PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
XXX XXXXXX FUNDS, INC.,
XXX XXXXXX EQUITY INCOME FUND,
XXX XXXXXX XXXXXXXX FUND,
XXX XXXXXX EQUITY TRUST
AND
XXX XXXXXX ASSET MANAGEMENT INC.
THIS AGREEMENT, dated as of the 1st day of July, 2001, by and among
Security Benefit Life Insurance Company, (the "Company"), a stock life insurance
company organized under the laws of the State of Kansas, on its own behalf and
on behalf of each segregated asset account of the Company set forth on Schedule
A hereto, as may be amended from time to time (each an "Account"), Xxx Xxxxxx
Equity Income, Xxx Xxxxxx Xxxxxxxx Fund and Xxx Xxxxxx Equity Trust on behalf of
the Xxx Xxxxxx Aggressive Growth Fund (each a "Fund" and collectively the
"Funds"); Xxx Xxxxxx Funds, Inc. ("Underwriter")., a Delaware corporation, and
Xxx Xxxxxx Asset Management Inc. (the "Adviser"), a Delaware corporation.
WHEREAS, the Adviser, which serves as investment adviser to the Funds,
is duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exhange Act of 1934, as amended, is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD") and serves as
principal underwriter of the shares of the Funds;
WHEREAS, the Company has issued or will issue certain variable annuity
contracts supported wholly or partially by the Account (the "Contracts"), and
said Contracts are listed in Schedule A hereto, as it may be amended from time
to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, the Company intends to purchase shares in the Funds listed in
Schedule B hereto, as it may be amended from time to time by mutual written
agreement on behalf of the Account to fund the aforesaid Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Funds, the Underwriter and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Subject to Article IX hereof, the Funds and the Underwriter agree
to make available to the Company for purchase on behalf of the Account, shares
of the 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
Funds and the Underwriter may so provide, and (ii) the Boards of Trustees of the
Funds (the "Boards") may suspend or terminate the offering of shares of any 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 Boards acting in good
faith and in light of their fiduciary duties under federal and any applicable
state laws, suspension or termination is necessary and in the best interests of
the shareholders of such Fund.
1.2. The Funds and the Underwriter shall redeem, at the Company's
request, any full or fractional 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, the Funds and the
Underwriter may delay redemption of Fund shares to the extent permitted by the
1940 Act, and any rules, regulations or orders thereunder.
1.3. Purchase and Redemption Procedures
(a) The Funds and the Underwriter hereby appoint 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 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 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 Funds prior to
the time that the Funds ordinarily calculate their net asset value as described
from time to time in the Funds' prospectuses shall constitute receipt and
acceptance by the Funds on that same Business Day, provided that the Funds
receive 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 Fund on the same
Business Day that it notifies the Fund of a purchase request for such shares.
Payment for 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 Fund shares
(unless the Fund determines and so advises the Company that sufficient proceeds
are available from redemption of shares of other 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 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 portfolio transactions effected by the Fund based upon
such purchase request. Upon receipt of federal funds so wired, such funds shall
cease to be the responsibility of the Company and shall become the
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responsibility of the Fund. Should a Fund need to extend settlement on a trade,
the Fund shall promptly contact the Company to discuss the extension.
(c) Payment for 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 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 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 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
Funds' prospectuses.
1.4. The Funds and the Underwriter shall use their best efforts to make
the net asset value per share 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 each such Fund is calculated, and shall calculate
such net asset value in accordance with the Funds' prospectuses. If the
Underwriter 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 Underwriter, 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
Underwriter's expense. If a Contract owner has received cash in excess of what
he/she is entitled, the Company will, when requested by the Funds, and to the
extent practicable and permitted by law, debit or cause the debit of the
Contract owner's account in the amount of such excess and repay it to the Funds.
Upon request by the Funds or the Underwriter, the Company shall provide the
Funds or the Underwriter with the name of the Contract owner and other relevant
information concerning the Contract owner's account to assist the Funds in the
collection from the Contract owner of any excess amount not repaid to the Funds.
1.5. The Underwriter shall use its best efforts to furnish notice (by
wire or telephone followed by written confirmation) to the Company of any income
dividends or capital gain distributions payable on any Fund shares by the record
date, but in no event later than 6:30 p.m. Eastern Time on the payment 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 Fund shares in the
form of additional shares of that 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 Underwriter shall
notify the Company promptly of the number of 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.
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1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Funds' shares may be sold
to other insurance companies and the cash value of the Contracts may be invested
in other investment companies.
(b) The Company shall not, without prior notice to the Adviser
and Underwriter (unless otherwise required by applicable law), take any
action to operate the Account as a management investment company under
the 1940 Act.
(c) The Company shall not, without prior notice to the Adviser
and Underwriter (unless otherwise required by applicable law), induce
Contract owners to change or modify the Fundsor change the Funds'
investment advisers.
(d) The Company shall not, without prior notice to the Funds,
induce Contract owners to vote on any matter submitted for
consideration by the shareholders of a Fund in a manner other than as
recommended by its Board.
1.8 The parties may agree, in lieu of the procedures set forth above in
this Article 1, to place and settle trades for Fund shares through a clearing
corporation. In the event that such a clearing corporation is used, the parties
agree to abide by the rules of the clearing corporation.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are, or
prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law, that
it has legally and validly established the Account as a segregated asset account
under Kansas insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 0000 Xxx.
2.2. The Fund and the Underwriter represent and warrant that Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act,
shall be duly authorized for issuance and sold in compliance in all material
respects with applicable state and federal securities laws and that the Funds
are and shall remain registered under the 0000 Xxx. The Funds shall 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.
2.3. The Funds represent that they are lawfully organized and validly
existing under the laws of the State of Delaware and that they do and will
comply in all material respects with the 1940 Act.
2.4. The Adviser represents and warrants that it is registered as an
investment adviser with the SEC.
2.5. The Funds and the Adviser represent and warrant that all of their
trustees/directors, officers, employees, and other individuals or entities
dealing with the money and/or
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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
under the 1940 Act or related provisions as may be promulgated from time to
time. The aforesaid bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.6. 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.
2.7. The Underwriter represents and warrants that it is registered as a
broker/dealer with the SEC and is a member in good standing with the NASD.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Funds 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 Fund
(for distribution to Contract owners with value allocated to such Funds) as the
Company may reasonably request to deliver to existing Contract owners. If
requested by the Company in lieu thereof, the Funds shall provide such documents
(including a "camera-ready" copy of such documents as set in type, a diskette in
the form sent to the financial printer, or an electronic copy of the documents
in a format suitable for posting on the Company's website, all as the Company
may reasonably request) and such other assistance as is reasonably necessary in
order for the Company to have prospectuses, SAIs, supplements and annual or
semi-annual reports for the Contracts and the Funds printed together in a single
document or posted on the Company's web-site or printed individually by the
Company if it so chooses. The expenses associated with printing and providing
such documentation shall be as set forth in Article V.
3.2. Each Fund's prospectus shall state that the current SAI for such
Fund is available.
3.3. The Funds shall provide the Company with information regarding the
Funds' 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 Funds, which consent shall not be unreasonably withheld.
3.4. The Funds 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 Funds, consistent with applicable provisions
of the 1940 Act.
3.5. When the Fund submits proposals to shareholders, the Company
shall, 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, follow
one of the two procedures outlined below:
(a) If the Company chooses to solicit Contract owners itself,
it shall:
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(i) solicit voting instructions from owners of or
participants in the Contract;
(ii) vote the Fund shares in accordance with
instructions received from owners of or participants in the
Contract; and
(iii) vote Fund shares for which no instructions have
been received in the same proportion as Fund shares of such
Fund for which instructions have been received.
(b) If the Company chooses to work with the Fund's proxy
service provider, the Company shall provide a list of Contract owners with value
allocated to a Designated Portfolio as of the record date to the Fund or its
agent in order to 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 any segregated asset account in its own right, as well as any shares
held in its general account, in each case, to the extent permitted by law.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Funds, the Underwriter, the Adviser or their designee, each piece of sales
literature or other promotional material that the Company develops and in which
the Funds , the Underwriter or the Adviser are named. No such material shall be
used until approved by the Funds, the Underwriter, the Adviser or their
designee, and the Funds, the Underwriter and the Adviser will use their best
efforts for them or their designee to review such sales literature or
promotional material within five (5) Business Days after receipt of such
material. The Funds, the Underwriter, the Adviser or their designee reserves the
right to reasonably object to the continued use of any such sales literature or
other promotional material in which the Funds, the Underwriter or the Adviser is
named, and no such material shall be used if the Funds, the Advisor and the
Underwriter or their designee so objects.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Funds or concerning the Funds,
the Underwriter or the Adviser in connection with the sale of the Contracts
other than the information or representations contained in the registration
statements or prospectuses or SAIs for the Fund shares, as such registration
statements and prospectuses or SAIs may be amended or supplemented from time to
time, or in reports or proxy statements for the Funds, or in sales literature or
other promotional material approved by the Funds, the Adviser, the Underwriter
or their designee, except with the permission of the Funds, the Adviser, the
Underwriter or their designee.
4.3. The Funds or their designee, shall furnish, or cause to be
furnished, to the Company, each piece of sales literature or other promotional
material that they develop and in which the Company, and/or the Account, is
named. No such material shall be used until approved by the Company, and the
Company will use its best efforts to review such sales literature or promotional
material within five (5) Business Days after receipt of such material. The
Company reserves the right to reasonably object to the continued use of any such
sales literature or other promotional material in which the Company and/or its
Account is named, and no such material shall be used if the Company so objects.
4.4. Neither the Funds, the Adviser, nor the Underwriter shall 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
6
therein are not registered under the 1933 Act), or SAI for the Contracts, as
such registration statement, prospectus, or SAI may be amended or supplemented`
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company,
except with the permission of the Company.
4.5. The Funds will provide to the Company at least one complete copy
of all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Funds or their shares, promptly after the filing of such
document(s) with the SEC or other regulatory authorities.
4.6. The Company will provide to the Funds at least one complete copy
of all registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, promptly after the filing of
such document(s) with the SEC or other regulatory authorities. The Company shall
promptly provide to the Funds, the Underwriter and the Adviser any complaints
received from the Contract owners pertaining to the Funds.
4.7. The Funds will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation, and of any material change in
the Funds' registration statementsor prospectuses for any Account. The Funds
will work with the Company so as to enable the Company to solicit proxies from
Contract owners, or to make changes to its prospectus or registration statement,
in an orderly manner..
4.8. All sales materials of each party will comply in all material
respects with the rules and regulations of the SEC and the NASD and will be
filed with the SEC or the NASD as may be required by the rules and regulations
of the SEC or NASD, respectively.
ARTICLE V. Fees and Expenses
5.1. The Funds shall pay no fee or other compensation to the Company
under this Agreement, except that if the Funds adopt and implement a plan
pursuant to Rule 12b-1 to finance distribution expenses, then the Funds may make
payments to the Company or to the underwriter for the Contracts if and in
amounts agreed to by the Funds in writing.
5.2. All expenses incident to performance by the Funds under this
Agreement shall be paid by the Funds. The Funds shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Funds, 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 prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Funds' shares. The Funds shall
bear the expenses of distributing the Funds' proxy materials and reports to
existing Contract owners. The Funds shall also bear the expense of printing the
Funds' prospectuses which is delivered to existing Contract owners
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5.3. 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 Funds are named.
ARTICLE VI. Qualification
The Funds represent and warrant that they are or will be qualified as a
regulated investment company 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 promptlyupon having a reasonable basis for
believing that they has ceased to so qualify or that it might not so qualify in
the future.
ARTICLE VII. Indemnification
7.1. Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless each of
the Funds, the Underwriter and the Adviser and each of its trustees/directors
and officers, and each person, if any, who controls the Funds, the Underwriter
or Adviser within the meaning of Section 15 of the 1933 Act or who is under
common control with the Funds, the Underwriter or the Adviser (collectively, the
"Indemnified Parties" for purposes of this Section 7.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue
statement or alleged untrue statements of any material fact
contained in the registration statement, prospectus (which
shall include a written description of a Contract that is not
registered under the 1933 Act), or SAI for the Contracts or
contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund or the
Underwriter for use in the registration statement, prospectus
or SAI for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts, or
(ii) arise out of or as a result of material
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 Funds 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 or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, SAI, or sales literature
of
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the Funds or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to
the Funds by or on behalf of the Company; or
(iv) arise as a result of any material failure by the
Company to provide the services and furnish the materials
under the terms of this Agreement; 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 7.1(b) and
7.1(c) hereof.
(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.
(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.
(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 Funds.
7.2. Indemnification by the Underwriter
(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
9
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the registration statement or prospectus or SAI
or sales literature of the Funds (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Underwriter or
Funds by or on behalf of the Company for use in the
registration statement, prospectus or SAI for the Funds or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of material
statements or representations by or on behalf of the Funds or
the Underwriter (other than statements or representations
contained in the registration statement, prospectus, SAI or
sales literature for the Contracts not supplied by the Funds
or the Underwriter) or wrongful conduct of the Underwriter or
the Funds with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, SAI or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Underwriter or the Funds; or
(iv) arise as a result of any material failure by the
Funds or the Underwriter 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 or on behalf of
the Underwriter or the Funds in this Agreement or arise out of
or result from any other material breach of this Agreement by
or on behalf of the Underwriter or the Funds;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
(b) The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance 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.
(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to
10
notify the Underwriter of any such claim shall not relieve the Underwriter from
any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Party, the
Underwriter will be entitled to participate, at its own expense, in the defense
thereof. The Underwriter also shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to the party named in the action. After
notice from the Underwriter to such party of the Underwriter's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Underwriter will not
be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
(d) The Indemnified Party agrees promptly to notify the
Underwriter of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York,
without regard to the conflict of laws provisions thereof.
ARTICLE IX. Termination
9.1. 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 Funds, by six (6) months advance written notice delivered to the
other parties; or
(b) termination by the Company by written notice to the other
parties based upon the Company's determination that shares of the Funds 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 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 either the Funds, the Underwriter or
Adviser 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 Funds' shares; provided, however, that the Funds, the
Underwriter or Adviser determines in their 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 the Funds, the Underwriter or
Adviser by the SEC or any state securities department or any other regulatory
body; provided, however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings will have a
material
11
adverse effect upon the ability of the Funds, the Underwriter or Adviser to
perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the other
parties in the event that any 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 either the Funds, the Underwriter or the
Adviser by written notice to the other parties, if either one or all the Funds,
the Underwriter and the Adviser, respectively, shall determine, in their sole
judgment exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, financial condition, or prospects
since the date of this Agreement or is the subject of material adverse
publicity; or
(h) termination by the Company by written notice to the other
parties, if the Company shall determine, in its sole judgment exercised in good
faith, that the Funds, the Underwriter or the Adviser has suffered a material
adverse change in its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company upon any substitution of the
shares of another investment company or series thereof for shares of a Fund in
accordance with the terms of the Contracts, provided that the Company has given
at least 45 days prior written notice to the Funds, the Underwriter and Adviser
of the date of substitution.
9.2. Notwithstanding any termination of this Agreement, the Funds
shall, at the option of the Company, continue to make available additional
shares of the Funds 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 Funds. Specifically, the owners of the
Existing Contracts may be permitted to reallocate investments in the Funds,
redeem investments in the Funds and/or invest in the Funds upon the making of
additional purchase payments under the Existing Contracts (subject to any such
election by the Company).
9.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties shall survive.
ARTICLE X. 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
Facsimile: (000) 000-0000
12
If to the Fund: Xxx Xxxxxx Investments Inc.
Attention: General Counsel
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
If to Adviser: Xxx Xxxxxx Asset Management Inc.
Attention: General Counsel
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
If to Underwriter: Xxx Xxxxxx Funds Inc.
Attention: General Counsel
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Funds must look solely to the
property of the respective Fund listed on Schedule B hereto as though each such
Fund had separately contracted with the Company, the Underwriter and the Adviser
for the enforcement of any claims against the Funds. The parties agree that
neither the Boards, officers, agents or shareholders of the Funds assume any
personal liability or responsibility for obligations entered into by or on
behalf of the Funds.
11.2. Each party acknowledges that the identities of the other party's
customers, information maintained by such other party regarding those customers,
and all computer programs and procedures developed by the other party or the
other party's affiliated persons, as that term is defined in the 1940 Act, or
agents in connection with the other party's performance of its duties constitute
the valuable property of the other party. Each party agrees that should it or
its affiliated person or agent come into possession of any list or compilation
of the identities of or other information about the other party's customers, or
any other property of such party, pursuant to this Agreement, the party who
acquired the information or property, or whose affiliated person or agent
acquired the information or property, shall use its best efforts to hold, or
cause its affiliated person or agent to hold, the information or property in
confidence and refrain from using, disclosing or distributing any of the
information or other property, except with the other party's prior written
consent or as required by law or judicial process.
11.3. 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.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. 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
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Kansas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable insurance
operations of the Company are being conducted in a manner consistent with the
Kansas insurance laws and regulations and any other applicable law or
regulations.
11.7. 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
applicable state and federal laws.
11.8 This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
11.9 This agreement constitutes the entire agreement between the
parties and supersedes any prior agreement with respect to the subject matter
whether oral or written.
11.10 Except as otherwise provided, neither this agreement nor any
rights or obligations may be assigned by any party without the written consent
of the other parties.
11.11 This agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
14
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative.
Security Benefit Life
Insurance Company By its authorized officer
By:
--------------------------
Title:
--------------------------
Xxx Xxxxxx Equity Income Fund By its authorized officer
By:
--------------------------
Title:
--------------------------
Xxx Xxxxxx Xxxxxxxx Fund By its authorized officer
By:
--------------------------
Title:
--------------------------
Xxx Xxxxxx Equity Trust By its authorized officer
By:
--------------------------
Title:
--------------------------
Xxx Xxxxxx Asset Management, Inc. By its authorized officer
By:
--------------------------
Title:
--------------------------
Xxx Xxxxxx Funds, Inc. By its authorized officer
By:
--------------------------
Title:
--------------------------
15
July 1, 2001
SCHEDULE A
ACCOUNT(S) CONTRACT(S)
SBL VARIABLE ANNUITY ACCOUNT XIV V6029
16
July 1, 2001
SCHEDULE B
Funds
1. Xxx Xxxxxx Equity Income Fund
2. Xxx Xxxxxx Xxxxxxxx Fund
3. Xxx Xxxxxx Equity Trust
x. Xxx Xxxxxx Aggressive Growth Fund
17
FIRST AMENDMENT
TO
PARTICIPATION AGREEMENT
THIS AMENDMENT, dated as of June 29, 2007, entered into by and among
Security Benefit Life Insurance Company (the "Company"), Xxx Xxxxxx Equity and
Income Fund, Xxx Xxxxxx Xxxxxxxx Fund and Xxx Xxxxxx Equity Trust (each a "Fund"
and collectively the "Funds"), Xxx Xxxxxx Funds Inc, ("Underwriter") and V an
Kampen Asset Management Inc. ("Adviser"), modifies the Participation Agreement,
dated as of July 1,2001, by and among the Company, the Funds, Underwriter and
Adviser (the "Agreement"), Capitalized terms used, but not defined, herein shall
have the same meanings as ascribed to them in the Agreement
WITNESSETH:
WHEREAS, pursuant to the Agreement, Company currently purchases shares
in the Funds listed on Schedule B thereto on behalf of the Account listed on
Schedule A thereto in order to fund the Contract listed on Schedule A;
WHEREAS, the parties desire to add an Account and Contract to Schedule A; and
WHEREAS, the Funds, the Underwriter and the Adviser desire to update the
address information that is set forth in Article X of the Agreement.
NOW THEREFORE, in consideration of their mutual promises, the parties
agree to amend the Agreement as follows:
1. ADDITION OF ACCOUNT AND CONTRACT. Schedule A to the Agreement
is hereby deleted, in its entirety, and replaced with new
Schedule A attached hereto for the purpose of adding a new
Account and Contract to the Agreement,
2. REVISED ADDRESSES The information provided for the Funds,
Adviser and Underwriter in Artic1e X of the Agreement is
hereby deleted, in its entirety, and replaced with the
following:
If to the Funds, Adviser or Underwriter:
Xxx Xxxxxx Investments Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
3. FURTHER AMENDMENTS. The modifications made by the Amendment shall apply to
the Agreement only, and shall not be construed to modify any separate
agreements between the parties.
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 continue to be in full force and
effect without change.
18
5. HEADINGS. The headings of the sections or other subdivisions of this
Amendment are for convenience of reference only and shall not affect the
meaning, construction, operation or effect of the terms hereof or otherwise
be considered in the interpretation of this Amendment or the Agreement.
6. COUNTERPARTS. This Amendment may be executed in one or more counterparts,
each of which will be an original and all of which, taken together, will be
deemed one and the same document.
[remainder of page intentionally left blank]
19
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on their behalf by duly authorized officers and such Amendment shall
become effective as of the date first above written
SECURITY BENEFIT LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------------------------------------
Title: Senior VP, Chief Operating Officer
-----------------------------------------------------------
Date: 7/5/07
-----------------------------------------------------------
ON BEHALF OF THE FUNDS:
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------------------------------------
As: President & Principal Executive Officer of each Fund, on
behalf of each Fund
-----------------------------------------------------------
Date:
-----------------------------------------------------------
XXX XXXXXX FUNDS, INC.
By: /s/ Xxxxxxx X Xxxxx
-----------------------------------------------------------
Name: Xxxxxxx X Xxxxx
-----------------------------------------------------------
Title: President and Chief Executive Officer
-----------------------------------------------------------
Date: July 25, 2007
-----------------------------------------------------------
XXX XXXXXX ASSET MANAGEMENT
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------------------------
Name: Xxxxxx X Xxxx
-----------------------------------------------------------
Title: Managing Director
-----------------------------------------------------------
Date: July 27, 2007
-----------------------------------------------------------
20
SCHEDULE A
ACCOUNT(S) CONTRACT(S)
SBL Variable Annuity Account XIV V6029
SBL Variable Annuity Account XV V6323
21
