Exhibit 99.B(d)(3)(B)
PRIVATE PLACEMENT
ADMINISTRATIVE AND SHAREHOLDER SERVICE AGREEMENT
This Agreement is made as of the 27th day of September, 2000, by and between
DIRECTED SERVICES, INC. ("Adviser") and SECURITY LIFE OF DENVER INSURANCE
COMPANY, ("Insurer") collectively "the Parties."
WHEREAS, Adviser serves as the investment adviser of THE GCG TRUST ("Trust")
which currently consists of 25 separate series (each a "Portfolio"); and
WHEREAS, Insurer has entered into an agreement, dated September 20, 2000, with
the Trust (a "Participation Agreement") pursuant to which the Trust will make
shares of each Portfolio listed from time to time on Schedule A of the Agreement
available to Insurer at net asset value and with no sales charges, subject to
the terms of the Participation Agreement, to Trust benefits under variable life
insurance policies ("Policies") to be issued by Insurer; and
WHEREAS, the Participation Agreement provides that the Trust will bear the costs
of preparing, filing with the Securities and Exchange Commission and setting for
printing the Trust's prospectus, statement of additional information, including
any amendments or supplements thereto, periodic reports to shareholders, and
other shareholder communications (collectively, the "Trust Materials"), and that
the Trust will provide Insurer with camera ready copies of all Trust materials;
and
WHEREAS, the Participation Agreement provides that Insurer shall print in
quantity and deliver to existing owners of Policies ("Policy owners") the Trust
materials, and that the costs of printing in quantity and delivering to existing
Policy owners such Trust materials will be borne by Insurer; and
WHEREAS, Insurer will incur various administrative expenses in connection with
the servicing of Policy owners who have allocated policy value to a Portfolio,
including, but not limited to, responding to various Policy owner inquiries
regarding a Portfolio; and
WHEREAS, the Parties wish to allocate expenses in a manner that is fair and
equitable, consistent with the best interests of Policy owners, and that does
not entail the expense and inconvenience of separately identifying and
accounting for each item of Trust expenses;
NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein, the Parties hereto agree as follows:
I. SERVICES PROVIDED:
Insurer agrees to provide services including, but not limited to:
a) providing necessary personnel and facilities to establish and
maintain Contract owner accounts and records;
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b) recording and crediting debits and credits to the accounts of
Contract owners;
c) paying the proceeds of redemptions to Contract owners;
d) delivering and responding to inquiries respecting Trust
prospectuses, reports, notices, proxies and proxy statements and
other information respecting the Portfolios (but not including
services paid for by the Trust, such as printing and mailing);
e) facilitating the tabulation of Contract owners' votes in the event
of a meeting of Trust shareholders (as specified in the
Participation Agreement);
f) providing and administering Contract features for the benefit of
Contract owners participating in the Trust, including fund
transfers, dollar cost averaging, asset allocation, portfolio
rebalancing, earnings sweep, and pre-authorized deposits and
withdrawals;
g) responding to inquiries from Contract owners using one or more of
the Portfolios as an investment vehicle regarding the services
performed by Insurer as they relate to the Trust or its Portfolios;
h) providing information to Adviser, the Trust, or the Trust's transfer
agent and to Contract owners with respect to shares attributable to
Contract owner accounts;
i) facilitating the printing and mailing of shareholder communications
from the Trust as may be required pursuant to the Participation
Agreement;
j) responding to inquiries from Contract owners concerning the Trust
and its operations;
k) providing such similar services as Adviser or Trust may reasonably
request to the extent permitted or required under applicable
statutes, rules and regulations.
II. EXPENSE ALLOCATIONS:
Subject to Section III, Insurer or its affiliates shall initially bear
the costs of:
a) printing and distributing all Trust materials to be distributed to
prospective Contract owners. Costs of distribution and tabulation of
Trust proxy materials shall be paid by the Trust, except postage
which will be paid by the Insurer.
b) printing and distributing all sales literature or promotional
material developed by Insurer or its affiliates and relating to the
Contracts;
c) servicing Contract owners who have allocated Contract value to a
Portfolio, which servicing shall include, but is not limited to, the
items listed above.
III. PAYMENT OF EXPENSES:
a) The Adviser and/or the Trust shall pay to Insurer a quarterly fee
equal to a percentage of the average daily net assets of each
Portfolio attributable to Contracts, issued by Insurer at the
following annual rates:
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ANNUAL RATE TOTAL AVERAGE MONTHLY NET ASSETS FOR ALL PORTFOLIOS
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0.25% All Assets placed by Security Life Under the Policies
b) For purposes of calculating the amount of the expense reimbursement,
described in (a) above, the "average daily net assets" of all
Portfolios for any calendar month shall be equal to the quotient
produced by dividing (i) the sum of the net assets of such
Portfolios determined in accordance with procedures established from
time to time by or under the direction of the Trusts' Board of
Trustees for each business day of such quarter, by (ii) the number
of such business days; and
c) The Adviser or Trust will calculate the payment contemplated by this
Section at the end of each calendar quarter and will make such
payment to Insurer within thirty (30) days thereafter. Each payment
will be accompanied by a statement showing the calculation of the
quarterly amounts payable by the Adviser or Trust and such other
supporting data as may be reasonably requested by Insurer.
d) From time to time, the Parties hereto shall review the quarterly fee
to determine whether it reasonably approximates the incurred and
anticipated costs, over time, of Insurer in connection with its
duties hereunder. The Parties agree to negotiate in good faith any
change to the quarterly fee proposed by a Party in good faith.
e) This Agreement shall not modify any of the provisions of the
Participation Agreement, but shall supplement those provisions.
IV. TERM OF AGREEMENT:
This Agreement shall continue in effect for so long as Insurer or its
successor(s) in interest, or any affiliate thereof, continues to hold
shares of the Company/Trust or its portfolios, and continues to perform
services in a similar capacity for the Company and Trust.
V. INDEMNIFICATION:
a) Insurer agrees to indemnify and hold harmless the Adviser and its
officers and directors, from any and all loss, liability and expense
resulting from the negligence or willful wrongful act of Security
Life under this Agreement, or by reason of the reckless disregard of
its obligations and duties under this Agreement.
b) Adviser agrees to indemnify and hold harmless Insurer and its
officers and directors from any and all loss, liability and expense
resulting from the negligence or willful wrongful act of Adviser
under this Agreement, or by reason of the reckless disregard of its
obligations and duties under this Agreement.
c) No party will be entitled to indemnification under Sections V(a) or
V(b) to the extent such loss, liability or expense is the result of
the willful misfeasance, bad faith or negligence in the performance
of such party's duties under this Agreement.
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VI. AMENDMENT
This Agreement may be amended only upon mutual agreement of the Parties
hereto in writing.
VII. NOTICES:
Notices and communications required or permitted hereby will be given to
the following persons at the following addresses and facsimile numbers,
or such other persons, addresses or facsimile numbers as the Party
receiving such notices or communications may subsequently direct in
writing:
Directed Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
Security Life of Denver Insurance Company
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Variable Attorney
Fax: (000) 000-0000
VIII. APPLICABLE LAW:
Except insofar as the Investment Company Act of 1940 or other federal
laws and regulations may be controlling, this Agreement will be
construed and the provisions hereof interpreted under and in accordance
with
Colorado law, without regard for that state's principles of
conflict of laws.
IX. EXECUTION IN COUNTERPARTS:
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
X. SEVERABILITY:
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby.
XI. RIGHTS CUMULATIVE:
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, that the Parties are entitled to under
federal and state laws.
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XII. HEADINGS
The headings used in this Agreement are for purposes of reference only
and shall not limit or define, the meaning of the provisions of this
Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.
DIRECTED SERVICES, INC. SECURITY LIFE OF DENVER INSURANCE
COMPANY
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
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Name: Xxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxxxxx, Xx.
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Title: Executive Vice President Title: Executive Vice President
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