EXHIBIT 8(i)
PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
POTOMAC INSURANCE TRUST,
AND
XXXXXXXX ASSET MANAGEMENT, LLC
THIS AGREEMENT, dated as of the 30th day of April, 2004, 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"), Potomac
Insurance Trust (the "Fund"), a Massachusetts business trust, and Xxxxxxxx Asset
Management, LLC(the "Adviser"), a New York limited liability company.
WHEREAS, the shares of beneficial interest of the Fund 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, the 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 Adviser, which serves as investment adviser to the Fund, is
duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended; and
WHEREAS, the Company has issued or will issue certain variable annuity
contracts supported wholly or partially by the Account (the "Contracts"), and
said Contracts are listed in Schedule A hereto, as it may be amended from time
to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, the Company intends to purchase shares in the 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 Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Subject to Article X hereof, the Fund agrees 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 Trustees of the Fund (the "Board") may
suspend or terminate the offering of shares of any Designated Portfolio or class
thereof upon written notice to the Company, 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. Requests received by the Company after the
calculation of the Fund's net asset value as described from time to time in the
Fund's prospectus on any given day shall be treated as if received on the
following Business Day. The receipt and acceptances of any requests shall be
made in accordance with Rule 22c-1 of the 1940 Act.
(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 3:00 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
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overdrafts by, the Fund, or any similar expenses incurred by the Fund, as a
result of portfolio transactions effected by the Fund based upon such purchase
request. Upon receipt of federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Fund.
(c) Payment for 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 by 3 p.m. Eastern Time on the
same Business Day the Fund is properly notified of the redemption order of such
shares (unless redemption proceeds are to be applied to the purchase of shares
of other Designated Portfolios in accordance with Section 1.3(b) of this
Agreement), except that the Fund reserves the right to delay payment of
redemption proceeds to the extent permitted under Section 22(e) of the 1940 Act
and any rules thereunder, and in accordance with the procedures and policies of
the Fund as described in the then-current prospectus.
1.4. The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule A offered by the then current prospectus of the
Fund in accordance with the provisions of the applicable prospectus.
1.5. 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. In the event that any such
material error is the result of the gross negligence of the Fund, or its
designated agent for calculating the net asset value, any administrative or
other costs or losses incurred for correcting underlying Contract owner accounts
shall be at the Adviser's expense.
1.6. If the Company provides incorrect processing information, the
Fund shall be entitled to an adjustment with respect to the number of shares
purchased or redeemed to reflect the correct information. Any error in the
information provided by the Company to the Fund shall be reported promptly to
the Fund and the Adviser upon discovery. In the event that the Company provides
incorrect processing information to the Fund which causes a material error in
the calculation of the NAV for a Designated Portfolio and which is the result of
the gross negligence of the Company, any administrative or other costs or losses
incurred by the Fund for correcting the transaction shall be at the Company's
expense.
1.7. 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 record date, but in no event later than 6:30 p.m. Eastern Time on
the ex-dividend date. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions as are payable on
any Designated 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.
1.8. Issuance and transfer of Fund shares shall be by book entry
only. Share certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
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1.9. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's shares may be sold
to other insurance companies and the cash value of the Contracts may be invested
in other investment companies.
(b) The Company shall not, without prior notice to the Adviser
(unless otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the Adviser
(unless otherwise required by applicable law), induce Contract owners to change
or modify the Fund or change the Fund's investment adviser.
(d) The Company shall not, without prior notice to the Fund,
induce Contract owners to vote on any matter submitted for consideration by the
shareholders of the Fund in a manner other than as recommended by the Board.
1.10 The parties may agree, in lieu of the procedures set forth
above in this Article 1, to place and settle trades for Fund shares through a
clearing corporation. In the event that such a clearing corporation is used, the
parties agree to abide by the rules of the clearing corporation.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are,
or prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act. The Company further represents and warrants
that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state securities and
insurance laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law, that
it has legally and validly established the Account as a segregated asset account
under Kansas insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, or alternatively (b) has not
registered the Account in proper reliance upon an exclusion from registration
under the 0000 Xxx.
2.2. The Fund represents and warrants that 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 makes no representation as to whether any aspect of
its operations (including, fees and expenses and investment policies) complies
with the insurance laws or insurance regulations of the various states.
2.4. The Fund represents and warrants that it is lawfully organized
and validly existing under the laws of the Commonwealth of Massachusetts and
that it does and will comply in all material respects with the 1940 Act.
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2.5. The Adviser represents and warrants that it is registered as an
investment adviser with the SEC.
2.6. The Fund and the Adviser represent and warrant that all of
their trustees/directors, officers, employees, and other individuals or entities
dealing with the money and/or securities of the Fund are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimum coverage as required
currently by Rule 17g-1 of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
2.7. The Company represents and warrants that all of its directors,
officers, employees, investment advisers and other individuals/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 in an amount of not
less than $5 million. The aforesaid includes coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.8 The Company represents and warrants that it (a) has adopted
policies and procedures to monitor trading activity in the Portfolios by
Contract owners and (b) is entitled (by disclosure in the prospectus) to require
that allocations to sub-accounts investing in the Portfolios made by or on
behalf of Contract owners be made exclusively via regular U.S. mail (i.e.
submissions via facsimile, e-mail and the Company's website are note permitted)
if such allocations follow a market timing strategy , and (c) will use
reasonable efforts to identify allocations following a market timing strategy
and enforce the "U.S. mail only" submission policy noted above upon the Fund's
or the Adviser's request.
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 as the Company may reasonably request to deliver to
existing Contract owners and for marketing of the Contracts. 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.
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3.4. So long as, and to the extent the SEC continues to interpret
the 1940 Act to require pass-through voting privileges for variable contract
owners, or to the extent otherwise required by law, the Company shall, at the
Company's option, follow one of the two methods described below to provide
pass-through voting privileges to contract owners:
(a) Provide a list of Contract owners with value allocated to a
Designated Portfolio as of the record date to the Fund or its agent in order to
permit the Fund to send solicitation material and gather voting instructions
from Contract owners on behalf of the Company. The Company shall also provide
such other information to the Fund as is reasonably necessary in order for the
Fund to properly tabulate votes for Fund initiated proxies. In the event that
the Company chooses this option, the Fund shall be responsible for properly
"echo voting" shares of a Designated Portfolio for which no voting instructions
have been received.
(b) Solicit voting instructions from Contract holders itself and
vote shares of the Designated Portfolio in accordance with instructions received
from Contract holders. The Company shall vote the shares of the Designated
Portfolios for which no instructions have been received in the same proportion
as shares of the Designated Portfolio for which instructions have been received.
3.5 The Company reserves the right to vote Fund shares held in its
general account in its own right, to the extent permitted by applicable laws.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) or the Adviser 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 five (5) 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 Adviser 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 Adviser in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus or SAI for the Fund shares, as such registration statement and
prospectus or SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund or its designee, except with the
permission of the Fund or its designee.
4.3. The Fund and the Adviser, or their 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 five (5) Business Days after receipt of such
material. The Company reserves the right to reasonably object to the continued
use of any such sales literature or other promotional material in which the
Company and/or its Account is named, and no such material shall be used if the
Company so objects.
4.4. 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 in connection with the sale of Portfolio shares other than the
information or representations contained in a registration statement,
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disclosure document and 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, promptly after the filing of
such document(s) with the SEC or other regulatory authorities. The Company shall
provide to the Fund and the Adviser 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 agrees and acknowledges that the Company has no
right, title or interest in the names and marks of the Fund and that all use of
any designation comprised in whole or part of such names or marks under this
Agreement shall insure to the benefit of the Fund and the Adviser. Except as
provided in Section 4.1, the Company shall not use any such names or marks on
its own behalf or on behalf of a Separate Account in connection with marketing
the Contracts without prior written consent of the Fund and the Adviser. Upon
termination of this Agreement for any reason, the Company shall cease all use of
any such names or marks. To the extent, if any, that any ownership interest in
and to the names and marks of the Fund does not automatically vest in the Fund
by virtue of this Agreement, and instead invests in the Company, the Company
hereby transfers and assignments to the Fund all right , titles and interest
that the Company may have in and to the names and marks of the Fund.
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.
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5.2. 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 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.
5.3. The Fund will pay or cause to be paid the expenses associated
with printing, mailing, distributing, solicitation and tabulation of proxy
materials to Contract owners with respect to proxies related to the Fund,
consistent with applicable provisions of the 1940 Act. The Fund shall also bear
the expense of printing and postage with respect to Fund prospectuses, annual
and semi-annual reports and all other Fund reports delivered to existing
Contract owners with value allocated to one or more Designated Portfolios
(regardless of whether such documents are printed by the Fund or the Company).
5.4. The Company shall bear the expense of distributing all
prospectuses and reports to prospective Contract owners. The Company shall bear
the expense of printing copies of the prospectus for the Contracts for use with
prospective Contract owners. The Company shall bear the expenses incident to
(including the costs of printing) sales literature and other promotional
material that the Company develops and in which the Fund (or a Designated
Portfolio thereof) is named.
ARTICLE VI. Qualification
6.1 The Fund will invest its assets in such a manner as to
ensure that the Contracts will be treated as annuity or life insurance
contracts, whichever is appropriate, under the Code and the regulations issued
thereunder (or any successor provisions). Without limiting the scope of the
foregoing, each Designated Portfolio represents and warrants that it will comply
with Section 817(h) of the Code and Treasury Regulation ss.1.817-5, and any
Treasury interpretations thereof, relating to the diversification requirements
for variable annuity, endowment, or life insurance contracts, and any amendments
or other modifications or successor provisions to such Section or Regulations.
In the event of a breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify the Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Regulation 1.817-5.
6.2 The Fund represents and warrants that it will seek to
qualify 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.
6.3 The Company represents that the Contracts are currently,
and at the time of issuance shall be, treated as life insurance or annuity
insurance contracts, under applicable provisions of the Code, and that it will
maintain such treatment, and that it will notify the Fund immediately upon
having a reasonable basis for believing the Contracts have ceased to be so
treated or that they might not be so treated in the future. The Company agrees
that any prospectus offering a contract that is a "modified endowment contract"
as that term is defined in Section 7702A of the Code (or any successor or
similar provision), shall identify such contract as a modified endowment
contract.
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ARTICLE VII. Potential Conflicts
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of Contract owners investing in
Portfolios. A material irreconcilable conflict may arise for a variety of
reasons, including: (a) state insurance regulatory authority action; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling 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 Portfolios are being managed; (e) a difference in voting
instructions given by contract owners of different Participating Insurance
Companies; and (f) a decision by a Participating Insurance Company to disregard
the voting instructions of Contract owners.
7.2 The Company will report any potential or existing conflicts to the
Board. The Company will be responsible for assisting the Board in carrying out
its responsibilities under the Conditions set forth in the notice when issued by
the SEC for the Portfolios (the "Notice"), which the Company has reviewed, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. The responsibility includes, but is not limited to,
an obligation by the Company to inform the Board whenever Contract owner voting
instructions are disregarded by the Company. These responsibilities will be
carried out with a view only to the interests of the Contract owners.
7.3 If a majority of the Board or majority of its disinterested trustees,
determines that a material irreconcilable conflict exists, affecting the
Company, the Company, at its expense and to the extent reasonably practicable
(as determined by a majority of the Board's disinterested trustees), will take
any steps necessary to remedy or eliminate the irreconcilable material conflict,
including; (a) withdrawing the assets allocable to some or all of the Separate
Accounts from the Fund or any Portfolio thereof and reinvesting those assets in
a different investment medium, which may include another Portfolio of Fund, or
another investment company; (b) submitting the question of whether such
segregation should be implemented to a vote of all affected Contract owners and
as appropriate, segregating the assets of any appropriate group (i.e., variable
annuity or variable life insurance Contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected Contract owners' the option of making such a change; and (c)
establishing a new registered management investment company (or series thereof)
or managed separate account. If a material irreconcilable conflict arises
because of a decision by the Company to disregard Contract owner voting
instructions, and that decision represents a minority position or would preclude
a majority vote, the Company may be required, at the election of Fund, to
withdraw the Separate Account's investment in Fund, and no charge or penalty
will be imposed as a result of such withdrawal. The responsibility to take such
remedial action shall be carried out with a view only to the interests of the
Contract owners.
For the purposes of this Section 7.3, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the Fund or the Adviser (or any other investment adviser of the Portfolios) be
required to establish a new funding medium for any Contract. Further, the
Company shall not be required by this Section 7.3 to establish a new funding
medium for any Contracts if any offer to do so has been declined by a vote of a
majority of Contract owners materially and adversely affected by the
irreconcilable material conflict.
7.4 The Board's determination of the existence of an material
irreconcilable conflict and its implications shall be made known promptly and in
writing to the Company.
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7.5 No less than annually, the Company and the Adviser shall submit to the
Board such reports, materials or data as the Board may reasonably request so
that the Board may fully carry out the obligations imposed upon them by these
Conditions. Such reports, materials, and data. shall be submitted more
frequently if deemed appropriate by the Board.
Article VIII. Indemnification
8.1 Indemnification by the Company
8.1(a). The Company agrees to indemnify and hold harmless each
of the Fund and the Adviser and each of its trustees/directors, officers,
employees or agents and each person, if any, who controls the Fund or Adviser
within the meaning of Section 15 of the 1933 Act or who is under common control
with the Fund or the Adviser (collectively, the "Indemnified Parties" for
purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable 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 or other disclosure document 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 Adviser
for use in the registration statement, prospectus, SAI or other
disclosure document 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, other disclosure document or sales
literature of the Fund not supplied by the Company or persons under
its control) or wrongful conduct of the Company or its agents or
persons under the Company's authorization or control, with respect
to the sale or distribution of the Contracts, or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI, other disclosure document 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 for use in the registration statement, prospectus, SAI
or other disclosure document of the Fund or in sales literature; or
-10-
(iv) arise as a result of any material failure by the Company
to provide the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company;
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(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.
8.1(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.
8.1(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.
8.2 Indemnification by the Adviser
8.2(a). The Adviser agrees to indemnify and hold harmless the
Company and each of its directors, officers, employees or agents 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
8.2) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser) or litigation
(including reasonable 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, other disclosure
document 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
-11-
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 Adviser or Fund by or on behalf
of the Company for use in the registration statement,
prospectus, SAI or other disclosure document for the Fund or
in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts
or Fund shares; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Fund or the Adviser
(other than statements or representations contained in the
registration statement, prospectus, SAI, other disclosure
document or sales literature for the Contracts not supplied by
the Fund or the Adviser) or wrongful conduct of the Adviser or
the Fund with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, other disclosure document 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 Adviser or the Fund; or
(iv) arise as a result of any failure by the Fund or the
Adviser 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
Adviser or the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by or
on behalf of the Adviser or the Fund;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Adviser shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
8.2(c). The Adviser shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Adviser in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
-12-
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the Adviser to such party of the
Adviser's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Adviser of
the commencement of any litigation or proceedings against it or any of its
officers, directors, employees or agents in connection with the issuance or sale
of the Contracts or the operation of the Account.
8.3 Indemnification by the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the
Company and each of its directors, officers, employees or agents 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
8.3) against any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund) or
litigation (including reasonable 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 as a result of any material 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
(ii) 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;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(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.
8.3(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
-13-
notify the Fund of any such claim shall not relieve the Fund from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the Fund to such party of the
Fund's election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the Fund
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.3(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, directors, employees or agents 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 IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Kansas,
without regard to the conflict of laws provisions thereof.
9.2. 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. If, in the
future, the Mixed and Shared Funding Order discussed in Article VII should
no longer be necessary under applicable law, then Article VII hereof shall
no longer apply.
ARTICLE X. Termination
10.1. 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 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
(c) termination by the Fund or Adviser in the event that formal
administrative proceedings are instituted against the Company
by the National Association of Securities Dealers, Inc. (the
"NASD"), the SEC, the Insurance Commissioner or like official
of any state or any other regulatory body 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 Adviser determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse
-14-
effect upon the ability of the Company to perform its
obligations under this Agreement; or
(d) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Adviser by the SEC or any state securities department or any
other regulatory body; provided, however, that the Company
determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material
adverse effect upon the ability of the Fund or Adviser to
perform its obligations under this Agreement; or
(e) 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
or fails to comply with the Section 817(h) diversification
requirements specified in Article VI hereof, or if the Company
reasonably believes that any such Portfolio may fail to so
qualify or comply with either provision; or
(f) termination by either the Fund or the Adviser by written
notice to the other parties, if either one or both the Fund
and the Adviser, respectively, shall determine, in their sole
judgment exercised in good faith, that the Company has
suffered a material adverse change in its business,
operations, financial condition, or prospects since the date
of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company by written notice to the other
parties, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund or the Adviser has
suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse
publicity; or
(i) at the option of the Fund with respect to any Portfolio, upon
60 days' advance written notice from the Fund or the Adviser
to the Company, upon a decision by the Fund to cease offering
shares of the Portfolio for sale
(j) termination by the Company upon any substitution of the shares
of another investment company or series thereof for shares of
a Designated Portfolio of the Fund in accordance with the
terms of the Contracts, provided that the Company has given at
least 45 days prior written notice to the Fund and Adviser of
the date of substitution.
10.2. Notwithstanding any termination of this Agreement, the Fund and the
Adviser shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"), unless the
Company seeks an order pursuant to Section 26(b) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated Portfolios.
Specifically, the owners of the Existing Contracts shall 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).
-15-
10.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
10.4 The Company shall not redeem Portfolio shares attributable to the
Contracts (as opposed to Portfolio shares attributable to the Company's assets
held in a Separate Account) except (i) as necessary to implement Contract owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
("Legally Required Redemption") or (iii) as permitted by an order of the SEC
pursuant to Section 26(c) of the 1940 Act or (iv) as permitted by a Contract if
such Contract is not, and is not required to be, registered pursuant to the
federal securities laws. Upon request, the Company will promptly furnish to the
Fund and the Adviser the opinion of counsel for the Company (which counsel shall
be reasonably satisfactory to the Fund and the Adviser) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund or the Adviser 90 days notice of its intention to do so.
ARTICLE XI. 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
One Security Benefit Place
Topeka, Kansas 66636 - 0001
If to the Fund: Potomac Funds
Attention: Xxxxxx X. X'Xxxxx
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000-0000
If to Adviser: Xxxxxxxx Asset Management, LLC
Attention: Xxxxxx X. X'Xxxxx
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000-0000
ARTICLE XII. Miscellaneous
12.1. 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 Adviser 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.
12.2. Subject to the requirements of legal process and regulatory
authority, the Fund and the Adviser shall treat as confidential the
names and addresses of the owners of the
-16-
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.
12.3. 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.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
12.5. 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.
12.6. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without
limitation the SEC, the NASD, and state insurance regulators) and
shall permit such authorities reasonable access to its books and
records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto
further agrees to furnish the Kansas Insurance Commissioner with any
information or reports in connection with services provided under
this Agreement which such Commissioner may request in order to
ascertain whether the variable insurance operations of the Company
are being conducted in a manner consistent with the Kansas insurance
laws and regulations and any other applicable law or regulations.
12.7. 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.
12.8. 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.
-17-
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: _____________________________
Xxxxxxx X. Xxxxx
Title: Vice President
Date: April 29, 2004
Potomac Insurance Trust By its authorized officer
By: _____________________________
Title: President
Date: ___________________________
Xxxxxxxx Asset Management, LLC By its authorized officer
By: _____________________________
Xxxxxx X. X'Xxxxx
Title: Managing Partner
Date: ___________________________
-18-
April 30, 2004
SCHEDULE A
ACCOUNT(s) CONTRACT(s) DESIGNATED PORTFOLIO(s)
Variable Annuity Account XIV V6029 Evolution Managed Bond
Evolution Managed Equity
A-1
AMENDMENT NUMBER 1
TO PARTICIPATION AGREEMENT
WHEREAS, Security Benefit Life Insurance Company (the "Company"), and
Potomac Insurance Trust (the "Fund"), a Massachusetts business trust, and
Xxxxxxxx Asset Management, LLC (the "Adviser"), a New York limited liability
company are parties to a Participation Agreement dated April 30, 2004 (the
"Agreement"); and
WHEREAS, terms of the Agreement contemplate that Accounts and Contracts of
the Company that are eligible to purchase Designated Portfolios of the Fund 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, the Fund and Adviser wish to receive Trade Estimates (as defined
below) for the Potomac Dynamic VP High Yield Bond Series of the Fund from the
Company; 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 hereto agree as follows:
1) The existing Schedule A to the Agreement is deleted and replaced with
the Schedule A attached hereto and
2) Section 1.6 is deleted entirely and replaced with the following:
1.6(a) If the Company provides incorrect processing information,
which term does not include Trade Estimates, the Fund shall be entitled to
an adjustment with respect to the number of shares purchased or redeemed
to reflect the correct information. Any error in the processing
information provided by the Company to the Fund shall be reported promptly
to the Fund and the Adviser upon discovery. In the event that the Company
provides incorrect processing information to the Fund which causes a
material error in the calculation of the NAV for a Designated Portfolio
and which is the result of the gross negligence of the Company, any
administrative or other costs or losses incurred by the Fund for
correcting the transaction shall be at the Company's expense.
(b) The Company shall make reasonable attempts to provide the
Adviser with estimated purchase and redemption orders ("Trade Estimates"),
at times mutually
agreed on by the parties, for the Potomac Dynamic VP High Yield Bond
Series of the Fund on days the New York Stock Exchange is open for
trading. Trade Estimates shall not be included within the meaning of
"processing information" as set forth in Section 1.6(a), and the Company
shall not be liable to the Fund, Adviser, or any other person or entity
for any act or omission by the Fund, the Adviser, or any other person or
entity, resulting from such Trade Estimate.
3) In the event of a conflict between the terms of this Amendment No. 1
and the Agreement, it is the intention of the parties that the terms of this
Amendment No. 1 shall control and the Agreement shall be interpreted on that
basis. To the extent the provisions of the Agreement have not been amended by
this Amendment No. 1, the parties hereby confirm and ratify the Agreement. The
Agreement, along with this Amendment No. 1, constitutes the entire agreement
among the parties with respect to the arrangements described herein.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
No. 1 to the Agreement to be executed in its name and on its behalf by its duly
authorized representative effective February 1, 2005.
Security Benefit Life
Insurance Company By its authorized officer
By: ___________________________
Title: ________________________
Date: _________________________
Potomac Insurance Trust By its authorized officer
By: ___________________________
Title: ________________________
Date: _________________________
Xxxxxxxx Asset Management, LLC By its authorized officer
By: ___________________________
Title: ________________________
Date: _________________________
February 1, 2005
SCHEDULE A
ACCOUNT(s) CONTRACT(s) DESIGNATED PORTFOLIO(s)
Variable Annuity Account XIV V6029 Evolution Managed Bond
Evolution Managed Equity
Potomac Dynamic VP High
Yield Bond
Potomac VP Money Market
