Exhibit (h)(4)(F)
PARTICIPATION AGREEMENT
Among
LSA VARIABLE SERIES TRUST,
LSA ASSET MANAGEMENT LLC
And
ALLSTATE LIFE INSURANCE COMPANY
THIS AGREEMENT (the "Agreement"), made and entered into as of the tenth
Day of October 2001, by and among Allstate Life Insurance Company
(hereinafter the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement (collectively,
the "Accounts"), LSA Variable Series Trust (the "Fund") and LSA Asset
Management LLC (the "Manager").
WHEREAS, the Fund is an open-end management investment company and is
available to act as the investment vehicle for separate accounts now in
existence or to be established in the future for variable life insurance
policies, variable annuity contracts and other tax-deferred products offered
by insurance companies (the "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio", (collectively, the
"Portfolios") and each representing the interests in a particular managed
pool of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC"), dated October 4, 1999 (File No. 812-11656)
(hereinafter, the "Order") granting relief to the Fund, the Manager and any
subsequently registered open-end investment companies that in the future are
advised by the Manager, or by any entity controlling, controlled by, or under
common control with the Manager. Specifically, the Order provides exemptions
from Section 15(a) of the 1940 Act and Rule 18f-2 thereunder, subject to the
conditions set forth
in the application, to permit investment advisers other than the Manager, to
serve and act as an investment sub-adviser to one or more portfolios of the
Fund (the "Adviser(s)") pursuant to written agreements between the Manager
and each Adviser that have been approved by the Board of Trustees of the Fund
(the "Board") but which have not been approved by a vote of a majority of the
outstanding voting securities of each portfolio. The Order also provides
exemptions from: certain registration statement disclosure requirements of
Items 3, 6(a)(1)(ii) and 15(a)(3) of Form N1-A and Item 3 of Form N-14;
certain proxy statement disclosure requirements of Items 22(a)(3)(iv),
(c)(1)(ii), (c)(1)(iii), (c)(8) and (c)(9) of Schedule 14A under the
Securities Exchange Act of 1934, as amended; certain semi-annual reporting
disclosure requirements of Item 48 of Form N-SAR; and, certain financial
statement disclosure requirements of Sections 6-07(2)(a), (b), and (c) of
Regulation S-X which may be deemed to require various disclosures regarding
advisory fees paid to the Advisers;
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and its shares are registered under the Securities Act of 1933, as amended
(the "1933 Act"):
WHEREAS, the Manager is duly registered as an investment adviser under
the Investment Advisers Act of 1940:
WHEREAS, the Company has registered or will register certain variable
annuity and/or life insurance contracts under the 1933 Act (the "Contracts")
(unless an exemption from registration is available);
WHEREAS, the Accounts are or will be duly organized, validly existing
segregated asset accounts, established by resolution of the Board of
Directors of the Company, to set aside and invest assets attributable to the
Contracts and the Accounts;
WHEREAS, the Company has registered or will register the Accounts as
unit investment trusts under the 1940 Act (unless an exemption from
registration is available);
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios (as
named in Schedule 2 to this Agreement and as may be amended from time to time
by mutual consent of the parties) on behalf of the Accounts to fund the
Contracts (as named in Schedule 3 to this Agreement and as may be amended
from time to time by mutual consent of the parties) and the Fund is
authorized to sell such shares to the Accounts at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the Fund, the
Manager and the Company agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those shares
of the Fund which the Company orders on behalf of the Account, executing such
orders on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the order for the shares of the Fund. For
purposes of this Section 1.1, the Company shall be the designee of the Fund
for receipt of such orders from each Account and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund receives notice
of such order by 9:30 a.m. Eastern Standard Time on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the SEC.
1.2. The Company will pay for Fund shares on the next
Business Day after it places an order to purchase Fund shares in accordance
with Section 1.1. Payment shall be in federal funds transmitted by wire or by
a credit for any shares redeemed.
1.3 The Fund agrees to make Fund shares available for
purchase at the applicable net asset value per share by the Company for its
Accounts (as named in Schedule 1 to this Agreement and as may be amended from
time to time by mutual consent of the parties)
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on those days on which the Fund calculates its net asset value pursuant to
the rules of the SEC; provided, however, that the Board may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering
of shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board,
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, in the best interests of the shareholders of any
Portfolio.
1.4 The Fund agrees to redeem, upon the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.4, the Company shall be the designee of the Fund
for receipt of requests for redemption and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives written (or
facsimile) notice of such request for redemption by 9:30 a.m. Eastern
Standard Time on the next following Business Day. Payment shall be made
within the time period specified in the Fund's prospectus or statement of
additional information, in federal funds transmitted by wire to the Company's
account as designated by the Company in writing from time to time.
1.5 The Company shall pay for the Fund shares on the next
Business Day after an order to purchase shares is made in accordance with the
provisions of Section 1.4. Payment shall be in federal funds transmitted by
wire pursuant to the instructions of the Fund's treasurer or by a credit for
any shares redeemed.
1.6 The Company agrees to purchase and redeem the shares
of the Portfolios named In Schedule 2 offered by the Fund's then current
prospectus and statement of additional information in accordance with the
provisions of such prospectus and statement of additional information.
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1.7 Net Asset Value. The Fund shall use its best efforts
to inform the Company of the net asset value per share for each Portfolio
available to the Company by 6:30 p.m. Eastern Standard Time or as soon as
reasonably practicable after the net asset value per share for such Portfolio
is calculated. The Fund shall calculate such net asset value in accordance
with the prospectus for such Portfolio. In the event that net asset values
are not communicated to the Company by such time, the Company agrees to use
its best efforts to include the net asset value when received in its next
business cycle for purposes of calculating purchase orders and requests for
redemption. However, if net asset values are not available for an inclusion
in the next business cycle and purchase orders/redemptions are not able to be
calculated and available to the Company to execute within the time-frame
identified in Section 2.3 (a), the Fund shall reimburse and make the Company
whole for any losses incurred as a result of such delays.
1.8 Pricing Errors. Any material errors in the
calculation of the net asset value, dividends or capital gain information
shall be reported to the Fund promptly upon discovery by the Company. An
error shall be deemed "material" based on the Company's interpretation of the
SEC's position and policy with regard to materiality, as it may be modified
from time to time. Neither the Fund, the Manager, nor any of their affiliates
shall be liable for any information provided to the Company pursuant to this
Agreement which information is based on incorrect information supplied by or
on behalf of the Company or any other Participating Company to the Fund or
the Manager. The Fund shall make the Company whole for any payments or
adjustments to the number of shares in the Account that are reasonably
demonstrated to be required as a result of pricing errors.
ARTICILE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the
Contracts are or will be registered under the 1933 Act; that the Contracts
will be issued and sold in compliance in all
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material respects with all applicable federal and state laws and that sale of
the Contracts shall comply in all material respects with state insurance
suitability requirements. The Company further represents and warrants that is
an insurance company duly organized and in good standing under applicable law
and that it has legally and validly established each Account prior to any
issuance or sale thereof as a segregated asset account under laws of the
State of Illinois and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the applicable laws of
the State of Delaware and all applicable federal and state securities laws
and that the Fund is and shall remain registered under the 0000 Xxx. The Fund
shall amend the registration statement for its shares under the 1933 Act and
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund shall register and qualify the shares for
sale in accordance with the laws of the various states only if and to the
extent deemed advisable by the Fund.
2.3 The Fund represents that it is currently qualified as
a Regulated Investment Company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4 The Company represents that the Contracts are
currently treated as life insurance policies or annuity contracts, under
applicable provisions of the Code and that it will make every effort to
maintain such treatment and that it will notify the Fund immediately upon
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having a reasonable basis for believing that the Contracts have ceased to be
so treated or that they might not be so treated in the future.
2.5 The Fund represents that to the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1 under the
1940 Act, the Fund undertakes to have its Board, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
2.6 The Fund makes no representation as to whether any
aspect of Its operations (including, but not limited to, fees and expenses
and investment policies) complies with the insurance laws or regulations of
the various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance
with the applicable laws of the State of Delaware and the Fund represents
that its operations are and shall at all times remain in material compliance
with the applicable laws of the State of Delaware to the extent required to
perform this Agreement.
2.7 The Fund represents that it is lawfully organized and
validly existing under the laws of the State of Delaware and that it does and
will comply in all material respects with the 0000 Xxx.
2.8 The Manager represents and warrants that it is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that it will perform its obligations
for the Fund in compliance in all material respects with the laws of its
state of domicile and any applicable state and federal securities laws. The
Manager further represents that it will make reasonable efforts to verify
that all subadvisers are similarly registered.
2.9 The Fund represents and warrants that its trustees,
officers, employees, and other individuals/entities, if any, dealing with the
money and/or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for
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the benefit of the Fund in an amount not less than the minimal 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 blanket fidelity bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.10 The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities, if any, dealing with the money and/or securities of the
Fund are covered by a blanket fidelity bond or similar coverage, in an amount
not less $5 million. The aforesaid includes coverage for larceny and
embezzlement is issued by a reputable bonding company. 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 Fund and the
Manager in the event that such coverage no longer applies.
ARTICLE III. SALES MATERIAL, PROSPECTUSES AND OTHER REPORTS
3.1 The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee, each piece of sales literature or
other promotional material in which the Fund or the Manager is named, at
least five Business Days prior to its use. No such material shall be used if
the Fund or its designee reasonably objects to such use within five Business
Days after receipt of such material.
3.2 Except with the express permission of the Fund, the
Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented
from time to time, or in reports or proxy statements for the Fund, or in
sales literature or other promotional material approved by the Fund or its
designee.
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3.3 For purposes of this Article III, the phrase "sales
literature or other promotional material" shall mean 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 billboard or electronic media), and sales literature (such
as brochures, circulars, market letters and form letters), distributed or
made generally available to customers or the public.
3.4 The Fund shall provide a copy of its current
prospectus within a reasonable period of its effective filing date, and
provide other assistance as is reasonably necessary in order for the Company
once each year (or more frequently if the prospectus for the Fund is
supplemented or amended) to have the prospectus for the Contracts and the
prospectus for the Fund printed together in one document (such printing to be
at the Company's expense). The Manager shall be permitted to review and
approve the typeset form of the Fund's prospectus prior to such printing.
3.5 The Fund or the Manager shall provide the Company
with either: (i) a copy of the Fund's proxy material, reports to
shareholders, other information relating to the Fund necessary to prepare
financial reports, and other communications to shareholders for printing and
distribution to Contract owners at the Company's expense, or (ii) camera
ready and/or printed copies, if appropriate, of such material for
distribution to Contract owners at the Company's expense, within a reasonable
period of the filing date for definitive copies of such material. The Manager
shall be permitted to review and approve the typeset form of such proxy
material, shareholder reports and communications prior to such printing.
ARTICLE IV. FEES AND EXPENSES
4.1 The Fund and Manager shall pay no fee or other
compensation to the Company under this Agreement, and the Company shall pay
no fee or other compensation to the Fund or Manager, except as provided
herein.
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4.2 All expenses incident to performance by each party of
its respective duties under this Agreement shall be paid by that party. The
Fund shall ensure that all its shares are registered and authorized for
issuance in accordance with applicable federal law and, if and to the extent
advisable by the Fund, in accordance with applicable state laws prior to
their sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, proxy materials and reports, and the
preparation of all statements and notices required by any federal or state
law.
4.3 The Fund, at its expense, shall provide the Company
with copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and statements of additional
information, which are covered in section 3.4) to shareholders in such
quantity as the Company shall reasonably require for distributing to Contract
owners. The Fund shall bear the expense of mailing such proxy materials in
the event the proxy vote is a result of actions initiated by the Fund.
4.4 In the event the Fund adds one or more additional
Portfolios and the parties desire to make such Portfolios available to the
respective Contract owners as an underlying investment medium, a new Schedule
3 which shall be an amendment to this Agreement shall be executed by the
parties authorizing the issuance of shares of the new Portfolios to the
particular Account. The amendment may also provide for the sharing of
expenses for the establishment of new Portfolios among Participating
Insurance Companies desiring to invest in such Portfolios and the provision
of funds as the initial investment in the new Portfolios.
4.5 Except as provided in this Section 4.5, all expenses
of preparing, setting in type and printing and distributing Fund prospectuses
and statements of additional information, or supplements thereto, shall be
the expense of the Company. For prospectuses and statements of additional
information provided by the Company to its existing owners of
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Contracts who currently own shares of one or more of the Fund's Portfolios,
in order to update disclosure as required by the 1933 Act and/or the 1940
Act, the cost of printing shall be borne by the Fund. If the Company chooses
to receive camera-ready film or computer diskettes in lieu of receiving
printed copies of the Fund's prospectus, the Fund shall bear the cost of
typesetting to provide the Fund's prospectus to the Company in the format in
which the Fund is accustomed to formatting prospectuses, and the Company
shall bear the expense of adjusting or changing the format to conform with
any of its prospectuses. In such event, the Fund will reimburse the Company
in an amount equal to the product of x and y where x is the number of such
prospectuses distributed to owners of the Contracts who currently own shares
of one or more of the Fund's Portfolios, and y is the Fund's per unit cost of
typesetting and printing the Fund's prospectus. The same procedure shall be
followed with respect to the Fund's statement of additional information. The
Company agrees to provide the Fund or its designee with such information as
may be reasonably requested by the Fund to assure that the Fund's expenses do
not include the cost of printing, typesetting, and distributing any
prospectuses or statements of additional information other than those
actually distributed to existing owners of the Contracts who currently own
shares of one or more of the Fund's Portfolios.
ARTICLE V. CONDITIONS OF THE ORDER: APPLICABLE LAW
5.1 The Company has reviewed a copy of the Order, and in
particular, has reviewed the conditions to the requested relief set forth
therein. The Company agrees to be bound by the responsibilities of a
Participating Insurance Company as set forth in the Order.
5.2 This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
Delaware.
5.3 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
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from those statutes, rules and regulations as the SEC may grant (including,
but not limited to, the Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE VI. DIVERSIFICATION
6.1 The Fund will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated as
variable contracts under the Code and the regulations issued thereunder.
Without limiting the scope of the foregoing, the Fund will at all times
comply with Section 817(h) of the Code and Treasury Regulation 1.817-5,
relating to the diversification requirements for variable annuity, endowment,
or life insurance contracts and any amendments or other modifications to such
Section or Regulations. In the even of a breach of this Article VI by the
Fund, it will take all reasonable steps (a) to notify Company of such breach
and (b) to adequately diversify the Fund so as to achieve compliance within
the grace period afforded by Regulation 817-5. The Fund shall provide the
Company information reasonably requested in relation to Section 817(h)
diversification requirements, including quarterly reports and annual
certifications.
ARTICLE VII. POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of
any material irreconcilable conflict between the interests of the contract
owners of all separate accounts investing in the Fund. A material
irreconcilable conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority: (b) a change in
applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance. tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by Variable
Insurance Product owners; or (f) a decision by a
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Participating Insurance Company to disregard the voting instructions of
contract owners. The Board shall promptly inform the Company if it determines
that an irreconcilable material conflict exists and the implications thereof.
ARTICLE VIII. INDEMNIFICATION
8.1 Indemnification By The Company
8.1(a) The Company agrees to indemnify and hold harmless the
Fund and each member of the Board and officers, and each Adviser and each
director and officer of each Adviser, and each person, if any, who controls
the Fund or the Adviser within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually, "Indemnified
Party", for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including legal and other expenses),
to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any
untrue statements or alleged untrue statements of any material
fact contained in the registration statement or prospectus for
the 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 if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Company by or
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on behalf of the Fund for use in the registration statement or
prospectus 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 Fund
shares; or
(ii) arise out of or as a result of
statements or representations (other than statements or
representations contained in the registration statement,
prospectus or sales literature of the Fund not supplied by the
Company, or persons under its control and other than
statements or representations authorized by the Fund or an
Adviser) or unlawful conduct of the Company or persons under
its control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of or as a result of any
untrue statement or alleged untrue statement of a material
fact contained in a registration statement, prospectus, or
sales literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon and in
conformity with information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by
the Company to provide the services and furnish the materials
under the terms of this Agreement; or
(v) 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
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Company, as limited by and in accordance with the provisions
of Sections 8.1(b) and 8.1 (c) hereof.
8.1(b) The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
as such may arise from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement.
8.1(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 provisions. In
case any such action is brought against the Indemnified Parties, 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.
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8.1(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 Fund shares or the Contracts or
the operation of the Fund.
8.2 Indemnification by the Manager
8.2(a). The Manager agrees, with respect to each Portfolio
that it manages, 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" and individually, "Indemnified Party," for purposes of
this Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Adviser) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of shares of the Portfolio that it manages or the
Contracts and:
(i) arise out of or are based upon any
untrue statement or alleged untrue statement of any material
fact contained in the registration statement or prospectus or
sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the
Company for use in the registration statement or prospectus
for the
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Fund or in sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the
Contracts or Portfolio shares; or
(ii) arise out of or as a result of
statements or representations (other than statements or
representations contained in the registration statement,
prospectus or sales literature for the Contracts not supplied
by the Fund or persons under its control and other than
statements or representations authorized by the Company) or
unlawful conduct of the Fund or Manager(s) or persons under
their control, with respect to the sale or distribution of the
Con-tracts or Portfolio shares; or
(iii) arise out of or as a result of any
untrue statement or alleged untrue statement of a material
fact contained in a registration statement, prospectus, 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 Fund; or
(iv) arise as a result of any failure by
the Fund to provide the services and furnish the materials
under the terms of this Agreement; or
(v) arise out of or result from any
material breach of any representation and/or warranty made by
the Manager in this Agreement or arise out of or result from
any other material breach of this Agreement by the Manager; as
limited by and in accordance with the provisions of Section
8.2(b) and 8.2(c) hereof.
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8.2(b). The Manager shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
as such may arise from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement.
8.2(c). The Manager 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
Manager 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 Manager of any such claim shall not relieve the Manager 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 Manager
will be entitled to participate, at its own expense, in the defense thereof.
The Manager also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Manager to such party of the Manager'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 Manager 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.
8.2(d). The Company agrees promptly to notify the Manager of
the commencement of any litigation or proceedings against it or any of its
officers or
18
directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3 Indemnification by the Fund
8.3(a). The Fund 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
(hereinafter collectively, the "Indemnified Parties" and individually,
"Indemnified Party," 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 Fund) or litigation (including legal and
other expenses) to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence (except for failure to comply
with Section 6.1 of this Agreement for which the standard is negligence), bad
faith or willful misconduct of the Board or any member thereof, are related
to the operations of the Fund and:
(i) arise as a result of any failure by
the Fund to provide the services and furnish the materials
under the terms of this Agreement (including any failure to
comply with Section 6.1 of this Agreement); or
(ii) arise out of or result from any
material breach of any representation and/or warranty made by
the Fund in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
8.3(b). The Fund shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
as may arise from such Indemnified Party's willful
19
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.
8.3(c). The Fund shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the Fund
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure to
notify the Fund of any such claim shall not relieve the Fund from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the Fund
will be entitled to participate, at its own expense, in the defense thereof.
The Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund to
such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Fund 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.
8.3(d). The Company agrees promptly to notify the Fund of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
20
ARTICLE IX. TERMINATION
9.1 This Agreement shall terminate with respect to some
or all Portfolios:
(a) at the option of any party upon six
months advance written notice to the other parties at the
address specified in Section X of this Agreement; or
(b) at the option of the Company to the
extent that shares of Portfolios are not reasonably available
to meet the requirements of its Contracts or are not
appropriate funding vehicles for the Contracts, as determined
by the Company reasonably and in good faith. Prompt written
notice of the election to terminate for such cause and an
explanation of such cause shall be furnished by the Company.
9.2. It is understood and agreed that the right of any
party hereto to terminate this Agreement pursuant to Section 9.1(a) may be
exercised for cause or for no cause.
ARTICLE X. 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 parties to this Agreement.
If to the Fund:
LSA Variable Series Trust
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
If to the Manager:
LSA Asset Management LLC
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
21
If to the Company:
Allstate Life Insurance Company
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
ARTICLE XI. MISCELLANEOUS
11.1 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 the 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 it may come
into the public domain.
11.2 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.
11.3 This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall constitute one and
the same instrument.
11.4 If any provision of this Agreement shall be held or
made invalid by a court decision, status, rule, or otherwise, the remainder
of the Agreement shall not be affected thereby.
11.5 Each party hereto shall cooperate with all
appropriate governmental authorities (including without limitation the SEC,
the National Association of Securities Dealers, Inc. 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. Each party hereto shall
promptly notify the other parties
22
to this Agreement, by written notice to the addresses specified in Section V,
of any such investigation or inquiry.
11.6 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.
11.7 It is understood by the parties that this Agreement
is not an exclusive arrangement.
11.8 The Company and the Manager each understand and agree
that the obligations of the Fund under this Agreement are not binding upon
any shareholder of the Fund personally, but bind only the Fund and the Fund's
property; the Company and the Manager separately represent that each has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder liability for acts or obligations of the Fund.
11.9 This Agreement shall not be assigned by any party
hereto without the prior written consent of all the parties.
11.10 This Agreement sets forth the entire agreement
between the parties and supercedes all prior communications, agreements and
understandings, oral or written, between the parties regarding the subject
matter hereof.
23
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and ratified in its name and on its behalf by its
duly authorized representative as of the day and year above written.
ALLSTATE LIFE INSURANCE COMPANY
By:
--------------------------------------
Title:
-----------------------------------
LSA VARIABLE SERIES TRUST
By:
--------------------------------------
Title:
-----------------------------------
LSA ASSET MANAGEMENT LLC
By:
--------------------------------------
Title:
-----------------------------------
24
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and ratified in its name and on its behalf by its
duly authorized representative as of the day and year above written.
ALLSTATE LIFE INSURANCE COMPANY
By:
-------------------------------------
Title:
-----------------------------------
LSA VARIABLE SERIES TRUST
By:
--------------------------------------
Title:
-----------------------------------
LSA ASSET MANAGEMENT LLC
By:
--------------------------------------
Title:
-----------------------------------
24
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and ratified in its name and on its behalf by its
duly authorized representative as of the day and year above written.
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Xxxx Xxxxxx
-------------------------
Title: Senior Vice President
LSA VARIABLE SERIES TRUST
By: /s/ Xxxx X. Xxxxxx
-------------------------
Title: President
LSA ASSET MANAGEMENT LLC
By: /s/ Xxxxxxxx X. Xxxxxxx
-------------------------
Title: Chief Operations Officer
24
SCHEDULE 1
SEPARATE ACCOUNTS
Allstate Financial Advisors Separate Account I
25
SCHEDULE 2
AUTHORIZED PORTFOLIOS
LSA Variable Series Trust Aggressive Growth Fund
LSA Variable Series Trust Balanced Fund
LSA Variable Series Trust Basic Value Fund
LSA Variable Series Trust Blue Chip Fund
LSA Variable Series Trust Capital Appreciation Fund
LSA Variable Series Trust Disciplined Equity Fund
LSA Variable Series Trust Diversified Mid-Cap Fund
LSA Variable Series Trust Emerging Growth Equity Fund
LSA Variable Series Trust Focused Equity Fund
LSA Variable Series Trust Growth Equity Fund
LSA Variable Series Trust Mid Cap Value Fund
LSA Variable Series Trust Value Equity Fund
26
SCHEDULE 3
CONTRACTS
Allstate Financial Personal Retirement Manager
27
