Exhibit 1.A(8)(c)(ii)
EXPENSE ALLOCATION AGREEMENT
This Agreement is made as of the 25th day of August, 1998 by and
between Security Life of Denver, a Colorado corporation ("Security Life"), A I M
Advisors, Inc., a Delaware corporation ("AIM Advisors"), and A I M Distributors,
Inc., a Delaware corporation ("AIM Distributors") (collectively, the "Parties").
W I T N E S S E T H:
WHEREAS, AIM Advisors and AIM Distributors serve as the investment
adviser and principal underwriter, respectively, of the AIM Variable Insurance
Funds, Inc., a Maryland corporation ("Fund"), which currently consists of nine
separate series (each, a "Portfolio"); and
WHEREAS, Security Life has each entered into an agreement, dated
December 3, 1997, with the Fund (a "Participation Agreement") pursuant to which
the Fund will make shares of each Portfolio listed from time to time on Schedule
A of the Agreement available to Security Life at net asset value and with no
sales charges, subject to the terms of the Participation Agreement, to fund
benefits under variable annuity contracts and/or variable life insurance
policies (collectively, "Policies") to be issued by Security Life; and
WHEREAS, the Participation Agreement provides that the Fund will bear
the costs of preparing, filing with the Securities and Exchange Commission and
setting for printing the Fund's prospectus, statement of additional information,
including any amendments or supplements thereto, periodic reports to
shareholders, Fund proxy material and other shareholder communications
(collectively, the "Fund Materials"), and that the Fund will provide Security
Life with camera ready copies of M Fund Materials; and
WHEREAS, the Participation Agreement provides that Security Life shall
print in quantity and deliver to existing owners of Policies ("Policy owners")
the Fund Materials, and that the costs of printing in quantity and delivering to
existing Policy owners such Fund Materials will be borne by Security Life; and
WHEREAS, the Participation Agreement provides that the expenses of
distributing a Portfolio's shares and the Policies will be borne by Security
Life; and
WHEREAS, Security Life 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, and consistent with the best interests of Policy 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 expense;
NOW, THEREFORE in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. EXPENSE ALLOCATIONS
1.1. Fund Materials.
(a) Subject to Section 2 hereof, Security Life, or its
affiliates, shall initially bear the costs of printing in quantity and
distributing all Fund Materials required by law to be distributed to existing
Policy owners who have allocated Policy value to a Portfolio.
(b) Subject to Section 2 hereof, Security Life, or its
affiliates, shall initially bear the costs of printing in quantity and mailing
all Fund Materials to prospective Policy owners.
1.2. Sales Materials.
(a) AIM Advisors and AIM Distributors, as they may allocate
between themselves, shall bear the costs of preparing all sales literature or
other promotional material relating to each Portfolio (collectively, "Fund Sales
Materials").
(b) Subject to Section 2 hereof, Security Life, or its
affiliates, shall initially bear the costs of printing in quantity all Fund
Sales Materials, and preparing and printing in quantity all sales literature or
other promotional material relating to the Policies (collectively, "Security
Life Sales Materials").
(c) Subject to Section 2 hereof, Security Life, or its
affiliates, shall initially bear the costs of mailing all Fund Sales Materials
and Security Life Sales Materials to prospective Policy owners.
1.3. Policy Owner Servicing.
Subject to Section 2 hereof, Security Life, or its affiliates,
shall initially bear all costs of servicing Policy owners who have allocated
Policy value to a Portfolio, which servicing shall include, but is not limited
to, responding to various Policy owner inquiries regarding a Portfolio and
recordkeeping relating thereto.
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SECTION 2. REIMBURSEMENT OF EXPENSES
(a) AIM Advisors and AIM Distributors, as they may allocate between
themselves, shall pay to Security Life, on a pro rata basis, a monthly payment
("Monthly Payment") equal to a percentage of all Portfolios' average monthly net
assets attributable to Policies issued by Security Life at the following annual
rates:
ANNUAL RATE TOTAL AVERAGE MONTHLY NET ASSETS FOR ALL PORTFOLIOS
0.15% Assets up to $ 100 million
0.20% Assets in excess of $ 100 million
(b) For purposes of calculating the amount of the expense
reimbursement, described in (a) above, the "average monthly 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 Funds' Board of Directors, for each business day of such month,
by (ii) the number of such business days; and
(c) AIM Advisors or AIM Distributors will calculate the payment
contemplated by this Section 2 at the end of each calendar month and will make
such payment to Security Life within thirty (30) days thereafter. Each payment
will be accompanied by a statement showing the calculation of the monthly
amounts payable by AIM Advisors or AIM Distributors and such other supporting
data as may be reasonably requested by Security Life.
(e) The form of payment made by AIM Advisors or AIM Distributors
pursuant to this Section 2 will be cash; provided, however, that AIM Advisors or
AIM Distributors and Security Life may from time to time mutually agree in
writing to payments by AIM Advisors or AIM Distributors of a portion of the
payments made pursuant to this Section 2 in the form of research services or
other forms of payment.
(f) From time to time, the Parties hereto shall review the Monthly
Payment to determine whether it exceeds or is reasonably expected to exceed the
incurred and anticipated costs, over time, of Security Life specified in Section
1 hereof. The Parties agree to negotiate in good faith a reduction to the
Monthly Payment as necessary to eliminate any such excess, or such other change
as may be necessary to reflect the actual costs of the services provided
hereunder.
SECTION 3. TERM OF AGREEMENT
This Agreement shall continue in effect for so long as the AIM Advisors 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 Policy value or any monies
attributable Security Life is allocated to a Portfolio.
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SECTION 4. TERMINATION
This Agreement may be terminated upon mutual agreement of the Parties
hereto in writing.
SECTION 5. AMENDMENT
This Agreement may be amended only upon mutual agreement of the Parties
hereto in writing.
SECTION 6. 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:
Security Life of Denver
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇ ) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Assistant General Counsel
A I M Advisors, Inc. or A I M Distributors, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
SECTION 7. APPLICABLE LAW
Except insofar as the 1940 Act or other federal laws and regulations
may be controlling, this Agreement will be construed and the provisions hereof
interpreted under and in accordance with Delaware law, without regard for that
state's principles of conflict of laws.
SECTION 8. 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.
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SECTION 9. 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.
SECTION 10. 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.
SECTION 11. 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.
SECURITY LIFE OF DENVER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Title: President
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A I M ADVISORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President
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A I M DISTRIBUTORS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: President
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