Contract
PARTICIPATION AGREEMENT
THIS AGREEMENT, is made as of May 21, 2002, by and among First Security
Benefit Life Insurance and Annuity Company of New York ("Company"), on its own
behalf and on behalf of Variable Annuity Account A, established 1/22/96, a
segregated asset account of the Company ("Account"), Strong Variable Insurance
Funds, Inc. ("Strong Variable") on behalf of the portfolios of Strong Variable
listed on the attached Exhibit A, as such Exhibit may be amended from time to
time (the "Designated Portfolios"), Strong Opportunity Fund II, Inc.
("Opportunity Fund II"), Strong Investor Services, Inc. (the "Transfer Agent"),
the transfer agent for the Opportunity Fund II and Strong Variable, and Strong
Investments, Inc. ("Distributors"), the distributor for Strong Variable and the
Opportunity Fund II (each, a "Party" and collectively, the "Parties").
PRELIMINARY STATEMENTS
A. Beneficial interests in Strong Variable are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Portfolio").
B. To the extent permitted by applicable insurance laws and regulations, the
Company intends to purchase shares of Opportunity Fund II and the Designated
Portfolios ("Fund" or "Funds" shall be deemed to refer to each Designated
Portfolio and to the Opportunity Fund II to the extent the context requires), on
behalf of the Account to fund the variable annuity contracts that use the Funds
as an underlying investment medium (the "Contracts").
C. The Company, Transfer Agent and Distributors desire to facilitate the
purchase and redemption of shares of the Funds by the Company for the Account
through one or more accounts, which number shall be as mutually agreed upon by
the parties, in each Fund (each an "Omnibus Account"), to be maintained of
record by the Company, subject to the terms and conditions of this Agreement.
D. The Company desires to provide administrative services and functions (the
"Services") for purchasers of Contracts ("Owners") who are beneficial owners of
shares of the Funds on the terms and conditions set forth in this Agreement.
AGREEMENTS
The parties to this Agreement agree as follows:
1. PERFORMANCE OF SERVICES. Company agrees to perform the administrative
functions and services specified in Exhibit B attached to this Agreement with
respect to the shares of the Funds beneficially owned by the Owners and included
in the Account. Nothing in this Agreement shall limit Company's right to engage
one or more of its wholly owned subsidiaries (each, a "Designee") to provide all
or any portion of the Services, but no such engagement shall relieve Company of
its duties, responsibilities or liabilities under this Agreement.
2. THE OMNIBUS ACCOUNTS.
2.1 Each Omnibus Account will be opened based upon the information contained
in Exhibit C to this Agreement. In connection with each Omnibus Account, Company
represents and warrants that it is authorized to act on behalf of each Owner
effecting transactions in the Omnibus Account and that the information specified
on Exhibit C to this Agreement is correct.
2.2 Each Fund shall designate each Omnibus Account with an account number.
These account numbers will be the means of identification when the Parties are
transacting in the Omnibus Accounts. The assets in the Accounts are segregated
from the Company's general account assets. Transfer Agent agrees to cause the
Omnibus Accounts to be kept open on each Fund's books, as applicable, regardless
of a lack of activity or small position size except to the extent the Company
takes specific action to close an Omnibus Account or to the extent a Fund's
prospectus reserves the right to close accounts which are inactive or of a small
position size. In the latter two cases, Transfer Agent will give prior notice to
the Company before closing an Omnibus Account.
2.3 The Company agrees to provide Transfer Agent such information as
Transfer Agent or Distributors may reasonably request concerning Owners as may
be necessary or advisable to enable Transfer Agent and Distributors to comply
with applicable laws, including state "Blue Sky" laws relating to the sales of
shares of the Funds to the Accounts.
3. FUND SHARES TRANSACTIONS.
3.1 IN GENERAL. Shares of the Funds shall be sold on behalf of the Funds by
Distributors and purchased by Company for the Account and, indirectly for the
appropriate subaccount thereof at the net asset value next computed after
receipt by Distributors of each order of the Company or its Designee, in
accordance with the provisions of this Agreement, the then current prospectuses
of the Funds, and the Contracts. Company may purchase shares of the Funds for
its own account subject to (a) receipt of prior written approval by
Distributors; and (b) such purchases being in accordance with the then current
prospectuses of the Fund and the Contracts. The Board of Directors of each Fund
("Directors") may refuse to sell shares of the applicable Fund to any person, or
suspend or terminate the offering of shares of the Fund if such action is
required by law or by regulatory authorities having jurisdiction. Company agrees
to purchase and redeem the shares of the Funds in accordance with the provisions
of this Agreement, of the Contracts and of the then current prospectuses for the
Contracts and Funds. Except as permitted by the terms of the Contracts or as
necessary to implement transactions initiated by Owners, or as otherwise
permitted by state or federal laws or regulations including any exemptions
therefrom, Company shall not redeem shares of Funds attributable to the
Contracts.
3.2 PURCHASE AND REDEMPTION ORDERS. On each day that a Fund is open for
business (a "Business Day"), the Company or its Designee shall aggregate and
calculate the net purchase or redemption order it receives for the Account from
the Owners for shares of the Fund that it received prior to the close of trading
on the New York Stock Exchange (the "NYSE") (i.e. 3:00 p.m., Central time,
unless the NYSE closes at an earlier time in which case such earlier time shall
apply) and communicate to Distributors, by telephone or facsimile (or by such
other means as the Parties to this Agreement may agree to in writing), the net
aggregate purchase or redemption order (if any) for the Omnibus Account for such
Business Day (such Business Day is sometimes referred to herein as the "Trade
Date"). The Company or its Designee will communicate such orders to Distributors
prior to 9:00 a.m., Central time, on the next Business Day following the Trade
Date. All trades communicated to Distributors by the foregoing deadline shall be
treated by Distributors as if they were received by Distributors prior to the
close of trading on the Trade Date.
3.3 SETTLEMENT OF TRANSACTIONS.
(a) PURCHASES. Company or its Designee will wire, or arrange for the
wire of, the purchase price of each purchase order to the custodian for the Fund
in accordance with written instructions provided by Distributors to the Company
so that either (i) such funds are received by the custodian for the Fund prior
to 12:00 p.m., Central time, on the next Business Day following the Trade Date,
or (ii) Distributors is provided with a Federal Funds wire system reference
number prior to such 12:00 p.m. deadline evidencing the entry of the wire
transfer of the purchase price to the applicable custodian into the Federal
Funds wire system prior to such time. Company agrees that if it fails to provide
funds to the Fund's custodian by the close of business on the next Business Day
following the Trade Date, then, at the option of Distributors, (A) the
transaction may be canceled, or (B) the transaction may be processed at the
next-determined net asset value for the applicable Fund after purchase order
funds are received. In such event, the Company shall indemnify and hold harmless
Distributors, Transfer Agent and the Funds from any actual liabilities, costs
and damages either may suffer as a result of such failure (but in no event shall
such amounts include any special or consequential damages).
(b) REDEMPTIONS. Transfer Agent will use its best efforts to cause to
be transmitted to such custodial account as Company shall direct in writing, the
proceeds of all redemption orders placed by Company or its Designee by 9:00
a.m., Central time, on the Business Day immediately following the Trade Date, by
wire transfer of Federal Funds on that Business Day. Should Transfer Agent need
to extend the settlement on a trade, it will contact Company to discuss the
extension but in no event shall settlement be extended beyond the time provided
for in the Investment Company Act of 1940. For purposes of determining the
length of settlement, Transfer Agent agrees to treat the Account no less
favorably than other shareholders of the Funds. Each wire transfer of redemption
proceeds shall indicate, on the Federal Funds wire system, the amount thereof
attributable to each Fund; PROVIDED, HOWEVER, that if the number of entries
would be too great to be transmitted through the Federal Funds wire system,
Transfer Agent shall, on the day the wire is sent, fax such entries to Company
or if possible, send via direct or indirect systems access until otherwise
directed by the Company in writing.
3.4 BOOK ENTRY ONLY. Issuance and transfer of shares of a Fund will be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Shares of the Funds ordered from Distributors will be recorded in the
appropriate book entry title for the Account.
3.5 DISTRIBUTION INFORMATION. Transfer Agent or Distributors shall use their
best efforts to provide the Company with all distribution announcement
information as soon as it is announced by the Funds but in no event later than
5:30 p.m. Central time on the payable date. The distribution information shall
set forth, as applicable, ex-dates, record date, payable date, distribution rate
per share, record date share balances, cash and reinvested payment amounts and
all other information reasonably requested by the Company. Where possible,
Transfer Agent or Distributors shall provide the Company with direct or indirect
systems access to Transfer Agent's systems for obtaining such distribution
information.
3.6 REINVESTMENT. The Company elects to reinvest all dividends and capital
gains distributions automatically on the payable date in additional shares of
the applicable Fund at net asset value in accordance with each Fund's then
current prospectus; provided, however, that the Company reserves the right to
revoke this election.
3.7 PRICING INFORMATION. Distributors shall use its best efforts to furnish
to the Company prior to 5:30 p.m., Central time, on each Business Day each
Fund's closing net asset value for that day, and for those Funds for which such
information is calculated, the daily accrual for interest rate factor (mil
rate). Such information shall be communicated via fax, or indirect or direct
systems access acceptable to the Company.
3.8 PRICE ERRORS.
(a) NOTIFICATION. If an adjustment is required in accordance with a
Fund's then current policies on reimbursement ("Fund Reimbursement Policies") to
correct any error in the computation of the net asset value of Fund shares
("Price Error"), Transfer Agent or Distributors shall notify Company as soon as
practicable after discovering the Price Error. Notice may be made via facsimile
or via direct or indirect systems access and shall state the incorrect price,
the correct price and, to the extent communicated to the Fund's shareholders,
the reason for the price change.
(b) UNDERPAYMENTS. If a Price Error causes an Account to receive less
than the amount to which it otherwise would have been entitled, Transfer Agent
shall make all necessary adjustments (subject to the Fund Reimbursement
Policies) so that the Account receives the amount to which it would have been
entitled
(c) OVERPAYMENTS. If a Price Error causes an Account to receive more
than the amount to which it otherwise would have been entitled, Company, when
requested by Transfer Agent (in accordance with the Fund Reimbursement
Policies), will use its best efforts to collect such excess amounts from the
applicable Owners.
(d) FUND REIMBURSEMENT POLICIES. Transfer Agent agrees to treat
Company's customers no less favorably than Transfer Agent treats its retail
shareholders in applying the provisions of paragraphs 3.8(b) and 3.8(c).
(e) EXPENSES. Transfer Agent shall reimburse Company for all reasonable
and necessary out-of-pocket expenses incurred by Company for payroll overtime,
stationery and postage in adjusting Owner accounts affected by a Price Error
described in paragraphs 3.8(b) and 3.8(c). Company shall use its best efforts to
mitigate all expenses which may be reimbursable under this section 3.8(e) and
agrees that payroll overtime shall not include any time spent programming
computers or otherwise customizing Company's recordkeeping system. Upon
requesting reimbursement, Company shall present an itemized xxxx to Transfer
Agent detailing the costs for which it seeks reimbursement.
3.9 AGENCY. Distributors hereby appoints the Company or its Designee as its
agent for the limited purpose of accepting purchase and redemption instructions
from the Owners for the purchase and redemption of shares of the Funds by the
Company on behalf of Account.
3.10 QUARTERLY REPORTS. Transfer Agent agrees to provide Company a statement
of Fund assets as soon as practicable and in any event within 30 days after the
end of each fiscal quarter, and a statement certifying the compliance by the
Funds during that fiscal quarter with the diversification requirements and
qualification as a regulated investment company. In the event of a breach of
Section 6.4(a), Transfer Agent will take all reasonable steps (a) to notify
Company of such breach and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation 1.817-5.
3.11 NO SALES TO PUBLIC. The Funds and Distributors agree that shares of the
Funds will be sold only to participating insurance companies and their separate
accounts. No shares of any Fund will be sold to the general public.
3.12 REQUIRED PROVISIONS. The Funds and the Distributors will not sell any
Fund's shares to any insurance company or separate account unless an agreement
containing provisions substantially the same as Articles 3, 4, 6, 9 and 10 of
this Agreement is in effect to govern such sales.
4. PROXY SOLICITATIONS AND VOTING. The Company shall, at its expense, distribute
or arrange for the distribution of all proxy materials furnished by the Funds to
the Account and shall: (a) solicit voting instructions from Owners; (b) vote the
Fund shares in accordance with instructions received from Owners; and (c) vote
the Fund shares for which no instructions have been received, as well as shares
attributable to it, in the same proportion as Fund shares for which instructions
have been received from Owners, so long as and to the extent that the Securities
and Exchange Commission (the "SEC") continues to interpret the Investment
Company Act of 1940, as amended (the "1940 Act"), to require pass-through voting
privileges for various contract owners. The Company and its Designees will not
recommend action in connection with, or oppose or interfere with, the
solicitation of proxies for the Fund shares held for Owners. The costs
associated with printing such proxies, as well as the costs associated with
printing proxy cards and the costs of tabulation, shall be borne by the Funds.
5. CUSTOMER COMMUNICATIONS.
5.1 PROSPECTUSES. Transfer Agent or Distributors, at its expense, will
provide the Company with as many copies of the current prospectus for the Funds
as the Company may reasonably request for distribution to existing or
prospective Owners. The cost of distributing prospectuses to existing or
prospective Owners shall be borne by the Company. The Company may choose to
receive camera-ready film (or other electronic media which is mutually agreeable
to the parties) in lieu of receiving printed copies of the Funds' prospectus;
provided that Transfer Agent and Distributors have the capability of
transmitting the prospectus in such format. If the Company chooses to receive
camera-ready film (or other electronic media) Transfer Agent or Distributor will
reimburse the Company for its cost of printing the prospectus; provided however,
in no event shall such cost exceed the cost Transfer Agent or Distributors would
have incurred had Transfer Agent or Distributors printed the prospectus.
5.2 SHAREHOLDER MATERIALS. Transfer Agent and Distributors shall, as
applicable, provide in bulk to the Company or its authorized representative, at
a single address and at no expense to the Company, the following shareholder
communications materials prepared for circulation to Owners in quantities
requested by the Company which are sufficient to allow mailing thereof by the
Company and, to the extent required by applicable law, to all Owners: proxy or
information statements, annual reports, semi-annual reports, and all initial and
updated prospectuses, supplements and amendments thereof. None of the Funds,
Transfer Agent or Distributors shall be responsible for the cost of distributing
such materials to Owners.
6. REPRESENTATIONS AND WARRANTIES.
6.1 The Company represents and warrants that:
(a) It is an insurance company duly organized and in good standing
under the laws of the State of New York and that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account and that the Company has and will maintain the capacity to issue
all Contracts that may be sold; and that it is and will remain duly registered,
licensed, qualified and in good standing to sell the Contracts in all the
jurisdictions in which such Contracts are to be offered or sold;
(b) It and each of its Designees is and will remain duly registered and
licensed under all applicable federal and state securities and insurance laws
and shall perform its obligations under this Agreement in compliance in all
material respects with any applicable state and federal laws;
(c) The Contracts are and will be registered under the Securities Act
of 1933, as amended (the "1933 Act"), and are and will be registered and
qualified for sale in the states where so required; and the Account is and will
be registered as a unit investment trust in accordance with the 1940 Act and
shall be a segregated investment account for the Contracts;
(d) The Contracts are currently treated as annuity contracts, under
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Company will maintain such treatment and will notify Transfer
Agent, Distributors and Funds promptly upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future;
(e) It and each of its Designees is registered as a transfer agent
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or is not required to be registered as such;
(f) To the extent required by applicable law, the arrangements provided
for in this Agreement will be disclosed to the Owners; and
(g) It is registered as a broker-dealer under the 1934 Act and any
applicable state securities laws, including as a result of entering into and
performing the Services set forth in this Agreement, or is not required to be
registered as such.
6.2 The Funds each represent and warrant that:
(a) Fund shares sold pursuant to this Agreement are and will be
registered under the 1933 Act and any applicable state securities laws and the
Fund is and will be registered as a registered investment company under the
Investment Company Act of 1940;
(b) It is currently qualified as a Regulated Investment Company under
Subchapter M of the Code, and that each Fund will maintain such qualification
(under Subchapter M or any successor or similar provision) and that the Company
will be notified immediately upon having a reasonable basis for believing that
any Fund has ceased to so qualify or that any Fund might not so qualify in the
future;
6.3 Distributors represents and warrants that:
(a) It is and will be a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and is and will be registered
as a broker-dealer with the SEC; and
(b) It will sell and distribute Fund shares in accordance with all
applicable state and federal laws and regulations.
(c) It will perform its obligations for the Funds in compliance in all
material respects with all applicable state and federal laws and regulations.
6.4 Transfer Agent represents and warrants that:
(a) Each Fund has complied and will continue to comply with Section
817(h) of the Code and Treasury Regulation 1.817-5 (or any successor or similar
provisions) relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and that it will notify the Company
immediately upon having a reasonable basis for believing that any Fund has
ceased to so comply or that any Fund might not so comply in the future.
(b) It is and will remain duly registered and licensed under all
applicable federal and state securities and insurance laws and shall perform its
obligations under this Agreement in compliance in all material respects with any
applicable state and federal laws.
6.5 Each of the Parties to this Agreement represents and warrants to the
others that:
(a) It has full power and authority under applicable law, and has taken
all action necessary, to enter into and perform this Agreement and the person
executing this Agreement on its behalf is duly authorized and empowered to
execute and deliver this Agreement;
(b) This Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms and it shall comply in all
material respects with all laws, rules and regulations applicable to it by
virtue of entering into this Agreement;
(c) No consent or authorization of, filing with, or other act by or in
respect of any governmental authority, is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement;
(d) The execution, performance and delivery of this Agreement will not
result in it violating any applicable law or breaching or otherwise impairing
any of its contractual obligations;
(e) Each Party to this Agreement is entitled to rely on any written
records or instructions provided to it by another Party; and
(f) Its directors, officers, employees, and investment advisers, and
other individuals/entities dealing with the money or securities of a 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
amount required by the applicable rules of the NASD and the federal securities
laws, which bond shall include coverage for larceny and embezzlement and shall
be issued by a reputable bonding company.
7. SALES MATERIAL AND INFORMATION
7.1 NASD FILINGS. Upon the request of Distributors, the Company shall
promptly inform Distributors as to the status of all sales literature filings
pertaining to the Funds and shall promptly notify Distributors of all approvals
or disapprovals of sales literature filings with the NASD. For purposes of this
Section 7, the phrase "sales literature or other promotional material" shall be
construed in accordance with all applicable securities laws and regulations.
7.2 COMPANY REPRESENTATIONS. Neither the Company nor any of its Designees
shall make any material representations concerning Transfer Agent, the
Distributors, or a Fund other than the information or representations contained
in: (a) a registration statement of the Fund or prospectus of a Fund, as amended
or supplemented from time to time; (b) published reports or statements of the
Funds which are in the public domain or are approved by Distributors or the
Funds; or (c) sales literature or other promotional material of the Funds. For
purposes of this Section 7, the phrase "sales literature or other promotional
material" shall be construed in accordance with all applicable securities laws
and regulations.
7.3 TRANSFER AGENT, DISTRIBUTORS AND FUND REPRESENTATIONS. None of Transfer
Agent, Distributors or any Fund shall make any material representations
concerning the Company or its Designees other than the information or
representations contained in: (a) a registration statement or prospectus for the
Contracts, as amended or supplemented from time to time; (b) published reports
or statements of the Contracts or the Account which are in the public domain or
are approved by the Company; or (c) sales literature or other promotional
material of the Company.
7.4 TRADEMARKS, ETC. Except to the extent required by applicable law, no
Party shall use any other Party's names, logos, trademarks or service marks,
whether registered or unregistered, without the prior consent of such Party.
7.5 INFORMATION FROM DISTRIBUTORS AND TRANSFER AGENT. Upon request,
Distributors or Transfer Agent will provide to Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, solicitations for voting instructions,
applications for exemptions, requests for no action letters, and all amendments
to any of the above, that relate to the Funds, in final form as filed with the
SEC, NASD and other regulatory authorities.
7.6 INFORMATION FROM COMPANY. Upon request, Company will provide to
Distributors at least one complete copy of all registration statements,
prospectuses, Statements of Additional Information, 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 a Fund and the Contracts, in final form as
filed with the SEC, NASD and other regulatory authorities.
7.7 REVIEW OF MARKETING MATERIALS. If so requested by Company, Transfer
Agent or Distributors will use its best efforts to review sales literature and
other marketing materials prepared by Company which relate to the Funds,
Transfer Agent or Distributors for factual accuracy as to such entities,
provided that Transfer Agent or Distributors is provided at least five (5)
Business Days to review such materials. Neither Transfer Agent nor Distributors
will review such materials for compliance with applicable laws. Company shall
provide Transfer Agent with copies of all sales literature and other marketing
materials which refer to the Funds, Transfer Agent or Distributors within five
(5) Business Days after their first use, regardless of whether Transfer Agent or
Distributors has previously reviewed such materials. If so requested by Transfer
Agent or Distributors, Company shall cease to use any sales literature or
marketing materials which refer to the Funds, Transfer Agent or Distributors
that Transfer Agent or Distributors determines to be inaccurate, misleading or
otherwise unacceptable.
8. FEES AND EXPENSES.
8.1 FUND REGISTRATION EXPENSES. Fund or Distributors shall bear the cost of
registration and qualification of Fund shares; preparation and filing of Fund
prospectuses and registration statements, proxy materials and reports;
preparation of all other statements and notices relating to the Fund or
Distributors required by any federal or state law; payment of all applicable
fees, including, without limitation, any fees due under Rule 24f-2 of the 1940
Act, relating to a Fund; and all taxes on the issuance or transfer of Fund
shares on the Fund's records.
8.2 CONTRACT REGISTRATION EXPENSES. The Company shall bear the expenses for
the costs of preparation and filing of the Company's prospectus and registration
statement with respect to the Contracts; preparation of all other statements and
notices relating to the Account or the Contracts required by any federal or
state law; expenses for the solicitation and sale of the Contracts including all
costs of printing and distributing all copies of advertisements, prospectuses,
Statements of Additional Information, proxy materials, and reports to Owners or
potential purchasers of the Contracts as required by applicable state and
federal law; payment of all applicable fees relating to the Contracts; all costs
of drafting, filing and obtaining approvals of the Contracts in the various
states under applicable insurance laws; filing of annual reports on form N-SAR,
and all other costs associated with ongoing compliance with all such laws and
its obligations under this Agreement.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY COMPANY.
(a) Company agrees to indemnify and hold harmless the Funds, Transfer
Agent and Distributors and each of their directors, officers, employees and
agents, and each person, if any, who controls any of them within the meaning of
Section 15 of the 1933 Act (each, an "Indemnified Party" and collectively, the
"Indemnified Parties" for purposes of this Section 9.1) from and against any and
all losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of Company), and expenses including reasonable legal
fees and expenses, (collectively, hereinafter "Losses"), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise insofar as such Losses are related to the sale or acquisition
of, or investment in, the Funds' shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the registration
statement, prospectus or sales literature for the Contracts or contained in 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 paragraph 9.1(a) 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 written information
furnished to Company by or on behalf of a Fund, Distributors or Transfer Agent
for use in the registration statement or prospectus for the Contracts or in the
Contracts or in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of, or as a result of, statements or
representations (other than statements or representations provided by Transfer
Agent, Distributors, Funds or any person under their control) or unlawful
conduct of Company, its Designees or its agents, 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,
or sales literature covering a 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 and in
conformity with written information furnished to a Fund, Transfer Agent or
Distributors by or on behalf of Company; or
(iv) arise out of, or as a result of, any material failure by
Company, its Designees or persons under the Company's or Designees' control to
provide the Services and furnish the materials contemplated under the terms of
this Agreement; or
(v) arise out of, or result from, any material breach of any
representation or warranty made by Company, its Designees or persons under the
Company's or Designees' control in this Agreement or arise out of or result from
any other material breach of this Agreement by Company. its Designees or persons
under the Company's or Designees' control; as limited by and in accordance with
the provisions of Sections 9.1(b) and 9.1(c) hereof; or
(vi) arise out of, or as a result of, adherence by Transfer Agent
or Distributors to instructions that it reasonably believes were originated by
an authorized agent of Company. For purposes of this paragraph, "authorized
agent of Company" shall mean any individual set forth in Exhibit E to this
Agreement. This indemnification provision is in addition to any liability which
the Company or its Designees may otherwise have.
(b) Company shall not be liable under this indemnification provision
with respect to any Losses to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to the Funds, whichever is applicable.
(c) 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 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 Company of any such claim shall not
relieve Company from any liability which it may have to the Indemnified Party
otherwise than on account of this indemnification provision. In case any such
action is brought against any Indemnified Party, and it notified the
indemnifying Party of the commencement thereof, the indemnifying Party will be
entitled to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel reasonably satisfactory to such Indemnified Party.
After notice from the indemnifying Party of its intention to assume the defense
of an action, the Indemnified Party shall bear the expenses of any additional
counsel obtained by it, and the indemnifying Party shall not be liable to such
Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation. The Indemnified Party may
not settle any action without the written consent of the indemnifying Party. The
indemnifying Party may not settle any action without the written consent of the
Indemnified Party unless such settlement completely and finally releases the
Indemnified Party from any and all liability. In either event, consent shall not
be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Company of the
commencement of any litigation or proceedings against the Indemnified Parties in
connection with the issuance or sale of Fund shares or the Contracts or the
operation of a Fund.
9.2 INDEMNIFICATION BY TRANSFER AGENT AND DISTRIBUTORS.
(a) Transfer Agent and Distributors agrees to indemnify and hold
harmless Company and each of its directors, officers, employees and agents and
each person, if any, who controls Company within the meaning of Section 15 of
the 1933 Act (each, an "Indemnified Party" and collectively, the "Indemnified
Parties" for purposes of this Section 9.2) from and against any and all Losses
to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such Losses are related to
the sale or acquisition of, or investment in, the Funds' shares or the Contracts
and:
(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 sales literature of a 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
Section 9.2(a) 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 written information furnished to a Fund, Transfer Agent or
Distributors by or on behalf of Company for use in the registration statement or
prospectus for a Fund or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund shares;
or
(ii) arise out of, or as a result of, statements or
representations (other than statements or representations provided by Company,
its Designee or any person under their control) or unlawful conduct of Transfer
Agent or Distributors or persons under its control, with respect to the sale or
distribution of Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement, prospectus,
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 statements
therein not misleading, if such statement or omission was made in reliance upon
and in conformity with written information furnished to Company by or on behalf
of Transfer Agent or Distributors; or
(iv) arise out of, or as a result of, any material failure by
Transfer Agent, Distributors or the Funds or persons under its control to
provide the Services and furnish the materials contemplated under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation or warranty made by Transfer Agent, Distributors or the Funds or
persons under its control in this Agreement or arise out of or result from any
other material breach of this Agreement by Transfer Agent, Distributors or the
Funds or persons under its control; as limited by and in accordance with the
provisions of Sections 9.2(b) and 9.2(c) hereof.
This indemnification provision is in addition to any liability which
Transfer Agent and Distributors may otherwise have.
(b) Transfer Agent and Distributors shall not be liable under this
indemnification provision with respect to any Losses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or the Account,
whichever is applicable.
(c) Transfer Agent and Distributors 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 Transfer Agent and
Distributors 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 Transfer Agent and Distributors of any such claim shall not relieve
Transfer Agent and Distributors from any liability which it may have to the
Indemnified Party otherwise than on account of this indemnification provision.
In case any such action is brought against any Indemnified Party, and it
notified the indemnifying Party of the commencement thereof, the indemnifying
Party will be entitled to participate therein and, to the extent that it may
wish, assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party. After notice from the indemnifying Party of its intention to
assume the defense of an action, the Indemnified Party shall bear the expenses
of any additional counsel obtained by it, and the indemnifying Party shall not
be liable to such Indemnified Party under this Section for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation. The Indemnified
Party may not settle any action without the written consent of the indemnifying
Party. The indemnifying Party may not settle any action without the written
consent of the Indemnified Party unless such settlement completely and finally
releases the Indemnified Party from any and all liability. In either event,
consent shall not be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Transfer Agent and
Distributors of the commencement of any litigation or proceedings against the
Indemnified Parties in connection with the issuance or sale of the Contracts or
the operation of the Account.
10. POTENTIAL CONFLICTS.
10.1 MONITORING BY DIRECTORS FOR CONFLICTS OF INTEREST. The Directors of
each Fund will monitor the Fund for any potential or existing material
irreconcilable conflict of interest between the interests of the contract owners
of all separate accounts investing in the Fund, including such conflict of
interest with any other separate account of any other insurance company
investing in the Fund. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretive letter, or any similar action by insurance, tax or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of the Fund are
being managed; (e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or by contract
owners of different life insurance companies utilizing the Fund; or (f) a
decision by Company to disregard the voting instructions of Owners. The
Directors shall promptly inform the Company, in writing, if they determine that
an irreconcilable material conflict exists and the implications thereof.
10.2 MONITORING BY THE COMPANY FOR CONFLICTS OF INTEREST. The Company will
promptly notify the Directors, in writing, of any potential or existing material
irreconcilable conflicts of interest, as described in Section 10.1 above, of
which it is aware. The Company will assist the Directors in carrying out their
responsibilities under any applicable provisions of the federal securities laws
and any exemptive orders granted by the SEC ("Exemptive Order"), by providing
the Directors, in a timely manner, with all information reasonably necessary for
the Directors to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Directors whenever Owner voting
instructions are disregarded.
10.3 REMEDIES. If it is determined by a majority of the Directors, or a
majority of disinterested Directors, that a material irreconcilable conflict
exists, as described in Section 10.1 above, the Company shall, at its own
expense take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including, but not limited to: (a)
withdrawing the assets allocable to some or all of the separate accounts from
the applicable Fund and reinvesting such assets in a different investment
medium, including (but not limited to) another fund managed by Transfer Agent,
or submitting the question whether such segregation should be implemented to a
vote of all affected Owners and, as appropriate, segregating the assets of any
particular group that votes in favor of such segregation, or offering to the
affected owners the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
10.4 CAUSES OF CONFLICTS OF INTEREST.
(a) STATE INSURANCE REGULATORS. If a material irreconcilable conflict
arises because a particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state regulators, then the
Company will withdraw the affected Account's investment in the applicable Fund
and terminate this Agreement with respect to such Account within the period of
time permitted by such decision, but in no event later than six months after the
Directors inform the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; PROVIDED, HOWEVER,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested Directors. Until the end of the foregoing period, the
Distributors and Funds shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund to the extent
such actions do not violate applicable law.
(b) DISREGARD OF OWNER VOTING. If a material irreconcilable conflict
arises because of Company's decision to disregard Owner voting instructions and
that decision represents a minority position or would preclude a majority vote,
Company may be required, at the applicable Fund's election, to withdraw the
Account's investment in said Fund. No charge or penalty will be imposed against
the Account as a result of such withdrawal.
10.5 LIMITATIONS ON CONSEQUENCES. For purposes of Sections 10.3 through 10.5
of this Agreement, a majority of the disinterested Directors shall determine
whether any proposed action adequately remedies any irreconcilable material
conflict. In no event will a Fund, Transfer Agent or the Distributors be
required to establish a new funding medium for any of the Contracts. The Company
shall not be required by Section 10.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of Owners
affected by the irreconcilable material conflict. In the event that the
Directors determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the Account's
investment in the applicable Fund and terminate this Agreement as quickly as may
be required to comply with applicable law, but in no event later than six (6)
months after the Directors inform the Company in writing of the foregoing
determination, PROVIDED, HOWEVER, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict.
10.6 CHANGES IN LAWS. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Funds' Exemptive Order) on terms and
conditions materially different from those contained in the Funds' Exemptive
Order, then (a) the Funds and/or Transfer Agent, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
10.1, 10.2, 10.3 and 10.4 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
11. MAINTENANCE OF RECORDS.
(a) Recordkeeping and other administrative services to Owners shall be
the responsibility of the Company and shall not be the responsibility of the
Funds, Transfer Agent or Distributors. None of the Funds, Transfer Agent or
Distributors shall maintain separate accounts or records for Owners. Company
shall maintain and preserve all records as required by law to be maintained and
preserved in connection with providing the Services and in making shares of the
Funds available to the Account.
(b) Upon the request of Transfer Agent or Distributors, the Company
shall provide copies of all the historical records relating to transactions
between the Funds and the Account, written communications regarding the Funds to
or from the Account and other materials, in each case (1) as are maintained by
the Company in the ordinary course of its business and in compliance with
applicable law, and (2) as may reasonably be requested to enable Transfer Agent
and Distributors, or its representatives, including without limitation its
auditors or legal counsel, to (A) monitor and review the Services, (B) comply
with any request of a governmental body or self-regulatory organization or the
Owners, (C) verify compliance by the Company with the terms of this Agreement,
(D) make required regulatory reports, (E) verify to Advisor's reasonable
satisfaction that all purchase and redemption orders aggregated for each Trade
Date were received by Company prior to the close of trading on the NYSE on such
Trade Date, or (F) perform general customer supervision. The Company agrees that
it will permit Transfer Agent and Distributors or such representatives of either
to have reasonable access to its personnel and records in order to facilitate
the monitoring of the quality of the Services.
(c) Upon the request of the Company, Transfer Agent and Distributors
shall provide copies of all the historical records relating to transactions
between the Funds and the Account, written communications regarding the Funds to
or from the Account and other materials, in each case (1) as are maintained by
Transfer Agent and Distributors, as the case may be, in the ordinary course of
its business and in compliance with applicable law, and (2) as may reasonably be
requested to enable the Company, or its representatives, including without
limitation its auditors or legal counsel, to (A) comply with any request of a
governmental body or self-regulatory organization or the Owners, (B) verify
compliance by Transfer Agent and Distributors with the terms of this Agreement,
(C) make required regulatory reports, or (D) perform general customer
supervision.
(d) The Parties agree to cooperate in good faith in providing records
to one another pursuant to this Section 11.
12. TERM AND TERMINATION.
12.1 TERM AND TERMINATION WITHOUT CAUSE. This Agreement shall continue in
full force and effect unless terminated by any Party upon six months advance
written notice or for one or more of the reasons noted in 12.2 through 12.4.
12.2 TERMINATION BY FUND, DISTRIBUTORS OR TRANSFER AGENT FOR CAUSE. Transfer
Agent, Fund or Distributors may terminate this Agreement by written notice to
the Company, if any of them shall determine, in its sole judgment exercised in
good faith, that (a) 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 (b) any of the
Contracts are not registered, issued or sold in accordance with applicable state
and federal law or such law precludes the use of Fund shares as the underlying
investment media of the Contracts issued or to be issued by the Company.
12.3 TERMINATION BY COMPANY FOR CAUSE. Company may terminate this Agreement
by written notice to Transfer Agent, Funds and Distributors, if Company shall
determine, in its sole judgment exercised in good faith, that (a) any of the
Fund shares are not registered, issued or sold in accordance with applicable
state 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; (b) a Fund ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision, or if the
Company reasonably believes that a Fund may fail to so qualify; or (c) a Fund
fails to meet the diversification requirements specified in Section 6.4(a) or if
the Company reasonably believes that a Fund may fail to meet such
diversification requirements or (d) Transfer Agent, Fund or Distributors 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.
12.4 TERMINATION BY ANY PARTY. This Agreement may be terminated as to any
Fund by any Party at any time (a) by giving 30 days' written notice to the other
Parties in the event of a material breach of this Agreement by the other Party
or Parties that is not cured during such 30-day period, and (b) (i) upon
institution of formal proceedings relating to the legality of the terms and
conditions of this Agreement against the Account, Company, any Designee, the
Funds, Transfer Agent or Distributors by the NASD, the SEC or any other
regulatory body provided that the terminating Party has a reasonable belief that
the institution of formal proceedings is not without foundation and will have a
material adverse impact on the terminating Party, (ii) by the non-assigning
Party upon the assignment of this Agreement in contravention of the terms
hereof, or (iii) as is required by law, order or instruction by a court of
competent jurisdiction or a regulatory body or self-regulatory organization with
jurisdiction over the terminating Party.
12.5 LIMIT ON TERMINATION. Notwithstanding the termination of this Agreement
with respect to any or all Funds, for so long as any Contracts remain
outstanding and invested in a Fund each Party to this Agreement shall continue
to perform such of its duties under this Agreement as are necessary to ensure
the continued tax deferred status thereof and the payment of benefits
thereunder, except to the extent proscribed by law, the SEC or other regulatory
body. Notwithstanding the foregoing, nothing in this Section 12.5 obligates a
Fund to continue in existence. In the event that any Fund elects to terminate
its operations, the Company shall, as soon as practicable, obtain an exemptive
order or order of substitution from the SEC to remove all Owners from the
applicable Fund.
13. NOTICES.
All notices under this Agreement shall be given in writing (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile, by registered or certified mail or by overnight delivery (postage
prepaid, return receipt requested) to the respective Parties as follows:
If to Strong Variable:
Strong Variable Insurance Funds, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Opportunity Fund II:
Strong Opportunity Fund II, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Transfer Agent:
Strong Investor Services, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Distributors:
Strong Investments, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Company:
First Security Benefit Life Insurance
and Annuity Company of New York
00 X. Xxx Xxx Xxxx
Xxxxx Xxxxxx, XX 00000
Attention: Chief Administrative Officer
Facsimile No.: (000) 000-0000
With a copy to:
First Security Benefit Life Insurance
and Annuity Company of New York
One Security Benefit Place
Topeka, Kansas 66636
Attention: General Counsel
Facsimile No.: (000) 000-0000
14. MISCELLANEOUS.
14.1. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way affect the construction or effect of any
provisions hereof.
14.2. ENFORCEABILITY. If any portion 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.
14.3. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
14.4. REMEDIES NOT EXCLUSIVE. 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 to this
Agreement are entitled to under state and federal laws.
14.5. CONFIDENTIALITY. Each Party agrees to take all steps necessary to
comply with all applicable laws, rules and regulations (including, without
limitation, the Securities and Exchange Commission Regulation S-P) protecting
the privacy of consumer nonpublic personal financial information ("Consumer
Information") disclosed to each Party under this Agreement. Each Party agrees
not to disclose or use Consumer Information other than to carry out the purposes
for which such Consumer Information is disclosed or as otherwise permitted by
law.
14.6. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of Wisconsin applicable to
agreements fully executed and to be performed therein; exclusive of conflicts of
laws.
14.7. SURVIVABILITY. Sections 6, 7.2, 7.3, 7.4, 9, 11 and 12.5 hereof shall
survive termination of this Agreement. In addition, all provisions of this
Agreement shall survive termination of this Agreement in the event that any
Contracts are invested in a Fund at the time the termination becomes effective
and shall survive for so long as such Contracts remain so invested.
14.8. AMENDMENT AND WAIVER. No modification of any provision of this
Agreement will be binding unless in writing and executed by the Party to be
bound thereby. No waiver of any provision of this Agreement will be binding
unless in writing and executed by the Party granting such waiver.
Notwithstanding anything in this Agreement to the contrary, Transfer Agent may
unilaterally amend Exhibit A to this Agreement to add additional series of
Strong Variable Funds ("New Funds") as Funds by sending to the Company a written
notice of the New Funds provided, however, that Company shall have no obligation
to make New Funds available in the Contracts. Any valid waiver of a provision
set forth herein shall not constitute a waiver of any other provision of this
Agreement. In addition, any such waiver shall constitute a present waiver of
such provision and shall not constitute a permanent future waiver of such
provision.
14.9. ASSIGNMENT. This Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and assigns. Neither
this Agreement nor any rights, privileges, duties or obligations of the Parties
may be assigned by any Party without the written consent of the other Parties or
as expressly contemplated by this Agreement; provided, however, that either
Party may assign its rights and obligations pursuant to this Agreement to any
entity that controls, is controlled by or is under common control with that
Party so long as, by the terms of such assignment, the ultimate controlling
entity of the assigning Party agrees to be liable for all financial obligations
of the assigning Party created under this Agreement.
14.10. ENTIRE AGREEMENT. This Agreement contains the full and complete
understanding between the Parties with respect to the transactions covered and
contemplated under this Agreement, and supersedes all prior agreements and
understandings between the Parties relating to the subject matter hereof,
whether oral or written, express or implied.
14.11. RELATIONSHIP OF PARTIES; NO JOINT VENTURE, ETC. Except for the
limited purpose provided in Section 3.8, it is understood and agreed that the
Company and each of its Designees shall be acting as an independent contractor
and not as an employee or agent of Transfer Agent, Distributors or the Funds,
and none of the Parties shall hold itself out as an agent of any other Party
with the authority to bind such Party. Neither the execution nor performance of
this Agreement shall be deemed to create a partnership or joint venture by and
among any of the Company, any Designees, Funds, Transfer Agent, or Distributors.
14.12. EXPENSES. All expenses incident to the performance by each Party of
its respective duties under this Agreement shall be paid by that Party.
14.13. TIME OF ESSENCE. Time shall be of the essence in this Agreement.
14.14. NON-EXCLUSIVITY. Each of the Parties acknowledges and agrees that
this Agreement and the arrangements described herein are intended to be
non-exclusive and that each of the Parties is free to enter into similar
agreements and arrangements with other entities.
14.15. OPERATIONS OF FUNDS. In no way shall the provisions of this Agreement
limit the authority of the Funds, Transfer Agent or Distributors to take such
action as it may deem appropriate or advisable in connection with all matters
relating to the operation of such Fund and the sale of its shares. In no way
shall the provisions of this Agreement limit the authority of the Company to
take such action as it may deem appropriate or advisable in connection with all
matters relating to the provision of Services or the shares of funds other than
the Funds offered to the Account.
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
By: XXXXX X. XXXXX
--------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President, General Counsel & Secretary
STRONG INVESTOR SERVICES, INC.
XXXXXX X. XXXXXX, XX.
--------------------------------------------------
Xxxxxx X. Xxxxxx, Xx.
Assistant Secretary
STRONG INVESTMENTS, INC.
XXXXXXXXX XXXX
--------------------------------------------------
Xxxxxxxxx X. Xxxx
Assistant Secretary
STRONG VARIABLE INSURANCE FUNDS, INC.
on behalf of the Designated Portfolios
XXXXX X. XXXXXXXXX
--------------------------------------------------
Xxxxx X. Xxxxxxxxx
Vice President and Assistant Secretary
STRONG OPPORTUNITY FUND II, INC.
XXXXX X. XXXXXXXXX
--------------------------------------------------
Xxxxx X. Xxxxxxxxx
Vice President and Assistant Secretary
EXHIBIT A
The following is a list of Designated Portfolios under this Agreement:
(None)
EXHIBIT B
THE SERVICES
Company or its Designees shall perform the following services. Such services
shall be the responsibility of the Company and shall not be the responsibility
of the Funds, Transfer Agent or Distributors.
1. Maintain separate records for each Account, which records shall reflect
Fund shares ("Shares") purchased and redeemed, including the date and price for
all transactions, Share balances, and the name and address of each Owner,
including zip codes and tax identification numbers.
2. Credit contributions to individual Owner accounts and invest such
contributions in shares of the Funds consistent with the terms of the Contracts.
3. Disburse or credit to the Owners, and maintain records of, all proceeds of
redemptions of Fund shares and all other distributions not reinvested in shares.
4. Prepare and transmit to the Owners, periodic account statements showing,
among other things, the total number of accumulation units owned under the
Contract as of the statement closing date, purchases and redemptions of
accumulation units during the period covered by the statement, and such other
information pertaining to the account as may be required by law.
5. Transmit to the Owners, as required by applicable law, prospectuses, proxy
materials, shareholder reports, and other information provided by Transfer
Agent, Distributors or Funds and required to be sent to shareholders under the
Federal securities laws.
6. Transmit to Distributors purchase orders and redemption requests placed by
the Account and arrange for the transmission of funds to the Funds.
7. Transmit to Distributors such periodic reports as Distributors shall
reasonably conclude is necessary to enable the Funds to comply with applicable
Federal securities and state Blue Sky requirements.
8. Transmit to each Owner confirmations of purchase orders and redemption
requests placed by each Owner.
9. Maintain all account balance information for the Account as may be
required by law.
10. Prepare, transmit and file any Federal, state and local government
reports and returns as required by law with respect to each account maintained
on behalf of the Account.
11. Respond to Owners' inquiries regarding, among other things, share prices,
account balances, dividend options, dividend amounts, and dividend payment
dates.
EXHIBIT C--ACCOUNT INFORMATION
(FOR ACCOUNTS TO HAVE DIVIDENDS AND CAPITAL GAINS REINVESTED AUTOMATICALLY)
1. Entity in whose name each First Security Benefit Life Insurance
Account will be opened: and Annuity Company of New York
Mailing address: 00 Xxxx Xxx Xxx Xxxx, 0xx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
2. Employer ID number (FOR INTERNAL USAGE ONLY): 00-0000000
0. Authorized contact persons: The following persons are authorized on behalf
of the Company to effect transactions in each Account:
Name: Xxxxx Xxxx Phone: 000-000-0000
Name: Xxxxxxx Xxxxxxx Phone: 000-000-0000
Name: Xxxx Xxxxxxxxx Phone: 000-000-0000
Name: Xxxxx Xxxxxxxxxx Phone: 000-000-0000
4. Will the Accounts have telephone exchange? Yes X No
----- -----
(THIS OPTION LETS COMPANY REDEEM SHARES BY TELEPHONE AND APPLY THE PROCEEDS
FOR PURCHASE IN ANOTHER IDENTICALLY REGISTERED ACCOUNT.)
5. Will the Accounts have telephone redemption? Yes X No
----- -----
(THIS OPTION LETS COMPANY SELL SHARES BY TELEPHONE. THE PROCEEDS WILL BE
WIRED TO THE BANK ACCOUNT SPECIFIED BELOW.)
6. All dividends and capital gains will be reinvested automatically.
7. Instructions for all outgoing wire transfers: UMB Bank, na, Kansas City, MO
ABA # 000000000
Acct# 9870857391
FSBL Operating Acct.
8. COMPANY CERTIFIES UNDER PENALTY OF PERJURY THAT:
(i) THE NUMBER SHOWN ON THIS FORM IS THE CORRECT EMPLOYER ID NUMBER (OR THAT
COMPANY IS WAITING TO BE ISSUED AN EMPLOYER ID NUMBER), AND
(ii) COMPANY IS NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (A) COMPANY IS
EXEMPT FROM BACKUP WITHHOLDING, OR (B) COMPANY HAS NOT BEEN NOTIFIED BY THE
INTERNAL REVENUE SERVICE ("IRS") THAT IT IS SUBJECT TO BACKUP WITHHOLDING AS A
RESULT OF FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (C) THE IRS HAS
NOTIFIED THE COMPANY THAT IT IS NO LONGER SUBJECT TO BACKUP WITHHOLDING.
(CROSS OUT (ii) IF COMPANY HAS BEEN NOTIFIED BY THE IRS THAT IT IS SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON ITS TAX
RETURN.)
THE IRS DOES NOT REQUIRE COMPANY'S CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
XXXXX X. XXXXX 5/21/02
----------------------------------- -----------------------------------
(SIGNATURE OF AUTHORIZED OFFICER) (DATE)
(Company shall inform Transfer Agent and Distributors of any changes to
information provided in this Account Information Form pursuant to Section 13 of
the Agreement.)
PLEASE NOTE: DISTRIBUTORS EMPLOYS REASONABLE PROCEDURES TO CONFIRM THAT
INSTRUCTIONS COMMUNICATED BY TELEPHONE ARE GENUINE AND MAY NOT BE LIABLE FOR
LOSSES DUE TO UNAUTHORIZED OR FRAUDULENT INSTRUCTIONS. PLEASE SEE THE PROSPECTUS
FOR THE APPLICABLE FUND FOR MORE INFORMATION ON THE TELEPHONE EXCHANGE AND
REDEMPTION PRIVILEGES.
EXHIBIT D
Billing and Count Information
1. Contact person to receive administrative fees:
Name: Xxxxxx Xxxxxxx
Title: Staff Accountant III
Company Name: First Security Benefit Life Insurance & Annuity
Company of New York
Address: One Security Benefit Place
City, State, Zip: Xxxxxx, Xxxxxx 00000-0000
Phone Number: 000-000-0000
Fax Number: 000-000-0000
E-mail address: xxxxxx.xxxxxxx@xxxxxxxxxxxxxxx.xxx
2. Contact person that will furnish participant/shareholder counts:
Name: Xxxxxxx X. Xxxxx
Title: Investment Relations Representative
Company Name: Security Benefit Group, Inc.
Address: One Security Benefit Place
City, State, Zip: Xxxxxx, XX 00000-0000
Phone Number: 000-000-0000
Fax Number: 000-000-0000
E-mail address: xxxxxxx.xxxxx@xxxxxxxxxxxxxxx.xxx
EXHIBIT E
(list of authorized representatives)
See Exhibit C.
Re: Fee Letter Relating to the First Security Benefit Life
Insurance and Annuity Company of New York Participation Agreement.
Dear Xx. Xxxxx:
Pursuant to the Participation Agreement by and among Strong Investor
Services, Inc. ("Strong"), First Security Benefit Life Insurance and Annuity
Company of New York (the "Company"), Strong Variable Insurance Funds, Inc.,
Strong Opportunity Fund II, Inc. and Strong Investments, Inc. ("Distributors")
dated May 21, 2002 (the "Participation Agreement"), the Company will provide
certain administrative services on behalf of the registered investment companies
or series thereof specified in Exhibit A (each a "Fund" and collectively the
"Funds").
In recognition of the reduction in administrative expenses that derives from
the performance of said administrative services, Strong agrees to pay the
Company the fee specified below for each Fund specified in Exhibit A to this
Agreement.
(a) For average aggregate amounts (as calculated in paragraph (b), below)
invested through variable insurance products issued by the Company with the
Funds, the monthly fee shall equal the percentage (calculated in paragraph
(b), below) of the applicable annual fee for each Fund specified in Exhibit
A.
(b) For purposes of computing the fee contemplated in paragraph (a) above,
Strong shall calculate and pay to the Company an amount with respect to each
Fund equal to the product of: (a) the product of (i) the number of calendar
days in the applicable month divided by the number of calendar days in that
year (365 or 366 as applicable) and (ii) the applicable percentage specified
in Exhibit A, to this Agreement, multiplied by (b) the average daily market
value of the investments held in such Fund pursuant to the Participation
Agreement computed by totaling the aggregate investment (share net asset
value multiplied by the total number of shares held) on each day during the
calendar month and dividing by the total number of days during such month.
(c) Strong shall calculate the amount of the payment to be made pursuant
to this Letter Agreement at the end of each calendar month and will make such
payment to the Company within 30 days after receiving the report referenced
in paragraph (e), below. Fees will be paid, at Strong's election, by wire
transfer or by check. All payments under this Agreement shall be considered
final unless disputed by the Company in writing within 60 days of receipt.
(d) The parties agree that the fees contemplated herein are solely for
shareholder servicing and other administrative services provided by the
Company and do not constitute payment in any manner for investment advisory,
distribution, trustee, or custodial services.
(e) The Company agrees to provide Strong by the 15th day of each month
with a report which indicates the number of Owners that hold through a
Contract interests in each Fund as of the last day of the prior month.
(f) If requested in writing by Strong, and at Strong's expense, the
Company shall provide to Strong, by February 14th of each year, a "Special
Report" from a nationally recognized accounting firm reasonably acceptable to
Strong which substantiates for each month of the prior calendar year: (a) the
number of Owners that hold, through an Account, interests in each Account
maintained by the Company on the last day of each month which held shares for
which the fee provided for in this Letter Agreement was received by the
Company, (b) that any fees billed to Strong for such month were accurately
determined in accordance with this Letter Agreement, and (c) such other
information in connection with this Agreement and the Participation Agreement
as may be reasonably requested by Strong.
(g) The parties to the Participation Agreement agree that Strong may
unilaterally amend Exhibit A to the Participation Agreement to add additional
investment companies or series thereof ("New Funds") as Funds subject to the
provisions of this Letter Agreement by sending to the Company a written
notice of the New Funds and indicating therein the fees to be paid to the
Company with respect to the administrative services provided pursuant to the
Participation Agreement in connection with such New Funds.
(h) The obligation to pay the fees specified in this Letter Agreement
shall survive the termination of the Participation Agreement for a period of
one year from the date of termination, provided that Company continues to
provide Services to the Owners with respect to those assets invested in the
Funds and provided that the Participation Agreement has not been terminated
because of an event described in Sections 12.2, 12.3 or 12.4 of the
Participation Agreement. Company agrees that in the event of termination it
will provide Transfer Agent with any reports and certificates as requested by
Transfer Agent to determine that the continued payment of fees has been
calculated in accordance with this Letter Agreement.
(i) Capitalized terms not otherwise defined herein shall have the meaning
assigned to them in the Participation Agreement.
If you are in agreement with the foregoing, please sign and date below where
indicated and return one copy of this signed letter agreement to me.
Very truly yours,
Strong Investor Services, Inc.
Accepted and agreed to as of May 21, 2002.
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
XXXXX X. XXXXX
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By:
Name: Xxxxx X. Xxxxx
Title: Vice President, General Counsel & Secretary
EXHIBIT A TO FEE LETTER
The Funds subject to this Agreement and applicable annual fees are as follows:
FUND ANNUAL FEE
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Strong Opportunity Fund II (Investor Class) .30%
