Amendment to Amended and Restated Participation Agreement
This Amendment, dated as of 25th day of October, 2012, amends the Participation
Agreement dated April 30 2007 (the "Agreement"), among First Symetra National
Life Insurance Company of New York ("Company"), Fidelity Distributors
Corporation ("Underwriter") and each of Variable Insurance Products Fund,
Variable Insurance Products Fund II, Variable Insurance Products Fund III,
Variable Insurance Products Fund IV and Variable Insurance Products Fund V
(each, a "Fund" and collectively, the "Funds").
WHEREAS, the parties acknowledge that excessive trading by insurance company
contract owners, including those of the Company, may adversely affect the
Funds, by forcing portfolio managers to take undesirable actions in order to
meet redemptions, such as retaining excess cash, selling desirable positions
and/or incurring excessive portfolio trading costs; and
WHEREAS, the Funds' Boards of Trustees have found that the deterrence of
excessive trading to be in the best interests of the Funds, and have
authorized Underwriter to take appropriate actions, including without
limitation the refusal of insurance company purchase orders, to deter
excessive trading; and
WHEREAS, the Underwriter has put in place procedures designed to detect and
deter excessive trading in all insurance company separate accounts; and
WHEREAS, the Underwriter, the Funds and the Company have entered into a
Rule 22c-2 Agreement which allows the Fund or its designee to obtain certain
shareholder information from the Company and requires the Company to execute
written instructions from the Fund to restrict or prohibit further
transactions from shareholders that have been identified by the Fund or its
designee as having engaged in excessive trading of the Funds' shares; and
WHEREAS, the Company and the Underwriter have studied various potential
solutions for deterring excessive trading, and have agreed to implement
redemption fee shares as an additional measure intent on deterring market
timing with relatively minimal disruption to long-term shareholders; and
WHEREAS, each Fund may create and offer one or more classes of shares of
certain portfolios, which are subject to redemption fees ("Redemption Fee
Class"), and
WHEREAS, Company, on behalf of certain of its Separate Accounts, may elect
to purchase Redemption Fee Class shares for use in variable annuity or
variable life insurance products issued by Company;
NOW, THEREFORE, the parties hereby agree as follows:
1. The first sentence of section 1.1 is amended to read as follows:
Subject to the provisions of Sections 1.2 and 2.13, the Underwriter
agrees to sell to the Company those shares of the Fund which each
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.
2. Section 1.4 is replaced in its entirety with the following:
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 and, in the event such insurance
company purchases R class shares, Sections 2.12 and 2.13, of
this Agreement is in effect to govern such sales.
3. Section 2.5 is replaced in its entirety with the following:
2.5. (a) With respect to Initial Class and Initial Class Redemption
Fee Class shares, 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.
(b) With respect to Service Class, Service Class 2, Service
Class Redemption Fee Class and Service Class 2 Redemption Fee Class
shares, the Fund has adopted Rule 12b-1 Plans under which it makes
payments to finance distribution expenses. The Fund represents and
warrants that it has a board of trustees, a majority of whom are not
interested persons of the Fund, which has formulated and approved
each of its Rule 12b-1 Plans to finance distribution expenses of the
Fund and that any changes to the Fund's Rule 12b-1 Plans will be
approved by a similarly constituted board of trustees.
4. Sections 2.12 and 2.13 are added:
2.12. The Company represents and warrants that it will enforce and
administer the short-term redemption fee (for purposes of Section
2.12, "the fee") applicable to R class shares in accordance with the
fee structure described in the Fund's then-current SEC registration
statement. The Distributor shall provide Company with commercially
reasonable advance written notice of any change in the fee structure.
In addition to, and without limiting, the provisions of this Agreement
concerning books and records contained in Section 12.6, books and
records maintained by the Company with respect to the calculation and
administration of the fee shall be the books and records of the Fund
and shall be made available to the Fund immediately upon request by
the Fund, the Fund's transfer agent and/or its auditors in order for
the Fund to conduct due diligence reviews or to comply with regulatory
examination requirements. The Company further represents and warrants
that it will periodically remit to the Fund, or to the Fund's transfer
agent, such information as the Fund or the Fund's transfer agent may
require in order to fulfill its obligations with respect to the
administration of the fee, and will also wire to the Fund the amount
of the fee attributable to transactions included in the period for
which the information is provided. The Company or the Underwriter or
their affiliates may make arrangements to pay the fee on behalf of
Contract owners making certain redemptions or terminal redemptions
deemed unlikely to result in or from market timing activities
("Covered Redemptions"), so long as the Fund receives the fee and
the parties comply with all other provisions of this Agreement. The
parties agree to cooperate with each other so that within a reasonable
time after the execution of this Agreement the information furnished
by the Company pursuant to this section 2.12 will be provided in an
automated format acceptable to the Fund or the Fund's transfer agent.
A description of the fee, and examples indicating its application,
are included in Schedule D, attached, which may be modified in the
Fund's sole discretion upon written notice to the Company. The
Company further represents and warrants that it will include in the
Disclosure Document (as defined in Section 3.1 below) for each
Contract the disclosure language substantially as set forth in then-
current Schedule D with respect to the fee.
2.13. The Company represents and warrants that it will use its best
efforts to discourage market timing and other disruptive trading
activity by third parties with power to act on behalf of multiple
contract owners and by individual contract owners. Company further
represents and warrants that any annuity contract forms or variable
life insurance policy forms not in use at the time of execution of
this Agreement, but added to in the future via amendment of Schedule
A hereto, will contain language reserving to the Company the right to
refuse to accept instructions from persons that engage in market
timing or other disruptive trading activity.
5. The second sentence of section 10.2 is amended to read as follows:
Specifically, and without limitation except for limitations imposed
under Sections 1.2 and 2.13, the owners of the Existing Contracts
invested in the Funds 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.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
indicated above.
First Symetra National Life Insurance Company of New York
By: ________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
Fidelity Distributors Corporation Variable Insurance Products Fund
Variable Insurance Products Fund II
Variable Insurance Products Fund III
Variable Insurance Products Fund IV
Variable Insurance Products Fund V
By: ________________________ By: ________________________
Name: Name:
Title: Title:
SCHEDULE D
REDEMPTION FEE CLASS SHARES' SHORT TERM REDEMPTION FEE
METHODOLOGY, REQUIRED DISCLOSURE AND EXAMPLES
1. Methodology and Required Disclosure. The following language both
describes the operation of the R class shares' short-term redemption fee and
serves as a model for the disclosure the Company must include in the
prospectus or other offering document(s) for the Contract(s). Differences
in the operational aspects of Contracts may require different disclosure, but
pursuant to Section 2.12 of the Agreement, all disclosure must be approved in
writing by the Fund or the Fund's designee.
A Contract owner (or a person who succeeds to the owner's rights after
the owner's death) who chooses to redeem an interest in a separate account
(or subaccount of a separate account) that invests in R class shares will
be subject to a 1.00% short-term trading fee if and to the extent that the
interest in the separate account (or subaccount, as appropriate) has been held
for less than 60 days. For this purpose, interests held longest will be
treated as being redeemed first and interests held shortest as being redeemed
last.
Redemption from a separate account may, but does not necessarily,
mean a withdrawal from a variable contract. It includes all transactions,
such as transfers among subaccounts, initiated at the request of a Contract
owner (or the owner's successor). The fee applies both to one-time
transactions and to periodic transactions, such as automatic rebalancing. In
the event that the Company or the Underwriter or their affiliate(s) have
made arrangements to pay the fee on behalf of Contract Owners making certain
Covered Redemptions, the fee shall still apply but the Company's Disclosure
Document may indicate that the fee will not be charged to Contract Owners in
the event of such redemptions.
The fee will not apply to redemptions made to generate money to pay
the Company its mortality and expense risk fee or other charges under a
Contract. The fee will also not apply to redemptions made to generate money
to make scheduled annuity income payments for Contracts no longer in the
deferral stage (i.e. Contracts that are either immediate annuities or deferred
annuity Contracts which have been annuitized), or to any other transactions
designated in writing by the Fund as exempt.
2. Examples: Annuity Contracts in Accumulation Phase and Variable
Life Insurance Policies
A. Contract owner purchases a Contract on Day One and purchases 100
units of a subaccount that invests in R class shares. On Day 58, Contract
owner transfers money within the contract by redeeming 50 units from the
subaccount. The value of those 50 units at the time of transfer is $500.
The fee applies to the entire amount transferred. The fee is $5
(1% of $500).
B. Contract Owner purchases a Contract on Day One and purchases 100
units of a subaccount that invests in R class shares. On Day 50 Contract
owner purchases an additional 50 units of the same subaccount. On Day 65
Contract Owner redeems 125 units at $10 each in order to transfer the proceeds
to another subaccount.
The first step is to determine which units are redeemed. Using the
first in, first out rule, all 100 units purchased on Day One are redeemed,
and 25 of the 50 units purchased on Day 50 are redeemed. The 100 units
purchased on Day One are not subject to the redemption fee, but the 25 units
purchased on Day 50 are subject to the fee. The value of the units subject
to the redemption fee is $250 (25 units at $10 per unit). The redemption fee
is $2.50 (1% of $250).
3. Examples: Annuity Contracts in Payout Phase (applies equally to
annuitized deferred contracts and immediate annuities)
A. On Day One, Contract Owner allocates all of variable annuity
income to a Subaccount that invests in R class shares. On Day 58, Contract
Owner makes a full withdrawal of withdrawal value. The withdrawal value
immediately before the reallocation is $50,000.
The fee applies to the entire amount reallocated. The fee is $500
(1% of $50,000).
B. On Day One, Contract Owner allocates half of the Purchase Payment
to a Subaccount that invests in R class shares. On Day 50 Contract Owner
allocates the remainder of his variable annuity income to the same Subaccount.
On Day 65 the withdrawal value in the Subaccount is $50,000, and Contract
Owner withdraws 80% of the withdrawal value from that Subaccount.
Immediately before the redemption the withdrawal value in the Subaccount
attributable to the original allocation is $30,000 and the withdrawal
value in the Subaccount attributable to the subsequent allocation is
$20,000.
The first step is to determine how much of the withdrawal value is
subject to the fee. Contract Owner reallocated $40,000 of withdrawal value
(80% of the total withdrawal value of $50,000). Using the first in, first
out rule, all $30,000 of withdrawal value that relates to the original
allocation is redeemed, and $10,000 of the subsequent allocation is redeemed.
The $30,000 of withdrawal value associated with the original allocation is
not subject to the redemption fee because the original allocation has been
maintained in the Subaccount for 60 days or longer, but the $10,000 of the
reallocation attributable to the subsequent allocation is subject to the fee
because it has been maintained in the Subaccount for less than 60 days.
Since the withdrawal value in the Subaccount subject to the fee has a value
of $10,000 at the time of the subsequent reallocation, the redemption fee is
$100 (1% of $10,000).
C. On Day One, Contract Owner allocates all of his variable annuity
income to a Subaccount that invests in R class shares. On Day 58 Contract
Owner changes his entire allocation of variable annuity income to another
Subaccount. The value of periodic annuity income in the first Subaccount
immediately before the reallocation is $500.
The fee applies to the entire amount reallocated. Contract Owner's
variable annuity income is reduced by $5 (1% of $500). Company remits to the
Fund the amount that was invested in the Fund immediately prior to the
reallocation attributable to the $5 of income.
D. On Day One, Contract Owner allocates half of the Purchase Payment
to a Subaccount that invests in R class shares. On Day 50 Contract Owner
allocates the remainder his variable annuity income to the same Subaccount.
On Day 65 the value of annuity income in the Subaccount is $500, and Contract
Owner reallocates 80% of his variable annuity income to another Subaccount.
Immediately before the redemption $300 of variable annuity income from the
Subaccount comes from the original allocation and $200 from the subsequent
allocation.
The first step is to determine how much of the variable annuity income
is subject to the fee. Contract Owner reallocated $400 of variable annuity
income (80% of the $500). Using the first in, first out rule, all $300 of
variable annuity income that related to the original allocation is redeemed,
and $100 of variable annuity income from the subsequent allocation is
redeemed. The $300 of income associated with the original allocation is not
subject to the redemption fee because the original allocation has been
maintained in the Subaccount for 60 days or longer, but the $100 of income
attributable to the subsequent allocation is subject to the fee because it
has been maintained in the Subaccount for less than 60 days.
Since the income in the Subaccount subject to the fee has a value of
$100 at the time of the subsequent reallocation, variable annuity income is
reduced by $1 (1% of $100). Company remits to the Fund the amount that was
invested in the Fund immediately prior to the reallocation attributable to
the $1 of income.
