Exhibit (h)(4)(C)
PARTICIPATION AGREEMENT
Among
LSA VARIABLE SERIES TRUST,
LSA ASSET MANAGEMENT LLC
And
GLENBROOK LIFE AND ANNUITY COMPANY
THIS AGREEMENT (the "Agreement"), made and entered into as of the first
day of May 2002, by and among Glenbrook Life and Annuity 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 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 "Trustees") 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;
2
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);
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 written (or facsimile)
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. hereof. Payment shall be in federal funds transmitted by wire
or by a credit for any shares redeemed.
3
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) on those days on which the Fund calculates
its net asset value pursuant to the rules of the SEC; provided, however, that
the Trustees 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 Trustees, 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 hereof. 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
4
additional information in accordance with the provisions of such prospectus
and statement of additional information.
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. New York 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 made available
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
immediately upon discovery to the Company. An error shall be deemed
"material" based on our 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
5
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 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 Arizona 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.
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
6
make every effort to maintain such treatment and that it will notify the Fund
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.
2.5 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 of Trustees, 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
7
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than 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. "Business Day" shall mean any day in which the New
York Stock Exchange is open for trading and in which the Fund calculates its
net asset value pursuant to the rules of the SEC.
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
8
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.
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
9
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.
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.
10
4.5 Except as provided in this Section 4.2, all expenses of
preparing, setting in type and printing and distributing Fund prospectuses
and statements of additional information shall be the expense of the Company.
For prospectuses and statements of additional information provided by the
Company to its existing owners of 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 procedures 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.
11
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 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 V. 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. An irreconcilable material
conflict may arise for a variety of reasons, including: (1) 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
12
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 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
13
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 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
14
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company, 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
15
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.
8.1(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). Each 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
16
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 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 Contracts 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;
17
as limited by and in accordance with the provisions of Section 8.2(b) and
8.2(c) hereof.
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.
18
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 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;
19
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 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
20
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.
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 month's 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.(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:
21
LSA Asset Management LLC
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
If to the Company:
Glenbrook Life and Annuity 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 decision, status, rule, or otherwise, the remainder of the Agreement
shall not be affected thereby.
22
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 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.
GLENBROOK LIFE AND ANNUITY COMPANY
By: /s/ Xxxxxxx X. Xxxxxx Pas
---------------------------------
Title: Assistant 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
Glenbrook Life Multi-Manager Variable Account
Glenbrook Life Variable Life Separate Account A
25
SCHEDULE 2
AUTHORIZED PORTFOLIOS
LSA Variable Series Trust Focused Equity Fund
LSA Variable Series Trust Growth Equity Fund
LSA Variable Series Trust Diversified Mid-Cap Fund
26
SCHEDULE 3
CONTRACTS
The Glenbrook Provider Ultra Variable Annuity
The Glenbrook Provider Advantage Variable Annuity
The Glenbrook Provider Extra Variable Annuity
Glenbrook Provider Variable Life
27