EXHIBIT d(i)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November, 2002 between USAA
INVESTMENT MANAGEMENT COMPANY, a corporation organized under the laws of the
state of Delaware and having a place of business in San Antonio, Texas (IMCO),
and USAA LIFE INVESTMENT TRUST a business trust organized under the laws of the
state of Delaware and having a place of business in San Antonio, Texas (the
Company).
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the 1940 Act); and
WHEREAS, IMCO is engaged in the business of rendering investment
management and advisory services and is registered under the Investment Advisers
Act of 1940, as amended; and
WHEREAS, the Company is authorized to issue shares of beneficial
interest (the Shares) in separate series with each such series representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, the Company presently offers Shares in each of the series
identified in Schedule A hereto (the Existing Funds) (such series, together with
all other series subsequently established by the Company with respect to which
the Company desires to retain IMCO to render management and investment advisory
services hereunder and with respect to which IMCO is willing so to do, being
herein collectively referred to as the Funds);
WHEREAS, the Company intends to offer shares of the Funds to separate
accounts of USAA Life Insurance Company to fund benefits under variable annuity
contracts and variable life insurance policies issued by USAA Life Insurance
Company (USAA Life), the owners of which contracts and policies have been deemed
to be beneficial shareholders of the Company;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. APPOINTMENT OF IMCO.
(a) EXISTING FUNDS. The Company hereby appoints IMCO to act as manager
and investment adviser for each of the Existing Funds for the period and on the
terms herein set forth. IMCO accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
(b) ADDITIONAL FUNDS. In the event that the Company establishes one or
more series of Shares other than the Existing Funds with respect to which it
desires to retain IMCO to render management and investment advisory services
hereunder, it shall so notify IMCO in writing. If IMCO is willing to render such
services it shall notify the Company in writing, whereupon the Company shall
appoint IMCO to act as manager and investment adviser for each of such series of
Shares for the period and on the terms herein set forth, IMCO shall accept such
appointment and agree to render the services herein set forth for the
compensation herein provided, and each of such series of Shares shall become a
Fund hereunder.
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2. DUTIES OF IMCO.
Subject to the delegation of any such duties to one or more investment
subadvisers (Subadvisers) as provided in Paragraph 3 hereof, IMCO, at its own
expense, shall furnish the following services and facilities to the Company:
(a) INVESTMENT PROGRAM. IMCO will (i) furnish continuously an
investment program for each Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Company (the Board)) what
investments shall be purchased, held, sold or exchanged for each Fund and what
portion, if any, of the assets of each Fund shall be held uninvested, and (iii)
make changes on behalf of the Company in the investments of each Fund.
(b) MONITORING. Should the Board determine it is in the best interests
of a Fund's shareholders to invest all of its investable assets in another
mutual fund with substantially the same investment objective (the Portfolio),
IMCO will monitor the services provided to the Portfolio, subject always to the
control of the Board. Such monitoring may include among other things, review of
Portfolio reports showing the composition of securities in the Portfolio on a
periodic basis and periodic review of investment practices of the Portfolio.
IMCO will report to the Board, at least annually, on the results of such
monitoring such that the Board may determine whether continued investment
exclusively in the Portfolio is in the best interests of the Fund's
shareholders.
3. SUBADVISERS.
(a) Subject to the general supervision and control of the Board and
under the terms and conditions set forth in this Agreement, IMCO, at its own
expense, may select and contract with one or more Subadvisers to manage the
investment operations and composition of each Fund and render investment advice
for each Fund, including the purchase, retention and disposition of the
investments, securities and cash contained in each Fund, in accordance with such
Fund's investment objectives, policies and restrictions as stated in the
Company's Master Trust Agreement, as amended, Bylaws and such Fund's Prospectus
and Statement of Additional Information (SAI), as is from time to time in
effect; provided that, (i) IMCO will continue to have overall supervisory
responsibility for the general management and investment of each Fund's assets,
and (ii) any contract with a Subadviser (a Subadvisory Agreement) shall be in
compliance with and approved in the manner required by the 1940 Act and rules
thereunder or in accordance with exemptive or other relief granted by the
Securities and Exchange Commission (SEC) or its staff.
(b) Subject to the general supervision and control of the Board, IMCO
will have full discretion to (i) select new or additional Subadvisers for each
Fund, (ii) enter into and materially modify existing Subadvisory Agreements, and
(iii) terminate and replace any Subadviser. In connection with IMCO's
responsibilities herein, IMCO will assess each Fund's investment focus and will
seek to implement decisions with respect to the allocation and reallocation of
each Fund's assets among one or more current or additional Subadvisers from time
to time, as IMCO deems appropriate, to enable each Fund to achieve its
investment goals. In addition, IMCO will monitor compliance of each Subadviser
with the investment objectives, policies and restrictions of any Fund or Funds
(or portions of any Fund) under the management of such Subadviser, and
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review and report to the Board on the performance of each Subadviser. IMCO will
furnish, or cause the appropriate Subadviser(s) to furnish, to the Company such
statistical information, with respect to the investments that a Fund (or
portions of any Fund) may hold or contemplate purchasing, as the Company may
reasonably request. On IMCO's own initiative, IMCO will apprise, or cause the
appropriate Subadviser(s) to apprise, the Company of important developments
materially affecting each Fund (or any portion of a Fund that they advise) and
will furnish the Company, from time to time, with such information as may be
appropriate for this purpose. Further, IMCO agrees to furnish, or cause the
appropriate Subadviser(s) to furnish, to the Board such periodic and special
reports as the Board may reasonably request. In addition, IMCO agrees to cause
the appropriate Subadviser(s) to furnish to third-party data reporting services
all currently available standardized performance information and other customary
data.
4. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by IMCO set forth
in Paragraphs 2 and 3 above, the Company assumes and shall pay all expenses for
all other Company operations and activities and shall reimburse IMCO for any
such expenses incurred by IMCO. The expenses to be borne by the Company shall
include, without limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the Company for
the safekeeping of its cash, portfolio securities and other property;
(b) the charges and expenses of auditors;
(c) brokerage commissions for transactions in the portfolio securities
of the Company;
(d) all taxes, including issuance and transfer taxes, and fees payable
by the Company to federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of the Company;
(f) fees involved in registering and maintaining registrations of the
Company and of its Shares with the SEC and various states and other
jurisdictions;
(g) all expenses of shareholders' and Board meetings and of preparing,
printing and mailing proxy statements, quarterly reports, semiannual reports,
annual reports and other communications (including Prospectuses) to existing
shareholders;
(h) compensation and travel expenses of Board members who are not
"interested persons" within the meaning of the 1940 Act;
(i) the expense of furnishing or causing to be furnished to each
shareholder a statement of his account, including the expense of mailing;
(j) charges and expenses of legal counsel in connection with matters
relating to the Company, including, without limitation, legal services rendered
in connection with the Company's legal and financial structure and relations
with its shareholders, issuance of
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Company Shares, and registration and qualification of securities under federal,
state and other laws;
(k) membership or association dues for the Investment Company Institute
or similar organizations;
(l) interest payable on Company borrowings; and
(m) postage.
5. ADVISORY FEE.
(a) For the services and facilities to be provided by IMCO as provided
in Paragraphs 2(a) and 3 hereof, the Company shall pay to IMCO a monthly fee
with respect to each Fund computed as set forth in Schedule B hereto. For the
services and facilities to be provided by IMCO as provided in Paragraph 2(b)
hereof, the Company shall pay no fee.
(b) IMCO may from time to time and for such periods as it deems
appropriate voluntarily waive fees or otherwise reduce its compensation
hereunder.
(c) In the event this Agreement is terminated with respect to any one
or more Funds as of a date other than the last day of any month, the Company
shall pay IMCO a pro rata portion of the amount that the Company would have been
required to pay, if any, had this Agreement remained in effect for the full
month.
6. COMPANY TRANSACTIONS.
In connection with the management of the investment and reinvestment of
the assets of the Company, IMCO, acting by its own officers, directors or
employees or by a duly authorized Subadviser, is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Company and is directed to use its best efforts to seek on behalf of a Fund the
best overall terms available. In assessing the best overall terms available for
any transaction, IMCO shall consider all factors it deems relevant, including
the breadth of the market in and the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, with respect to the specific
transaction and on a continuing basis.
IMCO, or a duly authorized Subadviser, may, to the extent permitted
under Section 28(e) of the Securities Exchange Act of 1934, as amended (1934
Act), cause a Fund to pay a broker or dealer that provides brokerage or research
services to IMCO, a Subadviser, the Company or a Fund an amount of commission
for effecting a Fund transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if IMCO or a
Subadviser determines, in good faith, that such amount of commission is
reasonable in relation to the value of such brokerage or research services
provided in terms of that particular transaction or IMCO's overall
responsibilities to the Fund, the Company or its other investment advisory
clients. To the extent permitted by Section 28(e), neither IMCO nor any
Subadviser shall be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of such action. The
Company reserves the right to
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direct IMCO to cause Subadvisers to effect transactions in Fund securities
through broker-dealers in a manner that will help generate resources to pay the
cost of certain expenses which the Company is required to pay or for which the
Company is required to arrange payment pursuant to this Agreement. In addition,
the Company hereby agrees that any entity or person associated with IMCO or any
Subadviser that is a member of a national securities exchange is authorized to
effect any transaction on such exchange for the account of a Fund to the extent
and as permitted by Section 11(a)(1)(H) of the 1934 Act.
7. RELATIONS WITH COMPANY.
Subject to and in accordance with the Master Trust Agreement, as
amended, and Bylaws of the Company and of IMCO, respectively, it is understood
that Board members, officers, agents and shareholders of the Company are or may
be interested in IMCO (or any successor thereof) as directors, officers, or
otherwise, that directors, officers, agents and shareholders of IMCO are or may
be interested in the Company as Board members, officers, shareholders or
otherwise, that IMCO (or any such successor) is or may be interested in the
Company as a shareholder or otherwise and that the effect of any such interests
shall be governed by such Master Trust Agreement, as amended, and Bylaws.
8. LIABILITY OF IMCO.
Neither IMCO nor its officers, directors, employees, agents or
controlling persons or assigns shall be liable for any error of judgment or
mistake of law or for any loss suffered by the Company or its shareholders in
connection with the matters to which this Agreement relates; provided that no
provision of this Agreement shall be deemed to protect IMCO against any
liability to the Company or its shareholders to which it might otherwise be
subject by reason of any willful misfeasance, bad faith or negligence in the
performance of its duties or the reckless disregard of its obligations and
duties under this Agreement. Nor shall any provision hereof be deemed to protect
any Board member or officer of the Company against any such liability to which
he might otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of his duties or the reckless disregard of his
obligations and duties. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall be executed and become effective
with respect to any Existing Fund on the first date upon which the Agreement
shall have been approved by a majority of the outstanding voting securities (as
that term is defined in the 0000 Xxx) of such Existing Fund, and with respect to
any additional Fund on the date set forth in the notice from IMCO in accordance
with Paragraph 1(b) hereof that IMCO is willing to serve as the manager and
investment adviser with respect to such Fund. Unless terminated as herein
provided, this Agreement shall remain in full force and effect with respect to
each Existing Fund through July 31, 2004, and, with respect to each additional
Fund, through the first July 31 occurring more than twelve months after the date
on which such Fund becomes a Fund hereunder, and shall continue in full force
and effect for periods of one year thereafter with respect to each Fund so long
as such continuance with respect to any such Fund is approved at least annually
(a) by
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either the Board or by vote of a majority of the outstanding voting shares (as
defined in the 0000 Xxx) of such Fund, and (b) in either event by the vote of a
majority of the Board members who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 0000 Xxx) of any Fund shall be effective
to continue this Agreement with respect to any such Fund notwithstanding (a)
that this Agreement has not been approved by the holders of a majority of the
outstanding shares of any other Fund affected thereby, and (b) that this
Agreement has not been approved by the vote of a majority of the outstanding
shares of the Company, unless such approval shall be required by any other
applicable law or otherwise.
(b) TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Board or by vote of a majority of the
outstanding shares (as defined in the 0000 Xxx) of a Fund, or by IMCO on sixty
days' written notice to the other party.
(c) AUTOMATIC TERMINATION. This Agreement shall automatically terminate
in the event of its assignment.
10. NAME OF COMPANY.
It is understood that the name "USAA," and any logo associated with
that name is the valuable property of the United Services Automobile
Association, and that the Company has the right to include "USAA" as a part of
its name only so long as this Agreement shall continue and IMCO is a wholly
owned subsidiary of the United Services Automobile Association. Upon termination
of this Agreement, the Company shall forthwith cease to use the "USAA" name and
logo and shall take appropriate action to change the Company's name.
11. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
12. SERVICES NOT EXCLUSIVE.
The services of IMCO to the Company hereunder are not to be deemed
exclusive, and IMCO shall be free to render similar services to others so long
as its services hereunder are not impaired thereby.
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13. MISCELLANEOUS.
(a) 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 and
rules thereunder or in accordance with exemptive or other relief granted by the
SEC or its staff.
(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, the parties hereto have caused this Agreement
to be executed as of the date first set forth
above.
USAA LIFE INVESTMENT TRUST USAA INVESTMENT MANAGEMENT COMPANY
By:/S/ XXXXXX X. XXXXXX By:/S/ XXXXXXXXXXX X. XXXXX
------------------------------ --------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxxxxxxx X. Xxxxx
Title: Vice President Title: President
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SCHEDULE A TO ADVISORY AGREEMENT
LISTING OF FUNDS
NAME OF FUND
USAA Life Income Fund
USAA Life Growth and Income Fund
USAA Life World Growth Fund
USAA Life Diversified Assets Fund
USAA Life Aggressive Growth Fund
A-1
Dated as of November 1, 2002
SCHEDULE B TO ADVISORY AGREEMENT - ADVISORY FEES
This Schedule B shall apply to each of the Funds identified on Schedule B-1
hereto (each, a Fund).
(a) The Company shall pay to IMCO a fee for each Fund calculated daily
and payable monthly in arrears, computed as a percentage of the average net
assets of the Fund for such month at the rate set forth in Schedule B-1 hereto.
(b) The "average net assets" of the Fund for any month shall be equal
to the quotient produced by dividing (i) the sum of the net assets of such Fund,
determined in accordance with procedures established from time to time by or
under the direction of the Board, for each calendar day of such month, by (ii)
the number of such days.
B-1
Dated as of November 1, 2002
SCHEDULE B-1 TO ADVISORY AGREEMENT - LISTING OF FUNDS
AND ADVISORY FEE RATES
NAME OF FUND FEE RATE
USAA Life Income Fund .20%
USAA Life Growth and Income Fund .20%
USAA Life World Growth Fund .35%
USAA Life Diversified Assets Fund .20%
USAA Life Aggressive Growth Fund .50%
B-2
Dated as of November 1, 2002
EXHIBIT d(ii)
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November, 2002 (the Effective
Date), between USAA INVESTMENT MANAGEMENT COMPANY, a corporation organized under
the laws of the State of Delaware and having its principal place of business in
San Antonio, Texas (IMCO) and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
corporation organized under the laws of the State of Delaware and having its
principal place of business in Boston, Massachusetts (MFS).
WHEREAS, IMCO serves as the investment adviser to USAA Life Investment
Trust, a business 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 MFS 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, MFS 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 MFS. IMCO hereby appoints MFS to act as an investment
adviser for each Fund Account in accordance with the terms and conditions of
this Agreement. MFS 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 MFS. MFS accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided.
2. DUTIES OF MFS.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO
and the Trust's Board of Trustees (the Board), MFS, 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. MFS 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 MFS
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anticipate materially modifying its investment process, it must provide written
notice in advance to IMCO, and any affected Prospectus and SAI should be amended
accordingly.
With respect to the management of each Fund Account pursuant to this
Agreement, MFS 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 MFS
wishes to hold cash or cash equivalents in excess of 10% of a Fund Account's
assets, MFS must request in writing and receive advance permission from IMCO.
In accordance with Subsection (b) of this Section 2, MFS 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, MFS 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. MFS shall establish compliance procedures reasonably calculated to ensure
compliance with the foregoing. IMCO shall be responsible for providing MFS with
the Trust's Declaration of Trust, 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 MFS with
prior written notice of any material change to the Trust's Registration
Statement that would affect MFS's management of a Fund Account.
(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, MFS 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, MFS 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, MFS, 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.
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933180
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), MFS 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 MFS 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 MFS 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 MFS's overall
responsibilities with respect to the Fund and to other clients of MFS as to
which MFS exercises investment discretion. The Board or IMCO may direct MFS 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 MFS deems the purchase or sale of a security to be in
the best interest of a Fund as well as other clients of MFS, MFS, 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 MFS 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.
MFS 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, MFS may effectuate cross transactions between a Fund Account and
such other account if it deems this to be advantageous.
MFS 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. MFS 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 MFS giving proper instructions to the custodian or
such depository or agents as may be designated by the custodian and IMCO, MFS
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, MFS 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. MFS shall refrain from
purchasing such securities for a Fund Account or directing any portfolio
transaction to any such broker or
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dealer on behalf of a Fund Account, unless and until the written approval of
IMCO to do so is obtained. In addition, MFS 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 MFS,
except as permitted under the 1940 Act. IMCO agrees that it will provide MFS
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
MFS 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. MFS, 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 MFS's duties under this Agreement.
However, MFS 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, MFS, at its expense and in
accordance with procedures and methods established by the Board, which may be
amended from time to time, will provide assistance to IMCO in determining the
fair value of such securities, including providing market price information
relating to these assets of the Fund. MFS 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. MFS, 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
MFS set forth herein. MFS, 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 MFS's duties hereunder.
(F) COMPLIANCE MATTERS. MFS, 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. MFS 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
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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. MFS acknowledges that certain books and records
are required to be maintained by the Funds pursuant to the 1940 Act and the
rules and regulations promulgated thereunder. MFS agrees to assist IMCO with
such book and records requirements by providing to IMCO certain information
relating to such books and records, as agreed to by IMCO and MFS, insofar as
such information relates to the investment affairs of the Fund Accounts.
Pursuant to Rule 31a-3 under the 1940 Act, MFS 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, MFS may maintain copies
of such records to comply with its recordkeeping obligations.
(H) PROXIES. MFS will, unless and until otherwise directed by IMCO or
the Board, vote proxies with respect to a Fund Account's securities and exercise
rights in corporate actions or otherwise in accordance with MFS's proxy voting
guidelines, as amended from time to time, which shall be provided to IMCO.
3. ADVISORY FEE. IMCO shall pay to MFS as compensation for MFS'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 MFS 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) MFS. MFS represents and warrants to IMCO that (i) the retention of
MFS by IMCO as contemplated by this Agreement is authorized by MFS's governing
documents; (ii) the execution, delivery and performance of this Agreement does
not violate any obligation by which MFS 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 MFS and when executed and
delivered by MFS will be a legal, valid and binding obligation of MFS,
enforceable against MFS 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) MFS is
registered as an investment adviser under the Advisers Act; (v) MFS has adopted
a written code of ethics complying with the requirements of Rule 17j-1 under the
1940 Act and that MFS 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, MFS shall furnish to IMCO all reports
and information provided under Rule 17j-1(c)(2); (vi) MFS is not prohibited by
the 1940 Act, the
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Advisers Act or other law, regulation or order from performing the services
contemplated by this Agreement; (vii) MFS will promptly notify IMCO of the
occurrence of any event that would disqualify MFS from serving as investment
manager of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise; (viii) MFS 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) MFS will notify IMCO of any "assignment" (as defined in the 0000 Xxx) of
this Agreement or change of control of MFS, as applicable, and any changes in
the key personnel who are either the portfolio manager(s) of any Fund Account or
senior management of MFS, in each case prior to or promptly after, such change;
and (x) MFS has adequate disaster recovery and interruption prevention measures
for business resumption in accordance with relevant provisions of the 1940 Act
and within industry standards.
(B) IMCO. IMCO represents and warrants to MFS that (i) the retention of
MFS 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;
and (vii) IMCO will promptly notify MFS of the occurrence of any event that
would disqualify IMCO from serving as investment manager of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise.
5. LIABILITY AND INDEMNIFICATION.
(A) MFS. MFS 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 applicable statute, at common law or
otherwise directly arising out of (i) any gross negligence, willful misconduct,
bad faith or reckless disregard of MFS 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 MFS 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 written
6
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information furnished to IMCO or the Trust by MFS Indemnities (as defined below)
for use therein. MFS 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).
(B) IMCO. IMCO shall be liable for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which MFS, 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, MFS 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 by MFS to IMCO or the Trust.
IMCO shall indemnify and hold harmless MFS Indemnities for any and all such
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses).
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 MFS
(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 MFS.
(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, MFS 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 MFS. MFS 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.
7
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(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 MFS by IMCO shall be without
prejudice to the obligation of MFS to complete transactions already initiated or
acted upon with respect to a Fund.
Upon termination of this Agreement, the duties of IMCO delegated to MFS
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, (if previously agreed to by the parties to this Agreement), 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 MFS to IMCO in connection with
the Funds hereunder are not to be deemed exclusive, and MFS 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 MFS 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 MFS 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 MFS, or IMCO itself, to
perform investment advisory services to any portion of the Funds.
8
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10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. MFS shall, upon reasonable notice, afford
IMCO at all reasonable times access to MFS'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 MFS to provide IMCO with
access to the books and records of MFS relating to any other accounts other than
the Funds.
(B) CONFIDENTIALITY. MFS, and its officers, employees and authorized
representatives, shall treat confidentially and as proprietary information of
the Trust all records and information relative to the Trust and prior, present
or potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where MFS
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 Trust.
(C) PRIVACY POLICY. MFS 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. MFS agrees that it will promptly notify IMCO in the
event that MFS becomes the subject of an administrative proceeding or
enforcement action, with respect to the subadvisory services it performs to the
Trust pursuant to this Agreement, by the Commission or other regulatory body
with applicable jurisdiction.
(F) INSURANCE. MFS 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 MFS's business activities.
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11. MISCELLANEOUS.
(A) NOTICES. All notices or other communications given under this
Agreement shall be made by guaranteed overnight delivery, telecopy or certified
mail; notice is effective when received. Notice shall be given to the parties at
the following addresses:
IMCO: USAA Investment Management Company
0000 Xxxxxxxxxxxxxx Xxxx, X-X0-X
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Securities Counsel & Compliance Dept.
MFS: Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention : Xxxx Xxxxxxx
(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 WHER MFS acknowledges that certain books and records are
required to be maintained by the Funds pursuant to the 1940 Act and the rules
and regulations promulgated thereunder. MFS agrees to assist IMCO with such book
and records requirements by providing to IMCO certain information relating to
such books and records, as agreed to by IMCO and MFS, insofar as such
information relates to the investment affairs of the Fund Accounts. EOF, IMCO
and MFS 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/ XXXXX X. XXXXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Authorized Signatory
Attest: MASSACHUSETTS FINANCIAL SERVICES
COMPANY
By: /S/ XXXXXX X. XXXXX By: /S/ XXXX X. XXXXXX
----------------------------------- -------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxx X. Xxxxxx
Title: Assistant Secretary Title: President
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SCHEDULE A
USAA LIFE WORLD GROWTH FUND
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SCHEDULE B
FEES
RATE PER ANNUM OF THE AGGREGATE AVERAGE
FUND ACCOUNT DAILY NET ASSETS OF THE FUND ACCOUNT PLUS
THE AVERAGE DAILY NET ASSETS MANAGED BY
MFS IN THE USAA CORNERSTONE STRATEGY
FUND (INTERNATIONAL STOCKS), THE USAA
INTERNATIONAL FUND, AND THE USAA WORLD
GROWTH FUND
USAA Life World Growth Fund 0.335% - on the first $350 million
0.225% - on the amounts over $350 million
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EXHIBIT d(iii)
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November, 2002 (the Effective
Date), between USAA INVESTMENT MANAGEMENT COMPANY, a corporation organized under
the laws of the State of Delaware and having its principal place of business in
San Antonio, Texas (IMCO) and WELLINGTON MANAGEMENT COMPANY, LLP, a limited
liability partnership organized under the laws of the Commonwealth of
Massachusetts and having its principal place of business in Boston,
Massachusetts (Wellington Management).
WHEREAS, IMCO serves as the investment adviser to USAA Life Investment
Trust, a business 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 Wellington Management 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, Wellington Management 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 WELLINGTON MANAGEMENT. IMCO hereby appoints Wellington
Management to act as an investment subadviser for each Fund Account in
accordance with the terms and conditions of this Agreement. Wellington
Management 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 Wellington Management. Wellington Management
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. DUTIES OF WELLINGTON MANAGEMENT.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO
and the Trust's Board of Trustees (the Board), Wellington Management, 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. Wellington Management
shall
933224
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 Wellington
Management anticipate materially modifying its investment process, it must
provide written notice in advance to IMCO, and any affected Prospectus and SAI
should be amended accordingly.
With respect to the management of each Fund Account pursuant to this
Agreement, Wellington Management 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 Wellington Management wishes to hold cash or cash
equivalents in excess of 10% of a Fund Account's assets for longer than two
consecutive business days, Wellington Management must request in writing and
receive advance permission from IMCO.
In accordance with Subsection (b) of this Section 2, Wellington
Management 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, Wellington Management 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 Prospectus and
Statement of Additional Information 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), including Section 817(h), as
from time to time in effect, and (vi) the written instructions of IMCO.
Wellington Management shall establish compliance procedures reasonably
calculated to ensure compliance with the foregoing. IMCO shall be responsible
for providing Wellington Management 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 Wellington Management with prior written notice of
any material change to the Trust's Registration Statement under the Securities
Act of 1933 and the 1940 Act that would affect Wellington Management's
management of a Fund Account.
(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, Wellington Management
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, Wellington Management shall
use its best efforts to obtain for the Fund Accounts the best overall terms
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described
2
933224
below. In using its best efforts to obtain the best terms available, Wellington
Management, 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), Wellington Management 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 Wellington Management 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
Wellington Management 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 Wellington Management's overall responsibilities with respect to
the Fund and to other clients of Wellington Management as to which Wellington
Management exercises investment discretion. The Board or IMCO may direct
Wellington Management 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 Wellington Management deems the purchase or sale of a
security to be in the best interest of a Fund as well as other clients of
Wellington Management, Wellington Management, 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 Wellington Management 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.
Wellington Management 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, Wellington Management may effectuate cross
transactions between a Fund Account and such other account if it deems this to
be advantageous.
Wellington Management 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. Wellington Management shall not have possession or custody of
any Fund's investments. The Trust shall be responsible for all
3
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custodial agreements and the payment of all custodial charges and fees and, upon
Wellington Management giving proper instructions to the custodian, Wellington
Management shall have no responsibility or liability for the acts, omissions or
other conduct of the custodian.
Notwithstanding the foregoing, Wellington Management 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 transactions on behalf of the Fund may not be effected, including,
without limitation, brokers or dealers affiliated with IMCO. Wellington
Management 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, Wellington Management 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
Wellington Management, except as permitted under the 1940 Act. IMCO agrees that
it will provide Wellington Management 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 Wellington Management 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. Wellington Management, 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 Wellington
Management's duties under this Agreement. However, Wellington Management 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 will be readily available are valued
on each day the New York Stock Exchange is open for business. For those
securities held in Fund Accounts subadvised by Wellington Management for which
market quotes are not readily available, Wellington Management, at its expense
and in accordance with procedures and methods established by the Board, which
may be amended from time to time, will provide assistance to IMCO in determining
the fair value of such securities, including providing market price information
relating to these assets of the Fund. Wellington Management 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. Wellington Management, 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 Wellington Management set forth herein. Wellington
Management, at its expense, will make available to the Board and
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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 Wellington Management's
duties hereunder.
(F) COMPLIANCE MATTERS. Wellington Management, 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. Wellington
Management 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. Wellington Management 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, Wellington Management 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, Wellington Management
may maintain copies of such records to comply with its recordkeeping
obligations.
(H) PROXIES. Wellington Management will, unless and until otherwise
directed by IMCO or the Board, vote proxies with respect to a Fund Account's
securities and exercise rights in corporate actions or otherwise in accordance
with Wellington Management's proxy voting guidelines, as amended from time to
time, which shall be provided to IMCO.
3. ADVISORY FEE. IMCO shall pay to Wellington Management as compensation
for Wellington Management'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
Wellington Management 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) WELLINGTON MANAGEMENT. Wellington Management represents and
warrants to IMCO that (i) the retention of Wellington Management by IMCO as
contemplated by this Agreement is authorized by Wellington Management's
governing documents; (ii) the execution,
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delivery and performance of this Agreement does not violate any obligation by
which Wellington Management 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 Wellington Management and when executed and
delivered by Wellington Management will be a legal, valid and binding obligation
of Wellington Management, enforceable against Wellington Management 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) Wellington Management is registered as an
investment adviser under the Advisers Act; (v) Wellington Management has adopted
a written code of ethics complying with the requirements of Rule 17j-1 under the
1940 Act and instituted implementation procedures and that Wellington Management
and certain of its employees, officers and partners 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, Wellington Management shall furnish to IMCO all reports and information
provided under Rule 17j-1(c)(2); (vi) Wellington Management 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) Wellington Management will
promptly notify IMCO of the occurrence of any event that would disqualify
Wellington Management from serving as investment manager of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise; (viii) Wellington
Management 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)
Wellington Management will notify IMCO of any "assignment" (as defined in the
0000 Xxx) of this Agreement or change of control of Wellington Management, as
applicable, and any changes in the key personnel who are either the portfolio
manager(s) of any Fund Account or senior management of Wellington Management, in
each case prior to or promptly after, such change; and (x) Wellington Management
has adequate disaster recovery and interruption prevention measures reasonably
designed to ensure business resumption in accordance with applicable law and
within industry standards.
(B) IMCO. IMCO represents and warrants to Wellington Management that
(i) the retention of Wellington Management 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
instituted implementation procedures and that IMCO and certain of its employees,
officers and directors are subject to reporting requirements thereunder; (vi)
IMCO is not prohibited by the 1940 Act, the Advisers Act or other law,
regulation or order from performing the services contemplated by this Agreement;
and (vii) IMCO will promptly
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notify Wellington Management of the occurrence of any event that would
disqualify IMCO from serving as investment manager of an investment company
pursuant to Section 9(a) of the 1940 Act or otherwise.
5. LIABILITY AND INDEMNIFICATION.
(A) WELLINGTON MANAGEMENT. Wellington Management shall indemnify and
hold harmless 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) for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which the 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 misconduct, bad faith or reckless
disregard of Wellington Management 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 Wellington Management 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 Wellington Management Indemnities (as defined
below) for use therein.
(B) IMCO. IMCO shall in demnify and hold harmless Wellington
Management, 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, Wellington Management Indemnities) for any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) to which the Wellington 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 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 by
Wellington Indemnities to IMCO or the Trust.
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 Trust, IMCO, or
Wellington Management (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' nor
7
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less than 10 days' written notice delivered or mailed by registered mail,
postage prepaid, to IMCO and Wellington Management.
(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,
Wellington Management 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 Wellington
Management. Wellington Management 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 Wellington Management by IMCO
shall be without prejudice to the obligation of Wellington Management to
complete transactions already initiated or acted upon with respect to a Fund.
Upon termination of this Agreement, the duties of IMCO delegated to
Wellington Management 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
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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 Wellington Management to IMCO
in connection with the Funds hereunder are not to be deemed exclusive, and
Wellington Management 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 Wellington Management 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 Wellington Management 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 Wellington Management, or
IMCO itself, to perform investment advisory services to any portion of the
Funds.
10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. Wellington Management shall, upon reasonable
notice, afford IMCO at all reasonable times access to Wellington Management'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 Wellington Management to provide IMCO with access to the books and
records of Wellington Management relating to any other accounts other than the
Funds or where such access is prohibited by law.
(B) CONFIDENTIALITY. Wellington Management, and its officers, employees
and authorized representatives, shall treat confidentially and as proprietary
information of the Trust all records and information relative to the Trust and
prior, present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where Wellington Management 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 Trust.
(C) PRIVACY POLICY. Wellington Management 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
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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.
During the term of this Agreement, IMCO agrees to furnish to Wellington
Management at its principal office all Prospectuses, Statements of Additional
Information, proxy statements, reports to shareholders, sales literature, or
other material prepared for distribution to sales personnel, shareholders of the
Trust or the public, which refer to Wellington Management or its clients in any
way, prior to use thereof and not to use such material if Wellington Management
reasonably objects in writing two business days (or such other time as may be
mutually agreed upon) after receipt thereof. Advance review shall not be
required from Wellington Management with respect to 1) sales literature in which
Wellington Management is only referenced in a listing of subadvisers to USAA
funds; and 2) other materials as agreed upon mutually by IMCO and Wellington
Management. Sales literature may be furnished to Wellington Management hereunder
by first-class or overnight mail, electronic or facsimile transmission, or hand
delivery.
(E) NOTIFICATIONS. Wellington Management agrees that it will promptly
notify IMCO in the event that Wellington Management or any of its affiliates is
or expects to become the subject of an administrative proceeding or enforcement
action by the Commission or other regulatory body with applicable jurisdiction.
(F) INSURANCE. Wellington Management 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 Wellington Management's business
activities.
(G) SHAREHOLDER MEETING EXPENSES. In the event that the Trust shall be
required to call a meeting of shareholders solely due to actions involving
Wellington Management, including, without limitation, a change of control of
Wellington Management, Wellington Management shall bear all reasonable expenses
associated with such shareholder meeting.
11. MISCELLANEOUS.
(A) NOTICES. All notices or other communications given under this
Agreement shall be made by guaranteed overnight delivery, telecopy or certified
mail; notice is effective when received. Notice shall be given to the parties at
the following addresses:
IMCO: USAA Investment Management Company
0000 Xxxxxxxxxxxxxx Xxxx, X-X0-X
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Securities Counsel & Compliance Dept.
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Wellington Management: Wellington Management Company, LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Legal Department
(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 Wellington Management 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/ XXXXX X. XXXXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Authorized Signatory
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Attest: WELLINGTON MANAGEMENT COMPANY, LLP
By: /S/ XXXX X. XXXXX By:/S/ XXXX X. XXXXX
----------------------------------- -------------------------------
Name: Xxxx X. Xxxxx Name: Xxxx X. Xxxxx
Title: Vice President and Counsel Title: Senior Vice President
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SCHEDULE A
USAA LIFE DIVERSIFIED ASSETS FUND
USAA LIFE GROWTH & INCOME FUND
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SCHEDULE B
FEES
Rate per annum of the average daily
FUND ACCOUNT net assets of the Fund Account
USAA Life Diversified Assets Fund 0.20%
USAA Life Growth & Income Fund 0.20%
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EXHIBIT d (vi)
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November, 2002 (the Effective
Date), between USAA INVESTMENT MANAGEMENT COMPANY, a corporation organized under
the laws of the State of Delaware and having its principal place of business in
San Antonio, Texas (IMCO) and XXXXXXX CAPITAL MANAGEMENT, LLC, a limited
liability company organized under the laws of the State of Delaware and having
its principal place of business in Denver, Colorado (Marsico).
WHEREAS, IMCO serves as the investment adviser to USAA Life Investment
Trust, a business 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 Marsico 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, Marsico 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 MARSICO. IMCO hereby appoints Marsico to act as an
investment adviser for each Fund Account in accordance with the terms and
conditions of this Agreement. Marsico 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 Marsico. Marsico
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. DUTIES OF MARSICO.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO
and the Trust's Board of Trustees (the Board), Marsico, 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. Marsico shall perform its duties described
herein in a manner consistent with the investment objectives, policies, and
restrictions set forth in the then-current prospectus and statement of
additional information (SAI) for each Fund. Should Marsico
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anticipate materially modifying its investment process, it must provide written
notice in advance to IMCO, and any affected Prospectus and SAI should be amended
accordingly.
With respect to the management of each Fund Account pursuant to this
Agreement, Marsico 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
Marsico wishes to hold cash or cash equivalents in excess of 10% of a Fund
Account's assets, Marsico must request in writing and receive advance permission
from IMCO.
In accordance with Subsection (b) of this Section 2, Marsico 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, Marsico 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), including Section 817(h) as from time to time in effect, and (vi) the
written instructions of IMCO. Marsico shall establish compliance procedures
reasonably calculated to ensure compliance with the foregoing. IMCO shall be
responsible for providing Marsico 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 Marsico with prior written notice of any material
change to the Trust's Registration Statement under the Securities Act of 1933
and the 1940 Act that would affect Xxxxxxx'x management of a Fund Account.
No statement in this Agreement or any other document constitutes a
representation by Marsico regarding the rate of growth or return of a Fund
Account. Neither Marsico nor any of its officers, directors, or employees make
any representations or warranties, express or implied, that any level of
performance or investment results will be achieved by any Fund Account, or that
any Fund Account will perform comparably with any standard or index, including
the performance achieved for other clients of Marsico.
(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, Marsico 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, Marsico shall use its best efforts
to obtain for the Fund Accounts the best overall terms available, except to the
extent it may be permitted to pay higher
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brokerage commissions for brokerage or research services as described below. In
using its best efforts to obtain the best terms available, Marsico, 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), Marsico 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 or research
services to Marsico 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 Marsico determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage or
research services provided by such broker-dealer, viewed in terms of either that
particular transaction or Xxxxxxx'x overall responsibilities with respect to the
Fund and to other clients of Marsico as to which Marsico exercises investment
discretion. The Board or IMCO may direct Marsico to effect up to 25% of all
transactions in portfolio securities for a Fund Account 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. Marsico will treat such a direction as a decision by the Board
or IMCO to retain, to the extent of the direction, the discretion that Marsico
otherwise would exercise to select broker-dealers and negotiate commissions for
the Fund Account.
On occasions when Marsico deems the purchase or sale of a security to
be in the best interest of a Fund as well as other clients of Marsico, Marsico,
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 Marsico 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.
Marsico 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, Marsico may effectuate cross transactions between a Fund Account
and such other account if it deems this to be advantageous.
Marsico 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
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Funds' custodian may need to settle a security's purchase or sale. Marsico 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 Marsico giving proper instructions to the custodian,
Marsico shall have no responsibility or liability for the acts, omissions or
other conduct of the custodian.
Notwithstanding the foregoing, Marsico 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. Upon receipt of a list of
such securities or broker-dealers, Marsico 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, Marsico 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
Marsico, except as permitted under the 1940 Act. IMCO agrees that it will
provide Marsico 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 Marsico 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.
IMCO and the Trust hereby approve Xxxxxxx'x placement of orders for the
purchase or sale of securities for a Fund Account with Banc of America
Securities LLC ("BAS") (a broker-dealer that is an affiliated person of Marsico
through their common ownership by Bank of America Corporation), or any other
affiliated broker-dealer, to the extent permitted by the 1940 Act and other law.
BAS or another affiliated broker-dealer will not deal as principal for its own
account in such transactions, but will act as agent for other persons including
the Fund Account. IMCO and the Trust are aware that the affiliation between
Marsico and an affiliated broker-dealer (such as BAS) could give Marsico or its
parent, Bank of America Corporation, an indirect interest in brokerage
commissions received by the affiliated broker-dealer, which could create a
potential conflict of interest when Marsico considers whether to use an
affiliated broker-dealer. Marsico generally will use an affiliated broker-dealer
for a Fund Account only when it believes that this is in the Fund Account's best
interests because the affiliated broker-dealer is expected to provide best
execution.
IMCO and the Trust hereby authorize Marsico and any affiliated
broker-dealer (including BAS) to effect agency cross transactions, in which the
affiliated broker-dealer acts as broker for parties on both sides of the
transaction, for any Fund Account, to the extent permitted by the 1940 Act and
other law. IMCO and the Trust acknowledge that Xxxxxxx'x affiliated
broker-dealer will generally receive compensation from the other party to such
transactions (the amount of which may vary), and that agency cross trades could
create potentially conflicting divisions of loyalties and responsibilities,
because the affiliated broker-dealer acts for and receives commissions from both
parties, while Marsico advise the Fund Account to enter into the trade.
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IMCO and the Trust may at any time revoke their consent to the execution of
future agency cross trades for a Fund account by giving written notice to
Marsico or the affiliated broker-dealer.
(C) EXPENSES. Marsico, 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 Xxxxxxx'x duties under this Agreement.
However, Marsico 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 will be 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, Marsico, at its
expense and in accordance with procedures and methods established by the Board,
which may be amended from time to time, will provide assistance to IMCO in
determining the fair value of such securities. Marsico also shall make
reasonable efforts to 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. Marsico, 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 Marsico set forth herein. Marsico, 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 Xxxxxxx'x
duties hereunder.
(F) COMPLIANCE MATTERS. Marsico, 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. Marsico 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. Marsico 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, Marsico 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
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for any Fund Account. Notwithstanding subsection (ii) above, Marsico may
maintain copies of such records to comply with its recordkeeping obligations.
(H) PROXIES. Marsico will, unless and until otherwise directed by IMCO
or the Board, vote proxies with respect to a Fund Account's securities and
exercise rights in corporate actions or otherwise in accordance with Xxxxxxx'x
proxy voting guidelines, as amended from time to time, which shall be provided
to IMCO.
3. ADVISORY FEE. IMCO shall pay to Marsico as compensation for Xxxxxxx'x
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 Marsico 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) MARSICO. Marsico represents and warrants to IMCO that (i) the
retention of Marsico by IMCO as contemplated by this Agreement is authorized by
Xxxxxxx'x governing documents; (ii) the execution, delivery and performance of
this Agreement does not violate any obligation by which Marsico 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 Marsico and when
executed and delivered by Marsico will be a legal, valid and binding obligation
of Marsico, enforceable against Marsico 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) Marsico is registered as an investment adviser under the Advisers Act; (v)
Marsico has adopted a written code of ethics complying with the requirements of
Rule 17j-1 under the 1940 Act and instituted implementation procedures and
Marsico 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
shall cause its employees, officers, partners and directors to furnish to IMCO
information that IMCO reasonably requests concerning such code of ethics; (vi)
Marsico 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) Marsico will promptly notify IMCO of the occurrence of any event that
would disqualify Marsico from serving as investment manager of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise; (viii) Marsico
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) Marsico will
notify IMCO of any "assignment" (as defined in the 0000 Xxx) of this Agreement
or change of control of Marsico, as applicable, and any changes in the key
personnel who are either the portfolio manager(s) of any Fund Account or senior
management of Marsico, in each case prior to or promptly after, such change; and
(x) Marsico
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has adequate disaster recovery and interruption prevention measures to ensure
business resumption in accordance with applicable law and within industry
standards.
(B) IMCO. IMCO represents and warrants to Marsico that (i) the
retention of Marsico 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 instituted implementation
procedures and that IMCO and certain of its employees, officers and directors
are subject to reporting requirements thereunder; (vi) IMCO is not prohibited by
the 1940 Act, the Advisers Act or other law, regulation or order from performing
the services contemplated by this Agreement; and (vii) IMCO will promptly notify
Marsico of the occurrence of any event that would disqualify IMCO from serving
as investment manager of an investment company pursuant to Section 9(a) of the
1940 Act or otherwise.
5. LIABILITY AND INDEMNIFICATION.
(A) MARSICO. Marsico 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 Indemnitees) 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 Marsico 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 Marsico which was required to be stated therein
or necessary to make the statements therein not misleading, if such statement or
omission was made primarily in reliance upon information furnished to IMCO or
the Trust by Marsico Indemnitees (as defined below) for use therein. Marsico
shall indemnify and hold harmless the IMCO Indemnitees for any and all such
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses).
(B) IMCO. IMCO shall be liable for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which Marsico, 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, Marsico Indemnitees) 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
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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 primarily in reliance upon information furnished to IMCO or
the Trust. IMCO shall indemnify and hold harmless Marsico Indemnitees for any
and all such losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses).
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 Trust, IMCO, or Marsico
(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 Marsico.
(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,
Marsico 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 Marsico.
Marsico 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 Marsico by IMCO shall be
without prejudice to the obligation of Marsico to complete transactions already
initiated or acted upon with respect to a Fund.
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Upon termination of this Agreement, the duties of IMCO delegated to
Marsico 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 Marsico to IMCO in connection
with the Funds hereunder are not to be deemed exclusive, and Marsico 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 Marsico 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 Marsico 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 Marsico, or IMCO
itself, to perform investment advisory services to any portion of the Funds.
10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. Marsico shall, upon reasonable notice,
afford IMCO at all reasonable times access to Xxxxxxx'x 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 Marsico to
provide IMCO with access to the books and records of Marsico relating to any
other accounts other than the Funds.
(B) CONFIDENTIALITY. Marsico, and its officers, employees and
authorized representatives, shall treat confidentially and as proprietary
information of the Trust all records and information relative to the Trust and
prior, present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where Marsico may be
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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 Trust.
(C) PRIVACY POLICY. Marsico 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. Marsico may disclose nonpublic customer information
to broker-dealers, custodians, and other third parties to the extent necessary
or appropriate to perform its duties under this Agreement.
(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 (as in the case of registration statements and other documents that are
required to be publicly filed); 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.
Marsico also may disclose non-confidential information about its service as
sub-adviser to the Trust to other clients or potential clients after the
information has been disclosed in publicly filed documents.
(E) NOTIFICATIONS. Marsico agrees that it will promptly notify IMCO in
the event that Marsico or any of its affiliates is or expects to become the
subject of an administrative proceeding or enforcement action by the Commission
or other regulatory body with applicable jurisdiction.
(F) INSURANCE. Marsico 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 Xxxxxxx'x business activities.
(G) SHAREHOLDER MEETING EXPENSES. In the event that the Trust shall be
required to call a meeting of shareholders solely due to actions initiated
solely by Marsico, including, without limitation, a change of control of
Marsico, Marsico shall bear all reasonable expenses associated with such
shareholder meeting.
11. MISCELLANEOUS.
(A) NOTICES. All notices or other communications given under this
Agreement shall be made by guaranteed overnight delivery, telecopy or certified
mail; notice is effective when received. Notice shall be given to the parties at
the following addresses:
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IMCO: USAA Investment Management Company
0000 Xxxxxxxxxxxxxx Xxxx, X-X0-X
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Securities Counsel & Compliance Dept.
Marsico: 0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Legal/Compliance Dept. and Client Services Dept.
(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 Marsico 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/ XXXXX X. XXXXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Authorized Signatory
Attest: XXXXXXX CAPITAL MANAGEMENT, LLC
By: /S/ XXXXXX X. XXXXXX By: /S/ XXXXXXXXXXX X. XXXXXXX
----------------------------------- -------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President and Title: President and Chief
General Counsel Operating Officer
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SCHEDULE A
USAA LIFE AGGRESSIVE GROWTH FUND
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SCHEDULE B
FEES
RATE PER ANNUM OF THE AVERAGE DAILY NET
ASSETS OF THE FUND ACCOUNT
FUND ACCOUNT
USAA Life Aggressive Growth Fund 0.20%
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