EXHIBIT 8A
PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
[NAME OF FUND],
AND
[NAME OF ADVISER]
THIS AGREEMENT, dated as of the ___ day of _________________, 2005, by
and among Security Benefit Life Insurance Company, (the "Company"), a stock life
insurance company organized under the laws of the State of Kansas, 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 an "Account"),
____________________ (the "Fund"), a [insert state and type of entity], and
__________ (the "Adviser"), a [insert state and type of entity.]
WHEREAS, the shares of beneficial interest/common stock of the Fund are
divided into several series of shares, each representing the interest in a
particular managed portfolio of securities and other assets (each a
"Portfolio"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act") and shares of
the Portfolios are registered under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the Adviser, which serves as investment adviser to the Fund,
is duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended; and
WHEREAS, the Company has issued or will issue certain variable annuity
contracts supported wholly or partially by the Account (the "Contracts"), and
said Contracts are listed in Schedule A hereto, as it may be amended from time
to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, the Company intends to purchase shares in the Portfolios
listed in Schedule A hereto, as it may be amended from time to time by mutual
written agreement (the "Designated Portfolios"), on behalf of the Account to
fund the aforesaid Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Subject to Article X hereof, the Fund agrees to make
available to the Company for purchase on behalf of the Account, shares of the
Designated Portfolios, such purchases to be effected at net asset value in
accordance with Section 1.3 of this Agreement. Notwithstanding the foregoing,
(i) the Portfolios (other than those listed on Schedule A) in existence now or
that may be established in the future will be made available to the Company only
as the Fund may so provide, and (ii) the Board of [insert Trustees or Directors]
of the Fund (the "Board") may suspend or terminate the offering of shares of any
Designated Portfolio or class thereof upon written notice to the Company, if
such action is required by law or by regulatory authorities having jurisdiction
or if, in the sole discretion of the Board acting in good faith and in light of
its fiduciary duties under federal and any applicable state laws, suspension or
termination is necessary and in the best interests of the shareholders of such
Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full
or fractional Designated Portfolio shares held by the Company on behalf of the
Account, such redemptions to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, the Fund may delay
redemption of Fund shares of any Designated Portfolio to the extent permitted by
the 1940 Act, and any rules, regulations or orders thereunder.
1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent
of the Fund for the limited purpose of receiving and accepting purchase and
redemption requests on behalf of the Account (but not with respect to any Fund
shares that may be held in the general account of the Company) for shares of
those Designated Portfolios made available hereunder, based on allocations of
amounts to the Account or subaccounts thereof under the Contracts and other
transactions relating to the Contracts or the Account. Receipt and acceptance of
any such request (or relevant transactional information therefore) on any day
the New York Stock Exchange is open for trading and on which a Designated
Portfolio calculates its net asset value (a "Business Day") pursuant to the
rules of the Securities and Exchange Commission ("SEC"), by the Company as such
limited agent of the Fund prior to the time that the Fund ordinarily calculates
its net asset value as described from time to time in the Fund's prospectus
shall constitute receipt and acceptance by the Designated Portfolio on that same
Business Day, provided that the Fund receives notice of such request by 9:30
a.m. Eastern Time on the next following Business Day.
(b) The Company shall pay for shares of each
Designated Portfolio on the same Business Day that it notifies the Fund of a
purchase request for such shares. Payment for Designated Portfolio shares shall
be made in federal funds transmitted to the Fund or other designated person by
wire to be received by 3:00 p.m. Eastern Time on the Business Day the Fund is
notified of the purchase request for Designated Portfolio shares (unless the
Fund determines and so advises the Company that sufficient proceeds are
available from redemption of shares of other Designated Portfolios effected
pursuant to redemption requests tendered by the Company on behalf of the
Account, or unless the Fund otherwise determines and so advises the Company to
delay the date of payment, to the extent the Fund may do so under the 1940 Act).
If federal funds are not received on time, such funds will be invested, and
Designated Portfolio shares purchased thereby will be issued, as soon as
practicable and the Company shall promptly, upon the Fund's request, reimburse
the Fund for any charges, costs, fees, interest or other expenses incurred by
the Fund in connection with any advances to, or borrowing or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. Upon receipt
of federal funds so wired, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
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(c) Payment for Designated Portfolio shares redeemed
by the Account or the Company shall be made by the Fund in federal funds
transmitted by wire to the Company or any other designated person by 3 p.m.
Eastern Time on the same Business Day the Fund is properly notified of the
redemption order of such shares (unless redemption proceeds are to be applied to
the purchase of shares of other Designated Portfolios in accordance with Section
1.3(b) of this Agreement), except that the Fund reserves the right to delay
payment of redemption proceeds to the extent permitted under Section 22(e) of
the 1940 Act and any rules thereunder, and in accordance with the procedures and
policies of the Fund as described in the then-current prospectus.
Any purchase or redemption request for Designated Portfolio shares held or to be
held in the Company's general account shall be effected at the net asset value
per share next determined after the Fund's receipt and acceptance of such
request, provided that, in the case of a purchase request, payment for Fund
shares so requested is received by the Fund in federal funds prior to close of
business for determination of such value, as defined from time to time in the
Fund's prospectus.
1.4. The Fund shall use its best efforts to make the net asset
value per share for each Designated Portfolio available to the Company by 6:30
p.m. Eastern Time each Business Day, and in any event, as soon as reasonably
practicable after the net asset value per share for such Designated Portfolio is
calculated, and shall calculate such net asset value in accordance with the
Fund's prospectus. If the Fund provides the Company with materially incorrect
share net asset value information, the Company on behalf of the Account, shall
be entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct share net asset value. Any material error in the calculation
of the net asset value per share, dividend or capital gain information shall be
reported promptly to the Company upon discovery. In the event that any such
material error is the result of the gross negligence of the Fund, or its
designated agent for calculating the net asset value, any administrative or
other costs or losses incurred for correcting underlying Contract owner accounts
shall be at the Adviser's expense.
1.5. The Fund shall use its best efforts to furnish notice (by
wire or telephone followed by written confirmation) to the Company of any income
dividends or capital gain distributions payable on any Designated Portfolio
shares by the record date, but in no event later than 6:30 p.m. Eastern Time on
the ex-dividend date. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions as are payable on
any Designated Portfolio shares in the form of additional shares of that
Designated Portfolio. The Company reserves the right, on its behalf and on
behalf of the Account, to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Fund shall notify the Company
promptly of the number of Designated Portfolio shares so issued as payment of
such dividends and distributions.
1.6. Issuance and transfer of Fund shares shall be by book
entry only. Share certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's shares may be sold
to other insurance companies and the cash value of the Contracts may be invested
in other investment companies.
(b) The Company shall not, without prior notice to the
Adviser (unless otherwise required by applicable law), take any action to
operate the Account as a management investment company under the 1940 Act.
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(c) The Company shall not, without prior notice to
the Adviser (unless otherwise required by applicable law), induce Contract
owners to change or modify the Fund or change the Fund's investment adviser.
(d) The Company shall not, without prior notice to
the Fund, induce Contract owners to vote on any matter submitted for
consideration by the shareholders of the Fund in a manner other than as
recommended by the Board.
1.8 The parties may agree, in lieu of the procedures set forth
above in this Article 1, to place and settle trades for Fund shares through a
clearing corporation. In the event that such a clearing corporation is used, the
parties agree to abide by the rules of the clearing corporation.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts
(a) are, or prior to issuance will be, registered under the 1933 Act, or (b) are
not registered because they are properly exempt from registration under the 1933
Act or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law, that
it has legally and validly established the Account as a segregated asset account
under Kansas insurance laws, and that it (a) 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, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 0000 Xxx.
2.2. The Fund represents and warrants that Designated
Portfolio shares sold pursuant to this Agreement shall be registered under the
1933 Act, shall be duly authorized for issuance and sold in compliance with
applicable state and federal securities laws and that the Fund is and shall
remain registered under the 0000 Xxx. 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.
2.3. The Fund represents and warrants that it is lawfully
organized and validly existing under the laws of the State of [fill in state]
and that it does and will comply in all material respects with the 1940 Act,
including, without limitation, Rule 38a-1 under the 1940 Act.
2.4. The Adviser represents and warrants that it is registered
as an investment adviser with the SEC and that it does and will comply in all
material respects with the Investment Advisers Act of 1940, including, without
limitation, Rule 206(4)-7 under the Investment Advisers Act.
2.5. The Fund and the Adviser represent and warrant that all
of their trustees/directors, officers, employees, and other individuals or
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 minimum
coverage as required currently by Rule 17g-1 of the 1940 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
bonding company.
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ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund shall provide the Company with as many printed
copies of the current prospectus, current Statement of Additional Information
("SAI"), supplements, proxy statements, and annual or semi-annual reports of
each Designated Portfolio as the Company may reasonably request to deliver to
existing Contract owners and for marketing of the Contracts. If requested by the
Company in lieu thereof, the Fund shall provide such documents (including a
"camera-ready" copy of such documents as set in type, a diskette in the form
sent to the financial printer, or an electronic copy of the documents in a
format suitable for posting on the Company's website, all as the Company may
reasonably request) and such other assistance as is reasonably necessary in
order for the Company to have prospectuses, SAIs, supplements and annual or
semi-annual reports for the Contracts and the Fund printed together in a single
document or posted on the Company's web-site or printed individually by the
Company if it so chooses. The expenses associated with printing and providing
such documentation shall be as set forth in Article V.
3.2. The Fund's prospectus shall state that the current SAI
for the Fund is available.
3.3. The Fund shall provide the Company with information
regarding the Fund's expenses, which information may include a table of fees and
related narrative disclosure for use in any prospectus or other descriptive
document relating to a Contract. The Company agrees that it will use such
information substantially in the form provided. The Company shall provide prior
written notice of any proposed modification of such information, which notice
will describe the manner in which the Company proposes to modify the
information, and agrees that it may not modify such information in any way
without the prior consent of the Fund, which consent shall not be unreasonably
withheld.
3.4. So long as, and to the extent the SEC continues to
interpret the 1940 Act to require pass-through voting privileges for variable
contract owners, or to the extent otherwise required by law, the Company shall,
at the Company's option, follow one of the two methods described below to
provide pass-through voting privileges to contract owners:
(a) Provide a list of Contract owners with value allocated to
a Designated Portfolio as of the record date to the Fund or its agent in order
to permit the Fund to send solicitation material and gather voting instructions
from Contract owners on behalf of the Company. The Company shall also provide
such other information to the Fund as is reasonably necessary in order for the
Fund to properly tabulate votes for Fund initiated proxies. In the event that
the Company chooses this option, the Fund shall be responsible for properly
"echo voting" shares of a Designated Portfolio for which no voting instructions
have been received.
(b) Solicit voting instructions from Contract holders itself
and vote shares of the Designated Portfolio in accordance with instructions
received from Contract holders. The Company shall vote the shares of the
Designated Portfolios for which no instructions have been received in the same
proportion as shares of the Designated Portfolio for which instructions have
been received.
3.5 The Company reserves the right to vote Fund shares held in
its general account in its own right, to the extent permitted by applicable
laws.
ARTICLE IV. Sales Material and Information
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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 that the Company develops and in which the Fund (or a
Designated Portfolio thereof) or the Adviser is named. No such material shall be
used until approved by the Fund or its designee, and the Fund will use its best
efforts for it or its designee to review such sales literature or promotional
material within five (5) Business Days after receipt of such material. The Fund
or its designee reserves the right to reasonably object to the continued use of
any such sales literature or other promotional material in which the Fund (or a
Designated Portfolio thereof) or the Adviser is named, and no such material
shall be used if the Fund or its designee so objects.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus or SAI for the Fund shares, as such registration statement and
prospectus or SAI 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, except with the
permission of the Fund or its designee.
4.3. The Fund and the Adviser, or their designee, shall
furnish, or cause to be furnished, to the Company, each piece of sales
literature or other promotional material that it develops and in which the
Company, and/or the Account, is named. No such material shall be used until
approved by the Company, and the Company will use its best efforts to review
such sales literature or promotional material within five (5) Business Days
after receipt of such material. The Company reserves the right to reasonably
object to the continued use of any such sales literature or other promotional
material in which the Company and/or its Account is named, and no such material
shall be used if the Company so objects.
4.4. The Fund shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account,
or the Contracts other than the information or representations contained in a
registration statement, prospectus (which shall include an offering memorandum,
if any, if the Contracts issued by the Company or interests therein are not
registered under the 1933 Act), or SAI for the Contracts, as such registration
statement, prospectus, or SAI 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, 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, SAIs, 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 Designated Portfolios or their shares, promptly after
the filing of such document(s) with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses (which shall include
an offering memorandum, if any, if the Contracts issued by the Company or
interests therein are not registered under the 1933 Act), SAIs, 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,
promptly after the filing of such document(s) with the SEC or other regulatory
authorities. The Company shall provide to the Fund and the Adviser any
complaints received from the Contract owners pertaining to the Fund or a
Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as
is reasonably practicable of any proxy solicitation for any Designated
Portfolio, and of any material change in the
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Fund's registration statement, particularly any change resulting in a change to
the registration statement or prospectus for any Account. The Fund will work
with the Company so as to enable the Company to solicit proxies from Contract
owners, or to make changes to its prospectus or registration statement, in an
orderly manner. The Fund will make reasonable efforts to attempt to have changes
affecting Contract prospectuses become effective simultaneously with the annual
updates for such prospectuses.
ARTICLE V. Fees and Expenses
5.1. The Fund shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Designated
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Fund may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Fund in
writing.
5.2. All expenses incident to performance by the Fund under
this Agreement shall be paid by the Fund. The Fund shall see to it 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 the proxy materials and reports to shareholders (including the costs 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 Fund will pay or cause to be paid the expenses
associated with printing, mailing, distributing, solicitation and tabulation of
proxy materials to Contract owners with respect to proxies related to the Fund,
consistent with applicable provisions of the 1940 Act. The Fund shall also bear
the expense of printing and postage with respect to Fund prospectuses, annual
and semi-annual reports and all other Fund reports delivered to existing
Contract owners with value allocated to one or more Designated Portfolios
(regardless of whether such documents are printed by the Fund or the Company).
5.4. The Company shall bear the expense of distributing all
prospectuses and reports to prospective Contract owners. The Company shall bear
the expense of printing copies of the prospectus for the Contracts for use with
prospective Contract owners. The Company shall bear the expenses incident to
(including the costs of printing) sales literature and other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) is named.
ARTICLE VI. Qualification
6.1 The Fund will invest its assets in such a manner
as to ensure that the Contracts will be treated as annuity or life insurance
contracts, whichever is appropriate, under the Code and the regulations issued
thereunder (or any successor provisions). Without limiting the scope of the
foregoing, each Designated Portfolio represents and warrants that it has
complied and will continue to comply with Section 817(h) of the Code and
Treasury Regulation ss.1.817-5, and any Treasury interpretations thereof,
relating to the diversification requirements for variable annuity, endowment, or
life insurance contracts, and any amendments or other modifications or successor
provisions to such Section or Regulations. In the event of a breach of this
Article VI by the Fund, it will take all reasonable steps (a) to notify the
Company of such breach and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation 1.817-5.
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6.2 The Fund represents and warrants that it is
qualified as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code,") and that it will
maintain such qualification (under Subchapter M or any successor or similar
provisions) 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.
6.3 The Company represents that the Contracts are
currently, and at the time of issuance shall be, treated as life insurance or
annuity insurance contracts, under applicable provisions of the Code, and that
it will maintain such treatment, and that it will notify the Fund immediately
upon having a reasonable basis for believing the Contracts have ceased to be so
treated or that they might not be so treated in the future. The Company agrees
that any prospectus offering a contract that is a "modified endowment contract"
as that term is defined in Section 7702A of the Code (or any successor or
similar provision), shall identify such contract as a modified endowment
contract.
ARTICLE VII. Potential Conflicts
Fund to insert here provisions from its mixed and shared funding order.
Article VIII. Indemnification
8.1 Indemnification by the Company
8.1(a). The Company agrees to indemnify and hold
harmless each of the Fund and the Adviser and each of its trustees/directors and
officers, and each person, if any, who controls the Fund or Adviser within the
meaning of Section 15 of the 1933 Act or who is under common control with the
Fund or the Adviser (collectively, the "Indemnified Parties" for purposes of
this Section 8.1) against any and 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 or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue
statement or alleged untrue statements of any material fact
contained in the registration statement, prospectus (which
shall include a written description of a Contract that is not
registered under the 1933 Act), or SAI 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 or the
Adviser for use in the registration statement, prospectus or
SAI for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts, or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other than
statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the Fund
not supplied by the Company
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or persons under its control) or wrongful conduct of the
Company or its agents or persons under the Company's
authorization or 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, SAI, or sales literature
of the Fund 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 or on behalf of the Company for use in the
registration statement, prospectus or SAI of the Fund or in
sales literature; or
(iv) arise as a result of any material 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 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 provisions of Sections 8.1(b) and
8.1(c) hereof.
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 its obligations or
duties under this Agreement.
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 an Indemnified Party, the 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 reasonably 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 expenses 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 Adviser
8.2(a). The Adviser 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
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of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Adviser) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(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 SAI 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 Adviser or Fund by or on behalf of
the Company for use in the registration statement,
prospectus or SAI 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 by or on behalf of the Fund or the
Adviser (other than statements or representations
contained in the registration statement, prospectus,
SAI or sales literature for the Contracts not
supplied by the Fund or the Adviser) or wrongful
conduct of the Adviser or the Fund 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, SAI 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 Adviser or the Fund; or
(iv) arise as a result of any failure by the Fund or
the Adviser to provide the services and furnish the
materials under the terms of this Agreement
(including a failure of the Fund, whether
unintentional or in good faith or otherwise, to
comply with the diversification and other
qualification 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 or on
behalf of the Adviser or the Fund in this Agreement
or arise out of or result from any other material
breach of this Agreement by or on behalf of the
Adviser or the Fund;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Adviser 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
- 10 -
negligence in the performance or 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 Adviser 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 Adviser 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 Adviser of any
such claim shall not relieve the Adviser 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 Party, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the Adviser to such party of the
Adviser'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
Adviser 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.
8.2(d). The Company agrees promptly to notify the
Adviser 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 and each of its directors and officers 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, expenses, 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 be
required to pay or may become subject under any statute or regulation, at common
law or otherwise, insofar as such losses, claims, expenses, damages, liabilities
or expenses (or actions in respect thereof) or settlements, are related to the
operations of the Fund 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 SAI 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 Adviser or Fund by or on behalf of
the Company for use in the registration statement,
prospectus or SAI 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 by or on behalf of the Fund or the
Adviser (other than statements or representations
contained in
- 11 -
the registration statement, prospectus, SAI or sales
literature for the Contracts not supplied by the Fund
or the Adviser) or wrongful conduct of the Adviser or
the Fund 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, SAI 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 Adviser or the Fund; or
(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 and other
qualification 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 or on
behalf of the Fund in this Agreement or arise out of
or result from any other material breach of this
Agreement by or on behalf of 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 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 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 reasonably 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 agrees promptly to notify the
Fund of the commencement of any litigation or proceeding against it or any of
its respective officers or directors in connection with
- 12 -
the Agreement, the issuance or sale of the Contracts, the operation of the
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State
of Kansas, without regard to the conflict of laws provisions thereof.
9.2. This Agreement shall be subject to the provisions of the
1933 and 1940 Acts as well as the Exchange Act of 1934, and the rules
and regulations and rulings thereunder, including such exemptions from
those statutes, rules and regulations as the SEC may grant, and the
terms hereof shall be interpreted and construed in accordance
therewith. If, in the future, the Mixed and Shared Funding Order
discussed in Article VII should no longer be necessary under applicable
law, then Article VII hereof shall no longer apply.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect
until the first to occur of:
(a) termination by any party, for any reason with respect
to some or all Designated Portfolios, by six (6)
months advance written notice delivered to the other
parties; or
(b) termination by the Company by written notice to the
other parties based upon the Company's determination
that shares of the Fund are not reasonably available
to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the
other parties in the event any of the Designated
Portfolio'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
the underlying investment media of the Contracts
issued or to be issued by the Company; or
(d) termination by the Fund or Adviser by written notice
to the Company in the event that formal
administrative proceedings are instituted against the
Company by the National Association of Securities
Dealers, Inc. (the "NASD"), the SEC, the Insurance
Commissioner or like official of any state or any
other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the
purchase of the Designated Portfolios' shares;
provided, however, that the Fund or Adviser
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
(e) termination by the Company by written notice to the
other parties in the event that formal administrative
proceedings are instituted against the Fund or
Adviser by the SEC or any state securities 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
- 13 -
adverse effect upon the ability of the Fund or
Adviser to perform its obligations under this
Agreement; or
(f) termination by the Company by written notice to the
other parties in the event that any Designated
Portfolio ceases to qualify as a regulated investment
company under Subchapter M or fails to comply with
the Section 817(h) diversification requirements
specified in Article VI hereof, or if the Company
reasonably believes that any such Portfolio may fail
to so qualify or comply with either provision; or
(g) termination by either the Fund or the Adviser by
written notice to the other parties, if either one or
both the Fund and the Adviser, respectively, shall
determine, in their sole judgment exercised in good
faith, that the Company has suffered a material
adverse change in its business, operations, financial
condition, or prospects since the date of this
Agreement or is the subject of material adverse
publicity; or
(h) termination by the Company by written notice to the
other parties, if the Company shall determine, in its
sole judgment exercised in good faith, that the Fund
or the Adviser has suffered a material adverse change
in its business, operations, financial condition or
prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(i) termination by the Company upon any substitution of
the shares of another investment company or series
thereof for shares of a Designated Portfolio of the
Fund in accordance with the terms of the Contracts,
provided that the Company has given at least 45 days
prior written notice to the Fund and Adviser of the
date of substitution.
10.2. Notwithstanding any termination of this Agreement, the Fund and
the Adviser 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"), unless the
Company seeks an order pursuant to Section 26(b) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated Portfolios.
Specifically, 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 (subject to any such election by the Company).
10.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XI. 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 Company: Security Benefit Life Insurance Company
Attention General Counsel
One Security Benefit Place
- 14 -
Topeka, Kansas 66636 - 0001
If to the Fund: [fill in]
If to Adviser: [fill in]
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to
the property of the respective Designated Portfolios listed on
Schedule A hereto as though each such Designated Portfolio had
separately contracted with the Company and the Adviser for the
enforcement of any claims against the Fund. The parties agree
that neither the Board, officers, agents or shareholders of
the Fund assume any personal liability or responsibility for
obligations entered into by or on behalf of the Fund.
12.2. Subject to the requirements of legal process and
regulatory authority, the Fund and the Adviser shall treat as
confidential the names and addresses of the owners of the
Contracts. Each party shall 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 such
information without the express written consent of the
affected party until such time as such information has come
into the public domain.
12.3. 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.
12.4. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall
constitute one and the same instrument.
12.5. 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.
12.6. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including
without limitation the SEC, 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. Notwithstanding the
generality of the foregoing, each party hereto further agrees
to furnish the Kansas Insurance Commissioner with any
information or reports in connection with services provided
under this Agreement which such Commissioner may request in
order to ascertain whether the variable insurance operations
of the Company are being conducted in a manner consistent with
the Kansas insurance laws and regulations and any other
applicable law or regulations.
12.7. 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.
- 15 -
12.8. 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.
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.
Security Benefit Life
Insurance Company By its authorized officer
By:
-------------------------------
Title:
----------------------------
Date:
------------------------------
[The Fund] By its authorized officer
By:
-------------------------------
Title:
----------------------------
Date:
------------------------------
[The Adviser] By its authorized officer
By:
-------------------------------
Title:
----------------------------
Date:
------------------------------
- 16 -
[Date]
SCHEDULE A
ACCOUNT(S) CONTRACT(S) DESIGNATED PORTFOLIO(S)
A-1
