FORM OF
MASTER AGREEMENT
AMONG
TRUSTEES OF THE MASTER TRUST FOR THE INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS LOCAL UNIONS SAVINGS AND RETIREMENT PLAN AND TRUST,
SCARBOROUGH SECURITIES CORPORATION,
SECURITY BENEFIT LIFE INSURANCE COMPANY, AND
SECURITY DISTRIBUTORS, INC.
THIS AGREEMENT is made as of the 1st day of July, 1999, by and among the
following: Trustees of the Master Trust for the International Brotherhood of
Electrical Workers Local Unions Savings and Retirement Plan and Trust (the
"Trustees"); Scarborough Securities Corporation ("Scarborough"), ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; Security Benefit Life Insurance Company ("SBL"),
with principal offices at ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇; and
Security Distributors, Inc. ("SDI"), ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇; all parties to this Agreement.
WITNESSETH:
WHEREAS, certain local unions of the International Brotherhood of Electrical
Workers ("IBEW") have established a Savings and Retirement Plan ("Plan") to
allow their members to have the opportunity for a convenient method of regular
savings, to receive higher rates of return than Plan participants could obtain
individually, and to accumulate savings for the purchase of a supplementary
retirement annuity or for such other purposes as the circumstances of a
participant might require;
WHEREAS, assets under the Plan have been held in trust for the benefit of
eligible members of IBEW that participate in the Plan;
WHEREAS, the Trustees wish to expand the investment options available to
Eligible Persons consistent with the retirement purposes of the Plan;
WHEREAS, the Trustees have determined that it would be in the best interests
of the Eligible Persons and consistent with the retirement purposes of the Plan
if a group variable annuity contract that offers multiple investment options
were to serve as the investment vehicle for the Plan;
WHEREAS, the Trustees, with the assistance of Scarborough, wish to take the
steps necessary to permit Eligible Persons to participate in the Annuity
Contract pursuant to the Plan, including amending the Plan to the extent
necessary to permit investment in the Annuity Contract, amending the trust
agreement under which assets are held in trust under the Plan for purposes of
holding the Annuity Contract, and investing existing assets of the Plan in the
Annuity Contract;
WHEREAS, Scarborough, a registered broker-dealer with the Securities and
Exchange Commission ("SEC") and a member of the National Association of
Securities Dealers, Inc. ("NASD") has been retained by the Trustees to, among
other things, facilitate the offering of the Annuity Contract to Eligible
Persons;
WHEREAS, SBL wishes to issue and administer a group annuity contract for
purposes of investment by Eligible Persons pursuant to the Plan (the "Annuity
Contract");
WHEREAS, SDI, a wholly-owned subsidiary of SBL, and a registered
broker-dealer with the SEC and a member of the NASD, wishes to serve as the
distributor of the Annuity Contract;
WHEREAS, this Agreement together with the Annuity Contract, the Trust as set
forth in Section 2.1, the Distribution Agreement as described in Section 4.1,
and the Custody Agreements as set forth in Section 3.5 are intended to serve as
the framework for setting forth the contractual relationships, rights,
responsibilities and obligations of the parties vis-a-vis one another; and
WHEREAS, the parties have entered into a letter of intent dated June 30, 1999
which provides, among other things, that the parties shall enter into a Master
Agreement setting forth the respective duties and obligations of the parties.
NOW THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE 1
ADDITIONAL DEFINITIONS
1.1 ACCOUNT VALUE - The amount held under the Annuity Contract, consisting
of amounts credited to the account of each Participant.
1.2 AFFILIATE - With respect to a party, any person controlling, controlled
by, or under common control with, such party, but shall not include a
Fund or Fund Series.
1.3 ANNUITY CONTRACT - The group unallocated variable annuity contract
developed by SBL in accordance with Article 3, as amended or revised
from time to time in accordance with Article 3 of this Agreement.
1.4 DISTRIBUTOR - SDI or any successor thereto.
1.5 EFFECTIVE DATE - This Agreement shall be effective as of July 1, 1999.
1.6 ELIGIBLE PERSONS - Any individual who is eligible to participate in the
Plan under the terms of the Plan or the Trust.
1.7 FUND and FUND SERIES - An investment company or series thereof serving
as a funding medium for the Annuity Contract, which, subject to Section
3.3, shall include those Funds and Fund Series named in Section 3.3 of
this Agreement as of the Effective Date, and any other investment
company or series thereof that may be added as a funding medium for the
Annuity Contract pursuant to a fund participation agreement with SBL as
described in Section 3.3 of this Agreement.
1.8 GENERAL ACCOUNT - The general account assets of SBL, which includes the
assets of SBL other than those allocated to a separate account.
1.9 INSURANCE COMMISSION - The appropriate agency charged with regulating
insurance activities in a state or other jurisdiction.
1.10 PARTICIPANT - A person eligible to participate in the Plan under the
terms of the Plan and who participates in the Annuity Contract.
1.11 PROSPECTUS - Unless the context otherwise requires, the prospectus and
statement of additional information included in a Registration Statement
or the definitive form thereof for the Annuity Contract and the Separate
Account funding the Annuity Contract, including any supplement thereto,
as filed with the SEC under the Securities Act of 1933 (the "1933 Act").
1.12 RELATED AGREEMENTS - The final executed forms of the agreements that are
the subject of exhibits to this agreement.
1.13 REGISTRATION STATEMENT - Unless the context otherwise requires, a
Registration Statement or amendment thereto for the Annuity Contract and
the Separate Account funding the Annuity Contract, as filed with the SEC
under the 1933 Act.
1.14 THE 1933 ACT - The Securities Act of 1933, as amended.
1.15 THE 1940 ACT - The Investment Company Act of 1940, as amended.
1.16 SEC - The U.S. Securities and Exchange Commission.
1.17 SEPARATE ACCOUNT - Each separate account of SBL supporting the Annuity
Contract.
1.18 SUBACCOUNT - A sub-division of the Separate Account representing an
investment option available under the Annuity Contract.
1.19 TRUST - A trust established to hold the Annuity Contract on behalf of
Eligible Persons.
1.20 TRUSTEES - The persons designated above and any persons who are
successors to those persons as trustees of the International Brotherhood
of Electrical Workers Local Unions Savings and Retirement Plan and
Trust.
ARTICLE 2
THE PLAN AND TRUST
2.1 ORGANIZATION. The Trustees have established or will establish the Trust,
which may be the successor to a trust that held assets under the Plan
prior to the offering of the Annuity Contract and may incorporate in its
terms the Plan, to serve as the contract holder of the Annuity Contract
on behalf of Participants. The Trust shall be established by the
Trustees entering into the International Brotherhood of Electrical
Workers Local Unions Savings and Retirement Plan and Trust Agreement in
the form attached in Exhibit 2.1.A. The Trust may be amended from time
to time provided that such amendment is approved by the Trustees,
Scarborough, and SBL, except that termination of the Trust shall not be
considered an amendment for these purposes, and the Trust may be
terminated pursuant to its terms, subject to Section 3.6 of this
Agreement. Approval by SBL of any change or amendment to the Trust as
provided above may be withheld only if SBL reasonably believes that the
amendment would render the Trust other than a fixed investment trust as
described in Treas. Reg. Section 301.7701-4(c), or if the amendment
would render any aspect of the Trust or its operation unlawful.
2.2 REPRESENTATIONS AND WARRANTIES. Each of the Trustees and Scarborough
represent and warrant to SBL and SDI that on and after the earlier of
the Effective Date or the date that the Trust first becomes the contract
holder of the Annuity Contract that the Trust may lawfully be entered
into on behalf of IBEW by those persons executing the Trust, the Trust
is a duly organized trust under Kansas law and is validly existing; and
the Trustees have all requisite power to carry on the business of the
Trust as contemplated under its terms.
2.3 COVENANTS. The Trustees covenant that they shall take all steps
necessary to maintain the Trust and the Plan so that the representations
and warranties set forth in Section 2.2 continue to be true for the
duration of this Agreement. The Trustees further covenant that they
shall take all steps necessary to maintain the Trust as a fixed
investment trust as described in Treas. Reg. Section 301.7701-4(c) so
that the participations in the Annuity Contract for Participants are
deemed to be held by such individuals and not by the Trust for tax
purposes and that they shall not take any action or omit to take any
action for the duration of this Agreement that would render the Trust
and the Plan other than a fixed investment trust as described in Treas.
Reg. Section 301.7701-4(c). The Trustees agree to promptly notify SBL
and SDI in the event that any of the representations and warranties set
forth in Section 2.2 no longer continue to be true or in the event that
the Trust and Plan cease to be a fixed investment trust as described in
Treas. Reg. Section 301.7701.4(c).
2.4 TRANSFER OF ASSETS. As soon as practicable after the Effective Date, the
Trustees shall cause the assets of the Plan to be invested in the
Annuity Contract. Scarborough agrees to facilitate and coordinate such
investment of assets, and to provide to SBL information as to the names
of the persons participating in the Plan as of such date to which the
transferred amounts should be credited as Account Value under the terms
of the Annuity Contract, and who shall become participants in the
Annuity Contract on such date.
2.5 TRUST EXPENSES. SBL agrees to pay Scarborough an amount not to exceed an
annual rate of 0.07% of the total Account Value under the Annuity
Contract so that Scarborough may pay the administrative expenses of the
Trust. SBL shall pay such amount on a monthly or other period agreeable
to SBL as directed by the Trustees or a person designated by the
Trustees.
ARTICLE 3
DEVELOPMENT AND ADMINISTRATION OF THE ANNUITY CONTRACT
3.1 DEVELOPMENT OF THE ANNUITY CONTRACT. The parties acknowledge that SBL
has consulted with Scarborough on the terms of the Annuity Contract and
the investment options to be offered thereunder. SBL agrees that it
shall develop the Annuity Contract, participation interests of which
shall be offered to Eligible Persons and held by the Trust. The Annuity
Contract shall be the form of annuity contract included in Exhibit 3.1.A
of this Agreement. The Annuity Contract may be amended from time to time
by SBL in accordance with its terms, provided that any such amendments
are approved in advance by the Trustees or a person designated by the
Trustees. As soon as possible following the Effective Date, SBL shall,
at its own expense, file an appropriate Registration Statement with the
SEC with respect to the Annuity Contract.
3.2 PRODUCT DESIGN. The parties agree that SBL shall require from each
Eligible Person who becomes a Participant after the Effective Date, a
minimum initial purchase payment of $2,000 and that the minimum
subsequent purchase payment shall be $100, except that there is no
minimum for automatic investments. The maximum purchase payment is
$1,000,000 per Participant. The parties further agree that the minimum
partial withdrawal and the minimum systematic withdrawal amount is $100
and SBL may limit the frequency of transfers among investment options in
the future. The foregoing requirements are not set forth in the Annuity
Contract. SBL and the Trustees agree that the Annuity Contract shall
contain, among other terms as provided in the form of Annuity Contract
in Exhibit 3.1.A, the following terms:
(a) annuity options;
(b) overall limits on charges and expenses, including a limit of an
annual rate of 1.29% of Separate Account assets for mortality and
expense risk, and a guaranteed limit of 0.10% of Separate Account
assets for administrative expenses;
(c) no sales charge or deferred sales charge;
(d) an allocation option ("Stable Value Option") that pays interest
guaranteed by SBL and that is supported for accounting purposes by
an insulated non-unitized separate account of SBL (and which
separate account shall not be commingled with any other assets of
SBL or any third party nor used for any other SBL annuity or life
insurance contract other than the Annuity Contract) under which the
current rate of interest, subject to crediting consistent with an
option that is not a security pursuant to Section 3(a)(8) of the
1933 Act, under which SBL would pay a current rate based upon the
projected rate of interest that SBL, in its reasonable business
judgment, taking into account factors including its own investment
risk, believes can be earned on any assets allocated by
Participants to the Stable Value Option ("Allocated Assets"), less
a spread, which will be a percentage of Allocated Assets and any
credit allocated thereto in an amount equal to the charges imposed
on the Separate Account for administration and mortality and
expense risks plus the investment advisory fee payable to an
investment adviser engaged to manage the assets allocated to the
Stable Value Option and amortizing any unrealized gain or loss with
respect to the Allocated Assets; and (e) the right to substitute
securities for securities underlying the Separate Account.
3.3 FUND OPTIONS. The parties agree that the Annuity Contract will offer
multiple investment options. SBL agrees to use its reasonable best
efforts to enter into fund participation agreements with the investment
companies that follow, or the investment companies containing the series
that follow, and, as appropriate, the investment adviser or other
service providers to such investment companies or series, with a view
that each shall become a Fund that underlies the Separate Account: the
International Series and Equity Income Series of SBL Fund; the ▇. ▇▇▇▇
Price Mid Cap Growth Portfolio of the ▇. ▇▇▇▇ Price Equity Series, Inc.;
and the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Growth Fund and the ▇▇▇▇▇▇▇ Sachs CORE
Small Cap Equity Fund of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Variable Insurance Trust. The
parties acknowledge that SBL is under no obligation to enter into an
agreement with any of the aforesaid investment companies (and investment
advisers or other service providers) in the event that such parties are
not willing to provide SBL with the contractual protection reasonably
requested by SBL consistent with industry practice. In the event that
SBL is not able to reach agreement and one or more of the aforesaid
investment companies does not become a Fund under the Annuity Contract,
SBL shall use its reasonable best efforts to enter into fund
participation agreements with other investment companies identified by
the Trustees and acceptable to SBL. SBL shall enter into an investment
advisory agreement with ▇. ▇▇▇▇ Price Stable Asset Management, Inc.
("TRP") in substantially the form set forth in Exhibit 3.3A, pursuant to
which TRP shall become the investment adviser to the Allocated Assets in
connection with the Stable Value Option. SBL agrees to consider in good
faith upon reasonable request of the Trustees at any time during the
term of this Agreement the addition of new investment options to become
Funds under the Annuity Contract. The parties acknowledge that SBL is
not responsible for the actions or omissions of any Fund underlying the
Separate Account, except to the extent that SBL has contractual
obligations to any such Fund.
3.4 EXCLUSIVITY OF ANNUITY CONTRACT. SBL shall offer participation interests
in the Annuity Contract solely to Eligible Persons. Nothing in this
Agreement shall prevent SBL from offering to other persons annuity
contracts containing terms that are the same as those in the Annuity
Contract. Nothing in this Agreement shall prohibit SBL, or an Affiliate
thereof, from entering into a participation agreement with a Fund so
that such Fund may act as an investment vehicle for a variable annuity
or life insurance product of SBL or an Affiliate thereof other than the
Annuity Contract.
3.5 CUSTODY. The Trustees shall enter into a Custody Agreement between the
Trustees on behalf of the Trust and a bank acceptable to SBL in the form
of the Custody Agreement included in Exhibit 3.5.A, under which the
Custodian shall be appointed by the Trustees to accept delivery of the
Annuity Contract on behalf of the Trust. SBL shall deliver the Annuity
Contract to the Trust through delivery to the Custodian. In the event
that the Custody Agreement shall be terminated for any reason, the
Annuity Contract shall be held by the Trustees in a manner acceptable to
the Trustees and to SBL. SBL shall enter into a Custody Agreement
between SBL and a bank acceptable to the Trustees in the form of the
Custody Agreement included in Exhibit 3.5.B, under which the Custodian
shall be appointed by SBL to maintain custody of the assets allocated
under the Annuity Contract to the Stable Value Option and deposited by
SBL for accounting purposes to a non-unitized separate account.
3.6 EARLY TERMINATION. If during the five year period beginning on the
Effective Date, the Trustees or Scarborough (1) dissolve or terminate
the Trust, or (2) establish, facilitate, or permit another substantially
similar investment or savings option, plan, or vehicle for Eligible
Persons other than the Annuity Contract, whether through the Trust or
otherwise, then the Trustees shall authorize and direct the Trust to pay
liquidated damages to SBL of an amount equal to the following: (1) 0.35%
of the greater of (a) the total Account Value under the Annuity Contract
as of the date of the violation or (b) $100 million times the number of
years (including fractional amounts for any portion of a year) remaining
in the initial five-year term of this Agreement, plus (2) $200,000 times
a percentage equal to x/60 where x is equal to the number of months
remaining in the initial five-year term of this Agreement; provided,
however, that the foregoing liquidated damages shall not be paid or
apply in the event that (i) SBL consents in writing to such action by
the Trustees, or (ii) an Excusing Condition occurs. An Excusing
Condition shall occur if:
(a) SBL should fail to maintain the financial standards set forth in
Schedule 3.6A, or
(b) SBL continues to fail to meet the service standards specified in
Schedule 3.8A for 120 days or more after being notified in writing
by Scarborough or the Trustees of any such failure, or
(c) SBL should no longer be able to act as an insurance company under
applicable law.
3.7 CONTINUOUS OFFERING. SBL agrees to take all steps necessary to
continuously offer during the term of this Agreement participation
interests in the Annuity Contract to Eligible Persons. Accordingly, SBL,
with the assistance of SDI where appropriate, agrees at its expense:
(a) to develop and prepare all necessary annuity contract forms,
participation forms, related applications, Registration Statements,
Prospectuses and other documents in the appropriate form, and for
establishing the appropriate Separate Account and Subaccounts to
support the Annuity Contract and invest in each Fund;
(b) to file all such annuity contract forms, participation enrollment
forms, applications, Registration Statements, Prospectuses and
other documents with the SEC and any Insurance Commission as deemed
appropriate by SBL; and
(c) to file amendments to the annuity contract forms, participation
forms, applications, Registration Statements, Prospectuses and
other documents to the extent appropriate or required by applicable
law.
3.8 ANNUITY CONTRACT AND SEPARATE ACCOUNT ADMINISTRATION. SBL shall be
responsible for the insurance underwriting, issuance, and administration
of the Annuity Contract and Separate Account. Accordingly, SBL shall
provide the following services: calculation of Separate Account
accumulation and annuity unit values; and processing premiums,
withdrawals and transfers of Account Value. In addition, with respect to
interests of Participants, SBL shall provide the following services:
establishing individual accounts for Participants; tracking Participant
account balances and cost basis; generation and delivery of
confirmations of Participant transactions under the Annuity Contract;
generation and delivery of Participant quarterly or other periodic
statements; and tax reporting with respect to Participant transactions
under the Annuity Contract. In rendering these services, SBL shall
exercise reasonable care and perform at a level commensurate with the
standards set forth in Schedule 3.8.A.
ARTICLE 4
DISTRIBUTION
4.1 DISTRIBUTION. SDI shall serve as the distributor for the Annuity
Contract. SDI and Scarborough shall enter into a Distribution Agreement
in substantially the form set forth in Exhibit 4.1.A. Pursuant to the
Distribution Agreement, Scarborough shall be authorized to solicit
Eligible Persons to become Participants in the Annuity Contract.
4.2 EXCLUSIVITY FOR SCARBOROUGH. SBL and SDI agree that Scarborough is the
exclusive person that may be appointed to solicit Eligible Persons to
become Participants in the Annuity Contract, and no other person may be
so appointed unless:
(a) Otherwise agreed to in writing by Scarborough;
(b) Scarborough should become ineligible to render the services under
the Distribution Agreement for any reason under applicable law,
including, but not limited to, suspension of its registration as a
broker-dealer with the SEC, or if Scarborough should no longer be
registered as a broker-dealer with the SEC or with any state where
necessary to solicit Eligible Persons to become Participants in the
Annuity Contract, or if Scarborough or its pertinent associated
persons should not be licensed under applicable insurance law to
solicit participation in the Annuity Contract; or
(c) Approved by the Trustees.
4.3 OTHER SERVICES. Scarborough shall perform the following administrative
functions relating to the Annuity Contract: (i) preparing information
relating to the Annuity Contract for delivery to Eligible Persons or to
Participants; (ii) preparing communications for Participants and
Eligible Persons, responding to questions from Participants and Eligible
Persons, and performing general customer service functions; (iii)
preparing year-end reports for the Trustees; (iv) effecting changes
relating to the Participants, including change of address; (v) effecting
transfers of Account Value or changes in the allocation of future
purchase payments as instructed by Participants; (vi) authorizing
telephone transfers of Account Value upon receipt of written
instructions from a Participant; and (vii) providing other necessary
documents and reports in an efficient and timely manner. Scarborough
will effect changes in Participant records either through e-mail
instructions to SBL, or if available, through direct access to SBL's
Participant recordkeeping system. In rendering these services,
Scarborough shall exercise reasonable care and perform at a level
commensurate with standards then prevailing in the industry. Scarborough
and SBL shall indemnify and hold harmless one another for any losses,
claims, damages or expenses (including attorneys' fees) arising from its
bad faith, willful misfeasance, negligence or failure to properly
perform its administrative functions as set forth in this Section 4.3.
ARTICLE 5
COMPENSATION AND EXPENSES
5.1 COMPENSATION FOR SBL. Unless the parties otherwise agree in writing and
except as provided in this Section 5.1 or Section 3.6, the sole source
of compensation for SBL for carrying out its responsibilities and
obligations assumed under this Agreement or the Related Agreements shall
be the revenues derived from the charges deducted under the Annuity
Contract. The parties acknowledge that SBL has incurred significant
administrative, systems, and development expenses in exploring the
feasibility of offering the Annuity Contract to Eligible Persons, and
acknowledge that additional fees will be incurred by SBL on and after
the Effective Date in meeting the obligations set forth herein and in
designing and offering the Annuity Contract in a manner which is
anticipated to meet the needs of the parties and the requirements of
applicable law. Within fifteen (15) days of the Effective Date, the
Trustees agree to authorize, and make payment, from the Trust to SBL in
the amount of $230,000 for such development expenses.
5.2 COMPENSATION FOR SCARBOROUGH. Unless the parties otherwise agree in
writing, the sole source of compensation for Scarborough for carrying
out its responsibilities and obligations under this Agreement and the
Distribution Agreement shall be compensation paid to Scarborough by SDI
under the Distribution Agreement. Such compensation shall be paid
monthly in an amount equal to 1/12 of 0.75% applied to Account Value as
of each calendar month end.
5.3 EXPENSES. Except as otherwise provided herein and in the Related
Agreements, each party shall bear the expenses it incurs in carrying out
its responsibilities and obligations assumed under this Agreement or the
Related Agreements. SBL or SDI shall bear the cost of printing
Prospectuses and participation enrollment forms for the Annuity Contract
and mailing Prospectuses to Participants. Scarborough shall bear the
cost of development and printing of any advertisements or sales
literature for the Annuity Contract; provided that SBL shall assist
Scarborough in developing the initial marketing brochure and will pay
the cost of printing the initial brochure, subject to a maximum cost of
$10,000.
ARTICLE 6
PROPRIETARY MATTERS
6.1 TRADEMARKS.
(a) SBL LICENSED MARKS.
SBL is the owner of all right, title and interest in and to the
name, trademark and service ▇▇▇▇ "SBL" used in connection with the
sale and promotion of financial and insurance products and any
other names, trademarks, service marks or logos later specified by
SBL (the "SBL licensed marks" or the "licensor's licensed marks").
SBL hereby grants to Scarborough a non-exclusive license to use the
SBL licensed marks in connection with its performance of the
services contemplated by this Agreement and the Related Agreements,
subject to the terms and conditions set forth in paragraph (b)
hereof.
(b) TERMS AND CONDITIONS.
(i) TERM. The grant of license by SBL (a "licensor") to
Scarborough thereof (the "licensee") shall terminate
automatically when this Agreement ceases to be in effect or
sooner upon termination by the licensor by written notice,
unless otherwise agreed in writing by the parties. Upon
automatic termination, every licensee shall cease to use the
licensor's licensed marks.
(ii) APPROVAL OF TRADEMARK-BEARING MATERIALS. Licensee shall use
the SBL licensed marks in accordance with the instructions of
SBL and licensee shall not use the SBL licensed marks on any
advertising or other printed materials or other media unless
SBL has approved such use in advance; provided that licensee
may use the SBL licensed marks in the normal course of
performing its services and functions with respect to the
Annuity Contract, all as contemplated by this Agreement. SBL
shall have the right at reasonable times and upon reasonable
intervals upon 15 days' written notice to licensee to review
all literature and other media describing or offering the
Annuity Contract.
6.2 CONFIDENTIALITY. Each party to this Agreement shall keep confidential
the terms and provisions of this Agreement (except as otherwise required
by law or regulation), the parties' respective methods of doing
business, the names, addresses and other personal information relating
to Participants, and any other information proprietary to any party to
this Agreement, and shall not reproduce, disseminate or otherwise
publish the same to any person not a party to this Agreement, without
the prior written approval of the other parties to this Agreement
(except as required by law or regulation and then only upon prior
written notice to the other party). THE FOREGOING OBLIGATION OF
CONFIDENTIALITY SHALL NOT APPLY TO INFORMATION THAT: (A) IS OR BECOMES
PUBLICLY KNOWN OR READILY ASCERTAINABLE BY THE PUBLIC THROUGH NO
WRONGFUL ACT OF THE RECIPIENT; (B) IS ALREADY KNOWN TO THE RECIPIENT OR
HAS BEEN INDEPENDENTLY DEVELOPED BY OR FOR THE RECIPIENT WITHOUT
UTILIZING THE CONFIDENTIAL INFORMATION; (C) THE RECIPIENT RECEIVES FROM
A THIRD PARTY, IF THE RECIPIENT DOES NOT KNOW OF ANY RESTRICTIONS ON THE
DISCLOSURE OF THAT INFORMATION; (D) THE DISCLOSER DISCLOSES TO A THIRD
PARTY WITHOUT SIMILAR RESTRICTIONS ON DISCLOSURE; OR (E) IS LAWFULLY
REQUIRED TO BE DISCLOSED UNDER APPLICABLE LAW, PROVIDED THAT BEFORE
MAKING SUCH DISCLOSURE THE RECIPIENT SHALL GIVE THE DISCLOSER AN
ADEQUATE OPPORTUNITY TO INTERPOSE AN OBJECTION AND/OR TAKE ACTION TO
ASSURE CONFIDENTIAL TREATMENT OF SUCH INFORMATION.
6.3 PUBLIC ANNOUNCEMENTS. To the extent reasonably feasible, the parties
shall confer with one another prior to the issuance of any reports,
statements or releases pertaining to this Agreement, the Annuity
Contract and the transactions contemplated hereby, except that a party
will in any event have the right to issue any such reports, statements
or releases if such issuance is required to comply with the requirements
of any applicable federal, state or local laws and regulations.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 ORGANIZATION AND GOOD STANDING. Except for the Trustees, each party
hereto represents that it is a corporation duly organized, validly
existing and in good standing under the laws of that jurisdiction set
forth on page one of this Agreement; has all requisite corporate power
to carry on its businesses as it is now being conducted and is qualified
to do business in each jurisdiction in which it is required to be so
qualified; and is in good standing in each jurisdiction in which such
qualification is necessary under applicable law.
7.2 AUTHORIZATION. Each party hereto represents that the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate
or other action by such party, and when so executed and delivered, this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
7.3 NO CONFLICTS. Each party hereto represents that the consummation of the
transactions contemplated herein and in the Related Agreements, and the
fulfillment of the terms of this Agreement and the Related Agreements,
shall not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or bylaws of such party, or
any indenture, agreement, trust instrument, mortgage, deed of trust, or
other instrument to which such party is a party or by which it is bound,
or violate any law, or, to the best of such party's knowledge, any
order, rule or regulation applicable to such party of any court or of
any federal or state regulatory body, administrative agency or any other
governmental instrumentality having jurisdiction over such party or any
of its properties.
ARTICLE 8
REMEDIES AND DISPUTE RESOLUTION
8.1 RIGHTS, REMEDIES, ETC, ARE CUMULATIVE. 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. Failure of a party to insist upon strict compliance with any of
the conditions of this Agreement shall not be construed as a waiver of
any of the conditions, but the same shall remain in full force and
effect. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provisions, whether
or not similar, nor shall any waiver constitute a continuing waiver.
8.2 INTERPRETATION, JURISDICTION, ETC. This Agreement, together with the
Related Agreements, constitutes the whole agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all
prior oral or written understandings, agreements or negotiations between
the parties with respect to such subject matter. This Agreement shall be
construed and its provisions interpreted under and in accordance with
the laws of the state of Kansas without giving effect to principles of
conflict of laws. This Section 8.2 shall not be construed to deny SBL,
or an Affiliate thereof, of any rights to which it is entitled as an
owner of shares of a Fund or Fund Series.
8.3 SEVERABILITY. This is a severable Agreement. In the event that any
provision of this Agreement would require a party to take action
prohibited by applicable federal or state law or prohibit a party from
taking action required by applicable federal or state law, then it is
the intention of the parties hereto that such provision shall be
enforced only to the extent permitted under the law, and, in any event,
that all other provisions of this Agreement shall remain valid and duty
enforceable as if the provision at issue had never been a part hereof.
ARTICLE 9
TERM AND TERMINATION
9.1 TERMINATION. This Agreement shall be in effect for an initial term of
five years from the Effective Date, which term is automatically
renewable for succeeding one-year terms ending on the anniversary of the
Effective Date. This Agreement will terminate automatically in the event
that the Trustees or Scarborough (1) dissolve or terminate the Trust, or
(2) establish, facilitate, or permit another substantially similar
investment or savings option, plan or vehicle for Eligible Persons other
than the Annuity Contract, whether through the Trust or otherwise. This
Agreement may be terminated by SBL or the Trustees after the initial
five-year term on the annual anniversary of the Effective Date provided
that 60 days' advance written notice is provided to the other party. In
addition, the following parties may terminate the Agreement as follows:
(a) The Trustees may terminate the Agreement at any time upon 60 days'
written notice in the event that an Excusing Condition as defined
in Section 3.6 of this Agreement, occurs.
(b) The Trustees may terminate the Agreement at any time SBL shall have
become insolvent or if, in the Trustees' reasonable good faith
judgment, there is an event, occurrence or circumstance, including
the enactment of federal or state legislation, a court decision, or
other change in circumstances which makes the Annuity Contract a
per se unsuitable investment for Eligible Persons;
(c) The Trustees may terminate this Agreement promptly upon written
notice to SBL in the event of a breach of a representation or
warranty by SBL or SDI or in the event that the Trustees reasonably
believe that performance of the obligations of any party under this
Agreement or the Related Agreements may involve a violation of
applicable law.
(d) SBL or SDI may terminate this Agreement immediately upon notice to
the Trustees and Scarborough (i) in the event of a breach of a
representation or warranty by the Trustees or Scarborough, or (ii)
in the event that SBL or SDI reasonably believes that performance
of the obligations of any party under this Agreement or the Related
Agreements may involve a violation of applicable law, or (iii) in
the event that Scarborough is no longer registered as a
broker-dealer with the SEC.
Upon termination of this Agreement, the parties shall cooperate and
use their best efforts to cause the Annuity Contract, without
penalty, to be assumed by one or more other insurance carriers
designated by the Trustees. It is understood that SBL may structure
the exchange as a reinsurance, coinsurance, or similar transaction,
or in the alternative, the Trustees or Scarborough shall have the
right to make arrangements for an exchange of all or a portion of
the Annuity Contract then outstanding, into insurance contracts
issued by another insurance carrier mutually acceptable to the
parties; provided that the Trustees or Scarborough first obtains an
opinion of counsel from counsel mutually acceptable to the parties
that such an exchange is consistent with, and does not affect, the
status of the trust as a fixed investment trust described in Treas.
Reg. Section 301.7701.4(c). SBL shall not be entitled to
compensation from such insurance carrier in connection with such
transaction or exchange other than to recover its expenses,
including the expense of disintermediation. The expense of
disintermediation shall be the amount by which the market value of
assets allocated to SBL's insulated non-unitized separate account
supporting the Stable Value Option is less than the amount of
Account Value allocated to the Stable Value Option under the
Annuity Contract, determined as of the date that the reinsurance,
coinsurance, exchange or similar transaction is effected.
Notwithstanding anything set forth herein to the contrary, the
respective rights and liabilities of the parties under this
Agreement and the Related Agreements shall survive the termination
of this Agreement.
9.2 CHANGES RELATING TO SCARBOROUGH OR THE TRUST. SBL shall have the right
in its sole discretion, to make changes in the Annuity Contract or
another Related Agreement, including causing a substitution of a Fund or
Fund Series, upon the occurrence or determination of any of the
following events:
(a) The Trust or Scarborough or an Affiliate thereof files a voluntary
petition in bankruptcy or for reorganization or shall be the
subject of an involuntary petition in bankruptcy for liquidation or
reorganization, or has a receiver, liquidator or trustee appointed
over its affairs; or
(b) In SBL's good faith judgment, there is an event, occurrence or
circumstance including the enactment of federal or state
legislation, court decision, a change in circumstances which makes
the Annuity Contract or insurance contracts of that type a PER SE
unsuitable investment for Eligible Persons.
9.3 ASSIGNMENT AND TRANSFER. This Agreement may not be assigned or
transferred by any party, except with the written consent of the other
parties hereto.
ARTICLE 10
GENERAL PROVISIONS
10.1 COOPERATION. Each party agrees to cooperate with the other party or
parties to this Agreement and with pertinent regulatory authorities in
the event that a regulatory authority, including, but not limited to,
the SEC, an Insurance Commissioner, or the Internal Revenue Service,
examines, investigates, or makes inquiries to any party to this
Agreement that relates directly or indirectly to this Agreement or the
Related Agreements.
10.2 NOTICE, CONSENT AND REQUEST. Any notice, consent or request required or
permitted to be given by a party to any other party shall be deemed
sufficient if sent by facsimile transmission followed by Federal Express
or other overnight carrier, or if sent by registered or certified-mail,
postage prepaid, addressed by the party giving notice to any other party
at the following addresses (or at such other address for a party as
shall be specified by like notice);
if to the Trustees to:
c/o Scarborough Alliance Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
if to Scarborough Securities Corporation to:
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
if to Security Benefit Life Insurance Company to:
Attn: Ms. ▇▇▇ ▇▇▇, Esq.
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
10.3 CAPTIONS. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
10.4 COUNTERPART. This Agreement may be executed in two or more counterparts,
each of which taken together shall be deemed to be one and the same
instrument.
10.5 AMENDMENT. No provisions of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
IN WITNESS WHEREOF, the parties hereto have each duly executed this Agreement
as of the day and year first above written.
SECURITY BENEFIT LIFE INSURANCE COMPANY
By its authorized officer
By:
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Title:
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Date:
SECURITY DISTRIBUTORS, INC.
By its authorized officer
By:
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Title:
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Date:
TRUSTEES OF THE INTERNATIONAL BROTHERHOOD
OF ELECTICAL WORKERS LOCAL UNIONS SAVINGS
AND RETIREMENT PLAN AND TRUST
By its authorized officer
By:
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Title:
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Date:
SCARBOROUGH SECURITIES CORPORATION
By its authorized officer
By:
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Title:
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Date:
LIST OF EXHIBITS
Exhibit 2.1.A International Brotherhood of Electrical Workers Local Unions
Savings and Retirement Plan and Trust Agreement
Exhibit 3.1.A Annuity Contract
Exhibit 3.5.A Custody Agreement for holding the Annuity Contract
Exhibit 4.1.A Distribution Agreement between Securities Distributors, Inc.
and Scarborough Securities Corporation
LIST OF SCHEDULES
Schedule 3.6A Minimum Financial Ratios for Security Benefit Life
Schedule 3.8.A Standards of Service for Security Benefit Life