PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 1st day of February, 1998, by
and among The Xxxxx American Fund (the "Trust"), an open-end management
investment company organized as a Massachusetts business trust,
Lincoln Benefit Life Company a company organized as a corporation under the
laws of the State of Nebraska, (the "Company"), on its own behalf and on
behalf of each segregated asset account of the Company set forth in Schedule A,
as may be amended from time to time (the "Accounts"), and Xxxx Xxxxx and
Company, Incorporated, a Delaware corporation, the Trust's distributor
(the "Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
has an effective registration statement relating to the offer and sale of the
various series of its shares under the Securities Act of 1933, as amended
(the "1933 Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be
used as an investment vehicle for separate accounts established for variable
life insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements
with the Trust (the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided
into the following series which are available for purchase by the Company for
the Accounts: Xxxxx American Small Capitalization Portfolio, Xxxxx American
Growth Portfolio, Xxxxx American MidCap Growth Portfolio, and Xxxxx American
Leveraged AllCap Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated
February 17, 1989 (File No. 812-7076), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of
Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of
the Portfolios of the Trust to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933
Act certain variable life insurance policies and variable annuity contracts
to be issued by the Company under which the Portfolios are to be made
available as investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account
as a unit investment trust under the 1940 Act unless an exemption from
registration under the 1940 Act is
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available and the Trust has been so advised;
WHEREAS, the Company desires to use shares of the Portfolios
indicated on Schedule A as investment vehicles for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the
parties agree as follows:
ARTICLE I.
PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
1.1. For purposes of this Article I, the Company shall be the Trust's agent
for the receipt from each account of purchase orders and requests
for redemption pursuant to the Contracts relating to each
Portfolio, provided that the Company notifies the Trust of such
purchase orders and requests for redemption by 9:30 a.m. Eastern
time on the next following Business Day, as defined in Section 1.3.
1.2. The Trust shall make shares of the Portfolios available to the
Accounts at the net asset value next computed after receipt of a
purchase order by the Trust (or its agent), as established in
accordance with the provisions of the then current prospectus of
the Trust describing Portfolio purchase procedures. The Company
will transmit orders from time to time to the Trust for the
purchase and redemption of shares of the Portfolios. The Trustees
of the Trust (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 if, 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, such action is deemed in the best interests of the
shareholders of such Portfolio.
1.3. The Company shall pay for the purchase of shares of a Portfolio on
behalf of an Account with federal funds to be transmitted by wire
to the Trust, with the reasonable expectation of receipt by the
Trust by 2:00 p.m. Eastern time on the next Business Day after the
Trust (or its agent) receives the purchase order. Upon receipt by
the Trust of the federal funds so wired, such funds shall cease to
be the responsibility of the Company and shall become the
responsibility of the Trust for this purpose. "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 Commission.
1.4. The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account,
at the net asset value next computed after receipt by the Trust
(or its agent) of the request for redemption, as established in
accordance with the provisions of the then current prospectus of
the Trust describing Portfolio redemption procedures. The Trust
shall make payment for such shares in the
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manner established from time to time by the Trust. Proceeds of
redemption with respect to a Portfolio will normally be paid to
the Company for an Account in federal funds transmitted by wire to
the Company by order of the Trust with the reasonable expectation
of receipt by the Company by 2:00 p.m. Eastern time on the next
Business Day after the receipt by the Trust (or its agent) of the
request for redemption. Such payment may be delayed if, for
example, the Portfolio's cash position so requires or if
extraordinary market conditions exist, but in no event shall
payment be delayed for a greater period than is permitted by the
1940 Act. The Trust reserves the right to suspend the right of
redemption, consistent with Section 22(e) of the 1940 Act and any
rules thereunder.
1.5. Payments for the purchase of shares of the Trust's Portfolios by
the Company under Section 1.3 and payments for the redemption of
shares of the Trust's Portfolios under Section 1.4 on any Business
Day may be netted against one another for the purpose of
determining the amount of any wire transfer.
1.6. Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company
or the Accounts. Portfolio Shares purchased from the Trust will
be recorded in the appropriate title for each Account or the
appropriate subaccount of each Account.
1.7. The Trust shall furnish, on or before the ex-dividend date, notice to
the Company of any income dividends or capital gain distributions
payable on the shares of any Portfolio of the Trust. The Company
hereby elects to receive all such income dividends and capital
gain distributions as are payable on a Portfolio's shares in
additional shares of that Portfolio. The Trust shall notify the
Company of the number of shares so issued as payment of such
dividends and distributions.
1.8. The Trust shall calculate the net asset value of each Portfolio on
each Business Day, as defined in Section 1.3. The Trust shall make
the net asset value per share for each Portfolio available to the
Company or its designated agent on a daily basis as soon as
reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset
value per share available to the Company by 6:30 p.m. Eastern time
each Business Day or as soon as practicable thereafter. In the
event that the 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 values when received in its next cycle for
purposes of calculating purchase orders and requests for
redemption. However, if, due to the Trust's failure to fulfill the
above undertaking, net asset values are not available for inclusion
in the next cycle and purchase orders/redemptions are not able to
be calculated and available for the Company to execute within the
time frame described in Section 1.1 despite the Company's best
efforts, the Distributor shall reimburse the Company for any
additional processing costs incurred as a result of such delays.
1.9. The Trust agrees that its Portfolio shares will be sold
only to Participating Insurance Companies and their segregated
asset accounts, to the Fund Sponsor or its affiliates and to such
other entities as may be permitted by Section 817(h) of the Code,
the regulations hereunder, or judicial or administrative
interpretations thereof. No shares of any Portfolio will be sold
directly to the general public. The Company agrees that it will
use Trust shares only for the purposes of funding the Contracts
through the Accounts listed in Schedule A, as amended from time to
time.
1.10. The Trust agrees that all Participating Insurance Companies shall have
the obligations
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and responsibilities regarding pass-through voting and conflicts
of interest corresponding materially to those contained in Section
2.9 and Article IV of this Agreement.
1.11 The Trust will provide notice of any error in its calculation of
net asset value of a Portfolio as soon as reasonably practical
after discovery thereof. Any such notice will state for each
day for which an error occurred the incorrect price, the correct
price and the reason for the price change. The Distributor shall
make the Company and Accounts whole for any payment and adjustments
to the number of shares in the Accounts that are reasonably
demonstrated to be required as a result of pricing errors.
ARTICLE II.
OBLIGATIONS OF THE PARTIES
2.1. The Trust shall prepare and be responsible for filing with the
Commission and any state regulators requiring such filing all
shareholder reports, notices, proxy materials (or similar
materials such as voting instruction solicitation materials),
prospectuses and statements of additional information of the
Trust. The Trust shall bear the costs of registration and
qualification of shares of the Portfolios, preparation and filing
of the documents listed in this Section 2.1 and all taxes to which
an issuer is subject on the issuance and transfer of its shares.
2.2. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Trust to the Contract owners as required to be
distributed to such Contract owners under applicable federal or state
law.
2.3. The Trust shall provide such documentation (including a final copy of
the Trust's prospectus as set in type or in camera-ready copy) and
other assistance as is reasonably necessary in order for the
Company to print together in one document the current prospectus
for the Contracts issued by the Company and the current prospectus
for the Trust. The Trust shall bear the expense of printing
copies of its current prospectus that will be distributed to
existing Contract owners, and the Company shall bear the expense
of printing copies of the Trust's prospectus that are used in
connection with offering the Contracts issued by the Company.
2.4. The Trust and the Distributor shall provide (1) at the Trust's
expense, one copy of the Trust's current Statement of Additional
Information ("SAI") to the Company and to any Contract owner who
requests such SAI, (2) at the Company's expense, such additional
copies of the Trust's current SAI as the Company shall reasonably
request and that the Company shall require in accordance with
applicable law in connection with offering the Contracts issued by
the Company.
2.5. The Trust, at its expense, shall provide the Company with copies of
its proxy material, periodic reports to shareholders and other
communications to shareholders in such quantity as the Company
shall reasonably require for purposes of distributing to Contract
owners. The Trust, at the Company's expense, shall provide the
Company with copies of its periodic reports to shareholders and
other communications to shareholders in such quantity as the
Company shall reasonably request for use in connection with
offering the Contracts issued by the Company. If requested by the
Company in lieu thereof, the Trust shall provide such
documentation (including a final copy of the Trust's proxy
materials, periodic reports to shareholders and other
communications to shareholders, as set in type or in camera-ready
copy) and other assistance as reasonably necessary in order for
the
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Company to print such shareholder communications for distribution to
Contract owners.
2.6. The Company agrees and acknowledges that the Distributor is the sole
owner of the name and xxxx "Xxxxx" and that all use of any
designation comprised in whole or part of such name or xxxx under
this Agreement shall inure to the benefit of the Distributor.
Except as provided in Section 2.5, the Company shall not use any
such name or xxxx on its own behalf or on behalf of the Accounts
or Contracts in any registration statement, advertisement, sales
literature or other materials relating to the Accounts or
Contracts without the prior written consent of the Distributor.
Upon termination of this Agreement for any reason, the Company
shall cease all use of any such name or xxxx as soon as reasonably
practicable.
2.7. The Company shall furnish, or cause to be furnished, to the Trust or
its designee a copy of each Contract prospectus and/or statement
of additional information describing the Contracts, each report to
Contract owners, proxy statement, application for exemption or
request for no-action letter in which the Trust or the Distributor
is named contemporaneously with the filing of such document with
the Commission. The Company shall furnish, or shall cause to be
furnished, to the Trust or its designee each piece of sales
literature or other promotional material in which the Trust or the
Distributor is named, at least five Business Days prior to its
use. No such material shall be used if the Trust or its designee
reasonably objects to such use within three Business Days after
receipt of such material.
2.8. The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or
the Distributor in connection with the sale of the Contracts other
than information or representations contained in and accurately
derived from the registration statement or prospectus for the
Trust shares (as such registration statement and prospectus may be
amended or supplemented from time to time), annual and semi-annual
reports of the Trust, Trust-sponsored proxy statements, or in
sales literature or other promotional material approved by the
Trust or its designee, except as required by legal process or
regulatory authorities or with the prior written permission of the
Trust, the Distributor or their respective designees. The Trust
and the Distributor agree to respond to any request for approval
on a prompt and timely basis. The Company shall adopt and
implement procedures reasonably designed to ensure that "broker
only" materials including information therein about the Trust or
the Distributor are not distributed to existing or prospective
Contract owners.
2.9. The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information about the Trust, the
Portfolios and the Distributor, in such form as the Company may
reasonably require, as the Company shall reasonably request in
connection with the preparation of registration statements,
prospectuses and annual and semi-annual reports pertaining to the
Contracts.
2.10. The Trust and the Distributor shall not give, and agree that no
affiliate of either of them
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shall give, any information or make any representations or
statements on behalf of the Company or concerning the Company, the
Accounts or the Contracts other than information or
representations contained in and accurately derived from the
registration statement or prospectus for the Contracts (as such
registration statement and prospectus may be amended or
supplemented from time to time), or in materials approved by the
Company for distribution including sales literature or other
promotional materials, except as required by legal process or
regulatory authorities or with the prior written permission of the
Company. The Company agrees to respond to any request for
approval on a prompt and timely basis.
2.11. So long as, and to the extent that, the Commission interprets the 1940
Act to require pass-through voting privileges for Contract owners,
the Company will provide pass-through voting privileges to
Contract owners whose cash values are invested, through the
registered Accounts, in shares of one or more Portfolios of the
Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and
the Company shall be responsible for assuring that the Accounts
calculate voting privileges in the manner established by the
Trust. With respect to each registered Account, the Company will
vote shares of each Portfolio of the Trust held by a registered
Account and for which no timely voting instructions from Contract
owners are received in the same proportion as those shares for
which voting instructions are received. The Company and its
agents will in no way recommend or oppose or interfere with the
solicitation of proxies for Portfolio shares held to fund the
Contacts without the prior written consent of the Trust, which
consent may be withheld in the Trust's sole discretion. The
Company reserves the right, to the extent permitted by law, to
vote shares held in any Account in its sole discretion.
2.12. The Company and the Trust will each provide to the other information
about the results of any regulatory examination relating to the
Contracts or the Trust, including relevant portions of any
"deficiency letter" and any response thereto.
2.13. No compensation shall be paid by the Trust to the
Company, or by the Company to the Trust, under this Agreement
(except for specified expense reimbursements). However, nothing
herein shall prevent the parties hereto from otherwise agreeing to
perform, and arranging for appropriate compensation for, other
services relating to the Trust, the Accounts or both.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. The Company represents and warrants that it is an
insurance company duly organized and in good standing under the
laws of the State of Nebraska and that it has legally and
validly established each Account as a segregated asset account
under such law as of the date set forth in Schedule A, and that
Lincoln Benefit Financial Services, the
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principal underwriter for the Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a
member in good standing of the National Association of Securities
Dealers, Inc.
3.2. The Company represents and warrants that it 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 and cause each
Account to remain so registered to serve as a segregated asset
account for the Contracts, unless an exemption from registration
is available.
3.3. The Company represents and warrants that the Contracts
will be registered under the 1933 Act unless an exemption from
registration is available prior to any issuance or sale of the
Contracts; the Contracts will be issued and sold in compliance in
all material respects with all applicable federal and state laws;
and the sale of the Contracts shall comply in all material
respects with state insurance law suitability requirements.
3.4. The Trust represents and warrants that it is duly
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 and the rules and regulations
thereunder.
3.5. The Trust and the Distributor represent and warrant that
the Portfolio shares offered and sold pursuant to this Agreement
will be registered under the 1933 Act and sold in accordance with
all applicable federal and state laws, and the Trust shall be
registered under the 1940 Act prior to and at the time of any
issuance or sale of such shares. The Trust shall amend its
registration statement 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 its
shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Trust.
3.6. The Trust represents and warrants that the investments
of each Portfolio will comply with the diversification
requirements for variable annuity, endowment or life insurance
contracts set forth in Section 817(h) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the rules and regulations
thereunder, including without limitation Treasury Regulation
1.817-5, and will notify the Company immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply
or might not so comply and will immediately take all reasonable
steps to adequately diversify the Portfolio to achieve compliance
within the grace period afforded by Regulation 1.817-5.
3.7. The Trust represents and warrants that it is currently
qualified as a "regulated investment company" under Subchapter M
of the Code, that it will make every effort to maintain such
qualification and will notify the Company immediately upon having
a reasonable basis for believing it has ceased to so qualify or
might not so qualify in the future.
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3.8. The Trust represents and warrants that it, its
directors, officers, employees and others dealing with the money
or securities, or both, of a Portfolio shall at all times be
covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the minimum
coverage required by Rule 17g-1 or other applicable regulations
under the 1940 Act. Such bond shall include coverage for larceny
and embezzlement and be issued by a reputable bonding company.
3.9. The Distributor represents that it is duly organized and
validly existing under the laws of the State of Delaware and that
it is registered, and will remain registered, during the term of
this Agreement, as a broker-dealer under the Securities Exchange
Act of 1934 and is a member in good standing of the National
Association of Securities Dealers, Inc.
ARTICLE IV.
POTENTIAL CONFLICTS
4.1. The parties acknowledge that a Portfolio's shares may be
made available for investment to other Participating Insurance
Companies. In such event, the Trustees will monitor the Trust for
the existence of any material irreconcilable conflict between the
interests of the contract owners of all Participating Insurance
Companies. 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 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 of any determination
by the Trustees that a material irreconcilable conflict exists and
of the implications thereof.
4.2. The Company agrees to report promptly 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 and requested by the Trustees to consider any issues raised
including, but not limited to, information as to a decision by the
Company to disregard Contract owner voting instructions. All
communications from the Company to the Trustees may be made in
care of the Trust.
4.3. If it is determined by a majority of the Trustees, or a
majority of the disinterested Trustees, that a material
irreconcilable conflict exists that affects the interests of
contract owners, the Company shall, in cooperation with other
Participating Insurance Companies whose contract owners are also
affected, at its own expense and to the extent reasonably
practicable (as determined by the Trustees) take whatever steps
are necessary to remedy
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or eliminate the material irreconcilable conflict, which steps
could include: (a) withdrawing the assets allocable to some or
all of the Accounts from the Trust or any Portfolio and
reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Trust, or
submitting the question of whether or not 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 (b) establishing a new registered management investment
company or managed separate account.
4.4. 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 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. Any such withdrawal and
termination must take place within six (6) months after the Trust
gives written notice that this provision is being implemented.
Until the end of such six (6) month period, the Trust shall
continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
4.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state regulators,
then the Company will withdraw the affected Account's investment
in the Trust and terminate this Agreement with respect to such
Account within six (6) months after the Trustees inform the
Company in writing that the Trust has determined that such
decision has created a material irreconcilable conflict; 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. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for
the purchase and redemption of shares of the Trust.
4.6. For purposes of Section 4.3 through 4.6 of this
Agreement, a majority of the disinterested Trustees shall
determine whether any proposed action adequately remedies any
material irreconcilable conflict, but in no event will the Trust
be required to establish a new funding medium for any Contract.
The Company shall not be required to establish a new funding
medium for the Contracts 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 the Trust and
terminate this Agreement within six (6) months
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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.
4.7. The Company shall at least annually submit to the
Trustees such reports, materials or data as the Trustees may
reasonably request so that the Trustees may fully carry out the
duties imposed upon them by the Shared Funding Exemptive Order,
and said reports, materials and data shall be submitted more
frequently if reasonably deemed appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-3(T) is 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 the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be
necessary to comply with Rule 6e-3(T), as amended, or Rule 6e-3,
as adopted, to the extent such rules are applicable.
ARTICLE V.
INDEMNIFICATION
5.1. Indemnification By the Company. The Company agrees to
indemnify and hold harmless the Distributor, the Trust and each of
its Trustees, officers, employees and agents and each person, if
any, who controls the Trust within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 5.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Company, which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as
such Losses are related to the sale or acquisition of the
Contracts or Trust shares and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in
the Contracts themselves or in sales literature generated or
approved by the Company on behalf of the Contracts or
Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the
purposes of this Article V), or arise out of or are based upon
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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 indemnity 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 was accurately derived
from written information furnished to the Company by or on
behalf of the Trust for use in Company Documents or otherwise
for use in connection with the sale of the Contracts or Trust
shares; or
(b) arise out of or result from statements or representations
( other than statements or representations contained in and
accurately derived from Trust Documents as defined in Section
5.2(a)) or wrongful conduct of the Company or persons under
its control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) 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 statement or omission was made in
reliance upon and accurately derived from written information
furnished to the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the
Company to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; or
(f) arise out of or result from the provision by the Company to the
Trust of insufficient or incorrect information regarding the
purchase or sale of shares of any Portfolio, or the failure
of the Company to provide such information on a timely basis.
5.2. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor agrees to
indemnify and hold harmless the Company and each of its directors,
officers, employees, and agents and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for the purposes of
this Section 5.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Distributor, which consent shall not be
unreasonably withheld) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as
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such Losses are related to the sale or acquisition of the Contracts
or Trust shares and:
(a) 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 Trust (or any
amendment or supplement thereto) (collectively, "Trust
Documents" for the purposes of this Article V), 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 indemnity 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
was accurately derived from written information furnished to
the Distributor or the Trust by or on behalf of the Company
for use in Trust Documents or otherwise for use in connection
with the sale of the Contracts or Trust shares and; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and
accurately derived form Company Documents) or wrongful
conduct of the Distributor or persons under its control, with
respect to the sale or acquisition of the Contracts or
Portfolio shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Company
Documents 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 statement or omission was made in reliance upon and
accurately derived from written information furnished to the
Company by or on behalf of the Trust; or
(d) arise out of or result from any failure by the Distributor or
the Trust to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor or
the Trust in this Agreement or arise out of or result from
any other material breach of this Agreement by the
Distributor or the Trust.
5.3. None of the Company, the Trust or the Distributor shall be liable
under the indemnification provisions of Sections 5.1 or 5.2, as
applicable, with respect to any Losses incurred or assessed
against an Indemnified Party that arise from such Indemnified
Party's willful misfeasance, bad faith or 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.
5.4. None of the Company, the Trust or the Distributor shall be liable
under the indemnification provisions of Sections 5.1 or 5.2, as
applicable, with respect to any claim
12
made against an Indemnified party unless such Indemnified Party
shall have notified the other party in writing within a reasonable
time after the summons, or other first written notification,
giving information of the nature of the claim shall have been
served upon or otherwise received by such Indemnified Party (or
after such Indemnified Party shall have received notice of service
upon or other notification to any designated agent), but failure
to notify the party against whom indemnification is sought of any
such claim shall not relieve that party from any liability which
it may have to the Indemnified Party in the absence of Sections
5.1 and 5.2.
5.5. In case any such action is brought against an Indemnified Party, the
indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party
also shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the party named in the action. After
notice from the indemnifying party to the Indemnified Party of an
election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it,
and the indemnifying party will not be liable to the Indemnified
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.
ARTICLE VI.
TERMINATION
6.1. This Agreement shall terminate:
(a) at the option of any party upon 60 days advance written notice to
the other parties, unless a shorter time is agreed to by the
parties;
(b) at the option of the Trust or the Distributor if the
Contracts issued by the Company cease to qualify as annuity
contracts or life insurance contracts, as applicable, under
the Code or if the Contracts are not registered, issued or
sold in accordance with applicable state and/or federal law;
or
(c) at the option of any party upon a determination by a majority of
the Trustees of the Trust, or a majority of its disinterested
Trustees, that a material irreconcilable conflict exists; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust or the Distributor by the NASD,
the SEC, or any state securities or insurance department or
any other regulatory body regarding the Trust's or the
Distributor's duties under this Agreement or related to the
sale of Trust shares or
13
the operation of the Trust; or
(e) at the option of the Company if the Trust or a Portfolio fails
to meet the diversification requirements specified in Section
3.6 hereof; or
(f) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable
Contracts issued by the Company, as determined by the Company,
and upon prompt notice by the Company to the other parties; or
(g) at the option of the Company in the event any of the shares of
the Portfolio are not registered, issued or sold in
accordance with applicable state and/or federal law, or such
law precludes the use of such shares as the underlying
investment media of the Variable Contracts issued or to be
issued by the Company; or
(h) at the option of the Company, if the Portfolio fails to qualify
as a Regulated Investment Company under Subchapter M of the
Code; or
(i) at the option of the Distributor if it shall determine in its
sole judgment exercised in good faith, that the Company
and/or its affiliated companies has suffered a material
adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is
the subject of material adverse publicity.
6.2. Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional
shares of any Portfolio and redeem shares of any Portfolio
pursuant to the terms and conditions of this Agreement for all
Contracts in effect on the effective date of termination of this
Agreement.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.9 shall
survive the termination of this Agreement as long as shares of the
Trust are held on behalf of Contract owners in accordance with
Section 6.2.
ARTICLE VII.
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 or its Distributor:
00
Xxxx Xxxxx Management, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
If to the Company:
Lincoln Benefit Life Company
000 Xxxxx 00 Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx
15
ARTICLE VIII.
MISCELLANEOUS
8.1. 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.
8.2. This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
8.3. 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.
8.4. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
New York. It shall also be subject to the provisions of the
federal securities laws and the rules and regulations thereunder
and to any orders of the Commission granting exemptive relief
therefrom and the conditions of such orders. Copies of any such
orders shall be promptly forwarded by the Trust to the Company.
8.5. All liabilities of the Trust arising, directly or indirectly, under
this Agreement, of any and every nature whatsoever, shall be
satisfied solely out of the assets of the Trust and no Trustee,
officer, agent or holder of shares of beneficial interest of the
Trust shall be personally liable for any such liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the
Commission, 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.
8.7. 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.
8.8. This Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the
other party.
8.10. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by both parties.
16
8.11. Each party hereto shall, except as required by law or otherwise
permitted by this Agreement, 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 shall not disclose such confidential information
without the written consent of the affected party unless such
information has become publicly available.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year
first above written.
Xxxx Xxxxx and Company, Incorporated
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President
The Xxxxx American Fund
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
----------------------------------------
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
17
SCHEDULE A
The Alger American Fund:
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American Small Capitalization Portfolio
Alger American MidCap Growth Portfolio
18
19
SERVICE AGREEMENT
AGREEMENT dated as of February 1, 1997, 1998, between Xxxx Xxxxx
Management, Inc. ("Xxxxx"), a New York Corporation with its principal offices at
00 Xxxxxx Xxxx, Xxx Xxxx, XX 00000, as Investment Adviser for The Xxxxx American
Fund (the "Fund"), and Lincoln Benefit Life (the "Company"), a Nebraska
corporation having its principal office and place of business at 000 Xxxxx 00
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000.
In consideration of the promises and mutual covenants set forth in this
Agreement, the Parties agree as follows:
1. SERVICES PROVIDED
The Company agrees to provide services to the Fund including the
following:
a) responding to inquiries from the Company Contract owners using one or
more Portfolios of the Fund as an investment vehicle regarding the
services performed by the Company as they relate to the Fund;
b) providing information to Xxxxx and to Contract owners with respect to
shares attributable to Contract owner accounts;
c) printing and mailing of shareholder communications from the Fund
(such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) as
may be required;
d) communication directly with Contract owners concerning the Fun's
operations;
e) providing such other similar services as Xxxxx may reasonably request
pursuant to the extent permitted or required
2. EXPENSE ALLOCATION
Subject to Paragraph 3 hereof, the Company or its affiliates shall
initially bear the costs of the following:
a) printing and distributing the Fund's prospectus, statement of
additional information and any amendments or supplements thereto,
periodic reports to shareholders, Fund proxy material for issues
raised by the Company (the costs of printing and distributing proxy
materials for issues raised by the Fund shall be borne by the Fund)
and other shareholder communications (collectively, the "Fund
Materials") to be distributed to prospective Contract owners;
b) printing and distributing all sales literature or promotional
material developed by the Company or its affiliates and relating to
the contracts;
c) servicing Contract value to a Portfolio, which servicing shall
include, but is not limited to, the items listed in Paragraph 1 of
this Agreement.
3. PAYMENT OF EXPENSES
a) Xxxxx will pay the Company a quarterly fee equal to a percentage of
the average daily net assets of the Portfolios attributable to
Contracts, at the annual rate set forth in the following schedule
("Portfolio Servicing Fee"), in connection with the expenses incurred
by the Company under Paragraph 2 hereof: invested in any Portfolio of
the Fund, of all assets in but less than $1 billion and 0.02% of all
assets in excess of $1 billion. The payment of the Portfolio
Servicing Fee shall commence at the end of the first calendar quarter
in which Contract value has been allocated to a Portfolio.
b) From time to time, the Parties hereto shall review the Portfolio
Servicing Fee to determine whether it reasonably approximates the
incurred and anticipated costs, over time of the Company in
connection with its duties hereunder. The Parties agree to negotiate
in good faith any change to the Portfolio Servicing Fee proposed by a
Party in good faith.
4. TERM OF AGREEMENT
Either Party may terminate this Agreement, without penalty, on 60 days'
written notice to the other Party. Unless so terminated, this Agreement
shall continue in effect for so long as Xxxxx or its successor(s) in
interest, or any affiliate thereof, continues to perform in a similar
capacity for the Fund, and for so long as any Contract value or any monies
attributable to the Company is allocated to a Portfolio.
5. INDEMNIFICATION
a) The Company agrees to indemnify and hold harmless Xxxxx and its
officers, directors and affiliates from any and all loss, liability
and expense resulting from the gross negligence or willful wrongful
act of the Company under this Agreement, except to the extent such
loss, liability or expense is the result of the willful misfeasance,
bad faith or gross negligence of Xxxxx in the performance of its
duties, or by reason of the reckless disregard of its obligations and
duties under this Agreement.
b) Xxxxx agrees to indemnify and hold harmless the Company and its
officers, directors and affiliates from any and all loss, liability
and expense resulting from the gross negligence or willful wrongful
act of Xxxxx under this Agreement, except to the extent such loss,
liability or expense is the result of the willful misfeasance, bad
faith or gross negligence of the Company in the performance of its
duties, or by reason of the reckless disregard of its obligations and
duties under this Agreement.
6. NOTICE
Notices and communications required or permitted hereby will be given to
the following persons at the following addresses and facsimile numbers, or
such other persons, addresses or facsimile numbers as the Party receiving
such notices or communications may subsequently direct in writing:
Xxxx Xxxxx Management, Inc.
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Fax: (000) 000-0000
Lincoln Benefit Life
000 Xxxxx 00 Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx
Fax: (000) 000-0000
7. APPLICABLE LAW
Except insofar as the Investment Company Act of 1940 or other federal laws
and regulations may be controlling, this Agreement will be construed and
the provisions hereof interpreted under and in accordance with New York
law, without regard for that state's principles of conflict of laws.
8. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
9. RIGHTS CUMULATIVE
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, that the Parties are entitled to under
federal and state laws.
10. ASSIGNMENT
Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written consent of the other
party thereto.
11. AMENDMENT
This Agreement may be amended or modified in whole or in party only by a
written agreement executed by both parties.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers signing below.
XXXX XXXXX MANAGEMENT, INC.
By: /s/Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
----------------------------------
Title: Executive Vice President
---------------------------------
By: /s/Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: Vice President
---------------------------------
