Unassociated DocumentEX-99.(8)(AA) 13 ex998ad.htm PARTICIPATION AGREEMENT -
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ & COMPANY, INCORPORATED
PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 31st day of October, 2010, by and among The ▇▇▇▇▇
Portfolios (the "Trust"), an open-end management investment company organized as
a Massachusetts business trust, First Security Benefit Life Insurance and
Annuity Company of New York, a life insurance company organized as a
corporation under the laws of the State of New York (the "Company"), on its own
behalf and on behalf of each segregated asset account of the Company set forth
in Schedule A, as may be updated from time to time for the convenience of the
parties (the "Accounts"), and ▇▇▇▇ ▇▇▇▇▇ & Company, Incorporated, a Delaware
corporation, the Trust's distributor (the "Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange Commission
(the "Commission") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be used as an
investment vehicle for separate accounts established for variable life insurance
policies and variable annuity contracts to be offered by life insurance
companies which have entered into fund participation agreements with the Trust
(the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided into the
following series, which are available for purchase by the Company for the
Accounts: with two classes of shares (Class I-2 and Class S Shares) ▇▇▇▇▇
Capital Appreciation Portfolio, ▇▇▇▇▇ Large Cap Growth Portfolio, ▇▇▇▇▇ Mid Cap
Growth Portfolio, and ▇▇▇▇▇ Small Cap Growth Portfolio; and with one class of
shares (Class S Shares) ▇▇▇▇▇ Balanced Portfolio, ▇▇▇▇▇ Growth & Income
Portfolio, and ▇▇▇▇▇ ▇▇▇▇ Cap Growth Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated February 17,
1989 (File No. 812-7076), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Portfolios (as defined below) of
the Trust to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933 Act certain
variable life insurance policies and variable annuity contracts to be issued by
the Company under which the Portfolios are to be made available as investment
vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act unless an exemption from registration under
the 1940 Act is available and the Trust has been so advised;
WHEREAS, the Company desires to use shares of the specified class or classes of
the portfolios indicated on Schedule A (the Portfolios) as investment vehicles
for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the parties agree as
follows:
ARTICLE I.
Purchase and Redemption of Trust Portfolio Shares
1.1.For purposes of this Article I, the Company shall be the Trust's
agent for the receipt from each account of purchase orders and requests
for redemption pursuant to the Contracts relating to each Portfolio,
provided that the Company notifies the Trust of such purchase orders and
requests for redemption by 9:30 a.m. Eastern time on the next following
Business Day, as defined in Section 1.3.
1.2.The Trust shall make shares of a specified class or classes of the
Portfolios available to the Accounts at the net asset value next computed
after receipt of a purchase order by the Trust (or its agent), as
established in accordance with the provisions of the then current
prospectus of the Trust describing Portfolio purchase procedures. The
Company will transmit orders from time to time to the Trust for the
purchase and redemption of shares of the Portfolios. The Trustees of the
Trust (the "Trustees") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Trustees acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, such action is deemed in the best interests of the
shareholders of such Portfolio.
1.3.The Company shall pay for the purchase of shares of a Portfolio on
behalf of an Account with federal funds to be transmitted by wire to the
Trust, with the reasonable expectation of receipt by the Trust by 2:00
p.m. Eastern Time on the next Business Day after the Trust (or its agent)
receives the purchase order. 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 for this purpose.
"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 Commission.
1.4.The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at the
shares net asset value next computed after receipt by the Trust (or its
agent) of the request for redemption, as established in accordance with
the provisions of the then current prospectus of the Trust describing
Portfolio redemption procedures. The Trust shall make payment for such
shares in the manner established from time to time by the Trust. Proceeds
of redemption with respect to a Portfolio will normally be paid to the
Company for an Account in federal funds transmitted by wire to the Company
by order of the Trust with the reasonable expectation of receipt by the
Company by 2:00 p.m. Eastern time on the next
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Business Day after the receipt by the Trust (or its agent) of the request
for redemption. Such payment may be delayed if, for example, the
Portfolio's cash position so requires or if extraordinary market
conditions exist, but in no event shall payment be delayed for a greater
period than is permitted by the 1940 Act. The Trust reserves the right to
suspend the right of redemption, consistent with Section 22(e) of the 1940
Act and any rules thereunder.
1.5.Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 on any Business Day may be netted
against one another for the purpose of determining the amount of any wire
transfer.
1.6.Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Portfolio shares purchased from the Trust will be recorded in
the appropriate title for each Account or the appropriate subaccount of
each Account.
1.7.The Trust shall furnish, on or before the ex-dividend date, notice to
the Company of any income dividends or capital gain distributions payable
on the applicable class of shares of any Portfolio of the Trust. The
Company hereby elects to receive all such income dividends and capital
gain distributions as are payable on a Portfolio's shares in additional
shares of the same class of that Portfolio. The Trust shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions.
1.8.The Trust shall calculate the net asset value of each class of each
Portfolio on each Business Day, as defined in Section 1.3. The Trust
shall make the net asset value per share for each class of each Portfolio
available to the Company or its designated agent on a daily basis as soon
as reasonably practical after the net asset values are calculated and
shall use its best efforts to make such net asset values are available to
the Company by 6:30 p.m. Eastern time each Business Day.
1.9.The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their segregated asset accounts, to
the Fund Sponsor or its affiliates and to such other entities as may be
permitted by Section 817(h) of the Internal Revenue Code of 1986, as
amended (the Code), the rules and regulations thereunder, or judicial or
administrative interpretations thereof. No shares of any Portfolio will
be sold directly to the general public. The Company agrees that it will
use Trust shares only for the purposes of funding the Contracts through
the Accounts listed in Schedule A, as updated from time to time for the
convenience of the parties.
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1.10.The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting
and conflicts of interest corresponding materially to those contained in
Section 2.11 and Article IV of this Agreement.
1.11The parties may agree, in lieu of the procedures set forth above in
this Article 1, to place and settle trades for Trust 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.
Obligations of the Parties
2.1.The Trust shall prepare and be responsible for filing with the
Commission and any state regulators requiring such filing all shareholder
reports, notices, proxy materials (or similar materials such as voting
instruction solicitation materials), prospectuses and statements of
additional information of the Trust. The Trust shall bear the costs of
registration and qualification of shares of the Portfolios, preparation
and filing of the documents listed in this Section 2.1 and all taxes to
which an issuer is subject on the issuance and transfer of its shares.
2.2.The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Trust to the Contract owners as required to be
distributed to such Contract owners under applicable federal or state law.
2.3.The Trust shall provide such documentation (including a final copy of
the Trust's prospectus as set in type or in camera-ready copy) and other
assistance as is reasonably necessary in order for the Company to print
together in one document the current prospectus for the Contracts issued
by the Company and the current prospectus for the Trust. Expenses will
be borne in accordance with Schedule C.
2.4.The Trust and the Distributor shall provide as many copies of the
Trust's current Statement of Additional Information ("SAI") as the Company
may reasonably request in connection with offering the Contracts issued by
the Company. Expenses will be borne in accordance with Schedule C.
2.5.The Trust shall provide the Company with printed copies of its proxy
material, periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably request,
with expenses to be borne in accordance with Schedule C hereof. If
requested by the Company in lieu thereof, the Trust shall provide such
documentation (including a final copy of the Trust's proxy materials,
periodic reports to shareholders and other communications to shareholders,
as set in type or in camera-ready copy) and other assistance as reasonably
necessary in order for the Company to print such shareholder
communications for distribution to Contract owners.
2.6. The Company agrees and acknowledges that the Distributor is the
sole owner of the name and ▇▇▇▇ "▇▇▇▇▇" and that all use of any designation
comprised in whole or part of such name or
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▇▇▇▇ under this Agreement shall inure to the benefit of the Distributor. Except
as provided in Section 2.5, the Company shall not use any such name or ▇▇▇▇ on
its own behalf or on behalf of the Accounts or Contracts in any registration
statement, advertisement, sales literature or other materials relating to the
Accounts or Contracts without the prior written consent of the Distributor,
which consent shall not be unreasonably withheld. Upon termination of this
Agreement for any reason, the Company shall cease all use of any such name or
▇▇▇▇ as soon as reasonably practicable.
2.7.Upon request, the Company shall furnish, or cause to be furnished, to
the Trust or its designee a copy of each Contract prospectus and/or
statement of additional information describing the Contracts, each report
to Contract owners, proxy statement, application for exemption or request
for no-action letter in which the Trust or the Distributor is named
contemporaneously with the filing of such document with the Commission.
The Company shall furnish, or shall cause to be furnished, to the Trust or
its designee each piece of sales literature or other promotional material
in which the Trust or the Distributor 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 three Business Days after
receipt of such material.
2.8.The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the
Trust or the Distributor in connection with the sale of the Contracts
other than information or representations contained in and accurately
derived from the registration statement or prospectus for the Trust shares
(as such registration statement and prospectus may be amended or
supplemented from time to time), annual and semi-annual reports of the
Trust, Trust-sponsored proxy statements, or in sales literature or other
promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the prior
written permission of the Trust, the Distributor or their respective
designees. The Trust and the Distributor agree to respond to any request
for approval on a prompt and timely basis, but in no event not longer than
five (5) Business Days after receipt of request for approval. The Company
shall adopt and implement procedures reasonably designed to ensure that
"broker only" materials including information therein about the Trust or
the Distributor are not distributed to existing or prospective Contract
owners.
2.9.The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information about the Trust, the Portfolios and
the Distributor, in such form as the Company may reasonably require, as
the Company shall reasonably request in connection with the preparation of
registration statements, prospectuses and annual and semi-annual reports
pertaining to the Contracts.
2.10.The Trust and the Distributor shall not give, and agree that no
affiliate of either of them shall give, any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Contracts (as such registration statement
and prospectus may be amended or supplemented from time to time), or in
materials approved by the
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Company for distribution including sales literature or other promotional
materials, except as required by legal process or regulatory authorities
or with the prior written permission of the Company. The Company agrees
to respond to any request for approval on a prompt and timely basis, but
in no event not longer than five (5) Business Days after receipt of
request for approval.
▇.▇▇.▇▇ long as, and to the extent that, the Commission interprets the
1940 Act to require pass-through voting privileges for Contract owners,
the Company shall, at the Companys option, follow one of the two methods
described below to provide pass-through voting privileges to Contract
owners whose cash values are invested, through the registered Accounts, in
shares of one or more Portfolios of the Trust:
(a) Provide a list of Contract owners as of the record date to the
Trust or its agent in order to permit the Trust to send solicitation material
and gather voting instructions from Contract owners on behalf of the Company.
The Company shall also provide such other information to the Trust as is
reasonably necessary in order for the Trust to properly tabulate votes for Trust
initiated proxies. In the event that the Company chooses this option, the Fund
shall be responsible for the properly echo voting shares of a Portfolio for
which no voting instructions have been received.
(b) Solicit voting instructions from Contract owners itself and vote
shares of the Portfolio in accordance with instructions received from Contract
owners. The Company shall vote the shares of the Portfolios for which no
instructions have been received in the same proportion as shares of the
Portfolio for which instructions have been received.
The Company and its agents will in no way recommend or oppose or interfere with
the solicitation of proxies for Portfolio shares held to fund the Contacts
without the prior written consent of the Trust, which consent may be withheld in
the Trust's sole discretion.
▇.▇▇.▇▇ compensation shall be paid by the Trust to the Company, or by the
Company to the Trust, under this Agreement (except for specified expense
reimbursements). However, nothing herein shall prevent the parties hereto
from otherwise agreeing to perform, and arranging for appropriate
compensation for, other services relating to the Trust, the Accounts or
both, if so specified in Schedule B hereto.
ARTICLE III.
Representations and Warranties
3.1.The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New
York and that it has legally and validly established each Account as a
segregated asset account under such law as of the date set forth in
Schedule A, and that Security Distributors, Inc., the principal
underwriter for the Contracts, is registered as a broker-dealer under the
Securities Exchange Act of 1934 and is a member in good standing of
Financial Industry Regulatory Authority
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(FINRA).
3.2.The Company represents and warrants that it 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
and cause each Account to remain so registered to serve as a segregated
asset account for the Contracts, unless an exemption from registration is
available.
3.3.The Company represents and warrants that the Contracts will be
registered under the 1933 Act unless an exemption from registration is
available prior to any issuance or sale of the Contracts; the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance law suitability
requirements.
3.4.The Trust represents and warrants that it is duly organized and
validly existing under the laws of the Commonwealth of Massachusetts and
that it does and will comply in all material respects with the 1940 Act
and the rules and regulations thereunder.
3.5.The Trust and the Distributor represent and warrant that the Portfolio
shares offered and sold pursuant to this Agreement will be registered
under the 1933 Act and sold in accordance with all applicable federal and
state laws, and the Trust shall be registered under the 1940 Act prior to
and at the time of any issuance or sale of such shares. The Trust shall
amend its registration statement 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 its shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust.
3.6.The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements for variable
annuity, endowment or life insurance contracts set forth in Section 817(h)
of the Code, and the rules and regulations thereunder, including without
limitation Treasury Regulation 1.817-5, and will notify the Company
immediately upon having a reasonable basis for believing any Portfolio has
ceased to comply or might not so comply and will immediately take all
reasonable steps to adequately diversify the Portfolio to achieve
compliance within the grace period afforded by Regulation 1.817-5.
3.7.The Trust represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it
will make every effort to maintain such qualification and will notify the
Company immediately upon having a reasonable basis for believing it has
ceased to so qualify or might not so qualify in the future.
3.8.The Trust and Distributor represent and warrant that each of its
directors, officers, employees and others dealing with the money or
securities, or both, of a Portfolio shall at all times be covered by a
blanket fidelity bond or similar coverage for the benefit of the Trust in
an amount not less than the minimum coverage required by Rule 17g-1 or
other applicable regulations under the 1940 Act. Such bond shall include
coverage for larceny
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and embezzlement and be issued by a reputable bonding company.
3.9.The Distributor represents that it is duly organized and validly
existing under the laws of the State of Delaware and that it is
registered, and will remain registered, during the term of this Agreement,
as a broker-dealer under the Securities Exchange Act of 1934 and is a
member in good standing of FINRA.
ARTICLE IV.
Potential Conflicts
4.1.The parties acknowledge that a Portfolio's shares may be made
available for investment to other Participating Insurance Companies. In
such event, the Trustees will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the contract
owners of all Participating Insurance Companies. A material
irreconcilable conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; or (e) a difference in
voting instructions given by variable annuity contract and variable life
insurance contract owners. The Trust shall promptly inform the Company of
any determination by the Trustees that a material irreconcilable conflict
exists and of the implications thereof.
4.2.The Company agrees to report promptly any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist
the Trustees in carrying out their responsibilities under the Shared
Funding Exemptive Order by providing the Trustees with all information
reasonably necessary for and requested by the Trustees to consider any
issues raised. All communications from the Company to the Trustees may be
made in care of the Trust.
4.3.If it is determined by a majority of the disinterested Trustees, that
a material irreconcilable conflict exists that affects the interests of
contract owners, the Company shall, in cooperation with other
Participating Insurance Companies whose contract owners are also affected,
at its own expense and to the extent reasonably practicable (as determined
by the Trustees) take whatever steps are necessary to remedy or eliminate
the material irreconcilable conflict, which steps could include: (a)
withdrawing the assets allocable to some or all of the Accounts from the
Trust or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Trust, or submitting the question of whether or not 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 contract 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 (b) establishing a new
registered management investment company or managed separate account.
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4.4.If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts
with 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 (6) months after the
Trustees inform the Company in writing that the Trust has determined that
such decision has created a material irreconcilable 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 Trustees. Until the end of
such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares
of the Trust.
4.5.For purposes of Section 4.3 through 4.5 of this Agreement, a
majority of the disinterested Trustees shall determine whether any
proposed action adequately remedies any material irreconcilable conflict,
but in no event will the Trust be required to establish a new funding
medium for any Contract. The Company shall not be required 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 material irreconcilable conflict. In the event that the
Trustees determine that any proposed action does not adequately remedy any
material irreconcilable conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six
(6) months after the Trustees inform the Company in writing of the
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested
Trustees.
4.6.The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that
the Trustees may fully carry out the duties imposed upon them by the
Shared Funding Exemptive Order, and said reports, materials and data shall
be submitted more frequently if reasonably deemed appropriate by the
Trustees.
4.7.If and to the extent that Rule 6e-3(T) is 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 the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule
6e-3(T), as amended, or Rule 6e-3, as adopted, to the extent such rules
are applicable.
ARTICLE V.
Compliance
5.1.The Trust, the Distributor and the Company shall comply with all
applicable federal and state laws, rules, and regulations, in conducting
their activities, including but not limited to: federal and state
securities laws; all rules, regulations and interpretations by
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governmental and regulatory bodies and self-regulatory organizations
having jurisdiction over the Trust, the Distributor and the Company,
including but not limited to the Commission and FINRA; all rules,
regulations, and procedures of the National Securities Clearing
Corporation (the NSCC); and all federal and state banking and insurance
laws, as applicable. The Distributor shall have full authority to take
such action as the Distributor may deem advisable with respect to all
matters pertaining to the continuous offering, distribution and redemption
of shares of the Trust and this Agreement.
5.2.The Distributor will inform the Company as to the states and
jurisdictions which, to the best information and belief of the
Distributor, the shares of the Trust have been registered for sale or are
exempt from the requirement of the respective securities laws of such
states and jurisdictions. The Distributor assumes no responsibility or
obligation as to the Companys right to sell shares of the Trust in any
state or jurisdiction.
5.3.The parties each acknowledge that certain information made available
to the other party hereunder may be deemed nonpublic personal information
under federal or state privacy laws (as amended) and the rules and
regulations promulgated thereunder (collectively, the "Privacy Laws").
The parties hereby agree (a) not to disclose or use such information
except as required to carry out their respective duties under this
Agreement or as otherwise permitted by the Privacy Laws in their ordinary
course of business; (b) to establish and maintain written procedures
reasonably designed to assure the security and privacy of all such
information and (c) to cooperate with each other and provide reasonable
assistance in ensuring compliance with such Privacy Laws to the extent
applicable to either or both of the parties. The obligations contained in
this Section 5.3 shall survive the termination of this Agreement.
5.4.Each party shall comply with Title III of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA PATRIOT) Act of 2001, as amended, and the
rules promulgated thereunder, and all federal, state, self-regulatory
organization and Commission anti-money laundering laws, rules, and
regulations.
5.5.The parties acknowledge that neither the Distributor nor the Trust
shall compensate the Company for promoting or selling the shares of the
Trust by having the Trusts portfolio securities transactions or any form
of remuneration resulting from such transactions directed to the Company
or the underwriter for the Contracts. Each party further agrees that it
has not entered into any agreement with or on behalf of the Trust pursuant
to which the Trust or any affiliate is expected to direct portfolio
transactions or remuneration received in connection therewith to any party
to compensate that party for promoting or selling shares of the Trust.
The Trust has implemented policies and procedures reasonably designed to
ensure compliance with Rule 12b-1(h) under the 1940 Act.
5.6.The Company agrees that it will make no offers or sales of shares of
the Trust in any foreign jurisdiction, except with the express written
consent of the Distributor.
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5.7.The Company agrees to notify the Distributor within a reasonable time
of any claim or complaint or any enforcement action or other proceeding
with respect to shares of the Trust offered hereunder against the Company
or its affiliates, employees or agents. The Company agrees to cooperate
with the Distributor in resolving any such customer complaint. The
Company further agrees to cooperate in any regulatory examination of the
Distributor to the extent that examination involves the Agreement or the
Companys sales of shares of the Trust.
ARTICLE VI.
Frequent or Disruptive Trading in Shares
6.1.The Trust has adopted written policies and procedures reasonably
designed to detect and prevent frequent and/or disruptive trading in
shares of the Trust. In addition to effecting its own policies and
procedures to detect and prevent frequent and/or disruptive trading in
shares of the Trust, the Company agrees to cooperate with the Distributor
to effect the Trusts policies and procedures as follows:
6.2.The Company agrees, on its own behalf, and on behalf of its
affiliates, to provide the following information to the Distributor, or
its designee:
(i)the taxpayer identification number (TIN) of all shareholders that
purchased, redeemed, transferred or exchanged shares of the Trust through
an account maintained by the Company during the period covered by the
request;
(ii) the amount, date, name or other identifier of any investment
professional associated with the shareholder account of such shareholder
purchases, redemptions, transfers and exchanges;
(iii)the transaction type of every purchase, redemption, transfer or
exchange of shares of the Trust held through the Company during the period
covered by the request; and
(iv)any other data mutually agreed upon in writing.
6.3.Requests to provide information shall set forth the specific period
for which transaction information is sought. However, unless otherwise
agreed to by the Company, any such request shall not cover a period of
more than ninety (90) consecutive business days and the Company shall not
be required to provide such shareholder information more frequently than
daily.
The Company agrees to transmit the requested information described in Section
6.2 above, to the extent such information is contained in the Companys books
and records, to the Distributor or its designee promptly, but in any event not
later than ten (10) business days, after receipt of the request. If the
requested information is not contained
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in the Companys books and records, the Company agrees to use reasonable efforts
to promptly obtain and transmit the requested information.
▇.▇.▇▇ the extent reasonably practicable, the format for any transaction
information provided to the Distributor by the Company should be
consistent with the NSCC Standardized Data Reporting Format. The Company
shall inform the Distributor as soon as practicable if the format of the
transaction information changes.
6.5.The Distributor specifically agrees not to use the information
received for marketing or any similar purpose without the prior written
consent of the Company.
6.6.The Company agrees to take reasonable steps to execute written
instructions from the Distributor to restrict or prohibit further
purchases or exchanges of shares of the Trust by a shareholder who has
been identified by the Distributor as having engaged in transactions of
the Trusts shares (directly or indirectly through the Companys account)
that violate policies established by the Trust for the purpose of
eliminating or reducing any dilution of the value of the outstanding
shares of the Trust. Instructions must include the following:
the TIN; and
the specific restriction(s) to be executed, including the length of
time such restriction shall remain in place.
The Company agrees to use reasonable efforts to execute instructions as soon as
reasonably practicable, but not later than five (5) business days after receipt
of the instructions. The Company shall provide written confirmation to the
Distributor as soon as reasonably practicable that instructions have been
executed.
ARTICLE VII.
Indemnification
7.1.Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Distributor, the Trust and each of its Trustees,
officers, employees and agents and each person, if any, who controls the
Trust within the meaning of Section 15 of the 1933 Act (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, which consent shall
not be unreasonably withheld) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage, liability
or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified Parties may
become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses are related to the sale or acquisition
of the Contracts or Trust shares and:
(a)arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Contracts or in the Contracts themselves
or in sales literature generated or
12
approved by the Company on behalf of the Contracts or Accounts (or any
amendment or supplement to any of the foregoing) (collectively, "Company
Documents" for the purposes of this Article VII), 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 indemnity 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 was accurately
derived from written information furnished to the Company by or on behalf
of the Trust or Distributor for use in Company Documents or otherwise for
use in connection with the sale of the Contracts or Trust shares; or
(b)arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from
Trust Documents as defined in Section 7.2(a)) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
acquisition of the Contracts or Portfolio shares; or
(c)arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined in
Section 7.2(a) 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 statement or omission was made
in reliance upon and accurately derived from written information furnished
to the Trust or Distributor by or on behalf of the Company; or
(d)arise out of or result from any failure by the Company to provide the
services or furnish the materials required under the terms of this
Agreement; or
(e)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; or
(f)arise out of or result from the provision by the Company to the Trust
of insufficient or incorrect information regarding the purchase or sale of
shares of any Portfolio, or the failure of the Company to provide such
information on a timely basis.
7.2.Indemnification by the Distributor. The Distributor agrees to
indemnify and hold harmless the Company and each of its directors,
officers, employees, and agents and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for the 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 Distributor, which consent
shall not be unreasonably withheld) or expenses (including the reasonable
costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in
13
connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common
law or otherwise, insofar as such Losses are related to the sale or
acquisition of the Contracts or Trust shares and:
(a)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 for the Trust (or any amendment or supplement
thereto) (collectively, "Trust Documents" for the purposes of this Article
VII), 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 indemnity 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 was accurately derived from written information
furnished to the Distributor or the Trust by or on behalf of the Company
for use in Trust Documents or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(b)arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from
Company documents) or wrongful conduct of the Distributor or Trust or
persons under its control, with respect to the sale or acquisition of the
Contracts or Portfolio shares; or
(c)arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company documents 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 statement or omission was made in reliance upon and
accurately derived from written information furnished to the Company by or
on behalf of the Distributor or Trust; or
(d)arise out of or result from any failure by the Distributor or the
Trust to provide the services or furnish the materials required under the
terms of this Agreement; or
(e)arise out of or result from any material breach of any representation
and/or warranty made by the Distributor or the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Distributor or the Trust.
7.3.None of the Company, the Trust or the Distributor shall be liable
under the indemnification provisions of Sections 7.1 or 7.2, as
applicable, with respect to any Losses incurred or assessed against an
Indemnified Party that 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 or duties under this Agreement.
14
7.4.None of the Company, the Trust or the Distributor shall be liable
under the indemnification provisions of Sections 7.1 or 7.2, as
applicable, with respect to any claim made against an Indemnified party
unless such Indemnified Party shall have notified the other party in
writing within a reasonable time after the summons, or other first written
notification, giving information of the nature of the claim that has been
served upon or otherwise received by such Indemnified Party (or after such
Indemnified Party shall have received notice of service upon or other
notification to any designated agent), but failure to notify the party
against whom indemnification is sought of any such claim shall not relieve
that party from any liability which it may have to the Indemnified Party
in the absence of Sections 7.1 and 7.2.
▇.▇.▇▇ case any such action is brought against an Indemnified Party, the
indemnifying party shall be entitled to participate, at its own expense,
in the defense of such action. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice from the
indemnifying party to the Indemnified Party of an election to assume such
defense, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the indemnifying party will not be
liable to the Indemnified 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.
ARTICLE VIII.
Termination
8.1.This Agreement shall terminate:
(a)at the option of any party upon six (6) months advance written notice
to the other parties, unless a shorter time is agreed to by the parties,
provided however that if the Trusts Plan of Distribution pursuant to Rule
12b-1 under the 1940 Act is terminated by the Trustees of the Trust,
payments under such plan may terminate earlier;
(b)at the option of the Trust or the Distributor by written notice to
the other parties if the Contracts issued by the Company cease to qualify
as annuity contracts or life insurance contracts, as applicable, under the
Code or if the Contracts are not registered, issued or sold in accordance
with applicable state and/or federal law; or
(c)at the option of any party by written notice to the other party upon
a determination by a majority of the disinterested Trustees of the Trust
that a material irreconcilable conflict exists; or
(d)at the option of the Company by written notice to the other parties
upon institution of formal proceedings against the Trust or the
Distributor by FINRA, the Commission, or any state securities or insurance
department or any other
15
regulatory body regarding the Trust's or the Distributor's duties under
this Agreement or related to the sale of Trust shares or the operation of
the Trust; or
(e)at the option of the Company by written notice to the other parties
if the Trust or a Portfolio fails to meet the diversification requirements
specified in Section 3.6 hereof; or
(f)at the option of the Company by written notice to the other parties
if shares of the Portfolios are not reasonably available to meet the
requirements of the Variable Contracts issued by the Company, as
determined by the Company, and upon prompt notice by the Company to the
other parties; or
(g)at the option of the Company by written notice to the other parties
in the event any of the shares of the Portfolio 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 Variable Contracts issued or to be issued by the Company; or
(h)at the option of the Company by written notice to the other parties
if the Portfolio fails to qualify as a Regulated Investment Company under
Subchapter M of the Code; or
(i)at the option of the Distributor by written notice to the other
parties if it 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.
8.2.Notwithstanding any termination of this Agreement, the Trust shall,
at the option of the Company, continue to make available additional shares
of any Portfolio and redeem shares of any Portfolio pursuant to the terms
and conditions of this Agreement for all Contracts in effect on the
effective date of termination of this Agreement.
8.3.The provisions of Article VII and Section 5.3 shall survive the
termination of this Agreement, and the provisions of Article IV and
Section 2.9 shall survive the termination of this Agreement as long as
shares of the Trust are held on behalf of Contract owners in accordance
with Section 8.2.
ARTICLE IX.
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.
16
If to the Trust:
The ▇▇▇▇▇ Portfolios
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
If to the Distributor:
▇▇▇▇ ▇▇▇▇▇ & Company, Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
If to the Company:
First Security Benefit Life Insurance and
Annuity Company of New York
One Security Benefit Place
Topeka, KS 66636-0001
Attn: General Counsel
ARTICLE X.
Miscellaneous
10.1.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.
10.2.This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
10.3.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.
10.4.This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New
York. It shall also be subject to the provisions of the federal
securities laws and the rules and regulations thereunder and to any orders
of the Commission granting exemptive relief therefrom and the conditions
of such orders. Copies of any such orders shall be promptly forwarded by
the Trust to the Company.
10.5.All liabilities of the Trust arising, directly or indirectly, under
this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Trust and no Trustee, officer, agent or
holder of shares of beneficial interest of the Trust shall be personally
liable for any such liabilities.
17
10.6.Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Commission,
FINRA 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.
10.7.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.
10.8.This Agreement shall not be exclusive in any respect.
10.9.Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the
other party.
10.10. No provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed
by both parties.
10.11If Any party to this Agreement is unable to perform its obligations
hereunder because of acts of God, strikes, equipment or transmission
failure or other causes beyond such partys reasonable control, such party
shall not be liable to any other party for any damages resulting from such
failure to perform or otherwise from such causes; provided, however, that
each party will take all reasonable steps to minimize such damage.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Participation Agreement as of the date and year first above
written.
▇▇▇▇ ▇▇▇▇▇ & Company, Incorporated
By: /s/ Illegible
Name: Illegible
Title: Illegible
First Security Benefit Life Insurance And Annuity Company of New York
By:_/s/▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President, Chief Financial Officer and Treasurer
The ▇▇▇▇▇ Portfolios
By: /s/ Illegible
Name: Illegible
Title: Illegible
18
SCHEDULE A
Dated October 22, 2010
The ▇▇▇▇▇ Portfolios:
▇▇▇▇▇ Capital Appreciation Portfolio Class I-2 and Class S
▇▇▇▇▇ Large Cap Growth Portfolio Class I-2 and Class S
▇▇▇▇▇ Mid Cap Growth Portfolio Class I-2 and Class S
▇▇▇▇▇ Small Cap Growth Portfolio Class I-2 and Class S
▇▇▇▇▇ Balanced Portfolio Class I-2
▇▇▇▇▇ Growth & Income Portfolio Class I-2
▇▇▇▇▇ ▇▇▇▇ Cap Growth Portfolio Class I-2
Portfolios will include any new Portfolios created subsequent to the date
hereof.
The Accounts:
Account A
Account B
Accounts will include any new Accounts created subsequent to the date hereof.
19
SCHEDULE B
Compensation for Sub-accounting and Administrative Services:
In compensation for services rendered to shareholders of Class S shares of the
Portfolios, the Distributor will pay the Company an Administrative Services Fee
in the amount of 0.25% of the average daily amount invested. The sub-accounting
and administrative services the Company, or its designee, provides include, but
are not limited to, the services listed below.
(1) providing sub-accounting services with respect to Portfolio shares
beneficially owned by clients, including maintaining records of dates and prices
for all share transactions;
(2) assisting in aggregating and processing purchases, exchange and redemption
transactions;
(3) transmitting and receiving funds in connection with clients orders to
purchase, exchange or redeem Portfolio shares;
(4) verifying client signatures in connection with redemption orders, transfers
among and changes in client accounts;
(5) providing periodic statements showing a client's account balances and, to
the extent practicable, integration of such information with information
concerning other client transactions otherwise effected with or through Company;
(6) furnishing on behalf of Distributor (either separately or on an integrated
basis with other reports sent to a client by Company) periodic statements and
confirmations of all purchases, exchanges and redemptions of Portfolio shares in
a client's account required by applicable federal or state law, all such
confirmations and statements to conform to Rule 10b-10 under the Securities
Exchange Act of 1934 or any other rules pertaining to the provision of
confirmations to investors of open-end investment companies that may be
promulgated from time to time and other applicable federal or state law;
(7) preparing and delivering on behalf of Distributor (either separately or on
an integrated basis with other reports sent to a client by Company) to client
and to appropriate regulatory authorities required tax information relating to
the accounts;
(8) transmitting proxy statements, annual reports, prospectuses and other
communications from the Funds to clients as may be agreed upon;
(9) upon request, providing reports containing state-by-state listings of the
principal residences of the beneficial owners of the shares;
(10) disbursing Portfolio dividends and distributions to clients or providing
for their reinvestment into Fund shares;
20
(11) assisting Distributor in identifying market timers and in enforcing the
Portfolios market timing policies as described in the Portfolios Prospectus;
(12) as applicable, perform any and all duties, procedures and responsibilities
established by the NSCC applicable to the Fund/SERV system and Networking
arrangements; and
(13) providing or arranging for the provision of such other related services as
agreed upon by the parties.
The minimum quarterly Administrative Services Fee payable by the Distributor is
$25. If fees due to the Company during a quarter total less than the $25
minimum payment, the Company will not be paid for providing subaccounting and
administrative services for that quarter.
If the Company is compensated at a lower rate than the compensation stated
herein, but fails to alert the Distributor within three months of a lower
payment, the Distributor will not adjust the Companys compensation
retroactively.
21
SCHEDULE C
EXPENSES
The Trust, Distributor and the Company will coordinate the functions and pay the
costs of completing these functions based upon an allocation of costs in the
tables below. The term Current is defined as an existing Contract owner with
value allocated to one or more Portfolios. The term Prospective is defined as
a potential new Contract owner.
ItemFunctionParty Responsible for Expense
Trust ProspectusPrinting and Distribution (including postage)Current and
Prospective Trust (Company may choose to do the printing at Trusts
expense)
Trust Prospectus and SAI SupplementsPrinting and Distribution (including
postage)Trust (Company may choose to do the printing at Trusts expense)
Trust SAIPrinting and Distribution (including postage)Trust
Proxy Material for TrustPrinting, Distribution to Current (including
postage), tabulation and solicitationTrust
Trust Annual & Semi-Annual ReportPrinting and Distribution (including
postage)Trust (Company may choose to do the printing at Trusts expense)
Contract ProspectusPrinting and Distribution (including postage)Company
Contract Prospectus and SAI SupplementsPrinting and Distribution
(including postage)Company
Contract SAIPrinting and Distribution (including postage)Company
Other communication to Prospective and CurrentPrinting and Distribution
(including postage)If Required by Law or Trust Trust
If Required by Company Company
Operations of the TrustAll operations and related expenses, including the
cost of registration and qualification of shares, taxes on the issuance or
transfer of shares, cost of management of the business affairs of a Trust,
and expenses paid or assumed by a Trust pursuant to any Rule 12b-1
planTrust
22
ItemFunction Party Responsible for Expense
Operations of the AccountsFederal registration of units of separate
account (24f-2 fees)Company
23
AMENDMENT NO. 1 TO
PARTICIPATION AGREEMENT
This Amendment No. 1to the Participation Agreement (the "Amendment") is
effective as of April 1, 2013, by and among The ▇▇▇▇▇ Portfolios (the "Trust"),
▇▇▇▇ ▇▇▇▇▇ & Company, Incorporated (the "Distributor"), and First Security
Benefit Life Insurance and Annuity Company of New York (the "Company").
WHEREAS, the Trust, the Distributor, and the Company are the parties to a
Participation Agreement for offering Shares of the Trust, dated October 31, 2010
(the "Agreement");
NOW, THEREFORE, in consideration of the mutual promises set forth herein, in
accordance with Section 10.10 of the Agreement, the parties hereto agree as
follows:
1. The address for notice to the Trust and to the Distributor in Article IX
of the Agreement is replaced with the following:
"If to the Trust:
The ▇▇▇▇▇ Portfolios
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
If to the Distributor:
▇▇▇▇ ▇▇▇▇▇ & Company, Incorporated
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: General Counsel"
2. Schedule B of the Agreement is hereby deleted in its entirety and replaced
with Schedule B attached hereto.
3. Except as provided herein, the terms and conditions contained in the
Agreement shall remain in full force and effect. Capitalized terms herein
that are not defined shall have the meanings ascribed to them in the
Agreement.
1
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Amendment as of the date and year first above written.
▇▇▇▇ ▇▇▇▇▇ & Company, Incorporated
By: ▇▇▇▇ ▇▇▇▇
------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Senior Vice President
The ▇▇▇▇▇ Portfolios
By: ▇▇▇▇ ▇▇▇▇
------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Assistant Secretary
First Security Benefit Life Insurance and
Annuity Company of New York
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
2
SCHEDULE B
-----------
COMPENSATION FOR SUB-ACCOUNTING AND ADMINISTRATIVE SERVICES:
In compensation for services rendered to shareholders of Class S shares of the
Portfolios, the Distributor will pay the Company an Administrative Services Fee
in the amount of 0.25% of the average daily amount invested. In compensation
for services rendered to shareholders of Class I-2 shares of the Portfolios, the
Distributor will pay the Company an Administrative Services Fee in the amount of
0.10% of the average daily amount invested. The sub-accounting and
administrative services the Company, or its designee, provides include, but are
not limited to, the services listed below.
(1) providing sub-accounting services with respect to Portfolio shares
beneficially owned by clients, including maintaining records of dates and prices
for all share transactions;
(2) assisting in aggregating and processing purchases, exchange and redemption
transactions;
(3) transmitting and receiving funds in connection with clients' orders to
purchase, exchange or redeem Portfolio shares;
(4) verifying client signatures in connection with redemption orders, transfers
among and changes in client accounts;
(5) providing periodic statements showing a client's account balances and, to
the extent practicable, integration of such information with information
concerning other client transactions otherwise effected with or through Company;
(6) furnishing on behalf of Distributor (either separately or on an integrated
basis with other reports sent to a client by Company) periodic statements and
confirmations of all purchases, exchanges and redemptions of Portfolio shares in
a client's account required by applicable federal or state law, all such
confirmations and statements to conform to Rule 10b-10 under the Securities
Exchange Act of 1934 or any other rules pertaining to the provision of
confirmations to investors of open-end investment companies that may be
promulgated from time to time and other applicable federal or state law;
(7) preparing and delivering on behalf of Distributor (either separately or on
an integrated basis with other reports sent to a client by Company) to client
and to appropriate regulatory authorities required tax information relating to
the accounts;
(8) transmitting proxy statements, annual reports, prospectuses and other
communications from the Funds to clients as may be agreed upon;
(9) upon request, providing reports containing state-by-state listings of the
principal residences of the beneficial owners of the shares;
(10) disbursing Portfolio dividends and distributions to clients or providing
for their reinvestment
3
into Fund shares;
(11) assisting Distributor in identifying market timers and in enforcing the
Portfolios' market timing policies as described in the Portfolios' Prospectus;
(12) as applicable, perform any and all duties, procedures and responsibilities
established by the NSCC applicable to the Fund/SERV system and Networking
arrangements; and
(13) providing or arranging for the provision of such other related services as
agreed upon by the parties.
The minimum quarterly Administrative Services Fee payable by the Distributor is
$25. If fees due to the Company during a quarter total less than the $25
minimum payment, the Company will not be paid for providing subaccounting and
administrative services for that quarter.
If the Company is compensated at a lower rate than the compensation stated
herein, but fails to alert the Distributor within three months of a lower
payment, the Distributor will not adjust the Company's compensation
retroactively.
4