PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
LINCOLN BENEFIT LIFE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
ALFS, INC.
TABLE OF CONTENTS
Description Page
Section 1. Available Funds....................................................2
1.1 Availability.................................................2
1.2 Addition, Deletion or Modification of Funds..................2
1.3 No Sales to the General Public...............................3
Section 2. Processing Transactions............................................3
2.1 Timely Pricing and Orders....................................3
2.2 Timely Payments..............................................3
2.3 Applicable Price.............................................4
2.4 Dividends and Distributions..................................4
2.5 Book Entry...................................................4
Section 3. Costs and Expenses.................................................4
3.1 General......................................................4
3.2 Parties To Cooperate.........................................5
Section 4. Legal Compliance...................................................5
4.1 Tax Laws.....................................................5
4.2 Insurance and Certain Other Laws.............................7
4.3 Securities Laws..............................................8
4.4 Notice of Certain Proceedings and Other Circumstances........8
4.5 LBL or the Underwriter To Provide Documents; Information
About AVIF...................................................9
4.6 AVIF or AIM To Provide Documents; Information About LBL
and the Underwriter.........................................10
Section 5. Mixed and Shared Funding..........................................11
5.1 General.....................................................11
5.2 Disinterested Trustees......................................11
5.3 Monitoring for Material Irreconcilable Conflicts............11
5.4 Conflict Remedies...........................................12
5.5 Notice to LBL...............................................13
5.6 Information Requested by Board of Trustees..................14
5.7 Compliance with SEC Rules...................................14
5.8 Requirements for Other Insurance Companies..................14
Section 6. Termination.......................................................14
6.1 Events of Termination.......................................14
6.2 Notice Requirement for Termination..........................16
6.3 Funds To Remain Available...................................16
6.4 Survival of Warranties and Indemnifications.................16
6.5 Continuance of Agreement for Certain Purposes...............16
Section 7. Parties To Cooperate Respecting Termination.......................17
Section 8. Assignment........................................................17
Section 9. Notices...........................................................17
Section 10. Voting Procedures................................................18
Section 11. Foreign Tax Credits..............................................19
Section 12. Indemnification..................................................19
12.1 Of AVIF and AIM by LBL and the Underwriter..................19
12.2 Of LBL and the Underwriter by AVIF and AIM..................21
12.3 Effect of Notice............................................24
12.4 Successors..................................................24
Section 13. Applicable Law...................................................24
Section 14. Execution in Counterparts........................................24
Section 15. Severability.....................................................24
Section 16. Rights Cumulative................................................24
Section 17. Headings.........................................................24
SCHEDULE A....................................................................26
SCHEDULE B....................................................................27
SCHEDULE C....................................................................28
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of July, 2001
("Agreement"), by and among AIM Variable Insurance Funds, a Delaware trust
("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM"); Lincoln
Benefit Life Company, a Nebraska life insurance company ("LBL"), on behalf of
itself and each of its segregated asset accounts listed in Schedule A hereto, as
the parties hereto may amend from time to time (each, an "Account," and
collectively, the "Accounts"); and ALFS, Inc., a Delaware corporation and the
principal underwriter of the Contracts and Policies referred to below
("Underwriter") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission ("SEC")
as an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of sixteen separate series, shares ("Shares")
of each of which are registered under the Securities Act of 1933, as amended
(the "1933 Act") and are currently sold to one or more separate accounts of life
insurance companies to fund benefits under variable annuity contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto as the
Parties hereto may amend from time to time (each a "Fund"; reference herein to
"AVIF" includes reference to each Fund, to the extent the context requires)
available for purchase by the Accounts; and
WHEREAS, AIM is a broker-dealer registered with the SEC under the Securities
Exchange Act of 1934 ("1934 Act") and a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, AIM currently serves as the distributor for the Shares; and
WHEREAS, LBL will be the issuer of certain variable annuity contracts
("Contracts") and/or variable life insurance policies ("Policies") as set forth
on Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts and Policies (hereinafter collectively, the "Policies"), if required
by applicable law, will be registered under the 1933 Act; and
WHEREAS, the Accounts may be divided into two or more subaccounts
("Subaccounts"; reference herein to an "Account" includes reference to each
Subaccount thereof to the extent the context requires); and
WHEREAS, LBL will serve as the depositor of the Accounts, each of which is
registered as a unit investment trust investment company under the 1940 Act (or
exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Policies will be registered as securities under the 1933 Act
(or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
LBL intends to purchase Shares in one or more of the Funds on behalf of the
Accounts to fund the Policies; and
WHEREAS, the Underwriter is a broker-dealer registered with the SEC under the
1934 Act and a member in good standing of the NASD; and
WHEREAS, the Underwriter intends to enter into Selling Group Agreements with
entities that may legally sell the Policies (the "Selling Group Members"); and
NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein, the Parties hereto agree as follows:
Section 1. Available Funds
1.1 Availability.
AVIF will make Shares of each Fund available to LBL for purchase and redemption
at net asset value and with no sales charges, subject to the terms and
conditions of this Agreement. The Board of Trustees of AVIF may refuse to sell
Shares of any Fund to any person, or suspend or terminate the offering of Shares
of any Fund if such action is required by law or by regulatory authorities
having jurisdiction 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 Fund.
1.2 Addition, Deletion or Modification of Funds.
The Parties hereto may agree, from time to time, to add other Funds to provide
additional funding media for the Policies, or to delete, combine, or modify
existing Funds, by amending Schedule A hereto. Upon such amendment to Schedule
A, any applicable reference to a Fund, AVIF, or its Shares herein shall include
a reference to any such additional Fund. Schedule A, as amended from time to
time, is incorporated herein by reference and is a part hereof.
1.3 No Sales to the General Public.
AVIF represents and warrants that no Shares of any Fund have been or will be
sold to the general public.
Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
(a) AVIF or its designated agent will use its best efforts to provide LBL
with the net asset value per Share for each Fund by 6:00 p.m. Central
Time on each Business Day. As used herein, "Business Day" shall mean
any day on which (i) the New York Stock Exchange is open for regular
trading, and (ii) AVIF calculates the Fund's net asset value.
(b) LBL will use the data provided by AVIF each Business Day pursuant to
paragraph (a) immediately above to calculate Account unit values and
to process transactions that receive that same Business Day's Account
unit values. LBL will perform such Account processing the same
Business Day, and will place corresponding orders to purchase or
redeem Shares with AVIF by 9:00 a.m. Central Time the following
Business Day; provided, however, that AVIF shall provide additional
time to LBL in the event that AVIF is unable to meet the 6:00 p.m.
time stated in paragraph (a) immediately above. Such additional time
shall be equal to the additional time that AVIF takes to make the net
asset values available to LBL.
(c) Each order to purchase or redeem Shares will separately describe the
amount of Shares of each Fund to be purchased, redeemed or exchanged
and will not be netted; provided, however, with respect to payment of
the purchase price by LBL and of redemption proceeds by AVIF, LBL and
AVIF shall net purchase and redemption orders with respect to each
Fund and shall transmit one net payment per Fund in accordance with
Section 2.2, below. Each order to purchase or redeem Shares shall also
specify whether the order results from purchase payments, surrenders,
partial withdrawals, routine withdrawals of charges, or requests for
other transactions under Policies (collectively, "Policy
transactions").
(d) If AVIF provides materially incorrect Share net asset value
information, LBL shall be entitled to an adjustment to the number of
Shares purchased or redeemed to reflect the correct net asset value
per Share. Any material error in the calculation or reporting of net
asset value per Share, dividend or capital gain information shall be
reported promptly upon discovery to LBL. Materiality and reprocessing
cost reimbursement shall be determined in accordance with standards
established by the parties as provided in Schedule B, attached hereto
and incorporated herein.
2.2 Timely Payments.
LBL will wire payment for net purchases to a custodial account designated by
AVIF by 1:00 p.m. Central Time on the same day as the order for Shares is
placed, to the extent practicable. AVIF will wire payment for net redemptions to
an account designated by LBL by 1:00 p.m. Central Time on the same day as the
Order is placed, to the extent practicable, but in any event within five (5)
calendar days after the date the order is placed in order to enable LBL to pay
redemption proceeds within the time specified in Section 22(e) of the 1940 Act
or such shorter period of time as may be required by law.
2.3 Applicable Price.
(a) Share purchase and redemption orders that result from Policy
transactions and that LBL receives prior to the close of regular
trading on the New York Stock Exchange on a Business Day will be
executed at the net asset values of the appropriate Funds next
computed after receipt by AVIF or its designated agent of the orders.
For purposes of this Section 2.3(a), LBL shall be the designated agent
of AVIF for receipt of orders relating to Policy transactions on each
Business Day and receipt by such designated agent shall constitute
receipt by AVIF; provided, that AVIF receives notice of such orders by
9:00 a.m. Central Time on the next following Business Day or such
later time computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by LBL will be effected at
the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and
such orders will be irrevocable.
2.4 Dividends and Distributions.
AVIF will furnish notice promptly to LBL of any income dividends or capital gain
distributions payable on the Shares of any Fund. LBL hereby elects to reinvest
all dividends and capital gains distributions in additional Shares of the
corresponding Fund at the ex-dividend date net asset values until LBL otherwise
notifies AVIF in writing, it being agreed by the Parties that the ex-dividend
date and the payment date with respect to any dividend or distribution will be
the same Business Day. LBL reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash.
2.5 Book Entry.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to LBL. Shares ordered from AVIF will be
recorded in an appropriate title for LBL, on behalf of its Account.
Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided in Schedule C, attached hereto and
made a part hereof, each Party will bear all expenses incident to its
performance under this Agreement.
3.2 Parties To Cooperate.
Each Party agrees to cooperate with the others, as applicable, in arranging to
print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of AVIF and the Accounts.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) AVIF represents and warrants that each Fund is currently qualified and
will continue to qualify as a regulated investment company ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). AVIF will notify LBL immediately upon having a
reasonable basis for believing that a Fund has ceased to so qualify or
that it might not so qualify in the future.
(b) AVIF represents that it will comply and maintain each Fund's
compliance with the diversification requirements set forth in Section
817(h) of the Code and Section 1.817-5(b) of the regulations under the
Code. AVIF will notify LBL immediately upon having a reasonable basis
for believing that a Fund has ceased to so comply or that a Fund might
not so comply in the future.
(c) LBL agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of LBL or,
to LBL's knowledge, of any Policy owner, annuitant or participant
under the Policies (collectively, "Participants"), that any Fund has
failed to comply with the diversification requirements of section
817(h) of the Code or LBL otherwise becomes aware of any facts that
could give rise to any claim against AVIF or its affiliates as a
result of such a failure or alleged failure to so comply with section
817(h) (hereinafter respectively referred to in this paragraph (c) as
"failure" or "alleged failure"):
(i) LBL shall promptly notify AVIF of such assertion or potential
claim;
(ii) LBL shall consult with AVIF as to how to minimize any liability
that may arise as a result of such failure or alleged failure;
(iii)LBL shall use its best efforts to minimize any liability of AVIF
or its affiliates resulting from such failure, including, without
limitation, demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS that such
failure was inadvertent, provided that LBL shall not be required
to make any such demonstration of inadvertence unless AVIF
represents or provides an opinion of counsel, which
representation or opinion shall be reasonably satisfactory to
LBL, to the effect that a reasonable basis exists for making such
a demonstration;
(iv) LBL shall permit AVIF, its affiliates and their legal and
accounting advisors to attend, advise and otherwise assist LBL
(which assistance LBL shall consider and/or accept in good faith)
with respect to any conferences, settlement discussions or other
administrative or judicial proceeding or contests (including
judicial appeals thereof) with the IRS, any Participant or any
other claimant regarding any claims that could give rise to
liability to AVIF or its affiliates as a result of such a failure
or alleged failure, provided that LBL shall control, in good
faith, the conduct of such conferences, discussions, proceedings,
or contests or appeals thereof;
(v) any written materials to be submitted by LBL to the IRS, any
Participant or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation,
any such materials to be submitted to the IRS pursuant to
Treasury Regulations Section 1.817-5(a)(2)), (a) shall be
provided by LBL to AVIF (together with any supporting information
or analysis) at least ten (10) business days, or such shorter
period to which the Parties hereto may from time to time agree,
prior to the day on which such proposed materials are to be
submitted, and (b) shall not be submitted by LBL to any such
person without the express written consent of AVIF which shall
not be unreasonably withheld;
(vi) LBL shall provide AVIF or its affiliates and their accounting and
legal advisors with such cooperation as AVIF shall reasonably
request (including, without limitation, by providing AVIF and its
accounting and legal advisors with copies of any relevant books
and records (or portions thereof) of LBL that may be reasonably
requested by or on behalf of AVIF and that LBL is permitted to
provide in accordance with applicable law) in order to facilitate
review by AVIF or its advisors of any written submissions
provided to it pursuant to the preceding clause or its assessment
of the validity or amount of any claim against its arising from
such a failure or alleged failure;
(vii)LBL shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against AVIF or its
affiliates (a) compromise or settle any claim, (b) accept any
adjustment on audit, or (c) forego any allowable administrative
or judicial appeals, without the express written consent of AVIF
or its affiliates, which shall not be unreasonably withheld,
provided that LBL shall not be required, after exhausting all
administrative remedies, to appeal any adverse IRS or judicial
decision unless AVIF or its affiliates shall have provided an
opinion of counsel approved by LBL, which approval shall not be
unreasonably withheld, to the effect that a reasonable basis
exists for taking such appeal (or, in the case of an appeal to
the United States Supreme Court, that LBL should be more likely
than not to prevail on such appeal), and provided further that
each Party shall bear one-half of the expenses of any judicial
appeal; and
(viii) AVIF and its affiliates shall have no liability as a result of
such failure or alleged failure if LBL fails to comply with any
of the foregoing clauses (i) through (vii), and such failure
could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any
compromise or settlement of any claim or liability hereunder, LBL may, in its
discretion, authorize AVIF or its affiliates to act in the name of LBL in, and
to control the conduct of, such conferences, discussions, proceedings, contests
or appeals and all administrative or judicial appeals thereof, and in that event
AVIF or its affiliates shall bear the fees and expenses associated with the
conduct of the proceedings that it is so authorized to control; provided that in
no event shall LBL have liability resulting from AVIF's refusal to accept the
proposed settlement or compromise with respect to any failure caused by AVIF. As
used in this Agreement, the term "affiliates" shall have the same meaning as
"affiliated person" as defined in Section 2(a)(3) of the 1940 Act.
(d) LBL represents and warrants that the Policies currently are and at all
times will be treated as annuity, endowment, or life insurance
contracts under applicable provisions of the Code. LBL will notify
AVIF immediately upon having a reasonable basis for believing that any
of the Policies have ceased to be so treated or that they might not be
so treated in the future, provided that such notice shall be kept
confidential during the period of LBL's investigation of any such
circumstances to the extent permitted by applicable law.
(e) LBL represents and warrants that each Account is and at all times will
be a "segregated asset account" and that interests in each Account are
offered exclusively through the purchase of or transfer into a
"variable contract," within the meaning of such terms under Section
817 of the Code and the regulations thereunder. LBL will notify AVIF
immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in
the future.
4.2 Insurance and Certain Other Laws.
(a) AVIF and AIM will use their best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically
requested in writing by LBL.
(b) LBL represents and warrants that (i) it is an insurance company duly
organized, validly existing and in good standing under the laws of the
State of [Nebraska] and has full corporate power, authority and legal
right to execute, deliver and perform its duties and comply with its
obligations under this Agreement, (ii) it has legally and validly
established and maintains each Account as a segregated asset account
under Nebraska Insurance Code and the regulations thereunder, and
(iii) the Policies comply in all material respects with all other
applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under
this Agreement.
(d) AIM represents and warrants that it is a Delaware corporation duly
organized, validly existing, and in good standing under the laws of
the State of Delaware and has full power, authority, and legal right
to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
(e) The Underwriter represents and warrants that it is a Delaware
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has full power, authority,
and legal right to execute, deliver, and perform its duties and comply
with its obligations under this Agreement.
4.3 Securities Laws.
(a) LBL and the Underwriter represent and warrant that (i) interests in
each Account pursuant to the Policies will be registered under the
1933 Act to the extent required by the 1933 Act, (ii) the Policies
will be duly authorized for issuance and sold in compliance with all
applicable federal and state laws, including, without limitation, the
1933 Act, the 1934 Act, the 1940 Act and Illinois law, (iii) each
Account is and will remain registered under the 1940 Act, to the
extent required by the 1940 Act, (iv) each Account does and will
comply in all material respects with the requirements of the 1940 Act
and the rules thereunder, to the extent required, (v) each Account's
1933 Act registration statement relating to the Policies, together
with any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and the rules
thereunder, (vi) LBL will amend the registration statement for its
Policies under the 1933 Act and for its Accounts under the 1940 Act
from time to time as required in order to effect the continuous
offering of its Policies or as may otherwise be required by applicable
law, and (vii) each Account Prospectus will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVIF and AIM represent and warrant that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent
required by the 1933 Act and duly authorized for issuance and sold in
compliance with Delaware law, (ii) AVIF is and will remain registered
under the 1940 Act to the extent required by the 1940 Act, (iii) AVIF
will amend the registration statement for its Shares under the 1933
Act and itself under the 1940 Act from time to time as required in
order to effect the continuous offering of its Shares, (iv) AVIF does
and will comply in all material respects with the requirements of the
1940 Act and the rules thereunder, (v) AVIF's 1933 Act registration
statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act
and rules thereunder, and (vi) AVIF Prospectus will at all times
comply in all material respects with the requirements of the 1933 Act
and the rules thereunder.
(c) AVIF will register and qualify its Shares for sale in accordance with
the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) AVIF and/or AIM will immediately notify LBL of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to AVIF's registration statement
under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC for
any amendment to such registration statement or AVIF Prospectus, (iii)
the initiation of any proceedings for that purpose or for any other
purpose relating to the registration or offering of AVIF's Shares, or
(iv) any other action or circumstances that may prevent the lawful
offer or sale of Shares of any Fund in any state or jurisdiction,
including, without limitation, any circumstances in which (a) such
Shares are not registered and, in all material respects, issued and
sold in accordance with applicable state and federal law, or (b) such
law precludes the use of such Shares as an underlying investment
medium of the Policies issued or to be issued by LBL. AVIF will make
every reasonable effort to prevent the issuance, with respect to any
Fund, of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) LBL and/or the Underwriter will immediately notify AVIF of (i) the
issuance by any court or regulatory body of any stop order, cease and
desist order, or other similar order with respect to each Account's
registration statement under the 1933 Act relating to the Policies or
each Account Prospectus, (ii) any request by the SEC for any amendment
to such registration statement or Account Prospectus, (iii) the
initiation of any proceedings for that purpose or for any other
purpose relating to the registration or offering of each Account's
interests pursuant to the Policies, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of said
interests in any state or jurisdiction, including, without limitation,
any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable
state and federal law. LBL will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
4.5 LBL or the Underwriter To Provide Documents; Information About AVIF.
(a) LBL or the Underwriter will provide to AVIF or its designated agent at
least one (1) complete copy of all SEC registration statements,
Account Prospectuses, reports, any preliminary and final voting
instruction solicitation material, applications for exemptions,
requests for no-action letters, and all amendments to any of the
above, that relate to each Account or the Policies, contemporaneously
with the filing of such document with the SEC or other regulatory
authorities.
(b) The Underwriter will provide to AVIF or its designated agent at least
one (1) complete copy of each piece of sales literature or other
promotional material not prepared by AVIF or its affiliates, in which
AVIF or any of its affiliates is named, at least ten (10) Business
Days prior to its use or such shorter period as the Parties hereto
may, from time to time, agree upon. No such material shall be used if
AVIF or its designated agent objects to such use within ten (10)
Business Days after receipt of such material or such shorter period as
the Parties hereto may, from time to time, agree upon. AVIF hereby
designates its investment adviser as the entity to receive such sales
literature, until such time as AVIF appoints another designated agent
by giving notice to LBL in the manner required by Section 9 hereof.
(c) Neither LBL, the Underwriter, nor any of their respective affiliates
will give any information or make any representations or statements on
behalf of or concerning AVIF or its affiliates in connection with the
sale of the Policies other than (i) the information or representations
contained in the registration statement, including the AVIF Prospectus
contained therein, relating to Shares, as such registration statement
and AVIF Prospectus may be amended from time to time; or (ii) in
reports or proxy materials for AVIF; or (iii) in sales literature or
other promotional material approved by AVIF, except with the express
written permission of AVIF.
(d) LBL and the Underwriter shall adopt and implement procedures
reasonably designed to ensure that information concerning AVIF and its
affiliates that is intended for use only by brokers or agents selling
the Policies (i.e., information that is not intended for distribution
to Participants or offerees) ("broker only materials") is so used, and
neither AVIF nor any of its affiliates shall be liable for any losses,
damages or expense relating to the improper use of such broker only
materials.
4.6 AVIF or AIM To Provide Documents; Information About LBL and the Underwriter.
(a) AVIF will provide to LBL at least one (1) complete copy of all SEC
registration statements, AVIF Prospectuses, reports, any preliminary
and final proxy material, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate
to AVIF or the Shares of a Fund, contemporaneously with the filing of
such document with the SEC or other regulatory authorities.
(b) AVIF will provide to LBL or the Underwriter camera ready or computer
diskette copies of all AVIF Prospectuses, proxy materials, periodic
reports to shareholders and other materials required by law to be sent
to Participants who have allocated any Policy value to a Fund. AVIF
will provide such copies to LBL or the Underwriter in a timely manner
so as to enable LBL or the Underwriter, as the case may be, to print
and distribute such materials within the time required by law to be
furnished to Participants.
(c) AIM will provide to LBL or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional
material in which LBL, the Underwriter or any of their respective
affiliates is named, or that refers to the Policies, at least ten (10)
Business Days prior to its use or such shorter period as the Parties
hereto may, from time to time, agree upon. No such material shall be
used if LBL or its designated agent objects to such use within ten
(10) Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon. LBL
shall receive all such sales literature until such time as it appoints
a designated agent by giving notice to AVIF in the manner required by
Section 9 hereof.
(d) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning LBL,
the Underwriter, each Account, or the Policies other than (i) the
information or representations contained in the registration
statement, including each Account Prospectus contained therein,
relating to the Policies, as such registration statement and Account
Prospectus may be amended from time to time; or (ii) in reports or
voting instruction materials for each Account; or (iii) in sales
literature or other promotional material approved by LBL or its
affiliates, except with the express written permission of LBL.
(e) AIM shall adopt and implement procedures reasonably designed to ensure
that information concerning LBL, the Underwriter, and their respective
affiliates that is intended for use only by brokers or agents selling
the Policies (i.e., information that is not intended for distribution
to Participants or offerees) ("broker only materials") is so used, and
neither LBL, the Underwriter, nor any of their respective affiliates
shall be liable for any losses, damages or expense relating to the
improper use of such broker only materials.
Section 5. Mixed and Shared Funding
5.1 General.
The SEC has granted an order to AVIF exempting it from certain provisions of the
1940 Act and rules thereunder so that AVIF may be available for investment by
certain other entities, including, without limitation, separate accounts funding
variable life insurance contracts, separate accounts of insurance companies
unaffiliated with LBL, and trustees of qualified pension and retirement plans
(collectively, "Mixed and Shared Funding"). The Parties recognize that the SEC
has imposed terms and conditions for such orders that are substantially
identical to many of the provisions of this Section 5. Sections 5.2 through 5.8
below shall apply. AVIF hereby notifies LBL that it may be appropriate to
include in the prospectus pursuant to which a Policy is offered disclosure
regarding the potential risks of Mixed and Shared Funding.
5.2 Disinterested Trustees.
AVIF agrees that its Board of Trustees shall at all times consist of Trustees a
majority of whom (the "Disinterested Trustees") are not interested persons of
AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the Rules
thereunder and as modified by any applicable orders of the SEC, except that if
this condition is not met by reason of the death, disqualification, or bona fide
resignation of any Trustee, then the operation of this condition shall be
suspended (a) for a period of forty-five (45) days if the vacancy or vacancies
may be filled by the Board; (b) for a period of sixty (60) days if a vote of
shareholders is required to fill the vacancy or vacancies; or (c) for such
longer period as the SEC may prescribe by order upon application.
5.3 Monitoring for Material Irreconcilable Conflicts.
AVIF agrees that its Board of Trustees will monitor for the existence of any
material irreconcilable conflict between the interests of the participants in
all separate accounts of life insurance companies utilizing AVIF ("Participating
Insurance Companies"), including each Account and participants on all qualified
retirement and pension plans investing in AVIF ("Participating Plans'). LBL
agrees to inform the Board of Trustees of AVIF of the existence of or any
potential for any such material irreconcilable conflict of which it is aware.
The concept of a "material irreconcilable conflict" is not defined by the 1940
Act or the rules thereunder, but the Parties recognize that such a conflict may
arise for a variety of reasons, including, without limitation:
(a) an action by any state insurance or other 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 Fund are being managed;
(e) a difference in voting instructions given by variable annuity contract
and variable life insurance contract Participants or by Participants
of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders of
the type referred to in Section 5.1 hereof, LBL will assist the Board of
Trustees in carrying out its responsibilities by providing the Board of Trustees
with all information reasonably necessary for the Board of Trustees to consider
any issue raised, including information as to a decision by LBL to disregard
voting instructions of Participants.
5.4 Conflict Remedies.
(a) It is agreed that if it is determined by a majority of the members of
the Board of Trustees or a majority of the Disinterested Trustees that
a material irreconcilable conflict exists, LBL will, if it is a
Participating Insurance Company for which a material irreconcilable
conflict is relevant, at its own expense and to the extent reasonably
practicable (as determined by a majority of the Disinterested
Trustees), take whatever steps are necessary to remedy or eliminate
the material irreconcilable conflict, which steps may include, but are
not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts
from AVIF or any Fund and reinvesting such assets in a different
investment medium, including another Fund of AVIF, or submitting
the question whether such segregation should be implemented to a
vote of all affected Participants and, as appropriate,
segregating the assets of any particular group (e.g., annuity
Participants, life insurance Participants) that votes in favor of
such segregation, or offering to the affected Participants the
option of making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940 Act
or a new separate account that is operated as a management
company.
(b) If the material irreconcilable conflict arises because of LBL's
decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority
vote, LBL may be required, at AVIF's election, to withdraw each
Account's investment in AVIF or any Fund. No charge or penalty will be
imposed as a result of such withdrawal. Any such withdrawal must take
place within six (6)months after AVIF gives notice to LBL that this
provision is being implemented, and until such withdrawal AVIF shall
continue to accept and implement orders by LBL for the purchase and
redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to LBL conflicts with
the majority of other state regulators, then LBL will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board
of Trustees informs LBL that it has determined that such decision has
created a material irreconcilable conflict (after consideration of the
interests of all Participants), and until such withdrawal AVIF shall
continue to accept and implement orders by LBL for the purchase and
redemption of Shares of AVIF.
(d) LBL agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense
and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees will
determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event, however, will AVIF or
any of its affiliates be required to establish a new funding medium
for any Policies. LBL will not be required by the terms hereof to
establish a new funding medium for any Policies if an offer to do so
has been declined by vote of a majority of Participants materially
adversely affected by the material irreconcilable conflict.
5.5 Notice to LBL.
AVIF will promptly make known in writing to LBL the Board of Trustees'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.
5.6 Information Requested by Board of Trustees.
LBL and AVIF (or its investment adviser) will at least annually submit to the
Board of Trustees of AVIF such reports, materials or data as the Board of
Trustees may reasonably request so that the Board of Trustees may fully carry
out the obligations imposed upon it by the provisions hereof or any exemptive
application filed with the SEC to permit Mixed and Shared Funding, and said
reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Trustees. All reports received by the Board of
Trustees of potential or existing conflicts, and all Board of Trustees actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Trustees or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.7 Compliance with SEC Rules.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Policies, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2
are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to
Mixed and Shared Funding, AVIF agrees that it will comply with the terms and
conditions thereof and that the terms of this Section 5 shall be deemed modified
if and only to the extent required in order also to comply with the terms and
conditions of such exemptive relief that is afforded by any of said rules that
are applicable.
5.8 Requirements for Other Insurance Companies.
AVIF will require that each Participating Insurance Company enter into an
agreement with AVIF that contains in substance the same provisions as are set
forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b), 4.5(a), 5, and 10 of this
Agreement.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of AVIF or LBL upon the approval by (i) a majority of
the Disinterested Trustees, or (ii) a majority vote of the Shares of
the affected Fund that are held in the corresponding Subaccount of an
Account (pursuant to the procedures set forth in Section 10 of this
Agreement for voting Shares in accordance with Participant
instructions); or
(b) at the option of AVIF or AIM upon institution of formal proceedings
against LBL or its affiliates by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding LBL's
obligations under this Agreement or related to the sale of the
Policies, the operation of each Account, or the purchase of Shares,
if, in each case, AVIF or AIM reasonably determines that such
proceedings, or the facts on which such proceedings would be based,
have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated;
or
(c) at the option of LBL upon institution of formal proceedings against
AVIF, its principal underwriter, or its investment adviser by the
NASD, the SEC, or any state insurance regulator or any other
regulatory body regarding AVIF's obligations under this Agreement or
related to the operation or management of AVIF or the purchase of AVIF
Shares, if, in each case, LBL reasonably determines that such
proceedings, or the facts on which such proceedings would be based,
have a material likelihood of imposing material adverse consequences
on LBL, or the Subaccount corresponding to the Fund with respect to
which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares are
not registered and, in all material respects, issued and sold in
accordance with any applicable federal or state law, or (ii) such law
precludes the use of such Shares as an underlying investment medium of
the Policies issued or to be issued by LBL; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of LBL if the Fund ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions, or
if LBL reasonably believes that the Fund may fail to so qualify;
(g) at the option of LBL if the Fund fails to comply with Section 817(h)
of the Code or with successor or similar provisions (other than by
reason of the failure of the Policies issued by LBL to qualify as
annuity or life insurance contracts under the Code, or the failure of
any Account or Policy to meet the definition of "segregated asset
account" or "variable contract"; respectively, within the meaning of
the Code), or if LBL reasonably believes that the Fund may fail to so
comply; or
(h) at the option of AVIF or AIM if the Policies issued by LBL cease to
qualify as annuity contracts or life insurance contracts under the
Code (other than by reason of the Fund's noncompliance with Section
817(h) or Subchapter M of the Code) or if interests in an Account
under the Policies are not registered, where required, and, in all
material respects, are not issued or sold in accordance with any
applicable federal or state law; or
(i) upon another Party's material breach of any provision of this
Agreement.
6.2 Notice Requirement for Termination.
No termination of this Agreement will be effective unless and until the Party
terminating this Agreement gives prior written notice to the other Party to this
Agreement of its intent to terminate, and such notice shall set forth the basis
for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be
given at least six (6) months in advance of the effective date of
termination unless a shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be
given at least ninety (90) days in advance of the effective date of
termination unless a shorter time is agreed to by the Parties hereto;
and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior
written notice shall be given as soon as possible within twenty-four
(24) hours after the terminating Party learns of the event causing
termination to be required.
6.3 Funds To Remain Available.
Except (a) as necessary to implement Participant-initiated transactions, (b) as
required by state insurance laws or regulations, (c) as required pursuant to
Section 5 of this Agreement, or (d) with respect to any Fund as to which this
Agreement has terminated pursuant to Section 6.1 hereof, LBL shall not (i)
redeem AVIF Shares attributable to the Policies (as opposed to AVIF Shares
attributable to LBL's assets held in each Account), or (ii) prevent Participants
from allocating payments to or transferring amounts from a Fund that was
otherwise available under the Policies, until six (6) months after LBL shall
have notified AVIF of its intention to do so and until thirty-six (36) full
calendar months shall have expired from the date on which an Account (including
the Accounts of Glenbrook Life and Annuity Co.) first invested in any Fund.
6.4 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 Continuance of Agreement for Certain Purposes.
If any Party terminates this Agreement with respect to any Fund pursuant to
Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this
Agreement shall nevertheless continue in effect as to any Shares of that Fund
that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that LBL may, by written notice shorten said six (6) month period in the case of
a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i).
Section 7. Parties To Cooperate Respecting Termination
The Parties hereto agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Policies in such Fund.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the written consent
of each other Party; however, LBL may utilize the services or employees of its
affiliated insurance companies to perform any of its duties under this
Agreement. Any such delegation or allocation of duties shall not be construed as
an impermissible assignment and shall not be considered to limit any rights of
LBL under this Agreement.
Section 9. Notices
Notices and communications required or permitted by Section 9 hereof will be
given by means mutually acceptable to the Parties concerned. Each other notice
or communication required or permitted by this Agreement 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:
Lincoln Benefit Life Company
ββββ βββββ ββββ ββββββ, βββββ βββ
βββββββ, ββββββββ βββββ
Facsimile: (βββ) βββ-ββββ
Attn: βββββββ ββββββ
ALFS, Inc.
ββββ βββββββ ββββ, βββββ βββ
ββββββββββ, ββββββββ βββββ
Facsimile: (βββ) βββ-ββββ
Attn: ββββ βββββ
AIM Variable Insurance Funds
A I M Distributors, Inc.
ββ ββββββββ βββββ, βββββ βββ
βββββββ, βββββ βββββ
Facsimile: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ, Esq.
Section 10. Voting Procedures
Subject to the cost allocation procedures established pursuant to Section 3.1
hereof, LBL will distribute all proxy material furnished by AVIF to Participants
to whom pass-through voting privileges are required to be extended and will
solicit voting instructions from Participants. LBL will vote Shares in
accordance with timely instructions received from Participants. LBL will vote
Shares that are (a) not attributable to Participants to whom pass-through voting
privileges are extended, or (b) attributable to Participants, but for which no
timely instructions have been received, in the same proportion as Shares for
which said instructions have been received from Participants. Neither LBL nor
any of its affiliates will in any way recommend action in connection with or
oppose or interfere with the solicitation of proxies for the Shares held for
such Participants, except with respect to matters as to which LBL has the right,
under Rule 6e-2 or 6e-3(T) under the 1940 Act, to vote the Shares without regard
to voting instructions from Participants. LBL reserves the right to vote shares
held in any Account in its own right, to the extent permitted by law. LBL shall
be responsible for assuring that each of its Accounts holding Shares calculates
voting privileges in a manner consistent with that of other Participating
Insurance Companies or in the manner required by any Mixed and Shared Funding
exemptive order that AVIF may obtain in the future. AVIF will notify LBL (i) of
any changes of interpretations or amendments to any Mixed and Shared Funding
exemptive order it obtains in the future, and (ii) of any proposal to be
submitted to Participants for their approval (prior to any Board of Trustees
meeting of AVIF at which such proposals are presented).
Section 11. Foreign Tax Credits
AVIF agrees to consult in advance with LBL concerning any decision to elect or
not to elect pursuant to Section 853 of the Code to pass through the benefit of
any foreign tax credits to its shareholders.
Section 12. Indemnification
12.1 Of AVIF and AIM by LBL and the Underwriter.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
LBL and the Underwriter each agrees to indemnify and hold harmless
AVIF, its affiliates (including AIM) except Participants, and each of
their respective trustees and officers, and each person, if any, who
controls AVIF or its affiliates (including AIM) within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 12.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the
written consent of LBL) or actions in respect thereof (including, to
the extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages,
liabilities or actions are related to the sale or acquisition of
AVIF's Shares and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, the
Policies, or sales literature or advertising for the Policies (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 LBL or the Underwriter
by or on behalf of AVIF for use in any Account's 1933 Act
registration statement, any Account Prospectus, the Policies, or
sales literature or advertising or otherwise for use in
connection with the sale of Policies or Shares (or any amendment
or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of LBL or the Underwriter and on
which such persons have reasonably relied) or the negligent,
illegal or fraudulent conduct of LBL, the Underwriter or their
respective affiliates or persons under their control (including,
without limitation, their employees and "Associated Persons," as
that term is defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the
Policies or Shares; or
(iii)arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing, 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 AVIF or AIM by or on behalf of LBL, the
Underwriter or their respective affiliates for use in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by LBL or the Underwriter to
perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement, or
any material breach of any representation and/or warranty made by
LBL or the Underwriter in this Agreement or arise out of or
result from any other material breach of this Agreement by LBL or
the Underwriter; or
(v) arise as a result of failure by the Policies issued by LBL to
qualify as life insurance, endowment, or annuity contracts under
the Code, otherwise than by reason of any Fund's failure to
comply with Subchapter M or Section 817(h) of the Code.
(b) Neither LBL nor the Underwriter shall be liable under this Section
12.1 with respect to any losses, claims, damages, liabilities or
actions to which an Indemnified Party would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance by that Indemnified Party of its duties or by reason of
that Indemnified Party's reckless disregard of obligations or duties
(i) under this Agreement, or (ii) to AVIF.
(c) Neither LBL nor the Underwriter shall be liable under this Section
12.1 with respect to any action against an Indemnified Party unless
AVIF or AIM shall have notified LBL or the Underwriter in writing
within a reasonable time after the summons or other first legal
process giving information of the nature of the action 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 LBL or the Underwriter of any such action shall
not relieve LBL or the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 12.1. Except as otherwise
provided herein, in case any such action is brought against an
Indemnified Party, LBL or the Underwriter shall be entitled to
participate, at its own expense, in the defense of such action and LBL
or the Underwriter also shall be entitled to assume the defense
thereof, with counsel approved by the Indemnified Party named in the
action, which approval shall not be unreasonably withheld. After
notice from LBL or the Underwriter to such Indemnified Party of its
election to assume the defense thereof, the Indemnified Party will
cooperate fully with LBL and shall bear the fees and expenses of any
additional counsel retained by it, and LBL will not be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
12.2 Of LBL and the Underwriter by AVIF and AIM.
(a) Except to the extent provided in Sections 12.2(d), 12.2(e) and
12.2(f), below, to the extent permitted by law, AVIF and/or AIM each
agrees to indemnify and hold harmless LBL, the Underwriter, their
respective affiliates, and each of their respective directors and
officers, and each person, if any, who controls LBL, the Underwriter,
or their respective affiliates within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 12.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of AVIF
and/or AIM) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common
law, or otherwise, insofar as such losses, claims, damages,
liabilities or actions are related to the sale or acquisition of
AVIF's Shares and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus or sales literature
or advertising of AVIF (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 AVIF or its
affiliates by or on behalf of LBL or its affiliates for use in
AVIF's 1933 Act registration statement, AVIF Prospectus, or in
sales literature or advertising (or any amendment or supplement
to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising for the
Policies, or any amendment or supplement to any of the foregoing,
not supplied for use therein by or on behalf of AVIF or its
affiliates and on which such persons have reasonably relied) or
the negligent, illegal or fraudulent conduct of AVIF, its
affiliates or persons under their control (including, without
limitation, their employees and "Associated Persons"), in
connection with the sale or distribution of AVIF Shares; or
(iii)arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, sales
literature or advertising covering the Policies, or any amendment
or supplement to any of the foregoing, 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 in conformity with information furnished to LBL, the
Underwriter, or their respective affiliates by AVIF or AIM for
use in any Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Policies, or any amendment or supplement to any of the foregoing;
or
(iv) arise as a result of any failure by AVIF or AIM to perform their
respective obligations, provide the services (including, but not
limited to, the provision of correct net asset value) and furnish
the materials required of them under the terms of this Agreement,
or any material breach of any representation and/or warranty made
by AVIF or AIM in this Agreement or arise out of or result from
any other material breach of this Agreement by AVIF or AIM.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e)
hereof, AVIF agrees to indemnify and hold harmless the Indemnified
Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, the
written consent of AVIF) or actions in respect thereof (including, to
the extent reasonable, legal and other expenses) to which the
Indemnified Parties may become subject directly or indirectly under
any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and
regulations thereunder, including, without limitation, any income
taxes and related penalties, rescission charges, liability under state
law to Participants asserting liability against LBL or the Underwriter
pursuant to the Policies, the costs of any ruling and closing
agreement or other settlement with the IRS, and the cost of any
substitution by LBL of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium
for each Account that LBL reasonably deems necessary or appropriate as
a result of the noncompliance.
(c) AVIF shall not be liable under this Section 12.2 with respect to any
losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of such Indemnified
Party's reckless disregard of its obligations and duties (i) under
this Agreement, or (ii) to LBL, each Account, the Underwriter or
Participants.
(d) AVIF shall not be liable under this Section 12.2 with respect to any
action against an Indemnified Party unless the Indemnified Party shall
have notified AVIF in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the action 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 AVIF of any
such action shall not relieve AVIF from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 12.2. Except as otherwise
provided herein, in case any such action is brought against an
Indemnified Party, AVIF will be entitled to participate, at its own
expense, in the defense of such action and also shall be entitled to
assume the defense thereof, with counsel approved by the Indemnified
Party named in the action, which approval shall not be unreasonably
withheld. After notice from AVIF to such Indemnified Party of AVIF's
election to assume the defense thereof, the Indemnified Party will
cooperate fully with AVIF and shall bear the fees and expenses of any
additional counsel retained by it, and AVIF will not be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
(e) In no event shall AVIF be liable under the indemnification provisions
contained in this Agreement to any individual or entity, including
without limitation, LBL, the Underwriter, or any other Participating
Insurance Company or any Participant, with respect to any losses,
claims, damages, liabilities or expenses that arise out of or result
from (i) a breach of any representation, warranty, and/or covenant
made by LBL or the Underwriter hereunder or by any Participating
Insurance Company under an agreement containing substantially similar
representations, warranties and covenants; (ii) the failure by LBL or
any Participating Insurance Company to maintain its segregated asset
account (which invests in any Fund) as a legally and validly
established segregated asset account under applicable state law and as
a duly registered unit investment trust under the provisions of the
1940 Act (unless exempt therefrom); or (iii) the failure by LBL or any
Participating Insurance Company to maintain its variable annuity
and/or variable life insurance contracts (with respect to which any
Fund serves as an underlying funding vehicle) as life insurance,
endowment or annuity contracts under applicable provisions of the
Code; provided, however, that the limitation of liability contained in
this paragraph (e) shall not apply if the breach or failures described
in subparagraphs (i), (ii) and (iii), above, by LBL or any
Participating Insurance Company resulted from the failure of AVIF to
comply with the requirements of Subchapter M or Section 817(h) of the
Code.
12.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party referred to
in Sections 12.1(c) or 12.2(d) above of participation in or control of any
action by the Indemnifying Party will in no event be deemed to be an admission
by the Indemnifying Party of liability, culpability or responsibility, and the
Indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
12.4 Successors.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
Section 13. Applicable Law
This Agreement will be construed and the provisions hereof interpreted under and
in accordance with Delaware law, without regard for that state's principles of
conflict of laws.
Section 14. Execution in Counterparts
This Agreement may be executed simultaneously in two or more counterparts, each
of which taken together will constitute one and the same instrument.
Section 15. 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.
Section 16. 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.
Section 17. Headings
The Table of Contents and headings used in this Agreement are for purposes of
reference only and shall not limit or define the meaning of the provisions of
this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS
Attest: By:
--------------------- --------------------------
Name: βββββ β. ββββββ Name: βββββ β. βββββββ
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: By:
--------------------- --------------------------
Name: βββββ β. ββββββ Name: βββββββ β. ββββ
Title: Assistant Secretary Title: President
LINCOLN BENEFIT LIFE, on behalf of itself and its separate
accounts
Attest: By:
---------------------- -------------------------
Name: Name:
---------------------- -------------------------
Title: Title:
---------------------- -------------------------
ALFS, INC.
Attest: By:
---------------------- -------------------------
Name: Name:
---------------------- -------------------------
Title: Title:
---------------------- -------------------------
SCHEDULE A
FUNDS AVAILABLE UNDER THE POLICIES
AIM Variable Insurance Funds
AIM V.I. Dent Demographic Trends Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Lincoln Benefit Life Variable Annuity Separate Account A
POLICIES FUNDED BY THE SEPARATE ACCOUNTS
LBL Advantage Variable Annuity
SCHEDULE B
AIM's Pricing Error Policies
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net
asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered
immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following
thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and
the correct net asset value is less than .5% of the correct net asset
value, AIM will reimburse the affected Fund to the extent of any loss
resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and
the correct net asset value is .5% of the correct net asset value or
greater, then AIM will determine the impact of the error to the
affected Fund and shall reimburse such Fund (and/or LBL, as
appropriate) to the extent of any loss resulting from the error. To
the extent that an overstatement of net asset value per share is
detected quickly and LBL has not mailed redemption checks to
Participants, LBL and AIM agree to examine the extent of the error to
determine the feasibility of reprocessing such redemption transaction
(for purposes of reimbursing the Fund to the extent of any such
overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to
paragraph (b), above, AIM shall reimburse LBL for LBL's reprocessing costs in
the amount of $3.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its
Board of Trustees. AIM agrees to use its best efforts to notify LBL at least
five (5) days prior to any such meeting of the Board of Trustees of AVIF to
consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
----------------------------------- --------------------------------------- --------------------------------------
DESCRIPTION LBL AIM/AVIF
----------------------------------- --------------------------------------- --------------------------------------
----------------------------------- --------------------------------------- --------------------------------------
Registration
Prepare and file registration Account registration statements Fund registration statements
statements1
Account fees
Payment of fees Fund fees
----------------------------------- --------------------------------------- --------------------------------------
----------------------------------- --------------------------------------- --------------------------------------
Prospectuses
Typesetting Account Prospectuses Fund Prospectuses
Printing2 Account Prospectuses Fund Prospectuses
----------------------------------- --------------------------------------- --------------------------------------
----------------------------------- --------------------------------------- --------------------------------------
SAIs
Typesetting Account SAIs Fund SAIs
Printing Account SAIs Fund SAIs
----------------------------------- --------------------------------------- --------------------------------------
----------------------------------- --------------------------------------- --------------------------------------
Supplements (to Prospectuses or
SAIs)
Typesetting and Printing Account Supplements (unless changes Fund Supplements (unless changes
relate only to the Fund) relate only to the Account)
Fund Supplements (for changes that Account Supplements (for changes
relate only to Account) that relate only to Fund)
----------------------------------- --------------------------------------- --------------------------------------
----------------------------------- --------------------------------------- --------------------------------------
Financial Reports
Typesetting Account Reports Fund Reports
Printing2 Account Reports Fund Reports
----------------------------------- --------------------------------------- --------------------------------------
----------------------------------- --------------------------------------- --------------------------------------
Mailing and Distribution3
To Contract owners Account and Fund Prospectuses, SAIs, Supplements (for which AIM/AVIF is
Supplements (for which LBL is responsible to typeset and print)
responsible to typeset and print) and
Reports
Supplements (for which LBL is Account and Fund Prospectuses, SAIs,
To Offerees responsible to typeset and print) Supplements (for which AIM/AVIF is
responsible to typeset and print)
and Reports
----------------------------------- --------------------------------------- --------------------------------------
----------------------------------- --------------------------------------- --------------------------------------
Proxies4
Typesetting, printing and mailing Account and Fund Proxies where the Account and
Fund Proxies where the of proxy solicitation materials matters submitted are
solely Account matters submitted are solely Fund and voting instruction related
related solicitation materials and tabulation of proxies to Participants
----------------------------------- --------------------------------------- --------------------------------------
----------------------------------- --------------------------------------- --------------------------------------
Other (Sales Related)
Contract owner communication Account related items Fund related items
Distribution
Policies
Administration
Account (Policies)
----------------------------------- --------------------------------------- --------------------------------------
1Includes all filings and costs necessary to keep registrations current
and effective; including, without limitation, filing Forms N-SAR and Rule 24f-2
Notices as required by law.
2To the extent that documents prepared by LBL and AIM are printed
together, the printing cost shall be allocated in proportion to the number of
pages attributable to each document.
3To the extent required by law.
4When proxy materials are required for both Account and Fund matters,
the costs shall be split proportionately based upon those materials related
solely to the Account and those materials related solely to the Fund. The cost
with respect to joint materials shall be allocated evenly between LBL and AIM.