PARTICIPATION AGREEMENT
AMONG
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
AND
AMERICAN CENTURY INVESTMENT SERVICES, INC.
THIS AGREEMENT, dated as of the 1st day of May, 2003, by and among
First Security Benefit Life Insurance and Annuity Company of New York, (the
"Company"), a stock life insurance company organized under the laws of the State
of New York, on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A hereto, as may be amended from time to time
(each an ("Account") and American Century Investment Services, Inc. (the
"Distributor"), a Missouri corporation.
WHEREAS, American Century Variable Portfolios, Inc. (the "Issuer") is
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 Class II shares 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
Issuer 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 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
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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.
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.
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(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 Issuer 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 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 New York 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
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Contracts, or alternatively (b) has not registered the Account in proper
reliance upon an exclusion from registration under the 0000 Xxx.
3.2. The Company represents and warrants that the Contracts are
currently and at the time of issuance will be treated as life insurance or
annuity contracts under applicable provisions of the Code and that it will
maintain such treatment and that it will notify the Fund and the Distributor
immediately upon having a reasonable basis for believing that the Contracts have
ceased to be so treated or that they might not be so treated in the future.
3.3. 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.
3.4. The Distributor represents that the 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.
3.5. 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.
3.6. 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.
3.7. 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.
3.8. 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.
3.9. 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
6
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
7
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 Class II 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 which the Company shall cause its affiliated
broker/dealer (Security Distributors, Inc. ("SDI")) and underwriter of the
Contracts to perform, Distributor will pay SDI a fee (the "Distribution Fee") of
25 basis points (0.25%) of the average aggregate amount invested by the Company
in Class II 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 SDI within 30 days
thereafter. Although SDI is not a party to this Agreement, the Distributor
agrees that SDI is a third-party beneficiary of this Section 6.4.
6.5. For the purposes of computing the payment to the Company and SDI
as 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.
8
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 or SDI as applicable, within 30 days thereafter. The
check for such payment will be accompanied by a statement showing the
calculation of 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 as follows:
For payments under 6.3, to:
First Security Benefit Life Insurance and
Annuity Company of New York
------------------------------------------
One Security Benefit Place
------------------------------------------
Xxxxxx, XX 00000
------------------------------------------
Attention: Xxxxx Xxxxxxxxxx - Finance
------------------------------------------
Phone No.: (000) 000-0000
------------------------------------------
Fax No.: (000) 000-0000
------------------------------------------
For payments under Section 6.4, to:
Security Distributors, Inc.
------------------------------------------
One Security Benefit Place
------------------------------------------
Xxxxxx, XX 00000
------------------------------------------
Attention: Xxxxx Xxxxxxxxxx - Finance
------------------------------------------
Phone No.: (000) 000-0000
------------------------------------------
Fax No.: (000) 000-0000
------------------------------------------
ARTICLE VII. Qualification
7.1 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.
7.2 The Distributor represents and warrants that each of the Funds will
comply and will maintain each Fund's compliance with the diversification
requirements set forth in Section 817(h) of the Internal Revenue Code (or any
successor or similar provisions and Section 1.817-5(b) of the regulations under
the Code (or any successor or similar provisions). The Distributor will notify
the Company immediately upon having a reasonable basis for believing that a Fund
has ceased to so comply or that a Fund might not comply in the future. In the
event of a breach of this Section 7.2, the Distributor will take all reasonable
steps to adequately diversify the affected Fund so as to achieve compliance
within the grace period afforded by Section 1.817-5 of the regulations under the
Internal Revenue Code.
ARTICLE VIII. Potential Conflicts.
8.1 The Company has received a copy of an application for exemptive
relief, as amended, filed by the Issuer on December 21, 1987, with the SEC and
the order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Issuer (the "Board") will monitor the
Issuer for the existence of any material irreconcilable conflict between
9
the interests of the contract owners of all separate accounts ("Participating
Companies") investing in funds of the Issuer. An irreconcilable material
conflict may arise for a variety of reasons, including: (i) an action by any
state insurance regulatory authority; (ii) 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
actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding; (iv) the manner
in which the investments of any portfolio are being managed; (v) a difference in
voting instructions given by variable annuity contract owners and variable life
insurance contract owners; or (vi) 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.
8.2 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 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 limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
8.3 If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in a Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the Company
is responsible for causing or creating said conflict, the Company shall at its
sole cost and expense, and to the extent reasonably practicable (as determined
by a majority of the disinterested Board members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
(a) withdrawing the assets allocable to the Accounts from
the Fund and reinvesting such assets in a different
investment medium or submitting the question of
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 Companies) that
votes in favor of such segregation, or offering to
the affected contract owners the option of making
such a change; and/or
(b) establishing a new registered management investment
company or managed separate account.
8.4 If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions and
said decision represents a minority position or would preclude a majority vote
by all of its contract owners having an interest in the Issuer, the Company at
its sole cost, may be required, at the Board's election, to withdraw an
Account's investment in the Issuer and terminate this Agreement; 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.
8.5 For the purpose of this Article VIII, a majority of the
disinterested Board members shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Issuer be required to establish a new funding medium for any Contract. The
Company shall not be required by this Article VIII to establish a new funding
medium for any Contract if an offer to do so has been declined by vote of a
majority of the Contract owners materially adversely affected by the
irreconcilable material conflict.
10
ARTICLE IX. Indemnification
9.1 Indemnification by the Company
9.1(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 9.1) 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 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 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 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 9.1(b) and
9.1(c) hereof.
11
9.1(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.
9.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the Company to such party of
the Company's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
9.1(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.
9.2 Indemnification by the Distributor
9.2(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 9.2)
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:
(vi) 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
(vii) 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
12
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
(viii) 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
(ix) 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 VII of this
Agreement); or
(x) 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 9.2(b) and
9.2(c) hereof.
9.2(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.
9.2(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.
9.2(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.
13
9.3 After any party notifies the other parties of an action in
which indemnification under this Article 9 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 X. Applicable Law
10.1 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 XI. Termination
11.1 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 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
14
(f) termination by the Company by written notice to the
other parties in the event that (i) 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 (ii) any Designated Fund fails to meet the
diversification requirements specified in Article VII
hereof or if the Company reasonably believes that any
Designated Fund may fail to meet such diversification
requirements; 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;
(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; or
(j) termination upon assignment by either party,
(k) termination of Section 6.4 which relates to the
Fund's Rule 12b-1 plan by a vote of a majority of
independent directors of the Funds.
11.2 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 additional purchase payments under the Existing
Contracts (subject to any such election by the Company).
11.3 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XII. 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.
15
If to the Company: First Security Benefit Life
Insurance and Annuity
Company of New York
Attention General Counsel
One Security Benefit Place
Topeka, Kansas 66636 - 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 XIII. Miscellaneous
13.1 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.
13.2 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.
13.3 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.
13.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.5 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.
13.6 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 New York 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
New York insurance laws and regulations and any other applicable law or
regulations.
13.7 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.
13.8 This Agreement or any of the rights and obligations hereunder may
not be assigned by any party.
16
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.
First Security Benefit Life Insurance and
Annuity Company of New York By its authorized officer
By:
-----------------------------
Title:
--------------------------
American Century Investment Services, Inc. By its authorized officer
By:
-----------------------------
Title:
--------------------------
17
May 1 , 2003
SCHEDULE A
Account(s) Contract(s) Designated Fund(s)
Variable Annuity Account B FSB234 American Century VP Ultra
Fund, Class II
American Century VP Value
Fund, Class II
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: 000-000-0000
Name: Xxxxx Xxxx Phone: 000-000-0000
Name: Xxxx Xxxxx Phone: 000-000-0000
Name: Xxxxx Xxxxxxxxxx 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
cause SDI to perform distribution services for Class II 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
(xi)
(xii)
(xiii) AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT ("Amendment") is made
as of this 10th day of November 2004, by and between FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK (the "Company") and AMERICAN CENTURY
INVESTMENT SERVICES, INC. (the "Distributor). Capitalized terms not otherwise
defined herein shall have the meaning ascribed to them in the Agreement (defined
below).
WHEREAS, the Company and Distributor are parties to a Participation
Agreement dated May 1, 2003 (the "Agreement"); and
WHEREAS, terms of the Agreement contemplate that Accounts and Contracts
of the Company that are eligible to purchase Funds of the Issuer 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.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. SCHEDULE A. Schedule A is hereby deleted in its entirety and is
replaced by Schedule A, attached hereto.
2. Ratification and Confirmation of Agreement. In the event of a
conflict between the terms of this Amendment and the Agreement, it is the
intention of the parties that the terms of this Amendment 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, the parties hereby
confirm and ratify the Agreement.
3. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
4. Full Force and Effect. 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.
5
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
as of the date first above written.
FIRST SECURITY BENEFIT LIFE INSURANCE AND
ANNUITY COMPANY OF NEW YORK By its authorized officer
By: Xxxxxx Xxxx, Xx.
Printed Name: Xxxxxx Xxxx, Xx.
Title: Vice President and Chief
Marketing Officer
AMERICAN CENTURY INVESTMENT SERVICES, INC. By its authorized officer
By: Xxxxxxx X. Xxxxx
Printed Name: Xxxxxxx X. Xxxxx
Title: President
6
SCHEDULE A
----------------------------- ------------- --------------------------------------------
ACCOUNT(S) CONTRACT(S) DESIGNATED FUND(S)
----------------------------- ------------- --------------------------------------------
Variable Annuity Account B FSB234 and American Century VP Value Fund, Class II
FSB236 American Century VP Ultra Fund, Class II
----------------------------- ------------- --------------------------------------------
7
AMENDMENT NO. 2 TO PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 2 TO THE PARTICIPATION AGREEMENT ("Amendment") is
effective as of the 28th day of March, 2007, by and between FIRST SECURITY
BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK (the "Company"), and
AMERICAN CENTURY INVESTMENT SERVICES, INC. (the "Distributor").
WHEREAS, Distributor and Company are parties to a Participation
Agreement dated May 1, 2003 as amended on November 10, 2004 (the "Agreement");
and
WHEREAS, terms of the Agreement contemplate that Accounts and Contracts
of the Company that are eligible to purchase Funds of the Issuer 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.
WHEREAS, the parties now desire to further modify the Agreement as
provided herein.
NOW, THEREFORE, in consideration of the mutual promises set
forth herein, the parties hereto agree as follows:
1. Fees and Expenses. Section 6.3 of the Agreement is hereby deleted in
its entirety and the following is substituted in lieu thereof:
"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"), the amount of which is designated on
Schedule A, of the average aggregate amount of Class II shares of a Fund held in
an 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."
8
2. Amendment of Schedule A. The parties agree to delete the existing
Schedule A to the Agreement and replace it with the Schedule A attached hereto.
3. Ratification and Confirmation of Agreement. In the event of a
conflict between the terms of this Amendment and the Agreement, it is the
intention of the parties that the terms of this Amendment 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, the parties hereby
confirm and ratify the Agreement.
4. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
5. Defined Terms. Full Force and Effect. Capitalized terms used but not
defined herein shall have the meaning given to them in the Agreement. Except as
expressly supplemented, amended or consented to hereby, all of the
representations, warranties, terms, covenants and conditions of the Agreement
shall remain unchanged and continue to be in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2
as of the date provided above.
FIRST SECURITY BENEFIT LIFE AMERICAN CENTURY
INSURANCE AND ANNUITY INVESTMENT SERVICES, INC.
COMPANY OF NEW YORK
By: ______________________ By: ______________________
Name: ______________________ Name: ______________________
Title: ______________________ Title: ______________________
9
SCHEDULE A
List of Designated Funds
Account(s) Contract(s) Designated Funds
Variable Annuity Account A FSB216 American Century VP Mid Cap Value Fund, Class II
American Century VP Value Fund, Class II
American Century VP Ultra Fund, Class II
Variable Annuity Account B FSB234 American Century VP Mid Cap Value Fund, Class II
American Century VP Value Fund, Class II
FSB236
American Century VP Ultra Fund, Class II
Administrative Services Fee Schedule
FUND ADMINISTRATIVE
SERVICES FEE
American Century VP Mid Cap Value Fund, Class II 15 basis points (0.15%)
American Century VP Value Fund, Class II 25 basis points (0.25%)
American Century VP Ultra Fund, Class II 25 basis points (0.25%)
A-1
