PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
DREYFUS APPRECIATION FUND, INC.,
DREYFUS GROWTH AND VALUE FUNDS, INC.
AND
GENERAL MONEY MARKET FUND, INC.
AND
DREYFUS SERVICE CORPORATION
THIS AGREEMENT, dated as of the 1st day of July, 2001, by and among
Security Benefit Life Insurance Company, (the "Company"), a stock life insurance
company organized under the laws of the State of Kansas, on its own behalf and
on behalf of each segregated asset account of the Company set forth on Schedule
A hereto, as may be amended from time to time (each an "Account"), the Dreyfus
Appreciation Fund, Inc., Dreyfus Growth and Value Funds, Inc. and General Money
Market Funds, Inc., each a Maryland Corporation (each a "Fund" and together, the
"Funds"), and Dreyfus Service Corporation, distributor for each Fund (the
"Distributor"), a New York Corporation.
WHEREAS, the shares of beneficial interest/common stock of the Funds
are divided into several series of shares, each representing the interest in a
particular managed portfolio of securities and other assets (each a
"Portfolio"); and
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act") and shares of
the Portfolios are registered under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the Distributor, which serves as principal underwriter to the
Funds, is duly registered as a broker-dealer under the Securities Exchange Act
of 1934, 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 Portfolios
listed in Schedule A hereto, as it may be amended from time to time by mutual
written agreement (the "Designated Portfolios"), on behalf of the Account to
fund the aforesaid Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Funds and the Distributor agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Subject to Article IX hereof, the Funds agree to make available to
the Company for purchase on behalf of the Account, shares of the Designated
Portfolios, such purchases to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the Portfolios
(other than those listed on Schedule A) in existence now or that may be
established in the future will be made available to the Company only as the Fund
may so provide, and (ii) the Board of Directors of the Fund (the "Board") may
suspend or terminate the offering of shares of any Designated Portfolio or class
thereof, if such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Board acting in good faith and
in light of its fiduciary duties under federal and any applicable state laws,
suspension or termination is necessary and in the best interests of the
shareholders of such Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Designated Portfolio 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 of any Designated Portfolio to the extent permitted by
the 1940 Act, and any rules, regulations or orders thereunder.
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 any Fund shares that
may be held in the general account of the Company) for shares of those
Designated Portfolios made available hereunder, based on allocations of amounts
to the Account or subaccounts thereof under the Contracts and other transactions
relating to the Contracts or the Account. Receipt and acceptance of any such
request (or relevant transactional information therefor) on any day the New York
Stock Exchange is open for trading and on which a Designated Portfolio
calculates its net asset value (a "Business Day") pursuant to the rules of the
Securities and Exchange Commission ("SEC"), by the Company as such limited agent
of the Fund prior to the time that the Fund ordinarily calculates its net asset
value as described from time to time in the Fund's prospectus shall constitute
receipt and acceptance by the Designated Portfolio on that same Business Day,
provided that the Fund receives notice of such request by 9:30 a.m. Eastern Time
on the next following Business Day.
(b) The Company shall pay for shares of each Designated
Portfolio on the same Business Day that it notifies the Fund of a purchase
request for such shares. Payment for Designated Portfolio shares shall be made
in federal funds transmitted to the Fund or other designated person by wire to
be received by 12:00 p.m. Eastern Time on the Business Day the Fund is notified
of the purchase request for Designated Portfolio shares (unless the Fund
determines and so advises the Company that sufficient proceeds are available
from redemption of shares of other Designated Portfolios effected pursuant to
redemption requests tendered by the Company on behalf of the Account, or unless
the Fund otherwise determines and so advises the Company to delay the date of
payment, to the extent the Fund may do so under the 1940 Act). If federal funds
are not received on time, such funds will be invested, and Designated Portfolio
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
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effected by the Fund based upon such purchase request. Upon receipt of federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
(c) Payment for Designated Portfolio 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 in a timely manner in
accordance with 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. If Company's order requests the redemption of any
shares of a Designated Portfolio valued at or greater than $1 million, the Fund
will wire such amount to Company within seven days of the order.
(d) Any purchase or redemption request for Designated
Portfolio shares held or to be held in the Company's general account shall be
effected at the net asset value per share next determined after the Fund's
receipt and acceptance of such request, provided that, in the case of a purchase
request, payment for Fund shares so requested is received by the Fund in federal
funds prior to close of business for determination of such value, as defined
from time to time in the Fund's prospectus.
(e) Company will make reasonable efforts to notify each
applicable Designated Portfolio in advance of any purchase or redemption order
greater than $1million.
1.4. The Fund shall use its best efforts to make the net asset value
per share for each Designated Portfolio available to the Company by 6:30 p.m.
Eastern Time each Business Day, and in any event, as soon as reasonably
practicable after the net asset value per share for such Designated Portfolio is
calculated, and shall calculate such net asset value in accordance with the
Fund's prospectus. If the Fund provides the Company with materially incorrect
share net asset value information, the Company on behalf of the Account, shall
be entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct share net asset value. Any material error in the calculation
of the net asset value per share, dividend or capital gain information shall be
reported promptly to the Company upon discovery. Non-material errors will be
corrected in the next Business Day's net asset value per share.
1.5. The Fund 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 Designated Portfolio
shares by the ex-dividend date, or if not a Business Day, on the first Business
Day thereafter. The Company, on its behalf and on behalf of the Account, hereby
elects to receive all such dividends and distributions as are payable on any
Designated Portfolio shares in the form of additional shares of that Designated
Portfolio. The Company reserves the right, on its behalf and on behalf of the
Account, to revoke this election and to receive all such dividends and capital
gain distributions in cash. The Fund shall notify the Company promptly of the
number of Designated Portfolio 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. The Company will
record shares ordered from a Designated Portfolio in an appropriate title for
the corresponding 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.
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(b) The Company shall not, without prior notice to the Fund
(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 Fund
(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.
1.8. The parties may agree, in lieu of the procedures set forth above
in this Article I, to place and settle trades for the shares of a Designated
Portfolio 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 Designated Portfolio 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. 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.
2.3. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.4. The Distributor represents and warrants that it is registered as a
broker-dealer with the SEC and is a member in good standing with the NASD.
2.5. The Fund and the Distributor 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
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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.The
Company represents and warrants that that the income, gains and losses, whether
or not realized, from assets allocated to the Account are, in accordance with
applicable Contracts, to be credited to or charged against such Account without
regard to other income, gains or losses from assets allocated to any other
accounts of the Company. The Company agrees to notify each Fund promptly of any
investment restrictions imposed by state insurance law and applicable to any
Designated Portfolio.
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
Designated Portfolio (for distribution to Contract owners with value allocated
to such Designated Portfolios) 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 Fund 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, which consent shall not be unreasonably withheld.
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. 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:
(a) solicit voting instructions from Contract owners or
participants on a timely basis and in accordance with
applicable law;
(b) vote the shares of the Designated Portfolio in accordance with
instructions received from contract holders or participants;
and
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(c) vote the shares of the Designated Portfolio for which no
instructions have been received in the same proportion as
shares of the Designated Portfolio for which instructions have
been received.
ARTICLE IV. Sales Material and Marketing
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 a Designated
Portfolio thereof) or the Distributor is named. No such material shall be used
until approved by the Fund or its designee, and the Fund will use its best
efforts for it or its designee to review such sales literature or promotional
material within ten Business Days after receipt of such material. The Fund or
its designee reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Fund (or a
Designated Portfolio thereof) or the Distributor is named, and no such material
shall be used if the Fund or its 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 Distributor in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus or SAI for the Fund shares, as such registration statement and
prospectus or SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund or its designee, except with the
permission of the Fund or its designee.
4.3. The Fund , or its designee, shall furnish, or cause to be
furnished, to the Company, each piece of sales literature or other promotional
material that it develops and in which the Company, and/or the Account, is
named. No such material shall be used until approved by the Company, and the
Company will use its best efforts to review such sales literature or promotional
material within ten Business Days after receipt of such material. The Company
reserves the right to reasonably object to the continued use of any such sales
literature or other promotional material in which the Company and/or its Account
is named, and no such material shall be used if the Company so objects.
4.4. 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 Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Designated Portfolios or their shares, promptly after the filing
of such document(s) with the SEC or other regulatory authorities.
4.6. The Company will provide to the 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, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account,
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promptly after the filing of such document(s) with the SEC or other regulatory
authorities. The Company shall provide to the Fund and the Distributor any
complaints received from the Contract owners pertaining to the Fund or a
Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Designated Portfolio,
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 Fund will work with the Company so as to enable the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses.
4.8 The Company shall designate certain persons or entities that shall
have the requisite license to solicit applications for the sale of Contracts. No
representation is made as to the number or amount of Contracts that are to be
sold by the Company. The Company shall make reasonable efforts to market the
Contacts and shall comply with all applicable federal and state laws in
connections therewith.
4.9 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, prospectuses,
statements of additional information, shareholder reports and proxy materials,
and any other material constituting sales literature or advertising under the
National Association of Securities Dealer, Inc. rules, the Act or the 1933 Act.
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 or any Designated Portfolio adopts
and implements a plan pursuant to Rule 12b-1 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. The charge to each Designated Portfolio for all expenses and costs
of the Designated Portfolio, including but not limited to management fees, Rule
12b-1 fees, if any, administrative expenses and legal expenses and regulatory
costs, will be included in the determination of the Designated Portfolio's daily
net asset value per share.
5.3. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. 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 Distributor shall bear
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the expense of printing the Fund's prospectus which is delivered to existing
Contract owners with value allocated to one or more Designated Portfolios
(regardless of whether such prospectuses are printed by the Fund or the Company)
and the expense of printing prospectuses used in marketing the Contracts.
5.4. 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 expenses incident to
(including the costs of printing) sales literature and other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) is named.
ARTICLE VI. Qualification
The Fund represents and warrants that it is or will be qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code,") and that it will maintain such
qualification (under Subchapter M or any successor or similar provisions) 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.
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 Distributor and each of its trustees/directors
and officers, and each person, if any, who controls the Fund or Distributor
within the meaning of Section 15 of the 1933 Act or who is under common control
with the Fund or the Distributor (collectively, the "Indemnified Parties" for
purposes of this Section 7.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
registration statement, prospectus (which shall include a written
description of a Contract that is not registered under the 1933 Act),
or SAI for the Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund or the
Distributor 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 the shares of
the Designated Portfolio, or
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(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 information furnished
to the Fund by or on behalf of the Company; or
(iv) arise out of the Company's incorrect calculation and/or
untimely reporting of the net purchase or redemption orders provided
that such incorrect calculations and/or untimely reporting of the net
purchase redemption order is not attributable to an incorrect and/or
untimely net asset value calculation provided by a Fund or its
designee.
(v) arise as a result of any material failure by the Company
to provide the services and furnish the materials under the terms of
this Agreement; or
(vi) 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
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement.
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 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 Distributor
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7.2(a). The Distributor agrees to indemnify and hold
harmless the Company and each of its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement 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 to
the Distributor 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 Distributor (other
than statements or representations contained in the registration
statement, prospectus, SAI or sales literature for the Contracts not
supplied by the Fund or the Distributor) or wrongful conduct of the
Distributor or the Fund with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Distributor
or the Fund; or
(iv) arise as a result of any failure by the Fund or the
Distributor to provide the services and furnish the materials under the
terms of this Agreement (including a failure of the Fund, whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by or on behalf of the Distributor
or the Fund in this Agreement or arise out of or result from any other
material breach of this Agreement by or on behalf of the Distributor or
the Fund;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b). The Distributor shall not be liable under
this indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross
10
negligence in the performance or such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company or the Account, whichever is applicable.
7.2(c). The Distributor shall not be liable under
this indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Distributor in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure to notify
the Distributor of any such claim shall not relieve the Distributor from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Party, the Distributor will be
entitled to participate, at its own expense, in the defense thereof. The
Distributor also shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the party named in the action. After notice from the
Distributor to such party of the Distributor's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Distributor will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
7.2(d). The Company agrees promptly to notify the
Distributor of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
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
(including legal and other expenses) to which the Indemnified Parties may be
required to pay or may become subject under any statute or regulation, at common
law or otherwise, insofar as such losses, claims, expenses, damages, liabilities
or expenses (or actions in respect thereof) or settlements, are related to the
operations of the Fund 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 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 to
the Distributor 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 Distributor (other
than statements or representations contained in the registration
statement, prospectus, SAI or sales literature for the Contracts not
supplied
11
by the Fund or the Distributor) or wrongful conduct of the Distributor
or the Fund with respect to the sale or distribution of the Contracts
or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Distributor
the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this Agreement);
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by or on behalf of the Fund in this
Agreement or arise out of or result from any other material breach of
this Agreement by or on behalf of the Fund;
(vi) arise out of the Fund's incorrect calculation and/or
untimely reporting of the net asset value calculation provided that
such incorrect calculations and/or untimely reporting of the net asset
value calculation is not attributable to an incorrect and/or untimely
purchase or redemption order provided by the Company;
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. The Company
agrees that, in the event an obligation to indemnify exists pursuant to Section
7.3 as well as Section 7.2 hereof, it will seek satisfaction under the
indemnification provisions of Section 7.2 before seeking indemnification under
this Section 7.3.
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
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 to the Company or the Account, whichever is applicable.
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
12
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 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.
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 six (6) months advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the other
parties based upon the Company's determination that shares of
the Fund are not reasonably available to meet the requirements
of the Contracts; or
(c) termination by the Company by written notice to the other
parties in the event any of the Designated Portfolio's shares
are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Fund or Distributor in the event that
formal administrative proceedings are instituted against the
Company by the National Association of Securities Dealers,
Inc. (the "NASD"), the SEC, the Insurance Commissioner or like
official of any state or any other regulatory body regarding
the Company's duties under this Agreement or related to the
sale of the Contracts, the operation of any Account, or the
purchase of the Designated Portfolios' shares; provided,
however, that the Fund or Distributor determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Company to perform its obligations under this
Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Distributor by the SEC or any state securities department or
any other regulatory body; provided, however, that the Company
13
determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material
adverse effect upon the ability of the Fund or Distributor to
perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the other
parties in the event that any Designated Portfolio ceases to
qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, or if the Company
reasonably believes that any such Portfolio may fail to so
qualify or comply; or
(g) termination by the Fund by written notice to the other
parties, if the Fund shall determine, in its sole judgment
exercised in good faith, that the Company has suffered a
material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is
the subject of material adverse publicity; or
(h) termination by the Company by written notice to the other
parties, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund or the Distributor has
suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company upon any substitution of the shares
of another investment company or series thereof for shares of
a Designated 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 Distributor
of the date of substitution.
j) termination by the Fund upon a determination by its Board,
acting in good faith and in light of its fiduciary duties and
under federal and any applicable state laws, that suspension
or termination is necessary and in the best interests of the
shareholders of such Designated Portfolio.
9.2. Notwithstanding any termination of this Agreement, the Fund and
the Distributor shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"), unless the
Company seeks an order pursuant to Section 26(b) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated 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.
14
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Company: Security Benefit Life Insurance Company
Attention General Counsel
000 XX Xxxxxxxx
Xxxxxx, Xxxxxx 00000 - 0001
If to the Fund: Name of Fund
c/o The Dreyfus Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
If to Distributor: Dreyfus Service Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Fund must look solely to the
property of the respective Designated Portfolios listed on Schedule A hereto as
though each such Designated Portfolio had separately contracted with the Company
and the Distributor for the enforcement of any claims against the Fund. 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 Distributor shall treat as confidential the names
and addresses of the owners of the Contracts. Each party shall treat as
confidential all information reasonably identified as confidential in writing by
any other party hereto and, except as permitted by this Agreement, shall not
disclose, disseminate or utilize such information without the express written
consent of the affected party until such time as such information has come into
the public domain.
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
15
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each party
hereto further agrees to furnish the Kansas Insurance Commissioner with any
information or reports in connection with services provided under this Agreement
which such Commissioner may request in order to ascertain whether the variable
insurance operations of the Company are being conducted in a manner consistent
with the Kansas insurance laws and regulations and any other applicable law or
regulations.
11.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to under
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.
16
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative.
Security Benefit Life Insurance Company By its authorized officer
By:
-------------------------
Title:
-------------------------
Dreyfus Appreciation Fund, Inc. By its authorized officer
By:
-------------------------
Title:
-------------------------
Dreyfus Growth and Value Funds, Inc. By its authorized officer
By:
-------------------------
Title:
-------------------------
General Money Market Fund By its authorized officer
By:
-------------------------
Title:
-------------------------
Dreyfus Service Corporation By its authorized officer
By:
-------------------------
Title:
-------------------------
17
A-1
July 1, 2001
SCHEDULE A
ACCOUNT(S) CONTRACT(S) DESIGNATED PORTFOLIO(S) SHARE CLASS
SBL VARIABLE ANNUITY ACCOUNT XIV V6029 DREYFUS APPRECIATION FUND, INC. CLASS A
DREYFUS GROWTH AND VALUE FUNDS, INC.
o DREYFUS PREMIER STRATEGIC VALUE FUND CLASS A
o DREYFUS MIDCAP VALUE FUND CLASS A
GENERAL MONEY MARKET FUND, INC. CLASS B
A-1
AMENDMENT NUMBER 1
TO PARTICIPATION AGREEMENT
WHEREAS, Security Benefit Life Insurance Company ("Company"), Advantage
Funds, Inc. (formerly known as "Dreyfus Growth and Value Funds, Inc."), Dreyfus
Appreciation Fund, Inc., and General Money Market Funds, Inc., (each a "Fund"
and together, the "Funds"), and Dreyfus Service Corporation, (the "Distributor")
are parties to a Participation Agreement dated July 1, 2001 (the "Agreement");
and
WHEREAS, terms of the Agreement contemplate that Accounts and Contracts
of the Company that are eligible to purchase Funds may be changed from time to
time by amending Schedule A to the Agreement; and
WHEREAS, the parties wish to add certain Accounts and Contracts to the
Agreement by deleting the existing Schedule A and replacing it with the Schedule
A attached hereto; and
WHEREAS, capitalized terms used but not defined herein, shall have the
meaning given them in the Agreement; and
WHEREAS, all other terms of the Agreement shall remain in full force
and effect;
NOW, THEREFORE, the parties agree to delete the existing Schedule A to
the Agreement and replace it with the Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment #1 to the Agreement to be executed in its name and on its behalf by
its duly authorized representative as of February 15, 2007.
Security Benefit Life Insurance Company On behalf of those Dreyfus
funds listed on Schedule A
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------- ----------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxxxxx
--------------------------------- ----------------------------
Title: Sr VP - CFO Title: Secretary
--------------------------------- ---------------------------
Dreyfus Service Corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Name: Xxxx X. Xxxxxx
---------------------------------
Title: Chief Financial Officer
---------------------------------
February 15, 2007
Schedule A
ACCOUNT(S) CONTRACT(S)
SBL Variable Annuity Account XIV V6029
SBL Variable Annuity Account XVI V6323
DESIGNATED PORTFOLIO(S) SHARE CLASS
Dreyfus Appreciation Fund, Inc. Class A
Dreyfus Growth and Value Funds, Inc.
o Dreyfus Premier Strategic Value Fund Class A
o Dreyfus MidCap Value Fund
General Money Market Fund, Inc. Class B
