BUSINESS AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of April, 2003 (the
"Effective Date") by and among Jefferson Pilot Financial Insurance Company ("JP
Financial"), a life insurance company organized under the laws of the State of
Nebraska (on behalf of itself and certain of its separate accounts); Jefferson
Pilot Variable Corporation (the "Distributor"), a corporation organized under
the laws of the State of North Carolina; AMERICAN FUNDS DISTRIBUTORS, INC.
("AFD"), a corporation organized under the laws of the State of California; and
CAPITAL RESEARCH AND MANAGEMENT COMPANY ("CRMC"), a corporation organized under
the laws of the State of Delaware.
WITNESSETH:
WHEREAS, JP Financial proposes to issue, now and in the future, certain
multi-manager variable life insurance policies that provide certain funds
("Funds") of the American Funds Insurance Series (the "Series") as investment
options (the "Contracts");
WHEREAS, JP Financial has established pursuant to the insurance law of the
State of Nebraska one or more separate accounts (each, an "Account") with
respect to the Contracts and has or will register each Account with the United
States Securities and Exchange Commission (the "Commission") as a unit
investment trust under the Securities Act of 1933 (the "1933 Act") and the
Investment Company Act of 1940 (the "1940 Act") (unless the Account is exempt
from such registration);
WHEREAS, the Contracts, which are or will be registered (unless exempt from
such registration) by JP Financial with the Commission for offer and sale, will
be in compliance with all applicable laws prior to being offered for sale;
WHEREAS, the Distributor, a broker-dealer registered under the Securities
Exchange Act of 1934 (the "1934 Act") and a member of the National Association
of Securities Dealers, Inc. (the "NASD"), will serve as principal underwriter of
the Contracts and will arrange for the distribution of the Contracts;
WHEREAS, AFD, a broker-dealer registered under the 1934 Act, a member of
the NASD, and the principal underwriter of the shares of the Series, will
provide certain marketing assistance in connection with the Contracts;
WHEREAS, the Series is divided into various Funds, each Fund being subject
to certain fundamental investment policies which may not be changed without a
majority vote of the shareholders of such Fund;
WHEREAS, the Series has received a "Mixed and Shared Funding Order" from
the Commission granting relief from certain provisions of the 1940 Act and the
rules thereunder to the extent necessary to permit shares of the Series to be
sold to variable annuity and life insurance separate accounts of unaffiliated
insurance companies;
WHEREAS, Class 2 shares of certain Funds in the Series will be available as
an underlying investment to the Contracts pursuant to the terms of a Fund
Participation Agreement among the Series, CRMC and JP Financial to be executed
in the form attached hereto as EXHIBIT A, (the "Fund Participation Agreement");
and
WHEREAS, CRMC, by virtue of an Investment Advisory and Service Agreement
between CRMC and the Series, will serve as investment adviser to the Series, as
the term "investment adviser" is defined in the 1940 Act.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, JP Financial, (on behalf of itself and each Account), the
Distributor, AFD and CRMC hereby agree as follows:
DUTIES OF JP FINANCIAL
1. CRMC will make available for use in the Contracts certain Funds that
it has in the Series, as described in the Fund Participation Agreement.
2. JP Financial will administer the Contracts and the Accounts, including
all Contract owner service and communication activities, such as: filing any
reports or other filings required by any law or regulation; establishing each
Account; creating the Contracts, confirmation and other administrative forms or
documents; and obtaining all required regulatory approvals to permit the sale
and maintenance of the Contracts.
3. JP Financial will not distribute any prospectus, sales literature,
advertising material or any other printed matter or material relating to the
Contracts or the Series, if, to its knowledge, any of the foregoing contains any
material misstatements.
4. JP Financial will provide to AFD and/or CRMC, upon AFD's and/or CRMC's
request, at least one complete copy of all registration statements,
prospectuses, statements of additional information, reports, solicitations for
voting instructions, sales literature and other promotional materials,
applications for exemptions or requests for no-action letters that may have a
material impact on the operation of the Series, and all amendments to any of the
above, that relate to the Contracts. JP Financial will advise AFD and CRMC
immediately of:
(a) the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement of the Contracts or
the initiation of any proceedings for that purpose;
(b) the institution of any regulatory proceeding, investigation or
hearing involving the offer or sale of the Contracts of which it
becomes aware; or
(c) the occurrence of any material event that, if known, makes untrue
any statement made in the registration statement of the Contracts
or the Series
2
or which requires the making of a change therein in order to
make any statement made therein not misleading.
5. Other than the 12b-1 fees provided for in the Fund Participation
Agreement and as provided below, JP Financial and the Distributor will bear
their respective expenses under this Agreement, including:
(a) the cost of providing service to Contract owners;
(b) the expenses and fees of registering or qualifying the Contracts
and the Account under federal or state laws;
(c) any expenses incurred by JP Financial employees in assisting AFD
and/or CRMC in performing AFD's and/or CRMC's duties hereunder;
provided, however, that pursuant to Paragraph 9 of the Fund Participation
Agreement, the Series shall bear the expenses for the cost of registration of
its shares, preparation of prospectuses and statements of additional information
to be sent to existing Contract owners (upon request in the case of the
statement of additional information), proxy statements and related materials and
annual and semi-annual shareholder reports, the printing and distribution of
such items to each Contract owner who has allocated net amounts to any
Subaccount, the preparation of all statements and notices required from it by
any federal or state law, and taxes on the issue or transfer of the Series'
shares subject to the Fund Participation Agreement.
6. JP Financial or its agents will receive and process applications and
purchase payments in accordance with the terms of the Contracts and the current
prospectus. All applications for Contracts are subject to acceptance or
rejection by JP Financial in its sole discretion.
7. JP Financial shall amend its registration statement for its Contracts
under the 1933 Act and the 1940 Act from time to time as required by law, and,
should it ever be required, under the state securities laws, in order to effect
the continuous offering of its Contracts; and JP Financial shall file for
approval of the Contracts under state insurance laws, when necessary, and to
maintain registration of the Accounts (unless the Accounts are exempt from such
registration) under the 1940 Act.
8. JP Financial may invoke its then existing limits on transfers as
stated in the Contracts or in a Contract's prospectus. JP Financial reserves
the right to refuse, to impose limitations on, or to limit any transaction
request if the request would tend to disrupt Contract administration or is
not in the best interest of the Contract holders or an Account or Subaccount.
DUTIES OF DISTRIBUTOR
9. JP Financial acknowledges that the distribution of Contracts
pursuant to this Agreement will take place primarily through its registered
representatives. AFD and CRMC
3
each acknowledge, however, that the Distributor and JP Financial have selling
agreements with certain non-affiliated broker-dealers ("Members") for additional
distribution of the Contracts through the Members' registered representatives.
Subject to the following paragraph, JP Financial agrees to provide to AFD and
CRMC on a monthly basis in writing information on a Fund basis regarding the
volume of sales of the Contracts and the name of each registered representative
of the Members selling the Contracts.
Any selling agreement between Distributor and a Member and affiliated or
unaffiliated broker-dealers ("Members") described in this Paragraph 9 will
provide that:
(a) each Member will distribute the Contracts only in those
jurisdictions in which the Contracts are registered or qualified
for sale and only through duly licensed registered
representatives of the Members who are properly insurance
licensed with JP Financial to sell the Contracts in the
applicable jurisdiction(s);
(b) all applications and initial and subsequent payments under the
Contracts collected by the Member will be remitted promptly by
the Member to JP Financial at such address as it may from time to
time designate; and
(c) each Member will comply with all applicable federal and state
laws, rules and regulations.
10. The Distributor represents that any exchanges or replacements of
existing variable insurance policies and contracts with the Contracts will be
effected in compliance with all applicable federal and state securities rules
and regulations.
11. The Distributor will promptly provide Members with current
prospectuses, and any supplements thereto, for the Contracts and for the Series.
The Distributor will use reasonable efforts to ensure that its registered
representatives deliver only the currently effective prospectuses of the
Contracts and the Series to existing clients.
12. The Distributor will use reasonable efforts to provide information
and marketing assistance to its registered representatives and to Members,
including preparing and providing such registered representatives with
advertising materials and sales literature, and other promotional or
marketing materials. The Distributor will provide wholesaling and marketing
services with respect to the Contracts.
13. The Distributor will use reasonable efforts to ensure that any sales
literature and advertising materials it disseminates with respect to the
Contracts conforms with the requirements of all pertinent federal and state laws
and rules and regulations thereunder. AFD shall have the right to approve all
sales material that mentions AFD's name and/or the Series (the "AFD Material")
prior to its use. The Distributor shall send all AFD Material to AFD's Marketing
Coordinator (Xxxxx Xxxx) at the AFD address listed in Paragraph 46 of this
Agreement or such other person as AFD may direct the Distributor in writing (any
such person shall be
4
referred to as the "AFD Reviewer"). The AFD Material will be deemed approved
unless the AFD Reviewer notifies the JP Financial Reviewer (as herein defined)
of any required changes within five business days of his/her receipt of the AFD
Material. No review of sales material produced by JP Financial shall be
necessary if all references contained in such materials regarding AFD and/or the
Series are identical to those references that appear in the Series' current
prospectus or statement of additional information.
JP Financial shall have the right to approve all sales material that
mentions JP Financial's and/or the Distributor's name (the "JPF Material") prior
to its use. AFD and/or CRMC shall send all JPF Material to JP Financial's
Marketing Representative at the New Hampshire address listed in Paragraph 46 of
this Agreement or such other person as JP Financial may direct AFD and/or CRMC
in writing. JPF Material will be deemed approved unless the reviewer for JP
Financial notifies the AFD and/or CRMC of any required changes within five
business days of his/her receipt of JPF Material. No review of sales material
produced by the AFD and/or the Series shall be necessary if all references
contained in such materials regarding JP Financial and/or the Distributors are
identical to those references that appear in JP Financial's current Contract
prospectus(es) or statement(s) of additional information.
14. The Distributor will be responsible for filing sales literature and
advertising materials, where necessary, with appropriate regulatory authorities,
including the NASD, used in connection with its marketing efforts for the
Contracts.
15. The Distributor will not distribute any prospectus, sales literature,
advertising material or any other printed matter or material relating to the
Contracts or the Series, if, to its knowledge, any of the foregoing contains any
material misstatements.
16. Subject to Paragraph 5 herein, the Distributor will bear all its
expenses of providing services under this Agreement, including the costs
attributable to wholesaling efforts, advertising, and producing and distributing
sales literature and prospectuses used by its registered representatives and the
Members with prospective Contract owners, provided that, pursuant to Paragraph 9
of the Fund Participation Agreement, the Series shall bear the expenses for the
cost of registration of its shares, preparation of its prospectuses and
statements of additional information to be sent to existing Contract owners
(upon request in the case of the statement of additional information), proxy
statements and related materials and annual and semi-annual shareholder reports,
the printing and distribution of such items to each Contract owner who has
allocated net amounts to any Subaccount, the preparation of all statements and
notices required from it by any federal or state law, and taxes on the issue or
transfer of the Series' shares subject to the Fund Participation Agreement.
17. The Distributor will provide to AFD and/or CRMC, upon AFD's and/or
CRMC's request, at least one complete copy of all registration statements,
prospectuses, statements of additional information, reports, solicitations for
voting instructions, sales literature and other promotional materials,
applications for exemptions or requests for no-action letters, and all
amendments to any of the above, that relate to the Contracts and materially
impact the Series. The Distributor will advise AFD and CRMC upon becoming aware
of:
5
(a) the institution of any regulatory proceeding, investigation
or hearing involving the offer or sale of the Contracts of
which they become aware and which materially impact the
Series; or
(b) the occurrence of any material event, if known, which makes
untrue any statement made in the registration statement of
the Contracts or the Series or which requires the making of
a change therein in order to make any statement made therein
not misleading.
DUTIES OF AFD
18. AFD will bear its expenses of providing services under this
Agreement. AFD will conduct training of JP Financial wholesalers regarding
CRMC's approach to investment management and specific Subaccount positioning
and sales. Training will include initial hire training, and from time to
time, refresher training.
19. AFD will furnish to IF Financial and/or the Distributor such
information with respect to the Series in such form as JP Financial and/or the
Distributor may reasonably request. AFD will advise JP Financial and/or the
Distributor upon becoming aware of:
(a) the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement of the
Series or the initiation of any proceedings for that
purpose;
(b) the institution of any proceeding, investigation or hearing
involving the offer or sale of the Series of which it
becomes aware; or
(c) the occurrence of any material event, if known, which makes
untrue any statement made in the registration statement of
the Series or which requires the making of a change therein
in order to make any statement made therein not misleading.
DUTIES OF CRMC
20. CRMC agrees to allow JP Financial to include in the Contracts
certain Funds described in the Fund Participation Agreement. CRMC will cause
the Series: (a) to make available for use in the Contracts the Funds in the
Series, as described in the Fund Participation Agreement and (b) to
adequately diversify the Funds of the Series, pursuant to the requirements of
Section 817(h) of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder relating to the diversification requirements for
variable annuity, endowment and life insurance contracts.
21. CRMC will furnish to JP Financial and/or the Distributor such
information with respect to the Series in such form as JP Financial and/or the
Distributor may reasonably request.
6
CRMC will advise JP Financial and the Distributor upon becoming aware of:
(a) the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement of the
Series or the initiation of any proceedings for that
purpose;
(b) the institution of any proceeding, investigation or hearing
involving the offer or sale of the Series of which it
becomes aware; or
(c) the occurrence of any material event, if known, which makes
untrue any statement made in the registration statement of
the Series or which requires the making of a change therein
in order to make any statement made therein not misleading.
22. CRMC will bear its expenses of providing services under this
Agreement.
23. The Series will pay JP Financial a Rule 12b-1 service fee to be
accrued daily and paid monthly at an annual rate of 0.25% of the average
daily net assets of the Class 2 assets of each Fund attributable to the
Contracts for personal services and account maintenance services for Contract
owners with investments in Subaccounts corresponding to the Class 2 shares of
each Fund so long as the Series' 12b-1 plan is effective with respect to the
Class 2 shares of a Fund. Such payments shall be calculated by the Series and
be paid by the Series to JP Financial as soon as practicable after the end of
each month and in any event within thirty days.
JOINT DUTIES
24. All the parties to this Agreement will cooperate in the
development of advertising, sales literature and all other sales materials to
be used with respect to the Funds.
25. The parties shall coordinate with each other in the filing with
the Commission of amendments to the registration statements for the Contracts
(if required by law) and for the Series, respectively.
26. Each of the parties hereto agrees: (a) to comply with all laws
applicable to it in the sale of Contracts and (b) to refrain from
participating, cooperating, or assisting in any way with its or any third
party's (i) development of marketing programs or other activities (written or
oral) which directly encourage exchanges from the Contracts or (ii) creation
of broker and/or client marketing tools which provide direct comparisons
between the Contracts and any other investment products directly targeting
the holders of the Contracts to exchange or transfer assets from the
Contracts, unless such marketing programs or other activities or broker or
client tools relate to variable insurance products issued by JP Financial or
an affiliate; or if agreed to by the parties.
REPRESENTATIONS AND XXXXXXXXXX
0
00. XX Financial represents and warrants to AFD and CRMC that:
(a) each of the recitals applicable to it and/or each Account is true
and correct;
(b) a registration statement under the 1933 Act and under the 1940
Act (if required by law) with respect to the Contracts and each
Account has been or will be filed with the Commission (a copy of
which will be delivered to AFD, upon request, when effective),
and copies of any and all amendments thereto will be forwarded to
AFD, upon request, at the time that they are filed with the
Commission (if required by law);
(c) each such registration statement (if required by law) and any
further amendments or supplements thereto will, when they become
effective, conform in all material respects to the requirements
of the 1933 Act and the 1940 Act, and the rules and regulations
of the Commission thereunder, and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this
representation and warranty shall not apply to any statement or
omission made in reliance upon and in conformity with the
information furnished in writing to JP Financial or the
Distributor by AFD or CRMC expressly for use therein;
(d) JP Financial is validly existing as a mutual life insurance
company under the laws of the state of Nebraska, with power
(corporate or other) to own its properties and conduct its
business, as described in the prospectus for the Contracts, and
has been duly qualified for the transaction of business and is in
good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business to the
extent such qualification is required;
(e) the Contracts to be issued through the Account have been duly and
validly authorized and, when issued and delivered against payment
therefor as provided in the prospectus (if a prospectus is
required by law) and in the Contracts, will be duly and validly
issued, and will conform to the description of the Contracts
contained in the prospectuses (if a prospectus is required by
law);
(f) the performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any statute, any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument to which
JP Financial is a party or by which JP Financial is bound, JP
Financial's charter as a life insurance company or By-Laws or any
order, rule or regulation of any court or governmental agency or
body
8
having jurisdiction over JP Financial or any of their
properties; and no consent, approval, authorization or order
of any court or govermnental agency or body which has not been
obtained by the Effective Date of this Agreement is required
for the consummation by JP Financial of the transactions
contemplated by this Agreement;
(g) there are no material legal or governmental proceedings pending
to which JP Financial or the Account is a party or of which any
property of JP Financial or the Account is subject, other than as
set forth in the prospectus relating to the Contracts, and other
than litigation incidental to the kind of business conducted by
JP Financial which, if determined adversely to JP Financial,
would not individually or in the aggregate have a material
adverse effect on the financial position, surplus or operations
of JP Financial;
(h) any information furnished in writing by JP Financial to AFD or
CRMC for use in the registration statement or annual report of
the Series will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, nor result in the Series' registration statement's
failing to materially conform in all respects to the requirements
of the 1933 Act and 1940 Act and the rules and regulations
thereunder; and
(i) JP Financial will materially comply with all applicable
requirements of state insurance laws and regulations in
connection with the Contracts.
28. The Distributor represents and warrants to AFD and CRMC that:
(a) each of the recitals applicable to it is true and correct;
(b) The Distributor is validly existing as a corporation under the
laws of the State of North Carolina, and it is a broker-dealer
duly registered with the Commission pursuant to the 1934 Act and
is a member in good standing of the NASD, with power (corporate
or other) to own its properties and conduct its business, and has
been duly qualified for the transaction of business and is in
good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business to the
extent such qualification is required;
(c) there are no material legal or governmental proceedings pending
to which the Distributor is a party or of which any property of
the Distributor is subject, other than as set forth in the
prospectus relating to the Contracts, and other than litigation
incidental to the kind of business conducted by the Distributor
which, if determined adversely to the Distributor, would not
individually or in the aggregate have a material adverse effect
on the
9
financial position, surplus or operations of the Distributor;
(d) any information furnished in writing by the Distributor to AFD or
CRMC for use in the registration statement or annual report of
the Series will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, nor result in the registration statement's failing to
conform materially in all respects to the requirements of the
1933 Act and 1940 Act and the rules and regulations thereunder;
(e) the Distributor will comply with all applicable requirements of
state insurance laws and regulations in connection with the sale
of the Contracts; and
(f) the Distributor will not pay commissions to persons who, to the
best of the Distributor's knowledge, are not appropriately
licensed in a manner as to comply with applicable state insurance
laws and regulations.
29. AFD and CRMC represent and warrant to JP Financial and the
Distributor that:
(a) each of the recitals applicable to it, them, and/or the Series is
true and correct;
(b) a registration statement under the 1933 Act (File No. 2-86838)
and under the 1940 Act (File No. 811-3857) with respect to the
Series has been filed with the Commission in the form previously
delivered to JP Financial and the Distributor, and copies of any
and all amendments thereto will be forwarded to JP Financial at
the time that they are filed with the Commission;
(c) the registration statement for the Series and any further
amendments or supplements thereto will, when they become
effective, conform in all material respects to the requirements
of the 1933 Act and the 1940 Act, and the rules and regulations
of the Commission thereunder, and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this
representation and warranty shall not apply to any statement or
omission made in reliance upon and in conformity with the
information furnished in writing to AFD or CRMC by JP Financial
or the Distributor expressly for use therein;
(d) AFD is validly existing as a corporation under the laws of the
State of California and it is a broker-dealer duly registered
with the Commission pursuant to the 1934 Act and is a member in
good standing of the NASD, with power (corporate or other) to own
its properties and conduct its
10
business, and has been duly qualified for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts
any business to the extent such qualification is required;
(e) CRMC is validly existing as a corporation under the laws of the
State of Delaware and it is an investment adviser duly registered
with the Commission pursuant to the Investment Advisers Act of
1940, with power (corporate or other) to own its properties and
conduct its business, and has been duly qualified for the
transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business to the extent such qualification is
required;
(f) the shares to be issued by the Series have been duly and validly
authorized and, when issued and delivered against payment
therefor as provided in the Series prospectus, will be duly and
validly issued, and will conform to the description of such
shares contained in that prospectus;
(g) the performance of duties under this Agreement by AFD and CRMC
will not result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any statute, any
indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which AFD or CRMC is a party or by
which AFD or CRMC is bound, the Articles of Incorporation or
By-Laws of AFD or CRMC, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over AFD
or CRMC or its property;
(h) there are no material legal or governmental proceedings pending
to which AFD or CRMC is a party or of which any property of AFD
or CRMC is subject, other than as set forth in the prospectus
relating to the Series, and other than litigation incidental to
the kind of business conducted by AFD or CRMC which, if
determined adversely to AFD or CRMC, would not individually or in
the aggregate have a material adverse effect on the financial
position, surplus or operations of AFD or CRMC;
(i) CRMC and AFD will use reasonable efforts to ensure that no
offering, sale or other disposition of the Contracts will be made
until it has been notified by JP Financial that the subject
registration statements (if required by law) have been declared
effective and that the Contracts have been released for sale by
JP Financial, and that such offer, sale or other disposition
shall be limited to those jurisdictions that have approved or
otherwise permit the offer and sale of the Contracts by JP
Financial;
(j) any information furnished in writing by AFD or CRMC to JP
Financial or
11
the Distributor for use in a registration statement (if required
by law) of the Contracts will not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, nor result in the registration statement's failing to
materially conform in all respects to the requirements of the
1933 Act and the rules and regulations thereunder; and
(k) AFD will comply with all applicable requirements of state
broker-dealer regulations and the 1934 Act as each applies to AFD
and shall conduct its affairs in accordance with the rules of the
NASD.
INDEMNIFICATION
30. AFD and/or CRMC agree to indenmify JP Financial and/or the Distributor
(or any affiliate, control person, shareholder, director, officer, employee or
agent of JP Financial and/or the Distributor) from, and hold them harmless
against, any and all losses, claims, liabilities incurred (including amounts
paid in settlement with the written consent of AFD and/or CRMC) or litigation
(including reasonable legal fees and costs relating to the investigation and/or
defense of any action) arising out of any act or omission of AFD and/or CRMC (or
those of its affiliates) relating to:
(a) rendering services under, or breaching, this Agreement;
(b) the failure by the Series or CRMC to adequately diversify the
various Funds of the Series, pursuant to the requirements of
Section 817(h) of the Internal Revenue Code of 1986, as amended,
and the regulations thereunder relating to the diversification
requirements for variable annuity, endowment and life insurance
contracts;
(c) the failure by the Series or CRMC to supply JP Financial with
information sufficient to adequately calculate its accumulation
and/or annuity unit values as required by law and the
registration statement (if required by law) for the Account;
(d) unlawful conduct, bad faith, willful misfeasance, or gross
negligence on the part of AFD and/or CRMC; or
(e) the failure by the Series and CRMC to invest the assets of each
Fund in accordance with the Fund's investment objective, policies
and restrictions;
provided, however, that indenmification will not be provided hereunder for any
such liability that results from the actions of JP Financial and/or the
Distributor or from JP Financial's and/or the Distributor's failure to fulfill
their respective duties and obligations arising under this Agreement.
12
31. JP Financial and/or the Distributor agree to indemnify AFD and/or CRMC
(or any affiliate, control person, shareholder, director, officer, employee or
agent of AFD and/or CRMC) from, and hold them harmless against, any and all
losses, claims, liabilities incurred (including amounts paid in settlement with
the written consent of JP Financial and/or the Distributor) or litigation
(including reasonable legal fees and costs relating to the defense of any
action) arising out of any act or omission of JP Financial and/or the
Distributor (or those of its affiliates) relating to:
(a) rendering services under, or breaching, this Agreement; or
(b) unlawful conduct, bad faith, willful misfeasance, or gross
negligence on the part of JP Financial and/or the Distributor;
provided, however, that indemnification will not be provided hereunder for any
such liability that results from the actions of AFD and/or CRMC or from AFD's
and/or CRMC's failure to fulfill their respective duties and obligations arising
under this Agreement.
32. Any party seeking indemnification (the "Potential Indemnitee") will
promptly notify any party from whom they intend to seek indemnification (each a
"Potential Indemnitor") of all demands made and/or actions commenced against the
Potential Indemnitee which may require a Potential Indemnitor to provide such
indemnification. At its option and expense, a Potential Indemnitor may retain
counsel and control any litigation for which it may be responsible to indemnify
a Potential Indemnitee under this Agreement.
33. With respect to any claim, the parties each shall give the other
reasonable access during normal business hours to its books, records and
employees and those books, records and employees within its control pertaining
to such claim and shall otherwise cooperate with one another in the defense of
any claim. Regardless of which party defends a particular claim, the defending
party shall give the other parties written notice of any significant development
in the case as soon as practicable, and such other party, at all times, shall
have the right to intervene in the defense of the case.
34. If a party is defending a claim and indemnifying the other party
hereto, and: (a) a settlement proposal is made by the claimant or (b) the
defending party desires to present a settlement proposal to the claimant, then
the defending party promptly shall notify the other party hereto of such
settlement proposal together with its counsel's recommendation. If the defending
party desires to enter into the settlement and the other party fails to consent
within five business days (unless such period is extended, in writing, by mutual
agreement of the parties hereto), then the other party, from the time it fails
to consent forward, shall defend the claim and shall further indemnify the
defending party for all costs associated with the claim which are in excess of
the proposed settlement amount.
Regardless of which party is defending the claim, if a settlement requires
an admission of liability by the non-defending party or would require the
non-defending party to either take action (other than purely ministerial action)
or refrain from taking action (due to an injunction or
13
otherwise) (a "Specific Performance Settlement"), the defending party may agree
to such settlement only after obtaining the express, written consent of the
non-defending party. If a non-defending party fails to consent to a Specific
Performance Settlement, the consequences described in the last sentence of the
first paragraph of this Paragraph 34 shall NOT apply.
35. The parties shall use good faith efforts to resolve any dispute
concerning this indemnification obligation. Should those efforts fail to resolve
the dispute, the ultimate resolution shall be determined in a DE NOVO
proceeding, separate and apart from the underlying matter complained of, before
a court of competent jurisdiction. Either party may initiate such proceedings
with a court of competent jurisdiction at any time following the termination of
the efforts by such parties to resolve the dispute (termination of such efforts
shall be deemed to have occurred thirty days from the commencement of the same
unless such time period is extended by the written agreement of the parties).
The prevailing party in such a proceeding shall be entitled to recover
reasonable attorneys' fees, costs and expenses.
RULE 12b-1 FEE
36. If the Series 12b-1 plan is no longer effective or is no longer
applicable to the Funds in the Contracts (the "12b-1 Termination"), AFD, CRMC
and the Series shall discuss with JP Financial, in good faith, alternate fee
arrangements and/or a reallocation of marketing expenses. If no new agreement is
reached within thirty days after the 12b-1 Termination (or at such later date
mutually acceptable to all of the parties), JP Financial, at its option, may
elect to terminate this Agreement, and/or may elect to obtain an order of
exemption pursuant to Section 26(b) of the 1940 Act ("Substitution Order") for
the Fund(s) or a vote of Contract owners authorizing redemption and substitution
of Fund shares. The Series, AFD and CRMC shall cooperate with JP Financial in
obtaining and implementing any such Substitution Order.
TERMINATION
37. This Agreement may be terminated:
(a) by mutual agreement at any time; or
(b) by any party at any time upon six months' written notice to the
other parties; or
(c) at JP Financial's option, pursuant to Paragraph 36 hereof.
(d) at JP Financial's option by written notice to AFD and/or CRMC if
JP Financial shall determine in its sole judgment exercised in
good faith, that either AFD or CRMC 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.
14
(e) at AFD or CRMC's option by written notice to JP Financial if AFD
or CRMC shall determine in its sole judgment exercised in good
faith, that JP Financial 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.
38. If this Agreement terminates, the parties shall cooperate after
termination to effect an orderly windup of the business.
MISCELLANEOUS
39. This Agreement shall be governed by the laws of the State of
California.
40. This Agreement (along with the Fund Participation Agreement)
constitutes the entire agreement among the parties pertaining to the Contracts,
and supersedes any and all prior agreements, understandings, documents,
projections, financial data, statements, representations and warranties, oral or
written, express or implied, between the parties hereto and their respective
affiliates, representatives and agents in respect of the subject matter hereof.
If there should be any conflict between the terms of this Agreement and those of
the Fund Participation Agreement, the terms of the Fund Participation Agreement
shall govern.
41. This Agreement may be amended from time to time only by agreement in
writing of the parties.
42. No waiver of any provision nor consent to any exceptions to the terms
of this Agreement shall be effective unless that waiver or consent is executed
in writing by the parties and then only for the specific purpose, extent and
instance so provided.
43. This Agreement and the parties' rights, duties and obligations under
this Agreement are not transferable or assignable by any of them without the
express, prior written consent of the other party hereto. Any attempt by a party
to transfer or assign this Agreement or any of its rights, duties or obligations
under this Agreement without such consent is void; provided, however, that a
merger of, reinsurance arrangement by, or change of control of a party shall not
be deemed to be an assignment for purposes of this Agreement.
44. This Agreement shall inure to the benefit of and be binding upon JP
Financial, the Distributor, AFD and CRMC, and their respective successors and
permitted assigns. Nothing expressed or mentioned in this Agreement is intended
or shall be construed to give any person or corporation, other than the parties
hereto and their respective successors and permitted assigns, any legal or
equitable right, remedy or claim in respect of this Agreement or any provision
herein contained.
45. This Agreement and any amendment to it may be executed in one or more
counterparts. All of those counterparts shall constitute one and the same
agreement. Neither this Agreement nor any amendment shall become effective until
all counterparts have been fully
15
executed and delivered.
46. All notices, requests, demands and/or other communications
permitted or required hereunder shall be in writing and shall be sent by
nationally recognized overnight courier, and/or by certified mail, return
receipt requested, addressed to each party (other than the Distributor) to
the individuals and at the address shown in the notice provisions of the Fund
Participation Agreement, or at such other address as a party has directed in
writing.
IF TO JEFFERSON PILOT FINANCIAL INSURANCE COMPANY:
Xxx Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Xxxxxxxx Xxxxx, Assistant Vice President and Associate Counsel
WITH A COPY TO: Xxxx X. Xxxxxx, Vice President
IF TO THE DISTRIBUTOR:
Jefferson Pilot Variable Corporation
Xxx Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
W. Xxxxxx Xxxxxxx, Vice President
IF TO AFD:
American Funds Distributors, Inc.
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, President
Facsimile No.: (000) 000-0000
WITH A COPY TO:
American Funds Distributors, Inc.
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Vice President and Senior Counsel,
Fund Business Management Group
Facsimile No.: (000) 000-0000
IF TO CRMC:
Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President and Legal Counsel,
16
Fund Business Management Group, and Secretary
Facsimile No.: (000) 000-0000
WITH A COPY TO:
Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Vice President and Senior Counsel,
Fund Business Management Group
Facsimile No.: (000) 000-0000
A notice shall be presumed to have been received: (a) on the day after it
was sent if sent by overnight courier, so long as a receipt evidencing that it
was sent, in fact, by overnight courier is obtained or (b) on the day that the
recipient signs the receipt if sent by certified mail.
47. The provisions of this Agreement are severable. Should any provision
hereof be held unlawful or invalid by any competent authority, the remainder of
the Agreement shall remain in full force and effect.
48. The provisions contained in Paragraphs 2, 4, 5-8, 17, 19-23, 25-26,
30-35 and 38-48 shall survive the termination of this Agreement for so long as
any of the Series shares remain as investment options in any of the Contracts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the date first above written.
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
(ON BEHALF OF ITSELF AND EACH ACCOUNT)
Attest: /s/ Xxxxx Xxxxxxxx
----------------------- By: /s/ Xxxxxxxx Xxxxx
----------------------------------
Its: AVP
THE DISTRIBUTOR
JEFFERSON PILOT VARIABLE CORPORATION
Attest: /s/ Xxxx Xxxxx Boiwert
----------------------- By: /s/ W. Xxxxxx Xxxxxxx
----------------------------------
Its: VP
17
AMERICAN FUNDS DISTRIBUTORS, INC.
Attest:
/s/ [illegible] By: /s/ Xxxxxxx Xxxxxx
--------------------- ----------------------------------
Its: Secretary
CAPITAL RESEARCH AND MANAGEMENT COMPANY
Attest:
/s/ [illegible] By: /s/ Xxxxxxx Xxxxxx
--------------------- ----------------------------------
Its: Vice President and Secretary
18
