DISTRIBUTION AGREEMENT
BETWEEN
LSA VARIABLE SERIES TRUST AND
ALLSTATE LIFE FINANCIAL SERVICES, INC.
AGREEMENT, dated as of October 1, 1999, by and between LSA Variable Series
Trust (the "Trust") and Allstate Life Financial Services, Inc. ("ALFS").
W IT N E S S ET H:
WHEREAS, the Trust is a Delaware business trust whose shareholders are and
will be separate accounts in unit investment trust form ("Eligible Separate
Accounts") of insurance companies ("Participating Insurance Companies"); and
WHEREAS, such Participating Insurance Companies issue, among other
products, variable insurance and annuity products ("Variable Products") whose
net premiums, contributions or other considerations may be allocated to Eligible
Separate Accounts for investment in the Trust; and
WHEREAS, the Trust's shares will not be sold except in connection with such
Variable Products outside the separate account context; and
WHEREAS, the Trust desires that ALFS undertake marketing activities with
respect to the Shares of the Trust's constituent series or investment portfolios
("Portfolios") Portfolios; and
WHEREAS, the Trust is registered as an open-end investment company under
the Investment Company Act of 1940, as amended ("Investment Company Act"); and
WHEREAS, the Investment Company Act prohibits any principal underwriter for
a registered open-end management investment company from offering for sale,
selling, or delivering after sale any security of which such company is the
issuer, except pursuant to a written contract with such investment company, and
ALFS will be a distributor for sale of the shares issued by the Trust; and
WHEREAS, ALFS is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended, ("Securities Exchange Act") and is a member of
the National Association of Securities Dealers, Inc. ("NASD").
NOW THEREFORE, the Trust and ALFS agree as follows:
SECTION 1. The Trust has adopted a form of Participation Agreement, which
was approved by the Board of Trustees of the Trust. This Agreement shall be
subject to the provisions of the form of Participation Agreement, the terms of
which are incorporated herein by reference, made a part hereof and controlling.
The form of Participation Agreement may be amended or superseded, without prior
notice, and this Agreement shall be deemed amended to the extent the form of
Participation Agreement is amended or superseded. ALFS represents and warrants
that it will act in a manner consistent with such form of Participation
Agreement as it is currently set forth and as it may be amended or superseded,
so long as ALFS serves as the principal underwriter of the shares of the Trust
(the "Shares").
SECTION 2. ALFS is hereby authorized, from time to time, to enter into
separate written agreements ("Sales Agreements" or, individually, a "Sales
Agreement"), on terms and conditions not inconsistent with this Agreement, with
Participating Insurance Companies which have Eligible Separate Accounts and
which agree to participate in the distribution of the Trust's shares, directly
or through affiliated broker dealers by means of distribution of Variable
Products and to use their best efforts to solicit applications for Variable
Products. ALFS may not enter into any Sales Agreement with any Participating
Insurance Company that is more favorable than that maintained with any other
Participating Insurance Company and Eligible Separate Account, except that not
all Portfolios of the Trust need be made available for investment by all
Participating Insurance Companies, Eligible Separate Accounts or Variable
Products. The Board of Trustees of the Trust may, in its sole discretion,
determine that certain Portfolios and classes of shares of the Trust shall be
available only to certain types of Variable Products or to a single
Participating Insurance Company and its affiliates.
SECTION 3. Such Participating Insurance Companies and their agents or
representatives soliciting applications for Variable Products shall be duly and
appropriately licensed, registered or otherwise qualified for the sale of
Variable Products under any applicable insurance laws and any applicable
securities laws of one or more states or other jurisdictions in which Variable
Products may be lawfully sold. Each such Participating Insurance Company shall,
when required by law, be both registered as a broker-dealer under the Securities
Exchange Act and a member of the NASD. Each such Participating Insurance Company
shall agree to comply with all laws and regulations, whether federal or state,
and whether relating to insurance, securities or other general areas, including
but not limited to the recordkeeping and sales supervision requirements of such
laws and regulations.
SECTION 4. The Trust's shares are divided into series or Portfolios, each
representing a different portfolio of investments. The Trust's Portfolios and
any restrictions on availability for shares relating thereto are set forth in
Schedule A hereto, which may be amended from time to time.
Purchases and redemptions of the Trust's shares of each Portfolio shall be
at the net asset value therefor, computed as set forth in the most recent
relevant Prospectus and Statement of Additional Information relating to the
Trust's contained in its Registration Statement on Form N-1A, or any amendments
thereto (respectively, "Trust Prospectus" and "SAI"), and any supplements
thereto and shall be submitted by the Participating Insurance Company to the
Trust's transfer agent pursuant to procedures and in accordance with payment
provisions adopted by ALFS and the Trust from time to time. The Trust's shares
may not be sold or transferred, except to an Eligible Separate Account or
Qualified Plan, without the prior approval of the Trust's Board of Trustees.
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SECTION 5. The Trust shall not pay any compensation to ALFS for services as
a distributor hereunder, nor shall the Trust reimburse ALFS for any expenses
related to such services. ALFS may, but need not, pay or charge Participating
Insurance Companies pursuant to Sales Agreements, as described in Section 2
hereof.
SECTION 6. The Trust represents to ALFS that the Trust Prospectus and SAI,
as of their respective effective dates, contain all statements and information
which are required to be stated therein by the Securities Act of 1933, as
amended ("Securities Act"), and in all respects conform to the requirements
thereof, and neither the Trust Prospectus nor the SAI include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the foregoing representations shall not apply to
information contained in or omitted from the Trust Prospectus and SAI in
reliance upon, and in conformity with, written information furnished by ALFS
specifically for use in the preparation thereof.
In this connection, ALFS acknowledges that the day-to-day operations of the
Trust, including without limitation, investment management, securities brokerage
allocation, cash control, accounting, recordkeeping and other administrative,
marketing and regulatory compliance functions, are carried on and may in the
future be carried on by LSA Asset Management LLC ("Asset Management") affiliates
of Asset Management and other parties unaffiliated with Asset Management on
behalf of the Trust (collectively, the "Preparing Parties"), under various
agreements and arrangements, and that such activities in large measure provide
the basis upon which statements and information are included or omitted from the
Trust Prospectus and SAI. ALFS further acknowledges that because of the
foregoing arrangements, the preparation of the Trust Prospectus and SAI is
substantially in the control of the Preparing Parties, subject to the broad
supervisory authority and responsibility of the Trust's Board of Trustees, and
that, essentially, the only Trust Prospectus or SAI information not
independently known to, or prepared by, the Preparing Parties is personal
information as to each Trustee's full name, age, background, business experience
and other personal information that may require disclosures under securities
laws and for which the Preparing Parties necessarily must rely on each such
Trustee to produce.
SECTION 7. The Trust will periodically prepare Prospectuses (and, if
applicable, SAIs) and any supplements thereto, proxy materials and annual and
semi-annual reports (collectively, the "Documents") and shall, in accordance
with the form of Participation Agreement, provide sufficient copies of such
Documents or shall make camera ready copy available to ALFS for reproduction by
ALFS or the Participating Insurance Companies. With respect to Documents
provided to existing owners of Variable Products, the cost of preparing,
printing, mailing or otherwise distributing such Documents shall be borne by the
Trust. With respect to the Trust's shares, the Trust shall not pay the cost of
printing, mailing or otherwise distributing such Documents except as specified
in this Section 7. The Trust will use its best efforts to provide notice to ALFS
of anticipated filings or supplements. ALFS or the Participating Insurance
Companies may alter the form of some or all of the Documents, with the prior
approval of the Trust's officers and legal counsel. Any preparation costs
associated with altering the form of the Documents will be borne by ALFS or the
Participating Insurance Companies, not the Trust.
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SECTION 8. ALFS and officers of the Trust may, from time to time, authorize
descriptions of the Trust for use in sales literature or advertising by the
Participating Insurance Companies (including brochures, letters, illustrations
and other similar materials, whether transmitted directly to potential
applicants or published in print or audio-visual media), which authorization
will not be unreasonably withheld or delayed.
SECTION 9. ALFS shall furnish to the Trust, at least quarterly, reports as
to the sales of Trust's shares made pursuant to this Agreement. These reports
may be combined with any similar report prepared by ALFS or any of the Preparing
Parties.
SECTION 10. ALFS shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of ALFS, the Trust, or any Participating
Insurance Company, present or future, any information, reports or other material
which any such body by reason of this Agreement may request or require as
authorized by applicable laws or regulations.
SECTION 11. This Agreement shall be subject to the provisions of the
Investment Company Act, the Securities Exchange Act and the Securities Act and
the rules, regulations, and rulings thereunder and of the NASD, from time to
time in effect, including such exemptions and no-action positions as the
Securities and Exchange Commission or its staff may grant, and the terms hereof
shall be interpreted and construed in accordance therewith. Without limiting the
generality of the foregoing, (a) the term "assigned" shall not include any
transaction exempted from section 15(b)(2) of the Investment Company Act and (b)
the vote of the persons having voting rights in respect of the Trust referred to
in Section 12 shall be the affirmative votes of the lesser of (i) the holders of
more than 50% of all votes in respect of shares entitled to be cast in respect
of the Trust or (ii) the holders of at least 67% of the votes in respect of
shares which are present at a meeting of such persons if the holders of more
than 50% of all votes in respect of shares entitled to be cast in respect of the
Trust are present or represented by proxy at such meeting, in either ease voted
in accordance with the provisions contained in the form of Participation
Agreement or any policies on conflicts adopted by the Trust's Board of Trustees.
SECTION 12. This Agreement shall continue in effect only so long as such
continuance is specifically approved at least annually by a majority of the
Trustees of the Trust who are not interested persons of the Trust or ALFS
("Independent Trustees") and by (a) persons having voting rights in respect of
the Trust, by the vote stated in Section 11, voted in accordance with the
provisions contained in the form of Participation Agreement or any policies on
conflicts adopted by the Board of Trustees of the Trust, or (b) the Board of
Trustees of the Trust. This Agreement may be terminated at any time, without
penalty, by a majority of the Independent Trustees or by persons having voting
rights in respect of the Trust by the vote stated in Section 11.
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SECTION 13. This Agreement shall terminate automatically if it shall be
assigned.
SECTION 14. The Trust shall indemnify and hold harmless ALFS from any and
all losses, claims, damages or liabilities (or actions in respect thereof) to
which ALFS may be subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or result from
negligent, improper, fraudulent or unauthorized acts or omissions by the Trust
or its officers, trustees, agents or representatives, other than acts or
omissions caused directly or indirectly by ALFS.
ALFS will indemnify and hold harmless the Trust, its officers, trustees,
agents and representatives against any losses, claims, damages or liabilities,
to which the Trust its officers, trustees, agents and representatives may become
subject, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of any material fact contained in the Trust Prospectus
and/or SAI or any supplements thereto; (ii) the omission or alleged omission to
state any material fact required to be stated in the Trust Prospectus and/or SAI
or any supplements thereto or necessary to make the statements therein not
misleading; or (iii) other misconduct or negligence of ALFS in its capacity as a
principal underwriter of the Trust's shares and will reimburse the Trust, its
officers, Trustees, agents and representatives for any legal or other expenses
reasonably incurred by any of them in connection with investigating or defending
against such loss, claim, damage, liability or action; provided, however, that
ALFS shall not be liable in any such instance to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the Trust
Prospectus and/or SAI or any supplement in good faith reliance upon and in
conformity with written information furnished by the Preparing Parties
specifically for use in the preparation of the Trust Prospectus and/or SAI.
SECTION 15. A copy of the Agreement and Declaration of Trust of the Trust
is on file with the Secretary of State of Delaware and notice is given hereby
that this Agreement is executed on behalf of the trustees of the Trust as
trustees and not individually, and that the obligations of or arising out of
this Agreement are not binding upon any of the trustees or shareholders
individually but are binding only upon the assets and property of each
Portfolio.
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WHEREOF, the parties hereto have caused this Agreement to be duly executed
as of the day and year first above written.
TRUST
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board of Trustees
ALLSTATE LIFE FINANCIAL SERVICES, INC.
By: /s/▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive Officer
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SCHEDULE A
Portfolios of
LSA Variable Series Trust
Focused Equity
Growth Equity
Disciplined Equity
Value Equity
Balanced
Emerging Growth Equity
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