EXHIBIT 1.(8)(d)(iii)
FORM OF
REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT (the "Agreement") made by and between XXXXXXX
XXXXXX INVESTMENTS, INC., a Delaware corporation ("Xxxxxxx Xxxxxx"), with a
principal place of business in Boston, Massachusetts and USAA LIFE INSURANCE
COMPANY, a Texas corporation (the "Company"), with a principal place of
business in San Antonio, Texas on behalf of the Separate Account of USAA Life
Insurance Company, a separate account of the Company, and any other separate
account of the Company as designated by the Company from time to time, upon
written notice to the Fund in accordance with Section 8 herein (the
"Account").
WHEREAS, Xxxxxxx Xxxxxx has caused to be organized Xxxxxxx Variable Life
Investment Fund (the "Fund"), a Massachusetts business trust created under a
Declaration of Trust dated March 15, 1985, as amended, the beneficial interest
in which is divided into several series, each designated a "Portfolio" and
representing the interest in a particular managed portfolio of securities; and
WHEREAS, the purpose of the Fund is to act as the investment vehicle for
the separate accounts established for variable life insurance policies and
variable annuity contracts to be offered by insurance companies which have
entered into reimbursement agreements substantially identical to this
Agreement; and
WHEREAS, the parties desire to express their agreement as to certain
matters;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. ADDITIONAL DEFINITIONS.
For purposes of this Agreement, the following definition shall apply:
(a) "Shares" means shares of beneficial interest, without par value,
of any Portfolio, now or hereafter created, of the Fund.
2. ACCESS TO OTHER PRODUCTS.
Xxxxxxx Xxxxxx shall permit the Company to participate in any registered
investment company other than the Fund which is intended as the funding
vehicle for insurance products and for which Xxxxxxx Xxxxxx or an affiliate of
Xxxxxxx Xxxxxx acts as investment adviser, on the same basis as other
insurance companies are permitted to participate in such a registered
investment company. This provision shall not require Xxxxxxx Xxxxxx to make
available to the Company shares of any investment company which is organized
solely as the funding vehicle for insurance products offered by a single
insurance company or a group of affiliated insurance companies.
3. RIGHT TO REVIEW AND APPROVE SALES MATERIALS.
The Company shall furnish, or shall cause to be furnished, to Xxxxxxx
Xxxxxx or its designee, at least twenty days prior to its intended use, each
piece of promotional material in which Xxxxxxx Xxxxxx or the Fund is named. No
such material shall be used unless Xxxxxxx Xxxxxx or its designee shall have
approved such use in writing, or twenty days shall have elapsed without
approval, rejection or objection since receipt by Xxxxxxx Xxxxxx or its
designee of such material.
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Xxxxxxx Xxxxxx shall furnish, or shall cause to be furnished, to the
Company or its designee, at least twenty days prior to its intended use, each
piece of promotional material in which the Company or its separate account(s)
is named. No such material shall be used unless the Company or its designee
shall have approved such use in writing, or twenty days shall have elapsed
without approval, rejection or objection since receipt by the Company or its
designee of such material.
4. SALES ORGANIZATION MEETINGS.
Representatives of Xxxxxxx Xxxxxx or its designee shall meet with the
sales organizations of the Company at such reasonable times and places as may
be agreed upon by the Company and Xxxxxxx Xxxxxx or its designee for the
purpose of educating sales personnel about the Fund.
5. DURATION.
This Agreement shall continue in effect for five (5) years from the date
of its execution, except that the obligation of each party hereto to indemnify
the other party hereto shall continue with respect to all losses, claims,
damages, liabilities or litigation based upon the acquisition of Shares
purchased as the funding vehicle for any variable life insurance policy or
variable annuity contract issued by the Company or any affiliated insurance
company.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless Xxxxxxx Xxxxxx and
each of its directors and officers and each person, if any, who controls
Xxxxxxx Xxxxxx within the meaning of Section 15 of the Securities Act of 1933
(the "Act") against any and all losses, claims, damages, liabilities or
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litigation (including legal and other expenses) to which Xxxxxxx Xxxxxx or
such directors, officers or controlling person may become subject under the
Act, under any other statute, at common law or otherwise, arising out of the
acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Company, any of its employees or representatives, any
affiliate of or any person acting on behalf of the Company or a principal
underwriter of its insurance products, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering Shares or any amendment thereof
or supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was made in
reliance upon information furnished to Xxxxxxx Xxxxxx or the Fund by the
Company, provided, however, that in no case (i) is the Company's indemnity in
favor of a director or officer or any other person deemed to protect such
director or officer or other person against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of his duties or by reason of his
reckless disregard of obligations and duties under this Agreement or (ii) is
the Company to be liable under its indemnity agreement contained in this
Paragraph 6 with respect to any claim made against Xxxxxxx Xxxxxx or any
person indemnified unless Xxxxxxx Xxxxxx or such person, as the case may be,
shall have notified the Company in writing pursuant to Paragraph 8 within a
reasonable time after the summons or other first legal process giving
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information of the nature of the claims shall have been served upon Xxxxxxx
Xxxxxx or upon such person (or after Xxxxxxx Xxxxxx or such person shall have
received notice of such service on any designated agent), but failure to
notify the Company of any such claim shall not relieve the Company from any
liability which it has to Xxxxxxx Xxxxxx or any person against whom such
action is brought otherwise than on account of the indemnity agreement
contained in this Paragraph 6. The Company shall 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 it elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to Xxxxxxx Xxxxxx, to its officers and directors, or to any
controlling person or persons, defendant or defendants in the suit. In the
event that the Company elects to assume the defense of any such suit and
retain such counsel, Xxxxxxx Xxxxxx, such officers and directors or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Company does not elect to assume the defense of any such suit, the Company
will reimburse Xxxxxxx Xxxxxx, such officers and directors or controlling
person or persons, defendant or defendants in such suit, for the reasonable
fees and expenses of any counsel retained by them. The Company agrees promptly
to notify Xxxxxxx Xxxxxx pursuant to Paragraph 8 of the commencement of any
litigation or proceedings against it in connection with the issue and sale of
any Shares.
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(b) Xxxxxxx Xxxxxx agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which the Company or such directors, officers or controlling
persons may become subject under the Act, under any other statute, at common
law or otherwise, arising out of the acquisition of any Shares by any person
which (i) may be based upon any wrongful act by Xxxxxxx Xxxxxx, any of its
employees or representatives or a principal underwriter of the Fund, or (ii)
may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement or prospectus covering
Shares or any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon information furnished to the
Company by Xxxxxxx Xxxxxx; provided, however, that in no case (i) is Xxxxxxx
Xxxxxx'x indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement or (ii) is Xxxxxxx Xxxxxx to be liable under its indemnity
agreement contained in this Paragraph 6 with respect to any claims made
against the Company or any such director, officer or controlling person unless
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it or such director, officer or controlling person, as the case may be, shall
have notified Xxxxxxx Xxxxxx in writing pursuant to Paragraph 8 within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon it or upon
such director, officer or controlling person (or after the Company or such
director, officer or controlling person shall have received notice of such
service on any designated agent), but failure to notify Xxxxxxx Xxxxxx of any
claim shall not relieve it from any liability which it may have to the Company
or any person against whom such action is brought otherwise than on account of
its indemnity agreement contained in this Paragraph 6. Xxxxxxx Xxxxxx 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 Xxxxxxx Xxxxxx elects to assume the defense, such defense
shall be conducted by counsel chosen by it and satisfactory to the Company,
its directors, officers or controlling person or persons, defendant or
defendants, in the suit. In the event Xxxxxxx Xxxxxx elects to assume the
defense of any such suit and retain such counsel, the Company, its directors,
officers or controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case Xxxxxxx Xxxxxx does not elect to assume the defense of any
such suit, it will reimburse the Company or such directors, officers or
controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. Xxxxxxx Xxxxxx
agrees promptly to notify the Company pursuant to Paragraph 8 of the
commencement of any litigation or proceedings against it or any of its
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officers or directors in connection with the issuance or sale of any Shares.
(c) Xxxxxxx Xxxxxx agrees to indemnify and hold harmless the Company and
each of its directors and officers against any and all losses, claims,
damages, liabilities or litigation arising from the imposition of additional
federal income taxes on the Company or any policyholder solely as a result of
a Final Determination that any Portfolio has failed (x) to comply with the
diversification requirements of section 817(h) of the Internal Revenue Code of
1986, as amended (the "Code"), relating to the diversification requirements
for variable annuity, endowment and life insurance contracts, or (y) to
qualify as a regulated investment company within the meaning of section 851 of
the Code; provided, however, that (i) Xxxxxxx Xxxxxx shall have no liability
under this Paragraph 6(c) if such failure is caused by a third party who is
not an employee or agent of Xxxxxxx Xxxxxx (e.g., the Fund's custodian or
another service provider), and (ii) in no case is Xxxxxxx Xxxxxx'x indemnity
under this Paragraph 6(c) deemed to protect any person against any liability
to which that person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of that person's
duties or by reason of reckless disregard by that person of obligations under
this Agreement.
The Company agrees that if the Internal Revenue Service asserts in
writing in connection with any governmental audit or review of the Company or,
to the Company's knowledge, of any policyholder, that any Portfolio has failed
to comply with the diversification requirements of section 817(h) of the Code
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or the Company otherwise becomes aware of any facts that could give rise to
any claim against Xxxxxxx Xxxxxx as a result of such a failure or alleged
failure, (i) the Company shall promptly notify Xxxxxxx Xxxxxx of such
assertion or potential claim; (ii) the Company shall consult with Xxxxxxx
Xxxxxx as to how to minimize any liability that may arise as a result of such
failure or alleged failure; (iii) the Company shall use its best efforts to
minimize any liability of Xxxxxxx Xxxxxx for indemnification resulting from
such failure, including, without limitation, demonstrating, pursuant to
Treasury Regulations Section 1.817-5(a) (2), to the Commissioner of the
Internal Revenue Service that such failure was inadvertent; (iv) the Company
shall permit Xxxxxxx Xxxxxx and its legal and accounting advisors to
participate in any conferences, settlement discussions or other administrative
or judicial proceedings or contests (including judicial appeals thereof) with
the Internal Revenue Service, any policyholder or any other claimant regarding
any claims that could give rise to indemnification by Xxxxxxx Xxxxxx as a
result of such a failure or alleged failure; (v) any written materials to be
submitted by the Company to the Internal Revenue Service, any policyholder or
any other claimant in connection with any of the foregoing proceedings or
contests (including, without limitation, any such materials to be submitted to
the Internal Revenue Service pursuant to Treasury Regulations Section
1.817-5(a) (2)), (a) shall be provided by the Company to Xxxxxxx Xxxxxx
(together with any supporting information or analysis) at least 10 business
days prior to the day on which such proposed materials are to be submitted and
(b) shall not be submitted by the Company to any such person without the
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express written consent of Xxxxxxx Xxxxxx, which shall not be unreasonably
withheld; (vi) the Company shall provide Xxxxxxx Xxxxxx and its advisors with
such cooperation as Xxxxxxx Xxxxxx shall reasonably request (including,
without limitation, by permitting Xxxxxxx Xxxxxx and its accounting and legal
advisors to review the relevant books and records of the Company) in order to
facilitate Xxxxxxx Xxxxxx'x review of any written submissions provided to it
pursuant to the preceding clause or its assessment of the validity or amount
of any claim against it arising from such a failure or alleged failure; (vii)
the Company shall not with respect to any claim of the IRS or any policyholder
that would give rise to a claim for indemnification against Xxxxxxx Xxxxxx (a)
compromise or settle any claim, (b) accept any adjustment on audit, or (c)
forego any allowable judicial appeals, without the express written consent of
Xxxxxxx Xxxxxx, which shall not be unreasonably withheld, provided that the
Company shall not be required to appeal any adverse judicial decision unless
Xxxxxxx Xxxxxx shall have provided an opinion of independent counsel to the
effect that a reasonable basis (consistent with Formal Opinion 85-352 of the
American Bar Association) exists for taking such appeal; and (viii) Xxxxxxx
Xxxxxx shall have no liability as a result of such failure or alleged failure
if the Company fails to comply with any of the foregoing clauses (i) through
(vii). Should Xxxxxxx Xxxxxx refuse to give its written consent to any
compromise or settlement of any claim or liability hereunder, the Company may,
in its discretion, authorize Xxxxxxx Xxxxxx to act in the name of the Company
in, and to control the conduct of, such conferences, discussions, proceedings,
contests or appeals and all administrative or judicial appeals thereof, and in
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that event Xxxxxxx Xxxxxx shall bear the fees and expenses associated with the
conduct of the proceedings that it is so authorized to control.
For purposes of this Paragraph 6(c), "Final Determination" shall mean,
with respect to any claim, a settlement of such claim (including the
acceptance of an adjustment proposed by the Internal Revenue Service) or a
decision of a court of competent jurisdiction with respect to such claim that
has become final after either the (i) exhaustion of allowable appeals or (2)
expiration of the time to take any such appeal with respect to the claim.
7. MASSACHUSETTS LAW TO APPLY.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
8. NOTICES.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in
writing to the other party.
If to Xxxxxxx Xxxxxx:
Xxxxxxx Xxxxxx Investments, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
(000) 000-0000
Attn: Xxxxx X. Xxxxx
If to the Company:
USAA Life Insurance Company
0000 Xxxxxxxxxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn.: Xxxxx X. Xxxxx, Esq.
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9. MISCELLANEOUS.
The captions in the Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the ___ day of ______, 199_.
[SEAL] XXXXXXX XXXXXX INVESTMENTS, INC.
By:
------------------
Xxxx X. Xxxxxx
Authorized Officer
[SEAL] USAA LIFE INSURANCE COMPANY
By:
--------------------
Name: Xxxxx X. Xxxxxx
Title: President
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