PARTICIPATION AGREEMENT Among Security Benefit Life Insurance Company, and Allianz Dresdner Asset Management of America, L.P
Among
Security Benefit Life Insurance Company,
and
Allianz Dresdner Asset Management of America, L.P
THIS AGREEMENT, dated as of the 25th day of April, 2002, by and among Security Benefit Life Insurance Company, (the “Company”), a stock life insurance company organized under the laws of the State
of Kansas, on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto, as may be amended from time to time (each an “Account”) and Allianz Dresdner Asset Management of America L.P. (“ADAMA”), a
Delaware limited partnership.
WHEREAS, ADAMA performs and procures the performance of various services for PIMCO Funds: Multi-Manager Series (“MMS”), a Massachusetts business trust, and PIMCO Funds: Pacific Investment
Management Series (“PIMS”), a Massachusetts business trust (MMS and PIMS are each sometimes referred to as a “Trust” and, collectively, as the “Trusts”); and
WHEREAS, MMS is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), and offers Class A shares of beneficial interest (“MMS
shares”) in separate series of funds (“MMS Funds”), each with its own investment objective or objectives and investment policies; and
WHEREAS, PIMS is registered as an open-end management investment company under the 1940 Act, and offers Class A shares of beneficial interest (“PIMS shares”) in separate series of funds (“PIMS
Funds”), each with its own investment objective or objectives and investment policies. (The MMS shares and PIMS shares are sometimes hereinafter collectively referred to as the “shares” and MMS Funds and PIMS Funds are sometimes hereinafter
collectively referred to as the “Portfolios” or individually, as a “Portfolio”); and
WHEREAS, shares of the Portfolios are registered under the Securities Act of 1933, as amended (the “1933 Act”); and
WHEREAS, ADAMA, which serves as investment adviser to the Trusts, is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Company has issued or will issue certain variable annuity contracts supported wholly or partially by the Account (the “Contracts”), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated asset account, duly established by the Company, on the date shown for such Account on Schedule A hereto, to set aside and
invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Company intends to purchase shares in the Portfolios listed in Schedule A hereto, as it may be amended from time to time by mutual written agreement (the “Designated Portfolios”), on
behalf of the Account to fund the aforesaid Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company and ADAMA agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Subject to Article IX hereof, the ADAMA agrees to make available, or cause to
be made 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 ADAMA may so provide, and (ii) the Board of Trustees of each Trust (each a “Board”) may
suspend or terminate the offering of shares of any Designated Portfolio or class thereof, if such action is required by law or by regulatory authorities having jurisdiction or if, in the sole discretion of the applicable 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. ADAMA shall cause the applicable Trust to 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, either Trust may delay
redemption of its 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) ADAMA hereby appoints, or shall cause the Company to be appointed as an agent of
each Trust for the limited purpose of receiving and accepting purchase and redemption requests on behalf of the Account (but not with respect to any Portfolio shares that may be held in the general account of the Company) for shares of those
Designated Portfolios made available hereunder, based on allocations of amounts to the Account or subaccounts thereof under the Contracts and other transactions relating to the Contracts or the Account. Receipt and acceptance of any such request
(or relevant transactional information therefor) on any day the New York Stock Exchange is open for trading and on which a Designated Portfolio calculates its net asset value (a “Business Day”) pursuant to the rules of the Securities and Exchange
Commission (“SEC”), by the Company as such limited agent of each Trust prior to the time that such Trust ordinarily calculates its net asset value as described from time to time in such Trust’s prospectus shall constitute receipt and acceptance by
the Designated Portfolio on that same Business Day, provided that such Trust receives notice of such request by 9:00 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 ADAMA of a purchase request for such shares. Payment for Designated Portfolio shares shall be made in federal funds transmitted to the applicable Trust or other designated person by wire to be received by 3:00 p.m.
Eastern Time on the Business Day the applicable Trust is notified of the purchase request for Designated Portfolio shares (unless the ADAMA 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 ADAMA otherwise determines and so advises the Company to delay the date of payment, to the extent the Trust may do so
under the 1940 Act). If federal funds are not received on time, such funds will be invested, and Designated Portfolio shares purchased thereby will be issued, as soon as practicable and the Company shall promptly, upon the ADAMA’s request,
reimburse the Trust for any charges, costs, fees, interest or other expenses incurred by the Trust in connection with any advances to, or borrowing or overdrafts by, the Trust, or any similar expenses incurred by the Trust, as a result of portfolio
transactions
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effected by the Trust based upon such purchase request. Upon receipt of federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of ADAMA.
(c) ADAMA shall cause the applicable Trust to pay for Designated Portfolio shares
redeemed by the Account or the Company 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 such Trust 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 each Trust 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 applicable Trust as described in the then-current prospectus. Neither Trust shall bear any responsibility whatsoever
for the proper disbursement or crediting of redemption proceeds to the Contract by the Company: the Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Designated Portfolio shares held or to be
held in the Company’s general account shall be effected at the net asset value per share next determined after the applicable Trust’s receipt and acceptance of such request, provided that, in the case of a purchase request, payment for shares so
requested is received by the applicable Trust in federal funds prior to close of business for determination of such value, as defined from time to time in the applicable Trust’s prospectus.
1.4. ADAMA shall use commercially reasonable efforts to make the net asset value per
share for each Designated Portfolio available to the Company by 7:00 p.m. Eastern Time each Business Day, and in any event, as soon as reasonably practicable after the net asset value per share for such Designated Portfolio is calculated, and shall
calculate such net asset value in accordance with the applicable Trust’s prospectus. 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 in accordance with such Trust’s procedures as in effect from time to time. 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 a 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 ADAMA’s expense.
1.5. ADAMA shall use commercially reasonable efforts to furnish notice (by wire or
telephone followed by written confirmation) to the Company of any income dividends or capital gain distributions payable on any Designated Portfolio shares by the record date, but in no event later than 7:00 p.m. Eastern Time on the ex-dividend
date. 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. ADAMA 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 shares shall be by book entry only. Share certificates
will not be issued to the Company or the Account. Purchase and redemption orders for shares shall be recorded in an appropriate ledger for the Account or the appropriate subaccount of the Account.
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1.7. (a) The parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the shares may be sold to other insurance companies and the cash value of the Contracts may be invested in
other investment companies.
(b) The Company shall not, without prior notice to ADAMA (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 ADAMA (unless otherwise required
by applicable law), induce Contract owners to change or modify the Trusts or change either Trust’s investment adviser.
(d) The Company shall not, without prior notice to ADAMA, induce Contract owners to
vote on any matter submitted for consideration by the shareholders of a Trust in a manner other than as recommended by the Board of such Trust.
1.8. The parties may agree, in lieu of the procedures set forth above in this
Article 1, to place and settle trades for shares through a clearing corporation. In the event that such a clearing corporation is used, the parties agree to abide by the rules of the clearing corporation.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are, or prior to
issuance will be, registered under the 1933 Act, or (b) are not registered because they are properly exempt from registration under the 1933 Act or will be offered exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the Contracts will be issued and sold in compliance in all material respects with all applicable federal securities and state securities and insurance laws 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, 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 1940 Act.
2.2. ADAMA 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 each Trust is and shall remain registered under the 1940 Act. Each 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. Each Trust shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent deemed advisable by such Trust.
2.3. ADAMA represents that each Trust is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that each Trust does and will comply in all material respects with the 1940 Act.
2.4. ADAMA represents and warrants that it is registered as an investment adviser
with the SEC.
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2.5. ADAMA represents and warrants that it, each Trust, all of their
trustees/directors, officers, employees, and other individuals or entities dealing with the money and/or securities of either Trust are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of
the applicable Trust in an amount not less than the minimum coverage as required currently by Rule 17g-1 of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.6. The Company represents and warrants that all of its directors, officers,
employees, and other individuals/entities employed or controlled by the Company dealing with the money and/or securities of the Account are covered by a blanket fidelity bond or similar coverage for the benefit of the Account, in an amount not less
than $5 million. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company. The Company agrees to hold for the benefit of the applicable Trust and to pay to the applicable Trust, any amounts lost
from larceny, embezzlement or other events covered by the aforesaid bond to the extent such amounts properly belong to the applicable Trust pursuant to the terms of this Agreement. The Company agrees to make commercially reasonable efforts to see
that this bond or another bond containing these provisions is always in effect, and agrees to notify the applicable Trust and ADAMA in the event such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. ADAMA shall provide the Company with as many printed copies of the current
prospectus, current Statement of Additional Information (“SAI”), supplements, proxy statements, and annual or semi-annual reports of each Designated Portfolio (for distribution to Contract owners with value allocated to such Designated Portfolios)
as the Company may reasonably request to deliver to existing Contract owners. If requested by the Company in lieu thereof, ADAMA 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 annually 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. Each Trust’s prospectus shall state that the current SAI for the such Trust is
available.
3.3. ADAMA shall provide the Company with information regarding each Fund’s
expenses, which information may include a table of fees and related narrative disclosure for use in any prospectus or other descriptive document relating to a Contract. The Company agrees that it will use such information 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 ADAMA.
3.4. ADAMA will pay or cause to be paid the expenses associated with text
composition, printing, mailing, distributing, and tabulation of proxy statements and voting instruction solicitation materials to Contract owners with respect to proxies related to the Trusts, consistent with applicable provisions of the 1940 Act.
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3.5. When either Trust submits proposals to shareholders, the Company shall, 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, follow one of the two procedures outlined below:
(a) If the Company chooses to solicit Contract owners itself, it shall:
(i) solicit voting instructions from owners of or participants in
the Contract;
(ii) vote the shares in accordance with instructions received
from owners of or participants in the Contract; and
(iii) vote shares of the Trust for which no instructions have
been received in the same proportion as shares of such Trust for which instructions have been received.
(b) If the Company chooses to work with the Trust’s proxy service provider, the
Company shall provide a list of Contract owners with value allocated to a Designated Portfolio as of the record date to ADAMA or its agent in order to facilitate the Trust’s solicitation of voting instructions from Contract owners. The Company
shall also provide such other information to the Trust as is reasonably necessary in order for the Trust to properly tabulate votes for Trust initiated proxies. The Company reserves the right to vote shares held in any segregated asset account in
its own right, as well as any shares held in its general account, in each case, to the extent permitted by law.
ARTICLE IV. Sales Material and Information
4.1.2020The Company shall furnish, or shall cause to be furnished, to ADAMA or its designee, each piece of sales literature or other promotional material that the Company develops and in which a
Trust (or a Designated Portfolio thereof) or ADAMA is named. No such material shall be used until approved by ADAMA or its designee, and ADAMA will use commercially reasonable efforts for it or its designee to review such sales literature or
promotional material within seven (7) Business Days after receipt of such material. ADAMA or its designee reserves the right to reasonably object to the continued use of any such sales literature or other promotional material in which a Trust (or a
Designated Portfolio thereof) or ADAMA is named, and no such material shall be used if ADAMA or its designee so objects.
4.2. The Company shall not give any information or make any representations or
statements on behalf of either Trust or concerning either Trust or ADAMA 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 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 Trusts, or in sales literature or other promotional material approved by ADAMA or its designee, except with the
permission of the ADAMA or its designee.
4.3. ADAMA 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 commercially reasonable
efforts to review such sales literature or promotional material within seven (7) 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. ADAMA shall not give any information or make any representations on behalf of
the Company or concerning the Company, the Account, or the Contracts other than the information or
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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. ADAMA 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 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 ADAMA 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, 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 ADAMA any complaints received from the Contract owners pertaining to either Trust or a Designated Portfolio.
4.7. ADAMA 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 a Trust’s registration statement, particularly any change resulting in a change to the registration statement or prospectus for any Account. ADAMA 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. ADAMA 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. ADAMA shall pay no fee or other compensation to the Company under this
Agreement.
5.2. All expenses incident to performance by ADAMA under this Agreement shall be
paid by ADAMA. ADAMA shall see to it that all shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by ADAMA, in accordance with applicable state laws prior to their
sale. ADAMA shall pay, or cause the applicable Trust to pay the expenses for the cost of registration and qualification of the shares, preparation and filing of the Trusts’ prospectus and registration statement, proxy materials and reports, setting
the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any
federal or state law, and all taxes on the issuance or transfer of the shares. ADAMA shall pay, or cause the applicable Trust to pay the expenses of distributing the Trust’s proxy materials and reports to existing Contract owners. The Fund shall
also bear the expense of printing the Fund’s prospectus which is delivered to existing Contract owners with value allocated to one or more Designated Portfolios.
5.3. The Company shall bear the expense of distributing all prospectuses and reports
to shareholders (whether for existing Contract owners or prospective Contract owners). The Company shall bear the expense of printing copies of the prospectus for the Contracts for use with prospective Contract owners. The Company shall bear the
expenses incident to (including the costs of printing) sales literature and other promotional material that the Company develops and in which a Trust (or a Designated Portfolio thereof) is named.
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ARTICLE VI. Qualification
ADAMA represents and warrants that each Portfolio of each Trust is or will be qualified as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
“Internal Revenue Code,”) and that it will maintain such qualification (under Subchapter M or any successor or similar provisions) and that ADAMA will notify the Company immediately upon having a reasonable basis for believing that any Portfolio
has ceased to so qualify or that it might not so qualify in the future.
ARTICLE VII. Indemnification
7.1. Indemnification by the Company
7.1(a). The Company agrees to indemnify and hold harmless each Trust, ADAMA and each
of their trustees/directors and officers, and each person, if any, who controls either Trust or ADAMA within the meaning of Section 15 of the 1933 Act or who is under common control with either Trust or ADAMA (collectively, the “Indemnified
Parties” for purposes of this Section 7.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the registration statement, prospectus (which shall include a written description of a Contract that is not registered under the 1933 Act), or SAI for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of either Trust or ADAMA 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 Trusts 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 either 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 information furnished to either Trust by or on behalf of the Company; or
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(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company;
as limited by and in accordance with the provisions of Sections 7.1(b) and 7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of its obligations or duties under this Agreement.
7.1(c). The Company shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim
shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to the party named in the action. After notice from the Company to such party of
the Company’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
7.1(d). The Indemnified Parties will promptly notify the Company of the commencement
of any litigation or proceedings against them in connection with the issuance or sale of the shares or the Contracts or the operation of either Trust.
7.2. Indemnification by the ADAMA
7.2(a). ADAMA agrees to indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 7.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the registration statement or prospectus or SAI or sales literature of either 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
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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 ADAMA or either Trust by or on
behalf of the Company for use in the registration statement, prospectus or SAI for either Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or shares; or
(ii) arise out of or as a result of statements or representations
by or on behalf of either Trust or ADAMA (other than statements or representations contained in the registration statement, prospectus, SAI or sales literature for the Contracts not supplied by either Trust or ADAMA) or wrongful conduct of ADAMA or
either Trust with respect to the sale or distribution of the Contracts or 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 ADAMA or either Trust; or
(iv) arise as a result of any failure by either Trust or ADAMA to
provide the services and furnish the materials under the terms of this Agreement (including a failure of any Portfolio of either Trust, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by or on behalf of ADAMA or either Trust in this Agreement or arise out of or result from any other material breach of this Agreement by or on behalf of ADAMA or either Trust;
as limited by and in accordance with the provisions of Sections 7.2(b) and 7.2(c) hereof.
7.2(b). ADAMA shall not be liable under this indemnification provision with respect
to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance or such Indemnified
Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations and duties under this Agreement or to the Company or the Account, whichever is applicable.
7.2(c). ADAMA 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 ADAMA 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 ADAMA of any such claim shall not relieve ADAMA 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, ADAMA will be entitled to participate, at its own expense, in
the defense thereof. ADAMA also shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to the party named in the action. After notice from ADAMA to such party of ADAMA’s election to assume the defense thereof, the
Indemnified Party shall bear the fees and
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expenses of any additional counsel retained by it, and ADAMA will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
7.2(d). The Company agrees promptly to notify ADAMA 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 VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof interpreted under
and in accordance with the laws of the State of Delaware, without regard to the conflict of laws provisions thereof.
8.2. This Agreement shall be subject to the provisions of the 1933 and 1940 Acts as
well as the Exchange Act of 1934, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant, and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE IX. Termination
9.1. This Agreement shall continue in full force and effect until the first to occur
of:
(a) termination by any party, for any reason with respect to some or all Designated
Portfolios, by four (4) months advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to ADAMA based upon the Company’s
determination that shares of a Trust are not reasonably available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to ADAMA 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 ADAMA in the event that formal administrative proceedings are
instituted against the Company by the National Association of Securities Dealers, Inc. (the “NASD”), the SEC, the Insurance Commissioner or like official of any state or any other regulatory body regarding the Company’s duties under this Agreement
or related to the sale of the Contracts, the operation of any Account, or the purchase of the Designated Portfolios’ shares; provided, however, that ADAMA determines in its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal administrative proceedings
are instituted against either Trust or ADAMA by the SEC or any state securities department or any other regulatory body; provided, however, that the Company determines in its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of ADAMA to perform its obligations under this Agreement; or
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(f) termination by the Company by written notice to ADAMA in the event that any
Designated Portfolio ceases to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, or if the Company reasonably believes that any such Portfolio may fail to so qualify or comply; or
(g) termination by ADAMA by written notice to the Company, if ADAMA 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 ADAMA, if the Company shall
determine, in its sole judgment exercised in good faith, that either Trust or ADAMA 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 either Trust in accordance with the terms of the Contracts, provided that the Company has given at least 45 days prior written notice to ADAMA of the date of substitution.
9.2. Notwithstanding any termination of this Agreement, ADAMA shall, at the option
of the Company, for a period not to exceed 2 years after such termination, continue to make available additional shares of the Trusts pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as “Existing Contracts”), unless the Company seeks an order pursuant to Section 26(b) of the 1940 Act to permit the substitution of other securities for the shares of the Designated Portfolios.
Specifically, the owners of the Existing Contracts may be permitted, during such two-year period, to reallocate investments in the applicable Trust, redeem investments in the applicable Trust and/or invest in the applicable Trust upon the making of
additional purchase payments under the Existing Contracts (subject to any such election by the Company).
9.3. Notwithstanding any termination of this Agreement, each party’s obligation
under Article VII to indemnify the other parties shall survive.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified mail or by recognized overnight courier 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.
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If to the Company:
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Security Benefit Life Insurance Company
Attention General Counsel One Security Benefit Place Topeka, Kansas 66636 – 0001 |
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If to ADAMA:
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Allianz Dresdner Asset Management of America L.P.
0000 Xxxxxxxx Xx. – 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention Chief Administrative Officer
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ARTICLE XI. Miscellaneous
11.1. All persons dealing with the either Trust 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 ADAMA for the enforcement of any claims against such Trust. The parties agree that neither the
Board, officers, agents or shareholders of either Trust assume any personal liability or responsibility for obligations entered into by or on behalf of any Trust.
11.2. Subject to the requirements of legal process and regulatory authority, ADAMA
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 (i) without the express written consent of the affected party until such time as such information has come into the public domain or (ii) as required by law, court order or
regulation or as requested by any regulatory agency or governmental body or agency having jurisdiction over the disclosing party.
11.3. The captions in this Agreement are included for convenience of reference only
and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect.
11.4. This Agreement may be executed simultaneously in counterparts, each of which
taken together shall constitute one and the same instrument.
11.5. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby.
11.6. Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD, and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
11.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
11.8. This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto except that ADAMA , may assign this Agreement at any time without consent to its affiliate PIMCO Funds Advisors, LLC (“PIMCO”) provided, (i) PIMCO and ADAMA are under
common control at the time of such assignment and (ii) by the terms of such assignment, ADAMA agrees to remain liable to the Company for ADAMA’s financial obligations under this Agreement.
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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.
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Security Benefit Life Insurance Company
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By its authorized officer
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By:
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Title:
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Senior Vice President & CMO
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Date:
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April 25, 2002
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Allianz Dresdner Asset Management of America L.P.
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By its authorized officer
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By:
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Title:
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Managing Director
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Date:
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April 29, 2002
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April 25, 2002
Schedule A
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Account(s)
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Contract(s)
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Designated Portfolio(s)
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V6029
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PIMCO Funds: Pacific Investment Management Series- High Yield Fund, Class A shares
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