INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 11th day
of January, 2010, (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 Epoch
Investment Partners, Inc., organized under the laws of the state of Delaware and
having its principal place of business in New York City, New York
(Epoch).
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 Epoch 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, Epoch 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 Epoch. IMCO
hereby appoints Epoch to act as an investment adviser for each Fund Account in
accordance with the terms and conditions of this Agreement. Epoch 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 Epoch. Epoch accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. Duties of Epoch.
(a) Authority to Invest. Subject
to the control and supervision of IMCO and the Trust’s Board of Trustees (the
Board), Epoch, 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. Epoch 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 Epoch 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, Epoch 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, Epoch 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 Epoch wishes to hold cash or cash
equivalents in excess of 10% of a Fund Account’s assets, Epoch must request in
writing and receive advance permission from IMCO.
In accordance with Subsection (b) of
this Section 2, Epoch 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, Epoch
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. Epoch shall establish
compliance procedures reasonably calculated to ensure compliance with the
foregoing. IMCO shall be responsible for providing Epoch 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 Epoch with prior written notice
of any material change to the Trust’s Registration Statement that would affect
Epoch’s management of a Fund Account.
(b) Portfolio Transactions. In
connection with the management of the investment and reinvestment of the Fund
Accounts’ assets, Epoch 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, Epoch 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, Epoch, 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), Epoch 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 Epoch 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 Epoch 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 Epoch’s overall
responsibilities with respect to the Fund and to other clients of Epoch as to
which Epoch exercises investment discretion. The Board or IMCO may direct Epoch
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 Epoch deems the
purchase or sale of a security to be in the best interest of a Fund as well as
other clients of Epoch, Epoch, 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 Epoch 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.
Epoch 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, Epoch may effectuate cross
transactions between a Fund Account and such other account if it deems this to
be advantageous.
Epoch 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. Epoch 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 Epoch giving proper
instructions to the custodian, Epoch 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, Epoch
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. Epoch 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, Epoch 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 Epoch, except as
permitted under the 1940 Act. IMCO agrees that it will provide Epoch 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 Epoch (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. Epoch, 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 Epoch’s duties under this Agreement. However, Epoch 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, Epoch, 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 Epoch
will take such steps as are reasonably necessary to assist IMCO in reaching such
pricing determinations for Fund Account securities. Epoch 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. Epoch, 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 Epoch set forth herein. Epoch, 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 Epoch’s duties hereunder.
(f) Compliance Matters. Epoch, 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. Epoch 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. Epoch 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, Epoch 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, Epoch may maintain copies of such records to comply with its
recordkeeping obligations.
(h) Proxies. Unless and until
Epoch 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 Epoch as compensation for Epoch’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
fifteen (15) business days after the end of such month. IMCO (and not the Funds)
shall pay such fees. If Epoch 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.
4. Representations And
Warranties.
(a) Epoch. Epoch represents and
warrants to IMCO that (i) the retention of Epoch by IMCO as contemplated by this
Agreement is authorized by Epoch’s governing documents; (ii) the execution,
delivery, and performance of this Agreement does not violate any obligation by
which Epoch 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 Epoch and when executed and delivered by Epoch will be a legal, valid,
and binding obligation of Epoch, enforceable against Epoch 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) Epoch is registered as an investment
adviser under the Advisers Act; (v) Epoch has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act and that Epoch
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, Epoch shall furnish to IMCO all reports and information
provided under Rule 17j-1(c)(2); (vi) Epoch 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) Epoch will promptly notify IMCO of the
occurrence of any event that would disqualify Epoch from serving as investment
manager of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise; (viii) Epoch 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) Epoch will notify IMCO of any “assignment” (as defined in the
0000 Xxx) of this Agreement or change of control of Epoch, as applicable, and
any changes in the key personnel who are either the portfolio manager(s) of any
Fund Account or senior management of Epoch, in each case prior to or promptly
after, such change; and (x) Epoch has adequate disaster recovery and
interruption prevention measures to ensure business resumption in accordance
with applicable law and within industry standards. Epoch 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 Epoch that (i) the retention of Epoch 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 Epoch 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 Epoch 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 Epoch 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) Epoch. Epoch 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 Epoch
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 Epoch 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 Epoch
Indemnities (as defined below) for use therein. Epoch 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 Epoch’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 Epoch 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 Epoch, 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, Epoch 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 (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 Epoch. IMCO shall indemnify and hold harmless Epoch 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 Epoch (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 sixty (60) days’ written
notice delivered or mailed by registered mail, postage prepaid, to IMCO and
Epoch.
(b) This
Agreement will terminate automatically with respect to a Fund, without the
payment of any penalty, unless within two (2) 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, Epoch 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 Epoch. IMCO will use its best
efforts to provide Epoch with thirty (30) days’ advance notice of termination.
Epoch may at any time, without the payment of any penalty, terminate this
Agreement with respect to a Fund by not less than ninety (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 Epoch by IMCO shall be without prejudice to the
obligation of Epoch to complete transactions already initiated or acted upon
with respect to a Fund.
Upon termination of this Agreement, the
duties of IMCO delegated to Epoch 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 Epoch to IMCO in connection with the Funds hereunder are not to be
deemed exclusive, and Epoch shall be free to render investment advisory services
to others. It is understood that the persons employed by Epoch 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 Epoch 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 Epoch, or IMCO itself, to perform
investment advisory services to any portion of the Funds.
10. Additional
Agreements.
(a) Access to Information. Epoch
shall, upon reasonable notice, afford IMCO at all reasonable times access to
Epoch’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 Epoch to provide IMCO with access to the books and records of
Epoch 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. Notwithstanding the foregoing, and in light of the
publicly disclosed status of mutual fund subadvisory relationships, IMCO agrees
that Epoch may refer to IMCO and/or the Trust on a representative client
list.
(c) Privacy Policy. Epoch
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. Epoch agrees
that it will promptly notify IMCO in the event that: (i) Epoch 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 Epoch’s knowledge, any affiliate of Epoch
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 Epoch to perform its duties under this
Agreement.
(f) Insurance. Epoch 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 Epoch’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 Epoch, including, without
limitation, a change of control of Epoch or a portfolio manager change, Epoch
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
Epoch: Epoch
Investment Partners, Inc.
000 Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Facsimile
No.: 000 000 0000
Attention:
(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.
IN WITNESS WHEREOF, IMCO and Epoch have
caused this Agreement to be executed as of the date first set forth
above.
USAA
INVESTMENT MANAGEMENT COMPANY
By: /s/
Xxxxxxxxxxx
Laia
Name: Xxxxxxxxxxx
Laia
Title: Vice
President
By: /s/
Xxxx X.
Xxxxxxx
Name: Xxxx X.
Xxxxxxx
Assistant Vice President Procurement Services
Title: Authorized
Signatory
Attest: EPOCH
INVESTMENT PARTNERS, INC.
By: /s/
Xxxxxx
Pernike By: /s/
Xxxxxxx X.
Xxxxxx
Name: Xxxxxx
Pernike Name:
Xxxxxxx X. Xxxxxx
Title: Managing
Director
Title: President and Chief Operating Officer
SCHEDULE
A
USAA
Income Stock Fund
SCHEDULE
B
FEES
|
Fund
Account
|
Rate
per annum of the average daily net assets of
the Fund Account*
|
Income
Stock
Fund 0.40%
on the first $200 million
0.35% on
the next $400 million
Once
assets reach $600 million the fee schedule above is replaced by the following
schedule:
0.30% on
the first $600 million
0.25% on
the next $400 million
Once
assets exceed $1 billion, both parties agree to discuss adding an additional
breakpoint that will apply only to those assets in excess of $1 billion. For the
avoidance of doubt, if at any time during this agreement, when a fee calculation
is made, and assets are less than $600 million, the following schedule will
apply: 0.40% on the first $200 million; 0.35% on the next $400 million.
Furthermore, if at any time during this agreement, when a fee calculation is
made, and assets exceed $600 million, the following schedule will apply: 0.30%
on the first $600 million; 0.25% on the next $400 million.
* Epoch
agrees that it will not seek to increase this fee rate during the period ending
January 10, 2013 (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”).
