EXHIBIT 8(q)
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MASTER-FEEDER PARTICIPATION AGREEMENT
AMONG
USAA MUTUAL FUND, INC.,
FUND ASSET MANAGEMENT, L.P.,
USAA INVESTMENT MANAGEMENT COMPANY, AND
FAM DISTRIBUTORS, INC.
DATED AS OF OCTOBER 27, 2000
THIS AGREEMENT is made and entered into as of the 27th day of October,
2000, by and among: USAA Mutual Fund, Inc. (the "Company"), on behalf of its
series USAA Extended Market Index Fund (the "Fund"); Fund Asset Management,
L.P. (the "Adviser"); USAA Investment Management Company (the "Manager"); and
FAM Distributors, Inc. ("FAM").
WHEREAS, the Adviser manages the Quantitative Master Series Trust (the
"Master Trust"), on behalf of its series, the Merrill Lynch Extended Market
Series (the "Portfolio");
WHEREAS, the Fund is a series of an open-end management investment
company, and the Fund and the Portfolio have the same investment objectives and
substantively the same investment policies;
WHEREAS, the Fund desires to invest its investable assets in the
Portfolio in exchange for a beneficial interest in the Portfolio ("Shares") on
the terms and conditions set forth herein, and the Portfolio believes that such
investments are in its best interests; and
WHEREAS, the Manager is the manager for the Fund, Adviser is the
manager for the Portfolio, and FAM is the placement agent for the Portfolio;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein made and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
INVESTMENTS AND REDEMPTIONS
1.1 INVESTMENTS. By placing orders through FAM, the Fund will invest
its investable assets in the Portfolio and, in exchange therefor, the Portfolio
will issue to the Fund Shares equal in value to the assets of the Fund conveyed
to the Portfolio. The Fund may add to or reduce its investment in the Portfolio
as described in the Portfolio's Form N-1A registration statement (the
"Portfolio's N-1A"). Notwithstanding the foregoing, the Portfolio reserves the
right to refuse purchase requests if such action is required by law or, in the
sole discretion of the trustees of the Master Trust, is in the best interests
of other shareholders of the Portfolio, provided that prior to taking such
action the Portfolio has delivered notice to the Manager of the reason(s) for
its belief that such action is required and has allowed the Manager ten days
following receipt of such notice, unless prohibited by applicable law, to
correct the problem(s) or concern(s) identified by the Portfolio. In connection
with each investment, each party hereto shall deliver to each other party such
documents as such other party reasonably may request.
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1.2 INVESTMENT DATE. Investments can occur initially on October 27,
2000 (or such later date as the parties hereto agree upon) and on subsequent
Business Days as the Fund determines. ("Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the
Portfolio calculates its net asset value pursuant to the rules of the
Securities and Exchange Commission ("SEC")). All acts occurring on the date of
investment shall be deemed to occur simultaneously as of the determination of
the Portfolio's net asset value on the date of investment.
1.3 REDEMPTIONS. FAM will redeem any full or fractional Shares of the
Portfolio when requested by the Manager on behalf of the Fund in accordance
with the operational procedures mutually agreed to by FAM and the Manager from
time to time and the provisions of the Portfolio's N-1A. FAM shall ensure that
the Portfolio makes payment via federal funds wire for such Shares no later
than 12:00 noon New York time on the day the redemption request is made, but in
no event shall payment be delayed for a greater period than is permitted by the
Investment Company Act of 1940, as amended (the "1940 Act") (including any rule
or order of the SEC thereunder).
1.4 PURCHASE AND REDEMPTION PROCEDURES. FAM shall accept cash movement
reports from the Fund on each Business Day, provided that such orders are
received prior to 9:00 a.m. New York time on such Business Day. FAM shall
accept transfer authorization reports from the Fund by 2:00 p.m. New York time
on each Business Day. Such transfer authorization reports shall reflect
purchase and redemption orders received from the Fund's shareholders in good
order prior to the time the net asset value of the Portfolio is priced (the
Portfolio's "valuation time") on the prior Business Day. Any such purchase or
redemption order received after the Portfolio's valuation time on a Business
Day shall be deemed received prior to 9:00 a.m. New York time on the next
succeeding Business Day. Purchase and redemption orders shall be provided to
FAM as agent for the Portfolio in such written or electronic form (including
facsimile) as may be mutually acceptable to FAM and the Manager. In the event
that the Manager elects to use a form of written or electronic communication
which is not capable of recording the time, date and recipient of any
communication and confirming good transmission, the Manager shall be
responsible for confirming that any communication sent by the Manager to FAM
was properly received. FAM may reject purchase and redemption orders that are
not in proper form. FAM shall be entitled to assume the authenticity of
communications received from, and shall be fully protected from all liability
in acting upon the instructions of, the persons named as authorized individuals
of the Manager in the attached Schedule A. Payment by the Fund for a purchase
order that is transmitted to and accepted by FAM shall be made by 12:00 noon
New York time on the same Business Day that FAM receives notice of the order.
Payments shall be made in federal funds transmitted by wire. In the event that
the Fund shall fail to pay in a timely manner for any purchase order validly
received by FAM, the Manager shall hold the Portfolio harmless from any losses
reasonably sustained as the result of the Portfolio acting in reliance on such
purchase order received by FAM.
1.5 TAX NOTICES. FAM shall furnish prompt notice to the Manager of any
income, dividends or capital gain distribution payable on Shares of the
Portfolio. The Fund hereby elects to receive all such income, dividends and
capital gain distributions as are payable in the form of additional Shares of
the Portfolio. FAM shall notify the Manager of the number of Shares so issued
as payment of such dividends and distributions. The Manager acknowledges that
the Portfolio has the status of a partnership for US federal income tax
purposes. FAM shall furnish to the Manager information regarding the Fund's
allocable share of income, gain, loss, deduction and credit of the Portfolio,
as determined for federal income tax purposes.
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1.6 NET ASSET VALUE DATA. FAM shall make the net asset value per Share
for the Portfolio available to the Manager on a daily basis as soon as
reasonably practical after such net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available by
6:00 p.m., New York time.
1.7 CONDITIONS PRECEDENT AND CONTINUING REPRESENTATIONS AND
WARRANTIES. The obligations of each party hereto to consummate the transactions
provided for herein are subject to all representations and warranties of the
other parties contained herein being true and correct in all material respects
as of the date hereof and as of the date of the transactions contemplated
hereby. Accordingly, each party shall be deemed to have made each
representation and warranty herein anew as of the date of each transaction.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 THE COMPANY. The Company represents and warrants as follows:
(a) Organization. The Company is duly organized and validly
existing under the laws of the State of Maryland as a business corporation. The
Fund is a duly and validly designated series of the Company and has the
requisite power and authority to own property and conduct its business as
proposed to be conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and delivery of
this Agreement by the Company on behalf of the Fund and the consummation of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors.
(c) No Bankruptcy Proceedings. The Fund is not under the
jurisdiction of a court in a proceeding under Title 11 of the United States
Code (the "Bankruptcy Code") or similar case within the meaning of Section
368(a)(3)(A) of the Bankruptcy Code.
(d) Fiscal Year. The fiscal year end for the Fund is December 31.
(e) SEC Filings. The Fund has duly filed all forms, reports,
proxy statements and other documents (collectively, "SEC Filings") required to
be filed under the Securities Act of 1933, as amended (the "1933 Act"),
Securities Exchange Act of 1934 (the "1934 Act") and the 1940 Act
(collectively, the "Securities Laws") in connection with the registration of
its shares, any meetings of its shareholders and its registration as an
investment company. The SEC Filings were prepared in accordance with applicable
requirements of the Securities Laws and the rules and regulations thereunder,
and do not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(f) 1940 Act Registration. The Company is duly registered as an
open-end management investment company under the 1940 Act. The Manager and the
Company acknowledge that shares of the Master Trust and the Portfolio are not
registered for sale with the SEC under the 1933 Act, and are offered to the
Company in reliance on the exemption set forth in Section 4(2) of the 1933 Act
for transactions not involving a public offering.
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2.2 THE ADVISER AND FAM REGARDING THE PORTFOLIO. The Adviser and FAM
jointly and severally represent and warrant as follows:
(a) Organization. The Master Trust is duly organized and validly
existing under the laws of the State of Delaware as a business trust. The
Portfolio is a duly and validly designated series of the Master Trust and has
the requisite power and authority to own property and conduct its business as
proposed to be conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and delivery of
this Agreement by the Adviser have been duly authorized by all necessary
actions by the Adviser.
(c) Authorization of Issuance of Interest. The issuance by each
Portfolio of Shares in exchange for the investment by each Fund has been duly
authorized by the Master Trust's Board of Trustees. When issued in accordance
with the terms of this Agreement, the Shares will be validly issued, fully paid
and non-assessable by the Portfolio.
(d) No Bankruptcy Proceedings. The Portfolio is under the
jurisdiction of a court in a proceeding under Title 11 of the Bankruptcy Code
or similar case within the meaning of Section 368(a)(3)(A) of the Bankruptcy
Code.
(e) Fiscal Year. The fiscal year end of the Portfolio is December
31.
(f) Auditors. The Portfolio has appointed Deloitte & Touche LLP
as its independent public accountants to certify the Portfolio's financial
statements in accordance with Section 32 of the 1940 Act, and the Adviser and
FAM shall promptly notify the Manager if any other independent public
accountant is designated to perform this function.
(g) SEC Filings. The Portfolio has duly filed all SEC Filings
required to be filed with the SEC pursuant to the 1934 Act and 1940 Act in
connection with any meetings of its investors and its registration as an
investment company. Shares of the Portfolio are not required to be registered
under the 1933 Act because such Shares are offered solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. The SEC Filings were prepared in accordance with
the requirements of the Securities Laws, as applicable, and the rules and
regulations thereunder, and do not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) 1940 Act Registration. The Master Trust is duly registered as
an open-end management investment company under the 1940 Act, and its
registration is in full force and effect.
(i) Tax Status. The Portfolio is taxable as a partnership under
the Internal Revenue Code of 1986, as amended (the "Code").
(j) Pricing and In-Kind Redemption Procedures. The Portfolio
has adopted pricing and valuation procedures that comply with the 1940 Act and
in-kind redemption procedures that comply with the 1940 Act and any related
interpretations issued by the SEC staff as in effect as of the date of the
transactions contemplated hereby.
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(k) Licenses. The Portfolio has obtained all requisite licenses
and other rights necessary to make use of the name "Wilshire" and to make use
of all proprietary data relating to the operation of the Portfolio, and the use
by the Portfolio of such name and data does not violate any licenses or
infringe upon any trademarks.
(l) Authority of Fund to Use Name. The Portfolio has the
authority to permit the Fund to make use of the name "Wilshire", and the Fund's
use of such name will not violate any licenses or infringe upon any trademarks.
2.3 MANAGER. The Manager represents and warrants as follows:
(a) Organization. The Manager is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to conduct its business as
contemplated by this Agreement.
(b) Authorization of Agreement. The execution and delivery of
this Agreement by the Manager have been duly authorized by all necessary
actions by the Manager.
(c) Investment Adviser. The Manager is registered as an
investment adviser with the SEC in good standing under the Investment Advisers
Act of 1940, as amended (the "Advisers Act").
2.4 FAM. FAM represents and warrants as follows:
(a) Organization. FAM is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite power and authority to conduct its business as contemplated by
this Agreement.
(b) Authorization of Agreement. The execution and delivery of
this Agreement by FAM have been duly authorized by all necessary actions by FAM.
(c) Broker-Dealer. FAM is duly registered as a broker-dealer with
the SEC and all jurisdictions where such registration is required to conduct
the activities contemplated herein, and is a member in good standing of the
National Association of Securities Dealers, Inc.
ARTICLE III
COVENANTS
3.1 THE COMPANY. The Company covenants as follows:
(a) Advance Review of Certain Documents. The Company will furnish
to FAM prior to filing or first use, as the case may be, drafts of amendments
to its registration statement on Form N-lA and prospectus supplements or
amendments relating to the Fund, and any proposed advertising or sales
literature relating to the Fund; provided, however, that such advance notice
shall not be required for advertising or sales literature that merely
references the name of the Fund.
(b) Proxy Voting. The Company agrees that on any matter in which
a vote of holders of Shares of the Master Trust is sought, with respect to
which the Fund is entitled to vote, the Company will either seek instructions
from the holders of the Fund's securities and vote on
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the matter in accordance with such instructions, or the Company will vote the
Shares of the Portfolio held by it in the same proportion as the vote of all
other holders of Shares of such Portfolio.
3.2 INDEMNIFICATION BY FUND.
(a) The Manager and the Fund, as applicable, will jointly and
severally indemnify and hold harmless the Portfolio, FAM and their respective
trustees, directors, officers and employees and each other person who controls
the Portfolio or FAM, as the case may be, within the meaning of Section 15 of
the 1933 Act (each a "Covered Person" and collectively "Covered Persons"),
against any and all losses, claims, demands, damages, liabilities and expenses
(each a "Liability" and collectively "Liabilities") (including the reasonable
cost of investigating and defending against any claims therefor and any counsel
fees incurred in connection therewith), joint or several, which:
(i) arise out of or are based upon any of the Securities
Laws, any other statute or common law or are incurred in connection with or as
a result of any formal or informal administrative proceeding or investigation
by a regulatory agency, insofar as such Liabilities arise out of or are based
upon the ground or alleged ground that any direct or indirect omission or
commission by the Fund (either during the course of its daily activities or in
connection with the accuracy of its representations or its warranties in this
Agreement) caused or continues to cause the Portfolio to violate any federal or
state securities laws or regulations or any other applicable domestic or
foreign law or regulations or common law duties or obligations, but only to the
extent that such Liabilities do not arise out of and are not based upon an
omission or commission of the Portfolio or FAM;
(ii) arise out of any misstatement of a material fact or an
omission of a material fact related to the Portfolio in the Fund's registration
statement (including amendments thereto) or included in Fund advertising or
sales literature, other than information provided by the Portfolio or FAM or
included in Fund advertising or sales literature at the request of the
Portfolio or FAM;
(iii) result from the failure of any representation or
warranty made by the Fund to be accurate when made or the failure of the Fund
to perform any covenant contained herein or to otherwise comply with the terms
of this Agreement; or
(iv) arise out of any unlawful or negligent act of the Fund
or any director, officer, employee or agent of the Fund, whether such act was
committed against the Fund, the Portfolio, FAM or any third party; provided,
however, that in no case shall the Manager or the Fund be liable with respect
to any claim made against any such Covered Person unless such Covered Person
shall have notified the Manager and the Fund in writing of the nature of the
claim within a reasonable time after the summons, other first legal process or
formal or informal initiation of a regulatory investigation or proceeding shall
have been served upon or provided to a Covered Person, or any federal, state or
local tax deficiency has come to the attention of FAM, the Portfolio or a
Covered Person. Failure to notify the Manager or the Fund of such claim shall
not relieve it from any liability that it may have to any party otherwise than
on account of the indemnification contained in this Section.
(b) The Manager and the Fund will be entitled to participate at
its own expense in the defense or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but, if the Manager or the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by the Manager or the Fund. In the event the Manager or the Fund elects to
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assume the defense of any such suit and retain such counsel, each Covered
Person and any other defendant or defendants may retain additional counsel, but
shall bear the fees and expenses of such counsel unless (A) the Manager or the
Fund shall have specifically authorized the retaining of such counsel or (B)
the parties to such suit include any Covered Person and the Manager or a Fund,
and any such Covered Person has been advised by counsel that one or more legal
defenses may be available to it that may not be available to the Manager or the
Fund, in which case neither the Manager nor the Fund shall be entitled to
assume the defense of such suit notwithstanding its obligation to bear the fees
and expenses of such counsel. Neither the Manager nor the Fund shall be liable
to indemnify any Covered Person for any settlement of any claim affected
without the Manager or Fund's written consent, which consent shall not be
unreasonably withheld or delayed. The indemnities set forth in paragraph (a)
above will be in addition to any liability that the Manager or the Fund might
otherwise have to a Covered Person.
3.3 THE ADVISER AND FAM. Each of the Adviser and FAM jointly and
severally covenant as follows:
(a) Advance Review of Filings. The Adviser and FAM will furnish to
the Manager, prior to filing, draft amendments to the Portfolio's Form N-1A.
(b) Tax Status. The Portfolio will qualify to be taxable as a
partnership under the Code for all periods during which this Agreement is in
effect, except to the extent that the failure to so qualify results from any
action or omission of a Fund.
(c) Availability of Shares. Subject to compliance with the terms
of this Agreement, the Portfolio shall permit its corresponding Fund to make
additional investments in the Portfolio on each Business Day on which shares of
the Fund are sold to the public; provided, however, that the Portfolio may
refuse to permit a Fund to make additional investments on any day on which the
Trustees of the Master Trust reasonably determine that permitting additional
investments by a Fund would constitute a breach of their fiduciary duties to
the Portfolio or would breach applicable law.
(d) Investment Objective. The Adviser and FAM will notify the
Fund at least 60 days prior to the Portfolio changing its investment objective
or policies.
3.4 INDEMNIFICATION BY THE ADVISER AND FAM.
(a) The Adviser and FAM will jointly and severally indemnify and
hold harmless the Company, the Fund, the Manager and their directors, officers
and employees and each other person who controls the Fund within the meaning of
Section 15 of the 1933 Act (each a "Covered Person" and collectively "Covered
Persons"), against any and all losses, claims, demands, damages, liabilities
and expenses (each a "Liability" and collectively, the "Liabilities")
(including the reasonable costs of investigating and defending against any
claims therefor and any counsel fees incurred in connection therewith), joint
or several, whether incurred directly or indirectly, which
(i) arise out of or are based upon any of the Securities
Laws, any other statute or common law or are incurred in connection with or as
a result of any formal or informal administrative proceeding or investigation
by a regulatory agency, insofar as such Liabilities arise out of or are based
upon the ground or alleged ground that any direct or indirect omission or
commission by the Adviser (either during the course of its daily activities or
in connection with the accuracy of its representations or its warranties in
this Agreement) caused or continues to
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cause the Fund to violate any federal or state securities laws or regulations
or any other applicable domestic or foreign law or regulations or common law
duties or obligations, but only to the extent that such Liabilities do not
arise out of and are not based upon an omission or commission of the Fund;
(ii) arise out of or are based upon an inaccurate
calculation of the Portfolio's net asset value (even if calculated by another
party retained for that purpose);
(iii) arise out of (A) any misstatement of a material fact or
an omission of a material fact in the Portfolio's N-1A (including amendments
thereto) or included at the request of FAM in advertising or sales literature
used by the Fund, or (B) any misstatement of a material fact or an omission of
a material fact in the Portfolio's N-1A or advertising or sales literature of
any investor in the Portfolio, other than the Fund;
(iv) arise out of the Portfolio's having caused the Fund to
fail to qualify as a regulated investment company under the Code;
(v) arise out of any claim by the Internal Revenue Service
that the Company is not entitled to a dividends paid deduction under the Code
as a result of the amount of any fees charged (or not charged) by the Adviser,
FAM or any affiliate thereof to (A) the Company or the Portfolio, or (B) any
other regulated investment company under the Code that invests in the
Portfolio.
(vi) result from the failure of any representation or warranty
made by the Adviser or FAM to be accurate when made or the failure of the
Adviser or FAM to perform any covenant contained herein or to otherwise comply
with the terms of this Agreement;
(vii) arise out of any unlawful or negligent act by the
Adviser, the Portfolio, FAM or any director, trustee, officer, employee or
agent of the Adviser, the Portfolio or FAM, whether such act was committed
against the Portfolio, the Fund or any third party;
(viii) arise out of any claim that the systems,
methodologies, or technology used in connection with operating the Portfolio,
including the technologies associated with maintaining the master-feeder
structure of the Portfolio, violates any license or infringes upon any patent
or trademark;
(ix) arise out of any claim that the use of the names used by
the Portfolio or any related use of names by the Fund violates any license or
infringes upon any trademark; or
(x) result from any Liability of the Portfolio, the Adviser
or FAM to any investor in the Portfolio (or shareholder thereof), other than
the Fund (and its shareholders); provided, however, that in no case shall the
Adviser or FAM be liable with respect to any claim made against any such
Covered Person unless such Covered Person shall have notified the Adviser and
FAM in writing of the nature of the claim within a reasonable time after the
summons, other first legal process or formal or informal initiation of a
regulatory investigation or proceeding shall have been served upon or provided
to a Covered Person or any federal, state or local tax deficiency has come to
the attention of the Fund or a Covered Person. Failure to notify the Adviser
and FAM of such claim shall not relieve it from any liability that it may have
to any Covered Person otherwise than on account of the indemnification
contained in this paragraph.
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(b) The Adviser and FAM will be entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but, if the Adviser or FAM elects
to assume the defense, such defense shall be conducted by counsel chosen by the
Adviser and FAM. In the event either the Adviser or FAM elects to assume the
defense of any such suit and retain such counsel, each Covered Person and any
other defendant or defendants may retain additional counsel, but shall bear the
fees and expenses of such counsel unless (A) the Adviser and FAM shall have
specifically authorized the retaining of such counsel or (B) the parties to
such suit include any Covered Person, the Portfolio, the Adviser or FAM, and
any such Covered Person has been advised by counsel that one or more legal
defenses may be available to it that may not be available to the Portfolio, the
Adviser or FAM, in which case neither the Adviser nor FAM shall be entitled to
assume the defense of such suit notwithstanding its obligation to bear the fees
and expenses of such counsel. Neither the Adviser nor FAM shall be liable to
indemnify any Covered Person for any settlement of any claim affected without
their written consent, which consent shall not be unreasonably withheld or
delayed. The indemnities set forth in paragraph (a) will be in addition to any
liability that each Portfolio and FAM might otherwise have to a Covered Person.
3.5 IN-KIND REDEMPTION. If the Fund desires to redeem all of its
Shares in the Portfolio, unless otherwise agreed to by the parties hereto, the
Adviser and FAM, as applicable, will direct the Portfolio to effect such
redemption "in kind" in accordance with the in-kind redemption procedures
adopted by the Master Trust's Board of Trustees.
3.6 AUDITORS. If the Fund's independent public accountants differ from
those of the Portfolio, FAM and the Adviser will use their best efforts to
require the Master Trust's independent public auditors to provide the Fund's
independent public auditors with any assistance or cooperation reasonably
requested by the Fund or the Fund's independent public auditors. Such
assistance and cooperation will be considered within the scope of the Master
Trust's independent public auditors' duties to the Master Trust, and shall
provided without charge to the Fund.
3.7 REASONABLE ACTIONS. Each party covenants that it will, subject to
the provisions of this Agreement, from time to time, as and when requested by
another party or in its own discretion, as the case may be, execute and deliver
or cause to be executed and delivered all such assignments and other
instruments, take or cause to be taken such actions, and do or cause to be done
all things reasonably necessary, proper or advisable in order to consummate the
transactions contemplated by this Agreement and to carry out its intent and
purpose.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 NOTIFICATION OF CERTAIN MATTERS. Each party will give prompt
notice to the other parties of (a) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate, and (b) any material failure of a party or any trustee, director,
officer, employee or agent thereof to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such person
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 4.1 shall not limit or otherwise affect the remedies available,
hereunder or otherwise, to the party receiving such notice.
4.2 ACCESS TO INFORMATION. The Portfolio and the Fund shall afford
each other access
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at all reasonable times to such party's officers, employees, agents and offices
and to all its relevant books and records and shall furnish each other party
with all relevant financial and other data and information as requested;
provided, however, that nothing contained herein shall obligate the Portfolio
or the Fund to provide each other with access to the books and records relating
to any other series of the Master Trust and the Company other than the
Portfolio or the Fund, nor shall anything contained herein obligate the
Portfolio or the Fund to furnish each other with a shareholder list, except as
may be required to comply with applicable law or any provision of this
Agreement.
4.3 CONFIDENTIALITY. Each party agrees that it shall hold in strict
confidence all data and information obtained from another party (unless such
information is or becomes readily ascertainable from public information or
trade sources) and shall ensure that its officers, employees and authorized
representatives do not disclose such information to others without the prior
written consent of the party from whom it was obtained, except if disclosure is
required by the SEC, any other regulatory body or the Fund's or Portfolio's
respective auditors, or in the opinion of counsel such disclosure is required
by law, and then only with as much prior written notice to the other party as
is practical under the circumstances.
4.4 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 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 and 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.
4.5 SHAREHOLDER MEETING EXPENSES. In the event that the Manager, the
Company or the Fund shall be required to call a meeting of shareholders solely
because of actions relating to the Adviser, the Master Trust and/or the
Portfolio, the Adviser shall bear all expenses associated with such shareholder
meeting.
4.6 WAIVER OF FEES/PAYMENT OF EXPENSES. The Adviser and FAM
understand that each of the Company and the Manager have entered into this
Agreement in reliance upon the Adviser's and FAM's representation and warranty
that the aggregate fees and expenses of the Portfolio, including but not
limited to investment management, custody, administration, accounting, legal,
audit and trustee fees (the "Portfolio Fees") in addition to other charges by
FAM to the Fund or the Manager shall not exceed (a) .11 of 1% per annum, with
respect to the Portfolio's first $500 million in average annual net assets, and
(b) .08 of 1% per annum, with respect to average annual net assets of the
Portfolio in excess of $500 million. Accordingly, the Adviser and FAM each
agrees to waive fees to the Portfolio or the Fund or pay expenses of the
Portfolio or the Fund such that the aggregate Portfolio Fees and all fees
charged to the Fund and the Manager by FAM do not exceed the foregoing amounts.
ARTICLE V
TERMINATION AND AMENDMENT
5.1 TERMINATION. This Agreement may be terminated (a) by the mutual
written agreement of all parties, (b) at any time by the Fund by redeeming all
of the Fund's Shares in the Portfolio, (c) on not less than 120 days' prior
written notice by the Portfolio to the Fund, and (d) at any time immediately
upon written notice to the other parties in the event that formal proceedings
are instituted against another party to this Agreement by the SEC or any other
regulatory body, provided that the terminating party has a reasonable belief
that the institution of
10
<PAGE>
the proceeding is not without foundation and will have a material adverse
impact on the terminating party. The indemnification obligations in Article III
and the confidentiality provisions in Section 4.3 shall survive the termination
of this Agreement.
5.2 AMENDMENT. This Agreement may be amended, modified or
supplemented at any time in such manner as may be mutually agreed upon in
writing by the parties.
ARTICLE VI
GENERAL PROVISIONS
6.1 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made when actually received in person or by facsimile, or three days after
being sent by certified or registered United States mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Company, the Fund or the Manager:
10750 Robert F. McDermott Freeway
Bank Services Building, BK B 04 S
San Antonio, Texas 78288
Attn: Vice President, Securities Counsel & Compliance
Fax: (210) 498-4022
If to the Adviser:
Fund Asset Management, L.P.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attn: Senior Vice President, Operations
Fax: (609) 282-3222
If to FAM:
FAM Distributors, Inc.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attn: Senior Vice President, Operations
Fax: (609) 282-3222
Any party to this Agreement may change the identity of the person to receive
notice by providing written notice thereof to all other parties to the
Agreement.
6.2 EXPENSES. Unless stated otherwise herein, all costs and expense
associated with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
6.3 HEADINGS. The headings and captions in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.4 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
11
<PAGE>
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
6.5 ENTIRE AGREEMENT. This Agreement and the agreements and other
documents delivered pursuant hereto set forth the entire understanding among
the parties concerning the subject matter of this Agreement and incorporate or
supersede all prior understandings.
6.6 SUCCESSORS AND ASSIGNMENTS. Each and all of the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and, except as otherwise specifically provided in this Agreement, their
respective successors and assigns. Notwithstanding the foregoing, no party
shall make any assignment of this Agreement or any rights or obligations
hereunder without the written consent of all other parties. As used herein, the
term "assignment" shall have the meaning ascribed thereto in the 1940 Act.
6.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the choice of law or conflicts of law provisions thereof.
6.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing one or more
counterparts.
6.9 THIRD PARTIES. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give any person, other than the parties
hereto and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
6.10 INTERPRETATION. Any uncertainty or ambiguity existing herein
shall not presumptively be interpreted against any party, but shall be
interpreted according to the application of the rules of interpretation for
arm's length agreements.
6.11 LIMITATION OF LIABILITY. Each party expressly acknowledges the
provisions in the Declaration of Trust of the Master Trust limiting the
liability of shareholders, officers and trustees of the Master Trust and the
provisions in the Articles of Incorporation of the Company limiting the
liability of shareholders, officers and directors of the Company.
6.12 ADDITIONAL LIMITATIONS OF LIABILITY. The parties hereto agree and
acknowledge that (a) the Company has entered into this Agreement solely on
behalf of the Fund and no other series of the Company shall have any obligation
hereunder with respect to any liability of the Company arising hereunder; (b)
the Adviser has entered into this Agreement solely on behalf of the Portfolio
and no other series of the Master Trust shall have any obligation hereunder
with respect to any liability of the Portfolio arising hereunder; and (c) no
series or feeder participant of the Master Trust shall be liable to any other
series or feeder participant of the Master Trust.
[Signature Page to Follow]
12
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as of the
date first written above.
USAA MUTUAL FUND, INC.,
on behalf of its series,
USAA EXTENDED MARKET INDEX FUND
By: /S/ MICHAEL J.C. ROTH
--------------------------
Name: Michael J.C. Roth
Title President
USAA INVESTMENT MANAGEMENT COMPANY
By: /S/ DAVID G. PEEBLES
--------------------------
Name: David G. Peebles
Title Senior Vice President
FAM DISTRIBUTORS, INC.
By: /S/TERRY GLENN
--------------------------
Name: Terry Glenn
Title President
FUND ASSET MANAGEMENT, L.P.
By: /S/ TERRY GLENN
--------------------------
Name: Terry Glenn
Title Executive Vice President
13
<PAGE>
SCHEDULE A
PERSONS AUTHORIZED TO ACT ON BEHALF OF MANAGER
FAM and its agents are authorized to rely on instructions from the
following individuals on behalf of the Manager on its own behalf and on behalf
of the Fund:
Name Signature
Michael J.C. Roth /S/MICHAEL J.C. ROTH
Sherron Kirk /S/SHERRON KIRK
David Peebles /S/DAVID G. PEEBLE
Mark S. Howard /S/MARK S. HOWARD
Terri Luensmann /S/TERRI LUENSMANN
Caryl Swann /S/CARLY SWANN
Robert Galindo /S/ROBERT GALINDO
Samuel Borowski /S/SAMUEL BOROWSKI
14
<PAGE>
EXHIBIT 8(r)
<PAGE>
Exhibit
USAA Transfer Agency Company
10750 Robert F. McDermott Freeway
San Antonio, TX 78288
Gentlemen:
Pursuant to Section 27 of the Transfer Agency Agreement dated as of
January 23, 1992 between USAA Mutual Fund, Inc. (the "Company") and USAA
Transfer Agency Company, (the "Transfer Agent") please be advised that the
Company has established four new series of its shares, namely, the Extended
Market Index Fund, the Nasdaq-100 Index Fund, the Global Titans Index Fund, and
the Capital Growth Fund (the "Funds"), and please be further advised that the
Company desires to retain the Transfer Agent to render transfer agency services
under the Transfer Agency Agreement to the Funds in accordance with the fee
schedules attached hereto as Exhibit A.
Please state below whether you are willing to render such services in
accordance with the fee schedules attached hereto as Exhibit A.
USAA MUTUAL FUND, INC.
Attest: /S/MICHAEL D. WAGNER By: /S/MICHAEL J.C. ROTH
-------------------- --------------------
Michael D. Wagner Michael J.C. Roth
Secretary President
Dated: October 27, 2000
We are willing to render services to the Extended Market Index Fund,
the Nasdaq-100 Index Fund, the Global Titans Index Fund, and the Capital Growth
Fund in accordance with the fee schedules attached hereto as Exhibit A.
USAA TRANSFER AGENCY COMPANY
Attest: /S/MARK S. HOWARD By: /S/SAMUEL J. BOROWSKI
----------------- ---------------------
Mark S. Howard Samuel J. Borowski
Assistant Secretary Senior Vice President
Dated: October 27, 2000
<PAGE>
EXHIBIT 8(s)
<PAGE>
USAA Transfer Agency Company
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
USAA MUTUAL FUND, INC.
Extended Market Index Fund
-------------------------------------------------------------------------------
GENERAL - Fees are based on an annual per shareholder account charge for
account maintenance plus out-of-pocket expenses. There is a minimum charge of
$2,000 per month applicable to the entire fund complex.
ANNUAL MAINTENANCE CHARGES - The annual maintenance charge includes the
processing of all transactions and correspondence. The fee is billable on a
monthly basis at the rate of 1/12 of the annual fee. USAA Transfer Agency
Company will charge for each open account from the month the account is opened
through January of the year following the year all funds are redeemed from the
account.
Extended Market Index Fund - charge per account $26
USAA MUTUAL FUND, INC. USAA TRANSFER AGENCY COMPANY
Extended Market Index Fund
By: /S/MICHAEL J.C. ROTH By: /S/SHERRON A. KIRK
-------------------- ------------------
Michael J. C. Roth Sherron A. Kirk
President Senior Vice President
Date: October 27, 2000 Date: October 27, 2000
<PAGE>
EXHIBIT 8(t)
<PAGE>
USAA Transfer Agency Company
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
USAA MUTUAL FUND, INC.
Nasdaq-100 Index Fund
GENERAL - Fees are based on an annual per shareholder account charge for
account maintenance plus out-of-pocket expenses. There is a minimum charge of
$2,000 per month applicable to the entire fund complex.
ANNUAL MAINTENANCE CHARGES - The annual maintenance charge includes the
processing of all transactions and correspondence. The fee is billable on a
monthly basis at the rate of 1/12 of the annual fee. USAA Transfer Agency
Company will charge for each open account from the month the account is opened
through January of the year following the year all funds are redeemed from the
account.
Nasdaq-100 Index Fund - charge per account $26
USAA MUTUAL FUND, INC. USAA TRANSFER AGENCY COMPANY
Extended Market Index Fund
By:/S/MICHAEL J.C. ROTH By: /S/SHERRON A. KIRK
-------------------- ------------------
Michael J. C. Roth Sherron A. Kirk
President Senior Vice President
Date: October 27, 2000 Date: October 27, 2000
<PAGE>
EXHIBIT 8(u)
<PAGE>
USAA Transfer Agency Company
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
USAA MUTUAL FUND, INC.
Global Titans Index Fund
-------------------------------------------------------------------------------
GENERAL - Fees are based on an annual per shareholder account charge for
account maintenance plus out-of-pocket expenses. There is a minimum charge of
$2,000 per month applicable to the entire fund complex.
ANNUAL MAINTENANCE CHARGES - The annual maintenance charge includes the
processing of all transactions and correspondence. The fee is billable on a
monthly basis at the rate of 1/12 of the annual fee. USAA Transfer Agency
Company will charge for each open account from the month the account is opened
through January of the year following the year all funds are redeemed from the
account.
Global Titans Index Fund - charge per account $26.00
USAA MUTUAL FUND, INC. USAA TRANSFER AGENCY COMPANY
Global Titans Index Fund
By:/S/MICHAEL J.C. ROTH By: /S/ SHERRON A. KIRK
-------------------- -------------------
Michael J. C. Roth Sherron A. Kirk
President Senior Vice President
Date: October 27, 2000 Date: October 27, 2000
<PAGE>
EXHIBIT 8(v)
<PAGE>
USAA Transfer Agency Company
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
USAA MUTUAL FUND, INC.
Capital Growth Fund
-------------------------------------------------------------------------------
GENERAL - Fees are based on an annual per shareholder account charge for
account maintenance plus out-of-pocket expenses. There is a minimum charge of
$2,000 per month applicable to the entire fund complex.
ANNUAL MAINTENANCE CHARGES - The annual maintenance charge includes the
processing of all transactions and correspondence. The fee is billable on a
monthly basis at the rate of 1/12 of the annual fee. USAA Transfer Agency
Company will charge for each open account from the month the account is opened
through January of the year following the year all funds are redeemed from the
account.
Capital Growth Fund - charge per account $26.00
USAA MUTUAL FUND, INC. USAA TRANSFER AGENCY COMPANY
Capital Growth Fund
By: /S/MICHAEL J.C. ROTH By: /S/SHERRON A. KIRK
-------------------- ------------------
Michael J. C. Roth Sherron A. Kirk
President Senior Vice President
Date: October 27, 2000 Date: October 27, 2000
<PAGE>
EXHIBIT 8(w)
<PAGE>
AGREEMENT FOR NASDAQ-100(R) INDEX-RELATED PRODUCTS
THIS AGREEMENT, is made by and between The Nasdaq Stock Market,
Inc. (NASDAQ), a Delaware Corporation which is a subsidiary of the National
Association of Securities Dealers, Inc. (NASD) (NASD with its subsidiaries are
collectively referred to as the CORPORATIONS), whose principal offices are
located at 1735 K Street, N.W., Washington, D.C. 20006 and USAA Mutual Fund,
Inc., a Maryland corporation (LICENSEE), whose principal offices are located at
10750 McDermott Freeway, BKB-04-S, San Antonio, TX 78288.
WHEREAS, Nasdaq possesses certain rights in the NASDAQ-100 INDEX(R)
(INDEX); and
WHEREAS, Nasdaq possesses certain rights to Nasdaq(R), Nasdaq-100(R),
and Nasdaq-100 Index(R) as trade names, trademarks or service marks (MARKS);
and
WHEREAS, Nasdaq determines the components of the Index, calculates,
maintains, and disseminates the Index; and
WHEREAS, Licensee desires to use and Nasdaq desires to license the
right to use the Index as a benchmark or component of the investment strategy
of the funds, financial instruments, derivatives or other products noted in
Attachment II (DERIVATIVE PRODUCTS) to be issued, listed and/or traded by
Licensee or its authorized affiliates and use the Marks in the names of the
Derivative Products, in materials used in connection with the marketing,
promotion and issuance of the Derivative Products, and in connection with
making such disclosure about the Derivative Products as Licensee deems
necessary or desirable under any applicable law, rules, regulations or
provisions of this Agreement; and
WHEREAS, Licensee is legally authorized to issue shares of the funds,
or issue, enter into, write, sell, redeem, purchase and/or renew (ISSUE,
ISSUING, or ISSUANCE) such Derivative Products, and each Derivative Product
will be Issued as legally required under applicable law;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, Licensee and Nasdaq, intending to be
legally bound, agree as follows:
Section 1. TERM AND LIFE OF AGREEMENT.
1.1 The TERM of this Agreement for a particular Derivative Product is
that stated for that Derivative Product in Attachment II. In the absence of a
statement there, the Term for that Derivative Product is the period from the
Commencement Date stated in Attachment II (if none is stated, the date signed
by Nasdaq) until the end of one year therefrom; thereafter, the Term of this
Agreement shall renew for subsequent one year terms, unless either party gives
Notice to the other at least ninety (90) days before the end of the present
Term, or otherwise terminates the Term of this Agreement as provided herein.
1
<PAGE>
1.2. The LIFE of this Agreement for a particular Derivative Product is
that stated for that Derivative Product in Attachment II. In the absence of a
statement there, the Life for that Derivative Product is until one year after
the date on which Licensee ceases Issuing, and no longer has outstanding, any
of such Derivative Product.
Section 2. SCOPE OF LICENSE. Nasdaq hereby grants Licensee a
non-exclusive, non-transferable and non-sub-licensable (except as provided
herein) license during the Life of this Agreement with respect to each
Derivative Product, as applicable, to use the Index as a benchmark or component
of the investment strategy of the Derivative Products which are Issued by
Licensee during the Term of this Agreement and in connection with transactions
and other activities by Licensee or its investment advisor or subadvisor
undertaken pursuant to such investment strategy, including without limitation
as a component of a pricing or settlement mechanism for securities issued or
contracts entered into in relation to such investment strategy. Nasdaq further
grants Licensee the right to use the Marks in the names of the Derivative
Products during the Life of this Agreement with respect to each Derivative
Product, as applicable, in materials used and other communications made in any
medium whatsoever in connection with the marketing, promotion and issuance of
the Derivative Products, and in connection with making such disclosure about
the Derivative Products as Licensee deems necessary or desirable under any
applicable law, rules, regulations or provisions of this Agreement. No license
is granted to use the Index or Marks for any other use, including as part of a
news service or for collateral products, without the Consent of Nasdaq. During
the Life of this Agreement, no further Consent of Nasdaq need be obtained for
use of the Index or Marks by any syndicator or underwriter of a Derivative
Product offering, or for any secondary or other resale of that Derivative
Product, provided such secondary or other resale, syndication, or underwriting
is legal under applicable law.
Section 3. FEES. Licensee shall pay Nasdaq the fees specified in
Attachment II (FEES), in United States funds. Where there are Annual Fees, such
are due as of the effective date of this Agreement, or by the beginning date of
any subsequent Term. Fees established as due by a particular date, are due by
that date. All other Fees are due within thirty (30) days of the date
established for the production of the report or date of the invoice upon which
the Fee is based. Any amount not paid within thirty (30) days after its due
date is subject to interest at the rate of 1 1/2% per month (or the highest
rate permitted by law) until paid, plus costs of collection, including
reasonable in-house and outside attorneys' fees. Licensee shall also assume
full and complete responsibility for the payment of any taxes, charges or
assessments imposed on Licensee, any sub-licensee, or the Corporations by any
foreign or domestic national, state, provincial, local or other government
bodies, or subdivisions thereof, and any related penalties or interest (other
than personal property or income taxes imposed on Nasdaq, whether or not
Licensee is required to collect such taxes) relating to this Agreement. In
addition, if Licensee is required by applicable law to deduct or withhold any
such tax, charge or assessment from the amounts due Nasdaq, then such amounts
due shall be increased so that the net amount actually received by Nasdaq after
the deduction or withholding of any such tax, charge or assessment, will equal
one hundred percent (100%) of the charges specified.
Section 4. AUDIT RIGHTS. During the Life of this Agreement, Nasdaq
shall have the right, with reasonable Notice to Licensee, during normal
business hours, to audit on a Confidential
2
<PAGE>
basis, any relevant books and records of Licensee or its sub-licensees to
ensure that the type and amount of Fees calculated or stated to be payable to
Nasdaq are complete and accurate. Licensee shall bear the costs of such audit
(including reasonable in-house and outside accountant and attorneys' fees, if
incurred) if Nasdaq reasonably determines that Licensee (together with its
sub-licensees) has not paid, calculated, and/or reported Fees of more than five
(5%) percent of that due Nasdaq under this Agreement.
Section 5. REVIEW OF MATERIALS.
5.1. Licensee shall submit to Nasdaq a copy of any material submitted
to any regulatory body or governmental agency, which is required in order to
obtain approval for the Issuance or resale of any Derivative Product. To the
extent practicable, such materials or a copy of the then best draft shall be
given to Nasdaq at least three (3) business days before their submittal to the
body or agency (but in any event, a copy of the final document shall be sent by
Notice to Nasdaq no later than three (3) business days after submittal to the
agency or body).
5.2. Licensee shall give Nasdaq a copy, within three (3) business days
of receipt, of any notice, correspondence, process, or other material received
from any regulatory body, governmental agency, or any court, during or after
the approval process which indicates that any Derivative Product is or might be
in violation of, or otherwise disapproved because of, any law, or any rule,
regulation, or order of any applicable body or agency.
5.3. For Derivative Product offerings which may be sold to the public,
Licensee shall provide Nasdaq with a copy for Nasdaq's review and approval of
any informational or promotional materials referring or relating to such
offering, including any prospectus, offering memorandum, registration
statement, circular, advertisement, or brochure prior to its initial
dissemination to third parties. Nasdaq shall notify the Licensee of its
approval or disapproval of any such materials within 72 hours (excluding any
day which is a Saturday or Sunday or a day on which The New York Stock Exchange
is closed) following receipt thereof from the Licensee. Failure of Nasdaq to
disapprove within this time period shall be deemed an approval. Licensee need
not resupply a copy of any material which is substantially like material
previously submitted to and approved by Nasdaq and is identical as it describes
the Corporations or their operations, the markets operated by the Corporations,
the Index or the Marks, or the authorization, review, or endorsement of the
Corporations of the Derivative Product. For all other Derivative Products,
Licensee shall provide a description of such product to Nasdaq within three (3)
business days of the initial Issue of such product, and upon reasonable
request, provide Nasdaq, on a Confidential basis, a copy of any other marketing
materials or agreements related to such product.
5.4. If Nasdaq reasonably objects by Notice or fax transmission to
Licensee to any material as it describes the Corporations or their operations,
the markets operated by the Corporations, the Index or the Marks, or the
authorization, review, or endorsement of the Corporations of the Derivative
Product, or Licensee's manner or use of the Marks, Licensee shall alter any
future informational or promotional materials containing substantially similar
language which is objectionable to Nasdaq. Such alteration of future materials
shall be to Nasdaq's reasonable satisfaction within thirty (30) days of receipt
of Nasdaq objection. If Licensee refuses
3
<PAGE>
to so alter, Nasdaq may terminate the Term of this License with regard to that
Derivative Product, upon thirty (30) days Notice to Licensee, with an
opportunity to cure within that period. Nasdaq shall use good faith efforts to
register any such objection with Licensee within thirty (30) days of Nasdaq's
receipt of such material.
Section 6. PROTECTION OF MARKS. Nasdaq will use reasonable efforts to
maintain and protect the value of its Index and Marks. However, nothing shall
obligate Nasdaq to undertake an action or settlement, or refrain from an action
or settlement, with respect to any particular potential, threatened, or actual
infringement of its Index or Marks. Licensee shall cooperate with Nasdaq in
maintenance, registrations, and policing of Nasdaq's rights in the Index and
the Marks. Such cooperation is not a waiver of nor shall it require violation
of its attorney/client, work product, or other privilege.
Section 7. CALCULATION OF INDEX.
7.1. Licensee agrees that the Index is represented by Nasdaq to be a
product of the selection, coordination, arrangement, and editing of Nasdaq and
that such efforts are represented by Nasdaq to involve the considerable
expenditure by Nasdaq of time, effort, and judgment. As between the parties,
Licensee recognizes that Nasdaq is the rightful licensor of any rights in the
Index and the Marks. No license is granted to Licensee to calculate the Index.
While Nasdaq will use reasonable efforts based on sources deemed reliable in
calculating the Index, NASDAQ DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS
OF THE INDEX OR OF THE DATA USED TO CALCULATE THE INDEX OR DETERMINE THE INDEX
COMPONENTS, OR THE UNINTERRUPTED OR UN-DELAYED CALCULATION OR DISSEMINATION OF
THE INDEX. NASDAQ DOES NOT GUARANTEE THAT THE INDEX ACCURATELY REFLECTS PAST,
PRESENT, OR FUTURE MARKET PERFORMANCE. NASDAQ IS NOT RESPONSIBLE FOR ANY
MANIPULATION OR ATTEMPTED MANIPULATION OF THE INDEX BY MEMBERS OF THE NASD.
Nasdaq is free to pick and alter the components and method of calculation of
the Index without Consent of Licensee.
7.2. Nasdaq shall give Licensee ninety (90) days Notice of the
cessation of public calculation or dissemination of the Index. However, Nasdaq
shall either continue to provide Licensee with a calculation of the Index for
the Life of this Agreement, or, on a Confidential basis, provide Licensee with
the then applicable method of calculation of the Index and permit Licensee to
calculate the Index and use the Index as contemplated by this Agreement.
Licensee may terminate the Term and/or the Life (with respect to any or all of
the Derivative Products) of this Agreement on the date Noticed by Nasdaq for
the cessation or dissemination of the Index, and Nasdaq shall refund Licensee a
portion of the pre-paid Fees for that Term calculated according to Section 11.
Section 8. MARKING OF LICENSEE'S USE.
8.1. In any prospectus, offering memorandum, contract, or in some
other conspicuous written manner, for each Derivative Product to each third
party involved in such Issuance, Licensee shall insure that substantially the
following language appears (in conspicuous type, such as at least 11 point type
and the second paragraph in bold or in some other conspicuous written manner):
<PAGE>
The Product(s) is not sponsored, endorsed, sold or promoted by The
Nasdaq Stock Market, Inc. (including its affiliates) (Nasdaq, with its
affiliates, are referred to as the CORPORATIONS). The Corporations
have not passed on the legality or suitability of, or the accuracy or
adequacy of descriptions and disclosures relating to, the Product(s).
The Corporations make no representation or warranty, express or
implied to the owners of the Product(s) or any member of the public
regarding the advisability of investing in securities generally or in
the Product(s) particularly, or the ability of the Nasdaq-100 Index(R)
to track general stock market performance. The Corporations' only
relationship to USAA Mutual Fund, Inc. (LICENSEE) is in the licensing
of the Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq(R) trademarks or
service marks, certain trade names of the Corporations and the use of
the Nasdaq-100 Index(R) which is determined, composed and calculated
by Nasdaq without regard to Licensee or the Product(s). Nasdaq has no
obligation to take the needs of the Licensee or the owners of the
Product(s) into consideration in determining, composing or calculating
the Nasdaq-100 Index(R). The Corporations are not responsible for and
have not participated in the determination of the timing of, prices
at, or quantities of the Product(s) to be issued or in the
determination or calculation of the equation by which the Product(s)
is to be converted into cash. The Corporations have no liability in
connection with the administration, marketing or trading of the
Product(s).
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED
CALCULATION OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN.
THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT(S), OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100 INDEX(R) OR ANY DATA
INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY
LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
8.2. In all other written materials using or referring to a Derivative
Product, Licensee shall include at least this much of the above language, or
similar formulation:
The Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq(R) are trade or
service marks of The Nasdaq Stock Market, Inc. (which witH its
affiliates are the CORPORATIONS) and have been licensed for use by
USAA Mutual Fund, Inc. The [name of Derivative Product(s)] (the
"Product(s)") is not sponsored, sold or promoted by the Corporations
and the Corporations make no representation about the advisability of
investing in them. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO
LIABILITY WITH RESPECT TO THE PRODUCT(S).
5
<PAGE>
Section 9. SUB-LICENSEES. Licensee may sub-license the use of the
Index by its investment advisor(s), subadvisor(s), subsidiaries or affiliates
listed in Attachment I. Licensee may, by Notice to Nasdaq, request permission
to sub-license other subsidiaries or affiliates under Licensee's control.
Nasdaq will not unreasonably refuse its Consent to such a request. Licensee may
also sub-license an entity which is a participant in a Derivative Product or in
a contract entered into by Licensee which uses the Index as a component of a
pricing or settlement mechanism (E.G., a corporation Issuing a corporate bond
with the Licensee as underwriter and utilizing the Index as a pricing component
or a counterparty to a futures contract providing for settlement based on the
value of the Index). Nasdaq, in its sole discretion, may Consent to such
sub-license. However, Licensee shall assume all responsibility for and will
hold harmless and indemnify the Corporations against any action or inaction by
a sub-licensee as if such action or inaction were that of the Licensee. In
order to sub-license any entity, Licensee must have obtained an agreement with
the sub-licensee, which is enforceable under applicable local law and contains
the provisions set forth in Attachment III, modified solely to make them
enforceable under applicable local law(s). Licensee may not waive any provision
of the sub-license or of this Agreement without Consent of Nasdaq.
Section 10. LIMITED WARRANTY. Nasdaq warrants that it will calculate
the Index in accordance with its then applicable method for calculation of the
Index. LICENSEE'S SOLE REMEDY IN EVENT OF A FAILURE OF THIS WARRANTY IS TO HAVE
NASDAQ RECALCULATE THE INDEX FOR THE AFFECTED TIMES ACCORDING TO NASDAQ'S
APPLICABLE METHOD FOR CALCULATION OF THE INDEX AT THE AFFECTED TIME(S). IN THE
EVENT THAT NASDAQ IS UNABLE OR UNWILLING TO RECALCULATE THE INDEX FOR AN
AFFECTED PERIOD OF OVER SEVEN CONSECUTIVE BUSINESS DAYS, NASDAQ WILL REFUND TO
THE LICENSEE THE PORTION OF FEES CALCULATED IN SECTION 11. THE CORPORATIONS DO
NOT REPRESENT OR WARRANT THAT THE INDEX OR THE MEANS BY WHICH NASDAQ CALCULATES
THE INDEX IS FREE OF DEFECTS. THE CORPORATIONS DO NOT REPRESENT OR WARRANT THE
TIMELINESS, SEQUENCE, ACCURACY OR COMPLETENESS OF THE CALCULATION OF THE INDEX,
OR THAT THE INDEX WILL MEET LICENSEE'S REQUIREMENTS. THE FOREGOING WARRANTIES
ARE IN LIEU OF ALL CONDITIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED CONDITIONS OR WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, ANY IMPLIED
WARRANTY ARISING FROM TRADE USAGE, COURSE OF DEALING, OR COURSE OF PERFORMANCE,
AND OF ANY OTHER WARRANTY OR OBLIGATION ON THE PART OF THE CORPORATIONS.
Nasdaq represents and warrants to Licensee that it owns the Index and
Marks free and clear of liens, pledges or encumbrances, and that it has not
granted any rights to any person that may conflict with the Licensee's rights
as provided in this Agreement.
Section 11. REFUNDS. Where this Section is cross-referenced, the
portion of Fees refunded will be calculated as follows. If an applicable Fee
was paid for the right to Issue a Derivative Product during a period of time,
then the amount of the Fee to be refunded shall be the amount of the Fee times
the number of days remaining in the period for which the affected Derivative
Product(s) were not permitted under this Agreement to be Issued or for which
the condition giving rise to such refund right was in effect, divided by the
total number of days in the
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period. If a Fee was paid which related to Issuance of an entire Derivative
Product, then the amount of the Fee to be refunded shall be the amount of the
Fee actually paid which related to that portion of that Derivative Product that
was affected.
Section 12. INDEMNIFICATION.
12.1. Nasdaq has registered the Marks in the United States and certain
other countries. In the United States Nasdaq warrants and represents that it
has the right to grant the rights to use the Index and Marks specified in this
Agreement and that the license shall not infringe the title or any patent,
copyright, trade secret, trademark, service mark, or other proprietary
(INTELLECTUAL PROPERTY) right of any third party. Nasdaq will as its sole and
entire liability and obligation to Licensee (and any third party or
sub-licensee): defend, indemnify, and hold harmless (INDEMNIFY) Licensee
(including its and its sub-licensee's officers, directors, employees, and
agents) against any and all claims, demands, actions, suits, or proceedings
(DISPUTES) asserting that the Index or any Mark infringes any Intellectual
Property right of any third party and Nasdaq will pay the third party the total
amount of any award, judgment, or settlement (including all damages however
designated) awarded to such third party resulting from the Dispute to the
extent caused by failure of Nasdaq's warranty.
12.2. Licensee agrees to Indemnify Corporations (including its and
their officers, directors, employees, and agents) from any and all Disputes as
the result of Licensee (including any sub-licensee) failure to fulfill its
obligations under this Agreement, any Licensee (including any sub-licensee) use
of the Index or any Mark that is not expressly permitted by this Agreement,
claims relating to or arising from a Derivative Product, or any other matter
relating or arising out of this Agreement except to the extent directly caused
by actions of the Corporations and will pay the third party the total amount of
any award, judgment, or settlement (including all damages however designated)
awarded such third party resulting from such Dispute except to the extent
directly caused by actions of the Corporations.
12.3. The right to be Indemnified shall apply to a dispute only if:
(a) the party seeking indemnification promptly, and within no more
than 5 calendar days of its receipt of notice of such Dispute, gives
Notice to the other party of the Dispute;
(b) the party seeking to be Indemnified cooperates fully with the
other in the defense thereof (such cooperation does not require and is
without waiver by either party of attorney/client, work product, or
other privilege);
(c) the Indemnifying party has sole control of the defense and all
related settlement negotiations.
12.4. In the event of a Dispute involving infringement or if in
Nasdaq's opinion such a Dispute is likely to occur, or if the use of the Index
or Mark is enjoined, Nasdaq may, at its sole
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<PAGE>
option and expense, procure for Licensee the right to continue using the Index
or Mark, replace or modify the Index or Mark to become non-infringing, or
terminate the Term of the Agreement (with a refund of Fees for that Term
calculated in Section 11).
Section 13. LIMITATION OF LIABILITY. EXCEPT FOR LIABILITY RESULTING
FROM THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE CORPORATIONS AND EXCEPT
TO THE EXTENT STATED IN SECTIONS 12, OR 16, THE TOTAL AMOUNT OF THE
CORPORATIONS' LIABILITY FOR CLAIMS OR LOSSES BASED UPON, ARISING OUT OF,
RESULTING FROM OR IN ANY WAY CONNECTED WITH THE PERFORMANCE OR BREACH OF THIS
AGREEMENT, WHETHER BASED UPON CONTRACT, TORT, WARRANTY, OR OTHERWISE, SHALL IN
NO CASE EXCEED THE GREATER OF ONE YEAR'S FEES UNDER THIS AGREEMENT OR $20,000.
THE ESSENTIAL PURPOSE OF THIS PROVISION IS TO LIMIT THE CORPORATIONS' LIABILITY
UNDER THIS AGREEMENT. BOTH PARTIES UNDERSTAND AND AGREE THAT THE TERMS OF THIS
AGREEMENT REFLECT A NEGOTIATED AND REASONABLE ALLOCATION OF RISK AND
LIMITATIONS GIVEN COMMERCIAL REALITIES OF THE TRANSACTION.
Section 14. CONSEQUENTIAL DAMAGES. EXCEPT AS NOTED IN SECTION 12 AND
EXCEPT FOR A BREACH OF SECTION 16, THE CORPORATIONS SHALL NOT BE LIABLE TO THE
LICENSEE, ANY SUB-LICENSEE, OR ANY OTHER PERSON FOR ANY LOST PROFITS,
ANTICIPATED PROFITS, LOSS BY REASON OF SHUTDOWN IN OPERATION OR INCREASED
EXPENSES OF OPERATION, LOSS OF GOODWILL, FOR LOSS CAUSED IN SALE OF, PURCHASE
OF, OR BY THE DERIVATIVE PRODUCT, CONSEQUENTIAL, INCIDENTAL, INDIRECT,
PUNITIVE, OR SPECIAL DAMAGES, EVEN IF THE CORPORATIONS HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
Section 15. FORCE MAJEURE. Notwithstanding any other term or condition
of this Agreement, neither Nasdaq nor Licensee shall be obligated to perform or
observe its obligations undertaken in this Agreement (except for obligations to
make payments hereunder) if prevented or hindered from doing so by any
circumstances beyond its control, including, without limitation, acts of God,
perils of the sea and air, fire, flood, drought, war, explosion, sabotage,
terrorism, embargo, civil commotion, acts of any governmental body, supplier
delays, communications, or power failure, equipment or software malfunction,
and labor disputes.
Section 16. CONFIDENTIALITY. Each party shall not use or disclose
other than as expressly permitted under this Agreement, and shall protect
against unintentional disclosure or use of, all information declared by the
other to be CONFIDENTIAL, or PROPRIETARY. In fulfilling its confidentiality
obligations, each party shall use a reasonable standard of care, at least the
same standard of care which it uses to protect its own similar confidential or
proprietary information. All confidential or proprietary information must be
conspicuously marked PROPRIETARY or CONFIDENTIAL. Information revealed orally
becomes subject to protection when related to marked written materials or when
designated as PROPRIETARY or CONFIDENTIAL as long as the designation is
confirmed in writing within 10 calendar days of the designation. Either party
(including the Corporations) may disclose information to the extent demanded by
a court, required by applicable statute or regulation, revealed to a government
agency with regulatory jurisdiction over the party (including the
Corporations), or in the party's regulatory responsibilities over its members,
associated persons, issuers, or others under the Exchange Act of 1934, as
amended (the ACT) or similar applicable law. The obligation of non-disclosure
shall
8
<PAGE>
not extend to information received by a party: (1) which is then already in the
possession of such party (including the Corporations) while it is not under a
duty of non-disclosure; (2) which is generally known or revealed to the public
or within the applicable industry without breach of this Agreement by such
party; (3) which is revealed to such party (including the Corporations) by a
third party--unless such party (including the Corporations) knows that such
third party is under a duty of non-disclosure; or (4) that such party
(including the Corporations) develops independently of the disclosure without
use of or reference to information from the party providing the information.
Each copy, including its storage media, shall be marked with all notices which
appear on the original. The obligation of non-disclosure shall survive for a
period of three years from the date of disclosure.
Section 17. NON-USE OF NASD NAME AND MARKS. Except as provided
hereunder, Licensee shall not use the names National Association of Securities
Dealers, Inc., The Nasdaq Stock Market, Inc., "NASD", or "Nasdaq", in any
advertising or promotional media without the prior written consent of Nasdaq.
Except as provided hereunder, Licensee shall not use any trademark, service
mark, copyright, or patent of the Corporations, registered or unregistered,
without written consent of Nasdaq.
Section 18. SURVIVAL OF PROVISIONS. The terms of this Agreement shall
apply to any rights that survive through the Life of this Agreement, or the
cancellation, termination, or rescission of this Agreement,
namely--Confidentiality, Non-Use of NASD Name and Marks, Indemnification, and
any warranties.
Section 19. CANCELLATION.
19.1. Either party may elect, without prejudice to any other rights or
remedies, to terminate the Term this Agreement, upon thirty (30) days notice
with an opportunity to cure within the stated period, if the other party has
failed to perform any material obligation under this Agreement or has otherwise
materially breached any representation, warranty or covenant of this Agreement.
19.2. Either party may elect, without prejudice to any other rights or
remedies, to terminate the Term of this Agreement without notice, if a petition
in bankruptcy has been filed by or against the other party or the other party
has made an assignment for the benefit of creditors, or a receiver has been
appointed for the other party or any substantial portion of other party's
property, or the other party's or its officers or directors takes action
approving or makes an application for any of the above.
19.3. Licensee represents and warrants that at each time there is any
Issuance of a Derivative Product, that it and each of its sub-licensees and
involved entities shall have all applicable authority to Issue such Derivative
Products and that each such Derivative Product is Issued strictly in accordance
with all applicable legal requirements. Nasdaq may elect, without prejudice to
any other rights or remedies, to terminate the Term of this Agreement upon 30
days notice with an opportunity to cure within such period, if Nasdaq
reasonably believes that any Derivative Product is illegal or has been
illegally Issued, or if the Licensee or any sub-licensee or
9
<PAGE>
any involved entity does not have the power to Issue any of the Derivative
Products which it has or is attempting to Issue.
19.4. Either party may elect, without prejudice to any other rights or
remedies, to terminate the Term of this Agreement with thirty (30) days Notice
(or in the event of an emergency, with such Notice as is practicable), if such
party's ability to perform its obligations under this Agreement is
substantially impaired by any new statute, or new rule, regulation, order,
opinion, judgment, or injunction of the Securities and Exchange Commission
(SEC), a court, an arbitration panel, or governmental body or self-regulatory
organization with jurisdiction over the party.
19.5. Licensee acknowledges that NASD is registered with the SEC as a
registered national securities association pursuant to Section 15A of the Act
and that as such NASD has a statutory obligation to protect investors and the
public interest, and that Section 19(g)(1) of the Act mandates that NASD, as a
self-regulatory organization, comply with the provisions of the Act, the rules
and regulations thereunder, and its own rules. Accordingly, Licensee agrees
that Nasdaq, as a subsidiary of NASD, when required to do so by NASD, may by
written Notice to Licensee unilaterally limit or terminate the Term of this
Agreement or Licensee's right to Issue certain Derivative Products. Licensee
shall have available to it those procedural protections provided by the Act and
application rules thereunder.
Section 20. SUBSEQUENT PARTIES; LIMITED RELATIONSHIP. The Agreement
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective permitted successors or assigns. Licensee shall not assign
this Agreement (including by operation of law) without the written consent of
Nasdaq. Nothing in the Agreement, express or implied, is intended to or shall
(a) confer on any person other than the parties hereto (and any of the
Corporations), or their respective permitted successors or assigns, any rights
to remedies under or by reason of this Agreement; (b) constitute the parties
hereto partners or participants in a joint venture; or (c) appoint one party
the agent of the other.
Section 21. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all prior negotiations, communications, writings, and
understandings.
Section 22. GOVERNING LAW. This Agreement shall be deemed to have been
made in the United States, in the State of New York, and shall be construed and
enforced in accordance with, and the validity and performance hereof shall be
governed by, the laws of the State of New York, without reference to principles
of conflicts of laws thereof. Licensee hereby consents to submit to the
jurisdiction of the courts for or in the State of New York in connection with
any action or proceeding instituted relating to this Agreement.
Section 23. AUTHORIZATION. This Agreement shall not be binding upon a
party unless executed by an authorized officer of that party. Licensee, Nasdaq,
and the persons executing this Agreement represent that such persons are duly
authorized by all necessary and appropriate corporate or other action to
execute the Agreement on behalf of Nasdaq or Licensee.
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<PAGE>
Section 24. HEADINGS. Section Headings are included for convenience
only and are not to be used to construe or interpret this Agreement.
Section 25. NOTICES. All notices, invoices, and other communications
required to be given in writing under this Agreement shall be directed to the
persons identified in subsections (a) and (b) below and shall be deemed to have
been duly given upon actual receipt by the parties, or upon constructive
receipt if sent by hand (with receipt confirmed in writing) by certified mail,
return receipt requested (as of the date of signature or of first refusal of
the return receipt), or by any other delivery method which obtains a signed
delivery receipt, addressed to the person named below to the following
addresses or to such other address as any party hereto shall hereafter specify
by written notice to the other party or parties hereto:
(a) IF TO LICENSEE:
Title: Vice President, Securities Counsel and Compliance
Address: USAA Investment Management Company
10750 McDermott Freeway
Bank Service Building, BKB-04-S
San Antonio, TX 78288
Telephone #: (210) 498-8696
(b) IF TO NASDAQ:
Name: John L. Jacobs
Title: Senior Vice President
Address: The Nasdaq Stock Market, Inc.
1735 K Street, N.W.
Washington, D.C. 20006
Telephone #: (202) 496-2552
With, in the event of notices of Dispute or default, a
required copy to:
The Nasdaq Stock Market, Inc.
1735 K Street, N.W.
Washington, D.C. 20006
Attn: Office of General Counsel - Nasdaq
Contracts Group
Section 26. AMENDMENT, WAIVER, AND SEVERABILITY. Except as otherwise
provided herein, no provision of this Agreement may be amended, modified, or
waived, unless by an instrument in writing executed by a duly authorized
officer of the party against whom enforcement of such amendment, modification,
or waiver is sought (CONSENT).
26.1. No failure on the part of Nasdaq or Licensee to exercise, no
delay in exercising, and no course of dealing with respect to any right, power,
or privilege under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power, or
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<PAGE>
privilege preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege under this Agreement.
26.2. If any of the provisions of this Agreement, or application
thereof to any person or circumstance, shall to any extent be held invalid or
unenforceable, the remainder of this Agreement, or the application of such
terms or provisions to persons or circumstances other than those as to which
they are held invalid or unenforceable, shall not be affected thereby and each
such term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
Section 27. COUNTERPARTS. The Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, and such
counterparts together shall constitute but one and the same instrument.
Section 28. SATISFACTION OF CLAIMS. Nasdaq acknowledges and agrees
that Licensee issues a number of distinct securities, each relating to the
assets and operations of a particular series or fund of Licensee. Nasdaq
acknowledges and agrees that with respect to any claim under this Agreement
relating to the use of the Marks and/or the Index by or in relation to a
particular series or fund of Licensee that constitutes a Derivative Product
hereunder, Nasdaq shall look solely to the property of the particular series or
fund of Licensee that constitutes such Derivative Product and shall not look to
the property of any other series or fund to satisfy such claim.
Section 29. SCHEDULE OF ATTACHMENTS. The following Attachments are
referred to in this Agreement and are incorporated as if set forth in full
herein. In the event of a conflict between the Attachments and this Agreement,
the Attachments shall govern:
Attachment I. -- Sub-Licensees
Attachment II. -- Definition of Derivative Products and Prices
Attachment III. -- Nasdaq Index Sub-License Agreement
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers.
USAA MUTUAL FUND, INC. (LICENSEE)
By: /S/MICHAEL J.C. ROTH
--------------------
Name: Michael J.C. Roth
--------------------
Title: President
--------------------
AUTHORIZED OFFICER
Date: October 27, 2000
--------------------
Executed this 27th day of October, 2000, for and on behalf of:
THE NASDAQ STOCK MARKET, INC. (NASDAQ)
By: /S/JOHN L.JACOBS
--------------------
Name: John L. Jacobs
---------------------
Title: SENIOR VICE PRESIDENT
---------------------
AUTHORIZED OFFICER
<PAGE>
ATTACHMENT I
PERMITTED SUB-LICENSEES OF USAA MUTUAL FUND, INC.
* USAA Investment Management Company
* Barclays Global Fund Advisors
* Upon reasonable prior written notice to Nasdaq, any other sub-investment
adviser chosen by the adviser of the Derivative Product(s)
<PAGE>
ATTACHMENT II
DEFINITION OF DERIVATIVE PRODUCTS AND PRICES
No Derivative Product may be an instrument issued by the Options Clearing
Corporation (OCC) or another clearing agency registered under Section 17 of the
Securities Exchange Act of 1934 or any instrument exclusively regulated by the
Commodity Futures Trading Commission (FCTC) or an option on such instruments. A
Derivative Product may only be listed or traded on a Non-American Market. A
"Non-American Market" means any financial instrument (including equities,
options, futures, debt, etc.) exchange or market not located in the Americas
and one not registered with any securities regulatory agency or body in the
Americas. In addition, no license will be granted for an exchange traded fund
or similar type product worldwide.
DESCRIPTION OF PRODUCT
USAA NASDAQ-100 INDEX FUND
The Fund seeks to match the performance of the stocks comprising the Nasdaq-100
Index(R). The Nasdaq-100 Index represents the largest non-financial stocks
traded on the Nasdaq Stock Market(R). The Fund seeks to match the performance
of the stocks comprising the Nasdaq-100 Index.
USAA is the Fund's investment adviser. Barclays Global Fund Advisors (Barclays)
serves as sub-adviser for the Fund. Barclays selects the Fund's investments and
places orders to buy and sell the Fund's investments.
Barclays attempts to achieve the Fund's objective by investing the Fund's
assets in the 100 stocks that comprise the Nasdaq-100 Index.
EFFECTIVE DATE
The Commencement Date for this Agreement shall be October 27, 2000, the date on
which the Derivative Product will become effective. However, by Agreement of
the parties, the Fees shall not commence until January 1, 2001 the ("Effective
Date").
FEES
The annual License Fees shall be the greater of $10,000 (the "Minimum Annual
Fee") or four basis points (.04%) of the AVERAGE ANNUAL DAILY net assets of the
Product ACCRUED DAILY AND PAYABLE quarterly up to a maximum of $200,000. The
Minimum Annual Fee shall be payable on the Effective Date and each one-year
anniversary thereof. Amounts in excess of the Minimum Annual Fee shall be paid
to Nasdaq within thirty (30) days after the close of each calendar quarter in
which they are incurred; each such payment shall be accompanied by a statement
setting forth the basis for its calculation. In addition, at year end a
statement providing average daily net assets at each month end must be
provided.
<PAGE>
ATTACHMENT III
NASDAQ INDEX SUB-LICENSE AGREEMENT
THIS AGREEMENT, is made by and between ______________________________
(LICENSEE), whose principal offices are located at which is a Licensee of
The Nasdaq Stock Market, Inc. (NASDAQ), a Delaware Corporation which is
a subsidiary of the National Association of Securities Dealers, Inc. (NASD)
(NASD with its affiliates are collectively referred to as the CORPORATIONS),
whose principal offices are located at 1735 K Street, N.W., Washington, D.C.
20006 and __________________________ (SUB-LICENSEE), whose principal offices
are located at ________________________________.
WHEREAS, Nasdaq possesses certain rights in the NASDAQ-100 INDEX(R)
(INDEX); and
WHEREAS, Nasdaq possesses certain rights to Nasdaq(R), Nasdaq-100(R),
and Nasdaq-100 Index(R) as trade names, trademarKs or service marks (MARKS);
and
WHEREAS, Nasdaq determines the components of the Index, calculates,
maintains, and disseminates the Index;
WHEREAS, Nasdaq and Licensee have previously entered into a separate
agreement concerning use of the Index and Marks in relating to certain
Derivative Products (LICENSE AGREEMENT); and
WHEREAS, Sub-Licensee is either: (1) an affiliate or subsidiary under
the control of Licensee which desires to use the Index as a component of a
pricing or settlement mechanism for the Derivative Products; or (2) a necessary
participant in a Derivative Product (E.G., a corporation Issuing a corporate
bond with the Licensee as underwriter and utilizing the Index as a pricing
component) Issued by Licensee or an authorized Sub-Licensee affiliate or
subsidiary under the control of Licensee; and
WHEREAS, Licensee is legally authorized to shares of the fund, or
issue, enter into, write, sell, purchase and/or renew (ISSUE, ISSUING, or
ISSUANCE) such Derivative Products, and each Derivative Products will be Issued
as legally required under applicable law;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, Licensee and Nasdaq, intending to be
legally bound, agree as follows:
Section 1. SCOPE OF SUB-LICENSE. Sub-Licensee hereby acknowledges that
it has received, reviewed, and understands the License Agreement entered into
between Licensee and Nasdaq relating to use of the Index and Marks. Except as
noted herein, Sub-Licensee hereby agrees to obligate itself to all the terms,
conditions, and obligations of that License Agreement as if Sub-Licensee were
the Licensee. Sub-Licensee agrees that Nasdaq may exercise any rights against
Sub-Licensee (including, for example, limitation of liability, indemnification,
or audit
<PAGE>
rights) Nasdaq has against the Licensee to the same extent as if Sub-Licensee
were directly contracting with Nasdaq. Sub-Licensee agrees it will not assert
against Nasdaq any defense, claim, or right Sub-Licensee may have against
Licensee, including those of set-off, abatement, counter-claim, contribution,
or indemnification.
Section 2. NO FURTHER SUB-LICENSE. All references in the License
Agreement to sub-licenses and sub-licensees, including any right of
sub-licensee to grant further sub-licenses or to permit further sub-licensees
are not applicable to this Sub-Licensee Agreement and are as if deleted from
the License Agreement.
Section 3. TERM. The Term of this Sub-License Agreement automatically
terminates, without Notice, if the Term of the License Agreement terminates
for any reason.
Section 4. GENERAL PROVISIONS. Sections from 21, through and
including, Section 27 of the License Agreement govern this Sub-License
Agreement. All terms and definitions used in this Sub-License Agreement, unless
otherwise indicated, have the same meanings and definitions as in the License
Agreement. LICENSEE HAS NO AUTHORITY TO WAIVE, RENEGOTIATE, OR FORGIVE ANY
PROVISION OF THE LICENSE AGREEMENT AS IT APPLIES TO SUB-LICENSEE.
IN WITNESS WHEREOF, the parties hereto have caused this Sub-License
Agreement to be executed by their duly authorized officers.
-------------------------------------------------------
(LICENSEE)
By: ______________________________________________
Name: ______________________________________________
Title: ______________________________________________
AUTHORIZED OFFICER
Date: ______________________________________________
-------------------------------------------------------
(SUB-LICENSEE)
By: ______________________________________________
Name: ______________________________________________
Title: ______________________________________________
AUTHORIZED OFFICER
Date: ______________________________________________
<PAGE>
EXHIBIT 8(x)
<PAGE>
CONFIDENTIAL
LICENSE AGREEMENT
This License Agreement, dated as of October 27, 2000
("Effective Date"), is made by and between Dow Jones & Company, Inc. ("Dow
Jones"), having an office at 200 Liberty Street, New York, New York 10281, and
USAA Mutual Fund, Inc. (the "Licensee"), having an office at 10750 McDermott
Freeway, San Antonio, Texas 78288.
WHEREAS, Dow Jones compiles, calculates and maintains the Dow
Jones Global Titans Index (the "Index"), and Dow Jones owns rights in and to
the Index, the proprietary data contained therein, and the Dow Jones Marks
(defined below) (such rights, including without limitation, copyright,
trademark or proprietary rights and trade secrets, being hereinafter
collectively referred to as the "Intellectual Property"); and
WHEREAS, Dow Jones uses in commerce and has trade name,
trademark and/or service mark rights to the designations, "Dow Jones" and "Dow
Jones Global Titans Index" (such rights being hereinafter individually and
collectively referred to as the "Dow Jones Marks"); and
WHEREAS, the Licensee wishes to use the Index and the related
Dow Jones Marks, pursuant to the terms and conditions hereinafter set forth, in
connection with (i) the issuance, marketing and promotion of the Products (as
defined in Section 1(b)) and (ii) making disclosure about such Products under
applicable laws, rules and regulations in order to indicate that the Products
are based on the Index and that Dow Jones is the source of the Index.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, it is agreed as follows:
1. Grant of License.
(a) Subject to the terms and conditions of this Agreement, Dow
Jones hereby grants to the Licensee a non-transferable (except to subsidiaries
pursuant to Section 12(a)) non-exclusive license (i) to use the Index solely in
connection with the issuance or trading, as the case may be, of the Products to
be issued or traded, as the case may be, by the Licensee, and (ii) to use and
refer to the Dow Jones Marks in connection with the marketing and promotion of
the Products in order to indicate that the Products are based on the Index and
that Dow Jones is the source of the Index, and as may otherwise be required by
applicable laws, rules or regulations or under this Agreement.
(b) As used in this Agreement, "Products" means the products
described on Schedule A hereto that are issued by the Licensee, and are based
upon the Index (but not any part of the Index other than the whole Index, and
not any subset of the components of the Index) and correlated to the underlying
securities comprising the Index. The terms of the Products, and any material
changes therein, will be subject to Dow Jones' prior written consent.
(c) Nothing contained in this Agreement shall restrict Dow
Jones from licensing any one or more Dow Jones indexes (including the Index) or
any of the Dow Jones Marks, to any other person or entity at any time.
<PAGE>
(d) The Licensee acknowledges that the Index and the Dow
Jones Marks are the exclusive property of Dow Jones and that Dow Jones has and
retains all Intellectual Property and other proprietary rights therein. Except
as otherwise specifically provided herein, Dow Jones reserves all rights to the
Index and the Dow Jones Marks, and this Agreement shall not be construed to
transfer to the Licensee any ownership right to, or equity interest in, any of
the Index or the Dow Jones Marks, or in any Intellectual Property or other
proprietary rights pertaining thereto.
(e) The Licensee acknowledges that the Index and its
compilation and composition, and any changes therein, are and will be in the
complete control and sole discretion of Dow Jones.
2. Term.
The term of this Agreement shall commence as of the date
hereof and shall remain in full force and effect until the fifth anniversary of
the Effective Date, unless this Agreement is terminated earlier as provided
herein (such term being referred to as the "Initial Term"). Upon expiration of
the Initial Term (other than by reason of termination of this Agreement as
provided herein), this Agreement may be renewed at the election of the
Licensee, by delivery of written notice to Dow Jones to that effect at least
120 days prior to expiration of the Initial Term, for an additional term of
three (3) years (the "Renewal Term"). Notwithstanding the foregoing, (i) in no
event shall the Licensee have the right to renew the term hereunder without Dow
Jones' prior written consent if, at the time of expiration of the Initial Term
(x) the Licensee is in material breach of this Agreement or (y) the aggregate
average assets invested in the Products in respect of the twelve-month period
ending on the last day of the Initial Term was less than $100,000,000. (The
Initial Term and the Renewal Term, if any, are referred to herein,
collectively, as the "Term.")
3. License Fees.
(a) As consideration for the license granted herein, the
Licensee shall pay to Dow Jones license fees ("License Fees") as set forth on
Schedule B hereto.
(b) If independently audited financial statements for the
Products are prepared, the Licensee shall provide Dow Jones with such audited
financial statements promptly after receipt thereof by the Licensee. Dow Jones
may use such audited financial statements to confirm the accuracy of any one or
more calculations of License Fees. Dow Jones shall not bear the cost of any
such audit. In addition, Dow Jones shall have the right to audit on a
confidential basis the relevant books and records of the Licensee to confirm
the accuracy of any one or more calculations of Licensee Fees. Dow Jones shall
bear its own costs of any such audit unless it is determined that Dow Jones has
been underpaid by 5% or more with respect to the payments being audited, in
which case Dow Jones' costs of such audit shall be paid by the Licensee. All
information provided to Dow Jones pursuant to this paragraph shall be treated
as Confidential Information pursuant to Section 7(b) of this Agreement.
4. Termination.
(a) If there is a material breach of this Agreement by either
party (such party, the "breaching party," and, the other party, the
"non-breaching party"), or if either party (such party, the "harmed party")
believes in good faith that material damage or harm is occurring to its
reputation or good will by reason of its continued performance hereunder (other
than pursuant to Section 4(d)), then the non-breaching party or the harmed
party, as the case may be, may terminate this Agreement, effective thirty (30)
days after written notice thereof to the other party (with reasonable
specificity as to the nature of the breach or the condition causing such damage
or harm, as the case may be, and including a statement as to such
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party's intent to terminate), unless the other party shall correct such breach
or the condition causing such damage or harm, as the case may be, within such
30-day period.
(b) The Licensee may terminate this Agreement upon ninety
(90) days' prior written notice to Dow Jones (or such lesser period of time as
may be necessary pursuant to law, rule, regulation or court order) if (i) any
legislation or regulation is finally adopted or any government interpretation
is issued that prevents the Licensee from issuing, marketing or promoting the
Products; (ii) any material litigation or regulatory proceeding regarding the
Products is commenced; (iii) the Licensee elects to terminate the public
offering or other distribution of the Products; or (iv) any of the events set
forth in Section 4(c)(i) or (iii) occurs.
(c) Dow Jones may terminate this Agreement upon ninety (90)
days' prior written notice to the Licensee if (i) any legislation or regulation
is finally adopted or any government interpretation is issued that in Dow
Jones' reasonable judgment materially impairs Dow Jones' ability to license and
provide the Index or the Dow Jones Marks under this Agreement; (ii) any
litigation or proceeding is commenced which relates, directly or indirectly, to
Dow Jones' licensing and providing the Index or the Dow Jones Marks under this
Agreement, or any such litigation proceeding is threatened and Dow Jones
reasonably believes that such litigation or proceeding would be reasonably
likely to have a material and adverse effect on the Index or the Dow Jones
Marks or on Dow Jones' ability to perform under this Agreement; (iii) Dow Jones
elects (other than pursuant to Section 4(d)) to cease compiling, calculating
and publishing values of the Index; or (iv) any of the events set forth in
Section 4(b)(i) through (iii) occurs.
(d) Notwithstanding anything to the contrary herein, Dow
Jones shall have the right, in its sole discretion, to cease compiling,
calculating and publishing values of the Index at any time that Dow Jones
determines that such Index no longer meets or will not be capable of meeting
the criteria established by Dow Jones for maintaining the Index, and thereupon
to terminate this Agreement (but Dow Jones will use all reasonable efforts to
provide the Licensee with as much prior notice as is reasonably practicable
under the circumstances).
(e) Dow Jones may terminate this Agreement, upon written
notice to the Licensee, if any securities exchange (i) ceases to provide data
to Dow Jones necessary for providing the Index, (ii) terminates Dow Jones'
right to receive data in the form of a "feed" from such securities exchange,
(iii) materially restricts Dow Jones' right to redistribute data received from
such securities exchange, or (iv) institutes charges (other than nominal
charges or charges which Dow Jones deems to be reasonable to be incurred in
connection with providing the Index) for the provision of data to Dow Jones or
the redistribution of data by Dow Jones.
(f) Dow Jones may terminate this Agreement upon written
notice to the Licensee if Products have not been issued within 180 days after
the date hereof.
(g) If this Agreement is terminated by Dow Jones pursuant to
subsections (c) (except for subsection (c) (iv)), (d) or (e) above, then Dow
Jones shall refund to Licensee a pro-rata portion of the license fee paid for
the then-current Year of the Term.
5. Dow Jones Obligations.
(a) Dow Jones is not, and shall not be, obligated to engage
in any way or to any extent in any marketing or promotional activities in
connection with the Products or in making any representation or statement to
investors or prospective investors in connection with the marketing or
promotion of the Products by the Licensee.
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(b) Dow Jones agrees to provide reasonable support for the
Licensee's development and educational efforts with respect to the Products as
follows:
(i) Dow Jones shall use commercially reasonable efforts to
respond in a timely fashion to any reasonable requests by the Licensee for
information regarding the Index;
(ii) Dow Jones or its agent shall use commercially
reasonable efforts to, or Dow Jones shall use commercially reasonable efforts
to arrange for a third party vendor to, calculate and disseminate the value of
the Index at least once each day that the New York Stock Exchange is open for
trading, in accordance with Dow Jones' current procedures, which procedures may
be modified by Dow Jones; and
(iii) Dow Jones shall use commercially reasonable efforts
to promptly correct, or instruct its agent to correct, any mathematical errors
made in Dow Jones' computations of the Index which are brought to Dow Jones'
attention by the Licensee; provided, that nothing in this Section 5 shall give
the Licensee the right to exercise any judgment or require any changes with
respect to Dow Jones' method of composing, calculating or determining the
Index; and, provided, further, that nothing herein shall be deemed to modify
the provisions of Section 9 of this Agreement.
(c) Dow Jones shall use reasonable efforts to safeguard the
confidentiality of all impending changes in the components or method of
computation of the Index until such changes are publicly disseminated, and
shall require the same of any agent with whom it has contracted for computation
thereof. Dow Jones shall implement reasonable procedures so that only those
persons at Dow Jones directly responsible for changes in the composition or
method of computation of the Index shall be granted access to information
respecting impending changes.
6. Trademark Filings; Recognition of Intellectual Property
Rights; Protection of Intellectual Property; Quality Control.
(a) Dow Jones shall apply only for such trademark and trade
name registrations for the Dow Jones Marks only in such jurisdictions, if any,
where Dow Jones, in its sole discretion, considers such filings appropriate.
The Licensee shall reasonably cooperate with Dow Jones in the maintenance of
such rights and registrations and shall do such acts and execute such
instruments as are reasonably necessary or appropriate for such purpose. The
Licensee shall use the following notice when referring to the Index or any of
the Dow Jones Marks in any informational materials to be used in connection
with the Products (including all prospectuses, registration statements,
advertisements, brochures and promotional and any other similar informational
materials, including documents required to be filed with governmental or
regulatory agencies) that in any way use or refer to Dow Jones, the Index or
any of the Dow Jones Marks (collectively, the "Informational Materials"):
"Dow Jones," "Dow Jones Global Titans IndexSM" are service
marks of Dow Jones & Company, Inc. and have been licensed for
use. The [Product] is not sponsored, sold or promoted by Dow
Jones and Dow Jones makes no representation regarding the
advisability of investing in them.
or such similar language as may be approved in advance in writing by Dow Jones.
(b) The Licensee agrees that the Dow Jones Marks and all
Intellectual Property and other rights, registrations and entitlement thereto,
together with all applications,
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<PAGE>
registrations and filings with respect to any of the Dow Jones Marks and any
renewals and extensions of any such applications, registration and filings, are
and shall remain the sole and exclusive property of Dow Jones. The Licensee
acknowledges that each of the Dow Jones Marks is part of the business and
goodwill of Dow Jones and agrees that it shall not, during the Term or
thereafter, contest the fact that the Licensee's rights in the Dow Jones Marks
under this Agreement (i) are limited solely to the use of the Dow Jones Marks
in connection with the issuance, marketing, and/or promotion of the Products
and disclosure about the Products under applicable law as provided in Section
1(a), and (ii) shall cease upon termination or expiration of this Agreement,
except as otherwise expressly provided herein. Upon termination or expiration
of this Agreement, the Licensee shall have no right to use any Dow Jones Marks
and shall inform any recipients of Informational Materials that in any way use
or refer to any Dow Jones Marks that this Agreement has been terminated or has
expired and that Dow Jones no longer provides the Index to the Licensee. The
Licensee recognizes the great value of the reputation and goodwill associated
with the Dow Jones Marks and acknowledges that such goodwill associated with
the Dow Jones Marks belongs exclusively to Dow Jones, and that Dow Jones is the
owner of all right, title and interest in and to the Dow Jones Marks in
connection with the Products. The Licensee further acknowledges that all rights
in any translations, derivations or modifications in the Dow Jones Marks which
may be created by or for the Licensee shall be and shall remain the exclusive
property of Dow Jones and said property shall be and shall remain a part of the
Intellectual Property subject to the provisions and conditions of this
Agreement. The Licensee shall never, either directly or indirectly, contest Dow
Jones' exclusive ownership of any of the Intellectual Property. The Licensee
shall not, except with Dow Jones' prior written consent, use any Dow Jones
Mark, or the designations "Dow Jones" or any other Dow Jones mark, in
conjunction with the Licensee's own trademark(s) resulting in a composite mark.
With respect to any such composite mark: (i) neither party shall own, register
or apply for registration of, such mark; (ii) after termination or expiration
of this Agreement, Licensee shall cease all use of such mark and (iii) after
termination or expiration of this Agreement, each party shall disclaim any
rights in the other's own trademark forming a part of such composite mark and
any goodwill associated therewith that such party might have acquired during
the Term in connection with the use of the other party's mark.
(c) In the event that the Licensee learns of any infringement
or imitation of the Index and/or any Dow Jones Mark, or of any use by any
person of a trademark similar to any of the Dow Jones Marks, it shall promptly
notify Dow Jones. Dow Jones shall take such action, if any, as it deems
advisable for the protection of rights in and to the Index and the Dow Jones
Marks and, if requested to do so by Dow Jones, the Licensee shall cooperate
with Dow Jones in all respects, at Dow Jones' expense, including, without
limitation, by being a plaintiff or co-plaintiff and, upon Dow Jones'
reasonable request, by causing its officers to execute appropriate pleadings
and other necessary documents. In no event, however, shall Dow Jones be
required to take any action it deems inadvisable. The Licensee shall have no
right to take any action which would materially affect the Index and/or any of
the Dow Jones Marks without Dow Jones' prior written approval.
(d) The Licensee shall use all reasonable efforts to protect
the goodwill and reputation of Dow Jones, the Index and the Dow Jones Marks in
connection with its use of the Index and any of the Dow Jones Marks under this
Agreement. The Licensee shall submit to Dow Jones, for Dow Jones' review and
approval, and the Licensee shall not use until receiving Dow Jones' approval
thereof in writing, all Informational Materials that in any way use or refer to
Dow Jones, the Index or any of the Dow Jones Marks. Dow Jones' approval shall
be required with respect to the use of and description of Dow Jones, the Index
or any of the Dow Jones Marks. Dow Jones shall notify the Licensee of its
approval or disapproval of any Informational Materials within 72 hours
(excluding any day which is a Saturday or Sunday or a day on which The New York
Stock Exchange is closed) following receipt thereof from the Licensee. Failure
of Dow Jones to disapprove within this time period shall be deemed an approval.
Once Informational Materials have been approved by Dow Jones, subsequent
Informational Materials which do not materially alter the use or description of
Dow Jones, the Index or such Dow Jones Marks, as the case may be, need not be
submitted for review and approval by Dow Jones. Informational Materials should
be sent to Mr. Don
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Williams, Dow Jones & Company, Inc., Dow Jones Indexes, P.O. Box 300,
Princeton, NJ 08543-0300, Tel: (609) 520-7233; Fax: (609) 520-7030;
[email protected], with a copy to Legal Department, Dow Jones &
Company, Inc., 200 Liberty Street, New York, NY 10281, Fax: (212) 416-2524, or
such other person(s) as Dow Jones may notify Licensee from time to time.
(e) (i) The Licensee shall not use, nor permit the use of,
the Dow Jones Marks in any Informational Material as part of a composite mark
with any of its own marks, the marks of any of its affiliates or the marks of
any third party (collectively, the "Non-Dow Jones Marks"), and (ii) the Dow
Jones Marks and the Non-Dow Jones Marks, to the extent they appear in any
Informational Material, shall appear separately and shall be clearly identified
with regard to ownership. Whenever the Dow Jones Marks are used in any
Informational Material in connection with any of the Products, the name of the
Licensee shall appear in close proximity to the Dow Jones Marks so that the
identity of the Licensee, and its status as an authorized licensee of such Dow
Jones Marks, is clear and obvious.
(f) The Licensee agrees that any proposed change by the
Licensee in (i) the terms and conditions of the Products or (ii) the use of the
Dow Jones Marks shall be submitted to Dow Jones for, and shall be subject to,
Dow Jones' prior written consent.
(g) If at any time Dow Jones is of the opinion that the
Licensee is not properly using the Intellectual Property in connection with the
Products or Informational Materials, or that the standard of quality of any of
the Products or Informational Materials does not conform to reasonable
standards, Dow Jones shall give notice to the Licensee to that effect. Upon
receipt of such notice, the Licensee shall forthwith correct the defects
therein, or shall forthwith cease the issuance, marketing, promotion and sale
or use of the non-conforming Products or Informational Materials.
(h) The parties acknowledge and agree that Licensee has
requested the right to use the "Global Titans" mark, and Dow Jones is willing
to grant a license to such mark as set forth in Section 1(a), subject to the
terms and conditions of this Agreement and the following additional conditions:
(i) whenever Licensee uses the "Global Titans" mark, Licensee shall use a house
mark (i.e., a trademark or service mark that is proprietary to Licensee)
immediately preceding the "Global Titans" mark. For example, Licensee may use
the "Global Titans" mark in the name the Product name "USAA Global Titans Index
Fund", but not "Global Titans Fund"; and (ii) notwithstanding anything to the
contrary in this Agreement, Dow Jones makes no representations or warranties
whatsoever (whether statutory, express or implied) with respect to the "Global
Titans" mark, including without limitation, the adequacy of Dow Jones's right,
title and interest thereto, and (iii) Dow Jones shall have no liability to the
Licensee or any third party with respect to the Licensee's use of the "Global
Titans" mark. Dow Jones shall have no rights whatsoever in Licensee's house
mark and shall not take any action to challenge Licensee's rights therein.
7. Proprietary Rights.
(a) The Licensee acknowledges that the Index is selected,
compiled, coordinated, arranged and prepared by Dow Jones through the
application of methods and standards of judgment used and developed through the
expenditure of considerable work, time and money by Dow Jones. The Licensee
also acknowledges that the Index and the Dow Jones Marks are valuable assets of
Dow Jones and agrees that it will take reasonable measures to prevent any
unauthorized use of the information provided to it concerning the selection,
compilation, coordination, arrangement and preparation of the Index.
(b) Each party shall treat as confidential and shall not
disclose or transmit to any third party (i) any documentation or other
materials that are marked as "Confidential" by the providing party and (ii) the
terms of this Agreement (collectively, "Confidential Information").
Confidential Information as described in clause (i) of the preceding sentence
shall not include (A) any information that is available to the
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public or to the receiving party hereunder from sources other than the
providing party (provided that such source is not subject to a confidentiality
agreement with regard to such information) or (B) any information that is
independently developed by the receiving party without use of or reference to
information from the providing party.
(c) Notwithstanding the foregoing, either party may reveal
Confidential Information to any regulatory agency or court of competent
jurisdiction if such information to be disclosed is (i) approved in writing by
the providing party for disclosure or (ii) required by law, regulatory agency
or court order to be disclosed by the receiving party, provided, if permitted
by law, that prior written notice of such required disclosure is given to the
providing party and provided further that the receiving party shall cooperate
with the providing party to limit the extent of such disclosure. The provisions
of Sections 7(b) and (c) shall survive termination or expiration of this
Agreement for a period of five (5) years from disclosure by either party to the
other of the last item of such Confidential Information.
8. Warranties; Disclaimers.
(a) Each party represents and warrants to the other that it
has the authority to enter into this Agreement according to its terms, and that
its execution and delivery of this Agreement and its performance hereunder will
not violate any agreement applicable to it or violate any applicable law or
regulation. The Licensee represents and warrants to Dow Jones that the
issuance, marketing, promotion, sale and resale of the Products by the Licensee
will not violate any agreement applicable to the Licensee or violate any
applicable laws, rules or regulations, including without limitation,
securities, commodities, and banking laws.
(b) The Licensee represents, warrants and covenants to Dow
Jones that the Products shall at all times comply with the descriptions set
forth on Schedule A.
(c) The Licensee shall include the statement contained in
Exhibit I hereto in any filing with a governmental agency, each prospectus and
registration statement, and in any contracts relating to the Products (and upon
request shall furnish copies thereof to Dow Jones after removing confidential
information), and the Licensee expressly agrees to be bound by the terms of the
statement contained in Exhibit I hereto (which terms are expressly incorporated
herein by reference and made a part hereof). Any changes in the statement
contained in Exhibit I hereto must be approved in advance in writing by an
authorized officer of Dow Jones.
(d) Notwithstanding any provision of this Agreement, and
without limiting the disclaimers set forth in this Agreement (including in
Exhibit I hereto), in no event shall the cumulative liability of Dow Jones to
the Licensee and its affiliates under or relating to this Agreement at any time
exceed the aggregate amount of License Fees received by Dow Jones pursuant to
this Agreement prior to such time.
9. Indemnification.
(a) The Licensee shall indemnify and hold harmless Dow Jones
and its affiliates, and their respective officers, directors, members,
employees and agents, against any and all judgments, damages, liabilities,
costs and losses of any kind (including reasonable attorneys' and experts'
fees) (collectively, "Losses") as a result of any claim, action or proceeding
that arises out of or relates to (i) this Agreement (except to the extent such
Losses arise out of or relate to a breach by Dow Jones of its representations
and warranties under this Agreement or a claim related to ownership of
intellectual property rights in the "Global Titans" mark) or (ii) the Products,
provided, however, that Dow Jones must promptly notify the Licensee in writing
of any such claim, action or proceeding (but the failure to do so shall not
relieve the Licensee of any
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liability hereunder except to the extent the Licensee has been materially
prejudiced therefrom). The Licensee may elect, by written notice to Dow Jones
within ten (10) days after receiving notice of such claim, action or proceeding
from Dow Jones, to assume the defense thereof with counsel reasonably
acceptable to Dow Jones. If the Licensee does not so elect to assume such
defense or disputes its indemnity obligation with respect to such claim, action
or proceeding, or if Dow Jones reasonably believes that there are conflicts of
interest between Dow Jones and the Licensee or that additional defenses are
available to Dow Jones with respect to such defense, then Dow Jones shall
retain its own counsel to defend such claim, action or proceeding, at the
Licensee's expense. The Licensee shall periodically reimburse Dow Jones for its
expenses incurred under this Section 9. Dow Jones shall have the right, at its
own expense, to participate in the defense of any claim, action or proceeding
against which it is indemnified hereunder and with respect to which the
Licensee has elected to assume the defense; provided, however, that Dow Jones
shall have no right to control the defense, consent to judgment, or agree to
settle any such claim, action or proceeding without the written consent of the
Licensee unless Dow Jones waives its right to indemnity hereunder. The
Licensee, in the defense of any such claim, action or proceeding, except with
the written consent of Dow Jones, shall not consent to entry of any judgment or
enter into any settlement which (i) does not include, as an unconditional term,
the grant by the claimant to Dow Jones of a release of all liabilities in
respect of such claims or (ii) otherwise adversely affects the rights of Dow
Jones.
(b) The indemnification provisions set forth herein are
solely for the benefit of Dow Jones and are not intended to, and do not, create
any rights or causes of actions on behalf of any third party.
10. Suspension of Performance.
Notwithstanding anything herein to the contrary, neither Dow
Jones nor the Licensee shall bear responsibility or liability for any Losses
arising out of any delay in or interruptions of performance of their respective
obligations under this Agreement due to any act of God, act of governmental
authority, or act of public enemy, or due to war, the outbreak or escalation of
hostilities, riot, fire, flood, civil commotion, insurrection, labor difficulty
(including, without limitation, any strike, other work stoppage, or slow-down),
severe or adverse weather conditions, power failure, communications line or
other technological failure, or other similar cause beyond the reasonable
control of the party so affected; provided, however, that this Section 10 shall
not affect the Licensee's obligations under Section 9(a) in the case of any
claim, action or proceeding brought by a third party.
11. Injunctive Relief.
In the event of a material breach by one party ("Breaching
Party") of provisions of this Agreement relating to the Confidential
Information of the other party ("Non-breaching Party"), the Breaching Party
acknowledges and agrees that damages would be an inadequate remedy and that the
Non-breaching Party shall be entitled to preliminary and permanent injunctive
relief to preserve such confidentiality or limit improper disclosure of such
Confidential Information, but nothing herein shall preclude the Non-breaching
Party from pursuing any other action or remedy for any breach or threatened
breach of this Agreement. All remedies under this Section 11 shall be
cumulative.
12. Other Matters.
(a) This Agreement is solely and exclusively between the
parties hereto and, except to the extent otherwise expressly provided herein,
shall not be assigned or transferred, nor shall any duty hereunder be
delegated, by either party, without the prior written consent of the other
party, and any attempt to so assign or transfer this Agreement or delegate any
duty hereunder without such written consent shall be null and void; provided,
however, that any wholly-owned subsidiary of the Licensee may use the Index and
the Dow Jones Marks in connection with the issuance, marketing and promotion of
the Products, provided
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that such subsidiary shall be subject to all of the terms and conditions of
this Agreement applicable to the Licensee. This Agreement shall be valid and
binding on the parties hereto and their successors and permitted assigns.
(b) This Agreement, including the Schedules and Exhibits
hereto (which are hereby expressly incorporated into and made a part of this
Agreement), constitutes the entire agreement of the parties hereto with respect
to its subject matter. This Agreement supersedes any and all previous
agreements between the parties with respect to the subject matter of this
Agreement. There are no oral or written collateral representations, agreements
or understandings except as provided herein.
(c) No waiver, modification or amendment of any of the terms
and conditions hereof shall be valid or binding unless set forth in a written
instrument signed by duly authorized officers of both parties. The delay or
failure by any party to insist, in any one or more instances, upon strict
performance of any of the terms or conditions of this Agreement or to exercise
any right or privilege herein conferred shall not be construed as a waiver of
any such term, condition, right or privilege, but the same shall continue in
full force and effect.
(d) No breach, default or threatened breach of this Agreement
by either party shall relieve the other party of its obligations or liabilities
under this Agreement with respect to the protection of the property or
proprietary nature of any property which is the subject of this Agreement.
(e) All notices and other communications under this Agreement
shall be (i) in writing, (ii) delivered by hand (with written confirmation of
receipt), by registered or certified mail (return receipt requested), or by
facsimile transmission (with written confirmation of receipt), to the address
or facsimile number set forth below or to such other address or facsimile
number as either party shall specify by a written notice to the other, and
(iii) deemed given upon receipt.
If to Dow Jones: Dow Jones & Company, Inc.
U.S. Route 1 North at Ridge Road
Monmouth Junction, NJ 08852
Attn: Michael A. Petronella
Managing Director, Dow Jones Indexes
Fax No: 609/452-3242
With a copy to: Dow Jones & Company, Inc.
200 Liberty Street
New York, New York 10025
Attn: Legal Department
Fax No: 212/416-2524
If to the Licensee: USAA Mutual Fund, Inc.
10750 McDermott Freeway
Bank Services Building, BK-B-04-S
San Antonio, TX 78288
Attn: Securities Counsel & Compliance
Phone: (210) 498-8696
Fax: (210) 498-4022
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(f) This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of New York without reference
to or inclusion of the principles of choice of law or conflicts of law of that
jurisdiction. It is the intent of the parties that the substantive law of the
State of New York govern this Agreement and not the law of any other
jurisdiction incorporated through choice of law or conflicts of law principles.
Each party agrees that any legal action, proceeding, controversy or claim
between the parties arising out of or relating to this Agreement may be brought
and prosecuted only in the United States District Court for the Southern
District of New York or in the Supreme Court of the State of New York in and
for the First Judicial Department, and by execution of this Agreement each
party hereto submits to the exclusive jurisdiction of such court and waives any
objection it might have based upon improper venue or inconvenient forum. Each
party hereto hereby waives any right it may have in the future to a jury trial
in connection with any legal action, proceeding controversy or claim between
the parties arising out of or relating to this Agreement.
(g) This Agreement (and any related arrangements between the
parties hereto) is solely and exclusively for the benefit of the parties hereto
and their respective successors, and nothing in this Agreement (and any related
arrangements between the parties hereto), express or implied, is intended to or
shall confer on any other person or entity (including, without limitation, any
sublicensee of the Licensee hereunder or any purchaser of any Products issued
by the Licensee), any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement (or any such related arrangements between
the parties hereto).
(h) Sections 6(b), 7(b) and (c) (as provided therein), 8, 9,
11 and 12(f), and this Section 12(h), shall survive the expiration or
termination of this Agreement.
(i) The parties hereto are independent contractors. Nothing
herein shall be construed to place the parties in the relationship of partners
or joint venturers, and neither party shall acquire any power, other than as
specifically and expressly provided in this Agreement, to bind the other in any
manner whatsoever with respect to third parties.
(j) All references herein to "reasonable efforts" shall
include taking into account all relevant commercial and regulatory factors. All
references herein to "regulations" or "regulatory proceedings" shall include
regulations or proceedings by self-regulatory organizations such as securities
exchanges.
(k) Dow Jones acknowledges and agrees that Licensee issues a
number of distinct securities, each relating to the assets and operations of a
particular series or fund of Licensee. Dow Jones acknowledges and agrees that
with respect to any claim under this Agreement relating to the use of the Dow
Jones Marks and/or the Index by or in relation to a particular series or fund
of Licensee that constitutes the Product hereunder, Dow Jones shall look solely
to the property of the particular series or fund of Licensee that constitutes
such Product and shall not look to the property of any other series or fund to
satisfy such claim.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first set forth above.
DOW JONES & COMPANY, INC.
By: /S/MICHAEL A. PETRONELLA
------------------------
Name: Michael A. Petronella
Title: Managing Director, Dow Jones
Indexes
USAA MUTUAL FUND, INC.
By: /S/MICHAEL J.C. ROTH
--------------------
Name: Michael J. C. Roth
Title: President
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INDEX OF ATTACHMENTS
SCHEDULES:
Schedule A Products Description
Schedule B License Fees
EXHIBITS:
Exhibit I Disclaimer Language
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SCHEDULE A
PRODUCTS DESCRIPTION
A mutual fund that (i) is an investment company registered under the Investment
Company Act of 1940, (ii) whose investment objective is to replicate the
performance of the Index, and (iii) is not traded on an Organized Securities
Markets (as defined below) (i.e., is not an exchange-traded fund), but may be
nominally listed on NASDAQ. "ORGANIZED SECURITIES MARKET" shall mean a U.S.
national securities exchange, an automated quotation or other electronic
trading system of a U.S.-registered securities association, a foreign
securities exchange or any other domestic or foreign securities market
determined by Dow Jones in its reasonable judgment to constitute an Organized
Securities Market. The name of the Product shall be subject to Dow Jones's
prior written consent.
13
<PAGE>
SCHEDULE B
LICENSE FEES
Licensee shall pay license fees in accordance with the following:
On January 1, 2001, and, during the Term, on each anniversary of the Effective
Date, the Licensee will pay to Dow Jones a flat annual minimum payment of
$10,000 in respect of the twelve-month period commencing on such anniversary
date (each, an "Annual Minimum Payment").
In addition, commencing January 1, 2001, during each Year (defined below) of
the Term, the Licensee will provide to Dow Jones a written report (each, a
"Monthly Report"), within 10 days after each month-end, which sets forth (i)
the asset balance for each Product at such month-end, and (ii) a calculation of
the Rolling Average Asset Balance (defined below) at such month-end. Within 10
days after each Quarter-end (defined below) during each Year of the Term, the
Licensee will pay (each, a "Quarterly Payment") to the Dow Jones affiliate
designated by Dow Jones an amount equal to one-quarter of the Basis Point
Amount (defined below); PROVIDED, HOWEVER, that, in each year of the Term, (i)
Licensee shall be entitled to apply a credit in an amount equal to the Annual
Minimum Payment against the aggregate of the Quarterly Payments for that year
until such credit is depleted and (ii) the License Fees for each Year shall not
exceed $150,000.
All amounts will be paid in cash and will be non-refundable. All amounts are
stated in U.S. dollars (at the applicable exchange rate prevailing at the time
payment is due, as published in the Wall Street Journal. All amounts are stated
net of any withholding taxes (i.e., the amount stated is the amount to be
received by Dow Jones after payment of any withholding taxes).
The terms hereof shall be deemed "Confidential Information" for purposes of
Section 7(b) of this Agreement.
Definitions:
"Basis Point Amount" means, at any time during a Year, an amount equal to 1.5
basis points (.00015) on the then Rolling Average Asset Balance up to and
including $100 million and 1.0 basis points (.0001) on the then Rolling Average
Asset Balance over $100 million.
"Quarter" means, with respect to any Year, the three-month period commencing on
the first day of such Year, and each succeeding three-month period during such
Year.
"Rolling Average Asset Balance" means, at any Quarter-end during a Year, the
average assets in the Products in the aggregate for the Quarter then ended,
calculated by adding the month-end asset balances for the Products for such
Quarter and dividing the result by three (i.e., the number of months in the
Quarter).
"Year" means a twelve-month period commencing on the Effective Date or on any
anniversary of the Effective Date.
14
<PAGE>
EXHIBIT I
The [Products] are not sponsored, endorsed, sold or promoted by Dow Jones. Dow
Jones makes no representation or warranty, express or implied, to the owners of
the [Product(s)] or any member of the public regarding the advisability of
investing in securities generally or in the [Product(s)] particularly. Dow
Jones' only relationship to the Licensee is the licensing of certain
trademarks, trade names and service marks of Dow Jones and of the Dow Jones
Global Titans IndexSM, which is determined, composed and calculated by Dow
Jones without regard to [the Licensee] or the [Product(s)]. Dow Jones has no
obligation to take the needs of [the Licensee] or the owners of the
[Product(s)] into consideration in determining, composing or calculating the
Dow Jones Global Titans IndexSM. Dow Jones is not responsible for and has not
participated in the determination of the timing of, prices at, or quantities of
the [Product(s)] to be issued or in the determination or calculation of the
equation by which the [Product(s)] are to be converted into cash. Dow Jones has
no obligation or liability in connection with the administration, marketing or
trading of the [Product(s)].
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE DOW
JONES GLOBAL TITANS INDEXSM OR ANY DATA INCLUDED THEREIN AND DOW JONES SHALL
HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. DOW
JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
[THE LICENSEE], OWNERS OF THE [PRODUCT(S)], OR ANY OTHER PERSON OR ENTITY FROM
THE USE OF THE DOW JONES GLOBAL TITANS INDEXSM OR ANY DATA INCLUDED THEREIN.
DOW JONES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE DOW JONES GLOBAL TITANS INDEXSM OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE ANY
LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL
DAMAGES OR LOSSES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF. THERE ARE NO
THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN DOW JONES
AND [THE LICENSEE].
15
<PAGE>
EXHIBIT 8(y)
<PAGE>
SUBLICENSE AGREEMENT
SUBLICENSE AGREEMENT, dated as of October 27, 2000 by and between USAA
Mutual Fund, Inc. ("SUBLICENSEE"), a Maryland corporation, having offices at
10750 Robert F. McDermott Freeway, Bank Services Building, BK B 04 S, San
Antonio, Texas 78288, and Fund Asset Management, L.P., on behalf of each
Merrill Lynch Party (as defined in the attached License Agreement) (each a
"LICENSEE"), having an office at 800 Scudders Mill Road, Plainsboro, New Jersey
08536.
WHEREAS, Licensee has entered into a License Agreement (the "License
Agreement") with Wilshire Associates Incorporated ("Wilshire"), dated as of
September 28, 2000; and
WHEREAS, Licensee has authority under above-mentioned License
Agreement to use the Wilshire Indices as components of the product described in
EXHIBIT A of the License Agreement attached hereto and make a part hereof (the
"Product"); and
WHEREAS, Licensee has authority under the above-mentioned License
Agreement to sublicense to an unaffiliated third party upon proper written
notice;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Licensee hereby grants to Sublicensee a paid-up, royalty-free
non-exclusive sublicense under Licensee's license in Section 1(a) of the
License Agreement, provided that such sublicense is of the same scope as said
license with respect to the Product to be marketed and promoted by Sublicensee
and subject to the same terms and conditions therein and provided that such
Product is deemed to constitute the "Product" for purposes of the License
Agreement. Licensee represents and warrants that Wilshire
<PAGE>
has granted its consent to such sublicense under Section 9(a) of the License
Agreement. Said sublicense shall extend for the full term of the License
Agreement, including the initial term and any renewal terms thereof; provided
that Licensee may terminate this Sublicense Agreement by written notice to
Sublicensee in the event Sublicensee shall have committed a material breach of
the terms of this Sublicense Agreement and License Agreement which breach is
not cured within thirty (30) days following written notice thereof.
2. The rights as set forth under Sections 6(a), 6(b), 6(d), 6(e), 7(b)
(including Section 7(c) to the extent applicable to said Section 7(b)), 8 and 9
of the License Agreement, in each case to the extent applicable to the
sublicense granted in Section 1 and Sublicensee's activities thereunder, shall
be passed down to Sublicensee; it being understood and agreed that (a) nothing
herein shall affect Licensee's own direct right of enforcement thereof, and (b)
the procedures to be followed in connection with Sublicensee's exercise of
rights under Section 7(b) of the License Agreement as assigned hereby shall be
as set forth in Section 3 below.
3. In the case of any Claim (as defined in the License Agreement) that
is asserted against Sublicensee or its affiliate or any of their respective
officers, directors, employees or agents (the "Sublicensee Indemnified
Parties") and that would, if asserted against a Licensee Indemnified Party (as
defined in the License Agreement), be subject to indemnification under Section
7(b) of the Licensee Agreement, the parties shall proceed as follows.
Sublicensee shall first give written notice of such Claim to Licensee and to
Wilshire, and shall request Wilshire to indemnify and defend the Sublicensee
Indemnified Parties with respect thereto pursuant to Sublicensee's rights under
the
2
134668
<PAGE>
foregoing assignment with respect to said Section 7(b). If Wilshire refuses or
fails to agree to provide such indemnification and defense, Sublicensee shall
have the right to require Licensee to assert a claim for indemnification
against Wilshire with respect to such Claim under said Section 7(b). To the
extent that Licensee recovers any amounts directly from Wilshire pursuant to
said Section 7(b) which are necessary to hold the Sublicensee Indemnified
Parties harmless from such Claim, Licensee shall apply the proceeds it recovers
from Wilshire to the extent necessary to make the Sublicensee whole. It is
further understood and agreed that any claim for indemnification pursuant to
the pass down under Section 2 or pursuant to this Section 3 is intended to be
satisfied by Wilshire pursuant to a claim for indemnification under Section
7(b) of the License Agreement, and Licensee shall not have any liability under
Section 2 or this Section 3 to satisfy such claim by other means.
4. Each party shall indemnify and hold harmless the other party
against any and all Damages as a result of any Claim by Wilshire or a third
party (as such terms are defined in the License Agreement) that is caused by,
arises out of or relates to any breach by the indemnifying party of the License
Agreement or this Sublicense Agreement, or the negligence or wrongful conduct
of the indemnifying party with respect to the Product; provided, however, that
the foregoing indemnification obligation shall not extend to any Damages from
any Claim caused by or arising out of or relating to the negligence, bad faith,
recklessness or willful misconduct of, or breach of the License Agreement or
this Sublicense Agreement by the indemnified party; and provided, further, that
the foregoing indemnification obligation shall not extend to any claims or
damages for investment
3
134668
<PAGE>
losses. The provisions of Section 7(c) of the License Agreement shall apply
with respect to any claim for indemnification under this Section 3.
5. Sublicensee hereby assumes Licensee's obligations under Sections
3(c), 4, 5, 8 and 9 of the License Agreement, in each case to the extent
applicable to the sublicense granted in Section 1 and Sublicensee's activities
thereunder.
4
134668
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Sublicense Agreement
to be executed as of the date first set forth above.
FUND ASSET MANAGEMENT, L.P. USAA MUTUAL FUND, INC.
/S/ TERRY GLENN /S/MICHAEL J.C. ROTH
---------------------------- ----------------------------------
Name: Terry Glenn Name: Michael J.C. Roth
Title: Executive Vice President Title: President
5
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<PAGE>
EXHIBIT 8(z)
<PAGE>
COMMODITY CUSTOMER'S AGREEMENT
This Commodity Customer's Agreement ("AGREEMENT") between UBS Warburg
LLC ("BROKER"), USAA Mutual Fund, Inc ("CUSTOMER") and Barclays Global Fund
Advisors., as advisor to Customer ("ADVISOR") is entered into for the purpose
of effecting the purchase and sale of certain contracts as specified herein.
1. APPLICABLE CONTRACTS: This Agreement will govern the purchase
and sale of futures contracts ("FUTURES CONTRACTS") and options
on futures contracts and options on commodities ("OPTION
CONTRACTS") (collectively, "CONTRACTS").
2. (I) REPRESENTATIONS: Customer represents and warrants as
follows:
(A) LAWFUL AGREEMENT: Customer may lawfully establish and
open one or more accounts (collectively, the
"ACCOUNT") in order to effect purchases and sales of
Contracts through Broker and any clearing members and
floor brokers chosen by Broker (including affiliates
of Broker).
(B) DUE AUTHORIZATION AND ENFORCEABILITY: Customer is duly
authorized and empowered to execute and deliver this
Agreement and to effect purchases and sales of
Contracts through Broker. Such transactions do not and
will not violate any rules or regulations of any
regulatory body to which the Customer is subject or
any agreements to which the Customer is a party. This
Agreement is binding on Customer and enforceable
against Customer in accordance with its terms.
(C) INTEREST OR CONTROL OF ACCOUNT: No person or entity
has, nor during the term of this Agreement will have,
any interest in or control of the Account other than
Customer, Advisor, if any, and those persons and
entities, if any, identified in Appendix A to this
Agreement.
(D) CPO AND CTA REGISTRATION: Customer has reviewed the
registration requirements of the Commodity Exchange
Act, as amended, and the National Futures Association
("NFA") relating to commodity pool operators and
commodity trading advisors and is either appropriately
registered with the Commodity Futures Trading
Commission ("CFTC") and a member of the NFA or exempt
from CFTC registration requirements.
(I) REPRESENTATIONS: Broker represents and warrants as
follows:
(A) REGISTRATION: Broker is and will continue to be, until
such time as the Customer is notified otherwise, a
firm registered as a Futures Commission Merchant under
the Commodity Exchange Act.
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<PAGE>
3. GENERAL AGREEMENTS: The parties agree that:
(A) BROKER'S RESPONSIBILITY: Broker is not acting as a
fiduciary, foundation manager, commodity pool
operator, commodity trading advisor or investment
adviser in respect of the Account, and Broker will
have no responsibility hereunder for compliance with
any law or regulation governing the conduct of
fiduciaries, foundation managers, commodity pool
operators, commodity trading advisors or investment
advisers.
(B) ADVICE: All advice with respect to Contracts
transmitted by Broker with respect to the Account is
incidental to the conduct of Broker's business as a
futures commission merchant and such advice will not
serve as the primary basis for any decision by or on
behalf of the Customer. Broker will have no
discretionary authority, power or control over any
decisions made by or on behalf of Customer in respect
of the Account, whether or not any advice of Broker is
utilized in any such decision. Any such advice,
although based upon information from sources Broker
believes to be reliable, may be incomplete, may not be
verified and may be changed without notice to
Customer. Broker makes no representation as to the
accuracy, completeness, reliability or prudence of any
such advice or information. Customer will not hold
Broker responsible for any losses sustained by
Customer as a result of any prediction, recommendation
or advice made or given by a representative of Broker
whether or not made or given at the request of
Customer.
(C) POSITIONS AND ADVICE: Broker and its managing
directors, officers, employees and affiliates may take
or hold positions in, or advise other customers
concerning, Contracts which are the subject of advice
from Broker to Customer. The positions and advice of
Broker and its managing directors, officers, employees
and affiliates may be inconsistent with, or contrary
to positions of, the advice given by Broker to
Customer, provided that, none of Brokers, its managing
directors, officers, employees or affiliates will
engage in such activities for the purpose of
benefiting, at the expense of Customer, either
themselves or their clients other than Customer.
(D) APPLICABLE LAW: The interpretation and enforcement of
this Agreement will be governed by the laws of the
State of New York. The Account and all transactions
and agreements in respect of the Account will be
maintained in compliance with: (i) the provisions of
the Commodity Exchange Act, as amended, and any rules,
regulations and interpretations promulgated thereunder
by the CFTC, including but in no way limited to the
provisions set forth in Appendix C as attached hereto;
(ii) the constitution, by-laws, rules and regulations
of (A) the contract market (and its clearing house, if
any) on which such transactions are executed and
cleared and (B) any
UBSW LLC / BGI as Advisor to Separate Client Account/USAA --neg.
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<PAGE>
relevant registered futures association; (iii) other
provisions of law governing the activities of the
parties hereto, and any rules, regulations and
interpretations promulgated pursuant thereto; and (iv)
custom and usage of the trade (all such provisions,
rules, regulations, interpretations, constitution,
by-laws, custom and usage herein referred to
collectively as "APPLICABLE LAW"). Neither Broker nor
any of its managing directors, officers, employees or
affiliates will be liable as a result of any action
taken by Broker, or its clearing members or floor
brokers, that was necessary to comply with Applicable
Law.
(E) SECURITY INTEREST AND RIGHTS RESPECTING COLLATERAL:
All cash, securities, Contracts or other property of
Customer now or at any future time in the Account or
held by any clearing house through which trades of the
Account are executed or other brokers or any other
similar entity engaged by Broker to act as agent of
Broker or Customer (collectively, the "COLLATERAL"),
are hereby pledged to Broker and will be subject to a
security interest in Broker's favor to secure any
indebtedness or other amounts at any time owing from
Customer to Broker ("CUSTOMER'S LIABILITIES").
Customer understands that the Collateral may be used
by Broker to satisfy clearing house or exchange
requirements, and hereby grants Broker the right to
pledge or repledge any of the Collateral in order to
do so without notice to Customer, or need to account
to Customer for any interest, income or benefit that
may be derived therefrom. The rights of Broker set
forth above will be qualified, by any applicable
requirements for segregation of Customer's property
under the Commodity Exchange Act, as amended, and the
rules and regulations promulgated thereunder.
(F) REPORTS AND OBJECTIONS: All reports concerning the
execution of orders, confirmations, purchase and sale
notices, correction notices and account statements
will be submitted to Advisor and will be conclusive
and binding on Customer unless Advisor or Customer
notifies Broker of any objection thereto (1) as to
oral or electronically transmitted reports, prior to
the opening of trading on the contract market on which
such transaction occurred following the day on which
Advisor receives such report, confirmation, purchase
and sale notice, correction notice or account
statement, as the case may be, or (2) as to written
reports, prior to the opening of business two business
days following the day on which Advisor receives such
report, confirmation purchase and sale notice,
correction notice or account statement, as the case
may be; provided that, with respect to monthly
statements, Advisor or Customer may notify Broker of
any objection thereto within five business days after
receipt of such monthly statement or report. Any such
notice, if given orally, will be promptly confirmed in
writing by party giving such notice.
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<PAGE>
(G) DELIVERY PROCEDURES: In the event that Customer or
Advisor on behalf of Customer intends to make or take
delivery pursuant to any Contract, Broker will be so
notified prior to the close of trading in such
Contract or at such earlier time as Broker may
reasonably require (but not more than five business
days before the last trading date). Sufficient funds
to take delivery pursuant to such Contract or
deliverable grade commodity to make delivery pursuant
to such Contract must be delivered to Broker at such
time as Broker may reasonably require in connection
with such delivery and Broker may exercise any of its
rights under Paragraph 6.
(H) POSITION LIMITS: Broker will have the right to limit
the size of open positions (net or gross) of Customer
with respect to the Account at any time and to refuse
acceptance of orders to establish new positions,
whether or not such refusal or limitation is required
by the CFTC or any contract market. Customer will not,
either alone or in combination with others, violate
any position or exercise limit established by the CFTC
or any applicable contract market unless in accordance
with Applicable Law and the next succeeding sentence
of this Section 3(h). If Customer or Advisor on behalf
of Customer intends at any time to exceed CFTC or
contract market position limits with respect to
transactions in the Account, then Customer or Advisor
will cause to be filed an application with the CFTC or
such contract market requesting authorization for
Customer or Advisor on behalf of Customer to exceed
such position limits and will provide Broker with
evidence of the CFTC or contract market approval of
such application and such other information as Broker
may reasonably request with respect thereto.
(I) EXERCISE OF OPTIONS: Except as specifically
instructed, Broker will have no responsibility for
taking or failing to take action to exercise any
Option Contract in the Account and Broker will take no
action to exercise any such Option Contract in the
Account without instructions from Customer or Advisor.
(J) OPTIONS ALLOCATION PROCEDURE: Exercise notices with
respect to Option Contracts sold by Customer may be
allocated to Customer pursuant to a random allocation
procedure and Customer will be bound by any such
allocation of exercise notices. Such notices may be
allocated to Customer after the close of trading on
the day on which such notices have been allocated to
Broker by the applicable contract market. In the event
of any allocation to Customer, unless Broker has
previously received such instructions as specified in
the next following sentence, Broker's sole
responsibility will be to use its best efforts to
notify Customer and Advisor by telephone of such
allocation at any time before trading commences on the
first day on which such Option Contracts are traded on
the applicable contract market following the day on
which the applicable contract market has allocated
such notices to Broker. Broker will have no
responsibility to
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<PAGE>
take any action on behalf of Customer unless and until
Broker receives instructions indicating the action
Broker is to take.
(K) RELIANCE ON INSTRUCTIONS: Broker will be entitled to
rely on any instructions, notices and communications
that it reasonably believes originated from Customer
or Advisor or their respective duly authorized agent
and Customer will be bound thereby.
(L) FINANCIAL AND OTHER INFORMATION: Customer or Advisor
will provide to Broker such financial information
regarding Customer and relating to this Agreement as
Broker may from time to time reasonably request and as
shall be required by regulatory authorities.
(M) CURRENCY EXCHANGE RISK: Customer will bear all risk
and cost in respect of the conversion of currencies
incident to transactions effected on behalf of
Customer pursuant to Advisor's direction.
(N) Electronic Reports: Customer consents to the
electronic delivery of reports via facsimile,
electronic mail, computer networks (e.g., local area
networks, commercial on-line services and SwisKey) or
other electronic means agreed upon by Customer and
Broker. Customer may revoke its consent at any time
upon reasonable notice to Broker.
4. PAYMENT OBLIGATIONS OF CUSTOMER: With respect to every Contract
purchased, sold or cleared for the Account, Customer will pay
Broker, within a reasonable time after demand:
(a) such brokerage charges, commissions and service fees
as are agreed between the parties from time to time
(Schedule B attached),
(b) all contract market, clearing house, NFA or clearing
member fees or charges,
(c) any tax imposed on such transactions by any competent
authority,
(d) the amount of any trading losses in the Account
arising out of trades executed pursuant to this
Agreement,
(e) any debit balance or deficiency in the Account, and
(f) interest on any debit balances or deficiencies in the
Account, at the overnight rate customarily charged by
Broker, together with costs and reasonable attorney's
fees incurred in collecting any such debit balance or
deficiency.
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<PAGE>
5. ORIGINAL AND VARIATION MARGIN; PREMIUMS; OTHER CONTRACT
OBLIGATIONS: With respect to every Contract purchased, sold or
cleared for the Account, Customer will make, or cause to be
made, all applicable original margin, variation margin and
premium payments and perform all other obligations attendant to
transactions or positions in such Contracts, as such payments
or performance may be required by Applicable Law or by Broker
in the reasonable exercise of its discretion, upon notice to
Advisor and Customer.
Customer will make or cause to be made original margin,
variation margin and premium payments generally by the opening
of business on the applicable contract market on the next
business day after notified thereof by Broker, provided that
Customer has received notice prior to noon on such day (if past
noon, the next day).
If Broker receives an intra-day variation margin call from any
exchange on which transactions were effected by Broker as
broker for Customer, Broker will immediately determine the
amount of margin needed from Customer due to variation in the
value of one or more open futures contracts held in the Account
or of mark-to-market payments on short positions in related
options held in the Account and will promptly notify Advisor
and Customer of the need for additional variation margin. In
such event, Customer will as soon as practicable provide such
additional variation margin to Broker.
6. CUSTOMER'S EVENTS OF DEFAULT; BROKER'S REMEDIES: Each of the
following will constitute an Event of Default hereunder:
(a) a case in bankruptcy will be commenced or a petition
for the appointment of a receiver will be filed by or
against the Customer or, if the Customer is an
employee benefit plan or master trust, by or against
the sponsor of such plan or any plan funded by such
trust, or if the Customer will suspend the transaction
of its usual business or any material portion thereof,
(b) any warrant or order of attachment is issued against
the Account or a judgment is levied against the
Account,
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<PAGE>
(c) if Customer is an employee benefit plan or master
trust, there will occur with respect to such plan or
any plan funded by such trust a "reportable event"
under the regulations of the Pension Benefit Guaranty
Corporation at 29 C.F.R. Sections 2615.11, 2615.12,
2615.16, 2615.21, 2615.22 and 2615.23 (or any
successor thereto),
(d) Customer fails to deposit or maintain required
margins, fails to pay required premiums, or fails to
make payments required by Section 4 hereof within two
business days of the request for such amount, or
(e) Customer fails to perform within two business days, in
any material respect (it being understood that any
failure to comply with applicable exchange or CFTC
requirements will be deemed material) its obligations
respecting delivery, exercise or a notice of
allocation of exercise, payment for delivery or
settlement under Contracts held in the Account.
If any Event of Default has occurred and is continuing, Broker
will have the right, in addition to any other remedy available
to Broker at law or in equity, to liquidate any or all open
Contracts held in or for the Account, sell any or all of the
securities, or other property of Customer held by Broker and to
apply the proceeds thereof to any amounts owed by the Customer
to Broker, borrow or buy any options, securities, Contracts or
other property for the Account and cancel any unfilled orders
for the purchase or sale of Contracts for the Account, all with
reasonable efforts by Broker under the circumstances to notify
Advisor prior to taking any such action. Any such liquidation,
sale, purchase, borrowing or cancellation will be made at the
discretion of Broker in a commercially reasonable and good
faith manner on a contract market, through a clearing house, on
other markets, at public auction or by private transaction.
Customer acknowledges and agrees that a prior demand or margin
call of any kind from Broker or prior notice from Broker will
not be considered a waiver of Broker's right to take such
action without notice or demand provided that Broker makes
reasonable efforts under the circumstances to notify Advisor.
In the event Broker exercises any remedies available to it,
Customer will compensate Broker for any and all reasonable
costs, losses, penalties, fines, taxes and damages which Broker
may incur, including reasonable attorney's fees incurred in
connection with the exercise of its remedies and the recovery
of any such costs, losses, penalties, fines, taxes and damages.
7. CUSTOMER'S RIGHT TO TRANSFER OR TERMINATE: In the event that
Customer deems it desirable, Customer will be entitled to
terminate this Agreement and/or to transfer Contracts held in
the Account to another futures commission merchant, in each
case in accordance with Section 13 hereof.
8. CONTRARY TO APPLICABLE LAW: To the extent that this Agreement
is found to be contrary to or inconsistent with Applicable Law,
this Agreement will continue and be enforceable to the maximum
extent permissible.
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<PAGE>
9. BINDING EFFECT; NO ASSIGNMENT: This Agreement will be binding
on and inure to the benefit of the parties hereto and their
successors. The Agreement may not be assigned by either party
without the other party's prior written consent.
10. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties and supersedes any prior agreements between
the parties as to the subject matter hereof. No provision of
this Agreement will in any respect be waived, altered,
modified, or amended unless such waiver, alteration,
modification or amendment is signed by the party against whom
such waiver, alteration, modification or amendment is to be
enforced.
11. INSTRUCTIONS, NOTICES OR COMMUNICATIONS: Except as specifically
otherwise provided in this Agreement, all instructions, notices
or other communications may be oral or written. All oral
instructions will be promptly confirmed in writing. All written
instructions, notices or other communications will be addressed
as follows:
(a) if to Broker to:
UBS Warburg LLC
677 Washington Blvd
Stamford CT 06901
Attn: Client Services Rep.
(b) if to Customer to:
USAA Mutual Fund, Inc.
10750 McDermott Freeway
Bank Service Building, BKB-04-S
San Antonio, TX 78288
Attn: Vice President, Securities Counsel
and Compliance
(c) if to Advisor to:
Barclays Global Fund Advisors
Barclays Global Investors, N.A.
45 Fremont Street, 17th Floor
San Francisco, CA 94105
Attn: J.S. Parsons
12. MANAGED ACCOUNTS: If an advisor is authorized in Appendix B to
exercise discretion and to act on behalf of Customer with
respect to the Account:
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(a) Advisor makes the representations set forth in Section
2 of this Agreement and, in addition, Advisor makes
the representations set forth in subsections (b) and
(d) of Section 2 as if the word Advisor were
substituted for the word Customer therein;
(b) Advisor hereby represents and warrants that it has
provided and will continue to provide the Customer
with an explanation of the nature and risks of the
strategies to be used in connection with all
transactions to be executed for the Account;
(c) If Advisor is registered with the CFTC as a commodity
trading advisor, Customer acknowledges that Advisor is
exempt from providing Customer a written disclosure
document (as otherwise required pursuant to CFTC Rule
4.31) on account of Customer's status as a qualified
eligible client under CFTC Rule 4.7;
(d) Advisor will cause Customer to take such action in
respect of the Account as is required of Customer
under this Agreement; and
(e) Customer acknowledges that:
(i) any communication, notice, report, statement,
advice or information given to Advisor by
Broker or received from Advisor by Broker in
respect of the Account will be deemed to have
been given to, or received from, Customer, as
the case may be;
(ii) any decision, instruction or action of, or
authorization by, Advisor in respect of the
Account will be deemed to constitute the
decision, instruction, action or authorization
of Customer;
(iii) Customer has carefully examined the provisions
of the documents by which it has given trading
authority or control over the Account to
Advisor and understands fully the obligations
which it has assumed by executing these
documents;
(iv) Broker is in no way responsible for any loss
to Customer occasioned by the actions of
Advisor and Broker does not by implication or
otherwise endorse the operating methods of
Advisor;
(v) by giving Advisor authority to exercise any of
Customer's rights over the Account, Customer
does so at its own risk.
13. TERMINATION: This Agreement may be terminated by Customer,
Advisor or Broker by written notice from Customer or Advisor to
Broker or from Broker to Customer or Advisor. In the event of
such notice, Customer will either close out open
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positions in the Account or arrange for such open positions to
be transferred to another futures commission merchant. Upon
satisfaction by Customer of all liabilities to Broker arising
hereunder (including payment of the applicable commissions on a
"half-turn basis" with respect to the transfer of Contracts to
another futures commission merchant), Broker will transfer to
another futures commission merchant all Contracts (if any) then
held for the Account, and will transfer to Customer or to
another futures commission merchant, as Customer may instruct,
all cash, securities and other property held in the Account,
whereupon this Agreement will terminate.
14. RIGHTS AND REMEDIES CUMULATIVE: All rights and remedies arising
under this Agreement as amended and modified from time to time
are cumulative and not exclusive of any other rights or
remedies which may be available at law or otherwise.
15. NO WAIVER: No failure on the part of Broker or Customer to
exercise, and no delay in exercising, any contractual right
will operate as a waiver thereof, nor will any single or
partial exercise by Broker or Customer of any right preclude
any other or future exercise thereof or the exercise of any
other partial right.
16. GOVERNING LAW: This Agreement and the rules, obligations and
remedies of the parties will be governed by and construed in
accordance with the laws of the State of New York, without
giving effect to principles of conflicts of law.
17. WAIVER OF IMMUNITY: Customer hereby waives irrevocably any
immunity to which it might otherwise be entitled in any
arbitration, action at law, suit in equity or any other
proceeding arising out of based or on this Agreement or any
transaction in connection herewith.
18. RECORDING: Broker or Customer in their sole and absolute
discretion, may record, on tape or otherwise, any telephone
conversation between Broker and Customer involving their
respective officers, agents, and employees. Customer and Broker
hereby agree and consent to such recording, with or without the
use of an automatic tone warning device, and waive any right
Customer or Broker, as the case may be, may have to object to
the use or admissibility into evidence of such recording in any
legal proceeding between Customer and Broker or in any other
proceeding to which Broker or Customer is a party or in which
Broker's or Customer's records are subpoenaed. Each party
hereto acknowledges that the other party may erase such
recordings after a reasonable period of time.
19. EXCULPATION AND INDEMNIFICATION: Neither Broker nor any of its
managing directors, officers, employees or affiliates (each a
"COVERED PARTY") shall be liable for any costs, losses,
penalties, fines, taxes and damages sustained or incurred by
Customer other than as a result of Broker's negligence or
reckless or intentional
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misconduct of a Covered Party. In no event will Broker be
liable to Customer for consequential, incidental or special
damages.
In the event that Broker's or Customer's performance of any of
its obligations and undertakings hereunder shall be interrupted
or delayed by any occurrence not occasioned by the conduct of
either party hereto, whether such occurrence shall be an act of
God or the common enemy or the result of war, riot, civil
commotion, sovereign conduct or other acts of State, then
Broker or Customer, as the case may be, shall be excused from
performance for such period of time as is reasonably necessary
after such occurrence to remedy the effects thereof and neither
Broker nor Customer, as the case may be, nor any of their
managing directors, officers, employees or affiliates shall be
directly or indirectly responsible for losses occasioned
thereby.
20. All calculations or variations made by Broker in connection
with this Agreement will be made in good faith, in a
commercially reasonable manner and in a manner consistent with
market practice.
21. Broker expressly acknowledges and agrees that (I) "Customer" is
USAA Mutual Fund, Inc., a Maryland corporation, (ii) actions
taken by Customer pursuant to this Agreement are taken on
behalf of those funds identified from time to time on Schedule
A hereto, (each a "Fund"), (iii) each Fund is a separate series
of USAA Mutual Fund, Inc., (iv) this Agreement constitutes a
separate agreement between Broker and each Fund, and (v)
Broker's rights and obligations with respect to one Fund create
no rights or obligations with respect to any other Fund or with
respect to any other series of USAA Mutual Fund, Inc.
Schedule A may be amended from time to time by mutual agreement
in writing of the parties hereto.
22. DISCLOSURE ACKNOWLEDGMENTS AND ELECTIONS:
(a) Customer hereby expressly acknowledges and agrees that it has
received, read and understood, and has retained a copy of, the "Risk
Disclosure Statement for Futures and Options", which includes the
disclosures required by CFTC Rules 1.55, 30.6, 33.7 and 190.10(c),
together with a disclosure pursuant to CFTC Rule 1.46(e)(1) (and the
related bankruptcy election included in the attached Special
Liquidation Customer Instructions).
(b) The notification and instructions contained herein are
continuing and shall remain in force until canceled by Customer in
writing.
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IN WITNESS WHEREOF, the parties hereto have executed this Commodity Customer's
Agreement in one or more counterparts dated as of October 27, 2000.
BROKER:
UBS WARBURG LLC
By:/S/MICHAEL TURRO
-------------------------
Name: Michael Turro
Title: Director
CUSTOMER:
USAA MUTUAL FUND, INC
By:/S/MICHAEL J.C. ROTH
-------------------------
Name: Michael J. C. Roth
Title: President
ADVISOR:
BARCLAYS GLOBAL FUND ADVISORS
By: SIGNATURE NOT READABLE
------------------------
Name:
Title:
By: SIGNATURE NOT READABLE
------------------------
Name:
Title:
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APPENDIX A
INTEREST OR CONTROL OF ACCOUNT
With reference to Section 2(c) of the Commodity Customer's Agreement,
the following persons and entities also have an interest in, or control of, the
Account:
1. Barclays Global Fund Advisors
2. USAA Mutual Fund, Inc.
3. USAA Investment Management Company
4. The plan(s) or trust(s), if any, participating in the USAA
Nasdaq-100 Index Fund and the USAA Global Titans Index Fund,
the participants in such plan(s) or trust(s), the beneficiaries
of such participants and the employer(s), if any, contributing
to such plan(s) or trust(s).
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APPENDIX B
DISCRETIONARY TRADING AUTHORIZATION
UBS Warburg LLC
677 Washington Blvd
Stamford, CT 06901Attn: Hina Mehta
Ladies and Gentlemen:
The undersigned Customer hereby authorizes Barclays Global Fund
Advisors and its affiliates as its agent and attorney-in-fact to purchase, sell
(including through short sales) and trade in commodities and commodity futures,
options on futures and commodity options contracts, on margin or otherwise, in
accordance with your terms and conditions for the Customer's account and risk
and in the Customer's name or number on your books. The Customer hereby agrees
to indemnify and hold you harmless (except to the extent that such losses (or
debit balances) result from your intentional wrong- doing or negligence) from,
and to pay you promptly on demand, any and all losses arising therefrom or
debit balance due thereon to the extent provided in the Commodity Customer's
Agreement.
This authorization and indemnity is in addition to (and in no way
limits or restricts) any rights which you may have under the Commodity
Customer's Agreement executed by the Customer and any other agreement or
agreements between you and the Customer.
This authorization may be terminated by the Customer at any time as of
the actual receipt by you of written notice of termination. Termination of this
authorization will not affect any liability in any way resulting from
transactions initiated prior to such termination. This authorization and
indemnity will inure to your benefit and that of your successors and permitted
assigns.
CUSTOMER:
USAA MUTUAL FUND, INC
By: /S/MICHAEL J.C. ROTH
--------------------------
Name: Michael J. C. Roth
Title: President
Date: October 27, 2000
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APPENDIX C
A Fund may place and maintain cash, securities and similar investments with a
Futures Commission Merchant in amounts necessary to effect the Fund's
transactions in Exchange-Traded Futures Contracts and Commodity Options;
PROVIDED THAT:
(1) The Broker agrees that it will hold and maintain Customer's
assets in the following manner:
(i) The Futures Commission Merchant shall comply
with the segregation requirements of section
4d(2) of the Commodity Exchange Act [7 U.S.C
6d(2)] and the rules thereunder [17 CFR
Chapter I] or, if applicable, the secured
amount requirements of rule 30.7 under the
Commodity Exchange Act [17 CFR Chapter 30.7];
(ii) The Futures Commission Merchant, as
appropriate to the Fund's transactions and in
accordance with the Commodity Exchange Act [7
U.S.C 1 through 25] and the rules and
regulations thereunder (including 17 CFR Part
30), may place and maintain the Fund's assets
to effect the Fund's transactions with another
Futures Commission Merchant, a Clearing
Organization, a U.S. or Foreign Bank, or a
member of a foreign board, and shall obtain an
acknowledgement, as required under rules
1.20(a) or 30.7(c) under the Commodity
Exchange Act [17 CFR 1.20(a) or 30.7(c)], as
applicable, that such assets are held on
behalf of the Futures Commission Merchant's
customers in accordance with the provisions of
the Commodity Exchange Act; and
(iii) The Futures Commission Merchant shall promptly
furnish copies of or extracts from the Futures
Commission Merchant's records or such other
information pertaining to the Fund's assets as
the Commission through its employees or agents
may request.
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ACKNOWLEDGMENTS
Cross-Trade Authorization
The undersigned consents to transactions whereby UBSW LLC, its
managing directors, officers, employees or affiliates may be on the opposite
side of orders for the purchase or sale of Futures Contracts and Option
Contracts placed for the Customer's Account in conformity with regulations of
the Commodity Futures Trading Commission and the by-laws, rules and regulations
of the contract market (and its clearing house, if any) on which such order is
executed.
CUSTOMER:
USAA MUTUAL FUND, INC
By: /S/MICHAEL J.C. ROTH
------------------------------------
Name: Michael J.C. Roth
Title: President
Date: October 27, 2000
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HEDGE ACCOUNT
(IF APPLICABLE)
The undersigned Customer represents and warrants that the Account is a
hedge account and every order given for the purchase or sale of Contracts and
for the Account, except with prior notice (which may be oral notice confirmed
in writing) to the contrary by the undersigned Customer to UBSW LLC, will be a
bona fide hedging transaction as defined in Regulation 1.3(z) promulgated by
the CFTC.
CUSTOMER:
USAA MUTUAL FUND, INC
By: /S/MICHAEL J.C. ROTH
------------------------------------
Name: Michael J.C. Roth
Title: President
Date: October 27, 2000
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SPECIAL LIQUIDATION CUSTOMER INSTRUCTIONS
UBS Warburg LLC
677 Washington Blvd
Stamford, CT 06901
Attn: Hina Mehta
Ladies and Gentlemen:
CFTC Rule 190.06(d) requires that Customer be given the opportunity to specify
whether, in the highly unlikely event of Broker bankruptcy, Customer wishes the
bankruptcy trustee to liquidate its open commodity contracts held in bona fide
hedging accounts without seeking instructions from Customer. In the unlikely
event of such bankruptcy, Customer hereby requests that the bankruptcy trustee
seek further instructions from Advisor before liquidating contracts in the
above accounts.
This instruction may at any time be amended by written notice sent to UBSW LLC,
141 West Jackson Blvd., Suite 800, Chicago, Illinois 60604, Attn: Michael
Turro.
CUSTOMER:
USAA MUTUAL FUND, INC
By: /S/ MICHAEL J.C. ROTH
------------------------------------
Name: Michael J.C. Roth
Title: President
Date: October 27, 2000
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COMMODITY ACCOUNT FACT SHEET
Account Title: USAA Mutual Fund, Inc
Customer Address: 10750 McDermott Freeway
Bank Service Building, BKB-04-S
San Antonio, TX 78288
Attn: Vice President, Securities Counsel and Compliance
Advisor Address: Barclays Global Fund Advisors
45 Fremont Street, 17th Floor
San Francisco, CA 94105
Attn: J.S. Parsons
Total Net Worth: $
----------------------------------
LIST OF AUTHORIZED INDIVIDUALS FOR COMMODITY TRANSACTIONS:
1. Patricia Dunn
2. Garrett Bouton
3. John E. Martinez
4. J. Parsons
5. Blake Grossman
6. Judith Robertson
7. David LaHorgue
8. Mike Williams
9. Jeff Hord
10. William Geyer
11. Gregg Schoenberg
12. Brett Chesney
13. Rich Ford
14. Vivian Wong
15. Patrick Dunne
16. Lee Sterne
17. Phil Schade
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