SERVICE AGREEMENT
This Agreement is made as of the 8th day of September, 1998, by and between
INVESCO Funds Group, Inc. ("INVESCO"), the distributor for the INVESCO Variable
Investment Funds, Inc. ( the "Company"), and Security Life of Denver Insurance
Company ("Security Life"), a Colorado corporation, collectively, the "Parties."
WITNESSETH:
WHERAS Security Life has entered into an agreement, dated August 26, 1994,
and amended February 22, 1995, with the Company and INVESCO (the "Participation
Agreement") pursuant to which INVESCO will make shares of each of its Portfolios
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 Participation Agreement; and
WHEREAS the Participation Agreement provides that the Company will bear the
costs of preparing, filing with the Securities and Exchange Commission, printing
or duplicating and mailing the Company's (or the Portfolios') 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 Participation Agreement provides that the Company, 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 Participation 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;
NOW THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
X.Xxxxxxxx Provided:
Security Life agrees to provide services to the Company and INVESCO
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 INVESCO, The
Company or its Portfolios;
b) providing information to the INVESCO or the Company and to
Contract Owners with respect to shares attributable to Contract Owner
accounts;
c) facilitate the printing and mailing of shareholder
communications from INVESCO or the Company as may be required pursuant
to Article III of the Participation Agreement;
d) communication directly with Contract Owners concerning INVESCO
or the Company's operations;
e) providing such similar services as the INVESCO or the Company
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 except as may otherwise be provided in
the Participation Agreement;
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.
III.Payment of Expenses,:
In recognition of the substantial savings in administrative expenses to
INVESCO and th Company by virtue of having a sole shareholder, Security Life,
and having that shareholder be responsible for the servicing of the Contract
Owners, INVESCO or its affiliates will pay an administrative service fee to
Security Life, as described below:
a) INVESCO shall pay to Security Life a quarterly fee
(hereinafter, the "Quarterly Fee") equal to a percentage of the
average daily net assets of the Portfolio attributable to Contracts
offered by Security Life, at the annual rate of .20% on the aggregate
net assets of the INVESCO VIF-Industrial Income and the INVESCO
VIP-Total Return and the INVESCO VIF-Small Company Growth Portfolios,
and at the annual rate of. 15% on the aggregate net assets of the
INVESCO VIF-I-Egh Yield and INVESCO VIF-Utilities Portfolio, in
connection with the expenses incurred by Life Company under Section 11
hereof The payment of the Quarterly Fee shall commence as of the
stated effective date of this Agreement but shall be payable only on
each Portfolio which has reached $30 million in total net assets.
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.
This Agreement shall not modify any of the provisions of Article III of
the Participation Agreement, but shall supplement those provisions.
c) This Agreement shall supercede paragraph 2.5 of the
Participation Agreement.
IV. Term of Agreement
This Agreement shall continue in effect for so long as Security Life or its
successor(s) in interest, or any affiliate thereof, continues to hold shares of
the Company or its portfolios, and continues to perform in a similar capacity
for the Company and INVESCO.
V. Indemnification:
a) Security Life agrees to indemnify and hold harmless the
Company, INVESCO and their 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 Company or
INVESCO in the performance of its duties, or by reason of the reckless
disregard of their obligations and duties under this Agreement.
b) The Company and INVESCO agree 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 the Company or INVESCO 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.
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:
INVESCO Funds Group, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: General Counsel
FAX: 000 000-0000
Security Life of Denver Insurance Company
0000 Xxxxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
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 Colorado 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.
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.
INVESCO Funds Group, Inc.
By:/s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Sr. Vice President & Treasurer
Security Life of Denver Insurance Company
By:/s/ Xxxxx X. Hard
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Name: Xxxxx X. Hard
Title:- Senior Vice President