PARTICIPATION AGREEMENT
BETWEEN
JEFFERSON NATIONAL LIFE INSURANCE COMPANY
AND
BISYS FUND SERVICES LP
AND
CHOICE INVESTMENT MANAGEMENT, LLC
AND
VARIABLE INSURANCE FUNDS
THIS AGREEMENT, dated as of the 1st day of May, 2003 by and between
Jefferson National Life insurance Company (the "Company"), a Texas life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto, as may be amended from
time to time (each account hereinafter referred to as the "Account"), BISYS Fund
Services LP (the "Distributor"), Choice Investment Management, LLC (the
"Adviser") and Variable Insurance Funds (the "Trust").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies ("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Trust are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and shares of the Portfolio are registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, the Trust has obtained an order (VARIABLE INSURANCE FUNDS, ET
AL, Investment Company Act Rel. No. 23594 (Dec. 10, 1998)) from the Securities
and Exchange Commission ("SEC") granting Participating Insurance Companies and
their separate accounts exemptions from the provisions of Sections 9(a), 13(a)
and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans, among others (the "Exemptive Order"), the terms of
which quali+/-~,', in its entirety, the terms of this Agreement;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable
annuity contracts supported wholly or partially by the Account (the
"Contracts"), and said Contracts are listed in Schedule A hereto, as it may be
amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated
asset account by the Company to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios managed by
the Adviser and listed in Schedule A hereto, as it may be amended from time to
time by mutual written agreement (the "Designated Portfolios"), on behalf of the
Account to fund the aforesaid Contracts;
WHEREAS, the Adviser serves as investment adviser to the Designated
Portfolios; and
WHEREAS, the Distributor serves as the distributor of the shares of each
Designated Portfolio and is authorized to sell such shares to the Company on
behalf of the Account at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Distributor, and the Adviser agree as follows:
ARTICLE I.
SALE AND REDEMPTION OF TRUST SHARES
1.1. The Trust has granted to the Distributor authority to
distribute the Trust's shares, and has agreed to instruct, and has so
instructed, the Distributor to make available to the Company, for purchase on
behalf of any Account, Trust shares of the Designated Portfolios. Pursuant to
such authority and instructions, the Distributor agrees to make available to the
Company for purchase on behalf of the Account, shares of the Designated
Portfolios, such purchases to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) Portfolios
(other than those listed on Schedule A) in existence now or that may be
established in the future will be made available to the Company only as the
Trust may so provide, and (ii) the Board of Trustees of the Trust (the "Board")
may suspend or terminate the offering of shares of any Designated Portfolio or
class thereof, if such action is required by law or by regulatory authorities
having jurisdiction or if, in the sole discretion of the Board acting in good
faith and in light of its fiduciary duties under federal and any applicable
state laws, suspension or termination is necessary in the best interests of the
shareholders of such Designated Portfolio. The Trust reserves the right, upon
prior written notice to the Company (given at the earliest practicable time), to
take all actions, including but not limited to, the dissolution, reorganization,
liquidation, merger or sale of all assets of the Trust or any Portfolio upon the
sole authorization of the Board, acting in good faith.
1.2. The Trust shall accept for redemption, at the Company's
request, any full or fractional Designated Portfolio shares held by the Company
on behalf of the Account, such redemptions to be effected at net asset value in
accordance with Section 1.3 of this Agreement. Notwithstanding the foregoing,
(i) the Company shall not redeem Trust shares attributable to Contract owners
except in the circumstances permitted in Section 10.3 of this Agreement, and
(ii) the Trust may delay redemption of such shares of any Designated Portfolio
to the extent permitted by the 1940 Act and any rules, regulations or orders
thereunder.
1.3. Purchase and Redemption Procedures
(a) For purposes of Sections 1.1 and 1.2, the Company
shall be an agent of the Trust for the limited purpose of receiving and
accepting purchase and redemption requests on behalf of the Account (but not
with respect to any Trust shares that may be held in the general account of the
Company) for shares of those Designated Portfolios made available hereunder,
based on allocations of amounts to the Account or subaccounts thereof under the
Contracts and other transactions relating to the Contracts or the Account.
Receipt and acceptance of any such request (or relevant transactional
information therefore) on any day the New York Stock Exchange, Inc. is open for
trading and on which a Designated Portfolio calculates its net asset value (a
"Business Day") pursuant to the rules of the SEC by the Company as such limited
agent of the Trust prior to the time that the Trust ordinarily calculates its
net asset value as described from time to time in each Designated Portfolio's
prospectus shall constitute receipt and acceptance by the Designated Portfolio
on that same Business Day, provided that the Trust or its agent receives notice
of such request by 8:30 a.m. Eastern Time on the next following Business Day.
(b) The Company shall pay for shares of each Designated
Portfolio on the same day that it notifies the Trust or its agent of a purchase
request for such shares. Payment for Designated Portfolio shares shall be made
in federal funds transmitted to the Trust or other designated person by wire to
be received by 2:00 p.m. Eastern Time on the day the Trust is notified of the
purchase request for Designated Portfolio shares (which request may be net of
redemptions of shares). If federal funds are not received on time, such funds
will be invested, and Designated Portfolio shares purchased thereby will be
issued, as soon as practicable and the Company shall promptly, upon the Trust's
request, reimburse the Trust or the Distributor, as appropriate, for any
charges, costs, fees, interest or other expenses incurred by the Trust or the
Distributor in connection with any advances to, or borrowing or overdrafts by,
the Trust, or any similar expenses incurred by the Trust, as a result of
portfolio transactions effected by the Trust based upon such purchase request.
Upon receipt of federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Trust.
(c) Payment for Designated Portfolio shares redeemed by
the Account or the Company shall be made in federal funds transmitted by wire to
the Company or any other designated person on the next Business Day after the
Trust or its agent is properly notified of the redemption order of such shares
(which order shall be net of any purchase orders), except that the Trust may
redeem Designated Portfolio shares in assets other than cash and delay payment
of redemption proceeds to the extent permitted under Section 22(e) of the 1940
Act and any rules thereunder, and in accordance with the procedures and policies
of the Trust as described in the then current prospectus and/or statement of
additional information ("SAI"). The Trust shall not bear any responsibility
whatsoever for the proper disbursement or crediting of redemption proceeds by
the Company, the Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Designated
Portfolio shares held or to be held in the Company's general account shall be
effected at the net asset value per share next determined after the receipt and
acceptance of such request by the Trust or its agent, provided that, in the case
of a purchase request, payment for Trust shares so requested is received by the
Trust in federal funds prior to close of business for determination of such
value, as defined from time to time in each Designated Portfolio's prospectus.
(e) The Company shall not redeem Trust shares
attributable to the Contracts (as opposed to Trust shares attributable to the
Company's assets held in the Account) except (i) as necessary to implement
Contract owner initiated or approved transactions, (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"), (iii) upon 45 days prior written notice to the Trust and Adviser,
as permitted by an order of the SEC pursuant to Section 26(c) of the 1940 Act,
but only if a substitution of other securities for the shares of the Designated
Portfolios is consistent with the terms of the Contracts, or (iv) as permitted
under the terms of the Contract. Upon request, the Company will promptly furnish
to the Trust reasonable assurance 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, the Company shall not prevent
Contract owners from allocating payments to a Designated Portfolio that was
otherwise available under the Contracts without first giving the Trust 45 days
notice of its intention to do so.
1.4. The Trust shall use its best efforts to make the net asset
value per share for each Designated Portfolio available to the Company by 6:30
p.m. Eastern Time each Business Day, and in any event, as soon as reasonably
practicable after the net asset value per share for such Designated Portfolio is
calculated, and the Trust shall calculate such net asset value in accordance
with the Trust's prospectus. Neither the Trust, any Designated Portfolio, the
Distributor, the Adviser, nor any of their affiliates shall be liable for any
information provided to the Company pursuant to this Agreement, or any loss
resulting from such information, if such information is based on incorrect
information supplied by the Company or any other Participating Insurance Company
to the Trust, the Distributor or the Adviser.
1.5. The Trust or its agent shall furnish notice (by wire or
telephone followed by written confirmation) to the Company as soon as reasonably
practicable of any income dividends or capital gain distributions payable on any
Designated Portfolio shares. The Company, on its behalf and on behalf of the
Account, hereby elects to receive all such dividends and distributions as are
payable on any Designated Portfolio shares in the form of additional shares of
that Designated Portfolio. The Company reserves the right, on its behalf and on
behalf of the Account, to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Trust or its agent shall notify the
Company promptly of the number of Designated Portfolio shares so issued as
payment of such dividends and distributions.
1.6. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Trust shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Trust's shares may be sold
to other insurance companies (subject to Section 1.8 hereof) and the cash value
of the Contracts may be invested in other investment companies, provided,
however, that until this Agreement is terminated pursuant to Article X, the
Company shall promote the Designated Portfolios on the same basis as other
funding vehicles available under the Contracts. Unless otherwise agreed between
the Company and the Adviser, funding vehicles other than those listed on
Schedule A to this Agreement may be available for the investment of the cash
value of the Contracts, provided, however, (i) any such vehicle or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of the Designated Portfolios
available hereunder; (ii) the Company gives the Adviser 45 days written notice
of its intention to make such other investment vehicle available as a funding
vehicle for the Contracts; and (iii) unless such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company has so informed the Adviser prior to their signing
this Agreement, the Adviser consents in writing to the use of such other
vehicle, such consent not to be unreasonably withheld.
(b) The Company shall not, without prior notice to the
Trust (unless
otherwise required by applicable law), take any action to operate the Account as
a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the
Adviser and the Trust (unless otherwise required by applicable law), induce
Contract owners to change or modify the Trust or change the Trust's investment
adviser.
(d) The Company shall not, without prior notice to the
Trust, induce Contract owners to vote on any matter submitted for consideration
by the shareholders of the Trust in a manner other than as recommended by the
Board.
1.8. The Company acknowledges that, pursuant to Form 24F-2, the
Trust is not required to pay fees to the SEC for registration of its shares
under the 1933 Act with respect to its shares issued to an Account that is a
unit investment trust that offers interests that are registered under the 1933
Act and on which a registration fee has been or will be paid to the SEC (a
"Registered Account"). The Company agrees to provide the Trust each year within
60 days of the end of the Trust's fiscal year, or when reasonably requested by
the Trust, information as to the number of shares purchased by a Registered
Account and any other Account the interests of which are not registered under
the 0000 Xxx. The Company acknowledges that the Trust intends to rely on the
information so provided and represents and warrants that such information shall
be accurate.
1.9 If the Fund provides the Company with materially incorrect
share net asset value information, the Separate Account(s) 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. Non-material errors will be corrected in
the net asset value of the next Business Day after discovery.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1. The Trust represents and warrants that (i) the Trust is
lawfully organized and validly existing under the laws of the Commonwealth of
Massachusetts, (ii) the Trust is and shall remain registered under the 1940 Act,
(iii) the Trust does and will comply in all material respects with the 1940 Act,
(iv) Designated Portfolio shares sold pursuant to this Agreement are registered
under the 1933 Act (to the extent required by that Act) and are duly authorized
for issuance, (v) the Trust shall amend the registration statement for the
shares of the Designated Portfolios under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of such
shares, (vi) the Board has elected for each Designated Portfolio to be taxed as
a Regulated Investment Company under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), and (v) shares of the Designated Portfolios
will be sold only to Participating Insurance Companies and their separate
accounts and to persons or plans that communicate to the Trust that they qualify
to purchase shares of the Designated Portfolios under Section 817(h) of the Code
and the regulations thereunder without impairing the ability of the Account to
consider the portfolio investments of the Designated Portfolios as constituting
investments of the Account for the purpose of satisfying the diversification
requirements of Section 817(h) ("Qualified Persons"). The Trust makes no
representations or warranties as to whether any aspect of the Designated
Portfolios' operations, including, but not limited to, investment policies, fees
and expenses, complies with the insurance laws and other applicable laws of the
various states.
2.2. The Distributor represents and warrants that shares of the
Designated Portfolios
will be sold only to Participating Insurance Companies and their separate
accounts and to persons or plans that the Trust informs the Distributor qualify
to purchase shares of the Designated Portfolios under Section 817(h) of the Code
and the regulations thereunder without impairing the ability of the Account to
consider the portfolio investments of the Designated Portfolios as constituting
investments of the Account for the purpose of satisfying the diversification
requirements of Section 817(h) ("Qualified Persons").
2.3. Subject to Company's representations and warranties in
Sections 2.5 and 2.6, the Adviser represents and warrants that it will invest
the assets of each Designated Portfolio in such a manner as to ensure that the
Contracts will be treated as annuity or life insurance contracts, whichever is
appropriate, under the Code and the regulations issued thereunder (or any
successor provisions). Without limiting the scope of the foregoing, the Adviser
represents and warrants that each Designated Portfolio has complied and will
continue to comply with Section 8 17(h) of the Code and Treasury Regulation
Section 1.817-5, and any Treasury interpretations thereof, 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 Regulation. The Adviser will make every reasonable effort (a) to
notify the Company immediately upon having a reasonable basis for believing that
a breach of this Section 2.3 has occurred, and (b) in the event of such a
breach, to adequately diversify the Designated Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation Section
1.817-5.
2.4. The Adviser represents and warrants that each Designated
Portfolio is or will be qualified as a Regulated Investment Company under
Subchapter M of the Code, that the Adviser will make every reasonable effort to
maintain such qualification (under Subchapter M or any successor or similar
provisions) and that the Adviser will notify the Company immediately upon having
a reasonable basis for believing that a Designated Portfolio has ceased to so
qualify or that it might not so qualify in the future.
2.5. The Company represents and warrants that the Contracts (a)
are, or prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance 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 under applicable law, that it has legally and validly established
the Account prior to any issuance or sale thereof as a segregated asset account
under Texas insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the 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, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 1940 Act. The Company also represents and warrants that it and the
Account are Qualified Persons. The Company shall register and qualify the
Contracts or interests therein as securities in accordance with the laws of the
various states only if and to the extent required by applicable law.
2.6. The Company represents and warrants that the Contracts are
currently, and at the time of issuance shall be, treated as life insurance or
annuity contracts, under applicable provisions of the Code, and that it will
make every reasonable effort to maintain such treatment, and that it will notify
the Distributor and the Adviser immediately upon having a reasonable basis for
believing the Contracts have ceased to be so treated or that they might not be
so treated in the future. In addition, Company represents and warrants that each
of its Accounts is a "segregated asset account" and that interests in the
Accounts are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Code and the regulations thereunder. Company will use every
reasonable effort to continue to meet such definitional requirements, and it
will notify the Trust and the Adviser immediately upon having a reasonable basis
for believing that such requirements have ceased to be met or that they might
not be met in the future.
2.7. The Distributor represents and warrants that it is
registered as a broker-dealer with the SEC and that it is a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD"). The
Distributor further represents and warrants that it will sell shares of the
Designated Portfolios in accordance with applicable state and federal laws in
all material respects.
2.8. The Adviser represents and warrants that it is registered
as an investment adviser with the SEC.
2.9. The Trust represents and warrants that all of its trustees,
officers, employees, and other individuals or entities dealing with the money
and/or securities of the Trust are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of the Trust in
an amount not less than the minimum coverage as required currently by Rule 1
7g-l of the 1940 Act or related provisions as may be promulgated from time to
time. The aforesaid bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.10. The Company represents and warrants that all of its
directors, officers, employees, and other individuals/entities employed or
controlled by the Company dealing with the money and/or securities of the
Account are covered by a blanket fidelity bond or similar coverage for the
benefit of the Account, in an amount not less than $5 million. The aforesaid
bond includes coverage for larceny and embezzlement and is issued by a reputable
bonding company. The Company agrees to hold for the benefit of the Trust and to
pay to the Trust any amounts lost from larceny, embezzlement or other events
covered by the aforesaid bond to the extent such amounts properly belong to the
Trust pursuant to the terms of this Agreement. The Company agrees to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Trust and the Adviser
in the event that such coverage no longer applies.
2.11. The Company represents and warrants that it shall comply
with any applicable privacy and notice provisions of 15 U.S.C. Section 6801-6827
and any applicable regulations promulgated thereunder (including but not limited
to 17 C.F.R. Part 248) as they may be amended.
2.12. The Company represents and warrants that it has in place an
anti-money laundering program ("AML program") that does now and will continue to
comply with applicable laws and regulations, including the relevant provisions
of the USA PATRIOT Act (Pub. L. No. 107-56 (2001)) and the Bank Secrecy Act, and
the regulations issued under either of the foregoing. The Company agrees to
cooperate with Distributor to satisfy Distributor's due diligence policies,
which may include annual AML compliance certifications, periodic AML due
diligence reviews and/or other requests deemed necessary to ensure the Company's
compliance with the AML regulations.
ARTICLE VI.
VOTING
3.1. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote Trust shares in accordance with instructions
received from
Contract owners; and
(iii) vote Trust shares for which no instructions have
been received in the same proportion as Trust shares
of such portfolio for which instructions have been
received, so long as and to the extent that the SEC
continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract
owners or to the extent otherwise required by law.
The Company will vote Trust shares held in any
segregated asset account in the same proportion as
Trust shares of such Designated Portfolio for which
voting instructions have been received from Contract
owners, to the extent permitted by law.
3.2. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in a Designated
Portfolio calculates voting privileges as required by the Exemptive Order and
consistent with any reasonable standards that the Trust may adopt and provide in
writing.
ARTICLE IV.
PROSPECTUSES AND PROXY STATEMENTS
4.1. The Trust or its agent shall provide the Company with as
many copies of the Trust's current prospectus (describing only the Designated
Portfolios listed on Schedule A), any supplements thereto or, to the extent
permitted and requested by Company, the Trust's profiles as the Company may
reasonably request. If requested by the Company in lieu thereof, the Trust or
its agent shall provide such documentation (including a "camera ready" final
copy of such documentation on diskette or electronically in .pdf format) and
other assistance as is reasonably necessary in order for the Company once each
year (or more frequently if the prospectus for the Trust is amended) to have the
prospectus for the Contracts and the Trust's prospectus or profile printed
together in one or more documents. The Trust agrees to cooperate with Company to
provide the documents on a timely basis to meet Company's reasonable deadline
requirements for production.
4.2. The Trust or its agent shall provide the Company with
information regarding the Designated Portfolios' expenses, which information may
include a table of fees and related narrative disclosure for use in any
prospectus or other descriptive document relating to a Contract. The Company
shall provide prior written notice of any proposed modification of such
information, which notice will describe in detail the manner in which the
Company proposes to modify the information, agrees to provide the Trust or its
agent with an opportunity to review such proposed modification prior to its use
by the Company, and agrees not to use the proposed modification without the
consent of the Trust or its agent, which consent shall not be unreasonably
withheld.
4.3. The Trust or its agent shall provide the Company with
copies of the Designated Portfolios' proxy material, reports to shareholders
(describing only the Designated Portfolios listed on Schedule A), and other
communications to shareholders (each, a "Shareholder Communication") in such
quantity as the Company shall reasonably require for distributing to Contract
owners. If requested by the Company in lieu thereof, the Trust or its agent
shall provide Shareholder Communications in "camera ready" format on diskette or
electronically in .pdf format. The Trust agrees to cooperate with Company to
provide such Shareholder Communications on a timely basis to meet Company's
reasonable deadline requirements for production and delivery.
ARTICLE V.
SALES MATERIAL AND INFORMATION
5.1. The Company shall furnish, or shall cause to be furnished,
to the Distributor and the Adviser each piece of sales literature or other
promotional material that the Company develops and in which the Trust (or a
Designated Portfolio thereof), the Distributor or the Adviser is named. No such
material shall be used until approved by the Distributor and the Adviser, and
the Distributor and the Adviser will use their reasonable best efforts to review
such sales literature or promotional material within ten Business Days after
receipt of such material. The Distributor and the Adviser reserve the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Trust (or a Designated Portfolio thereof), the
Distributor or the Adviser is named, and no such material shall be used if the
Distributor or the Adviser so objects.
5.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or the Distributor or
concerning the Trust or the Adviser or the Distributor in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus or SAI for the Trust shares, as such
registration statement and prospectus or SAI may be amended or supplemented from
time to time, or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the Distributor and the
Adviser, except with the permission of the Trust or its designee.
5.3. Each of the Distributor, the Trust or the Adviser or its
respective designee, shall furnish, or cause to be furnished, to the Company,
each piece of sales literature or other promotional material that it develops
and in which the Company, and/or its Account, is named. No such material shall
be used until approved by the Company, and the Company will use its best efforts
to review such sales literature or promotional material within ten Business Days
after receipt of such material. The Company reserves the right to reasonably
object to the continued use of any such sales literature or other promotional
material in which the Company and/or its Account is named, and no such material
shall be used if the Company so objects.
5.4. The Distributor and the Trust shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus (which shall
include an offering memorandum, if any, if the Contracts issued by the Company
or interests therein are not registered under the 1933 Act), or SAI for the
Contracts, as such registration statement, prospectus, or SAI may be amended or
supplemented from time to time, or in published reports for the 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.
5.5. The Trust will provide to the Company at least one complete
copy of all registration statements, prospectuses, SAIs, 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 Designated Portfolios or their shares, promptly after
the filing of such document(s) with the SEC or other regulatory authorities.
5.6. The Company will provide to the Distributor and the Trust
at least one complete copy of all registration statements, prospectuses (which
shall include an offering memorandum, if any, if
the Contracts issued by the Company or interests therein are not registered
under the 1933 Act), SAIs, 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 Contracts or the Account, promptly after the filing of such
document(s) with the SEC or other regulatory authorities. The Company shall
provide to the Distributor, the Adviser and the Trust any complaints received
from the Contract owners pertaining to the Trust or a Designated Portfolio.
5.7. For purposes of this Article V, the phrase "sales
literature and other promotional materials" includes, but is not limited to, any
of the following that refer to the Trust, any Designated Portfolio or any
affiliate of the Trust: advertisements (such as material published, or designed
for use in, a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, 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, reports, market letters, form letters,
seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, and registration statements, prospectuses, SAIs, shareholder reports,
proxy materials, and any other Shareholder Communications distributed or made
generally available with regard to the Trust.
ARTICLE VI.
FEES AND EXPENSES
6.1. Except as otherwise provided herein, no party to this
Agreement shall pay any fee or other compensation to any other party to this
Agreement. Except as otherwise provided herein, all expenses incident to
performance by a party under this Agreement shall be paid by such party.
6.2. The Trust or its agent will pay the expenses associated
with the following: setting the prospectus and profiles in type; printing copies
of the prospectus and profiles to be delivered to existing Contract owners
investing in the Designated Portfolios; providing a reasonable number of copies
of the SAI to the Company for itself and for any current owner of a Contract who
requests such SAI; setting in type and printing the proxy materials and reports
to shareholders (including the costs of printing a prospectus that constitutes
an annual report); and the preparation of all statements and notices required by
any federal or state law.
6.3. Unless otherwise agreed, the Company shall bear the
expenses of printing copies of the current prospectus and profiles for the
Contracts; printing copies of the Trust's prospectus and profiles that are used
in connection with offering the Contracts; distributing the Trust's prospectus
to owners of Contracts issued by the Company; and of distributing the Trust's
proxy materials and reports to such Contract owners. If the prospectus for the
Contracts and the Trust's prospectus are printed together in one or more
documents, printing costs shall be allocated to reflect the Trust's share,
pursuant to Section 6.2, of the total costs for printing the Trust's
prospectus(es) to be delivered to existing Contract owners investing in the
Designated Portfolio(s), determined according to the number of pages of the
Trust's respective portions of the documents.
ARTICLE VII.
POTENTIAL CONFLICTS
7.1. The parties to this Agreement agree that the conditions or
undertakings required by the Exemptive Order that may be imposed on the Company,
the Trust, the Distributor and/or the Adviser by virtue of such order by the
SEC: (i) shall apply only upon the sale of shares of the Designated Portfolios
to variable life insurance separate accounts (and then only to the extent
required under the 1940 Act); (ii) will be incorporated herein by reference; and
(iii) such parties agree to comply with such conditions and undertakings to the
extent applicable to each such party notwithstanding any provision of this
Agreement to the contrary.
7.2. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Exemptive Order) on terms and conditions
materially different from those contained in the Exemptive Order, then (a) the
parties to this Agreement 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 3.1 and 3.2 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
(a) The Company agrees to indemnify and hold harmless
each of the Trust, the Distributor, and the Adviser and each of their
trustees/directors and officers, and each person, if any, who controls the
Trust, the Distributor, or the Adviser within the meaning of Section 15 of the
1933 Act or who is under common control with the Trust, the Distributor, or the
Adviser (collectively, the "Indemnified Parties" 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 legal and other reasonable expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement
or alleged untrue statements of any material fact
contained in the registration statement, prospectus
(which shall include a written description of a
Contract that is not registered under the 1933 Act),
or SAI 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 to the extent that 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
Trust for use in the registration statement,
prospectus or SAI 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 Trust 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, SAI, or sales literature of
the Trust not supplied by the Company or persons
under its control) or wrongful conduct of the
Company or its agents or persons under the Company's
authorization or control, with respect to the sale
or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, SAI, or sales
literature of the Trust 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
Trust 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, required under the terms of this
Agreement (including a material failure, whether
unintentional or in good faith or otherwise, to
comply with the qualification requirements specified
in Section 2.6 of this Agreement); or
(v) 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; or
(vi) arise out of information provided to the Company
pursuant to this Agreement, or to any other
Participating Insurance Company pursuant to another
participation agreement, which information is based
on incorrect information supplied by the Company to
the Trust, Distributor or Adviser as limited by and
in accordance with the provisions of Sections 8.1(b)
and 8.1(c) hereof.
(b) The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of 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 its 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 an Indemnified Party, 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 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, unless
such Indemnified Party's interests in such legal process are materially adverse
to those of the Company and indemnification is otherwise appropriate under this
Section 8.1, PROVIDED that in no event will the Company be liable for the costs
and expenses of more than one counsel for all Indemnified Parties for related
claims and actions, unless the interests of one or more Indemnified Parties in
such legal process are materially adverse from the interests of one or more
other Indemnified Parties. The Company shall not settle or compromise any action
of which it assumes the defense without the consent of the affected Indemnified
Parties unless the Indemnified Parties are thereby released of all liability,
fault and obligation.
(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 Trust shares or the Contracts or the
operation of the Trust.
8.2. Indemnification by the Distributor
(a) The Distributor agrees 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
(collectively, the "Indemnified Parties" 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 Distributor) or litigation
(including legal and other reasonable expenses) to which the Indemnified Parties
may become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(i) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus, SAI or sales literature for
the Contracts not supplied by the Trust or the
Distributor) or wrongful conduct of the Distributor
with respect to the sale or distribution of the
Contracts or Trust shares; or
(ii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, SAI 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 and in conformity with information furnished to
the Company by or on behalf of the Distributor; or
(iii) arise as a result of any material failure by the
Distributor to provide the services and furnish the
materials required under the terms of this
Agreement;
(iv) arise out of or result from any material breach of
any representation and/or warranty made by the
Distributor in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Distributor; as limited by and in
accordance with the provisions of Sections 8.2(b)
and 8.2(c) hereof.
(b) The Distributor shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
(c) The Distributor 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 Distributor 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 Distributor of
any such claim shall not relieve the Distributor 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 one or more Indemnified Parties, the Distributor will be entitled to
participate, at its own expense, in the defense thereof The Distributor also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Distributor to such party
of the Distributor'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 Distributor 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, unless such Indemnified Party's interests in such action are
materially adverse to those of Distributor and indemnification is otherwise
appropriate under this Section 8.2, PROVIDED that in no event will Distributor
be liable for the costs and expenses of more than one counsel for all
Indemnified Parties for related claims or actions. Distributor shall not settle
or compromise any action of which it assumes the defense without the consent of
the affected Indemnified Parties unless the Indemnified Parties are thereby
released of all liability, fault and obligation.
(d) The Company agrees promptly to notify the
Distributor of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.3. Indemnification by the Adviser
(a) The Adviser agrees 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
(collectively, the "Indemnified Parties" 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 Adviser) or litigation (including
legal and other reasonable expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement
or prospectus or SAI or sales literature of the
Trust (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 to the extent that such statement or omission
or such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Adviser or Trust by or on behalf of
the Company for use in the registration statement,
prospectus or SAI for the Trust or in sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Trust 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, SAI or sales literature for
the Contracts not supplied by the Trust or the
Adviser) or wrongful conduct of the Trust or Adviser
with respect to the sale or distribution of the
Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, SAI 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 and in conformity with information furnished to
the Company by or on behalf of the Trust or the
Adviser; or
(iv) arise as a result of any material failure by the
Adviser to provide the services and furnish the
materials required under the terms of this Agreement
(including a material failure, whether unintentional
or in good faith or otherwise, to comply with the
diversification and other qualification requirements
specified in Sections 2.3 and 2.4 of this
Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Adviser in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Adviser; as limited by and in accordance with
the provisions of Sections 8.3(b) and 8.3(c) hereof
(b) The Adviser shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
(c) The Adviser 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 Adviser 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 Adviser of any such claim shall not
relieve the Adviser 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 Party, the Adviser will be entitled to participate, at its own
expense, in the defense thereof The Adviser also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Adviser to such party of the Adviser'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 Adviser 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, unless such Indemnified Party's
interests in such legal process are materially adverse to those of the Adviser
and indemnification is otherwise appropriate under this Section 8.3, PROVIDED
that in no event will the Adviser be liable for the costs and expenses of more
than one counsel for all Indemnified Parties for related claims or actions. The
Adviser shall not settle or compromise any action of which it assumes the
defense without the consent of the affected Indemnified Parties unless the
Indemnified Parties are thereby released of all liability, fault and obligation.
(d) The Company agrees promptly to notify the Adviser of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
8.4. Indemnification By the Trust
(a) The Trust agrees 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
(collectively, the "Indemnified Parties" for purposes of this Section 8.4)
against any and all losses, claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the Trust) or litigation
(including legal and other reasonable expenses) to which the Indemnified Parties
may be required to pay or may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, expenses, damages,
liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise as a result of any material failure by the
Trust to provide the services and furnish the
materials required 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 Trust
in this Agreement or arise Out of or result from any
other material breach of this Agreement by the
Trust; as limited by and in accordance with the
provisions of Sections 8.4(b) and 8.4(c) hereof The
parties acknowledge that the Trust's indemnification
obligations under this Section 8.4 are subject to
applicable law. The Company agrees that, in the
event an obligation to indemnify exists pursuant to
Section 8.4 as well as Section 8.2 or Section 8.3
hereof~ it will seek satisfaction under the
indemnification provisions of Section 8.2 or Section
8.3 before seeking indemnification under this
Section 8.4.
(b) The Trust shall not be liable under this
indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of 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 or to the
Company or the Account, whichever is applicable.
(c) The Trust 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 Trust 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 Trust of any
such claim shall not relieve the Trust 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 Trust or its agent will be entitled to
participate, at its own expense, in the defense thereof. The Trust or its agent
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Trust to such party of
the Trust's (or its agent'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 Trust or its agent 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, unless such Indemnified Party's interests in
such legal process are materially adverse to those of the Trust and
indemnification is otherwise appropriate under this Section 8.4, PROVIDED that
in no event will the Trust be liable for the costs and expenses of more than one
counsel for all Indemnified Parties for related claims or actions. The Trust
shall not settle or compromise any action of which it assumes the defense
without the consent of the affected Indemnified Parties unless the Indemnified
Parties are thereby released of all liability, fault and obligation.
(d) The Company agrees promptly to notify the Trust of
the commencement of any litigation or proceeding against it or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Trust.
ARTICLE IX.
APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
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 SEC
may grant (including, but not limited to, the Exemptive Order) and the terms
hereof shall be interpreted and construed in accordance therewith. If, in the
future, the Exemptive Order should no longer be necessary under applicable law,
then Article VII shall no longer apply.
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 with
respect to some or all Designated
Portfolios, by three (3) months advance written notice delivered to the other
parties; or
(b) termination by the Company by written notice to the
Distributor, the Adviser and the Trust based upon the Company's determination
that shares of the Trust are not reasonably available to meet the requirements
of the Contracts; or
(c) termination by the Company by written notice to the
Distributor, the Adviser and the Trust in the event any of the Designated
Portfolio'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; or
(d) termination by the Distributor, the Adviser or the
Trust in the event that formal administrative proceedings are instituted against
the Company by the NASD, the SEC, an insurance commissioner or like official of
any state or any other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the operation of any Account,
or the purchase of the Designated Portfolios' shares; provided, however, that
the Distributor or the Adviser determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a material adverse
effect upon the ability of the Company to perform its obligations under this
Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Trust, the Distributor or
the Adviser by the SEC or any state securities or insurance department or any
other regulatory body; provided, however, that the Company determines in its
sole judgment exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of, the Distributor, the
Adviser or the Trust to perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the
Distributor, the Adviser and the Trust with respect to any Designated Portfolio
in the event that such Designated Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M or fails to comply with the Section 8
17(h) diversification requirements specified in Section 2.3 hereof, or if the
Company reasonably believes that such Designated Portfolio may fail to so
qualify or comply; or
(g) termination by the Distributor, the Adviser or the
Trust by written notice to the Company in the event that the Contracts fail to
meet the qualifications specified in Section 2.6 hereof or
(h) termination by the Distributor, the Adviser or the
Trust by written notice to the Company, if the Distributor or the Adviser, shall
determine, in its sole judgment exercised in good faith, that the Company 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
(i) termination by the Company by written notice to the
Distributor, the Adviser and the Trust, if the Company shall determine, in its
sole judgment exercised in good faith, that the Distributor, the Adviser or the
Trust 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
(j) termination by the Adviser or the Trust by written
notice to the Company, if the Company gives the Adviser the written notice
specified in Section 1 .7(a)(ii) hereof and at the time such notice was given
there was no notice of termination outstanding under any other provision of this
Agreement; provided, however, any termination under this Section 10.1(j) shall
be effective forty-five days after the notice was given; or
(k) termination by the Trust if the Board has decided to
(i) refuse to sell shares of any Designated Portfolio to the Company and/or any
of its Accounts; (ii) suspend or terminate the offering of shares of any
Designated Portfolio; or (iii) dissolve, reorganize, liquidate, merge or sell
all assets of the Trust or any Designated Portfolio, subject to the provisions
of Section 1.1; or
(1) termination by the Company upon any substitution of
the shares of another investment company or series thereof for shares of a
Designated Portfolio of the Trust in accordance with the terms of the Contracts,
provided that the Company has given at least 45 days prior written notice to the
Adviser and the Trust of the date of substitution;
(m) termination by any party in the event that the Board
determines that a material irreconcilable conflict exists as provided in Article
VII; or
(n) termination with respect to the Distributor
automatically upon termination of the Distribution Agreement between Distributor
and the Trust.
10.2. (a) Notwithstanding any termination of this Agreement,
and except as provided in Section 10.2(b), the Trust and the Distributor shall,
at the option of the Company, continue, until the one year anniversary from the
date of termination, and from year to year thereafter if deemed appropriate by
the Trust and the Distributor, to make available additional shares of the
Designated Portfolios 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, based
on instructions from the owners of the Existing Contracts, the Accounts shall be
permitted to reallocate investments in the Designated Portfolios of the Trust
and redeem investments in the Designated Portfolios, and shall be permitted to
invest in the Designated Portfolios in the event that owners of the Existing
Contracts make additional premium payments under the Existing Contracts. Company
agrees, promptly after any termination of this Agreement, to take all steps
necessary to redeem the investment of the Accounts in the Designated Portfolios
within one year from the date of termination of the Agreement as provided in
Article X. Such steps shall include, but not be limited to, obtaining an order
pursuant to Section 26(c) of the 1940 Act to permit the substitution of other
securities for the shares of the Designated Portfolios. The Trust may, in its
discretion, permit the Accounts to continue to invest in the Designated
Portfolios beyond such one year anniversary for an additional year beginning on
the first annual anniversary of the date of termination, and from year to year
thereafter; provided that the Trust agrees in writing to permit the Accounts to
continue to invest in the Designated Portfolios at the beginning of any such
year.
(b) In the event (i) the Agreement is terminated
pursuant to Sections 10.1(g) or 10.1(m), at the option of the Trust, the
Distributor or the Adviser; or (ii) the one year anniversary of the termination
of the Agreement is reached or, after waiver as provided in Section 10.2(a),
such subsequent anniversary is reached (each of (i) and (ii) referred to as a
"triggering event" and the date of termination as provided in (i) or the date of
such anniversary as provided in (ii) referred to as the "request date"), the
parties agree that such triggering event shall be considered as a request for
immediate redemption of shares of the Designated Portfolios held by the
Accounts, received by the Trust and its agents as of the request date, and the
Trust agrees to process such redemption request in accordance with the 1940 Act
and the regulations thereunder and the Trust's registration statement.
(c) 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. The parties
further agree that, to the extent that all or a portion of the assets of the
Accounts
continue to be invested in the Trust or any Designated Portfolio of the Trust,
Articles I, II, VII, VIII and IX will remain in effect after termination.
10.3. Notwithstanding any termination of this Agreement, each
party's obligation under Article VIII to indemnify the other parties 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 Company: Jefferson National Life Insurance Company
0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
If to Distributor BISYS Fund Services, LP
c/o BISYS Fund Services, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: President
If to Adviser: ______________________
If to the Trust: Variable Insurance Funds
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: President
ARTICLE XII.
MISCELLANEOUS
12.1. 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 without the express written consent
of the affected party until such time as such information has come into the
public domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.4. 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.
12.5. Each party hereto 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.
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 variable insurance
operations of the Company are being conducted in a manner consistent with the
Texas insurance laws and regulations and any other applicable law or
regulations.
12.6. 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.
12.7. 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 Adviser may assign this
Agreement or any rights or obligations hereunder to any affiliate or company
under common control with the Adviser, if such assignee is duly licensed and
registered to perform services under this Agreement. The Company shall promptly
notify the Trust, the Distributor and the Adviser of any change in control of
the Company.
12.8. All persons dealing with the Trust must look solely to the
property of the respective Designated Portfolios listed on Schedule A hereto as
though each such Designated Portfolio had separately contracted with such party
for the enforcement of any claims against the Trust. The parties agree that
neither the Board, officers, agents or shareholders of the Trust assume any
personal liability or responsibility for obligations entered into by or on
behalf of the Trust. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but bind only the trust property
of the Trust as provided in the Trust's Declaration of Trust. The provisions of
this section 12.8 shall survive termination of the Agreement.
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 as of the date specified below.
Jefferson National Life Insurance Company: By its authorized officer
By: /s/ Xxxxx X. Xxxxxx
Title: General Counsel
Date:
Choice Investment Management, LLC: By its authorized officer
By: /s/ Signature Illegible
Title: COO
Date:
BISYS Fund Services, L P: By its authorized officer
By: /s/ Signature Illegible
Title: Executive Vice President
Date: 9-18-03
Variable Insurance Funds:
By: /s/ Signature Illegible
Title: President
Date: 9-18-03
May 1,2003
SCHEDULE A DESIGNATED PORTFOLIO(S)
ACCOUNT(S) CONTRACT(S) CHOICE VILT MARKET NEUTRAL
FUND
Jefferson National
Variable Annuity Account C CVIC-2000 CHOICE VIT LONG-SHORT FUND
Jefferson National
Variable Annuity Account E CVIC-2001
Jefferson National
Variable Annuity Account F CVIC-2004
Jefferson National
Variable Annuity Account G CVIC-2005
Jefferson National
Variable Annuity Account H 22-4056
Jefferson National
Variable Annuity Account I 22-4025
Jefferson National
Variable Annuity Account L 32-4000
32-4002
32-4003
22-4047
22-4048
