PARTICIPATION AGREEMENT
BETWEEN
JEFFERSON NATIONAL LIFE INSURANCE COMPANY
AND
XXXXXXXX ASSET MANAGEMENT, LLC
AND
THE POTOMAC INSURANCE TRUST
THIS AGREEMENT, dated as of the 1st day of May 1, 2005 by and between
Jefferson National Life Insurance Company (the "Company"), a Texas stock life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto, as may be amended from
time to time (each account hereinafter referred to as the "Account"), Xxxxxxxx
Asset Management, LLC (the "Adviser") and The Potomac Insurance Trust (the
"Trust").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies ("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Trust are divided
into several series of shares, each designated a "Portfolio" and representing
the interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and shares of the Portfolio are registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, the Trust has obtained an order (VARIABLE INSURANCE FUNDS, ET
AL., Investment Company Act Rel. No. 23594 (Dec. 10, 1998)) from the Securities
and Exchange Commission ("SEC") granting Participating Insurance Companies and
their separate accounts exemptions from the provisions of Sections 9(a), 13(a)
and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans, among others (the "Exemptive Order"), the terms of
which qualify, in its entirety, the terms of this Agreement;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated
asset account by the Company to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios managed by
the Adviser and listed in Schedule A hereto, as it may be amended from time to
time by mutual written agreement (the "Designated Portfolios"), on behalf of the
Account to fund the aforesaid Contracts;
WHEREAS, the Adviser serves as investment adviser to the Designated
Portfolios; and
NOW, THEREFORE, in consideration of their mutual promises, the Company
and the Adviser agree as follows:
ARTICLE I. SALE AND REDEMPTION OF TRUST SHARES
1.1. The Trust has agreed to make to the Company, for purchase on
behalf of any Account, Trust shares of the Designated Portfolios. The Trust
agrees to make available to the Company for purchase on behalf of the Account,
shares of the Designated Portfolios, such purchases to be effected at net asset
value in accordance with Section 1.3 of this Agreement. Notwithstanding the
foregoing, (i) Portfolios (other than those listed on Schedule A) in existence
now or that may be established in the future will be made available to the
Company only as the Trust may so provide, and (ii) the Board of Trustees of the
Trust (the "Board") may suspend or terminate the offering of shares of any
Designated Portfolio or class thereof, if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Board acting in good faith and in light of its fiduciary duties under federal
and any applicable state laws, suspension or termination is necessary in the
best interests of the shareholders of such Designated Portfolio. The Trust
reserves the right, upon prior written notice to the Company (given at the
earliest practicable time), to take all actions, including but not limited to,
the dissolution, reorganization, liquidation, merger or sale of all assets of
the Trust or any Portfolio upon the sole authorization of the Board, acting in
good faith.
1.2. The Trust shall accept for redemption, at the Company's request,
any full or fractional Designated Portfolio shares held by the Company on behalf
of the Account, such redemptions to be effected at net asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the
Company shall not redeem Trust shares attributable to Contract owners except in
the circumstances permitted in Section 10.3 of this Agreement, and (ii) the
Trust may delay redemption of such shares of any Designated Portfolio to the
extent permitted by the 1940 Act and any rules, regulations or orders
thereunder.
1.3. Purchase and Redemption Procedures
(a) For purposes of Sections 1.1 and 1.2, the Company shall be an
agent of the Trust for the limited purpose of receiving and accepting purchase
and redemption requests on behalf of the Account (but not with respect to any
Trust shares that may be held in the general account of the Company) for shares
of those Designated Portfolios made available hereunder, based on allocations of
amounts to the Account or subaccounts thereof under the Contracts and other
transactions relating to the Contracts or the Account. Receipt and acceptance of
any such request (or relevant transactional information therefor) on any day the
New York Stock Exchange, Inc. is open for trading and on which a Designated
Portfolio calculates its net asset value (a "Business Day") pursuant to the
rules of the SEC by the Company as such limited agent of the Trust prior to the
time that the Trust ordinarily calculates its net asset value as described from
time to time in each Designated Portfolio's prospectus shall constitute receipt
and acceptance by the Designated Portfolio on that same Business Day, provided
that the Trust or its agent receives notice of in good form PRIOR to the 2:00
p.m. Eastern Time ("Trading Notice Deadline"). The Trust reserves the right to
change the Trading Notice Deadlines and other trading instructions from
time-to-time by providing Company with reasonable prior written notice.
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(b) The Company shall pay for shares of each Designated Portfolio
on the Business Day following the day that it notifies the Trust or its agent of
a purchase request for such shares. Payment for Designated Portfolio shares
shall be made in federal funds transmitted to the Trust or other designated
person by wire to be received by 2:00 p.m. Eastern Time on the day the Trust is
notified of the purchase request for Designated Portfolio shares (which request
may be net of redemptions of shares). If federal funds are not received on time,
such funds will be invested, and Designated Portfolio shares purchased thereby
will be issued, as soon as practicable and the Company shall promptly, upon the
Trust's request, reimburse the Trust, as appropriate, for any charges, costs,
fees, interest or other expenses incurred by the Trust in connection with any
advances to, or borrowing or overdrafts by, the Trust, or any similar expenses
incurred by the Trust, as a result of portfolio transactions effected by the
Trust based upon such purchase request. Upon receipt of federal funds so wired,
such funds shall cease to be the responsibility of the Company and shall become
the responsibility of the Trust.
(c) Payment for Designated Portfolio shares redeemed by the
Account or the Company shall be made in federal funds transmitted by wire to the
Company or any other designated person on the next Business Day after the Trust
or its agent is properly notified of the redemption order of such shares (which
order shall be net of any purchase orders), except that the Trust may redeem
Designated Portfolio shares in assets other than cash and delay payment of
redemption proceeds to the extent permitted under Section 22(e) of the 1940 Act
and any rules thereunder, and in accordance with the procedures and policies of
the Trust as described in the then current prospectus and/or statement of
additional information ("SAI"). The Trust shall not bear any responsibility
whatsoever for the proper disbursement or crediting of redemption proceeds by
the Company, the Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Designated Portfolio
shares held or to be held in the Company's general account shall be effected at
the net asset value per share next determined after the receipt and acceptance
of such request by the Trust or its agent, provided that, in the case of a
purchase request, payment for Trust shares so requested is received by the Trust
in federal funds prior to close of business for determination of such value, as
defined from time to time in each Designated Portfolio's prospectus.
(e) The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), (iii) upon 45 days
prior written notice to the Trust and Adviser, as permitted by an order of the
SEC pursuant to Section 26(c) of the 1940 Act, but only if a substitution of
other securities for the shares of the Designated Portfolios is consistent with
the terms of the Contracts, or (iv) as permitted under the terms of the
Contract. Upon request, the Company will promptly furnish to the Trust
reasonable assurance that any redemption pursuant to clause (ii) above is a
Legally Required Redemption. Furthermore, except in cases where permitted under
the terms of the Contracts, the Company shall not prevent Contract owners from
allocating payments to a Designated Portfolio that was otherwise available under
the Contracts without first giving the Trust 45 days notice of its intention to
do so.
1.4. The Trust shall use its best efforts to make the net asset value
per share for each Designated Portfolio available to the Company by 6:30 p.m.
Eastern Time each Business Day, and in any event, as soon as reasonably
practicable after the net asset value per share for such Designated Portfolio is
calculated, and the Trust shall calculate such net asset value in accordance
with the Trust's prospectus. Neither the Trust, any Designated Portfolio, the
Adviser, nor any of their affiliates shall be liable for any information
provided to the Company pursuant to this Agreement, or any loss resulting from
such information, if such information is based on incorrect information supplied
by the Company or any other Participating Insurance Company to the Trust or the
Adviser.
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1.5. The Trust or its agent shall furnish notice (by wire or telephone
followed by written confirmation) to the Company as soon as reasonably
practicable of any income dividends or capital gain distributions payable on any
Designated Portfolio shares. The Company, on its behalf and on behalf of the
Account, hereby elects to receive all such dividends and distributions as are
payable on any Designated Portfolio shares in the form of additional shares of
that Designated Portfolio. The Company reserves the right, on its behalf and on
behalf of the Account, to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Trust or its agent shall notify the
Company promptly of the number of Designated Portfolio shares so issued as
payment of such dividends and distributions.
1.6. Issuance and transfer of Trust shares shall be by book entry only.
Share certificates will not be issued to the Company or the Account. Purchase
and redemption orders for Trust shares shall be recorded in an appropriate
ledger for the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Trust's shares may be sold
to other insurance companies (subject to Section 1.8 hereof) and the cash value
of the Contracts may be invested in other investment companies, provided,
however, that until this Agreement is terminated pursuant to Article X, the
Company shall promote the Designated Portfolios on the same basis as other
funding vehicles available under the Contracts. Unless otherwise agreed between
the Company and the Adviser, funding vehicles other than those listed on
Schedule A to this Agreement may be available for the investment of the cash
value of the Contracts, provided, however, (i) any such vehicle or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of the Designated Portfolios
available hereunder; (ii) the Company gives the Adviser 45 days written notice
of its intention to make such other investment vehicle available as a funding
vehicle for the Contracts; and (iii) unless such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company has so informed the Adviser prior to their signing
this Agreement, the Adviser consents in writing to the use of such other
vehicle, such consent not to be unreasonably withheld.
(b) The Company shall not, without prior notice to the Trust
(unless otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the Adviser and
the Trust (unless otherwise required by applicable law), induce Contract owners
to change or modify the Trust or change the Trust's investment adviser.
(d) The Company shall not, without prior notice to the Trust,
induce Contract owners to vote on any matter submitted for consideration by the
shareholders of the Trust in a manner other than as recommended by the Board.
1.8. The Company acknowledges that, pursuant to Form 24F-2, the Trust
is not required to pay fees to the SEC for registration of its shares under the
1933 Act with respect to its shares issued to an Account that is a unit
investment trust that offers interests that are registered under the 1933 Act
and on which a registration fee has been or will be paid to the SEC (a
"Registered Account"). The Company agrees to provide the Trust each year within
60 days of the end of the Trust's fiscal year, or when reasonably requested by
the Trust, information as to the number of shares purchased by a Registered
Account and any other Account the interests of which are not registered under
the 0000 Xxx. The Company acknowledges that the Trust intends to rely on the
information so provided and represents and warrants that such information shall
be accurate.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
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2.1. The Trust represents and warrants that (i) the Trust is lawfully
organized and validly existing under the laws of the Commonwealth of
Massachusetts, (ii) the Trust is and shall remain registered under the 1940 Act,
(iii) the Trust does and will comply in all material respects with the 1940 Act,
(iv) Designated Portfolio shares sold pursuant to this Agreement are registered
under the 1933 Act (to the extent required by that Act) and are duly authorized
for issuance, (v) the Trust shall amend the registration statement for the
shares of the Designated Portfolios under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of such
shares, (vi) the Board has elected for each Designated Portfolio to be taxed as
a Regulated Investment Company under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), and (v) shares of the Designated Portfolios
will be sold only to Participating Insurance Companies and their separate
accounts and to persons or plans that communicate to the Trust that they qualify
to purchase shares of the Designated Portfolios under Section 817(h) of the Code
and the regulations thereunder without impairing the ability of the Account to
consider the portfolio investments of the Designated Portfolios as constituting
investments of the Account for the purpose of satisfying the diversification
requirements of Section 817(h) ("Qualified Persons"). The Trust makes no
representations or warranties as to whether any aspect of the Designated
Portfolios' operations, including, but not limited to, investment policies, fees
and expenses, complies with the insurance laws and other applicable laws of the
various states.
2.2. Reserved.
2.3. Subject to Company's representations and warranties in Sections
2.5 and 2.6, the Adviser represents and warrants that it will invest the assets
of each Designated Portfolio in such a manner as to ensure that the Contracts
will be treated as annuity or life insurance contracts, whichever is
appropriate, under the Code and the regulations issued thereunder (or any
successor provisions). Without limiting the scope of the foregoing, the Adviser
represents and warrants that each Designated Portfolio has complied and will
continue to comply with Section 817(h) of the Code and Treasury Regulation
ss.1.817-5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts, and any amendments or other modifications or successor provisions to
such Section or Regulation. The Adviser will make every reasonable effort (a) to
notify the Company immediately upon having a reasonable basis for believing that
a breach of this Section 2.3 has occurred, and (b) in the event of such a
breach, to adequately diversify the Designated Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation ss.1.817-5.
2.4. The Adviser represents and warrants that each Designated Portfolio
is or will be qualified as a Regulated Investment Company under Subchapter M of
the Code, that the Adviser will make every reasonable effort to maintain such
qualification (under Subchapter M or any successor or similar provisions) and
that the Adviser will notify the Company immediately upon having a reasonable
basis for believing that a Designated Portfolio has ceased to so qualify or that
it might not so qualify in the future.
2.5. The Company represents and warrants that the Contracts (a) are, or
prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law, that it has legally and validly established
the Account prior to any issuance or sale thereof as a segregated asset account
under Texas insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
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segregated investment account for the Contracts, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 1940 Act. The Company also represents and warrants that it and the
Account are Qualified Persons. The Company shall register and qualify the
Contracts or interests therein as securities in accordance with the laws of the
various states only if and to the extent required by applicable law.
2.6. The Company represents and warrants that the Contracts are
currently, and at the time of issuance shall be, treated as life insurance or
annuity contracts, under applicable provisions of the Code, and that it will
make every reasonable effort to maintain such treatment, and that it will notify
the Adviser immediately upon having a reasonable basis for believing the
Contracts have ceased to be so treated or that they might not be so treated in
the future. In addition, Company represents and warrants that each of its
Accounts is a "segregated asset account" and that interests in the Accounts are
offered exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. Company will use every reasonable effort to continue to
meet such definitional requirements, and it will notify the Trust and the
Adviser immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the future.
2.7. The Adviser represents and warrants that it is registered as an
investment adviser with the SEC.
2.8. The Trust represents and warrants that all of its trustees,
officers, employees, and other individuals or entities dealing with the money
and/or securities of the Trust are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of the Trust in
an amount not less than the minimum coverage as required currently by Rule 17g-1
of the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid bond shall include coverage for larceny and embezzlement and shall
be issued by a reputable bonding company.
2.9. The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the Account,
in an amount not less than $5 million. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company. The
Company agrees to hold for the benefit of the Trust and to pay to the Trust any
amounts lost from larceny, embezzlement or other events covered by the aforesaid
bond to the extent such amounts properly belong to the Trust pursuant to the
terms of this Agreement. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Trust and the Adviser in the event that such
coverage no longer applies.
ARTICLE III. VOTING
3.1. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote Trust shares in accordance with instructions received
from Contract owners; and
(iii) vote Trust shares for which no instructions have been
received in the same proportion as Trust shares of such
portfolio for which instructions have been received,
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so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company will vote Trust shares held in any
segregated asset account in the same proportion as Trust shares of such
Designated Portfolio for which voting instructions have been received from
Contract owners, to the extent permitted by law.
3.2. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in a Designated
Portfolio calculates voting privileges as required by the Exemptive Order and
consistent with any reasonable standards that the Trust may adopt and provide in
writing.
ARTICLE IV. PROSPECTUSES AND PROXY STATEMENTS
4.1. The Trust or its agent shall provide the Company with as many
copies of the Trust's current prospectus (describing only the Designated
Portfolios listed on Schedule A), any supplements thereto or, to the extent
permitted and requested by Company, the Trust's profiles as the Company may
reasonably request. If requested by the Company in lieu thereof, the Trust or
its agent shall provide such documentation (including a "camera ready" final
copy of such documentation on diskette) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus for the Trust is amended) to have the prospectus for the Contracts
and the Trust's prospectus or profile printed together in one or more documents.
The Trust agrees to cooperate with Company to provide the documents on a timely
basis to meet Company's reasonable deadline requirements for production.
4.2. The Trust or its agent shall provide the Company with information
regarding the Designated Portfolios' expenses, which information may include a
table of fees and related narrative disclosure for use in any prospectus or
other descriptive document relating to a Contract. The Company shall provide
prior written notice of any proposed modification of such information, which
notice will describe in detail the manner in which the Company proposes to
modify the information, agrees to provide the Trust or its agent with an
opportunity to review such proposed modification prior to its use by the
Company, and agrees not to use the proposed modification without the consent of
the Trust or its agent, which consent shall not be unreasonably withheld.
4.3. The Trust or its agent shall provide the Company with copies of
the Designated Portfolios' proxy material, reports to shareholders (describing
only the Designated Portfolios listed on Schedule A), and other communications
to shareholders (each, a "Shareholder Communication") in such quantity as the
Company shall reasonably require for distributing to Contract owners. If
requested by the Company in lieu thereof, the Trust or its agent shall provide
Shareholder Communications in "camera ready" format on diskette. The Trust
agrees to cooperate with Company to provide such Shareholder Communications on a
timely basis to meet Company's reasonable deadline requirements for production
and delivery.
ARTICLE V. SALES MATERIAL AND INFORMATION
5.1. The Company shall furnish, or shall cause to be furnished, to the
Adviser each piece of sales literature or other promotional material that the
Company develops and in which the Trust (or a Designated Portfolio thereof) or
the Adviser is named. No such material shall be used until approved by the
Adviser, and the Adviser will use its reasonable best efforts to review such
sales literature or promotional material within ten Business Days after receipt
of such material. The Adviser reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which the Trust (or a Designated Portfolio thereof) or the Adviser is named, and
no such material shall be used if the Adviser so objects.
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5.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust or
the Adviser in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus or SAI for the Trust shares, as such registration statement and
prospectus or SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Trust, or in sales literature or other
promotional material approved by the Adviser, except with the permission of the
Trust or its designee.
5.3. Each of the Trust or the Advisor or its respective designee, shall
furnish, or cause to be furnished, to the Company, each piece of sales
literature or other promotional material that it develops and in which the
Company, and/or its Account, is named. No such material shall be used until
approved by the Company, and the Company will use its best efforts to review
such sales literature or promotional material within ten Business Days after
receipt of such material. The Company reserves the right to reasonably object to
the continued use of any such sales literature or other promotional material in
which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
5.4. The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account,
or the Contracts other than the information or representations contained in a
registration statement, prospectus (which shall include an offering memorandum,
if any, if the Contracts issued by the Company or interests therein are not
registered under the 1933 Act), or SAI for the Contracts, as such registration
statement, prospectus, or SAI may be amended or supplemented from time to time,
or in published reports for the Account which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
5.5. The Trust will provide to the Company at least one complete copy
of all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Designated Portfolios or their shares, promptly after the filing
of such document(s) with the SEC or other regulatory authorities.
5.6. The Company will provide to the Trust at least one complete copy
of all registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, promptly after the filing of
such document(s) with the SEC or other regulatory authorities. The Company shall
provide to the Adviser and the Trust any complaints received from the Contract
owners pertaining to the Trust or a Designated Portfolio.
5.7. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Trust, any Designated Portfolio or any affiliate of
the Trust: advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, and registration
statements, prospectuses, SAIs, shareholder reports, proxy materials, and any
other Shareholder Communications distributed or made generally available with
regard to the Trust.
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ARTICLE VI. FEES AND EXPENSES
6.1. Except as otherwise provided herein, no party to this Agreement
shall pay any fee or other compensation to any other party to this Agreement.
Except as otherwise provided herein, all expenses incident to performance by a
party under this Agreement shall be paid by such party.
6.2. The Trust or its agent will pay the expenses associated with the
following: setting the prospectus and profiles in type; printing copies of the
prospectus and profiles to be delivered to existing Contract owners investing in
the Designated Portfolios; providing a reasonable number of copies of the SAI to
the Company for itself and for any current owner of a Contract who requests such
SAI; setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes an
annual report); and the preparation of all statements and notices required by
any federal or state law.
6.3. Unless otherwise agreed, the Company shall bear the expenses of
printing copies of the current prospectus and profiles for the Contracts;
printing copies of the Trust's prospectus and profiles that are used in
connection with offering the Contracts; distributing the Trust's prospectus to
owners of Contracts issued by the Company; and of distributing the Trust's proxy
materials and reports to such Contract owners. If the prospectus for the
Contracts and the Trust's prospectus are printed together in one or more
documents, printing costs shall be allocated to reflect the Trust's share,
pursuant to Section 6.2, of the total costs for printing the Trust's
prospectus(es) to be delivered to existing Contract owners investing in the
Designated Portfolio(s), determined according to the number of pages of the
Trust's respective portions of the documents.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The parties to this Agreement agree that the conditions or
undertakings required by the Exemptive Order that may be imposed on the Company,
the Trust and/or the Adviser by virtue of such order by the SEC: (i) shall apply
only upon the sale of shares of the Designated Portfolios to variable life
insurance separate accounts (and then only to the extent required under the 1940
Act); (ii) will be incorporated herein by reference; and (iii) such parties
agree to comply with such conditions and undertakings to the extent applicable
to each such party notwithstanding any provision of this Agreement to the
contrary.
7.2. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then (a) the parties to
this Agreement shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.1 and 3.2 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification By the Company
(a) The Company agrees to indemnify and hold harmless each of the
Trust and the Adviser and each of their trustees/directors and officers, and
each person, if any, who controls the Trust or the Adviser within the meaning of
Section 15 of the 1933 Act or who is under common control with the Trust or the
Adviser (collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any
- 9 -
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or litigation (including
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:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained
in the registration statement, prospectus (which shall
include a written description of a Contract that is not
registered under the 1933 Act), or SAI for the Contracts
or contained in the Contracts or sales literature for
the Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading, provided
that this agreement to indemnify shall not apply as to
any Indemnified Party to the extent that such statement
or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Trust
for use in the registration statement, prospectus or SAI
for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or
Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration statement,
prospectus, SAI, or sales literature of the Trust not
supplied by the Company or persons under its control) or
wrongful conduct of the Company or its agents or persons
under the Company's authorization or control, with
respect to the sale or distribution of the Contracts or
Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature of the
Trust or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading if such a
statement or omission was made in reliance upon
information furnished to the Trust by or on behalf of
the Company; or
(iv) arise as a result of any material failure by the Company
to provide the services and furnish the materials
required under the terms of this Agreement (including a
material failure, whether unintentional or in good faith
or otherwise, to comply with the qualification
requirements specified in Section 2.6 of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Company; or
(vi) arise out of information provided to the Company
pursuant to this Agreement, or to any other
Participating Insurance Company pursuant to
- 10 -
another participation agreement, which information is
based on incorrect information supplied by the Company
to the Trust or Adviser.
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of its obligations or duties under this Agreement.
(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation, unless
such Indemnified Party's interests in such legal process are materially adverse
to those of the Company and indemnification is otherwise appropriate under this
Section 8.1, PROVIDED that the Company shall be liable for the costs and
expenses of different counsel for separate Indemnified Parties for related
claims or actions only to the extent that such Indemnified Parties' interest in
such legal process are materially adverse to each other. The Company shall not
settle or compromise any action of which it assumes the defense without the
consent of the affected Indemnified Parties unless the Indemnified Parties are
thereby released of all liability, fault and obligation.
(d) The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Trust shares or the Contracts or the operation
of the Trust.
8.2. Indemnification by the Adviser
(a) The Adviser agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Adviser) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement or prospectus or SAI or
sales literature of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or
are based upon the
- 11 -
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
Adviser or Trust by or on behalf of the Company for use
in the registration statement, prospectus or SAI for the
Trust or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration statement,
prospectus, SAI or sales literature for the Contracts
not supplied by the Trust or the Adviser) or wrongful
conduct of the Trust or Adviser with respect to the sale
or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI or sales literature covering
the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein
not misleading, if such statement or omission was made
in reliance upon information furnished to the Company by
or on behalf of the Trust or the Adviser; or
(iv) arise as a result of any material failure by the Adviser
to provide the services and furnish the materials
required under the terms of this Agreement (including a
material failure, whether unintentional or in good faith
or otherwise, to comply with the diversification and
other qualification requirements specified in Sections
2.3 and 2.4 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Adviser;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
(b) The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Account, whichever is applicable.
(c) The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the
- 12 -
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Party, the Adviser will be entitled to participate, at its own
expense, in the defense thereof. The Adviser also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Adviser to such party of the Adviser's election to assume
the defense thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Adviser will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
(d) The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3. Indemnification By the Trust
(a) The Trust agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.4) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust) or litigation (including legal
and other expenses) to which the Indemnified Parties may be required to pay or
may become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, expenses, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise as a result of any material failure by the Trust
to provide the services and furnish the materials
required under the terms of this Agreement; or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Trust;
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof. The parties acknowledge that the Trust's indemnification
obligations under this Section 8.4 are subject to applicable law. The Company
agrees that, in the event an obligation to indemnify exists pursuant to Section
8.4 as well as Section 8.2 or Section 8.3 hereof, it will seek satisfaction
under the indemnification provisions of Section 8.2 or Section 8.3 before
seeking indemnification under this Section 8.4.
(b) The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Account, whichever is applicable.
(c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Trust or its agent will be entitled to
participate, at its
- 13 -
own expense, in the defense thereof. The Trust or its agent also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Trust to such party of the Trust's
(or its agent's) election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Trust or its agent will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
(d) The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceeding against it or any of its respective
officers or directors in connection with the Agreement, the issuance or sale of
the Contracts, the operation of the Account, or the sale or acquisition of
shares of the Trust.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Exemptive Order) and the terms
hereof shall be interpreted and construed in accordance therewith. If, in the
future, the Exemptive Order should no longer be necessary under applicable law,
then Article VII shall no longer apply.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to some
or all Designated Portfolios, by three (3) months advance written notice
delivered to the other parties; or
(b) termination by the Company by written notice to the Adviser
and the Trust based upon the Company's determination that shares of the Trust
are not reasonably available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Adviser
and the Trust in the event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state and/or federal
law or such law precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company; or
(d) termination by the Adviser or the Trust in the event that
formal administrative proceedings are instituted against the Company by the
NASD, the SEC, an insurance commissioner or like official of any state or any
other regulatory body regarding the Company's duties under this Agreement or
related to the sale of the Contracts, the operation of any Account, or the
purchase of the Designated Portfolios' shares; provided, however, that the
Adviser determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the ability
of the Company to perform its obligations under this Agreement; or
- 14 -
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Trust or the Adviser by
the SEC or any state securities or insurance department or any other regulatory
body; provided, however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings will have a
material adverse effect upon the ability of the Adviser or the Trust to perform
its obligations under this Agreement; or
(f) termination by the Company by written notice to the Adviser
and the Trust with respect to any Designated Portfolio in the event that such
Designated Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M or fails to comply with the Section 817(h) diversification
requirements specified in Section 2.3 hereof, or if the Company reasonably
believes that such Designated Portfolio may fail to so qualify or comply; or
(g) termination by the Adviser or the Trust by written notice to
the Company in the event that the Contracts fail to meet the qualifications
specified in Section 2.6 hereof; or
(h) termination by the Adviser or the Trust by written notice to
the Company, if the Adviser shall determine, in its sole judgment exercised in
good faith, that the Company has suffered a material adverse change in its
business, operations, financial condition, or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(i) termination by the Company by written notice to the Adviser
and the Trust, if the Company shall determine, in its sole judgment exercised in
good faith, that the Adviser or the Trust has suffered a material adverse change
in its business, operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity; or
(j) termination by the Adviser or the Trust by written notice to
the Company, if the Company gives the Adviser the written notice specified in
Section 1.7(a)(ii) hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision of this Agreement;
provided, however, any termination under this Section 10.1(j) shall be effective
forty-five days after the notice was given; or
(k) termination by the Trust if the Board has decided to (i)
refuse to sell shares of any Designated Portfolio to the Company and/or any of
its Accounts; (ii) suspend or terminate the offering of shares of any Designated
Portfolio; or (iii) dissolve, reorganize, liquidate, merge or sell all assets of
the Trust or any Designated Portfolio, subject to the provisions of Section 1.1;
or
(l) termination by the Company upon any substitution of the shares
of another investment company or series thereof for shares of a Designated
Portfolio of the Trust in accordance with the terms of the Contracts, provided
that the Company has given at least 45 days prior written notice to the Adviser
and the Trust of the date of substitution;
(m) termination by any party in the event that the Board
determines that a material irreconcilable conflict exists as provided in Article
VII; or
- 15 -
10.2. (a) Notwithstanding any termination of this Agreement, and except
as provided in Section 10.2(b), the Trust shall, at the option of the Company,
continue, until the one year anniversary from the date of termination, and from
year to year thereafter if deemed appropriate by the Trust, to make available
additional shares of the Designated Portfolios pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts").
Specifically, based on instructions from the owners of the
Existing Contracts, the Accounts shall be permitted to reallocate investments in
the Designated Portfolios of the Trust and redeem investments in the Designated
Portfolios, and shall be permitted to invest in the Designated Portfolios in the
event that owners of the Existing Contracts make additional premium payments
under the Existing Contracts.
Company agrees, promptly after any termination of this
Agreement, to take all steps necessary to redeem the investment of the Accounts
in the Designated Portfolios within one year from the date of termination of the
Agreement as provided in Article X. Such steps shall include, but not be limited
to, obtaining an order pursuant to Section 26(c) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated Portfolios.
The Trust may, in its discretion, permit the Accounts to continue to invest in
the Designated Portfolios beyond such one year anniversary for an additional
year beginning on the first annual anniversary of the date of termination, and
from year to year thereafter; provided that the Trust agrees in writing to
permit the Accounts to continue to invest in the Designated Portfolios at the
beginning of any such year.
(b) In the event (i) the Agreement is terminated pursuant to
Sections 10.1(g) or 10.1(m), at the option of the Trust or the Adviser; or (ii)
the one year anniversary of the termination of the Agreement is reached or,
after waiver as provided in Section 10.2(a), such subsequent anniversary is
reached (each of (i) and (ii) referred to as a "triggering event" and the date
of termination as provided in (i) or the date of such anniversary as provided in
(ii) referred to as the "request date"), the parties agree that such triggering
event shall be considered as a request for immediate redemption of shares of the
Designated Portfolios held by the Accounts, received by the Trust and its agents
as of the request date, and the Trust agrees to process such redemption request
in accordance with the 1940 Act and the regulations thereunder and the Trust's
registration statement.
(c) The parties agree that this Section 10.2 shall not apply to
any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement. The parties
further agree that, to the extent that all or a portion of the assets of the
Accounts continue to be invested in the Trust or any Designated Portfolio of the
Trust, Articles I, II, VII, VIII and IX will remain in effect after termination.
10.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
- 16 -
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Company: Jefferson National Life Insurance Company
0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx-Xxxxx
If to Adviser: Xxxxxxxx Asset Management, LLC
00 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X'Xxxxx
If to the Trust: The Potomac Funds
00 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X'Xxxxx
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information has come into the
public domain.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the [insert state] Insurance Commissioner with any information
or reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable insurance
operations of the Company are being conducted in a manner consistent with the
[insert state] insurance laws and regulations and any other applicable law or
regulations.
- 17 -
12.6. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.7. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Adviser may assign this Agreement or any
rights or obligations hereunder to any affiliate or company under common control
with the Adviser, if such assignee is duly licensed and registered to perform
services under this Agreement. The Company shall promptly notify the Trust and
the Adviser of any change in control of the Company.
12.8. All persons dealing with the Trust must look solely to the
property of the respective Designated Portfolios listed on Schedule A hereto as
though each such Designated Portfolio had separately contracted with such party
for the enforcement of any claims against the Trust. The parties agree that
neither the Board, officers, agents or shareholders of the Trust assume any
personal liability or responsibility for obligations entered into by or on
behalf of the Trust. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but bind only the trust property
of the Trust as provided in the Trust's Declaration of Trust. The provisions of
this section 12.8 shall survive termination of the Agreement.
- 18 -
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative as of the date specified below.
Jefferson National
Life Insurance Company: By its authorized officer
By:
-------------------------------------------
Title:
----------------------------------------
Date:
-----------------------------------------
Xxxxxxxx Asset
Management, LLC By its authorized officer:
By:
-------------------------------------------
Title:
----------------------------------------
Date:
-----------------------------------------
The Potomac Insurance
Trust By its authorized officer:
By:
-------------------------------------------
Title:
----------------------------------------
Date:
-----------------------------------------
- 19 -
[Date]
SCHEDULE A
ACCOUNT(S) CONTRACT(S) DESIGNATED PORTFOLIO(S)
DYNAMIC VP XX XXXX FUND
VP MONEY XXXXXX FUND
A-1
