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[JANUS CAPITAL CORPORATION LETTERHEAD] EXHIBIT 1-A(8)(a)(i)
September 4, 1996
Xx. Xxxx X. Xxxxxxx, Xx.
Marketing Officer
Federal Xxxxxx Life Assurance Company
0 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000-0000
Dear Xx. Xxxxxxx:
This letter sets forth the agreement between Federal Xxxxxx Life
Assurance Company (the "Company"), and Janus Capital Corporation (the
"Adviser"), concerning certain administrative services.
1. Administrative Services and Expenses. Administrative services for
the separate accounts of the Company (the "Accounts") which invest in
one or more portfolios (collectively, the "Portfolios") of Janus Aspen
Series (the "Trust") pursuant to the Participation Agreement among the
Company, the Adviser, and the Trust dated September 16, 1996 (the
"Participation Agreement"), and for purchasers of variable annuity or
life insurance contracts (the "Contracts") issued through the Account
are the responsibility of the Company. Administrative services for the
Portfolios, in which the Account invests, and for purchasers of shares
of the Portfolios, are the responsibility of the Trust. These
administrative services the Company intends to provide to the Trust and
its Portfolios are set forth in Schedule A attached to this letter
agreement, which may be amended from time to time.
2. Service Fee. In consideration of the anticipated administrative
expense savings resulting to the Trust from the Company's services, the
Adviser agrees to pay the Company a fee ("Service Fee"), computed daily
and paid monthly in arrears, equal to fifteen (15) basis points (0.15%)
applied to the average monthly value of the total number of shares of
the Portfolios held in the subaccounts of the Account, commencing with
the month in which the average monthly value of investments by the
subaccounts of the Account, together with any investments by the
separate accounts of Xxxxxx Investors Life Insurance Company in the
Portfolios, reaches $50 million. The Service Fee will be correspondingly
suspended if the average monthly market value of such investments drops
below $50 million in any month.
For purposes of this Paragraph 2, the average monthly value of the
shares of the Portfolios will be based on the daily net asset values
reported by such Portfolios to the Company divided by the number of
days in the month.
3. Nature of Payments. The parties to this letter agreement
recognize and agree that the Adviser's payments to the Company
relate to administrative services only and do not
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constitute payment in any manner for administrative services provided
by the Company to the Account or to the Contracts, for investment
advisory services or for costs of distribution of Contracts or of shares
of the Portfolios, and that these payments are not otherwise related to
investment advisory or distribution services or expenses.
4. Representations and Warranties.
a. The Adviser represents and warrants that in the event the
Trustees of the Trust approve the payment of all or any portion of
the Service Fee by the Trust, the Trust will calculate in the same
manner the Service Fee to all insurance companies that have
entered into Service Fee arrangements with the Adviser and/or the
Trust (the "Participating Insurance Companies").
b. The Company represents and warrants that: (1) it and
its employees and agents meet the requirements of applicable law,
including but not limited to federal and state securities law and
state insurance law, for the performance of services contemplated
herein; and (2) it will not purchase Trust shares of the
Portfolios with Account assets derived from tax-qualified
retirement plans except indirectly, through Contracts purchased in
connection with such plans and that the Service Fee does not
include any payment to the Company that is prohibited under the
Employee Retirement Income Securities Act of 1974 ("ERISA") with
respect to any assets of a Contract owner invested in a Contract
using the Portfolios as investment vehicles.
c. The Company represents, warrants and agrees that: (1)
the payment of the Service Fee by the Adviser is designed to
reimburse the Company for providing administrative services to the
Trust that the Trust would customarily pay and does not represent
reimbursement to the Company for providing administrative services
to the Contract or Account as described in Section 26 of the
Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations thereunder; (2) no portion of the Service Fee will be
rebated by the Company to any Contract owner; and (3) if the
Company or the Adviser, with advice of counsel, determines that it
is required or appropriate under applicable law, the Company will
disclose to each Contract owner the existence of the Service Fee
received by the Company pursuant to this letter agreement and will
disclose the amount of the Service Fee, if any, that is paid by
the Trust.
5. Indemnification
a. The Company agrees to indemnify and hold harmless the
Adviser and its directors, officers, and employees from any and
all loss, liability and expense resulting from any gross
negligence or willful wrongful act of the Company in performing
its services under this letter agreement, from the inaccuracy or
breach of any representation made in this letter agreement, or
from a breach of a material
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provision of this letter agreement, except to the extent such
loss, liability or expense is the result of the Adviser's willful
misfeasance, bad faith or gross negligence in the performance of
its duties.
b. The Adviser agrees to indemnify and hold harmless the
Company and its directors, officers, agents and employees from any
and all loss, liability and expense resulting from any gross
negligence or willful wrongful act of the Adviser in performing
its services under this letter agreement, from the inaccuracy or
breach of any representation made in this letter agreement, or
from a breach of a material provision of this letter agreement,
except to the extent such loss, liability or expense is the result
of the Company's willful misfeasance, bad faith or gross
negligence in the performance of its duties.
6. Termination.
a. Either party may terminate this letter agreement, without penalty,
on sixty (60) days' written notice to the other party.
b. This letter agreement will terminate at the option of either party
in the event of the termination of the Participation Agreement.
c. This letter agreement will terminate immediately upon
the determination of either party, with the advice of counsel,
that the payment of the Service Fee is in conflict with applicable
law.
d. In the event of the termination of either the
Participation Agreement among the Adviser, the Trust and Xxxxxx
Life Insurance Company or the letter agreement between the Adviser
and Xxxxxx Life Insurance Company that is substantially similar to
this letter agreement, the assets of Xxxxxx Life Insurance
Company's separate accounts will no longer be taken into account
in determining whether the $50 million minimum set forth in
Section 2 has been reached.
7. Amendment. This letter agreement may be amended only upon mutual
agreement of the parties hereto in writing.
8. Confidentiality. The terms of this letter agreement will
be treated as confidential and will not be disclosed to the public or any
outside party except with each party's prior written consent, as required
by law or judicial process or as provided in paragraph 4c herein.
9. Assignment. This letter agreement may not be assigned (as
that term is defined in the 1940 Act) by either party without the prior
written approval of the other party, which approval will not be
unreasonably withheld, except that the Adviser may assign its obligations
under this letter agreement, including the payment of all or any portion of
the Service Fee, to the trust upon thirty (30) days' written notice to the
Company.
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10. Governing Law. This letter agreement will be construed and
the provisions hereof interpreted under and in accordance with the laws of
the State of Colorado.
11. 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.
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,
JANUS CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Title: Vice President
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FEDERAL XXXXXX LIFE ASSURANCE COMPANY
By : /s/ Xxxx X. Xxxxxxx, Xx.
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Name: Xxxx X. Xxxxxxx, Xx.
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Title: Marketing Officer
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Attachment: Schedule A
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Schedule A
Pursuant to the letter agreement to which this Schedule is attached, the
Company will perform administrative services including, but not limited to, the
following:
1. Print and mail to Contract owners copies of the Portfolios'
prospectuses, proxy materials, periodic fund reports to shareholders and other
materials that the Trust is required by law or otherwise to provide to its
shareholders.
2. Provide Contract owner services including, but not limited to,
financial consultants' advice with respect to inquiries related to the
Portfolios (not including information about performance or related to sales)
and communicating with Contract owners about Portfolio (and subaccount)
performance.
3. Provide other administrative support for the Trust as mutually
agreed to by the Company and the Adviser and relieve the Trust of other usual
or incidental administrative services provided to individual Contract owners.
