PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
RS INVESTMENT TRUST, ON BEHALF OF ITS,
RS PARTNERS FUND SERIES ONLY
AND RS INVESTMENT MANAGEMENT, L.P.
THIS AGREEMENT, dated as of the 1st day of July, 2003, 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"), RS Investment
Trust (the "Trust") on behalf of its RS Partners Fund series (the "Fund") only,
and RS Investment Management, L.P. (the "Adviser"), a California partnership.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act") and its shares
are registered under the Securities Act of 1933, as amended (the "1933 Act");
and
WHEREAS, the Adviser, which serves as investment adviser to the Fund, is
duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended; and
WHEREAS, the Company has issued or will issue certain variable annuity
contracts supported wholly or partially by the Account (the "Contracts"), and
said Contracts are listed in Schedule A hereto, as it may be amended from time
to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, the Company intends to purchase shares in the Fund, on behalf of
the Account to fund the aforesaid Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Adviser agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. Subject to Article IX hereof, the Fund agrees to make its
shares available to the Company for purchase on behalf of the Account, such
purchases to be effected at net asset value in accordance with Section 1.3 of
this Agreement. Notwithstanding the foregoing, the Board of Trustees of the Fund
(the "Board") may suspend or terminate the offering of shares of the 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 or in the best interests of
the Fund or its shareholders.
1.2. The Fund 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 Fund may delay redemption of
Fund shares to the extent permitted at the time by the 1940 Act, and any rules,
regulations or orders thereunder or the Fund's prospectus.
1.3. PURCHASE AND REDEMPTION PROCEDURES
(a) The Fund hereby appoints the Company as an agent of the
Fund for the limited purpose of receiving and accepting purchase and redemption
requests on behalf of the Account (but not with respect to the 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 the 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 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 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 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 responsibility of the Fund.
(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, except that the Fund reserves the right to delay payment of redemption
proceeds to the
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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
Fund's prospectus.
1.4. The Adviser shall use its best efforts to make the net asset
value per share for each 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 the Fund is calculated, and shall calculate such
net asset value in accordance with the Fund's prospectus. If the Trust provides
the Company with materially incorrect share net asset value information, the
Company on behalf of the Account, shall be entitled to an adjustment to the
number of shares purchased or redeemed to reflect the correct share net asset
value. Any material error in the calculation of the net asset value per share,
dividend or capital gain information shall be reported promptly to the Company
upon discovery. In the event that any such material error is the result of the
gross negligence of the Fund, or its designated agent for calculating the net
asset value, any administrative or other costs or losses incurred for correcting
underlying Contract owner accounts shall be at the Adviser's expense.
1.5. The Adviser 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 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 the 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 Fund
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.
1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's shares may be sold
to other insurance companies and the cash value of the Contracts may be invested
in other investment companies.
(b) The Company shall not, without prior notice to the
Adviser (unless otherwise required by applicable law), take any action to
operate the Account as a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the
Adviser (unless otherwise required by applicable law), induce Contract owners to
change or modify the Fund or change the Fund's investment adviser.
(d) The Company shall not, without prior notice to the Fund,
induce Contract owners to vote on any matter submitted for consideration by the
shareholders of the Fund in a manner other than as recommended by the Board.
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1.8 The parties may agree, in lieu of the procedures set forth
above in this Article 1, to place and settle trades for Fund shares through a
clearing corporation. In the event that such a clearing corporation is used, the
parties agree to abide by the rules of the clearing corporation.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts (a)
are, or prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law, that
it has legally and validly established the Account as a segregated asset account
under Kansas insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 0000 Xxx.
2.2. The Fund represents and warrants that 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 the Fund is and shall remain registered under the 0000
Xxx. The Fund shall amend the registration statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares to the Company. The Fund shall register and
qualify the shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund in order to effect the
sale of shares to the Company hereunder.
2.3. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
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 Fund and the Adviser represent and warrant that all of
their trustees/directors, officers, employees, and other individuals or entities
dealing with the money and/or securities of the Fund are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimum coverage as required
currently by Rule 17g-1 of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
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.
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2.7. Each party to this Agreement hereby agrees to abide by and
comply with all applicable anti-money laundering laws and regulations including
the Anti-Money Laundering and Abatement Act and relevant provisions of the USA
Patriot Act of 2001.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Fund shall provide the Company with as many printed copies
of the current prospectus, current Statement of Additional Information ("SAI),
supplements, proxy statements, and annual or semi-annual reports of each Fund
(for distribution to Contract owners with value allocated to the Funds) as the
Company may reasonably request to deliver to existing Contract owners. If
requested by the Company in lieu thereof, the Fund shall provide such documents
(including a "camera-ready" copy of such documents as set in type, a diskette in
the form sent to the financial printer, or an electronic copy of the documents
in a format suitable for posting on the Company's website, all as the Company
may reasonably request) and such other assistance as is reasonably necessary in
order for the Company to have prospectuses, SAIs, supplements and annual or
semi-annual reports for the Contracts and the Fund printed together in a single
document or posted on the Company's web-site or printed individually by the
Company if it so chooses. The expenses associated with printing and providing
such documentation shall be as set forth in Article V.
3.2. The Fund's prospectus shall state that the current SAI for the
Fund is available.
3.3. The Adviser shall provide the Company with information
regarding the Fund's expenses, which information may include a table of fees and
related narrative disclosure for use in any prospectus or other descriptive
document relating to a Contract. The Company agrees that it will use such
information substantially in the form provided. The Company shall provide prior
written notice of any proposed modification of such information, which notice
will describe the manner in which the Company proposes to modify the
information, and agrees that it may not modify such information in any way
without the prior consent of the Fund in its sole discretion.
3.4. The Fund will pay or cause to be paid the expenses associated
with text composition, printing, mailing, distributing, and tabulation of proxy
statements and voting instruction solicitation materials to Contract owners with
respect to proxies related to the Fund, consistent with applicable provisions of
the 1940 Act.
3.5. 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 the 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 on behalf of the Company. The Company
shall also provide such other information to the Fund as is reasonably necessary
in order for the Fund to properly tabulate votes for Fund initiated proxies. The
Company reserves the right to vote Fund shares held in its general account in
its own right, to the extent permitted by applicable laws.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material that the Company develops and in which the Fund or the Adviser is
named. No such material shall be used until approved in writing by the Adviser
or its designee, and the Adviser will use its best efforts for it or its
designee to review such sales literature or promotional material within five (5)
Business Days after receipt of such material. The Fund
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and the Adviser, themselves or through their designees, reserve the right to
object in their sole discretion to the continued use of any such sales
literature or other promotional material in which the Fund or the Adviser is
named, and no such material shall be used if the Fund, the Adviser, or any
designee so objects.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus or SAI for the Fund shares, as such registration statement and
prospectus or SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund or its designee, except with the
permission of the Fund or its designee.
4.3. The Adviser, 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 in writing 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 object in its sole discretion to the
continued use of any such sales literature or other promotional material in
which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
4.4. The Fund shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account,
or the Contracts other than the information or representations contained in a
registration statement, prospectus (which shall include an offering memorandum,
if any, if the Contracts issued by the Company or interests therein are not
registered under the 1933 Act), or SAI for the Contracts, as such registration
statement, prospectus, or SAI may be amended or supplemented from time to time,
or in published reports for the Account which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company, except with
the permission of the Company.
4.5. The Adviser will provide to the Company at least one complete
copy of all registration statements, prospectuses, SAIs, reports, proxy
statements, and all amendments to any of the above, that relate to the Fund or
their shares, promptly after the filing of such document(s) with the SEC.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or interests
therein are not registered under the 1933 Act), SAIs, reports, solicitations for
voting instructions, 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. The Company shall provide to the Fund and the Adviser any complaints
received from the Contract owners pertaining to the Fund.
4.7. The Fund will use reasonable efforts to provide the Company
with as much notice as is reasonably practicable of any proxy solicitation for
the 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 Adviser will work with the Company so as to
facilitate the solicitation of proxies from Contract owners, or to make changes
to its prospectus or registration statement, in an orderly manner.
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ARTICLE V. FEES AND EXPENSES
5.1. The Fund shall pay no fee or other compensation to the Company
under this Agreement, except that if the Fund adopts and implements a plan
pursuant to Rule 12b-l to finance distribution expenses, then the Fund may make
payments to the Company or to the underwriter for the Contracts if and in
amounts agreed to by the Fund in writing.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund or the Adviser. The Fund shall bear the
expenses for the cost of registration and qualification of the Fund's shares,
preparation and filing of the Fund's prospectus and registration statement,
proxy materials and reports, setting the prospectus in type, setting in type and
printing the proxy materials and reports to shareholders (including the costs of
printing a prospectus that constitutes an annual report), the preparation of all
statements and notices required by any federal or state law, and all taxes on
the issuance or transfer of the Fund's shares. The Fund shall bear the expenses
of distributing the Fund's proxy materials and reports to existing Contract
owners. The Fund shall also bear the expense of printing the Fund's prospectus,
and annual and semi-annual reports, which are delivered to existing Contract
owners with value allocated to the Fund (regardless of whether such prospectuses
are printed by the Fund or the Company; provided that, where such prospectuses
are printed by the Company, the expense thereof must be an amount considered
reasonable by the Fund).
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 Fund is named.
ARTICLE VI. QUALIFICATION
The Fund represents and warrants that it is, and intends to remain
qualified as a regulated investment company (a "RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code,") and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future. If during any period the Fund fails to qualify as a RIC under
Subchapter M, then the Adviser will indemnify the Company to the extent, but
only to the extent, of the amount of any tax payable by the Fund in respect of
such period, multiplied by the percentage obtained by dividing the number of
shares of the Fund held by the Company at the time the amount of such tax is
first deducted from the assets of the Fund shown on the Fund's financial
statements by the total number of shares of the Fund outstanding at such time.
In addition, in any such case, the Adviser will indemnify the Company for all
reasonable legal expenses incurred by the Company in the defense of any claim by
Contract owners against it arising from the failure of the Fund to qualify as a
RIC.
ARTICLE VII. INDEMNIFICATION
7.1. INDEMNIFICATION BY THE COMPANY
7.1(a). The Company agrees to indemnify and hold harmless
each of the Fund and the Adviser and each of its trustees/directors and
officers, and each person, if any, who controls the Fund or Adviser within the
meaning of Section 15 of the 1933 Act or who is under common control with the
Fund or the Adviser (collectively, the "Indemnified Parties" for purposes of
this Section 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
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Parties may become subject, 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 in writing to the
Company by or on behalf of the Fund or the Adviser for use in the
registration statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the Contracts,
or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other than
statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the Fund not
supplied by the Company or persons under its control) or wrongful
conduct of the Company or its agents or persons under the Company's
authorization or control, with respect to the sale or distribution
of the Contracts, or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon written information
furnished to the Fund by or on behalf of the Company for use in such
registration statement, prospectus, SAI or sales literature; or
(iv) 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.
7.1(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
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. Further, the Company shall not be liable (including by way of
indemnification) for any exemplary, indirect, punitive, special or consequential
damages.
7.1(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
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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.
7.1(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.
7.2. INDEMNIFICATION BY THE ADVISER
7.2(a). The Adviser agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning 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 Adviser) or litigation expenses
(including legal and other expenses) actually paid by the Indemnified Parties to
Contract owners, regulatory authorities or any third-party claimaints, insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature of
the Fund (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished in writing to the Adviser or Fund by or
on behalf of the Company for use in the registration statement,
prospectus or SAI for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Fund or the Adviser (other
than statements or representations contained in the registration
statement, prospectus, SAI or sales literature for the Contracts not
supplied by the Fund or the Adviser) or wrongful conduct of the
Adviser or the Fund with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
written information furnished to the Company by or
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on behalf of the Adviser or the Fund for use in such registration
statement, prospectus, SAI or sales literature; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by or on behalf of the Adviser
or the Fund in this Agreement or arise out of or result from any
other material breach of this Agreement by or on behalf of the
Adviser or the Fund;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b). The Adviser shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company or the Account, whichever is applicable. Further the
Adviser shall not be liable (including by way if indemnification) for any
exemplary, indirect, punitive, special or consequential damages.
7.2(c). The Adviser shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Adviser in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the Adviser to such party of the
Adviser's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.2(d). The Company agrees promptly to notify the Adviser of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
7.2(e). Notwithstanding the foregoing, no person shall be
entitled to any indemnification under this Section 7.2 in respect of any failure
of the Fund to qualify as a RIC for any period.
7.3. INDEMNIFICATION BY THE FUND
7.3(a). The Fund agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.3)
against any and all losses, claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the Fund) or litigation
expenses (including legal and other expenses) actually
- 10 -
paid by the Indemnified Parties to Contract owners, regulatory authorities or
any third-party claimants, resulting from:
(i) any untrue statement or alleged untrue statement of
any material fact contained in the registration statement or
prospectus or SAI or sales literature of the Fund (or any amendment
or supplement to any of the foregoing), or 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 in writing to the Adviser or
Fund by or on behalf of the Company for use in the registration
statement, prospectus or SAI for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(ii) any material breach of any representation and/or
warranty made by or on behalf of the Fund in this Agreement any
other material breach of this Agreement by or on behalf of the Fund;
as limited by and in accordance with the provisions of Sections 7.3(b) and
7.3(c) hereof. The parties acknowledge that the Fund's indemnification
obligations under this Section 7.3 are subject to applicable law.
7.3(b). The Fund shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
negligence 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. Further, the Fund shall not be liable (including by way
of indemnification) for any exemplary, indirect, punitive, special or
consequential damages. Notwithstanding the foregoing, no person shall be
entitled to any indemnification under this Section 7.3 in respect of any failure
of the Fund to qualify as a RIC for any period.
7.3(c). The Fund shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Fund in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the Fund to such party of the Fund's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Fund will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.3(d). The Company agrees promptly to notify the Fund of the
commencement of any litigation or proceeding against it or any of its respective
officers or directors in connection with
- 11 -
the Agreement, the issuance or sale of the Contracts, the operation of the
Account, or the sale or acquisition of shares of the Fund.
ARTICLE 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.
8.2. This Agreement shall be subject to the provisions of the 1933
and 1940 Acts as well as the Exchange Act of 1934, and the rules and regulations
and rulings thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant, and the terms hereof shall be interpreted and
construed in accordance therewith.
8.3. The parties waive their right to seek remedies in court,
including any right to a jury trial. The parties agree that in the event of any
dispute between the parties arising out of, relating to or in connection with
this Agreement, such dispute shall be resolved exclusively by arbitration to be
conducted in accordance with the rules of JAMS/ENDISPUTE applying the laws of
New York. Disputes shall not be resolved in any other forum or venue. The
parties agree that such arbitration shall be conducted by a retired judge who is
experienced in resolving disputes regarding the securities business, that
discovery shall not be permitted except as required by the rules of
JAMS/ENDISPUTE, that the arbitration award shall not include factual findings or
conclusions of law, and that no punitive damages shall be awarded. The parties
understand that any party's right to appeal or to seek modification of any
ruling or award of the arbitrator is severely limited. Any award rendered by the
arbitrator shall be final and binding, and judgment may be entered on it in any
court of competent jurisdiction or as otherwise provided by law.
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 Designated Portfolios, by 120 days' advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the other
parties based upon the Company's determination that shares of
the Fund are not reasonably available to meet the requirements
of the Contracts; or
(c) termination by the Company by written notice to the other
parties in the event the Fund's shares sold hereunder are not
registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(d) termination by the Fund or Adviser 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; or
- 12 -
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Adviser by the SEC or any state securities department or any
other regulatory body; or
(f) termination by the Company by written notice to the other
parties in the event that the 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 the Fund may fail to so qualify or comply; or
(g) termination by either the Fund or the Adviser by written
notice to the other parties, if either one or both the Fund
and the Adviser, respectively, shall determine, in their sole
judgment exercised in good faith, that the Company has
suffered a material adverse change in its business,
operations, financial condition, or prospects since the date
of this Agreement or is the subject of material adverse
publicity; or
(h) termination by the Company by written notice to the other
parties, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund or the Adviser has
suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company upon any substitution of the shares
of another investment company or series thereof for shares of
a Designated Portfolio of the Fund in accordance with the
terms of the Contracts, provided that the Company has given at
least 45 days prior written notice to the Fund and Adviser of
the date of substitution.
9.2. Notwithstanding any termination of this Agreement, the Fund
and the Adviser shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"), unless the
Company seeks an order pursuant to Section 26(b) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated Portfolios.
Specifically, the owners of the Existing Contracts 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).
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.
- 13 -
If to the Company: Security Benefit Life Insurance Company
Attention General Counsel
One Security Benefit Place
Topeka, Kansas 66636 - 0001
If to the Fund: RS Investment Trust
Attention Xxxxx Xxxxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to Adviser: RS Investment Management, L.P.
Attention Xxxxx Xxxxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
ARTICLE XI. MISCELLANEOUS
11.1. The parties agree that neither the Board, officers, agents or
shareholders of the Fund assume any personal liability or responsibility for
obligations entered into by or on behalf of the Fund.
11.2. Subject to the requirements of legal process and regulatory
authority, the Fund and the Adviser shall treat as confidential the names and
addresses of the owners of the Contracts. Each party shall treat as confidential
all information reasonably identified as confidential in writing by any other
party hereto and, except as permitted by this Agreement, shall not disclose,
disseminate or utilize such information without the express written consent of
the affected party until such time as such information has come into the public
domain.
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.
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 (the Company to pay any costs or expenses incurred by the Fund or
the Adviser in connection therewith).
- 14 -
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 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.
- 15 -
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative.
By its authorized officer
Security Benefit Life
Insurance Company
By: /s/
---------------------------------
Title: Vice President
Date: June 30, 2003
RS Investment Trust, on behalf of By its authorized officer
its RS Partners Fund series only
By: /s/
---------------------------------
Title: TREASURER
-------------------------------
Date: 6/30/03
--------------------------------
RS Investment Management, L.P. By its authorized officer
By: /s/
---------------------------------
Title: CFO
-------------------------------
Date: 6/30/03
--------------------------------
- 16 -
July 1, 2003
SCHEDULE A
ACCOUNT(S) CONTRACT(S) FUND
SBL VARIABLE ANNUITY ACCOUNT V6029 RS Investment Trust, on
XIV behalf of its RS Partners
Fund series only
A-I
