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EXHIBIT 99.1A(8)(a)
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 16th day of September, 1996, between JANUS
ASPEN SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), JANUS CAPITAL CORPORATION, a Colorado corporation
(the "Adviser"), and FEDERAL XXXXXX LIFE ASSURANCE COMPANY, a life insurance
company organized under the laws of the State of Illinois (the "Company"), on
its own behalf and on behalf of each segregated asset account of the Company
set forth on Schedule A, as may be amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Trust has
registered its shares under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the Trust issues shares of beneficial interest, divided into
several series of shares, each series representing an interest in a particular
managed portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has received an order from the SEC granting
Participating Insurance Companies and their separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies and certain qualified pension and retirement plans
(the "Exemptive Order"); and
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WHEREAS, the Company desires to utilize shares of one or more Portfolios
as an investment vehicle for variable life insurance and/or variable annuity
contracts ("Contracts") funded by the Accounts; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Adviser serves as investment adviser to the Trust;
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
SALE OF TRUST SHARES
1.1. The Trust shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Portfolio of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of the
Contracts. The Trustees of the Trust (the "Trustees") may refuse to sell shares
of any Portfolio to any person, or suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees acting in
good faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Portfolio.
1.2. The Trust will redeem any full or fractional shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then
current prospectus of the Trust.
1.3. For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints
the Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Trust
provided that i) such orders are received by the Company in good order prior to
the time the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 11:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for
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trading and on which the Trust calculates its net asset value pursuant to the
rules of the SEC.
1.4. Purchase orders that are transmitted to the Trust in accordance with
Section 1.3 shall be paid for by the Company no later than 12:00 noon New York
time on the same Business Day that the Trust receives notice of the order. The
Trust shall pay and transmit the proceeds of redemption orders that are
transmitted to the Trust in accordance with Section 1.3 no later than 12:00
noon New York time on the same Business Day that the Trust receives notice of
the redemption, except that the Trust reserves the right to postpone payment
upon redemption consistent with Section 22(e) of the 1940 Act and any rules
thereunder. Payments for such purchase orders will be made net of any
redemptions received on the same day as the purchase. Payments shall be made in
federal funds transmitted by wire.
1.5. Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Trust will be recorded in the appropriate title for
each Account or the appropriate subaccount of each Account.
1.6. The Trust shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Trust's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Trust shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7. The Trust shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6 p.m. New York time. Any
material error in the calculation or reporting of net asset value per share
shall be reported immediately upon discovery to the Company. In such event the
Company shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct net asset value per share and the Trust or the
Adviser shall bear the cost of correcting such errors. Any error of a lesser
amount shall be corrected in the next Business Day's net asset value per share.
1.8. The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified
pension and retirement plans to the extent permitted by the Exemptive Order. No
shares of any Portfolio will be sold directly to the general public. The
Company agrees that Trust shares will be used
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only for the purposes of funding the Contracts and Accounts listed in Schedule
A, as amended from time to time.
1.9. The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.8 and
Article IV of this Agreement.
ARTICLE II.
OBLIGATIONS OF THE PARTIES
2.1. The Trust shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder reports,
notices, proxy materials (or similar materials such as voting instruction
solicitation materials), prospectuses and statements of additional information
of the Trust. The Trust shall bear the costs of registration and qualification
of its shares, preparation and filing of the documents listed in this Section
2.1. and all taxes to which an issuer is subject on the issuance and transfer
of its shares.
2.2. At the option of the Company, the Trust shall either (a) provide the
Company (at the Company's expense) with as many copies of the Trust's current
prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the
foregoing, as the Company shall reasonably request; or (b) provide the Company
with a camera ready copy of such documents in a form suitable for printing. The
Trust shall provide the Company with a copy of its statement of additional
information in a form suitable for duplication by the Company. The prospectus
and statement of additional information provided by the Trust shall relate
either to all Portfolios of the Trust or only selected Portfolios of the Trust,
as the Company shall reasonably request. The Trust (at its expense) shall
provide the Company with copies of any Trust-sponsored proxy materials in such
quantity as the Company shall reasonably require for distribution to Contract
owners.
2.3. The Company shall bear the costs of printing and distributing the
Trust's prospectus, statement of additional information, shareholder reports
and other shareholder communications to owners of and applicants for policies
for which the Trust is serving or is to serve as an investment vehicle. The
Company shall bear the costs of distributing proxy materials (or similar
materials such as voting solicitation instructions) to Contract owners. The
Company assumes sole responsibility for ensuring that such materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
2.4. The Company agrees and acknowledges that the Adviser is the sole
owner of the name and xxxx "Janus" and that all use of any designation
comprised in whole
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or part of Janus (a "Xxxxx Xxxx") under this Agreement shall inure to the
benefit of the Adviser. Except as provided in Section 2.5, the Company shall
not use any Xxxxx Xxxx on its own behalf or on behalf of the Accounts or
Contracts in any registration statement, advertisement, sales literature or
other materials relating to the Accounts or Contracts without the prior written
consent of the Adviser. Upon termination of this Agreement for any reason, the
Company shall cease all use of any Xxxxx Xxxx(s) as soon as reasonably
practicable.
2.5. The Company shall furnish, or cause to be furnished, to the Trust (or
its designee), a copy of the initial Contract prospectus and statement of
additional information in which the Trust or the Adviser is first named prior
to the filing of such document with the SEC. The Company shall furnish, or
shall cause to be furnished, to the Trust (or its designee) a copy of each
subsequent Contract prospectus and statement of additional information in which
the Trust or the Adviser is named concurrently with the filing of such document
with the SEC provided that there are no material changes in disclosure related
to the Trust or the Adviser. The Trust may, in its reasonable discretion,
request that the Company modify any references to the Trust or the Adviser in
subsequent filings. The Company shall furnish, or shall cause to be furnished,
to the Trust (or its designee), each piece of sales literature or other
promotional material in which the Trust or the Adviser is named, at least five
Business Days prior to its use or concurrently with the filing of such document
with the National Association of Securities Dealers, Inc. ("NASD"), whichever
is greater. No such material shall be used if the Trust (or its designee)
reasonably objects to such use within five Business Days after receipt of such
material.
2.6 The Trust shall furnish, or cause to be furnished, to the Company (or
its designee), a copy of any initial Trust prospectus and statement of
additional information in which the Company is first named prior to the filing
of such document with the SEC. The Trust shall furnish, or shall cause to be
furnished, to the Company (or its designee) a copy of each subsequent Trust
prospectus and statement of additional information in which the Company is
named concurrently with the filing of such document with the SEC provided that
there are no material changes in disclosure related to the Company. The Company
may, in its reasonable discretion, request that the Trust modify any references
to the Company in subsequent filings. The Trust shall furnish, or shall cause
to be furnished to the Company (or its designee) each piece of sales literature
or other promotional material in which the Company is named, at least five
Business Days prior to its use or concurrently with the filing of such document
with the NASD, whichever is greater. No such material shall be used if the
Company (or its designee) reasonably objects to such use within five Business
Days after receipt of such material.
2.7. The Company shall not give any information or make any
representations or statements on behalf of the Trust or the Adviser or
concerning the Trust or the Adviser
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in connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust shares (as such registration statement
and prospectus may be amended or supplemented from time to time), reports of
the Trust, Trust-sponsored proxy statements, or in sales literature or other
promotional material approved by the Trust or its designee or the Adviser,
except as required by legal process or regulatory authorities or with the
written permission of the Trust or its designee or the Adviser.
2.8. Neither the Trust nor the Adviser shall give any information or make
any representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Contracts (as such registration statement and
prospectus may be amended or supplemented from time to time), or in materials
approved by the Company for distribution including sales literature or other
promotional materials, except as required by legal process or regulatory
authorities or with the written permission of the Company.
2.9. The Trust or the Adviser will provide the Company with as much
advance notice as is reasonably practicable of any material change affecting
the Portfolios (including, but not limited to, any material change in its
registration statement or prospectus affecting the Portfolios and any proxy
solicitation sponsored by the Trust or the Adviser affecting the Portfolios)
and consult with the Company in order to implement any such change in an
orderly manner, recognizing the expenses of changes and attempting to minimize
such expenses by implementing them in conjunction with regular annual updates
of the prospectus for the Contracts.
2.10. The Trust and the Adviser agree to maintain a blanket fidelity bond
or similar coverage for the benefit of the Trust in an amount not less than the
minimal coverage required by Section 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time under the 0000 Xxx.
2.11. So long as, and to the extent that the SEC interprets the 1940 Act
to require pass-through voting privileges for variable policyowners, the
Company will provide pass-through voting privileges to owners of policies whose
cash values are invested, through the Accounts, in shares of the Trust. The
Trust shall require all Participating Insurance Companies to calculate voting
privileges in the same manner and the Company shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by the
Trust. With respect to each Account, the Company will vote shares of the Trust
held by the Account and for which no timely voting instructions from
policyowners are received as well as shares it owns that are held by that
Account, in the same proportion as those shares for which voting instructions
are received. The Company and its agents will in no way recommend or oppose or
interfere with the solicitation of proxies for Trust shares held by Contract
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owners without the prior written consent of the Trust, which consent may be
withheld in the Trust's sole discretion, except in the event that the Company
determines, in reliance on an opinion of counsel, that a proxy proposal would
result in a violation of applicable insurance laws.
2.12. The Trust and Adviser shall use their best efforts to maintain
qualification of each Portfolio as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended ("Code") and
shall notify the Company immediately upon having a reasonable basis for
believing that a Portfolio has ceased to so qualify or that it might not so
qualify in the future. The Trust and the Adviser acknowledge that compliance
with Subchapter M is an essential element of compliance with Section 817(h).
2.13. The Trust and Adviser shall use their best efforts to enable each
Portfolio to comply with the requirements of Section 817(h) of the Code and the
regulations issued thereunder relating to the diversification requirements for
variable life insurance policies and variable annuity contracts, and shall
notify the Company immediately upon having a reasonable basis for believing
that any Portfolio has ceased or might cease to comply.
2.14. The Trust shall provide the Company or its designee with reports
certifying compliance with the aforesaid Section 817(h) diversification and
Subchapter M qualification requirements on a quarterly basis.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of Illinois and
that it has legally and validly established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
3.2. The Company represents and warrants that each of the Accounts (1) has
been registered as a unit investment trust in accordance with the provisions of
the 1940 Act or, alternatively (2) has not been registered in proper reliance
upon an exclusion from registration under the 0000 Xxx.
3.3. The Company represents and warrants that the Contracts or interests
in the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or, alternatively (2) are not registered because they are
properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under
the 1933 Act. The Company further represents
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and warrants that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws; and the sale of
the Contracts shall comply in all material respects with state insurance
suitability requirements.
3.4. The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.5. The Trust represents and warrants that the Trust shares offered and
sold pursuant to this Agreement are registered under the 1933 Act and the Trust
is registered under the 0000 Xxx. The Trust shall amend its registration
statement under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Trust shall register
and qualify its shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Trust.
3.6. The Trust and the Adviser represent and warrant that the investments
of each Portfolio will comply with the diversification requirements set forth
in Section 817(h) of the Code and the rules and regulations thereunder.
3.7. The Adviser represents and warrants that it is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended, and
any applicable state securities laws.
ARTICLE IV.
POTENTIAL CONFLICTS
4.1. The parties acknowledge that the Trust's shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or
(f) a decision by an insurer to disregard the voting instructions of contract
owners. The Trustees shall promptly inform the Company if they determine that
an irreconcilable material conflict exists and the implications thereof.
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4.2. The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3. If it is determined by a majority of the Trustees, or a majority of
the disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its expense and to the extent reasonably practicable (as
determined by the Trustees) take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, which steps could include: (a)
withdrawing the assets allocable to some or all of the Accounts from the Trust
or any Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Trust, or submitting
the question of whether or not such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Any such
withdrawal and termination must take place within six (6) months after the
Trust gives written notice that this provision is being implemented. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of
the Trust.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Trust and terminate this Agreement with
respect to such Account within six (6) months after the Trustees inform the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by
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the foregoing material irreconcilable conflict as determined by a majority of
the disinterested Trustees. Until the end of such six (6) month period, the
Trust shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Company be required to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of
Contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Trustees determine that any proposed action
does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Trust and terminate this
Agreement within six (6) months after the Trustees inform the Company in
writing of the foregoing determination; provided, however, that such withdrawal
and termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested
Trustees.
4.7. The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then the Trust and/or
the Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable.
ARTICLE V.
INDEMNIFICATION
5.1. Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Trust, the Adviser, and each of their Trustees or Directors,
officers, employees and agents and each person, if any, who controls the Trust
or the Adviser within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Article V) against any and all
losses, claims, damages, liabilities
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(including amounts paid in settlement with the written consent of the Company)
or expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Contracts or in the Contracts themselves
or in sales literature generated or approved by the Company on behalf of
the Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article V), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided that
this indemnity shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and was accurately derived from written information
furnished to the Company by or on behalf of the Trust or the Adviser for
use in Company Documents or otherwise for use in connection with the sale
of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived
from Trust Documents as defined in Section 5.2(a)) or wrongful conduct of
the Company or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Trust Documents as
defined in Section 5.2(a) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement or omission
was made in reliance upon and accurately derived from written information
furnished to the Trust or the Adviser by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the terms of
this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company.
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5.2. Indemnification By the Trust and the Adviser. The Trust and Adviser
agree to indemnify and hold harmless the Company and each of its directors,
officers, employees and agents and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Article V) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Adviser) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise, insofar as such
Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Trust (or any amendment or supplement
thereto), (collectively, "Trust Documents" for the purposes of this
Article V), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided that
this indemnity shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and was accurately derived from written information
furnished to the Trust by or on behalf of the Company for use in Trust
Documents or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived
from Company Documents) or wrongful conduct of the Trust or persons under
its control, with respect to the sale or acquisition of the Contracts or
Trust shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Company Documents or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance upon and
accurately derived from written information furnished to the Company by or
on behalf of the Trust; or
(d) arise out of or result from any failure by the Trust or the
Adviser to provide the services or furnish the materials required under the
terms of this Agreement; or
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(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust or Adviser in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Trust or Adviser.
5.3. None of the parties to this Agreement shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4. None of the parties to this Agreement shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other parties in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice
of service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim or
shall not relieve that party from any liability which it may have to the
Indemnified Party in the absence of Sections 5.1 and 5.2.
5.5. In case any such action is brought against the Indemnified Parties,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the
Indemnified Party of an election to assume such defense, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
ARTICLE VI.
TERMINATION
6.1 This Agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of any party, for any reason upon ninety (90) days
advance written notice to the other parties, unless a shorter time period
is agreed to in writing by the parties to this Agreement;
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(b) at the option of the Company, upon one week advance written
notice to the Trust, if the Trust shares are not reasonably available to
meet the requirements of the Contracts as determined by the Company;
(c) at the option of the Company, immediately upon institution of
formal proceedings against the Trust or Adviser by the NASD, SEC, or any
other regulatory body that are deemed by the Company to materially affect
the performance of the obligations under this Agreement;
(d) at the option of the Trust or the Adviser, immediately upon
institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Account, or the Company by
the NASD, SEC, or any other regulatory body that are deemed by the Trust
or Adviser to materially affect the performance of the obligations under
this Agreement;
(e) upon the requisite vote of Contract owners having an interest in
the Trust, or SEC approval of an application pursuant to Section 26(b) of
the 1940 Act, to substitute for the Trust's shares the shares of another
investment company in accordance with the terms of the applicable
Contracts. The Company will give sixty (60) days written notice to the
Trust of any proposed application or vote to replace the Trust's shares.
The Trust and Adviser shall cooperate with the Company in connection with
such application;
(f) upon assignment (as defined in Section 2(a)(4) of the 0000 Xxx)
of the Agreement, unless made with the written consent of all other
parties hereto;
(g) if the Trust's shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of the Trust's
shares as an underlying investment medium for Contracts issued or to be
issued by the Company. Prompt notice shall be given by each party should
such situation occur;
(h) by any party to the Agreement upon a determination by a majority
of the Trustees of the Trust, or a majority of its disinterested
Trustees, that an irreconcilable material conflict exists;
(i) at the option of the Trust or Adviser if the Contracts cease to
qualify as annuity contracts or life insurance contracts, as applicable,
under the Code or if the Contracts are not registered, issued or sold in
accordance with applicable state and/or federal law; or
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(j) if the need for substitution of the shares of another investment
company, pursuant to Section 26(b) of the 1940 Act, arises out of the
Trust's failure to be registered, issued or sold in conformance with
federal law, including applicable tax law, the expenses of obtaining such
order shall be reimbursed by the Trust or Adviser. The Trust and Adviser
shall cooperate with the Company in connection with such application.
6.2 Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares of the
Trust (or any Portfolio) pursuant to the terms and conditions of this Agreement
for all Contracts in effect on the effective date of termination of this
Agreement provided that the Company continues to pay the costs set forth in
Section 2.3.
6.3. The provisions of Articles III and V shall survive the termination of
this Agreement, and the provisions of Article IV and Section 2.11 shall survive
the termination of this Agreement as long as shares of the Trust are held on
behalf of Contract owners in accordance with Section 6.2.
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ARTICLE VII.
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
0 Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to the Adviser:
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
ARTICLE VIII.
MISCELLANEOUS
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
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8.4. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of State of Colorado.
8.5. The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
8.7. 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, which the parties hereto are entitled to under state and
federal laws.
8.8. The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
FEDERAL XXXXXX LIFE ASSURANCE COMPANY
By: /s/ Xxxx X. Xxxxxxx, Xx.
--------------------------
Name: Xxxx X. Xxxxxxx, Xx.
--------------------------
Title: Marketing Officer
--------------------------
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JANUS ASPEN SERIES
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: Vice President
-----------------------------
JANUS CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
-----------------------------
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SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
-------------------------------------- -------------------
FKLA Variable Separate Account Xxxxxx Quick VUL
established May 27, 1994 Policy Form Series
S-4050-A
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