FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of the lst day of July, 1994, by and among
Janus Capital Corporation, a Colorado corporation ("Janus Capital"), Janus
Service Corporation, a Colorado corporation, ("Janus Service") (together
"Janus"), and The Lincoln National Life Insurance Company, a life insurance
company organized under the laws of the State of Indiana (the "Company"), on
its own behalf and on behalf of each segregated asset account of the Company
set forth on Schedule A, as may be Amended from time to time (the "Accounts").
WITNESSETH:
WHEREAS, the Company has established the Accounts to serve as funding
vehicles for certain variable group annuity contracts offered by the Company
set forth on Schedule A ("Contracts"); and
WHEREAS, each Janus Fund set forth on Schedule B hereto (which may be
amended from time to time by mutual written consent) ("Fund or Funds") engages
in business as an investment company registered under the Investment Company
Act of 1940, as amended (" 1940 Act "); and
WHEREAS, to the extent permitted by applicable securities and insurance
laws and regulations, the Company intends to purchase shares in the Funds on
behalf of each Account.
NOW, THEREFORE, in consideration of their mutual promises, the Company
and Janus agree as follows:
ARTICLE I.
SALE OF FUND SHARES
1.1. Janus will provide to the Company closing net asset values,
dividends, and capital gains information at the close of trading each business
day. Orders by the Company will be sent to Janus the morning of the following
business day (after receipt by the Company). The Funds will execute orders at
the net asset values as determined as of the close of trading on the day of
receipt of such orders by the Company, provided that (a) the Company receives
such orders prior to the time the net asset values of the Funds are priced in
accordance with their prospectuses the day before the order is placed with the
Funds, and (b) such orders are received by Janus Capital by 9:00 a.m. Mountain
Time the day following their receipt by the Company and payment for such orders
is received by Janus Capital no later than 2:00 p.m. Mountain Time that day.
Payment for net purchases will be wired to a custodial account designated by
Janus to coincide with the order for shares of the 'Funds. Proceeds from net
redemptions of Fund shares will be wired from the Fund's custodial account to
an account designated by the Company. Dividends and capital gains distributions
shall be reinvested in additional shares at the ex-dividend date net asset
value.
1.2. Janus Service appoints the Company as its agent for the limited
purpose of accepting orders for the purchase and redemption of shares of the
Funds by the Company on behalf of each Account.
ARTICLE II.
OBLIGATIONS OF THE PARTIES
2.1. Janus Capital shall prepare and be responsible for filing with
the Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and statements
of additional information of the Funds. Janus Capital shall bear the costs of
registration and qualification of its shares and the preparation and filing of
the documents listed in this section 2. 1.
2.2 Recordkeeping and other administrative services to Contract owners
shall be the responsibility of the Company and shall not be the responsibility
of Janus. Janus and the Funds will recognize one omnibus account for the
Company in the Funds. Upon the request of Janus, the Company shall provide
copies of records related to the Company's Fund transactions as may reasonably
be requested to enable the Funds or their representatives to comply with any
request of a governmental body or self-regulatory organization.
2.3. The Company agrees and acknowledges that Janus Capital is the
sole owner of the name and xxxx "Xxxxx" and that any and all use of any
designation comprised in whole or in part of Janus (a "Xxxxx Xxxx") under this
Agreement shall inure to the benefit of Janus. The use by the Company of any
Xxxxx Xxxx in any advertisement or sales literature of other materials
promoting the Funds shall be with the prior written consent of Janus. Except to
the extent required by law, the Company shall not, without prior written
consent of Janus, make written representations regarding the Funds, Janus or
their affiliates, except those contained in the then current prospectus and the
then current printed sales literature for the Funds. Upon termination of this
Agreement for any reason, the Company shall cease all use of any Xxxxx Xxxx(s)
as soon as reasonably practicable. The Company shall not hold itself out to the
public or engage in any activity as an agent or distributor for the Funds. The
Company will comply with all applicable state and federal laws with respect to
the use of shares of the Funds.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of
Indiana and that it has legally and validly established each Account as a
segregated asset account under such law on the date set forth in Schedule A.
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3.2. The Company represents and warrants that the Contracts are
currently treated as group annuity contracts under applicable provisions of the
Code and state law and that it will make every effort to maintain such
treatment and that it will notify Janus 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.
3.3. The Company represents and warrants that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws.
3.4. Janus represents and warrants that it is duly organized and
validly existing under the laws of the State of Colorado.
3.5. Janus represents and warrants that Fund shares offered and sold
pursuant to this Agreement will be registered under the Securities Act of 1933
and the Funds shall be registered under the 1940 Act prior to any issuance or
sale of such shares.
3.6. Janus makes no representation as to whether any aspect of any
Fund's operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states.
ARTICLE IV. INDEMNIFICATION
4.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless Janus Capital, Janus Service, the Funds, and each of their
trustees, officers, employees and agents and each person, if any, who controls
Janus within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Article IV) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise, insofar as such
Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in any
disclosure document for the Contracts or in the Contracts themselves or
in sales literature generated or approved by the Company on behalf of
the Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article IV), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and was accurately derived from
written information furnished
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to the Company by or on behalf of Janus for use in Company Documents
or otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Janus Documents as defined in Section 4.2(a)) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or acquisition of the Contracts or Fund shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Fund Documents
as defined in Section 4.2(a) or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived
from written information furnished to Janus by or on behalf of the
Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company.
4.2. INDEMNIFICATION BY JANUS CAPITAL. Janus Capital agrees to
indemnify and hold harmless the Company and each of its directors, officers,
employees and agents and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Article IV) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of Janus) or expenses (including the reasonable costs of investigating
or defending any alleged loss, claim, damage, liability or expense and
reasonable legal counsel fees incurred in connection therewith) (collectively,
"Losses"), to which the Indemnified Parties may become subject under any
statute or regulation, or at common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Fund (or any amendment or
supplement thereto), (collectively, "Fund Documents" for the purposes
of this Article IV), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to Janus by or on behalf of
the Company for use in Janus Documents or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
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(b) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of Janus; or
(c) arise out of or result from any failure by Janus to
provide the services or furnish the materials required under the terms
of this Agreement; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by Janus in this Agreement or arise
out of or result from any other material breach of this Agreement by
Janus.
4.3. Neither the Company nor Janus shall be liable under the
indemnification provisions of sections 4.1 or 4.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
4.4. Neither the Company nor Janus shall be liable under the
indemnification provisions of sections 4.1 or 4.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice
of service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim or
shall not relieve that party from any liability which it may have to the
Indemnified Party in the absence of sections 4.1 and 4.2.
4.5 In case any such action is brought against the Indemnified
Parties, the indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the indemnifying party to the
Indemnified Party of an election to assume such defense, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
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ARTICLE V. FEES AND EXPENSES
5.1. Janus recognizes the Company as the sole shareholder of each
Fund's shares purchased under this Agreement. Janus further recognizes that
substantial savings in administrative expense such as significant reductions in
postage expense and shareholder communications and recordkeeping by virtue of
each Fund's having a sole shareholder rather than multiple shareholders will be
derived. In consideration of the administrative savings resulting from such
arrangement, Janus Capital agrees to pay the Company a fee equivalent to 15
basis points per annum of the average amount invested in each Fund through the
Accounts in accordance with this Agreement ("Fee").
5.2. Janus will calculate the amount of the Fee to be paid to the
Company at the end of each calendar quarter and will make such payment to the
Company within thirty (30) days thereafter. Each check for such payment will be
accompanied by a statement showing the calculation of the Fee for the relevant
calendar quarter and such other supporting data as may be reasonably requested
by the Company.
ARTICLE VI. TERMINATION
6.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason on sixty (60) days'
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to Janus with
respect to any Fund based upon the Company's determination that shares
of such Fund are not reasonably available to meet the requirements of
the Contracts; or
(c) termination by the Company by written notice to Janus with
respect to any Fund in the event any of the Fund's 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; and
(d) termination by the Company by written notice to Janus with
respect to any Fund in the event that such Fund 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 such Fund may fail to do so qualify.
(e) termination by Janus if it is determined by any federal or
state regulatory authority that compensation to be paid hereunder is
in violation of or inconsistent with any federal or state law. If
Janus terminates for such reason, the Company may maintain investments
in the Funds without further payment from Janus.
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ARTICLE VII. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to Janus:
Janus Capital Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.,
Xxxx X. Xxxxxxx
-If to the Company:
The Lincoln National Life Insurance Company
0000 X. Xxxxxxx Xx.
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Pension Product Management
ARTICLE VIII. MISCELLANEOUS
8.1 . The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of State of Colorado.
8.5. Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
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8.6. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
8.7. The parties to this Agreement, acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.8. Neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the prior written approval of the other
party.
8.9. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Agreement as of the date and year first above written.
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By:
Name:
Title:
JANUS CAPITAL CORPORATION
By :
Name:
Title:
JANUS SERVICE CORPORATION
By:
Name:
Title:
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SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Contracts Funded
Date Established by-Board of Directors By Separate Account
-------------------------------------- -------------------
Separate Account 42 Form 19476
July 1, 0000
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XXXXXXXX X
JANUS FUNDS
Janus Fund
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