act and that the Sub-Adviser and certain of its
employees, officers and directors are subject to reporting
requirements thereunder and, accordingly, agrees that it
shall, on a timely basis, furnish, and
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shall cause its employees, officers and directors to furnish,
to the Adviser and/or to the Company, all reports and
information required to be provided under such code of ethics
with respect to such persons.
(iii) agrees that it will maintain for the Company all and
only such records as required under Rules 31a-1 and 31a-2
under the 1940 Act in respect to its services hereunder and
that such records are the property of the Company and further
agrees to surrender promptly to the Company any such records
upon the Company's request, all in accordance with Rule 31a-3
under the 1940 Act.
6. LIABILITY OF SUB-ADVISER; INDEMNIFICATION.
Neither the Sub-Adviser nor the officers, directors, employees,
agents, or legal representatives (collectively, "Related Persons") of the
Sub-Adviser shall be liable for any error of judgment or mistake of law, or for
any loss suffered by any Fund or its shareholders in connection with the
matters to which this Agreement relates; provided that, except as set forth in
the succeeding paragraph, no provision of this Agreement shall be deemed to
protect the Sub-Adviser or its Related Persons against any liability to which
it might otherwise be subject by reason of any willful misfeasance, bad faith
or negligence or the reckless disregard of the Sub-Adviser's obligations and
duties (each of which is hereby referred to as a "Culpable Act") under this
Agreement.
Neither the Sub-Adviser nor its Related Persons shall be liable for
any error of judgment or mistake of law, or for any loss suffered by the
Adviser or its Related Persons in connection with the matters to which this
Agreement relates; provided that this provision shall not be deemed to protect
the Sub-Adviser or its Related Persons against any liability to which it might
otherwise be subject by reason of any Culpable Act by the Sub-Adviser or its
Related Persons.
Neither the Sub-Adviser and its Related Persons nor the Adviser and
its Related Persons shall be liable for delays or errors by reason of
circumstances beyond their control, including, but not limited to, acts of
civil or military authority, national emergencies, labor difficulties,
suspensions of trading, fire, mechanical breakdown, flood or catastrophe, "Acts
of God," insurrection, war, riots or failure of communication or power supply;
PROVIDED, HOWEVER, that the Sub-Adviser and its Related Persons or the Adviser
and its Related Persons, as the case may be, have acted reasonably in
preventing the occurrence of such events and eliminating the continuation of
such events; PROVIDED further that neither the Adviser and its Related Persons
nor the Sub-Adviser and its Related Persons, as the case may be, shall be
liable for any consequential damages related thereto.
The Adviser shall indemnify the Sub-Adviser and its Related Persons
and hold them harmless from and against any and all actions, suits or claims
whether groundless or meritorious, and from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liabilities (collectively, "Damages") arising directly or indirectly out of
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or in connection with the performance of services by the Sub-Adviser or its
Related Persons hereunder to the extent such Damages result from any willful
misfeasance, bad faith or negligence or the reckless disregard of the Adviser's
obligations and duties under this Agreement.
The Sub-Adviser shall indemnify the Adviser and its Related Persons
from and against any Damages arising directly or indirectly out of or in
connection with the performance of services by the Adviser or its Related
Persons under this Agreement or the Advisory Agreement, in each case, to the
extent such Damages result from any Culpable Act of the Sub-Adviser or any of
its Related Persons.
7. REPRESENTATIONS AND WARRANTIES.
(a) ADVISER. The Adviser represents and warrants to the
Sub-Adviser that (i) the retention of the Sub-Adviser by the Adviser as
contemplated by this Agreement is authorized by the respective governing
documents of the Company and the Adviser; (ii) the execution, delivery and
performance of each of this Agreement and the Advisory Agreement does not
violate any obligation by which the Company or the Adviser or their respective
property is bound, whether arising by contract, operation of law or otherwise;
and (iii) each of this Agreement and the Advisory Agreement has been duly
authorized by appropriate action of the Company and the Adviser and when
executed and delivered by the Adviser will be the legal, valid and binding
obligation of the Company and the Adviser, enforceable against the Company and
Adviser in accordance with its terms hereof 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); and (iv) the Adviser
is registered as an investment adviser under the Advisers Act.
(b) SUB-ADVISER. The Sub-Adviser represents and warrants to
the Adviser that (i) the retention of the Sub-Adviser by the Adviser as
contemplated by this Agreement is authorized by the Sub-Adviser's governing
documents; (ii) the execution, delivery and performance of this Agreement does
not violate any obligation by which the Sub-Adviser or its property is bound,
whether arising by contract, operation of law or otherwise; and (iii) this
Agreement has been duly authorized by appropriate action of the Sub-Adviser and
when executed and delivered by the Sub-Adviser will be the legal, valid and
binding obligation of the Sub-Adviser, enforceable against the Sub-Adviser in
accordance with its terms hereof, 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); and (iv) the Sub-Adviser is either
registered as an investment adviser under the Advisers Act, or is not required
to so register under applicable law.
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8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective with
respect to the USAA Nasdaq-100 Index Fund and the USAA Global Titans Index Fund
on the Effective Date and, with respect to any additional Fund, on the date of
receipt by the Adviser of notice from the Sub-Adviser in accordance with
Paragraph 1(b) hereof that the Sub-Adviser is willing to serve as Sub-Adviser
with respect to such Fund. Unless terminated as herein provided, this Agreement
shall remain in full force and effect for two years from the date hereof with
respect to the USAA Nasdaq-100 Index Fund and the USAA Global Titans Index Fund
and, with respect to each additional Fund, for two years from the date on which
such Fund becomes a Fund hereunder. Subsequent to such initial periods of
effectiveness, this Agreement shall continue in full force and effect for
periods of one year thereafter with respect to each Fund so long as such
continuance with respect to any such Fund is approved at least annually (a) by
either the Directors of the Company or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of such Fund, and (b) in either
event, by the vote of a majority of the Directors of the Company who are not
parties to this Agreement or "interested persons" (as defined in the 0000 Xxx)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
(b) AMENDMENT. This Agreement may be amended by agreement of
the parties, provided that the amendment shall be approved both by the vote of
a majority of the Directors of the Company, including a majority of the
Directors who are not parties to this Agreement or interested persons of any
such party to this Agreement at a meeting called for that purpose.
(c) TERMINATION. This Agreement may be terminated with
respect to any Fund at any time, without payment of any penalty, (i) by vote of
the Directors of the Company or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of that Fund, (ii) by the Adviser, or
(iii) by the Sub-Adviser, in each case on sixty (60) days' prior written notice
to the other party. Upon the effective date of termination of this Agreement,
the Sub-Adviser shall deliver all books and records of the Company or any Fund
held by it (i) to such entity as the Company may designate as a successor
sub-adviser, or (ii) to the Adviser.
(d) AUTOMATIC TERMINATION. This Agreement shall automatically
and immediately terminate in the event of its assignment (as defined in the
1940 Act).
(e) 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 0000 Xxx) 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 (ii) that such action has not been
approved by the vote of a
108484
9
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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 the Sub-Adviser to the Adviser in connection with the
Funds hereunder are not to be deemed exclusive, and the Sub-Adviser shall be
free to render similar services to others so long as its services hereunder are
not impaired thereby. It is understood that the persons employed by the
Sub-Adviser to assist in the performance of its duties hereunder will not
devote their full time to such services and nothing hereunder contained shall
be deemed to limit or restrict the right of the Sub-Adviser to engage in or
devote time and attention to other businesses or to render services of whatever
kind or nature.
10. ADDITIONAL AGREEMENTS
(a) ACCESS TO INFORMATION. The Sub-Adviser shall afford the
Adviser at all reasonable times access to Sub-Adviser's officers, employees,
agents and offices and to all its relevant books and records and shall furnish
the Adviser with all relevant financial and other data and information as
requested; provided, however, that nothing contained herein shall obligate the
Sub-Adviser to provide the Adviser with access to the books and records of the
Sub-Adviser relating to any other funds other than the Funds.
(b) CONFIDENTIALITY. Each party agrees that it shall hold in
strict confidence all data and information obtained from another party (unless
such information is or becomes readily ascertainable from public or published
information or trade sources) and shall ensure that its officers, employees and
authorized representatives do not disclose such information to others without
the prior written consent of the party from whom it was obtained, except if
disclosure is required by the Securities and Exchange Commission, and other
regulatory body or the Funds' auditors, or in the opinion of counsel such
disclosure is required by law, and then only with as much prior written notice
to the other party as is practical under the circumstances.
(c) 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 reasonably 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.
(d) NOTIFICATIONS. The Sub-Adviser agrees that it will
promptly notify the Adviser and the Company in the event that the Sub-Adviser
or any of its affiliates: (i) becomes subject to a statutory or regulatory
disqualification that prevents the Sub-Adviser from serving as investment
adviser pursuant to this Agreement; or (ii) is or expects to become the subject
of an
108484
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administrative proceeding or enforcement action by the Securities and Exchange
Commission or other regulatory body.
(e) INSURANCE. The Sub-Adviser 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 the Sub-Adviser's business
activities.
(f) SHAREHOLDER MEETING EXPENSES. In the event that the
Company shall be required to call a meeting of shareholders because of actions
involving the Sub-Adviser, including, without limitation, a change of control
of the Sub-Adviser, the Sub-Adviser shall bear all 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:
The Adviser: USAA Investment Management Company
10750 Xxxxxx X. XxXxxxxxx Freeway, BK-B-04-S
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Securities Counsel & Compliance Dept.
Sub-Adviser: Barclays Global Fund Advisors
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
(b) SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
(c) SUCCESSORS AND ASSIGNMENTS. Each and all of the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and, except as otherwise specifically provided in this
Agreement, their respective successors and assigns.
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Notwithstanding the foregoing, no party shall make any assignment of this
Agreement or any rights or obligations hereunder without the written consent of
all other parties. As used herein, the term "assignment" shall have the meaning
ascribed thereto in the 1940 Act.
(d) APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with and governed by the laws of the State of Delaware
without giving effect to the choice of law or conflicts of law provisions
thereof.
(e) 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.
(f) EXPENSES. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
(g) HEADINGS. The headings and captions contained in this
Agreement are for reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) 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.
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IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of the date first set forth above.
USAA INVESTMENT MANAGEMENT COMPANY
By:
--------------------------------
Name:______________________________
Title:_____________________________
BARCLAYS GLOBAL FUND ADVISORS
By:
--------------------------------
Name:______________________________
Title:_____________________________
By:
--------------------------------
Name:______________________________
Title:_____________________________
Acknowledged and agreed:
USAA MUTUAL FUND, INC.
By:
--------------------------------
Name:______________________________
Title:_____________________________
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SCHEDULE A
SUB-ADVISORY FEES
USAA NASDAQ-100 INDEX FUND*:
The Adviser shall pay to the Sub-Adviser a fee based upon the average
daily value of the net assets of the USAA Nasdaq-100 Index Fund (a) at the
annual rate of six hundredths of one percent (0.06%) of the average daily
net assets of the USAA Nasdaq-100 Index Fund on amounts up to and
including the first two hundred and fifty million dollars ($250,000,000),
and (b) at the annual rate of three hundredths of one percent (0.03%) of
the average daily net assets of the USAA Nasdaq-100 Index Fund for amounts
exceeding two hundred and fifty million dollars ($250,000,000). Such fee
shall be paid on a monthly basis within ten (10) business days after the
end of the calendar month.
USAA GLOBAL TITANS INDEX FUND*:
The Adviser shall pay to the Sub-Adviser a fee based upon the average
daily value of the net assets of the USAA Global Titans Index Fund (a) at
the annual rate of nine hundredths of one percent (0.09%) of the average
daily net assets of the USAA Global Titans Index Fund on amounts up to and
including the first two hundred and fifty million dollars ($250,000,000),
and (b) at the annual rate of four hundredths of one percent (0.04%) of
the average daily net assets of the USAA Global Titans Index Fund for
amounts exceeding two hundred and fifty million dollars ($250,000,000).
Such fee shall be paid on a monthly basis within ten (10) business days
after the end of the calendar month.
MINIMUM SUB-ADVISORY FEES UPON TERMINATION:
If the Adviser terminates this Agreement, the Adviser, in accordance
with the terms below, agrees to pay the Sub-Adviser a fee of two hundred
thousand dollars ($200,000) per Fund for each year the Agreement is in
effect with respect to that Fund (the "Fee"); PROVIDED, HOWEVER, that no
Fee shall be charged to the Adviser if the Adviser terminates this
Agreement due to the failure of the Sub-Adviser to perform its duties and
obligations as set forth in the Agreement. Adviser and Sub-Adviser
understand that Sub-Adviser has priced its services with the expectation
that their relationship will be a long-term one. This Fee reflects the
Sub-Adviser's need to recover certain costs during the initial term of
this Agreement. The Fee shall be paid only as follows:
(i) If the Adviser terminates this Agreement with respect to a Fund within
one (1) year of the Effective Date, the Adviser shall pay to the
Sub-Adviser a Fee equal to two hundred thousand dollars ($200,000)
less the amount of any sub-advisory fees already paid
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pursuant to this Agreement by the Adviser to the Sub-Adviser for such
Fund. The Fee shall be paid no later than thirty (30) days after the
termination of the Agreement.
(ii) If the Adviser terminates this Agreement with respect to a Fund within
two (2) years of the Effective Date, the Adviser shall pay to the
Sub-Adviser a Fee equal to four hundred thousand dollars ($400,000)
less the amount of any sub-advisory fees already paid pursuant to this
Agreement by the Adviser to the Sub-Adviser for such Fund. The Fee
shall be paid no later than thirty (30) days after the termination of
the Agreement.
(iii) If the Adviser terminates this Agreement with respect to a Fund within
three (3) years of the date shown on the first page of the Agreement,
the Adviser shall pay to the Sub-Adviser a Fee equal to six hundred
thousand dollars ($600,000) less the amount of any sub-advisory fees
already paid pursuant to this Agreement by the Adviser to the
Sub-Adviser for such Fund. The Fee shall be paid no later than thirty
(30) days after the termination of the Agreement.
108484
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EXHIBIT 4(o)
DRAFT
9/20/00
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of the 27th day of October, 2000, between
FUND ASSET MANAGEMENT, L.P., a Delaware limited partnership ("FAMLP"), and
USAA MUTUAL FUND, INC. (the "Company"), a Maryland corporation.
W I T N E S S E T H:
WHEREAS, the Company is registered with the Securities and Exchange
Commission ("SEC") as an open-end series management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Company has established a new series, the USAA Extended
Market Index Fund (the "Index Fund"), and has registered with the SEC offers
and sales of shares issued by the Index Fund under the Securities Act of 1933,
as amended; and
WHEREAS, FAMLP is the investment adviser of Quantitative Master Series
Company (the "Master Trust"), which has registered with the SEC as an open-end
series management investment company under the 1940 Act; and
WHEREAS, the capital stock of the Master Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets, which series includes the Xxxxxxx
Xxxxx Extended Market Series (the "Master Index Fund"); and
WHEREAS, pursuant to a Master-Feeder Participation Agreement dated as
of the 27th day of October, 2000, by and among the Company, FAMLP, USAA
Investment Management Company and FAM Distributors, Inc. (the "Feeder
Agreement"), the Company shall invest all of the Index Fund's investable assets
in the Master Index Fund in exchange for a beneficial interest in the Master
Index Fund; and
WHEREAS, as a consequence of and pursuant to the terms of the Feeder
Agreement, the Company desires to retain FAMLP for the purpose of performing
certain services for the Index Fund; and
WHEREAS, FAMLP is willing to provide services on the terms and
conditions hereafter set forth;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE 1
DUTIES OF FAMLP
1.1 The Company hereby employs FAMLP to furnish (or to arrange for
affiliates to furnish) the services described below for the period and on the
terms and conditions set forth in this Agreement. FAMLP hereby accepts such
employment and agrees during such period, at its own expense and for the
consideration set forth above, to render (or to arrange for affiliates to
render) such services. The parties intend that FAMLP shall for all purposes be
deemed a subcontractor of the Company and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Company
or the Index Fund.
1
132370
1.2. FAMLP shall provide the Company with the services set forth in
Schedule A and such other incidental administrative services relating to the
Index Fund and the Master Index Fund as the Company may from time to time
reasonably request.
ARTICLE 2
ASSIGNMENT OF AGREEMENT
2.1 FAMLP shall have the right to assign this Agreement and the duties
and liabilities hereunder (i) to any third party or affiliate, with the prior
written consent of the Company, or (ii) to State Street Bank and Trust Company
("State Street") upon prior written notice to the Company. In the event that
FAMLP assigns this Agreement to State Street, FAMLP's liability for any errors
committed by State Street in performing the services assigned shall be limited
to the amount, if any, that FAMLP recovers from State Street under any
agreement providing for the assignment of such services otherwise entered into
between FAMLP and State Street.
2.2 Upon assignment of this Agreement, FAMLP agrees that it shall
remain solely responsible for the payment of any fees or expenses payable to
the assignee (the "Assignee") for the services to be provided by such Assignee.
In no event shall the Company be obligated in any way for any such fees or
expenses.
2.3 FAMLP agrees that, prior to assigning this Agreement, it will
provide the Company an opportunity to review the terms and conditions of any
contemplated assignment, including, but not limited to, a copy of any written
agreement to be entered into between FAMLP and the Assignee.
ARTICLE 3
DURATION AND TERMINATION OF THIS AGREEMENT
3.1 This Agreement may be terminated at any time by written agreement
of the parties hereto. This Agreement may also be terminated (a) at any time by
the Company by written notice to FAMLP, and (b) by FAMLP by 120 days prior
written notice to the Company. Notwithstanding the above, this Agreement will
automatically terminate upon termination of the Feeder Agreement. Upon
termination:
A. The Company shall designate a successor (which may be an
affiliate of the Company) by notice in writing to FAMLP on or
before the termination date.
B. FAMLP shall deliver to the successor, or if none has been
designated, to the Company, all records, funds and other
properties of the Company or the Index Fund deposited with or
held by FAMLP hereunder.
3.2 AMENDMENT. This Agreement may be amended, modified or supplemented
at any time in such manner as may be mutually agreed upon in writing by the
parties.
2
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DRAFT
9/20/00
ARTICLE 4
STANDARD OF CARE; INDEMNIFICATION
4.1 FAMLP shall use reasonable care in performing its obligations
under this Agreement. FAMLP shall not be in violation of this Agreement with
respect to any matter as to which it has satisfied its obligation of reasonable
care.
4.2 FAMLP shall indemnify the Company against, and hold the Company
harmless from, any liabilities, losses, claims, costs, damages, penalties,
fines, obligations, or expenses of any kind whatsoever (including, without
limitation, reasonable attorneys', accountants', consultants' or experts' fees
and disbursements) ("Liabilities"), that may be imposed on, incurred by or
asserted against the Company, that result from FAMLP's negligence, fraudulent
acts or willful misconduct in performing its duties as set out in this
Agreement.
4.3 The Company shall indemnify FAMLP against, and hold FAMLP harmless
from, any Liabilities that may be imposed on, incurred by or asserted against
FAMLP in connection with or arising out of the Company's negligence, fraudulent
acts or willful misconduct in performance of its duties under this Agreement.
ARTICLE 5
NOTICES
5.1 Notices, requests, instructions and other writings addressed to
the Company at 00000 XxXxxxxxx Xxxxxxx, XXX-00-X, Xxx Xxxxxxx, Xxxxx 00000,
Attn: Vice President Securities Counsel & Compliance, or such address as the
Company may have designated to FAMLP in writing, shall be deemed to have been
properly given to the Company hereunder; notices, requests, instructions and
other writings addressed to FAMLP at 000 Xxxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000, Attn: Senior Vice President, Operations or to such other address
as FAMLP may have designated to the Company in writing, shall be deemed to have
been properly given to FAMLP hereunder.
ARTICLE 6
GOVERNING LAW
6.1 This Agreement shall be construed in accordance with the laws
of the State of New York.
ARTICLE 7
MISCELLANEOUS
7.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
7.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
7.3 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
FUND ASSET MANAGEMENT, L.P.
By:____________________________
Name:____________________________
Title:____________________________
USAA MUTUAL FUND, INC.
By:____________________________
Name:____________________________
Title:____________________________
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SCHEDULE A
ACCOUNTING SERVICES
* FAMLP shall calculate and provide to the Company the Index Fund's net
asset value, in accordance with the Index Fund's prospectus. Such net
asset value information shall be transmitted via File Transfer Protocol
(FTP) to the Company's Unix Server using the file format layout determined
by the Company. FAMLP will price the portfolio securities of the Index
Fund for which market quotations are available by the use of outside
services designated by the Company which are normally used and contracted
with for this purpose; all other portfolio securities will be priced in
accordance with the Company's instructions. FAMLP shall also provide the
Company with copies of daily trial balances and allocation reports.
* FAMLP shall prepare and maintain, with the direction and as interpreted by
the Company or the Company's or the Index Fund's accountants and/or other
advisors, in complete, accurate, and current form, all accounts and
records needed to be maintained as a basis for calculation of the Index
Fund's net asset value, and as further agreed upon by the parties in
writing, and shall preserve such records in the manner and for the periods
required by law or for such longer period as the parties may agree upon in
writing. The Company shall advise FAMLP in writing of all applicable
record retention requirements, other than those set forth in the 1940 Act.
* FAMLP shall make available to the Company for inspection or reproduction
within a reasonable time, upon demand, all accounts and records of the
Index Fund maintained and preserved by FAMLP.
* For purposes of reporting requirements and risk-monitoring, FAMLP shall
provide to the Company a monthly transmission of the Master Index Fund's
holdings in a form to be mutually determined by the parties to this
Agreement.
* FAMLP shall assist the Index Fund's accountants, or upon approval of the
Company or upon demand, any regulatory body, in any requested review of
the Index Fund's accounts and records maintained by FAMLP.
* Upon receipt from the Company of any necessary information or
instructions, FAMLP shall provide information from the books and records
it maintains for the Company with respect to the Index Fund that the
Company needs for the Index Fund tax returns, questionnaires, or periodic
reports to shareholders and such other reports and information requests as
the Company and FAMLP shall agree upon from time to time. Such reports
shall include reports related to tax-basis accounting, including the
partnership allocation of capital gains/losses and all related
calculations and schedules necessary to arrive at total dollars to be
distributed for excise tax and fiscal year-end shareholder distributions.
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