Exhibit (8)(rr)(i)
PARTICIPATION AGREEMENT
AMONG
RYDEX VARIABLE TRUST,
SBL FUND,
RYDEX DISTRIBUTORS, LLC
AND
[INSURANCE COMPANY]
THIS AGREEMENT, made and entered into as of this ______ day of
___________, 2011 by and among JEFFERSON NATIONAL LIFE INSURANCE COMPANY
(hereinafter the "Company"), a Texas life insurance company, on its own behalf
and on behalf of each Account (defined below), RYDEX VARIABLE TRUST, a Delaware
statutory trust, SBL FUND, a Kansas corporation and RYDEX DISTRIBUTORS, LLC
(hereinafter the "Underwriter"), a Kansas limited liability company.
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is a
member in good standing of the Financial Industry Regulatory Authority ("FINRA")
and serves as the principal underwriter for Rydex Variable Trust and SBL Fund,
each a registered investment company (each a "Fund"); and
WHEREAS, the Funds engage in business as open-end investment management
companies and are available to act as (i) investment vehicles for separate
accounts established by insurance companies for individual and group life
insurance policies and individual and group annuity contracts with variable
accumulation and/or pay-out provisions (hereinafter referred to individually
and/or collectively as "Variable Insurance Products") and (ii) investment
vehicles for certain qualified pension and retirement plans (hereinafter
"Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Funds as investment
vehicles under their Variable Insurance Products enter into participation
agreements with the Funds and the Underwriter (the "Participating Insurance
Companies"); and
WHEREAS, beneficial interests in the Funds are divided into several series
of interests or shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement (each such series is hereinafter referred to as a
"Series"); and
WHEREAS, each Fund has obtained an order from the Securities and Exchange
Commission, dated February 25, 1999 (File No. 812-11344), granting Participating
Insurance Companies and Variable Insurance Product separate accounts exemptions
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended
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(hereinafter the "1940 Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of each Fund to be sold to
and held by Variable Insurance Product separate accounts of both affiliated and
unaffiliated life insurance companies and Qualified Plans (hereinafter each a
"Mixed and Shared Funding Exemptive Order"); and
WHEREAS, each Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Variable Insurance Products issued or that will be issued by
the Company ("Contracts") have been or will be registered by the Company under
the 1933 Act, unless such Contracts are exempt from registration thereunder; and
WHEREAS, the Company has established each account as a duly organized,
validly existing segregated asset account, by resolution or under authority of
the Board of Directors of the Company to set aside and invest assets
attributable to the aforementioned Contracts (each an "Account"), and the
Company has registered or will register each Account as a unit investment trust
under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Series on behalf of
each Account to fund the aforementioned Contracts, and the Underwriter is
authorized to sell such shares to the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Funds, and the Underwriter each agree as follows:
ARTICLE I. PURCHASE OF FUND SHARES
1.1. The Funds agree to make available for purchase by the Company shares
of the Funds and shall execute orders placed for each Account on a daily basis
at the net asset value next computed after receipt by the Funds or their
designee of such order. For purposes of this Section, the Company shall be the
designee of the Funds for receipt of such orders from each Account and receipt
by such designee shall constitute receipt by the Funds; provided that the
Company uses its best efforts to deliver the order to the Funds by 9:00 a.m.
Eastern time on the next following Business Day, and provided further that the
final order is received by the Funds not later than 9:30 a.m. on such Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Funds calculates their net asset value
pursuant to the rules of the Securities and Exchange Commission.
1.2. The Funds, so long as this Agreement is in effect, agree to make
their shares available indefinitely for purchase at the applicable net asset
value per share by the Company and its Accounts on those days on which the Funds
calculate their net asset values pursuant to rules of the Securities and
Exchange Commission and the Funds shall use best efforts to
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calculate such net asset value on each day which the New York Stock Exchange is
open for trading. Notwithstanding the foregoing, the Board of Trustees of Rydex
Variable Trust and the Board of Directors of SBL Fund (hereinafter the "Boards")
may refuse to permit the Funds to sell shares of the Funds to any person, or
suspend or terminate the offering of shares of any Series if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board 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 Fund.
1.3. The Funds agree that shares of the Funds will be sold only to
Participating Insurance Companies and their separate accounts and to certain
Qualified Plans all in accordance with the requirement of Section 817(h)(1) of
the Internal Revenue Code of 1986, as amended ("Code") and Treasury regulation
1.817-5(f). No shares of any Fund will be sold to the general public.
1.4. The Funds will not make their shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as in Section 1.3 of Article I, Section 2.4 of Article
II, Section 3.5 of Article III, Article VI and Article VII of this Agreement is
in effect to govern such sales.
1.5. The Funds agree to redeem for cash, on the Company's request, any
full or fractional shares of a Fund held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt by a Fund or
its designee of the request for redemption. Subject to and in accordance with
applicable laws, and subject to written consent of the Company, the Funds may
redeem shares for assets other than cash. For purposes of this Section 1.5, the
Company shall be the designee of the Funds for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Funds; provided that the Company uses its best efforts to deliver
the order to the Funds by 9:00 a.m. Eastern time on the next following Business
Day, and provided further that the final order is received by the Funds not
later than 9:30 a.m. on such Business Day. Payment by the Funds of redemption
proceeds shall be made to the Company in federal funds transmitted by wire by
3:00 p.m. Eastern time on the Business Day that the Funds receive actual notice
of an order to redeem, provided however, that the Funds reserve the right to
postpone the date of payment in accordance with the 1940 Act.
1.6. The Company agrees that purchases and redemptions of Fund shares
offered by the then current prospectuses of the Funds shall be made in
accordance with the provisions of such prospectuses, provided however, that the
provisions of the then current Fund prospectuses will not be deemed to alter any
provision of Section 1.1 or 1.5.
1.7. The Company shall pay for Fund shares on the Business Day that it
receives actual notice of a purchase order. Payment shall be in federal funds
transmitted by wire by 3 p.m. Eastern. For purposes of Section 2.8 and 2.9, upon
receipt by the Funds of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Funds.
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1.8. Issuance and transfer of the Funds' shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Funds will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Funds shall furnish same day notice (by electronic means, wire or
telephone, followed by written confirmation) to the Company, by 6:30 p.m.
Eastern time, of any income, dividends or capital gain distributions payable on
Fund shares. The Company hereby elects to receive all such income dividends and
capital gain distributions as are payable on the Fund shares in additional
shares of that Fund. The Company reserves the right to revoke this election and
to receive all such income dividends and capital gain distributions in cash. The
Funds shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Funds shall make the net asset value per share for each Fund
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 6:30 p.m. Eastern time. If the
Funds provide the Company with materially incorrect share net asset value
information, the Company on behalf of the Account, shall be entitled to an
adjustment to the number of shares purchased or redeemed to reflect the correct
share net asset value. Any material error in the calculation of the net asset
value per share, dividend or capital gain information shall be reported promptly
upon discovery to the Company. In the event that any such material error is the
result of the negligence of the Funds, or its designated agent for calculating
the net asset value, any administrative or other costs or losses incurred for
correcting underlying Contract owner accounts shall be at Underwriter's expense.
1.11. Except as noted on Schedule A, it is agreed that Company, on behalf
of an Account, has access under this Agreement to all Series and all share
classes thereof (including Series and share classes created in the future) and
that it shall not be necessary to list the Accounts, the Contracts, the Series
or the share classes on Schedule A. It is further agreed that a segregated asset
account of the Company shall become an "Account" hereunder as of the date such
segregated asset account first invests in a Fund. A series of the Funds shall
become a "Series" hereunder as of the date an Account first invests in such
Series. Notwithstanding the fact that Accounts, Contracts and Series need not be
listed on Schedule A, the parties may, in their discretion and for convenience
and ease of reference only, include one or more Accounts, Contracts and Series
on Schedule A from time to time. [NTD: I don't believe trading through NSCC is
covered in this agreement. Do we want to?]
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
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under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Texas state insurance laws and has registered or, prior to any issuance or
sale of the Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Funds represent and warrant that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with applicable federal and state securities
laws and that the Funds are and shall remain registered under the 0000 Xxx. The
Funds shall amend the registration statements for their shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of shares. The Funds shall register and qualify the shares
for sale in accordance with the laws of the various states, to the extent
required by applicable state law.
2.3. The Funds represent and warrant that each Series is currently
qualified as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and that they will maintain such
qualification (under Subchapter M or any successor or similar provision) and
that the Funds will notify the Company immediately upon having a reasonable
basis for believing that they have ceased to so qualify or that they might not
so qualify in the future. The Funds represent and warrant that they have
complied and will continue to comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 (or any successor or similar provisions) relating to
the diversification requirements for variable annuity, endowment, or life
insurance contracts and that the Funds will notify the Company immediately upon
having a reasonable basis for believing that they have ceased to so comply or
that they might not so comply in the future.
2.4. The Company represents and warrants that the Contracts are currently
treated as life insurance policies or annuity contracts, under applicable
provisions of the Code and that it will maintain such treatment and that it will
notify the Funds immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.5. The Funds represent that to the extent that they decide to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, they will have
the Boards approve any plan under Rule 12b-1 to finance distribution expenses to
the extent such approval is required by the 0000 Xxx.
2.6. The Funds represent that they are lawfully organized and validly
existing under the laws of the state in which each is organized and that they do
and will comply in all material respects with the 1940 Act.
2.7. The Underwriter represents and warrants that it is registered with
the SEC under the 1934 Act as a broker/dealer and is a member in good standing
of FINRA, and that it shall remain duly registered in all material respects to
the extent required under all applicable federal and state securities laws and
that it will perform its obligations for the Funds in compliance in all material
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respects with the laws of its state of domicile and any applicable state and
federal securities laws, including the 1933 Act, the 1934 Act and the 0000 Xxx.
2.8. The Funds represent and warrant that their directors, officers,
employees dealing with the money and/or securities of the Funds are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Funds in an amount not less than the minimum
coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid blanket fidelity bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.9. The Company represents and warrants that all of its directors,
officers, employees dealing with the money and/or securities of the Funds are
and shall continue to be covered by a blanket fidelity bond or similar coverage
for the benefit of the Company and the separate accounts in an amount not less
than the minimum coverage as required by Rule 17g-1 under the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid
blanket fidelity bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.10 Each party represents and warrants that the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate, partnership or trust action, as
applicable, by such party, and, when so executed and delivered, this Agreement
will be the valid and binding obligation of such party enforceable in accordance
with its terms.
ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1. The Funds shall provide the Company with as many printed copies of
the current prospectus, current Statement of Additional Information ("SAI"),
supplements, proxy statements, and annual or semi-annual reports of each series
as the Company may reasonably request, with expenses to be borne in accordance
with Schedule C hereof. If requested by the Company in lieu thereof, the Funds
shall provide such documents (including a print-ready PDF, or an electronic copy
of the documents in a format suitable for printing and posting on the Company's
website, all as the Company may reasonably request) and such other assistance as
is reasonably necessary in order for the Company to have prospectuses, SAIs,
supplements and annual or semi-annual reports for the Contracts and the Funds
printed together in a single document or posted on the Company's web-site or
printed individually by the Company if it so chooses.
3.2 If the Funds determine to distribute Fund summary prospectuses to
Contract owners pursuant to Rule 498 of the 1933 Act, as set forth in Schedule D
of this Agreement, then each party to the Agreement represents and warrants that
it complies with the requirements of Rule 498 and applicable SEC guidance
regarding the Rule in connection therewith, and that it maintains policies and
procedures reasonably designed to ensure that it can meet its obligations in
connection with Fund summary prospectuses. The parties agree to comply with the
terms included in the attached Schedule D as of the effective date of this
Agreement.
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3.3. The Funds' statement of additional information shall be obtainable
from the Funds, the Company or such other person as the Funds may designate, as
agreed upon by the parties.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
Fund for which instructions have been received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any Account in its own right, to the extent permitted by law. The Funds
and the Company shall follow the procedures, and shall have the corresponding
responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule B attached hereto and incorporated
herein by reference. Participating Insurance Companies shall be responsible for
ensuring that each of their separate accounts participating in a Fund calculates
voting privileges in a manner consistent with the standards set forth on
Schedule B, which standards will also be provided to the other Participating
Insurance Companies.
3.5. The Funds will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Funds will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Funds
are not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Funds will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the Commission may promulgate with respect
thereto.
3.6. The Funds shall use reasonable efforts to provide Fund prospectuses,
reports to shareholders, proxy materials and other Fund communications (or
camera-ready equivalents) to the Company sufficiently in advance of the
Company's mailing dates to enable the Company to complete, at reasonable cost,
the printing, assembling and distribution of the communications in accordance
with applicable laws and regulations.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Underwriter, each piece of sales literature or other promotional material in
which the Funds or the Underwriter are
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named, at least five Business Days prior to its use. No such material shall be
used if the Funds or their designee reasonably objects to such use within five
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Funds or concerning the Funds in
connection with the sale of the Contracts other than the information or
representations contained in the registration statements or prospectuses for the
Funds, as such registration statements and prospectuses may be amended or
supplemented from time to time, or in reports or proxy statements for the Funds,
or in sales literature or other promotional material approved by the Funds or
their designee, except with the permission of the Funds.
4.3. The Funds or their designee 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 or its separate account(s) or
Contracts are named at least five Business Days prior to its use. 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.
4.4. The Funds and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. Upon request, the Funds will provide to the Company at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Funds or
their shares, contemporaneously with the filing of such document with the
Securities and Exchange Commission or other regulatory authorities.
4.6. Upon request, the Company will provide to the Funds at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above, that
relate to the investment in the Funds under the Contracts, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Funds or any affiliate of the Funds: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording,
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videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, reprints or excerpts of any other advertisement, sales
literature, or published article), or other communications distributed or made
generally available to some or all agents or employees, and registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Funds shall pay no fee or other compensation to the Company under
this Agreement, except that if any Fund adopts and implements or has adopted and
implement a plan pursuant to Rule 12b-1 (or any successor rule adopted under the
0000 Xxx) to finance distribution expenses or a shareholder servicing plan to
finance investor services, then payments may be made to the Company or its
affiliate, or to the underwriter for the Contracts, or to other service
providers if and in amounts agreed upon by the parties.
5.2. All expenses incident to performance by the parties under this
Agreement shall be paid in accordance with Schedule C.
ARTICLE VI. DIVERSIFICATION
6.1. The Funds will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as annuity, endowment or
life insurance contracts, whichever is applicable, under the Code and the
regulations issued thereunder. Without limiting the scope of the foregoing, each
Fund has complied and will at all times continue to comply with Section 817(h)
of the Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications or successor provisions to such Section or
Regulations. In the event of a breach of this Article VI by a Fund, the Fund
will take all reasonable steps (a) to notify Company of such breach as promptly
as possible and (b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Regulation 1.817-5. Upon the written request
of the Company, the Fund shall provide Company a certification of its compliance
with Section 817(h) of the Code and Treasury Regulation 1.817-5 within twenty
(20) days of the end of each calendar quarter.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board of Trustees of Rydex Variable Trust or the Board of
Directors of SBL Fund, as applicable (referred to in this Article VII
collectively as the "Board"), will monitor the Funds for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Funds. 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
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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 Fund are
being managed; (e) a difference in voting instructions given by Variable
Insurance Product owners; or (f) a decision by a Participating Insurance Company
to disregard the voting instructions of contract owners. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Board whenever contract owner voting instructions
are disregarded. Such responsibilities shall be carried out by the Company with
a view only to the interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Funds and reinvesting such assets in a different investment medium,
including (but not limited to) another Series of the Funds, or submitting the
question whether 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 policy 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 (2) establishing a new registered
management investment company or managed separate account. Such responsibilities
shall be carried out by the Company with a view only to the interests of its
Contract owners.
7.4. 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 Funds' election, to withdraw the affected Account's
investment in the Funds and terminate this Agreement with respect to such
Account (at the Company's expense); 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 members
of the Board. Any such withdrawal and termination must take place within six (6)
months after a Fund gives written notice that this provision is being
implemented, and until the end of that six-month period the Distributor shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of Fund shares, subject to the terms of the Fund's then-current
prospectus.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the position of the majority of
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other state regulators, then the Company will withdraw the affected Account's
investment in the Funds and terminate this Agreement with respect to such
Account within six months after the Board informs 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 the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Until the
end of the foregoing six month period, the Underwriter and Funds shall continue
to accept and implement orders by the Company for the purchase (and redemption)
of shares of the Funds.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Funds be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 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 Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in a Fund
(subject to any applicable regulatory approval) and terminate this Agreement
within six (6) months after the Board informs 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 members of the Board.
7.7. If and to the extent the Mixed and Shared Funding Exemptive Order or
any amendment thereto contains terms and conditions different from Sections 3.5,
3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement, then the Funds and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with the Mixed and Shared Funding Exemptive Order, and
Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall continue
in effect only to the extent that terms and conditions substantially identical
to such Sections are contained in the Mixed and Shared Funding Exemptive Order
or any amendment thereto. 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 Mixed and Shared Funding Exemptive
Order) on terms and conditions materially different from those contained in the
Mixed and Shared Funding Exemptive Order, then (a) the Funds 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; and (b) Sections 3.4, 3.5,
7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such Sections
are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification By The Company
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(a) The Company agrees to indemnify and hold harmless the Funds and each
member of the Board and each officer and employee of the Funds, the Underwriter
and each director, officer and employee of the Underwriter, and each person, if
any, who controls the Funds, or the Underwriter within the meaning of Section 15
of the 1933 Act (collectively, "Indemnified Parties" and individually,
"Indemnified Party," for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including reasonable legal
and other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities, or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of Fund shares or the
Contracts and:
(i) 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 or statement of additional information for the
Contracts or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the foregoing), 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
agreement to indemnify 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 in conformity with information furnished to the Company
by or on behalf of the Funds for use in the registration statement or
prospectus or statement of additional information for the Contracts or in
the Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the registration
statement, prospectus, statement of additional information or sales
literature of the Funds not supplied by the Company, or persons under its
control and other than statements or representations authorized by the
Funds or the Underwriter) or unlawful conduct of the Company or persons
under its control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, statement of additional information or sales literature of the
Funds or any amendment thereof or supplement thereto 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
a statement or omission was made in reliance upon and in conformity with
information furnished to the Funds by or on behalf of the Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
-12-
(v) arise out of or result from any material breach of any
representation 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, as limited by and in accordance with the provisions of Sections
8.1(b) and 8.1(c) hereof. [NTD: it's not clear whether this last proviso
(e.g. limited by 8.1(b) and (c)) is qualifying just (v) as opposed to (i)
- (v). JNL would prefer it qualify in each of the indemnity sections.
Please clarify.]
(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from the willful
misfeasance, bad faith, or gross negligence on the part of any of the
Indemnified Parties 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.
(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such 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.
(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Funds' shares or the Contracts or the operation of
the Funds.
8.2. Indemnification by the Underwriter
(a). The Underwriter agrees to indemnify and hold harmless the Company and
each of its directors, officers and employees and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, "Indemnified Parties" and individually, "Indemnified Party," for
purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Underwriter) or litigation (including reasonable legal and other expenses)
to which the
-13-
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of shares of a Fund or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, prospectus, statement of
additional information or sales literature of the Funds
(or any amendment or supplement to any of the
foregoing), 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 agreement to indemnify 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 in conformity with information furnished to the
Funds by or on behalf of the Company for use in the
registration statement, prospectus, statement of
additional information for the Funds or in sales
literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration statement,
prospectus, statement of additional information or sales
literature for the Contracts not supplied by the Funds
or persons under its control and other than statements
or representations authorized by the Company) or
unlawful conduct of the Funds, Underwriter(s) or
Underwriter or persons under their control, with respect
to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in
a registration statement, prospectus, statement of
additional information or sales literature covering the
Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein
not misleading, if such statement or omission was made
in reliance upon information furnished to the Company by
or on behalf of the Trust; or
(iv) arise as a result of any material failure by the Funds
to provide the services and furnish the materials under
the terms of this Agreement, or
-14-
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Funds or
Underwriter in this Agreement or arise out of or result
from any other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the
provisions of Sections 8.2(b) and 8.2(c) hereof. [NTD:
same comment as in 8.1]
(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities, or
litigation incurred or assessed against an Indemnified Party as such may arise
from the willful misfeasance, bad faith, or gross negligence on the part of any
of the Indemnified Parties in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement.
(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice from the Underwriter
to such party of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such 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.
(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against the Indemnified Parties in
connection with the issuance or sale of the Contracts or the operation of each
Account.
8.3. Indemnification by the Funds
(a). The Funds agree to indemnify and hold harmless the Company, and each
of its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (hereinafter collectively,
"Indemnified Parties" and individually, "Indemnified Party," for purposes of
this Section 8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Funds) or
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses,
-15-
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith or willful misconduct of
the Board, or any member thereof, and are related to the operations of the Funds
and:
(i) arise as a result of any material failure by the Funds
to provide the services and furnish the materials under
the terms of this Agreement; or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Funds in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Funds;
(b). The Funds shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
(c). The Funds shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Funds in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Funds of any such claim shall not
relieve the Funds from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Funds will be entitled to participate, at their own
expense, in the defense thereof. The Funds also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the party named in the
action. After notice from the Funds to such party of the Funds' election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Funds will not be
liable to such 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.
(d). The Company agrees promptly to notify the Funds of the commencement
of any litigation or proceedings against the Indemnified Parties in connection
with this Agreement, the issuance or sale of the Contracts, with respect to the
operation of any Account, or the sale or acquisition of shares of the Funds.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the substantive laws of the State of
New York.
-16-
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Mixed and
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by one hundred and eighty
(180) days advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the applicable Fund
or Funds and the Underwriter with respect to any Series based upon
the Company's determination that shares of such Series are not
reasonably available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the applicable Fund
or Funds and the Underwriter with respect to any Series in the event
any of the Series' shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment media
of the Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the applicable Fund
or Funds and the Underwriter in the event that any Series ceases to
qualify as a Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision, or if the Company
reasonably believes that any Series may fail to so qualify; or
(e) termination by the Company by written notice to the applicable Fund
or Funds and the Underwriter in the event that any Series fails to
meet the diversification requirements specified in Article VI hereof
or if the Company reasonably believes that any Series may fail to
meet such diversification requirements; or
(f) termination by either of the Funds or the Underwriter by written
notice to the Company if either of the Funds or Underwriter shall
determine, in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a material
adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of
material adverse publicity, or
(g) termination by the Company by written notice to the Funds and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that
-17-
either the Funds or the Underwriter have suffered a material adverse
change in their or its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of
material adverse publicity; or
10.2. Notwithstanding any termination of this Agreement, the Funds shall,
at the option of the Company, continue to make available additional shares of
the Series pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to direct
reallocation of investments in the Series, redemption of investments in the
Series and investment in the Series upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this Section 10.2
shall not apply to any terminations under Article VII and the effect of such
Article VII terminations shall be governed by Article VII of this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the Securities and Exchange Commission pursuant to
Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish
to the Funds the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Funds) to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, or as required by
applicable law, rule or regulation, the Company shall not prevent Contract
owners from allocating payments to a Series that was otherwise available under
the Contracts without first giving the Series 90 days prior written notice of
its intention to do so.
10.4 Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII shall survive.
ARTICLE XI. 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 Funds:
Rydex Variable Trust
One Security Benefit Place
Topeka, KS 66636-0001
Attn: Law Department
SBL Fund
One Security Benefit Place
-18-
Topeka, KS 66636-0001
Attn: Law Department
If to Underwriter:
Rydex Distributors, LLC
000 Xxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Law Department
If to the Company:
Jefferson National Life Insurance Company
0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: General Counsel
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Fund or Series thereof must look solely to
the property of the applicable Fund or applicable Series thereof for the
enforcement of any claims against such Fund as neither the Boards, officers,
agents or shareholders assume any personal liability for obligations entered
into on behalf of the Funds and no Series of a Fund assumes liability for the
obligation of any other Series of the Funds. For purposes of the foregoing,
obligations of the Funds under this Agreement, including without limitation
indemnification obligations of the Funds under Section 8.3 of this Agreement,
arising out of acts or failures to act by or on behalf of one or more series of
the Funds shall be deemed to be obligations of such series only, enforceable
only out of the assets of such series.
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3. 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.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
-19-
12.5. 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.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
FINRA 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Texas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the Texas
Insurance Regulations and any other applicable law or regulations.
12.7. 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.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign its rights under this
Agreement (but not its obligations) to any affiliate of or company under common
control with the Underwriter.
12.9 This Agreement may be amended only by a writing signed by all
parties.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
JEFFERSON NATIONAL LIFE RYDEX VARIABLE TRUST
INSURANCE COMPANY
By: By:
--------------------------------- ---------------------------------
SBL FUND
By:
---------------------------------
RYDEX DISTRIBUTORS, LLC.
By:
---------------------------------
-20-
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
------------------------------------------
Shares of the Funds shall be made available as investments for the
following Separate Accounts:
NAME OF SEPARATE ACCOUNT
ALL COMPANY SEPARATE ACCOUNTS OFFERING ANY OR ALL OF THE BELOW FUNDS
Additionally, "Accounts" and "Contracts" will include any new Accounts and
Contracts created subsequent to the date hereof.
FUND AND SERIES
Rydex Variable Trust
Alternative Strategies Allocation Fund
Xxxxxxx Fund
Banking Fund
Basic Materials Fund
Biotechnology Fund
Clermont Fund
Commodities Strategy Fund
Consumer Products Fund
Dow 2x Strategy Fund
DWA Flexible Allocation Fund
DWA Sector Rotation Fund
Electronics Fund
Energy Fund
Energy Services Fund
All-Asset Aggressive Strategy Fund
All-Asset Conservative Strategy Fund
All-Asset Moderate Strategy Fund
Europe 1.25x Strategy Fund
Financial Services Fund
Government Long Bond 1.2x Strategy Fund
Health Care Fund
International Long Short Select Fund
Internet Fund
Inverse Dow 2x Strategy Fund
Inverse Government Long Bond Strategy Fund
-21-
Inverse Mid-Cap Strategy Fund
Inverse NASDAQ-100(R) Strategy Fund
Inverse Xxxxxxx 2000(R) Strategy Fund
Inverse S&P 000 Xxxxxxxx Xxxx
Xxxxx 0x Xxxxxxxx Fund
Leisure Fund
Managed Futures Strategy Fund
Mid-Cap 1.5x Strategy Fund
Multi-Hedge Strategies Fund
NASDAQ-100(R) 2x Strategy Fund
NASDAQ-100(R) Fund
Nova Fund
Precious Metals Fund
Real Estate Fund
Retailing Fund
Xxxxxxx 2000(R) 1.5x Strategy Fund
Xxxxxxx 2000(R) 2x Strategy Fund
S&P 500 2x Strategy Fund
S&P 500 Pure Growth Fund
S&P 500 Pure Value Fund
S&P MidCap 400 Pure Growth Fund
S&P MidCap 400 Pure Value Fund
S&P SmallCap 600 Pure Growth Fund
S&P SmallCap 600 Pure Value Fund
Select Allocation Fund
Strengthening Dollar 2x Strategy Fund
Technology Fund
Telecommunications Fund
Transportation Fund
U.S. Government Money Market Fund
U.S. Long Short Momentum Fund
Utilities Fund
Weakening Dollar 2x Strategy Fund
SBL Fund
Series A (Large Cap Core Series)
Series B (Large Cap Value Series)
Series C (Money Market Series) - NOT AVAILABLE
Series D (Global Series)
Series E (U.S. Intermediate Bond Series)
Series J (Mid Cap Growth Series)
Series N (Managed Asset Allocation Series)
Series O (All Cap Value Series)
Series P (High Yield Series)
-22-
Series Q (Small Cap Value Series)
Series V (Mid Cap Value Series) - NOT AVAILABLE
Series X (Small Cap Growth Series)
Series Y (Large Cap Concentrated Growth Series)
Series Z (Alpha Opportunity Series) - NOT AVAILABLE
Additionally, "Series" will include any series created subsequent to the date
hereof.
-23-
SCHEDULE B
PROXY VOTING PROCEDURES
-----------------------
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Funds. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1 The proxy proposals are given to the Company by the Funds as early as
possible before the date set by the Funds for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Funds will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2 Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call
in the number of Customers to the Funds, as soon as possible, but no later
than two weeks after the Record Date.
3 The Funds' Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Funds will provide the last Annual
Report to the Company pursuant to the terms of Section 3.3 of the
Agreement to which this Schedule relates.
4 The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Funds. [NTD: Historically, a proxy
tabulation firm has been used at Fund's expense] Allow approximately 2-4
business days for printing information on the Cards. Information commonly
found on the Cards includes:
a name (legal name as found on account registration)
b address
c Fund or account number
d coding to state number of units
e individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Funds).
-24-
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5 During this time, the Funds will develop, produce and pay for the Notice
of Proxy and the Proxy Statement (one document). Printed and folded
notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Company). Contents of envelope sent to Customers by the Company will
include:
a Voting Instruction Card(s)
b one proxy notice and statement (one document)
c return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly as
possible and that their vote is important. One copy will be supplied
by the Funds.)
e cover letter - optional, supplied by Company and reviewed and
approved in advance by the Trust
6 The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Trust.
7 Package mailed by the Company.
* The Funds must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including,) the meeting, counting backwards.
8 Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Funds in the past.
9 Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
-25-
10 If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
11 There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12 The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Funds receives the tabulations
stated in terms of a percentage and the number of shares.) The Funds must
review and approve tabulation format.
13 Final tabulation in shares is verbally given by the Company to the Funds
on the morning of the meeting not later than 10:00 a.m. Eastern time. The
Funds may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
14 A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Funds will provide a standard form for each Certification.
15 The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Funds will be
permitted reasonable access to such Cards.
16 All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
-26-
SCHEDULE C
EXPENSES
--------
The Funds and the Company will coordinate the functions and pay the costs of
completing these functions based upon an allocation of costs in the tables
below. The term "Current" is defined as an existing Contract owner. The term
"Prospective" is defined as a potential new Contract owner.
---------------------------------------------------------------------------------------------------------
ITEM FUNCTION PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
COORDINATION EXPENSE
---------------------------------------------------------------------------------------------------------
Fund Prospectus Printing of prospectuses Company Current - Fund
Prospective - Company
---------------------------------------------------------------------------------------------------------
Distribution (including Company Company
postage) to Current Clients
---------------------------------------------------------------------------------------------------------
Distribution (including Company Company
postage) to Prospective
Clients
---------------------------------------------------------------------------------------------------------
Fund Prospectus If Required by Fund or Distributor Distributor
Update & Distribution Distributor
---------------------------------------------------------------------------------------------------------
If Required by Company Company (Distributor to Company
provide Company with
document in PDF format)
---------------------------------------------------------------------------------------------------------
Fund SAI Printing Distributor Company
---------------------------------------------------------------------------------------------------------
Distribution (including Company Company
postage) to Current Clients
---------------------------------------------------------------------------------------------------------
Distribution (including Company Company
postage) to Prospective
Clients
---------------------------------------------------------------------------------------------------------
Proxy Material for Fund Printing of proxy required Fund Fund
by Law
---------------------------------------------------------------------------------------------------------
Distribution (including Company Fund
labor) of proxy required by
Law
---------------------------------------------------------------------------------------------------------
Fund Annual & Semi-Annual Printing of reports Fund Current - Fund
Report Prospective - Company
---------------------------------------------------------------------------------------------------------
-27-
---------------------------------------------------------------------------------------------------------
ITEM FUNCTION PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
COORDINATION EXPENSE
---------------------------------------------------------------------------------------------------------
Distribution Company Current - Fund
Prospective - Company
---------------------------------------------------------------------------------------------------------
Other communication to New If Required by Law, the Company Current - Fund
and Prospective clients Fund or Distributor Prospective - Company
---------------------------------------------------------------------------------------------------------
If Required by Company Company Company
---------------------------------------------------------------------------------------------------------
Distribution (including Company Company
labor and printing) if
required by Company
---------------------------------------------------------------------------------------------------------
Operations of the Fund All operations and related Fund Fund
expenses, including the
cost of registration and
qualification of shares,
taxes on the issuance or
transfer of shares, cost of
management of the business
affairs of a Fund, and
expenses paid or assumed by
a Fund pursuant to any Rule
12b-1 plan
---------------------------------------------------------------------------------------------------------
Operations of the Accounts Federal registration of Company Company
units of separate account
(24f-2 fees)
---------------------------------------------------------------------------------------------------------
-28-
SCHEDULE D
Fund Summary Prospectus Schedule entered into by and among Rydex Variable Trust
and SBL Fund (the "Funds"), Rydex Distributors, LLC (the "Underwriter"), and
Jefferson National Life Insurance Company (the "Company").
All capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to such term in the Agreement.
1. For purposes of this Schedule D, the terms Summary Prospectus and
Statutory Prospectus shall have the same meaning as set forth in Rule 498.
2. The Funds shall provide the Company with copies of the Summary
Prospectuses and any supplements thereto in the same manner and at the
same times as the Agreement requires that the Funds provide the Company
with Statutory Prospectuses.
3. The Funds and the Underwriter each represents and warrants that the
Summary Prospectuses and the web site hosting of such Summary Prospectuses
will comply with the requirements of Rule 498 applicable to the Funds and
their Series. Each Fund further represents and warrants that it has
appropriate policies and procedures in place to ensure that such web site
continuously complies with Rule 498.
4. The Funds and the Underwriter each agrees that the URL indicated on each
Summary Prospectus will lead Contract owners directly to the web page used
for hosting Summary Prospectuses and that such web page will host the
current Fund documents required to be posted in compliance with Rule 498.
The Funds shall immediately notify the Company of any unexpected extended
interruptions in availability of this web page.
5. The Funds and the Underwriter represent and warrant that they will be
responsible for compliance with the provisions of Rule 498(f)(i) involving
Contract owner requests for additional Fund documents made directly to the
Funds or the Underwriter, or one of their affiliates. The Funds and the
Underwriter further represent and warrant that any information obtained
about Contract owners pursuant to this provision will be used solely for
the purposes of responding to requests for additional Fund documents.
6. The Company represents and warrants that it will respond to requests for
additional Fund documents made by Contract owners directly to the Company
or one of its affiliates.
7. The Company represents and warrants that any bundling of Summary
Prospectuses and Statutory Prospectuses will be done in compliance with
Rule 498.
8. At the Company's request, the Underwriter and the Funds will provide the
Company with URLs to the current Fund documents for use with the Company's
electronic delivery of Fund documents or on the Company's website. The
Underwriter and the Funds will be responsible
-29-
for ensuring the integrity of the URLs and for maintaining the Funds'
current documents on the site to which such URLs originally navigate to.
9. If either Fund determines that it will end its use of the Summary
Prospectus delivery option, such Fund will provide the Company with at
least 60 days' advance notice of its intent so that the Company can
arrange to deliver a Statutory Prospectus in place of a Summary
Prospectus. In order to comply with Rule 498(e)(1), the Funds shall
continue to maintain their website in compliance with the requirements of
this Agreement and Rule 498 for a minimum of 90 days after the termination
of any such notice period.
10. The parties agree that all other provisions of the Participation
Agreement, including the indemnification provisions and Schedule C, will
apply to the terms of this Schedule D as applicable.
-30-
