For the period ended 01/31/06 Series 6
File Number 811-2429
Sub-Item 77Q1(e): Exhibits
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INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of August, 2005 (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 OFI INSTITUTIONAL ASSET MANAGEMENT, a corporation
organized under the laws of the State of New York and having its principal place
of business in New York (OFI).
WHEREAS, IMCO serves as the investment adviser to USAA Mutual Fund,
Inc. a corporation organized under the laws of the state of Maryland (the
Company) and registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, under its Investment Advisory Agreement with the Company
(Investment Advisory Agreement), IMCO is authorized to appoint subadvisers for
series of the Company (each a Fund, or collectively Funds); and
WHEREAS, IMCO wishes to retain OFI to render investment advisory
services to such series (or portions thereof) of the Company as now or hereafter
may be identified in Schedule A to this Agreement, as such Schedule A may be
amended from time to time (each such series or portion thereof referred to
herein as a Fund Account and collectively as Fund Accounts); and
WHEREAS, OFI 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 OFI. IMCO hereby appoints OFI to act as an investment adviser
for each Fund Account in accordance with the terms and conditions of this
Agreement. OFI will be an independent contractor and will have no authority to
act for or represent the Company or IMCO in any way or otherwise be deemed an
agent of the Company or IMCO except as expressly authorized in this Agreement or
another writing by the Company, IMCO and OFI. OFI accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided.
2. DUTIES OF OFI.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO
and the Company's Board of Directors (the Board), OFI, 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. OFI 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 OFI 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, OFI 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, OFI 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 OFI
wishes to hold cash or cash equivalents in excess of 10% of a Fund Account's
assets, OFI must request in writing and receive advance permission from IMCO.
In accordance with Subsection (b) of this Section 2, OFI shall arrange
for the execution of all orders for the purchase and sale of securities and
other investments for each Fund Account and will exercise full discretion and
act for the Company in the same manner and with the same force and effect as the
Company might or could do with respect to such purchases, sales, or other
transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales, or other
transactions.
In the performance of its duties, OFI will act in the best interests of
each Fund and will comply with (i) applicable laws and regulations, including,
but not limited to, the 1940 Act and the Investment Advisers Act of 1940, as
amended (Advisers Act), and the rules under each, (ii) the terms of this
Agreement, (iii) the stated investment objective, policies and restrictions of
each Fund, as stated in the then-current Registration Statement of each Fund,
(iv) the Company's compliance procedures and other policies, procedures or
guidelines as the Board or IMCO reasonably may establish from time to time, (v)
the provisions of the Internal Revenue Code of 1986, as amended (Code),
applicable to "regulated investment companies" (as defined in Section 851 of the
Code), as from time to time in effect, and (vi) the written instructions of
IMCO. OFI shall establish compliance procedures reasonably calculated to ensure
compliance with the foregoing. IMCO shall be responsible for providing OFI with
the Company's Articles of Incorporation, as amended and supplemented, the
Company's By-Laws and amendments thereto and current copies of the materials
specified in Subsections (a)(iii) and (iv) of this Section 2. IMCO shall provide
OFI with prior written notice of any material change to the Company's
Registration Statement that would affect OFI's management of a Fund Account.
(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, OFI 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, OFI shall use its best efforts to obtain for the Fund
Accounts the most favorable price and execution available, except to the extent
it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain the
most favorable price and execution available, OFI, bearing in mind each Fund's
best interests at all times, shall consider all factors it deems relevant,
including by way of
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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 mark-up, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker-dealer involved,
the general execution and operational facilities of the broker-dealer and the
quality of service rendered by the broker-dealer in other transactions.
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), OFI 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 OFI 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 OFI 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 OFI's overall
responsibilities with respect to the Fund and to other clients of OFI as to
which OFI exercises investment discretion. The Board or IMCO may direct OFI to
effect transactions in portfolio securities through broker-dealers in a manner
that will help generate resources to pay the cost of certain expenses that the
Company is required to pay or for which the Company is required to arrange
payment.
On occasions when OFI deems the purchase or sale of a security to be in
the best interest of a Fund as well as other clients of OFI, OFI, 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 OFI 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.
OFI may buy securities for a Fund Account at the same time it is
selling such securities for another client account and may sell securities for a
Fund Account at the time it is buying such securities for another client
account. In such cases, subject to applicable legal and regulatory requirements,
and in compliance with such procedures of the Company as may be in effect from
time to time, OFI may effectuate cross transactions between a Fund Account and
such other account if it deems this to be advantageous.
OFI 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. OFI shall not
have possession or custody of any Fund's investments. The Company shall be
responsible for all custodial agreements and the payment of all custodial
charges and fees and, upon OFI giving proper instructions to the custodian, OFI
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.
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Notwithstanding the foregoing, OFI 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. OFI 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, OFI 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 OFI, except as permitted under the 1940 Act. IMCO agrees that it
will provide OFI 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 OFI that is a member of a national securities exchange
is authorized to effect any transaction on such exchange for the account of the
Funds that is permitted by Section 11(a) of the Exchange Act, and the Funds
consent to the retention of compensation for such transactions.
(C) EXPENSES. OFI, 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 OFI's duties under this Agreement.
However, OFI shall not be obligated to pay any expenses of IMCO, the Company or
the Funds, including without limitation, interest and taxes, brokerage
commissions and other costs in connection with the purchase or sale of
securities or other investment instruments for the Funds and custodian fees and
expenses.
(D) VALUATION. Securities traded on a national securities exchange or
the NASDAQ market for which market quotes are readily available are valued on
each day the New York Stock Exchange is open for business. For those securities
for which market quotes are not readily available, OFI, 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 1940
Act. The parties acknowledge that IMCO is responsible for final pricing
determinations and calculations, and that OFI will take such steps as necessary
to assist IMCO in reaching such pricing determinations for Fund Account
securities. OFI 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. OFI, 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
OFI set forth herein. OFI, 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 OFI's duties hereunder.
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(F) COMPLIANCE MATTERS. OFI, 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. OFI also shall cooperate with and
provide reasonable assistance to IMCO, the Company's administrator, the
Company's custodian and foreign custodians, the Company's transfer agent and
pricing agents and all other agents and representatives of the Company and IMCO,
keep all such persons fully informed as to such matters as they may reasonably
deem necessary to the performance of their obligations to the Company and IMCO,
provide prompt responses to reasonable requests made by such persons and
maintain any appropriate interfaces with each so as to promote the efficient
exchange of information.
(G) BOOKS AND RECORDS. OFI 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, OFI 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, OFI may maintain copies of such records to comply with its
recordkeeping obligations.
(H) PROXIES. Unless and until OFI 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 OFI as compensation for OFI'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 OFI 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.
OFI 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 OFI (the
Substantially Similar Services) and (ii) OFI charges a lower fee for providing
the Substantially Similar Services than it charges with respect to the Fund
Account, then OFI shall reduce its fee with respect to the Fund Account so 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) OFI. OFI represents and warrants to IMCO that (i) the retention of
OFI by IMCO as contemplated by this Agreement is authorized by OFI's governing
documents; (ii) the
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execution, delivery and performance of this Agreement does not violate any
obligation by which OFI 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 OFI and when executed and delivered by OFI will be a
legal, valid and binding obligation of OFI, enforceable against OFI 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) OFI is registered as an investment adviser
under the Advisers Act; (v) OFI has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and that OFI 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, OFI shall furnish to IMCO all reports and information provided under
Rule 17j-1(c)(2); (vi) OFI 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) OFI will promptly notify IMCO of the occurrence of any
event that would disqualify OFI from serving as investment manager of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise; (viii)
OFI 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) OFI will notify
IMCO of any "assignment" (as defined in the 1940 Act) of this Agreement or
change of control of OFI, as applicable, and any changes in the key personnel
who are either the portfolio manager(s) of any Fund Account or senior management
of OFI, in each case prior to or promptly after, such change; and (x) OFI has
adequate disaster recovery and interruption prevention measures to ensure
business resumption in accordance with applicable law and within industry
standards. OFI 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 OFI that (i) the
retention of OFI by IMCO as contemplated by this Agreement is authorized by the
respective governing documents of the Company and IMCO; (ii) the execution,
delivery and performance of each of this Agreement and the Investment Advisory
Agreement does not violate any obligation by which the Company or IMCO or their
respective property is bound, whether arising by contract, operation of law or
otherwise; (iii) each of this Agreement and the Investment Advisory Agreement
has been duly authorized by appropriate action of the Company and IMCO and when
executed and delivered by IMCO will be a legal, valid and binding obligation of
the Company and IMCO, enforceable against the Company and IMCO in accordance
with its terms, subject, as to enforcement, to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and to general equitable
principles (regardless of whether enforcement is sought in a proceeding in
equity or law); (iv) IMCO is registered as an 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 OFI 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
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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) OFI. OFI shall be liable for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which the Company, a Fund, IMCO, any affiliated persons thereof (within the
meaning of the 1940 Act) and any controlling persons thereof (as described in
Section 15 of the Securities Act of 1933, as amended (the 1933 Act))
(collectively, IMCO Indemnities) may become subject under the 1933 Act, the 1940
Act, the Advisers Act, or under any other statute, at common law or otherwise
arising out of (i) any negligence, willful misconduct, bad faith or reckless
disregard of OFI 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 OFI 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 Company by
OFI Indemnities (as defined below) for use therein. OFI 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 OFI'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 Company.
(B) IMCO. IMCO shall be liable for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which OFI, any affiliated persons thereof (within the meaning of the 1940 Act)
and any controlling persons thereof (as described in Section 15 of the 1933 Act)
(collectively, OFI 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
Company. IMCO shall indemnify and hold harmless OFI 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
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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 1940 Act) of the Funds, IMCO, or OFI
(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 OFI.
(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, OFI 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 OFI. OFI 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.
(e) Any notice of termination served on OFI by IMCO shall be without
prejudice to the obligation of OFI to complete transactions already initiated or
acted upon with respect to a Fund.
Upon termination of this Agreement, the duties of IMCO delegated to OFI
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
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voting securities (as defined in the 1940 Act) of any Fund shall be effective to
continue, amend or terminate this Agreement with respect to any such Fund
notwithstanding (i) that such action has not been approved by the holders of a
majority of the outstanding voting securities of any other Fund affected
thereby, and/or (ii) that such action has not been approved by the vote of a
majority of the outstanding voting securities of the Company, unless such action
shall be required by any applicable law or otherwise.
9. SERVICES NOT EXCLUSIVE. The services of OFI to IMCO in connection with the
Funds hereunder are not to be deemed exclusive, and OFI 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 OFI 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 OFI 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 OFI, or IMCO itself, to perform
investment advisory services to any portion of the Funds.
10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. OFI shall, upon reasonable notice, afford
IMCO at all reasonable times access to OFI'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 OFI to provide IMCO with
access to the books and records of OFI 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 constituted
authorities, or when so requested by the other party.
(C) PRIVACY POLICY. OFI 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
9
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. OFI agrees that it will promptly notify IMCO in the
event that: (i) OFI 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 OFI's
knowledge, any affiliate of OFI 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 OFI to perform
its duties under this Agreement..
(F) INSURANCE. OFI 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 OFI's business activities.
(G) SHAREHOLDER MEETING AND OTHER EXPENSES. In the event that the
Company shall be required to call a meeting of shareholders or send an
information statement or prospectus supplement to shareholders solely due to
actions involving OFI, including, without limitation, a change of control of OFI
or a portfolio manager change, OFI shall bear all reasonable expenses associated
with such shareholder meeting, information statement, or prospectus supplement;
provided however, OFI shall not be responsible for any expenses relating to such
other matters in connection with or included in any shareholder meeting,
information statement, or prospectus supplement that is not due to OFI's
actions.
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
OFI: OppenheimerFunds, Inc.
Two World Financial Center
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 10281-1008
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxx, Vice President &
Associate Counsel
With a copy to:
OFI Institutional Asset Management
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0000 Xxxxx Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxx Xxxxxxxxx
(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 OFI have caused this Agreement to be
executed as of the date first set forth above.
Attest: USAA INVESTMENT MANAGEMENT
COMPANY
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxx
--------------------------------- -----------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxxxxxx X. Xxxxx
Title: Secretary Title: President
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Authorized Signatory
Attest: OFI INSTITUTIONAL ASSET MANAGEMENT
By: /s/ Xxxxxx X. Xxxxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
---------------------- ---------------------
Name: Xxxxxx X. Xxxxxxxxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: CIO - Fixed Income Title: President
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SCHEDULE A
INCOME STOCK FUND
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SCHEDULE B
FEES
FUND ACCOUNT RATE PER ANNUM OF THE AVERAGE
DAILY NET ASSETS OF THE FUND ACCOUNT
Income Stock Fund 0.085% on amounts up to $500 million; and
0.075% on amounts in excess of $500
million.*
--------
* OFI agrees that it will not seek to increase these fee rates during the
three-year period ending July 31, 2008 (the Three-Year Lock). This Three-Year
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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