Exhibit (8)(j)(iv)
FUND PARTICIPATION AGREEMENT
THIS FUND PARTICIPATION AGREEMENT ("Agreement") made as of the 13 day of
February, 2008, by and between Lord Xxxxxx Series Fund, Inc. (the "Fund"), a
Maryland Corporation, on its behalf and on behalf of each separate investment
series thereof, whether existing as of the date above or established subsequent
thereto, (each a "Portfolio" and collectively, the "Portfolios"), Lord Xxxxxx
Distributor LLC, a New York limited liability company (the "Distributor"), and
Jefferson National Life Insurance Company (the "Company"), a life insurance
company organized under the laws of the State of Texas.
WHEREAS, the parties have entered into a Fund Participation Agreement (the
"FPA") dated as of March 6, 1995, as amended, and the parties have agreed that
this Agreement (the "Agreement") will replace and supersede the FPA; and
WHEREAS, the parties have entered into a Shareholder Information Agreement (the
"SIA") dated as of March 27, 2007 and the parties have agreed that this
Agreement will replace and supersede the SIA; and
WHEREAS, the Fund is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"), as
an open-end, diversified management investment company; and
WHEREAS, the Fund is organized as a series fund comprised of separate investment
series, namely the Portfolios; and
WHEREAS, the Fund was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies and also offers its shares to certain qualified pension and
retirement plans; and
WHEREAS, the Fund has filed an application with the SEC requesting an order
granting relief from various provisions of the '40 Act and the rules thereunder
to the extent necessary to permit Fund shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated participating insurance companies accounts ("Participating
Companies") and qualified pension and retirement plans outside the separate
account context (including, without limitation, those trusts, plans, accounts
contracts or annuities described in Sections 401(a), 403(a), 403(b), 408(a),
408(b), 414(d), 457(b), 408(k), 501(c)(18) of the Internal Revenue Code of 1986,
as amended (the "Code") and any other trust, plan, account, contract or annuity
trust that is determined to be within the scope of Treasury Regulation
ss.1.817.5(f)(3)(iii)("Plans"); and
WHEREAS, the Company has established or will establish one or more separate
accounts ("Separate Accounts") to offer Variable Contracts and is desirous of
having the Fund as one of the underlying funding vehicles for such Variable
Contracts; and
WHEREAS, the Distributor is registered with the SEC as a broker-dealer under the
Securities Exchange Act of 1934, (the "'34 Act") as amended, and acts as the
Fund's principal underwriter and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Fund to fund the aforementioned
Variable Contracts and the Fund is authorized to sell such shares to the Company
at net asset value ("NAV").
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, and the Distributor agree as follows:
Article I. Sale of Fund Shares
1.1 The Fund agrees to make Variable Contract Class shares ("Shares") of the
Fund available to the Separate Accounts of the Company for investment of
purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in the Fund's then current prospectus and statement of
additional information. The Company agrees to purchase and redeem the Shares of
the Portfolios offered by the then current prospectus and statement of
additional information of the Fund in accordance with the provisions of such
prospectus and statement of additional information. The Company shall not permit
any person other than a Variable Contract owner, or such owner's investment
adviser, registered representative or attorney-in-fact ("Owner") to give
instructions to the Company which would require the Company to redeem or
exchange Shares of the Fund.
1.2 The Fund agrees to sell to the Company those Shares of the selected
Portfolios of the Fund which the Company orders, executing such orders on a
daily basis at the NAV next computed after receipt by the Fund or its designee
of the order for the Shares of the Fund. For purposes of this Section 1.2, the
Company shall be the designee of the Fund for receipt of such orders from the
designated Separate Account and receipt by such designee shall constitute
receipt by the Fund; provided, to the extent not inconsistent with regulatory
requirements, that the Company receives the order by 4:00 p.m. Eastern time (or
other applicable closing time of the New York Stock Exchange) and the Fund
receives notice from the Company by telephone, facsimile (orally confirmed) or
by such other means as the Fund and the Company may mutually agree of such order
by 9:00 a.m. Eastern time on the next following Business Day. "Business Day"
shall mean any day on which the New York Stock Exchange is open for trading and
on which the Fund calculates its NAV pursuant to the rules of the SEC.
1.3 The Fund agrees to redeem on the Company's request, any full or fractional
Shares of the Fund held by the Company, executing such requests on a daily basis
at the NAV next computed after receipt by the Fund or its designee of the
request for redemption, in accordance with the provisions of this agreement and
the Fund's then current registration statement. For purposes of this Section
1.3, the Company shall be the designee of the Fund for receipt of requests for
redemption from the designated Separate Account and receipt by such designee
shall constitute receipt by the Fund; provided, to the extent not inconsistent
with regulatory requirements, that the Company receives the request for
redemption by 4:00 p.m. Eastern time (or other applicable closing time of the
New York Stock Exchange) and the Fund receives notice from the Company by
telephone, facsimile (orally confirmed) or by such other means as the Fund and
the Company may mutually agree of such request for redemption by 9:00 a.m.
Eastern time on the next following Business Day.
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1.4 The Fund shall furnish, on or before the ex-dividend date, notice to the
Company of any income dividends or capital gain distributions payable on the
Shares of any Portfolios of the Fund. The Company hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's Shares in additional Shares of the Portfolio. The Fund shall notify
the Company or its designee of the number of Shares so issued as payment of such
dividends and distributions.
1.5 The Fund shall make the NAV per share for the selected Portfolios available
to the Company on a daily basis, via a mutually agreeable form, as soon as
reasonably practicable after the NAV per share is calculated but shall use its
best efforts to make such NAV available by 6:30 p.m. Eastern time.
1.6 At the end of each Business Day, the Company shall use the information
described in Section 1.5 to calculate Separate Account unit values for the day.
Using these unit values, the Company shall process each such Business Day's
Separate Account transactions based on requests and premiums received by it by
the close of trading on the floor of the New York Stock Exchange (currently 4:00
p.m. Eastern time) to determine the net dollar amount of Fund Shares which shall
be purchased or redeemed at that day's closing NAV per share. To the extent not
inconsistent with regulatory requirements, the net purchase or redemption orders
so determined shall be transmitted to the Fund by the Company by 9:00 a.m.
Eastern time on the Business Day next following the Company's receipt of such
requests and premiums in accordance with the terms of Sections 1.2 and 1.3
hereof.
1.7 If the Company's order requests the purchase of Fund Shares, the Company
shall pay for such purchase by wiring federal funds to the Fund or its
designated custodial account on the day the order is transmitted by the Company.
If the Company's order requests a net redemption resulting in a payment of
redemption proceeds to the Company, the Fund shall wire the redemption proceeds
to the Company by the next Business Day.
1.8 The Fund agrees that all Shares of the Portfolios of the Fund will be sold
only to Participating Insurance Companies which have agreed to participate in
the Fund to fund their Separate Accounts and/or to Plans, all in accordance with
the requirements of Section 817(h) of the Code and Treasury Regulation
ss.1.817-5. Shares of the Portfolios of the Fund will not be sold directly to
the general public.
1.9 The Fund may refuse to sell Shares of any Portfolios to any person, or
suspend or terminate the offering of the Shares of any Portfolios if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Board of Directors/Trustees of the Fund (the
"Board"), deemed necessary, desirable or appropriate. Without limiting the
foregoing, it has been determined that there is a significant risk that the Fund
and its shareholders may be adversely affected by short-term or excessive
trading activity, particularly activity used to try and take advantage of
short-term swings in the market. Accordingly, the Fund reserves the right to
reject any purchase order, including those purchase orders with respect to
shareholders or accounts whose trading has been or may be disruptive to the Fund
or that may otherwise adversely affect the Fund. The Company agrees to use its
reasonable best efforts to render assistance to, and to cooperate with, the Fund
to achieve compliance with the Fund's policies and restrictions on short-term or
excessive trading activity as they may be amended from time to time, or to the
extent required by applicable regulatory requirements.
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1.10 Issuance and transfer of Portfolio Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Separate Accounts. Shares
ordered from Portfolios will be recorded in appropriate book entry titles for
the Separate Accounts.
1.11 NAV errors shall be handled in accordance with Section 9.3 below.
Article II. Owner Transaction Information
2.1 The Company agrees to provide to the Funds or their designee, upon request,
the taxpayer identification number ("TIN"), the Individual/International
Taxpayer Identification Number ("ITIN"), or other government-issued identifier
("GII"), if known, of any or all Owners underlying an Account and the amount,
date, name or other identifier of any investment professional(s) associated with
such Owners (if known), and transaction type (purchase, redemption, transfer, or
exchange) of every purchase, redemption, transfer, or exchange of Shares held
through an Account (the "Information"). In addition:
(i) Requests for Information must set forth a specific period, not to
exceed ninety (90) business days from the date of the most recent calendar
month-end preceding the request, for which Information is sought. The Funds or
their designee may request Information older than ninety (90) business days from
the date of the request as they deem necessary to investigate compliance with
policies established by the Funds for the purpose of eliminating or reducing any
dilution of the value of the outstanding Shares issued by the Funds;
(ii) In accordance with the preceding paragraph, the Company agrees to
transmit the Information to the Funds or their designee promptly, but in any
event not later than five (5) business days, after receipt of a request for
Information or after the last day of a period for which the Information has been
requested, unless mutually agreed upon otherwise by the parties. If requested by
the Funds or their designee, the Company agrees to use reasonable efforts to
determine promptly whether any specific person about whom it has received
Information is itself a financial intermediary ("Indirect Intermediary") and,
upon further request of the Funds or their designee, promptly either: (i)
provide or arrange to provide to the Funds or their designee the Information and
any other information required to be provided by law, rule, or regulation for
those Owners who hold accounts with an Indirect Intermediary; or (ii) restrict
or prohibit the Indirect Intermediary from purchasing Shares in nominee name on
behalf of other persons. The Company agrees to inform the Funds or their
designee whether the Company will perform (i) or (ii). For purposes of this
paragraph, an "Indirect Intermediary" has the same meaning as provided in Rule
22c-2 under the '40 Act ("Rule 22c-2");
(iii) To the extent practicable, the format for any Information provided
to the Funds should be consistent with the NSCC's Standardized Data Reporting
Format, or if not practicable, in an alternative format mutually agreed upon by
the parties; and
(iv) The Funds agree not to use Information received from the Company
solely as a result of entering into this Agreement for marketing or any other
similar purpose without the Company's prior written consent, unless otherwise
required by law, rule, or regulation.
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2.2 The Company agrees to execute instructions from the Funds or their designee
("Instructions") to restrict or prohibit further purchases or exchanges of
Shares by Owners that have been identified by the Funds or a designee as having
engaged in transactions in Shares (directly or indirectly through the Account)
that may violate the Funds' policies regarding short term or excessive trading
activity. The Funds or their designee will include in the Instructions the TIN,
ITIN, or GII, if known, and the specific restriction(s) to be implemented. If
the TIN, ITIN, or GII, is not known, the Instructions must include an equivalent
identifying number of the Owners or other agreed upon information to which the
Instructions relate. In addition, the Company agrees as follows:
(i) To implement Instructions as soon as reasonably practicable, but not
later than five (5) business days after receipt of the Instructions by the
Company; and
(ii) To provide confirmation to the Funds in a mutually agreed upon format
that Instructions have been implemented. The Company agrees to provide
confirmation as soon as is reasonably practicable, but not later than ten (10)
business days after the Instructions have been implemented.
2.3 For the purpose of this Article 2:
(i) The term "Funds" does not include any "excepted funds" as defined in
Rule 22c.
(ii) The term "Shares" means the interests of Owners corresponding to the
redeemable securities of record issued by the Funds under the 1940 Act that are
held by the Company.
(iii) The term "Owner" means the beneficial Owner of Shares, whether the
Shares are held directly or by the Company in nominee name.
Article III. Fees and Expenses
3.1 Except as otherwise provided under this Agreement, the Fund and the
Distributor shall pay no fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the Fund or
the Distributor, except as made a part of this Agreement as it may be amended
from time to time with the mutual consent of the parties hereto. All expenses
incident to performance by each party of its respective duties under this
Agreement shall be paid by that party, unless otherwise specified in this
Agreement
Article IV. Representations and Warranties
4.1 The Company represents and warrants that it is an insurance company duly
organized and in good standing under the laws of Texas and that it has legally
and validly established each Separate Account as a segregated asset account
under such laws.
4.2 The Company represents and warrants that it has registered or, prior to any
issuance or sale of the Variable Contracts, will register each Separate Account
as a unit investment trust ("UIT") in accordance with the provisions of the '40
Act and cause each Separate Account to remain so registered to serve as a
segregated asset account for the Variable Contracts, unless an exemption from
registration is available.
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4.3 The Company represents and warrants that the income, gains and losses,
whether or not realized, from assets allocated to each Separate Account are, in
accordance with the applicable Variable Contracts, to be credited to or charged
against such Separate Account without regard to other income, gains or losses
from assets allocated to any other accounts of the Company. The Company
represents and warrants that the assets of the Separate Account are and will be
kept separate from the General Account of the Company and any other separate
accounts the Company may have, and will not be charged with liabilities from any
business that the Company may conduct or the liabilities of any companies
affiliated with the Company.
4.4 The Company represents and warrants that the Variable Contracts will be
registered under the Securities Act of 1933 (the "'33 Act") unless an exemption
from registration is available prior to any issuance or sale of the Variable
Contracts and that the Variable Contracts will be issued and sold in compliance
in all material respects with all applicable federal and state laws and further
that the sale of the Variable Contracts shall comply in all material respects
with state insurance law suitability requirements. The Company agrees to notify
the Fund promptly of any investment restrictions imposed by state insurance law
applicable to the Fund.
4.5 The Company represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify the Fund immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
4.6 The Fund represents and warrants that the Portfolio Shares offered and sold
pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and the Fund shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such Shares. The Fund shall amend its registration statement under the '33 Act
and the '40 Act from time to time as required in order to effect the continuous
offering of its Shares. The Fund shall register and qualify its Shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund.
4.7 The Fund represents and warrants that each Portfolio will comply with the
diversification requirements set forth in Section 817(h) of the Code, and the
rules and regulations thereunder, including without limitation Treasury
Regulation ss.1.817-5, and will notify the Company immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance. The Fund shall provide Company a
certification of its compliance with Section 817(h) of the Code and Treasury
Regulation 1.817-5 within thirty (30) days of the end of each calendar quarter.
4.8 The Fund represents and warrants that each Portfolio invested in by the
Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and to qualify for such treatment for
each taxable year and will notify the Company immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
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4.9 The Distributor represents and warrants that it is and will be a member in
good standing of the Financial Industry Regulatory Authority, Inc. ("FINRA") and
is and will be registered as a broker-dealer with the SEC. The Distributor
further represents that it will sell and distribute Portfolio Shares in
accordance with all applicable state and federal laws and regulations, including
without limitation the '33 Act, the '34 Act and the '40 Act.
4.10 The Distributor represents and warrants that it will remain duly registered
and licensed in all material respects under all applicable federal and state
securities laws and shall perform its obligations hereunder in compliance in all
material respects with any applicable state and federal laws.
4.11 The Fund represents and warrants that all its directors, trustees,
officers, employees, and other individuals/entities who deal with the money
and/or securities of the Fund are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than that required by Rule 17g-1 under the '40 Act. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. The Fund shall make all reasonable
efforts to see that this bond or another bond containing these same provisions
is always in effect, and each agrees to notify the Company in the event such
coverage no longer applies.
4.12 The Company represents and warrants that all of its employees and agents
who deal with the money and/or securities of the Fund are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage in an
amount not less than that required to be maintained by entities subject to the
requirements of Rule 17g-1 of the '40 Act. The aforesaid bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company. The Company shall make all reasonable efforts to see that this bond or
another bond containing these same provisions is always in effect, and each
agrees to notify the Fund in the event such coverage no longer applies.
Article V. Prospectus and Proxy Statements
5.1 The Fund shall prepare and be responsible for filing with the SEC 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 Fund.
5.2 At least annually, the Fund or its designee shall provide the Company, free
of charge, with as many copies of the current prospectus for the Shares of the
Portfolios as the Company may reasonably request for distribution to existing
Owners whose Variable Contracts are funded by such Shares. The Fund or its
designee shall provide the Company, at the Company's expense, with as many more
copies of the current prospectus for the Shares as the Company may reasonably
request for distribution to prospective purchasers of Variable Contracts. If
requested by the Company in lieu thereof, the Fund or its designee shall provide
such documentation in a mutually agreeable form and such other assistance as is
reasonably necessary in order for the parties hereto once a year (or more
frequently if the prospectus for the Shares is supplemented or amended) to have
the prospectus for the Variable Contracts and the prospectus for the Fund Shares
and any other fund shares offered as investments for the Variable Contracts
printed at the
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Company's expense together in one document, provided however that the Company
shall ensure that, except as expressly authorized in writing by the Fund, no
alterations, edits or changes whatsoever are made to prospectuses or other Fund
documentation after such documentation has been furnished to the Company or its
designee, and the Company shall assume liability for any and all alterations,
errors or other changes that occur to such prospectuses or other Fund
documentation after it has been furnished to the Company or its designee.
5.3 The Fund, at the Fund's expense, shall provide the Company with copies of
the Fund's proxy statements, Fund reports to shareholders, and other Fund
communications to shareholders in such quantity as the Company shall reasonably
require for distributing to Owners. Alternatively and in lieu thereof, the
Company may elect to print at its own expense any of the Fund's proxy
statements, Fund reports to shareholders, and other Fund communications to
shareholders.
5.4 The Fund will provide the Company with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, and all amendments or supplements to any of the above
that relate to the Portfolios promptly after the filing of each such document
with the SEC or other regulatory authority. The Company will provide the Fund
with at least one complete copy of all prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements, and all
amendments or supplements to any of the above that relate to a Separate Account
promptly after the filing of each such document with the SEC or other regulatory
authority.
Article VI. Sales Materials
6.1 The Company will furnish, or will cause to be furnished, to the Fund or the
Distributor, each piece of sales literature or other promotional material in
which the Fund, the Distributor or any affiliate thereof is named, at least ten
(10) business days prior to its intended use. No such material shall be used
unless the Fund or the Distributor approves such material. Such approval shall
be presumed given if notice to the contrary is not received by the Company
within ten days after receipt by the Fund or the Distributor of such material.
6.2 The Fund or the Distributor will furnish, or will cause to be furnished, to
the Company, each piece of sales literature or other promotional material in
which the Company or its Separate Accounts are named, at least ten (10) business
days prior to its intended use. No such material shall be used unless the
Company approves such material. Such approval shall be presumed given if notice
to the contrary is not received by the Fund within ten days after receipt by the
Company of such material.
6.3 Except with the permission of the Company, neither the Fund nor the
Distributor shall give any information or make any representations on behalf of
the Company or concerning the Company, the Separate Accounts, or the Variable
Contracts other than the information or representations contained in the
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts for distribution to Owners of
such Variable Contracts, or in sales literature or other promotional material
approved by the Company or its designee. Neither the Fund nor the Distributor
shall give such information or make such representations or statements in a
context that causes the information, representations or statements to be false
or misleading.
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6.4 Except with the permission of the Fund or the Distributor, neither the
Company nor its affiliates or agents shall give any information or make any
representations or statements on behalf of the Fund, the Distributor or any
affiliate thereof or concerning the Fund, the Distributor or any affiliate
thereof, other than the information or representations contained in the
registration statements or prospectuses for the Fund, as such registration
statements and prospectuses may be amended or supplemented from time to time, or
in reports to shareholders or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or the Distributor
or designee thereof. Neither the Company nor its affiliates or agents shall give
such information or make such representations or statements in a context that
causes the information, representations or statements to be false or misleading.
6.5 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
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 (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or 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, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under the National Association of Securities Dealers, Inc. or FINRA
rules, the '40 Act or the '33 Act.
Article VII. Potential Conflicts
7.1 The parties acknowledge that the Fund has received an exemptive order from
the SEC granting relief from various provisions of the '40 Act and the rules
thereunder to the extent necessary to permit the Fund Shares to be sold to and
held by variable annuity and variable life insurance separate accounts of
Participating Companies and Plans. The terms of such exemptive order (the "Mixed
and Shared Funding Exemptive Order"), require the Fund and each Participating
Company and Plan to comply with conditions and undertakings substantially as
provided in this Article. In the event of any inconsistencies between the terms
of the Mixed and Shared Funding Exemptive Order and those provided for in this
Article, the conditions and undertakings imposed by the Mixed and Shared Funding
Exemptive Order shall govern this Agreement.
7.2 The Fund's Board will monitor the Fund for the existence of any material
irreconcilable conflict between and among the interests of the Owners of all
Participating Companies and of Plan Participants and Plans investing in the
Fund, and determine what action, if any, should be taken in response to such
conflicts. An irreconcilable material conflict may arise for a variety of
reasons, which may include: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling or any
similar action by insurance, tax or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of the Fund are being managed; (e) a difference in
voting instructions
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given by variable annuity and variable life insurance contract Owners; (f) a
decision by a Participating Insurance Company to disregard the voting
instructions of Owners and (g) if applicable, a decision by a Plan to disregard
the voting instructions of plan participants.
7.3 The Company will report any potential or existing conflicts to the Board.
The Company will be obligated to assist the Board in carrying out its duties and
responsibilities under the Mixed and Shared Funding Exemptive Order by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. The responsibility includes, but is not limited to, an
obligation by the Company to inform the Board whenever it has determined to
disregard Owners voting instructions.
7.4 If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract Owner investments in the Fund, the Board shall give prompt notice of
the conflict and the implications thereof to all Participating Companies and
Plans. If the Board determines that the Company is a relevant Participating
Company or Plan with respect to said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to: (a) withdrawing the assets
allocable to some or all of the Separate Accounts from the Fund or any Portfolio
thereof and reinvesting those assets in a different investment medium, which may
include another Portfolio of the Fund, or another investment company; (b)
submitting the question as to whether such segregation should be implemented to
a vote of all affected Owners and as appropriate, segregating the assets of any
appropriate group (i.e., variable annuity or variable life insurance contract
Owners of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected Owners the option of making such a
change; and (c) establishing a new registered management investment company (or
series thereof) or managed separate account. If a material irreconcilable
conflict arises because of the Company's decision to disregard Owner voting
instructions, and that decision represents a minority position or would preclude
a majority vote, the Company may be required, at the election of the Fund to
withdraw the Separate Account's investment in the Fund, and no charge or penalty
will be imposed as a result of such withdrawal. The responsibility to take such
remedial action shall be carried out with a view only to the interests of the
Owners. For the purposes of this Article, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
the Fund or its investment adviser (or any other investment adviser of the Fund)
be required to establish a new funding medium for any Variable Contract.
Further, the Company shall not be required by this Article to establish a new
funding medium for any Variable Contracts if any offer to do so has been
declined by a vote of a majority of Owners materially and adversely affected by
the irreconcilable material conflict.
7.5 The Board's determination of the existence of an irreconcilable material
conflict and its implications shall be made known promptly and in writing to the
Company.
7.6 No less than annually, the Company shall submit to the Board such reports,
materials or data as the Board may reasonably request so that the Board may
fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
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7.7 If and to the extent that the SEC promulgates new rules or regulations with
respect to mixed or shared funding on terms and conditions materially different
from those contained in the Mixed and Shared Funding Exemptive Order, then (a)
the Fund and/or the Participating Insurance Companies as appropriate, shall take
such steps as may be necessary to comply with such rules and regulations, as
adopted, to the extent such rules are applicable; and (b) this Article VI shall
be deemed to incorporate such new terms and conditions, and any term or
condition of this Article VI that is inconsistent therewith, shall be deemed to
be succeeded thereby.
7.8 The Company acknowledges it has been advised by the Fund that it may be
appropriate for the Company to disclose the potential risks of mixed and shared
funding in prospectuses or other applicable disclosure documents.
Article VIII. Voting
8.1 The Company will provide pass-through voting privileges to all Owners so
long as the SEC continues to interpret the '40 Act as requiring pass-through
voting privileges for Owners. Accordingly, the Company, where applicable, will
vote Shares of the Portfolio held in its Separate Accounts in a manner
consistent with voting instructions timely received from its Owners. The Company
will be responsible for assuring that each of its Separate Accounts that
participates in the Fund calculates voting privileges in a manner consistent
with other Participating Insurance Companies. The Company will vote Shares for
which it has not received timely voting instructions, as well as Shares it owns,
in the same proportion as its votes those Shares for which it has received
voting instructions. The Company and its agents shall not oppose or interfere
with the solicitation of proxies for Fund Shares held for such Owners.
Article IX. Indemnification
9.1 Indemnification by the Company. Subject to Section 9.3 below, the Company
agrees to indemnify and hold harmless the Fund and the Distributor, and each of
their trustees, directors, members, principals, officers, partners, employees
and agents and each person, if any, who controls the Fund or the Distributor
within the meaning of Section 15 of the '33 Act (collectively, the "Indemnified
Parties" for purposes of this Article) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company, which consent shall not be unreasonably withheld) or
litigation (including reasonable legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's Shares or the Variable Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the registration statement or
prospectus for the Variable Contracts or contained in the Variable Contracts (or
any amendment or supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information furnished
to the Company by or on behalf of an
11
Indemnified Party for use in the registration statement or prospectus for the
Variable Contracts or in the Variable Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with the sale of the
Variable Contracts or Fund Shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature of the Fund not supplied by the Company, or
persons under its control) or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution of the Variable Contracts
or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of the Fund 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 statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arises out of information or instructions from the Company or its
agents concerning the purchase, redemption, transfer or other transaction in
Fund Shares; or
(vi) 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.
(b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from 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.
(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
12
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
9.2 Indemnification by the Fund and the Distributor.
(a) Subject to Section 9.3 below, the Fund and the Distributor agree 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 '33 Act (collectively, the "Indemnified
Parties" for the purposes of this Article) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Fund and the Distributor which consent shall not be unreasonably
withheld) or litigation (including reasonable legal and other 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 are related to the sale
or acquisition of the Fund's Shares or the Variable Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus of the Fund (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in conformity
with information furnished to the Fund or the Distributor by or on behalf of the
Company for use in the registration statement or prospectus for the Fund (or any
amendment or supplement) or otherwise for use in connection with the sale of the
Variable Contracts or 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 or sales literature for the Variable Contracts not supplied by the
Fund or the Distributor or persons under its control) or wrongful conduct of the
Fund or the Distributor or persons under its control, with respect to the sale
or distribution of the Variable Contracts or Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement or prospectus covering the
Variable 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 statements therein not misleading if
such statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the Company for
inclusion therein by or on behalf of the Fund or the Distributor; or
(iv) arise as a result of a failure by the Fund or the Distributor to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Fund or the Distributor in this Agreement or arise
out of or result from any other material breach of this Agreement by the Fund or
the Distributor.
13
(b) The Fund or 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 of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement.
(c) The Fund or the Distributor, as the case may be, 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 Fund or
the Distributor, as the case may be, 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 Fund or the Distributor of any such claim
shall not relieve the Fund or 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 the Indemnified Parties, the Fund or the Distributor shall be entitled
to participate at its own expense in the defense thereof. The Fund or 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 Fund or the
Distributor to such party of the Fund's or 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 Fund or 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.
9.3 Indemnification for Errors. In the event of any error or delay with respect
to information regarding the purchase, redemption, transfer or registration of
Shares of the Fund, the parties agree that each is obligated to make the
Separate Accounts and/or the Fund, respectively, whole for any error or delay
that it causes, subject in the case of pricing errors to the related Portfolio's
policies on materiality of pricing errors. In addition, each party agrees that
neither will receive compensation from the other for the administrative costs of
any reprocessing necessary as a result of an error or delay. Each party agrees
to provide the other with prompt notice of any errors or delays of the type
referred to in this Section.
Article X. Term; Termination
10.1 This Agreement shall be effective as of the date hereof and shall continue
in force until terminated in accordance with the provisions herein.
10.2 This Agreement shall terminate in accordance with the following provisions:
(a) At the option of the Company or the Fund at any time from the date
hereof upon ninety (90) days notice, unless a shorter time is agreed to by the
parties;
(b) At the option of the Company, if Fund Shares are not reasonably
available to meet the requirements of the Variable Contracts as determined by
the Company. Prompt notice of election to terminate shall be furnished by the
Company, said termination to be effective ten days
14
after receipt of notice unless the Fund makes available a sufficient number of
Shares to reasonably meet the requirements of the Variable Contracts within said
ten-day period;
(c) At the option of the Company, upon the institution of formal
proceedings against the Fund by the SEC, the National Association of Securities
Dealers, Inc., FINRA or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in the Company's reasonable
judgment, materially impair the Fund's ability to meet and perform the Fund's
obligations and duties hereunder. Prompt notice of election to terminate shall
be furnished by the Company with said termination to be effective upon receipt
of notice;
(d) At the option of the Fund, upon the institution of formal proceedings
against the Company by the SEC, FINRA, or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which would, in the
Fund's reasonable judgment, materially impair the Company's ability to meet and
perform its obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by the Fund with said termination to be effective
upon receipt of notice;
(e) In the event the Fund's Shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the use
of such Shares as the underlying investment medium of Variable Contracts issued
or to be issued by the Company. Termination shall be effective upon such
occurrence without notice;
(f) At the option of the Fund if the Variable Contracts cease to qualify
as annuity contracts or life insurance contracts, as applicable, under the Code,
or if the Fund reasonably believes that the Variable Contracts may fail to so
qualify. Termination shall be effective upon receipt of notice by the Company;
(g) At the option of the Company, upon the Fund's breach of any material
provision of this Agreement, which breach has not been cured to the satisfaction
of the Company within ten days after written notice of such breach is delivered
to the Fund;
(h) At the option of the Fund, upon the Company's breach of any material
provision of this Agreement, which breach has not been cured to the satisfaction
of the Fund within ten days after written notice of such breach is delivered to
the Company;
(i) At the option of the Fund, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or state
law. Termination shall be effective immediately upon such occurrence without
notice;
(ii) In the event this Agreement is assigned without the prior written
consent of the Company, the Fund, and the Distributor, termination shall be
effective immediately upon such occurrence without notice.
10.3 Notwithstanding any termination of this Agreement pursuant to Section 10.2
hereof, the Fund at the option of the Company will continue to make available
additional Fund Shares, as provided below, pursuant to the terms and conditions
of this Agreement, for all Variable Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the Owners of the Existing Contracts
15
or the Company, whichever shall have legal authority to do so, shall be
permitted to reallocate investments in the Fund, redeem investments in the Fund
and/or invest in the Fund upon the payment of additional premiums under the
Existing Contracts.
Article XI. Notices
11.1 Any notice hereunder shall be given by registered or certified mail return
receipt requested or via overnight delivery 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 Fund:
Lord Xxxxxx Family of Funds
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
If to the Distributor:
Lord Xxxxxx Distributor LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
If to the Company:
Jefferson National Life Insurance Company
0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article XII. MISCELLANEOUS
12.1 Privacy. Each party hereto acknowledges that, by reason of its performance
under this Agreement, it shall have access to, and shall receive from the other
party (and its affiliates, partners and employees), the confidential information
of the other party (and its affiliates, partners and employees), including but
not limited to the "nonpublic personal information" of their consumers within
the meaning of SEC Regulation S-P (collectively, "Confidential Information").
Each party shall hold all such Confidential Information in the strictest
confidence and shall use such Confidential Information solely in connection with
its performance under this Agreement and for the business purposes set forth in
this Agreement. Under no circumstances may a party cause any Confidential
Information of the other party to be disclosed to any third party or reused or
redistributed without the other party's prior written consent.
12.2 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
16
12.3 Severability. 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.
12.4 Governing Law. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
12.5 Liability. This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his or her capacity as an officer of the
Fund. The obligations of this Agreement shall be binding upon the assets and
property of the Fund and each respective Portfolio thereof only and shall not be
binding on any Director/Trustee, officer or shareholder of the Fund
individually. In addition, notwithstanding any other provision of this
Agreement, no Portfolio shall be liable for any loss, expense, fee, charge or
liability of any kind relating to or arising from the actions or omissions of
any other Portfolio or from the application of this Agreement to any other
Portfolio. It is also understood that each of the Portfolios shall be deemed to
be entering into a separate Agreement with the Company so that it is as if each
of the Portfolios had signed a separate Agreement with the Company and that a
single document is being signed simply to facilitate the execution and
administration of the Agreement.
12.6 Inquiries and Investigations. Each party shall cooperate with each other
party and all appropriate governmental authorities (including without limitation
the SEC, FINRA and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation,
examination or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.7 Subcontractors, Agents or Affiliates. The Company may hire or make
arrangements for subcontractors, agents or affiliates to perform the services
set forth in this Agreement. The Company shall provide the Fund with written
notice of the names of any subcontractors, agents or affiliates the Company
hires or arranges to perform such services, and any specific operational
requirements that arise as a result of such arrangement. The Company agrees that
it is and will be responsible for the acts and omissions of its subcontractors,
affiliates, and agents and that the indemnification provided by the Company in
Section 9 of this Agreement shall be deemed to cover the acts and omissions of
such subcontractors, affiliates, and agents to the same extent as if they were
the acts or omissions of the Company.
12.8 Client Lists. The Company hereby consents to the Distributor's, the Fund's,
or its investment adviser's use or reference to the Company's name in connection
with any full, partial or representative list of clients.
12.9 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto and supersedes all prior agreement and
understandings relating to the subject matter hereof.
12.10 Amendment, Waiver and Other Matters. Neither this Agreement, nor any
provision hereof, may be amended, waived, modified or terminated in any manner
except by a written instrument properly authorized and executed by all parties
hereto. The rights, remedies and
17
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.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
Lord Xxxxxx Series Fund, Inc.
By:
--------------------------------
Xxxxxxxx X. Xxxxxx
Vice President and Secretary
Lord Xxxxxx Distributor LLC
By: Lord, Xxxxxx & Co. LLC, its Managing Member
By:
--------------------------------
Xxxxxxxx X. Xxxxxx
Member
Jefferson National Life insurance Company
By:
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: General Counsel & Secretary
18
