PARTICIPATION AGREEMENT
Among
XXXXXX VARIABLE TRUST
XXXXXX RETAIL MANAGEMENT, INC.
and
Lincoln Benefit Life Company
THIS AGREEMENT, made and entered into as of this 1st day of August,
2001, among Lincoln Benefit Life Company (the "Company"), a Nebraska
corporation, on its own behalf and on behalf of each separate account of the
Company set forth on Schedule A hereto, as such Schedule may be amended from
time to time (each such account hereinafter referred to as the "Account"),
PUTNAM VARIABLE TRUST (the "Trust"), a Massachusetts business trust, and PUTNAM
RETAIL MANAGEMENT, INC. (the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Trust is an open-end diversified management investment company and
is available to act as the investment vehicle for separate accounts established
for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into Participation Agreements with the Trust and
the Underwriter (the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several series of
shares, each designated a "Fund" and representing the interest in a particular
managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated December 29, 1993 (File No. 812-8612), granting the variable
annuity and variable life insurance separate accounts participating in the Trust
exemptions from the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the
Investment Company Act of 1940, as amended (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 the Participating Insurance Companies (the
"Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment company
under the 1940 Act and the sale of its shares is registered under the Securities
Act of 1933, as amended (the " 1933 Act"); and
WHEREAS, the Company has registered or will register certain variable life
and/or variable annuity contracts under the 1933 Act and any applicable state
securities and insurance law; and
WHEREAS, each Account is a duly organized, validly existing separate account,
established by resolution of the Board of Directors of the Company, on the date
shown for such Account on Schedule A hereto, to set aside and invest assets
attributable to one or more variable insurance contracts (the "Contracts"); and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and is a member in good standing of the National Association
of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in certain Funds ("Authorized Funds") on
behalf of each Account to fund certain of the Contracts and the Underwriter is
authorized to sell such shares to unit investment trusts such as each Account at
net asset value;
NOW, THEREFORE, in consideration of the promises herein, the Company, the Trust
and the Underwriter agree as follows:
ARTICLE 1. Sale of Trust Shares
1.1 The Underwriter agrees, subject to the Trust's rights under Section 1.2 and
otherwise under this Agreement, to sell to the Company those Trust shares
representing interests in Authorized Funds which each Account orders, executing
such orders on a daily basis at the net asset value next computed after receipt
by the Trust or its designee of the order for the shares of the Trust. For
purposes of this Section 1.1, the Company shall be the designee of the Trust for
receipt of such orders from each Account and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of such
order by 9:30 a.m. Eastern time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Trust calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission. The initial Authorized Funds are set
forth in Schedule B, as such schedule is amended from time to time.
1.2 The Trust agrees to make its shares available indefinitely for purchase at
the applicable net asset value per share by the Company and its Accounts on
those days on which the Trust calculates its net asset value pursuant to rules
of the Securities and Exchange Commission and the Trust shall use reasonable
efforts to calculate such net asset value on each day on which the New York
Stock Exchange is open for trading. Notwithstanding the foregoing, the Trustees
of the Trust (the "Trustees") may refuse to sell shares of any Fund to the
Company or any other person, or suspend or terminate the offering of shares of
any Fund if such action is required by law or by regulatory authorities having
jurisdiction over the Trust or if the Trustees determine, in the exercise of
their fiduciary responsibilities, that to do so would be in the best interests
of shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust will be sold
only to Participating Insurance Companies and their separate accounts. No shares
of any Fund will be sold to the general public.
1.4 The Trust shall redeem its shares in accordance with the terms of its then
current prospectus. For purposes of this Section 1.4, the Company shall be the
designee of the Trust for receipt of requests for redemption from each Account
and receipt by such designee shall constitute receipt by the Trust; provided
that the Trust receives notice of such request for redemption by 9:30 a.m.,
Eastern time, on the next following Business Day.
1.5 The Company shall purchase and redeem the shares of Authorized Funds offered
by the then current prospectus of the Trust in accordance with the provisions of
such prospectus.
1.6 The Company shall pay for Trust shares on the next Business Day after an
order to purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
1.7 Issuance and transfer of the Trust's shares will be by book entry only.
Share certificates will not be issued to the Company or any Account. Shares
ordered from the Trust will be recorded as instructed by the Company to the
Underwriter in an appropriate title for each Account or the appropriate
sub-account of each Account.
1.8 The Underwriter shall furnish prompt notice (by wire or telephone, followed
by written confirmation) to the Company of the declaration of any income,
dividends or capital gain distributions payable on the Trust's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Fund shares in additional shares of that
Fund. The Company reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash. The Underwriter
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.9 The Underwriter shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical after
the Trust calculates its net asset value per share and each of the Trust and the
Underwriter shall use its best efforts to make such net asset value per share
available by 6:30 p.m. Eastern time.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that
(a) at all times during the term of this Agreement the Contracts are or
will be registered under the 1933 Act; the Contracts will be issued
and sold in compliance in all material respects with all applicable
laws and 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 and that it has
legally and validly established each Account prior to any issuance or
sale thereof as a separate account under applicable law 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; and
(b) the Contracts are currently treated as endowment, annuity or life
insurance contracts, under applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and that it will make
every effort to maintain such treatment and that it will notify the
Trust and the Underwriter immediately upon 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.
2.2 The Trust represents and warrants that
(a) at all times during the term of this Agreement Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sold by the Trust to the Company in
compliance with all applicable laws, subject to the terms of Section
2.4 below, and the Trust is and shall remain registered under the 1940
Act. The Trust 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 Trust 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 Trust or the Underwriter in connection with their sale by the
Trust to the Company and only as required by Section 2.4;
(b) it is currently qualified as a Regulated Investment Company under
Subchapter M of the Code, and that it will use its best efforts to
maintain such qualification (under Subchapter M or any successor
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; and
(c) it is lawfully organized and validly existing under the laws of the
Commonwealth of Massachusetts and that it does and will comply in all
material respects with the 1940 Act.
2.3 The Underwriter represents and warrants that it is a member in good standing
of the NASD and is registered as a broker-dealer with the SEC. The Underwriter
further represents that it will sell and distribute the Trust shares in
accordance with all applicable securities laws applicable to it, including
without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4 Notwithstanding any other provision of this Agreement, the Trust shall be
responsible for the registration and qualification of its shares and of the
Trust itself under the laws of any jurisdiction only in connection with the
sales of shares directly to the Company through the Underwriter. The Trust shall
not be responsible, and the Company shall take full responsibility, for
determining any jurisdiction in which any qualification or registration of Trust
shares or the Trust by the Trust may be required in connection with the sale of
the Contracts or the indirect interest of any Contract in any shares of the
Trust and advising the Trust thereof at such time and in such manner as is
necessary to permit the Trust to comply.
2.5 The Trust 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.
ARTICLE II. Prospectuses and Proxy Statements; Voting
3.1 The Trust shall provide such documentation (including a camera-ready copy of
its prospectus) 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
printed together in one or more documents (such printing to be at the Company's
expense).
3.2 The Trust's Prospectus shall state that the Statement of Additional
Information for the Trust is available from the Underwriter or its designee (or
in the Trust's discretion, the Prospectus shall state that such Statement is
available from the Trust), and the Underwriter (or the Trust), at its expense,
shall print and provide such Statement free of charge to the Company and to any
owner of a Contract or prospective owner who requests such Statement.
3.3 The Trust, at its expense, shall provide the Company with copies of its
reports to shareholders, proxy material and other communications to shareholders
in such quantity as the Company shall reasonably require for distribution to the
Contract owners, such distribution to be at the expense of the Company.
3.4 The Company shall vote all Trust shares as required by law and the Shared
Funding Exemptive Order. The Company reserves the right to vote Trust shares
held in any separate account in its own right, to the extent permitted by law
and the Shared Funding Exemptive Order. The Company shall be responsible for
assuring that each of its separate accounts participating in the Trust
calculates voting privileges in a manner consistent with all legal requirements
and the Shared Funding Exemptive Order.
3.5 The Trust will comply with all applicable provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Trust will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the Commission may promulgate with
respect thereto.
ARTICLE IV. Sales Material and Information
4.1 Without limiting the scope or effect of Section 4.2 hereof, the Company
shall furnish, or shall cause to be furnished, to the Underwriter each piece of
sales literature or other promotional material (as defined hereafter) in which
the Trust, its investment adviser or the Underwriter is named at least 10 days
prior to its use. No such material shall be used if the Underwriter objects to
such use within five Business Days after receipt of such material.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Trust shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in annual or semi-annual reports or proxy statements for the Trust,
or in sales literature or other promotional material approved by the Trust or
its designee or by the Underwriter, except with the written permission of the
Trust or the Underwriter or the designee of either or as is required by law.
4.3 The Underwriter or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material prepared by the Underwriter in which the Company
and/or its separate account(s) is named at least 10 days prior to its use. No
such material shall be used if the Company or its designee objects to such use
within five Business Days after receipt of such material.
4.4 Neither the Trust nor the Underwriter shall give any information or make any
representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each 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 written permission of the Company or as is required by
law.
4.5 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, 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, research 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 registered representatives.
ARTICLE V. Fees and Expenses
5.1 Except as provided in Article VI, the Trust and Underwriter shall pay no fee
or other compensation to the Company under this agreement.
5.2 All expenses incident to performance by the Trust under this Agreement shall
be paid by the Trust. The Trust shall bear the expenses for the cost of
registration and qualification of the Trust's shares, preparation and filing of
the Trust's prospectus and registration statement, proxy materials and reports,
setting the prospectus and shareholder reports in type, setting in type and
printing the proxy materials, and the preparation of all statements and notices
required by any federal or state law, in each case as may reasonably be
necessary for the performance by it of its obligations under this Agreement.
5.3 The Company shall bear the expenses of (a) printing and distributing the
Trust's prospectus in connection with sales of the Contracts; (b) distributing
the reports to Trust's Shareholders and (c) of distributing the Trust's proxy
materials to owners of the Contracts.
Article VI. Service Fees
6.1 So long as the Company complies with its obligations in this Article VI, the
underwriter shall pay such Company a service fee (the "Service Fee") on shares
of the Funds held in the Accounts at the annual rates specified in Schedule B
(excluding any accounts for the Company's own corporate retirement plans),
subject to Section 6.2 hereof.
6.2 The Company understands and agrees that all Service Fee payments are subject
to the limitations contained in each Fund's Distribution Plan, which may be
varied or discontinued at any time and hereby waives the right to receive such
service fee payments with respect to the Fund if the Fund ceases to pay 12b-1
fees to the Underwriter.
6.3 (a) The Company's failure to provide the services described in Section
6.4 or otherwise comply with the terms of this Agreement will render
it ineligible to receive Service Fees; and
(b) the Underwriter may, without the consent of the Company, amend this
Article VI to change the terms of the Service Fee payments with prior
written notice to the Company.
6.4 The Company will provide the following services to the Contract Owners
purchasing Fund shares:
(i) Maintaining regular contact with Contract owners and assisting in
answering inquiries concerning the Funds;
(ii) Assisting in printing and distributing shareholder reports,
prospectuses and other sale and service literature provided by the
Underwriter;
(iii)Assisting the Underwriter and its affiliates in the establishment and
maintenance of shareholder accounts and records;
(iv) Assisting Contract owners in effecting administrative changes, such as
exchanging shares in or out of the Funds;
(v) Assisting in processing purchasing purchase and redemption
transactions; and
(vi) Providing any other information or services as the Contract owners or
the Underwriter may reasonably request.
The Company will support the Underwriter's marketing efforts by granting
reasonable requests for visits to the Company's offices by representatives of
the Underwriter.
6.5 The Company's compliance with the service requirement set forth in this
Agreement will be evaluated from time to time by monitoring redemption levels of
Fund shares held in any Account and by such other methods as the Underwriter
deems appropriate.
ARTICLE VII. Diversification
7.1 The Trust shall use its best efforts to cause each Authorized Fund to
maintain a diversified pool of investments that would, if such Fund were a
segregated asset account, satisfy the diversification provisions of Treas.
Reg.ss.1.817-5(b)(1) or (2).
7.2 The Trust shall annually send the Company a certificate, in the form
mutually agreed, certifying as to its compliance with Section 7.1.
ARTICLE VIII. Potential Conflicts
8.1 The Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Trust. 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 law 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 Fund are being managed; (e) a difference in voting instructions given by
variable annuity contract and variable life insurance contract owners; or (f) a
decision by an insurer to disregard the voting instructions of contract owners.
The Trust shall promptly inform the Company if the Trustees determine that a
material irreconcilable conflict exists and the implications thereof.
8.2 The Company will report any potential or existing conflicts of which it is
aware to the Trustees. The Company will assist the Trustees in carrying out
their responsibilities under the Shared Funding Exemptive Order, by providing
the Trustees with all information reasonably necessary for the T rustees to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Trustees whenever Contract owner voting
instructions are disregarded.
8.3 If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall to the extent reasonably practicable (as determined by a majority
of the disinterested Trustees), take, at the Company's expense, whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, up to
and including: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Trust or any Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another Fund of the
Trust, or submitting the question whether such segregation should be implemented
to a vote of all affected contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account.
8.4 If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in one or more portfolios of the Trust and terminate this Agreement
with respect to such Account; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. No charge or penalty shall be imposed as a result of such withdrawal.
Any such withdrawal and termination must take place within six (6) months after
the Trust gives written notice that this provision is being implemented, and
until the end of that six month period the Underwriter and Trust shall, to the
extent permitted by law and any exemptive relief previously granted to the
Trust, continue to accept and implement orders by the Company for the purchase
(or redemption) of shares of the Trust.
8.5 If a material irreconcilable conflict arises because of a particular state
insurance regulator's decision applicable to the Company to disregard Contract
owner voting instructions and that decision represents a minority position that
would preclude a majority vote, then the Company may be required, at the Trust's
direction, to withdraw the affected Account's investment in one or more
Authorized Funds of the Trust; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Any such withdrawal and termination must take place within six (6)
months after the Trust gives written notice that this provision is being
implemented, unless a shorter period is required by law, and until the end of
the foregoing six month period (or such shorter period if required by law), the
Underwriter and Trust shall, to the extent permitted by law and any exemptive
relief previously granted to the Trust, continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Trust. No
charge or penalty will be imposed as a result of such withdrawal.
8.6 For purposes of Sections 8.3 through 8.6 of this Agreement, a majority of
the disinterested Trustees shall determine whether any proposed action
adequately remedies any material irreconcilable conflict. Neither the Trust nor
the Underwriter shall be required to establish a new finding medium for the
Contracts, nor shall the Company be required to do so, if an offer to do so has
been declined by vote of a majority of Contract owners materially adversely
affected by the material irreconcilable conflict. In the event that the Trustees
determine that any proposed action does not adequately remedy any material
irreconcilable conflict, then the Company will withdraw the Account's investment
in one or more Authorized Funds of the Trust and terminate this Agreement within
six (6) months (or such shorter period as may be required by law or any
exemptive relief previously granted to the Trust) after the Trustees inform the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested Trustees. No charge or penalty will be imposed as a result of such
withdrawal.
8.7 The responsibility to take remedial action in the event of the Trustees'
determination of a material irreconcilable conflict and to bear the cost of such
remedial action shall be the obligation of the Company, and the obligation of
the Company set forth in this Article VII shall be carried out with a view only
to the interests of Contract owners.
8.8 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 Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Trust and/or the Participating Insurance Companies, as appropriate,
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 3.4, 3.5, 8.1, 8.2, 8.3, 8.4 and 8.5 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.
8.9 The Company has reviewed the Shared Funding Exemption Order and hereby
assumes all obligations referred to therein which are required, including,
without limitation, the obligation to provide reports, material or data as the
Trustees may request as conditions to such Order, to be assumed or undertaken by
the Company.
ARTICLE IX. Indemnification
9.1. Indemnification by the Company
9.1 (a). The Company shall indemnify and hold harmless the Trust and the
Underwriter and each of the Trustees, directors of the Underwriter,
officers, employees or agents of the Trust or the Underwriter and each
person, if any, who controls the Trust or the Underwriter within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 9.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Company which consent may not be
unreasonably withheld) or litigation (including reasonable legal and
other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition
of the Trust's shares or the Contracts or the performance by the
parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a
Registration Statement, Prospectus or Statement of Additional
Information 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 on behalf of the Trust
for use in the Registration Statement, Prospectus or Statement of
Additional Information 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 written statements or
representations (other than statements or representations
contained in the Trust's Registration Statement or Prospectus, or
in sales literature for Trust shares not supplied by the Company,
or persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or
distribution of the 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, 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 or the Underwriter by or on behalf of the
Company; or
(iv) arise out of or result from any breach of any representation
and/or warranty made by the Company in this Agreement or arise
out of or result from any other breach of this Agreement by the
Company, as limited by and in accordance with the provisions of
Sections 9.1(b) and 9.1(c) hereof.
9.1 (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 to the
extent 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 or to
the Trust, whichever is applicable.
9.1 (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), on the basis of which the Indemnified Party should reasonably
know of the availability of indemnity hereunder in respect of such
claim 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 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 Indemnified Party named in
the action. After notice from the Company to such Indemnified 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 Indemnified
Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
9.1 (d) The Underwriter shall promptly notify the Company of the
commencement of any litigation or proceedings against the Trust or the
Underwriter in connection with the issuance or sale of the Trust
Shares or the Contracts or the operation of the Trust.
9.1 (e) The provisions of this Section 9.1 shall survive any termination
of this Agreement.
9.2 Indemnification by the Underwriter
9.2 (a) The Underwriter shall indemnify and hold harmless the Company and
each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act and any director, officer, employee or
agent of the foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 9.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the
written consent of the Underwriter which consent may not be
unreasonably withheld) or litigation (including reasonable legal and
other expenses) to which the Indemnified Parties may become subject
under any statute, 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
Trust's shares or the Contracts or the performance by the parties of
their obligations hereunder and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the sales
literature of the Trust prepared by or approved by the Trust or
Underwriter (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 Underwriter
or Trust by or on behalf of the Company for use 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 written statements or
representations (other than statements or representations
contained in the Registration Statement, Prospectus, Statement of
Additional Information or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) of the
Underwriter or persons under its 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, Statement of Additional Information 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
Underwriter; or
(iv) arise out of or result from any breach of any representation
and/or warranty made by the Underwriter in this Agreement or
arise out of or result from any other breach of this Agreement by
the Underwriter; as limited by and in accordance with the
provisions of Sections 9.2(b) and 9.2(c) hereof.
9.2 (b) The Underwriter 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 or to each
Company or the Account, whichever is applicable.
9.2 (c) The Underwriter 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 Underwriter 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) on the basis of which the Indemnified Party should reasonably
know of the availability of indemnity hereunder in respect of such
claim, but failure to notify the Underwriter of any such claim shall
not relieve the Underwriter 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 Underwriter
will be entitled to participate, at its own expense, in the defense
thereof. The Underwriter also shall be entitled to assume the defense
thereof, with counsel satisfactory to the Indemnified Party named in
the action. After notice from the Underwriter to such Indemnified
Party of the Underwriter'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 Underwriter will not be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
9.2 (d) The Company shall promptly notify the Underwriter of the Trust 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 each Account.
9.2 (e) The provisions of this Section 9.2 shall survive any termination
of this Agreement.
9.3 Indemnification by the Trust
9.3 (a) The Trust shall indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act and any director, officer, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes of
this Section 9.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Trust which consent may not be unreasonably withheld)
or litigation (including reasonable legal and other expenses) to which
the Indemnified Parties may become subject under any statute, 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 operations of the Trust and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a Registration
Statement, Prospectus and Statement of Additional Information of
the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Trust by or on behalf of the Company for use in the
Registration Statement, Prospectus, or Statement of Additional
Information for the Trust (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 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 9.3(b) and 9.3(c)
hereof.
9.3 (b) The Trust shall not be liable under the 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 or by reason of such Indemnified Party's reckless disregard
of obligations and duties under this Agreement or to the Company, the
Trust, the Underwriter or each Account, whichever is applicable.
9.3 (c) The Trust shall not be liable under this indemnification provision
with respect to any claim made against any 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) on the
basis of which the Indemnified Party should reasonably know of the
availability of indemnity hereunder in respect of such claim, 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 will be entitled to participate, at
its own expense, in the defense thereof. The Trust also shall be
entitled to assume the defense thereof, with counsel reasonably
satisfactory to the Indemnified Party named in the action. After
notice from the Trust to such Indemnified Party of the Trust'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 will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense
thereof other than reasonable costs of investigation.
9.3 (d) The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it or any of its
officers or, directors, in connection with this Agreement, the
issuance or sale of the Contracts or the sale or acquisition of shares
of the Trust.
9.3 (e) The provisions of this Section 9.3 shall survive any termination
of this Agreement.
ARTICLE X. Applicable Law
10.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
10.2 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 Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE XI. Termination
11.1.This Agreement shall terminate:
(a) at the option of any party upon 180 days advance written notice to the
other parties; or
(d) with respect to any Account, upon requisite vote of the Contract
owners having an interest in such Account (or any subaccount) to
substitute the shares of another investment company for the
corresponding Fund shares of the Trust in accordance with the terms of
the Contracts for which those Fund shares had been selected to serve
as the underlying investment media. The Company will give 90days'
prior written notice to the Trust of the date of any proposed vote to
replace the Trust's shares; or
(e) with respect to any Authorized Fund, upon 60 days advance written
notice from the Underwriter to the Company, upon a decision by the
Underwriter to cease offering shares of the Fund for sale.
11.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1 (a) may be exercised for any
reason or for no reason.
11.3 No termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other parties
to this Agreement of its intent to terminate, which notice shall set forth the
basis for such termination. Such prior written notice shall be given in advance
of the effective date of termination as required by this Article XI.
11.4 Notwithstanding any termination of this Agreement, subject to Section 1.2
of this Agreement, the Trust and the Underwriter shall, at the option of the
Company, continue to make available additional shares of the Trust 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, without limitation, subject to Section 1.2
of this Agreement, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust and/or
invest in the Trust upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 11.4 shall not apply to
any termination under Article VIII and the effect of such Article VIII
termination shall be governed by Article VIII of this Agreement.
11.5 The Company shall not redeem Trust shares attributable to the Contracts (as
opposed to Trust shares attributable to the Company's assets held in either
Account) except (i) as necessary to implement Contract owner initiated
transactions, or (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"). Upon request, the Company will promptly
furnish to the Trust and the Underwriter an opinion of counsel for the Company,
reasonably satisfactory to the Trust, to the effect that any redemnification
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, subject to
Section 1.2 of this Agreement, the Company shall not prevent Contract owners
from allocating payments to an Authorized Fund that was otherwise available
under the Contracts without first giving the Trust or the Underwriter 90 days
notice of its intention to do.
ARTICLE XII. 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 Trust:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
If to the Underwriter:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
If to the Company:
Lincoln Benefit Life Company
0000 X 00xx Xxxxxx - Xxxxx 0X0
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esq.
ARTICLE XIII. Miscellaneous
13.1 A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations of or arising
out of this instrument, including without limitation Article VII, are not
binding upon any of the Trustees or shareholders individually but binding only
upon the assets and property of the Trust.
13.2 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.
13.3 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
13.4 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.
13.5 Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Securities and
Exchange Commission, the NASD and state insurance regulators) and shall pertmit
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.
13.6 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.
13.7 Notwithstanding any other provision of this Agreement, the obligations of
the Trust and the Underwriter are several and, without limiting in any way the
generality of the foregoing, neither such party shall have any liability for any
action or failure to act by the other party, or any person acting on such other
party's behalf.
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 and
its seal to be hereunder affixed hereto as of the date specified below.
LINCOLN BENEFIT LIFE
By its authorized officer,
Name:
Title:
XXXXXX VARIABLE TRUST
By its authorized officer,
Name:
Title:
XXXXXX RETAIL MANAGEMENT, INC.
By its authorized officer,
Name:
Title:
Schedule A
Separate Accounts
Lincoln Benefit Life Variable Annuity Account
Schedule B
Authorized Funds
Xxxxxx VT High Yield 0.25% per annum
Xxxxxx VT International Growth and Income 0.25% per annum
