Exhibit 8(g)
PARTICIPATION AGREEMENT
Among
LSA VARIABLE SERIES TRUST,
LSA ASSET MANAGEMENT LLC
And
NORTHBROOK LIFE INSURANCE COMPANY
THIS AGREEMENT (the "Agreement"), made and entered into as of the first day
of May 2002, by and among Northbrook Life Insurance Company (hereinafter the
"Company"), on its own behalf and on behalf of each separate account of the
Company named in Schedule 1 to this Agreement (collectively, the "Accounts"),
LSA Variable Series Trust (the "Fund") and LSA Asset Management LLC (the
"Manager").
WHEREAS, the Fund is an open-end management investment company and is
available to act as the investment vehicle for separate accounts now in
existence or to be established in the future for variable life insurance
policies, variable annuity contracts and other tax-deferred products offered by
insurance companies (the "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio", (collectively, the "Portfolios") and
each representing the interests in a particular managed pool of securities and
other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC"), dated October 4, 1999 (File No. 812-11656) (hereinafter,
the "Order") granting relief to the Fund, the Manager and any subsequently
registered open-end investment companies that in the future are advised by the
Manager, or by any entity controlling, controlled by, or under common control
with the Manager. Specifically, the Order provides exemptions from Section 15(a)
of the 1940 Act and Rule 18f-2 thereunder, subject to the conditions set forth
in the application, to permit investment advisers other than the Manager, to
serve and act as an investment sub-adviser to one or more portfolios of the Fund
(the "Adviser(s)") pursuant to written agreements between the Manager and each
Adviser that have been approved by the Board of Trustees of the Fund (the
"Board") but which have not been approved by a vote of a majority of the
outstanding voting securities of each portfolio. The Order also provides
exemptions from: certain registration statement disclosure requirements of Items
3, 6(a)(1)(ii) and 15(a)(3) of Form N1-A and Item 3 of Form N-14; certain proxy
statement disclosure requirements of Items 22(a)(3)(iv), (c)(1)(ii),
(c)(1)(iii), (c)(8) and (c)(9) of Schedule 14A under the Securities Exchange Act
of 1934, as amended; certain semi-annual reporting disclosure requirements of
Item 48 of Form N-SAR; and, certain financial statement disclosure requirements
of Sections 6-07(2)(a), (b), and (c) of Regulation S-X which may be deemed to
require various disclosures regarding advisory fees paid to the Advisers;
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and its shares are registered under the Securities Act of 1933, as amended (the
"1933 Act"):
WHEREAS, the Manager is duly registered as an investment adviser under the
Investment Advisers Act of 1940:
WHEREAS, the Company has registered or will register certain variable
annuity and/or life insurance contracts under the 1933 Act (the "Contracts")
(unless an exemption from registration is available);
WHEREAS, the Accounts are or will be duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company, to set aside and invest assets attributable to the Contracts and
the Accounts;
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless an exemption from registration is
available);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios (as named
in Schedule 2 to this Agreement and as may be amended from time to time by
mutual consent of the parties) on behalf of the Accounts to fund the Contracts
(as named in Schedule 3 to this Agreement and as may be amended from time to
time by mutual consent of the parties) and the Fund is authorized to sell such
shares to the Accounts at net asset value; and NOW, THEREFORE, in consideration
of their mutual promises, the Fund, the Manager and the Company agree as
follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Fund which the
Company orders on behalf of the Account, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Fund. For purposes of this
Section 1.1, the Company shall be the designee of the Fund for receipt of
such orders from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such order
by 9:30 a.m. Eastern Standard Time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Fund calculates its net asset value
pursuant to the rules of the SEC.
1.2. The Company will pay for Fund shares on the next Business Day after it
places an order to purchase Fund shares in accordance with Section 1.1.
Payment shall be in federal funds transmitted by wire or by a credit for
any shares redeemed.
1.3 The Fund agrees to make Fund shares available for purchase at the
applicable net asset value per share by the Company for its Accounts (as
named in Schedule 1 to this Agreement and as may be amended from time to
time by mutual consent of the parties) on those days on which the Fund
calculates its net asset value pursuant to the rules of the SEC; provided,
however, that the Board may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board, acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, in the best interests of the shareholders of any
Portfolio.
1.4 The Fund agrees to redeem, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt by the
Fund or its designee of the request for redemption. For purposes of this
Section 1.4, the Company shall be the designee of the Fund for receipt of
requests for redemption and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives written (or facsimile)
notice of such request for redemption by 9:30 a.m. Eastern Standard Time on
the next following Business Day. Payment shall be made within the time
period specified in the Fund's prospectus or statement of additional
information, in federal funds transmitted by wire to the Company's account
as designated by the Company in writing from time to time.
1.5 The Company shall pay for the Fund shares on the next Business Day after an
order to purchase shares is made in accordance with the provisions of
Section 1.4. Payment shall be in federal funds transmitted by wire pursuant
to the instructions of the Fund's treasurer or by a credit for any shares
redeemed.
1.6 The Company agrees to purchase and redeem the shares of the Portfolios
named In Schedule 2 offered by the Fund's then current prospectus and
statement of additional information in accordance with the provisions of
such prospectus and statement of additional information.
1.7 Net Asset Value. The Fund shall use its best efforts to inform the Company
of the net asset value per share for each Portfolio available to the
Company by 6:30 p.m. Eastern Standard Time or as soon as reasonably
practicable after the net asset value per share for such Portfolio is
calculated. The Fund shall calculate such net asset value in accordance
with the prospectus for such Portfolio. In the event that net asset values
are not communicated to the Company by such time, the Company agrees to use
its best efforts to include the net asset value when received in its next
business cycle for purposes of calculating purchase orders and requests for
redemption. However, if net asset values are not available for an inclusion
in the next business cycle and purchase orders/redemptions are not able to
be calculated and available to the Company to execute within the time-frame
identified in Section 2.3 (a), the Fund shall reimburse and make the
Company whole for any losses incurred as a result of such delays.
1.8 Pricing Errors. Any material errors in the calculation of the net asset
value, dividends or capital gain information shall be reported to the Fund
promptly upon discovery by the Company. An error shall be deemed "material"
based on the Company's interpretation of the SEC's position and policy with
regard to materiality, as it may be modified from time to time. Neither the
Fund, the Manager, nor any of their affiliates shall be liable for any
information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by or on behalf of
the Company or any other Participating Company to the Fund or the Manager.
The Fund shall make the Company whole for any payments or adjustments to
the number of shares in the Account that are reasonably demonstrated to be
required as a result of pricing errors.
ARTICILE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold
in compliance in all 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 or that it
might not so qualify in the future.
2.4 The Company represents that the Contracts are currently treated as life
insurance policies or annuity contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that
it will notify the Fund immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future. 2.5 The Fund represents that to the
extent that it decides to finance distribution expenses pursuant to Rule
12b-1 under the 1940 Act, the Fund undertakes to have its Board, a majority
of whom are not interested persons of the Fund, formulate and approve any
plan under Rule 12b-1 to finance distribution expenses.
2.6 The Fund makes no representation as to whether any aspect of Its operations
(including, but not limited to, fees and expenses and investment policies)
complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees
and expenses are and shall at all times remain in compliance with the
applicable laws of the State of Delaware and the Fund represents that its
operations are and shall at all times remain in material compliance with
the applicable laws of the State of Delaware to the extent required to
perform this Agreement.
2.7 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will comply in
all material respects with the 0000 Xxx.
2.8 The Manager represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile
and any applicable state and federal securities laws. The Manager further
represents that it will make reasonable efforts to verify that all
subadvisers are similarly registered.
2.9 The Fund represents and warrants that its trustees, officers, employees,
and other individuals/entities, if any, dealing with the money and/or
securities of the Fund are and shall continue to be at all times covered by
a blanket fidelity bond or similar coverage for the benefit of the Fund in
an amount not less than the minimal coverage as required currently by Rule
17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid blanket fidelity bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10 The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities, if any,
dealing with the money and/or securities of the Fund are covered by a
blanket fidelity bond or similar coverage, in an amount not less $5
million. The aforesaid includes coverage for larceny and embezzlement is
issued by a reputable bonding company. The Company agrees to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Fund and the
Manager in the event that such coverage no longer applies.
ARTICLE III. Sales Material, Prospectuses and Other Reports
3.1 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material
in which the Fund or the Manager is named, at least five Business Days
prior to its use. No such material shall be used if the Fund or its
designee reasonably objects to such use within five Business Days after
receipt of such material. 3.2 Except with the express permission of the
Fund, the Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for
the Fund shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee.
3.3 For purposes of this Article III, the phrase "sales literature or other
promotional material" shall mean advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape
display, signs or billboard or electronic media), and sales literature
(such as brochures, circulars, market letters and form letters),
distributed or made generally available to customers or the public.
3.4 The Fund shall provide a copy of its current prospectus within a reasonable
period of its effective filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is supplemented or amended) to
have the prospectus for the Contracts and the prospectus for the Fund
printed together in one document (such printing to be at the Company's
expense). The Manager shall be permitted to review and approve the typeset
form of the Fund's prospectus prior to such printing.
3.5 The Fund or the Manager shall provide the Company with either: (i) a copy
of the Fund's proxy material, reports to shareholders, other information
relating to the Fund necessary to prepare financial reports, and other
communications to shareholders for printing and distribution to Contract
owners at the Company's expense, or (ii) camera ready and/or printed
copies, if appropriate, of such material for distribution to Contract
owners at the Company's expense, within a reasonable period of the filing
date for definitive copies of such material. The Manager shall be permitted
to review and approve the typeset form of such proxy material, shareholder
reports and communications prior to such printing.
ARTICLE IV. Fees and Expenses
4.1 The Fund and Manager shall pay no fee or other compensation to the Company
under this Agreement, and the Company shall pay no fee or other
compensation to the Fund or Manager, except as provided herein.
4.2 All expenses incident to performance by each party of its respective duties
under this Agreement shall be paid by that party. The Fund shall ensure
that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent advisable
by the Fund, in accordance with applicable state laws prior to their sale.
The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, proxy materials and reports, and the
preparation of all statements and notices required by any federal or state
law.
4.3 The Fund, at its expense, shall provide the Company with copies of its
proxy statements, reports to shareholders, and other communications (except
for prospectuses and statements of additional information, which are
covered in section 3.4) to shareholders in such quantity as the Company
shall reasonably require for distributing to Contract owners. The Fund
shall bear the expense of mailing such proxy materials in the event the
proxy vote is a result of actions initiated by the Fund.
4.4 In the event the Fund adds one or more additional Portfolios and the
parties desire to make such Portfolios available to the respective Contract
owners as an underlying investment medium, a new Schedule 3 which shall be
an amendment to this Agreement shall be executed by the parties authorizing
the issuance of shares of the new Portfolios to the particular Account. The
amendment may also provide for the sharing of expenses for the
establishment of new Portfolios among Participating Insurance Companies
desiring to invest in such Portfolios and the provision of funds as the
initial investment in the new Portfolios.
4.5 Except as provided in this Section 4.5, all expenses of preparing, setting
in type and printing and distributing Fund prospectuses and statements of
additional information shall be the expense of the Company. For
prospectuses and statements of additional information, or supplements
thereto, 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
procedure shall be followed with respect to the Fund's statement of
additional information. The Company agrees to provide the Fund or its
designee with such information as may be reasonably requested by the Fund
to assure that the Fund's expenses do not include the cost of printing,
typesetting, and distributing any prospectuses or statements of additional
information other than those actually distributed to existing owners of the
Contracts who currently own shares of one or more of the Fund's Portfolios.
ARTICLE V. Conditions of the Order: Applicable Law
5.1 The Company has reviewed a copy of the Order, and in particular, has
reviewed the conditions to the requested relief set forth therein. The
Company agrees to be bound by the responsibilities of a Participating
Insurance Company as set forth in the Order.
5.2 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
5.3 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant (including, but not limited to, the Order) and the terms hereof shall
be interpreted and construed in accordance therewith.
ARTICLE VI. Diversification
6.1 The Fund will at all times invest money from the Contracts in such a manner
as to ensure that the Contracts will be treated as variable contracts under
the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of
the Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts
and any amendments or other modifications to such Section or Regulations.
In the even of a breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period
afforded by Regulation 817-5. The Fund shall provide the Company
information reasonably requested in relation to Section 817(h)
diversification requirements, including quarterly reports and annual
certifications.
ARTICLE VII. Potential Conflicts
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. A material irreconcilable conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority: (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
action by insurance. tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by Variable Insurance Product
owners; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of contract owners. The Board shall promptly inform
the Company if it determines that an irreconcilable material conflict
exists and the implications thereof.
ARTICLE VIII. Indemnification
8.1 Indemnification By The Company
8.1(a) The Company agrees to indemnify and hold harmless the Fund and
each member of the Board and officers, and each Adviser and each director
and officer of each Adviser, and each person, if any, who controls the Fund
or the Adviser within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually, "Indemnified
Party", for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement or prospectus for the Contracts
or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or
on behalf of the Fund for use in the registration statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of
the Fund not supplied by the Company, or persons under its
control and other than statements or representations
authorized by the Fund or an Adviser) or unlawful conduct of
the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii)arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature of
the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and
in accordance with the provisions of Sections 8.1(b) and 8.1
(c) hereof.
8.1(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an
Indemnified Party as such may arise from such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or
duties under this Agreement.
8.1(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the
Company in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this
indemnification provisions. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action.
The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After
notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it,
and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the
Contracts or the operation of the Fund.
8.2 Indemnification by the Manager
8.2(a). The Manager agrees, with respect to each Portfolio that it
manages, to indemnify and hold harmless the Company and each of
its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually,
"Indemnified Party," for purposes of this Section 8.2) against
any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the
Adviser) or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or
acquisition of shares of the Portfolio that it manages or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Fund by or on
behalf of the Company for use in the registration statement or
prospectus for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale
of the Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or sales
literature for the Contracts not supplied by the Fund or persons
under its control and other than statements or representations
authorized by the Company) or unlawful conduct of the Fund or
Manager(s) or persons under their control, with respect to the
sale or distribution of the Con-tracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature covering
the Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Manager in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Manager; as limited by and in
accordance with the provisions of Section 8.2(b) and 8.2(c)
hereof. 8.2(b). The Manager shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against
an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement.
8.2(c) The Manager shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the
Manager in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the
Manager of any such claim shall not relieve the Manager from any
liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought
against the Indemnified Parties, the Manager will be entitled to
participate, at its own expense, in the defense thereof. The
Manager also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After
notice from the Manager to such party of the Manager's election
to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it,
and the Manager will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Manager of the
commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or
sale of the Contracts or the operation of each Account. 8.3
Indemnification by the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any,
who controls the Company within the meaning of Section 15 of the
1933 Act (hereinafter collectively, the "Indemnified Parties" and
individually, "Indemnified Party," for purposes of this Section
8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of
the Fund) or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence
(except for failure to comply with Section 6.1 of this Agreement
for which the standard is negligence), bad faith or willful
misconduct of the Board or any member thereof, are related to the
operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under the
terms of this Agreement (including any failure to comply
with Section 6.1 of this Agreement); or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an
Indemnified Party as may arise from such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and
duties under this Agreement.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Fund
in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim
shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify the Fund of any such
claim shall not relieve the Fund from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties,
the Fund will be entitled to participate, at its own expense, in
the defense thereof. The Fund also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named
in the action. After notice from the Fund to such party of the
Fund's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel
retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
8.3(d). The Company agrees promptly to notify the Fund of the
commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts, with respect to
the operation of either Account, or the sale or acquisition of
shares of the Fund.
ARTICLE IX. Termination
9.1 This Agreement shall terminate with respect to some or all Portfolios:
(a) at the option of any party upon six months advance written
notice to the other parties at the address specified in
Section X of this Agreement; or
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the
requirements of its Contracts or are not appropriate funding
vehicles for the Contracts, as determined by the Company
reasonably and in good faith. Prompt written notice of the
election to terminate for such cause and an explanation of
such cause shall be furnished by the Company.
9.2. It is understood and agreed that the right of any party hereto to terminate
this Agreement pursuant to Section 9.1(a) may be exercised for cause or for
no cause.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other parties to this Agreement.
If to the Fund:
LSA Variable Series Trust
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
If to the Manager:
LSA Asset Management LLC
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
If to the Company:
Northbrook Life Insurance Company
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
ARTICLE XI. Miscellaneous
11.1 Subject to the requirements of legal process and regulatory authority, each
party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted
by the Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written
consent of the affected party until such time as it may come into the
public domain.
11.2 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.3 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
11.4 If any provision of this Agreement shall be held or made invalid by a court
decision, status, rule, or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.5 Each party hereto shall cooperate with all appropriate governmental
authorities (including without limitation the SEC, the National Association
of Securities Dealers, Inc. and state insurance regulators) and shall
permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby. Each party hereto shall promptly
notify the other parties 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.
11.10This 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.
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.
NORTHBROOK LIFE INSURANCE COMPANY
By:____________________________________
Title: __________________________________
LSA VARIABLE SERIES TRUST
By: ___________________________________
Title:__________________________________
LSA ASSET MANAGEMENT LLC
By: ___________________________________
Title: __________________________________
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.
NORTHBROOK LIFE INSURANCE COMPANY
By: ___________________________________
Title: __________________________________
LSA VARIABLE SERIES TRUST
By: ___________________________________
Title: __________________________________
LSA ASSET MANAGEMENT LLC
By: ___________________________________
Title: __________________________________
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.
NORTHBROOK LIFE INSURANCE COMPANY
By: ___________________________________
Title: __________________________________
LSA VARIABLE SERIES TRUST
By: ___________________________________
Title: __________________________________
LSA ASSET MANAGEMENT LLC
By: ___________________________________
Title: __________________________________
Schedule 1
Separate Accounts
Northbrook Variable Annuity Account II
Schedule 2
Authorized Portfolios
LSA Variable Series Trust Aggressive Growth Fund
Schedule 3
Contracts
Variable Annuity II
Variable Annuity II Asset Manager
Preferred Client Variable Annuity
Variable Annuity 3
Variable Annuity 3 Asset Manager
