PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
PIMCO VARIABLE INSURANCE TRUST,
AND
PIMCO ADVISORS DISTRIBUTORS LLC
THIS AGREEMENT, dated as of the 1st day of May, 2003, by and among
Security Benefit Life Insurance Company, (the "Company"), a Kansas life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each account hereinafter referred to as the "Account"), PIMCO
Variable Insurance Trust (the "Fund"), a Delaware business trust, and PIMCO
Advisors Distributors LLC (the "Underwriter"), a Delaware limited liability
company.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter ("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission (the "SEC") granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, if and to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Pacific Investment Management Company (the "Adviser"), which
serves as investment adviser to the Fund, is duly registered as an investment
adviser under the federal Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or 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;
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;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Administrative Class 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, and the Underwriter is authorized to
sell such shares to the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has agreed to instruct, and has so instructed,
the Underwriter to make available to the Company for purchase on behalf of the
Account Fund shares of those Designated Portfolios selected by the Underwriter.
Pursuant to such authority and instructions, and subject to Article X hereof,
the Underwriter agrees to make available to the Company for purchase on behalf
of the Account, shares of those Designated Portfolios listed on Schedule A to
this Agreement, such purchases to be effected at net asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) Fund
series (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
Underwriter may so provide, and (ii) the Board of Trustees of the Fund (the
"Board") may suspend or terminate the offering of Fund shares of any Designated
Portfolio or class thereof, 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 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, (i) the Company
shall not redeem Fund shares attributable to Contract owners except in the
circumstances permitted in Section 10.3 of this Agreement, and (ii) 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
2
(a) The Fund hereby appoints the Company as an agent of the
Fund for the limited purpose of receiving 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 of any such request (or relevant transactional
information therefor) on any day the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value
pursuant to the rules of the SEC (a "Business Day") 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 Prospectus (which as of the date of execution of this
Agreement is 4:00 p.m. Eastern Time) shall constitute receipt by the
Fund on that same Business Day, provided that the Fund receives notice
of such request by 9:00 a.m. Eastern Time on the next following
Business Day.
(b) The Company shall pay for shares of each Designated
Portfolio on the same 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 by wire to be received
by the Fund by 4:00 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). 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.
(c) Payment for Designated Portfolio shares redeemed by the
Account or the Company shall be made in federal funds transmitted by
wire to the Company or any other designated person by 4 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 redeem Designated Portfolio shares in assets
other than cash (as limited in accordance with Rule 18f-1 under the
0000 Xxx) and 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. The Fund shall not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company; the Company alone shall be
responsible for such action.
(d) 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 of such request, provided that, in the case of
a purchase request, payment for Fund shares so requested is received
3
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
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 7:00 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. Neither the Fund, any Designated Portfolio, the Underwriter,
nor any of their affiliates shall be liable for any information provided to the
Company pursuant to this Agreement which information is based on incorrect
information supplied by the Company.
1.5. The Fund shall furnish notice (by wire or telephone followed by
written confirmation) to the Company as soon as reasonably practicable of any
income dividends or capital gain distributions payable on any Designated
Portfolio shares by the record 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.
Stock 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 (subject to Section 1.8 hereof) and the cash value
of the Contracts may be invested in other investment companies provided,
however, that until this Agreement is terminated pursuant to Article X, the
Company shall promote the Designated Portfolios on a similar basis as other
funding vehicles available under the Contracts. The Company's obligation under
this provision shall be fully discharged so long as sales literature describing
all of the investment options available under the Contracts mentions the
Designated Portfolios as being available and quarterly performance information
about the Designated Portfolios is made available on the same basis as the
Contract's other investment options.
(b) The Company shall not, without prior notice to the Underwriter
(unless otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the Underwriter
(unless otherwise required by applicable law), induce Contract owners to change
or modify the Fund or change the Fund's distributor or 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 of
Trustees of the Fund.
4
1.8. The Underwriter and the Fund shall sell Fund shares only to
Participating Insurance Companies and their separate accounts and to persons or
plans ("Qualified Persons") that communicate to the Underwriter and the Fund
that they qualify to purchase shares of the Fund under Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
thereunder without impairing the ability of the Account to consider the
portfolio investments of the Fund as constituting investments of the Account for
the purpose of satisfying the diversification requirements of Section 817(h).
The Underwriter and the Fund shall not sell Fund shares to any insurance company
or separate account unless an agreement complying with Article VI of this
Agreement is in effect to govern such sales, to the extent required. The Company
hereby represents and warrants that it and the Account are Qualified Persons.
The Fund reserves the right to cease offering shares of any Designated Portfolio
in the discretion of the Fund.
1.9. 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.
1.10 In accordance with the Fund's procedures as in effect from time to
time, in the event of an error in the computation of a Designated Portfolio's
net asset value per share ("NAV") or any dividend or capital gain distribution
(each, a "pricing error"), the Fund shall immediately notify the Company as soon
as possible after discovery of the error. Such notification may be verbal, but
shall be confirmed promptly in writing in accordance with Article XI of this
Agreement. A pricing error shall be corrected as follows: (a) if the pricing
error results in a difference between the erroneous NAV and the correct NAV of
less than $0.01 per share, then no corrective action need be taken; (b) if the
pricing error results in a difference between the erroneous NAV and the correct
NAV equal to or greater than $0.01 per share, but less than 1/2 of 1% of the
Designated Portfolio's NAV at the time of the error, then the Fund shall
reimburse the Designated Portfolio for any loss, after taking into consideration
any positive effect of such error; however, no adjustments to Contract owner
accounts need be made; and (c) if the pricing error results in a difference
between the erroneous NAV and the correct NAV equal to or greater than 1/2 of 1%
of the Designated Portfolio's NAV at the time of the error, then the Fund shall
reimburse the Designated Portfolio for any loss (without taking into
consideration any positive effect of such error) and shall reimburse the Company
for the costs of adjustments made to correct Contract owner accounts. If an
adjustment is necessary to correct a material error which has caused Contract
owners to receive less than the amount to which they are entitled, the number of
shares of the appropriate Designated Portfolio(s) attributable to the accounts
of the Contract owners will be adjusted and the amount of any underpayments
shall be credited by the Fund to the Company for crediting of such amounts to
the applicable Contract owners accounts. Upon notification by the Fund of any
overpayment due to a material error, the Company shall promptly remit to the
Fund any overpayment that has not been paid to Contract owners; however, the
Fund acknowledges that the Company does not intend to seek additional payments
from any Contract owner who, because of a pricing error, may have underpaid for
units of interest credited to his/her account. In no event shall the Company be
liable to Contract owners for any such adjustments or underpayment amounts. A
pricing error within categories (b) or (c) above shall be deemed to be
"materially incorrect" or constitute a "material error" for purposes of this
Agreement.
5
The standards set forth in this Section 1.10 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the Parties shall amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
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 and that the sale of the Contracts shall comply in all material
respects with any state insurance suitability requirements that may be deemed to
be applicable to the sale. 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 prior to any
issuance or sale thereof 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 1940 Act. The Company
shall register and qualify the Contracts or interests therein as securities in
accordance with the laws of the various states only if and to the extent deemed
advisable by the Company.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, 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 or the Underwriter.
2.3. The Fund may make payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act. Prior to financing distribution
expenses pursuant to Rule 12b-1, the Fund will have the Board, a majority of
whom are not interested persons of the Fund, formulate and approve a plan
pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses.
2.4. The Fund makes no representations as to whether any aspect of its
operations, including, but not limited to, investment policies, fees and
expenses, complies with the insurance laws of the various states.
6
2.5. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and that it does and will
comply in all material respects with the 1940 Act.
2.6. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
2.7. The Fund and the Underwriter represent and warrant that all of
their trustees/directors, officers, employees, investment advisers, 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.
2.8. The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the Account,
in an amount not less than $5 million. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company. The
Company agrees to hold for the benefit of the Fund and to pay to the Fund any
amounts lost from larceny, embezzlement or other events covered by the aforesaid
bond to the extent such amounts properly belong to the Fund pursuant to the
terms of this Agreement. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Fund and the Underwriter in the event that such
coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many copies of
the Fund's current prospectus as the Company may reasonably request. The Fund
shall bear the expense of printing copies of the Fund's current prospectus for
the Contracts that will be distributed to existing Contract owners who have
allocated Contract value to a Designated Portfolio, and the Company shall bear
the expense of printing copies of the Fund's prospectus that are used in
connection with offering the Contracts issued by the Company. If requested by
the Company in lieu thereof, the Fund shall provide such documentation
(including a final copy of the new prospectus in electronic format at the Fund's
expense) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for the Fund is
amended) to have the prospectus for the Contracts and the Fund's prospectus
printed together in one document. The expenses of such printing shall be
apportioned between (a) the Company and (b) the Fund or its designee in
proportion to the number of pages of the Contract and Designated Portfolios'
prospectuses, with the Fund or its designee to contribute a maximum of $5,000
annually in aggregate towards the expenses of printing such a combined document
to existing Contract owners who have allocated Contract value to a Designated
Portfolio. Any additional expenses shall be borne by the Company. Additionally,
the Company shall bear all printing expenses of such combined documents where
used for distribution to prospective purchasers.
7
3.2. The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available, and the Underwriter
(or the Fund), at its expense, shall provide a reasonable number of copies of
such SAI free of charge to the Company for itself and for any owner of a
Contract who requests such SAI.
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 in
the form provided. The Company shall provide prior written notice of any
proposed modification of such information, which notice will describe in detail
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.
3.4. The Fund will pay or cause to be paid the expenses associated with
text composition, printing, mailing, distributing, and tabulation of proxy
statements and voting instruction solicitation materials to Contract owners with
respect to proxies related to the Fund, consistent with applicable provisions of
the 1940 Act.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of
such portfolio for which instructions have been
received,
so long as and to the extent that 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 will vote Fund shares held in any
segregated asset account in the same proportion as Fund shares of such portfolio
for which voting instructions have been received from Contract owners, to the
extent 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.
3.6.3.6. Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated
Portfolio calculates voting privileges as required bythe Shared Funding
Exemptive Order and consistent with any reasonable standards that the
Fund may adopt and provide in writing.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) or the Adviser or the Underwriter 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
8
literature or other promotional material in which the Fund (or a Designated
Portfolio thereof) or the Adviser or the Underwriter is named, and no such
material shall be used if the Fund or its designee so object.
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 or the Underwriter 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 or by the
Underwriter, except with the permission of the Fund or the Underwriter or the
designee of either.
4.3. The Fund and the Underwriter, 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 its
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 and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other 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 or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, 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 Fund or its 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 Underwriter any complaints received from the
Contract owners pertaining to the Fund or the 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
9
change in the 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.
4.8. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Fund or Underwriter may make payments to the
Company or to the underwriter for the Contracts if and in amounts agreed to by
the Underwriter in writing, and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter, or other
resources available to the Underwriter. Currently, no such payments are
contemplated.
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 and printing 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. The Fund or its
designee shall bear the expense of distributing Fund proxy material to Contract
owners as well as the expenses of tabulating the votes of Contract owners voting
Fund shares at Fund shareholder meetings.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts issued by the Company and of distributing the
Fund's annual and semi annual reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
10
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 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.
6.2. The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the 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 and the Underwriter 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
The following provisions shall apply only upon issuance of the Mixed and Shared
Funding Order and the sale of shares of the Fund to variable life insurance
separate accounts, and then only to the extent required under the 0000 Xxx.
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the Contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not
11
limited to, an obligation by the Company to inform the Board whenever Contract
owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement with respect to each Account; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Fund shall continue to
accept and implement orders by the Company for the purchase (and redemption) of
shares of the Fund.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contract if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination;
12
provided, however, that such withdrawal and termination shall be limited to the
extent required by any such material irreconcilable conflict as determined by a
majority of the disinterested members of the Board.
7.7. If and to the extent the Mixed and Shared Funding Exemption Order
or any amendment thereto contains terms and conditions different from Sections
3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then the Fund
and/or the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with the Mixed and Shared Funding Exemptive
Order, and Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in the Mixed and Shared
Funding Exemptive Order or any amendment thereto. If and to the extent that Rule
6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive
relief from any provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shared funding (as defined in the Mixed and Shared
Funding Exemptive Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the Fund
and/or the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
the Underwriter and each of its trustees/directors and officers, and each
person, if any, who controls the Fund or Underwriter within the meaning of
Section 15 of the 1933 Act or who is under common control with the Underwriter
(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 Underwriter for use in
the registration statement, prospectus or SAI for the Contracts or in
the
13
Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the Fund not
supplied by the Company 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 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 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; 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 (including a failure, whether unintentional or in good faith
or otherwise, to comply with the 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 the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company; or
(vi) 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
14
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 Underwriter
8.2(a). The Underwriter 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 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute 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 Underwriter 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
(other than statements or representations contained in the registration
statement, prospectus, SAI or sales literature for the Contracts not
supplied by the Fund, the Underwriter or persons under their control)
or wrongful conduct of the Fund or Underwriter or persons under their
authorization or control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement, prospectus, SAI
or sales literature covering the Contracts, or any amendment thereof or
15
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 or the Underwriter; or
(iv) arise as a result of any failure by the Fund or the Underwriter 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 requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or the Fund in
this Agreement or arise out of or result from any other material breach
of this Agreement by the Underwriter 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 Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
16
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 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 requirements specified in Article VI of
this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons 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.
17
8.3(d). The Company and the Underwriter agree 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 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 California.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, any Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith. If, in the future, the Mixed and Shared Funding Exemptive Order
should no longer be necessary under applicable law, then Article VII 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 Fund and
the Underwriter 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 Fund and
the Underwriter 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 Underwriter in the event that
formal administrative proceedings are instituted against the
Company by 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 Fund's shares; provided, however, that the
Fund or Underwriter 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
18
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Underwriter by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; provided,
however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Fund or Underwriter to perform its obligations
under this Agreement; or
(f) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Designated Portfolio in
the event that such 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
such Portfolio may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written notice to
the Company in the event that the Contracts fail to meet the
qualifications specified in Article VI hereof; or
(h) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or
the Underwriter 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
(i) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that the Fund, Adviser, or
the Underwriter 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
(j) 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 Underwriter
of the date of substitution; or
(k) termination by any party in the event that the Fund's Board of
Trustees determines that a material irreconcilable conflict
exists as provided in Article VII.
10.2. Notwithstanding any termination of this Agreement, the Fund and
the Underwriter shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"), unless the
Underwriter requests that the Company seek, or unless the Company determines for
itself to seek, an order pursuant to Section 26(b) of the 1940 Act to permit the
19
substitution of other securities for the shares of the Designated Portfolios. In
the event that the Underwriter requests that the Company seek an order, the
Underwriter agrees to pay the cost of seeking and implementing such an order,
and the Company agrees that it shall reasonably cooperate with the Underwriter
and seek such an order upon request. In the event that it is the Company which
has determined to seek an order (i.e. it has not been requested by the
Underwriter) then the costs of seeking and implementing such order will be borne
by the Company. Specifically, the owners of the Existing Contracts may 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 election to seek an order under Section
26(b) by the Underwriter, or the Company, as applicable.). The parties agree
that this Section 10.2 shall not apply to any terminations under Article VII and
the effect of such Article VII terminations shall be governed by Article VII of
this Agreement. The parties further agree that this Section 10.2 shall not apply
to any terminations under Section 10.1(g) of this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), (iii) upon 45 days
prior written notice to the Fund and Underwriter, as permitted by an order of
the SEC pursuant to Section 26(b) of the 1940 Act, but only if a substitution of
other securities for the shares of the Designated Portfolios is consistent with
the terms of the Contracts, or (iv) as permitted under the terms of the
Contract. Upon request, the Company will promptly furnish to the Fund and the
Underwriter reasonable assurance that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contacts, the Company shall not prevent
Contract owners from allocating payments to a Portfolio that was otherwise
available under the Contracts without first giving the Fund or the Underwriter
45 days notice of its intention to do so.
10.4. 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 Fund: PIMCO Variable Insurance Trust
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
If to the Company: Security Benefit Life Insurance Company
Attention: General Counsel
One Security Benefit Place
Topeka, Kansas 66636-0001
If to Underwriter: PIMCO Advisors Distributors LLC
0000 Xxxxxxxx Xxxxxx
00
Xxxxxxxx, XX 00000
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to the
property of the Fund, and in the case of a series company, the respective
Designated Portfolios listed on Schedule A hereto as though each such Designated
Portfolio had separately contracted with the Company and the Underwriter 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 Underwriter shall treat as confidential the names
and addresses of the owners of the Contracts and other information about the
owners of the Contracts provided by the Company. Each person 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 names and addresses and other confidential
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 annuity
operations of the Company are being conducted in a manner consistent with the
Kansas variable annuity 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.
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.
21
22
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
SECURITY BENEFIT LIFE
INSURANCE COMPANY:
By its authorized officer
By: XXX XXXX
Name: Xxx Xxxx
Title: Senior Vice President
Date: May 20, 2003
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Date: May 5, 2003
PIMCO ADVISORS DISTRIBUTORS LLC
By its authorized officer
By: XXXXXX XXXXXX
Name: Xxxxxx Xxxxxx
Title: Managing Director
Date: May 8, 2003
23
Schedule A
ACCOUNT(S) CONTRACT(S) DESIGNATED PORTFOLIO(S)
SBL Variable Annuity Account XIV SecureDesigns Variable Annuity PIMCO All Asset Portfolio
June 26, 2000 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
SBL Variable Annuity Account XIV AdvanceDesigns Variable Annuity PIMCO All Asset Portfolio
June 26, 2000 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
SBL Variable Annuity Account XIV AdvisorDesigns Variable Annuity PIMCO Real Return Portfolio
June 26, 2000 PIMCO Total Return Portfolio
24
AMENDMENT NUMBER 1
TO PARTICIPATION AGREEMENT
WHEREAS, Security Benefit Life Insurance Company (the "Company"), PIMCO
Variable Insurance Trust (the "Fund") and PIMCO Advisors Distributors LLC (the
"Underwriter") are parties to a Participation Agreement dated May 1, 2003 (the
"Agreement"); and
WHEREAS, terms of the Agreement contemplate that Accounts and Contracts
of SBL that are eligible to purchase Designated Portfolios of the Fund may be
changed from time to time by amending Schedule A to the Agreement; and
WHEREAS, the parties wish to add certain Accounts and Contracts to the
Agreement by deleting the existing Schedule A and replacing it with the Schedule
A attached hereto; and
WHEREAS, capitalized terms used but not defined herein, shall have the
meaning given them in the Agreement; and
WHEREAS, all other terms of the Agreement shall remain in full force
and effect;
NOW, THEREFORE, the parties agree to delete the existing Schedule A to
the Agreement and replace it with the Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment # 1 to the Agreement to be executed in its name and on its behalf by
its duly authorized representative and its seal to be hereunder affixed hereto
as of the date specified below.
SECURITY BENEFIT LIFE
INSURANCE COMPANY:
By its authorized officer
By: XXX XXXX
Name: Xxx Xxxx
Title: Sr. Vice President & Chief Marketing
Officer
Date: March 8, 2004
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Date: March 25, 2004
PIMCO ADVISORS DISTRIBUTORS LLC
By its authorized officer
By: XXXXXX X. XXXXXX, XX.
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Managing Director
Date: April 8, 2004
25
Schedule A
---------------------------------------------- ----------------------------------------- -------------------------------------
ACCOUNT(S) CONTRACT(S) DESIGNATED PORTFOLIO(S)
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XIV SecureDesigns Variable Annuity PIMCO All Asset Portfolio
June 26, 2000 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XIV AdvanceDesigns Variable Annuity PIMCO All Asset Portfolio
June 26, 2000 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XIV AdvisorDesigns Variable Annuity PIMCO Real Return Portfolio
June 26, 2000 PIMCO Total Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
Variflex Separate Account Variflex Variable Annuity PIMCO All Asset Portfolio
January 31, 1984 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
Variflex Separate Account Variflex ES Variable Annuity PIMCO All Asset Portfolio
January 31, 1984 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account VIII Variflex LS Variable Annuity PIMCO All Asset Portfolio
September 12, 1994 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account VIII Variflex Signature Variable Annuity PIMCO All Asset Portfolio
September 12, 1994 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account VIII Variflex Extra Credit Variable Annuity PIMCO All Asset Portfolio
September 12, 1994 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XVII ClassicStrategies Variable Annuity PIMCO All Asset Portfolio
November 24, 2003 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
26
AMENDMENT NUMBER 2
TO PARTICIPATION AGREEMENT
WHEREAS, Security Benefit Life Insurance Company (the "Company"), PIMCO
Variable Insurance Trust (the "Fund") and Allianz Global Investors Distributors
(formerly PIMCO Advisors Distributors LLC) (the "Underwriter") are parties to a
Participation Agreement dated May 1, 2003 (the "Agreement"); and
WHEREAS, terms of the Agreement contemplate that Accounts and Contracts
of SBL that are eligible to purchase Designated Portfolios of the Fund may be
changed from time to time by amending Schedule A to the Agreement; and
WHEREAS, the parties wish to add certain Accounts and Contracts to the
Agreement by deleting the existing Schedule A and replacing it with the Schedule
A attached hereto; and
WHEREAS, capitalized terms used but not defined herein, shall have the
meaning given them in the Agreement; and
WHEREAS, all other terms of the Agreement shall remain in full force
and effect;
NOW, THEREFORE, the parties agree to delete the existing Schedule A to
the Agreement and replace it with the Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment # 2 to
the Agreement to be executed in its name and on its behalf by its duly
authorized representative and its seal to be hereunder affixed hereto as of the
date specified below.
SECURITY BENEFIT LIFE
INSURANCE COMPANY:
By its authorized officer
By: XXXXXX X. XXXXXXXXX
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Date: July 7, 2005
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Date: July 25, 2005
ALLIANZ GLOBAL INVESTORS DISTRIBUTORS LLC
By its authorized officer
By: X. XXXXX MORE, JR.
Name: E. Xxxxx Xxxxx, Jr.
Title: Managing Director and CEO
Date:
27
Schedule A
---------------------------------------------- ----------------------------------------- -------------------------------------
ACCOUNT(S) CONTRACT(S) DESIGNATED PORTFOLIO(S)
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XIV SecureDesigns Variable Annuity PIMCO All Asset Portfolio
June 26, 2000 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XIV AdvanceDesigns Variable Annuity PIMCO All Asset Portfolio
June 26, 2000 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XIV AdvisorDesigns Variable Annuity PIMCO Real Return Portfolio
June 26, 2000 PIMCO Total Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
Variflex Separate Account Variflex Variable Annuity PIMCO All Asset Portfolio
January 31, 1984 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
Variflex Separate Account Variflex ES Variable Annuity PIMCO All Asset Portfolio
January 31, 1984 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account VIII Variflex LS Variable Annuity PIMCO All Asset Portfolio
September 12, 1994 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account VIII Variflex Signature Variable Annuity PIMCO All Asset Portfolio
September 12, 1994 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account VIII Variflex Extra Credit Variable Annuity PIMCO All Asset Portfolio
September 12, 1994 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XVII ClassicStrategies Variable Annuity PIMCO All Asset Portfolio
November 24, 2003 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
---------------------------------------------- ----------------------------------------- -------------------------------------
SBL Variable Annuity Account XVII ThirdFed Variable Annuity PIMCO All Asset Portfolio
November 24, 2003 CUSIP 000000000
---------------------------------------------- ----------------------------------------- -------------------------------------
Date: July 1, 2005
28
AMENDMENT NUMBER 3
TO PARTICIPATION AGREEMENT
WHEREAS, Security Benefit Life Insurance Company (the "Company"), PIMCO
Variable Insurance Trust (the "Fund") and Allianz Global Investors Distributors
(formerly PA Distributors LLC) (the "Underwriter") are parties to a
Participation Agreement dated May 1, 2003 (the "Agreement"); and
WHEREAS, terms of the Agreement contemplate that Accounts and Contracts
of SBL that are eligible to purchase Designated Portfolios of the Fund may be
changed from time to time by amending Schedule A to the Agreement; and
WHEREAS, the parties wish to add certain Accounts and Contracts to the
Agreement by deleting the existing Schedule A and replacing it with the Schedule
A attached hereto; and
WHEREAS, capitalized terms used but not defined herein, shall have the
meaning given them in the Agreement; and
WHEREAS, all other terms of the Agreement shall remain in full force
and effect;
NOW, THEREFORE, the parties agree to delete the existing Schedule A to
the Agreement and replace it with the Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment # 3 to the Agreement to be executed in its name and on its behalf by
its duly authorized representative and its seal to be hereunder affixed hereto
as of the date specified below.
SECURITY BENEFIT LIFE
INSURANCE COMPANY:
By its authorized officer
By: KALMANN BAKK, JR.
Name: Kalmann Bakk, Jr.
Title: Sr. Vice President & Chief Marketing
Officer
Date: August 31, 2005
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Date:
ALLIANZ GLOBAL INVESTORS DISTRIBUTORS LLC
By its authorized officer
By: X. XXXXX MORE, JR.
Name: E. Xxxxx Xxxxx, Jr.
Title: Managing Director and CEO
Date: October 13, 2005
29
Date: October 13, 2005
Schedule A
--------------------------------------------- ------------------------------ -------------------------------------------------
ACCOUNT(S) CONTRACT(S) DESIGNATED PORTFOLIO(S)
--------------------------------------------- ------------------------------ -------------------------------------------------
SBL Variable Annuity Account XIV SecureDesigns Variable PIMCO All Asset Portfolio
June 26, 2000 Annuity PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
SBL Variable Annuity Account XIV AdvanceDesigns Variable PIMCO All Asset Portfolio
June 26, 2000 Annuity PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
SBL Variable Annuity Account XIV AdvisorDesigns Variable PIMCO Real Return Portfolio
June 26, 2000 Annuity PIMCO Total Return Portfolio
--------------------------------------------- ------------------------------ -------------------------------------------------
Variflex Separate Account Variflex Variable Annuity PIMCO All Asset Portfolio
January 31, 1984 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
Variflex Separate Account VIVA Variable Annuity PIMCO All Asset Portfolio
January 31, 1984 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
Variflex Separate Account PGA Variable Annuity PIMCO All Asset Portfolio
January 31, 1984 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
SBL Variable Annuity Account VIII Variflex LS Variable Annuity PIMCO All Asset Portfolio
September 12, 1994 PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
30
--------------------------------------------- ------------------------------ -------------------------------------------------
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
SBL Variable Annuity Account VIII Variflex Signature Variable PIMCO All Asset Portfolio
September 12, 1994 Annuity PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
31
--------------------------------------------- ------------------------------ -------------------------------------------------
SBL Variable Annuity Account VIII Variflex Extra Credit PIMCO All Asset Portfolio
September 12, 1994 Variable Annuity PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
SBL Variable Annuity Account XVII ClassicStrategies Variable PIMCO All Asset Portfolio
November 24, 2003 Annuity PIMCO Low Duration Portfolio
PIMCO Real Return Portfolio
PIMCO CommodityRealReturn Strategy Portfolio
PIMCO Foreign Bond Portfolio (U.S.
Dollar-Hedged)
--------------------------------------------- ------------------------------ -------------------------------------------------
SBL Variable Annuity Account XVII ThirdFed Variable Annuity PIMCO All Asset Portfolio
November 24, 2003
--------------------------------------------- ------------------------------ -------------------------------------------------
Administrative Class shares will be offered for each Portfolio listed
above, unless otherwise indicated.
CUSIP NUMBERS:
PIMCO All Asset Portfolio, CUSIP #000000000
PIMCO Low Duration Portfolio, CUSIP # 000000000
PIMCO Real Return Portfolio, CUSIP # 000000000
PIMCO Total Return Portfolio, CUSIP # 000000000
PIMCO CommodityRealReturn Strategy Portfolio, CUSIP #000000000
PIMCO Foreign Bond Portfolio (U.S. Dollar-Hedged), CUSIP #000000000
Date: August 23, 2005
32
AMENDMENT NUMBER 4
TO PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
PIMCO VARIABLE INSURANCE TRUST,
AND
ALLIANZ GLOBAL INVESTORS DISTRIBUTORS LLC
WHEREAS, Security Benefit Life Insurance Company (the "Company"), PIMCO
Variable Insurance Trust (the "Fund") and Allianz Global Investors Distributors,
LLC (the "Underwriter") are parties to a Participation Agreement dated May 1,
2003, as amended (the "Agreement"); and
WHEREAS, terms of the Agreement contemplate that it may be amended with
the mutual agreement of the parties; and
WHEREAS, the parties wish to change the use of the terms "Account,"
"Contract," and "Designated Portfolios" in such a way that the Accounts,
Contracts and Designated Portfolios need not be listed on Schedule A to the
Agreement, but nonetheless, for convenience the parties may determine to list
them on Schedule A; and
WHEREAS, capitalized terms used but not defined in this Amendment,
shall have the meaning given them in the Agreement; and
WHEREAS, all other terms of the Agreement shall remain in full force
and effect;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree to amend the Agreement as follows:
1. The first paragraph of the Agreement is hereby deleted and replaced with the
following:
THIS AGREEMENT, dated as of the 1st day of May, 2003 (as subsequently
amended), by and among Security Benefit Life Insurance company, (the "Company"),
a Kansas life insurance company, on its own behalf and on behalf of each
segregated asset account of the Company currently in existence or hereafter
created (each account hereinafter referred to as the ("Account"), PIMCO Variable
Insurance Trust (the "Fund"), a Delaware Statutory trust, and Allianz Global
Investors Distributors LLC (formerly known as PIMCO Advisors Distributors LLC)
(the "Underwriter"), a Delaware limited liability company. An Account will
become subject to the terms of this Agreement as of the date such Account first
invests in a Portfolio of the Fund.
2. The sixth recital clause of the Agreement is hereby deleted and replace with
the following:
33
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or
partially by the Account (the "Contracts");
3. The seventh recital clause of the Agreement is hereby deleted and replaced
with the following
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company; to set aside and invest
assets attributable to the aforesaid Contracts
4. The ninth recital clause of the Agreement is hereby deleted and replaced with
the following:
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the various
Portfolios of the Fund on behalf of the Account to fund the aforesaid
Contracts, and the Underwriter is authorized to sell such shares to the
Account at net asset value
5. It is agreed that Company, on behalf of an Account, has access under this
Agreement to all Portfolios of the Fund and all share classes thereof (including
Portfolios and share classes created in the future) and that it shall not be
necessary to list the Accounts, the Contracts, the Portfolios or the share
classes on Schedule A. It is further agreed that a Portfolio of the Fund shall
become a "Designated Portfolio" hereunder as of the date an Account of the
Company first invests in such Portfolio. Notwithstanding the fact that Accounts,
Contracts and Designated Portfolios need not be listed on Schedule A, the
parties may, in their discretion and for convenience and ease of reference only,
include one or more Accounts, Contracts and Designated Portfolios on Schedule A
from time to time.
6. In order to reflect the intent of this Amendment regarding Schedule A,
Section 1.1 of the Agreement is deleted and replaced with the following:
1.1 The Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and has agreed to instruct, and has so
instructed, the Underwriter to make available to the Company for
purchase on behalf of the Account Fund shares of the Designated
Portfolios . Pursuant to such authority and instructions, and subject
to Article X hereof, the Underwriter agrees to make available to the
Company for purchase on behalf of the Account, the shares of any
Designated Portfolio as requested by the Company, such purchases to be
effected at net asset value in accordance with Section 1.3 of this
Agreement. Notwithstanding the foregoing, (i) a Fund series (other than
a Fund series that constitutes a Designated Portfolio as of October 13,
2006) in existence now or that may be established in the future may be
made available to the Company on terms different than those set forth
herein as the Underwriter may so provide in writing to the Company, and
(ii) the Board of Trustees of the Fund (the "Board") may suspend or
terminate the offering of Fund shares of any Designated Portfolio or
class thereof, 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 in the best interests of the shareholders of such Designated
Portfolio.
34
7. Delete Section 5.1 and replace with the following:
Except as otherwise provided herein, no party to this Agreement shall
pay any fee or other compensation to any other party to this Agreement. Except
as otherwise provided herein, all expenses incident to performance by a party
under this Agreement shall be paid by such party.
8. In order to reflect the intent of this Amendment regarding Schedule A,
Section 12.1 of the Agreement is deleted and replaced with the
following:
12.1 All persons dealing with the Fund must look solely to the property
of the Fund, and in the case of a series company, the respective
Designated Portfolios as though each such Designated Portfolio had
separately contracted with the Company and the Underwriter 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
9. The existing Schedule A is deleted in its entirety and replaced with the
accompanying Schedule A
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment Number 4 to the Agreement to be executed in its name and on its behalf
by its duly authorized representative as of the date specified below.
SECURITY BENEFIT LIFE
INSURANCE COMPANY
By its authorized officer
By: XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Sr. Vice President, CFO and Treasurer
Date: 10/13/06
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By: XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Date: 10/20/06
ALLIANZ GLOBAL INVESTORS
DISTRIBUTORS LLC
By its authorized officer
By: XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Managing Director
Date: 11/10/06
35
SCHEDULE A
ACCOUNTS - All Accounts of the Company, including, without limitation:
Variflex Separate Account
SBL Variable Annuity Account VIII
SBL Variable Annuity Account XIV
SBL Variable Annuity Account XVII
CONTRACTS - All Contracts of the Company, including without limitation:
Variflex Variable Annuity
VIVA Variable Annuity
PGA Variable Annuity
Variflex Extra Credit Variable Annuity
Variflex LS Variable Annuity
Variflex Signature Variable Annuity
AdvisorDesigns Variable Annuity
AdvanceDesigns Variable Annuity
SecureDesigns Variable Annuity
ClassicStrategies Variable Annuity
ThirdFed Variable Annuity
EliteDesigns Variable Annuity
DESIGNATED PORTFOLIOS - All Portfolios of the Fund, including without
limitation:
All Asset All Authority Portfolio
All Asset Portfolio
CommodityRealReturn Strategy Portfolio
Diversified Income Portfolio
Emerging Markets Bond Portfolio
Foreign Bond Portfolio (U.S. Dollar-Hedged)
Foreign Bond Portfolio (Unhedged)
Global Bond Portfolio (Unhedged)
High Yield Portfolio Long-Term U.S. Government Portfolio
Low Duration Portfolio Money Market Portfolio Real Return Portfolio
RealEstateRealReturn Strategy Portfolio Short-Term Portfolio
StocksPLUS(R) Growth & Income Portfolio
36
StocksPLUS(R) Total Return Portfolio
Total Return Portfolio
Total Return Portfolio II
Additionally, the "Designated Portfolios" will include any Portfolio of
the Fund created subsequent to the date hereof.
SHARE CLASSES: - All Share Classes of the Fund*, including without
limitation:
Administrative Class
Advisor Class
M Class
* Certain Share Classes are not available in certain Portfolios of the
Fund.
Additionally, a permitted share classes of a Designated Portfolio will
include any share class created subsequent to the date hereof.
Date: October 13, 2006
37
AMENDMENT NO. 5
TO PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 5 TO THE PARTICIPATION AGREEMENT is entered into as
of March 12, 2007, by and between Allianz Global Investors Distributors LLC
("AGID"), the principal underwriter for Premier VIT and PIMCO Variable Insurance
Trust (each a "Trust" and, collectively, the "Trusts") and Security Benefit Life
Insurance Company ("Company").
WHEREAS, the Company and AGID are parties to that certain Participation
Agreement dated April 25, 2002, as amended, and
WHEREAS, AGID and Company (each a "Party" and, together, the "Parties")
seek to enter into this Amendment in order for the Trusts, AGID and Company to
comply with the requirements of Rule 22c-2 ("Rule 22c-2") under the Investment
Company Act of 1940, as amended (the "1940 Act"), and to make other changes to
the Participation Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, which consideration is full and complete, AGID and Company hereby
agree as follows:
A. CONTRACTHOLDER INFORMATION
A.1. AGREEMENT TO PROVIDE INFORMATION. Company agrees to provide Fund Agent,
upon written request, the taxpayer identification number ("TIN"), the
Individual/International Taxpayer Identification Number ("ITIN"), or
other government-issued identifier ("GII") and the Contract owner
number or participant account number, if known, of any or all
Contractholder(s) of the account, the name or other identifier of any
investment professional(s) associated with the Contractholder(s) or
account (if known), and the amount, date and transaction type
(purchase, redemption, transfer, or exchange) of every purchase,
redemption, transfer, or exchange of Shares held through an account
maintained by Company during the period covered by the request. Unless
otherwise specifically requested by the Fund Agent, the Company shall
only be required to provide information relating to
Contractholder-Initiated Transfer Purchases or Contractholder-Initiated
Transfer Redemptions.
A.1.1. PERIOD COVERED BY REQUEST. Requests must set forth a specific
period, not to exceed 90 days from the date of the request,
for which transaction information is sought. Fund Agent may
request transaction information older than 90 days from the
date of the request as it deems necessary to investigate
compliance with policies established or utilized by a Trust or
Fund Agent for the purpose of eliminating or reducing any
dilution of the value of the outstanding shares issued by a
Fund.
38
If requested by Fund Agent, Company will provide the
information specified in Section A.1 above for each trading
day.
A.1.2. FORM AND TIMING OF RESPONSE. Company agrees to provide,
promptly upon request of Fund Agent, the requested information
specified in Section A.1. Intermediary agrees to use its best
efforts to determine promptly whether any specific person
about whom it has received the identification and transaction
information specified in Section A.1 is itself a "financial
intermediary," as that term is defined in Rule 22c-2 (an
"Indirect Intermediary") and, upon request of Fund Agent,
promptly either (i) provide (or arrange to have provided) the
information set forth in Section A.1 for those Contractholders
who hold an account with an Indirect Intermediary or (ii)
restrict or prohibit the Indirect Intermediary from purchasing
Shares in nominee name on behalf of other persons.
Intermediary additionally agrees to inform Fund Agent whether
it plans to perform (i) or (ii) above. Responses required by
this paragraph must be communicated in writing and in a format
mutually agreed upon by the Parties. To the extent
practicable, the format for any Contractholder and transaction
information provided to Fund Agent should be consistent with
the NSCC Standardized Data Reporting Format.
A.1.3. LIMITATIONS ON USE OF INFORMATION. Fund Agent agrees not to
use the information received hereunder for marketing or any
other similar purpose without the prior written consent of
Company; provided, however, that this provision shall not
limit the use of publicly available information, information
already in the possession of Fund Agent, a Trust or their
affiliates (and not received from Company)at the time the
information is received pursuant to this Amendment or
information which lawfully comes into the possession of Fund
Agent, a Trust or their affiliates from a third party who is
under no duty (contractual or otherwise) of confidentiality.
B. EXECUTION OF TRADING RESTRICTION INSTRUCTIONS
B.1. AGREEMENT TO RESTRICT TRADING. Company agrees to execute written
instructions from Fund Agent to restrict or prohibit further purchases
or exchanges of Shares by a Contractholder that has been identified by
Fund Agent as having engaged in transactions in Shares (directly or
indirectly through Intermediary's account) that violate policies
established or utilized by a Trust or Fund Agent for the purpose of
eliminating or reducing any dilution of the value of the outstanding
Shares issued by a Fund. Unless otherwise directed by Fund Agent, any
such restrictions or prohibitions shall only apply to
Contractholder-Initiated Transfer Purchases or Contractholder-Initiated
Transfer Redemptions that are effected directly or indirectly through
Company.
39
B.1.1. FORM OF INSTRUCTIONS. Instructions must include the TIN, ITIN
or GII and the specific individual Contractholder number or
participant account number associated with the Contractholder,
if known, and the specific restriction(s) to be executed. If
the TIN, ITIN, GII or the specific individual Contractholder
number or participant account number associated with the
Contractholder is not known, the instructions must include an
equivalent identifying number of the Contractholder(s) or
account(s) or other agreed upon information to which the
instruction relates.
B.1.2. TIMING OF RESPONSE. Company agrees to execute instructions
from Fund Agent as soon as reasonably practicable, but not
later than five (5) business days after receipt of the
instructions by Company.
B.1.3. CONFIRMATION BY INTERMEDIARY. Company must provide written
confirmation to Fund Agent that Fund Agent's instructions to
restrict or prohibit trading have been executed. Company
agrees to provide confirmation as soon as reasonably
practicable, but not later than ten (10) business days after
the instructions have been executed.
C. DEFINITIONS
For purposes of this Amendment, certain terms are used as defined in
the preamble or body of this Amendment. The following terms shall have the
following meanings, unless a different meaning is clearly required by the
context:
C.1. The term "Contractholder" means the holder of interests in a Contract
or a participant in an employee benefit plan with a beneficial interest
in a Contract.
C.2. The term "Contractholder-Initiated Transfer Purchase" means a
transaction that is initiated or directed by a Contractholder that
results in a transfer of assets within a Contract to a Fund, but does
not include transactions that are executed: (i) automatically pursuant
to a contractual or systematic program or enrollment such as a transfer
of assets within a Contract to a Fund as a result of "dollar cost
averaging" programs, insurance company approved asset allocation
programs, or automatic rebalancing programs; (ii) pursuant to a
Contract death benefit; (iii) as a result of a one-time step-up in
Contract value pursuant to a Contract death benefit; (iv) as a result
of an allocation of assets to a Fund through a Contract as a result of
payments such as loan repayments, scheduled contributions, retirement
plan salary reduction contributions, or planned premium payments to the
Contract; or (v) pre-arranged transfers at the conclusion of a required
"free look" period.
The term "Contractholder-Initiated Transfer Redemption" means a
transaction that is initiated or directed by a Contractholder that
results in a transfer of assets within a Contract out of a Fund, but
does not include transactions that are executed: (i) automatically
pursuant to a contractual or systematic program or
40
enrollments such as transfers of assets within a Contract out of a Fund
as a result of annuity payouts, loans, systematic withdrawal programs,
insurance company approved asset allocation programs and automatic
rebalancing programs; (ii) as a result of any deduction of charges or
fees under a Contract; (iii) within a Contract out of a Fund as a
result of scheduled withdrawals or surrenders from a Contract; or (iv)
as a result of payment of a death benefit from a Contract.
C.3. The term "Funds" shall mean the constituent series of the Trusts, but
for purposes of Section A of this Amendment shall not include Funds
excepted from the requirements of paragraph (a) of Rule 22c-2 by
paragraph (b) of Rule 22c-2.
C.4. The term "Fund Agent" shall mean AGID or such other persons or entities
as may be designated as such by the Trusts for purposes of this
Amendment from time to time.
C.5. The term "Participation Agreement" shall mean the Participation
Agreement and/or other similar agreement(s) relating to transactions in
Shares to which Company is a party.
C.6. The term "promptly" shall mean as soon as practicable but in no event
later than five (5) business days from Company's receipt of the request
for information from Fund Agent
C.7. The term "Shares" means the interests of Contractholders corresponding
to the redeemable securities of record issued by a Fund.
C.8. The term "written" includes electronic writings and facsimile
transmissions.
In addition, for purposes of this Amendment, the term "purchase" does not
include the automatic reinvestment of dividends or distributions.
D. ADDITIONAL AMENDMENTS TO PARTICIPATION AGREEMENT
The Participation Agreement is hereby further amended to incorporate
the provisions set forth in Exhibit A hereto.
E. SCOPE OF AMENDMENT
Company acknowledges and agrees that this Amendment shall apply to the
handling of all transactions in Shares, whether authorized under the
Participation Agreement or any other agreement between or among Company and a
Trust, any transfer agent of a Trust, AGID, any other Fund Agent or any of their
affiliates, and further acknowledges and agrees that the Participation Agreement
and any other such agreement is hereby modified to the extent necessary to
reflect the agreements herein.
41
F. EFFECTIVE DATE
This Amendment shall be effective upon its execution hereof or, if
later, upon the effectiveness of the provisions of Rule 22c-2 relating to
agreements with "financial intermediaries" (as such term is defined in Rule
22c-2). Prior to the effective date of this Amendment, AGID and Company agree
that any request made to Company by AGID for Contractholder transaction
information, and Company's response to such request, shall be governed by
whatever practices AGID and Company had utilized in the absence of a formal
agreement, if any, to govern such requests.
G. AMENDMENTS TO COMPLY WITH RULE 22C-2
This Agreement may not be amended without written consent of the
parties hereto.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
42
IN WITNESS WHEREOF, the undersigned has caused this Amendment No. 5 to
be executed as of the date first above written.
ALLIANZ GLOBAL INVESTORS
DISTRIBUTORS LLC
XXXXX XXXXXXX
By: Xxxxx Xxxxxxx
Title: Managing Director
Legal name of Intermediary:
SECURITY BENEFIT LIFE INSURANCE COMPANY
XXXXXX X. XXXXX
By: Xxxxxx X. Xxxxx
Title: Chief Operating Officer
43
EXHIBIT A
ADDITIONAL AMENDMENTS TO PARTICIPATION AGREEMENT
Capitalized terms used in the provisions set forth below are used as
defined in the Participation Agreement.
COMPLIANCE MATTERS. As required by the Participation Agreement, Company
shall comply with provisions of the Prospectuses and Statement of
Additional Information of each Trust, and with applicable federal and
state securities laws. Among other things, Company shall be responsible
for reasonably assuring that: (a) only orders to purchase, redeem or
exchange Shares received by Company or any Indirect Intermediary prior
to the Valuation Time shall be submitted directly or indirectly by
Company to the Fund or its transfer agent or other applicable agent for
receipt of a price based on the net asset value per Share calculated
for that day in accordance with Rule 22c-1 under the 1940 Act(1); and
(b) Company shall cause to be imposed and/or waived applicable
redemption fees, if any, only in accordance with the relevant Fund's
then current Prospectuses or Statement of Additional Information and/or
as instructed by Fund Agent. Company further agrees to make reasonable
efforts to assist the Funds and their service providers (including but
not limited to Fund Agent) to detect, prevent and report market timing
or excessive short-term trading of Shares. To the extent Company has
actual knowledge of violations of Fund policies (as set forth in the
applicable Fund's then current Prospectuses or Statement of Additional
Information) regarding (i) the timing of purchase, redemption or
exchange orders and pricing of Shares, (ii) market timing or excessive
short-term trading, or (iii) the imposition of redemption fees, if any,
Company agrees to report such known violations to Fund Agent. For
purposes of this provision, the term "Valuation Time" refers to the
time as of which the Shares are valued on each business day, currently
the close of regular trading on the New York Stock Exchange (normally,
4:00 p.m., Eastern Time) on each day that the New York Stock Exchange
is open for business.
(1) Orders to purchase, redeem or exchange Fund shares received by Company
subsequent to the Valuation Time on any given day shall receive a price
based on the next determined net asset value per Share in accordance
with Rule 22c-1 under the 1940 Act.
-----------
(1) Orders to purchase, redeem or exchange Fund shares received by Company
subsequent to the Valuation Time on any given day shall receive a price
based on the next determined net asset value per Share in accordance
with Rule 22c-1 under the 1940 Act.
