EXHIBIT 8(d)(vii)
FUND PARTICIPATION AGREEMENT
Security Life of Denver ("Insurance Company"), Xxx Xxx Investment Trust
("Trust") and the Trust's investment adviser, Xxx Xxx Associates Corporation
("Advisee") hereby agree that shares of the series of the Trust as listed on
Exhibit A, as it may, from time to time, be amended ("Portfolios"), shall be
Made available to serve as an underlying investment medium for Individual
Deferred Variable Life Contracts and Variable Annuity Contracts ("Contracts") to
be offered by Insurance Company subject to the following provisions:
1. Insurance Company represents that it has established separate Accounts Al and
LI (each such account hereinafter, a "Variable Account"), a separate account
under Colorado law, and has registered it as a unit investment trust under
the Investment Company Act of 1940 ("1940 Act") to serve as an investment
vehicle for the Contracts. The Contracts provide for the allocation of net
amounts received by Insurance Company to separate series of the Variable
Account for investment in the shares of specified investment companies
selected among those companies available through the Variable Account to act
as underlying investment media. Selection of a particular investment company
is made by the Contract owner who may change such selection from time to time
in accordance with the terms of the applicable Contract.
2. Insurance Company agrees to make every reasonable effort to market its
Contracts. It will use its best efforts to give equal emphasis and promotion
to shares of the Trust as is given to other underlying investments of the
Variable Account. In marketing its Contracts, Insurance Company will comply
with all applicable state or Federal laws.
3. The Trust or the Adviser will provide closing net asset value, dividend and
capital gain information to Insurance Company each business day by 6:15 p.m.
New York time. Insurance Company will use this data to calculate unit values,
which will in turn be used to process that same business day's Variable
Account unit value. The Variable Account processing will be done the same
evening, and orders will be placed by 9:30 a.m. New York time on the morning
of the following business day. Orders will be sent by the Insurance Company
directly to the Trust or its specified agent, and payment for purchases will
be wired to a custodial account designated by the Trust or the Adviser on the
same day that the purchase order is executed by the Trust. The Trust will
execute the orders at the net asset value as determined as of the close of
trading on the prior day. Dividends and capital gains distributions shall be
reinvested in additional shares at the ex-date net asset value.
4. If Insurance Company's order requests a net redemption resulting in a payment
of redemption proceeds to Insurance Company, Trust shall wire the redemption
proceeds to Insurance 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 Insurance
Company within seven days and Trust shall notify the person designated in
writing by Insurance Company as the recipient for such notice of such delay
by 3:00 p.m. New York time the same business day that Insurance Company
transmits the redemption order to Trust. If Insurance 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
Adviser, Trust shall so apply such proceeds the following business day that
Insurance Company transmits such order to Trust.
5. Trust will bear the printing costs (or duplicating costs with respect to the
statement of additional information) and incremental mailing Costs associated
with the delivery of the following Trust (or individual portfolio) documents,
and any supplements thereto, to existing variable contract owners of
Insurance Company.
(a) prospectuses and statements of additional information;
(b) annual and semi-annual reports; and
(c) proxy materials.
For purposes of this Section, incremental mailing costs shall mean (1) all
costs attributable to any mailing that includes only the document or
documents listed in the preceding sentence and (ii) where the document or
documents listed in the preceding sentence are mailed with other materials,
any cost in excess of what Insurance Company would have otherwise paid to
mail periodic confirmation statements or similar documents.
Insurance 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, which reimbursement shall not exceed the Trust's cost
of production of such materials. Insurance Company shall monitor such costs
and shall use its best efforts to control these costs. Insurance 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 Insurance 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 Insurance Company attesting to
the accuracy of the information contained in the letter. If requested by
Insurance Company, the Trust shall provide such documentation (including a
final copy of the Trust prospectus as set in type or in camera-ready copy)
and other assistance as is reasonably necessary in order for Insurance
Company to print together in one document the current prospectus for the
variable contracts issued by Insurance Company and the current prospectus for
the Trust.
Trust will provide, at its expense, Insurance Company with the following
Trust (or individual Portfolio) documents, and any supplements thereto, with
respect to prospective variable contract owners of Insurance Company.
(d) camera ready copy of the current prospectus for printing by the
Insurance Company;
(e) a copy of the statement of additional information suitable for
duplication;
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(f) camera ready copy of proxy material suitable for printing; and
(g) camera ready copy of the annual and semi-annual reports for printing by
the Insurance Company.
6. Insurance Company and its agents shall make no representations concerning the
Trust or Trust shares except those contained in the then current prospectuses
of the Trust and in current printed sales literature of the Trust.
7. Administrative services to Contract owners shall be the responsibility of
Insurance Company, and shall not be the responsibility of the Trust or the
Adviser. The Trust and Adviser recognize that Insurance Company shall be the
sole shareholder of Trust shares issued pursuant to the Contracts. Such
arrangement will result in multiple share orders.
8. The Trust shall comply with Sections 817(h) and 851 of the Internal Revenue
Code of 1986, if applicable, and the regulations thereunder, and the
applicable provisions of the 1940 Act relating to the diversification
requirements for variable annuity, endowment, and life insurance contracts.
Upon request, the Trust shall provide Insurance Company with a letter from
the appropriate Trust officer certifying the Trust's compliance with the
diversification requirements and qualification as a regulated investment
company.
9. Insurance Company agrees to inform the Board of Trustees of the Trust of the
existence of, or any potential for, any material irreconcilable conflict of
interest between the interests of the Contract owners of the Variable Account
investing in the Trust and/or any other separate account of any other
insurance company investing in the Trust.
A material irreconcilable conflict may arise for a variety of reasons,
including:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws 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 Contract owners and
variable annuity insurance contract owners or by variable annuity or
life insurance contract owners of different life insurance companies
utilizing the Trust; or
(f) a decision by Insurance Company to disregard the voting instructions of
contract owners.
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Insurance Company will be responsible for assisting the Board of Trustees of
the 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 Insurance 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 the Trust or a majority of its disinterested Trustees
that a material irreconcilable conflict exists affecting Insurance Company,
Insurance Company shall, at its own expense, take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, which
steps may include, but are not limited to,
(a) withdrawing the assets allocable to some or all of the separate
accounts from the Trust or any Portfolio and reinvesting such assets
in a different investment medium, including another Portfolio of the
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 Insurance Company's
decision to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, Insurance
Company may be required, at the Trusts election, to withdraw the Variable
Account's investment in the Trust. No charge or penalty will be imposed
against the Variable Account as a result of such withdrawal. Insurance
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
interests of Contract owners.
For purposes hereof, a majority of the disinterested members of the Board of
Trustees of the Trust shall determine whether any proposed action adequately
remedies any material irreconcilable conflict. In no event will the Trust be
required to establish a new funding medium for any Contracts. Insurance
Company shall not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of affected Contract owners.
The Trust will undertake to promptly make known to Insurance Company the
Board of Trustees' determination of the existence of a material
irreconcilable conflict and its implications.
10. This Agreement shall terminate as to the sale and issuance of new Contracts:
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(a) at the option of Insurance Company, the Adviser or the Trust upon six
months' advance written notice to the other parties;
(b) at the option of Insurance Company, if Trust shares are not available
for any reason to meet the requirements of Contracts as determined by
Insurance Company. Reasonable advance notice of election to terminate
shall be furnished by Insurance Company;
(c) at the option of Insurance Company, the Adviser or the Trust, upon
institution of formal proceedings against the Broker-Dealer or Broker-
Dealers marketing the Contracts, the Variable Account, Insurance
Company or the Trust by the National Association of Securities Dealers
("NASD"), the SEC or any other regulatory body;
(d) upon a decision by Insurance Company, in accordance with regulations
of the SEC, to substitute such Trust shares with the shares of another
investment company for Contracts for which the Trust shares have been
selected to serve as the underlying investment medium. Insurance
Company will give 60 days' written notice to the Trust and the Adviser
of any proposed vote to replace Trust shares;
(e) upon assignment of this Agreement unless made with the written consent
of each other party;
(f) in the event Trust shares are not registered, issued or sold in
conformance with Federal or State law or such law precludes the use of
Trust shares as an underlying investment medium of Contracts issued or
to be issued by Insurance Company. Prompt notice shall be given by
either party to the other in the event the conditions of this
provision occur.
11. Notwithstanding any termination of this Agreement pursuant to this
Agreement, at the election of Insurance Company, Trust shall continue to
make available additional Trust shares, as provided below, 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, the
owners of the Existing Contracts or Insurance 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 unless proscribed by
Federal or State law.
12. Each notice required by this Agreement shall be given by wire and confirmed
in writing to:
Security Life of Denver
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxx, Esq.
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Van Eck Investment Trust
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President, with a copy to the Secretary
Xxx Xxx Associates Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President, with a copy to the General Counsel
13. Advertising and sales literature with respect to the Trust prepared by
Insurance Company or its agents for use in marketing its Contracts will be
submitted to the Trust for review before such material is submitted to the
SEC or NASD for review.
14. Insurance Company will distribute all proxy material furnished by the Trust
and will vote Trust shares in accordance with instructions received from
the Contract owners of such Trust shares. Insurance Company shall vote the
Trust shares for which no instructions have been received in the same
proportion as Trust shares for which said instructions have been received
from Contract owners. Insurance Company and its agents will in no way
recommend action in connection with or oppose or interfere with the
solicitation of proxies for the Trust shares held for such Contract owners.
15. (a) Insurance Company agrees to indemnify and hold harmless the Trust, the
Adviser, and each of its trustees, directors, officers, employees,
agents and each person, if any, who controls the Trust within the
meaning of the Securities Act of 1933 (the "Act") (the Trust and such
persons collectively, "Trust Indemnified Person") against any losses,
claims, damages or liabilities to which a Trust Indemnified Person may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in information furnished by
Insurance Company for use in the Registration Statement or prospectus
of the Trust or in the Registration Statement or prospectus for the
Variable Account, 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, or arise out of or as a result of conduct, statements or
representations (other than statements or representations contained in
the prospectus and Trust prepared sales literature of the Trust) of
Insurance Company or its agents with respect to the sale and
distribution of contracts for which Trust shares are an underlying
investment or arise out of a material breach of this Agreement by
insurance Company or its agents; and Insurance Company will reimburse
any legal or other expenses reasonably incurred by a Trust Indemnified
Person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which Insurance Company may otherwise
have.
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(b) The Trust agrees to indemnify and hold harmless Insurance Company and
each of its directors, officers, employees, agents and each person, if
any, who controls Insurance Company within the meaning of the Act
(insurance Company and such persons collectively, "Insurance Company
Indemnified Person") against any losses, claims, damages or
liabilities to which an Insurance Company Indemnified Person may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) 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 Trust-prepared sales literature of the Trust, 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, or arise out
of or are based upon the Trust's failure to comply with the
diversification requirements of the Investment Company Act of 1940 and
of Section 817 (h) of the Internal Revenue Code of 1986, as amended
(the "Code"), and to maintain the Fund as a Regulated Investment
Company under the Code, or arise out of a material breach of this
Agreement by the Trust or its agents and the Trust will reimburse any
legal or other expenses reasonably incurred by an Insurance Company
Indemnified Person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
the Trust will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon
an untrue statement or omission or alleged omission made in such
Registration Statement or prospectus in conformity with written
information furnished to the Trust by Insurance Company specifically
for use therein or in Insurance Company-prepared sales literature.
This indemnity agreement will be in addition to any liability which
the Trust may otherwise have.
(c) The Adviser agrees to indemnify and hold harmless each Insurance
Company Indemnified Person against any losses, claims, damages or
liabilities to which an Insurance Company Indemnified Person may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) 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 Adviser-prepared sales literature of the Trust, 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, or arise out
of or are based upon the Adviser's failure to comply with the
diversification requirements of the Investment Company Act of 1940 and
of Section 817(h) of the Code as amended, and to maintain the Fund as
a Regulated Investment Company under the Code, or arise out of a
material breach of this Agreement by the Adviser or its agents and the
Adviser will reimburse any legal or other expenses reasonably incurred
by each Insurance Company Indemnified Person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Adviser will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or omission or
alleged omission made in such Registration Statement or prospectus in
conformity with written information furnished to the Adviser by
Insurance Company specifically for use therein or Insurance Company-
prepared sales literature. This
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indemnity agreement will be in addition to any liability which the
Adviser may otherwise have.
(d) The Trust and the Adviser shall indemnify and hold Insurance Company
harmless against any and all liability, loss, damages, costs or
expenses which Insurance Company may incur, suffer or be required to
pay directly due to the Trust's or Adviser's (or their designated
agent's) (1) incorrect calculation of the daily net asset value,
dividend rate or capital gain distribution rate; (2) incorrect
reporting of the daily net asset value, dividend rate or capital gain
distribution rate; or (3) untimely reporting of the net asset value,
dividend rate or capital gain distribution rate. Any gain to Insurance
Company attributable to the Trust's, or Adviser's (or their designated
agent's) incorrect calculation or reporting of the daily net asset
value shall be immediately returned to the Trust, to the extent
reasonably practicable unless such gain has been paid to the Contract
owner and the owner is no longer invested in the Separate Account.
(e) Promptly after receipt by an indemnified party under this paragraph of
notice of the commencement of action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying
party under this paragraph, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this, paragraph. In case any
such action is brought against any indemnified party, and it notified
the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that
it may wish, assume the defense thereof, with counsel satisfactory to
such indemnified party. After notice from the indemnifying party to
such indemnified party under this paragraph of indemnified party's
election to assume the defense thereof, the indemnified party will
bear the fees and expenses of any additional counsel retained by it
and the indemnifying party will not be liable to the indemnified party
under this paragraph for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(f) Nothing herein shall entitle an indemnified party to special,
consequential or exemplary damages or damages of like kind or nature
and with respect to section 15(d) hereof all liability, loss and
damages shall be limited to the amount required to correct the value
of the account as if there had been no incorrect calculation or
reporting or untimely reporting of net asset value, dividend rate or
capital gain distribution rate.
(g) No indemnifying party shall be liable under Sections 15(a), (b), or
(c) of this Agreement where such liability arises from the willful
misfeasance, bad faith, or gross negligence of the indemnified party
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.
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16. If, in the course of future marketing of the Contracts, Insurance Company
or its agents shall request the continued assistance of the Trust's sales
personnel, compensation (which will be negotiated by the Trust and
Insurance Company) shall be paid by Insurance Company to the Trust.
17. Each party hereto agrees to furnish the California Insurance Commissioner
with any information or reports in connection with services provided under
this Agreement which such Commissioner may request in order to ascertain
whether the insurance operations Insurance Company are being conducted in a
manner consistent with the California Insurance Regulations and any other
applicable law or regulations. Insurance Company agrees to inform the Trust
and Adviser of any applicable law or regulation of the State of California
or any other State. Trust agrees that Insurance Company shall have the
right to inspect, audit and copy all records pertaining to the performance
of services under this Agreement pursuant to the requirements of the
California Insurance Department. However, Trust and Adviser shall own and
control all the pertinent records pertaining to their performance of
services under this Agreement.
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SECURITY LIFE OF DENVER
August 31, 1994 By /s/ Xxxxx Xxxxxxx
Date
XXX XXX INVESTMENT TRUST
August 31, 1994 By /s/ Xxxxxxxx Xxxxxxxxxxx
Date
XXX XXX ASSOCIATES CORPORATION
August 31, 1994 By /s/ Xxxxxxxx Xxxxxxxxxxx
Date
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EXHIBIT A
FUND
Gold and Natural Resources Fund
World Wide Balanced Fund
