PARTICIPATION AGREEMENT
AMONG
SECURITY BENEFIT LIFE INSURANCE COMPANY,
SECURITY DISTRIBUTORS, INC.,
ABN AMRO FUNDS,
AND
ABN AMRO DISTRIBUTION SERVICES (USA), INC.
THIS AGREEMENT, dated as of the 29th day of September, 2006, 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"),Security Distributors, Inc., ("SDI"), a registered broker-dealer
organized under the laws of Kansas, ABN AMRO Funds (the "Trust") a Delaware
Business Trust, and ABN AMRO Distribution Services (USA), Inc. (the
"Distributor"), a registered broker-dealer organized under the laws of Delaware.
WHEREAS, the shares of beneficial interest/common stock of the Trust
are divided into several series of shares, each representing the interest in a
particular managed Fund of securities and other assets (each a "Fund") and
listed in Schedule B hereto; and
WHEREAS, the Trust is registered as an investment management company
under the Investment Company Act of 1940, as amended (the "1940 Act") and shares
of the Funds are registered under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the Distributor is duly registered as a broker-dealer under
the Securities Exchange Act of 1934, as amended (the "1934 Act") and is a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); 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 B 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 to set aside and invest assets
attributable to the aforesaid Contracts; and
WHEREAS, the Company intends to purchase shares in the Funds listed in
Schedule B hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios"), on behalf of the Account to fund the
aforesaid Contracts; and
WHEREAS, SDI is duly registered as a broker/dealer under the 1934 Act,
is a member in good standing of the NASD and is the underwriter for the
Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust and the Distributor agree as follows:
A-1
ARTICLE I. Sale of Fund Shares
1.1. Subject to Article IX hereof, the Trust 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 Funds
(other than those listed on Schedule B) in existence now or that may be
established in the future will be made available to the Company only as the
Trust may so provide in writing and as an amendment to Schedule B, 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, 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 Trust or its designee 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 Trust or
its designee 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 Trust 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 8:30 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
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 overdrafts by, the Fund, or any similar expenses incurred by
the Fund, as a result of Fund 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.
2
(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.
(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.
1.4. The Trust or its designee shall use its best efforts to make the net
asset value per share for each Designated Portfolio available to the Company by
7:00 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. In the event that the information is provided after
6:30 p.m. Eastern Time, the Trust represents and warrants that it shall make
available to Company a contact person that is able to answer questions and
provide information about the reasons for delay and when the information is
expected to be provided (See Attached Schedule C). If the Trust provides the
Company with materially incorrect share net asset value information, the Company
on behalf of the Account, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct share net asset value. Any
material error in the calculation of the net asset value per share, dividend or
capital gain information shall be reported promptly to the Company upon
discovery. In the event that any such material error is the result of the gross
negligence of the Trust, or its designated agent for calculating the net asset
value, any administrative or other costs or losses incurred for correcting
underlying Contract owner accounts shall be at the Adviser's expense.
1.5. The Trust or its designee shall use its commercially reasonable
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 7:00 p.m. Eastern Time on the ex-dividend date. In the
event that the information is provided after 6:30 p.m. Eastern Time, the Trust
represents and warrants that it shall make available to Company a contact person
that is able to answer questions and provide information about the reasons for
delay and when the information is expected to be provided. 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 Trust
or it designee 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.
1.7. (a) The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies and the cash value of the Contracts may be invested in other
investment companies.
(b) The Company shall not, without prior notice to the Trust (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 Trust (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 Trust, 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 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 Trust 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 Trust is and shall remain registered under
the 1940 Act. The Trust 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 Trust 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 Trust.
2.3. The Trust represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Delaware and that it does and
will comply in all material respects with the 1940 Act, including, without
limitation, Rule 38a-1 under the 1940 Act.
2.4. The Distributor represents and warrants that it is registered as a
broker-dealer with the SEC; that it is and shall remain duly registered under
all applicable federal and state securities laws; and that it shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Delaware and any applicable state and federal securities laws.
2.5. The Trust 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 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.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Trust 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
Trust 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 Trust 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 Trust 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 Trust, which consent shall not be unreasonably withheld.
3.3. 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
Trust 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 Trust as is reasonably necessary in order for the Trust to
properly tabulate votes for Trust initiated proxies. In the event that the
Company chooses this option, the Trust 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
Trust 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 Trust is named. No such material shall be used until
approved by the Trust or its designee, and the Trust or its designee will use
its commercially reasonable 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 Trust 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 Trust is
named, and no such material shall be used if the Trust or its designee so
objects.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Trust 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
Trust or its designee, except with the permission of the Trust or its designee.
4.3. The Trust 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
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 Trust 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 Trust 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 Trust 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 Trust and the Distributor any
complaints received from the Contract owners pertaining to the Fund or a
Designated Portfolio.
4.7. The Trust 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 Trust will work with the Company so as to facilitate the
solicitation of proxies from Contract owners, or to make changes to its
prospectus or registration statement, in an orderly manner.
ARTICLE V. Fees and Expenses
5.1. The Trust and/or Distributor shall pay a 12b-1 fee to SDI under this
Agreement, as adopted and implemented by the Trust pursuant to Rule 12b-1 to
finance distribution expenses. The Distributor shall make payments to SDI as set
forth in the applicable current Prospectus for each Designated Portfolio for
services provided by SDI pursuant to this Agreement and as stated in Schedule B
attached hereto. SDI understands that any compensation paid to them is subject
to the terms of one of the Amended and Restated Distribution and Services Plans
under Rule 12b-1 adopted by the Trust (the "Plan"), Rule 12b-1 promulgated
pursuant to the 1940 Act, and all rules and regulations of the NASD. Further
more, regarding the compensation for the promotion and sale of Fund shares, all
parties expressly provide that SDI will not be compensated in contravention of
Rule 12b-1(h).
5.2. The Trust shall pay or cause to pay a sub-Ta/Record keeping fee on
Class N Shares of the Fund in addition to the applicable12b-1 fee payment listed
in 5.1 above to the Company for services provided to the Contract holders
invested in the Designated Portfolios as outlined in Schedule B.
5.3. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Trust. The Trust shall see to it that all its Fund shares
are registered and authorized for issuance in accordance with applicable federal
law and, if and to the extent deemed advisable by the Trust, in accordance with
applicable state laws prior to their sale. The Trust 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.
5.4. The Trust 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 Trust shall also bear the expense of
printing 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 Trust or the Company).
5.5. The Company shall bear the expense of distributing all prospectuses
and reports to shareholders (whether for existing Contract owners or prospective
Contract owners). The Company shall bear the expense of printing copies of the
prospectus for the Contracts for use with prospective Contract owners. The
Company shall bear the expenses incident to (including the costs of printing)
sales literature and other promotional material that the Company develops and in
which the Fund (or a Designated Portfolio thereof) is named.
5.6 Notwithstanding the termination of this Agreement, the Trust and/or
Distributor will continue to pay SDI the fee set forth, and in accordance with,
Section 5.1 so long as net assets of the Accounts remain in a Designated
Portfolio, provided such continued payment is permitted in accordance with
applicable law and regulation and the applicable Rule 12b-1 Plan is not
terminated.
5.7 Notwithstanding the termination of this Agreement, the Trust will
continue to pay or cause to pay the Company the fee set forth, and in accordance
with, Section 5.2 so long as net assets of the Accounts remain in a Designated
Portfolio, provided such continued payment is permitted in accordance with
applicable law and regulation.
ARTICLE VI. Qualification
The Trust represents and warrants that each Designated Portfolio is
currently qualified as a Regulated Investment Company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code,") and
that each Designated Portfolio will maintain such qualification (under
Subchapter M or any successor or similar provisions) as long as this Agreement
is in effect and that it will notify the Company immediately or as soon as
reasonably possible, if a Fund has ceased to qualify or that a Fund might cease
to 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 Trust
and the Distributor and each of its trustees/directors and officers, and each
person, if any, who controls the Fund within the meaning of Section 15 of the
1933 Act or who is under common control with the Trust 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 Trust for use in the registration statement, prospectus or SAI for
the Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts, or
(ii) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or representations
contained in the registration statement, prospectus, SAI, or sales
literature of the Fund not supplied by the Company or persons under its
control) or wrongful conduct of the Company or its agents or persons
under the Company's authorization or control, with respect to the sale or
distribution of the Contracts, or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement, prospectus, SAI, or
sales literature of the Fund or any amendment thereof or supplement thereto
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in reliance upon
information furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company;
as limited by and in accordance with the provisions of Sections 7.1(b) and
7.1(c) hereof.
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
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 Adviser) 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 Adviser or Fund by or on behalf of the
Company for use in the registration statement, prospectus or SAI for the
Fund or in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations by
or on behalf of the Trust 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 Trust) or wrongful
conduct of the Distributor or the Trust 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 Trust; or
(iv) arise as a result of any failure by the Trust or the Distributor
to provide the services and furnish the materials under the terms of this
Agreement (including a failure of the Trust, 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 Trust 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
Trust;
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 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 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 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 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 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 Trust
7.3(a). The Trust 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 Trust) 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
Trust 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 Trust 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 Trust (other than statements or representations
contained in the registration statement, prospectus, SAI or sales
literature for the Contracts not supplied by the Fund) or wrongful conduct
of the Adviser or the Trust 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 Trust; or
(iv) arise as a result of any failure by the Trust 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 Trust in this
Agreement or arise out of or result from any other material breach of this
Agreement by or on behalf of the Trust;
as limited by and in accordance with the provisions of Sections 7.3(b) and
7.3(c) hereof. The parties acknowledge that the Trust'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 Trust 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 Trust 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 Trust 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 Trust of any such claim shall not
relieve the Trust 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 Trust will be entitled to participate, at its own
expense, in the defense thereof. The Trust also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the party named in the
action. After notice from the Trust 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 Trust will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.3(d). The Company agrees promptly to notify the Trust 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 Delaware,
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 Trust or Distributor by written notice to the
Company in the event that formal administrative proceedings are
instituted against the Company by 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 Trust 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 by written notice to the other parties in
the event that formal administrative proceedings are instituted
against the Trust or Distributor 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 Trust 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 Fund may fail to so qualify or comply; or
(g) termination by either the Trust or the Distributor by written notice
to the other parties, if either one or both the Trust and the
Distributor, respectively, shall determine, in their sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, financial condition, or
prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(h) termination by the Company by written notice to the other parties, if
the Company shall determine, in its sole judgment exercised in good
faith, that the Trust 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 Trust and Distributor of the date of
substitution.
9.2. Notwithstanding any termination of this Agreement, the Fund and the
Adviser shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"), unless the
Company seeks an order pursuant to Section 26(b) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated Portfolios.
Specifically, the owners of the Existing Contracts may be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts (subject to any such election by the Company).
9.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties shall survive.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Company: Security Benefit Life Insurance Company
Attention: General Counsel
One Security Benefit Place
Topeka, Kansas 66636 - 0001
If to SDI: Security Distributors, Inc.
Attention: General Counsel
One Security Benefit Place
Topeka, Kansas 66636 - 0001
If to the Trust: ABN AMRO Funds
000 Xxxxx Xxxxx Xxxxxx, 00XX
Xxxxxxx XX 00000
Attn: President
If to Distributor: ABN AMRO Distribution Services (USA) Inc.
000 Xxxxx Xxxx
Xxxx xx Xxxxxxx, XX 00000
Attn: Xxxxx XxXxxxxxx
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Trust must look solely to the property
of the respective Designated Funds listed on Schedule B hereto as though each
such Designated Portfolio had separately contracted with the Company and the
Distributor for the enforcement of any claims against the Trust. 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 Trust.
11.2. Subject to the requirements of legal process and regulatory
authority, the Trust 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 as applicable) and shall permit such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each party
hereto further agrees to furnish the Kansas Insurance Commissioner with any
information or reports in connection with services provided under this Agreement
which such Commissioner may request in order to ascertain whether the variable
insurance operations of the Company are being conducted in a manner consistent
with the Kansas insurance laws and regulations and any other applicable law or
regulations.
11.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
11.8 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
11.9 One or more new series or portfolios of each Trust and Classes I, N
and R shares thereof may be established (each a "New Fund"), not then
represented on Schedule B hereto. Each such New Fund shall become subject to the
provisions of the Agreement to the same extent as the existing Funds as
reflected on Schedule B, except to the extent that with the payment of fees as
outlined in Article 5 Fees and Expenses above, fees related to 5.2 shall be by
executed amendment only, all other fees outlined in Article 5 shall be subject
to the provisions of the Agreement to the same extent as the existing Funds as
reflected on Schedule B; and also except to the extent such provisions may be
modified with respect to each additional New Fund in writing by the parties at
the time of the addition of the New Fund, and each such New Fund shall be added
to Schedule B.
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: /s/Xxxxxxx X. Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx
Title:VP____________________
Date:9-28-06________________
Security Distributors, Inc. By its authorized officer
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx
Title:Pres__________________
Date:9-28-06________________
ABN AMRO Funds By its authorized officer
By: /s/ Xxxxxx Xxxxxxxxxx
----------------------------
Xxxxxx Xxxxxxxxxx
Title:C.O.O.________________
Date:10-6-06________________
ABN AMRO Distribution Services (USA) Inc. By its authorized officer
By: /s/ Xxxxx XxXxxxxxx
----------------------------
Xxxxx XxXxxxxxx
Title:Vice President________
Date:10-2-06________________
SCHEDULE A
ACCOUNT(S) CONTRACT(S) DESIGNATED FUNDS(S)
VARIABLE ANNUITY SEPARATE V6029 ALL FUNDS OF THE TRUST
ACCOUNT XIV
VARIABLE ANNUITY SEPARATE GV9497 ALL FUNDS OF THE TRUST
ACCOUNT XVI
SCHEDULE B - LIST OF FUNDS AND CORRESPONDING FEES
----------------------------------------------------------------------------------------------------------------------------------
ABN AMRO FUNDS
----------------------------------------------------------------------------------------------------------------------------------
FUNDS FUND # QUOTRON CUSIP ANNUAL FEE
PAYOUT
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
* FEES SUBJECT TO SECTION 5.1:
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
CLASS N 25 bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
CLASS S 25 bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
CLASS R 50 bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
CLASS I No Fees
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
** SUBJECT TO SECTION 5.2 CLASS N - SUB-TA FEES
--------------------------------------------------------- ------------------------------------------------------------------------
ABN AMRO Bond 120 CHTBX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/Montag & Xxxxxxxx Balanced 130 MOBAX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO Balanced 131 CHTAX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO Mid Cap 132 CHTTX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO Growth 133 CHTIX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/Montag & Xxxxxxxx Growth 134 MCGFX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/Veredus Aggressive Growth 135 VERDX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/Veredus SciTech 137 AVSTX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/TAMRO Small Cap 138 ATASX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/TAMRO Large Cap Value 139 ATLVX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO Value 140 RVALX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO Real Estate 143 ARFCX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/Veredus Select Growth 144 AVSGX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO Mid Cap Growth 147 ABMGX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/River Road Small Cap Value 160 ARDEX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
ABN AMRO/River Road Dynamic Equity 161 ARSVX 00000X000 10bps
--------------------------------------------------------- ------------- --------------------- -------------------- ---------------
FEE PAYOUT:
* 1. For Class N and Class S, Distributor will pay 0.25% annually of the
Fund's average daily net assets and for Class R, Distributor will pay 0.50%
annually of the Fund's average daily net assets, as maintained and serviced by
SDI pursuant to the Plan adopted and maintained pursuant to Rule 12b-1 under the
1940 Act. Distributor will pay zero fees on Class I shares.
** 2. Trust will pay or cause to pay Company 0.10% annually of the Fund's
Class N average daily net assets.
PLAN PARAMETERS:
The payment to SDI and the Company, respectively, shall be calculated by
the Distributor and/or the Trust at the end of each calendar quarter. All
payments are made quarterly for purchases settling prior to the last
business day of the quarter and are payable within thirty (30) days
following the respective quarter end. Payment will be accompanied by a
statement showing the calculation of the quarterly amounts payable by the
Trust or Distributor and such other supporting data as may be reasonably
requested by SDI or the
Company. Minimum check to be paid to a servicing agent is $10.00.
Schedule C
PRICING CONTACTS AT PFPC, INC.
PFPC Inc., 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxxx XX 00000-0000
Fund Administration & Accounting Contacts:
Xxxxx Xxxxx - VP/Director Fund Administration & Accounting
Phone: 000-000-0000
Fax: 000-000-0000
e-mail: xxxxx.xxxxxx@xxxx.xxx
Xxx Xxxxxx - Manager Fund Administration & Accounting
Phone: 000-000-0000
Fax: 000-000-0000
e-mail: xxxxxx.xxxxxx@xxxx.xxx
