EXHIBIT 1.A (8) (a) (iii)
SALES AGREEMENT
THIS AGREEMENT is made by and between XXXXXXXXX & XXXXXX ADVISERS
MANAGEMENT TRUST ("TRUST") , a Massachusetts business trust, XXXXXXXXX & XXXXXX
MANAGEMENT INCORPORATED ("N&B MANAGEMENT"), a New York corporation, and SECURITY
LIFE OF DENVER INSURANCE COMPANY ("LIFE COMPANY") , a life insurance company
organized under the laws of the State of Colorado.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 (11"40 Act") as an open-end
diversified management investment company; and
WHEREAS, TRUST is organized as a series fund, comprised of several
Portfolios which are listed on Appendix A hereto; and
WHEREAS, TRUST was initially organized to act as the funding vehicle for
certain variable life insurance and/or variable annuity contracts ("variable
contracts") offered by life insurance companies through separate accounts of
such life insurance companies and now also offers its shares to certain
qualified pension and retirement plans; and
WHEREAS, N&B MANAGEMENT is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940 and as a broker-dealer under the
Securities Exchange Act of 1934, as amended; and
WHEREAS, N&B MANAGEMENT is the investment adviser to TRUST and the
distributor of the shares of TRUST; and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer variable contracts and is
desirous of having TRUST as one of the underlying funding vehicles for such
variable contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned variable contracts and TRUST is authorized to sell such shares to
LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST and N&B MANAGEMENT agree as follows:
1. TRUST will make available to the designated Separate Accounts of LIFE
COMPANY shares of the selected Portfolios for investment of purchase payments of
variable contracts allocated to the designated Separate Accounts as provided in
TRUST's Prospectus.
2. TRUST represents and warrants that all shares of the Portfolios of
TRUST will be sold only to other insurance companies which have agreed to
participate in TRUST to fund their Separate Accounts and/or to certain qualified
pension and other retirement plans, all in accordance with the requirements of
Section 817(h) of the Internal Revenue Code of 1986, as amended ("Code") and
Treasury Regulation 1.817-5. Shares of the Portfolios of TRUST will not be sold
directly to the general public.
3. (a) TRUST agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section
3(a), LIFE COMPANY shall be the designee of TRUST for receipt of such orders
from LIFE COMPANY and receipt by such designee shall constitute receipt by
TRUST; provided that TRUST receives notice of such order by 9:30 a.m. New York
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which TRUST
calculates its net asset value pursuant to the rules of the SEC.
(b) TRUST agrees to redeem for cash, on LIFE COMPANY's request, any full
or fractional shares of TRUST held by LIFE COMPANY, executing such requests on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the request for redemption. For purposes of this Section 3(b), LIFE
COMPANY shall be the designee of TRUST for receipt of requests for redemption
from LIFE COMPANY and receipt by such designee shall constitute receipt by
TRUST; provided that TRUST receives notice of such request for redemption by
9:30 a.m. New York time on the next following Business Day.
(c) TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practical after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:15 p.m. New York time.
If TRUST provides LIFE COMPANY with the incorrect share net asset value
information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any error in
the calculation of net asset value, dividend and capital gain information
greater than or equal to $.01 per share of TRUST, shall be reported immediately
upon discovery to LIFE COMPANY. Any error of a lesser amount shall be corrected
in the next Business Day's net asset value per share for TRUST.
(d) At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 3(c) to calculate Separate Account unit values
f or the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to TRUST by LIFE
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COMPANY by 9:30 a.m. New York time on the Business Day next following LIFE
COMPANY's receipt of such requests and premiums in accordance with the terms of
Sections 3(a) and 3(b) hereof.
(e) If LIFE COMPANY's order requests the purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, TRUST shall wire the redemption
proceeds to LIFE COMPANY by the next Business Day, unless doing so would require
TRUST to dispose of portfolio securities or otherwise incur additional costs,
but in such event, proceeds shall be wired to LIFE COMPANY within seven days and
TRUST shall notify the person designated in writing by LIFE COMPANY as the
recipient for such notice of such delay by 3:00 p.m. New York time the same
Business Day that LIFE COMPANY transmits the redemption order to TRUST. If LIFE
COMPANY's order requests the application of redemption proceeds from the
redemption of shares to the purchase of shares of another fund managed or
distributed by N&B MANAGEMENT, TRUST shall so apply such proceeds the same
Business Day that LIFE COMPANY transmits such order to TRUST.
4. (a) TRUST will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs associated
with the delivery of the following TRUST (or individual portfolio) documents,
and any supplements thereto, to existing variable contract owners of LIFE
COMPANY:
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
LIFE COMPANY will submit any bills for printing, duplicating and/or mailing
costs, relating to the TRUST documents described above, to TRUST for
reimbursement by TRUST. LIFE COMPANY shall monitor such costs and shall use its
best efforts to control these costs. LIFE COMPANY will provide TRUST on a semi-
annual basis, or more frequently as reasonably requested by TRUST, with a
current tabulation of the number of existing variable contract owners of LIFE
COMPANY whose variable contract values are invested in TRUST. This tabulation
will be sent to TRUST in the form of a letter signed by a duly authorized
officer of LIFE COMPANY attesting to the accuracy of the information contained
in the letter. if requested by LIFE COMPANY, the TRUST shall provide such
documentation (including a final copy of the TRUST's prospectus as set in type
or in camera-ready copy) and other assistance as is reasonably necessary in
order for LIFE COMPANY to print together in one document the current prospectus
for the variable contracts issued by LIFE COMPANY and the current prospectus for
the TRUST.
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(b) TRUST will provide, at its expense, LIFE COMPANY with the following
TRUST (or individual Portfolio) documents, and any supplements thereto, with
respect to prospective variable contract owners of LIFE COMPANY:
(i) camera ready copy of the current prospectus for printing
by the LIFE COMPANY;
(ii) a copy of the statement of additional information
suitable for duplication;
(iii) camera ready copy of proxy material suitable for
printing; and
(iv) camera ready copy of the annual and semiannual reports
for printing by the LIFE COMPANY.
5. (a) LIFE COMPANY will furnish, or will cause to be furnished, to TRUST
and N&B MANAGEMENT, each piece of sales literature or other promotional material
in which TRUST or N&B MANAGEMENT is named at least fifteen days prior to its
intended use. No such material will be used if TRUST or N&B MANAGEMENT objects
to its use in writing within ten Business Days after receipt of such material.
(b) TRUST and N&B MANAGEMENT will furnish, or will cause to be furnished,
to LIFE COMPANY, each piece of sales literature or other promotional material in
which LIFE COMPANY or its Separate Accounts are named, at least fifteen Business
Days prior to its intended use. No such material will be used if LIFE COMPANY
objects to its use in writing within ten Business Days after receipt of such
material.
(c) The TRUST and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, the Separate Accounts, or the variable contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such variable contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports for the Separate Accounts or reports prepared for
distribution to owners of such variable contracts, or in sales literature or
other promotional material approved by LIFE COMPANY or its designee, except with
the permission of LIFE COMPANY.
(d) LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by TRUST or its designee, except with the
permission of TRUST.
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(e) For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public media) ,
sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or reprints or
excerpts or any other advertisement, sales literature, or published article) ,
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. rules, the
140 Act or the Securities Act of 1933 (11"33 Act").
6. Each Portfolio of TRUST will comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulations. In the event TRUST becomes
aware that any Portfolio of TRUST has failed to comply, it will take all
reasonable steps (a) to notify LIFE COMPANY of such failure, and (b) to
adequately diversify t@e Portfolio so as to achieve compliance.
7. (a) Except as limited by and in accordance with the provisions of
Sections 7(b) and 7(c) hereof, LIFE COMPANY agrees to indemnify and hold
harmless TRUST and N&B MANAGEMENT and each trustee of the Board of Trustees of
TRUST and officers and each person, if any, who controls TRUST and each of the
directors and officers of N&B MANAGEMENT and each person, if any, who controls
N&B MANAGEMENT within the meaning of Section 15 of the 133 Act (collectively,
the "Indemnified Parties" for purposes of this Section 7) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of LIFE COMPANY) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of TRUST's shares or the variable
contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the registration statement or prospectus for the
variable contracts or contained in the variable contracts
(or any amendment or supplement to any of the foregoing) ,
or arise out of or are based upon the omission or the
alleged omission to state therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to LIFE
COMPANY by or on behalf of
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TRUST for use in the registration statement or
prospectus for the variable contract or in the variable
contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the variable contracts or TRUST shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature of TRUST not
supplied by LIFE COMPANY, or persons under its
contract) or wrongful conduct of LIFE COMPANY or
persons under its control, with respect to the sale or
distribution of the variable contracts or TRUST shares;
or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, or sales literature
of TRUST or any amendment thereof or supplement thereto
or the omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not misleading
if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity
with information furnished to TRUST by or on behalf of
LIFE COMPANY; or
(iv) arise as a result of any failure by LIFE COMPANY to
substantially provide the services and furnish the
materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in
this Agreement or arise out of or result from any other
material breach of this Agreement by LIFE COMPANY.
(b)LIFE COMPANY shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to TRUST,
whichever is applicable.
(c)LIFE COMPANY shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to assume
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the defense thereof, with counsel satisfactory to the party named in the action.
After notice from LIFE COMPANY to such party of LIFE COMPANY's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and LIFE COMPANY will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8. (a) Except as limited by and in accordance with the provisions of
sections 8(b) and 8(c) hereof, N&B MANAGEMENT agrees to indemnify and hold
harmless LIFE COMPANY and each of its directors and officers and each person, if
any, who controls LIFE COMPANY within the meaning of Section 15 of the 133 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of N&B MANAGEMENT) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of TRUST's shares or the
variable contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement or prospectus or sales
literature of TRUST (or any amendment or supplement to
any of the foregoing), or arise out of or are based
upon the omission or the alleged. omission to state
therein a material fact required to be stated therein
or necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to N&B MANAGEMENT or TRUST
by or on behalf of LIFE COMPANY for use in the
registration statement or prospectus for TRUST or in
sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
variable contracts or TRUST shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature for the
variable contracts not supplied by N&B MANAGEMENT or
persons under its control) or wrongful conduct of
TRUST, its adviser or N&B MANAGEMENT or persons under
their control, with respect to the sale or distribution
of the variable contracts or TRUST shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the variable contracts, or any amendment
thereof or supplement thereto or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, if such
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statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY by or on
behalf of TRUST; or
(iv) arise as a result of (a) a failure by TRUST to
substantially provide the services and furnish the
materials under the terms of this Agreement; or (b) a
failure by TRUST to comply with the diversification
requirements of Section 817 (h) of the Code; or (c) a
failure by TRUST to qualify as a Regulated Investment
Company under Subchapter M of the Code; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by N&B MANAGEMENT
in this Agreement or arise out of or result from any
other material breach of this Agreement by N&B
MANAGEMENT.
(b) N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
LIFE COMPANY.
(c) N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified N&B MANAGEMENT in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify N&B MANAGEMENT of
any such claim shall not relieve N&B MANAGEMENT from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, N&B MANAGEMENT shall be entitled to participate
at its own expense in the defense thereof. N&B MANAGEMENT. also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from N&B MANAGEMENT to such party of N&B
MANAGEMENT'S election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and N&B
MANAGEMENT will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
9. (a) TRUST represents and warrants that TRUST shares sold pursuant to
this Agreement shall be registered under the 133 Act and duly authorized for
issuance, and shall be issued, in compliance in all material respects with
applicable law, and that TRUST is and shall remain registered under the 140 Act
for so long as required thereunder.
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(b) TRUST represents and warrants that it currently qualifies and will
make every effort to continue to qualify as a Regulated Investment Company under
Subchapter M of the Code, and to maintain such qualification (under Subchapter M
or any successor or similar provisions) , and that TRUST will notify LIFE
COMPANY immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
(c) TRUST will register and qualify its shares for sale in accordance with
the laws of the various states as may be required by law.
10. TRUST will provide LIFE COMPANY with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. LIFE
COMPANY will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
11. TRUST will disclose in its prospectus that (1) shares of the TRUST are
offered to affiliated or unaffiliated insurance company separate accounts and
qualified plans which fund both annuity and life insurance contracts, (2) due to
differences in tax treatment or other considerations, the interests of various
variable contract owners and qualified plans participating in the TRUST might at
some time be in conflict, and (3) the Board of Trustees of the TRUST will
monitor for any material conflicts and determine what action, if any, should be
taken. The TRUST hereby notifies LIFE COMPANY that prospectus disclosure may be
appropriate regarding potential risks of offering shares of the TRUST to
separate accounts and qualified plans funding both variable annuity contracts
and variable life insurance policies and to separate accounts and qualified
plans funding variable contracts of unaffiliated life insurance companies.
12. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having Jurisdiction (including, without
limitation, the SEC, the NASD, and state insurance regulators) and shall permit
each other and such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby. TRUST and N&B MANAGEMENT shall own and control
all the pertinent records pertaining to their performance of services under this
Agreement.
13. LIFE COMPANY agrees to inform the Board of Trustees of TRUST of the
existence of or any potential for any material irreconcilable conflict of
interest between the interest of the contract owners of the Separate Accounts of
LIFE COMPANY investing in TRUST and/or any other separate account of any other
insurance company investing in TRUST upon LIFE COMPANY having knowledge of same.
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A material irreconcilable conflict may arise for a variety of reasons,
including:
(a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or securities
laws or regulations, or a-public ruling, private letter ruling, no-
action or interpretive letter, or any similar action by insurance,
tax or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or by
contract owners of different life insurance companies utilizing
TRUST; or
(f) a decision by a participating life insurance company to disregard the
voting instructions of contract owners.
LIFE COMPANY will be responsible for assisting the Board of Trustees of
TRUST in carrying out its responsibilities by providing the Board with all
information reasonably necessary for the Board to consider any issue raised
including information as to a decision by LIFE COMPANY to disregard voting
instructions of contract owners.
It is agreed that if it is determined by a majority of the members of the
Board of Trustees of TRUST or a majority of its disinterested Trustees that an
irreconcilable material conflict exists affecting LIFE COMPANY, LIFE COMPANY
shall, at its own expense, take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, which steps may include, but are
not limited to,
(a) withdrawing the assets allocable to some or all of the Separate
Accounts from TRUST or any Portfolio and reinvesting such assets in a
different investment medium, including another Portfolio of TRUST or
submitting the questions of whether such segregation should be
implemented to a vote of all affected contract owners and, as
appropriate, segregating the assets of any particular group (i.e.,
annuity contract owners, life insurance contract owners or qualified
contract owners) that votes in favor of such segregation, or offering
to the affected contract owners the option of making such a 'change;
(b) establishing a new registered management investment company or
managed separate account.
If a material irreconcilable conflict arises because of LIFE COMPANY's
decision to disregard contract owner voting instructions and that decision
represents a minority position or
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would preclude a majority vote, the LIFE COMPANY may be required, at TRUST's
election, to withdraw its Separate Account's investment in TRUST. No charge or
penalty will be imposed against a Separate Account of LIFE COMPANY as a result
of such withdrawal. LIFE COMPANY agrees that any remedial action taken by it in
resolving any material conflicts of interest will be carried out with a view
only to the interest of contract owners.
For purposes hereof, a majority of the disinterested members of the Board
of Trustees of TRUST shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict. In no event will TRUST
be required to establish a new funding medium for any variable contracts. LIFE
COMPANY shall not be required by the terms hereof to establish a new funding
medium for any variable contracts if an offer to do so has been declined by vote
of a majority of affected contract owners.
TRUST agrees to inform LIFE COMPANY of the existence of or any potential
for any material irreconcilable conflict of interest between the interests of
the contract owners of the Separate Accounts of LIFE COMPANY investing in TRUST
and/or any other separate account of any other insurance company investing in
TRUST (upon TRUST having knowledge of same).
A material irreconcilable conflict may arise for a variety of reasons,
including:
(a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax,, or
securities law or regulations, or a public ruling, private letter
ruling, or any similar action by insurance, tax, or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or by
contract owners of different Participating life insurance companies
utilizing TRUST; or
(f) a decision by a participating life insurance company to disregard the
voting instructions of contract owners.
The Board of Trustees of TRUST shall promptly inform LIFE COMPANY if it
determines that an irreconcilable material conflict exists and the implications
thereof.
00.XXXX COMPANY shall provide pass-through voting privileges, as provided
in this paragraph, to all variable contract owners so long as the SEC or its
staff continues to interpret the 140 Act to require such pass-through voting
privileges for variable contract owners. LIFE
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COMPANY will vote shares for which it has not received voting instructions as
well as shares attributable to it in the same proportion as it votes shares for
which it has received instructions. LIFE COMPANY shall be responsible for
assuring that each of its Separate Accounts participating in TRUST calculates
voting privileges in a manner consistent with other life companies utilizing
TRUST provided that each participating life insurance company enters into an
agreement containing a provision or provisions, which do not vary in any
material respects, from the terms of Section 13 hereof.
15. (a) This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
(b) This Agreement shall terminate automatically in the event of its
assignment unless such assignment is made with the written consent of LIFE
COMPANY and TRUST.
(c) This Agreement shall terminate without penalty at the option of the
terminating party in accordance with the following provisions:
(i) At the option of LIFE COMPANY or TRUST at any time from
the date hereof upon 180 days' advance written notice,
unless a shorter time is agreed to by the parties;
(ii) At the option of LIFE COMPANY, if TRUST shares are not
reasonably available to meet the requirements of the
variable contracts as determined by LIFE COMPANY.
Prompt notice of election to terminate shall be
furnished by LIFE COMPANY, said termination to be
effective ten days after receipt of notice unless TRUST
makes available a sufficient number of shares to
reasonably meet the requirements of the variable
contracts within said ten-day period;
(iii) At the option of LIFE COMPANY, upon the institution of
formal proceedings against TRUST by the SEC, the
National Association of Securities Dealers, Inc., or
any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in LIFE
COMPANY'S reasonable judgment, materially impair
TRUST'S ability to meet and perform TRUST'S obligations
and duties hereunder. Prompt notice of election to
terminate shall be furnished by LIFE COMPANY with said
termination to be effective upon receipt of notice;
(iv) At the option of LIFE COMPANY, upon its good faith
determination, or at the option of TRUST upon a
determination by a majority of the Board, or a majority
of disinterested Board members, that an irreconcilable
material conflict exists among the interests of (i)
owners of variable contracts issued by participating
life insurance companies; or (ii) the interests of
participating life insurance companies.
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(v) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the
National Association of Securities Dealers, Inc., or
any other regulatory body, the expected or anticipated
ruling, judgement or outcome which would, in TRUST'S
reasonable judgment, materially impair LIFE COMPANY'S
ability to meet and perform its obligations and duties
hereunder. Prompt notice of election to, terminate
shall be furnished by TRUST with said termination to be
effective upon receipt of notice;
(vi) At the option of TRUST, if (i) TRUST shall determine in
its sole judgement reasonably exercised in good faith,
that LIFE COMPANY has suffered a material adverse
change in its business or financial condition or is the
subject of material adverse publicity and such material
adverse change or material adverse publicity is likely
to have a material adverse impact upon business and
operation of TRUST and N&B MANAGEMENT, (ii) TRUST shall
have notified LIFE COMPANY in writing of such
determination and its intent to terminate this
Agreement, and, (iii) after consideration of the
actions taken by LIFE COMPANY and any other changes in
circumstances since the giving of such notice, the
determination of TRUST shall continue to apply on the
sixtieth (60th) day since giving of such notice, then
such sixtieth day shall be the effective date of
termination;
(vii) At the option Of LIFE COMPANY after having been
notified by TRUST of a termination or proposed
termination of the Investment Advisory Agreement
between TRUST and N&B MANAGEMENT or its successors,
which notice TRUST shall provide promptly to LIFE
COMPANY, the effective date of termination of the
Agreement to be as determined by LIFE COMPANY;
(viii) In the event TRUST's shares are not registered, issued
or sold in accordance with applicable state or federal
law, or such law precludes the use of such shares of
the underlying investment medium of variable contracts
issued or to be issued by LIFE COMPANY. Termination
shall be effective immediately upon such occurrence
without notice;
(ix) At the option of TRUST upon a reasonable determination
by the Board in good faith that it is no longer
advisable and in the best interests of shareholders for
TRUST to continue to operate pursuant to this
Agreement;
(x) At the option of TRUST if the variable contracts cease
to qualify as annuity contracts or life insurance
contracts, as applicable, under the Code, or if TRUST
reasonably believes that the variable contracts may
fail to so qualify;
(xi) At the option of LIFE COMPANY, upon TRUST'S breach of
any material provision of this Agreement, which breach
has not been cured to the satisfaction
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of LIFE COMPANY within ten days after written notice of
such breach is delivered to TRUST;
(xii) At the option of TRUST, upon LIFE COMPANY's breach of
any material provision of this Agreement, which breach
has not been cured to the satisfaction of TRUST within
ten days after written notice of such breach is
delivered to LIFE COMPANY;
(xiii) At the option of TRUST, if the variable contracts are
not registered, issued or sold in accordance with
applicable federal and/or state law. Termination shall
be effective immediately upon such occurrence without
notice;
(xiv) At the option of LIFE COMPANY, if LIFE COMPANY shall
determine, in its sole judgment reasonably exercised in
good faith, that TRUST is the subject of material
adverse publicity and such material adverse publicity
is likely to have a material adverse impact on the sale
of the variable contracts and/or the operations or
business reputation of LIFE COMPANY, the LIFE COMPANY
shall have notified TRUST in writing of such
determination and its intent to terminate this
Agreement, and, after consideration of the actions
taken by TRUST and any other changes in circumstances
since the giving of such notice, the determination of
the LIFE COMPANY shall continue to apply on the
sixtieth day since giving of such notice, which
sixtieth (60th) day shall be the effective date of
termination; or
(xv) Upon requisite vote of the variable contract owners
having an interest in the Separate Accounts to
substitute the shares of another investment company for
the corresponding shares of the TRUST in accordance
with the terms of the variable contracts for which
those shares had been selected to serve as the
underlying investment media, such termination to be
effective sixty days after notification of TRUST.
(d) Notwithstanding any termination of this Agreement pursuant to Section
15(c) hereof, TRUST at its option may elect to continue to make available
additional TRUST shares, as provided below, for so long as TRUST desires
pursuant to the terms and conditions of this Agreement, for all variable
contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if TRUST so elects to make additional TRUST shares available, the
owners of the Existing Contracts or LIFE COMPANY, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in TRUST,
redeem investments in TRUST and/or invest in TRUST upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 15(c) hereof, TRUST and N&B MANAGEMENT, as
promptly as is practicable under the circumstances, shall notify LIFE COMPANY
whether TRUST shall elect to continue to make TRUST shares available after such
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termination. If TRUST shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either TRUST or LIFE COMPANY may terminate the Agreement, as so
continued pursuant to this Section 15 (d) , upon prior written notice to the
other party such notice to be for a period that is reasonable under the
circumstances but, if given by TRUST, need not be for more than six months. In
determining whether to elect to continue to make available additional TRUST
shares, TRUST shall act in good faith, giving due consideration to the interests
of existing shareholders, including holders of Existing Contracts.
16. This Agreement shall be subject to the provisions of the '40 Act and
the rules and regulations thereunder, including any exemptive relief therefrom
and the orders of the SEC setting forth such relief.
17. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Colorado.
18. It is understood by the parties that this Agreement is not an
exclusive arrangement.
19. This Agreement is made by TRUST pursuant to authority granted by the
Trustees, and the obligations created hereby are binding on the Trust and its
property, but not on any of the Trustees or shareholders of TRUST individually.
A copy of the Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts and notice is hereby given that the Agreement has
been executed by a Trustee on behalf of the TRUST in his or her capacity as
Trustee and not individually.
Executed this 28th day of September, 1994.
XXXXXXXXX & XXXXXX
ADVISERS MANAGEMENT TRUST
ATTEST: /s/ Xxxxx Xxxxxx BY: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, Chairman
SECURITY LIFE INSURANCE
COMPANY OF DENVER
ATTEST: /s/ Xxxxxx X. Xxxxxx BY: /s/ Xxxxx Xxxxxxx
XXXXXXXXX & XXXXXX MANAGEMENT
INCORPORATED
ATTEST: /s/ Xxxxx Xxxxxxx BY: /s/ Xxxx Xxxxxx
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APPENDIX A
Xxxxxxxxx and Xxxxxx Limited Maturity Bond Portfolio
Xxxxxxxxx and Xxxxxx Growth Portfolio
Xxxxxxxxx and Xxxxxx Partners Portfolio
Xxxxxxxxx and Xxxxxx Government Income Portfolio
