Exhibit 8.6(b)
ADMINISTRATIVE SERVICES AGREEMENT
FEDERAL XXXXXX LIFE ASSURANCE COMPANY ("INSURER") and INVESCO FUNDS GROUP,
INC. ("INVESCO") (collectively, the "Parties") mutually agree to the
arrangements set forth in this Administrative Services Agreement (the
"Agreement"), dated as of , 2003.
----------
WHEREAS, INVESCO is the investment adviser to INVESCO Variable Investment
Funds (the "Fund"); and
WHEREAS, INVESCO has entered into an Administrative Services Agreement,
dated February 28, 1997, as amended July 6, 1998, with the Fund (the "Master
Agreement") pursuant to which it has agreed to provide, or arrange to provide,
certain administrative services, including such services as may be requested by
the Fund's Board of Directors from time to time; and
WHEREAS, INSURER issues variable life insurance policies and/or variable
annuity contracts (collectively, the "Contracts"); and
WHEREAS, INSURER has entered into a participation agreement, dated
--------
(the "Participation Agreement") with the Fund, pursuant to which the Fund has
agreed to make shares of certain of its portfolios ("Portfolios") available for
purchase by one or more of INSURER's separate accounts or divisions thereof
(each, a "Separate Account"), in connection with the allocation by Contract
owners of purchase payments to corresponding investment options offered under
the Contracts; and
WHEREAS, INSURER and INVESCO expect that the Fund, and its Portfolios, can
derive substantial savings in administrative expenses by virtue of having one or
more Separate Accounts of INSURER each as a single shareholder of record of
Portfolio shares, rather than having numerous public shareholders of such
shares; and
WHEREAS, INSURER and INVESCO expect that the Fund, and its Portfolios, can
derive such substantial savings because INSURER performs the administrative
services listed on Schedule A hereto for the Fund in connection with the
Contracts issued by INSURER; and
WHEREAS, INSURER has no contractual or other legal obligation to perform
such administrative services, other than pursuant to this Agreement and the
Participation Agreement; and
WHEREAS, INSURER desires to be compensated for providing such
administrative services; and
WHEREAS, INVESCO desires that the Fund benefit from the lower
administrative expenses resulting from the administrative services performed by
INSURER; and
WHEREAS, INVESCO desires to retain the administrative services of INSURER
and to
Page 1 of 7
compensate INSURER for providing such administrative services;
NOW, THEREFORE, the Parties agree as follows:
Section 1. Administrative Services; Payments Therefor.
(a) INSURER shall provide the administrative services set out in Schedule A
hereto and made a part hereof, as the same may be amended from time to time. For
such services, INVESCO agrees to pay to INSURER a quarterly fee ("Quarterly
Fee") equal to a percentage of the average daily net assets of the Fund
attributable to the Contracts issued by INSURER ("INSURER Fund Assets") at the
following annual rates:
(i) With respect to the Zurich Xxxxxx LifeInvestor, Xxxxxxx
Destinations Life, and the Xxxxxxx Destinations Contracts, the
following shall apply:
INVESCO shall pay to INSURER a Quarterly Fee equal to 0.30% of
the average daily net assets invested in each Portfolio and
attributable to such Contracts offered by INSURER. The payment of
the Quarterly Fee shall commence on the date first indicated
above.
(ii) With respect to the Xxxxxxx ZS4 Contract, the following shall
apply:
INVESCO shall pay to INSURER a Quarterly Fee equal to a
percentage of the average daily net assets attributable to the
Xxxxxxx ZS4 Contract offered by INSURER and invested in the
INVESCO VIF Utilities Fund, at the following rate:
INSURER FUND QUARTERLY FEE
ASSETS ANNUAL RATE
---------------- -------------
$0-25 Million 0.30%
$25-50 Million 0.35%
$50-100 Million 0.40%
$100-150 Million 0.45%
$150 + Million 0.50%
(b) INVESCO shall calculate the Quarterly Fee at the end of each calendar
quarter and will make such payment to INSURER, without demand or notice by
INSURER, within 30 days thereafter, in a manner mutually agreed upon by the
Parties from time to time.
Page 2 of 7
(c) From time to time, the Parties shall review the Quarterly Fee to
determine whether it exceeds or is reasonably expected to exceed the incurred
and anticipated costs, over time, of INSURER. The Parties agree to negotiate in
good faith a reduction to the Quarterly Fee as necessary to eliminate any such
excess or as necessary to reflect a reduction in the fee paid by the Fund to
INVESCO pursuant to the Master Agreement.
Section 2. Nature of Payments.
The Parties to this Agreement recognize and agree that INVESCO's payments
hereunder are for administrative services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution of
Contracts or of Portfolio shares, and are not otherwise related to investment
advisory or distribution services or expenses. INSURER represents and warrants
that the fees to be paid by INVESCO for services to be rendered by INSURER
pursuant to the terms of this Agreement are to compensate the INSURER for
providing administrative services to the Fund, and are not designed to reimburse
or compensate INSURER for providing administrative services with respect to the
Contracts or any Separate Account.
Section 3. Term and Termination.
Any Party may terminate this Agreement, without penalty, on 60 days written
notice to the other Party. Unless so terminated, this Agreement shall continue
in effect for so long as INVESCO 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 INSURER provides the services contemplated hereunder with respect
to Contracts under which values r monies are allocated to a Portfolio.
Section 4. Amendment.
This Agreement may be amended upon mutual agreement of the Parties in
writing.
Section 5. Notices.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered to:
Federal Xxxxxx Life Assurance Company
Street address
City, State Zip
Facsimile: (___)
Attention: name.
Page 3 of 7
INVESCO Funds Group, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxxx, Esquire
Section 6. Miscellaneous.
(a) Successors and Assigns. This Agreement shall be binding upon the
Parties and their transferees, successors and assigns. The benefits of and the
right to enforce this Agreement shall accrue to the Parties and their
transferees, successors and assigns.
(b) Assignment. Neither this Agreement nor any of the rights, obligations
or liabilities of any Party hereto shall be assigned without the written consent
of the other Party.
(c) Intended Beneficiaries. Nothing in this Agreement shall be construed to
give any person or entity other than the Parties, as well as the Fund, any legal
or equitable claim, right or remedy. Rather, this Agreement is intended to be
for the sole and exclusive benefit of the Parties, as well as the Fund.
(d) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall together constitute one
and the same instrument.
(e) Applicable Law. This Agreement shall be interpreted, construed, and
enforced in accordance with the laws of the State of Delaware without reference
to the conflict of law principles thereof.
(f) Severability. If any portion of this Agreement shall be found to be
invalid or unenforceable by a court or tribunal or regulatory agency of
competent jurisdiction, the remainder shall not be affected thereby, but shall
have the same force and effect as if the invalid or unenforceable portion had
not been inserted.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
of first above written.
INVESCO Funds Group, Inc. Federal Xxxxxx Life Assurance Company
By: By:
------------------------------------ ---------------------------------
Name: Xxxxxx X. Xxxxxx Name:
-------------------------------
Title: Senior Vice President & Treasurer Title:
------------------------------
Page 4 of 7
SCHEDULE A
ADMINISTRATIVE SERVICES FOR
INVESCO VARIABLE INSURANCE FUNDS
INSURER shall provide certain administrative services respecting the
operations of the Fund, as set forth below. This Schedule, which may be amended
from time to time as mutually agreed upon by INSURER and INVESCO, constitutes an
integral part of the Agreement to which it is attached. Capitalized terms used
herein shall, unless otherwise noted, have the same meaning as the defined terms
in the Agreement to which this Schedule relates.
A. Records of Portfolio Share Transactions; Miscellaneous Records
1. INSURER shall maintain master accounts with the Fund, on behalf of each
Portfolio, which accounts shall bear the name of INSURER as the record owner of
Portfolio shares on behalf of each Separate Account investing in the Portfolio.
2. INSURER shall maintain a daily journal setting out the number of shares
of each Portfolio purchased, redeemed or exchanged by Contract owners each day,
as well as the net purchase or redemption orders for Portfolio shares submitted
each day, to assist INVESCO, the Fund and/or the Fund's transfer agent in
tracking and recording Portfolio share transactions, and to facilitate the
computation of each Portfolio's net asset value per share. INSURER shall
promptly provide INVESCO, the Fund, and the Fund's transfer agent with a copy of
such journal entries or information appearing thereon in such format as may be
reasonably requested from time to time. INSURER shall provide such other
assistance to INVESCO, the Fund, and the Fund's transfer agent as may be
necessary to cause various Portfolio share transactions effected by Contract
owners to be properly reflected on the books and records of the Fund.
3. In addition to the foregoing records, and without limitation, INSURER
shall maintain and preserve all records as required by law to be maintained and
preserved in connection with providing administrative services hereunder.
B. Order Placement and Payment
1. INSURER shall determine the net amount to be transmitted to the Separate
Accounts as a result of redemptions of each Portfolio's shares based on Contract
owner redemption requests and shall disburse or credit to the Separate Accounts
all proceeds of redemptions of Portfolio shares. INSURER shall notify the Fund
of the cash required to meet redemption payments.
2. INSURER shall determine the net amount to be transmitted to the Fund as
a result of purchases of Portfolio shares based on Contract owner purchase
payments and transfers allocated to the Separate Accounts investing in each
Portfolio. INSURER shall transmit net purchase payments to the Fund's custodian.
Page 5 of 7
C. Accounting Services
INSURER shall perform miscellaneous accounting services as may be
reasonably requested from time to time by INVESCO, which services shall relate
to the business contemplated by the Participation Agreement between INSURER and
the Fund, as amended from time to time. Such services shall include, without
limitation, periodic reconciliation and balancing of INSURER's books and records
with those of the Fund with respect to such matters as cash accounts, Portfolio
share purchase and redemption orders placed with the Fund, dividend and
distribution payments by the Fund, and such other accounting matters that may
arise from time to time in connection with the operations of the Fund as related
to the business contemplated by the Participation Agreement.
D. Reports
INSURER acknowledges that INVESCO may, from time to time, be called upon by
the Fund's Board of Trustees (the "Board"), to provide various types of
information pertaining to the operations of the Fund and related matters, and
that INVESCO also may, from time to time, decide to provide such information to
the Board in its own discretion. Accordingly, INSURER agrees to provide INVESCO
with such assistance as INVESCO may reasonably request so that INVESCO can
report such information to the Fund's Board in a timely manner. INSURER
acknowledges that such information and assistance shall be in addition to the
information and assistance required of INSURER pursuant to the Fund's mixed and
shared funding SEC exemptive order, described in the Participation Agreement.
INSURER further agrees to provide INVESCO with such assistance as INVESCO
may reasonably request with respect to the preparation and submission of reports
and other documents pertaining to the Fund to appropriate regulatory bodies and
third party reporting services.
E. Fund-related Contract Owner Services
INSURER agrees to print and distribute, in a timely manner, prospectuses,
statements of additional information, supplements thereto, periodic reports and
any other materials of the Fund required by law or otherwise to be given to its
shareholders, including, without limitation, Contract owners investing in
Portfolio shares, provided, that with respect to proxy materials, INSURER shall
bear the expenses associated with (i) text composition, printing, mailing,
distributing, and tabulating proxy materials, including voting instruction
solicitation materials, sent to policy owners with respect to proxy
solicitations related to the Account or related to matters requested by INSURER
and agreed to by the Fund, (ii) making typesetting and other customization
changes to Fund proxy materials, which changes are requested by INSURER and
agreed to by the Fund, and (iii) mailing and distributing Fund proxy materials.
INSURER further agrees to provide telephonic support for Contract owners,
including, without limitation, advice with respect to inquiries about the Fund
and each Portfolio thereof (not including information about performance or
related to sales), communicating with Contract owners about Fund (and Separate
Account) performance, and assisting with proxy solicitations, specifically with
respect to soliciting voting instructions from Contract owners.
Page 6 of 7
F. Miscellaneous Services
INSURER shall provide such other administrative support to the Fund as
mutually agreed between INSURER and INVESCO or the Fund from time to time.
INSURER shall, from time to time, relieve the Fund of other usual or incidental
administration services of the type ordinarily borne by mutual funds that offer
shares to individual members of the general public.
Page 7 of 7
