EXHIBIT d(xxiii)
FORM OF
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 3rd day of December, 2007 (the Effective Date)
between USAA INVESTMENT MANAGEMENT COMPANY, a corporation organized under the
laws of the State of Delaware and having its principal place of business in San
Antonio, Texas (IMCO) and The Renaissance Group, LLC, which from time to time
does business as Renaissance Investment Management, a limited liability company
organized under the laws of the State of Delaware and having its principal place
of business in Cincinnati, Ohio (Renaissance).
WHEREAS, IMCO serves as the investment adviser to USAA Mutual Funds Trust,
a statutory trust organized under the laws of the State of Delaware (the Trust)
and registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, under its Investment Advisory Agreement with the Trust (Investment
Advisory Agreement), IMCO is authorized to appoint subadvisers for series of the
Trust (each a Fund, or collectively Funds); and
WHEREAS, IMCO wishes to retain Renaissance to render investment advisory
services to such series (or portions thereof) of the Trust as now or hereafter
may be identified in Schedule A to this Agreement, as such Schedule A may be
amended from time to time (each such series or portion thereof referred to
herein as a Fund Account and collectively as Fund Accounts); and
WHEREAS, Renaissance is willing to provide such services to the Fund
Accounts and IMCO upon the terms and conditions and for the compensation set
forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT OF RENAISSANCE. IMCO hereby appoints Renaissance to act as an
investment adviser for each Fund Account in accordance with the terms and
conditions of this Agreement. Renaissance will be an independent contractor and
will have no authority to act for or represent the Trust or IMCO in any way or
otherwise be deemed an agent of the Trust or IMCO except as expressly authorized
in this Agreement or another writing by the Trust, IMCO and Renaissance.
Renaissance accepts such appointment and agrees to render the services herein
set forth for the compensation herein provided.
2. DUTIES OF RENAISSANCE.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO and
the Trust's Board of Trustees (the Board), Renaissance, at its own expense,
shall have full discretion to manage, supervise and direct the investment and
reinvestment of Fund Accounts allocated to it by IMCO from time to time. It is
understood that a Fund Account may consist of all, a portion of, or none of the
assets of the Fund, and that IMCO has the right to allocate and reallocate such
assets to a Fund Account at any time. Renaissance shall perform its duties
described herein in a manner consistent with the investment objective, policies
and restrictions set forth in the then
current Prospectus and Statement of Additional Information (SAI) for each Fund.
Should Renaissance anticipate materially modifying its investment process, it
must provide written notice in advance to IMCO, and any affected Prospectus and
SAI should be amended accordingly.
For each Fund set forth on Schedule A to this Agreement, Renaissance shall
provide investment advice only with respect to the discrete portion of the
Fund's portfolio allocated to it by IMCO from time to time and shall not consult
with any other subadviser of such Fund concerning transactions for the Fund in
securities or other assets.
With respect to the management of each Fund Account pursuant to this
Agreement, Renaissance shall determine what investments shall be purchased,
held, sold or exchanged by each Fund Account and what portion, if any, of the
assets of each Fund Account shall be held in cash or cash equivalents, and
purchase or sell portfolio securities for each Fund Account; except that, to the
extent Renaissance wishes to hold cash or cash equivalents in excess of 10% of a
Fund Account's assets, Renaissance must request in writing and receive advance
permission from IMCO.
In accordance with Subsection (b) of this Section 2, Renaissance shall
arrange for the execution of all orders for the purchase and sale of securities
and other investments for each Fund Account and will exercise full discretion
and act for the Trust in the same manner and with the same force and effect as
the Trust might or could do with respect to such purchases, sales, or other
transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales, or other
transactions.
In the performance of its duties, Renaissance will act in the best
interests of each Fund and will comply with (i) applicable laws and regulations,
including, but not limited to, the 1940 Act and the Investment Advisers Act of
1940, as amended (Advisers Act), and the rules under each, (ii) the terms of
this Agreement, (iii) the stated investment objective, policies and restrictions
of each Fund, as stated in the then-current Registration Statement of each Fund,
(iv) the Trust's compliance procedures and other policies, procedures or
guidelines as the Board or IMCO reasonably may establish from time to time, (v)
the provisions of the Internal Revenue Code of 1986, as amended (Code),
applicable to "regulated investment companies" (as defined in Section 851 of the
Code), as from time to time in effect, and (vi) the written instructions of
IMCO. Renaissance shall establish compliance procedures reasonably calculated to
ensure compliance with the foregoing. IMCO shall be responsible for providing
Renaissance with the Trust's Master Trust Agreement, as amended and
supplemented, the Trust's By-Laws and amendments thereto and current copies of
the materials specified in Subsections (a)(iii) and (iv) of this Section 2. IMCO
shall provide Renaissance with prior written notice of any material change to
the Trust's Registration Statement that would affect Renaissance's management of
a Fund Account.
(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, Renaissance will
select the brokers or dealers that will execute purchase and sale transactions
for the Fund Accounts, subject to the conditions herein. In the selection of
broker-dealers and the placement of orders for the purchase and sale of
portfolio investments for the Fund Accounts, Renaissance shall use its best
efforts to obtain for the
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Fund Accounts the most favorable price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain the
most favorable price and execution available, Renaissance, bearing in mind each
Fund's best interests at all times, shall consider all factors it deems
relevant, including by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission and
dealer's spread or xxxx-up, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial stability of
the broker-dealer involved, the general execution and operational facilities of
the broker-dealer and the quality of service rendered by the broker-dealer in
other transactions.
Subject to such policies as the Board may determine and to the extent
authorized by Section 28(e) of the Securities Exchange Act of 1934 (Exchange
Act), Renaissance shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused a Fund Account to pay a broker-dealer that provides brokerage and
research services to Renaissance an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer offering equally good execution capability in the portfolio
investment would have charged for effecting that transaction if Renaissance
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or
Renaissance's overall responsibilities with respect to the Fund and to other
clients of Renaissance as to which Renaissance exercises investment discretion.
The Board or IMCO may direct Renaissance to effect transactions in portfolio
securities through broker-dealers in a manner that will help generate resources
to pay the cost of certain expenses that the Trust is required to pay or for
which the Trust is required to arrange payment.
On occasions when Renaissance deems the purchase or sale of a security to
be in the best interest of a Fund as well as other clients of Renaissance,
Renaissance, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by Renaissance in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to its other clients over time.
Renaissance may buy securities for a Fund Account at the same time it is
selling such securities for another client account and may sell securities for a
Fund Account at the time it is buying such securities for another client
account. In such cases, subject to applicable legal and regulatory requirements,
and in compliance with such procedures of the Trust as may be in effect from
time to time, Renaissance may effectuate cross transactions between a Fund
Account and such other account if it deems this to be advantageous.
Renaissance will advise the Funds' custodian or such depository or agents
as may be designated by the custodian and IMCO promptly of each purchase and
sale of a portfolio security, specifying the name of the issuer, the description
and amount or number of shares of the security purchased, the market price, the
commission and gross or net price, the trade date and settlement date, the
identity of the effecting broker or dealer and any other pertinent data that the
Funds' custodian may need to settle a security's purchase or sale. Renaissance
shall not have possession or custody of any Fund's investments. The Trust shall
be responsible for all custodial
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agreements and the payment of all custodial charges and fees and, upon
Renaissance giving proper instructions to the custodian, Renaissance shall have
no responsibility or liability for the acts, omissions or other conduct of the
custodian, depository, or other agent designated by the custodian and IMCO.
Notwithstanding the foregoing, Renaissance agrees that IMCO shall have the
right by written notice to identify securities that may not be purchased on
behalf of any Fund and/or brokers and dealers through which portfolio
transaction on behalf of the Fund may not be effected, including, without
limitation, brokers or dealers affiliated with IMCO. Renaissance shall refrain
from purchasing such securities for a Fund Account or directing any portfolio
transaction to any such broker or dealer on behalf of a Fund Account, unless and
until the written approval of IMCO to do so is obtained. In addition,
Renaissance agrees that it shall not direct portfolio transactions for the Fund
Accounts through any broker or dealer that is an "affiliated person" (as that
term is defined in the 1940 Act or interpreted under applicable rules and
regulations of the Commission) of Renaissance, except as permitted under the
1940 Act. IMCO agrees that it will provide Renaissance with a list of brokers
and dealers that are affiliated persons of the Funds, or affiliated persons of
such persons, and shall timely update that list as the need arises. The Funds
agree that any entity or person associated with IMCO or Renaissance (or any of
their "affiliated persons") that is a member of a national securities exchange
is authorized to effect any transaction on such exchange for the account of the
Funds that is permitted by Section 11(a) of the Exchange Act or Rule 11a2-2(T)
thereunder, and the Funds consent to the retention of compensation for such
transactions.
(C) EXPENSES. Renaissance, at its expense, will furnish all necessary
facilities and personnel, including salaries, expenses and fees of any personnel
required for them to faithfully perform their duties under this Agreement and
administrative facilities, including bookkeeping, and all equipment and services
necessary for the efficient conduct of Renaissance's duties under this
Agreement. However, Renaissance shall not be obligated to pay any expenses of
IMCO, the Trust or the Funds, including without limitation, interest and taxes,
brokerage commissions and other costs in connection with the purchase or sale of
securities or other investment instruments for the Funds and custodian fees and
expenses.
(D) VALUATION. Securities traded on a national securities exchange or the
NASDAQ market for which market quotes are readily available are valued on each
day the New York Stock Exchange is open for business. For those securities for
which market quotes are not readily available, Renaissance, at its expense, will
provide assistance to IMCO regarding the valuation of securities that are the
subject of a significant event, not registered for public sale, not traded on
any securities markets, or otherwise deemed illiquid for purposes of the 0000
Xxx. The parties acknowledge that IMCO is responsible for final pricing
determinations and calculations, and that Renaissance will take such steps as
are reasonably necessary to assist IMCO in reaching such pricing determinations
for Fund Account securities. Renaissance also shall monitor for "significant
events" that occur after the closing of a market but before the Funds calculate
their net asset values and that may affect the valuation of any Fund Account's
portfolio securities and shall notify IMCO immediately of the occurrence of any
such events.
(E) REPORTS AND AVAILABILITY OF PERSONNEL. Renaissance, at its expense,
shall render to the Board and IMCO such periodic and special reports as the
Board and IMCO may
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reasonably request with respect to matters relating to the duties of Renaissance
set forth herein. Renaissance, at its expense, will make available to the Board
and IMCO at reasonable times its portfolio managers and other appropriate
personnel in order to review investment policies of the Funds and to consult
with the Board and IMCO regarding the investment affairs of the Funds, including
economic, statistical and investment matters relevant to Renaissance's duties
hereunder.
(F) COMPLIANCE MATTERS. Renaissance, at its expense, will provide IMCO with
such compliance reports relating to its duties under this Agreement as may be
agreed upon by such parties from time to time. Renaissance also shall cooperate
with and provide reasonable assistance to IMCO, the Trust's administrator, the
Trust's custodian and foreign custodians, the Trust's transfer agent and pricing
agents and all other agents and representatives of the Trust and IMCO, keep all
such persons fully informed as to such matters as they may reasonably deem
necessary to the performance of their obligations to the Trust and IMCO, provide
prompt responses to reasonable requests made by such persons and maintain any
appropriate interfaces with each so as to promote the efficient exchange of
information.
(G) BOOKS AND RECORDS. Renaissance will maintain for the Funds all books
and records required to be maintained by the Funds pursuant to the 1940 Act and
the rules and regulations promulgated thereunder insofar as such records relate
to the investment affairs of the Fund Accounts. Pursuant to Rule 31a-3 under the
1940 Act, Renaissance agrees that: (i) all records it maintains for a Fund
Account are the property of the Fund; (ii) it will surrender promptly to a Fund
or IMCO any such records (or copies of such records) upon the Fund's or IMCO's
request; and (iii) it will preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records it maintains for any Fund Account.
Notwithstanding subsection (ii) above, Renaissance may maintain copies of such
records to comply with its recordkeeping obligations.
(H) PROXIES. Unless and until Renaissance is otherwise directed by IMCO or
the Board, IMCO will vote proxies with respect to a Fund Account's securities
and exercise rights in corporate actions or otherwise in accordance with IMCO's
proxy voting guidelines.
3. ADVISORY FEE. IMCO shall pay to Renaissance as compensation for Renaissance's
services rendered pursuant to this Agreement a fee based on the average daily
net assets of each Fund Account at the annual rates set forth in Schedule B,
which schedule can be modified from time to time, subject to any appropriate
approvals required by the 1940 Act. Such fees shall be calculated daily and
payable monthly in arrears within 15 business days after the end of such month.
IMCO (and not the Funds) shall pay such fees. If Renaissance shall serve for
less than the whole of a month, the compensation as specified shall be prorated
based upon the number of calendar days during which this Agreement is in effect
during such month, and the fee shall be computed based upon the average daily
net assets of a Fund Account for such days. Renaissance agrees that if (i) it
provides investment advisory services substantially similar to the services
provided to a Fund Account to any other registered, open-end management
investment company (or series thereof) with a substantially similar investment
mandate and with assets under management equal to or less than the assets of the
Fund Account under management by Renaissance (the Substantially Similar
Services) and (ii) Renaissance charges a lower fee for providing the
Substantially Similar Services than it charges with respect to the Fund Account,
then Renaissance shall reduce its fee with respect to the Fund Account so
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that it is equal to or less than the fee charged for providing the Substantially
Similar Services on a going forward basis starting immediately.
4. REPRESENTATIONS AND WARRANTIES.
(A) RENAISSANCE. Renaissance represents and warrants to IMCO that (i) the
retention of Renaissance by IMCO as contemplated by this Agreement is authorized
by Renaissance's governing documents; (ii) the execution, delivery and
performance of this Agreement does not violate any obligation by which
Renaissance or its property is bound, whether arising by contract, operation of
law or otherwise; (iii) this Agreement has been duly authorized by appropriate
action of Renaissance and when executed and delivered by Renaissance will be a
legal, valid and binding obligation of Renaissance, enforceable against
Renaissance in accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or law); (iv) Renaissance is registered as
an investment adviser under the Advisers Act; (v) Renaissance has adopted a
written code of ethics complying with the requirements of Rule 17j-1 under the
1940 Act and that Renaissance and certain of its employees, officers, partners
and directors are subject to reporting requirements thereunder and, accordingly,
agrees that it shall, on a timely basis, furnish a copy of such code of ethics
to IMCO, and, with respect to such persons, Renaissance shall furnish to IMCO
all reports and information provided under Rule 17j-1(c)(2); (vi) Renaissance is
not prohibited by the 1940 Act, the Advisers Act or other law, regulation or
order from performing the services contemplated by this Agreement; (vii)
Renaissance will promptly notify IMCO of the occurrence of any event that would
disqualify Renaissance from serving as investment manager of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise; (viii)
Renaissance has provided IMCO with a copy of its Form ADV, which as of the date
of this Agreement is its Form ADV as most recently filed with the SEC, and
promptly will furnish a copy of all amendments to IMCO at least annually; (ix)
Renaissance will notify IMCO of any "assignment" (as defined in the 0000 Xxx) of
this Agreement or change of control of Renaissance, as applicable, and any
changes in the key personnel who are either the portfolio manager(s) of any Fund
Account or senior management of Renaissance, in each case prior to or promptly
after, such change; and (x) Renaissance has adequate disaster recovery and
interruption prevention measures to ensure business resumption in accordance
with applicable law and within industry standards. Renaissance makes no
representation or warranty, express or implied, that any level of performance or
investment results will be achieved by the Fund, whether on a relative or
absolute basis.
(B) IMCO. IMCO represents and warrants to Renaissance that (i) the
retention of Renaissance by IMCO as contemplated by this Agreement is authorized
by the respective governing documents of the Trust and IMCO; (ii) the execution,
delivery and performance of each of this Agreement and the Investment Advisory
Agreement does not violate any obligation by which the Trust or IMCO or their
respective property is bound, whether arising by contract, operation of law or
otherwise; (iii) each of this Agreement and the Investment Advisory Agreement
has been duly authorized by appropriate action of the Trust and IMCO and when
executed and delivered by IMCO will be a legal, valid and binding obligation of
the Trust and IMCO, enforceable against the Trust and IMCO in accordance with
its terms, subject, as to enforcement, to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights
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generally and to general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or law); (iv) IMCO is registered as an
investment adviser under the Advisers Act; (v) IMCO has adopted a written code
of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and
that IMCO and certain of its employees, officers and directors are subject to
reporting requirements thereunder; (vi) IMCO is not prohibited by the 1940 Act,
the Advisers Act or other law, regulation or order from performing the services
contemplated by this Agreement; (vii) IMCO will promptly notify Renaissance of
the occurrence of any event that would disqualify IMCO from serving as
investment manager of an investment company pursuant to Section 9(a) of the 1940
Act or otherwise; (viii) IMCO has provided Renaissance with a copy of certain
applicable portions of the Trust's compliance policies and procedures adopted
pursuant to Rule 38a-1 under the 1940 Act, and will provide Renaissance with a
copy of any amendments to such compliance policies and procedures within a
reasonable time after receiving the same from the Trust; and (ix) IMCO and/or
its affiliates have adopted and use their best efforts to enforce their policies
to identify and prevent investors in the Fund from market timing the purchase
and sale of the Fund's shares or engaging in arbitrage activity to the detriment
of long-term investors in the Fund.
5. LIABILITY AND INDEMNIFICATION.
(A) RENAISSANCE. Renaissance shall be liable for any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) to which the Trust, a Fund, IMCO, any affiliated persons thereof
(within the meaning of the 0000 Xxx) and any controlling persons thereof (as
described in Section 15 of the Securities Act of 1933, as amended (the 1933
Act)) (collectively, IMCO Indemnities) may become subject under the 1933 Act,
the 1940 Act, the Advisers Act, or under any other statute, at common law or
otherwise arising out of (i) any gross negligence, willful misfeasance, bad
faith or reckless disregard of Renaissance in the performance of any of its
duties or obligations hereunder or (ii) any untrue statement of a material fact
contained in the Prospectus and SAI, proxy materials, reports, advertisements,
sales literature, or other materials pertaining to the Funds or the omission to
state therein a material fact known to Renaissance which was required to be
stated therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon information furnished in
writing to IMCO or the Trust by Renaissance Indemnities (as defined below) for
use therein. Renaissance shall indemnify and hold harmless the IMCO Indemnities
for any and all such losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses); PROVIDED, HOWEVER, that in no
case is Renaissance's indemnity hereunder deemed to protect a person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence or reckless disregard of
Renaissance in performance of its duties under this Agreement or the Investment
Advisory Agreement with the Trust.
(B) IMCO. IMCO shall be liable for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which Renaissance, any affiliated persons thereof (within the meaning of the
0000 Xxx) and any controlling persons thereof (as described in Section 15 of the
1933 Act) (collectively, Renaissance Indemnities) may become subject under the
1933 Act, the 1940 Act, the Advisers Act, or under any other statute, at common
law or otherwise arising out of (i) any gross negligence, willful misfeasance,
bad faith or reckless disregard by IMCO in the performance of any of its duties
or obligations hereunder or
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(ii) any untrue statement of a material fact contained in the Prospectus and
SAI, proxy materials, reports, advertisements, sales literature, or other
materials pertaining to the Funds or the omission to state therein a material
fact known to IMCO which was required to be stated therein or necessary to make
the statements therein not misleading, unless such statement or omission was
made in reliance upon information furnished in writing to IMCO or the Trust by
Renaissance. IMCO shall indemnify and hold harmless Renaissance Indemnities for
any and all such losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses); PROVIDED, HOWEVER, that in no case shall
IMCO's indemnity hereunder be deemed to protect a person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence or reckless disregard of IMCO in the
performance of its duties under this Agreement.
6. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective with respect to a Fund upon its execution; provided, however, that
this Agreement shall not become effective with respect to a Fund unless it has
first been approved in the manner required by the 1940 Act and rules thereunder
or in accordance with exemptive or other relief granted by the SEC or its staff.
This Agreement shall remain in full force and effect continuously thereafter,
except as follows:
(a) By vote of a majority of (i) the Board members who are not parties to
this Agreement or "interested persons" (as defined in the 0000 Xxx) of the
Funds, IMCO, or Renaissance (Independent Board Members) or (ii) the outstanding
voting shares of a Fund, such Fund may at any time terminate this Agreement,
without the payment of any penalty, by providing not more than 60 days' written
notice delivered or mailed by registered mail, postage prepaid, to IMCO and
Renaissance.
(b) This Agreement will terminate automatically with respect to a Fund,
without the payment of any penalty, unless within two years after its initial
effectiveness and at least annually thereafter, the continuance of the Agreement
is specifically approved by (i) the Board or the shareholders of the Fund by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Independent Board Members, by vote cast in person at a meeting
called for the purpose of voting on such approval. If the continuance of this
Agreement is submitted to the shareholders of the Fund for their approval and
such shareholders fail to approve such continuance as provided herein,
Renaissance may continue to serve hereunder in a manner consistent with the 1940
Act and the rules thereunder.
(c) IMCO may at any time terminate this Agreement with respect to a Fund,
without the payment of any penalty, upon written notice delivered in person or
by facsimile, or mailed by registered mail, postage prepaid, to Renaissance.
Renaissance may at any time, without the payment of any penalty, terminate this
Agreement with respect to a Fund by not less than 90 days' written notice
delivered or mailed by registered mail, postage prepaid, to IMCO.
(d) This Agreement automatically and immediately shall terminate with
respect to the Funds, without the payment of any penalty, in the event of its
assignment (as that term is defined in the 1940 Act or interpreted under
applicable rules and regulations of the Commission) or if the Investment
Advisory Agreement shall terminate for any reason.
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(e) Any notice of termination served on Renaissance by IMCO shall be
without prejudice to the obligation of Renaissance to complete transactions
already initiated or acted upon with respect to a Fund.
Upon termination of this Agreement, the duties of IMCO delegated to
Renaissance under this Agreement automatically shall revert to IMCO.
Notwithstanding any termination of this Agreement with respect to a Fund,
Sections 5, 10(a), 10(e), 11(a), and 11(c) of this Agreement shall remain in
effect after any such termination.
7. AMENDMENT OF AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this Agreement shall be
effective until approved in the manner required by the 1940 Act, any rules
thereunder or any exemptive or other relief granted by the SEC or its staff
(Applicable Law).
8. APPROVAL, AMENDMENT, OR TERMINATION BY INDIVIDUAL FUND. Any approval,
amendment, or termination of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 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/or (ii) that such action has not been approved by the vote
of a majority of the outstanding voting securities of the Trust, unless such
action shall be required by any applicable law or otherwise.
9. SERVICES NOT EXCLUSIVE. The services of Renaissance to IMCO in connection
with the Funds hereunder are not to be deemed exclusive, and Renaissance shall
be free to render investment advisory services to others. It is understood that
the persons employed by Renaissance to assist in the performance of its duties
hereunder will not devote their full time to such services and nothing contained
herein shall be deemed to limit or restrict in any manner whatsoever the right
of Renaissance to engage in or devote time and attention to other businesses or
to render services of whatever kind or nature. It is understood that IMCO may
appoint at any time in accordance with Applicable Law one or more subadvisers,
in addition to Renaissance, or IMCO itself, to perform investment advisory
services to any portion of the Funds.
10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. Renaissance shall, upon reasonable notice,
afford IMCO at all reasonable times access to Renaissance's officers, employees,
agents and offices and to all its relevant books and records and shall furnish
IMCO with all relevant financial and other data and information as requested;
provided, however, that nothing contained herein shall obligate Renaissance to
provide IMCO with access to the books and records of Renaissance relating to any
other accounts other than the Funds.
(B) CONFIDENTIALITY. All information and advice furnished by one party to
the other party (including their respective officers, employees and authorized
representatives) shall be treated confidentially and as proprietary information.
Each party will not use such records and
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information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the other party, which approval shall not be unreasonably withheld and may not
be withheld where a party may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the other party.
Notwithstanding the foregoing, and in light of the publicly disclosed status of
mutual fund subadvisory relationships, IMCO agrees that Renaissance may refer to
IMCO and/or the Trust on a representative client list.
(C) PRIVACY POLICY. Renaissance acknowledges that nonpublic customer
information (as defined in Regulation S-P, including any amendments thereto) of
customers of the Funds received from IMCO is subject to the limitations on
redisclosure and reuse set forth in Section 248.11 of such Regulation, and
agrees such information (i) shall not be disclosed to any third party for any
purpose without the written consent of IMCO unless permitted by exceptions set
forth in Sections 248.14 or 248.15 of such Regulation and (ii) shall be
safeguarded pursuant to procedures adopted under Section 248.30 of such
Regulation if so required.
(D) PUBLIC ANNOUNCEMENTS. No party shall issue any press release or
otherwise make any public statements with respect to the matters covered by this
Agreement without the prior written consent of the other parties hereto, which
consent shall not be unreasonably withheld; provided, however, that consent
shall not be required if, in the opinion of counsel, such disclosure is required
by law; provided further, however, that the party making such disclosure shall
provide the other parties hereto with as much prior written notice of such
disclosure as is practical under the circumstances.
(E) NOTIFICATIONS. Renaissance agrees that it will promptly notify IMCO in
the event that: (i) Renaissance becomes or reasonably expects to become the
subject of an administrative proceeding or enforcement action by the Commission
or other regulatory body with applicable jurisdiction or (ii) to the best of
Renaissance's knowledge, any affiliate of Renaissance becomes or reasonably
expects to become the subject of an administrative proceeding or enforcement
action by the Commission or other regulatory body with applicable jurisdiction
that could reasonably be expected to have a material adverse effect upon the
ability of Renaissance to perform its duties under this Agreement..
(F) INSURANCE. Renaissance 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 Renaissance's business activities.
(G) SHAREHOLDER MEETING AND OTHER EXPENSES. In the event that the Trust
shall be required to call a meeting of shareholders or send an information
statement or prospectus supplement to shareholders solely due to actions
involving Renaissance, including, without limitation, a change of control of
Renaissance or a portfolio manager change, Renaissance shall bear all reasonable
expenses associated with such shareholder meeting, information statement, or
prospectus supplement.
10
11. MISCELLANEOUS.
(A) NOTICES. All notices or other communications given under this Agreement
shall be made by guaranteed overnight delivery, telecopy or certified mail;
notice is effective when received. Notice shall be given to the parties at the
following addresses:
IMCO: USAA Investment Management Company
0000 Xxxxxxxxxxxxxx Xxxx, X-X0-X
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Securities Counsel
Renaissance: RENAISSANCE INVESTMENT MANAGEMENT
000 XXXX XXXX XXXXX, XXXXX 0000
XXXXXXXXXX, XX 00000
ATTENTION: CHIEF COMPLIANCE OFFICER
(B) SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors.
(C) GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Texas, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Texas conflict with the applicable provisions of
the 1940 Act, the latter shall control.
(D) COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(E) HEADINGS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(F) ENTIRE AGREEMENT. This Agreement states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act.
11
IN WITNESS WHEREOF, IMCO and Renaissance have caused this Agreement to be
executed as of the date first set forth above.
Attest: USAA INVESTMENT MANAGEMENT COMPANY
By: By:
-------------------------- ------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. Xxxxx
Title: Secretary Title: Vice President
By: ---------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Authorized Signatory
Attest: THE RENAISSANCE GROUP, LLC
By: By:
----------------------------- ------------------------------
Name: Name:
Title: Title:
12
SCHEDULE A
GROWTH FUND
13
SCHEDULE B
FEES
Fund Account Rate per annum of the average
daily net assets of the Fund Account
Growth Fund 0.20%*
* Renaissance agrees that it will not seek to increase this fee rate during the
period ending December 2, 2011 (the Lock). This Lock does not limit the rights
of the Fund's shareholders, the Fund's Board, or IMCO as set forth in Section 6
of the Agreement ("Duration and Termination of this Agreement").
14
EXHIBIT d(xxiv)
FORM OF
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the ___ day of September, 2007 (the Effective Date)
between USAA INVESTMENT MANAGEMENT COMPANY, a corporation organized under the
laws of the State of Delaware and having its principal place of business in San
Antonio, Texas (IMCO) and CREDIT SUISSE SECURITIES (USA) LLC, a limited
liability company organized under the laws of the State of Delaware and having
its principal place of business in New York (Credit Suisse).
WHEREAS, IMCO serves as the investment adviser to USAA Mutual Funds Trust,
a statutory trust organized under the laws of the State of Delaware (the Trust)
and registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, under its Investment Advisory Agreement with the Trust (Investment
Advisory Agreement), IMCO is authorized to appoint subadvisers for series of the
Trust (each a Fund, or collectively Funds); and
WHEREAS, IMCO wishes to retain Credit Suisse to render investment advisory
services to such series (or portions thereof) of the Trust as now or hereafter
may be identified in Schedule A to this Agreement, as such Schedule A may be
amended from time to time (each such series or portion thereof referred to
herein as a Fund Account and collectively as Fund Accounts); and
WHEREAS, Credit Suisse is willing to provide such services to the Fund
Accounts and IMCO upon the terms and conditions and for the compensation set
forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT OF CREDIT SUISSE. IMCO hereby appoints Credit Suisse to act as an
investment adviser for each Fund Account in accordance with the terms and
conditions of this Agreement. Credit Suisse will be an independent contractor
and will have no authority to act for or represent the Trust or IMCO in any way
or otherwise be deemed an agent of the Trust or IMCO except as expressly
authorized in this Agreement or another writing by the Trust, IMCO and Credit
Suisse. Credit Suisse accepts such appointment and agrees to render the services
herein set forth for the compensation herein provided.
2. DUTIES OF CREDIT SUISSE.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO and
the Trust's Board of Trustees (the Board), Credit Suisse shall have full
discretion to manage, supervise and direct the development and implementation of
an index options overlay strategy on the Fund Accounts for the purpose of acting
as a migrating collar on a portion of the Fund's equity exposure. Other than as
provided for herein, Credit Suisse will not have discretionary management
authority over the securities held in the Fund Account. IMCO shall designate the
maximum Total Value of options to be written for each Fund Account. Total Value
shall be equal to, on a cumulative basis, the fair market value of the index
underlying the options at the time of execution of the options positions. Credit
Suisse shall adjust the options strategy in accordance with written guidelines
provided by IMCO from time to time.
Credit Suisse shall perform its duties described herein in a manner consistent
with the investment objective, policies and restrictions set forth in the then
current Prospectus and Statement of Additional Information (SAI) for each
1
Fund, as provided to Credit Suisse by IMCO from time to time. Should Credit
Suisse anticipate materially modifying its investment process, it must provide
written notice in advance to IMCO, and any affected Prospectus and SAI should be
amended accordingly.
For each Fund set forth on Schedule A to this Agreement, Credit Suisse
shall not consult with any other subadviser of such Fund concerning transactions
for the Fund in securities or other assets.
In accordance with Subsection (b) of this Section 2, Credit Suisse shall
arrange for the execution of all orders for the purchase and sale of securities
and other investments for each Fund Account and will exercise full discretion
and act for the Trust in the same manner and with the same force and effect as
the Trust might or could do with respect to such purchases, sales, or other
transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales, or other
transactions.
In the performance of its duties, Credit Suisse will act in the best
interests of each Fund and will comply with (i) applicable laws and regulations,
including, but not limited to, the 1940 Act and the Investment Advisers Act of
1940, as amended (Advisers Act), and the rules under each, (ii) the terms of
this Agreement, (iii) the stated investment objective, policies and restrictions
of each Fund, as stated in the then-current Registration Statement of each Fund,
(iv) the Trust's compliance procedures and other policies, procedures or
guidelines as the Board or IMCO reasonably may establish from time to time, (v)
the provisions of the Internal Revenue Code of 1986, as amended (Code),
applicable to "regulated investment companies" (as defined in Section 851 of the
Code), as from time to time in effect, and (vi) the written instructions of
IMCO. Credit Suisse shall establish compliance procedures reasonably calculated
to ensure compliance with the foregoing. IMCO shall be responsible for providing
Credit Suisse with the Trust's Master Trust Agreement, as amended and
supplemented, the Trust's By-Laws and amendments thereto and current copies of
the materials specified in Subsections (a)(iii) and (iv) of this Section 2. IMCO
shall provide Credit Suisse with prior written notice of any material change to
the Trust's Registration Statement that would affect Credit Suisse's management
of a Fund Account.
(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, Credit Suisse will
select the brokers or dealers that will execute purchase and sale transactions
for the Fund Accounts, subject to the conditions herein. In the selection of
broker-dealers and the placement of orders for the purchase and sale of
portfolio investments for the Fund Accounts, Credit Suisse shall use its best
efforts to seek to obtain for the Fund Accounts the most favorable price and
execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described below. In
using its best efforts to seek to obtain the most favorable price and execution
available, Credit Suisse, bearing in mind each Fund's best interests at all
times, shall consider all factors it deems relevant, including by way of
illustration, price, the size of the transaction, the nature of the market for
the security, the amount of the commission and dealer's spread or xxxx-up, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker-dealer involved,
the general execution and operational facilities of the broker-dealer and the
quality of service rendered by the broker-dealer in other transactions.
Subject to such policies as the Board may determine and to the extent
authorized by Section 28(e) of the Securities Exchange Act of 1934 (Exchange
Act), Credit Suisse shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused a Fund Account to pay a broker-dealer that provides brokerage and
research services to Credit Suisse an amount of
2
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker-dealer offering equally good execution
capability in the portfolio investment would have charged for effecting that
transaction if Credit Suisse determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or Credit Suisse's overall responsibilities with respect
to the Fund and to other clients of Credit Suisse as to which Credit Suisse
exercises investment discretion. The Board or IMCO may direct Credit Suisse to
effect transactions in portfolio securities through broker-dealers in a manner
that will help generate resources to pay the cost of certain expenses that the
Trust is required to pay or for which the Trust is required to arrange payment.
On occasions when Credit Suisse deems the purchase or sale of a security to
be in the best interest of a Fund as well as other clients of Credit Suisse,
Credit Suisse, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by Credit Suisse in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to its other clients over time.
Credit Suisse may buy securities for a Fund Account at the same time it is
selling such securities for another client account and may sell securities for a
Fund Account at the time it is buying such securities for another client
account. In such cases, subject to applicable legal and regulatory requirements,
and in compliance with such procedures of the Trust as may be in effect from
time to time, Credit Suisse may effectuate cross transactions between a Fund
Account and such other account if it deems this to be advantageous.
Credit Suisse will advise the Funds' custodian or such depository or agents
as may be designated by the custodian and IMCO promptly of each purchase and
sale of a portfolio security, specifying the name of the issuer, the description
and amount or number of shares of the security purchased, the market price, the
commission and gross or net price, the trade date and settlement date, the
identity of the effecting broker or dealer and any other pertinent data that the
Funds' custodian may need to settle a security's purchase or sale. Credit Suisse
shall not have possession or custody of any Fund's investments. The Trust shall
be responsible for all custodial agreements and the payment of all custodial
charges and fees and, upon Credit Suisse giving proper instructions to the
custodian, Credit Suisse shall have no responsibility or liability for the acts,
omissions or other conduct of the custodian, depository, or other agent
designated by the custodian and IMCO.
Notwithstanding the foregoing, Credit Suisse agrees that IMCO shall have
the right by written notice to identify securities that may not be purchased on
behalf of any Fund and/or brokers and dealers through which portfolio
transaction on behalf of the Fund may not be effected, including, without
limitation, brokers or dealers affiliated with IMCO. Credit Suisse shall refrain
from purchasing such securities for a Fund Account or directing any portfolio
transaction to any such broker or dealer on behalf of a Fund Account, unless and
until the written approval of IMCO to do so is obtained. In addition, Credit
Suisse agrees that it shall not direct portfolio transactions for the Fund
Accounts through any broker or dealer that is an "affiliated person" (as that
term is defined in the 1940 Act or interpreted under applicable rules and
regulations of the Commission) of Credit Suisse, except as permitted under the
1940 Act. IMCO agrees that it will provide Credit Suisse with a list of brokers
and dealers that are affiliated persons of the Funds, or affiliated persons of
such persons, and shall timely update that list as the need arises. The Funds
agree that any entity or person associated with IMCO or Credit Suisse that is a
member of a national securities exchange is authorized to effect any transaction
on such exchange for the account
3
of the Funds that is permitted by Section 11(a) of the Exchange Act, and the
Funds consent to the retention of compensation for such transactions.
(C) EXPENSES. Credit Suisse, at its expense, will furnish all necessary
facilities and personnel, including salaries, expenses and fees of any personnel
required for Credit Suisse to faithfully perform its duties under this Agreement
and administrative facilities, including bookkeeping, and all equipment and
services necessary for the efficient conduct of Credit Suisse's duties under
this Agreement. However, Credit Suisse shall not be obligated to pay any
expenses of IMCO, the Trust or the Funds, including without limitation, interest
and taxes, brokerage commissions and other costs in connection with the purchase
or sale of securities or other investment instruments for the Funds and
custodian fees and expenses.
(D) VALUATION. Securities traded on a national securities exchange or the
NASDAQ market for which market quotes are readily available are valued on each
day the New York Stock Exchange is open for business. For those securities for
which market quotes are not readily available, Credit Suisse, at its expense,
will provide reasonable assistance to IMCO regarding the valuation of securities
that are the subject of a significant event, not registered for public sale, not
traded on any securities markets, or otherwise deemed illiquid for purposes of
the 0000 Xxx. The parties acknowledge that IMCO is responsible for final pricing
determinations and calculations, and that Credit Suisse will take such steps as
necessary to assist IMCO in reaching such pricing determinations for Fund
Account securities. Credit Suisse also shall monitor for "significant events"
that occur after the closing of a market but before the Funds calculate their
net asset values and that may affect the valuation of any Fund Account's
portfolio securities and shall notify IMCO immediately of the occurrence of any
such events.
(E) REPORTS AND AVAILABILITY OF PERSONNEL. Credit Suisse, at its expense,
shall render to the Board and IMCO such periodic and special reports as the
Board and IMCO may reasonably request with respect to matters relating to the
duties of Credit Suisse set forth herein. Credit Suisse, at its expense, will
make available to the Board and IMCO at reasonable times its portfolio managers
and other appropriate personnel in order to review investment policies of the
Funds and to consult with the Board and IMCO regarding the investment affairs of
the Funds, including economic, statistical and investment matters relevant to
Credit Suisse's duties hereunder.
(F) COMPLIANCE MATTERS. Credit Suisse, at its expense, will provide IMCO
with such compliance reports relating to its duties under this Agreement as may
be agreed upon by such parties from time to time. Credit Suisse also shall
cooperate with and provide reasonable assistance to IMCO, the Trust's
administrator, the Trust's custodian and foreign custodians, the Trust's
transfer agent and pricing agents and all other agents and representatives of
the Trust and IMCO, keep all such persons fully informed as to such matters as
they may reasonably deem necessary to the performance of their obligations to
the Trust and IMCO, provide prompt responses to reasonable requests made by such
persons and maintain any appropriate interfaces with each so as to promote the
efficient exchange of information.
(G) BOOKS AND RECORDS. Credit Suisse will maintain for the Funds all books
and records required to be maintained by the Funds pursuant to the 1940 Act and
the rules and regulations promulgated thereunder insofar as such records relate
to the investment affairs of the Fund Accounts. Pursuant to Rule 31a-3 under the
1940 Act, Credit Suisse agrees that: (i) all records it maintains for a Fund
Account are the property of the Fund; (ii) it will surrender promptly to a Fund
or IMCO any such records (or copies of such records) upon the Fund's or IMCO's
request; and (iii) it will preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records it
4
maintains for any Fund Account. Notwithstanding subsection (ii) above, Credit
Suisse may maintain copies of such records to comply with its recordkeeping
obligations.
(H) PROXIES. Unless and until Credit Suisse is otherwise directed by IMCO
or the Board, IMCO will vote proxies with respect to a Fund Account's securities
and exercise rights in corporate actions or otherwise in accordance with IMCO's
proxy voting guidelines.
3. ADVISORY FEE. IMCO shall pay to Credit Suisse as compensation for Credit
Suisse's services rendered pursuant to this Agreement a fee based on the total
Notional Amount for each Fund Account at the annual rates set forth in Schedule
B, which schedule can be modified from time to time, subject to any appropriate
approvals required by the 1940 Act. Such fees shall be calculated daily and
payable monthly in arrears within 15 business days after the end of such month.
IMCO (and not the Funds) shall pay such fees. If Credit Suisse shall serve for
less than the whole of a month, the compensation as specified shall be prorated
based upon the number of calendar days during which this Agreement is in effect
during such month. "Notional Amount" is equal to the daily closing price of the
index underlying options strategies written for each Fund Account using the
closing price listed on an agreed upon exchange.
4. REPRESENTATIONS AND WARRANTIES.
(A) CREDIT SUISSE. Credit Suisse represents and warrants to IMCO that (i)
the retention of Credit Suisse by IMCO as contemplated by this Agreement is
authorized by Credit Suisse's governing documents; (ii) the execution, delivery
and performance of this Agreement does not violate any obligation by which
Credit Suisse or its property is bound, whether arising by contract, operation
of law or otherwise; (iii) this Agreement has been duly authorized by
appropriate action of Credit Suisse and when executed and delivered by Credit
Suisse will be a legal, valid and binding obligation of Credit Suisse,
enforceable against Credit Suisse in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or law); (iv) Credit
Suisse is registered as an investment adviser under the Advisers Act; (v) Credit
Suisse has adopted a written code of ethics complying with the requirements of
Rule 17j-1 under the 1940 Act and that Credit Suisse and certain of its
employees, officers, partners and directors are subject to reporting
requirements thereunder and, accordingly, agrees that it shall, on a timely
basis, furnish a copy of such code of ethics to IMCO, and, with respect to such
persons, Credit Suisse shall furnish to IMCO all reports and information
provided under Rule 17j-1(c)(2); (vi) Credit Suisse is not prohibited by the
1940 Act, the Advisers Act or other law, regulation or order from performing the
services contemplated by this Agreement; (vii) Credit Suisse will promptly
notify IMCO of the occurrence of any event that would disqualify Credit Suisse
from serving as investment manager of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise; (viii) Credit Suisse has provided IMCO with a
copy of its Form ADV, which as of the date of this Agreement is its Form ADV as
most recently filed with the SEC, and promptly will furnish a copy of all
amendments to IMCO at least annually; (ix) Credit Suisse will notify IMCO of any
"assignment" (as defined in the 0000 Xxx) of this Agreement or change of control
of Credit Suisse, as applicable, and any changes in the key personnel who are
either the portfolio manager(s) of any Fund Account or senior management of
Credit Suisse, in each case prior to or promptly after, such change; and (x)
Credit Suisse has adequate disaster recovery and interruption prevention
measures to ensure business resumption in accordance with applicable law and
within industry standards. Credit Suisse makes no representation or
5
warranty, express or implied, that any level of performance or investment
results will be achieved by the Fund, whether on a relative or absolute basis.
(B) IMCO. IMCO represents and warrants to Credit Suisse that (i) the
retention of Credit Suisse by IMCO as contemplated by this Agreement is
authorized by the respective governing documents of the Trust and IMCO; (ii) the
execution, delivery and performance of each of this Agreement and the Investment
Advisory Agreement does not violate any obligation by which the Trust or IMCO or
their respective property is bound, whether arising by contract, operation of
law or otherwise; (iii) each of this Agreement and the Investment Advisory
Agreement has been duly authorized by appropriate action of the Trust and IMCO
and when executed and delivered by IMCO will be a legal, valid and binding
obligation of the Trust and IMCO, enforceable against the Trust and IMCO in
accordance with its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or law); (iv) IMCO is registered as an investment adviser
under the Advisers Act; (v) IMCO has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and that IMCO and certain
of its employees, officers and directors are subject to reporting requirements
thereunder; (vi) IMCO is not prohibited by the 1940 Act, the Advisers Act or
other law, regulation or order from performing the services contemplated by this
Agreement; (vii) IMCO will promptly notify Credit Suisse of the occurrence of
any event that would disqualify IMCO from serving as investment manager of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise; and
(viii) IMCO and/or its affiliates have adopted and use their best efforts to
enforce their policies to identify and prevent investors in the Fund from market
timing the purchase and sale of the Fund's shares or engaging in arbitrage
activity to the detriment of long-term investors in the Fund.
5. LIABILITY AND INDEMNIFICATION.
(A) CREDIT SUISSE. Credit Suisse shall be liable for any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) to which the Trust, a Fund, IMCO, any affiliated persons thereof
(within the meaning of the 0000 Xxx) and any controlling persons thereof (as
described in Section 15 of the Securities Act of 1933, as amended (the 1933
Act)) (collectively, IMCO Indemnities) may become subject under the 1933 Act,
the 1940 Act, the Advisers Act, or under any other statute, at common law or
otherwise arising out of (i) any negligence, willful misconduct, bad faith or
reckless disregard of Credit Suisse in the performance of any of its duties or
obligations hereunder or (ii) any untrue statement of a material fact contained
in the Prospectus and SAI, proxy materials, reports, advertisements, sales
literature, or other materials pertaining to the Funds or the omission to state
therein a material fact known to Credit Suisse which was required to be stated
therein or necessary to make the statements therein not misleading, if such
statement or omission was made in reliance upon information furnished in writing
to IMCO or the Trust by Credit Suisse Indemnities (as defined below) for use
therein. Credit Suisse shall indemnify and hold harmless the IMCO Indemnities
for any and all such losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses); provided, however, that in no
case is Credit Suisse's indemnity hereunder deemed to protect a person against
any liability to which any such person would otherwise be subject by reason of
willful misconduct, bad faith or gross negligence in performance of its duties
under this Agreement or the Investment Advisory Agreement with the Trust.
(B) IMCO. IMCO shall be liable for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which Credit Suisse, any affiliated persons thereof (within the meaning of the
0000 Xxx) and any controlling persons thereof (as described in Section 15 of the
1933 Act)
6
(collectively, Credit Suisse Indemnities) may become subject under the 1933 Act,
the 1940 Act, the Advisers Act, or under any other statute, at common law or
otherwise arising out of (i) any negligence, willful misconduct, bad faith or
reckless disregard by IMCO in the performance of any of its duties or
obligations hereunder or (ii) any untrue statement of a material fact contained
in the Prospectus and SAI, proxy materials, reports, advertisements, sales
literature, or other materials pertaining to the Funds or the omission to state
therein a material fact known to IMCO which was required to be stated therein or
necessary to make the statements therein not misleading, unless such statement
or omission was made in reliance upon information furnished in writing to IMCO
or the Trust. IMCO shall indemnify and hold harmless Credit Suisse Indemnities
for any and all such losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses); provided, however, that in no
case shall IMCO's indemnity hereunder be deemed to protect a person against any
liability to which any such person would otherwise be subject by reason of
willful misconduct, bad faith or gross negligence in the performance of its
duties under this Agreement.
6. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective with respect to a Fund upon its execution; provided, however, that
this Agreement shall not become effective with respect to a Fund unless it has
first been approved in the manner required by the 1940 Act and rules thereunder
or in accordance with exemptive or other relief granted by the SEC or its staff.
This Agreement shall remain in full force and effect continuously thereafter,
except as follows:
(a) By vote of a majority of (i) the Board members who are not "interested
persons" (as defined in the 0000 Xxx) of the Funds, IMCO, or Credit Suisse
(Independent Board Members) or (ii) the outstanding voting shares of a Fund,
such Fund may at any time terminate this Agreement, without the payment of any
penalty, by providing not more than 60 days' written notice delivered or mailed
by registered mail, postage prepaid, to IMCO and Credit Suisse.
(b) This Agreement will terminate automatically with respect to a Fund,
without the payment of any penalty, unless within two years after its initial
effectiveness and at least annually thereafter, the continuance of the Agreement
is specifically approved by (i) the Board or the shareholders of the Fund by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Independent Board Members, by vote cast in person at a meeting
called for the purpose of voting on such approval. If the continuance of this
Agreement is submitted to the shareholders of the Fund for their approval and
such shareholders fail to approve such continuance as provided herein, Credit
Suisse may continue to serve hereunder in a manner consistent with the 1940 Act
and the rules thereunder.
(c) IMCO may at any time terminate this Agreement with respect to a Fund,
without the payment of any penalty, by written notice delivered in person or by
facsimile, or mailed by registered mail, postage prepaid, to Credit Suisse.
Credit Suisse may at any time, without the payment of any penalty, terminate
this Agreement with respect to a Fund by not less than 90 days' written notice
delivered or mailed by registered mail, postage prepaid, to IMCO.
(d) This Agreement automatically and immediately shall terminate with
respect to the Funds, without the payment of any penalty, in the event of its
assignment (as that term is defined in the 1940 Act or interpreted under
applicable rules and regulations of the Commission) or if the Investment
Advisory Agreement shall terminate for any reason.
7
(e) Any notice of termination served on Credit Suisse by IMCO shall be
without prejudice to the obligation of Credit Suisse to complete transactions
already initiated or acted upon with respect to a Fund.
Upon termination of this Agreement, the duties of IMCO delegated to Credit
Suisse under this Agreement automatically shall revert to IMCO. Notwithstanding
any termination of this Agreement with respect to a Fund, Sections 5, 10(a),
10(e), 11(a), and 11(c) of this Agreement shall remain in effect after any such
termination.
7. AMENDMENT OF AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this Agreement shall be
effective until approved in the manner required by the 1940 Act, any rules
thereunder or any exemptive or other relief granted by the SEC or its staff
(Applicable Law).
8. APPROVAL, AMENDMENT, OR TERMINATION BY INDIVIDUAL FUND. Any approval,
amendment, or termination of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 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/or (ii) that such action has not been approved by the vote
of a majority of the outstanding voting securities of the Trust, unless such
action shall be required by any applicable law or otherwise.
9. SERVICES NOT EXCLUSIVE. The services of Credit Suisse to IMCO in connection
with the Funds hereunder are not to be deemed exclusive, and Credit Suisse shall
be free to render investment advisory services to others so long as its services
hereunder are not impaired thereby. It is understood that the persons employed
by Credit Suisse to assist in the performance of its duties hereunder will not
devote their full time to such services and nothing contained herein shall be
deemed to limit or restrict in any manner whatsoever the right of Credit Suisse
to engage in or devote time and attention to other businesses or to render
services of whatever kind or nature. It is understood that IMCO may appoint at
any time in accordance with Applicable Law one or more subadvisers, in addition
to Credit Suisse, or IMCO itself, to perform investment advisory services to any
portion of the Funds.
10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. Credit Suisse shall, upon reasonable notice,
afford IMCO at all reasonable times access to Credit Suisse's officers,
employees, agents and offices and to all its relevant books and records and
shall furnish IMCO with all relevant financial and other data and information as
requested; provided, however, that nothing contained herein shall obligate
Credit Suisse to provide IMCO with access to the books and records of Credit
Suisse relating to any other accounts other than the Funds.
(B) CONFIDENTIALITY. All information and advice furnished by one party to
the other party (including their respective officers, employees and authorized
representatives) shall be treated confidentially and as proprietary information.
Each party will not use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except after prior
notification to and approval in writing by the other party, which approval shall
not be unreasonably withheld and may not be withheld where a party may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly
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constituted authorities, when so requested by the other party, or as otherwise
required by applicable law or regulation.
(C) PRIVACY POLICY. Credit Suisse acknowledges that nonpublic customer
information (as defined in Regulation S-P, including any amendments thereto) of
customers of the Funds received from IMCO is subject to the limitations on
redisclosure and reuse set forth in Section 248.11 of such Regulation, and
agrees such information (i) shall not be disclosed to any third party for any
purpose without the written consent of IMCO unless permitted by exceptions set
forth in Sections 248.14 or 248.15 of such Regulation and (ii) shall be
safeguarded pursuant to procedures adopted under Section 248.30 of such
Regulation if so required.
(D) PUBLIC ANNOUNCEMENTS. No party shall issue any press release or
otherwise make any public statements with respect to the matters covered by this
Agreement without the prior written consent of the other parties hereto, which
consent shall not be unreasonably withheld; provided, however, that consent
shall not be required if, in the opinion of counsel, such disclosure is required
by law; provided further, however, that the party making such disclosure shall
provide the other parties hereto with as much prior written notice of such
disclosure as is practical under the circumstances.
(E) NOTIFICATIONS. Credit Suisse agrees that it will promptly notify IMCO
in the event that: (i) Credit Suisse becomes or reasonably expects to become the
subject of an administrative proceeding or enforcement action by the Commission
or other regulatory body with applicable jurisdiction or (ii) to the best of
Credit Suisse's knowledge, any affiliate of Credit Suisse becomes or reasonably
expects to become the subject of an administrative proceeding or enforcement
action by the Commission or other regulatory body with applicable jurisdiction
that could reasonably be expected to have a material adverse effect upon the
ability of Credit Suisse to perform its duties under this Agreement.
(F) INSURANCE. Credit Suisse 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 Credit Suisse's business activities.
(G) SHAREHOLDER MEETING AND OTHER EXPENSES. In the event that the Trust
shall be required to call a meeting of shareholders or send an information
statement or prospectus supplement to shareholders solely due to actions
involving Credit Suisse, including, without limitation, a change of control of
Credit Suisse or a portfolio manager change, Credit Suisse shall bear all
reasonable expenses associated with such shareholder meeting, information
statement, or prospectus supplement.
11. MISCELLANEOUS.
(A) NOTICES. All notices or other communications given under this Agreement
shall be made by guaranteed overnight delivery, telecopy or certified mail;
notice is effective when received. Notice shall be given to the parties at the
following addresses:
IMCO: USAA Investment Management Company
0000 Xxxxxxxxxxxxxx Xxxx, X-X0-X
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Securities Counsel
9
Credit Suisse: Credit Suisse Securities (USA) LLC
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
(B) SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors.
(C) GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Texas, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Texas conflict with the applicable provisions of
the 1940 Act, the latter shall control.
(D) COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(E) HEADINGS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(F) ENTIRE AGREEMENT. This Agreement states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act.
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IN WITNESS WHEREOF, IMCO and Credit Suisse have caused this Agreement to be
executed as of the date first set forth above.
Attest: USAA INVESTMENT MANAGEMENT
COMPANY
By: _______________________________ By: ________________________________
Name: Xxxxx Xxxxxxx Name: Xxxxxx X. Xxxxx
Title: Senior Vice President Title: Vice President
By: ________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Authorized Signatory
Attest: CREDIT SUISSE SECURITIES (USA) LLC
By: _____________________________ By: _______________________________
Name: Name:
Title: Title:
By: ________________________________
Name:
Title:
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SCHEDULE A
First Start Growth Fund
Total Return Strategy Fund
Balanced Strategy Fund
Cornerstone Strategy Fund
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SCHEDULE B
FEES
TOTAL NOTIONAL AMOUNT OF ALL FUND ACCOUNTS ANNUAL SUBADVISORY FEE*
First $0.00 - $50,000,000.00 0.23%
Next $50,000,000.01 - $250,000,000.00 0.20%
Next $250,000,000.01 - $500,000,000.00 0.12%
Next $500,000,000.01 - $2,000,000,000.00 0.10%
Over $2,000,000,000.00 0.08%
--------------------
* Credit Suisse agrees that it will not seek to increase these fee rates
during the period ending October 1, 2010 (the Lock). This Lock does not limit
the rights of the Fund's shareholders, the Fund's Board, or IMCO as set forth in
Section 6 of the Agreement ("Duration and Termination of this Agreement").
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