[AMERICAN EXPRESS ICON] AMERICAN IDS LIFE INSURANCE COMPANY
EXPRESS
--------- IDS Tower 10
FINANCIAL Minneapolis, Minnesota 55440
ADVISORS
---------
October 21, 1996
Ladies and Gentlemen:
This letter sets forth the agreement among American Partners Life Insurance
Company ("American Partners Life") and American Centurion Life Assurance Company
("American Centurion Life," collectively the "Insurance Companies"), and INVESCO
Funds Group, Inc., ("INVESCO") concerning certain administrative services.
1. ADMINISTRATIVE SERVICES AND EXPENSES. Administrative services for APL
Variable Annuity Account 1 and ACL Variable Annuity Account 1(collectively,
the "Accounts") which invest in the INVESCO VIF-Industrial Income Portfolio
(the "Fund') pursuant to the Participation Agreements, as may be amended
from time to time, among American Partners Life, INVESCO Variable
Investment Funds, Inc. (the "Company") and INVESCO dated October 31, 1995
and among American Centurion Life, the Company and INVESCO dated December
4, 1996, (collectively the "Participation Agreements"), and for purchasers
of variable annuity contracts (the "Contracts) issued through the Accounts,
are the responsibility of the Insurance Companies. Administrative services
for the Fund, in which the Accounts invest, and for purchasers of Fund
shares, are the responsibility of the Company or INVESCO.
INVESCO recognizes the Insurance Companies as the shareholders of Fund
shares purchased under the Participation Agreements on behalf of the
Accounts. INVESCO further recognizes that it will derive a substantial
savings in Administrative expenses by virtue of having the Insurance
Companies as the shareholders of record of Fund shares purchased under the
Participation Agreements, rather than multiple shareholders having record
ownership of such Fund shares. The administrative expenses for which
INVESCO will derive such savings are set forth in Schedule A to this letter
agreement.
2. ADMINISTRATIVE EXPENSE PAYMENTS. In consideration of the anticipated
administrative expense savings resulting to INVESCO from the Insurance
Companies' services set forth above, INVESCO agrees to pay the Insurance
Companies a fee, computed daily and paid monthly in arrears, equal to
twenty (20) basis points (0.20%) applied to the average daily value of the
total number of shares of each Fund of the Companies held in the
subaccounts of the Accounts until such time as INVESCO, following
consultation with the Company's Board of Directors, removes the expense cap
that currently is imposed on the Fund. In the event that the expense cap on
the Fund is removed, INVESCO agrees to pay the Insurance Companies a fee,
computed daily and paid monthly in arrears, equal to twenty-five (25) basis
points (0.25%) applied to the average daily value of the total number of
shares of each Fund of the Companies held in the subaccounts of the
Accounts.
As soon as practicable after the end of each month, for the Fund, the
Insurance Companies will send INVESCO, at the address and in the manner set
forth in the Participation Agreements, a statement of the average daily
value for the preceding month of shares of such Fund as to which the fee
stated in this Paragraph 2 is calculated, together with a statement of the
amount of such fee allocated to American Partners Life and American
Centurion Life. In the calculation of such fee, the Insurance Companies'
records will govern unless an error can be shown in the number of shares
used in such calculation.
INVESCO will pay American Partners Life and American Centurion Life each
Company's pro-rata share of such fee within thirty (30) days after
INVESCO's receipt of such statement. Such payment will be by wire transfers
unless the amount thereof is less than $500. Wire transfers will be sent to
the accounts and in the manner specified by American Partners Life and
American Centurion Life. Such wire transfers will be separate from wire
transfers of redemption proceeds and distributions. Amounts less than $500
may be paid by checks or by another method acceptable to the parties.
For purposes of this Paragraph 2, the average daily value of the shares of
the Fund will be based on the net asset values reported by INVESCO to the
Insurance Companies. No adjustments will be made to such net asset values
to correct errors in the net asset values so reported for any day unless
such error is corrected and the corrected net asset value per share is
reported to the Insurance Companies before 5:00 p.m. Central time on the
first Business Day after the day to which the error relates.
3. NATURE OF PAYMENTS. The parties to this letter agreement recognize and
agree that INVESCO's payments to the Insurance Companies relate to
administrative services only and do not constitute payment in any manner
for investment advisory services or for costs of distribution of Contracts
or of Fund shares, and that these payments are not otherwise related to
investment advisory or distribution services or expenses. The amount of
administrative expense payments made by INVESCO to the Insurance Companies
pursuant to Paragraph 2 of this letter agreement will not be deemed to be
conclusive with respect to actual administrative expenses or savings of
INVESCO.
4. TERM. This letter agreement will remain in full force and effect for so
long as assets of the Fund are attributable to amounts invested by the
Insurance Companies under the Participation Agreements, unless terminated
in accordance with Paragraph 5 of this letter agreement. In accordance with
Section 10.4 of the Participation Agreements, this fee will continue to be
due and payable with respect to the shares attributable to Existing
Contracts for so long as the Insurance Companies continue to provide the
administrative services contemplated by this letter agreement.
5. TERMINATION. This letter agreement will be terminated upon mutual agreement
of the parties hereto in writing.
6. AMENDMENT. This letter agreement may be amended only upon mutual agreement
of the parties hereto in writing.
7. COUNTERPARTS. This letter agreement may be executed in counterparts, each
of which will be deemed an original but all of which will together
constitute one and the same instrument.
8. GOVERNING LAW. This letter agreement will be construed and the provisions
hereof will be interpreted under an in accordance with the laws of the
State of Minnesota.
9. ENTIRE AGREEMENT. This letter agreement, together with the attached
Schedules or attachments, contains the entire agreement among the parties
and supersedes any prior or inconsistent agreements, understandings or
arrangements among the parties with respect to the subject matter of this
letter agreement, all of which are merged herein.
If this letter agreement is consistent with your understanding of the matters we
discussed concerning administrative expense payments, kindly sign below and
return a signed copy to us.
Very truly yours,
AMERICAN PARTNERS LIFE AMERICAN CENTURION LIFE
INSURANCE COMPANY ASSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------- --------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X: Xxxxx
Title: Vice President, Variable Title: Vice President, Variable
Product Development Product Development
ATTEST ATTEST
By: /s/ Xxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxx
---------------- --------------------
Name: Xxxx X. Xxxx Name: Xxxx X. Xxxxxxx
Title: Assistant Secretary Title: General Counsel
and Secretary
Acknowledged and Agreed:
INVESCO FUNDS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
Attachment: Schedule A
SCHEDULE A
MAINTENANCE OF BOOKS AND RECORDS
o Record issuance of shares
o Record transfers (via purchase and sell orders)
o Reconciliation and balancing of the separate accounts at the fund level
in the general ledgers, at various banks and within systems interface
COMMUNICATION WITH THE FUND
o Purchase Orders
- Determination of aggregate amount available for investment by the Fund
- Deposit of receipts at the Fund's custodian (generally by wire
transfer)
- Notification of the custodian of the estimated amount required to pay
dividend or distribution
o Redemption Orders
- Determination of aggregate amount required for redemptions by the Fund
- Notification of the custodian and Fund of cash required to meet
payments
- Cost of share redemptions
o Daily pricing
PROCESSING DISTRIBUTIONS FROM THE FUND
o Process ordinary dividends and capital gains
o Reinvest Fund distributions
REPORTS
o Periodic information reporting to the Fund
FUND-RELATED CONTRACTOWNER SERVICES
o Financial consultant's advice to contractowners with respect to Fund
inquiries (not including information about performance or related to
sales)
o Communications to contractowners regarding fund and subaccounts'
performance
OTHER ADMINISTRATIVE SUPPORT
o Providing other administrative support for the Fund as mutually agreed
between the Insurance Companies and the Company or INVESCO
o Relieving the Company or INVESCO of other usual or incidental
administrative services provided to individual contractowners
