PARTICIPATION AGREEMENT
-----------------------
AMONG
LINCOLN BENEFIT LIFE COMPANY
AND
VARIABLE INSURANCE PRODUCTS FUND
AND
FIDELITY DISTRIBUTORS CORPORATION
THIS AGREEMENT is entered into this 29th day of November, 1993 by and among
LINCOLN BENEFIT LIFE COMPANY (the "Company") on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter referred to as
the "Account"), the VARIABLE INSURANCE PRODUCTS FUND (the "Fund"), an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts, and FIDELITY DISTRIBUTORS CORPORATION (the "Underwriter").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation
agreements substantially identical to this Agreement (hereinafter
"Participating Insurance Companies"); and
2
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated October 15, 1985 (File No. 812-6102), granting Participating
Insurance Companies and variable life and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a) and (b)
of the Investment Company Act of 1940, as amended, (hereinafter the "1940 Act")
and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent necessary
to permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
3
WHEREAS, the Company has registered or will register certain variable
annuity and variable life contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable life contracts; and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of the Account to fund certain of the aforesaid variable life contracts and the
Underwriter is authorized to sell such shares to unit investment trusts such as
the Account at net asset value;
4
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Account, the Fund and the Underwriter agree as follows:
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ARTICLE I
SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the Fund
which the Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from
the Account and receipt by such designee shall constitute receipt by the
Fund, provided that the Fund receives notice of such order by 12:00 noon
(Boston time) on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and
on which the Fund calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.
1.2 The Fund agrees to make its shares available indefinitely for purchase at
the applicable net asset value per share by the Company and its Account on
those days on which the Fund calculates its net asset value pursuant to
rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the
New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Trustees")
may refuse to sell shares of any Portfolio to any person or
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suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Trustees acting in
good faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be sold
only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of
Article II of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt by the
Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from the Account and receipt by such designee shall
constitute receipt by the Fund, provided that the Fund receives notice of
such request for redemption on the next following Business Day.
7
1.6 The Company agrees to purchase and redeem the shares of each Portfolio
offered by the then current prospectus of the Fund and in accordance with
the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life contracts with the form number(s) which
are listed on Schedule A attached hereto and incorporated herein by this
reference, as such Schedule A may be amended from time to time hereafter by
mutual written agreement of the parties hereto (the "Contracts"), shall be
invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, or in the Company's
general account, provided that such amounts may also be invested in an
investment company other than the Fund if (a) such other investment
company, or series thereof, has investment objectives or policies that are
substantially different from the investment objectives and policies of all
the Portfolios of the Fund; or (b) the Company gives the Fund and the
Underwriter 45 days written notice of its intention to make such other
investment company available as a funding vehicle for the Contracts; or (c)
such other investment company was available as a funding vehicle for the
Contracts prior to the date of this Agreement and the Company so informs
the Fund and Underwriter prior to their signing this Agreement (a list of
such funds appearing on Schedule B to this Agreement); or (d) the Fund or
8
Underwriter consents to the use of such other investment company.
1.7 The Company shall pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by
wire. For purpose of Sections 2.10 and 2.11, upon receipt by the Fund
of the federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Fund.
1.8 Issuance and transfer of the Funds' shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Fund will be recorded in an appropriate title for
the Account or the appropriate subaccount of the Account.
1.9 The Fund shall furnish same day notice (by wire or telephone, followed by
written confirmation) to the Company of any income, dividends or capital
gain distributions payable on the Fund's shares. The Company hereby elects
to receive all such dividends and distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company
reserves the right to revoke this election and to receive all such
dividends and distributions in cash. The Fund shall notify the Company of
the number of shares so issued as payment of such dividends and
distributions.
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1.10 The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its bet
efforts to make such net asset value per share available by 7:00 p.m.
(Boston time).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act, that the Contracts will be issued and sold
in compliance in all material respects with all applicable Federal and
State laws, and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable laws and that it has
legally and validly established the Account prior to any issuance or sale
thereof as a segregated asset account under the Nebraska Insurance Code and
has registered or, prior to any issuance or sale of the Contracts, will
register the Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for
the Contracts.
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2.2 The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, shall be duly authorized
for issuance and sold in compliance with the laws of the Commonwealth of
Massachusetts and all applicable federal and state securities laws and that
the Fund is and shall remain registered under the 1940 Act. The Fund shall
amend the Registration Statement for its shares under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund shall register and qualify the shares for
sale in accordance with the laws of the various states only if and to the
extent deemed advisable by the Fund or the Underwriter.
2.3 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might not
so qualify in the future.
2.4 The Company represents that the Contracts are currently treated as life
insurance or annuity contracts, under applicable provisions of the Code,
and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter immediately upon having
11
a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes
to have a board of trustees, a majority of whom are not interested persons
of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6 The Fund makes no representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and investment policies)
complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees
and expenses are and shall at all times remain in compliance with the laws
of the State of Nebraska and the Fund and the Underwriter represent that
their respective operations are and shall at all times remain in material
compliance with the laws of the State of Nebraska to the extent required to
perform this Agreement.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-
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dealer with the SEC. The Underwriter further represents that it will sell
and distribute the Fund shares in accordance with the laws of the State of
Nebraska and all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and
will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered under all applicable federal and state securities
laws and that the Adviser shall perform its obligations for the Fund in
compliance in all material respects with the laws of the State of Nebraska
and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are and shall continue
to be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Fund in an amount not less than the minimal coverage
as required currently by Section 17(g) of the Investment Company Act of
1940 or related provisions as may be promulgated from time to time. The
aforesaid Bond shall include coverage for larceny and
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embezzlement and shall be issued by a reputable bonding company.
2.11 The Company represents and warrants that all of its directors, officers,
employees, and other individuals/entities who are directly dealing with the
money and/or securities of the Fund shall continue to be at all times
covered by a blanket fidelity bond or similar coverage in an amount not
less than the minimal coverage as required currently by Section 17(g) of
the Investment Company Act or related provisions as may be promulgated from
time to time. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bond company.
ARTICLE III
PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 The Underwriter shall provide the Company (at the Company's expense) with
as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new
prospectus as set in type at the Fund's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is amended) to have the
prospectus
14
for the Contracts and the Fund's prospectus printed together in one
document at the Company's expense.
3.2 The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund), and the Underwriter (or the Fund), at its
expense, shall print and provide such statement free of charge to the
Company and to any owner of a Contract or prospective owner who requests
such Statement.
3.3 The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 If required by current law, the Company shall:
(i) Solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received from
Contract owners; and
(iii) vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such portfolio for which
instructions have been received, to the extent that the
Securities and Exchange Commission continues to interpret the
Investment Company Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to
vote Fund shares held in any
15
segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a
manner consistent with the standards set forth in Schedule C
hereto, and incorporated herein by this reference, which
standards will also be provided to the other Participating
Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders and, in particular, the Fund will either provide for annual
meetings or comply with Section 16(c) of the 1940 Act (although the Fund is
not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund
will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to
periodic elections of trustees and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV
SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material
in which the Fund or its
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Investment Adviser or the Underwriter is named, at least fifteen Business
Days prior to its use. No such material shall be used if the Fund or its
designee object to such use within ten Business Days after receipt of such
material.
4.2 The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares,
as such documents may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund or its designee or by the
Underwriter, except with the permission of the Fund or the Underwriter or
the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company and/or its separate
account(s) is named at least fifteen Business Days prior to its use. No
such material shall be used if the Company or its designee object to such
use within ten Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other
17
than the information or representations contained in a registration
statement or prospectus for the Contracts, as such registration
statement and prospectus may be amended or supplemented from time
to time, or in published reports for the Account which are in the public
domain or approved by the Company for distribution to Contract owners,
or in sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above that relate to the Fund or
its shares, contemporaneously with the filing of such document with the
Securities and Exchange Commission or other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above,
that relate to the contracts or the Account, contemporaneously with the
filing of such document with the Securities and Exchange Commission.
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4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such
as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media),
sales literature (I.E., any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other
communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements
of Additional Information, shareholder reports, and proxy materials.
ARTICLE V
FEES AND EXPENSES
5.1 The Fund and Underwriter shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts to the
19
extent allowed by law and as further agreed in writing. Such payments
will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the
Underwriter. No such payment shall be made directly by the Fund.
5.2 All expenses incident to performance by the Fund under this Agreement shall
be paid by the Fund. The Fund shall ensure that all its shares are
registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses for: the cost of registration and qualification of the
Fund's shares; preparation and filing of the Fund's prospectus and
registration statement; proxy materials and reports; setting the prospectus
in type; setting in type and printing the proxy materials and reports to
shareholders (including the cost of printing a prospectus that constitutes
an annual report); the preparation of all statements and notices required
by any federal or state law; and all taxes on the issuance or transfer of
the Fund's shares.
5.3 The Company shall bear the expense of printing and distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing
the Fund's proxy materials and reports to owners of Contracts issued by the
Company.
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ARTICLE VI
DIVERSIFICATION
6. The Fund will at all times invest money from the Contracts in such a manner
as to ensure that the Contracts will be treated as variable contracts under
the Internal Revenue Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Regulation Section 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such
Section or Regulation.
ARTICLE VII
POTENTIAL CONFLICTS
7.1 The Board of Trustees of the Fund (the "Board") will monitor the Fund for
the existence of any material irreconcilable conflict between the interests
of the contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons,
including:
(i) an action by any state insurance regulatory authority;
(ii) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private
letter ruling, no-action or
21
interpretative letter, or any similar action by insurance, tax,
or securities regulatory authorities;
(iii) an administrative or judicial decision in any relevant proceeding;
(iv) the manner in which the investments of any Portfolio are being
managed;
(v) a difference in voting instructions given by variable annuity
contract and variable life insurance contract owners; or
(vi) a decision by an insurer to disregard the voting instructions of
contract owners.
The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2 The Company will report any potential or existing conflicts of which it is
aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the
Board with all information as reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense
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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 irreconcilable material conflict, up to and including:
(i) withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such assets
in a different investment medium, including (but not limited to)
another Portfolio of the Fund, or submitting the question whether
such segregation should be implemented to a vote of all affected
contract owners and, as appropriate, segregating the assets of any
appropriate group (I.E., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option
of making such a change; and
(ii) establishing a new registered management investment company or
managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by the
Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the Account's
investment in the Fund and terminate this Agreement provided, however, that
such withdrawal and
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termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Any such withdrawal and termination
must take place within six (6) months after the Fund gives written notice
that this provision is being implemented, and until the end of that six
month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares
of the Fund.
7.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators', then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six
months after the Board informs the Company in writing that it has
determined that such decision has created an irreconcilable material
conflict, provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the
Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies
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any irreconcilable material conflict, but in no event will the Fund be
required to establish a new funding medium for the Contracts. The
Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely
affected by the irreconcilable material conflict. In the event that
the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will
withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by
any such material irreconcilable conflict as determined by a majority
of the disinterested members of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or a
subsequent Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Shared Funding Exemptive Order)
on terms and conditions materially different from those contained in the
Shared Funding Exemptive Order, then (a) the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3(T), and related Rules as
25
amended, to the extent such rules are applicable; and (b) Sections 3.4,
3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect
only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a) The Company agrees to indemnify and hold harmless the Fund
and each of its Trustees and officers and each person, if
any, who controls the Fund within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 8.1) against any all losses,
claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or
litigation (including legal and other expenses), to which
the Indemnified Parties may become subject under any
statute, regulation, or at common law, insofar as such
losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale
or acquisition of the fund shares in connection with
Contracts and:
26
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the Registration Statement or prospectus for the
Contracts or contained in the Contracts or sales literature
for the Contracts or any amendment or supplement to any of
the foregoing, (or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading), provided that
this Agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration
Statement or prospectus for the Contracts or in the
Contracts or sales literature (or any amendment or
supplement) or otherwise for use related to the sale of
Fund shares in connection with the Contracts; or
(ii) arise out of or are as a result of untrue statements or
misrepresentations (other than statements or
representations contained in the Registration Statement,
prospectus or sales literature of the Fund not supplied by
the
27
Company or persons under its control) or wrongful conduct
of the Company or persons under its control, with respect
to the sale or distribution of the Contracts; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or
any amendment thereof or supplement thereto (or the
omission to state therein a material fact required to be
stated therein or necessary to make the statement therein
not misleading) if such a statement or omission was made in
reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement;
(vi) or arise out of or result from any other material breach of
this Agreement by the Company;
as limited by and in accordance with the provision of Section 8.1(b) and
8.1(c) hereof.
28
8.1(b) The Company shall not be liable under this Indemnification
provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c) The Company shall not be liable under this Indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the
Company in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this
Indemnification provision. In case any such action is brought
against the Indemnified Parties, the
29
Company shall be entitled to participate, at its own expense, in
the defense of such action. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other
expense subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
8.1(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the
Contracts or the operation of the Fund.
8.2 INDEMNIFICATION BY THE UNDERWRITER
8.2(a) The Underwriter agrees to indemnify and hold harmless the
Company, its affiliated principal underwriter of the Contracts,
and each of their directors, officers and employees and each
person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section
30
8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of
the Underwriter) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject
under any statute, regulation or common law, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Registration Statement or prospectus or sales
literature of the Fund or any amendment or supplement to
any of the foregoing (or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading), provided that
this Agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement
31
or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or
sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful
conduct of the Fund, Adviser or Underwriter or persons
under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the
Contracts, or any amendment thereof or supplement thereto,
(or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statement or statements therein not misleading),
if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Underwriter or the Fund; or
32
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in
this Agreement; or
(vi) arise out of or result from any other material breach of
this Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b) The Underwriter shall not be liable under this Indemnification
provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company or the Account,
whichever is applicable.
8.2(c) The Underwriter shall not be liable under this Indemnification
provision with respect to any claim
33
made against an Indemnified Party unless such Indemnified Party
shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any
designated agent), but failure to notify the Underwriter of any
such claim shall not relieve 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
Indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled
to participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After
notice from the Underwriter to such party of the Underwriter's
election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such
party under this Agreement for any legal or other expenses
subsequently incurred by such party
34
independently in connection with the defense thereof other than
reasonable costs of investigation.
8.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.3 INDEMNIFICATION BY THE FUND
8.3(a) The Fund agrees to indemnify and hold harmless the Company, its
affiliated principal underwriter of the Contracts, and each of
their directors, officers and employees and each person, if any,
who controls the Company within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of
this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
written consent of the Fund) or litigation (including legal and
other expenses) to which the Indemnified Parties may become
subject under any statute, regulation or common law, insofar as
such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the operations
of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials
35
under the terms of this Agreement (including a failure to
comply with the diversification requirements specified in
Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement; or
(iii) arise out of or result from any other material breach of
this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b) The Fund shall not be liable under this Indemnification provision
with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of
such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Fund, the Underwriter or the
Account, whichever is applicable.
8.3(c) The Fund shall not be liable under this Indemnification provision
with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Fund in
writing within a reasonable time after the summons
36
or other first legal process giving information of the nature of
the claim shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the Fund
of any such claim shall not relieve the Fund from any liability
which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this
Indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it,
and the Fund will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings
against them or any of its
37
respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts and related
operation of the Account, or the sale or acquisition of shares
of the Fund.
ARTICLE IX
APPLICABLE LAW
9.1 Except as otherwise specifically provided herein, this Agreement shall be
construed in accordance with the laws of the Commonwealth of Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X
TERMINATION
10.1 TERMINATION - GENERAL
10.1(a) This Agreement shall terminate at the option of any party upon
six (6) months advance written notice to the other parties;
provided, however such notice
38
shall not be given earlier than eighteen (18) months following
the date of this Agreement; or
10.1(b) This Agreement shall terminate upon any required vote of the
Contract owners having an interest in the Account (or any
subaccount or order of the Commission) to substitute the shares
of another investment company for the corresponding Portfolio
shares of the Fund in accordance with the terms of the contracts
for which those Portfolio shares had been selected to serve as
the underlying investment media. The Company will give thirty
(30) days' prior written notice to the Fund of the date of any
proposed vote to replace the Fund's shares.
39
10.2 BY THE COMPANY
10.2(1) This Agreement shall terminate at the option of the Company:
(i) in the event that and to the extent that shares of
Portfolios are not reasonably available to meet the
requirements of the Contracts as determined by the Company,
provided, however, that such termination shall apply only
to the Portfolio(s) not reasonably available. Prompt
notice of the election to terminate for such cause shall be
furnished by the Company; or
(ii) in the event formal administrative proceedings are
instituted against the Fund or Underwriter by the NASD, the
Securities and Exchange Commission, or any state securities
or insurance department or any other regulatory body,
provided, however, that the Company determines, in its sole
judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Fund or Underwriter to
perform its obligations under this Agreement; or
(iii) in the event any of the Fund's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as
40
the underlying investment media of the contracts issued or
to be issued by the Company; or
(iv) if the Fund ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
or
(v) if the Fund fails to meet the diversification requirements
specified in Article VI hereof.
10.2(b) This Agreement shall terminate at the option of the Company
if, (1) the Company shall determine, in its sole judgment
reasonably exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business or financial condition or is the subject of material
adverse publicity and such material adverse change or material
adverse publicity will have a material adverse impact upon the
business and operations of the Company; and (2) the Company has
notified the Fund and the Underwriter in writing of such
determination and its intent to terminate the Agreement; and (3)
after considering the actions taken by the Fund and/or the
Underwriter and any other changes in circumstances since the
giving of such notice, such determination shall continue to
41
apply on the sixtieth (60th) day following the giving of such
notice, which sixtieth day shall be the effective date of
termination.
10.3 BY THE FUND OR UNDERWRITER
10.3(a) This Agreement shall terminate at the option of either the
Fund or the Underwriter:
(i) in the event that formal administrative proceedings are
instituted against the Company by the National Association
of Securities Dealers, Inc. ("NASD"), the Securities and
Exchange Commission, the Insurance commissioner or any
other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the
operation of the Account, or the purchase of the Fund
shares, provided, however, that the Fund determines, in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Company to perform its
obligations under this Agreement; or
(ii) if the Company gives the Fund and the Underwriter the
written notice specified in Section 1.6(b) hereof and at
the time such notice was given there was not notice of
termination outstanding under any other provision of this
Agreement; provided, however,
42
any termination under this Subsection shall be effective
forty five (45) days after the notice specified in section
1.6(b) was given.
10.3(b) This Agreement shall terminate if, (1) the Fund or the
Underwriter, respectively, shall determine, in their sole
judgment reasonably exercised in good faith, that the Company
and/or its affiliated insurance companies has suffered a material
adverse change in its business or financial condition or is the
subject of material adverse publicity and such material adverse
change or material adverse publicity will have a material adverse
impact upon the business and operations of either the Fund or the
Underwriter, and (2) the Fund or the Underwriter has notified the
Company in writing of such determination and its intent to
terminate this Agreement, and (3) after considering the actions
taken by the Company and any other changes in circumstances since
the giving of such notice, such determination of the Fund or the
Underwriter shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be
the effective date of termination.
10.4 NOTICE OF TERMINATION
No termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other
parties to this Agreement of
43
its intent to terminate which notice shall set forth the basis for such
termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Article VII, or the provision of Section 10.1 requiring prior
written notice, such prior written notice shall be given in advance
of the effective date of termination as required by such provisions;
and
(b) in the event that any termination is based upon the provisions of
this Agreement regarding NASD action, such prior written notice
shall be given at least ninety (90) days before the effective date
of termination.
10.5 EFFECT OF TERMINATION
Notwithstanding any termination of this Agreement, the Fund and the
Underwriter shall at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and
conditions of this Agreement for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred
to as "Existing Contracts"). Specifically, without limitation, the
owners of the Existing Contracts shall be permitted to reallocate
investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.5 shall
not apply to any terminations under Article VII and the effect of such
44
Article VII terminations shall be governed by Article VII of this
Agreement.
10.6 REDEMPTIONS
The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in
the Account) except (a) as necessary to implement Contract Owner initiated
transactions, or (b) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or pursuant
to the provisions of a Commission order. Upon request, the Company will
promptly furnish to the Fund and the Underwriter the opinion of counsel
for the Company (which counsel shall be reasonably satisfactory to the
Fund and the Underwriter) to the effect that any redemption pursuant to
clause (b) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall
not prevent Contract owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund
or the Underwriter 90 days notice of its intention to do so.
45
ARTICLE XI
CONFIDENTIALITY
11. Subject to the requirements of legal process and regulatory authority, the
Underwriter and the Fund hereto shall treat as confidential the names and
addresses of the owners of the Contracts. Each party shall also treat as
confidential all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by this
Agreement, shall not disclose, disseminate or utilize Contract owner names
and addresses and other confidential information without the express
written consent of the affected party until such time as it may come into
the public domain.
ARTICLE XII
REGULATORY ACTION
12.1 Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Securities and
Exchange Commission, the NASD and state insurance regulators) and shall
permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
12.2 The Fund and Underwriter agree that to the extent any advisory or other
fees received by the Fund, the
46
Underwriter or the Adviser are determined to be unlawful in legal or
administrative proceedings the Underwriter shall indemnify and
reimburse the Company for any out of pocket expenses and actual
damages the Company has incurred as a result of any such proceeding.
Such indemnification and reimbursement obligation shall be in addition
to any other indemnification and reimbursement obligations of the Fund
and/or the Underwriter under this Agreement.
ARTICLE XIII
NOTICES
13. Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing
to the other party.
If to the Fund: Variable Insurance Products Fund
82 Devonshire Street
Boston, Massachusetts 02109
ATT: Treasurer
If to the Company: Lincoln Benefit Life Company
134 South 13th Street
Lincoln, Nebraska 68508
ATT: Carol S. Watson, Esq.
If to the Underwriter: Fidelity Distributors Corporation
82 Devonshire Street
47
Boston, Massachusetts 02109
ATT: Treasurer
48
ARTICLE XIV
MISCELLANEOUS
14.1 All persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the
trustees, officers, agents or shareholders assume any personal liability
for obligations entered into on behalf of the Fund.
14.2 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
14.3 If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
14.4 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
14.5 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
14.6 This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties
hereto; provided,
49
however, that the Underwriter may assign this Agreement or any rights or
obligations hereunder to any affiliate of or company under common control
with the Underwriter, if such assignee is duly licensed and registered to
perform the obligations of the Underwriter under this Agreement.
14.7 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), as soon as
practical and in any event within 90 days from the end of each
fiscal year;
(b) the Company's quarterly statements (statutory and GAAP), as soon
as practical and in any event within 45 days after the end of
each quarterly period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;
50
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
51
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
LINCOLN BENEFIT LIFE COMPANY
BY: /s/ Fred H. Jonske
------------------------------------
Fred H. Jonske
President & COO
DATE: November 29, 1993
------------------------------------
VARIABLE INSURANCE PRODUCTS FUND
BY: /s/ J. Gary Burkhead
------------------------------------
DATE: 12/20/93
------------------------------------
FIDELITY DISTRIBUTORS CORPORATION
BY: /s/ Kurt A. Lange
------------------------------------
DATE: 12/3/93
------------------------------------
52
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
NAME OF SEPARATE ACCOUNT CONTRACTS FUNDED
DATE ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT
- -------------------------------------- -------------------
Lincoln Benefit Life
Variable Annuity Account; VAP 9330
August 3, 1992
Lincoln Benefit Life
Variable Life Account; VUL 9390
May 17, 1990
SCHEDULE B
Other investment companies currently available under variable products issued by
the Company;
Janus Aspen Series
Federated Insurance Management Series
Scudder Variable life Investment Fund
IAI Retirement Funds, Inc.
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and
return envelopes are provided and paid for by the Insurance Company).
Contents of envelope sent to Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Fund.)
e. cover letter - optional, supplied by Company and reviewed and approved
in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
The Fund MUST allow at least a 15-day solicitation time to the Company as
the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but NOT including) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For example, if the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be NOT RECEIVED for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first
arrive into categories depending upon their vote; an estimate of how the
vote is progressing may then be calculated. If the initial estimates and
the actual vote do not coincide, then an internal audit of that vote should
occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of SHARES.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulations in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the Final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT AMONG
VARIABLE INSURANCE PRODUCTS FUND
FIDELITY DISTRIBUTORS CORPORATION
and
LINCOLN BENEFIT LIFE COMPANY
WHEREAS, LINCOLN BENEFIT LIFE COMPANY (the "Company"), VARIABLE INSURANCE
PRODUCTS FUND (the "Fund") and FIDELITY DISTRIBUTORS CORPORATION have previously
entered into a Participation Agreement (the "Agreement") containing certain
arrangements concerning prospectus costs; and
WHEREAS, the Trustees of the Fund have approved certain changes to the
expense structure of the Fund; and
NOW, THEREFORE, the parties do hereby agree to amend the Agreement by
substituting the following arrangement in place of any inconsistent language in
the Participation Agreement, wherever found:
1. The Fund will provide to the Company each year, at the Fund's cost,
such number of prospectuses and Statements of Additional Information as are
actually distributed to the Company's then-existing variable life and/or
variable annuity contract owners.
2. If the Company takes camera-ready film or computer diskettes containing
the Fund's prospectus and/or Statement of Additional Information in lieu of
receiving hard copies of these documents, the Fund will reimburse the Company in
an amount computed as follows. The number of prospectuses and Statements of
Additional Information actually distributed to existing contract owners by the
Company will be multiplied by the Fund's actual per-unit cost of printing the
documents.
3. The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund in order to verify that
the prospectuses and Statements of Additional Information provided to the
Company, or the reimbursement made to the Company, are or have been used only
for the purposes set forth hereinabove.
IN WITNESS WHEREOF we have set our hand as of the 15th day of December,
1994.
LINCOLN BENEFIT LIFE COMPANY
By: /s/Fred H. Jonske
----------------------------
Name: Fred H. Jonske
----------------------------
Title: President & COO
----------------------------
VARIABLE INSURANCE PRODUCTS FUND FIDELITY DISTRIBUTORS CORPORATION
By: /s/J. Gary Burkhead By: /s/Kurt A. Lange
---------------------------- -----------------------------
Name: J. Gary Burkhead Name: Kurt A. Lange
---------------------------- -----------------------------
Title: Senior Vice President Title: President
---------------------------- -----------------------------
ADDENDUM TO PARTICIPATION AGREEMENT
This Addendum to Participation Agreement ("Addendum"), is entered into this
________ day of ________, 1998, by and among Lincoln Benefit Life Company (the
"Company") on its own behalf and on behalf of each segregated asset account of
the Company set forth in Schedule A hereto as may be amended from time to time
(each such account herein after referred to as the "Account"), the Variable
Insurance Products Fund (the "Fund"), and unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts, and Fidelity
Distributors Corporation (the "Underwriter").
Whereas, the parties hereto previously entered into a Participation Agreement
dated the 29th day of November, 1993.
Whereas, the parties now desire to amend the terms of that Participation
Agreement as described below:
Now, therefore, in consideration of their mutual promises, the Company, the
Account, the Fund, and the Underwriter agree as follows:
Schedule A and Schedule B to the Participation Agreement are hereby replaced in
entirety by the Schedule A and Schedule B attached hereto.
In witness whereof, each of the parties hereto has caused this Addendum to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be here under affixed hereto as of the dates specified below.
LINCOLN BENEFIT LIFE VARIABLE INS. PRODUCTS FUND
By: By:
------------------------------ -----------------------------
Date: Date:
---------------------------- -----------------------------
FIDELITY DISTRIBUTORS CORPORATION
By:
------------------------------
Date:
----------------------------
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
NAME OF SEPARATE ACCOUNT CONTRACTS FUNDED
DATE ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT
- -------------------------------------- -------------------
Lincoln Benefit Life
Variable Annuity Account; VAP 9330
August 3, 1992 VAP 9830
VAP 9840
Lincoln Benefit Life
Variable Life Account; VUL 9390
May 17, 1990 VUL 9800
SCHEDULE B
Other investment companies currently available under variable products issued by
the Company;
Janus Aspen Series
Federated Insurance Management Series
Scudder Variable life Investment Fund
IAI Retirement Funds, Inc.
The Alger American Fund
Strong Variable insurance Funds, Inc.
T. Rowe Price Equity Series, Inc.
MFS Variable Insurance Trust