SERVICE AGREEMENT
This Agreement is made as of the 1st day of January, 1998, by and between
INVESCO Funds Group, Inc. ("INVESCO"), and Security Life of Denver Insurance
Company ("Security Life"), a Colorado corporation, collectively, the "Parties."
WITNESSETH:
WHEREAS INVESCO serves as the distributor for the INVESCO Variable
Investment Funds, Inc. ( the "Company"); and
WHEREAS 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:
I. SERVICES 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 lNVESCO 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 the Company by virtue of having a sole shareholder, Security Life, and
having that shareholder be responsible for the servicing of the Contract Owners,
INVESCO 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 VIF-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-High Yield and INVESCO
VIF-Utilities Portfolios, in connection with the expenses incurred by
Security Life under Section II 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 another Party in good faith.
c) This Agreement shall not modify any of the provisions of Article III of the
Participation Agreement, but shall supplement those provisions.
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, 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 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 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: Xxxx X. Xxxxx, Esq.
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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Xxxxxx X. Xxxxxx
Senior Vice President & Treasurer
SECURITY LIFE OF DENVER INSURANCE COMPANY
By:/s/ Xxxxx X. Hard
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Xxxxx X. Hard
Senior Vice President
