EXHIBIT D (II)
AMENDED AND RESTATED
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November, 2002 (the Effective Date),
and amended and restated as of the 1st day of June, 2003, 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 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, MFS 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, 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.
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 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 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 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 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.
(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.
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.
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.
IN WITNESS WHEREOF, 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
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Name: Xxxx X. Xxxxxx Name: Xxxxxxxxxxx X. Xxxxx
Title: Secretary Title: President
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx X. Xxxxxx
Title: Authorized Signatory
Attest: MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxxxx By: /s/ Xxxx X. Xxxxxx
----------------------------- ---------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx Name: Xxxx X. Xxxxxx
Title: Vice President and Title: President
Senior Counsel
SCHEDULE A
USAA LIFE WORLD GROWTH FUND
SCHEDULE B
FEES
Rate per annum of the aggregate average daily
FUND ACCOUNT 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
EXHIBIT D (iii)
AMENDED AND RESTATED
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November, 2002 (the Effective
Date), and amended and restated as of the 1st day of May, 2003, 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
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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 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.
For each Fund set forth on Schedule A to this Agreement, Wellington
Management 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, 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.
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(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 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.
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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 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
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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 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
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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, 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
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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 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
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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 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
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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 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
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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 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
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Facsimile No.: (000) 000-0000
Attention: Securities Counsel & Compliance Dept.
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/ XXXX X. XXXXXX
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Authorized Signatory
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Attest: WELLINGTON MANAGEMENT COMPANY, LLP
By: /S/ XXXX X. XXXXX By: /S/XXXXXX XXXXXX
-------------------------------- -----------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxx Xxxxxx
Title: Vice President and Counsel Title: Senior Vice President
12
SCHEDULE A
USAA LIFE DIVERSIFIED ASSETS FUND
USAA LIFE GROWTH & INCOME FUND
13
SCHEDULE B
FEES
Rate per annum of the average daily net
FUND ACCOUNT 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(iv)
AMENDED AND RESTATED
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November, 2002 (the Effective Date),
and amended and restated as of the 1st day of May, 2003, 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 (Xxxxxxx).
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 Xxxxxxx 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, Xxxxxxx 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 XXXXXXX. IMCO hereby appoints Xxxxxxx to act as an
investment adviser for each Fund Account in accordance with the terms and
conditions of this Agreement. Xxxxxxx 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 Xxxxxxx. Xxxxxxx
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. DUTIES OF XXXXXXX.
(A) AUTHORITY TO INVEST. Subject to the control and supervision of IMCO and
the Trust's Board of Trustees (the Board), Xxxxxxx, 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. Xxxxxxx shall perform its duties described
herein in a
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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 Xxxxxxx 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, Xxxxxxx 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, Xxxxxxx 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
Xxxxxxx wishes to hold cash or cash equivalents in excess of 10% of a Fund
Account's assets, Xxxxxxx must request in writing and receive advance permission
from IMCO.
In accordance with Subsection (b) of this Section 2, Xxxxxxx 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, Xxxxxxx 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. Xxxxxxx shall establish compliance procedures
reasonably calculated to ensure compliance with the foregoing. IMCO shall be
responsible for providing Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx regarding the rate of growth or return of a Fund
Account. Neither Xxxxxxx 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 Xxxxxxx.
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(B) PORTFOLIO TRANSACTIONS. In connection with the management of the
investment and reinvestment of the Fund Accounts' assets, Xxxxxxx 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, Xxxxxxx 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 or
research services as described below. In using its best efforts to obtain the
best terms available, Xxxxxxx, 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), Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx as to which Xxxxxxx exercises investment
discretion. The Board or IMCO may direct Xxxxxxx 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. Xxxxxxx will treat such a direction as a decision by the Board
or IMCO to retain, to the extent of the direction, the discretion that Xxxxxxx
otherwise would exercise to select broker-dealers and negotiate commissions for
the Fund Account.
On occasions when Xxxxxxx 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 Xxxxxxx 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.
Xxxxxxx 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
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from time to time, Xxxxxxx may effectuate cross transactions between a Fund
Account and such other account if it deems this to be advantageous.
Xxxxxxx 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. Xxxxxxx 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 Xxxxxxx giving proper instructions to the custodian,
Xxxxxxx shall have no responsibility or liability for the acts, omissions or
other conduct of the custodian.
Notwithstanding the foregoing, Xxxxxxx 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, Xxxxxxx 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, Xxxxxxx 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
Xxxxxxx, except as permitted under the 1940 Act. IMCO agrees that it will
provide Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx
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
Xxxxxxx and an affiliated broker-dealer (such as BAS) could give Xxxxxxx 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 Xxxxxxx considers whether to use an
affiliated broker-dealer. Xxxxxxx 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.
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IMCO and the Trust hereby authorize Xxxxxxx 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 Xxxxxxx advise the Fund Account to enter into the trade. 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 Xxxxxxx or the
affiliated broker-dealer.
(C) EXPENSES. Xxxxxxx, 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, Xxxxxxx 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, Xxxxxxx, 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. Xxxxxxx 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. Xxxxxxx, 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
Xxxxxxx set forth herein. Xxxxxxx, 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. Xxxxxxx, 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. Xxxxxxx 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.
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(G) BOOKS AND RECORDS. Xxxxxxx 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, Xxxxxxx 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, Xxxxxxx may maintain copies of such records to comply
with its recordkeeping obligations.
(H) PROXIES. Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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) XXXXXXX. Xxxxxxx represents and warrants to IMCO that (i) the retention
of Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx and when
executed and delivered by Xxxxxxx will be a legal, valid and binding obligation
of Xxxxxxx, enforceable against Xxxxxxx 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) Xxxxxxx is registered as an investment adviser under the Advisers Act; (v)
Xxxxxxx has adopted a written code of ethics complying with the requirements of
Rule 17j-1 under the 1940 Act and instituted implementation procedures and
Xxxxxxx 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)
Xxxxxxx 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) Xxxxxxx will promptly notify IMCO of the occurrence of any event that
would disqualify Xxxxxxx from serving as investment manager of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise; (viii) Xxxxxxx
has
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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) Xxxxxxx will
notify IMCO of any "assignment" (as defined in the 0000 Xxx) of this Agreement
or change of control of Xxxxxxx, as applicable, and any changes in the key
personnel who are either the portfolio manager(s) of any Fund Account or senior
management of Xxxxxxx, in each case prior to or promptly after, such change; and
(x) Xxxxxxx 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 Xxxxxxx that (i) the retention of
Xxxxxxx 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
Xxxxxxx 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) XXXXXXX. Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx Indemnitees (as defined below) for use therein. Xxxxxxx
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).
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(B) IMCO. IMCO shall be liable for any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which Xxxxxxx, 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, Xxxxxxx 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 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 Xxxxxxx 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 Xxxxxxx
(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 Xxxxxxx.
(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,
Xxxxxxx 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 Xxxxxxx. Xxxxxxx
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
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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 Xxxxxxx by IMCO shall be without
prejudice to the obligation of Xxxxxxx to complete transactions already
initiated or acted upon with respect to a Fund.
Upon termination of this Agreement, the duties of IMCO delegated to Xxxxxxx
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 Xxxxxxx to IMCO in connection with
the Funds hereunder are not to be deemed exclusive, and Xxxxxxx 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 Xxxxxxx
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 Xxxxxxx 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 Xxxxxxx, or IMCO itself,
to perform investment advisory services to any portion of the Funds.
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10. ADDITIONAL AGREEMENTS.
(A) ACCESS TO INFORMATION. Xxxxxxx 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 Xxxxxxx to provide IMCO
with access to the books and records of Xxxxxxx relating to any other accounts
other than the Funds.
(B) CONFIDENTIALITY. Xxxxxxx, 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
Xxxxxxx 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. Xxxxxxx 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. Xxxxxxx 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.
Xxxxxxx 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. Xxxxxxx agrees that it will promptly notify IMCO in the
event that Xxxxxxx 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. Xxxxxxx 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.
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(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 Xxxxxxx, including, without limitation, a change of control of
Xxxxxxx, Xxxxxxx 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.
Xxxxxxx: 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 Xxxxxxx have caused this Agreement to be
executed as of the date first set forth above.
Attest: USAA INVESTMENT MANAGEMENT
COMPANY
By: /S/ XXXX X. XXXXXX By: /S/ XXXXXXXXXXX X. XXXXX
-------------------------------- -------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxxxxxx X. Xxxxx
Title: Secretary Title: President
By: /S/ XXXX X. XXXXXX
------------------------------
Name: Xxxx X. Xxxxxx
Title: Authorized Signatory
Attest: 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 Operating
General Counsel 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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