AMENDMENT NUMBER 4 TO PARTICIPATION AGREEMENT
WHEREAS, Rydex Variable Trust (the "Trust"), Rydex Distributors, Inc. (the
"Underwriter") and First Security Benefit Life Insurance and Annuity Company of
New York (the "Company") are parties to a Participation Agreement dated May 1,
2002, as amended July 1, 2003 and December 13, 2004 (the "Agreement"); and
WHEREAS, terms of the Agreement contemplate that the Funds of the Trust made
available under the Agreement may be changed from time to time by amending
Schedule A to the Agreement; and
WHEREAS, the parties wish to add certain Funds of the Trust to the Agreement by
deleting the existing Schedule A and replacing it with the Schedule A attached
hereto; and
WHEREAS, all other terms of the Agreement shall remain in full force and effect;
NOW, THEREFORE, the parties agree to delete the existing Schedule A to the
Agreement and replace it with the Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment Number
4 to the Agreement to be executed in its name and on its behalf by its duly
authorized representative as of September 28, 2005.
RYDEX VARIABLE TRUST
/s/ Xxxx Xxxxxxxxxxx
----------------------------------------
By:
Title:
RYDEX DISTRIBUTORS, INC.
/s/ Xxxx Xxxxxxxxxxx
----------------------------------------
By:
Title: President
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
/s/ Xxxxxx X Xxxxx
----------------------------------------
By: Xxxxxx X Xxxxx
Title: V. P., CFO, and Treasurer
September 28, 2005
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Shares of the Funds of the Trust shall be made available as investments
for the following Separate Accounts:
--------------------------------------------------------------------------------
NAME OF SEPARATE ACCOUNT AND DATE ESTABLISHED BY BOARD OF DIRECTORS
Variable Annuity Account A - January 22, 1996
FORM NUMBER AND NAME OF CONTRACT FUNDED BY SEPARATE ACCOUNT
FSB216 - AdvisorDesigns
DESIGNATED PORTFOLIO(S)
Rydex Arktos Rydex Mekros
Rydex Banking Rydex Mid Cap Growth
Rydex Basic Materials Rydex Mid Cap Value
Rydex Biotechnology Rydex Nova
Rydex Consumer Products Rydex OTC
Rydex Electronics Rydex Precious Metals
Rydex Energy Rydex Real Estate
Rydex Energy Services Rydex Retailing
Rydex Financial Services Rydex Sector Rotation
Rydex Health Care Rydex Small Cap Growth
Rydex Internet Rydex Small Cap Value
Rydex Inverse Dynamic Dow 30 Rydex Technology
Rydex Inverse Mid Cap Rydex Telecommunications
Rydex Inverse Small Cap Rydex Titan 500
Rydex Juno Rydex Transportation
Rydex Large Cap Europe Rydex U.S. Government Bond
Rydex Large Cap Growth Rydex U.S. Government Money Market
Rydex Large Cap Japan Rydex Ursa
Rydex Large Cap Value Rydex Utilities
Rydex Leisure Rydex Velocity 100
Rydex Long Dynamic Dow 30 CLS AdvisorOne Funds - Xxxxxxx Fund
Rydex Medius CLS AdvisorOne Funds - Clermont Fund
Rydex Commodities
Rydex Strengthening Dollar
Rydex Weakening Dollar
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NAME OF SEPARATE ACCOUNT AND DATE ESTABLISHED BY BOARD OF DIRECTORS
Variable Annuity Account B - January 22, 1996
FORM NUMBER AND NAME OF CONTRACT FUNDED BY SEPARATE ACCOUNT
FSB234 - AdvanceDesigns and FSB236 - SecureDesigns
DESIGNATED PORTFOLIO(S)
RYDEX SECTOR ROTATION
--------------------------------------------------------------------------------
AMENDMENT NUMBER 3 TO PARTICIPATION AGREEMENT
WHEREAS, Rydex Variable Trust (the "Trust"), Rydex Distributors, Inc. (the
"Underwriter") and First Security Benefit Life Insurance and Annuity Company of
New York (the "Company") are parties to a Participation Agreement dated May 1,
2002, as amended July 1, 2003 (the, "Agreement"); and
WHEREAS, terms of the Agreement contemplate that the Funds of the Trust made
available under the Agreement may be changed from time to time by amending
Schedule A to the Agreement; and
WHEREAS, the parties wish to add certain Funds of the Trust to the Agreement by
deleting the existing Schedule A and replacing it with the Schedule A attached
hereto; and
WHEREAS, all other terms of the Agreement shall remain in full force and effect;
NOW, THEREFORE, the parties agree to delete the existing Schedule A to the
Agreement and replace it with the Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment Number
3 to the Agreement to be executed in its name and on its behalf by its duly
authorized representative as of DECEMBER 13, 2004.
RYDEX VARIABLE TRUST
/s/ Xxxx Xxxxxxxxxxx
----------------------------------------
By:
Title: President
RYDEX DISTRIBUTORS, INC.
/s/ Xxxx Xxxxxxxxxxx
----------------------------------------
BY:
Title: CEO
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
/s/ Xxxxxx Xxxx
----------------------------------------
By: Xxxxxx Xxxx
Title: Vice President and Chief Marketing Officer
December 13, 2004
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Shares of the Funds of the Trust shall be made available as investments
for the following Separate Accounts:
--------------------------------------------------------------------------------
NAME OF SEPARATE ACCOUNT AND DATE ESTABLISHED BY BOARD OF DIRECTORS
Variable Annuity Account A - January 22, 1996
FORM NUMBER AND NAME OF CONTRACT FUNDED BY SEPARATE ACCOUNT
FSB216 - AdvisorDesigns
DESIGNATED PORTFOLIO(S)
Rydex Arktos Rydex Mekros
Rydex Banking Rydex Mid Cap Growth
Rydex Basic Materials Rydex Mid Cap Value
Rydex Biotechnology Rydex Nova
Rydex Consumer Products Rydex OTC
Rydex Electronics Rydex Precious Metals
Rydex Energy Rydex Real Estate
Rydex Energy Services Rydex Retailing
Rydex Financial Services Rydex Sector Rotation
Rydex Health Care Rydex Small Cap Growth
Rydex Internet Rydex Small Cap Value
Rydex Inverse Dynamic Dow 30 Rydex Technology
Rydex Inverse Mid Cap Rydex Telecommunications
Rydex Inverse Small Cap Rydex Titan 500
Rydex Juno Rydex Transportation
Rydex Large Cap Europe Rydex U.S. Government Bond
Rydex Large Cap Growth Rydex U.S. Government Money Market
Rydex Large Cap Japan Rydex Ursa
Rydex Large Cap Value Rydex Utilities
Rydex Leisure Rydex Velocity 100
Rydex Long Dynamic Dow 30 CLS AdvisorOne Funds - Xxxxxxx Fund
Rydex Medius CLS AdvisorOne Funds - Clermont Fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NAME OF SEPARATE ACCOUNT AND DATE ESTABLISHED BY BOARD OF DIRECTORS
Variable Annuity Account B - January 22, 1996
FORM NUMBER AND NAME OF CONTRACT FUNDED BY SEPARATE ACCOUNT
FSB234 - AdvanceDesigns and FSB236 - SecureDesigns
DESIGNATED PORTFOLIO(S)
Rydex Sector Rotation
--------------------------------------------------------------------------------
AMENDMENT NUMBER 2 TO PARTICIPATION AGREEMENT
WHEREAS, Rydex Variable Trust (the "Trust"), Rydex Distributors, Inc. (the
"Underwriter") and First Security Benefit Life Insurance and Annuity Company of
New York (the "Company") are parties to a Participation Agreement dated May 1,
2002, as amended May 1, 2003 (the "Agreement"); and
WHEREAS, terms of the Agreement contemplate that the Funds of the Trust made
available under the Agreement may be changed from time to time by amending
Schedule A to the Agreement; and
WHEREAS, the parties wish to add certain Funds of the Trust to the Agreement by
deleting the existing Schedule A and replacing it with the Schedule A attached
hereto; and
WHEREAS, all other terms of the Agreement shall remain in full force and effect;
NOW, THEREFORE, the parties agree to delete the existing Schedule A to the
Agreement and replace it with the Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment Number
2 to the Agreement to be executed in its name and on its behalf by its duly
authorized representative as of July 1, 2003.
RYDEX VARIABLE TRUST
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxx
Title: Secretary
RYDEX DISTRIBUTORS, INC.
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxx
Title: Vice President
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
/s/ Xxxxxx Xxxx
----------------------------------------
By: Xxxxxx Xxxx
Title: Vice President
July 1, 2003
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Shares of the Funds of the Trust shall be made available as investments
for the following Separate Accounts:
NAME OF SEPARATE ACCOUNT AND FORM NUMBER AND NAME OF
DATE ESTABLISHED BY BOARD OF DIRECTORS CONTRACT FUNDED BY SEPARATE ACCOUNT
Variable Annuity Account A FSB 216
January 22, 1996
Variable Annuity Account B FSB234
January 22, 1996
FUNDS OF THE TRUST AVAILABLE UNDER THE AGREEMENT
Rydex Arktos Rydex Medius
Rydex Banking Rydex Mekros
Rydex Basic Materials Rydex Real Estate
Rydex Biotechnology Rydex Sector Rotation
Rydex Consumer Products Rydex Titan 500
Rydex Electronics Rydex U.S. Government Bond
Rydex Energy Rydex Velocity 100
Rydex Energy Services CLS AdvisorOne Funds - Xxxxxxx Fund
Rydex Financial Services CLS AdvisorOne Funds - Clermont Fund
Rydex Health Care
Rydex Internet
Rydex Juno
Rydex Large Cap Europe
Rydex Large Cap Japan
Rydex Leisure
Rydex Nova
Rydex OTC
Rydex Precious Metals
Rydex Retailing
Rydex Technology
Rydex Telecommunications
Rydex Transportation
Rydex U.S. Government Money Market
Rydex Ursa
Rydex Utilities
AMENDMENT NUMBER 1 TO PARTICIPATION AGREEMENT
WHEREAS, Rydex Variable Trust (the "Trust"), Rydex Distributors, Inc. (the
"Underwriter") and First Security Benefit Life Insurance and Annuity Company of
New York (the "Company") are parties to a Participation Agreement dated May 1,
2002 (the "Agreement"); and
WHEREAS, terms of the Agreement contemplate that the Funds of the Trust made
available under the Agreement may be changed from time to time by amending
Schedule A to the Agreement; and
WHEREAS, the parties wish to add certain Funds of the Trust to the Agreement by
deleting the existing Schedule A and replacing it with the Schedule A attached
hereto; and
WHEREAS, all other terms of the Agreement shall remain in full force and effect;
NOW, THEREFORE, the parties agree to delete the existing Schedule A to the
Agreement and replace it with the Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment Number
1 to the Agreement to be executed in its name and on its behalf by its duly
authorized representative as of May 1, 2003.
RYDEX VARIABLE TRUST
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
By:
Title:
RYDEX DISTRIBUTORS, INC.
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
By:
Title:
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
/s/ Xxx Xxxx
----------------------------------------
By: Xxx Xxxx
Title: Vice President
May 1, 2003
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Shares of the Funds of the Trust shall be made available as investments
for the following Separate Accounts:
NAME OF SEPARATE ACCOUNT AND FORM NUMBER AND NAME OF
DATE ESTABLISHED BY BOARD OF DIRECTORS CONTRACT FUNDED BY SEPARATE ACCOUNT
Variable Annuity Account A FSB 216
January 22, 1996
Variable Annuity Account B FSB234
January 22, 1996
FUNDS OF THE TRUST AVAILABLE UNDER THE AGREEMENT
Rydex Arktos Rydex Medius
Rydex Banking Rydex Mekros
Rydex Basic Materials Rydex Real Estate
Rydex Biotechnology Rydex Sector Rotation
Rydex Consumer Products Rydex Titan 500
Rydex Electronics Rydex U.S. Government Bond
Rydex Energy Rydex Velocity 100
Rydex Energy Services
Rydex Financial Services
Rydex Health Care
Rydex Internet
Rydex Juno
Rydex Large Cap Europe
Rydex Large Cap Japan
Rydex Leisure
Rydex Nova
Rydex OTC
Rydex Precious Metals
Rydex Retailing
Rydex Technology
Rydex Telecommunications
Rydex Transportation
Rydex U.S. Government Money Market
Rydex Ursa
Rydex Utilities
PARTICIPATION AGREEMENT
Among
RYDEX VARIABLE TRUST,
RYDEX DISTRIBUTORS, INC.
and
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK
DATED AS OF
MAY 1, 2002
-1-
TABLE OF CONTENTS
Page
----
ARTICLE I. Purchase of Trust Shares....................................... 4
ARTICLE II. Representations and Warranties................................. 6
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements;
Voting......................................................... 8
ARTICLE IV. Sales Material and Information................................. 9
ARTICLE V. Fees and Expenses.............................................. 11
ARTICLE VI. Diversification................................................ 11
ARTICLE VII. Potential Conflicts............................................ 11
ARTICLE VIII. Indemnification................................................ 13
ARTICLE IX. Applicable Law................................................. 17
ARTICLE X. Termination.................................................... 18
ARTICLE XI Notices........................................................ 19
ARTICLE XII. Miscellaneous.................................................. 20
SCHEDULE A Separate Accounts and Associated Contracts..................... 22
SCHEDULE B Proxy Voting Procedures........................................ 23
-2-
THIS AGREEMENT, made and entered into as of the 1st day of May, 2002 by
and among FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(hereinafter the "Company"), a New York Corporation, on its own behalf and on
behalf of each separate account of the Company set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter referred to as
the "Account"), RYDEX VARIABLE TRUST (hereinafter the "Trust"), a Delaware
business trust, and RYDEX DISTRIBUTORS, INC. (hereinafter the "Underwriter"), a
Maryland corporation.
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as (i) the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and individual and group annuity contracts with variable
accumulation and/or pay-out provisions (hereinafter referred to individually
and/or collectively as "Variable Insurance Products") and (ii) the investment
vehicle for certain qualified pension and retirement plans (hereinafter
"Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Trust as an
investment vehicle under their Variable Insurance Products enter into
participation agreements with the Trust and the Underwriter (the "Participating
Insurance Companies");
WHEREAS, beneficial interests in the Trust are divided into several series
of interests or shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement as evidenced by Schedule A, as may be amended
from time to time by mutual agreement of the parties hereto (each such series is
hereinafter referred to as a "Fund"); and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated February 25, 1999 (File No. 812-11344), granting Participating
Insurance Companies and Variable Insurance Product separate accounts exemptions
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended (hereinafter the" 1940 Act"), and Rules 6e-2(b)(
15) and 6e-3(T)(b)(l5) thereunder, to the extent necessary to permit shares of
a Fund to be sold to and held by Variable Insurance Product separate accounts of
both affiliated and unaffiliated life insurance companies and Qualified Plans
(hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is a
member in good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD") and serves as principal underwriter of the shares of the
Trust; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
-3-
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the aforementioned
Variable Insurance Products; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforementioned Variable Insurance Products
and the Underwriter is authorized to sell such shares to each such Account at
net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust and Underwriter each agree as follows:
ARTICLE I. PURCHASE OF TRUST SHARES
1.1. The Trust agrees to make available for purchase by the Company
shares of the Trust and shall execute orders placed for each Account on a daily
basis at the net asset value next computed after receipt by the Trust or its
designee of such order. For purposes of this Section 1.1, the Company shall be
the designee of the Trust for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Trust; provided that
the Company uses its best efforts to deliver the order to the Trust by 9:00 a.m.
Eastern time on the next following Business Day, and provided further that the
final order is received by the Trust not later than 9:30 a.m. on such Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Trust calculates its net asset value pursuant
to the rules of the Securities and Exchange Commission.
1.2. The Trust, so long as this Agreement is in effect, agrees to make
its shares available indefinitely for purchase at the applicable net asset value
per share by the Company and its Accounts on those days on which the Trust
calculates its net asset value pursuant to rules of the Securities and Exchange
Commission and the Trust shall use it's best efforts to calculate such net asset
value on each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Trust (hereinafter
the "Board") may refuse to permit the Trust to sell shares of any Fund to any
person, or suspend or terminate the offering of shares of any Fund if such
action is required bylaw or by regulatory authorities having jurisdiction or is,
in the sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Fund.
1.3. The Trust agrees that shares of the Trust will be sold only to
Participating Insurance Companies and their separate accounts and to certain
Qualified Plans all in accordance with the requirement of Section
-4-
817(h)(l) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury
regulation 1.817-5(f). No shares of any Fund will be sold to the general public.
1.4. The Trust will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as in Section 1.3 of Article I, Section 2.4 of Article
II, Section 3.5 of Article III, Article VI and Article VII of this Agreement is
in effect to govern such sales.
1.5. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional shares of a Trust held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the request for redemption. Subject to and in
accordance with applicable laws, and subject to written consent of the Company,
the Trust may redeem shares for assets other than cash. For purposes of this
Section 1.5, the Company shall be the designee of the Trust for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Trust; provided that the Company uses its best efforts
to deliver the order to the Trust by 9:00 a.m. Eastern time on the next
following Business Day, and provided further that the final order is received by
the Trust not later than 9:30 a.m. on such Business Day. Payment by the Trust of
redemption proceeds shall be made to the Company in federal funds transmitted by
wire by p.m. Eastern time on the Business Day that the Trust receives actual
notice of an order to redeem, provided however, that the Trust reserves the
right to postpone the date of payment in accordance with the 1940 Act.
1.6. The Company agrees that purchases and redemptions of Fund shares
offered by the then current prospectus of the Trust shall be made in accordance
with the provisions of such prospectus, provided however, that the provisions of
the then current Fund prospectus will not be deemed to alter any provision of
Section 1.1 or 1.5. The Variable Insurance Products issued by the Company, under
which amounts may be invested in the Trust (hereinafter the "Contracts"), are
listed on Schedule A attached hereto and incorporated herein by reference, as
such Schedule A may be amended from time to time by mutual written agreement of
all of the parties hereto.
1.7. The Company shall pay for Trust shares on the Business Day that it
receives actual notice of a purchase order. Payment shall be in federal funds
transmitted by wire by 3 p.m. Eastern. For purposes of Section 2.9 and 2.10,
upon receipt by the Trust of the federal funds so wired, such funds shall cease
to be the responsibility of the Company and shall become the responsibility of
the Trust.
1.8. Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Trust shall furnish same day notice (by electronic means, wire
or telephone, followed by written confirmation) to the Company, by 6:30 p.m.
Eastern time, of any income, dividends or capital gain distributions payable on
Fund shares. The Company hereby elects to receive all such income dividends and
capital gain distributions as are payable on the Fund shares in additional
shares of that Fund. The Company reserves the right to revoke this election and
to receive all such income dividends and capital gain
-5-
distributions in cash. The Trust shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.10. The Trust shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6:30 p.m. Eastern time. 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
upon discovery to the Company. 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
Underwriter's expense.
1.11. 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 are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under New York state insurance laws and has registered or, prior to any issuance
or sale of the Contracts, will register each 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.
2.2. The Trust represents and warrants that Trust shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state 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, to the extent required by applicable state law.
2.3. The Trust, on behalf of each Fund, represents and warrants that
each Fund is currently qualified as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
that each Fund will maintain such qualification (under Subchapter M or any
successor or similar provision) and that the Trust will notify the Company
immediately upon having a reasonable basis for believing that any Fund has
ceased to so qualify or that any Fund might not so qualify in the future. The
-6-
Trust, on behalf of each Fund, represents and warrants that each Fund has
complied and will continue to comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 (or any successor or similar provisions) relating to
the diversification requirements for variable annuity, endowment, or life
insurance contracts and that the Trust will notify the Company immediately upon
having a reasonable basis for believing that any Fund has ceased to so comply or
that any Fund might not so comply in the future.
2.4. The Company represents and warrants that the Contracts are
currently treated as life insurance policies or annuity contracts, under
applicable provisions of the Code and that it will maintain such treatment and
that it will notify the Trust immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future.
2.5. The Trust represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-l under the 1940 Act, it will have
aboard of trustees, a majority of whom are not interested persons of the Trust,
formulate and approve any plan under Rule 12b-l to finance distribution
expenses.
2.6. The Trust represents that the Trust's investment policies, fees
and expenses are and shall at all times remain in compliance with the laws of
the State of New York and the Trust represents that their respective operations
are and shall at all times remain in material compliance with the laws of the
State of New York to the extent required to perform this Agreement.
2.7. The Trust represents 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.
2.8. The Underwriter represents and warrants that it is registered with
the SEC under the 1934 Act, as a broker/dealer and is a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD"), and that it
shall remain duly registered in all material respects to the extent required
under all applicable federal and state securities laws and that it will perform
its obligations for the Trust in compliance in all material respects with the
laws of its state of domicile and any applicable state and federal securities
laws, including the 1933 Act, the 1934 Act and the 0000 Xxx.
2.9. The Trust represents and warrants that its directors, officers,
employees dealing with the money and/or securities of the Trust are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less than the minimum
coverage as required by Rule 17g-(l) under the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid blanket fidelity bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.10. The Company represents and warrants that all of its directors,
officers, employees dealing with the money and/or securities of the Trust are
and shall continue to be covered by a blanket fidelity bond or similar coverage
for the benefit of the Company and the Separate Account in an amount not less
than the minimum coverage as required by Rule 17g-l under the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid
blanket fidelity bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
-7-
2.12. The Underwriter represents and warrants that the Trust's
investment adviser is and shall remain duly registered under all applicable
federal and state securities laws and that the investment adviser shall perform
its obligations for the Trust in compliance in all material respects with the
laws of the State of New York and any applicable state and federal securities
laws.
2.13. Each party represents and warrants that the execution and delivery
of this Agreement and the consummation of the transactions contemplated herein
have been duly authorized by all necessary corporate, partnership or trust
action, as applicable, by such party, and, when so executed and delivered, this
Agreement will be the valid and binding obligation of such party enforceable in
accordance with its terms.
ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1. The Trust or its designee shall provide the Company with as many
printed copies of the Trust's current prospectus and statement of additional
information as the Company may reasonably request. If requested by the Company,
in lieu of providing printed copies the Trust shall provide camera-ready film or
computer diskettes containing the Trust's prospectus and statement of additional
information, and such other assistance as is reasonably necessary in order for
the Company once each year (or more frequently if the prospectus and/or
statement of additional information for the Trust is amended during the year) to
have the prospectus for the Contracts and the Trust's prospectus printed
together in one document, and to have the statement of additional information
for the Trust and the statement of additional information for the Contracts
printed together in one document. Alternatively, the Company may print the
Trust's prospectus and/or its statement of additional information in combination
with other trusts or companies' prospectuses and statements of additional
information, together with the prospectus and/or statement of additional
information for the Contracts.
3.2. Except as provided in this Section 3.2., all expenses of printing
and distributing Trust prospectuses and statements of additional information
shall be the expense of the Company. For prospectuses and statements of
additional information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or the
1940 Act, the cost of printing and distributing (including, but not limited to,
postage and handling costs) shall be borne by the Trust (regardless of whether
such documents are printed together with, or separate from, other prospectuses
and statements of additional information). If requested by the Company, the
Trust will provide camera-ready film or computer diskettes in lieu of printed
copies of the Trust's prospectus and statement of additional information. The
Company agrees to provide the Trust or its designee with such information as may
be reasonably requested by the Trust to assure that the Trust's expenses do not
include the cost of printing any prospectuses or statements of additional
information other than those actually distributed to existing owners of the
Contracts.
3.3. The Trust's statement of additional information shall be
obtainable from the Trust, the Company or such other person as the Trust may
designate, as agreed upon by the parties.
3.4. The Trust shall provide the Company with copies of its proxy
statements, reports to shareholders (annual and semi-annual reports), and other
communications (except for prospectuses and statements of additional
information, which are covered in section 3.1) to shareholders in such quantity
as the Company
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shall reasonably require for distributing to Contract owners. The cost of
printing and distributing (including, but not limited to, postage and handling
costs) such documents shall be borne by the Trust.
3.5. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with
instructions received from Contract owners; and
(iii) vote Fund shares for which no instructions have
been received in the same proportion as Trust
shares of such Fund for which instructions have
been received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any Account in its own right, to the extent permitted by law. The Trust
and the Company shall follow the procedures, and shall have the corresponding
responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule B attached hereto and incorporated
herein by reference. Participating Insurance Companies shall be responsible for
ensuring that each of their separate accounts participating in a Fund calculates
voting privileges in a manner consistent with the standards set forth on
Schedule B, which standards will also be provided to the other Participating
Insurance Companies.
3.6. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Trust will act in accordance with the Securities and Exchange 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.
3.7. The Trust shall use reasonable efforts to provide Trust
prospectuses, reports to shareholders, proxy materials and other Trust
communications (or camera-ready equivalents) to the Company sufficiently in
advance of the Company's mailing dates to enable the Company to complete, at
reasonable cost, the printing, assembling and distribution of the communications
in accordance with applicable laws and regulations.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Underwriter, each piece of sales literature or other promotional material in
which the Trust or the Underwriter is named, at least five Business Days prior
to its use. No such material shall be used if the Trust or its designee
reasonably objects to such use within five Business Days after receipt of such
material.
-9-
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust,
or in sales literature or other promotional material approved by the Trust or
its designee, except with the permission of the Trust.
4.3. The Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or its separate account(s) or
Contracts are named at least five Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within five Business Days after receipt of such material.
4.4. The Trust and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each 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 or its
designee, 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, statements of additional
information, 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 Trust or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Trust at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
investment in the Trust under the Contracts, contemporaneously with the filing
of such document with the Securities and Exchange Commission or other regulatory
authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Trust or any affiliate of the Trust: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to
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some or all agents or employees, and registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company
under this Agreement, except that if the Trust or any Fund adopts and implements
a plan pursuant to Rule 12b-l to finance distribution expenses or a shareholder
servicing plan to finance investor services, then payments may be made to the
Company, or to the underwriter for the Contracts, or to other service providers
if and in amounts agreed upon by the parties.
5.2. All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the 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 Fund shares,
preparation and filing of the Trust'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), distributing the Trust
proxy materials to owners of Contracts, the preparation of all statements and
notices required by any federal or state law, and all taxes on the issuance or
transfer of Fund shares.
5.3. The Company shall bear the expenses of distributing the Trust's
prospectus, proxy materials and reports to prospective owners of Contracts
issued by the Company. The expenses of distributing such material to existing
Contract owners shall be governed by Section 3.2, 3.4 and Schedule B.
ARTICLE VI. Diversification
6.1. The Trust will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as annuity,
endowment or life insurance contracts, whichever is applicable, under the Code
and the regulations issued thereunder. Without limiting the scope of the
foregoing, each Fund has complied and will at all times continue to comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications or successor provisions to
such Section or Regulations, hi the event of a breach of this Article VI by a
Fund, the Trust will take all reasonable steps (a) to notify Company of such
breach as promptly as possible and (b) to adequately diversify the Fund so as to
achieve compliance within the grace period afforded by Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Trust. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or
-11-
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of any Fund are
being managed; (e) a difference in voting instructions given by Variable
Insurance Product owners; or (f) a decision by a Participating Insurance Company
to disregard the voting instructions of contract owners. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their 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 irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Trust or any Fund and reinvesting such assets in a different investment
medium, including (but not limited to) another Fund of the Trust, or submitting
the question 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., annuity contract owners, life insurance policy owners,
or variable 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 (2) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account (at the Company's expense); provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the position of the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Trust and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Trust shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Trust.
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7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Trust be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement shall continue in effect only to the extent that terms
and conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a) The Company agrees to indemnify and hold harmless the Trust and
each member of the Board and each officer and employee of the Trust, the
Underwriter and each director, officer and employee of the Underwriter, and each
person, if any, who controls the Trust, or the Underwriter within the meaning of
Section 15 of the 1933 Act (collectively, an "Indemnified Parties" and
individually, "Indemnified Party," 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, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of Fund shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus or statement of additional
information 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 or prospectus or statement of additional information 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 Trust shares; or
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(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, statement of
additional information or sales literature of the Trust not
supplied by the Company, or persons under its control and other
than statements or representations authorized by the Trust or the
Underwriter) or unlawful conduct of the Company or persons under
its control, with respect to the sale or distribution of the
Contracts or Trust shares; or
(iii) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, statement of additional
information or sales literature of the Trust or any amendment
thereof or supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon and in conformity
with information furnished to the Trust 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 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 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from the
willful misfeasance, bad faith, or gross negligence on the part of any of the
Indemnified Parties in the performance of such Party's duties or by reason of
such Party's reckless disregard of obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, 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.
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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 Trust shares or the Contracts or the operation of
the Trust.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors, officers and employees and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, an "Indemnified Parties" and individually, "Indemnified Party,"
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 Underwriter) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of shares of a Fund or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact
contained in the registration statement, prospectus,
statement of additional information or sales
literature of the Trust (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, statement of
additional information for the Trust or in sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus, statement of additional
information or sales literature for the Contracts not
supplied by the Trust or persons under its control and
other than statements or representations authorized by
the Company) or unlawful conduct of the Trust,
Underwriter(s) or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained
in a registration statement, prospectus, statement of
additional information 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
-15-
(iv) arise as a result of any material failure by the Trust
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 Trust or
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities, or
litigation incurred or assessed against an Indemnified Party as such may arise
from the willful misfeasance, bad faith, or gross negligence on the part of any
of the Indemnified Parties in the performance of such Party's duties or by
reason of such Party's reckless disregard of obligations and duties under this
Agreement.
8.2(c). The Underwriter 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 Underwriter 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 Underwriter of
any such claim shall not relieve the Underwriter 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 Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice from the Underwriter
to such party of the Underwriter'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 Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter 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 each Account.
8.3. INDEMNIFICATION BY THE TRUST
8.3(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 (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.3) against any and all losses, claims, 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 become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the
-16-
gross negligence, bad faith or willful misconduct of the Board or any member
thereof, and are related to the operations of the Trust and:
(i) arise as a result of any material failure by the Trust
to provide the services and furnish the materials
under the terms of this Agreement; or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in
this Agreement or arise out of or result from any
other material breach of this Agreement by the Trust;
8.3(b). The Trust shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as may arise from 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.
8.3(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 Trust'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.
8.3(d). The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Trust.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the substantive laws of the State of
Delaware.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations
-17-
as the Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
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 by one hundred and eighty
(180) days advance written notice delivered to the other parties;
or
(b) termination by the Company by written notice to the Trust and the
Underwriter with respect to any Fund based upon the Company's
determination that shares of such Fund are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Trust and the
Underwriter with respect to any Fund in the event any of the
Fund'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 Company by written notice to the Trust and the
Underwriter in the event that any Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or
under any successor or similar provision, or if the Company
reasonably believes that any Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Trust and the
Underwriter in the event that any Fund fails to meet the
diversification requirements specified in Article VI hereof or if
the Company reasonably believes that any Fund may fail to meet
such diversification requirements; or
(f) termination by the Trust by written notice to the Company if the
Trust shall determine, in its sole judgment exercised in good
faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement
or is the subject of material adverse publicity, or
(g) termination by the Company by written notice to the Trust and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Trust or the Underwriter
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
10.2. Notwithstanding any termination of this Agreement, the Trust
shall, at the option of the Company, continue to make available additional
shares of the Trust 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"). Specifically, without
limitation, the owners of the Existing Contracts
-18-
shall be permitted to direct reallocation of investments in the Trust,
redemption of investments in the Trust and investment in the Trust upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.2 shall not apply to any terminations under Article
VII and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.3. The Company shall not redeem Trust shares attributable to the
Contracts (as distinct from Trust shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the Securities and Exchange Commission pursuant to
Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish
to the Trust the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Trust) to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Fund that was otherwise
available under the Contracts without first giving the Trust 90 days prior
written notice of its intention to do so.
10.4. Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII 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 Trust:
Rydex Variable Trust
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
If to Underwriter:
Rydex Distributors, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
If to the Company:
First Security Benefit Life Insurance and Annuity Company of New York
Attention: Chief Administrative Officer
00 Xxxx Xxx Xxx Xxxx, 0xx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
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With a copy, which shall not constitute notice hereunder, to:
Security Benefit Life Insurance Company
Attention: General Counsel
One Security Benefit Place
Topeka, Kansas 66636
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Trust must look solely to the
property of the Trust for the enforcement of any claims against the Trust as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust.
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and 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 names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
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
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California 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 insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
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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; provided, however, that an Underwriter may assign its rights under this
Agreement (but not its obligations) to any affiliate of or company under common
control with the Underwriter.
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 and its seal to be hereunder affixed hereto as of the date
specified above.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President, Secretary & General Counsel
RYDEX VARIABLE TRUST
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
President
RYDEX DISTRIBUTORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
President
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SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Shares of the Funds of the Trust shall be made available as investments
for the following Separate Accounts:
NAME OF SEPARATE ACCOUNT AND FORM NUMBER AND NAME OF CONTRACT
DATE ESTABLISHED BY BOARD OF DIRECTORS FUNDED BY SEPARATE ACCOUNT
Variable Annuity Account A FSB216
January 22, 1996
FUNDS OF THE TRUST AVAILABLE UNDER THE AGREEMENT
Rydex Arktos Rydex Medius
Rydex Banking Rydex Mekros
Rydex Basic Materials Rydex Real Estate
Rydex Biotechnology Rydex Sector Rotation
Rydex Consumer Products Rydex Titan 500
Rydex Electronics Rydex U.S. Government Bond
Rydex Energy Rydex Velocity 100
Rydex Energy Services
Rydex Financial Services
Rydex Health Care
Rydex Internet
Rydex Large Cap Europe
Rydex Large Cap Japan
Rydex Leisure
Rydex Nova
Rydex OTC
Rydex Precious Metals
Rydex Retailing
Rydex Technology
Rydex Telecommunications
Rydex Transportation
Rydex U.S. Government Money Market
Rydex Ursa
Rydex Utilities
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SCHEDULE B
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Trust. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1 The proxy proposals are given to the Company by the Trust as early as
possible before the date set by the Trust for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Trust will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2 Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call
in the number of Customers to the Trust, as soon as possible, but no later
than two weeks after the Record Date.
3 THE Trust's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Trust will provide the last Annual
Report to the Company pursuant to the terms of Section 3.3 of the
Agreement to which this Schedule relates.
4 The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Trust. The Company, at the Trust's
expense, shall produce and personalize the Voting Instruction Cards. The
Trust or its affiliate must approve the Card before it is printed. Allow
approximately 2-4 business days for printing information on the Cards.
Information commonly found on the Cards includes:
a name (legal name as found on account registration)
b address
c Trust or account number
d coding to state number of units
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e individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Trust).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5 During this time, the Trust will develop, produce and pay for the Notice
of Proxy and the Proxy Statement (one document). Printed and folded
notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Trust). Contents of envelope sent to Customers by the Company will
include:
a Voting Instruction Card(s)
b one proxy notice and statement (one document)
c return envelope (postage pre-paid by the Trust) addressed to the
Company or its tabulation agent
d "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly as
possible and that their vote is important. One copy will be supplied
by the Trust.)
e cover letter - optional, supplied by Company and reviewed and
approved in advance by the Trust
6 The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Trust.
7 Package mailed by the Company.
* The Trust must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including,) the meeting, counting backwards.
8 Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Tabulation costs shall be borne by the Trust.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Trust in the past.
9 Signatures on Card checked against legal name on account registration
which was printed on the Card.
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Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10 If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
11 There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12 The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Trust receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Trust must
review and approve tabulation format.
13 Final tabulation in shares is verbally given by the Company to the Trust
on the morning of the meeting not later than 10:00 a.m. Eastern time. The
Trust may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
14 A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Trust will provide a standard form for each Certification.
15 The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Trust will be
permitted reasonable access to such Cards.
16 All approvals and "signing-off may be done orally, but must always be
followed up in writing.
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