Exhibit 4(k)
USAA CONTRACT CONTROL NUMBER: 0000000000
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of May, 2003 (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 NORTHERN TRUST INVESTMENTS, INC., a corporation organized under
the laws of the State of Illinois and having its principal place of business in
Chicago, Illinois (NTI).
WHEREAS, IMCO serves as the investment adviser to USAA Mutual Fund, Inc., a
corporation organized under the laws of the state of Maryland (the Company) and
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the 1940 Act); and
WHEREAS, under its Investment Advisory Agreement with the Company
(Investment Advisory Agreement), IMCO is authorized to appoint subadvisers for
series of the Company (each a Fund, or collectively Funds); and
WHEREAS, IMCO wishes to retain NTI to render investment advisory services
to such series (or portions thereof) of the Company as now or hereafter may be
identified in Schedule A to this Agreement, as such Schedule A may be amended
from time to time (each such series or portion thereof referred to herein as a
Fund Account and collectively as Fund Accounts); and
WHEREAS, NTI 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 NTI. IMCO hereby appoints NTI to act as an investment
subadviser for each Fund Account in accordance with the terms and conditions of
this Agreement. NTI will be an independent contractor and will have no authority
to act for or represent the Company or IMCO in any way or otherwise be deemed an
agent of the Company or IMCO except as expressly authorized in this Agreement or
another writing by the Company, IMCO and NTI. NTI accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided.
2. DUTIES OF NTI.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO and
the Company's Board of Directors (the Board), NTI, 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. NTI 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 NTI anticipate materially
modifying its investment process, it must provide written notice in advance to
IMCO, and any affected Prospectus and SAI should be amended accordingly.
For each Fund set forth on Schedule A to this Agreement, NTI shall provide
investment advice only with respect to the discrete portion of the Fund's
portfolio allocated to it by IMCO from time to time and shall not consult with
any other subadviser of such Fund concerning transactions for the Fund in
securities or other assets.
With respect to the management of each Fund Account pursuant to this
Agreement, NTI 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 NTI
wishes to hold cash or cash equivalents in excess of 10% of a Fund Account's
assets for longer than two consecutive business days, NTI must request in
writing and receive advance permission from IMCO.
In accordance with Subsection (b) of this Section 2, NTI shall arrange for
the execution of all orders for the purchase and sale of securities and other
investments for each Fund Account and will exercise full discretion and act for
the Company in the same manner and with the same force and effect as the Company
might or could do with respect to such purchases, sales, or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales, or other transactions.
In the performance of its duties, NTI 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 Company's compliance procedures and other
policies, procedures or guidelines as the Board or IMCO reasonably may establish
from time to time, (v) the provisions of the Internal Revenue Code of 1986, as
amended (Code), applicable to "regulated investment companies" (as defined in
Section 851 of the Code), including Section 817(h), as from time to time in
effect, and (vi) the written instructions of IMCO. NTI shall establish
compliance procedures reasonably calculated to ensure compliance with the
foregoing. IMCO shall be responsible for providing NTI with the Company's
Articles of Incorporation, as amended and supplemented, the Company's Bylaws and
amendments thereto and current copies of the materials specified in Subsections
(a)(iii) and (iv) of this Section 2. IMCO shall provide NTI with prior written
notice of any material change to the Company's Registration Statement under the
Securities Act of 1933 and the 1940 Act that would affect NTI's management of a
Fund Account.
(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, NTI 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, NTI 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 below. In using its best efforts to obtain the best terms
available, NTI, 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), NTI 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 NTI an amount of commission for effecting a portfolio
investment
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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 NTI 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 NTI's overall responsibilities with respect to the
Fund and to other clients of NTI as to which NTI exercises investment
discretion. The Board or IMCO may direct NTI to effect transactions in portfolio
securities through broker-dealers in a manner that will help generate resources
to pay the cost of certain expenses that the Company is required to pay or for
which the Company is required to arrange payment.
On occasions when NTI deems the purchase or sale of a security to be in the
best interest of a Fund as well as other clients of NTI, NTI, 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 NTI 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.
NTI may buy securities for a Fund Account at the same time it is selling
such securities for another client account and may sell securities for a Fund
Account at the time it is buying such securities for another client account. In
such cases, subject to applicable legal and regulatory requirements, and in
compliance with such procedures of the Company as may be in effect from time to
time, NTI may effectuate cross transactions between a Fund Account and such
other account if it deems this to be advantageous.
NTI 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. NTI shall not
have possession or custody of any Fund's investments. The Company shall be
responsible for all custodial agreements and the payment of all custodial
charges and fees and, upon NTI giving proper instructions to the custodian, NTI
shall have no responsibility or liability for the acts, omissions or other
conduct of the custodian.
Notwithstanding the foregoing, NTI 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. NTI 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, NTI 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 NTI,
except as permitted under the 1940 Act. IMCO agrees that it will provide NTI
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
NTI 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. NTI, 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 NTI's duties under this Agreement. In
addition, NTI shall
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reimburse the S&P 500 Index Fund for all license fees paid by the S&P 500 Index
Fund to Standard & Poor's in amounts not exceeding the annual rate of 0.001% of
the average daily net assets of such Fund. However, NTI shall not be obligated
to pay any expenses of IMCO, the Company or the Funds, including without
limitation, interest and taxes, brokerage commissions and other costs in
connection with the purchase or sale of securities or other investment
instruments for the Funds and custodian fees and expenses.
(D) VALUATION. Securities traded on a national securities exchange or the
NASDAQ market for which market quotes are readily available will be valued on
each day the New York Stock Exchange is open for business. For those securities
held in Fund Accounts subadvised by NTI for which market quotes are not readily
available, NTI, at its expense and in accordance with procedures and methods
established by the Board, which may be amended from time to time, will provide
such assistance to IMCO in determining the fair value of such securities as IMCO
may reasonably request, including providing market price information relating to
these assets of the Fund. NTI shall also provide reasonable assistance to IMCO
in monitoring 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
promptly in the event NTI determines that a significant event has occurred .
(E) REPORTS AND AVAILABILITY OF PERSONNEL. NTI, 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
NTI set forth herein. NTI, 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 NTI's duties hereunder.
(F) COMPLIANCE MATTERS. NTI, 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. NTI also shall cooperate with and
provide reasonable assistance to IMCO, the Company's administrator, the
Company's custodian and foreign custodians, the Company's transfer agent and
pricing agents and all other agents and representatives of the Company and IMCO,
keep all such persons fully informed as to such matters as they may reasonably
deem necessary to the performance of their obligations to the Company and IMCO,
provide prompt responses to reasonable requests made by such persons and
maintain any appropriate interfaces with each so as to promote the efficient
exchange of information.
(G) BOOKS AND RECORDS. NTI 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, NTI 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, NTI may maintain copies of such records to comply with its
recordkeeping obligations.
(H) PROXIES. NTI 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 NTI's proxy voting
guidelines, as amended from time to time, which shall be provided to IMCO.
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3. ADVISORY FEE. IMCO shall pay to NTI as compensation for NTI'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 C, 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 NTI 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) NTI. NTI represents and warrants to IMCO that (i) the retention of NTI
by IMCO as contemplated by this Agreement is authorized by NTI's governing
documents; (ii) the execution, delivery and performance of this Agreement does
not violate any obligation by which NTI 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 NTI and when executed and
delivered by NTI will be a legal, valid and binding obligation of NTI,
enforceable against NTI 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) NTI is
registered as an investment adviser under the Advisers Act; (v) NTI 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 NTI 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 shall cause its employees, officers,
and partners to furnish to IMCO all reports and information required to be
provided under Rule 17j-1(c)(2) with respect to persons who are "Access Persons"
(as defined in Rule 17j-1(a)(1)) with respect to a Fund Account; (vi) NTI 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) NTI will
promptly notify IMCO of the occurrence of any event that would disqualify NTI
from serving as investment manager of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise; (viii) NTI 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) NTI will notify IMCO of any "assignment" (as
defined in the 0000 Xxx) of this Agreement or change of control of NTI, as
applicable, and any changes in the key personnel who are either the portfolio
manager(s) of any Fund Account or senior management of NTI, in each case prior
to or promptly after, such change; and (x) NTI has adequate disaster recovery
and interruption prevention measures reasonably designed to ensure business
resumption in accordance with applicable law and within industry standards.
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(B) IMCO. IMCO represents and warrants to NTI that (i) the retention of NTI
by IMCO as contemplated by this Agreement is authorized by the respective
governing documents of the Company and IMCO; (ii) the execution, delivery and
performance of each of this Agreement and the Investment Advisory Agreement does
not violate any obligation by which the Company or IMCO or their respective
property is bound, whether arising by contract, operation of law or otherwise;
(iii) each of this Agreement and the Investment Advisory Agreement has been duly
authorized by appropriate action of the Company and IMCO and when executed and
delivered by IMCO will be a legal, valid and binding obligation of the Company
and IMCO, enforceable against the Company and IMCO in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or law);
(iv) IMCO is registered as an investment adviser under the Advisers Act; (v)
IMCO has adopted a written code of ethics complying with the requirements of
Rule 17j-1 under the 1940 Act and 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 NTI 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) NTI. NTI shall indemnify and hold harmless the Company, 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)(collectively, Losses) 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 negligence,
willful misconduct, bad faith or reckless disregard of NTI 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 NTI which was required to
be stated therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon information furnished in
writing to IMCO or the Company by NTI Indemnities (as defined below) for use
therein.
(B) IMCO. IMCO shall indemnify and hold harmless NTI, 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, NTI
Indemnities) for any and all Losses to which the NTI Indemnities may become
subject under the 1933 Act, the 1940 Act, the Advisers Act, or under any other
statute, at common law or otherwise arising out of (i) any negligence, willful
misconduct, bad faith or reckless disregard by IMCO in the performance of any of
its duties or obligations hereunder or (ii) any untrue statement of a material
fact contained in the Prospectus and SAI, proxy materials, reports,
advertisements, sales literature, or other materials pertaining to the Funds or
the omission to state therein a material fact known to IMCO which was required
to be stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon information
furnished in writing by NTI Indemnities to IMCO or the Company.
(c) Notwithstanding anything herein to the contrary, the NTI Indemnities
shall not be liable to any IMCO Indemnities for any Losses resulting from NTI's
acts or omissions as subadviser to a Fund Account, except to the extent such
Losses result from a breach of contract or the negligence, willful misconduct,
bad faith or reckless disregard by the NTI Indemnities.
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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 Company, IMCO, or NTI (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 less than 10 days' written notice delivered
or mailed by registered mail, postage prepaid, to IMCO and NTI.
(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, NTI 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 NTI. NTI may at any
time, without the payment of any penalty, terminate this Agreement with respect
to a Fund by not less than 60 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 NTI by IMCO shall be without
prejudice to the obligation of NTI to complete transactions already initiated or
acted upon with respect to a Fund.
Upon termination of this Agreement, the duties of IMCO delegated to NTI
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
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action has not been approved by the vote of a majority of the outstanding voting
securities of the Company, unless such action shall be required by any
applicable law or otherwise.
9. SERVICES NOT EXCLUSIVE. The services of NTI to IMCO in connection with the
Funds hereunder are not to be deemed exclusive, and NTI 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 NTI 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 NTI 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 NTI, or IMCO itself, to perform
investment advisory services to any portion of the Funds.
10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. NTI shall, upon reasonable notice, afford IMCO
at all reasonable times access to NTI'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 NTI to provide IMCO with
access to the books and records of NTI relating to any other accounts other than
the Funds or where such access is prohibited by law.
(B) CONFIDENTIALITY. NTI, and its officers, employees and authorized
representatives, shall treat confidentially and as proprietary information of
the Company all records and information relative to the Company 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
Company, which approval shall not be unreasonably withheld and may not be
withheld where NTI 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 Company.
(C) PRIVACY POLICY. NTI 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. During the term of this
Agreement, IMCO agrees to furnish to NTI 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, share-holders of the Company or the public, which refer to NTI
or its clients in any way, prior to use thereof and not to use such material if
NTI 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 NTI with respect to 1) sales literature in which NTI is only
referenced in a listing of subadvisers to USAA funds; and 2) other materials as
agreed upon mutually by
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IMCO and NTI. Sales literature may be furnished to NTI hereunder by first-class
or overnight mail, electronic or facsimile transmission, or hand delivery.
(E) NOTIFICATIONS. NTI agrees that it will promptly notify IMCO in the
event that NTI 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. NTI 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 NTI's business activities.
(G) SHAREHOLDER MEETING EXPENSES. In the event that the Company shall be
required to call a meeting of shareholders solely due to a change of control of
NTI, NTI shall bear all reasonable expenses associated with such shareholder
meeting and
attributable to such change in control.
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
NTI: Northern Trust Investments, Inc.
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Vice President
(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.
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(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 NTI 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
Attest: NORTHERN TRUST INVESTMENTS, INC.
By: ________________________________ By: ____________________________________
Name: Name:
Title: Title:
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SCHEDULE A
S&P 500 Index Fund
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SCHEDULE B
FEES
Rate per annum of the average daily net
Fund Account assets of the Fund Account
S&P 500 Index Fund 0.02% on the first $1.5 billion of assets
0.01% on assets over $1.5 billion and
up to $3 billion
0.005% on assets over $3 billion
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