EXHIBIT 1.A(8)(c)
SERVICE AGREEMENT
This Agreement is made as of the 28th day of February, 1995 by and between
Security Life of Denver Insurance Company ("Security Life") and Xxxx Xxxxx
Management, Inc., a New York corporation ("Adviser") (collectively, the
"Parties").
W I T N E S S E T H:
WHEREAS, the Adviser serves as the investment adviser of The Xxxxx American
Fund, a Massachusetts business trust (the "Fund"), which currently consists of
six separate series (each, a "Portfolio"); and
WHEREAS, Security Life has entered into an agreement, dated August 26,
1994, and amended February 28, 1995, with the Fund and Adviser (the "Sales
Agreement") pursuant to which the Fund will make shares of each Portfolio listed
from time to time on Schedule A thereto available to certain variable life
insurance and/or variable annuity contracts offered by Security Life through
certain separate accounts (the "Separate Accounts") at net asset value and with
no sales charges, subject to the terms of the Sales Agreement; and
WHEREAS, the Sales Agreement provides that the Fund will bear the costs of
preparing, filing with the Securities and Exchange Commission, printing or
duplicating and mailing the Fund's prospectus, statement of additional
information and any amendments or supplements thereto, periodic reports to
shareholders, Fund proxy material and other shareholder communications
(collectively, the "Fund Materials") required by law to be sent to owners of
Contracts ("Contract owners") who have allocated any Contract value to a
Portfolio; and
WHEREAS, the Sales Agreement provides that the Adviser, at its expense,
will provide Security Life with camera ready copies or copies suitable for
duplication of all Fund Materials with respect to prospective Variable Contract
owners of Security Life; and
WHEREAS, the Sales Agreement makes no provision for which party shall incur
various administrative expenses in connection with the servicing of Contract
owners who have allocated Contract value to a portfolio, including, but not
limited to, responding to various Contract owner inquiries regarding a
Portfolio; and
WHEREAS, the Parties hereto wish to allocate the expenses in a manner that
is fair and equitable, and consistent with the best interests of Contract
owners; and
WHEREAS, the Parties hereto wish to establish a means for allocating the
expenses that does not entail the expense and inconvenience of separately
identifying and accounting for each item of Fund expense;
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NOW THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
I. Services Provided:
Security life agrees to provide services to the Adviser including the
following:
a) responding to inquiries from Security Life Contract owners using one or
more of the Portfolios as an investment vehicle regarding the services performed
by Security life as they relate to the Fund or its Portfolios;
b) providing information to the Adviser and to Contract owners with
respect to shares attributable to Contract owner accounts;
c) printing and mailing of shareholder communications from the Fund as may
be required pursuant to Paragraph 4 of the Sales Agreement;
d) communication directly with Contract owners concerning the Fund's
operations;
e) providing such similar services as Adviser may reasonably request to
the extent permitted or required under applicable statutes, rules and
regulations.
II. Expense Allocations:
Subject to Section III hereof, Security Life or its affiliates shall
initially bear the costs of the following:
a) printing and distributing all Fund Materials to be distributed to
prospective Contract owners;
b) printing and distributing all sales literature or promotional material
developed by Security Life 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 in Paragraph I of this Agreement.
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III. Payment of Expenses:
a) The Adviser shall pay to Security Life a quarterly fee equal to a
percentage of the average daily net assets of the Portfolio attributable to
Contracts, at the annual rate of .10% (hereinafter, the "Quarterly Fee"), in
connection with the expenses incurred by Security Life under Section 11 hereof.
The payment of the Quarterly Fee shall commence at the end of the first calendar
quarter in which Contract value has been allocated to a Portfolio.
b) 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 Security Life 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.
c) This Agreement shall not modify any of the provisions of Paragraph 4 of
the Sales Agreement, but shall supplement those provisions.
IV. Term of Agreement:
Any Party may terminate this Agreement, without penalty, on 60 days'
written notice to the other Parties. Unless so terminated, this Agreement shall
continue in effect for so long as the Adviser or its successor(s) in interest,
or any affiliate thereof, continues to perform in a similar capacity for the
Fund, and for so long as any Contract value or any monies attributable to
Security life is allocated to a Portfolio.
V. Indemnification:
a) Security Life agrees to indemnify and hold harmless the Adviser and its
officers and directors, from any and all loss, liability and expense resulting
from the gross negligence or willful wrongful act of Security Life under this
Agreement, except to the extent such loss, liability or expense is the result of
the willful misfeasance, bad faith or gross negligence of the Adviser in the
performance of its duties, or by reason of the reckless disregard of its
obligations and duties under this Agreement.
b) Adviser agrees to indemnify and hold harmless Security Life and its
officers and directors from any and all loss, liability and expense resulting
from the gross negligence or willful wrongful act of Adviser under this
Agreement, except to the extent such loss, liability or expense is the result of
the willful misfeasance, bad faith or gross negligence of Security Life in the
performance of its duties, or by reason of the reckless disregard of its
obligations and duties under this Agreement.
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VI. 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:
Xxxx Xxxxx Management, Inc.
00 Xxxxxx Xxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxx
FAX: (000) 000-0000
Security Life of Denver Insurance Company
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
FAX: (000) 000-0000
VII. 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 New York law, without
regard for that state's principles of conflict of laws.
VIII. 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.
IX. 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.
X. 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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XI. 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.
XXXX XXXXX MANAGEMENT, INC. SECURITY LIFE OF DENVER INSURANCE
COMPANY
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxx Xxxxxxx
Name: Xxxxxxx Xxxx Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President Title: Vice President
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