PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT (the "Agreement") made by and between SCUDDER
VARIABLE LIFE INVESTMENT FUND (the "Fund"), a Massachusetts business trust
created under a Declaration of Trust dated March 15, 1985, as amended, with a
principal place of business in Boston, Massachusetts and LINCOLN BENEFIT LIFE
COMPANY, a Nebraska corporation (the "Company"), with a principal place of
business in Lincoln, Nebraska on behalf of Lincoln Benefit Life Variable Annuity
Account, a separate account of the Company, and any other separate account of
the Company as designated by the Company from time to time, upon written notice
to the Fund in accordance with Section 10 herein (the "Account").
WHEREAS, the Fund acts as the investment vehicle for the separate
accounts established for variable life insurance policies and variable annuity
contracts (collectively referred to herein as "Variable Insurance Products") to
be offered by insurance companies which have entered into participation
agreements substantially identical to this Agreement ("Participating Insurance
Companies") and their affiliated insurance companies; and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares of beneficial interest ("Shares"), and additional series of
Shares may be established, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities; and
WHEREAS, it is in the best interest of Participating Insurance Companies
to make capital contributions if requires so that the annual expenses of each
Portfolio of the Fund in which a Participating Insurance Company is a
shareholder will not exceed a fixed percentage of the Portfolio's average annual
net assets; and
WHEREAS, the Parties desire to evidence their agreement as to certain
other matters,
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. ADDITIONAL DEFINITIONS.
For the purposes of this Agreement, the following definitions shall
apply:
(a) The "expenses of a Portfolio" for any fiscal year shall mean
the expenses for such fiscal year as shown in the Statement of Operations (or
similar report) certified by the Fund's independent public accountants;
(b) A "Portfolio's average daily net assets" for each fiscal year
shall mean the sum of the net asset values determined throughout the year for
the purpose of determining net asset value per Share, divided by the number of
such determinations during such year;
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(c) The Company's "Required Contribution" on behalf of the Account
in respect of a Portfolio for any fiscal year shall mean an amount equal to the
expenses of that Portfolio for such year minus the below-indicated percentage of
that Portfolio's average daily net assets for the year:
International Portfolio . . . . . . . . . . . . . . . . . . . . . . 1.50%
Each other Portfolio. . . . . . . . . . . . . . . . . . . . . . . . 0.75%
multiplied by a fraction the denominator of which is the average daily net
assets of that Portfolio and the numerator of which is the average daily net
asset value of the Shares of that Portfolio owned by the Account (referred to
herein as a "Participating Shareholder"). The Company's Required Contribution
in respect of a Portfolio shall be pro-rated based on the number of business
days on which this Agreement is in effect for periods of less than a fiscal
year.
(d) The "average daily net asset value of the Shares of the
Portfolio" owned by the Account for any fiscal year of the Fund shall mean the
greater of (i) $500,000 or (ii) the sum of the aggregate net asset values of the
Shares so owned determined during the fiscal year, as of each determination of
the net asset value per Share, divided by the total number of determinations of
net asset value during such year.
(e) "Shares" means shares of beneficial interest, without par
value, of any Portfolio, now or hereafter created, of the Fund.
2. CAPITAL CONTRIBUTION
The Company on behalf of the Account shall, within sixty days after the
end of each fiscal year of the Fund, make a capital contribution to the Fund in
respect of each Portfolio equal to the Required Contribution for that Portfolio
for such year; provided, however, that in the event that both clauses (i) and
(ii) of paragraph (d) of Section 1 of this Agreement or similar agreements are
applicable to different participating Insurance Companies during the same fiscal
year, there shall be a proportionate reduction of the Required Contribution of
each Participating Insurance Company to which said clause (ii) is applicable so
that the total of all required capital contributions to the Fund on behalf of
any Portfolio is not greater than the excess of the expenses of that Portfolio
for that fiscal year less the percentage of that Portfolio's total expenses set
forth in paragraph (c) of Section 1 of this Agreement for such fiscal year.
3. DUTY OF FUND TO SELL.
The Fund shall make its Shares available for purchase at the applicable
net asset value per Share by participating Insurance Companies and their
affiliates and separate accounts on those days on which the Fund calculates its
net asset value pursuant to rules of the Securities and Exchange Commission;
provided, however, that the Trustees of the Fund may refuse to sell Shares of
any Portfolio to any person, or suspend or terminate the offering of Shares of
any Portfolio, if such action is required by law or be regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees, necessary in
the best interest of the shareholders of any Portfolio.
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4. REQUIREMENT TO EXECUTE PARTICIPATION AGREEMENT; REQUESTS.
Each Participating Insurance Company shall, prior to purchasing Shares
in the Fund, execute and deliver a participation agreement in a form
substantially identical to this Agreement.
The Fund shall make available, upon written request from the
Participating Insurance Company given in accordance with Paragraph 10, to each
Participating Insurance Company which has executed an Agreement and which
Agreement has not been terminated pursuant to Paragraph 8 (i) a list of all
other Participating Insurance Companies, and (ii) a copy of the Agreement as
executed by any other Participating Insurance Company.
The Fund shall also make available upon request to each Participating
Insurance Company which has executed an Agreement and which Agreement has not
been terminated pursuant to Paragraph 8, the net asset value of any Portfolio of
the Fund as of any date upon which the Fund calculates the net asset value of
its Portfolios for the purpose of purchase and redemption of Shares.
5. INDEMNIFICATION.
(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 Securities Act of 1933 (the "Act")
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses), arising out of the acquisition of any
Shares by any person, to which the Fund or such Trustees, officers or
controlling person may become subject under the Act, under any other statute, at
common law or otherwise, which (i) may be based upon any wrongful act by the
Company, any of its employees or representatives, any affiliate of or any person
acting on behalf of the Company or a principal underwriter of its insurance
products, or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering Shares or any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon information furnished to the
Fund by the Company, or (iii) may be based on any untrue statement or alleged
untrue statement of a material fact contained in a registration statement or
prospectus covering insurance products sold by the Company or any insurance
company which is an affiliate thereof, or any amendments 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, unless such statement or omission was made in reliance upon
information furnished to the Company or such affiliate by or on behalf of the
Fund; provided, however, that in no case (i) is the Company's indemnity in favor
of a Trustee or officer or any other person deemed to protect such Trustee or
officer or other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties or by reason of his reckless
disregard of obligations and duties under this Agreement or (ii) is the Company
to be liable under its indemnity agreement contained in this Paragraph 5 with
respect to any
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claim made against the Fund or any person indemnified unless the Fund or such
person, as the case may be, shall have notified the Company in writing pursuant
to Paragraph 10 within a reasonable time after the summons or other first legal
process giving information of the nature of the claims shall have been served
upon the Fund or upon such person (or after the Fund or such person 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 has to the Fund or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this Paragraph
5. The Company shall be entitled to participate, at its own expense, in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if it elects to assume the defense, such
defense shall be conducted by counsel chosen by it and satisfactory to the Fund,
to its officers and Trustees, or to any controlling person or persons, defendant
or defendants in the suit. In the even t that the Company elects to assume the
defense of any such suit and retain such counsel, the Fund, such officers and
Trustees or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them,
but, in case the Company does not elect to assume the defense of any such suit,
the Company will reimburse the Fund, such officers and Trustees or controlling
person or persons, defendant or defendants in such suit, for the reasonable fees
and expenses of any counsel retained by them. The Company agrees promptly to
notify the Fund pursuant to Paragraph 10 or the commencement of any litigation
or proceedings against it in connection with the issue and sale of any Shares.
(b) The Fund agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which it or such directors, officers or controlling person may become
subject under the Act, under any other statute, at common law or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Fund, any of its employees or representatives
or a principal underwriter of the Fund or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or omission was made in reliance
upon information furnished to the Fund by the Company or (iii) may be based on
any untrue statement or alleged untrue statement of a material fact contained in
a registration statement or prospectus covering insurance products sold y the
Company, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund; provided, however, that in no case (i) is
the Fund's indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person against any liability
to which any person would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of his duties or by reason of
his reckless disregard of obligations and duties under this Agreement or (ii) is
the Fund to be liable under its indemnity agreement contained in this Paragraph
5 with respect to any claims made against the Company or any such director,
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officer or controlling person unless it or such director, officer or controlling
person, as the case may be, shall have notified the Fund in writing pursuant to
Paragraph 10 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 it or upon such director, officer or controlling person (or after the
Company or such director, officer or controlling person shall have received
notice of such service on any designated agent), but failure to notify the Fund
of any claim shall not relieve it from any liability which it may have to the
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this Paragraph. The Fund will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Company, its directors, officers or controlling
person or persons, defendant or defendants, in the suit. In the even the Fund
elects to assume the defense of any such suit. In the event the Fund elects to
assume the defense of any such suit and retain such counsel, the Company, its
directors, officers or controlling person or persons, defendant or defendants in
the suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Fund does not elect to assume the defense of any such
suit, it will reimburse the Company or such directors, officers or controlling
person or persons, defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Fund agrees promptly to
notify the Company pursuant to Paragraph 10 of the commencement of any
litigation or proceedings against it or any of its officers or Trustees in
connection with the issuance or sale of any Shares.
6. PROCEDURE FOR RESOLVING IRRECONCILABLE CONFLICTS.
(a) The Trustees of the Fund will monitor the operations of the
Fund for the existence of any material irreconcilable conflict among the
interests of all the contract holders and policy owners of Variable Insurance
Products (the "Participants") of all separate accounts investing in the Fund.
An irreconcilable material conflict may arise, among other things, from: (a) an
action by any state insurance regulatory authority; (b) a change in applicable
insurance laws or regulations; (c) a tax ruling or provision of the Internal
Revenue Code or the regulations thereunder: (d) any other development relating
to the tax treatment of insurers, contract holders or policy owners or
beneficiaries of Variable Insurance Products; (e) the manner in which the
investments of any Portfolio are being managed; (f) a difference in voting
instructions given by variable annuity contract holders, on the one hand, and
variable life insurance policy owners, on the other hand, or by the contract
holders or policy owners of different participating insurance companies; or (g)
a decision by an insurer to override the voting instructions of Participants.
(b) The Company will be responsible for reporting any potential or
existing conflicts to the Trustees of the Fund. The Company will be responsible
for assisting the Trustees in carrying our their responsibilities under this
Paragraph 6(b) and Paragraph 6(a), by providing the Trustees with all
information reasonably necessary for the Trustees to consider the issues raised.
The Fund will also request its investment adviser to report to the Trustees any
such conflict which comes to the attention of the adviser.
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(c) If it is determined by a majority of the Trustees of the Fund,
or a majority of its disinterested Trustees, that a material irreconcilable
conflict exists involving the Company, the Company shall, at its expense, and to
the extent reasonably practicable (as determined by a majority of the
disinterested Trustees), take whatever steps are necessary to eliminate the
irreconcilable material conflict, including 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 another
Portfolio of the Fund, offering to the affected Participants the option of
making such a change or establishing a new funding medium including a registered
investment company.
For purposes of this Paragraph 6(c), the Trustees, or the disinterested
Trustees, shall determine whether or not any proposed action adequately remedies
any irreconcilable material conflict. In the even of a determination of the
existence of an irreconcilable material conflict, the Trustees shall cause the
Fund to take such action, such as the establishment of one or more additional
Portfolios, as they in their sole discretion determine to be in the interest of
all shareholders and Participants in view of all applicable factors, such as
cost, feasibility, tax, regulatory and other considerations. In no event will
the Fund be required by this Paragraph 6(c) to establish a new funding medium
for any variable contract or policy.
The Company shall not be required by this Paragraph 6(c) to establish a
new funding medium for any variable contract or policy if an offer to do so has
been declined by a vote of a majority of the participants materially adversely
affected by the material irreconcilable conflict. The Company will recommend to
its Participants that they decline an offer to establish a new funding medium
only if the Company believes it is in the best interest of the Participants.
(d) The Trustees' determination of the existence of an
irreconcilable material conflict and its implications promptly shall be
communicated to all participating Insurance Companies by written notice thereof
delivered or mailed, first class postage prepaid.
7. VOTING PRIVILEGES.
The Company shall be responsible for assuring that its separate account
or accounts participating in the Fund shall use a calculation method of voting
procedures substantially the same as the following: those Participants
permitted to give instructions and the number of Shares for which instructions
may be given will be determined as of the record date for the Fund shareholders'
meeting, which shall not e more than 60 days before the date of the meeting.
Whether or not voting instructions are actually given by a particular
Participant, all Fund shares held in any separate account or sub-account thereof
and attributable to policies will be voted for, against, or withheld from voting
on any proportion in the same proportion as (i) the aggregate record date cash
value held in such sub-account for policies giving instructions, respectively,
to vote for, against, or withhold votes on such proposition, bears to (ii) the
aggregate record date cash value held in the sub-account for all policies for
which voting instructions are received. Participants continued in effect under
lapse options will not be permitted to give voting instructions. Shares held in
any other insurance company general or separate account
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or sub-account thereof will be voted in the proportion specified in the second
preceding sentence for shares attributable to policies.
8. DURATION AND TERMINATION.
This agreement shall remain in force for the period ending five years
from the date of its execution (such date and any anniversary of such date being
hereinafter called a "Renegotiation Date"), and from year to year thereafter
provided that neither the Company nor the Fund shall have given written notice
to the other within thirty(30) days prior to a Renegotiation Date that it
desires to renegotiate the amount of contribution to capital due hereunder
("Renegotiation Notice"). If a Renegotiation Notice is properly given as
aforesaid and the Fund and the Company shall fail, within sixty (60) days after
the Renegotiation Date, either to enter into an amendment to this Agreement or a
written acknowledgment that the Agreement shall continue in effect, this
Agreement shall terminate as of the one hundred twentieth day after such
Renegotiation Date. If this Agreement is so terminated, the Fund may, at any
time thereafter, automatically redeem the Shares of any Portfolio held by a
Participating Shareholder. The Fund agrees that it will not effect such
redemption during the period following the Company's filing of a notice with the
Securities and Exchange Commission (the "SEC") to obtain approval to make a
substitution for the Shares, provided, however, the Company has filed such
notice with the SEC promptly following the sixtieth day after the Renegotiation
Date. This Agreement may be terminated at any time, at the option of either of
the Company or the Fund, when neither the Company, any insurance company nor the
separate account or accounts of such insurance company which is an affiliate
thereof which is not a Participating Insurance Company own any Shares of the
Fund or may be terminated by either party to the Agreement upon a determination
by a majority of the Trustees of the Fund, or a majority of its disinterested
Trustees, following certification thereof by a Participating Insurance Company
given in accordance with Paragraph 10 that an irreconcilable conflict exists
among the interest of (i) all contract holders and policyholders of Variable
Insurance Products of all separate accounts or (ii) the interests of the
Participating Insurance Companies investing in the Fund. Notwithstanding
anything to the contrary in this Agreement or its termination as provided
herein, the Company's obligation to make a capital contribution to the Fund in
accordance with this Agreement at the time in effect shall continue (i)
following a properly given Renegotiation Notice, in the absence of agreement
otherwise, until termination of this Agreement, and (ii) (except termination due
to the existence of an irreconcilable conflict or if the Fund fails to meet the
diversification requirements specified in Paragraph 9), following termination of
this Agreement, until the later of the fifth anniversary of the date of this
Agreement or the date on which the Company, its separate account(s) or the
separate account(s) of any affiliated insurance company owns no Shares.
In the event that the Company elects to terminate its obligations under
this Agreement, it may nonetheless elect in writing to continue this Agreement
with respect to those contracts ("Existing Contracts") in effect with respect to
Participants at the time of such termination. If the Company does so elect to
continue this Agreement, the terms of this Agreement and the obligations of the
parties hereto shall continue with respect to existing Contracts. Without
limitation, the Company shall be permitted at the direction of such a
Participant who shall have continuously remained a Participant to (i) maintain,
(ii) reallocate, (iii) redeem, and (iv) invest in the Fund upon the making of
additional
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purchase payments under an Existing Contract. Any such election made pursuant
to this Paragraph 8 must be made by giving written notice of such election to
the Fund within thirty (30) days prior to a Renegotiation Date. The parties
agree that no such election may be made in the event that a majority of the
Trustees of the Fund, or a majority of the disinterested Trustees, determine
that an irreconcilable conflict exists as further described in this Paragraph 8.
9. COMPLIANCE.
The Fund will comply with the provisions of Section 4240(a) of the New
York Insurance Law.
Each Portfolio of the Fund will comply with the provisions of Section
817(h) of the Internal Revenue Code of 1986, as amended (the "Code"), relating
to diversification requirements for variable annuity, endowment and life
insurance contracts. Specifically, each Portfolio will comply with either (i)
the requirement of Section 817 (h)(1) of the Code that its assets be adequately
diversified, or (ii) the "Safe Harbor for Diversification" specified in Section
817(h)(2) of the Code, or (iii) the diversification requirement of Section
817(h)(1) of the Code by having all or part of its assets invested in U.S.
Treasury securities which qualify for the "Special Rule for Investments in
United States Obligations" specified in Section 817(h)(3) of the Code.
The provisions of Paragraphs 6 and 7 of this Agreement shall be
interpreted in a manner consistent with any Rule or order of the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended,
applicable to the parties hereto.
No Shares of any Portfolio of the Fund may be sold to the general
public.
10. NOTICES.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Scudder Variable Life Investment Fund
175 Federal Street
Boston, Massachusetts 02110
(617) 482-3990
Attn: David B. Watts
If to the Company:
Lincoln Benefit Life Company
134 South 13th Street Suite 300
Lincoln, Nebraska 68508
Attn: Carol S. Watson
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11. MASSACHUSETTS LAW TO APPLY.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
12. MISCELLANEOUS.
The name "Scudder Variable Life Investment Fund" is the designation of
the Trustees for the time being under a Declaration of Trust dated March 15,
1985, as amended, and 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. No Portfolio
shall be liable for any obligations properly attributable to any other
Portfolio.
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. This Agreement may be executed
simultaneously in two or more counterparts, each of which taken together shall
constitute one and the same instrument.
13. ENTIRE AGREEMENT.
This Agreement incorporates the entire understanding and agreement among
the parties hereto, and supersedes any and all prior understandings and
agreements between the parties hereto with respect to the subject matter hereof.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the 30th day of December, 1993.
SEAL
SCUDDER VARIABLE LIFE INVESTMENT FUND
By: /s/David B. Watts
------------------------------------
David B. Watts
President
SEAL
LINCOLN BENEFIT LIFE COMPANY
By: /s/Fred H. Jonske
------------------------------------
President and COO
Fred H. Jonske
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REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT (the "Agreement") made by and between SCUDDER,
STEVENS & CLARK, INC., a Delaware corporation ("SS&C"), with a principal place
of business in Boston, Massachusetts and LINCOLN BENEFIT LIFE COMPANY, a
Nebraska corporation (the "Company"), with a principal place of business in
Lincoln, Nebraska on behalf of the Lincoln Benefit Life Variable Annuity
Account, a separate account of the Company, and any other separate account of
the Company as designated by the Company form time to time, upon written notice
to the Fund in accordance with Section 8 herein (the "Account").
WHEREAS, SS&C has caused to be organized Scudder Variable Life
Investment Fund (the "Fund"), a Massachusetts business trust created under a
Declaration of Trust dated March 15, 1985, as amended, the beneficial interest
in which is divided into several series, each designated a "Portfolio" and
representing the interest in a particular managed portfolio of securities; and
WHEREAS, the purpose of the Fund is to act as the investment vehicle for
the separate accounts established for variable life insurance policies and
variable annuity contracts to be offered by insurance companies which have
entered into reimbursement agreements substantially identical to this Agreement
("Participating Insurance Companies"); and
WHEREAS, it is in the best interest of the parties hereto for
Participating Insurance Companies, including the Company, to assume a portion of
the organization and other expenses incurred by SS&C in connection with the Fund
during the term of this agreement; and
WHEREAS, the parties desire to express their agreement as to certain
other matters;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. ADDITIONAL DEFINITIONS.
For purposes of this Agreement, the following definitions shall apply:
(a) The "average annual net asset value of the Shares of each
Portfolio of the Fund" shall mean the sum of the aggregate net
asset values of the Shares of such Portfolio owned by the
Account (referred to herein as the "Participating
Shareholder") determined as of each determination of the net
asset value per Share of the Fund during the fiscal year,
divided by the number of such determinations during such year.
(b) "Shares" means shares of beneficial interest, without par
value, of any Portfolio, now or hereafter created, of the
Fund.
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2. ACCESS TO OTHER PRODUCTS.
SS&C shall permit a Participating Shareholder to participate in any
registered investment company other than the Fund which is intended as the
funding vehicle for insurance products and for which SS&C or an affiliate of
SS&C acts as investment adviser, on the same basis as other insurance companies
are permitted to participate in such a registered investment company. This
provision shall not require SS&C to make available to the Company shares of any
investment company which is organized solely as the funding vehicle for
insurance products offered by a single insurance company or a group of
affiliated insurance companies.
3. RIGHT TO REVIEW AND APPROVE SALES MATERIALS.
The Company shall furnish, or shall cause to be furnished, to SS&C or
its designee, at least twenty days prior to its intended use, each piece of
promotional material in which SS&C or the Fund is named. No such material shall
be used unless SS&C or its designee shall have approved such use in writing, or
twenty days shall have elapsed without approval, rejection or objection since
receipt by SS&C or its designee of such material.
SS&C shall furnish, or shall cause to be furnished, to the Company or
its designee, at least twenty days prior to its intended use, each piece of
promotional material in which the Company or its separate account(s) is named.
No such material shall be used unless the Company or its designee shall have
approved such use in writing, or twenty days shall have elapsed without
approval, rejection or objection since receipt by the Company or its designee of
such material.
4. SALES ORGANIZATION MEETINGS.
Representatives of SS&C or its designee shall meet with the sales
organizations of the Company at such reasonable times and places as may be
agreed upon by the Company and SS&C or its designee for the purpose of educating
sales personnel about the Fund.
5. DURATION.
This Agreement shall continue in effect as long as the Company owns
Shares of any Portfolio, except that the obligation of each party hereto to
indemnify the other party hereto shall continue with respect to all losses,
claims, damages, liabilities or litigation based upon the acquisition of Shares
purchased as the funding vehicle for any variable life insurance policy or
variable annuity contract issued by the Company or any affiliated insurance
company.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless SS&C and
each of its Directors and officers and each person, if any, who controls SS&C
within the meaning of Section 15 of the Securities Act of 1933 (the "Act") or
any person, controlled
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by or under common control with SS&C ("affiliate") against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which SS&C or such Directors, officers or controlling person may become
subject under the Act, under any other statute, at common law or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Company, any of its employees or
representatives, any affiliate of or any person acting on behalf of the Company
or a principal underwriter of its insurance products, or (ii) may be based upon
any untrue statement or alleged untrue statement of a material fact contained in
a registration statement or prospectus covering Shares or any amendment thereof
or supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in reliance upon
information furnished to SS&C or the Fund by the Company, provided, however,
that in no case (i) is the Company's indemnity in favor of a Director or officer
or any other person deemed to protect such Director or officer or other person
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of obligations and duties
under this Agreement or (ii) is the Company to be liable under its indemnity
agreement contained in this Paragraph 6 with respect to any claim made against
SS&C or any person indemnified unless SS&C or such person, as the case may be,
shall have notified the Company in writing pursuant to Paragraph 8 within a
reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon SS&C or upon
such person (or after SS&C or such person 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 has to SS&C or
any person against whom such action is brought otherwise than on account of the
indemnity agreement contained in this Paragraph 6. The Company shall be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any such liability,
but, if it elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to SS&C, to its officers and Directors, or
to any controlling person or persons, defendant or defendants in the suit. In
the event that the Company elects to assume the defense of any such suit and
retain such counsel, SS&C, such officers and directors or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them, but, in case the Company does not
elect to assume the defense of any such suit, the Company will reimburse SS&C,
such officers and Directors or controlling person or persons, defendant or
defendants in such suit, for the reasonable fees and expenses of any counsel
retained by them. The Company agrees promptly to notify SS&C pursuant to
Paragraph 8 of the commencement of any litigation or proceedings against it in
connection with the issue and sale of any Shares.
(b) SS&C agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which it or such directors, officers or controlling persons may become
subject under the Act, under any other statute, at common law or otherwise
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by SS&C, any of its employees or
3
representatives or a principal underwriter of the Fund, or (ii) may be based
upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering Shares or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made in
reliance upon information furnished to the Company by SS&C; provided, however,
that in no case (i) is SS&C's indemnity in favor of a director or officer or any
other person deemed to protect such director or officer or other person against
any liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement or (ii) is SS&C to be liable under its indemnity agreement
contained in this Paragraph 6 with respect to any claims made against the
Company or any such director, officer or controlling person unless it or such
director, officer or controlling person, as the case may be, shall have notified
SS&C in writing pursuant to Paragraph 8 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 it or upon such director, officer or
controlling person (or after the Company or such director, officer or
controlling person shall have received notice of such service on any designated
agent), but failure to notify SS&C of any claim shall not relieve it from any
liability which it may have to the person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this Paragraph
6. SS&C will be entitled to participate at its own expense in the defense, or,
if it so elects, to assume the defense of any suit brought to enforce any such
liability, but if SS&C elects to assume the defense, such defense shall be
conducted by counsel chosen by it and satisfactory to the Company, its
directors, officers or controlling person or persons, defendant or defendants,
in the suit. In the event SS&C elects to assume the defense of any such suit
and retain such counsel, the Company, its directors, officers or controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case SS&C does not
elect to assume the defense of any such suit, it will reimburse the Company or
such directors, officers or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. SS&C agrees promptly to notify the Company pursuant to
Paragraph 8 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 any
Shares.
7. MASSACHUSETTS LAW TO APPLY.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
8. NOTICES.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to SS&C:
4
Scudder, Stevens & Clark, Inc.
175 Federal Street
Boston, Massachusetts 02110
(617) 482-3990
Attn: David B. Watts
If to the Company:
Lincoln Benefit Life Company
134 South 13th Street
Lincoln, Nebraska 68508
Attn: Carol S. Watson
9. MISCELLANEOUS.
The captions in the 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. This Agreement may be executed
simultaneously in two or more counterparts, each of which taken together shall
constitute one and the same instrument.
5
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the 30TH day of DECEMBER, 1993.
SEAL
SCUDDER, STEVENS & CLARK, INC.
By: /s/ David S. Lee
------------------------------------
David S. Lee
Authorized Officer
SEAL
LINCOLN BENEFIT LIFE COMPANY
By: /s/Fred H. Jonske
------------------------------------
Fred H. Jonske
President and C.O.O.
6
Scudder Investor Services, Inc.
175 Federal Street
Boston, Massachusetts 02110
PARTICIPATING CONTRACT AND POLICY AGREEMENT
Ladies and Gentlemen:
We (sometimes hereinafter referred to as "Investor Services") are the
Principal Underwriter of shares of Scudder Variable Life Investment Fund (the
"Fund"), a no-load, open-end, diversified registered management investment
company established in 1985 as a Massachusetts business trust. The Fund is a
series fund consisting of the Balanced Portfolio, Bond Portfolio, Capital Growth
Portfolio, International Portfolio and Money Market Portfolio (individually or
collectively hereinafter referred to as the "Portfolio" or the "Portfolios").
Additional Portfolios may be created from time to time. The Fund is the funding
vehicle for variable annuity contracts and variable life insurance policies
("Participating Contracts and Policies") to be offered to the separate accounts
(the "Accounts") of certain life insurance companies ("Participating Insurance
Companies") to be offered to the separate accounts (the "Accounts") of certain
life insurance companies ("Participating Insurance Companies"). Owners of
Participating Contracts and Policies will designate a portion of their premium
to be invested in insurance company separate accounts or sub-accounts which
invest in, or represent an investment in, directly or indirectly, shares of
beneficial interest ("Shares") of the Portfolios of the Fund. You are a
registered broker/dealer which intends to offer and sell Participating Contracts
and Policies. In connection with such offer and sale you will be obligated to
deliver the prospectuses of such Participating Contracts and Policies and,
contemporaneously therewith, the prospectus of the Fund. Sales of Shares to
Participating Insurance Companies or their affiliates or the separate accounts
of either shall be effected solely by us as principal underwriter of the Fund,
and not by you; provided, however, that you shall be our agent in connection
with the receipt of purchase orders for Fund Shares and not in connection with
their offer and sale. The relationship between us shall be further governed by
the following terms and conditions:
1. To the extent, if any, that your activities or the activities of
the Participating Insurance Companies in connection with the sale
of participating Contracts and Policies may constitute the sale of
Shares, you and we agree that (i) we are the sole "principal
underwriter" of the Fund and the sold "underwriter" of the Shares
as those terms are defined in the Investment Company Act of 1940
(the "1940 Act") and in the Securities Act of 1933 (the "1933
Act"), respectively, and (ii) neither you nor the Participating
Insurance Companies or the Accounts shall be deemed to be
"principal underwriters" of the Fund or "underwriters" of the Fund
within the meaning of the 1940 Act and the 1933 Act, respectively.
2. You hereby represent and warrant to us as follows:
(a) You are a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and have
full power and authority to enter into this Agreement.
1
(b) This Agreement has been duly authorized, executed and
delivered by you and is a valid and binding obligation
enforceable against you in accordance with its terms.
(c) Your compliance with the provisions of this Agreement will not
conflict with or result in a violation of the provisions of
your charter or by-laws, of any statute or any judgment,
decree, order, rule or regulation of any court or governmental
agency or body having jurisdiction.
3. We hereby represent and warrant to you as follows:
(a) A registration statement (File No. 2-96461) on Form N-1A with
respect to the Shares (x) has been prepared by the Fund in
conformity with the Requirement of the 1940 Act and the 1933
Act and all applicable published instructions, rules and
regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission"), (y) has been filed
with the Commission, and (z) is currently effective. The
registration statement, including financial statements and
exhibits, and the final prospectus, including the statement of
additional information, as subsequently amended and
supplemented, are herein respectively referred to as the
"Registration Statement" and the "Prospectus".
(b) The Registration Statement and the Prospectus and any
amendment or supplement thereto will contain all statements
required to be stated therein and will comply in all material
respects with the requirements of the 1940 Act, the 1933 Act
and the Rules and Regulations, and the Registration Statement
and any post-effective amendment thereto will not contain or
incorporate by reference 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, in light
of the circumstances under which they were made, not
misleading, and the Prospectus and any amendment or supplement
thereto will not contain or incorporate by reference any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) We are a corporation duly organized and validly existing in
good standing under the laws of The Commonwealth of
Massachusetts and have full power and authority to enter into
this Agreement.
(d) This Agreement has been duly authorized, executed and
delivered by us and is a valid and binding obligation
enforceable against us in accordance with its terms.
2
(e) Our compliance with all of the provisions of this Agreement
will not conflict with or result in a violation of the
provisions of our charter or by-laws, or any statute or any
judgment, decree, order, rule or regulation of any court of
governmental agency or body having jurisdiction over us.
4. You hereby covenant and agree with us as follows:
(a) You shall be an independent contractor and neither you nor any
of your directors, partners, officers or employees as such, is
or shall be an employee of us or of the Fund. You are
responsible for your own conduct and the employment, control
and conduct of your agents and employees and for injury to
such agents or employees or to others through your agents or
employees.
(b) You or one or more Participating Insurance Companies will be
responsible for insuring compliance with all applicable laws
and regulations of any regulatory body having jurisdiction
over you or Participating Contracts and Policies.
(c) No person is authorized to make any representations concerning
Shares except those contained in the prospectus and statement
of additional information relating thereto and in such printed
information as issued by us for use as information
supplemental to the prospectus. In offering Participating
Contracts and Policies you shall, with respect to the Fund and
the Shares, rely solely on the representations contained in
the prospectus and statement of additional information and in
the above-mentioned supplemental information.
(d) You are not entitled to any compensation whatsoever from us or
the Fund with respect to offers of Participating Contracts and
Policies.
5. We hereby covenant and agree with you as follows:
(a) If, at any time when a prospectus relating to the Shares is
required to be delivered under the 1940 Act, the 1933 Act or
the Rules and Regulations, we become aware of the occurrence
of any event as a result of which the Prospectus as then
amended or supplemented would include any untrue statement of
a material fact, or omit to state a material fact necessary to
make the statements therein, in light of the circumstances
under which made, not misleading, or if we become aware that
it has become necessary at any time to amend or supplement the
Prospectus to comply with the 1940 Act, the 1933 Act or the
Rules and Regulations, we will promptly notify you and
promptly request the Fund to prepare and to file with the
Commission an amendment to
3
the Registration Statement or supplement to the Prospectus
which will correct such statement or omission or an amendment
or supplement which will effect such compliance, and deliver
to you copies of any such amendment or supplement.
(b) We will cooperate with you in taking such action as may be
necessary to qualify the Shares for offering and sale under
the securities or Blue Sky laws of any state or jurisdiction
as you may request and will continue such qualification in
effect so long as is required by applicable law in connection
with the distribution of Shares.
6. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Shares entirely, as to any person
or generally. We reserve the right to amend this agreement at any
time and you agree that the sale of Participating Contracts and
Policies, after notice of any such amendment has been sent to you,
shall constitute your agreement to any such amendment.
7. If we elect to provide to you for the purpose of your offering
Participating Contracts and Policies copies of any prospectus and
statement of additional information relating to the Shares and
printed information supplemental thereto, we shall furnish you with
such copies as you reasonably request upon the payment of
reasonable charges therefor by you or one or more Participating
Insurance Companies. If we elect not to provide such copies of
such documents printed by you or one or more Participating
Insurance Companies shall bear the entire cost of printing copies
for your use. You shall not use such copies of such documents
printed by you or one or more Participating Insurance Companies
until you shall have furnished us with a copy thereof and we either
have given you written approval for use or twenty days shall have
elapsed following our receipt thereof and we have not objected
thereto in writing.
8. (a) You will indemnify and hold harmless Investor Services and
each of its directors and officers and each person, if any,
who controls Investor Services within the meaning of Section
15 of the 1933 Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of
investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred
in connection therewith), arising by reason of any person's
acquiring any Shares, which may be based upon the 1933 Act or
any other statute or common law, and which (i) may be based
upon any wrongful act by you, any of your employees or
representatives, any affiliate of or any person acting on
behalf of you, or (ii) may be based upon any untrue statement
or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering Shares or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to
be
4
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in
reliance upon information furnished to us or the Fund by you,
or (iii) may be based on any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement or prospectus covering insurance
products sold by you, or any amendments 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,
unless such statement or omission was made in reliance upon
information furnished to you or a Participating Insurance
Company by or on behalf of Investor Services or the Fund;
provided, however, that in no case (i) is the indemnity by you
in favor of any person indemnified to be deemed to protect
Investor Services or any such person against any liability to
which Investor Services or any such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its or his duties or by
reason of its or his reckless disregard of its obligations and
duties under this Agreement, of (ii) are you to be liable
under your indemnity agreement contained in this paragraph
with respect to any claim made against Investor Services or
any person indemnified unless Investor Services or such
person, as the case may be, shall have notified you 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 Investor Services or upon such
person (or after Investor Services or such person shall have
received notice of such service on any designated agent), but
failure to notify you of any such claim shall not relieve you
from any liability which you may have to Investor Services or
any person against whom such action is brought otherwise than
on account of your indemnity agreement contained in this
paragraph. You shall be entitled to participate, at your own
expense, in the defense, or, if you so elect, to assume the
defense of any suit brought to enforce any such liability,
but, if you elect to assume the defense, such defense shall be
conducted by counsel chosen by you and satisfactory to
Investor Services, or to its officers or directors, or to any
controlling person or persons, defendant or defendants in the
suit. In the event that you assume the defense of any such
suit and retain such counsel, Investor Services or such
officers and directors or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in
case you do not elect to assume the defense or any such suit,
you shall reimburse Investor Services and such officers,
directors or controlling person or persons, defendant of
defendants in such suit, for the reasonable fees and expenses
of any counsel retained by them. You agree promptly to notify
Investor Services of the
5
commencement of any litigation or proceedings against it in
connection with the offer, issue and sale of any shares.
(b) Investor Services will indemnify and hold harmless you and
each of your directors and officers and each person, if any,
who controls you within the meaning of Section 15 of the 1933
Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending
any alleged loss, liability, damages, claim or expense and
reasonable counsel fees incurred in connection therewith),
arising by reason of any person's acquiring any Shares, which
may be based upon the 1933 Act or any other statute or common
law, and which (i) may be based upon any wrongful act by
Investor Services, any of its employees or representatives, or
(ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement or prospectus covering Shares or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading unless such information furnished by Investor
Services or the Fund by you or (iii) may be based on any
untrue statement or alleged untrue statement of a material
fact contained in a registration statement or prospectus
covering insurance products sold by you, or any amendment 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 you by or on behalf of Investor
Services of the Fund; provided, however, that in no case (i)
is the indemnity by Investor Services in favor of any person
indemnified to be deemed to protect you or any such person
against any liability to which you or any such person would
otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your or his
duties by reason of your or his reckless disregard of your or
his obligations and duties under this Agreement, or (ii) is
Investor Services to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made
against you or any person indemnified unless you or such
person, as the case may be, shall have notified Investor
Services 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 you or upon such
person (or after you or such person shall have received notice
of such service on any designated agent), but failure to
notify Investor Services of any such liability which Investor
Services may have to you or any person against whom such
action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. Investor Services
shall be entitled to participate, at it own expense,
6
in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but, if it
elects to assume the defense, such defense shall be conducted
by counsel chosen by Investor Services and satisfactory to
you, or to your controlling person or persons, defendant or
defendants in the suit. In the event that Investor Services
assumes the defense of any such suit and retains such counsel,
you or such officers or directors or controlling person or
persons, defendant or defendants in the suit, shall bear the
fees and expenses of any additional counsel retained by it,
but, in case Investor Services does not elect to assume the
defense of any such suit, Investor Services shall reimburse
you and such officers, directors or controlling person or
persons, defendant or defendants in such suit, for the
reasonable fees and expenses of any counsel retained by it.
Investor Services agrees promptly to notify you of the
commencement of any litigation or proceedings against it in
connection with the offer, issue and sale of any Shares.
9. The indemnities, representations, warranties, covenants and
agreements of each party to this Agreement as set forth in
this Agreement will remain in full force and effect regardless
of any investigation made by or on behalf of either of such
parties or any of their respective officers, directors,
partners or any controlling person, and will survive delivery
of and payment for the Shares.
10. Any provision of this Agreement which may be determined by
competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, each
party hereto waives any provision of law which renders any
provision hereof prohibited or unenforceable in any respect.
11. This Agreement constitutes the entire agreement among the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
12. This Agreement shall automatically terminate in the event of
its assignment. This Agreement may be terminated at any time
by either party by written notice given to the other party,
provided that the obligation of each party to indemnify the
other party pursuant to paragraph 8 hereof shall apply with
respect to any Shares sold before or after such termination.
13. Any notice hereunder shall be duly given if mailed or
telegraphed to the other party hereto at the address specified
below. This
7
Agreement shall be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts.
14. This Agreement may be executed in any number of counterparts
which, taken together shall constitute one and the same
instrument. This Agreement shall become effective upon
receipt by us of your acceptance hereof.
15. This Agreement may not be modified or amended except by a
written instrument duly executed by the parties hereto.
SCUDDER INVESTOR SERVICES, INC.
By: /s/David S. Lee
------------------------------------
David S. Lee
President
175 Federal Street
Boston, Massachusetts 02110
The undersigned hereby accepts the offer set
forth in the above letter.
LINCOLN BENEFIT FINANCIAL SERVICES
Dated: December 30, 1993 By: /s/B. Eugene Wraith
----------------- ------------------------------------
B. Eugene Wraith
President
134 South 13th Street
Lincoln, Nebraska 68508
8