ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of May 1, 2003, between USAA LIFE INSURANCE COMPANY,
a corporation organized under the laws of the state of Texas and having a place
of business in San Antonio, Texas ("USAA Life"), and USAA LIFE INVESTMENT TRUST,
a Delaware business trust having a place of business in San Antonio, Texas (the
"Trust").
RECITALS
The Trust is an open-end management investment company registered under
the Investment Company Act of 1940 (the "1940 Act"), as amended, whose shares
("Shares") are registered under the Securities Act of 1933 (the "1933 Act"), as
amended, and with Shares offered in various investment funds as set forth in
Exhibit A (the "Existing Funds") (such funds together with any funds
subsequently established by the Trust for which the Trust desires to retain USAA
Life to provide services under this Agreement, and for which USAA Life is
willing to do so, being collectively referred to as the "Funds").
The Trust makes its shares available for purchase to the Separate
Account of USAA Life Insurance Company and the Life Insurance Separate Account
of USAA Life Insurance Company (the "Separate Accounts"), and may in the future
(subject to any necessary approval by the Board of Trustees) make its shares
available to any other separate accounts of USAA Life or any of USAA Life's
subsidiaries or affiliates, and to separate accounts of non-affiliated life
insurance companies (all such eligible purchasers being referred to collectively
as "Purchasers").
USAA Life issues variable annuity contracts and variable life insurance
policies (collectively "Contracts") funded through the Separate Accounts. USAA
Life invests certain assets of the Separate Accounts in the Trust for the
benefit of the owners of the Contracts ("Contract Owners"). USAA Life represents
that the services provided under this Agreement and the fees received hereunder
do not duplicate services provided and fees received under the Contracts or
otherwise in connection with the Separate Accounts.
AGREEMENT
In consideration of the agreements contained herein, and for other good
and valuable consideration, receipt of which is hereby acknowledged, the Trust
and USAA Life agree as follows:
1. APPOINTMENT OF USAA LIFE.
(a) Existing Funds. The Trust hereby appoints USAA Life to act as
administrator for the Existing Funds for the period and on the terms herein set
forth. USAA Life accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
(b) Additional Funds. In the event that the Trust desires to
retain USAA Life to render administrative services hereunder with respect to any
Fund other than an Existing Fund, it shall notify USAA Life in writing. If USAA
Life is willing to render such services it shall notify the Trust in writing,
whereupon the Trust shall appoint USAA Life to act as administrator for such
Fund for the period and on the terms herein
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set forth, and USAA Life shall accept such appointment and agree to render the
services herein set forth for the compensation herein provided.
(c) USAA Life shall be subject to the direction and control of
the Trust in providing services under this Agreement, and shall provide such
services in compliance with all applicable provisions of the Trust's Master
Trust Agreement, Bylaws, Prospectus, and any applicable federal or state laws
and regulations.
2. DUTIES OF USAA LIFE.
USAA Life shall administer the affairs of the Trust and provide related
services required for the operation of the Funds; provided, that USAA Life shall
not have any obligation to provide under this Agreement any services related to
the distribution of Fund shares or any other services which are the subject of a
separate agreement or arrangement between the Trust and USAA Life or its
affiliates with respect to the Funds. Subject to the foregoing, USAA Life shall
provide the following services and facilities to the Trust:
(a) Office Space, Equipment and Facilities. Furnish such office
space, office equipment, and office facilities as are adequate for the Trust's
needs with respect to the Funds.
(b) Personnel. Provide the services of individuals competent to
perform all of the Trust's executive, administrative, and clerical functions
that are not performed by employees or other agents engaged by the Trust or by
USAA Life acting in some other capacity pursuant to a separate agreement or
arrangement with the Trust with respect to the Funds.
(c) Agents. Assist the Trust in selecting and coordinating the
activities of the other agents engaged by the Trust with respect to the Funds,
including the Trust's transfer agent, custodian, independent auditors, and legal
counsel.
(d) Trustees and Officers. Authorize and permit USAA Life's
directors, officers and employees who may be elected or appointed as trustees or
officers of the Trust to serve in such capacities, without remuneration from or
other cost to the Trust.
(e) Books and Records. Assure that all financial, accounting and
other records required to be prepared, maintained, and preserved by the Trust
with respect to the Funds are prepared, maintained, and preserved by it or on
its behalf in accordance with applicable laws and regulations.
(f) Regulatory Reports and Filings. Prepare and file (as
required) or arrange for others to prepare and file, but not pay for, all tax
returns with respect to the Trust, all proxy statements with respect to the
Funds, all periodic reports by the Trust with respect to the Funds, and all
reports and filings required to maintain the registration and qualification of
the Trust and the Shares, or to meet other regulatory or tax requirements
applicable to the Funds under federal and state securities and tax laws.
(g) Board Reports. Prepare and coordinate materials relating to
the Funds to be presented to the Trust's Board of Trustees in preparation for
its meetings.
(h) Fidelity Bond. Provide and maintain a bond issued by a
reputable insurance company authorized to do business in the place where the
bond is issued, against larceny and embezzlement covering each officer and
employee of the Trust who may singly or jointly with others have access to funds
or securities of the Trust, with direct or indirect authority to draw upon such
funds or to direct generally the disposition of such funds. The bond shall be
in such reasonable amount as a majority of the Board of Trustees of the Trust
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who are not officers or employees of the Trust shall determine, with due
consideration to the aggregate assets of the Trust to which any such officer or
employee may have access.
(i) Calculation of Net Asset Value. Compute each Fund's net
asset value per Share.
(j) Delegation. Delegate, at its expense, some or all of its
duties hereunder to other persons or entities approved by USAA Life upon prior
notice to the Trust.
(k) Other Services. Provide such other services as the parties
may from time to time agree in writing.
3. DUTIES OF THE TRUST.
Provide or cause others to provide to USAA Life all financial or other
information necessary to USAA Life's providing services under this Agreement.
4. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by USAA Life set
forth in paragraph 2 above and except for the services provided by USAA Life set
forth in any other Agreement between the Trust and USAA Life, the Trust assumes
and shall pay all expenses for all other Fund operations and activities and
shall reimburse USAA Life for any such expenses incurred by USAA Life. The
expenses to be borne by the Trust shall include, without limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the Trust for
the safekeeping of a Fund's cash, portfolio securities and other property;
(b) the charges and expenses of independent auditors;
(c) brokerage commissions, if any, for transactions in the
portfolio securities of the Funds;
(d) all taxes, including issuance and transfer taxes, and fees
payable by a Fund to federal, state or other governmental agencies;
(e) the cost of any share certificates representing Shares of
a Fund;
(f) fees involved in registering and maintaining registrations of
the Trust and of its Shares with the applicable federal, state, and other
jurisdictions;
(g) all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing proxy statements, any quarterly reports,
semiannual reports, annual reports and other communications (including
prospectuses) to existing shareholders and Contract Owners;
(h) compensation and travel expenses of Trustees who are not
"interested persons" of the Trust within the meaning of the 1940 Act;
(i) charges and expenses of legal counsel in connection with
matters relating to the Funds, including, without limitation, legal services
rendered in connection with the Funds' legal and financial structure
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and relations with its shareholders and Contract Owners, issuance of Fund
Shares, and registration and qualification of securities under federal, state
and other laws;
(j) membership or association dues for the Investment Company
Institute or similar organizations;
(k) interest payable on Fund borrowings; and
(l) postage.
5. ADMINISTRATION FEE.
(a) For the services and facilities to be provided by USAA Life
as provided in paragraph 2 hereof, the Trust shall reimburse USAA Life, on a
monthly basis in arrears, for the cost of providing the services under this
Agreement; provided, however, that such reimbursement shall be subject to the
Maximum Expense with respect to each Fund, as set forth in Exhibit A hereto.
(b) USAA Life may, from time to time, and for such periods as it
deems appropriate, voluntarily waive fees or otherwise reduce its compensation
hereunder.
6. LIABILITY AND INDEMNIFICATION.
(a) USAA Life. USAA Life shall exercise reasonable care in performing
its services under this Agreement. USAA Life shall indemnify and hold the
Trust, and its trustees, officers, and employees harmless from and against any
and all loss, cost, damage and expense (a "Loss"), including reasonable expenses
for counsel, incurred by it resulting from any claim, demand, action or suit
relating to the performance of its duties under this Agreement, or any action or
omission by it in the performance of its duties hereunder; provided, however,
that this indemnification shall not apply to any Loss resulting from any action
or inaction of the Trust constituting willful misconduct, bad faith or
negligence in the performance of its duties or the reckless disregard of its
duties under this Agreement. Prior to confessing any claim against it, which
may be the subject of this indemnification, the Trust shall give USAA Life
reasonable opportunity to defend against such claim in its own name or in the
name of the Trust.
(b) Trust. The Trust shall indemnify and hold USAA Life and its
officers, directors and employees harmless from and against any and all loss,
cost, damage and expense (a "Loss"), including reasonable expenses for counsel,
incurred by it resulting from any claim, demand, action or suit relating to the
performance of its duties under this Agreement, or any action or omission by it
in the performance of its duties hereunder; provided, however, that this
indemnification shall not apply to any Loss resulting from any action or
inaction of USAA Life constituting willful misconduct, bad faith or negligence
in the performance of its duties or the reckless disregard of its duties under
this Agreement. Prior to confessing any claim against it which may be the
subject of this indemnification, USAA Life shall give the Trust reasonable
opportunity to defend against such claim in its own name or in the name of USAA
Life.
7. CONFIDENTIALITY.
(a) Trust records maintained by USAA Life under this Agreement shall be
and remain the property of the Trust. USAA Life shall promptly surrender or
make such records available to the Trust or its designee, without charge, except
for reimbursement of expenses for the surrender of such documents, upon request
by the Trust or upon termination of this Agreement.
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(b) USAA Life shall not disclose or use any records or information
obtained hereunder in any manner whatsoever except as expressly authorized
hereunder, and further, shall keep confidential any information obtained
pursuant to this Agreement with the Trust as set forth herein, and disclose such
information only if the Trust has authorized such disclosure, or if such
disclosure is expressly required by applicable federal or state regulatory
authorities.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective as of the
date first set forth above and, unless terminated, shall continue in force from
year to year thereafter, but only so long as such continuance is specifically
approved annually (a) by the Trust's Board of Trustees or by a vote of a
majority of the Funds' outstanding voting securities (as that term is defined in
the 0000 Xxx) and (b) by a majority of the Trustees who are not parties to this
Agreement or "interested persons" of any such party (as defined in the 1940
Act.)
(b) Termination. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Board of Trustees of the Trust or
by vote of a majority of the outstanding shares (as defined in the 1940 Act), or
by USAA Life on 60 days' written notice to the other party, subject to
subparagraph (c) below with respect to Maximum Expenses. This Agreement shall
automatically terminate upon its assignment by USAA Life; provided, however,
that USAA Life may delegate its duties as provided in subparagraph (j) of
paragraph 2 hereof.
(c) Amendment. This agreement may be amended at any time by
mutual agreement in writing of the parties hereto, provided that any such
amendment is approved by a majority of the Trustees of the Trust who are not
interested persons. Notwithstanding the foregoing, no change (including
termination of this Agreement) to the Maximum Expenses set forth in Exhibit A
shall take effect until the then current Maximum Expense has been in effect for
at least one year and the Trust has received advance notice as required by
subparagraph (b) above.
9. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
10. SERVICES NOT EXCLUSIVE.
The services of USAA Life to the Trust hereunder are not to be deemed
exclusive, and USAA Life shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
11. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Texas and the applicable provisions of the 1940 Act. To the extent the
applicable law of the State of Texas, or any of the provisions herein, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
12. ENTIRE AGREEMENT.
This is the complete and entire agreement as represented herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USSA LIFE INVESTMENT TRUST USAA LIFE INSURANCE COMPANY
By: /s/ Xxxxxxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------- ------------------------------
Name: Xxxxxxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President Title: President
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EXHIBIT A
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LISTING OF FUNDS AND MAXIMUM EXPENSES
-------------------------------------
Name of Fund Maximum Expense
------------ ---------------
USAA Life Growth & Income 0.60%
USAA Life Aggressive Growth 0.95%
USAA Life World Growth 0.95%
USAA Life Diversified Assets 0.75%
USAA Life Income 0.65%
(a) For purposes of this Agreement, Maximum Expense is based on
the total Fund expenses for all Fund operations and
activities, including but not limited to the expenses
allocated to the Trust under section 4 of this Agreement,
investment advisory expenses, and the cost of administrative
services provided under this Agreement. Maximum Expense is
computed as a percentage of the average net assets of the
Fund for each month at the rate set forth in this Exhibit.
(b) The schedule of Maximum Expenses as set forth herein shall
remain in full force and effect for the life of this
Agreement.
(c) The "average net assets" of the Fund for any month shall be
equal to the quotient produced by dividing (i) the sum of the
net assets of such Fund, determined in accordance with
procedures established from time to time by or under the
direction of the Board of Trustees of the Trust, for each
calendar day of such month, by (ii) the number of such days.
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