PARTICIPATION AGREEMENT
AMONG
FIRST SECURITY BENEFIT LIFE INSURANCE AND
ANNUITY COMPANY OF NEW YORK,
AND
CITIGROUP GLOBAL MARKETS INC.
IHIS AGREEMENT, dated as of the 29th day of September, 2005, by and among
First Security Benefit Life Insurance and Annuity Company of New York, (the
"Company"), a stock life insurance company organized under the laws of the State
of New York, 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"), and Citigroup Global Markets Inc (the "Distributor"),
a Delaware Corporation.
WHEREAS, the shares of beneficial interest/common stock of each Fund
("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 of1940 (the "1940 Act") and shares of
the Portfolios are registered under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the Distributor, which serves as Distributor of Fund shares, is
duly registered as a broker-dealer under the Securities Exchange Act of 1934
(the "1934 Act"), 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 premises, the Company,
the Fund and the Adviser agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. Subject to Article X hereof, the Distributor 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 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 Distributor hereby appoints the Company as an
agent of the Distributor 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 therefore)
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 Distributor prior to the time that the Fund
ordinarily calculates its net asset value, currently 4:00 p.m. Eastern Time, as
described from time to time in the Fund's prospectus shall constitute receipt
and acceptance by the Designated Portfolio on that same Business Day, provided
that the Fund receives notice of such request by 9.30 a.m. Eastern Time on the
next following Business Day.
(b) The Company shall pay for shares of each Designated
Portfolio on the same Business Day that it notifies the Fund of a purchase
request for such shares. Payment for Designated Portfolio shares shall be made
in federal funds transmitted to the Fund or other designated person by wire to
be received by 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 finds
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, 01.any similar
expenses incurred by the Fund, as a result of portfolio transactions
-2-
effected by the Fund based upon such purchase request. Upon receipt of federal
funds so wised, 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.
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 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.
1.5. The Fund shall use its best efforts to furnish notice (by wire
or telephone followed by written confirmation) to the Company of any income
dividends or capital gain distributions payable on any Designated Portfolio
shares by the 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.
1.6. 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.
-3-
(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 m 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.
1.9. The Company agrees to maintain records sufficient to identify
the date and time of receipt of all transactions and shall make such records
available upon request for examination by Distributor (and at Distributor's
expense) or its designated representative, at the request of the transfer agent
or by appropriate governmental authorities Under no circumstances shall Company
change, alter or manipulate any transactions received by you in good order.
1.10. Company represents that there are controls in place designed
to prevent market timing.
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 Distributor 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 fox sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund.
-4-
2.3. The Distributor represents and warrants that the Fund is
lawfully organized and validly existing under the laws of the State of Maryland
or the Commonwealth of Massachusetts and that it does and will comply in all
material respects with the 1940 Act, including, without limitation, Rule 38a- 1
under the 0000 Xxx.
2.4. The Distributor represents and warrants that the investment
adviser to the Fund (the "Adviser") is registered as an investment advises with
the SEC and that the Advisor does and will comply in all material respects with
the Investment Advisers Act of 1940, including, without limitation, Rule
206(4)-7 under the Investment Advisers Act.
2.5. The Distributor represents and warrants, for itself and for
the Fund, that all of the 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 Distributor represents and warrants that it is registered
as a broker/dealer under the 1934 Act and that it does and will comply in all
material respects with all applicable state and federal securities laws in the
performance of its obligations for the Fund.
2.7. Company represents that the provisions of Title II of the
United States Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as amended, and the
rules promulgated thereunder and any related state, self regulatory organization
and SEC anti-money laundering laws, rules and regulations and any local laws,
rules or regulations requiring anti-money laundering procedures or compliance
are not applicable to it or to the Accounts and that it does not have procedures
to comply with such laws, rules or regulations, Company represents that if in
the future it is required to comply with such laws, rules or regulations it will
fully comply with such laws, rules or regulations or will notify Distributor of
its determination not to comply with such laws, rules or regulations.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Distributor shall provide the Company with as many printed
copies of the current prospectus, current Statement ofAdditiona1 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
-5-
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 Distributor, which consent shall not be
unseasonably withheld.
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 Distributor 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) the Distributor or the Adviser is named. No such
material shall be used until approved by the Distributor or its designee, and
the Distributor 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 Distributor or its designee reserves the light 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) the
Distributor or the Adviser is named, and no such material shall be used if the
Distributor 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 or Distributor in connection with the sale of the Contracts other
than the information or representations contained in the registration statement
or prospectus or SAI for the Fund shares, as such registration statement and
prospectus or SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or other
promotional material approved by the Fund or its designee, except with the
permission of the Fund or its designee.
4.3. The Distributor, 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
-6-
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. Neither the Distributor, Advisor or Fund shall 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 Distributor 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 Distributor any complaints received
from the Contract owners pertaining to the Fund or a Designated Portfolio.
4.7. The Distributor 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 Distributor 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
Distributor will make reasonable efforts to attempt to have changes affecting
Contract prospectuses become effective simultaneously with the annual updates
for such prospectuses.
ARTICLE V. FEES AND EXPENSES
5.1. In consideration of the performance of the distribution
services as are from time to time agreed by the parties, which services the
Company shall cause its affiliated broker/dealer (Security Distributors, Inc.
("SDI")) and underwriter of the Contracts to perform, Distributor will pay SDI a
fee of 25 basis points of the average daily value of the Fund's shares invested
in by the Company via the Contracts. Distributor shall calculate and pay the
amount pursuant to this section no less frequently than calendar quarterly.
Although SDI is not a party to this Agreement, the Distributor agrees that SDI
is a third-party beneficiary of this Section 5.1.
5.2. No expenses incident to performance by the Fund or Distributor
under this Agreement shall be paid by the Company or the Account. The
Distributor shall see to it that all the
-7-
Fund's shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the
Distributor, in accordance with applicable state laws prior to their sale. The
Distributor shall bear or cause the Fund to 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 Distributor will pay or cause the Fund to pay 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 Distributor shall
also bear (or cause the Fund to 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 Distributor represents and warrants that 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, the Distributor represents and
warrants with respect to each Designated Portfolio that each Designated
Portfolio has complied and will continue to comply with Section 817(h) of the
Code and Treasury Regulation $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 successo1
provisions to such Section or Regulations. In the event of a breach of this
Article VI, the Distributor will take all reasonable steps (a) to notify the
Company of such breach and (b) to cause the Fund to adequately diversify its
assets so as to achieve compliance within the grace period afforded by
Regulation 1817-5.
6.2. The Distributor represents and warrants that the Fund is
qualified as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code,") and that the
Fund will maintain such qualification (under Subchapter M or any successor or
similar provisions) and that the Distributor will notify the Company immediately
upon having a reasonable basis for believing that the Fund 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.
-8-
ARTICLE VII. POTENTIAL CONFLICTS
7.1. A majority of the Board of Directors shall consist of persons
who are not "interested persons" of the Fund, as defined by Section 2(a)(19) of
the 1940 Act, and the rules thereunder and as modified by any applicable orders
of the Commission, except that if this condition is not met by reason of the
death, disqualification, or bona fide resignation of any Director or Directors,
then the operation of this condition shall be suspended: (a) for a period of 45
days if the vacancy or vacancies may be filled by the remaining Directors; (b)
for a period of 60 days if a vote of shareholders is required to fill the
vacancy or vacancies; or (c) for such longer period as the Commission may
prescribe by order upon application.
7.2. The Board of Directors will monitor the Fund for the existence
of any material irreconcilable conflict between the interests of the Contract
owners of all Separate Accounts investing in the Fund and of the Plan
participants investing in the Fund. A material irreconcilable conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; b) a change in applicable federal or state insurance, tax,
or securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions given by
variable annuity Contract owners, variable life insurance Contract owners and
trustees of Plans; (f) a decision by an insurer to disregard the voting
instructions of Contract owners; or (g) if applicable, a decision by a Plan to
disregard voting instructions of Plan participants.
7.3. Participating Insurance Companies, the Adviser or any other
investment adviser who may save as the adviser to any Portfolio in the fume, and
any Plan that executes a fund participation agreement upon becoming an owner of
10 percent or more of the assets of the Fund (collectively, the "Participants")
will report any potential or existing conflicts of interest to the Board of
Directors. Participants will be responsible for assisting the Board of Directors
in carrying out its responsibilities under these conditions by providing the
Board of Directors with all information reasonability necessary for the Board of
Directors to consider any issues raised. This responsibility includes, but is
not limited to, an obligation by each Participating Insurance Company to inform
the Board of Directors whenever voting instructions of Contract owners are
disregarded and, if pass-through voting is applicable, an obligation by each
Plan to inform the Board of Directors whenever it has determined to disregard
Plan participant voting instructions. The responsibility to report such
information and conflicts and to assist the Board of Directors will be
contractual obligations of all Participating Insurance Companies and Plans with
participation agreements, and such agreements shall provide that these
responsibilities will be carried out with a view only to the interests of the
Plan participants or Contract owners, as appropriate.
7.4. If it is determined by a majority of the Board of Directors,
or by a majority of the disinterested Director s, that a material irreconcilable
conflict exists, the relevant Participating Insurance Companies and Plans will,
at their own expense and to the extent reasonably practicable (as determined by
a majority of the disinterested Directors), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, which steps could
include: (a) withdrawing the assets allocable to some or all of the Separate
Accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including another Portfolio of the Fund, or
submitting the question as to 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 Contract owners
-9-
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 (b)
establishing a new registered management investment company or managed Separate
Account If a material irreconcilable conflict arises because of a decision by a
Participating Insurance Company to disregard Contract owner voting instructions
and that decision represents a minority position or would preclude a majority
vote, then that insurer may be required, at the Fund's election, to withdraw the
insurer's Separate Account investment in the Fund or relevant Portfolio(s) and
no charge or penalty will be imposed as a result of such withdrawal. If a
material irreconcilable conflict arises because of a Plan's decision to
disregard Plan participant voting instructions, if applicable, and that decision
represents a minority position or would preclude a majority vote, the Plan may
be required, at the Fund's election, to withdraw its investment in the Fund or
relevant Portfolio(s) and no charge or penalty will be imposed as a result of
such withdrawal. The responsibility to take remedial action in the event of a
determination by the Board of Directors of a material irreconcilable conflict
and to bear the cost of such remedial action will be a contractual obligation of
all Participating Insurance Companies and Plans under their agreements governing
participation in the Fund, and these responsibilities will be carried out with a
view only to the interests of Contract owners and Plan participants.
7.5. For purposes of Condition 4, a majority of the disinterested
Directors will determine whether or not any proposed action adequately remedies
any material irreconcilable conflict, but in no event will the Fund or the
Adviser be required to establish a new funding medium for any Contract. No
Participating Insurance Company shall be required by Condition 4 to establish a
new funding medium for any Contract if any offer to do so has been declined by
vote of a majority of the Contract owners materially and adversely affected by
the material irreconcilable conflict. Further, no Plan shall be required by
Condition 4 to establish a new funding medium for such Plan if (a) a majority of
Plan participants materially and adversely affected by the irreconcilable
material conflict vote to decline such offer, or (b) pursuant to governing Plan
documents and applicable law, the Plan makes such decision without Plan
participant vote.
7.6. The determination of the Board of Directors of the existence
of a material irreconcilable conflict and its implications will be made known in
writing promptly to all Participants.
7.7. Participating Insurance Companies will provide pass-through
voting privileges to all Contract owners so long as the Commission continues to
interpret the 1940 Act as requiring pass-through voting privileges for Contract
owners. Accordingly, Participating Insurance Companies will vote shares of the
Fund held in their Separate Accounts in a manner consistent with voting
instructions timely-received from Contract owners. Each Participating Insurance
Company will also vote shares of the Fund held in its Separate Accounts for
which no voting instructions from Contract owners are timely-received in the
same proportion as those shares of the Fund for which voting instructions from
Contract owners are timely-received Participating Insurance Companies will be
responsible for assuring that each of their Separate Accounts participating in
the Fund calculates voting privileges in a manner consistent with other
Participating Insurance Companies. The obligation to calculate voting privileges
in a manner consistent with all other Separate Accounts investing in the Fund
will be a contractual obligation of all Participating Insurance Companies under
their agreements governing their participation in the Fund Each Plan will vote
as required by applicable law and governing Plan documents.
7.8. All reports of potential or existing conflicts received by the
Board of Directors, and all action by the Board of Directors with regard to
determining the existence of a conflict; notifying Participants of a conflict,
and determining whether any proposed action adequately remedies a
-10-
conflict, will be properly recorded in the minutes of the meetings of the Board
of Directors or other appropriate records, and such minutes or other records
shall be made available to the Commission upon request.
7.9. The Fund will notify all Participating Insurance Companies
that separate account disclosure in their respective Separate Account
prospectuses may be appropriate to advise accounts regarding the potential risks
of mixed and shared funding. The Fund shall disclose in its prospectus that (a)
the Fund is intended to be a funding vehicle for variable annuity and variable
life insurance contracts offered by various insurance companies and for Plans;
(b) due to differences of tax treatment and other considerations, the interests
of various Contract owners participating in the Fund and the interests of Plans
investing in the Fund may conflict; and (c) the Board of Directors will monitor
events in order to identify the existence of any material irreconcilable
conflicts and to determine what action, if any, should be taken in response to
any such conflict.
7.10. The Fund will comply with all provisions of the 1940 Act that
require voting by shareholders (which, for these purposes, will be the persons
having a voting interest in the shares of the Fund), and, in particular; the
Fund will provide for annual shareholder meetings (except insofar as the
Commission may interpret Section 16 of the 1940 Act not to require such
meetings) and comply with Section 16(a) of the 1940 Act and, if and when
applicable, Section 16(b) of the 1940 Act. Further, the Fund will act in
accordance with the Commission's interpretation of the requirements of Section
16(a) with respect to periodic elections of Directors and with whatever rules
the Commission may promulgate with respect thereto.
7.11. If and to the extent that Rule 6e-2 or 6e-3(T) under the 1940
Act is amended, or proposed Rule 6e-3 under the 1940 Act is adopted, to provide
exemptive relief from any provision of the 1940 Act, or the rules promulgated
thereunder, with respect to mixed or shared funding, on tams and conditions
materially different from any exemptions granted in the order requested in the
application, then the Fund and/or Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with such Rules
6e-2 and 6e-3(T), as amended, or proposed Rule 6e-3 as adopted, to the extent
that such rules are applicable.
7.12. The Participants, at least annually, will submit to the Board
of Directors such reports, materials, or data as the Board of Directors may
reasonably request so that the Board of Directors may fully carry out the
obligations imposed upon it by the conditions contained in the application Such
reports, materials, and data will be submitted more frequently if deemed
appropriate by the Board of Directors. The obligations of the Participants to
provide these reports, materials, and data to the Board of Directors, when the
Board of Directors so reasonably requests, shall be a contractual obligation of
all Participants under their agreements governing participation in the Fund.
7.13. If a Plan should ever become a holder often percent or more of
the assets of the Fund, such Plan will execute a participation agreement with
the Fund that includes conditions set forth herein to the extent applicable. A
Plan will execute an application containing an acknowledgment of this condition
upon such Plan's initial purchase of the shares of the Fund.
-11-
Article VII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.l(a). The Company agrees to indemnify and hold harmless both
the Distributor and the Fund and each of its trustees/directors and officers,
and each person, if any, who controls the Fund or Distributor within the
meaning of Section 15 of the 1933 Act or who is under common control with the
Fund or the 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 legal and other expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
registration statement, prospectus (which shall include a written
description of a Contract that is not registered under the 1933
Act), or SAI for. the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state- therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by
or on behalf of the Fund or the Distributor for use in the
registration statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the Contracts,
or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other than
statements or representations contained in the registration
statement, prospectus, SAI, or sales literature of the Fund not
supplied by the company or persons under its control) or wrongful
conduct of the Company or its agents or persons under the Company's
authorization or control, with respect to the sale or distribution
of the Contracts, or
(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 for use in the
registration statement, prospectus or SAI of the Fund or in sales
literature; or
(iv) arise as a result of any material failure by the
Company to provide the services and furnish the materials under the
tams 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.l(b) and
8.l(c) hereof.
-12-
8.l(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.l(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 fist 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 Distributor
8.2(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 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales
literature of the Fund (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Distributor or Fund by or on
behalf of the Company for use in the registration statement,
prospectus or SAI for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
-13-
(ii) arise out of or as a result of statements or
representations by or on behalf of the Fund or the
Distributor (other than statements or representations
contained in the registration statement, prospectus, XXx or
sales literature for the Contracts not supplied by the Fund or
the Distributor) or wrongful conduct of the Distributor or the
Fund with respect to the sale or distribution of the Contracts
or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Distributor or
the Fund; or
(iv) arise as a result of any failure by the Fund or the
Distributor to provide the services and furnish the materials
under the terms of this Agreement (including a failure of the
Fund, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by or on behalf of the
Distributor or the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by or
on behalf of the Distributor or the Fund;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(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.
8.2(c). The Distributor shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Distributor in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Distributor of
any such claim shall not relieve the Distributor from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Distributor will be entitled to participate,
at its own expense, in the defense thereof. The Distributor also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the Distributor to such party
of the Distributor's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Distributor will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
-14-
8.2(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.
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 New
York, 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 VIII
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 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 Distributor by written notice to the
Company in the event that formal administrative proceedings
rue 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 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 Fund or Distributor by the SEC or
any state securities department or any 0ther regulatory body;
provided, however, that the Company determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a
-15-
material adverse effect upon the ability of the 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
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 Designated Portfolio may
fail to so qualify or comply with either provision; or
(g) termination by Distributor by written notice to the Company,
if the Distributor, shall determine, in its sole judgment
exercised in good faith, that the Company has suffered a
material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is
the subject of material adverse publicity; or
(h) termination by the Company by written notice to the
Distributor, if the Company shall determine, in its sole
judgment exercised in good faith, that 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 Distributor 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).
10.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
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: First Security Benefit Life Insurance and
Annuity Company of New York 00 Xxxx Xxx Xxx Xxxx,
0xx Floor
-16-
White Plains, New York 10604
Attn: Xxx Xxxx, Chief Administrative Officer
--
With a Copy to:
First Security Benefit Life Insurance and Annuity
Company of New York
One Security Benefit Place
Topeka, Kansas 66636-0001
Attn: General Counsel
If to the Distributor: 000 Xxxxx Xxxxxxxx Xxxxx
0xx X0,
Xxxxxxxx XX 00000
Attention: Xxxxx Xxxxxxx
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 nor 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 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
-17-
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 other than in accordance with this section.
Company represents that it has been informed by Distributor of the
proposed transaction between Xxxx Xxxxx and Citigroup involving the
sale of the Adviser to Xxxx Xxxxx. Company agrees that all of the
rights and obligations under this agreement will be automatically
assigned to a new principal underwriter and distributor of shares of
the Fund upon completion of the proposed transaction between Xxxx
Xxxxx and Citigroup. Distributor agrees to notify Company of the
name and address of such new principal underwriter and distributor
as soon as reasonably practicable after the closing of the
transaction between Xxxx Xxxxx and Citigroup.
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.
First Security Benefit Life
Insurance and Annuity Company of New York By its authorized officer
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Title: VP, CFO & Treasurer
----------------------------
Date: 10/10/05
----------------------------
Citigroup Global Markets, Inc. By its authorized officer
By: /s/
-------------------------------
Title: Managing Director
----------------------------
Date: 9/30/05
-----------------------------
-18-
-19-
September 29,2005
SCHEDULE A
--------------------------------------------------------------------------------
ACCOUNT(S) CONTRACT(S) DESIGNATED PORTFOLIO(S)
--------------------------------------------------------------------------------
Variable Annuity Separate FSB234, FSB236 Salomon Brothers Variable
Account B Aggressive Growth
Salomon Brothers Variable Small
Cap Growth
--------------------------------------------------------------------------------
CUSIP NUMBERS
SALOMON BROTHERS VARIABLE AGGRESSIVE GROWTH - 00000X000
SALOMON BROTHERS VARIABLE SMALL CAP GROWTH - 00000X000
A-1
