PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
SECURITY DISTRIBUTORS, INC.,
AND
AMERICAN CENTURY INVESTMENT SERVICES, INC.
THIS AGREEMENT, dated as of the 1st day of July, 2001, by and among
Security Benefit Life Insurance Company, ("SBL"), a stock life insurance company
organized under the laws of the State of Kansas, on its own behalf and on behalf
of each segregated asset account of SBL set forth on Schedule A hereto, as may
be amended from time to time (each an ("Account"), Security Distributors, Inc.,
a Kansas corporation and a registered broker/dealer ("SDI" and collectively with
SBL, the ("Company") and American Century Investment Services, Inc. (the
"Distributor"), a Missouri corporation,
WHEREAS, American Century Mutual Funds, Inc., American Century Capital
Portfolios, Inc. and American Century World Mutual Funds, Inc. (collectively,
the "Issuers") are each registered as an open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act") and offer series of
shares representing an interest in a particular managed portfolio of securities
(the "Funds"), which are registered under the Securities Act of 1933, as amended
(the " 1933 Act"); and
WHEREAS, Distributor serves as principal underwriter of each of the Funds
and is duly registered as a broker/dealer with SEC; and
WHEREAS, American Century Investment Management, Inc., which serves as
investment advisor to the Fund, is duly registered as an investment advisor
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Company has issued or will issue certain variable annuity
contracts supported wholly or partially by the Account (the "Contracts"), and
said Contracts are listed in Schedule A hereto, as it may be amended from time
to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, the Company intends to purchase shares of the Advisor Class of
the Funds listed in Schedule A hereto, as it may be amended from time to time by
mutual written agreement (the "Designated Funds"), on behalf of the Account to
fund the aforesaid Contracts; and
WHEREAS, the Distributor desires to retain the Company to perform certain
services and the Company is willing and able to furnish such services.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
and Distributor agree as follows:
ARTICLE I SALE OF FUND SHARES
1.1. Subject to Article IX hereof, the Distributor agrees to cause
the Issuers to make available to the Company for purchase on behalf of the
Account, shares of the Designated Funds, such purchases to be effected at net
asset value in accordance with Section 1.3 of this Agreement. Notwithstanding
the foregoing, (i) the Funds (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 Issuer may so provide, and (ii) the Board of Directors
of the Funds (the "Board") may suspend or terminate the offering of shares of
any Designated Fund 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 and in the
best interests of the shareholders of such Designated Fund.
1.2. The Distributor shall cause the Funds to redeem, at the
Company's request, any full or fractional Designated Fund 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, any Fund may delay redemption of Fund shares of any Designated Fund
to the extent permitted by the 1940 Act, and any rules, regulations or orders
thereunder.
1.3. PURCHASE AND REDEMPTION PROCEDURES
(a) The Distributor hereby appoints the Company as an agent
of the Funds for the limited purpose of receiving and accepting purchase and
redemption requests on behalf of the Account (but not with respect to any Fund
shares that may be held in the general account of the Company) for shares of
those Designated Funds made available hereunder, based on allocations of amounts
to the Account or subaccounts thereof under the Contracts and other transactions
relating to the Contracts or the Account. Receipt and acceptance of any such
request (or relevant transactional information therefor) on any day the New York
Stock Exchange is open for trading and on which a Designated Fund calculates its
net asset value (a "Business Day") pursuant to the rules of the Securities and
Exchange Commission ("SEC"), by the Company as such limited agent of the Fund
prior to the time that the Fund ordinarily calculates its net asset value as
described from time to time in the Fund's prospectus shall constitute receipt
and acceptance by the Designated Fund on that same Business Day, provided that
the Fund receives notice of such request by 9:30 a.m. Eastern Time on the next
following Business Day.
(b) The Company shall pay for shares of each Designated Fund
on the same Business Day that it notifies the Fund of a purchase request for
such shares. Payment for Designated Fund shares shall be made in federal funds
transmitted to the Fund or other designated person by wire to be received by
3:00 p.m. Eastern Time on the Business Day the Fund is notified of the purchase
request for Designated Fund shares (unless the Fund determines and so advises
the Company that sufficient proceeds are available from redemption of shares of
other Designated Funds effected pursuant to redemption requests tendered by the
Company on behalf of the Account, or unless the Fund otherwise determines and so
advises the Company to delay the date of payment, to the extent the Fund may do
so under the 1940 Act). If federal funds are not received on time, such funds
will be invested, and Designated Fund 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 Fund transactions effected by the Fund
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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 Fund shares redeemed by the
Account or the Company shall be made by the Fund in federal funds transmitted by
wire to the Company or any other designated person. The Funds shall use
reasonable efforts to wire such funds by 3 p.m. Eastern Time on the same
Business Day the Fund is properly notified of the redemption order of such
shares (unless redemption proceeds are to be applied to the purchase of shares
of other Designated Funds in accordance with Section 1.3(b) of this Agreement),
except that the Fund reserves the right to delay payment of redemption proceeds
to the extent permitted under Section 22(e) of the 1940 Act and any rules
thereunder, and in accordance with the procedures and policies of the Fund as
described in the then-current prospectus.
(d) Any purchase or redemption request for Designated Fund
shares held or to be held in the Company's general account shall be effected at
the net asset value per share next determined after the Fund's receipt and
acceptance of such request, provided that, in the case of a purchase request,
payment for Fund shares so requested is received by the Fund in federal funds
prior to close of business for determination of such value, as defined from time
to time in the Fund's prospectus.
(e) If transactions in Fund shares are to be settled through
the National Securities Clearing Corporation's Mutual Fund Settlement, Entry,
and Registration Verification (Fund/SERV) system, the terms of the Fund/SERV and
Networking Agreement between the Company and American Century Services
Corporation, an affiliate of Distributor, will apply and supersede the
provisions set forth in this Section 1.3.
1.4. The Fund shall use reasonable efforts to make the net asset
value per share for each Designated Fund available to the Company by 6:30 p.m.
Eastern Time each Business Day, and in any event, as soon as reasonably
practicable after the net asset value per share for such Designated Fund is
calculated, and shall calculate such net asset value in accordance with the
Fund's prospectus. If any Fund provides the Company with materially incorrect
share net asset value information, the Company on behalf of the Account, shall
be entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct share net asset value. Any material error in the calculation
of the net asset value per share, dividend or capital gain information shall be
reported promptly to the Company upon discovery. In the event that any such
material error is the result of the gross negligence of the Fund, or its
designated agent for calculating the net asset value, any administrative or
other costs or losses incurred for correcting underlying Contract owner accounts
shall be at the Distributor's expense. Whether such an error is material shall
be determined by the Fund in accordance with the policy adopted by each fund's
Board of Directors.
1.5. The Fund shall use reasonable efforts to furnish notice (by
wire or telephone followed by written confirmation) to the Company of any income
dividends or capital gain distributions payable on any Designated Fund shares by
the record date, but in no event later than 6:30 p.m. Eastern Time on the
ex-dividend date. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions as are payable on
any Designated Fund shares in the form of additional shares of that Designated
Fund. 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 Fund shares so issued as payment of such dividends and
distributions.
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1.6. Issuance and transfer of Fund shares shall be by book entry
only. Share certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's shares may be sold
to other parties, including insurance companies and the cash value of the
Contracts may be invested in other investment companies.
(b) The Company shall not, without prior notice to the
Distributor (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
Distributor (unless otherwise required by applicable law), induce Contract
owners to change or modify a Fund or change a Fund's investment advisor.
(d) The Company shall not, without prior notice to a Fund,
induce Contract owners to vote on any matter submitted for consideration by the
shareholders of such Fund in a manner other than as recommended by the Board.
1.8 (a) The Company covenants and agrees that all orders
accepted and transmitted by it hereunder will be based upon instructions that it
received from the Account owners, in proper form prior to the Close of Trading
of the Exchange on that Business Day. The Company shall time stamp all orders or
otherwise maintain records that will enable the Company to demonstrate
compliance with this provision.
(b) The Company covenants and agrees that all orders
transmitted to the Issuers, whether by telephone, telecopy, or other electronic
transmission acceptable to Distributor, shall be sent by or under the authority
and direction of a person designated by the Company as being duly authorized to
act on behalf of the owner of the Accounts, and is "an appropriate person" as
used in Sections 8-107 and 8-401 of the Uniform Commercial Code. For purposes of
this paragraph, persons "duly authorized to act on behalf of the owner of the
Accounts" shall mean those persons set forth in Schedule B to this Agreement as
it may be amended from time to time.
ARTICLE II. ADMINISTRATIVE SERVICES. The Company shall be the sole shareholder
of Fund shares purchased for the Account pursuant to this Agreement (the "Record
Owner"). The Record Owner shall properly complete any applications or other
forms required by Distributor or the Issuers from time to time. The Company
agrees to provide all administrative services for the investors in the Account,
including but not limited to those services specified in Schedule C the
"Administrative Services"). Neither Distributor nor the Issuers shall be
required to provide Administrative Services for the benefit of investors in the
Account. The Company agrees that it will maintain and preserve all records as
required by law to be maintained and preserved in connection with providing the
Administrative Services, and will otherwise comply in all material respects with
all laws, rules and regulations applicable to the provision of the
Administrative Services. Upon request, the Company will provide Distributor or
its representatives reasonable information regarding the quality of the
Administrative Services being provided and its compliance with the terms of this
Agreement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
3.1. 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
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registration under the 1933 Act or will be offered exclusively in transactions
that are properly exempt from registration under the 1933 Act. The Company
further represents and warrants that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal securities and
state securities and insurance laws. The Company further represents and warrants
that it is an insurance company duly organized and in good standing under
applicable law, that it has legally and validly established the Account as a
segregated asset account under Kansas insurance laws, and that it (a) has
registered or, prior to any issuance or sale of the Contracts, will register the
Account as a unit investment trust in accordance with the provisions of the 1940
Act to serve as a segregated investment account for the Contracts, or
alternatively (b) has not registered the Account in proper reliance upon an
exclusion from registration under the 0000 Xxx.
3.2. The Distributor represents and warrants that Designated Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act,
shall be duly authorized for issuance and sold in compliance with applicable
state and federal securities laws and that each is and shall remain registered
under the 1940 Act. The Distributor shall cause the Funds to amend the
registration statements for their 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 and shall cause the Funds to 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 Funds.
3.3. The Distributor represents that each Issuer is lawfully
organized and validly existing under the laws of the state in which it is
registered and that they do and will comply in all material respects with the
1940 Act.
3.4. The Company represents and warrants that (a) this Agreement has
been duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; and (b) the activities of the
Company contemplated by this Agreement comply in all material respects with all
provisions of federal and state securities laws applicable to such activities.
3.5. The Distributor represents and warrants that (a) this Agreement
has been duly authorized by all necessary corporate action and, when executed
and delivered, shall constitute the legal, valid and binding obligation of the
Distributor, enforceable in accordance with its terms; and (b) the activities of
the Distributor and the Funds contemplated by this Agreement comply in all
material respects with all provisions of federal and state securities laws
applicable to such activities.
3.6. The Distributor represents and warrants that all of their
trustees/directors, officers, employees, and other individuals or entities
dealing with the money and/or securities of the Funds are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Funds 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.
3.7. 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.
3.8. The Distributor represents and warrants that it is duly
registered as a broker/dealer with the SEC and is a member in good standing of
the NASD.
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ARTICLE IV. PROSPECTUSES AND PROXY STATEMENTS; VOTING
4.1. The Distributor shall provide the Company with as many printed
copies of the current prospectus, current Statement of Additional Information
("SAI"), supplements, proxy statements, and annual or semi-annual reports of
each Designated Fund (for distribution to Contract owners with value allocated
to such Designated Funds) as the Company may reasonably request to deliver to
existing Contract owners. If requested by the Company in lieu thereof, the
Distributor shall provide such documents (including a "camera-ready" copy of
such documents as set in type, a diskette in the form sent to the financial
printer, or an electronic copy of the documents in a format suitable for posting
on the Company's web-site, all as the Company may reasonably request) and such
other assistance as is reasonably necessary in order for the Company to have
prospectuses, SAIs, supplements and annual or semi-annual reports for the
Contracts and the Fund printed together in a single document or posted on the
Company's web-site or printed individually by the Company if it so chooses. The
expenses associated with printing and providing such documentation shall be as
set forth in Article V.
4.2. Each Fund's prospectus shall state that the current SAI for the
Fund is available.
4.3. The Distributor shall provide the Company with information
regarding each Fund's expenses, which information may include a table of fees
and related narrative disclosure for use in any prospectus or other descriptive
document relating to a Contract. The Company agrees that it will use such
information substantially in the form provided. The Company shall provide prior
written notice of any proposed modification of such information, which notice
will describe the manner in which the Company proposes to modify the
information, and agrees that it may not modify such information in any way
without the prior consent of the Fund, which consent shall not be unreasonably
withheld.
4.4. The Distributor 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.
4.5. So long as, and to the extent the SEC continues to interpret
the 1940 Act to require pass-through voting privileges for variable contract
owners, or to the extent otherwise required by law, the Company shall provide a
list of Contract owners with value allocated to a Designated Fund as of the
record date to the Fund or its agent in order to facilitate the Fund's
solicitation of voting instructions from Contract owners. The Company shall also
provide such other information to the Fund as is reasonably necessary in order
for the Fund to properly tabulate votes for Fund initiated proxies. 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.
4.6. The Company represents and warrants that in the event it
chooses to post any Fund's prospectus, periodic report or other information on
its web-site, it will promptly update such information and will not post
outdated prospectuses, reports or information at any time. If a prospectus is
supplemented at any time, the Company will promptly post such supplement with
the prospectus.
ARTICLE V. SALES MATERIAL AND INFORMATION
5.1 The Company shall furnish, or shall cause to be furnished, to
the Distributor or its designee, each piece of sales literature or other
promotional material that the Company develops and in which the Issuer (or a
Designated Fund thereof) or the Distributor is named. No such material shall be
used until approved by the Distributor or its designee, and the Distributor will
use its best efforts for it or its designee to review such sales literature or
promotional material within ten (10) Business Days after
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receipt of such material. The Distributor or its designee reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Issuer (or a Designated Fund thereof) or the
Distributor is named, and no such material shall be used if the Distributor or
its designee so objects.
5.2 The Company shall not give any information or make any
representations or statements on behalf of a Fund or concerning a Fund or the
Distributor 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 Distributor or its designee, except with
the permission of the Distributor or its designee.
5.3 The Distributor or its designee, shall furnish, or cause to be
furnished, to the Company, each piece of sales literature or other promotional
material that it develops and in which the Company, and/or the Account, is
named. No such material shall be used until approved by the Company, and the
Company will use its best efforts to review such sales literature or promotional
material within ten (10) 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.
5.4 The Distributor shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account,
or the Contracts other than the information or representations contained in a
registration statement, prospectus (which shall include an offering memorandum,
if any, if the Contracts issued by the Company or interests therein are not
registered under the 1933 Act), or SAI for the Contracts, as such registration
statement, prospectus, or SAI may be amended or supplemented from time to time,
or in published reports for the Account which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company, except with
the permission of the Company.
5.5 The Distributor 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, and all amendments
to any of the above, that relate to the Designated Funds or their shares,
promptly after the effectiveness of such document(s) filed with the SEC or other
regulatory authorities.
5.6 The Company will provide to the Distributor 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, 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 Distributor any
complaints received from the Contract owners pertaining to the Fund or a
Designated Fund.
5.7 The Distributor will provide the Company with as much notice as
is reasonably practicable of any proxy solicitation for any Designated Fund, and
of any material change in the Fund's registration statement, particularly any
change resulting in a change to the registration statement or prospectus for any
Account. The Distributor 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
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orderly manner. The Distributor will make reasonable efforts to attempt to have
changes affecting Contract prospectuses become effective simultaneously with the
annual updates for such prospectuses.
ARTICLE VI. FEES AND EXPENSES
6.1. All expenses incident to performance by the Funds under this
Agreement shall be paid by the Funds. The Distributor shall see to it that all
Fund shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the such
Fund, in accordance with applicable state laws prior to their sale. The Funds
shall bear the expenses for the cost of registration and qualification of the
Funds' shares, preparation and filing of the Funds' prospectuses and
registration statements, proxy materials and reports, setting the prospectuses
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 each
Fund's shares. The Fund shall bear the expenses of distributing the Fund's proxy
materials and reports to existing Contract owners.
6.2. The Company shall bear the expense of distributing all
prospectuses and reports to shareholders (whether for existing Contract owners
or prospective Contract owners). The Company shall bear the expense of printing
copies of the prospectus for the Contracts for use with prospective Contract
owners. The Company shall bear the expenses incident to (including the costs of
printing) sales literature and other promotional material that the Company
develops and in which the Issuer (or a Designated Fund thereof) is named.
6.3. Distributor acknowledges that it will derive a substantial
savings in administrative expenses, such as reduction in expenses related to
postage, shareholder communications and recordkeeping, by virtue of having a
single shareholder account per Fund for the Accounts rather than having each
Participant as a shareholder. In consideration of performance of the
Administrative Services by the Company, Distributor will pay the Company a fee
(the "Administrative Services Fee") of 25 basis points (0.25%) of the average
aggregate amount of Advisor Class shares of the Funds held in the Account under
this Agreement. Distributor will calculate the amount of the payment to be made
pursuant to this Section 6.3 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The parties acknowledge
that the payments received by the Company under this Section 6.3 are for
administrative and shareholder services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution.
6.4. In consideration of performance of the Distribution Services
specified on Schedule D by the Company, Distributor will pay the Company a fee
(the "Distribution Fee") of 25 basis points (0.25%) of the average aggregate
amount invested by the Company in Advisor Class shares of the Funds under this
Agreement. Distributor will calculate the amount of the payment to be made
pursuant to this Section 6.4 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter.
6.5. For the purposes of computing the payment to the Company
contemplated by this Article 6, the average aggregate amount invested by the
Account in the Funds over a one month period shall be computed by totaling the
Account's aggregate investment (share net asset value multiplied by total number
of shares of the Funds held by the Account) on each Business Day during the
month and dividing by the total number of Business Days during such month.
6.6. Distributor will calculate the amount of the payment to be made
pursuant to this Article 6, at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of
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the amounts being paid by Distributor for the relevant months and such other
supporting data as may be reasonably requested by the Company and shall be
mailed to:
Security Distributors, Inc.
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000 XX Xxxxxxxx
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Xxxxxx, XX 00000
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Attention: Xxxxx Xxxxxxxxxx -- Finance
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Phone No.: (000)000-0000
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Fax No.: (000)000-0000
ARTICLE VII. QUALIFICATION
The Distributor represents and warrants that the Funds are qualified as
regulated investment companies under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code,") and that they will maintain
such qualification (under Subchapter M or any successor or similar provisions)
and that they will notify the Company immediately upon having a reasonable basis
for believing that they have ceased to so qualify or that they might not so
qualify in the future.
ARTICLE VITI. INDEMNIFICATION
8.7. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless each
of the Funds and the Distributor and each of their trustees/directors and
officers, and each person, if any, who controls the Fund or Distributor within
the meaning of Section 15 of the 1933 Act or who is under common control with
the Fund or the Distributor (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 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 SA1 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 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 Distributor specifically
for use in the registration statement, prospectus or SAI for the
Contracts or in the Contracts or sales literature (or any amendment
or supplement) or ; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other than
statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the Fund not
supplied by the Company
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or persons under its control) or wrongful conduct of the Company or
its agents or persons under the Company's authorization or control,
with respect to the sale or distribution of the Contracts, or
(iii) arise out of any untrue statement 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 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
specifically for use therein; or
(iv) arise as a result of any material failure by the Company
to provide the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company;
as limited by and in accordance with the provisions of Sections 8.l(b) and
8.l(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.l(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the Company to such party of
the Company's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
8.8. INDEMNIFICATION BY THE DISTRIBUTOR
8.2(a). The Distributor 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 7.2)
- 10 -
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) 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 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 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 was
made in reliance upon and in conformity with information furnished
to the Distributor or a 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
(ii) arise out of or as a result of statements or
representations by or on behalf of the Fund or the Distributor
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature for the
Contracts not supplied by the Fund or the Distributor) or wrongful
conduct of the Distributor or the Fund with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement of a material fact
contained in a registration statement, prospectus, SAI or sales
literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission 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 Distributor or the Fund specifically for use therein;
or
(iv) arise as a result of any failure by the Fund or the
Distributor to provide the services and furnish the materials under
the terms of this Agreement (including a failure of the Fund,
whether unintentional or in good faith or otherwise, to comply with
the diversification and other qualification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by or on behalf of the
Distributor or the Fund in this Agreement or arise out of or result
from any other material breach of this Agreement by or on behalf of
the Distributor 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 Distributor 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 or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
- 11 -
8.2(c). The Distributor 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 Distributor 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 Distributor of
any such claim shall not relieve the Distributor 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 Distributor will be entitled to participate,
at its own expense, in the defense thereof. The Distributor also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the Distributor to such party
of the Distributor'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 Distributor will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Distributor
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
8.9. After any party notifies the other parties of an action in
which indemnification under this Article 8 may be required, the parties will
review the action in question to determine (i) if it claims that an untrue
statement or omission of a material fact exists in documents created by Company
or in a Fund's registration statement, and (ii) if so, whether the party who
created the document in question is required to indemnify hereunder. Any such
decision shall not be an admission of liability but rather a determination of
what party should properly bear the costs of defense until the case is finally
adjudicated. The decision of a court with proper jurisdiction over the parties
and the matter at hand shall be determinative of who should bear such costs.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be subject to the applicable provisions of
the 1933 and 1940 Acts as well as the applicable provisions of the Exchange Act
of 1934, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant, and
the terms hereof shall be interpreted and construed in accordance therewith.
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 four (4) months advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the other
parties based upon the Company's determination that shares of
a Fund are not reasonably available to meet the requirements
of the Contracts; or
(c) termination by the Company by written notice to the other
parties in the event any of the Designated Fund's shares are
not registered, issued or sold in accordance with applicable
state and/or federal law or such law precludes the use
- 12 -
of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Distributor in the event that formal
administrative proceedings are instituted against the Company
by the National Association of Securities Dealers, Inc. (the
"NASD"), the SEC, the Insurance Commissioner or like official
of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale
of the Contracts, the operation of any Account, or the
purchase of the Designated Funds' shares; provided, however,
that the Fund or Distributor determines in its sole judgment
exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Company to perform its obligations under this
Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against a Fund or
Distributor by the SEC or any state securities department or
any other regulatory body; provided, however, that the Company
determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material
adverse effect upon the ability of the Fund or Distributor to
perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the other
parties in the event that any Designated Fund ceases to
qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, or if the Company
reasonably believes that any such Fund may fail to so qualify
or comply; or
(g) termination by the Distributor by written notice to the other
parties, if the Distributor shall determine, in its sole
judgment exercised in good faith, that the Company has
suffered a material adverse change in its business,
operations, financial condition, or prospects since the date
of this Agreement or is the subject of material adverse
publicity; or
(h) termination by the Company by written notice to the other
parties, if the Company shall determine, in its sole judgment
exercised in good faith, that a Fund or the Distributor has
suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company upon any substitution of the shares
of another investment company or series thereof for shares of
a Designated 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 Distributor of the
date of substitution.
10.2. Notwithstanding any termination of this Agreement, the Fund
and the Distributor shall, at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts"), unless the
Company seeks an order pursuant to Section 26(b) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated Funds.
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
- 13 -
additional purchase payments under the Existing Contracts (subject to any such
election by the Company).
10.3. Notwithstanding any termination of this Agreement, each
party's obligation under Article VIII to indemnify the other parties shall
survive.
ARTICLE XI NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Company: Security Benefit Life Insurance Company
Attention General Counsel
000 XX Xxxxxxxx Xxxxxx,
Xxxxxx 00000 - 0001
If to the Funds or the Distributor: American Century Investment Services, Inc.
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Funds must look solely to the
property of the respective Designated Funds listed on Schedule A hereto for the
enforcement of any claims against the Fund. The parties agree that neither the
Board, officers, agents or shareholders of a Fund assume any personal liability
or responsibility for obligations entered into by or on behalf of a Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, the Funds and the Distributor shall treat as confidential the names
and addresses of the owners of the Contracts. Each party shall treat as
confidential all information reasonably identified as confidential in writing by
any other party hereto and, except as permitted by this Agreement, shall not
disclose, disseminate or utilize such information without the express written
consent of the affected party until such time as such information has come into
the public domain.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
- 14 -
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Kansas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable insurance
operations of the Company are being conducted in a manner consistent with the
Kansas insurance laws and regulations and any other applicable law or
regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies,
and obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.8 This Agreement or any of the rights and obligations
hereunder may not be assigned by any party.
- 15 -
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative.
Security Benefit Life
Insurance Company By its authorized officer
By: /s/ Xxxxxxx Xxxxxxx
---------------------------
Xxxxxxx Xxxxxxx
Title: Vice President
------------------------
Security Distributors, Inc.
By its authorized officer
By: /s/ Xxx X. Xxx
---------------------------
Xxx X. Xxx
Title: Secretary
------------------------
American Century Investment Services, Inc. By its authorized officer
By: /s/ Xxxxxxx X. Lyms
---------------------------
Xxxxxxx X. Lyms
Title: Executive Vice President
--------------------------
- 16 -
July 1,2001
SCHEDULE A
Account(s) Contract(s) Designated Fund(s)
SBL Variable Annuity Account XIV V6029 American Century Heritage, Advisor Class
American Century Select, Advisor Class
American Century Equity Income, Advisor
Class
American Century International Growth,
Advisor Class
A-l
SCHEDULE B
Authorized contact persons: The following persons are authorized on behalf
of the Company to effect transactions in each Account:
Name: Xxxxx Xxxxxxxxx Phone: ###-##-####
Name: Xxxxx Xxxx Phone: 000-000-0000
Name: Xxxx Xxxxx Phone: 000-000-0000
Name: Xxxxx Erownfield Phone: 000-000-0000
- 2 -
SCHEDULE C
Administrative Services
Pursuant to the Agreement to which this is attached, the Company shall
perform all administrative and shareholder services with respect to investors in
the Account, including, but not limited to, the following:
1. Maintain separate records for each investor, which records
shall reflect the shares purchased and redeemed and share balances of such
investors. The Company will maintain a single master account with each Fund on
behalf of the Account and such account shall be in the name of the Company (or
its nominee) as the record owner of shares owned by the Account.
2. Disburse or credit to the investors all proceeds of
redemptions of shares of the Funds and all dividends and other distributions not
reinvested in shares of the Funds.
3. Prepare and transmit to the investors as required by law
periodic statements showing the total number of units owned by the investors as
of the statement closing date, purchases and redemptions of Fund shares by the
investors during the period covered by the statement and the dividends and other
distributions paid during the statement period (whether paid in cash or
reinvested in Fund shares), and such other information as may be required, from
time to time, by the investors.
4. Transmit purchase and redemption orders to the Funds on behalf
of the investors in the Account in accordance with the procedures set forth in
the Agreement.
5. Distribute to the investors copies of the Funds' prospectus,
proxy materials, periodic fund reports to shareholders and other materials that
the Funds are required by law or otherwise to provide to their shareholders or
prospective shareholders.
6. Maintain and preserve all records as required by law to be
maintained and preserved in connection with providing the Administrative
Services for the Account.
- 3 -
SCHEDULE D
Distribution Services
Pursuant to the Agreement to which this is attached, the Company shall
perform distribution services for Advisor Class shares of the Funds, including,
but not limited to, the following:
1. Receive and answer correspondence from prospective shareholders, including
distributing prospectuses, statements of additional information, and
shareholder reports.
2. Provide facilities to answer questions from prospective investors about
Fund shares.
3. Assist investors in completing application forms and selecting dividend
and other account options.
4. Provide other reasonable assistance in connection with the distribution of
Fund shares.
- 4 -
AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT is made as of June 24
2002, by and among SECURITY BENEFIT LIFE INSURANCE COMPANY ("SBL"), SECURITY
DISTRIBUTORS, INC. ("SDI" and collectively with SBL, the "Company") and AMERICAN
CENTURY INVESTMENT SERVICES, INC. ("Distributor"). Capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in the
Agreement (defined below).
RECITALS
WHEREAS, the Company and the Distributor are parties to a certain
Participation Agreement dated July 1, 2001 (the "Agreement") in connection with
the participation by the Funds in various variable annuity contracts on behalf
of the Account;
WHEREAS, the parties wish to add one or more of the Investor Class Shares
of the Funds to those which the Company may make available to the Contracts
under the Agreement; and
WHEREAS, in connection with the addition of one or more Investor Class
Shares of the Fund as investment options under the Contracts, the parties agree
to revise the compensation section of the Agreement; and
WHEREAS, the parties now desire to modify the Agreement as provided
herein;
NOW, THEREFORE, in consideration of the mutual promises set forth herein
the parties hereto agree as follows:
1. ADDITION OF CLASS. The first "Whereas" clause of the Agreement is
hereby deleted in its entirety and the following paragraph is substituted in
lieu thereof:
"WHEREAS, the Company wishes to make available as investment
options under the Contracts one or more of the Investor and Advisor
Class funds made available by Distributor from time to time (the
"Funds"), each of which is a series of mutual fund shares registered
under the Investment Company Act of 1940, as amended, and issued by
a registered investment company (collectively, the "Issuers"); and"
In connection with the addition of the Investor Class Funds, the sixth
"Whereas" clause of the Agreement is hereby deleted in its entirety and the
following paragraph is substituted in lieu thereof:
"WHEREAS, the Company intends to purchase one or more shares
of the Investor and Advisor Class Funds, on behalf of the Account to
fund the aforesaid Contracts; and"
2. DESIGNATED FUNDS. After the date of this amendment, all references
to "Designated Funds" in the Agreement shall be deemed to refer to the "Funds."
3. SCHEDULE A. Schedule A is hereby deleted in its entirety and is
replaced by Schedule A, attached hereto.
4. FEES AND EXPENSES. The second sentence of Section 6.3 is hereby
amended by adding the phrase "Investor and" before the phrase "Advisor Class
shares of the Funds."
5. CONFLICTS AND ENTIRE AGREEMENT. In the event of a conflict between
the terms of this Amendment No. 1 and the Agreement, it is the intention of the
parties that the terms of this Amendment No. 1 shall control and the Agreement
shall be interpreted on that basis. To the extent the provisions of the
Agreement have not been amended by this Amendment No. 1, the parties hereby
confirm and ratify the Agreement. The Agreement, along with this Amendment No.
1, constitutes the entire agreement among the parties with respect to the
arrangements described herein.
6. COUNTERPARTS. This Amendment No. 1 may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
7. AMENDMENTS. Except as expressly supplemented, amended or consented
to hereby, all of the representations, warranties, terms, covenants and
conditions of the Agreement shall remain unamended and shall continue to be in
full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 as
of the date first above written.
SECURITY BENEFIT LIFE AMERICAN CENTURY INVESTMENT
INSURANCE COMPANY SERVICES, INC.
BY: /s/ Xxx X. Xxx BY: /S/ Xxxxx X. Xxxxxx
----------------------------------- --------------------------
Name: Xxx X. Xxx Name: XXXXX X. XXXXXX
----------------------------------- -----------------------
Title: Vice President, Assoc. General Title: SR. VICE PRESIDENT
------------------------------------- -----------------------
Counsel & Asst. Secretary
SECURITY DISTRIBUTORS, INC.
By: /s/ Xxx X. Xxx
-----------------------------------
Name: Xxx X. Xxx
-----------------------------------
Title: Secretary
-----------------------------------
2
SCHEDULE A
Account(s) Contract(s)
SBL Variable Annuity Account XIV V6029
3
[LOGO]
December 13, 2004 American Century
Investments
Security Benefit Group Inc
Attn: Accounts Receivable
0 XX Xxxxxxxx Xxxxxxx Xx
Xxxxxx, XX 00000-0000
Dear Supplier:
I would like to take this opportunity to inform you of an upcoming change that
may affect your recordkeeping regarding our account.
Effective January 1, 2005, certain American Century Investments companies will
be reorganized, including American Century Services Corporation ("ACSC"). After
January 1, 2005, ACSC will be known as American Century Services LLC, which will
be organized under Delaware law. This reorganization does not reflect any change
of control in ownership or direction of our company. Moreover, this
reorganization does not affect the validity of any contracts that we have with
your company.
Also, as the end of the calendar year approaches, we would like to take this
opportunity to extend to you and your colleagues our seasonal greetings and best
wishes for a successful and profitable new year. It is through our suppliers
that American Century Investments is able to deliver excellence to our
customers.
If I can assist you in answering any questions, please do not hesitate to call
me at 000-000-0000. Again, thank you for your support during the past year and
best wishes from all of us at American Century Investments.
Very truly yours,
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, C.P.M.
Director of Purchasing
American Century Investments
P.O. BOX 413210, 0000 Xxxx Xxxxxx 1-800-345-2021 or 816-531-5575 Offices in: Denver, Colorado; Mountain View, California;
Xxxxxx Xxxx, XX 00000-0000 xxx.xxxxxxxxxxxxxxx.xxx New York, New York; Singapore
