EXHIBIT 7(a)
CUSTODIAN AGREEMENT
BY AND BETWEEN
USAA LIFE INVESTMENT TRUST
AND
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
Article 1. Employment of Custodian and Property
To Be Held By It 2
Article 2. Duties of Custodian with Respect to Property
of Trust Held by Custodian 2
Section 2.1 Holding Securities 2
Section 2.2 Delivery of Securities 3
Section 2.3 Registration of Securities 8
Section 2.4 Bank Accounts 9
Section 2.5 Payments for Shares 9
Section 2.6 Availability of Federal Funds 10
Section 2.7 Collection of Income 10
Section 2.8 Payment of Trust Monies 11
Section 2.9 Liability for Payment in Advance of
Receipt of Securities Purchased 14
Section 2.10 Payments for Repurchases or Redemptions
of Shares of Trust 14
Section 2.11 Appointment of Agents 15
Section 2.12 Deposit of Trust Assets in Securities System 15
Section 2.12A Trust Assets Held in Custodian's
Direct Paper System 18
Section 2.13 Segregated Account 20
Section 2.14 Ownership Certificates for Tax Purposes 21
Section 2.15 Proxies 21
Section 2.16 Communications Relating to Portfolio
Securities 22
Section 2.17 Proper Instructions 22
Section 2.18 Actions Permitted Without Express Authority 23
Section 2.19 Evidence of Authority 24
Section 2.20 Reports to Trust by Custodian on Insurance
or Bonding 24
Article 3. Duties of Custodian with Respect to Books of Account and
Calculation of Net Asset Value and Net Income 25
Article 4. Records 26
Article 5. Opinion of Trust's Independent Public Accountants 26
Article 6. Reports to Trust by Independent Public Accountants 26
Article 7. Compensation of Custodian 27
Article 8. Responsibility of Custodian 27
Article 9. Effective Period, Termination and Amendment 29
Article 10. Successor Custodian 30
Article 11. Interpretive and Additional Provisions 32
Article 12. Additional Funds 33
Article 13. Massachusetts Law To Apply 33
Article 14. Prior Agreements 33
Article 15. Shareholder Communications 33
CUSTODIAN AGREEMENT
This Custodian Agreement (the "Agreement") between USAA Life
Investment Trust (the "Trust"), a business trust organized and existing under
the laws of the State of Delaware, having its principal place of business at
0000 Xxxxxxxxxxxxxx Xxxx, Xxx Xxxxxxx, Xxxxx 00000, and State Street Bank and
Trust Company (the "Custodian"), a Massachusetts trust company, having its
principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000.
WITNESSETH:
WHEREAS, the Trust is authorized to issue shares in separate Funds,
with each such Fund representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust intends to initially offer shares in five Funds:
USAA Life Money Market Fund, USAA Life Income Fund, USAA Life Growth and Income
Fund, USAA Life World Growth Fund, and USAA Life Diversified Assets Fund (the
"Fund" or "Funds") such Funds together with all other Funds subsequently
established by the Trust and made subject to this Agreement in accordance with
Article 12.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
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1. Employment of Custodian and Property To Be Held by It
The Trust hereby employs the Custodian as the custodian of the assets
of the Funds of the Trust pursuant to the provisions of the Master Trust
Agreement (the "Trust Agreement"). The Trust on behalf of the Funds agrees to
deliver to the Custodian all assets, including securities and cash, of the
Funds, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Funds
from time to time, and the cash consideration received by it for such new or
treasury shares of beneficial interest of the Trust representing interests in
the Funds, as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of the Funds held or received by the Trust and
not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.17), the Custodian shall on behalf of the applicable Fund or Funds from time
to time employ one or more sub-custodians, but only in accordance with and upon
receipt of certified copy of an approving resolution of the Board of Trustees
of the Trust on behalf of the applicable Fund or Funds, and provided that the
Custodian shall have no more or less responsibility or liability to the Trust
on account of any actions or omissions of any subcustodian so employed than any
such sub-custodian has to the Custodian.
2. Duties of Custodian with Respect to Property of Trust Held by
Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Fund all non-cash property, including all
securities owned by such Fund, other than
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(a) securities which are maintained pursuant to Section 2.12 in a
clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as (the "Securities System") and (b)
commercial paper of an issuer for which the Custodian acts as issuing
and paying agent ("Direct Paper") which is deposited and/or maintained
in the Direct Paper System of the Custodian pursuant to Section 2.12A.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Funds held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper
book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Trust on behalf of the
applicable Funds, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases.
(1) Upon sale of such securities for the account of the
Funds and receipt of payment therefore:
(2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Funds and, in the case of repurchases that
are effected through a Securities System, subject to
the requirements of Section 2.12 hereof;
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(3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.12 hereof;
(4) To the depository agent in connection with tender or
other similar offers for securities of the Funds;
(5) To the issuer thereof or its agent when such securities
are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or
other consideration is to be delivered to the
Custodian;
(6) To the issuer thereof, or its agent, for transfer into
the name of the Funds or into the name of any nominee
or nominees of the Custodian or into the nominee name
of any agent appointed pursuant to Section 2.11 or into
the nominee name of any subcustodian appointed pursuant
to Article 1; or for exchange for a different number of
bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided
that, in any such case, the new securities are to be
delivered to the Custodian;
(7) Upon the sale of such securities for the account of the
Funds, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery" custom; provided that in any such case, the
Custodian shall
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have no responsibility or liability for any loss
arising from the delivery of such securities prior to
receiving payment for such securities except as may
arise from the Custodian's own negligence or willful
misconduct;
(8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the
new securities and cash, if any, are to be delivered to
the Custodian;
(9) In the case of warrants, rights or similar securities,
the surrender thereof in the exercise of such warrants,
rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
(10) For delivery in connection with any loans of securities
made by the Funds, but only against receipt of adequate
collateral as agreed upon from time to time by the
Custodian and the Trust on behalf of the Funds, which
may be in the form of cash or obligations issued by the
United States government, its agencies or
instrumentalities, except that in connection with any
loans for
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which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be
held liable or responsible for the delivery of
securities owned by the Funds prior to the receipt of
such collateral;
(11) For delivery as security in connection with any
borrowing by the Trust on behalf of the Funds
requiring a pledge of assets by the Trust on behalf of
the Funds, but only against receipt of amounts
borrowed;
(12) For delivery in accordance with the provisions of
any agreement by the Trust on behalf of the Funds,
the Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of the National Association of
Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of the Options Clearing
Corporation and of any registered national
securities exchange, or of any similar organization
or organizations, regarding escrow or other
arrangements in connection with transactions by the
Funds of the Trust;
(13) For delivery in accordance with the provisions of
any agreement by the Trust on behalf of the Funds,
the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act,
relating to compliance with the rules of the
Commodity Futures Trading Commission
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and/or any Contract Market, or any similar
organization or organizations, regarding account
deposits in connection with transactions by the
Funds of the Trust;
(14) For any other proper trust purpose, but only upon
receipt of, in addition to Proper Instructions from
the Trust on behalf of the applicable Fund or Funds,
a certified copy of a resolution of the Board of
Trustees or of the Executive Committee of the Board
signed by an Officer of the Trust and certified by
the Secretary or an Assistant Secretary, specifying
the securities of the Funds to be delivered, setting
forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper trust
purpose, and naming the person or persons to whom
delivery of such securities shall be made.
In delivering any securities pursuant to this Section 2.2,
the Custodian shall credit to the Account of the Fund which
held such securities the cash or other property received
thereof, except to the extent that the Custodian may be
instructed otherwise by certified resolution meeting the
requirements of paragraph (14) of this Section 2.2.
2.3 Registration of Securities. Securities held by the Custodian
(other than bearer securities) shall be registered in the
name of the Trust or in the name of any
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nominee of the Trust or in the name of any nominee of the
Custodian which nominee shall be assigned exclusively to the
Trust, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other
registered investment companies having the same investment
adviser as the Trust, or m the nominee name of any agent
appointed pursuant to Section 2.11 or in the nominee name of
any subcustodian appointed pursuant to Article 1, in either
of which case, the nominee name shall be one used exclusively
for the Trust. The Custodian shall clearly record on its
records the Fund for which each security of the Trust is
being held. All securities accepted by the Custodian on
behalf of the Trust under the terms of this Agreement shall
be in "street name" or other good delivery form.
If, however, the Trust directs the Custodian to maintain
securities in "street name", the Custodian shall utilize its
best efforts only to timely collect income due the Trust on
such securities and to notify the Trust on a best efforts
basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of each Fund of
the Trust, subject only to draft or order by the Custodian
acting pursuant to the terms of this Agreement, and shall
hold in such account or accounts, subject to the provisions
hereof, all cash received by
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it from or for the accounts of the Trust, other than cash
maintained by the Trust in a bank account established and
used in accordance with Rule 17f-3 under the Investment
Company Act of 1940 (The "1940 Act"). Funds held by the
Custodian for a Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to
act as a custodian under The 1940 Act and that each such bank
or trust company and the funds to be deposited with each such
bank or trust company shall on behalf of each applicable Fund
be approved by vote of a majority of the Board of Trustees of
the Trust. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the
applicable separate account of USAA Life Insurance Company
(the "Separate Account"), and, on the date of receipt,
deposit into the account of the appropriate Fund such
payments for shares of that Fund issued or sold from time to
time by the Trust. USAA Life or a third party administrator
on its behalf shall cause such payments to be made to the
Custodian. The Custodian will provide timely notification to
the Trust and the Trust's Transfer Agent of any receipt by it
of payments for shares of such Funds and the identity of the
fund to which each such payment relates.
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2.6 Availability of Federal Funds. Upon mutual agreement between
the Trust on behalf of each applicable Fund and the
Custodian, the Custodian shall, upon die receipt of Proper
Instructions from the Trust on behalf of a Fund, make federal
funds available to such Fund as of specified times agreed
upon from time to time by the Trust and the Custodian in the
amount of checks received in payment for shares of such Fund
which are deposited into the Fund's account.
2.7 Collection of Income. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all income
and other payments with respect to registered securities held
hereunder to which each Fund shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by
the issuer, such securities are held by the Custodian or its
agent, or are held in a Securities System on such date of
payment, and shall credit such income, as collected, to such
Fund's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due
each Fund on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Trust.
The Custodian will have no duty or responsibility in
connection therewith, other than to provide the Trust with
such information or data as may be necessary to assist the
Trust in arranging for
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the timely delivery to the Custodian of the income to which
the Fund is properly entitled.
2.8 Payment of Trust Monies. Upon receipt of Proper Instructions
from the Trust on behalf of the applicable Fund, which may be
continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out monies of a Fund in the
following cases only:
(1) Upon purchase of securities, options, futures
contracts or options on futures contracts for the
account of the Funds but only (a) against the delivery
of such securities or evidence of title to such
options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States
or abroad which is qualified under the 1940 Act, as
amended, to act as a custodian and has been designated
by the Custodian as its agent for this purpose
pursuant to Section 2.11 hereof, registered in the
manner required for such instruments to be held
pursuant to this Agreement or in proper form for
transfer; (b) in the case of a purchase effected
through a Securities System, in accordance with the
conditions set forth in Section 2.12 hereof; (c) in
the case of a purchase involving the Direct Paper
System, in accordance with the
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conditions set forth in Section 2.12A; (d) in the case
of repurchase agreements entered into between the
Trust on behalf of the Funds and the Custodian, or
another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in
certificate form or for securities purchased through a
Securities System, in accordance with the conditions
set forth in Section 2.12 hereof or (ii) through
agreement by the Custodian or other bank or
broker-dealer to repurchase such securities from the
Funds or (iii) for transfer to a time deposit account
of the Trust in any bank, whether domestic or foreign;
such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Trust as
defined in Section 2.17;
(2) In connection with conversion, exchange or surrender
of securities owned by the Funds as set forth in
Section 2.2 hereof;
(3) For the redemption or repurchase of Shares issued by
the Funds as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred
by the Funds, including but not limited to the
following payments for the account of the Funds:
interest, taxes, management, accounting, transfer
agent and
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legal fees, and operating expenses of the Trust
whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
(5) For the payment of any dividends on shares of the
Funds declared pursuant to the governing documents of
the Trust;
(6) For payment of the amount of dividends received in
respect of securities sold short by a Fund;
(7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions from the Trust
on behalf of the Funds, a certified copy of a
resolution of the Board of Trustees or of the
Executive Committee of the Trust signed by an Officer
of the Trust and certified by its Secretary or
Assistant Secretaries, specifying the amount of such
payment, setting forth the purpose for which such
payment is to be made, declaring such purpose, and
naming the person or persons to whom such payment is
to be made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this
Agreement, in any and every case where payment for purchase
of securities for the account of a Fund is made by the
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Custodian in advance of receipt of the securities purchased
(i.e., in advance of the time specified in Section 2.8(1)) in
the absence of specific written instructions from the Trust
on behalf of such Fund or Funds to so pay in advance, the
Custodian shall be absolutely liable to the Trust for such
securities to the same extent as if the securities had been
received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of Trust.
From such funds as may be available for the purpose but
subject to the limitations of the Trust Agreement and any
applicable votes of the Board of Trustees of the Trust
pursuant thereto, the Custodian shall, upon receipt of Proper
Instructions, make funds available for payment to holders of
shares who have delivered to the Trust's Transfer Agent a
request for redemption or repurchase of the shares. In
connection with the redemption or repurchase of shares of a
Fund, the Custodian is authorized upon receipt of Proper
Instructions to wire funds to or through a commercial bank
designated by the redeeming shareholders.
2.11 Appointment of Agents. The Custodian may at any time or times
in its discretion appoint (and may at any time remove) any
other bank or trust company which is itself qualified under
the 1940 Act, as amended, to act as a custodian, as its agent
to carry out such of the provisions of this Article 2 as the
Custodian may from time to time direct; provided, however,
that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
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2.12 Deposit of Trust Assets in Securities System. The Custodian
may deposit and/or maintain securities owned by a Fund in a
clearing agency registered with the Securities and Exchange
Commission (the "Commission") under Section 17A of the
Exchange Act, which acts as a securities depository, or in
the book entry system authorized by the U.S. Department of
the Treasury and certain federal agencies, known as
Securities System in accordance with applicable Federal
Reserve Board and Commission rules and regulations, if any,
and subject to the following provisions:
(1) The Custodian may keep securities of the Funds in a
Securities System provided that such securities are
represented in an account ("Account") of the
Custodian in the Securities System which shall not
include any assets of the Custodian other than
assets held as fiduciary, custodian or otherwise for
customers;
(2) The records of the Custodian with respect to
securities of the Funds which are maintained in a
Securities System shall identity by book entry those
securities belonging to the Funds;
(3) The Custodian shall pay for securities purchased for
the account of the Funds upon (i) receipt of written
advice from the Securities System that such
securities have been transferred to the Account, and
(ii) the making of
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an entry on the records of the Custodian to reflect
such payment and transfer for the account of the
Funds. The Custodian shall transfer securities sold
for the account of the Funds upon (i) receipt of
written advice from the Securities System that
payment for such securities has been transferred to
the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of
all advice from the Securities System of transfers
of securities for the account of the Funds shall
identity the Fund, be maintained for the Funds by
the Custodian and be provided to the Trust at its
request. Upon request, the Custodian shall furnish
the Trust on behalf of the Funds confirmation of
each transfer to or from the account of the Funds in
the form of a written advice or notice and shall
furnish to the Trust on behalf of the Funds copies
of daily transaction sheets reflecting each day's
transactions in the Securities System for the
account of the Fund. The Custodian shall comply with
all requirements of Rule 17f-4(d)(3) under the 1940
Act;
(4) The Custodian shall provide the Trust for the Funds
with any report obtained by the Custodian on the
Securities System's accounting system, internal
accounting control and procedures for safeguarding
securities deposited in the Securities System. The
Custodian shall send to the Trust such reports on
their own systems of internal accounting control as
the Trust
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may reasonably request from time to time; the
Custodian shall send to the Trust such reports
automatically whenever there is a material change in
any such system;
(5) The Custodian shall have received from the Trust on
behalf of the Funds the initial certificate required
by Article 9 hereof;
(6) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to
the Trust for the benefit of the Funds for any loss
or damage to the Funds resulting from use of the
Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or
from failure of the Custodian or any such agent to
enforce effectively such rights as it or the Trust
may have against the Securities System or any
guaranty or insurance fund; at the election of the
Trust, it shall be entitled to be subrogated to the
rights of the Custodian or any agent with respect to
any claim against the Securities System or any other
person or fund which the Custodian or agent may have
as a consequence of any such loss or damage if and
to the extent that the Funds have not been made
whole for any such loss or damage.
2.12A Trust Assets Held in Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a
Fund in the Direct Paper System
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of the Custodian subject to the following provisions:
(1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of
Proper Instructions from the Trust on behalf of the
Funds;
(2) The Custodian may keep securities of the Funds in
the Direct Paper System only if such securities are
represented in an Account of the Custodian in the
Direct Paper System which shall not include any
assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
(3) The records of the Custodian with respect to
securities of the Funds which are maintained in the
Direct Paper System shall identify by book-entry
those securities belonging to the Funds;
(4) The Custodian shall pay for securities purchased for
the account of the Funds upon the making of an entry
on the records of the Custodian to reflect such
payment and transfer of securities to the account of
the Funds. The Custodian shall transfer securities
sold for the account of the Funds upon the making of
an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account
of the Funds;
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(5) The Custodian shall furnish the Trust on behalf of
the Funds confirmation of each transfer to or from
the account of the Funds, in the form of a written
advice or notice, in the Direct Paper System on the
next business day following such transfer and shall
furnish to the Trust on behalf of the Funds copies
of daily transaction sheets reflecting each day's
transactions in the Securities System for the
account of the Funds;
(6) The Custodian shall provide the Trust on behalf of
the Funds with any report on its system of internal
accounting control as the Trust may reasonably
request from time to time.
2.13 Segregated Account. The Custodian shall upon receipt of
Proper Instructions from the Trust on behalf of each
applicable Fund establish and maintain a segregated account
or accounts for and on behalf of each such Fund, into which
account or accounts may be transferred cash and/or
securities, including securities maintained in an account by
the Custodian pursuant to Section 2.12 or 2.12A hereof, (i)
in accordance with the provisions of any agreement by the
Trust on behalf of the Funds, the Custodian, and a
broker-dealer registered under the Exchange Act and a member
of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance
with the rules of the Options Clearing Corporation and of any
registered national securities exchange (or the Commodity
Futures Trading Commission or any registered
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contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Funds, (ii) for purposes
of segregating cash or government securities in connection
with options purchased, sold or written by the Funds or
commodity futures contracts or options thereon purchased or
sold by the Funds, (iii) for the purposes of compliance by
the Trust and Funds with the procedures required by
Investment Company Act Release No. 10666, or any subsequent
release or releases of the Commission relating to the
maintenance of segregated accounts by registered investment
companies, (iv) to hold securities subject to repurchase
agreements, to the extent that certificates for such
securities are held in physical custody, and (v) for other
proper trust purposes, but only, in the case of clause (v)
upon receipt of, in addition to Proper Instructions from the
Trust on behalf of the applicable Fund, a certified copy of a
resolution of the Board of Trustees or of the Executive
Committee signed by an Officer of the Trust and certified by
the Secretary or Assistant Secretaries, setting forth the
purpose or purposes of such segregated account and declaring
such purposes to be proper trust purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for
all federal and state tax purposes in connection with receipt
of income or other payments with respect to securities of
each Fund held by it and in connection with transfers of
securities.
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2.15 Proxies. The Custodian shall, with respect to the securities
held hereunder, cause to be promptly executed by the
registered holder of such Securities, if the securities are
registered otherwise than in the name of the Funds or a
nominee of the Funds, all proxies, without indication of the
manner in which such proxies are to be voted, and shall
promptly deliver to the Funds such proxies, all proxy
soliciting materials and all notices relating to such
securities.
2.16 Communications Relating to Portfolio Securities. Subject to
the provisions of Section 2.3, the Custodian shall transmit
promptly to the Trust for each Fund all written information
(including, without limitation, pendency of calls and
maturities of securities and expirations of rights in
connection therewith and notices of exercise of call and put
options written by the Trust on behalf of the Funds and the
maturity of future contracts purchased or sold by the Funds)
received by the Custodian from issuers of the securities
being held for the Funds. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Funds
all written information received by the Custodian from
issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or
exchange offer. If the Funds desire to take action with
respect to any tender offer, exchange offer or any other
similar transaction, the Funds shall notify the Custodian at
least three business days prior to the date on which the
Custodian is to take such action.
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2.17 Proper Instructions. Proper Instructions as used throughout
this Article 2 means a writing signed or initialed by one or
more person or persons as the Board of Trustees shall have
from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be
considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to
give such instructions with respect to the transaction
involved. The Trust shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the
Secretary or Assistant Secretaries as to the authorization by
the Board of Trustees of the Trust accompanied by a detailed
description of procedures approved by the Board of Trustees,
Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices
provided that the Board of Trustees and the Custodian are
satisfied that such procedures afford adequate safeguards for
the Funds' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which
requires a segregated asset account in accordance with
Section 2.13.
2.18 Actions Permitted Without Express Authority. The Custodian
may in its discretion, without express authority from the
Trust on behalf of each applicable Fund:
22
(1) make payments (not to exceed $3,000 with respect to
any Fund before an accounting shall be made to the
Trust) to itself or others for minor expenses of
handling securities or other similar items relating
to its duties under this Contract, provided that all
such payments shall be accounted for to the Trust on
behalf of the Funds;
(2) surrender securities in temporary form for
securities in definitive form;
(3) endorse for collection, in the name of the Funds,
checks, drafts and other negotiable instruments; and
(4) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of the Funds except as
otherwise directed by the Board of Trustees of the
Trust.
2.19 Evidence of Authority. The Custodian shall be protected in
acting upon any instructions, notice, request, consent,
certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed by an
authorized person by or on behalf of the Trust. The Custodian
may receive and accept a certified copy of a vote of the Board
of Trustees of the Trust as conclusive evidence (a) of the
authority of any person to act in accordance with
23
such vote or (b) of any determination or of any actions by the
Board of Trustees pursuant to the Trust Agreement as described
in such vote, and such vote may be considered as in full force
and effect until receipt by the Custodian of written notice to
the contrary.
2.20 Reports to Trust by Custodian on Insurance or Bonding. The
Custodian shall furnish annually to the Trust information
concerning what insurance or bonding coverage is applicable
to the Trust's securities. Such information shall be similar
in kind and scope to that furnished to the Trust in
connection with the initial approval of this Agreement. In
addition, the Custodian will promptly inform the Trust in the
event of any material adverse change in its financial
condition or any material loss of the assets of the Trust.
3. Duties of Custodian with Respect to Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
Trustees of the Trust to keep the books of account of each Fund and/or
compute the net asset value per share of the outstanding shares of
each Fund or, if directed in writing to do so by the Trust on behalf
of the Funds, shall itself keep such books of account and/or compute
such net asset value per share. If so directed, the Custodian shall
also calculate daily the net income of the Funds as described in the
Trust's currently effective
24
Prospectus related to such Funds and shall advise the Trust and the
TPA for the Separate Account daily of the total amounts of such net
income and, if instructed in writing by an Officer of the Trust to do
so, shall advise the TPA for the Separate Account periodically of the
division of such net income among its various components. The
calculations of the net asset value per share and the daily income of
each Fund shall be made at the time or times described from time to
time in the Fund's currently effective prospectus related to such
Fund.
4. Records
The Custodian shall with respect to each Fund create and
maintain all records relating to its activities and obligations under
this Agreement in such manner as will meet the obligations of the
Trust under the 1940 Act, with particular attention to Section 31
thereof and Rules 31a-1 and 3 la-2 thereunder. All such records shall
be the property of the Trust and shall at all times during the regular
business hours of the Custodian be open for inspection by duly
authorized Officers, employees or agents of the Trust and employees
and agents of the Commission. The Custodian shall, at the Trust's
request, supply the Trust with a tabulation of securities owned by
each Fund and held by the Custodian and shall, when requested to do so
by the Trust and for such compensation as shall be agreed upon between
the Trust and the Custodian, include certificate numbers in such
tabulations or provide such other information as the Trust may
reasonably request.
5. Opinion of Trust's Independent Public Accountants
The Custodian shall take all reasonable action, as the Trust
on behalf of each applicable
25
Fund may from time to time request, to obtain from year to year
favorable opinions from the Trust's independent accountants with
respect to its activities hereunder in connection with the preparation
of the Trust's Form N-lA and Form N-SAR or other annual reports to the
Commission and with respect to any other requirements of such
Commission.
6. Reports to Trust by Independent Public Accountants
The Custodian shall provide the Trust, on behalf of each of
the Funds at such times as the Trust may reasonably require, with
reports by the Custodian or by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on future
contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the Custodian
under this Agreement; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Trust to
provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies,
the report shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon in writing
from time to time between the Trust on behalf of each applicable Fund
and the Custodian.
26
8. Responsibility of Custodian
So long as and to the extent that it is in the exercise of
reasonable care; the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall
be held harmless in acting upon any notice, request, consent,
certificate or other instrument reasonably believed by it to be
genuine and to be signed by the proper party or parties, including any
future commission merchant acting pursuant to the terms of a
three-party future or options agreement. Notwithstanding anything to
the contrary elsewhere in this Agreement, the Custodian shall be
responsible for all damages and expenses actually incurred as a result
of the negligent action, negligent inaction, or willful misconduct of
the Custodian, any agent appointed by the Custodian pursuant to
Section 2.11, or any of their officers, agents, nominees, or
employees, in the performance of any function hereunder, including,
without limitation, reasonable attorney fees and investigation
expenses; but the Custodian shall be indemnified by and shall be
without liability to the Trust for any action taken or omitted by it
in good faith without negligence. It shall be entitled to rely on and
may act upon advice of counsel reasonably acceptable to the Trust (who
may be counsel for the Trust) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such
advice.
If the Trust on behalf of a Fund requires the Custodian to
take any action with respect to securities, which action involves the
payment of money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Trust or the
Funds being liable for the payment of money or incurring liability of
some other form, the Trust on behalf
27
of the Funds, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and
form satisfactory to it.
If the Trust requires the Custodian, its affiliates,
subsidiaries or agents, to advance cash or securities for any purpose
(including but not limited to securities settlements, foreign exchange
contracts and assumes settlement) for the benefit of a Fund or in the
event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities
(excluding the Custodian's operating overhead and taxes arising
generally out of the Custodian's business) in connection with the
performance of this Agreement, except such as may arise from its or
its officers', employees', agent's or nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any
time held for the account of the applicable Fund shall be security
therefore and should the Trust fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to
dispose of such Fund's assets to the extent necessary to obtain
reimbursement.
9. Effective Period, Termination and Amendment
This Agreement shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual agreement
of the parties hereto and may be terminated by either party by an
instrument m writing delivered or mailed by registered mail, postage
prepaid to the other party, such termination to take effect not sooner
than thirty days after the date of such delivery or mailing; provided,
however, that the Custodian shall not with respect to a Fund act under
Section 2.12
28
hereof in the absence of receipt of an initial certificate of the
Secretary or Assistant Secretaries that the Board of Trustees of the
Trust has approved the initial use of a particular Securities System
by such Fund as required in each case by Rule 17f-4 under The 1940
Act, as amended, and that the Custodian shall not with respect to a
Fund act under Section 2.12A hereof in the absence of receipt of an
initial certificate of the Secretary or Assistant Secretaries that the
Board of Trustees has approved the initial use of the Direct Paper
System by such Fund; provided further, however, that the Trust shall
not amend or terminate this Agreement in contravention of any
applicable federal or state regulations, or any provision of the Trust
Agreement, and further provided, that the Trust on behalf of one of
more of the Funds may be at any time by action of its Board of
Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or
(ii) immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at
the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Agreement, the Trust on behalf of
each applicable Fund shall pay to the Custodian such compensation as
may be due as of the date of such termination and shall Likewise
reimburse the Custodian for its costs, expenses and disbursements in
discharging its responsibilities hereunder, excluding the Custodian's
operating overhead.
10. Successor Custodian
If a successor custodian for the Trust or one or more of the Funds
shall be appointed by
29
the Board of trustees of the Trust, the Custodian shall, upon
termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities
or other assets of each applicable Fund then held by it its agents, or
subcustodians hereunder, shall transfer to an account of the successor
custodian or subcustodian all of the securities of each such Fund held
in a Securities System, and shall cause all securities held by
sub-custodians to be transferred to the accounts of the successor
custodian or its sub-custodians, as the successor custodian may
direct.
If no such successor custodian shall he appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of
the Board of Trustees of the Trust, deliver at the office of the
Custodian and transfer such securities, funds and other properties in
accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Trustees shall
have been delivered to the Custodian on or before the date when such
termination shall become effective, then the Custodian shall have the
right to deliver to a bank or trust company, which is a "bank" as
defined in the 1940 Act, doing business in Boston, Massachusetts, of
its own selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than
$25,000,000, all securities, funds and other properties held by the
Custodian on behalf of each applicable Fund and all instruments held
by the Custodian relative thereto and all other property held by it
under this Agreement, on behalf of each applicable Fund and to
transfer to an account of such successor custodian all of
30
the securities of each such Fund held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the
Custodian under this Agreement.
In the event that securities, funds and other properties
remain in the possession of the Custodian, or in the Custodian's
account with a Securities System, after the date of termination hereof
owing to failure of the Trust to procure the certified copy of the
vote referred to or of the Board of Trustees to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for
its services during such period as the Custodian retains possession of
such securities, funds and other properties and the provisions of this
Agreement relating to the duties and obligations of the Custodian
shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Agreement, the
Custodian and the Trust on behalf of each of the Funds, may from time
to time agree on such provisions interpretive of or in addition to the
provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in writing signed by
both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Trust Agreement.
No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
31
12. Additional Funds.
In the event that the Trust establishes one or more series of
shares in a Fund or Funds in addition to USAA Life Money Market Fund,
USAA Life Income Fund, USAA Life Growth and Income Fund, USAA Life
World Growth Fund, and USAA Life Diversified Assets Fund with respect
to which it desires to have the Custodian render services as Custodian
under the terms hereof, it shall so notify the Custodian in writing,
and if the Custodian agrees in writing to provide such services, such
series of shares shall become a Fund hereunder.
13. Massachusetts Law To Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with laws of the Commonwealth of
Massachusetts.
14. Prior Agreements
This Agreement supersedes and terminates, as of the date
hereof, all prior Agreements between the Trust on behalf of each of
the Funds and the Custodian relating to the custody of the Trust's
assets.
15. Shareholder Communications
Rule 14b-2 under the Exchange Act requires banks which hold
securities for the account of customers to respond to requests by
issuers of securities for the names, addresses and holding of
beneficial owners of securities of that issuer held by the bank unless
the beneficial owner has expressly objected to disclosure of this
information. In order to comply with the rule, the
32
Custodian needs the Trust to indicate whether it authorizes the
Custodian to provide the Trust's name, address, and share position to
requesting companies whose securities the Trust owns. If the Trust
tells the Custodian "no," the Custodian will not provide this
information to requesting companies. If the Trust tells the Custodian
"yes" or does not check either "yes" or "no" below, the Custodian is
required by the rule to treat the Trust as consenting to disclosure of
this information for all securities owned by the Trust or any Funds or
Accounts established by the Trust. For the Trust's protection, the
Rule prohibits the requesting company from using the Trust's name and
address for any purpose other than corporate communications. Please
indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's
Fund's name, address, and share positions.
NO [X ] The Custodian is not authorized to release the
Fund's name, address, and share positions.
33
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its s name and on its behalf by its duly
authorized representative as of the date below.
Dated: ATTEST USAA LIFE INVESTMENT TRUST
This 16th By: /s/ X.X. Xxxxxxxx, Xx. By: /s/ Xxxxx X. Xxxxxx
---- ------------------ --------------------
Day of Dec. X.X. Xxxxxxxx, Xx. Xxxxx X. Xxxxxx
1994. Secretary President & CEO
Dated: ATTEST STATE STREET
BANK AND TRUST COMPANY
This 14th By: /s/(illegible) By: /s/ Xxxxxx X. Xxxxx
Day of Nov. ----------------- --------------------
1994. Xxxxxx X. Xxxxx
45707
EXHIBIT 7(b)
AMENDMENT TO THE CUSTODIAN AGREEMENT
BY AND BETWEEN
USAA LIFE INVESTENNT TRUST
AND
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
AMENDMENT TO THE CUSTODIAN AGREEMENT
Section 1. Appointment of Foreign Sub-Custodians 2
Section 2. Assets To Be Held 2
Section 3. Foreign Securities Depositories 3
Section 4. Segregation of Securities 3
Section 5. Agreements with Foreign Banking Institutions 4
Section 6. Access of Independent Accountants of the Trust 5
Section 7. Reports by Custodian 5
Section 8. Transactions in Foreign Custody Account 6
Section 9. Liability of Foreign Sub-Custodians 7
Section 10. Liability of Custodian 8
Section 11. Reimbursement for Advances 9
Section 12. Monitoring Responsibilities 9
Section 13. Branches of U.S. Banks 13
Section 14. Applicability of Custodian Agreement 14
AMENDMENT TO THE CUSTODIAN AGREEMENT
AGREEMENT made by and between the State Street Bank and Trust Company
(the "Custodian") and USAA Life Investment Trust (the "Trust").
WHEREAS, the Custodian and the Trust are parties to a Custodian Agreement
dated ___________ 1994, (the "Agreement") governing the terms and conditions
under which the Custodian maintains custody of the securities and other assets
of the Trust; and
WHEREAS, the Custodian and the Trust desire to amend the Trust's
Agreement to provide for the maintenance of the foreign securities, and cash
incidental to transactions in such securities, in the custody of certain
foreign banking institutions and foreign securities depositories acting as
sub-custodians in conformity with the requirements of Rule 17f-5 under
Investment Company Act of 1940 (the "1940 Act");
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Trust hereby amend the Agreement by the addition
of the following terms conditions:
1
1. Appointment of Foreign Sub-Custodians
The Trust hereby authorizes and instructs the Custodian to employ as
subcustodians for the Trust's securities and other assets maintained outside
the United States the foreign banking institutions and foreign securities
depositories specifically approved by the Trust's Board of Trustees and
authorized by the Trust's Board of Trustees, as evidenced by a certified
resolution to be designated on Schedule A hereto ("foreign sub-custodians").
Upon receipt of "Proper Instructions", as defined in Section 2.17 of the
Agreement, together with a certified resolution of the Trust's Board of
Trustees, the Custodian and the Trust may agree to amend Schedule A hereto from
time to time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodians. By delivery of Proper
Instructions, the Trust may instruct the Custodian to cease the employment of
any one or more of such sub-custodians for maintaining custody of the Trust's
assets.
2. Assets To Be Held
The Custodian shall limit the securities and other assets maintained
in the custody of the foreign sub-custodians to: (a) "foreign securities", as
defined in paragraph (c)(1) of Rule
2
17f-5 under the 1940 Act, and (b) cash and cash equivalents in such amounts as
the Custodian or the Trust may determine to be reasonably necessary to effect
the Trust's foreign securities transactions. The Custodian shall cause cash
held by foreign sub-custodians to be in interest bearing accounts, to the
extent practicable.
3. Foreign Securities Depositories
Except as may otherwise be agreed upon in writing by the
Custodian and the Trust, assets of the Trust shall be maintained in foreign
securities depositories only through arrangements implemented by the foreign
banking institutions serving as sub-custodians pursuant to the terms hereof.
Where possible, such arrangements shall include entry into agreements
containing the provisions set forth in Section 5 hereof.
4. Segregation of Securities
The Custodian shall identify on its books as belonging to
each applicable Fund of the Trust, the foreign securities of such Fund held by
each foreign sub-custodian. Each agreement pursuant to which the Custodian
employs a foreign banking institution shall require
that such institution establish a custody account for the Custodian on behalf
of the Trust for each applicable Fund and physically segregate in that account,
securities and other assets of the Trust, and in the event that such
institution deposits the Trust's securities in a foreign securities depository,
that it shall identify on its books as belonging to the Custodian, as agent for
the Trust, the securities so deposited.
5. Agreements with Foreign Banking Institutions
Each agreement with a foreign banking institution shall be
substantially in the form set forth in Exhibit 1 hereto and shall provide that:
(a) the Trust's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking institution
or its creditors or agents, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the Trust's assets will be freely
transferable without the payment of money or value other than for custody or
administration; (c) adequate records will be maintained identifying the assets
as belonging to each applicable Fund of the Trust; (d) officers of or auditors
employed by, or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for the
Trust, will be given access to the books and records of the foreign banking
institution relating
4
to its actions under its agreement with the Custodian; and (e) assets of the
Trust held by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents. The procedures established by the
Custodian for giving "Instructions" (as defined in its agreements with foreign
sub-custodians) to foreign sub-custodians shall provide that the foreign
sub-custodian may rely only on instructions that bear the signature of an
authorized person or are accompanied by an appropriate identification code or
test key established by the Custodian and the foreign sub-custodian. Any
instructions given otherwise than in hard copy form will be promptly confirmed
by duplicate hard copy instructions from the Custodian to the foreign
sub-custodian.
6. Access of Independent Accountants of the Trust
Upon request of the Trust, the Custodian will use its best
efforts to arrange for the independent public accountants of the Trust to be
afforded access to the books and records of any foreign banking institution
employed as a foreign sub-custodian insofar as such books and records relate to
the performance of such foreign banking institution under its agreement with
the Custodian.
5
7. Reports by Custodian
The Custodian will supply to the Trust from time to time, as
mutually agreed upon, statements in respect of the securities and other assets
of the Trust held by foreign sub-custodians, including but not limited to an
identification of entities having possession of each Fund's securities and
other assets and advices or notifications of any transfers of securities to or
from each custodial account maintained by a foreign banking institution for the
Custodian on behalf of each applicable Fund indicating, as to securities
acquired for a Fund, the identity of the entity having physical possession of
such securities.
8. Transactions in Foreign Custody Account
(a) Except as otherwise provided in paragraph (b) of this
Section 8, the provisions of Section 2.2 and 2.8 of the Agreement shall apply,
mutatis mutandis to the foreign securities of the Trust held outside the United
States by foreign sub-custodians.
(b) Notwithstanding any provision of the Agreement to the
contrary,
6
settlement and payment for securities received for the account of the Trust and
delivery of securities maintained for the account of the Trust may be effected
in accordance with the customary established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the reasonable expectation of receiving later
payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of the Agreement, and the Trust agrees
to hold any such nominee harmless from any liability arising solely out of its
status as a holder of record of such securities, provided that such liability
did not result from the negligence or willful misconduct of the Custodian,
sub-custodian, nominee, or any of their officers, employees or agents.
9. Liability of Foreign Sub-Custodians
Each agreement pursuant to which the Custodian employs a
foreign banking
7
institution as foreign sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify, and hold
harmless, the Custodian and the Trust from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the Trust, it
shall be entitled to be subrogated to the rights of the Custodian with respect
to any claims against a foreign banking institution or foreign securities
depository or guaranty or insurance fund as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that the Trust
has not been made whole for any such loss, damage, cost, expense, liability or
claim.
10. Liability of Custodian
The Custodian shall be liable for the acts or omissions of a
foreign banking institution or foreign securities depository to the same extent
as set forth with respect to sub- custodians generally in the Agreement and,
regardless of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by Section 13 hereof, the Custodian shall not be liable for any
loss, damage, cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism or any loss
where the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this Section 10, in
8
delegating custody duties to State Street London Ltd., the Custodian shall not
be relieved of any responsibility to the Trust for any loss due to such
delegation, except such loss as may result from (a) political risk (including,
but not limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b) other
losses (excluding a bankruptcy or insolvency of State Street London Ltd. not
caused by political risk) due to Acts of God, nuclear incident or other losses
under circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
11. Reimbursement for Advances
If the Trust requires the Custodian to advance cash or
securities for any purpose for the benefit of a Fund including the purchase or
sale of foreign exchange or of contracts for foreign exchange, or in the event
that the Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liability (excluding the Custodian's
operating overhead and taxes arising generally out of the conduct of the
Custodian's business) in connection with the performance of this Agreement,
except such as may arise from its or its officers', employees', agent's or
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Fund shall
9
be security therefore and should the Trust fall to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of such Fund's assets to the extent necessary to obtain reimbursement.
12. Monitoring Responsibilities
The Custodian shall furnish annually to the Trust, during the
month of June, information concerning the foreign sub-custodians employed by
the Custodian, which shall include information concerning what insurance or
bonding coverage is applicable to the Trust's foreign securities. Such
information shall be similar in kind and scope to that furnished to the Trust
in connection with the initial approval of this amendment to the Agreement. In
addition, the Custodian will promptly inform the Trust in the event that the
Custodian learns of a material adverse change in the financial condition of a
foreign sub-custodian or any material loss of the assets of the Trust or in the
case of any foreign sub-custodian not the subject of an exemptive order from
the Securities and Exchange Commission if notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted U.S.
10
accounting principles).
The Custodian shall use its best efforts to cause each foreign
sub-custodian to:
(i) take such steps as may be necessary to secure or otherwise prevent
the loss of rights attached to or otherwise relating to the Trust's foreign
securities;
(ii) collect dividend, interest and other income payments made and
stock dividends, rights and similar securities paid or issued with respect to
the Trust's foreign securities and collect and hold all such payments, stock
dividends, rights and similar items for the account of the Trust;
(iii) present for payment the Trust's foreign securities that are
called, redeemed, or retired or otherwise become payable and all coupons and
other income items that call for payment upon presentation and hold the amounts
received for the account of the Trust;
(iv) execute such ownership and other certificates as may be required
to obtain payment in respect of the Trust's foreign securities; and
11
(v) exchange interim receipts or temporary securities for the Trust's
foreign securities for definitive securities.
The Custodian shall promptly notify the Trust if it becomes aware that any
foreign sub-custodian has failed or is failing to take any of the foregoing
actions, or has attempted but unsuccessfully to take any of the foregoing
actions.
The Custodian shall also promptly notify the Trust if it becomes aware
of any failure of a foreign sub-custodian to fulfill any of its other
obligations under its agreement with the Custodian, any circumstances that
might cause the continued use of a foreign sub-custodian to be inconsistent
with the requirements of Rule 17f-5 under the 1940 Act or with any action of
the Trust's Board of Trustees in connection therewith, of any other
circumstances or information of which the Custodian becomes aware and which
might materially increase the risk of loss to the Trust of continuing to use a
sub-custodian or continuing to maintain assets in a foreign country.
The Custodian shall promptly furnish the Trust with a copy of any
reports received by the Custodian in connection with any foreign
sub-custodian's system of internal accounting
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controls as they relate to the Trust's assets.
The Custodian will promptly notify the Trust upon receiving notices,
reports or proxies or otherwise becoming aware of corporate developments
affecting assets held by foreign subcustodians (including, but not limited to,
calls for redemption, notices of maturities, mergers, consolidations,
reorganizations, recapitualizations, tender offers, rights offerings,
exchanges, subscriptions, and other offerings) and promptly transmit to the
Trust copies of all communications and information received by the Custodian in
these regards. The Custodian will do all things reasonably within its control
in order to assure that proxies relating to the Trust's assets held by the
foreign sub-custodian may be voted, to the extent that the Trust may legally do
so.
13. Branches of U.S. Banks
(a) Except as other wise set forth in this amendment to the
Agreement, the provisions hereof shall not apply where the custody of the
Trust's assets is maintained in a foreign branch of a banking institution that
is a "bank" as defined by Section 2(a)(5) of the 1940 Act meeting the
qualification set forth in Section 26(a) of the said 1940 Act. The appointment
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of any such branch as a sub-custodian shall be governed by Article 1 of the
Agreement.
(b) Cash held for the Trust in the United Kingdom shall be
maintained in an interest bearing account established for the Trust with the
Custodian's London Branch, which Account shall be subject to the direction of
the Custodian, State Street London Ltd. or both.
14. Applicability of Custodian Agreement
Except as specifically superseded or modified herein, the
terms and provisions of the Agreement shall continue to apply with full force
and effect.
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IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on its behalf by its duly authorized representative
as of the date below.
Dated: ATTEST USAA LIFE INVESTMENT TRUST
This 16th By:/s/X.X. Xxxxxxxx, Xx. By: /s/Xxxxx X. Xxxxxx
day of Dec. ---------------------- ----------------------
1994. X.X. Xxxxxxxx, Xx Xxxxx X. Xxxxxx
Secretary President & CEO
STATE STREET
Dated: ATTEST BANK AND TRUST COMPANY
This 14th By: /s/(illegible) By: /s/ Xxxxxx X. Xxxxx
day of Nov. --------------------- --------------------
1994.
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EXHIBIT I
SUBCUSTODIAN AGREEMENT
AGREEMENT made this ___ day of _________, 19___ , between State Street
Bank and Trust Company, A massachusetts Trust Company (hereinafter referred to
as the "Custodian"), having its principal place of business at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, XX, _________________________________ and (hereinafter referred
to as the "Subcustodian") , a organized under the laws of
___________________and having an office at
WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;
WHEREAS, Custodian wishes to establish Account (the "Account") with
the Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and
WHEREAS, Subcustodian agrees to establish the Account and to hold and
maintain all Property in the Account in accordance with the terms and
conditions herein set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:
I. THE ACCOUNT
A. ESTABLISHMENT OF THE ACCOUNT. Custodian hereby requests that
Subcustodian establish for each client of the Custodian an Account which shall
be composed of:
1. A Custody Account for any and all Securities (as
hereinafter defined) from time to time received by Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as hereinafter
defined) from time to time received by Subcustodian therefor.
B. USE OF THE ACCOUNT. The Account shall be used exclusively to hold,
acquire, transfer or otherwise care for, on behalf of Custodian as custodian
and the customers of Custodian and not for Custodian's own interest, Securities
and such Cash or cash equivalents as are transferred to Subcustodian or as are
received in payment of any transfer of, or as payment on, or interest on, or
dividend from, any such Securities (herein collectively called "Cash").
C. TRANSFER OF PROPERTY IN THE ACCOUNT. Beneficial ownership of the
Securities and Cash in the Account shall be freely transferable without payment
of money or value other than for safe custody and administration.
D. OWNERSHIP AND SEGREGATION OF PROPERTY IN THE ACCOUNT. The ownership
of the property in the Account, whether Securities, Cash or both, and whether
any such property is held by Subcustodian in an Eligible Depository, shall be
clearly recorded on Subcustodian's books as belonging to Custodian on behalf of
Custodian's customers, and not for Custodian's own interest and, to the extent
that Securities are physically held in the Account, such Securities shall also
be physically segregated from the general assets of Subcustodian, the assets of
Custodian in its individual capacity and the assets of Subcustodian's other
customers. In addition, Subcustodian shall maintain such other records as may
be necessary to identify the property hereunder as belonging to each Account.
E. REGISTRATION OF SECURITIES IN THE ACCOUNT. Securities which are
eligible for deposit in a depository as provided for in Paragraph III may be
maintained with the depository in an account for Subcustodian's customers.
Securities which are not held in a depository and that are ordinarily held in
registered form will be registered in the name of Subcustodian or in the name
of Subcustodian's nominee, unless alternate Instructions are furnished by
Custodian.
II. SERVICES TO BE PROVIDED BY THE SUBCUSTODIAN
The services Subcustodian will provide to Custodian and the manner in
which such services will be performed will be as set forth below in this
Agreement.
A. SERVICES PERFORMED PURSUANT TO INSTRUCTIONS. All transactions
involving the Securities and Cash in the Account shall be executed solely in
accordance with Custodian's Instructions as that term is defined in Paragraph
IV hereof, except those described in paragraph B below.
B. SERVICES TO BE PERFORMED WITHOUT INSTRUCTIONS. Subcustodian will,
unless it receives Instructions from Custodian to the contrary:
1. COLLECT CASH. Promptly collect and receive all dividends,
income, principal, proceeds from transfer and other payments with respect to
property held in the Account, and present for payment all Securities held in
the Account which are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for payment upon
presentation, and credit Cash receipts therefrom to the Deposit Account.
2. EXCHANGE SECURITIES. Promptly exchange Securities where
the exchange is purely ministerial including, without limitation, the exchange
of temporary Securities for those in definitive form and the exchange of
warrants, or other documents of entitlement to Securities, for the Securities
themselves.
3. SALE OF RIGHTS AND FRACTIONAL INTERESTS. Whenever
notification of a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend or stock split is received for the Account and
such rights entitlement or fractional interest bears an expiration date,
Subcustodian will promptly endeavor to obtain Custodian's Instructions, but
should these not be received in time for Subcustodian to take timely action,
Subcustodian is authorized to sell such rights entitlement or fractional
interest and to credit the Account.
4. EXECUTE CERTIFICATES. Execute in Custodian's name for the
Account, whenever Subcustodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income from the
Securities held in the account.
5. PAY TAXES AND RECEIVE REFUNDS. To pay or cause to be paid
from the Account any and all taxes and levies in the nature of taxes imposed on
the property in the Account by any governmental authority, and to take all
steps necessary to obtain all tax exemptions, privileges or other benefits,
including reclaiming and recovering any foreign withholding tax, relating to
the Account and to execute any declaration, affidavits, or certificates of
ownership which may be necessary in connection therewith.
6. PREVENT LOSSES. Take such steps as may be reasonably
necessary to secure or otherwise prevent the loss of, entitlements attached to
or otherwise relating to property held in the Account.
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C. ADDITIONAL SERVICES
1. TRANSMISSION OF NOTICES OF CORPORATE ACTION. By such means
as will permit Custodian to take timely action with respect thereto,
Subcustodian will promptly notify Custodian upon receiving notices or reports,
or otherwise becoming aware, of corporate action affecting Securities held in
the Account (including, but not limited to, calls for redemption, mergers,
consolidations, reorganizations, recapitalizations, tender offers, rights
offerings, exchanges, subscriptions and other offerings) and dividend, interest
and other income payments relating to such Securities.
2. COMMUNICATIONS REGARDING THE EXERCISE OF ENTITLEMENTS.
Upon request by Custodian, Subcustodian will promptly deliver, or cause any
Eligible Depository authorized and acting hereunder to deliver, to Custodian
all notices, proxies, proxy soliciting materials and other communications that
call for voting or the exercise of rights or other specific action (including
material relative to legal proceedings intended to be transmitted to security
holders) relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting
instruments to be executed by the registered holder of the Securities, but
without indicating the manner in which such Securities are to be voted.
3. MONITOR FINANCIAL SERVICE. In furtherance of its
obligations under this Agreement, Subcustodian will monitor a leading financial
service with respect to announcements and other information respecting property
held in the Account, including announcements and other information with respect
to corporate actions and dividend, interest and other income payments.
III. USE OF SECURITIES DEPOSITORY
Subcustodian may, with the prior written approval of Custodian, maintain all or
any part of the Securities in the Account with a securities depository or
clearing agency which is incorporated or organized under the laws of a country
other than the United States of America and is supervised or regulated by a
government agency or regulatory authority in the foreign jurisdiction having
authority over such depositories or agencies, and which operates (a) the
central system for handling of designated securities or equivalent book entries
in ____________________________________________________________________________
or (b) a transnational system for the central handling of securities or
equivalent book entries (herein called "Eligible Depository"), provided
however, that, while so maintained, such Securities shall be subject only to
the directions of Subcustodian, and that Subcustodian duties, obligations and
responsibilities with regard to such Securities shall be the same as if such
Securities were held by Subcustodian on its premises.
IV. CLAIMS AGAINST PROPERTY IN THE ACCOUNT
The property in the account shall not be subject to any right, charge, security
interest, lien or claim of any kind (collectively "Charges") in favor of
Subcustodian or any Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment for such property's safe
custody or administration in accordance with the terms of this Agreement.
Subcustodian will immediately notify Custodian of any attempt by any party to
assert any Charge against the property held in the Account and shall take all
lawful actions to protect such property from such Charges until Custodian has
had a reasonable time to respond to such notice.
V. SUBCUSTODIAN'S WARRANTY
Subcustodian represents and warrants that:
(A) It is a branch of a "qualified U.S. bank" or an "eligible foreign
custodian" as those terms are defined in Rule 17f-5 of the Investment Company
Act
3
of 1940, a copy of which is attached hereto as Attachment A (the "Rule"), and
Subcustodian shall immediately notify Custodian, in writing or by other
authorized means, in the event that there appears to be a substantial
likelihood that Subcustodian will cease to qualify under the Rule as currently
in effect or as hereafter amended, or
(B) It is the subject of an exemptive order issued by the United
States Securities and Exchange Commission which order permits Custodian to
employ Subcustodian notwithstanding the fact that Subcustodian fails to qualify
under the terms of the Rule, and Subcustodian shall immediately notify
Custodian, in writing or by other authorized means, if for any reason it is no
longer covered by such exemptive order.
Upon receipt of any such notification required under (A) or (B) of this
section, Custodian may terminate this Agreement immediately without prior
notice to Subcustodian.
VI. DEFINITIONS
A. INSTRUCTIONS. The term "Instructions" means:
1. instructions in writing signed by authorized individuals
designated as such by Custodian;
2. telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable form as
shall customarily be used for the transmission of like information, and
4. such other forms of communication as from time to time may
be agreed upon by Custodian and Subcustodian, which Subcustodian believes in
good faith to have been given by Custodian or which are transmitted with proper
testing or authentication pursuant to terms and conditions which Custodian may
specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. Subcustodian shall act in
accordance with Instructions and shall not be liable for any act or omission in
respect of any Instruction except in the case of willful default, negligence,
fraud, bad faith, willful misconduct, or reckless disregard of duties on the
part of Subcustodian. Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry practice and local
settlement practice.
B. ACCOUNT. The term "Account" means collectively the Custody Account,
and the Deposit Account.
C. SECURITIES. The term "Securities" includes, without limitation,
stocks, shares, bonds, debentures, debt securities (convertible or
non-convertible), notes, or other obligations or securities and any
certificates, receipts, futures contracts, foreign exchange contracts, options,
warrants, scrip or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
VII. MISCELLANEOUS PROVISIONS
A. STATEMENTS REGARDING THE ACCOUNT. Subcustodian will supply
Custodian with such statements regarding the Account as Custodian may request,
including the identity and location of any Eligible Depository authorized and
acting hereunder. In addition, Subcustodian will supply Custodian an advice or
notification of any transfers of Securities to or from the Account indicating,
4
as to Securities acquired for the Account, if applicable, the Eligible
Depository having physical possession of such Securities.
B. EXAMINATION OF BOOKS AND RECORDS. Subcustodian agrees that its
books and records relating to the Account and Subcustodian's actions under this
Agreement shall be open to the physical, on-premises inspection and audit at
reasonable times by officers of, auditors employed by or other representatives
of Custodian including (to the extent permitted under the law of ______________
________________________) the independent public accountants for any customer
of Custodian whose property is being held hereunder and such books and records
shall be retained for such period as shall be agreed upon by Custodian and
Subcustodian.
As Custodian may reasonably request from time to time, Subcustodian will
furnish its auditor's reports on its system of internal controls, and
Subcustodian will use its best efforts to obtain and furnish similar reports of
any Eligible Depository authorized and acting hereunder.
C. STANDARD OF CARE. In holding, maintaining, servicing and disposing
of Property under this Agreement, and in fulfilling any other obligations
hereunder, Subcustodian shall exercise the same standard of care that it
exercises over its own assets, PROVIDED that Subcustodian shall exercise at
least the degree of care and maintain adequate insurance as expected of a
prudent professional Subcustodian for hire and shall assume the burden of
proving that it has exercised such care in its maintenance of Property held by
Subcustodian in its Account. The maintenance of the Property in an Eligible
Depository shall not affect Subcustodian's standard of care, and Subcustodian
will remain as fully responsible for any loss or damage to such securities as
if it had itself retained physical possession of them. Subcustodian shall also
indemnify and hold harmless Custodian and each of Custodian's customers from
and against any loss, damage, cost, expense, liability or claim (including
reasonable attorney's fees) arising out of or in connection with the improper
or negligent performance or the nonperformance of the duties of Subcustodian.
Subcustodian shall be responsible for complying with all provisions of the law
of , or any other law, applicable to Subcustodian in connection with its duties
hereunder, including (but not limited to) the payment of all transfer taxes or
other taxes and compliance with any currency restrictions and securities laws
in connection with its duties as Subcustodian.
D. LOSS OF CASH OR SECURITIES. Subcustodian agrees that, in the even
of any loss of Securities or Cash in the Account, Subcustodian will use its
best efforts to ascertain the circumstances relating to such loss and will
promptly report the same to Custodian and shall use every legal means available
to it to effect the quickest possible recovery.
E. COMPENSATION OF SUBCUSTODIAN. Custodian agrees to pay to
Subcustodian from time to time such compensation for its services and such
out-of-pocket or incidental expenses of Subcustodian pursuant to this Agreement
as may be mutually agreed upon in writing from time to time.
F. OPERATING REQUIREMENTS. The Subcustodian agrees to follow such
Operating Requirements as the Custodian may establish from time to time. A copy
of the current Operating Requirements is attached as Attachment B to this
Agreement.
G. TERMINATION. This Agreement may be terminated by Subcustodian or
Custodian on 60 days' written notice to the other party, sent by registered
mail, provided that any such notice, whether given by Subcustodian or
Custodian, shall be followed within 60 days by Instructions specifying the
names of the persons to whom Subcustodian shall deliver the Securities in the
Account and to whom the Cash in the account shall be paid. If within 60 days
following the giving of such notice of termination, Subcustodian does not
receive such Instructions,
5
Subcustodian shall continue to hold such Securities and Cash subject to this
Agreement until such Instructions are given. The obligations of the parties
under this Agreement shall survive the termination of this Agreement.
G. NOTICES. Unless otherwise specified in this Agreement, all notices
and communications with respect to matters contemplated by this Agreement shall
be in writing, and delivered by mail, postage prepaid, telex, SWIFT, or other
mutually agreed telecommunication methods to the following addresses (or to
such other address as either party hereto may from time to time designate by
notice duly given in accordance with this paragraph)
To Subcustodian:
To Custodian: State Street Bank and Trust Company
Securities Operations/
Network Administration
X.X. Xxx 0000
Xxxxxx, XX 00000
H. CONFIDENTIALITY. Subcustodian and Custodian shall each use its best
efforts to maintain the confidentiality of the property in the Account and the
beneficial owners thereof, subject, however, to the provisions of any laws,
requiring disclosure. In addition, Subcustodian shall safeguard any test keys,
identification codes or other security devices which Custodian shall make
available to it. The Subcustodian further agrees it will not disclose the
existence of this Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has secured the
Custodian's written consent.
I. ASSIGNMENT. This Agreement shall not be assignable by either party
but shall bind any successor in interest of Custodian and Subcustodian
respectively.
J. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of . To the extent inconsistent with this Agreement or
Custodian's Operating Requirements as attached hereto, Subcustodian's rules and
conditions regarding accounts generally or custody accounts specifically shall
not apply.
CUSTODIAN: STATE STREET BANK AND TRUST COMPANY
By:________________________
Date_______________________
AGREED TO BY SUBCUSTODIAN
By:_________________________
Date:_______________________
6
